EXHIBIT 13.1
Shareholder Information
TRANSFER AGENT
Wachovia
Corporate Trust Department
Post Office Box 3001
Winston-Salem, North Carolina 27102
(910) 770-4994
Inquiries regarding stock transfers, lost certificates or address changes should
be directed to the Corporate Trust Department of Wachovia at the above address.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Atlanta, Georgia
FORM 10-K
American Software's Form 10-K Annual Report to the Securities and Exchange
Commission is available without charge to shareholders upon written request to
Pat McManus, Investor Relations, 470 East Paces Ferry Road, Atlanta, Georgia
30305.
NASDAQ SYMBOL
The Company's Class A Common Shares are listed on the NASDAQ Stock Market -
National Market under the symbol AMSWA and are listed daily in most newspapers
under the abbreviation "Am Software".
MARKET MAKERS
The following firms make a market in the common shares of American Software:
Alex Brown & Sons
Bear, Stearns & Co.
Cantor, Fitzgerald & Co.
Dean Witter Reynolds, Inc.
Gruntal & Co., Inc.
Herzog, Heine, Geduld, Inc.
Interstate/Johnson Lane
Merrill Lynch, Pierce, Fenner & Smith, Inc.
Mayer & Schweitzer, Inc.
Morgan, Keegan & Co.
Nash Weiss/Division of Shatkin Inv.
Olde Discount Corporation
Oppenheimer & Co., Inc.
Prudential Securities Inc.
Sherwood Securities Corp.
The Robinson-Humphrey Company, Inc.
Troster Singer
MARKET PRICE INFORMATION
The table below presents the high and low sales prices for American Software,
Inc. common stock as reported by NASDAQ, for the Company's last two fiscal years
(1994 and 1995).
FISCAL YEAR 1995 HIGH LOW
First Quarter $ 5 7/8 $ 4 3/8
Second Quarter 5 1/2 4 3/8
Third Quarter 3 1/8 2 1/2
Fourth Quarter 4 1/4 2 3/4
FISCAL YEAR 1994 HIGH LOW
First Quarter $ 8 7/8 $ 5 1/2
Second Quarter 8 3/8 6 3/8
Third Quarter 8 1/8 5 1/8
Fourth Quarter 6 3/8 5
The closing price on July 24, 1995, was 53/4.
CASH DIVIDENDS
FISCAL 1995
First Quarter $ .08
Second Quarter .08
Third Quarter --
Fourth Quarter --
FISCAL 1994
First Quarter $ .08
Second Quarter .08
Third Quarter .08
Fourth Quarter .08
There were 1,355 shareholders of record of the Company's Class A Common Shares
and 2 shareholders of the Company's Class B Common Shares as of July 24, 1995.
ANNUAL MEETING
The annual meeting of shareholders will be held at 4:00 p.m. on Wednesday,
September 6, 1995, at the Hotel Nikko Atlanta, 3300 Peachtree Road, N.E.,
Atlanta, Georgia. All American Software shareholders are encouraged to attend.
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American Software, Inc. and Subsidiaries
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Selected Consolidated Financial Data (In thousands, except per share amounts)
1995 1994 1993 1992 1991
-------------------------------------------------------------------------------------------------------------------------
For year ended April 30:
Revenues.................................... $ 79,462 $ 94,222 $ 106,844 $ 113,125 $ 101,854
Total costs and expenses.................... 93,050 108,328 103,558 89,932 79,777
----------------------------------------------------------------------
Operating earnings (loss)................ (13,588) (14,106) 3,286 23,193 22,077
Other income................................ 2,246 2,428 3,459 4,686 4,601
----------------------------------------------------------------------
Earnings (loss) before income taxes...... (11,342) (11,678) 6,745 27,879 26,678
Income tax expense (benefit)................ (4,653) (5,090) 1,635 9,316 9,196
----------------------------------------------------------------------
Net earnings (loss)...................... $ (6,689) $ (6,588) $ 5,110 $18,563 $ 17,482
======================================================================
Net earnings (loss) per common and
common equivalent share.................. $ ( .30) $ ( .30) $ .23 $ .80 $ .75
Cash dividends per share.................... $.16 $ .32 $ .31 $ .27 $ .23
As of April 30:
Working capital............................. $ 36,407 $ 46,328 $ 61,839 $ 73,171 $ 61,063
Total assets................................ $107,792 $ 117,641 $ 131,540 $ 135,655 $ 122,088
Long-term debt.............................. $ -- $ -- $ -- $ 290 $ 299
Shareholders' equity........................ $ 74,037 $ 84,268 $ 98,031 $ 105,861 $ 90,453
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American Software, Inc. and Subsidiaries
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
As an aid to understanding the Company's operating results for the three
years ended April 30, 1995, the following table shows the percentage of certain
items included in the consolidated statements of earnings as they relate to
revenues.
Percentage of Revenues Years Ended April 30,
1995 1994 1993
% % %
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Revenues:
License fees............................................ 26 33 37
Services................................................ 45 44 44
Maintenance............................................. 29 23 19
-----------------------------------
Total revenues.......................................... 100 100 100
Cost of revenues:
License fees............................................ 30 32 29
Services................................................ 28 23 21
Maintenance............................................. 5 6 5
-----------------------------------
Total cost of revenues.................................. 63 61 55
-----------------------------------
Selling, general, and administrative expenses................... 54 47 41
Provision for doubtful accounts................................. -- 7 1
-----------------------------------
Operating earnings (loss)............................... (17) (15) 3
Other income.................................................... 3 3 3
-----------------------------------
Earnings (loss) before income taxes..................... (14) (12) 6
Income tax expense (benefit).................................... (6) (5) 1
-----------------------------------
Net earnings (loss)..................................... (8) (7) 5
===================================
Fiscal 1995 was a year in which the Company's performance improved in the
second half of the year as compared to the first half. The first six months of
fiscal 1995 yielded a net loss per share of $.26 while the second six months
resulted in a net loss of $.04 per share. Two positive factors that affected the
improvement in the second half of fiscal 1995 were the increase in software
license fee revenues and decrease in total expenses. Software license fee
revenues increased from $7.5 million for the first six months to $13.2 million
for the last half of the year. Total expenses decreased over the same period
from $49.5 million to $43.5 million.
Software license fee revenues decreased to $20.8 million in fiscal 1995
from $31.1 million in fiscal 1994 and $39.4 million in fiscal 1993. Though these
revenues have declined for the last three fiscal years, the Company is
encouraged by its results in the second half of fiscal 1995, as mentioned above.
Due to a more stable and better trained sales force and better product
offerings, the Company believes software license fee revenues will continue to
grow in fiscal 1996.
Services revenues, which are composed primarily of consulting revenues,
custom programming revenues, and outsourcing revenues, decreased to $36.0
million in fiscal 1995 from $41.5 million in fiscal 1994 and $47.5 million in
fiscal 1993. Outsourcing revenues, a component of services revenue, increased
54% to $9.2 million in fiscal 1995 from $6.0 in fiscal 1994. Outsourcing
consists generally of providing the data processing functions for customers by
running their software for them on the Company's equipment. Services revenues
apart from outsourcing revenues declined 24% to $26.8 million in fiscal 1995
from $35.5 million in fiscal 1994. Unlike outsourcing, the consulting and custom
programming business tends to be driven by software license fees generated six
to nine months prior. If historical trends prevail, this segment of the business
should benefit in fiscal 1996 from the increased software licenses obtained in
the second half of fiscal 1995 and the expected software license growth in
fiscal 1996.
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American Software, Inc. and Subsidiaries
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTINUED
Maintenance revenues increased 5% to $22.6 million in fiscal 1995 versus
$21.6 million in fiscal 1994 and increased 9% from fiscal 1993 to fiscal 1994.
The growth in maintenance has slowed from previous years due primarily to the
slower rate at which new customers are added to maintenance. The decreasing rate
at which new customers were added to maintenance relates directly to the
decrease in software license fees over the last three years.
Expenses decreased 14% to $93.0 million in fiscal 1995 from $108.3 million
in fiscal 1994 and increased 5% in fiscal 1994 from $103.6 million in fiscal
1993. Expenses for salaries and commissions decreased $5.6 million in fiscal
1995 from fiscal 1994. This was due to a personnel decrease from 905 at the end
of the fiscal 1994 to 670 at the end of fiscal 1995. Other significant
reductions included employee travel of $2.8 million and marketing expenses of
$.4 million. Additionally, factors that caused fiscal 1994 expenses to be higher
were a $5.4 million increase to the provision for doubtful accounts and a $1.2
million impairment charge of capitalized software development costs. The
impairment charge in fiscal 1994 was for the write-off of principally certain
mainframe enhancements.
The cost of revenues for license fees consists primarily of salaries and
related employee benefits, royalties and amortization of computer software
costs. These costs were $24.3 million in fiscal 1995 versus $32.8 million in
fiscal 1994, primarily due to a decrease in salaries and employee benefits
related to the decrease in personnel during the year.
Services costs of revenues consist of salaries and related employee
benefits, contract programming and related travel and living expenses. Services
costs increased 2% to $21.9 million in fiscal 1995 from $21.3 million in fiscal
1994, due to an increase in outsourcing costs of $2.6 million, partially offset
by decreases in services salaries of $2.1 million.
Maintenance cost of revenues consists of salaries and related employee
benefits. These costs decreased 29% to $4.2 million in fiscal 1995 from $5.9
million in fiscal 1994. The reduction in these costs was directly related to the
Company's reduction in its workforce.
The Company's internal new product development and enhancement of existing
products include two categories: research and development expenditures and
additions to capitalized computer software development costs. These totalled
$12.6 million, $11.7 million, and $13.7 million in fiscal years 1995, 1994, and
1993, respectively, and represented 60%, 38% and 35% of license fees in those
years.
Selling, general and administrative expenses increased 3% to $42.9 million
in fiscal 1995 from $41.8 million in fiscal 1994. The increase was primarily due
to an expansion of the Company's selling presence worldwide. The Company also
decentralized its sales support functions to form cohesive sales units in the
field offices. The Company believes that the sales force in place at the end of
fiscal 1995 is sufficient to meet its sales objectives for fiscal 1996.
The provision for (recovery of) doubtful accounts for fiscal 1995 of $(.16
million) was lower than the provision for fiscal 1994 of $6.6 million due
primarily to the write-off of two international accounts during fiscal 1994.
Other income is comprised predominantly of interest income. Cash and
investments totaled approximately $32,505,000, $40,674,000, and $50,080,000 and
comprised 30%, 35%, and 38% of total assets at April 30, 1995, 1994, and 1993,
respectively. Interest income has decreased as a result of total dollars
invested in fiscal 1993 through 1995.
The income tax benefit in fiscal 1995 was 41% of the pretax loss compared
to 44% in fiscal 1994, and 24% in expense in fiscal 1993. Most of the benefit
can be carried back against previously paid taxes.
The Company believes that inflation has not materially affected the results
of its operations for the past three years.
OPERATING PATTERN
The Company experienced an irregular pattern of quarterly operating
results, caused primarily by fluctuations in both the number and size of
software license contracts received and delivered from quarter to quarter.
LIQUIDITY AND CAPITAL RESOURCES
Over the past three years, working capital has been provided almost
entirely by cash from operations. The Company had no material commitments for
capital expenditures as of April 30, 1995.
The Company's operating activities provided cash of $14.0 million in fiscal
1995, $11.8 million in fiscal 1994 and $19.2 million in 1993. With the Company's
adoption of SFAS 115 on May 1, 1994, its securities and money market funds are
treated as a trading portfolio. The activities of that portfolio are included in
operating activities in the consolidated statement of cash flows for fiscal
1995. The decline in accounts receivable for fiscal 1995 compared to fiscal 1994
had a lesser effect than the decline in fiscal 1994 compared to fiscal 1993.
Cash used for investing activities was $11.2 million in fiscal 1995, $3.1
million in fiscal 1994 and $5.6 million in fiscal 1993. The Company acquired a
30% interest in TXbase Systems, Inc. for $.8 million in fiscal 1995; acquired
certain licensing rights from CODA for $3.3 million in fiscal 1994; and acquired
the assets of Distribution Sciences, Inc. for $4.7 million ($2.5 million in
cash) in fiscal 1993.
Cash used for financing activities was $3.7 million in fiscal 1995, $7.7
million in fiscal 1994 and $16.2 million in fiscal 1993. The reduction in cash
used for financing activities in fiscal 1995 as compared to fiscal 1994 was due
to the suspension of the Company's quarterly dividends after payment of two
quarterly dividends. The reduction in fiscal 1994 as compared to fiscal 1993 was
due to the reduced amount of stock repurchased and extinguishment of long-term
debt.
The Company's consolidated balance sheet remains extremely strong with a
current ratio of 2.4 to 1. Liquidity also remains strong, with cash and
investments totaling 30% of total assets. The Company expects existing cash and
investments, combined with working capital generated from operations, to be
sufficient to meet its operational needs in fiscal 1996.
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American Software, Inc. and Subsidiaries
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CONSOLIDATED BALANCE SHEETS
April 30, 1995 and 1994
Assets 1995 1994
- -------------------------------------------------------------------------------------------------------------------
Current assets:
Cash.................................................................. $ 1,228,461 $ 2,172,745
Investments, estimated market value of $38,760,616
in 1994 (note 2)................................................... 31,276,773 38,500,941
Trade accounts receivable, less allowance for
doubtful accounts of $1,906,284 in 1995 and
$3,800,000 in 1994................................................. 11,008,273 15,581,382
Unbilled accounts receivable.......................................... 5,409,390 4,325,913
Current deferred income taxes (note 3)................................ 2,269,548 2,465,206
Refundable income taxes............................................... 8,304,601 6,117,848
Prepaid expenses and other current assets............................. 2,474,950 3,177,126
---------------------------------
Total current assets............................................... 61,971,996 72,341,161
---------------------------------
Property and equipment, at cost:
Buildings and leasehold improvements.................................. 19,021,450 17,807,393
Computer equipment.................................................... 14,167,275 12,752,300
Office furniture and equipment........................................ 4,186,816 3,804,575
---------------------------------
37,375,541 34,364,268
Less accumulated depreciation and amortization........................ 19,283,211 16,886,676
---------------------------------
Net property and equipment......................................... 18,092,330 17,477,592
---------------------------------
Capitalized computer software development costs,
less accumulated amortization of $28,248,564 in
1995 and $21,532,475 in 1994.......................................... 20,372,465 20,049,606
Purchased computer software costs, less accumulated
amortization of $7,522,237 in 1995 and $5,199,170 in 1994............. 5,414,553 7,139,495
---------------------------------
Total computer software costs...................................... 25,787,018 27,189,101
---------------------------------
Other assets, net............................................................. 1,940,209 633,080
---------------------------------
$ 107,791,553 $ 117,640,934
=================================
See accompanying notes to consolidated financial statements.
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American Software, Inc. and Subsidiaries
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CONSOLIDATED BALANCE SHEETS
April 30, 1995 and 1994
Liabilities and Shareholders' Equity 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable............................................................ $ 5,132,774 $ 4,377,914
Accrued compensation and related costs...................................... 2,797,422 5,055,926
Accrued royalties........................................................... 1,161,836 1,114,376
Other current liabilities................................................... 3,722,891 2,193,017
Deferred revenue............................................................ 12,750,156 13,272,252
----------------------------------
Total current liabilities........................................... 25,565,079 26,013,485
Deferred income taxes (note 3).................................................. 8,189,662 7,358,968
----------------------------------
Total liabilities................................................... 33,754,741 33,372,453
----------------------------------
Shareholders' equity (note 5):
Common stock:
Class A, $.10 par value. Authorized 50,000,000
shares; issued 18,729,871 shares in 1995
and 18,688,728 shares in 1994....................................... 1,872,988 1,868,873
Class B, $.10 par value. Authorized 10,000,000
shares; issued and outstanding 4,840,489 shares
in 1995 and 1994; convertible into Class A shares
on a one-for-one basis.............................................. 484,049 484,049
Additional paid-in capital.................................................. 30,656,333 30,415,118
Retained earnings........................................................... 52,846,986 63,105,879
----------------------------------
85,860,356 95,873,919
Less Class A treasury stock, 1,306,943 shares in
1995 and 1,239,000 shares in 1994, at cost.............................. 11,823,544 11,605,438
----------------------------------
Total shareholders' equity.......................................... 74,036,812 84,268,481
----------------------------------
Commitments and contingencies (notes 4, 7 and 8)
$ 107,791,553 $ 117,640,934
==================================
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American Software, Inc. and Subsidiaries
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CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended April 30, 1995, 1994, and 1993
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
Revenues (note 6):
License fees.................................................. $ 20,780,444 $ 31,107,052 $ 39,454,427
Services...................................................... 36,049,657 41,492,285 47,494,758
Maintenance................................................... 22,631,551 21,622,555 19,894,711
--------------------------------------------------
Total revenues............................................. 79,461,652 94,221,892 106,843,896
Cost of revenues:
License fees.................................................. 24,274,510 32,760,937 31,928,453
Services...................................................... 21,864,138 21,331,001 22,142,464
Maintenance................................................... 4,167,879 5,859,773 5,665,424
--------------------------------------------------
Total cost of revenues..................................... 50,306,527 59,951,711 59,736,341
--------------------------------------------------
Selling, general, and administrative
expenses...................................................... 42,901,873 41,750,390 42,567,216
Provision for (recovery of) doubtful
accounts...................................................... (158,944) 6,626,099 1,254,759
--------------------------------------------------
Operating earnings (loss).................................. (13,587,804) (14,106,308) 3,285,580
Other income (expense):
Interest income............................................... 2,044,864 2,492,378 2,880,518
Other, net.................................................... 200,464 (64,092) 578,613
--------------------------------------------------
Earnings (loss) before income taxes........................ (11,342,476) (11,678,022) 6,744,711
Income tax expense (benefit) - (note 3)............................. (4,653,314) (5,090,000) 1,634,970
--------------------------------------------------
Net earnings (loss)........................................ $ (6,689,162) $ (6,588,022) $ 5,109,741
==================================================
Net earnings (loss) per common and
common equivalent share....................................... $ (.30) $ (.30) $ .23
==================================================
Weighted average number of common
and common equivalent shares
outstanding................................................... 22,317,899 22,324,258 22,708,960
==================================================
See accompanying notes to consolidated financial statements.
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American Software, Inc. and Subsidiaries
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended April 30, 1995, 1994, and 1993
Common stock Additional Total
Class A Class B paid-in Retained Treasury shareholders'
Shares Amount Shares Amount capital earnings stock equity
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1992... 18,347,241 $ 1,834,724 5,012,869 $ 501,287 $ 28,483,627 $ 78,721,913 $ (3,680,250) $ 105,861,301
Cash dividends declared
- $.31 per share.......... -- -- -- -- -- (6,989,740) -- (6,989,740)
Proceeds from stock options
exercised at $2.22 to
$9.25 per share.......... 97,780 9,778 -- -- 439,102 -- -- 448,880
Income tax benefit from
stock transactions
involving options
(note 3)................. -- -- -- -- 140,682 -- -- 140,682
Conversion of Class B shares
into Class A shares...... 153,580 15,358 (153,580) (15,358) -- -- -- --
Grants of compensatory stock
options.................. -- -- -- -- 590,424 -- -- 590,424
Repurchase of 709,000
Class A shares........... -- -- -- -- -- -- (7,130,563) (7,130,563)
Net earnings................ -- -- -- -- -- 5,109,741 -- 5,109,741
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Balance at April 30, 1993... 18,598,601 1,859,860 4,859,289 485,929 29,653,835 76,841,914 (10,810,813) 98,030,725
Cash dividends declared -
$.32 per share........... -- -- -- -- -- (7,148,013) -- (7,148,013)
Proceeds from stock
options exercised at
$2.22 to $6.67 per share. 71,327 7,133 -- -- 234,353 -- -- 241,486
Conversion of Class B
shares into Class A
shares................... 18,800 1,880 (18,800) (1,880) -- -- -- --
Grants of compensatory
stock options............ -- -- -- -- 526,930 -- -- 526,930
Repurchase of 127,000
Class A shares........... -- -- -- -- -- -- (794,625) (794,625)
Net loss.................... -- -- -- -- -- (6,588,022) -- (6,588,022)
-------------------------------------------------------------------------------------------------------
Balance at April 30, 1994... 18,688,728 1,868,873 4,840,489 484,049 30,415,118 63,105,879 (11,605,438) 84,268,481
Cash dividends declared -
$.16 per share........... -- -- -- -- -- (3,569,731) -- (3,569,731)
Proceeds from stock options
exercised at $2.22 to
$4.11 per share and
other stock option
transactions............. 41,143 4,115 -- -- 46,791 -- -- 50,906
Grants of compensatory
stock options............ -- -- -- -- 194,424 -- -- 194,424
Repurchase of 85,000
Class A shares........... -- -- -- -- -- -- (296,250) (296,250)
Issuance of 17,057
Class A shares under
the Dividend
Reinvestment Plan........ -- -- -- -- -- -- 78,144 78,144
Net loss.................... -- -- -- -- -- (6,689,162) -- (6,689,162)
-------------------------------------------------------------------------------------------------------
Balance at April 30, 1995... 18,729,871 $ 1,872,988 4,840,489 $ 484,049 $ 30,656,333 $ 52,846,986 $(11,823,544) $ 74,036,812
=======================================================================================================
See accompanying notes to consolidated financial statements.
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American Software, Inc. and Subsidiaries
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended April 30, 1995, 1994, and 1993
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings (loss)................................................. $ (6,689,162) $ (6,588,022) $ 5,109,741
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation and amortization................................... 11,748,244 12,159,628 8,752,555
Net loss (gain) on investments.................................. (609,099) 326,019 (332,407)
Loss on disposal of property.................................... 38,376 -- --
Capitalized software impairment charge.......................... -- 1,167,496 --
Income tax benefit from stock transactions
involving options............................................. -- -- 140,682
Grants of compensatory stock options............................ 194,424 526,930 590,424
Deferred income taxes........................................... 1,026,352 (577,072) 584,252
Changes in operating assets and liabilities:
Net increase in money market funds............................ (3,324,796) -- --
Purchases of trading securities............................... (4,055,226) -- --
Proceeds from sale of trading securities...................... 8,947,802 -- --
Proceeds from maturities of trading
securities.................................................. 6,265,487 -- --
Accounts receivable........................................... 3,489,632 9,207,942 2,700,712
Prepaid expenses and other current assets..................... (375,114) (1,675,610) 806,721
Accounts payable and other liabilities........................ 73,690 (515,433) 1,740,712
Income taxes.................................................. (2,186,753) (3,274,939) (282,750)
Deferred revenue.............................................. (522,096) 996,838 (650,185)
----------------------------------------------------
Net cash provided by operating activities................... 14,021,761 11,753,777 19,160,457
----------------------------------------------------
Cash flows from investing activities:
Capitalized software development costs.............................. (7,352,301) (7,315,470) (8,610,918)
Net decrease in money market funds.................................. -- 9,659,922 895,575
Purchases of investments............................................ -- (7,624,256) (27,579,159)
Proceeds from maturities of investments............................. -- 3,276,226 3,732,312
Proceeds from sales of investments.................................. -- 4,681,535 30,563,933
Purchase of assets (note 4)......................................... -- (3,300,000) (2,500,000)
Purchase of TXbase Systems, Inc. stock (note 4)..................... (827,164) -- --
Purchases of property and equipment................................. (3,049,649) (2,517,387) (2,126,280)
----------------------------------------------------
Net cash used in investing activities....................... (11,229,114) (3,139,430) (5,624,537)
----------------------------------------------------
Cash flows from financing activities:
Repurchases of common stock......................................... (296,250) (794,625) (7,130,563)
Repayment of long-term debt......................................... -- -- (2,490,403)
Proceeds from Dividend Reinvestment Plan (note 5)................... 78,144 -- --
Proceeds from exercise of stock options............................. 50,906 241,486 448,880
Dividends paid...................................................... (3,569,731) (7,148,013) (6,989,740)
----------------------------------------------------
Net cash used in financing activities....................... (3,736,931) (7,701,152) (16,161,826)
----------------------------------------------------
Net change in cash...................................................... (944,284) 913,195 (2,625,906)
Cash at beginning of year............................................... 2,172,745 1,259,550 3,885,456
----------------------------------------------------
Cash at end of year..................................................... $ 1,228,461 $ 2,172,745 $ 1,259,550
====================================================
Supplemental disclosure of cash (received)
paid during the year for income taxes................................. $ (3,492,913) $ (1,237,989) $ 1,333,468
====================================================
Supplemental disclosure of noncash investing and financing activities:
In 1993, the Company purchased the assets of Distribution Sciences, Inc. for
$4,738,360 (see note 4). In conjunction with the purchase, a note payable was
issued as follows:
Assets acquired............ $ 4,738,360
Cash paid.................. (2,500,000)
-----------
Note payable issued........ $ 2,238,360
===========
Subsequent to the date of acquisition, the Company entered into an agreement to
extinguish the note payable.
See accompanying notes to consolidated financial statements.
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American Software, Inc. and Subsidiaries
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1995, 1994, and 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of American
Software, Inc. and its wholly owned subsidiaries (the Company). All
significant intercompany balances and transactions have been eliminated in
consolidation.
The Company is engaged in the development, marketing, and support activities
of a broad range of computer applications software. The Company's operations
are principally in the computer software industry with an emerging computer
operations outsourcing business.
(B) REVENUE RECOGNITION
License fees in connection with license agreements for standard proprietary
and tailored software are recognized upon delivery of the software providing
collection is considered probable and no significant obligations remain
outstanding. The percentage-of-completion method of accounting is utilized
to recognize revenue on products under development for fixed amounts.
Progress under the percentage-of-completion method is measured based on
management's best estimate of the cost of work completed in relation to the
total cost of work to be performed under the contract. Any estimated losses
on products under development for fixed amounts are immediately recognized
in the consolidated financial statements. All significant costs associated
with maintenance included in the initial license fee are recognized.
Revenue related to custom programming and education is recognized as the
related services are performed.
Maintenance revenue is recognized ratably over the term of the maintenance
agreements.
Deferred revenue represents advance payments to the Company by customers for
services and products.
(C) INVESTMENTS
Investments at April 30, 1995, consist of money market funds, debt
securities, and marketable equity securities. The Company adopted the
provisions of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" (SFAS
115) as of May 1, 1994. Pursuant to the provisions of SFAS 115, the Company
has classified its investment portfolio as "trading." "Trading" securities
are bought and held principally for the purpose of selling them in the near
term and are recorded at fair value. Unrealized gains and losses on trading
securities are included in the determination of net earnings (loss). The
effect of adopting SFAS 115 was not significant and has been included in
other income, net in the accompanying 1995 consolidated statement of
operations.
Investments at April 30, 1994 include money market funds, debt securities,
and marketable equity securities. Money market funds are stated at market.
Debt securities are carried at cost. Marketable equity securities (other
marketable securities) are recorded at the lower of aggregate cost or
market. The cost of the marketable securities sold is based on the earliest
acquisition cost of each security held at the time of sale. Unrealized gains
and losses on marketable equity securities are recognized in the
determination of net earnings (loss).
(D) PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation of buildings,
computer equipment, and office furniture and equipment is calculated using
the straight-line method based upon estimated useful lives of 30 years, five
years, and five years, respectively. Leasehold improvements are amortized
using the straight-line method over the estimated useful lives of the assets
or the lease term, whichever is shorter.
- --------------------------------------------------------------------------------
American Software, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(E) CAPITALIZED COMPUTER SOFTWARE DEVELOPMENT COSTS
The Company capitalizes computer software development costs by project,
commencing when technological feasibility for the respective product is
established and concluding when the product is ready for general release to
customers. The Company makes an ongoing assessment of the recoverability of
its capitalized software projects by comparing the amount capitalized for
each product group to the estimated net realizable value ("NRV") of the
product group. If the NRV is less than the amount capitalized, a write-down
to NRV is recorded. The Company capitalized computer software development
costs totaling $7,352,301, $7,315,470, and $8,610,918 in 1995, 1994, and
1993, respectively. The Company expensed $1,167,496 in 1994 as this amount
was deemed unrealizable based on future sales projections. Capitalized
computer software development costs are being amortized using the straight-
line method over an estimated useful life of three years. Amortization
expense was $7,029,442, $7,491,124, and $4,793,398 in 1995, 1994, and 1993,
respectively.
The total of research and development costs and additions to capitalized
computer software development costs are $12,552,301, $11,665,470, and
$13,688,918 in fiscal years 1995, 1994, and 1993, respectively. The Company
incurred research and development costs totaling approximately $5,200,000,
$4,350,000, and $5,078,000, which were expensed in 1995, 1994, and 1993,
respectively.
(F) PURCHASED COMPUTER SOFTWARE COSTS
Purchased computer software costs represent the cost of acquiring computer
software. Amortization of purchased computer software costs is calculated
using the straight-line method over a period of five years. Amortization
expense was $2,322,267, $2,189,516, and $897,487 in 1995, 1994, and 1993,
respectively.
(G) INCOME TAXES
The Company accounts for income taxes using the Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS
109 requires an asset and liability method of accounting for income taxes.
Under the asset and liability method of SFAS 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and
tax credit carry forward. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under SFAS 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
(H) EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Earnings (loss) per common and common equivalent share are based on the
weighted average number of Class A and B shares outstanding, since the
Company considers the two classes of common stock as one class for the
purposes of the earnings (loss) per share computation, and share equivalents
from dilutive stock options outstanding during each year. Share equivalents
are excluded from the aforementioned computation during loss periods.
(I) RECLASSIFICATIONS
Certain reclassifications have been made to the 1994 and 1993 consolidated
financial statements to conform to the 1995 presentation.
- --------------------------------------------------------------------------------
American Software, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(2) INVESTMENTS
As discussed in note 1, the Company adopted SFAS 115 as of May 1, 1994. The
change in method of accounting for investments did not have a significant
effect on the 1995 consolidated statement of operations. Prior years'
financial statements have not been restated to apply the provisions of SFAS
115.
Investments consist of the following:
April 30, 1995 1994
----------------------------------------------------------------------------------------
Money market funds....................................... $ 6,052,123 $ 2,727,331
Debt securities:
U.S. Treasury securities......................... 1,460,892 2,451,834
Tax-exempt state and municipal bonds............. 19,868,293 28,307,423
----------------------------
Total debt securities......................... 21,329,185 30,759,257
----------------------------
Other marketable securities.............................. 3,895,465 5,014,353
----------------------------
$31,276,773 $38,500,941
============================
In 1995, the Company's investment portfolio experienced a net unrealized
holding gain of $609,099, which has been included in other income, net in
the consolidated statement of operations.
The Company utilizes major investment bankers to maintain custody of its
investments. At April 30, 1995, a major investment banker held 37% of the
investments and two other major investment bankers combined held 41% of the
investments. At April 30, 1995, 99% of the tax-exempt state and municipal
bonds related to state and municipal governments and authorities in Georgia.
The cost and estimated market value of investments in debt securities at
April 30, 1994, are as follows:
Gross Gross Estimated
unrealized unrealized market
Cost gains losses value
-----------------------------------------------------------------------------------------------------
U.S. Treasury securities............... $ 2,451,834 $ -- $ 59,514 $ 2,392,320
Tax-exempt state and
municipal bonds..................... 28,307,423 568,558 249,368 28,626,613
-----------------------------------------------------------
$ 30,759,257 $ 568,558 $ 308,882 $ 31,018,933
===========================================================
Proceeds from sale of debt securities were $2,321,676 in 1994 and proceeds
from maturities of debt securities were $3,276,226 in 1994. Gross gains from
sale of debt securities were $85,725 in 1994 and gross losses from sales of
debt securities were $7,031 in 1994.
- --------------------------------------------------------------------------------
American Software, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Proceeds from sale of debt securities were $27,257,248 in 1993 and proceeds
from maturities of debt securities were $3,356,000 in 1993. Gross gains from
sale of debt securities were $638,694 in 1993 and gross losses from sales of
debt securities were $245,029 in 1993.
Other marketable securities were carried at market at April 30, 1994, which
was lower than cost. These investments had an aggregate cost of
approximately $5,287,000 at April 30, 1994. A valuation allowance to reduce
the carrying amount of the portfolio to market in the amounts of
approximately $273,000 and $119,000 was recorded at April 30, 1994, and
1993, respectively. Changes in the valuation allowance were included in the
determination of net earnings (loss). At April 30, 1994, the gross
unrealized gains and losses pertaining to other marketable securities were
approximately $435,000 and $708,000, respectively. Net realized gains of
$239,540 and $383,238 from the sale of other marketable securities are
included in the determination of net earnings (loss) in 1994 and 1993,
respectively.
(3) INCOME TAXES
Total income tax expense (benefit) for the years ended April 30, 1995, 1994,
and 1993 was allocated as follows:
1995 1994 1993
-------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes.......... $ (4,653,314) $ (5,090,000) $ 1,634,970
Shareholder's equity, for compensation
expense for tax purposes in excess of
amounts recognized for financial
reporting purposes......................... -- -- (140,682)
-----------------------------------------------
$ (4,653,314) $ (5,090,000) $ 1,494,288
===============================================
Income tax expense (benefit) consists of the following:
Years ended April 30,
1995 1994 1993
--------------------------------------------------------------------------------------------------
Current:
Federal............................... $ (5,372,185) $ (3,699,670) $ 51,412
State................................. (696,280) (433,456) 24,422
---------------------------------------------------
(6,068,465) (4,133,126) 75,834
---------------------------------------------------
Deferred:
Federal............................... 1,191,589 (805,708) 1,349,744
State................................. 223,562 (151,166) 209,392
---------------------------------------------------
1,415,151 (956,874) 1,559,136
---------------------------------------------------
$ (4,653,314) $ (5,090,000) $ 1,634,970
===================================================
- --------------------------------------------------------------------------------
American Software, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The Company's effective income tax rate of 41%, 44%, and 24% for the years
ended April 30, 1995, 1994, and 1993, respectively, differs from the
"expected" income tax expense (benefit) for those years calculated by
applying the Federal statutory rate of 34% to earnings (loss) before income
taxes as follows:
1995 1994 1993
-----------------------------------------------------------------------------------------------------------
Computed "expected" income tax
expense (benefit).............................. $ (3,856,442) $ (3,970,527) $ 2,293,202
Increase (decrease) in income taxes
resulting from:
State income taxes, net of Federal
income tax effect.......................... (311,994) (369,221) 154,317
Foreign taxes paid........................... 571,812 661,651 627,799
Foreign tax credits.......................... (571,812) (661,651) (627,799)
Tax-exempt interest income................... (639,752) (751,444) (710,143)
Reduction in state tax rate applicable
to deferred income taxes................... -- -- (187,259)
Cancellation of compensatory
stock options.............................. 226,530 -- --
Other, net................................... (71,656) 1,192 84,853
--------------------------------------------------
$ (4,653,314) $ (5,090,000) $ 1,634,970
==================================================
The significant components of deferred income tax expense attributable to
earnings (loss) before income taxes for the years ended April 30, 1995,
1994, and 1993 are as follows:
1995 1994 1993
--------------------------------------------------------------------------------------------------
Deferred tax expense (benefit)................. $ 1,188,621 $ (956,874) $ 1,746,395
Cancellation of compensatory
stock options................................ 226,530 -- --
Reduction in state tax rate applicable
to deferred income........................... -- -- (187,259)
---------------------------------------------
$ 1,415,151 $ (956,874) $ 1,559,136
=============================================
The Company recognized an income tax benefit of $-0- in 1995 and 1994 and
$140,682 in 1993 related to its employees' sale and disqualification of
stock from qualified stock options and exercise of nonqualified stock
options. The income tax benefit in 1993 has been excluded from the
determination of income tax expense (benefit) and included directly in
additional paid-in capital.
- --------------------------------------------------------------------------------
American Software, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at April
30, 1995, and April 30, 1994, are presented as follows:
1995 1994
----------------------------------------------------------------------------------------------------
Deferred tax assets:
Compensated absences and other expenses, due
to accrual for financial reporting purposes............. $ 1,107,994 $ 1,107,944
Accounts receivable, due to allowance for
doubtful accounts....................................... 724,007 1,063,440
Compensation expense related to grants of
nonqualified stock options.............................. 189,063 442,110
Deferred gain on sale of real estate option................ 169,214 265,908
Other, net................................................. 79,270 293,822
------------------------------
Total gross deferred tax assets........................ 2,269,548 3,173,224
------------------------------
Deferred tax liabilities:
Capitalized computer software development costs............ (7,730,382) (7,614,841)
Property and equipment, primarily due to
differences in depreciation............................. (459,280) (452,145)
------------------------------
Total gross deferred tax liabilities................... (8,189,662) (8,066,986)
------------------------------
Net deferred tax liability............................. $ (5,920,114) $ (4,893,762)
==============================
Refundable income taxes arose primarily from the 1995 and 1994 taxable
losses that were carried back to earlier profitable years to recover income
taxes previously paid.
(4) ACQUISITIONS
In 1995, the Company acquired a 30% interest in TXbase Systems, Inc., a
client/server-based software company, for $827,164. This investment is being
accounted for under the equity method. The excess investment over the
underlying equity in net assets is being amortized using the straight-line
method over a period of five years. In conjunction with the purchase, the
Company extended TXbase Systems, Inc. a line of credit in the amount of
$800,000 providing certain financial and other requirements are met. Any
outstanding advance balance is convertible into additional equity ownership
at the discretion of the Company. No advances on this line of credit were
outstanding as of April 30, 1995.
In July 1993, the Company purchased from Coda Corporation the proprietary
rights to certain computer software for $3,300,000.
In June 1992, the Company acquired the assets and assumed certain
liabilities of Distribution Sciences, Inc., a transportation software
company, for approximately $4,738,000. The acquisition has been accounted
for under the purchase method of accounting. The results of operations have
been included since the date of acquisition. The pro forma results are not
significant to the accompanying consolidated financial statements.
- --------------------------------------------------------------------------------
American Software, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
In connection with the acquisition of Distribution Sciences, Inc., the
seller provided a noninterest-bearing note payable, which had a discounted
value of $2,238,360 using an interest rate of 6.5%. Subsequent to the date
of acquisition, the Company entered into an agreement to extinguish the note
payable at a gain. Such gain was not significant.
(5) SHAREHOLDERS' EQUITY
In 1992, the Company discontinued issuing options under its Incentive Stock
Option Plan and its Nonqualified Stock Option Plan. There are 62,026 options
outstanding under these plans at April 30, 1995. These plans were replaced
with the 1991 Employee Stock Option Plan ("1991 Plan") and the Director and
Officer Stock Option Plan ("D and O Plan"). Under the 1991 Plan, the Board
of Directors is authorized to grant key employees options to purchase up to
1,650,000 shares of Class A common stock, plus any shares granted under the
terminated plans that terminate or expire without being wholly exercised.
These options are exercisable in four equal annual installments commencing
one year from the effective date of grant. All options must be exercised
within ten years of the effective date of grant, but will expire sooner if
the optionee's employment terminates. Under the D and O Plan, the Board of
Directors is authorized to grant directors and officers options to purchase
up to 900,000 shares of Class A common stock. These options are exercisable
based upon the terms of such options up to 10 years after the date of grant,
but will expire sooner if the optionee's employment terminates.
Additionally, both the 1991 Plan and D and O Plan can issue either incentive
stock options or nonqualified stock options. Both the 1991 Plan and D and O
Plan will terminate on May 13, 2001.
Summarized option data for the incentive options and the nonqualified
options as of April 30, 1995, is as follows:
Shares Range of
under price
option per share
Options outstanding
at April 30, 1994....................... 1,611,148 $ 2.22-16.88
Options granted........................... 2,639,524 2.75-5.75
Options exercised......................... (41,143) 2.22-4.11
Options canceled.......................... (1,996,479) 2.75-16.88
---------------------------
Options outstanding
at April 30, 1995....................... 2,213,050 $ 2.22-15.00
===========================
Incentive and nonqualified options exercisable at April 30, 1995, are 21,938
and 67,088 shares, respectively. Options available for grant at April 30,
1995, for the 1991 Plan and D and O Plan are 421,052 and 453,063 shares,
respectively.
Except for the election or removal of Directors and class votes as required
by law or the Articles of Incorporation, holders of both classes of common
stock vote as a single class on all matters with each share of Class A
common stock entitled to cast one-tenth vote per share and each share of
Class B common stock entitled to cast one vote per share. Neither has
cumulative voting rights. Holders of Class A common stock, as a class, are
entitled to elect 25% of the Board of Directors (rounded up to the nearest
whole number of Directors) if the number of outstanding shares of Class A
common stock is at least 10% of the number of outstanding shares of both
classes of common stock. No cash or property dividend may be paid to holders
of shares of Class B common stock during any fiscal year of the Company
unless a dividend of $.05 per share has been paid in such year on each
outstanding share of Class A common stock. This $.05 per share annual
dividend preference is noncumulative.
- --------------------------------------------------------------------------------
American Software, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Dividends per share of Class B common stock during any fiscal year may not
exceed dividends paid per share of Class A common stock during each year.
Each share of Class B common stock is convertible at any time into one share
of Class A common stock at the option of the shareholder. Class A and B
shares are considered as one class for purposes of the earnings (loss) per
share computation.
In 1995, the Company adopted a Dividend Reinvestment Plan retroactive to
February 25, 1994. Under the Plan, 500,000 shares of the Company's Class A
common stock are reserved for the use of the Dividend Reinvestment Plan. The
shares are to be utilized from treasury stock to the extent available, with
any additional shares to be utilized from authorized but unissued shares of
Class A common stock. In 1995, 17,057 shares were issued pursuant to this
plan.
(6) INTERNATIONAL REVENUES
International revenues approximated $10,321,000 or 13%, $16,442,000 or 17%,
and $17,216,000 or 16%, of consolidated revenues for the years ended April
30, 1995, 1994, and 1993, respectively, and were primarily from customers in
Canada, Europe, Australia, and Asia.
(7) COMMITMENTS
The Company leases an office facility from a partnership controlled by the
two Class B shareholders, under an operating lease expiring in December
1996, with annual adjustments for inflation. Amounts expensed under this
lease for the years ended April 30, 1995, 1994, and 1993 approximated
$291,000, $285,000, and $278,000, respectively.
The Company leases other office facilities, certain office equipment, and
computer equipment under various operating leases expiring through 1997.
Rental expense for these operating leases approximated $5,866,000,
$3,586,000, and $3,570,000 for the years ended April 30, 1995, 1994, and
1993, respectively.
Approximate aggregate minimum annual rentals under all long-term,
noncancellable, operating leases are as follows:
Years ending April 30,
1996.................................... $ 4,887,038
1997.................................... 3,187,949
1998.................................... 1,555,737
1999.................................... 1,384,241
2000.................................... 266,699
------------
$ 11,281,664
============
- --------------------------------------------------------------------------------
American Software, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The Company has a profit sharing plan covering all employees with at least
12 months of service. The Company's contribution to the plan is determined
by the Board of Directors, and is limited to a maximum of fifteen percent
(15%) of the compensation (as defined) of the participating employees during
the Company's fiscal year, and is payable only out of the annual net
earnings or accumulated earnings of the Company. Participants in the plan
are entitled, but not required, to contribute a maximum of ten percent (10%)
of their annual compensation to the plan. The Company did not make
contributions for 1995, 1994, or 1993.
(8) CONTINGENCIES
The Company has been named as a defendant in legal actions arising from
their normal business activities in which certain damages have been claimed.
Although the amount of any ultimate liability with respect to such matters
cannot be determined, in the opinion of management, based upon consultation
with legal counsel, any such liability will not have a material adverse
effect on the consolidated financial position or results of operations of
the Company.
(9) QUARTERLY FINANCIAL DATA (UNAUDITED)
Unaudited quarterly financial data is as follows:
Fiscal quarters
First Second Third Fourth
---------------------------------------------------------------------------------------------------------------------
1995:
Revenues.................................... $ 18,257,025 $ 20,257,247 $ 20,593,907 $ 20,353,473
Gross profit................................ 5,296,361 7,232,929 8,002,484 8,623,351
Operating loss.............................. (5,809,381) (5,179,983) (1,951,495) (646,945)
Net earnings (loss)......................... (2,967,007) (2,891,634) (992,181) 161,660
------------------------------------------------------------------
Earnings (loss) per common and
common equivalent share................. $ (.13) $ (.13) $ (.04) $ .01
------------------------------------------------------------------
1994:
Revenues.................................... $ 25,164,057 $ 22,440,061 $ 24,333,028 $ 22,284,746
Gross profit................................ 10,749,576 7,670,909 9,206,290 6,643,406
Operating earnings (loss)................... 898,552 (5,749,716) (652,077) (8,603,067)
Net earnings (loss)......................... 1,033,620 (2,903,831) 216,521 (4,934,332)
------------------------------------------------------------------
Earnings (loss) per common and
common equivalent share................. $ .05 $ (.13) $ .01 $ (.22)
------------------------------------------------------------------
- --------------------------------------------------------------------------------
American Software, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
American Software, Inc.:
We have audited the accompanying consolidated balance sheets of American
Software, Inc. and subsidiaries as of April 30, 1995 and 1994, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the years in the three-year period ended April 30, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Software,
Inc. and subsidiaries as of April 30, 1995 and 1994, and the results of their
operations and their cash flows for each of the years in the three-year period
ended April 30, 1995, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Atlanta, Georgia
June 9, 1995