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Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 
 
FORM 10-Q
 
(Mark One)
 
    x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: July 31, 2002            
 
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: 0-23057            
 
 
LOGILITY, INC.
(Exact name of registrant as specified in its charter)
 
Georgia
  
58-2281338
(State or other jurisdiction of
incorporation or organization)
  
(IRS Employer Identification Number)
 
470 East Paces Ferry Road, N.E., Atlanta, Georgia
  
30305
(Address of principal executive offices)
  
(Zip Code)
(404) 261-9777
(Registrant’s telephone number, including area code)
 
None
(Former name, former address and former fiscal year, if changed since last report)
 
        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. [x]
 
        Indicate the number of shares outstanding of the issuer’s common stock, as of the latest practicable date.
 
                              Class                               
  
Outstanding at September 10, 2002
Common Stock, no par value
  
13,199,074 Shares
 

Table of Contents
LOGILITY, INC.
 
Form 10-Q
 
Quarter Ended July 31, 2002
 
Index
 
    
Page Number
Part I—Financial Information
     
 
Item 1.  Financial Statements
     
 
  
3
 
  
4
 
  
5
 
  
6-9
 
  
10-18
 
  
18-19
 
  
19
 
  
19
 

2

Table of Contents
PART I—FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
LOGILITY, INC.
Condensed Balance Sheets (Unaudited)
(in thousands, except share data)
 
    
July 31,
2002
     
April 30,
2002
  
Current Assets:
                  
Cash and cash equivalents
   
$
6,629
 
   
$
7,721
 
Investments-current
   
 
16,827
 
   
 
15,391
 
Trade accounts receivable, less allowance for doubtful accounts of $142 and $326 at July 31, 2002 and April 30, 2002, respectively:
                  
Billed
   
 
2,998
 
   
 
5,327
 
Unbilled
   
 
1,647
 
   
 
701
 
Due from American Software, Inc.
   
 
1,091
 
   
 
1,085
 
Prepaid expenses and other current assets
   
 
389
 
   
 
409
 
    
  
Total current assets
   
 
29,581
 
   
 
30,634
 
Furniture and equipment, less accumulated depreciation
   
 
802
 
   
 
912
 
Intangible assets, less accumulated amortization
   
 
7,400
 
   
 
7,634
 
Other assets, net
   
 
1,034
 
   
 
933
 
    
  
    
$
38,817
 
   
$
40,113
 
    
  
Liabilities and Shareholders’ Equity:
                  
Current liabilities:
                  
Accounts payable
   
$
20
 
   
$
624
 
Accrued compensation and related costs
   
 
1,198
 
   
 
1,309
 
Other current liabilities
   
 
1,278
 
   
 
1,549
 
Deferred revenues
   
 
4,790
 
   
 
4,966
 
    
  
Total current liabilities
   
 
7,286
 
   
 
8,448
 
Deferred income taxes
   
 
2,882
 
   
 
2,882
 
    
  
Total liabilities
   
 
10,168
 
   
 
11,330
 
    
  
Shareholders’ equity:
                  
Preferred stock: 2,000,000 shares authorized; no shares issued
   
 
—  
 
   
 
—  
 
Common stock, no par value; 20,000,000 shares authorized; 13,888,339 and 13,885,214 shares issued at July 31, 2002 and April 30, 2002, respectively
   
 
—  
 
   
 
—  
 
Additional paid-in capital
   
 
44,709
 
   
 
44,703
 
Accumulated deficit
   
 
(11,465
)
   
 
(11,374
)
Treasury stock, at cost – 686,265 and 663,107 shares at July 31, 2002 and April 30, 2002, respectively
   
 
(4,595
)
   
 
(4,546
)
    
  
Total shareholders’ equity
   
 
28,649
 
   
 
28,783
 
Commitments and contingencies
   
 
—  
 
   
 
—  
 
    
  
    
$
38,817
 
   
$
40,113
 
    
  
 
See accompanying notes to condensed financial statements.

3

Table of Contents
Item 1.    Financial Statements (continued)
 
LOGILITY, INC.
Condensed Statements of Operations (Unaudited)
(In thousands, except per share data)
 
    
Three Months Ended July 31,
  
    
2002
     
2001
  
Revenues:
                  
License fees
   
$
1,738
 
   
$
2,549
 
Services and other
   
 
1,381
 
   
 
2,732
 
Maintenance
   
 
2,702
 
   
 
2,836
 
    
  
Total revenues
   
 
5,821
 
   
 
8,117
 
    
  
Cost of revenues:
                  
License fees
   
 
979
 
   
 
1,016
 
Services and other
   
 
1,187
 
   
 
1,892
 
Maintenance
   
 
451
 
   
 
488
 
    
  
Total cost of revenues
   
 
2,617
 
   
 
3,396
 
    
  
Gross margin
   
 
3,204
 
   
 
4,721
 
    
  
Operating expenses:
                  
Research and development
   
 
1,415
 
   
 
1,457
 
Less: Capitalized development
   
 
(768
)
   
 
(929
)
Sales and marketing
   
 
2,054
 
   
 
2,994
 
General and administrative
   
 
782
 
   
 
896
 
    
  
Total operating expenses
   
 
3,483
 
   
 
4,418
 
    
  
Operating income (loss)
   
 
(279
)
   
 
303
 
    
  
Other income, net
   
 
188
 
   
 
290
 
    
  
Income (loss) before income taxes
   
 
(91
)
   
 
593
 
Income taxes
   
 
—  
 
   
 
—  
 
    
  
Net income (loss)
   
$
(91
)
   
$
593
 
    
  
Net income (loss) per common share—Basic and Diluted*
   
$
(0.01
)
   
$
0.04
 
    
  
Shares used in per share calculation: Basic
   
 
13,212
 
   
 
13,260
 
    
  
Diluted
   
 
13,212
 
   
 
13,314
 
    
  
 
*
 
Diluted weighted average common shares outstanding are not included in the three months ended July 31, 2002 calculation due to the anti-dilution of the net loss.
 
See accompanying notes to condensed financial statements.
 

4

Table of Contents
Item 1.  Financial Statements (continued)
LOGILITY, INC.
Condensed Statements of Cash Flows (Unaudited)
(in thousands)
 
    
Three Months Ended July 31,
  
    
2002
     
2001
  
Cash flows from operating activities:
                  
Net income (loss)
   
$
(91
)
   
$
593
 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                  
Depreciation and amortization
   
 
1,016
 
   
 
1,081
 
(Increase) decrease in assets:
                  
Accounts receivable
   
 
1,383
 
   
 
74
 
Related party net receivable
   
 
(6
)
   
 
381
 
Prepaid expenses and other assets
   
 
42
 
   
 
70
 
Increase (decrease) in liabilities:
                  
Accounts payable, accrued costs and other
   
 
(986
)
   
 
(644
)
Deferred revenues
   
 
(176
)
   
 
(536
)
    
  
Net cash provided by operating activities
   
 
1,182
 
   
 
1,019
 
    
  
Cash flows from investing activities:
                  
Additions to capitalized computer software development costs
   
 
(768
)
   
 
(929
)
Additions to purchased computer software costs
   
 
(7
)
   
 
(6
)
Proceeds from maturities of investments
   
 
27,302
 
   
 
3,999
 
Purchases of investments
   
 
(28,738
)
   
 
(2,995
)
Purchases of furniture and equipment
   
 
(20
)
   
 
(16
)
    
  
Net cash (used in) provided by investing activities
   
 
(2,231
)
   
 
53
 
    
  
Cash flows from financing activities:
                  
Repurchases of common stock
   
 
(49
)
   
 
(46
)
Proceeds from exercise of stock options
   
 
6
 
   
 
19
 
    
  
Net cash used in financing activities
   
 
(43
)
   
 
(27
)
    
  
Net change in cash and cash equivalents
   
 
(1,092
)
   
 
1,045
 
Cash and cash equivalents at beginning of period
   
 
7,721
 
   
 
5,376
 
    
  
Cash and cash equivalents at end of period
   
$
6,629
 
   
$
6,421
 
    
  
 
See accompanying notes to condensed financial statements.
 

5

Table of Contents
 
Item 1.    Financial Statements (continued)
 
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
 
A.
 
Basis of Presentation
 
The accompanying condensed financial statements of Logility, Inc. (the “Company”), are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The financial information presented in the condensed financial statements reflects all normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the periods indicated. These financial statements should be read in conjunction with the Company’s Form 10-K for the fiscal year ended April 30, 2002 as filed with the SEC on July 26, 2002. The interim results reflected in the condensed financial statements are not necessarily indicative of the results to be expected for the full year.
 
The Company is an approximately 86% owned subsidiary of American Software, Inc. (the “Parent”), a publicly held provider of enterprise resource planning solutions (NASDAQ – AMSWA).
 
B.
 
Industry Segments
 
The Company has adopted Statement of Financial Accounting Standards No. 131, Disclosures About Segments of an Enterprise and Related Information. The Company operates and manages its business in one segment, providing business-to-business collaborative commerce solutions to optimize supply chain operations for manufacturers, distributors and retailers.
 
C.
 
Comprehensive Income
 
The Company has adopted Statement of Financial Accounting Standards No. 130 (“SFAS No. 130”), Reporting Comprehensive Income. SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. No statements of comprehensive income (loss) have been included in the accompanying condensed financial statements since comprehensive income (loss) and net income (loss) presented in the accompanying condensed statements of operations would be the same.
 
D.
 
Revenue Recognition
 
The Company recognizes revenue in accordance with Statement of Position (“SOP”) 97-2, Software Revenue Recognition, and SOP 98-9, Software Revenue Recognition With Respect to Certain Transactions.
 
License.    License revenues in connection with license agreements for standard proprietary and tailored software are recognized upon delivery of the software, provided collection is considered probable, the fee is fixed or determinable, there is evidence of an arrangement, and vendor-specific evidence exists to defer any revenue related to undelivered elements of the arrangement.
 
Services.    Revenues derived from services primarily include consulting, implementation, and training. The Company bills fees under both time and materials and fixed fee arrangements and recognizes revenues as it performs the services.

6

Table of Contents
 
Item 1.    Financial Statements (continued)
 
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
 
Maintenance.    Revenues derived from maintenance contracts primarily include telephone consulting, product updates and releases of new versions of products previously purchased by the customer, as well as error reporting and correction services. Maintenance contracts are typically sold for a separate fee with initial contractual periods ranging from one to three years, with renewal for additional periods thereafter. Maintenance fees are generally billed annually in advance. Maintenance revenues are recognized ratably over the term of the maintenance agreement. In situations where the maintenance fee is bundled with the license fee, the Company determines Vendor Specific Objective Evidence (“VSOE”) for maintenance based on stated renewal rates in the contract.
 
Deferred Revenues.    Deferred revenues represent advance payments or billings for software licenses, services, and maintenance bill