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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED APRIL 30, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-12456
AMERICAN SOFTWARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-1098795
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATED OR ORGANIZATION) IDENTIFICATION NO.)
470 EAST PACES FERRY ROAD, N.E. 30305
ATLANTA, GEORGIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(404) 261-4381
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON
WHICH REGISTERED
------------------- ------------------------
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
CLASS A COMMON SHARES, $.10 PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X. No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
At July 24, 1995, 17,426,197 Class A Common Shares and 4,836,889 Class B
Common Shares of the registrant were outstanding. The aggregate market value
(based upon the closing price of Class A Common Shares as quoted on the NASDAQ
National Market System at July 24, 1995) of the Class A shares held by
nonaffiliates was approximately $99 million.
DOCUMENTS INCORPORATED BY REFERENCE; LOCATION IN FORM 10-K
1. Annual Report to Shareholders for the year ended April 30, 1995 into Parts I
and II of this Form 10-K.
2. 1995 Proxy Statement into Part III.
3. Form S-1 Registration Statement No. 2-81444 into Part IV.
4. Form S-8 Registration Statement No. 33-55214 into Part IV.
5. Form 10-K's for fiscal years ended April 30, 1984, 1985, and 1990 into Part
IV.
6. Form 10-Q's for the quarters ended January 31, 1990 and October 31, 1990
into Part IV.
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PART I
ITEM 1. BUSINESS
A. GENERAL
American Software, through its subsidiaries, develops, markets and supports
enterprise wide Supply Chain Management (TM) application software systems to be
used in a variety of IBM and IBM plug-compatible mainframe, IBM midframe and
Unix open client/server computers. The Company's software enables the customer
to perform various business tasks principally in the areas of: (i) Logistics
Distribution, (ii) Manufacturing, (iii) Purchasing and Customer Order
Processing, and (iv) Financial Control. The Company also provides support for
its software products, such as software enhancements, documentation updates,
customer education, consulting, systems integration services and maintenance.
The Company markets and supports its Supply Chain Management application
software products to a wide range of end users, including manufacturers of
building materials, chemicals, consumer goods, electronics, food products,
pharmaceuticals, pulp and paper, steel, and textiles, as well as retail,
wholesale distributors and financial institutions, the health care industry,
petroleum producers, public utilities and the transportation industry. The
Company broadly classifies its products as addressing the supply chain
management requirements of the world's enterprises.
Computer software consists of coded instructions that control the computer's
internal operations. There are two general classes of computer software: system
software and application software. System software controls the basic hardware
operations. Application software, which is the type developed and licensed by
the Company, directs the computer to perform specific tasks or functions and
produces reports for use in many diverse applications.
Application software for mainframe, midframe and open systems client server
computers is generally available in forms ranging from standard packages to
custom-designed programs. The Company primarily offers standard software
packages. The Company's management believes there is a significant long-term
trend toward the purchase of systems integration services by customers who have
acquired the Company's application products.
B. PRODUCTS
The Company's strategy has been to create an integrated line of standard
application software operating on three strategic computer platforms: (1) IBM
Mainframe or compatible, (2) IBM Midrange--AS/400, and (3) UNIX--IBM RS/6000--
HP-9000--Sequent and other unix platforms. These products are designed to be
used either singly or in combination to assist customers in forecasting and
inventory management, in purchasing and materials control and in order
processing and receivables control. The products are written in various
standard programming languages utilized for business application software,
including ANS COBOL, COBOL II, Micro Focus COBOL, UNIX, AIX and other
programming languages, and many have both on-line and batch capabilities. An
integral part of this strategy has been to integrate unique characteristics of
personal computers as workstations or clients in the products provided by the
Company. ES/9000, RS/6000 and AS/400 are registered trademarks of the
International Business Machine Corporation. HP-9000 is a registered trademark
of Hewlett Packard Corporation. The following is a summary of the Company's
main software product groups.
LOGISTICS DISTRIBUTION SOFTWARE
The Company's logistics distribution software consists of an integrated
system of five software modules designed to provide the user with accurate
sales forecasts in order to minimize investment in inventory and to distribute
inventory more effectively. These modules perform primarily the following
functions:
1. Demand Forecasting--Analyzes historical demand for products sold or goods
and materials used, and projects future demand.
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2. Distribution Requirements Planning--Recommends a time-phased replenishment
plan for all levels in a distribution network, utilizing sales forecasts,
existing inventory information, and inventory control parameters.
3. Inventory Planning--Computes inventory safety stock and ordering
quantities on the basis of management-specified customer service levels and
inventory turnover objectives.
4. Inventory Deployment--Determines most effective use of available inventory
if adequate inventory is not available, and allocates the available quantity
such that each warehouse receives an equitable portion.
5. Vehicle Scheduling and Loading--Specifies the actual replenishment
quantities that should be shipped from a source location to a receiving
location, taking into consideration the capacity and number of available
vehicles.
MANUFACTURING SOFTWARE
The Company's manufacturing software is a comprehensive state-of-the-art
business application for planning, controlling and executing manufacturing
activities. The Company's multi-plant design ensures enterprisewide visibility
and consistency. It also accomodates inter-plant dependencies while providing
plant by plant flexibility in operations. The modules that make up this
application set are:
1. Master Scheduling--Prepares a production plan consistent with existing and
anticipated customer orders, available inventory, production capacity, and
available resources.
2. Material Requirements Planning--Calculates manufacturing and purchasing
requirements at appropriate manufacturing stages.
3. Bill of Material--Maintains information on all component parts for each
product.
4. Capacity Planning--Projects work loads at various work centers based upon
the master schedule and/or material requirements plan.
5. Production Order Status--Provides inventory quantities and current
manufacturing order status and inventory information.
6. Route and Work Center Maintenance--Acts as a storehouse of information
that is accessed by other manufacturing systems and establishes production work
center routings.
7. Shop Floor Control--Provides current order status for each individual shop
operation.
8. CMAT--Provides for standard cost development and comparison of standard
versus actual costs.
9. Flow Manufacturing--also most commonly referred to as just-in-time,
represents a revolutionary approach to the design, manufacture, and delivery of
products by businesses to their markets.
PURCHASING & CUSTOMER ORDER PROCESSING SOFTWARE
The Company's purchasing and customer order processing software consists of
an integrated system of six modules which provides information concerning the
status of purchasing activities, customer orders, inventory position and
internal inventory requisition requirements. Several modules support the
general operational functions of most types of businesses and are frequently
referred to as cross-industry modules. These modules perform primarily the
following functions:
1. Inventory Control and Accounting--Processes inventory activities, provides
accurate status updates, and maintains price and cost details.
2. Purchasing--Produces updates, and continuously monitors the status of
requisitions and purchase orders for goods and services.
3. Material Request--Communicates material requirements to purchasing
functions, resulting in cohesive, centralized procurement activities.
4. Item Information Management System--Converts manufacturer's part numbers
into the user's inventory item identification system and provides real time
inquiry and reports on the status of user's inventory.
5. Bid (Request for Quotation)--Produces bids from existing data, updates
bids with vendors' responses, selects the desired bid and produces the
resulting purchase order in an on-line real-time environment.
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6. Customer Order Processing--Performs customer order entry, status inquiry,
order processing, and shipping and invoicing functions.
FINANCIAL CONTROL SOFTWARE
The Company's financial control software provides comprehensive financial
solutions such as financial reporting, budgeting, asset management, cash
management, credit management and receivables management. These systems assist
in resolving customers' specific financial control issues faster and more
effectively. The specific aplications available are:
1. General Ledger and Budgeting--This system is comprised of five basic sub-
systems which provide financial data base, general ledger, transaction
processing, management reporting and budget planning functions.
2. Accounts Receivable--Provides the functions and features needed to support
cash application for trade receivables and maintains real-time customer account
information.
3. Accounts Payable--Processes invoices, creates separate accounts for
multiple companies, maintains vendor history, activity and standard terms,
prints checks and projects cash flow while processing all types of employee
expenses such as travel, entertainment, relocation, tuition refund, etc.;
identifies reimbursable and non-reimbursable expenses and processes central
billing.
4. Capital Project Accounting--Tracks and accumulates project commitments and
expenditures and then compares to budgets.
5. Fixed Asset Accounting--Maintains property and tax records, and prepares
depreciation schedules for accounting and tax purposes.
UTILITIES INDUSTRY MODULE
6. Continuing Property Records--Accounts for public utilities property,
including both specific and mass property, maintains property and tax records,
and prepares depreciation schedules for accounting and tax purposes.
C. CLIENT/SERVER PRODUCTS
The Company developed several products using client server technology as
early as 1985. This development activity is expected to continue across the
Company's existing portfolio of systems as well as any new systems development
in the future. Current products using client server technology include ENSOFT
LPW(TM)--a client server version integrating the Company's major Logistics
Distribution systems and ENSOFT SCP(TM)--a client server version integrating
the Company's major Manufacturing Planning systems with Logistics Distribution.
In June of 1994, the Company announced its next generation of software products
based on a CASE model driven development concept* The new product line is
targeted to the AS/400 and UNIX Open Systems, client server architecture.
D. TRANSPORTATION SOFTWARE SUBSIDIARY
In June 1992, the Company acquired Distribution Sciences, Inc. (DSI) based in
Chicago, Illinois. DSI is a leading provider of software solutions addressing
the transportation cost component of a customer's product acquisition and
distribution costs.
DSI is operated as a wholly-owned subsidiary with its own sales and support
organization. DSI and the Company share leads and customer lists to achieve
market synergies.
E. INTEGRATED SYSTEM DESIGN
While the Company's software applications can be used individually, they are
designed to be combined as integrated systems to meet unique customer
requirements. The user may select virtually any combination of modules to form
an integrated solution to a particular business problem. The license fee for
such a solution could range from $7,000 for a single module to in excess of
$4,000,000 for a multi-module, multiple-user solution incorporating the full
range of Company products.
4
The Company markets its products under the Supply Chain Management suite of
applications. Supply Chain Management is a business concept which addresses new
techniques and processes that are critical to reengineering today's businesses.
Within this enterprise application suite several unique combinations of modules
are marketed as industry-specific business solutions. Logistics Distribution is
marketed to companies involved in product distribution while Manufacturing is
targeted to the industrial and product manufacturing industry.
The Company offers customer-unique solutions. In addition to combining
modules to form a solution, the user may also include selected applied
technology modules or templates to be included with each application. Through
an internally-developed computer automated software factory approach, the
Company automatically assembles and delivers the combination of modules and
options for each user's specific requirements without the need for costly
manual programming and customization.
Customers frequently require services beyond those provided by the Company's
standard arrangements. To meet those customers' needs, the Company established
a separate professional services division which provides specialized business
and software implementation consulting, custom programming, on-site
installation, system-to-system interfacing and extensive training. These
services, frequently referred to as systems integration services, are provided
for an additional fee normally under a separate contract, based upon time and
materials utilized.
F. MARKETING AND SALES
Typically, the Company's customers are medium-sized companies or divisions of
larger companies with substantial data processing budgets. The Company has
licensed its application software to approximately 1,650 customers. No single
customer accounted for more than ten percent of the Company's revenues in
fiscal 1995.
First-time customers may license a single module or a system composed of
several modules. These customers often license other modules to expand the
range of software available to them, and may also license additional modules or
systems similar to those already licensed for use at additional locations.
The Company sells its products directly to the end-user through its sales and
presales staff of approximately 105 persons located in seven (7) areas
worldwide: Mid America (23), Northeast (18), Southern (31), Western (10),
European (10), Canada (4), and Asia Pacific (9). The presales staff provide
consultation, advice and assistance to the sales executives and the customer in
selecting an appropriate configuration of application software modules to
address the user's needs. The Company obtains sales leads from its advertising
in trade publications, its participation in computer industry trade shows and
exhibitions, Company-conducted seminars and telemarketing activities, and
referrals from existing customers.
The Company also has joint marketing arrangements with a number of other
software and hardware manufacturers under which each party seeks to market its
own product or services in conjunction with products or services of the other
party. Those software and hardware manufacturers include Applied Data Research
Inc.; Computer Associates, Inc.; Information Builders Inc., now part of
Sterling Software Inc.; Intermec Corporation; Interactive Images Inc.;
Syntellect, Inc.; Deloitte & Touche LLP, Price Waterhouse LLP, Ernst & Young
LLP, IBM International Business Machines Inc.; Electronic Data Systems Corp.
(EDS); Software AG of North America, Inc.; Hewlett Packard; Sequent Computer
System Inc.; and Sybase, Inc.
In 1995, the Company continued its program, begun in fiscal 1988, to develop
a network of sales agents to support its sales internationally. These agents
along with a designated American Software employed Country Manager are
establishing a national presence for the Company in targeted countries
throughout Asia-Pacific and Europe.
G. LICENSES
American Software, like many business application software firms, typically
enters into license agreements which grant non-exclusive rights to use its
products. The Company's standard license agreements contain provisions designed
to prevent disclosure and unauthorized use of the Company's software. These
5
agreements warrant that the Company's products will function in accordance with
the specifications set forth in its product documentation. These licenses are
generally granted for a term of ninety-nine years and provide that, for a one-
time fee, the customer may use the software to process its data at a single
facility for a specified division or divisions. A significant portion of the
license fee is generally payable upon the delivery of product documentation,
with the balance due upon installation.
H. INSTALLATION, MAINTENANCE AND SUPPORT
As additional cost options, the Company provides Implementation Services and
customized support. Implementation services and customized support include
installation of the Company's software, project planning and management, and
training of the customer's user and systems personnel on the use of the
software system. The customer receives documentation manuals which describe the
system's features and its method of operation. The user is normally entitled to
software product enhancements and maintenance for a period of six months at no
additional charge. The Company's software products are continually enhanced and
improved to accommodate technological changes and other factors which may
affect the customer's information requirements. To receive maintenance, which
includes enhancements, from the Company after the initial period, customers pay
fees which are based on the then-current price of the product.
As a part of its support service, the Company provides experienced
application and data processing personnel to answer telephone inquiries on a
24-hours-a-day, seven days-a-week basis, and furnishes consulting support in
implementing and maintaining the systems. In addition, training courses and
documentation materials are available to train customers' personnel and to
update them on new system features.
In fiscal 1992, the Company began to market its professional and data
processing resources on an outsourcing basis. Outsourcing is the provision of
data processing services, normally under long-term contract, by outside
providers. The Company has entered into 25 outsourcing contracts as of July 14,
1995 to provide data processing and support services on terms of up to five
years. The Company believes outsourcing represents a significant growth
opportunity by providing a basis for predictable long-term recurring revenues.
To complement customer support, the Company and its product users actively
participate in its User Group Association. Established in 1980, the User Group
exchanges ideas and techniques for use of the Company's products and provides a
forum for customers' suggestions for product development and enhancement. User
Group meetings include guest speakers who are recognized authorities in their
areas of expertise. During fiscal 1995, approximately 1,200 customer
representatives representing approximately 500 companies attended these User
Group meetings.
I. RESEARCH AND DEVELOPMENT
American Software is committed to the development and acquisition of new
products and to the continued enhancement of its existing products. During
fiscal 1995, 1994, and 1993, the Company expensed approximately $5,200,000,
$4,350,000 and $5,078,000, respectively, for research and development. In
addition, the Company capitalized $7,352,301, $7,315,470, and $8,610,918 in
software development costs during fiscal years 1995, 1994, and 1993,
respectively, in accordance with the Statement of Financial Accounting
Standards No. 86. The Company's new internal product development and
enhancements of existing products include two categories: research and
development expenditures and additions to capitalized computer software
development costs. These combined categories totaled $12,552,000, $11,665,000,
and $13,689,000 in fiscal years 1995, 1994 and 1993, respectively, and
represented 60%, 38%, and 35%, respectively, of total license fee revenues in
those years.
The Company believes that a CASE (Model Driven Development) Architecture will
be important for its long-term growth and that this will be a multi-year
development effort. The Company employs approximately 200 persons in research,
development and enhancement activities. A significant portion of these
resources will be transitioned to the CASE project as other R&D development
obligations and initiatives are completed over the next several years.
6
J. COMPETITION
The computer application software industry is highly competitive. In the
application software market, the Company competes directly with a number of
firms, including computer manufacturers, large diversified computer service
companies and independent suppliers of software products. Approximately six
firms that market mainframe application software products and ten firms that
market midrange and client/server application software products are significant
competitors for one or more of the Company's products. A number of these
competitors have financial, marketing, management and technical resources
substantially greater than those of the Company.
The Company's primary market for its software is finished goods distributors
and manufacturers, industrial manufacturers, utilities, public transportation
and health care providers on IBM mainframe, AS/400, RS/6000, HP-9000, Sequent
and other UNIX platforms. The company is transitioning from a primarily IBM
mainframe and AS/400 product set to include a more diversified offering of UNIX
Open Systems Client/Server applications to its product portfolio. As it makes
this transition plans are being put in place to help the current client base
transition to this new environment while still supporting their current
platforms.
The Company believes that purchasers of software products are principally
concerned with the range of product modules available, ease of integration,
variety of features, performance, simplicity of use, documentation, technical
support and training. The Company further believes that its software products
and services are competitive in these areas. Price considerations are a key
factor and the Company believes its pricing is competitive in its market. The
Company believes the market trend to open systems, allowing software to operate
across hardware platforms, will increase the number of competitors and
intensity of competition. Management believes that it is necessary for the
Company to expend significant development funds annually to maintain its
position in the marketplace.
K. TRADEMARKS AND COPYRIGHTS
The Company seeks to protect its proprietary interest in software products
and trade secrets. It maintains non-disclosure and confidentiality agreements
and other contractual arrangements with customers, consultants, employees, and
others. While the strict enforceability of such agreements cannot be assured,
the Company believes that they provide a deterrent to the use of information
which may be proprietary to the Company, and in the event of any breach of such
agreements, the Company intends to take appropriate legal action. It also
copyrights its programs and software documentation related to these programs.
In addition, certain trademarks of the Company have been registered, and others
have registration applications pending. Management believes that the
competitive position of the Company depends primarily on the technical
competence and creative ability of its personnel and that its business is not
materially dependent on copyright protection or trademarks.
L. EMPLOYEES
At April 30, 1995, the Company had 606 full-time employees, including 45
persons in accounting and administration, 253 in product development and
technical support, 188 in customer support and professional services, and 120
in marketing, sales and sales support. The Company believes that its continued
success will depend in part on its ability to continue to attract and retain
highly skilled technical, marketing and management personnel, who are in great
demand.
The Company has never had a work stoppage and no employees are represented
under collective bargaining arrangements. The Company considers its employee
relations to be excellent.
M. INTERNATIONAL SALES
See note 6 of Notes to Consolidated Financial Statements included in the
Company's Annual Report for the fiscal year ended April 30, 1995 ("Annual
Report") for a discussion of international sales. Such information is
incorporated herein by reference.
7
ITEM 2. PROPERTIES
The Company's corporate headquarters are located in an approximately 100,000
square foot office building owned by the Company at 470 East Paces Ferry Road,
N.E., Atlanta, Georgia.
The Company also leases a two-story 17,500 square foot building at 443 East
Paces Ferry Road, N.E. Atlanta, Georgia, which is used primarily for financial
administration. This building is owned by a limited partnership of which Thomas
L. Newberry and James C. Edenfield, the principal shareholders, are the sole
partners. The lease is for a term of fifteen (15) years, expiring December 31,
1996, at a current base rental of approximately $16.17 per square foot, subject
to increases based upon changes in the Consumer Price Index and periodic
adjustments based upon appraised market rates.
In January, 1989, the Company acquired a four-story 42,000 square foot
building used for additional office space at 3110 Maple Drive, N.E., Atlanta,
Georgia, along with a one-story 1,400 square foot building at 3116 Maple Drive
used for recruiting, and a one-story 13,000 square foot building at 3120 Maple
Drive which is used for office space.
In January, 1990, the Company entered into a seven-year operating lease for
26,000 square feet of space at 3423 Piedmont Road, Atlanta, Georgia, with the
option to obtain additional space in the building as it becomes available. This
is currently being used for client education and additional office space.
In May, 1990, the Company acquired a two-story 10,000 square foot building
used for additional office space at 480 East Paces Ferry Road, N.E. Atlanta,
Georgia, along with a one-story 4,000 square foot building at 490 East Paces
Ferry Road which is under lease to a restaurant.
The Company has entered into leases for sales offices located in various
cities in the U. S. and overseas. Normally, these leases are for terms of less
than five years and average 4,700 square feet of leasable space.
The Company owns a variety of electronic and computer equipment, including
seven mid-sized computers, consisting of one IBM 9370, five IBM AS/400s, and
one IBM 4381 and leases two IBM AS/400s, two IBM 3090 600Es, one IBM 3090-400J
and one IBM 9121 210, all of which are used for program development and
testing, outsourcing and product demonstrations.
ITEM 3. LEGAL PROCEEDINGS
On March 3, 1995, the Company and one of its subsidiaries filed an action
against a firm which provides services to licensees of the Company's software
products alleging copyright infringement, misappropriation of trade secrets,
unfair competition and related claims stemming from the defendant's activities
as they relate to some of the Company's intellectual property. American
Software, Inc. and American Software USA, Inc. v. The McKinley Group, Inc., et
al., United States District Court for the Northern District of Georgia, Atlanta
Division. The complaint seeks injunctive relief as well as monetary damages.
The defendant has filed an answer to the Company's complaint and asserted
defenses to the Company's claims which among other things denies the validity
of the copyrights and trade secrets which are the subject of the main action by
the Company. The defendant also asserted counterclaims against the Company
including antitrust, defamation and other violations on the part of the
Company. The counterclaims do not contain a request for specific monetary
damages. Management believes that the defendant's defenses and counterclaims
are without merit and intends to vigorously pursue both the main action as well
as the defense of these counterclaims.
The Company is involved in various claims and other legal actions arising in
the ordinary course of business. In the opinion of management, based upon
consultation with legal counsel, any liability likely to arise from such
actions will not have a material adverse effect on the consolidated financial
position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of shareholders during the fourth
quarter of the Company's recently completed fiscal year.
8
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
This information is set forth under the caption "Shareholder Information" on
page 35 of the Annual Report and such information is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
This information is set forth under the caption "Selected Consolidated
Financial Data" on page 31 of the Annual Report, which information is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This information is set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 14 and 15
of the Annual Report and such information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company and the
independent auditors' report thereon appearing on pages 16 through 30 of the
Annual Report are incorporated herein by reference.
Consolidated Statements of Operations for each of the years in the three-
year period ended April 30, 1995
Consolidated Balance Sheets as of April 30, 1995 and 1994
Consolidated Statements of Shareholders' Equity for each of the years in
the three-year period ended April 30, 1995
Consolidated Statements of Cash Flows for each of the years in the three-
year period ended April 30, 1995
Notes to Consolidated Financial Statements
Independent Auditors' Report
Also refer to the financial statement schedule on page 17 of this report on
Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
9
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Company are:
NAME AGE POSITION
---- --- --------
James C. Edenfield 60 President, Chief Executive Officer, Treasurer and Director
Thomas L. Newberry 62 Chairman of the Board of Directors
David H. Gambrell 65 Director
Thomas R. Williams 66 Director
James L. Altman 61 Vice President-Facilities
Paul Di Bono, Jr. 56 Senior Vice President, General Manager-Midrange Division
J. Michael Edenfield 37 Executive Vice President, Chief Operating Officer
Peter W. Pamplin 40 Controller, Acting Chief Financial Officer
James R. McGuone 47 Secretary
All directors hold office until the next annual meeting of the shareholders
of the Company. Executive officers of the Company are elected annually and
serve at the pleasure of the Board of Directors.
Mr. Edenfield is a co-founder of the Company and has served as Chief
Executive Officer since November, 1989, and as Co-Chief Executive Officer for
more than five years prior to that time. He has been a Director since 1971.
Prior to founding the Company, Mr. Edenfield held several executive positions
and was a director of Management Science America, Inc., an applications
software development and sales company. He holds a Bachelor of Industrial
Engineering degree from the Georgia Institute of Technology.
Dr. Newberry is a co-founder of the Company and has served as its Chairman of
the Board since November, 1989, and was Co-Chief Executive Officer prior to
that for more than five years. He has been a Director since 1971. Prior to
founding the Company, he held executive positions with several companies
engaged in computer systems analysis and software development and sales
including Management Science America, Inc., where he was also a director. Dr.
Newberry holds Bachelor, Master of Science, and Ph.D. degrees in Industrial
Engineering from the Georgia Institute of Technology.
Mr. Gambrell has served as a Director of the Company since January 20, 1983.
He has been a practicing attorney since 1952, and is a partner of the law firm
of Gambrell & Stolz, counsel to the Company. He served as a member of the
United States Senate from the State of Georgia in 1971 and 1972. Mr. Gambrell
holds a Bachelor of Science degree from Davidson University and a J.D. degree
from the Harvard Law School.
Mr. Williams has served as a Director of the Company since April 27, 1989. He
is currently the President of the Wales Group, Inc., a closely-held corporation
engaged in investments and venture capital, and has held such position since
1987. He is a Former Chairman of the Board of First Wachovia Corporation, First
National Bank of Atlanta and First Atlanta Corporation. He holds a Bachelor of
Science degree in Industrial Engineering from the Georgia Institute of
Technology and a Master of Science degree in Industrial Management from the
Massachusetts Institute of Technology. Mr. Williams is a director of BellSouth
Corporation; Georgia Power Company; National Life Insurance Company of Vermont;
ConAgra, Inc.; and AppleSouth, Inc. He is also a trustee of The Fidelity Group
of Mutual Funds.
Mr. Altman joined the Company in June 1972. In December 1977, he became a
Vice President responsible for systems development and project management. Mr.
Altman holds a Bachelor of Industrial Engineering degree from the Georgia
Institute of Technology and is a registered professional engineer with the
State of Georgia.
10
Mr. Di Bono joined the Company in January 1982 and in July 1993 was elected
Senior Vice President and General Manager for Midrange Division. Prior to that
time, he served as Vice President for Marketing since December 1985. Mr. Di
Bono holds a B.S. degree in industrial psychology/business administration from
Iowa State University.
Mr. Edenfield joined the Company in September 1981 and has served as Senior
Vice President of North American Sales and Marketing of American Software USA,
Inc. since July 1993. Prior to holding that position, he served as Senior Vice
President of North American Sales from August 1992 to July 1993, as Group Vice
President from May 1991 to August 1992 and as Regional Vice President from May
1987 to May 1991. Mr. Edenfield holds a Bachelor of Industrial Management
degree from the Georgia Institute of Technology. Mr. Edenfield is the son of
James C. Edenfield, Chief Executive Officer of the Company.
Mr. Pamplin joined the Company in February 1985 and became Controller in
August 1987. Mr. Pamplin holds a B. S. in Biochemistry and an M. B. A. from
Virginia Polytechnic Institute and State University. Mr. Pamplin assumed the
responsibilities of Acting Chief Financial Officer in April 1995.
Mr. McGuone was elected the Secretary of the Company in May 1988. He has been
a practicing attorney since 1972, and is a partner of the law firm of Gambrell
& Stolz, counsel to the Company. Mr. McGuone holds a B. A. degree from
Pennsylvania State University and a J. D. degree from Fordham University School
of Law.
Compliance with Section 16 of the Exchange Act. Section 16(a) of the
Securities Exchange Act of 1934 (the "Exchange Act") requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission").
Officers, directors and holders of more than 10% of the Common Stock are
required by regulations promulgated by the Commission pursuant to the Exchange
Act to furnish the Company with copies of all Section 16(a) forms they file.
The Company assists officers and directors in complying with the reporting
requirements of Section 16(a) of the Exchange Act.
Based upon its review of the copies of such forms received by it, the Company
believes that since May 1, 1994 all Section 16(a) filing requirements
applicable to its directors, officers and greater than 10% beneficial owners
were complied with.
ITEM 11. EXECUTIVE COMPENSATION
This information is set forth under the caption "Certain Information
Regarding Executive Officers and Directors" in the Company's 1995 Proxy
Statement (the "Proxy Statement"), which information is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is set forth under the caption "Voting Securities--Security
Ownership" in the Proxy Statement, which information is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is set forth under the caption "Certain Information
Regarding Executive Officers and Directors--Certain Transactions; Compensation
Committee and Relationship to Company" in the Proxy Statement, which
information is incorporated herein by reference. Refer also to the Properties
Section (Part I, Item 2) of this report on Form 10-K.
11
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report.
1. Financial statements
All financial statements of the Company as described in Item 8 of this
report on Form 10-K.
2. Financial statement schedules included in Part IV of this Form:
PAGE
----
Independent Auditors' Report........................................ 16
Schedule II--Consolidated Valuation Accounts--Allowance for Doubtful
Accounts for the three years ended April 30, 1995.................. 17
All other financial statements and schedules not listed above are
omitted as the required information is not applicable or the
information is presented in the financial statements or related notes.
3. Exhibits
The following exhibits are filed herewith or incorporated herein by
reference:
3.1 The Company's Amended and Restated Articles of Incorporation, and
amendments thereto, included as Exhibit 3.1 to the Company's Form
10-Q for the quarter ended October 31, 1990, and incorporated herein
by this reference.
3.2 The Company's Amended and Restated By-Laws dated November 13, 1989,
included as Exhibit 3.1 to the Form 10-Q for the quarter ended
January 31, 1990, and incorporated herein by this reference.
10.1 Amended and Restated 1991 Employee Stock Option Plan effective
August 23, 1994.
10.2 Amended and Restated Directors and Officers Stock Option Plan
effective August 23, 1994.
10.3 Stock Option Agreement between the Company and James C. Edenfield
dated May 15, 1990, included as Exhibit 10.5 to the Company's Form
10-K for the fiscal year ended April 30, 1990 and incorporated
herein by this reference.
10.4 Stock Option Agreement between the Company and James C. Edenfield
dated January 30, 1995.
10.5 American Software, Inc. 401(K)/Profit Sharing Plan and Trust
Agreement included as Exhibits 4.1 and 4.2, respectively, to the
Registrant's Registration Statement No. 33-55214 on Form S-8 and
incorporated herein by this reference.
10.6 Lease Agreement dated December 15, 1981, between Company and
Newfield Associates, included as Exhibit 10.6 to the Company's
Registration Statement Number 2-81444 on Form S-1 (the "1983
Registration Statement") and incorporated herein by this reference.
10.7 Amendment dated January 14, 1983, to Lease Agreement between the
Company and Newfield Associates, included as Exhibit 10.7 to the
1983 Registration Statement and incorporated herein by this
reference.
10.8 Joint Venture Agreement between PruTech Research and Development
Partnership and American Software, Inc., dated December 29, 1983,
included as Exhibit 10.15 to the Company's Form 10-K for the fiscal
year 1984 ("1984 Form 10-K") and incorporated herein by this
reference.
10.9 Base Technology License Agreement between PruTech Research and
Development Partnership and American Software, Inc. dated December
29, 1983, included as Exhibit 10.16 to the 1984 Form 10-K and
incorporated herein by this reference.
12
10.10 First Amendment to Joint Venture between PruTech Research and
Development Partnership and American Software, Inc. dated December
29, 1984, included as Exhibit 10.14 to the Company's Form 10-K for
the fiscal year 1985 ("1985 Form 10-K") and incorporated herein by
this reference.
10.11 First Amendment to Base Technology License Agreement between
PruTech Research and Development Partnership and American Software,
Inc., dated December 29, 1984, included as Exhibit 10.15 to the
1985 Form 10-K and incorporated herein by this reference.
10.12 First Amendment to Agreement for License or Sale of Technology
between PruTech Research and Development Partnership and American
Software, Inc., dated December 29, 1984, included as Exhibit 10.18
to the 1985 Form 10-K and incorporated herein by this reference.
11.1 Statements re: Computation of Per Share Earnings (Loss).
13.1 American Software, Inc.'s 1995 Annual Report to Shareholders,
excluding the portions thereof not incorporated by reference in
this Form 10-K.
21.1 Subsidiaries.
23.1 Independent Auditors' Consent.
27 Financial Data Schedule.
(b) Reports on Form 8-K
The Company did not file a report on Form 8-K during the fourth quarter of
the recently completed fiscal year.
13
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
AMERICAN SOFTWARE, INC.
/s/ James C. Edenfield
By __________________________________
JAMES C. EDENFIELD, PRESIDENT,
CHIEF EXECUTIVE OFFICER, TREASURER
AND DIRECTOR
Date: July 28, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ James C. Edenfield President, Chief July 28, 1995
- ------------------------------------- Executive Officer,
JAMES C. EDENFIELD Treasurer and
Director
/s/ Thomas L. Newberry Chairman of the July 28, 1995
- ------------------------------------- Board of Directors
THOMAS L. NEWBERRY
/s/ David H. Gambrell Director July 28, 1995
- -------------------------------------
DAVID H. GAMBRELL
/s/ Thomas R. Williams Director July 28, 1995
- -------------------------------------
THOMAS R. WILLIAMS
/s/ Peter W. Pamplin Chief Accounting July 28, 1995
- ------------------------------------- Officer, Acting
PETER W. PAMPLIN Chief Financial
Officer
14
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
American Software, Inc.:
Under date of June 9, 1995, we reported on the 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, as
contained in the 1995 annual report to shareholders. These consolidated
financial statements and our report thereon are incorporated by reference in
the annual report on Form 10-K for the year 1995. In connection with our audits
of the aforementioned consolidated financial statements, we also have audited
the related financial statement schedule as listed in the accompanying index.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
June 9, 1995
15
SCHEDULE II
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED VALUATION ACCOUNTS--ALLOWANCE FOR DOUBTFUL ACCOUNTS
YEARS ENDED APRIL 30, 1995, 1994, AND 1993
ADDITIONS
BALANCE AT CHARGED BALANCE
BEGINNING TO COSTS AT END
YEAR ENDED OF YEAR AND EXPENSES DEDUCTIONS(1) OF YEAR
- ---------- ---------- ------------ ------------- ---------
April 30, 1993.................. $1,300,000 1,254,759 1,154,759 1,400,000
April 30, 1994.................. 1,400,000 6,626,099 4,226,099 3,800,000
April 30, 1995.................. 3,800,000 (158,944) 1,734,772 1,906,284
- --------
(1) Write-offs of accounts receivable.
16
EXHIBIT INDEX
Exhibit Page
Number Description of Exhibits Number
- ------ ----------------------- ----------
10.1 Amended and Restated 1991 Employee Stock Option Plan.
10.2 Amended and Restated Directors and Officers Stock Option Plan.
10.4 Stock Option Agreement between the Company and James C. Edenfield
dated January 30, 1995.
11.1 Statements re: Computation of Per Share Earnings (Loss).
13.1 1995 Annual Report to Shareholders.
21.1 Subsidiaries.
23.1 Independent Auditors' Consent.
27 Financial Data Schedule