UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
(mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
- --- EXCHANGE ACT OF 1934
For the transition period from to
-------------- ---------------
Commission File Number 0-23852
MRO SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2448516
(State or other jurisdiction (I.R.S employer
incorporation or organization) identification number)
100 CROSBY DRIVE, BEDFORD MASSACHUSETTS 01730
(Address of principal executive offices, including zip code)
(781) 280-2000
(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
------ -----
Number of shares outstanding of the Registrant's common stock as of the latest
practicable date: 23,112,082 shares of common stock, $.01 par value per share,
as of May 10, 2002.
MRO SOFTWARE, INC.
10-Q INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited) as of March 31, 2002 3
and September 30, 2001.
Consolidated Statements of Operations (unaudited) for the six 4
months ended March 31, 2002 and 2001.
Consolidated Statements of Cash Flows (unaudited) for the six 5
months ended March 31, 2002 and 2001.
Notes to Consolidated Financial Statements (unaudited). 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 23
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 6. Exhibits and Reports on Form 8-K 25
SIGNATURE 27
2
MRO SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31, SEPTEMBER 30,
2002 2001
----------- -------------
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents $ 61,115 $ 42,115
Marketable securities 757 5,532
Accounts receivable, trade, less allowance
for doubtful accounts of $4,340 at March 31, 2002
and $3,849 at September 30, 2001, respectively 32,003 42,746
Prepaid expenses and other current assets 8,166 5,099
Deferred income taxes 3,368 3,045
----------- -----------
Total current assets 105,409 98,537
----------- -----------
Marketable securities 500 707
Property and equipment, net 10,577 11,669
Intangible assets, net 44,878 52,353
Other assets 2,042 2,082
Deferred income taxes 7,821 6,105
----------- -----------
Total assets $ 171,227 $ 171,453
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 17,249 $ 16,445
Accrued compensation 6,843 10,789
Income taxes payable -- 823
Deferred revenue 24,314 19,893
----------- -----------
Total current liabilities 48,406 47,950
----------- -----------
Other long term liabilities 87 150
Stockholders' equity
Preferred stock, $.01 par value;1,000 authorized,
none issued and outstanding
Common stock, $.01 par value;50,000 authorized;
23,104 and 22,250 issued at March 31, 2002
and September 30, 2001, respectively 231 223
Additional paid-in capital 94,180 88,059
Deferred compensation (231) (285)
Retained earnings 30,089 36,844
Accumulated other comprehensive loss (1,535) (1,488)
----------- -----------
Total stockholders' equity 122,734 123,353
----------- -----------
Total liabilities and stockholders' equity $ 171,227 $ 171,453
=========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
3
MRO SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
---------------------- ----------------------
2002 2001 2002 2001
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenues:
Software $ 7,777 $ 15,510 $ 21,602 $ 28,107
Support and services 30,111 30,232 62,762 59,103
-------- -------- -------- --------
Total revenues 37,888 45,742 84,364 87,210
-------- -------- -------- --------
Cost of revenues:
Software 1,403 1,221 3,360 2,222
Support and services 15,685 17,389 32,631 33,458
-------- -------- -------- --------
Total cost of revenues 17,088 18,610 35,991 35,680
-------- -------- -------- --------
Gross profit 20,800 27,132 48,373 51,530
Operating expenses:
Sales and marketing 13,695 16,715 29,711 36,750
Product development 6,494 6,703 13,161 12,263
General and administrative 4,619 5,484 9,347 10,781
Amortization of goodwill and other intangibles 3,052 3,053 6,105 6,154
-------- -------- -------- --------
Total operating expenses 27,860 31,955 58,324 65,948
-------- -------- -------- --------
Loss from operations (7,060) (4,823) (9,951) (14,418)
Interest income 261 409 533 778
Other expense, net (71) (383) (74) (107)
-------- -------- -------- --------
Loss before income taxes (6,870) (4,797) (9,492) (13,747)
Benefit from income taxes (2,040) (1,228) (2,737) (2,483)
-------- -------- -------- --------
Net loss $ (4,830) $ (3,569) $ (6,755) $(11,264)
======== ======== ======== ========
Net loss per share, basic and diluted $ (0.21) $ (0.16) $ (0.30) $ (0.51)
-------- -------- -------- --------
Shares used to calculate net loss per share
Basic and diluted 22,775 22,109 22,543 22,096
The accompanying notes are an integral part of the
consolidated financial statements.
4
MRO SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
MARCH 31,
---------------------
2002 2001
-------- --------
(IN THOUSANDS)
Cash flows from operating activities:
Net loss $ (6,755) $(11,264)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 9,357 10,041
Loss on sale and disposal of property
and equipment -- 69
Amortization of premium on marketable securities 40 7
Stock-based compensation 54 39
i2 warrant expense -- 3,287
Deferred income taxes (2,045) (3,666)
Changes in operating assets and liabilities,
net of effect of acquisitions:
Accounts receivable 10,568 798
Prepaid expenses and other assets (2,974) 789
Accounts payable and accrued expenses 729 (327)
Accrued compensation (3,942) (482)
Income taxes payable (806) 2,533
Deferred revenue 4,474 3,039
-------- --------
Net cash provided by operating activities 8,700 4,863
-------- --------
Cash flows from investing activities:
Acquisitions of property and equipment and other
capital expenditures (745) (2,710)
Purchase of marketable securities -- (2,987)
Sale of marketable securities 4,932 3,200
-------- --------
Net cash provided by/(used in) investing activities 4,187 (2,497)
-------- --------
Cash flows from financing activities:
Payment of line of credit -- (2,278)
Proceeds from exercise of stock options 6,129 312
-------- --------
Net cash provided by/(used in) financing activities 6,129 (1,966)
-------- --------
Effect of exchange rate changes on cash (16) (162)
-------- --------
Net increase in cash and cash equivalents 19,000 238
Cash and cash equivalents, beginning of period 42,115 31,584
-------- --------
Cash and cash equivalents, end of period $ 61,115 $ 31,822
======== ========
The accompanying notes are an integral part of the
consolidated financial statements.
5
MRO SOFTWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of MRO Software, Inc. ("MRO") and its majority-owned subsidiaries
(collectively, the "Company"), as of March 31, 2002 and have been prepared by
the Company in accordance with generally accepted accounting principles for
interim reporting and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. All intercompany accounts and transactions have been eliminated.
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting only of those of a normal
recurring nature, necessary for a fair presentation of the Company's financial
position, results of operations and cash flows at the dates and for the periods
indicated. The results of operations for the periods presented herein are not
necessarily indicative of the results of operations to be expected for the
entire fiscal year, which ends on September 30, 2002, or for any other future
period.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended September
30, 2001 included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on December 28, 2001.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Certain prior year financial statement items have been reclassified to conform
to the current year's format.
B. INCOME PER SHARE
Basic income (loss) per share is computed by dividing net income or loss
available to common shareholders by the weighted average number of common shares
outstanding. Diluted net income (loss) per share is computed by dividing net
income (loss) available to common shareholders by the weighted average common
shares outstanding plus dilutive potential common shares. For purposes of this
calculation, stock options are considered dilutive potential common shares in
periods in which they have a dilutive effect. All potential dilutive common
shares are excluded from the computation of net loss per share because they are
anti-dilutive.
6
Basic and diluted net loss per share are calculated as follows:
THREE MONTHS ENDED
(IN THOUSANDS, EXCEPT PER SHARE DATA) 03/31/02 03/31/01
- ------------------------------------- -------- --------
Net loss $ (4,830) $ (3,569)
Denominator:
Weighted average common shares
outstanding-basic 22,775 22,109
Effect of dilutive securities (1) -- --
-------- --------
Weighted average common shares
outstanding-diluted 22,775 22,109
======== ========
Net loss per share-basic & diluted $ (0.21) $ (0.16)
SIX MONTHS ENDED
(IN THOUSANDS, EXCEPT PER SHARE DATA) 03/31/02 03/31/01
- ------------------------------------- -------- --------
Net loss $ (6,755) $(11,264)
Denominator:
Weighted average common shares
outstanding-basic 22,543 22,096
Effect of dilutive securities (1) -- --
-------- --------
Weighted average common shares
outstanding-diluted 22,543 22,096
======== ========
Net loss per share-basic & diluted $ (0.30) $ (0.51)
(1) Options to purchase shares of the Company's common stock of 1,381 and 1,681
for the three months ended March 31, 2002 and 2001, respectively and 1,458 and
1,932 for the six months ended March 31, 2002 and 2001, respectively, were
outstanding but were not included in the computations of diluted net loss per
share because the exercise price of the options was greater than the weighted
average market price of the common stock during the period. Common stock
equivalents of 1,329 and 394 for the three months ended March 31, 2002 and 2001,
respectively and 1,177 and 281 for the six months ended March 31, 2002 and 2001,
respectively, were excluded from the computation of diluted net loss per share,
as the effect was anti-dilutive due to the Company's net loss.
7
C. REVENUE RECOGNITION
The Company licenses its software products under noncancellable license
agreements. Software license fee revenues are generally recognized upon contract
execution and shipment, provided collection of the resulting receivable is
deemed probable, the fees are fixed or determinable, and no significant
modification or customization of the software is required. Services revenues are
comprised of consulting and training fees related to installation of the
Company's software solutions, maintenance/support ("PCS") contracts for software
solutions, content management and cataloging services, annual commerce and
transaction fees, and subscription based fees related to the Company's Online
Commerce Services ("OCS") business. Consulting, training, content management and
cataloging services are recognized as the services are performed. PCS revenues
are recognized ratably over the term of the agreement, generally one year.
Customers typically subscribe to OCS on an annual basis and revenue is recorded
as services revenue and recognized on a straight-line basis over the applicable
subscription period.
The Company's multi-element arrangements could include the following three
elements: (a) software licenses, (b) PCS, and (c) consulting, training and other
services ("services"). Revenue is allocated to the elements of the arrangement
based upon the vendor specific objective evidence ("VSOE") of fair value of each
element. VSOE is established for the Company's undelivered elements (PCS and/or
services), but not for the delivered elements (software licenses). The Company
uses the residual method to recognize its software license revenue since it is
unable to determine the VSOE of the fair value of software licenses. Under the
residual method, the fair value of undelivered elements (PCS and/or services) is
deferred and recognized when the services are delivered and the difference
between the total arrangement and the amount attributable to the undelivered
elements is assigned to the delivered elements (software licenses). VSOE is
established for PCS and is based on the price of the PCS when it is sold
separately to the customer. The PCS renewal rate is a consistent percentage of
the stipulated software license fee, offered to all customers. VSOE for
consulting services is based on fixed hourly rates set according to the skill
level of the consultant required. VSOE for training services is based on an
established per-student fee structure.
Our customers do not have any right of return except as stipulated under a
standard 90-day warranty that runs concurrent with PCS. The Company does not
maintain any reserves with respect to this warranty based on a history of high
performance of our software. On the rare occasion that a customer insists on
conditions of acceptance, the Company defers revenue until the condition has
been satisfied and the customer's acceptance is obtained.
Revenue from products sold through indirect channels ("resellers") is recognized
upon shipment of the software, as long as evidence of an arrangement exists,
collectability is probable and the fee is fixed or determinable. Revenue is
recorded net of any commissions or discounts. Our resellers do not have any
right of return beyond the standard 90-day performance warranty that runs
concurrent with PCS.
8
D. SEGMENT INFORMATION, GEOGRAPHIC DATA AND MAJOR CUSTOMERS:
In fiscal year 2001, the Company operated in two reportable industry segments:
(1) the development, marketing and support of "Demand-Side" software products
and services, consisting of MAXIMO(R) Enterprise(TM) and MAXIMO Extended
Enterprise(TM) and (2) the development, marketing and support of "Supply-Side"
software products and services, consisting of Enterprise Catalog Content
Management and OCS. During fiscal year 2001, the Company's management assessed
the operating results of these segments separately and allocated resources
accordingly.
Beginning in fiscal year 2002, the "Demand-Side" product offerings have been
re-named Strategic MRO, and the "Supply-Side" product offerings have been split
into two distinct products groups: Enterprise Catalog Management and OCS. The
Company reports revenues per these three product groups but does not allocate
operating expenses to these three product groups. The Company's management
assesses its operating results on an aggregate basis to make decisions about
resources to be allocated to the various product groups. All segment-reported
financial information contained in this report has been restated to reflect the
Company's repositioning to one industry segment, effective in the first quarter
of fiscal year 2002.
The Company manages its business across the following geographic areas: United
States, Other Americas (Canada and Latin America), Europe/Middle East and
Africa, and Asia Pacific.
A summary of the Company's revenues by geographical area was as follows:
THREE MONTHS ENDED
MARCH 31,
(IN THOUSANDS) 2002 2001
-------- --------
Revenues:
United States $ 23,775 $ 27,827
Other Americas 1,375 2,318
Intercompany revenues 1,444 2,334
-------- --------
Subtotal $ 26,594 $ 32,479
Europe/Middle East and Africa 10,265 13,059
Asia/Pacific 2,473 2,538
Consolidating eliminations (1,444) (2,334)
-------- --------
Total revenues $ 37,888 $ 45,742
======== ========
9
SIX MONTHS ENDED
MARCH 31,
(IN THOUSANDS) 2002 2001
-------- --------
Revenues:
United States $ 52,703 $ 53,721
Other Americas 3,506 4,859
Intercompany revenues 4,817 3,296
-------- --------
Subtotal $ 61,026 $ 61,876
Europe/Middle East and Africa 22,977 23,173
Asia/Pacific 5,178 5,457
Consolidating eliminations (4,817) (3,296)
-------- --------
Total revenues $ 84,364 $ 87,210
======== ========
The Company has subsidiaries in foreign countries, which sell the Company's
products and services in their respective geographic areas. Intercompany
revenues primarily represent shipments of software to international subsidiaries
and are eliminated from consolidated revenues.
E. COMMON STOCK:
In December 2000, the Company issued a stock purchase warrant to i2
Technologies, Inc. ("i2") under which i2 had the right to purchase up to 500,000
shares of the Company's common stock at an exercise price of $10.25 per share.
The Company valued the warrant at $3.3 million using the Black-Scholes valuation
model, with the following assumptions: (1) risk-free interest rate of 4.8%; (2)
life of 2.5 years; and (3) volatility of 105%. The warrant was immediately
exercisable and was recorded as a one-time non-cash sales and marketing expense
in the three months ended December 31, 2000. On March 14, 2002, i2 exercised the
entire warrant on a "net exercise" or "cashless" basis pursuant to which the
exercise price was paid by reducing the number of shares issued, and as a result
268,823 shares were issued to i2 upon exercise of the warrant and there were no
cash proceeds received by the Company.
F. COMPREHENSIVE NET LOSS:
The following table reflects the components of comprehensive net loss:
THREE MONTHS ENDED
MARCH 31,
(IN THOUSANDS) 03/31/02 03/31/01
- -------------- -------- --------
Net loss $ (4,830) $ (3,569)
Other comprehensive net loss,
Net of tax:
Unrealized gain on securities arising during
period 1 4
Foreign currency translation adjustment (121) (371)
-------- --------
Comprehensive net loss $ (4,950) $ (3,936)
======== ========
10
SIX MONTHS ENDED
MARCH 31,
(IN THOUSANDS) 03/31/02 03/31/01
- -------------- -------- --------
Net loss $ (6,755) $(11,264)
Other comprehensive net loss,
Net of tax:
Unrealized (loss)/gain on securities arising
during period (8) 8
Foreign currency translation adjustment (39) 158
-------- --------
Comprehensive net loss $ (6,802) $(11,098)
======== ========
G. ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141") "Business Combinations",
which requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interests method. In
addition, SFAS 141 establishes specific criteria for the recognition of
intangible assets separately from goodwill and requires unallocated negative
goodwill to be written off immediately as an extraordinary gain. The provisions
of SFAS 141 have been adopted as of July 1, 2001. The adoption of SFAS 141 has
not changed the method of accounting used in previous business combinations
initiated prior to July 1, 2001.
In June 2001, the FASB also issued Statement of Financial Accounting Standards
No. 142 ("SFAS 142") "Goodwill and Other Intangible Assets", which is effective
for fiscal years beginning after December 15, 2001. Certain provisions shall
also be applied to acquisitions initiated subsequent to June 30, 2001. SFAS 142
requires, among other things, the discontinuance of amortization related to
goodwill and indefinite lived intangible assets. These assets will then be
subject to an impairment test at least annually. In addition, the standard
includes provisions upon adoption for the reclassification of certain existing
recognized intangibles as goodwill, reassessment of the useful lives of existing
recognized intangibles and reclassification of certain intangibles out of
previously reported goodwill. The Company will adopt SFAS 142 effective October
1, 2002. Upon adoption of SFAS 142, goodwill will no longer be amortized and
assembled workforce will be combined with goodwill. At March 31, 2002, goodwill
approximated $61.4 million including an intangible asset of assembled workforce
of $5.8 million and accumulated goodwill amortization approximated $25.8
million. In addition, the Company will be required to measure goodwill for
impairment as part of the transition provision of SFAS 142. The Company is
required to complete transition impairment tests no later than March 31, 2003.
Any impairment resulting from these transition tests will be recognized as the
cumulative effect of a change in accounting principle. The Company will not be
able to determine if an impairment will be required until completion of such
impairment tests.
In October 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 provides guidance on the
accounting for the impairment or disposal of long-lived assets. The objectives
of SFAS 144 are to address issues
11
relating to the implementation of SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and to develop a
model for long-lived assets to be disposed of by sale, whether previously held
and used or newly acquired. SFAS 144 is effective for financial statements
issued for fiscal years beginning after December 15, 2001 and will become
effective for the Company commencing October 1, 2002. The Company is currently
evaluating the impact that this statement will have on its results of operations
and financial position.
H. ACQUISITIONS
On August 22, 2001, the Company completed the acquisition of Collego Corporation
("Collego"), a provider of catalog content management enterprise applications
for industrial suppliers. The Company acquired the assets of Collego to provide
specific functionality to significantly enhance an existing product line and to
shorten time-to-market of this functionality. The Company had previously
explored developing this functionality internally and had attempted to contract
with a third party developer. However, the Company determined that the
acquisition of Collego provided the most effective means of developing this
technology requirement, and also achieved the Company's time-to-market goal. In
addition, the Company also acquired a product that could be sold separately,
namely Collego Catalog Manager.
The acquisition was recorded under the purchase method of accounting and was
subject to the new SFAS accounting pronouncements, SFAS No. 141 and SFAS No.
142. The total purchase price of the acquisition was $3.9 million plus
acquisition expenses of $8 thousand. An additional $750 thousand is payable
contingent on certain future events and has not been included in the purchase
price accounting. The contingent amount is being held in escrow and will be paid
upon expiration of twelve months from the closing; provided that these certain
events occur. If the contingent payment is made, the Company will account for
the payment of $750 thousand as additional purchase price and will allocate it
to goodwill. The Company completed a purchase price allocation and allocated
$3.8 million of the purchase price to acquired technology and the balance of
$167 thousand was allocated to goodwill. In accordance with SFAS No. 142, other
intangible assets are being amortized over five years and goodwill is not being
amortized.
12
I. INTANGIBLE ASSETS
The following components comprise the Company's intangible assets as of March
31, 2002 and September 30, 2001:
(IN THOUSANDS) MARCH 31, 2002 SEPTEMBER 30, 2001
-------------- ------------------
Goodwill $ 55,648 $ 55,622
Workforce in place 5,768 5,768
---------- ----------
Sub-total indefinite lived assets 61,416 61,390
---------- ----------
Acquired technology 12,644 12,644
Customer list 411 411
Backlog 298 298
Leasehold advantage 224 224
Subscriber list 1,199 1,199
Other 136 133
---------- ----------
Sub-total other intangibles 14,962 14,909
---------- ----------
Total intangible assets 76,328 76,299
Accumulated amortization (31,450) (23,946)
---------- ----------
Total intangible assets, net $ 44,878 $ 52,353
========== ==========
J. LITIGATION
The Company is party to various legal disputes and proceedings arising from the
ordinary course of general business activities. In the opinion of management,
resolution of these matters is not expected to have a material adverse affect on
the financial position, results of the operations and cash flows of the Company.
However, depending on the amount and the timing, and unfavorable resolution of
some or all of these matters could materially affect the Company's future
results of operations or cash flows in a particular period.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, as well as documents incorporated herein by
reference, may contain forward-looking statements (within the meaning of section
27A of the Securities Act of 1933, as amended, and section 21E of the Securities
Exchange Act of 1934, as amended). The following and similar expressions
identify forward-looking statements: "expects", "anticipates", and "estimates".
Forward-looking statements include, without limitation, statements related to:
the Company's plans, objectives, expectations and intentions; the timing of,
availability and functionality of products under development or recently
introduced; and market and general economic conditions. Important factors that
could cause actual results to differ materially from those suggested by the
forward-looking statements for various reasons, include those discussed under
the heading "Factors Affecting Future Performance" below. These forward-looking
statements speak only as of the date of this Quarterly Report, and the Company
disclaims any obligation to update such forward looking statements as a result
of any change in circumstances or otherwise.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company's discussion and analysis of its financial conditions and results of
operations are based upon its consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
that management make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses. These estimates and assumptions are
affected by management's applications of accounting policies.
Critical accounting policies include revenue recognition, estimating the
allowance for doubtful accounts, deferred tax assets, and the valuation of
long-lived assets.
The Company derives revenues from software and services. Software license fee
revenues are generally recognized upon contract execution and shipment, provided
collection of the resulting receivable is deemed probable, the fees are fixed or
determinable, and no significant modification or customization of the software
is required. Consulting, training, content management and cataloging services
are recognized as the services are performed. Maintenance/support ("PCS")
revenues are recognized ratably over the term of the agreement, generally one
year. Online Commerce Services ("OCS") services are recognized on a
straight-line basis over the applicable subscription period, generally one year.
The Company's multi-element arrangements could include the following three
elements: (a) software licenses, (b) PCS and (c) consulting, training and other
services. Revenue is allocated to the elements of the arrangement based upon the
vendor specific objective evidence ("VSOE") of fair value of each element. VSOE
is established for the Company's undelivered elements (PCS and/or services), but
not for the delivered elements (software licenses). The Company uses the
residual method to recognize its software license revenue since it is unable to
determine the VSOE of the fair value of software licenses. Under the residual
method, the fair value of the undeliverable elements (PCS and/or services) is
deferred and recognized when the services are delivered and the difference
between the total
14
arrangement and the amount attributable to the undelivered elements assigned to
the delivered elements (software licenses). VSOE for PCS is based on the price
of the PCS when it is sold separately to the customer. VSOE for consulting
services is based on fixed hourly rates set according to the skill level of the
consultant required. VSOE for training services is based on an established
per-student fee structure.
Revenue from products sold through indirect channels ("resellers") is recognized
upon shipment of the software, as long as evidence of an arrangement exists,
collectability is probable, and the fee is fixed or determinable.
We recognize revenue consistent with various accounting principles, including
the Securities and Exchange Commission's Staff Accounting Bulletin, No. 101,
"Revenue Recognition in Financial Statements", Statement of Position No. 97-2,
"Software Revenue Recognition", Statement of Financial Accounting Standards No.
48, "Revenue Recognition When Right of Return Exists", among others. Revenue
recognition involves judgments regarding the separability of multiple element
arrangements, vendor specific evidence of fair value and likelihood of
non-payment. Changes in judgments of the factors could impact the timing and
amount of revenue that we could recognize.
The Company maintains allowances for doubtful accounts, which reflect the
Company's estimate of the amounts owed by customers that customers will be
unable to pay. Management performs ongoing credit evaluations of its customers'
financial condition and limits the amount of credit when deemed necessary. The
Company believes that the current estimate of allowances for doubtful accounts
recorded as of March 31, 2002, adequately covers any potential credit risks.
However, if the financial condition of our customers deteriorates and they are
not able to make payments in excess of our estimates, then we may need to
increase our allowance reserves, which will result in a charge to income in the
period that the adjustment is made.
The Company computes deferred income taxes based on the differences between the
financial statement values and the tax basis of assets and liabilities using the
tax rates in effect for the years in which the differences are expected to
reverse. The Company has not recorded a valuation allowance related to goodwill
amortization because we expect to realize taxable income in future periods, and
it is more likely than not that all of the net deferred tax assets will be
realized. Management will continually assess the realizability of its net
deferred tax assets. In the event that it is determined that we cannot realize
the net deferred tax assets, an adjustment to the net deferred tax assets will
be required and will result in a charge to income in the period such a
determination is made.
Long-lived assets are amortized over their estimated useful lives. In accordance
with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets to Be
Disposed of," the Company periodically reviews the long-lived assets, including
intangible assets resulting from acquisitions, for impairment whenever events or
changes in circumstances indicate that the carrying amount of these assets may
exceed their fair value. The Company estimates whether future cash flows
expected to result from the use of assets exceed the carrying amount of the
assets. In the event that the Company judges that an impairment exists, all or a
portion of the asset will be written-off based on the amount by which the
carrying amount exceeds the fair value of the asset. In order to determine the
fair value, the Company obtains quoted market prices or utilizes valuation
15
techniques, such as discounted cash flows. The Company also periodically
assesses the useful life of its fixed assets and may in the future need to
adjust the life of an asset and write-it off.
OVERVIEW
MRO Software, Inc. provides e-Business solutions for asset intensive companies.
Through our unique combination of domain expertise in maintenance, repair and
operations and enterprise asset maintenance ("EAM") software products, and
through our hosted solutions that enable manufacturers and distributors to
participate in e-commerce, the Company provides a comprehensive industrial
supply chain solution. The Company's Strategic MRO, OCS and Enterprise Catalog
Management solutions allow customers to streamline their internal processes and
compete more efficiently in an increasingly collaborative and electronic market.
Our Strategic MRO solutions (MAXIMO(R)) help companies in asset intensive
industries increase their return on assets while decreasing their operational
costs, including the costs of transacting with their suppliers. Our OCS
solutions provide the tools and technology to enable distributors and
manufacturers of industrial parts - through one catalog and one connection - to
gain exposure to all types of buyers via multiple marketplaces and exchanges.
The Enterprise Catalog Management products are the Internet-based content
management tools and cataloging services, which supplement the OCS offerings
with powerful online industrial catalog applications and broaden MAXIMO's
product functionality.
In fiscal year 2001, the Company operated in two reportable industry segments:
(1) the development, marketing and support of "Demand-Side" software products
and services, consisting of MAXIMO Enterprise(TM) and MAXIMO Extended
Enterprise(TM) and (2) the development, marketing and support of "Supply-Side"
software products and services, consisting of Enterprise Catalog Content
Management and OCS. During fiscal year 2001, the Company's management assessed
the operating results of these segments separately and allocated resources
accordingly.
Beginning in fiscal year 2002, the "Demand-Side" product offerings have been
re-named Strategic MRO, and the "Supply-Side" product offerings have been split
into two distinct products groups: Enterprise Catalog Management and OCS. The
Company reports revenues per these three product groups but does not allocate
operating expenses to these three product groups. The Company's management
assesses its operating results on an aggregate basis to make decisions about
resources to be allocated to the various product groups. All segment-reported
financial information contained in this report has been restated to reflect the
Company's repositioning to one industry segment, effective in the first quarter
of fiscal year 2002.
16
RESULTS OF OPERATIONS
REVENUES
Three Three Six Six
Months Months Months Months
Ended Change Ended Ended Change Ended
(in thousands) 03/31/02 % 03/31/01 03/31/02 % 03/31/01
- ---------------------------------------------------------------------------------------------------
Software licenses $ 7,777 (50)% $15,510 $21,602 (23)% $28,107
Percentage of total revenues 21% 34% 26% 32%
Support and services $30,111 (0.04)% $30,232 $62,762 6% $59,103
Percentage of total revenues 79% 66% 74% 68%
Total revenues $37,888 (17)% $45,742 $84,364 (3)% $87,210
The Company's revenues are derived primarily from two sources: (i) software
licenses, and (ii) fees for support and services. The Company has organized its
product offerings into three product groups: (1) Strategic MRO products and
services, (2) Enterprise Catalog Management products and services and (3) Online
Commerce Services. Strategic MRO products consist of the MAXIMO software
products and services. Enterprise Catalog Management products consist of content
normalization/cataloging software products and services and the Collego Catalog
Manager software products and services. Online Commerce Services are the
application service provider fees that enable manufacturers and suppliers to
engage in online commerce according to their needs.
Software license revenues decreased 50% and 23% for the three and six months
ended March 31, 2002 and 2001, respectively. The decline is attributable to a
decrease in Strategic MRO software revenues. Strategic MRO software license
revenues decreased 51% to $7.6 million from $15.4 million for the three months
ended March 31, 2002 and 2001, respectively, and decreased 24% to $21.1 million
from $27.9 million for the six months ended March 31, 2002 and 2001,
respectively. The Company attributes these decreases to a difficult sales
environment, longer than anticipated sales cycles and a general slowdown in IT
spending. In the three months ended March 31, 2002, there were no individual
software licenses sold greater than $1.0 million, as compared to the three
months ended March 31, 2001, in which there were four large software licenses
sold greater than $1.0 million. Enterprise Catalog Management software licenses
increased 97% to $211 thousand from $107 thousand for the three months ended
March 31, 2002 and 2001, respectively, and 181% to $469 thousand from $167
thousand for the six months ended March 31, 2002 and 2001, respectively. The
Company has not yet realized any software license revenue from its Collego
Catalog Management product, which was acquired in August 2001, but expects to in
the second half of this fiscal year.
Support revenues were $13.1 million and $11.6 million for the three months ended
March 31, 2002 and 2001, respectively, and $25.9 million and $22.7 million for
the six months ended March 31, 2002 and 2001, respectively. Support revenues
have increased as a result of an
17
increase in the number of Strategic MRO customers supported by the Company and a
strong renewal rate. Approximately 92% of our customers renew their yearly
maintenance contracts. Strategic MRO support revenues were $13.0 million and
$11.3 million for the three months ended March 31, 2002 and 2001, respectively,
and $25.8 million and $22.1 million for the six months ended March 31, 2002 and
2001, respectively. Enterprise Catalog Management support revenues were $59
thousand and $132 thousand for the three months ended March 31, 2002 and 2001,
respectively, and $82 thousand and $148 thousand for the six months ended March
31, 2002 and 2001, respectively.
Service revenues were $17.0 million and $18.6 million for the three months ended
March 31, 2002 and 2001, respectively, and $36.9 million and $36.4 million for
the six months ended March 31, 2002 and 2001, respectively. The decrease in
service revenues for the three months ended March 31, 2002 as compared to the
three months ended March 31, 2001 is attributable to a decrease in the demand
for content normalization services, reflecting a declining and stagnant
e-commerce market. Strategic MRO service revenues increased 4% to $15.1 million
from $14.5 million for the three months ended March 31, 2002 and 2001,
respectively, and 12% to $31.5 million from $28.2 million for the six months
ended March 31, 2002 and 2001, respectively. Enterprise Catalog Management
service revenues decreased 74% to $953 thousand from $3.7 million for the three
months ended March 31, 2002 and 2001, respectively, and decreased 53% to $3.6
million from $7.6 million for the six months ended March 31, 2002 and 2001,
respectively.
OCS support and service revenues increased 56 % to $941 thousand from $603
thousand for the three months ended March 31, 2002 and 2001, respectively, and
64% to $1.8 million from $1.1 million for the six months ended March 31, 2002
and 2001, respectively. The adoption rate of these services by the industrial
supplier community has been slower than anticipated. The Company continues to
invest in development activities while simultaneously controlling operating
expenses and other administrative expenses.
COST OF REVENUES
Three Three Six Six
Months Months Months Months
Ended Change Ended Ended Change Ended
(in thousands) 03/31/02 % 03/31/01 03/31/02 % 03/31/01
- --------------------------------------------------------------------------------------------------------
Software licenses $ 1,403 15% $ 1,221 $ 3,360 51% $ 2,222
Percentage of software licenses 18% 8% 16% 8%
Support and services $15,685 (10)% $17,389 $32,631 (2)% $33,458
Percentage of support and services 52% 58% 52% 57%
Total cost of revenues $17,088 (8)% $18,610 $35,991 0.09% $35,680
Percentage of total revenues 45% 41% 43% 41%
Cost of software license revenues consists of software purchased for resale,
royalties paid to vendors of third-party software, the cost of software product
packaging and media, certain
18
employee costs related to software duplication, packaging and shipping, and
amortization of acquired technology. The increase in the cost of software
license revenues for the three months ended March 31, 2002 compared to the three
months ended March 31, 2001 was due to an increase of $200 thousand for software
purchased for resale. The increase in the six months ended March 31, 2002
compared to the six months ended March 31, 2001 is attributable to an increase
of $800 thousand for software purchased for resale and $300 thousand for
amortization of acquired technology.
Cost of support and services consists primarily of personnel costs for employees
and the related costs of benefits and facilities, costs for utilization of
third-party consultants, and costs to support the MRO Operations Center. Cost of
support revenues was $2.1 million and $2.4 million for the three months ended
March 31, 2002 and 2001, respectively, and $4.0 million and $4.6 million for the
six months ended March 31, 2002 and 2001, respectively. Cost of support revenues
as a percentage of total support revenues was 16% and 21% for the three months
ended March 31, 2002 and 2001, respectively, and 16% and 20% for the six months
ended March 31, 2002 and 2001, respectively. The decreases in cost of support
revenues for the three and six months ended March 31, 2002 compared to the three
and six months ended March 31, 2001 were attributable to a reduction in the
personnel costs needed to support the OCS operations center in line with the
slower than anticipated adoption of these services. Cost of service revenues was
$13.6 million and $14.9 million for the three months ended March 31, 2002 and
2001, respectively, and $28.6 million and $28.8 million for the six months ended
March 31, 2002 and 2001, respectively. Cost of service revenues as a percentage
of total service revenues was 80% and 81% for the three months ended March 31,
2002 and 2001, respectively, and 78% and 79% for the six months ended March 31,
2002 and 2001, respectively. The decrease in cost of service revenues for the
three months ended March 31, 2002 compared to the three months ended March 31,
2001 was primarily attributable to a decrease of $800 thousand for the cost of
third-party consultants implementing Strategic MRO products and a $400 thousand
reduction of reimbursable travel expenses. The decrease in cost of service
revenues for the six months ended March 31, 2002 compared to the six months
ended March 31, 2001 was primarily attributable to a decrease of $700 thousand
in reimbursable travel expenses offset by an increase of $500 thousand in
service incentives.
OPERATING EXPENSES
Three Three Six Six
Months Months Months Months
Ended Change Ended Ended Change Ended
(in thousands) 03/31/02 % 03/31/01 03/31/02 % 03/31/01
- ------------------------------------------------------------------------------------------------
Sales and marketing $13,695 (18)% $16,715 $29,711 (19)% $36,750
Percentage of total revenues 36% 37% 35% 42%
Product development $ 6,494 (3)% $ 6,703 $13,161 7% $12,263
Percentage of total revenues 17% 15% 16% 14%
General and administrative $ 4,619 (16)% $ 5,484 $ 9,347 (13)% $10,781
Percentage of total revenues 12% 12% 11% 12%
19
The decrease in sales and marketing expenses for the three months ended March
31, 2002 compared to the three months ended March 31, 2001 was primarily
attributable to a $1.8 million decrease in sales commissions, as a result of the
decrease in MRO Strategic software licenses revenues. The Company also reduced
travel costs by $700 thousand and personnel costs by $500 thousand. The decrease
in sales and marketing expenses for the six months ended March 31, 2002 compared
to the six months ended March 31, 2001 was primarily attributable to a one-time
charge of $3.3 million for a warrant issued to i2 Technologies, Inc., in the
quarter ended March 31, 2001. The decrease is also attributable to a $1.5
million decrease in sales commissions due to a decrease in MRO Strategic
software licenses and a $2.1 million reduction in travel costs.
The decrease in product development expenses for the three months ended March
31, 2002 compared to the three months ended March 31, 2001 was primarily due to
a decrease in the use of outside consultants. The increase in product
development expenses for the six months ended March 31, 2002 as compared to the
six months ended March 31, 2001 was attributable to personnel expenses incurred
to further develop the Company's Collego Enterprise Catalog Manager product
offerings and to further develop MAXIMO 5.0. In the three months ended March 31,
2002, the Company released MAXIMO 5.1, its upgrade to MAXIMO 5.0. The Company
will continue to make enhancements to MAXIMO 5.1, as well as its other product
offerings.
The decrease in general and administrative expenses for the three and six months
ended March 31, 2002 compared to the three and six months ended March 31, 2001
was primarily due to a $1 million decrease in bad debt expense and reduction in
personnel expenses. In the six months ended March 31, 2001, the Company wrote
off of a receivable from a company that filed bankruptcy.
NON-OPERATING EXPENSES
Three Three Six Six
Months Months Months Months
Ended Change Ended Ended Change Ended
(in thousands) 03/31/02 % 03/31/01 03/31/02 % 03/31/01
- -------------------------------------------------------------------------------------
Interest income $ 261 (36)% $ 409 $ 533 (31)% $ 778
Other expense, net $ (71) (81)% $ (383) $ (74) (31)% $ (107)
Interest income is attributable to interest earned on marketable securities and
cash and cash equivalents. Interest rates have declined over the prior year and
thus the Company earned less on its investments. The Company also holds less
marketable securities than in the previous year. Due to an unfavorable bond
market, the Company has invested more of its cash in short-term securities such
as money market funds. Other expense was primarily attributable to currency
translation losses in the current quarter.
BENEFIT FROM INCOME TAXES
The Company's effective tax rate was a benefit of 30% and 26% for the quarters
ended March 31, 2002 and 2001, respectively. The difference between the
effective tax rates and the federal statutory tax rate of 35% is due to the
non-deductible nature of certain intangible and goodwill costs. The current
effective tax rate also reflects the full tax benefit of deferred tax assets
arising from future deductible temporary differences, consisting mainly of
tax-deductible goodwill. The
20
Company currently expects taxable income in future periods and it is more likely
than not that all of the net deferred tax assets will be realized. The amount of
net deferred tax assets considered realizable as of March 31, 2002 could be
reduced based on changing conditions. Management will periodically assess the
realizability of the net deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2002, the Company had cash and cash equivalents and marketable
securities of approximately $62.4 million and working capital of $57.0 million.
Cash provided by operations was $8.7 million for the six months ended March 31,
2002 primarily attributable to the collection of accounts receivables.
Cash provided by investing activities was $4.2 million for the six months ended
March 31, 2002 due to the maturities of marketable securities.
Cash provided by financing activities was $6.1 million for the six months ended
March 31, 2002 due to proceeds from the exercise of employee stock options.
As of March 31, 2002, the Company's principal commitments consist primarily of
office space and equipment operating leases for its U.S. and European
headquarters. Under the terms of the U.S. lease agreement, upon termination of
the lease, the Company has the right to extend the lease for an additional six
year term for an agreed upon fixed cost. The lease terminates on November 30,
2003. The Company leases its facilities and certain equipment under
non-cancelable operating lease agreements that expire at various dates through
June 2006.
The Company may use a portion of its cash to acquire additional businesses,
products or technologies complementary to its business. The Company also plans
to make investments over the next year in its products and technology. On
December 20, 2001, the Company announced its intention to purchase Datastream
Systems, Inc. for a combination of cash and stock. The Company withdrew this
offer as disclosed on Form 425 filed with the SEC on February 27, 2002.
The Company expects that its cash flow from operations will be sufficient to
meet its working capital and capital expenditure requirements through at least
March 31, 2003. The Company's liquidity and working capital requirements,
including the current portions of any long-term commitments, are satisfied
through its cash flow from operations. The Company has no debt obligations. The
factors, which might impact the Company's cash flows, are the same factors as
those, which might impact the Company's business and operations generally, as
described below under the heading "Factors affecting Future Performance". Should
the Company experience a downturn in cash flows from operations, the Company's
capital reserves (cash balance plus marketable securities) will be sufficient to
meet its working capital and planned capital expenditure requirements through at
least March 31, 2003.
21
FACTORS AFFECTING FUTURE PERFORMANCE
The nature of forward-looking information is that such information involves
significant assumptions, risks and uncertainties. Certain public documents of
the Company and statements made by authorized officers, directors, employees,
agents and representatives of the Company, acting on its behalf, may include
forward-looking information which will be influenced by the factors referenced
below, and by other assumptions, risks and uncertainties. Forward-looking
information is based on assumptions, estimates, forecasts and projections
regarding the Company's future results as well as the future effectiveness of
the Company's strategic plans and future operational decisions. Forward-looking
statements made by or on behalf of the Company are subject to the risk that the
forecasts, projections, and expectations of management, or assumptions
underlying such forecasts, projections and expectations, may become inaccurate.
Accordingly, actual results and the Company's implementation of its plans and
operations may differ materially from forward-looking statements made by or on
behalf of the Company. Certain important factors that could affect the Company's
actual results and actions and could cause such results and actions to differ
materially from any forward-looking statements made by or on behalf of the
Company are set forth on pages 18-24 in the Company's Annual Report to
Stockholders for fiscal 2001 under the heading "Factors Affecting Future
Performance", and are incorporated herein by reference.
OTHER RISK FACTORS
The factors referenced above and incorporated herein by reference are not a
complete description of all risk factors relevant to the Company's future
performance, and should be read and understood together with and in the context
of similar discussions which may be contained in the documents that the Company
files with the SEC in the future. In addition, the following factors could also
affect the Company's actual results and actions and could cause such results and
actions to differ materially from any forward-looking statements made by or on
behalf of the Company: delays and slowdowns in IT spending and the market for
our products, adverse macroeconomic conditions, delays in product development
and product roll-out, difficulties in gaining market acceptance for new
products, and confusion associated with the introduction of, and delays in
customer adoption of, MAXIMO version 5 with an entirely new architecture.
NO REVISIONS OR UPDATES TO FORWARD-LOOKING STATEMENTS
The Company undertakes no obligation to release publicly any revision or update
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary exposures to market risk are the effect of fluctuations in
interest rates earned on its cash and cash equivalents and marketable securities
and exposures to foreign currency exchange rate fluctuations.
At March 31, 2002, the Company held $62.4 million in cash and cash equivalents
and marketable securities consisting of taxable and tax-exempt municipal
securities. Cash equivalents are classified as available for sale and valued at
amortized cost, which approximates fair market value. A hypothetical 10 percent
increase in interest rates would not have a material impact on the fair market
value of these instruments due to their short maturity.
The Company develops its products in the United States and markets them in North
America, Europe, Middle East and Africa, Australia, Asia Pacific and Latin
America. As a result, our financial results could be affected by factors such as
changes in foreign currency exchange rates or weak economic conditions in
foreign markets. Currently, the Company has no hedging contracts.
23
PART II. OTHER INFORMATION
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM
REGISTERED SECURITIES
In December 2000, the Company issued a stock purchase warrant to i2
Technologies, Inc. ("i2") under which i2 had the right to purchase up to 500,000
shares of the Company's common stock at an exercise price of $10.25 per share.
On March 14, 2002, i2 exercised the entire warrant on a "net exercise" or
"cashless" basis pursuant to which the exercise price was paid by reducing the
number of shares issued, and as a result 268,823 shares were issued to i2 upon
exercise of the warrant and there were no cash proceeds received by the Company.
The Company has no knowledge as to whether i2 is still holding or has sold these
shares. The warrant was issued to i2, and the shares were issued upon exercise
of the warrant by i2, in reliance upon the exemption from registration set forth
in Section 4(2) of the Securities Act of 1933, as amended. The Company relied on
a representation from i2 that it is an accredited investor and was purchasing
the shares for its own account for investment purposes.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
The Company held the Annual Meeting of Stockholders on March 5, 2002. At the
Annual Meeting, the stockholders of the Company voted to approve the following
actions by the following votes:
1. To elect Norman E. Drapeau, Jr. and Richard P. Fishman as Class III
Directors of the Company for a term of three years.
No. of Shares/Votes
-------------------
For Authority Withheld
--- ------------------
Norman E. Drapeau, Jr. 17,131,033 283,027
Richard P. Fishman 17,190,781 223,279
2. To approve an amendment to the Company's Amended and Restated 1999 Equity
Incentive Plan to provide that stock awards maybe granted to Non-Employee
Directors on a discretionary basis.
No. of Shares/Votes
-------------------
For 11,846,712
Against 2,676,438
Abstain 87,100
(Not-Voted) (2,803,810)
3. To approve the adoption of the Company's 2002 Employee Stock Purchase
Plan, for which 750,000 shares of Common Stock have been reserved for issuance.
No. of Shares/Votes
-------------------
For 13,949,483
Against 600,553
Abstain 60,214
(Not-Voted) (2,803,810)
24
4. To ratify the appointment by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent public accountants for
the 2002 fiscal year.
No. of Shares/Votes
-------------------
For 17,247,654
Against 161,423
Abstain 4,983
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated Articles of Organization of the Company
(included as Exhibit 3.3 to the Company's Registration Statement on Form
S-1, Registration No. 33-76420, and incorporated herein by reference)
3.2 Restated By-Laws of the Company, as amended (included as Exhibit 3.2
to the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996, File No. 0-23852, and incorporated herein by
reference)
3.3 Amendment to By-Laws adopted on February 1, 2001 (included as
Exhibit 3.3 to the Company's Current Report on Form 10-Q for the quarter
ended March 31, 2001, File No. 0-23852 and incorporated herein by
reference)
3.4 Form of Certificate of Designation of Series A Junior Participating
Preferred Stock of MRO Software, Inc. (which is attached as Exhibit A to
the Rights Agreement included as Exhibit 4 (b) to the Company's Current
Report on Form 8-K dated February 2, 1998, File No. 0-23852, and
incorporated herein by reference)
3.5 Amendment to Articles of Organization adopted on December 15, 1999
(included as Exhibit 3.4 to the Company's Form 10-Q for the quarter ended
December 31, 1999, File No. 0-23852, and incorporated herein by reference)
3.6 Amendment to Articles of Organization, dated March 6, 2001 (included
as Exhibit 3.4 to the Company's Current Report on Form 8-K dated March 9,
2001, File No. 0-23852, and incorporated herein by reference)
4. Instruments defining the Rights of Security Holders, Including
Indentures
4.1 Specimen certificate for the Common Stock, $ .01 par value, of the
Company (included as Exhibit 4.1 to the Company's Current Report on Form
10-Q for the quarter ended December 31, 2001, File No. 0-23852 and
incorporated herein by reference)
25
4.2 Article 4B of the Amended and Restated Articles of Organization of
the Company (included as Exhibit 4.1 to the Company's Registration
Statement on Form S-1, Registration No. 33-76420, and incorporated herein
by reference)
4.3 Rights Agreement dated as of January 27, 1998, between the Company
and BankBoston, N.A. as Rights Agent (included as Exhibit 4 (a) to the
Company's Current Report on Form 8-K dated February 2, 1998, File No.
0-23852, an incorporated herein by reference)
4.4 Form of Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company (included as Exhibit 4 (b) to the Company's
Current report on Form 8-K dated February 2, 1998, File No. 0-23852, and
incorporated herein by reference)
4.5 Form of Rights Certificate (included as Exhibit 4 (c) to the
Company's Current Report on Form 8-K dated February 2, 1998, File No.
0-23852, and incorporated herein by reference)
10. Material Contracts
10.1 Executive Bonus Plan
(b) Reports on Form 8-K
On March 27, 2002, the Company filed a Form 8-K related to its
announcement on March 26, 2002 of the Company's preliminary results for
the quarter ending March 31, 2002, indicating that such results would fall
significantly below previous articulated guidance.
26
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.
MRO SOFTWARE, INC.
Date: May 15, 2002 By: /s/ Peter J. Rice
------------ -----------------
Peter J. Rice
Executive Vice President -
Finance and Administration,
Chief Financial Officer and
Treasurer
(Principal Financial Officer)
27