þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 77-0105228 | |
(State or Other Jurisdiction of | (I.R.S. Employer Identification No.) | |
Incorporation or Organization) |
o Large accelerated filer | þ Accelerated filer | o Non-accelerated filer | o Smaller reporting company | |||
(Do not check if a smaller reporting company) |
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PART I
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ITEM 1. | 1 | |||||||
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ITEM 1A. | 11 | |||||||
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ITEM 1B. | 20 | |||||||
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ITEM 2. | 20 | |||||||
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ITEM 3. | 20 | |||||||
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ITEM 4. | 20 | |||||||
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PART II
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ITEM 5. | 21 | |||||||
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ITEM 6. | 23 | |||||||
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ITEM 7. | 24 | |||||||
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ITEM 7A. | 38 | |||||||
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ITEM 8. | 38 | |||||||
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ITEM 9. | 38 | |||||||
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ITEM 9A. | 38 | |||||||
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ITEM 9B. | 40 | |||||||
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PART III
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ITEM 10. | 41 | |||||||
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ITEM 11. | 41 | |||||||
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ITEM 12. | 41 | |||||||
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ITEM 13. | 41 | |||||||
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ITEM 14. | 41 | |||||||
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PART IV
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ITEM 15. | 42 | |||||||
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SIGNATURES |
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76 | ||||||
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Exhibit 10.1(a) | ||||||||
Exhibit 10.2(a) | ||||||||
Exhibit 10.4 | ||||||||
Exhibit 10.5 | ||||||||
Exhibit 10.6 | ||||||||
Exhibit 10.7(a) | ||||||||
Exhibit 10.9(a) | ||||||||
Exhibit 21.1 | ||||||||
Exhibit 23.1 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
1
| Expand Our Footprint Within the Existing Customer Base. As of January 31, 2009, QAD software was licensed in more than 90 countries. QAD enjoys a historical maintenance renewal rate in excess of 90 percent, demonstrating strong continued commitment and loyalty from its customers. QAD strives to work closely with its customer base to identify emerging business requirements and to rapidly develop solutions addressing their needs. We leverage our reputation and success with existing customers to build business for our offerings in additional customer divisions and sites. | ||
| Leverage Our Market Position and Expertise in Key Industries . We have developed expertise in specific market niches within the six industries we serve. This focus on specific market nichessuch as automotive parts in the automotive industry and medical devices in the life sciences industryallows QAD to precisely target its application development and differentiate itself from competitors who have more broadly targeted applications. An example of QADs niche market focus is the development of its Enhanced Controls module, which enables medical device companies to meet the regulatory compliance requirements of cGMP (Current Good Manufacturing Practice) as defined by local regulatory agencies such as the U.S. FDA (Food and Drug Administration) and the European Medicines Agency (EMA). | ||
| Leverage Our Market Position and Reputation in Emerging Manufacturing Markets. Many of QADs customers are global multinational manufacturers. These companies are often first to establish operations in new and emerging manufacturing markets around the world. In supporting these companies, QAD has focused on establishing operations in emerging markets. The global capabilities of QAD Enterprise Applications, together with local operations, allow QAD to develop a presence in these markets where growth is positive. | ||
| Extend Our Product Offerings. To remain competitive, QADs strategy is to continually broaden the capabilities of its applications. In pursuit of this goal, we continue to invest significantly in research and development (R&D) efforts. We expect to continue to focus on acquisitions of software, technology and service companies as necessary. In fiscal 2009 we increased our capabilities to support Product Information Management and Product Lifecycle Management to further benefit our customers. | ||
| Provide Capabilities to Support an On Demand Environment. In fiscal 2009, QAD continued to offer some of its applications on demand in a Software as a Service (SaaS) model. Those products included QAD Enterprise Applications and QAD Supply Visualization (SV). QAD continues to monitor the evolution of this deployment method and currently expects this market to continue to develop. | ||
| Enhance Our Services Offerings. QAD Global Services is focused on areas where we can help our customers reduce operating costs and improve key business processes. We continue to grow our Application Management Services offering with application lifecycle management, systems management, database administration and help desk support. We have a team of experts in the Business Consulting Services practice to help customers increase their return on investment in QAD Enterprise Applications and identify areas for business improvement. We have introduced an Integrated Development Toolkit for customers to create non-intrusive custom programs to reduce development time and provides an easier upgrade path. QAD Global Services continues to provide support for the QAD On Demand offering and has added several global customers in fiscal 2009. |
2
| Provide Training and Education. QAD customers are often faced with the challenge of ensuring their employees are trained in both the use of QAD Enterprise Applications as well as the application of underlying business processes. This can be particularly challenging during times of organizational change or when employees change roles within the company. To assist customers in this area, QAD has a broad range of online eLearning tools that are available to customers as part of their maintenance and support agreement. QAD also provides customer-specific and classroom training. QAD has a diagnostic services offering (Learning Assessment), which enables customers to identify training requirements and implement actionable plans to address them. | ||
| Leverage Our Global Network of Alliances. QAD has strategic alliances with partners, enabling the Company to expand its sales reach, improve marketing impact, provide technological advantages and strengthen its strategic position in the industries it serves. We leverage the expertise of distribution, software, services and technology alliances to meet the diverse needs of our customers around the world. We augment our direct sales organization with a global network of distributors and sales agents, as well as service organizations that offer consulting and implementation services to expand our reach. |
3
4
5
| Implementation Services which includes implementations, core model development and rollout, customization development, training, installations and reporting services; | ||
| On Demand and Application Management Services which includes service delivery management, application lifecycle management, help desk support, systems management and infrastructure management services; | ||
| Migration and Upgrade Services which includes technical conversions, service pack upgrades, customization upgrades, migrations to current releases of QAD Enterprise Applications and upgrade assessments; and | ||
| Business Consulting Services which includes strategic consulting, business optimization services, business metrics improvement, health checks, ROI tools and MMOG/LE (Materials Management Operations Guidelines/Logistics Evaluation) assessments. |
6
7
8
9
NAME | AGE | POSITION(S) | ||||
|
||||||
Pamela M. Lopker
|
54 | Chairman of the Board and President | ||||
Karl F. Lopker
|
57 | Chief Executive Officer | ||||
Daniel Lender
|
42 | Executive Vice President and Chief Financial Officer | ||||
Kara Bellamy
|
33 | Sr. Vice President, Corporate Controller and Chief Accounting Officer |
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
Table of Contents
Changes in the relative proportions of revenues and income before taxes in various
jurisdictions;
Changing tax laws, regulations and interpretations thereof;
Unanticipated changes in tax rates;
Changes in accounting and tax treatment of stock-based compensation;
Tax effects of purchase accounting for acquisitions and restructuring charges that may
cause fluctuations between reporting periods;
Changes to the valuation allowance on net deferred tax assets;
Assessments and any related tax interest or penalties; and
Discrete items which are not related to income.
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Longer accounts receivable collection cycles;
Costs and difficulties of managing international operations and alliances;
Greater difficulty enforcing intellectual property rights;
Import or export requirements;
Changes in political or economic conditions; and
Changes in regulatory requirements or tax law.
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Low Price
High Price
$
2.56
$
5.32
4.01
7.41
6.57
8.02
7.39
8.90
$
8.25
$
9.88
7.57
9.39
7.90
9.71
8.07
10.17
Table of Contents
AMONG QAD INC., THE NASDAQ COMPOSITE TOTAL RETURN INDEX,
AND THE NASDAQ COMPUTER INDEX
Measurement Periods
(Quarterly from Fiscal
Year 2005 through
NASDAQ Composite Total
Fiscal Year 2009)
QAD Inc.
Return Index
NASDAQ Computer Index
100.00
100.00
100.00
67.18
93.07
89.21
62.73
91.48
89.18
47.97
95.73
92.33
52.10
99.96
97.25
51.99
93.14
90.77
49.73
105.90
101.46
51.07
102.77
99.93
52.09
111.76
108.36
49.54
112.57
104.49
49.85
101.37
93.70
54.56
114.71
109.32
53.85
119.43
112.90
63.55
122.39
115.41
54.42
123.42
119.90
60.81
138.58
142.17
60.29
115.84
114.08
50.66
116.95
117.25
47.01
112.72
109.63
34.49
83.41
80.79
17.56
71.56
68.75
Table of Contents
Years Ended January 31,
(1)
2009
(4) (5)
2008
2007
2006
(3)
2005
(2)
(in thousands, except per share data)
$
46,673
$
61,491
$
54,425
$
57,926
$
60,545
133,717
128,183
122,740
117,139
113,729
83,050
73,073
58,422
50,429
56,932
263,440
262,747
235,587
225,494
231,206
(23,166
)
5,588
8,137
15,625
23,386
$
(23,095
)
$
5,416
$
7,276
$
20,539
$
24,483
$
(0.75
)
$
0.17
$
0.22
$
0.63
$
0.72
$
(0.75
)
$
0.17
$
0.22
$
0.61
$
0.70
$
0.10
$
0.10
$
0.10
$
0.10
$
0.18
31,467
45,613
54,192
59,971
55,289
(3,023
)
8,846
14,762
20,694
27,559
193,673
235,893
227,132
207,331
207,093
266
274
272
243
1,725
16,717
16,998
17,271
17,546
23,911
48,096
72,595
76,572
72,159
64,037
(1)
Historical results of operations are not necessarily indicative of future results. Refer to
Item 1A entitled Risk Factors for discussion of factors that may impact future results.
(2)
Fiscal 2005 includes $6.5 million tax benefit from the reversal of valuation allowances.
(3)
Fiscal 2006 includes $11.5 million tax benefit from the reversals of valuation allowances and
contingency reserves.
(4)
Fiscal 2009 includes $14.4 million goodwill impairment charge.
(5)
Fiscal 2009 includes $0.7 million tax benefit from the reversal of valuation allowances.
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Years Ended January 31,
2009
2008
2007
18
%
23
%
23
%
51
49
52
31
28
25
100
100
100
4
4
4
42
38
36
28
27
27
17
16
17
13
13
13
5
109
98
97
(9
)
2
3
(2
)
(9
)
2
5
2
(9
)%
2
%
3
%
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Year Ended
January 31,
(in thousands)
2009
$
854
1,607
590
300
$
3,351
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Year Ended January 31,
2010
2011
2012
2013
2014
Thereafter
Total
(In millions)
$
0.3
$
0.3
$
0.3
$
0.3
$
0.4
$
15.4
$
17.0
1.1
1.1
1.1
1.1
1.0
0.5
5.9
7.9
5.9
3.6
1.6
0.9
1.8
21.7
$
9.3
$
7.3
$
5.0
$
3.0
$
2.3
$
17.7
$
44.6
Table of Contents
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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QAD Inc.:
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April 14, 2009
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43
44
45
46
47
49
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QAD Inc.:
April 14, 2009
Table of Contents
January 31,
2009
2008
$
31,467
$
45,613
70,954
83,027
19,092
22,742
121,513
151,382
41,438
42,450
5,699
8,783
6,237
22,591
18,786
10,687
$
193,673
$
235,893
$
266
$
274
12,494
12,249
80,695
89,349
31,081
40,664
124,536
142,536
16,717
16,998
4,324
3,764
35
35
139,930
135,362
(36,614
)
(36,336
)
(48,478
)
(21,596
)
(6,777
)
(4,870
)
48,096
72,595
$
193,673
$
235,893
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Years Ended January 31,
2009
2008
2007
$
46,673
$
61,491
$
54,425
133,717
128,183
122,740
83,050
73,073
58,422
263,440
262,747
235,587
9,752
9,794
8,307
111,819
101,072
85,240
73,025
71,016
63,790
43,107
41,069
40,053
33,763
33,459
29,695
734
749
365
14,406
286,606
257,159
227,450
(23,166
)
5,588
8,137
(1,433
)
(2,243
)
(2,533
)
1,245
1,362
1,136
(244
)
720
(1,874
)
(432
)
(161
)
(3,271
)
(22,734
)
5,749
11,408
361
333
4,132
$
(23,095
)
$
5,416
$
7,276
$
(0.75
)
$
0.17
$
0.22
$
(0.75
)
$
0.17
$
0.22
Table of Contents
Common Stock
Accumulated
and Additional
Other
Total
Paid-in Capital
Treasury Stock
Accumulated
Comprehensive
Stockholders
Comprehensive
Shares
Amount
Shares
Amount
Deficit
Loss
Equity
Income (Loss)
35,350
$
123,449
(2,814
)
$
(20,752
)
$
(24,285
)
$
(6,253
)
$
72,159
420
420
35,350
123,449
(2,814
)
(20,752
)
(23,865
)
(6,253
)
72,579
7,276
7,276
$
7,276
(1,095
)
(1,095
)
(1,095
)
$
6,181
2
6
559
4,022
(2,308
)
1,720
(3,245
)
(3,245
)
(165
)
(165
)
5,400
5,400
132
(12
)
(132
)
110
110
(794
)
(6,008
)
(6,008
)
35,352
129,097
(3,061
)
(22,870
)
(22,307
)
(7,348
)
76,572
681
681
35,352
129,097
(3,061
)
(22,870
)
(21,626
)
(7,348
)
77,253
5,416
5,416
$
5,416
2,478
2,478
2,478
$
7,894
7
10
689
5,125
(2,225
)
2,910
216
216
(3,161
)
(3,161
)
6,162
6,162
(12
)
(132
)
12
132
44
44
(2,236
)
(18,723
)
(18,723
)
35,347
135,397
(4,596
)
(36,336
)
(21,596
)
(4,870
)
72,595
(23,095
)
(23,095
)
$
(23,095
)
(1,907
)
(1,907
)
(1,907
)
$
(25,002
)
3
(1
)
187
1,382
(798
)
583
(355
)
(355
)
5,505
5,505
(3,055
)
(3,055
)
(625
)
75
559
66
44
44
(264
)
(2,219
)
(2,219
)
35,350
$
139,965
(4,598
)
$
(36,614
)
$
(48,478
)
$
(6,777
)
$
48,096
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Years Ended January 31,
2009
2008
2007
$
(23,095
)
$
5,416
$
7,276
11,134
9,417
8,260
1,665
690
629
(658
)
11
(73
)
12
14,406
385
59
739
5,516
6,206
5,461
(75
)
(216
)
(474
)
(485
)
(62
)
7,593
(13,881
)
(4,173
)
(3,888
)
(849
)
(516
)
1,496
(1,558
)
1,087
(3,685
)
8,943
(120
)
(3,078
)
2,206
283
7,253
15,875
18,876
(6,338
)
(5,165
)
(4,631
)
906
275
(894
)
(1,428
)
(1,510
)
1,575
(2,612
)
(7,059
)
(4,749
)
(8,516
)
104
204
(14,016
)
(9,663
)
(16,159
)
(288
)
(277
)
(310
)
(3,067
)
(3,188
)
(3,249
)
583
2,910
1,720
75
216
(2,219
)
(18,723
)
(6,008
)
468
649
975
(389
)
(4,448
)
(18,413
)
(7,261
)
(2,935
)
3,622
(1,235
)
(14,146
)
(8,579
)
(5,779
)
45,613
54,192
59,971
$
31,467
$
45,613
$
54,192
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Years Ended January 31,
2009
2008
2007
$
1,184
$
1,292
$
1,218
3,942
2,244
1,176
768
781
808
1,210
8,632
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended January 31,
2009
2008
2007
(in thousands, except per share data)
$
(23,095
)
$
5,416
$
7,276
30,675
31,617
32,425
738
688
30,675
32,355
33,113
$
(0.75
)
$
0.17
$
0.22
$
(0.75
)
$
0.17
$
0.22
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair value measurement at reporting date using
Quoted Prices in
Active Markets for
Significant Other
Significant
January 31,
Identical Assets
Observable Inputs
Unobservable Inputs
Description
2009
(Level 1)
(Level 2)
(Level 3)
$
18,586
$
18,586
$
$
$
18,586
$
18,586
$
$
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
January 31,
2009
2008
(in thousands)
$
8,594
$
8,884
3,808
3,103
12,402
11,987
(6,703
)
(3,204
)
$
5,699
$
8,783
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
North
Asia
Latin
America
EMEA
Pacific
America
Total
(in thousands)
$
3,563
$
14,151
$
316
$
804
$
18,834
570
570
665
1,805
1,929
10
13
1,952
4,133
16,650
991
817
22,591
601
602
1,203
(14,406
)
(14,406
)
(2,846
)
(104
)
(201
)
(3,151
)
$
4,734
$
$
887
$
616
$
6,237
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
January 31,
2009
2008
(in thousands)
$
1,534
$
1,528
501
565
135
185
2,170
2,278
(1,638
)
(1,130
)
$
532
$
1,148
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
January 31,
2009
2008
(in thousands)
$
74,527
$
86,684
(1,305
)
(1,288
)
(2,268
)
(2,369
)
$
70,954
$
83,027
$
7,099
$
8,008
4,372
7,262
3,758
4,693
3,863
2,779
$
19,092
$
22,742
$
31,966
$
32,448
29,140
28,068
14,786
15,644
5,725
5,894
3,850
3,850
245
552
85,712
86,456
(44,274
)
(44,006
)
$
41,438
$
42,450
$
16,219
$
7,681
2,567
3,006
$
18,786
$
10,687
$
3,420
$
4,054
2,476
2,008
6,598
6,187
$
12,494
$
12,249
$
70,621
$
81,417
10,074
7,932
$
80,695
$
89,349
$
7,781
$
11,231
7,081
8,146
2,884
2,509
2,872
133
2,340
2,503
940
4,675
3,503
7,183
7,964
$
31,081
$
40,664
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
January 31,
2009
2008
(in thousands)
$
16,983
$
17,245
27
16,983
17,272
(266
)
(274
)
$
16,717
$
16,998
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended January 31,
2009
2008
2007
(in thousands)
$
501
$
173
$
113
21
397
199
3,402
2,277
2,898
3,924
2,847
3,210
(1,965
)
(1,059
)
1,195
(440
)
(1,229
)
(302
)
(1,158
)
(442
)
29
(3,563
)
(2,730
)
922
216
$
361
$
333
$
4,132
Years Ended January 31,
2009
2008
2007
(in thousands)
$
(7,730
)
$
1,955
$
3,889
(274
)
(670
)
111
3,202
(1,707
)
(1,780
)
772
1,014
729
(3,154
)
(155
)
293
499
(64
)
94
527
422
366
(361
)
(438
)
(256
)
557
24
504
2,100
2,635
(94
)
(712
)
1,588
46
894
$
361
$
333
$
4,132
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
January 31,
2009
2008
(in thousands)
$
1,092
$
1,240
1,747
2,078
662
843
784
608
7,999
7,247
209
209
3,071
3,101
140
174
16,052
15,399
4,880
3,317
716
2,179
37,352
36,395
(10,590
)
(13,744
)
$
26,762
$
22,651
$
924
$
950
1,372
2,681
2,397
1,021
1,039
1,545
1,950
6,171
7,708
$
20,591
$
14,943
4,372
7,262
16,219
7,681
$
20,591
$
14,943
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended January 31,
2009
2008
(in thousands)
$
2,345
$
2,409
499
4
(68
)
$
2,844
$
2,345
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended January 31,
2009
2008
2007
(in thousands)
$
114,447
$
115,924
$
101,983
84,264
82,551
78,641
46,140
45,977
38,500
18,589
18,295
16,463
$
263,440
$
262,747
$
235,587
$
10,308
$
17,011
$
18,974
(17,524
)
2,592
65
2,658
2,714
2,588
(229
)
295
(519
)
(18,379
)
(17,024
)
(12,971
)
$
(23,166
)
$
5,588
$
8,137
$
569
$
574
$
486
963
1,081
2,017
373
521
874
237
201
390
8,992
7,040
4,493
$
11,134
$
9,417
$
8,260
$
3,608
$
3,377
$
2,880
971
1,141
784
1,504
396
816
255
251
151
$
6,338
$
5,165
$
4,631
January 31,
2009
2008
(in thousands)
$
34,580
$
34,682
4,731
6,082
1,704
1,247
423
439
$
41,438
$
42,450
(1)
North America revenue includes sales into Canada, which accounted for 4% of total revenue in
fiscal 2009 and 3% in both fiscal years 2008 and 2007.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended January 31,
2009
2008
2007
(in thousands)
$
1,042
$
1,104
$
990
1,330
1,458
1,290
740
861
918
2,404
2,783
2,263
$
5,516
$
6,206
$
5,461
Years Ended January 31,
2009
2008
2007
5.25
5.25
5.22
3.20%
4.58%
4.93%
50%
59%
71%
1.37%
1.05%
1.30%
(1)
The expected life of SARs granted under the stock plans is based on historical exercise
patterns, which the Company believes are representative of future behavior.
(2)
The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with
the expected life of the equity awards in effect at the time of grant.
(3)
The Company estimates the volatility of its common stock at the date of grant based on the
historical volatility of the Companys common stock, which it believes is representative of
the expected volatility over the expected life of the equity award.
(4)
The Company expects to continue paying quarterly dividends at the same rate as it has over
the last year.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Weighted
Weighted
Average
Average
Options/
Exercise
Remaining
Aggregate
SARs
Price per
Contractual
Intrinsic Value
(in thousands)
Share
Term (years)
(in thousands)
5,628
$
7.98
5.4
$
7,273
1,229
7.43
(193
)
3.17
(338
)
8.38
(359
)
8.02
5,967
$
7.99
4.9
$
22
5,682
$
8.00
4.8
$
22
3,205
$
8.11
3.8
$
22
(1)
The expected-to-vest options and SARs are the result of
applying the pre-vesting forfeiture rate assumptions to
total outstanding options and SARs.
Weighted
Average
Grant Date
RSUs
Fair Value
(in thousands)
334
$
8.17
564
5.75
(83
)
8.30
(68
)
7.49
747
$
6.39
685
$
6.46
(1)
The number of RSUs vested includes shares withheld on behalf
of employees to satisfy statutory tax withholding
requirements.
(2)
RSUs expected to vest are net of estimated future forfeitures.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Quarter Ended
April 30
July 31
Oct. 31
Jan. 31
(1)
(in thousands, except per share data)
$
66,838
$
69,513
$
67,767
$
59,322
36,861
37,053
36,530
31,425
(963
)
(2,902
)
(533
)
(18,768
)
(730
)
(1,433
)
(1,821
)
(19,111
)
$
(0.02
)
$
(0.05
)
$
(0.06
)
$
(0.62
)
(0.02
)
(0.05
)
(0.06
)
(0.62
)
$
56,644
$
64,197
$
66,608
$
75,298
31,862
37,345
38,494
44,180
(3,012
)
726
3,156
4,718
(1,892
)
544
1,516
5,248
$
(0.06
)
$
0.02
$
0.05
$
0.17
(0.06
)
0.02
0.05
0.16
(1)
The results for the quarter ended January 31, 2009 include a $14.4 million goodwill
impairment charge.
Table of Contents
Charged
Impact of
Balance at
(Credited) to
Foreign
Balance at
Beginning of
Statements of
Currency
End of
Period
Operations
Deletions
Acquisitions
Translation
Period
1,136
365
(250
)
1
1,252
1,980
264
(239
)
520
26
2,551
$
3,116
$
629
$
(489
)
$
520
$
27
$
3,803
1,252
249
(160
)
(53
)
1,288
2,551
441
(484
)
(139
)
2,369
$
3,803
$
690
$
(644
)
$
$
(192
)
$
3,657
1,288
989
(924
)
(48
)
1,305
2,369
676
(642
)
(135
)
2,268
$
3,657
$
1,665
$
(1,566
)
$
$
(183
)
$
3,573
Table of Contents
QAD Inc.
By:
/s/
Daniel Lender
Daniel Lender
Chief Financial Officer
Signature
Title
Date
Chairman of the Board, President
April 14, 2009
Director, Chief Executive Officer
(Principal
Executive Officer)
April 14, 2009
Executive Vice President, Chief
Financial Officer
(Principal Financial Officer)
April 14, 2009
Sr. Vice President, Corporate Controller
(Chief Accounting Officer)
April 14, 2009
Director
April 14, 2009
Director
April 14, 2009
Director
April 14, 2009
Director
April 14, 2009
Director
April 14, 2009
Table of Contents
EXHIBIT
NUMBER
EXHIBIT TITLE
3.1
3.1
(a)
3.1
(b)
3.2
4.1
10.1
10.1
(a)
10.2
10.2
(a)
10.3
10.4
10.5
10.6
10.7
10.7
(a)
10.8
10.9
10.9
(a)
Table of Contents
EXHIBIT
NUMBER
EXHIBIT TITLE
21.1
23.1
31.1
31.2
32.1
32.2
(*)
Indicates the document is filed herewith.
()
Indicates a management contract or compensatory plan or arrangement required to be filed as an exhibit.
Number of Shares Subject to Option
|
«Shares» | |
Grant Date
|
«MMonth» «Day», «Year» | |
Exercise Price Per Share (U.S. dollars)
|
«Price» | |
Expiration Date
|
«MMonth» «Day», «EYear» |
OPTIONEE
|
QAD INC. | |||
|
||||
|
|
|||
«name»
|
Number of Shares Subject to SAR
|
||||
|
||||
Grant Date
|
||||
|
||||
Grant Price per Share (U.S. dollars)
|
||||
|
||||
Expiration Date
|
||||
|
(a) |
The SAR may not be exercised in whole or in part at any time prior to the first
anniversary of the Grant Date.
|
||
(b) |
Grantee may exercise the SAR as to one-fourth of the Grant Shares on the first
anniversary of the Grant Date and an additional one-fourth at each of the subsequent three
anniversaries thereof.
|
||
(c) |
The right to exercise the SAR shall be cumulative. Grantee may exercise all, or from
time to time any part, of the maximum number of Grant Shares which are exercisable under
this SAR, but in no case may Grantee exercise the SAR with regard to a fraction of a Grant
Share, or for any Grant Share for which the SAR is not exercisable.
|
Number of Shares Subject to SAR
|
||||
|
||||
Grant Date
|
||||
|
||||
Grant Price per Share (U.S. dollars)
|
||||
|
||||
Expiration Date
|
||||
|
(a) |
The SAR may not be exercised in whole or in part at any time prior to the first
anniversary of the Grant Date.
|
(b) |
Grantee may exercise the SAR as to one-fourth of the Grant Shares on the first
anniversary of the Grant Date and an additional one-fourth at each of the subsequent three
anniversaries thereof.
|
(c) |
The right to exercise the SAR shall be cumulative. Grantee may exercise all, or from
time to time any part, of the maximum number of Grant Shares which are exercisable under
this SAR, but in no case may Grantee exercise the SAR with regard to a fraction of a Grant
Share, or for any Grant Share for which the SAR is not exercisable.
|
2
3
Number of Shares Subject to RSUs
|
Shares # | |
Grant Date
|
Date |
Date | Percentage Vested | |||
1
st
Anniversary of Grant Date
|
25 | % | ||
2
nd
Anniversary of Grant Date
|
25 | % | ||
3
rd
Anniversary of Grant Date
|
25 | % | ||
4
th
Anniversary of Grant Date
|
25 | % |
4
5
6
|
Keep the Executive Management team focused on the business rather than on their
personal financial security
|
|
Bridge the unemployment gap
|
|
Compensation Base
is defined as an Executives highest fiscal year base salary in
effect within two years prior to the Executives Termination
|
|
Participation
: Included in this Tier are the following Company Executives
|
1. |
Chief Executive Officer
|
||
2. |
President
|
||
3. |
Chief Financial Officer
|
||
4. |
Executives with Position Title of Executive Vice President
|
|
Benefits
:
|
|
Six (6) months of Compensation Base
|
|
Six (6) months of COBRA payments or similar regional heath coverage
|
2
|
Participation
: All employees not identified and included in the Tier 1 structure
above, must be expressly approved by the Committee in order to receive Benefits under
this Policy, as noted within Committee minutes.
|
|
Benefits
:
|
|
Six (6) months of Compensation Base
|
|
Six (6) months of COBRA payments or similar regional heath coverage
|
|
It is intended that lump sum payments to be made under this Policy will, be paid
within the short-term deferral period (as defined for purposes of Section 409A), and
each such payment shall be treated as a short-term deferral within the meaning of
Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent
permissible under Section 409A. It is intended that COBRA payments and other health
coverage provided under this Policy qualify as separation pay plan medical benefits
within the meaning of Treasury Regulation Section 1.409A-1(b)(9)(v)(B), and this
Policy shall be interpreted and administered accordingly.
|
|
If a payment under this policy is made to an Executive upon his or her separation
from service while he or she is a specified employee (as defined under Section 409A
of the Code and determined in good faith by the Compensation Committee of the Board),
any payment of deferred compensation (as defined under Treasury Regulation Section
1.409A-1(b)(1) after giving effect to the exemptions in Treasury Regulation Sections
1.409A-1(b)(3) through (b)(12 that is scheduled to be paid within six (6) months after
such separation from service shall accrue with interest and shall be paid within 30
days after the end of the six-month period beginning on the date of such separation
from service or, if earlier, within 30 days after the appointment of the personal
representative or executor of the Executives estate following his death. During the
6-month delay period, interest shall accrue at the prime rate of interest published in
the northeast edition of The Wall Street Journal on the date of Executives separation
from service. Accordingly, subject to the requirements of Section 409A of the Code, an
Executive may not receive his or her Change in Control Benefits payment until 6 months
after separation from service.
|
|
This Policy is intended to comply with the provisions of Section 409A, and, to the
extent practicable, this Policy shall be construed in accordance therewith. However,
the Company does not guarantee any particular tax effect to Executive. The Company
shall not be liable to Executive for any payment made under this Agreement that is
determined to result in an additional tax, penalty, or interest under Section 409A of
the Code, nor for reporting in good faith any payment made under this Agreement as an
amount includible in gross income under Section 409A of the Code.
|
3
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
QAD INC ., a Delaware corporation | ||||||
|
||||||
|
By: |
/s/ MURRAY RAY
|
12/18/08
Date |
|||
|
CPO & EVP, Human Resources | |||||
|
||||||
EMPLOYEE : | ||||||
|
||||||
/s/ KARL LOPKER | 12/18/08 | |||||
Karl F. Lopker | Date |
Page 10
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
QAD INC ., a Delaware corporation | ||||||||||
|
||||||||||
|
By: |
/s/ MURRAY RAY
|
12/18/08
Date |
|||||||
|
CPO & EVP, Human Resources | |||||||||
|
||||||||||
EMPLOYEE : | ||||||||||
|
||||||||||
/s/ PAMELA LOPKER | 12/18/08 | |||||||||
Pamela M. Lopker | Date |
Page 10
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
QAD INC ., a Delaware corporation | ||||||||||
|
||||||||||
|
By: |
/s/ MURRAY RAY
CPO & EVP, Human Resources |
12/18/08
Date |
|||||||
|
||||||||||
EMPLOYEE : | ||||||||||
|
||||||||||
/s/ DANIEL LENDER | 12/18/08 | |||||||||
Daniel Lender | Date |
Page 10
Fiscal Quarter Ending: | Minimum Ratio: | |||
January 31, 2008 through January 31, 2009
|
2.00:1.00 | |||
February 1, 2009 through October 31, 2009
|
1.30:1.00 | |||
Thereafter
|
1.50:1.00 |
2
3
4
5
QAD INC.
, as the Borrower
|
||||
By: | /s/ JOHN NEALE | |||
Name: | John Neale | |||
Title: | Sr. VP Finance & Treasurer |
BANK OF AMERICA, N.A.
, as the Lender
|
||||
By: | /s/ SUGEET MANCHANDA MADAN | |||
Name: | Sugeet Manchanda Madan | |||
Title: | Senior Vice President |
C-3
Fiscal Quarter Ending: | Minimum Ratio: | |||
January 31, 2008 through January 31, 2009
|
2.00:1.00 | |||
February 1, 2009 through October 31, 2009
|
1.30:1.00 | |||
Thereafter
|
1.50:1.00 |
C-4
Twelve | ||||||||||
Quarter | Quarter | Quarter | Quarter | Months | ||||||
Consolidated EBITDA | Ended | Ended | Ended | Ended | Ended | |||||
|
||||||||||
Consolidated
Net Income
|
||||||||||
|
||||||||||
+ Consolidated
Interest Charges
|
||||||||||
|
||||||||||
+ income taxes (net
of credits)
|
||||||||||
|
||||||||||
+ depreciation expense
|
||||||||||
|
||||||||||
+ amortization expense
|
||||||||||
|
||||||||||
+ Financial
Accounting Standard
123R and 142
goodwill impairment
charges (non-cash
items)
|
||||||||||
|
||||||||||
= Consolidated
EBITDA
|
C-5
Country of | ||
Percentage Owned by QAD Inc. | Organization | |
|
||
QAD Australia Pty. Limited 100%
|
Australia | |
QAD Europe NV/SA 100%
|
Belgium | |
QAD Brasil Ltda. 100%
|
Brazil | |
QAD (Bermuda) Ltd. 100%
|
Bermuda | |
QAD Canada ULC 100%
|
Canada | |
QAD China Ltd. 100%
|
China | |
QAD Europe s.r.o. 100%
|
Czech Republic | |
QAD Europe SAS 100%
|
France | |
QAD Europe GmbH 100%
|
Germany | |
QAD Asia Limited 100%
|
Hong Kong | |
QAD India Private Limited 100%
|
India | |
Precision Software Limited 100%
|
Ireland | |
QAD Ireland Limited 100%
|
Ireland | |
QAD Italy S.r.l. 100%
|
Italy | |
QAD Japan k.k. 100%
|
Japan | |
QAD Kenya Limited 100%
|
Kenya | |
QAD Korea Limited 100%
|
Korea | |
QAD Mexicana, S.A. de C.V. 100%
|
Mexico | |
QAD Sistemas Integrados Servicios de Consultoria, S.A. de C.V. 100%
|
Mexico | |
QAD EMEA Holdings B.V. 100%
|
Netherlands | |
QAD Europe B.V. 100%
|
Netherlands | |
QAD Holland Holdings B.V. 100%
|
Netherlands | |
QAD Netherlands B.V. 100%
|
Netherlands | |
QAD NZ Limited 100%
|
New Zealand | |
QAD Polska Sp. zo.o. 100%
|
Poland | |
QAD Lusitana Europe Software e Servicos, Unipessoal, Limitada 100%
|
Portugal | |
QAD Romania S.R.L. 100%
|
Romania | |
QAD Singapore Private Limited 100%
|
Singapore | |
QAD Software South Africa (Pty) Ltd. 100%
|
South Africa | |
QAD Europe S.l. 100%
|
Spain | |
QAD Europe A.G. 100%
|
Switzerland | |
QAD I&I Company Limited 100%
|
Thailand | |
QAD Bilgisayar Yazilim Ltd. Sirketi 100%
|
Turkey | |
Bisgen Ltd. 100%
|
United Kingdom | |
Precision Distribution Systems Limited 100%
|
United Kingdom | |
Precision Solutions Limited 100%
|
United Kingdom | |
QAD EMEA Limited 100%
|
United Kingdom | |
QAD Europe Limited 100%
|
United Kingdom | |
QAD Holding Limited 100%
|
United Kingdom | |
QAD Ltd. 100%
|
United Kingdom | |
QAD United Kingdom Ltd. 100%
|
United Kingdom | |
Enterprise Engines, Inc. 100%
|
USA | |
FBO Systems, Inc. 100%
|
USA | |
QAD Brazil Inc. 100%
|
USA | |
QAD Holdings Inc. 100%
|
USA | |
QAD Japan Inc. 100%
|
USA | |
QAD Ortega Hill, LLC 100%
|
USA |
/s/ KPMG LLP |
1. | I have reviewed this Annual Report on Form 10-K of QAD Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-15(e) ) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the Registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and |
5. | The Registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of Registrants board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and | ||
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting. |
Date: April 14, 2009
|
||
|
||
/s/ KARL F. LOPKER
|
||
Chief Executive Officer
QAD Inc. |
1. | I have reviewed this Annual Report on Form 10-K of QAD Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-15(e) ) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the Registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and |
5. | The Registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of Registrants board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and | ||
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting. |
Date: April 14, 2009
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/s/ DANIEL LENDER
Chief Financial Officer QAD Inc. |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 14, 2009
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/s/ KARL F. LOPKER
Chief Executive Officer QAD Inc. |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 14, 2009
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/s/ DANIEL LENDER
Chief Financial Officer QAD Inc. |