10-Q

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 October 31, 2013

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 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) 261-4381

(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.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Classes	Outstanding at December 2, 2013
Class A Common Stock, $.10 par value	24,920,679 Shares
Class B Common Stock, $.10 par value	2,587,086 Shares

AMERICAN SOFTWARE, INC. AND SUBSIDIARIES

Form 10-Q

Quarter ended October 31, 2013

Index

	Page No.
Part I—Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of October 31, 2013 and April 30, 2013		3
Condensed Consolidated Statements of Operations for the Three and Six Months ended October 31, 2013 and 2012		4
Condensed Consolidated Statements of Cash Flows for the Six Months ended October 31, 2013 and 2012		5
Notes to Condensed Consolidated Financial Statements—Unaudited		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3. Quantitative and Qualitative Disclosures About Market Risk		30
Item 4. Controls and Procedures		30
Part II—Other Information
Item 1. Legal Proceedings		31
Item 1A. Risk Factors		31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3. Defaults Upon Senior Securities		31
Item 4. Mine Safety Disclosures		31
Item 5. Other Information		31
Item 6. Exhibits		32

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

American Software, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except share data)

	October 31, 2013			April 30, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	49,226		$	41,164
Investments		12,539			18,602
Trade accounts receivable, less allowance for doubtful accounts of $127 at October 31, 2013 and $337 at April 30, 2013
Billed		12,759			13,179
Unbilled		4,406			3,741
Prepaid expenses and other current assets		3,551			3,162
Total current assets		82,481			79,848
Investments—Noncurrent		8,405			6,658
Property and equipment, net of accumulated depreciation of $30,012 at October 31, 2013 and $29,489 at April 30, 2013		4,114			4,482
Capitalized software, net of accumulated amortization of $8,289 at October 31, 2013 and $7,664 at April 30, 2013		9,724			8,708
Goodwill		13,819			12,601
Other intangibles, net of accumulated amortization of $2,570 at October 31, 2013 and $2,256 at April 30, 2013		845			687
Other assets		129			86
Total assets	$	119,517		$	113,070
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	455		$	1,207
Accrued compensation and related costs		2,959			2,961
Dividends payable		2,752			—
Other current liabilities		4,138			2,969
Deferred income taxes		218			332
Deferred revenue		19,361			21,291
Total current liabilities		29,883			28,760
Deferred income taxes		1,330			1,066
Long-term deferred revenue		505			—
Other long-term liabilities		366			—
Total liabilities		32,084			29,826
Shareholders’ equity:
Common stock:
Class A, $.10 par value. Authorized 50,000,000 shares: Issued 29,365,186 shares at October 31, 2013 and 29,184,846 shares at April 30, 2013		2,937			2,918
Class B, $.10 par value. Authorized 10,000,000 shares: Issued and outstanding 2,587,086 shares at October 31, 2013 and April 30, 2013; convertible into Class A shares on a one-for-one basis		259			259
Additional paid-in capital		100,583			98,947
Retained earnings		7,932			5,398
Class A treasury stock, 4,444,815 shares at October 31, 2013 and April 30, 2013, at cost		(24,278	)		(24,278	)
Total shareholders’ equity		87,433			83,244
Commitments and contingencies
Total liabilities and shareholders’ equity	$	119,517		$	113,070

See accompanying notes to condensed consolidated financial statements—unaudited.

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American Software, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (unaudited)

(in thousands, except earnings per share data)

	Three Months Ended October 31,					Six Months Ended October 31,
	2013			2012		2013			2012
Revenues:
License	$	6,192		$	5,504	$	9,410		$	10,586
Services and other		11,662			12,312		22,890			24,807
Maintenance		9,077			8,447		17,949			16,784
Total revenues		26,931			26,263		50,249			52,177
Cost of revenues:
License		1,234			1,443		2,395			2,812
Services and other		8,181			8,142		16,221			16,765
Maintenance		1,990			1,998		3,952			3,910
Total cost of revenues		11,405			11,583		22,568			23,487
Gross margin		15,526			14,680		27,681			28,690
Research and development		2,004			2,303		4,104			4,409
Sales and marketing		5,018			4,937		9,412			9,758
General and administrative		3,071			2,939		6,224			6,049
Amortization of acquisition-related intangibles		125			125		250			250
(Recovery of) provision for doubtful accounts		(84	)		140		(84	)		267
Total operating expenses		10,134			10,444		19,906			20,733
Operating income		5,392			4,236		7,775			7,957
Other income (expense):
Interest income		215			278		466			584
Other, net		202			31		(5	)		(2	)
Earnings before income taxes		5,809			4,545		8,236			8,539
Income tax expense		2,116			1,774		2,950			3,346
Net earnings	$	3,693		$	2,771	$	5,286		$	5,193
Earnings per common share (a):
Basic	$	0.13		$	0.10	$	0.19		$	0.19
Diluted	$	0.13		$	0.10	$	0.19		$	0.19
Cash dividends declared per common share	$	0.10		$	0.09	$	0.10		$	0.18
Shares used in the calculation of earnings per common share:
Basic		27,448			27,151		27,406			27,112
Diluted		27,874			27,627		27,841			27,596

(a) Basic per share amounts are the same for Class A and Class B shares. Diluted per share amounts for Class A shares are shown above. Diluted earnings per share for Class B shares under the two-class method are $0.13 and $0.10 for the three months ended October 31, 2013 and 2012 and $0.19 for the six months ended October 31, 2013 and 2012, respectively. See Note D to the Condensed Consolidated Financial Statements.

See accompanying notes to condensed consolidated financial statements—unaudited.

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American Software, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

	Six Months Ended October 31,
	2013			2012
Cash flows from operating activities:
Net earnings	$	5,286		$	5,193
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		1,462			2,085
Stock-based compensation expense		700			775
Bond amortization		1			11
Tax benefit of stock options exercised		88			86
Excess tax benefits from stock-based compensation		(68	)		(70	)
Net loss on investments		350			183
Retirement of property and equipment		—			15
Deferred income taxes		(103	)		(294	)
Changes in operating assets and liabilities:
Purchases of trading securities		(7,412	)		(8,074	)
Proceeds from maturities and sales of trading securities		11,152			9,732
Accounts receivable, net		(118	)		1,436
Prepaid expenses and other assets		(429	)		(91	)
Accounts payable and other liabilities		165			(3,269	)
Deferred revenue		(1,438	)		(1,474	)
Net cash provided by operating activities		9,636			6,244
Cash flows from investing activities:
Capitalized computer software development costs		(1,641	)		(1,811	)
Purchases of property and equipment, net of disposals		(155	)		(521	)
Proceeds from maturities of investments		225			693
Purchase of business, net of cash acquired		(1,191	)		—
Net cash used in investing activities		(2,762	)		(1,639	)
Cash flows from financing activities:
Repurchase of common stock		—			(254	)
Excess tax benefits from stock based compensation		68			70
Proceeds from exercise of stock options		1,120			912
Dividends paid		—			(4,887	)
Net cash provided by (used in) financing activities		1,188			(4,159	)
Net change in cash and cash equivalents		8,062			446
Cash and cash equivalents at beginning of period		41,164			39,111
Cash and cash equivalents at end of period	$	49,226		$	39,557

See accompanying notes to condensed consolidated financial statements—unaudited.

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AMERICAN SOFTWARE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements—Unaudited

October 31, 2013

A. Basis of Presentation and Principles of Consolidation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of our management, these condensed consolidated financial statements contain all normal recurring adjustments considered necessary for a fair presentation of the financial position at October 31, 2013, the results of operations for the three and six months ended October 31, 2013 and 2012 and cash flows for the six months ended October 31, 2013 and 2012. The results for the three and six months ended October 31, 2013 are not necessarily indicative of the results expected for the full year. You should read these statements in conjunction with our audited consolidated financial statements and management’s discussion and analysis and results of operations included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2013.

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for the fiscal year ended April 30, 2013 describes the significant accounting policies that we have used in preparing our financial statements. On an ongoing basis, we evaluate our estimates, including but not limited to those related to revenue/vendor specific objective evidence (“VSOE”), bad debts, capitalized software costs, goodwill, intangible assets, stock-based compensation, income taxes and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results could differ materially from these estimates under different assumptions or conditions.

Principles of Consolidation

The consolidated financial statements include the accounts of American Software, Inc. (“American Software” or the “Company”), and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

B. Revenue Recognition

We recognize revenue in accordance with the Software Revenue Recognition Topic of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification.

License. We recognize license revenue in connection with license agreements for standard proprietary software upon delivery of the software, provided we consider collection to be probable, the fee is fixed or determinable, there is evidence of an arrangement, and VSOE exists with respect to any undelivered elements of the arrangement. For multiple-element arrangements, we recognize revenue under the residual method, whereby (1) the total fair value of the undelivered elements, as indicated by VSOE, is deferred and subsequently recognized and (2) the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as revenue related to the delivered elements. We record revenues from sales of third-party products in accordance with Principal Agent Considerations within the Revenue Recognition Topic of the FASB’s Accounting Standards Codification. Furthermore, we evaluate sales through our indirect channel on a case-by-case basis to determine whether the transaction should be recorded gross or net, including but not limited to assessing whether or not we: (1) act as principal in the transaction, (2) take title to the products, (3) have risks and rewards of ownership, such as the risk of loss for collection, delivery, or returns, and (4) act as an agent or broker with compensation on a commission or fee basis. Accordingly, in most cases we record our sales through the Demand Management, Inc. (“DMI”) channel on a gross basis.

Maintenance. Revenue derived from maintenance contracts primarily includes 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. We recognize maintenance revenue ratably over the term of the maintenance agreement. In situations where we bundle all or a portion of the maintenance fee with the license fee, VSOE for maintenance is determined based on prices when sold separately.

Services. Revenue derived from services primarily includes consulting, implementation, and training. We primarily bill fees under time and materials arrangements and recognize them as we perform the services. In accordance with the other presentation matters within the Revenue Recognition Topic of the FASB’s Accounting Standards Codification, we recognize

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amounts received for reimbursement of travel and other out-of-pocket expenses incurred as revenue in the condensed consolidated statements of operations under services and other. These amounts totaled approximately $606,000 and $1.2 million for the three and six months ended October 31, 2013, respectively, and $682,000 and $1.2 million for the three and six months ended October 31, 2012, respectively.

Indirect Channel Revenue. We recognize revenues for sales made through indirect channels principally when the distributor makes the sale to an end-user, the license fee is fixed or determinable, the license fee is nonrefundable, and the sale meets all other conditions for revenue recognition.

Deferred Revenue. Deferred revenue represents advance payments or billings for software licenses, services, and maintenance billed in advance of the time revenue is recognized.

Sales Taxes. We account for sales taxes collected from customers on a net basis.

Unbilled Accounts Receivable. The unbilled receivable balance consists of amounts generated from license fee and services revenues. At October 31, 2013 and April 30, 2013, unbilled license fees were approximately $2.3 million and $1.1 million, respectively, and unbilled services revenues were approximately $2.1 million and $2.7 million, respectively. Unbilled license fee accounts receivable represents revenue that has been recognized, but under the terms of the license agreement, which include specified payment terms that are considered normal and customary, certain payments have not yet been invoiced to the customers. Unbilled services revenues primarily occur due to the timing of the respective billings, which occur subsequent to the end of each reporting period.

C. Declaration of Dividend Payable

On August 20, 2013, our Board of Directors declared a quarterly cash dividend of $0.10 per share of our Class A and Class B common stock. The cash dividend is payable on December 9, 2013 to Class A and Class B shareholders of record at the close of business on November 15, 2013.

D. Earnings Per Common Share

We have two classes of common stock of which Class B Common Shares are convertible into Class A Common Shares at any time, on a one-for-one basis. Under our Articles of Incorporation, if we declare dividends, holders of Class A Common Shares shall receive a $.05 dividend per share prior to the Class B Common Shares receiving any dividend and holders of Class A Common Shares shall receive a dividend at least equal to Class B Common Shares dividends on a per share basis. As a result, we have computed the earnings per share in accordance with Earnings Per Share within the Presentation Topic of the FASB’s Accounting Standards Codification, which requires companies that have multiple classes of equity securities to use the “two-class” method in computing earnings per share.

For our basic earnings per share calculation, we use the “two-class” method. Basic earnings per share are calculated by dividing net earnings attributable to each class of common stock by the weighted average number of shares outstanding. All undistributed earnings are allocated evenly between Class A and B Common Shares in the earnings per share calculation to the extent that earnings equal or exceed $.05 per share. This allocation is based on management’s judgment after considering the dividend rights of the two classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B shares to Class A shares.

The calculation of diluted earnings per share is similar to the calculation of basic earnings per share, except that the calculation includes the dilutive effect of the assumed exercise of options issuable under our stock incentive plans. For our diluted earnings per share calculation for Class A shares, we use the “if-converted” method. This calculation assumes that all Class B Common Shares are converted into Class A Common Shares and, as a result, assumes there are no holders of Class B Common Shares to participate in undistributed earnings.

For our diluted earnings per share calculation for Class B shares, we use the “two-class” method. This calculation does not assume that all Class B Common Shares are converted into Class A Common Shares. In addition, this method assumes the dilutive effect if Class A stock options were converted to Class A shares and the undistributed earnings are allocated evenly to both Class A and B shares including Class A shares issued pursuant to those converted stock options. This allocation is based on management’s judgment after considering the dividend rights of the two classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B shares into Class A shares.

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The following tables set forth the computation of basic earnings per common share and diluted earnings per common share (in thousands except for per share amounts):

Basic earnings per common share:

	Three Months Ended October 31, 2013				Six Months Ended October 31, 2013
	Class A		Class B		Class A		Class B
Distributed earnings	$	0.10	$	0.10	$	0.10	$	0.10
Undistributed earnings		0.03		0.03		0.09		0.09
Total	$	0.13	$	0.13	$	0.19	$	0.19
Distributed earnings	$	2,492	$	259	$	2,492	$	259
Undistributed earnings		853		89		2,296		239
Total	$	3,345	$	348	$	4,788	$	498
Basic weighted average common shares outstanding		24,861		2,587		24,819		2,587
	Three Months Ended October 31, 2012				Six Months Ended October 31, 2012
	Class A		Class B		Class A		Class B
Distributed earnings	$	0.09	$	0.09	$	0.18	$	0.18
Undistributed earnings		0.01		0.01		0.01		0.01
Total	$	0.10	$	0.10	$	0.19	$	0.19
Distributed earnings	$	2,211	$	233	$	4,420	$	466
Undistributed earnings		296		31		278		29
Total	$	2,507	$	264	$	4,698	$	495
Basic weighted average common shares outstanding		24,564		2,587		24,525		2,587

Diluted EPS for Class A Common Shares Using the If-Converted Method

Three Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	3,345		24,861	$	0.13
Common Stock Equivalents		—		426		—
		3,345		25,287		0.13
Class B Conversion		348		2,587		—
Diluted EPS for Class A	$	3,693		27,874	$	0.13

Six Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	4,788		24,818	$	0.19
Common Stock Equivalents		—		436		—
		4,788		25,254		0.19
Class B Conversion		498		2,587		—
Diluted EPS for Class A	$	5,286		27,841	$	0.19

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Three Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	2,507		24,564	$	0.10
Common Stock Equivalents		—		476		—
		2,507		25,040		0.10
Class B Conversion		264		2,587		—
Diluted EPS for Class A	$	2,771		27,627	$	0.10

Six Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	4,698		24,525	$	0.19
Common Stock Equivalents		—		484		—
		4,698		25,009		0.19
Class B Conversion		495		2,587		—
Diluted EPS for Class A	$	5,193		27,596	$	0.19

Diluted EPS for Class B Common Shares Using the Two-Class Method

Three Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	348			2,587	$	0.13
Reallocation of undistributed earnings to Class A shares from Class B shares		(1	)		—		—
Diluted EPS for Class B	$	347			2,587	$	0.13

Six Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	498			2,587	$	0.19
Reallocation of undistributed earnings to Class A shares from Class B shares		(4	)		—		—
Diluted EPS for Class B	$	494			2,587	$	0.19

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Three Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	264			2,587	$	0.10
Reallocation of undistributed earnings to Class A shares from Class B shares		(1	)		—		—
Diluted EPS for Class B	$	263			2,587	$	0.10

Six Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	495			2,587	$	0.19
Reallocation of undistributed earnings to Class A shares from Class B shares		(1	)		—		—
Diluted EPS for Class B	$	494			2,587	$	0.19

For the three and six months ended October 31, 2013, we excluded options to purchase 1,434,477 and 1,390,965 Class A Common Shares, respectively, and for the three and six months ended October 31, 2012, we excluded options to purchase 1,516,668 and 1,428,223 Class A Common Shares, respectively, from the computation of diluted earnings per Class A Common Shares. We excluded these option share amounts because the exercise prices of those options were greater than the average market price of the Class A Common Shares during the applicable period. As of October 31, 2013, we had a total of 3,281,087 options outstanding and, as of October 31, 2012, we had a total of 3,681,440 options outstanding.

E. Acquisitions

We account for business combinations using the acquisition method of accounting and accordingly, the identifiable assets acquired and liabilities assumed are recorded based upon management’s estimates of current fair values as of the acquisition date. The estimation process includes analyses based on income and market approaches. Goodwill represents the excess purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. The goodwill generated is due in part to the synergies that are not included in the fair value of identifiable intangible assets. Goodwill recorded in an acquisition is assigned to applicable reporting units based on expected revenues. Identifiable intangible assets with finite lives are amortized over there useful lives. Amortization of current technology is recorded in Cost of Revenue-License and amortization of all other intangible assets is recorded in Amortization of acquisition-related intangibles. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in general and administrative expenses in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

On August 14, 2013, the Company completed the acquisition of certain assets of privately-held Taylor Manufacturing Systems, USA, LLC (“TMS”) an Atlanta-based provider in the advance planning systems (“APS”) area. The acquisition of TMS will allow the Company to expand its software product offerings.

Under the terms of the purchase agreement, the Company acquired the assets in exchange for a purchase price of $1,841,000. The purchase price consisted of $1,191,000 paid in cash at closing, subject to certain adjustments, and three additional cash payments of $200,000, generally payable on the anniversary date of the transaction in each of the three years following closing. The additional cash payments resulted in the Company recording a short-term liability of $200,000 for the payment due on the first anniversary and a long-term liability of $366,000 for the payments due on the second and third anniversaries. The Company incurred acquisition costs of approximately $68,500 during the three and six months ended October 31, 2013. The operating results of TMS are not material for proforma disclosure. We allocated $1,218,000 of the total purchase price to goodwill, which has been assigned to the Supply Chain Management segment and is deductible for income tax purposes.

The following preliminary allocation of the total purchase price reflects the fair value of the assets acquired and liabilities assumed as of August 14, 2013 (in thousands):

Current Assets	$	130
Goodwill		1,218
Current Technology		472
Total Assets Acquired		1,820
Current Liabilities		(213	)
Long Term liabilities		(366	)
Net Assets Acquired	$	1,241

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Current technology is being amortized on a straight line basis over the remaining estimated economic life of the product (4 years), including the period being reported. The fair value of deferred revenues in a business combination is considered to be an assumed liability (which must arise from a legal performance obligation) and, accordingly, is estimated based on the direct cost of fulfilling the obligation plus a normal profit margin, which approximates fair value. Also, in practice, the normal profit margin is limited to the profit margin on the costs to provide the product or service (that is, the fulfillment effort).

F. Stock-Based Compensation

During the six months ended October 31, 2013 and 2012, we granted options for 313,000 and 343,000 shares of common stock, respectively. We recorded stock option compensation cost of approximately $361,000 and $384,000 and related income tax benefits of approximately $117,000 and $110,000 during the three months ended October 31, 2013 and 2012, respectively. We recorded stock option compensation cost of approximately $700,000 and $775,000 and related income tax benefits of approximately $228,000 and $215,000 during the six months ended October 31, 2013 and 2012, respectively. We record stock-based compensation expense on a straight-line basis over the vesting period directly to additional paid-in capital.

We classify cash flows resulting from the tax deductions in excess of the tax benefits initially recognized for those options (excess tax benefits) as financing cash flows. During the six months ended October 31, 2013 and 2012, we realized excess tax benefits of approximately $68,000 and $70,000, respectively.

During the six months ended October 31, 2013 and 2012, we issued 180,340 and 167,704 shares of common stock, respectively, resulting from the exercise of stock options. The total intrinsic value of options exercised during the six months ended October 31, 2013 and 2012 based on market value at the exercise dates was approximately $450,000 and $472,000, respectively. As of October 31, 2013, unrecognized compensation cost related to unvested stock option awards approximated $3.6 million, which we expect to recognize over a weighted average period of 1.8 years.

G. Fair Value of Financial Instruments

We measure our investments based on a fair value hierarchy disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. A number of factors affect market price observability, including the type of asset or liability and its characteristics. This hierarchy prioritizes the inputs into three broad levels as follows:

• Level 1—Quoted prices in active markets for identical instruments.

• Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The following is a general description of the valuation methodologies we use for financial assets and liabilities measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Cash Equivalents—Cash equivalents include investments in government obligation based money-market funds, other money market instruments and interest-bearing deposits with initial terms of three months or less. The fair value of cash equivalents approximates its carrying value due to the short-term nature of these instruments.

Marketable Securities—Marketable securities utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. Government debt securities, as these securities all have quoted prices in active markets. Marketable securities utilizing Level 2 inputs include municipal bonds. We value these securities using market-corroborated pricing or other models that use observable inputs such as yield curves.

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The following tables present our assets and liabilities that we measured at fair value on a recurring basis as of October 31, 2013 and April 30, 2013, respectively, and indicates the fair value hierarchy of the valuation techniques we used to determine such fair value (in thousands):

	October 31, 2013
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	47,274	$	—	$	—	$	47,274
Marketable securities		7,454		13,222		—		20,676
Total	$	54,728	$	13,222	$	—	$	67,950
	April 30, 2013
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	37,716	$	—	$	—	$	37,716
Marketable securities		11,215		13,548		—		24,763
Total	$	48,931	$	13,548	$	—	$	62,479

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In addition to cash equivalents and marketable securities classified as trading securities, we also have an equity method investment valued at approximately $269,000 and $271,000 as of October 31, 2013 and April 30, 2013, respectively, and approximately $0 and $226,000 in held-to-maturity investments as of October 31, 2013 and April 30, 2013, respectively, which are not recorded at fair value and thus are not included in the tables above. The held-to-maturity investments consist of certificates of deposits and tax-exempt state and municipal bonds and are recorded at amortized cost. We obtain fair values for these securities from third-party broker statements. We derive the fair value amounts primarily from quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These investments consisted of the following at October 31, 2013 and April 30, 2013 (in thousands):

	October 31, 2013
	Carrying value		Unrealized Gain		Unrealized Loss		Fair value
Held-to-maturity:
Certificates of Deposit	$	—	$	—	$	—	$	—
Tax-exempt state and municipal bonds		—		—		—		—
	$	—	$	—	$	—	$	—
	April 30, 2013
	Carrying value		Unrealized Gain		Unrealized Loss		Fair value
Held-to-maturity:
Certificates of Deposit	$	—	$	—	$	—	$	—
Tax-exempt state and municipal bonds		226		1		—		227
	$	226	$	1	$	—	$	227

The contractual maturities of debt securities classified as held to maturity at October 31, 2013 and April 30, 2013 were as follows (in thousands):

	October 31, 2013		April 30, 2013
Due within one year	$	—	$	226
Due within two years		—		—
Due within three years		—		—
Due after three years		—		—
	$	—	$	226

H. Stock Repurchases

On August 19, 2002, our Board of Directors approved a resolution authorizing the repurchase of up to an additional 2.0 million shares of our Class A common stock. We have made and will make these repurchases through open market purchases at prevailing market prices. The timing of any repurchase will depend upon market conditions, the market price of our common stock and management’s assessment of our liquidity and cash flow needs. Under this repurchase plan, through October 31, 2013, we have repurchased 909,862 shares of common stock at a cost of approximately $4.9 million. As of October 31, 2013, under all repurchase plans previously authorized, including this most recent plan, we have repurchased a total of 4,444,815 shares of common stock at a cost of approximately $24.3 million.

I. Comprehensive Income

We have not included condensed consolidated statements of comprehensive income in the accompanying unaudited condensed consolidated financial statements since comprehensive income and net earnings presented in the accompanying condensed consolidated statements of operations would be substantially the same.

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J. Industry Segments

We provide our software solutions through three major business segments, which are further broken down into a total of four major product and service groups. The three business segments are (1) Supply Chain Management (“SCM”), (2) Enterprise Resource Planning (“ERP”), and (3) Information Technology (“IT”) Consulting.

The SCM segment consists of Logility, a wholly-owned subsidiary, as well as its subsidiary, DMI, which provide collaborative supply chain solutions to streamline and optimize the forecasting, production, distribution and management of products between trading partners. The ERP segment consists of (i) American Software ERP, which provides purchasing and materials management, customer order processing, financial, e-commerce and traditional manufacturing solutions, and (ii) New Generation Computing (“NGC”), which provides industry-specific business software to both retailers and manufacturers in the apparel, sewn products and furniture industries. The IT Consulting segment consists of The Proven Method, Inc., an IT staffing and consulting services firm. We also provide support for our software products, such as software enhancements, documentation, updates, customer education, consulting, systems integration services, and maintenance.

Our chief operating decision maker is the President and Chief Executive Officer (“CEO”). While the CEO is apprised of a variety of financial metrics and information, we manage our business primarily on a segment basis, with the CEO evaluating performance based upon segment operating profit or loss that includes an allocation of common expenses, but excludes certain unallocated expenses.

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In the following table, we have broken down the intersegment transactions applicable to the three and six months ended October 31, 2013 and 2012:

	Three Months Ended October 31,						Six Months Ended October 31,
	2013			2012			2013			2012
Revenues:
Enterprise Resource Planning	$	3,296		$	3,470		$	6,048		$	6,908
Collaborative Supply Chain Management		16,934			16,356			31,135			31,805
IT Consulting		6,701			6,437			13,066			13,464
	$	26,931		$	26,263		$	50,249		$	52,177
Operating income (loss) before intersegment eliminations:
Enterprise Resource Planning	$	(666	)	$	(947	)	$	(2,160	)	$	(2,180	)
Collaborative Supply Chain Management		5,315			4,708			8,636			9,131
IT Consulting		743			475			1,299			1,006
	$	5,392		$	4,236		$	7,775		$	7,957
Intersegment eliminations:
Enterprise Resource Planning	$	(413	)	$	(600	)	$	(893	)	$	(996	)
Collaborative Supply Chain Management		394			570			844			943
IT Consulting		19			30			49			53
	$	—		$	—		$	—		$	—
Operating income (loss) after intersegment eliminations:
Enterprise Resource Planning	$	(1,079	)	$	(1,547	)	$	(3,053	)	$	(3,176	)
Collaborative Supply Chain Management		5,709			5,278			9,480			10,074
IT Consulting		762			505			1,348			1,059
	$	5,392		$	4,236		$	7,775		$	7,957
Capital expenditures:
Enterprise Resource Planning	$	93		$	40		$	93		$	317
Collaborative Supply Chain Management		23			141			52			177
IT Consulting		5			—			10			27
	$	121		$	181		$	155		$	521
Capitalized Software:
Enterprise Resource Planning	$	—		$	—		$	—		$	—
Collaborative Supply Chain Management		924			948			1,641			1,811
IT Consulting		—			—			—			—
	$	924		$	948		$	1,641		$	1,811
Depreciation and amortization:
Enterprise Resource Planning	$	220		$	232		$	441		$	469
Collaborative Supply Chain Management		210			808			1,015			1,612
IT Consulting		3			2			6			4
	$	433		$	1,042		$	1,462		$	2,085
Earnings (loss) before income taxes:
Enterprise Resource Planning	$	(310	)	$	(706	)	$	(1,737	)	$	(1,614	)
Collaborative Supply Chain Management		5,380			4,776			8,677			9,147
IT Consulting		739			475			1,296			1,006
	$	5,809		$	4,545		$	8,236		$	8,539

Major Customer

For the three months ended October 31, 2013, there were no major customers that accounted for more than 10% of total revenues. For the six months ended October 31, 2013, we had one major customer, The Home Depot, which accounted for approximately 10.0%, or $5.0 million of total revenues. For the three and six months ended October 31, 2012, this major customer accounted for approximately 10.6%, or $2.8 million, and 12.2%, or $6.4 million, of total revenues, respectively. Revenues from our major customer for the periods reported are primarily attributable to our IT consulting segment. The related accounts receivable balance for this customer was approximately $1.1 million as of October 31, 2013, and $1.6 million as of April 30, 2013.

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K. Contingencies

We more often than not indemnify our customers against damages and costs resulting from claims of patent, copyright or trademark infringement associated with use of our products. We have historically not been required to make any payments under such indemnifications. However, we continue to monitor the conditions that are subject to the indemnifications to identify whether it is probable that a loss has occurred, and would recognize any such losses under the indemnifications when those losses are estimable. In addition, we warrant to our customers that our products operate substantially in accordance with the software products’ specifications. Historically, we have incurred no costs related to software product warranties and we do not expect to incur such costs in the future, and as such we have made no accruals for software product warranty costs. Additionally, we are involved in various claims arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our financial position or results of operations.

L. Subsequent Event

On November 14, 2013, our Board of Directors declared a quarterly cash dividend of $0.10 per share of our Class A and Class B common stock. The cash dividend is payable on February 24, 2014 to Class A and Class B shareholders of record at the close of business on February 7, 2014.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements relating to our future financial performance, business strategy, financing plans and other future events that involve uncertainties and risks. You can identify these statements by forward-looking words such as “anticipate,” “intend,” “plan,” “continue,” “could,” “grow,” “may,” “potential,” “predict,” “strive” “will,” “seek,” “estimate,” “believe,” “expect,” and similar expressions that convey uncertainty of future events or outcomes. Any forward-looking statements we make herein are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning future:

• results of operations;

• liquidity, cash flow and capital expenditures;

• demand for and pricing of our products and services;

• viability and effectiveness of strategic alliances;

• industry conditions and market conditions;

• acquisition activities and the effect of completed acquisitions; and

• general economic conditions.

Although we believe that the goals, plans, expectations, and prospects that our forward-looking statements reflect are reasonable in view of the information currently available to us, those statements are not guarantees of performance. There are many factors that could cause our actual results to differ materially from those anticipated by forward-looking statements made herein. These factors include, but are not limited to, continuing U.S. and global economic uncertainty, the timing and degree of business recovery, unpredictability and the irregular pattern of future revenues, dependence on particular market segments or customers, competitive pressures, delays, product liability and warranty claims and other risks associated with new product development, undetected software errors, market acceptance of our products, technological complexity, the challenges and risks associated with integration of acquired product lines, companies and services, as well as a number of other risk factors that could affect our future performance. All forward-looking statements included in this Form 10-Q are based upon information available to us as of the filing date of this Form 10-Q. We undertake no obligation to update any of these forward-looking statements for any reason. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements. We discuss certain factors in greater detail in “Business Overview” below. The terms “fiscal 2014” and “fiscal 2013” refer to our fiscal years ending April 30, 2014 and 2013, respectively.

ECONOMIC OVERVIEW

Corporate capital spending trends and commitments are the primary determinants of the size of the market for business software. Corporate capital spending is, in turn, a function of general economic conditions in the U.S. and abroad and in particular may be affected by conditions in global credit markets.

In October 2013, the International Monetary Fund (“IMF”) provided an update to the World Economic Outlook (“WEO”) for the 2013 world economic growth forecast. The update noted that, “Global growth remains in low gear, averaging only 2 ¹⁄₂ percent during the first half of 2013, which is about the same pace as in the second half of 2012. In a departure from previous developments since the Great Recession, the advanced economies have recently gained some speed, while the emerging market economies have slowed. The emerging market economies, however, continue to account for the bulk of global growth. Within each group, there are still broad differences in growth and position in the cycle.”

For the remainder of fiscal 2014, we expect the world economy to continue to be weak, which could result in a difficult selling environment. Overall information technology spending continues to be relatively weak as a result of the current global economic environment when compared to the period prior to the last recession. However we noted some improvement in sales activity in the U.S. and Europe, the Middle East, and Africa during the second quarter of fiscal 2014. We believe information technology spending will incrementally improve over the long term as increased global competition forces companies to improve productivity by upgrading their technology systems. Although this improvement could slow or regress at any time, due in part to concerns in global capital markets and general economic conditions, we believe that our organizational and financial structure will enable us to take advantage of any sustained economic rebound. Customers continue to take long periods to evaluate discretionary software purchases.

We believe weak economic conditions may be driving some businesses to focus on achieving more process and efficiency improvements in their operations and to invest in solutions that improve operating margins, rather than make large infrastructure-type technology purchases. If this trend continues, we believe it may tend to favor solutions such as our Logility supply chain solutions,

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which are designed to provide a more rapid return on investment and are targeted at some of the largest profit drivers in a customer’s business. While the current economic crisis has had a particularly adverse impact on the weaker companies in our target markets, we believe a larger percentage of our customers are seeking to make investments to strengthen their operations, and some are taking advantage of current economic conditions to gain market share.

BUSINESS OVERVIEW

American Software was incorporated as a Georgia corporation in 1970. We develop, market and support a portfolio of software and services that deliver enterprise management and collaborative supply chain solutions to the global marketplace. We have designed our software and services to bring business value to enterprises by supporting their operations over intranets, extranets, client/servers or the Internet. References to “the Company,” “our products,” “our software,” “our services” and similar references include the appropriate business unit actually providing the product or service.

We provide our software solutions through three major business segments, which are further broken down into a total of four major product and service groups. The three business segments are (1) Supply Chain Management (“SCM”), (2) Enterprise Resource Planning (“ERP”) and (3) Information Technology (“IT”) Consulting. The SCM segment consists of Logility, a wholly-owned subsidiary that provides collaborative supply chain solutions to streamline and optimize the production, distribution and management of products between trading partners. The ERP segment consists of (i) American Software ERP, which provides purchasing and materials management, customer order processing, financial, e-commerce and traditional manufacturing solutions, and (ii) New Generation Computing (“NGC”), which provides industry-specific business software to both retailers and manufacturers in the apparel, sewn products and furniture industries. The IT Consulting segment consists of The Proven Method, an IT staffing and consulting services firm.

We derive revenues primarily from three sources: software licenses, services and other, and maintenance. We generally determine software license fees based on the number of modules, servers, users and/or sites licensed. Services and other revenues consist primarily of fees from software implementation, training, consulting and customization services. We primarily bill under time and materials arrangements and recognize revenues as we perform services. We typically enter into maintenance agreements for a one- to three-year term at the time of the initial product license. We generally bill maintenance fees annually in advance and then recognize the resulting revenues ratably over the term of the maintenance agreement. Deferred revenues represent advance payments or billings for software licenses, services and maintenance billed in advance of the time we recognize the related revenues.

Our cost of revenue for licenses includes amortization of capitalized computer software development costs, royalties paid to third-party software vendors, and agent commission expenses related to license revenues generated by the indirect channel, primarily from Demand Management, Inc. (“DMI”), a subsidiary of Logility. Costs for maintenance and services include the cost of personnel to conduct implementations and customer support, consulting, other personnel-related expenses, and agent commission expenses related to maintenance revenues generated by the indirect channel, primarily from DMI. We account for the development costs of software intended for sale in accordance with the Intangibles—Goodwill and Other topic of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification. We monitor the net realizable value of our capitalized software on a quarterly basis based on an estimate of future product revenues. We currently expect to fully recover the value of the capitalized software asset recorded on our consolidated balance sheet; however, if future product revenues are less than management’s current expectations, we may incur a write-down of capitalized software costs.

Our selling expenses generally include the salary and commissions paid to our sales professionals, along with marketing, promotional, travel and associated costs. Our general and administrative expenses generally include the salary and benefits paid to executive, corporate and support personnel, as well as facilities-related costs, utilities, communications expenses, and various professional fees.

We currently view the following factors as the primary opportunities and risks associated with our business:

• Dependence on Capital Spending Patterns. There is risk associated with our dependence on the capital spending patterns of U.S. and international businesses, which in turn are functions of economic trends and conditions over which we have no control.

• Acquisition Opportunities. There are opportunities for selective acquisitions or investments to provide opportunities to expand our sales distribution channels and/or broaden our product offering by providing additional solutions for our target markets.

• Acquisition Risks. There are risks associated with acquisitions of complementary companies, products and technologies, including the risks that we will not achieve the financial and strategic goals that we contemplate at the time of the transaction. More specifically, in any acquisition we will face risks and challenges associated with the uncertain value of the acquired business or assets, the difficulty of assimilating operations and personnel, integrating acquired technologies and products and maintaining the loyalty of the customers of the acquired business.

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• Competitive Technologies. There is a risk that our competitors may develop technologies that are substantially equivalent or superior to our technology.

• Competition in General. There are risks inherent in the market for business application software and related services, which has been and continues to be intensely competitive; for example, some of our competitors may become more aggressive with their prices and/or payment terms, which may adversely affect our profit margins.

A discussion of a number of additional risk factors associated with our business is included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2013.

COMPARISON OF RESULTS OF OPERATIONS

Three-Month Comparisons. The following table sets forth certain revenue and expense items as a percentage of total revenues and the percentage changes in those items for the three months ended October 31, 2013 and 2012:

	Three Months Ended October 31,
	Percentage of Total Revenues						Pct. Change in Dollars
	2013			2012			2013 vs 2012
Revenues:
License		23	%		21	%		13	%
Services and other		43			47			(5	)
Maintenance		34			32			7
Total revenues		100			100			3
Cost of revenues:
License		6			5			(14	)
Services and other		30			31			—
Maintenance		7			8			—
Total cost of revenues		43			44			(2	)
Gross margin		57			56			6
Research and development		7			9			(13	)
Sales and marketing		19			19			2
General and administrative		11			11			4
Amortization of acquisition-related intangibles		—			—			—
Provision for doubtful accounts		—			1			nm
Total operating expenses		37			40			(3	)
Operating income		20			16			27
Other income (expense):
Interest income		1			1			(23	)
Other, net		1			—			nm
Earnings before income taxes		22			17			28
Income tax expense		(8	)		(7	)		19
Net earnings		14	%		11	%		33	%

nm—not meaningful

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Six-Month Comparisons. The following table sets forth certain revenue and expense items as a percentage of total revenues and the percentage changes in those items for the six months ended October 31, 2013 and 2012:

	Six Months Ended October 31,
	Percentage of Total Revenues						Pct. Change in Dollars
	2013			2012			2013 vs 2012
Revenues:
License		19	%		20	%		(11	)%
Services and other		46			48			(8	)
Maintenance		35			32			7
Total revenues		100			100			(4	)
Cost of revenues:
License		5			5			(15	)
Services and other		32			32			(3	)
Maintenance		8			8			1
Total cost of revenues		45			45			(4	)
Gross margin		55			55			(4	)
Research and development		8			8			(7	)
Sales and marketing		19			19			(4	)
General and administrative		12			12			3
Amortization of acquisition-related intangibles		—			—			—
Provision for doubtful accounts		—			1			nm
Total operating expenses		39			40			(4	)
Operating income		16			15			(2	)
Other income (expense):
Interest income		1			1			(20	)
Other, net		—			—			150
Earnings before income taxes		17			16			(4	)
Income tax expense		(6	)		(6	)		(12	)
Net earnings		11	%		10	%		2	%

nm—not meaningful

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2013 AND 2012

Revenues

	Three Months Ended October 31,
	2013		2012		% Change			% of Total Revenues
								2013			2012
	(in thousands)
License	$	6,192	$	5,504		13	%		23	%		21	%
Services and other		11,662		12,312		(5	)%		43	%		47	%
Maintenance		9,077		8,447		7	%		34	%		32	%
Total revenues	$	26,931	$	26,263		3	%		100	%		100	%

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	Six Months Ended October 31,
	2013		2012		% Change			% of Total Revenues
								2013			2012
	(in thousands)
License	$	9,410	$	10,586		(11	)%		19	%		20	%
Services and other		22,890		24,807		(8	)%		46	%		48	%
Maintenance		17,949		16,784		7	%		35	%		32	%
Total revenues	$	50,249	$	52,177		(4	)%		100	%		100	%

For the three months ended October 31, 2013, the 3% increase in revenues over the three months ended October 31, 2012 was attributable primarily to a 13% increase in license fee revenues and, to a lesser extent, a 7% increase in maintenance revenues. This was partially offset by a 5% decrease in services and other revenues. For the six months ended October 31, 2013, the 4% decrease in revenues over the six months ended October 31, 2012 was attributable primarily to an 11% decrease in license revenues and, to a lesser extent, an 8% decrease in services and other revenues which was partially offset by a 7% increase in maintenance revenues. The primary reason for the increase in license fee revenues in the three months ended October 31, 2013 was an increase is software sales at both software business units; Logility which increased 5%, and ERP which increased 76%, for the three months ended October 31, 2013 compared to the three months ended October 31, 2012, respectively.

Due to intensely competitive markets we do discount license fees from our published list price due to pricing pressure in our industry. Numerous factors contribute to the amount of the discounts provided, such as previous customer purchases, the number of customer sites utilizing the software, the number of modules purchased and the number of users, as well as the overall size of the contract. While all these factors may affect the discount amount of a particular contract, the overall percentage discount has not materially changed in the recent reported fiscal periods.

The change in our revenues from period to period is primarily due to the volume of products and related services sold in any period and the amount of products or modules purchased with each sale.

International revenues represented approximately 17% of total revenues in the three and six months ended October 31, 2013, and represented approximately 12% of total revenues in the three and six months ended October 31, 2012, respectively. Our revenues, in particular our international revenues, may fluctuate substantially from period to period primarily because we derive most of our license fee revenues from a relatively small number of customers in a given period.

License Revenue

	Three Months Ended October 31,
	2013		2012		% Change
	(in thousands)
Enterprise Resource Planning	$	998	$	567		76	%
Supply Chain Management		5,194		4,937		5	%
Total license revenues	$	6,192	$	5,504		13	%
	Six Months Ended October 31,
	2013		2012		% Change
	(in thousands)
Enterprise Resource Planning	$	1,400	$	992		41	%
Supply Chain Management		8,010		9,594		(17	)%
Total license revenues	$	9,410	$	10,586		(11	)%

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For the three and six months ended October 31, 2013, license fee revenues increased 13% and decreased 11%, respectively, when compared to the same periods in the prior year. While we expect a degree of quarterly fluctuation due to the timing of signing license fee agreements, our SCM and ERP units experienced an increase in license fee close rates in the current quarter when compared to the same period last year due to an improvement in business investment activity toward the end of the quarter. In the six months ended October 31, 2013, license fee revenues from our SCM business unit decreased 17% when compared to the corresponding periods in the prior year due to overall uncertainty in global economic markets. Our SCM business unit constituted 84% and 85% of total license fee revenues for the three and six months ended October 31, 2013, respectively, compared to 90% and 91% for the three and six months ended October 31, 2012, respectively. Our ERP business unit license fee revenues increased by 76% and 41% for the three and six months ended October 31, 2013, respectively, when compared to the same periods in the prior year, primarily due to an increase in license fee sales to the apparel and retail industries due to improved sales execution and sales environment.

The direct sales channel provided approximately 60% and 64% of license fee revenues for the three and six months ended October 31, 2013, respectively, compared to approximately 75% and 74% of license fee revenues for the three and six months ended October 31, 2012, respectively. The decrease in the proportion of sales by our direct sales channel, which tends to target larger companies, for the current quarter when compared to the prior year period is primarily due to two deals, totaling approximately $3 million, that closed during the quarter being deferred and recognized over an approximate three-year period. In general, large and midsized companies do not require access to capital markets to fund expenditures to the same degree as do smaller companies. Thus, our indirect sales channel faces relatively greater challenges in the current economy, as the indirect channel tends to target smaller companies. However, during the second quarter of fiscal 2013, indirect sales increased 82% when compared to the same period last year due to improved pipeline activity from an improving capital spending environment in smaller companies. For the three and six months ended October 31, 2013, our margins after commissions on direct sales were approximately 83% and 84%, respectively, compared to 87% for the three and six months ended October 31, 2012. The margins decreased in the current periods due to the concentration (or mix) of sales staff achieving certain commission rate levels when compared to the same periods last year. For the three and six months ended October 31, 2013, our margins after commissions on indirect sales were approximately 55% and 54%, respectively, compared to 43% and 46% for the three and six months ended October 31, 2012, respectively. The indirect channel margins for the three and six months ended October 31, 2013 increased when compared to the same period in the prior year due to the mix of value-added reseller (“VAR”) commission rates. These margin calculations include only commission expense for comparative purposes and do not include other costs of license fees such as amortization of capitalized software.

Services and Other Revenue

	Three Months Ended October 31,
	2013		2012		% Change
	(in thousands)
Enterprise Resource Planning	$	1,136	$	1,844		(38	)%
Supply Chain Management		3,825		4,031		(5	)%
IT Consulting		6,701		6,437		4	%
Total services and other revenues	$	11,662	$	12,312		(5	)%
	Six Months Ended October 31,
	2013		2012		% Change
	(in thousands)
Enterprise Resource Planning	$	2,329	$	3,768		(38	)%
Supply Chain Management		7,495		7,575		(1	)%
IT Consulting		13,066		13,464		(3	)%
Total services and other revenues	$	22,890	$	24,807		(8	)%

For the three and six months ended October 31, 2013, services revenue decreased by 5% and 8%, respectively, primarily due to a decrease in services revenues from our SCM and ERP business segment implementation services and, to a lesser extent for the six-month period, IT Consulting business segment. For the three and six months ended October 31, 2013, services and other revenues from Logility (SCM) decreased by 5% and 1%, respectively, when compared to the prior year periods. Logility services revenues decreased for the current quarter due to lower license fee sales in recent periods, which tend to decrease services implementation revenue with a one to three quarter lag. For the three and six months ended October 31, 2013, our ERP segment’s revenues decreased 38% when compared to the prior year periods due to completion of one large implementation project in the apparel industry in the second quarter last year. For the three and six months ended October 31, 2013, our IT Consulting segment’s revenues increased 4% and decreased 3%, respectively, when compared to the prior year periods. The increase in the current quarter was due to an increase in IT staffing and project work from customers. This typically occurs in the early stages of an economic recovery since companies are more inclined to hire temporary staff than permanent staff.

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We have observed that there is a tendency for services and other revenues, other than from IT Consulting, to lag changes in license revenues by one to three quarters, as new licenses in one quarter often involve implementation and consulting services in subsequent quarters, for which we recognize revenues only as we perform those services.

Maintenance Revenue

	Three months Ended October 31,
	2013		2012		% Change
	(in thousands)
Enterprise Resource Planning	$	1,162	$	1,059		10	%
Supply Chain Management		7,915		7,388		7	%
Total maintenance revenues	$	9,077	$	8,447		7	%
	Six months Ended October 31,
	2013		2012		% Change
	(in thousands)
Enterprise Resource Planning	$	2,319	$	2,148		8	%
Supply Chain Management		15,630		14,636		7	%
Total maintenance revenues	$	17,949	$	16,784		7	%

For the three and six months ended October 31, 2013, maintenance revenues increased 7% when compared to the same periods in the prior year due primarily to higher license fee sales in recent quarters and improved renewal rates in our SCM unit, which experienced a 7% increase in maintenance revenue for the three and six months ended October 31, 2013, respectively, when compared to the same periods last year. Our legacy ERP unit experienced an increase of 10% and 8%, respectively, for the three and six months ended October 31, 2013 compared to the same periods in the prior year due to increased license fees in recent quarters when compared to the same periods in the prior year. Logility accounted for 87% of total maintenance revenues for both the three- and six-month periods ended October 31, 2013, respectively, compared to 87% of total maintenance revenues for both the three- and six-month periods ended October 31, 2012. Typically, our maintenance revenues have had a direct relationship to current and historic license fee revenues, since new licenses are the potential source of new maintenance customers.

GROSS MARGIN

The following table provides both dollar amounts (in thousands) and percentage measures of gross margin:

	Three months ended October 31,								Six months ended October 31,
	2013				2012				2013				2012
Gross margin on license fees	$	4,958	80	%	$	4,061	74	%	$	7,015	75	%	$	7,774	73	%
Gross margin on services and other		3,481	30	%		4,170	34	%		6,669	29	%		8,042	32	%
Gross margin on maintenance		7,087	78	%		6,449	76	%		13,997	78	%		12,874	77	%
Total gross margin	$	15,526	58	%	$	14,680	56	%	$	27,681	55	%	$	28,690	55	%

For the three and six months ended October 31, 2013, total gross margin percentage increased when compared to the same periods in the prior year primarily due to an increase in the gross margin on license fees and maintenance which was partially offset by a decrease in the gross margin on services.

Gross Margin on License Fees

For the three and six months ended October 31, 2013, gross margin on license fees increased when compared to the same periods in the prior year due to higher license fee revenue and lower amortization expense which temporarily declined in the second quarter due to the completion of capitalized software amortization expense (approximately $625,000 per quarter) from our Voyager project at the end of the first quarter of fiscal 2014. We expect capitalized software amortization expense to increase in the third quarter of fiscal 2014 upon the next major Voyager project release. License fee gross margin percentage tends to be directly related to the level of license fee revenues due to the relatively fixed cost of computer software amortization expense, amortization of acquired software and the sales mix between our direct and indirect channels.

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Gross Margin on Services and Other

For the three and six months ended October 31, 2013, the gross margin percentage on services and other revenue decreased by 4 and 3 percentage points, respectively, when compared to the same periods in the prior fiscal year due to lower services revenue which resulted in lower utilization rates. Services and other gross margin are directly related to the level of services and other revenues. The primary component of cost of services and other revenues is services staffing, which is relatively inelastic in the short term.

Gross Margin on Maintenance

Maintenance gross margin percentage for the three and six months ended October 31, 2013 and 2012 increased by 2 and 1 percentage points, respectively, when compared to the same periods in the prior fiscal year primarily due to higher maintenance revenue. Maintenance gross margin normally is directly related to the level of maintenance revenues. The primary component of cost of maintenance revenue is maintenance staffing, which is relatively inelastic in the short term.

Expenses

	Three Months Ended October 31,										Six Months Ended October 31,
	2013		2012		% of Revenues						2013		2012		% of Revenues
					2013			2012							2013			2012
	(in thousands)										(in thousands)
Research and development	$	2,004	$	2,303		7	%		9	%	$	4,104	$	4,409		8	%		8	%
Sales and marketing	$	5,018	$	4,937		19	%		19	%	$	9,412	$	9,758		19	%		19	%
General and administrative	$	2,987	$	3,079		11	%		12	%	$	6,140	$	6,316		12	%		12	%
Amortization of acquisition-related intangible assets	$	125	$	125		0	%		0	%	$	250	$	250		0	%		0	%
Other income (expense), net	$	417	$	309		2	%		1	%	$	461	$	582		1	%		1	%
Income tax expense	$	2,116	$	1,774		8	%		7	%	$	2,950	$	3,346		6	%		6	%

Research and Development

Gross product research and development costs include all non-capitalized and capitalized software development costs. A breakdown of the research and development costs is as follows:

	Three months ended (in thousands)
	October 31, 2013			Percent Change			October 31, 2012
Total capitalized computer software development costs	$	924			(3	)%	$	948
Percentage of gross product research and development costs		32	%					29	%
Total research and development expense		2,004			(13	)%		2,303
Percentage of total revenues		7	%					9	%
Total research and development expense and capitalized computer software development costs	$	2,928			(10	)%	$	3,251
Percentage of total revenues		11	%					12	%
Total amortization of capitalized computer software development costs *	$	—			(100	)%	$	625
	Six months ended (in thousands)
	October 31, 2013			Percent Change			October 31, 2012
Total capitalized computer software development costs	$	1,641			(9	)%	$	1,811
Percentage of gross product research and development costs		29	%					29	%
Total research and development expense		4,104			(7	)%		4,409
Percentage of total revenues		8	%					8	%
Total research and development expense and capitalized computer software development costs	$	5,745			(8	)%	$	6,220
Percentage of total revenues		11	%					12	%
Total amortization of capitalized computer software development costs *	$	625			(50	)%	$	1,251

* Included in cost of license fees

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For the three and six months ended October 31, 2013, gross product research and development costs decreased when compared to the same periods in the previous fiscal year due to the timing of spending on several software products. Capitalized software development costs decreased for the three and six months ended October 31, 2013 when compared to the same period last year due to timing of capitalizable project work. We expect capitalized product development costs to be lower in coming quarters as a result of fewer capitalizable research and development projects and we expect capitalized software amortization expense to increase in the third quarter of fiscal 2014 upon the release of the new Voyager software project and then to remain relatively the same for the remainder of the fiscal year. Costs included in gross product development are salaries of product development personnel, hardware lease expense, computer software expense, telephone expense and rent.

Sales and Marketing

For the three and six months ended October 31, 2013, sales and marketing expenses increased 2% and decreased 4%, respectively, when compared to the same periods a year ago primarily due to the timing of expenses related to the annual customer conferences and sales commissions. We generally include commissions on indirect sales in cost of sales.

General and Administrative

For the three and six months ended October 31, 2013, the 4% and 3% increase, respectively, in general and administrative expenses was primarily due to legal and audit expenses related to the purchase of Taylor Manufacturing Inc. This increase was partially offset by a recovery of allowance for doubtful accounts due to favorable customer collection activity.

At October 31, 2013, the total number of employees was 368 compared to 365 at October 31, 2012.

Operating Income/(Loss)

	Three Months Ended October 31,									Six Months Ended October 31,
	2013			2012			% Change			2013			2012			% Change
	(in thousands)									(in thousands)
Enterprise Resource Planning	$	(666	)	$	(947	)		(30	)%	$	(2,160	)	$	(2,180	)		(1	)%
Collaborative Supply Chain Management		5,315			4,708			13	%		8,636			9,131			(5	)%
IT Consulting		743			475			56	%		1,299			1,006			29	%
Total Operating Income	$	5,392		$	4,236			27	%	$	7,775		$	7,957			(2	)%

Our ERP segment operating loss in the three and six months ended October 31, 2013 decreased from the loss in the same periods in the prior year due to higher license fee revenues.

Our SCM segment’s contribution to operating income increased by 13% for the three months ended October 31, 2013 compared to same period last year as a result of increased revenue and lower software amortization expense. Operating income decreased by 5% for the six months ended October 31, 2013 compared to same period last year primarily due to lower license fee revenue.

Our IT consulting segment operating income increased 56% and 29% for the three and six months ended October 31, 2013 compared to same periods last year as a result of improved gross margins from 20% in the second quarter of fiscal 2013 to 26% in fiscal 2014 due to higher billing rates and project profitability.

Other Income

Other income is comprised of net interest and dividend income, rental income net of related depreciation expenses, exchange rate gains and losses, and realized and unrealized gains and losses from investments. For the three and six months ended October 31, 2013, the increase in other income was due primarily to higher realized and unrealized gains on investments as a result of stronger financial market conditions, higher rental income, and less exchange rate losses when compared to the same periods of the prior year. This increase was partially offset by a decrease in interest income on an investment portfolio consisting of a greater proportion of certificates of deposit and municipal bonds when compared to the same periods last year. We recorded a gain of approximately $12,000 for the three months ended October 31, 2013 and a loss of approximately $349,000 for the six months ended October 31, 2012 compared to losses of approximately $93,000 and $183,000 for the three and six months ended October 31, 2012, respectively, from our trading securities.

For the three and six months ended October 31, 2013, our investments generated an annualized yield of approximately 1.28% and 1.42% respectively, compared to approximately 2.01% and 2.06% for the three and six months ended October 31, 2012, respectively.

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Income Taxes

We recognize deferred tax assets and liabilities based on the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. We measure deferred tax assets and liabilities using statutory tax rates in effect in the year in which we expect the differences to reverse. We establish a deferred tax asset for the expected future benefit of net operating loss and credit carry-forwards. Under the Income Tax Topic of the FASB Accounting Standards Codification, we cannot recognize a deferred tax asset for the future benefit of our net operating losses, tax credits and temporary differences unless we can establish that it is “more likely than not” that the deferred tax asset would be realized. During the three months ended October 31, 2013, our effective tax rate was 36.4% compared to our effective tax rate of 39% in the three months ended October 31, 2012. We expect our effective rate will be between 36% and 39% during fiscal 2014.

Operating Pattern

We experience an irregular pattern of quarterly operating results, caused primarily by fluctuations in both the number and size of software license contracts received and delivered from quarter to quarter and our ability to recognize revenues in that quarter in accordance with our revenue recognition policies. We expect this pattern to continue.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION

Sources and Uses of Cash

We have historically funded, and continue to fund, our operations and capital expenditures primarily with cash generated from operating activities. The changes in net cash that our operating activities provide generally reflect the changes in net earnings and non-cash operating items plus the effect of changes in operating assets and liabilities, such as investment trading securities, trade accounts receivable, trade accounts payable, accrued expenses and deferred revenue. We have no debt obligations or off-balance sheet financing arrangements, and therefore we used no cash for debt service purposes.

The following table shows information about our cash flows and liquidity positions during the six months ended October 31, 2013 and 2012. You should read this table and the discussion that follows in conjunction with our condensed consolidated statements of cash flows contained in “Item 1. Financial Statements” in Part I of this report and in our Annual Report on Form 10-K for the fiscal year ended April 30, 2013.

	Six Months Ended October 31, (in thousands)
	2013			2012
Net cash provided by operating activities	$	9,636		$	6,244
Net cash used in investing activities		(2,762	)		(1,639	)
Net cash provided by (used in) financing activities		1,188			(4,159	)
Net change in cash and cash equivalents	$	8,062		$	446

For the six months ended October 31, 2013, the net increase in cash provided by operating activities when compared to the same period last year was due primarily to: 1) an increase in accounts payable and other accruals due to timing of payments, 2) higher proceeds from the maturity and sales of trading securities, 3) a decrease in purchases of trading securities, 4) higher unrealized losses on investments due to improved conditions in financial markets compared to the same period last year, 5) an increase in net earnings, and 6) a lower decrease in deferred revenues due to timing of revenue recognition.

This increase was partially offset by: 1) an increase in customer accounts receivable compared to a decrease in the same period last year caused by the timing of closing customer sales and related collections, 2) a decrease in depreciation and amortization, 3) a higher increase in prepaid expenses when compared to the same period last year due to the timing of purchases, 4) a decrease in the tax benefit of stock options exercised compared to an increase in the prior year due to the mix of options exercised, 5) lower stock-based compensation expense due to a decrease in option grants, 6) a higher increase in deferred income taxes due to timing, 7) a decrease to the retirement of property, and 8) a decrease in bond amortization.

The increase in cash used in investing activities when compared to cash provided by investing activities in the same period in the prior year was due primarily to the purchase of a business, net of cash acquired and a decrease in the proceeds from the maturities of investments. This was partially offset by a decrease in capitalized computer software development costs and a decrease in the purchases of property and equipment due to timing of company spending.

Cash provided by financing activities increased when compared to cash used by financing activities in the same period as the prior year due primarily to 1) a decrease in dividends paid, 2) a decrease in repurchase of our common stock in the current period when compared to the same period last year, and 3) an increase in proceeds from exercise of stock options. This was partially offset by a decrease in excess tax benefits from stock-based compensation.

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The following table shows net changes in total cash, cash equivalents, and investments, which is one measure management uses to view net total cash generated by our activities:

	As of October 31, (in thousands)
	2013		2012
Cash and cash equivalents	$	49,226	$	39,557
Short and long-term investments		20,944		25,214
Total cash and short and long-term investments	$	70,170	$	64,771
Net increase (decrease) in total cash and investments (six months ended October 31)	$	3,746	$	(2,099	)

Our total activities provided more cash and investments during the six months ended October 31, 2013, when compared to the prior year period, due primarily to the changes in operating assets and liabilities noted above and acceleration of the payment of the quarterly dividend.

Days Sales Outstanding in accounts receivable were 58 days as of October 31, 2013, compared to 65 days as of October 31, 2012. This decrease is primarily due to a decrease in sales in recent quarters. Our current ratio on October 31, 2013 was 2.8 to 1 and on October 31, 2012 was 2.9 to 1.

Our business in recent periods has generated substantial positive cash flow from operations, excluding purchases and proceeds of sale of trading securities. For this reason, and because we had $70.2 million in cash and investments with no debt as of October 31, 2013, we believe that our sources of liquidity and capital resources will be sufficient to satisfy our presently anticipated requirements during at least the next twelve months for working capital, capital expenditures and other corporate needs. However, at some future date we may need to seek additional sources of capital to meet our requirements. If such need arises, we may be required to raise additional funds through equity or debt financing. We do not currently have a bank line of credit. We can provide no assurance that bank lines of credit or other financing will be available on terms acceptable to us. If available, such financing may result in dilution to our shareholders or higher interest expense.

On December 17, 1997, our Board of Directors approved a resolution authorizing the repurchase up to 1.5 million of our Class A Common Shares. On March 11, 1999, our Board of Directors approved a resolution authorizing us to repurchase an additional 700,000 shares for a total of up to 2.2 million of our Class A Common Shares. On August 19, 2002, our Board of Directors approved a resolution authorizing us to repurchase an additional 2.0 million shares for a total of up to 4.2 million of our Class A Common Shares. These repurchases have been and will be made through open market purchases at prevailing market prices. The timing of any repurchases will depend upon market conditions, the market price of our common stock and management’s assessment of our liquidity and cash flow needs. Under these three repurchase plans, as of December 3, 2013 we have repurchased a total of approximately 3.1 million shares of common stock at a cost of approximately $12.3 million.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have based the following discussion and analysis of financial condition and results of operations on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended April 30, 2013 describes the significant accounting policies that we have used in preparing our financial statements. On an ongoing basis, we evaluate our estimates, including, but not limited to those related to vendor specific objective evidence (“VSOE”), bad debts, capitalized software costs, goodwill, intangible asset impairment, stock-based compensation, income taxes and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results could differ materially from these estimates under different assumptions or conditions.

We believe the critical accounting policies listed below affect significant judgments and estimates used in the preparation of the financial statements.

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Revenue Recognition. We recognize revenue in accordance with the Software Revenue Recognition Topic of FASB’s Accounting Standards Codification. We recognize license revenues in connection with license agreements for standard proprietary software upon delivery of the software, provided we deem collection to be probable, the fee is fixed or determinable, there is evidence of an arrangement, and VSOE exists with respect to any undelivered elements of the arrangement. We generally bill maintenance fees annually in advance and recognize the resulting revenues ratably over the term of the maintenance agreement. We derive revenues from services which primarily include consulting, implementation, and training. We bill for these services primarily under time and materials arrangements and recognize fees as we perform the services. Deferred revenues represent advance payments or billings for software licenses, services, and maintenance billed in advance of the time we recognize revenues. We record revenues from sales of third-party products in accordance with Principal Agent Considerations within the Revenue Recognition Topic of the FASB’s Accounting Standards Codification. Furthermore, we evaluate sales through our indirect channel on a case-by-case basis to determine whether the transaction should be recorded gross or net, including but not limited to assessing whether or not we 1) act as principal in the transaction, 2) take title to the products, 3) have risks and rewards of ownership, such as the risk of loss for collection, delivery, or returns, and 4) act as an agent or broker with compensation on a commission or fee basis. Accordingly, our sales through the DMI channel are typically recorded on a gross basis.

Generally, our software products do not require significant modification or customization. Installation of the products is routine and is not essential to their functionality. Our sales frequently include maintenance contracts and professional services with the sale of our software licenses. We have established VSOE for our maintenance contracts and professional services. We determine fair value based upon the prices we charge to customers when we sell these elements separately. We defer maintenance revenues, including those sold with the initial license fee, based on VSOE, and recognize the revenue ratably over the maintenance contract period. We recognize consulting and training service revenues, including those sold with license fees, as we perform the services based on their established VSOE. We determine the amount of revenue we allocate to the licenses sold with services or maintenance using the “residual method” of accounting. Under the residual method, we allocate the total value of the arrangement first to the undelivered elements based on their VSOE and allocate the remainder to license fees.

Allowance for Doubtful Accounts. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. If the financial condition of these customers were to deteriorate, resulting in an impairment of their ability to make payments, we may require additional allowances or we may defer revenue until we determine that collectability is probable. We specifically analyze accounts receivable and historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when we evaluate the adequacy of the allowance for doubtful accounts.

Valuation of Long-Lived and Intangible Assets. In accordance with the Intangibles-Goodwill and Other Topic of the FASB’s Accounting Standards Codification, we do not amortize goodwill and other intangible assets with indefinite lives. Our goodwill is subject to annual impairment tests, which require us to estimate the fair value of our business compared to the carrying value. The impairment reviews require an analysis of future projections and assumptions about our operating performance. Should such review indicate the assets are impaired, we would record an expense for the impaired assets.

In accordance with the Property, Plant, and Equipment Topic of the FASB’s Accounting Standards Codification, long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability would be measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, we recognize an impairment charge in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The determination of estimated future cash flows, however, requires management to make estimates. Future events and changes in circumstances may require us to record a significant impairment charge in the period in which such events or changes occur. Impairment testing requires considerable analysis and judgment in determining results. If other assumptions and estimates were used in our evaluations, the results could differ significantly.

Annual tests or other future events could cause us to conclude that impairment indicators exist and that our goodwill is impaired. For example, if we had reason to believe that our recorded goodwill and intangible assets had become impaired due to decreases in the fair market value of the underlying business, we would have to take a charge to income for that portion of goodwill or intangible assets that we believed was impaired. Any resulting impairment loss could have a material adverse impact on our financial position and results of operations. At October 31, 2013, our goodwill balance was $13.8 million and our intangible assets with definite lives balance was approximately $845,000, net of accumulated amortization.

Valuation of Capitalized Software Assets. We capitalize certain computer software development costs in accordance with the Intangibles-Goodwill and Other Topic of the FASB’s Accounting Standards Codification. Costs incurred internally to create a computer software product or to develop an enhancement to an existing product are charged to expense when incurred as research and development expense until technological feasibility for the respective product is established. Thereafter, we capitalize all software development costs and report those costs at the lower of unamortized cost or net realizable value. Capitalization ceases when the product or enhancement is available for general release to customers. We make ongoing evaluations of the recoverability of our capitalized software projects by comparing the amount capitalized for each product to the estimated net realizable value of the

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product. If such evaluations indicate that the unamortized software development costs exceed the net realizable value, we write off the amount by which the unamortized software development costs exceed net realizable value. We amortize capitalized computer software development costs ratably based on the projected revenues associated with the related software or on a straight-line basis over three years, whichever method results in a higher level of amortization. Amortization of capitalized computer software development costs is included in the cost of license revenues in the condensed consolidated statements of operations.

Stock-Based Compensation. We estimate the value of options granted on the date of grant using the Black-Scholes option pricing model. Management’s judgments and assumptions related to volatility, the expected term and the forfeiture rate are made in connection with the calculation of stock compensation expense. We periodically review all assumptions used in our stock option pricing model. Changes in these assumptions could have a significant impact on the amount of stock compensation expense.

Income Taxes. We provide for the effect of income taxes on our financial position and results of operations in accordance with the Income Tax Topic of the FASB’s Accounting Standards Codification. Under this accounting guidance, income tax expense is recognized for the amount of income taxes payable or refundable for the current year and for the change in net deferred tax assets or liabilities resulting from events that are recorded for financial reporting purposes in a different reporting period than recorded in the tax return. Management must make significant assumptions, judgments and estimates to determine our current provision for income taxes and also our deferred tax assets and liabilities and any valuation allowance to be recorded against our net deferred tax asset. Our judgments, assumptions and estimates relative to the current provision for income tax take into account current tax laws, our interpretation of current tax laws, allowable deductions, and projected tax credits. Changes in tax law or our interpretation of tax laws could significantly impact the amounts provided for income taxes in our financial position and results of operations. Our assumptions, judgments and estimates relative to the value of our deferred tax assets take into account our expectations of the amount and category of future taxable income. Actual operating results and the underlying amount and category of income in future years, which could significantly increase tax expense, could render inaccurate our current assumptions, judgments and estimates of recoverable net deferred taxes.

Business Combinations and Intangible Assets Including Goodwill. We account for business combinations using the acquisition method of accounting and accordingly, the identifiable assets acquired and liabilities assumed are recorded based upon management’s estimates of current fair values as of the acquisition date. The estimation process includes analyses based on income and market approaches. Goodwill represents the excess purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. The goodwill generated is due in part to the synergies that are not included in the fair value of identifiable intangible assets. Goodwill recorded in an acquisition is assigned to applicable reporting units based on expected revenues. Identifiable intangible assets with finite lives are amortized over there useful lives. Amortization of current technology is recorded in Cost of Revenue-License and amortization of all other intangible assets is recorded in Amortization of acquisition-related intangibles. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in general and administrative expenses in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

29

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency. In the three and six months ended October 31, 2013, we generated approximately 17% of our revenues outside the United States. We typically make international sales through our foreign subsidiaries or our Logility subsidiary and denominate those sales typically in U.S. Dollars, British Pounds Sterling or Euros. However, expenses incurred in connection with these sales are typically denominated in the local currencies. We recorded exchange rate gains of approximately $5,000 for the three months ended October 31, 2013 and exchange rate losses of approximately $40,000 for the six months ended October 31, 2013, compared to exchange rate losses of approximately $7,000 and $112,000 for the three and six months ended October 31, 2012, respectively. We estimate that a 10% movement in foreign currency rates would have had the effect of creating up to a $249,000 exchange gain or loss for the six months ended October 31, 2013. We have not engaged in any hedging activities.

Interest Rates and Other Market Risks. We have no debt, and therefore limit our discussion of interest rate risk to risk associated with our investment profile. We manage our interest rate risk by maintaining an investment portfolio of trading and held-to-maturity investments with high credit quality and relatively short average maturities. These instruments include, but are not limited to, money-market instruments, bank time deposits, and taxable and tax-advantaged variable rate and fixed rate obligations of corporations, municipalities, and national, state, and local government agencies, in accordance with an investment policy approved by our Board of Directors. These instruments are denominated in U.S. Dollars. The fair market value of these instruments as of October 31, 2013 was approximately $68.2 million compared to $60.8 million as of October 31, 2012.

We also hold cash balances in accounts with commercial banks in the United States and foreign countries. These cash balances represent operating balances only and are invested in short-term time deposits of the local bank. Such operating cash balances held at banks outside the United States are denominated in the local currency and are minor.

Many of our investments carry a degree of interest rate risk. When interest rates fall, our income from investments in variable-rate securities declines. When interest rates rise, the fair market value of our investments in fixed-rate securities declines. In addition, our investments in equity securities are subject to stock market volatility. Due in part to these factors, our future investment income may fall short of expectations or we may suffer losses in principal if forced to sell securities, which have seen a decline in market value due to changes in interest rates. We attempt to mitigate risk by holding fixed-rate securities to maturity, but, if our liquidity needs force us to sell fixed-rate securities prior to maturity, we may experience a loss of principal.

Inflation. Although we cannot accurately determine the amounts attributable thereto, we have been affected by inflation through increased costs of employee compensation and other operational expenses. To the extent permitted by the marketplace for our products and services, we attempt to recover increases in costs by periodically increasing prices.

Item 4. Controls and Procedures

Management’s Report on Internal Control Over Financial Reporting

As of the end of the period covered by this report, our management evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) under the supervision and with the participation of our chief executive officer and chief financial officer. Based on and as of the date of such evaluation, the aforementioned officers have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Our chief executive officer and chief financial officer, with the assistance of our Disclosure Committee, have conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report. We perform this evaluation on a quarterly basis so that the conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our Annual Report on Form 10-K and quarterly reports on Form 10-Q. Based on this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

30

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently involved in legal proceedings requiring disclosure under this item.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended April 30, 2013. There have been no material changes to the risk factors as previously disclosed in such Annual Report on Form 10-K,

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable

(b) Not applicable

(c) The following table summarizes repurchases of our stock in the three months ended October 31, 2013:

Fiscal Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs*
August 1, 2013 through August 31, 2013		—	$	—		—		1,090,138
September 1, 2013 through September 30, 2013		—		—		—		1,090,138
October 1, 2013 through October 31, 2013		—		—		—		1,090,138
Total Fiscal 2014 Second Quarter		—	$	—		—		1,090,138

* Our Board of Directors approved the above share purchase authority on August 19, 2002, when the Board approved a resolution authorizing us to repurchase up to 2.0 million shares of Class A common stock. This action was announced on August 22, 2002. The authorization has no expiration date.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

31

Item 6. Exhibits

Exhibit 3.1	Amended and Restated Articles of Incorporation, and amendments thereto (1)
Exhibit 3.2	Amended and Restated By-Laws dated May 18, 2009 (2)
Exhibits 31.1-31.2.	Rule 13a-14(a)/15d-14(a) Certifications
Exhibit 32.1.	Section 906 Certifications
Exhibit 101.INS	XBRL Instance Document.
Exhibit 101.SCH	XBRL Taxonomy Extension Schema Document.
Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

(1) Incorporated by reference herein. Filed by the Company as an exhibit to its quarterly report filed on Form 10-Q for the quarter ended October 31, 1990.

(2) Incorporated by reference herein. Filed by the Company as an exhibit to its quarterly report filed on Form 10-Q for the quarter ended January 31, 2010.

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AMERICAN SOFTWARE, INC.
Date: December 6, 2013	By:	/s/ J. Michael Edenfield
		J. Michael Edenfield
		President, Chief Executive Officer, Director and Chief Operating Officer
Date: December 6, 2013	By:	/s/ Vincent C. Klinges
		Vincent C. Klinges
		Chief Financial Officer
Date: December 6, 2013	By:	/s/ Bryan L. Sell
		Bryan L. Sell
		Controller and Principal Accounting Officer

33

EX-31.1

EXHIBIT 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, J. Michael Edenfield, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American Software, 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 registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.

Date: December 6, 2013	By:	/s/ J. Michael Edenfield
		J. Michael Edenfield
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, Vincent C. Klinges, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American Software, 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 registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.

Date: December 6, 2013	By:	/s/ Vincent C. Klinges
		Vincent C. Klinges
		Chief Financial Officer

EX-32.1

Exhibit 32.1

Certifications Pursuant to Section 906 of

The Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

The undersigned, as the Chief Executive Officer of American Software, Inc., certifies that, to the best of his knowledge and belief, this report on Form 10-Q for the fiscal quarter ended October 31, 2013 (the “Report”), which accompanies this certification, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of American Software, Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and shall not be relied upon for any other purpose.

This 6th day of December, 2013	/s/ J. Michael Edenfield
	J. Michael Edenfield
	Chief Executive Officer

The undersigned, as the Chief Financial Officer of American Software, Inc., certifies that, to the best of his knowledge and belief, this report on Form 10-Q for the fiscal quarter ended October 31, 2013 (the “Report”), which accompanies this certification, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of American Software, Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and shall not be relied upon for any other purpose.

This 6th day of December, 2013	/s/ Vincent C. Klinges
	Vincent C. Klinges
	Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to American Software, Inc. and will be retained by American Software, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The information in this Exhibit 32.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

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Contingencies

6 Months Ended

Oct. 31, 2013

Contingencies

K. Contingencies

We more often than not indemnify our customers against damages and costs resulting from claims of patent, copyright or trademark infringement associated with use of our products. We have historically not been required to make any payments under such indemnifications. However, we continue to monitor the conditions that are subject to the indemnifications to identify whether it is probable that a loss has occurred, and would recognize any such losses under the indemnifications when those losses are estimable. In addition, we warrant to our customers that our products operate substantially in accordance with the software products’ specifications. Historically, we have incurred no costs related to software product warranties and we do not expect to incur such costs in the future, and as such we have made no accruals for software product warranty costs. Additionally, we are involved in various claims arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our financial position or results of operations.

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Oct. 31, 2013		Oct. 31, 2012		Oct. 31, 2013		Oct. 31, 2012
Revenues:
License	$ 6,192		$ 5,504		$ 9,410		$ 10,586
Services and other	11,662		12,312		22,890		24,807
Maintenance	9,077		8,447		17,949		16,784
Total revenues	26,931		26,263		50,249		52,177
Cost of revenues:
License	1,234		1,443		2,395		2,812
Services and other	8,181		8,142		16,221		16,765
Maintenance	1,990		1,998		3,952		3,910
Total cost of revenues	11,405		11,583		22,568		23,487
Gross margin	15,526		14,680		27,681		28,690
Research and development	2,004		2,303		4,104		4,409
Sales and marketing	5,018		4,937		9,412		9,758
General and administrative	3,071		2,939		6,224		6,049
Amortization of acquisition-related intangibles	125		125		250		250
(Recovery of) provision for doubtful accounts	(84)		140		(84)		267
Total operating expenses	10,134		10,444		19,906		20,733
Operating income	5,392		4,236		7,775		7,957
Other income (expense):
Interest income	215		278		466		584
Other, net	202		31		(5)		(2)
Earnings before income taxes	5,809		4,545		8,236		8,539
Income tax expense	2,116		1,774		2,950		3,346
Net earnings	$ 3,693		$ 2,771		$ 5,286		$ 5,193
Earnings per common share:
Basic	$ 0.13	[1]	$ 0.10	[1]	$ 0.19	[1]	$ 0.19	[1]
Diluted	$ 0.13	[1]	$ 0.10	[1]	$ 0.19	[1]	$ 0.19	[1]
Cash dividends declared per common share	$ 0.10		$ 0.09		$ 0.10		$ 0.18
Shares used in the calculation of earnings per common share:
Basic	27,448		27,151		27,406		27,112
Diluted	27,874		27,627		27,841		27,596

[1] Basic per share amounts are the same for Class A and Class B shares. Diluted per share amounts for Class A shares are shown above. Diluted earnings per share for Class B shares under the two-class method are $0.13 and $0.10 for the three months ended October 31, 2013 and 2012 and $0.19 for the six months ended October 31, 2013 and 2012, respectively. See Note D to the Condensed Consolidated Financial Statements.

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Earnings Per Common Share

6 Months Ended

Oct. 31, 2013

Earnings Per Common Share

D. Earnings Per Common Share

We have two classes of common stock of which Class B Common Shares are convertible into Class A Common Shares at any time, on a one-for-one basis. Under our Articles of Incorporation, if we declare dividends, holders of Class A Common Shares shall receive a $.05 dividend per share prior to the Class B Common Shares receiving any dividend and holders of Class A Common Shares shall receive a dividend at least equal to Class B Common Shares dividends on a per share basis. As a result, we have computed the earnings per share in accordance with Earnings Per Share within the Presentation Topic of the FASB’s Accounting Standards Codification, which requires companies that have multiple classes of equity securities to use the “two-class” method in computing earnings per share.

For our basic earnings per share calculation, we use the “two-class” method. Basic earnings per share are calculated by dividing net earnings attributable to each class of common stock by the weighted average number of shares outstanding. All undistributed earnings are allocated evenly between Class A and B Common Shares in the earnings per share calculation to the extent that earnings equal or exceed $.05 per share. This allocation is based on management’s judgment after considering the dividend rights of the two classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B shares to Class A shares.

The calculation of diluted earnings per share is similar to the calculation of basic earnings per share, except that the calculation includes the dilutive effect of the assumed exercise of options issuable under our stock incentive plans. For our diluted earnings per share calculation for Class A shares, we use the “if-converted” method. This calculation assumes that all Class B Common Shares are converted into Class A Common Shares and, as a result, assumes there are no holders of Class B Common Shares to participate in undistributed earnings.

For our diluted earnings per share calculation for Class B shares, we use the “two-class” method. This calculation does not assume that all Class B Common Shares are converted into Class A Common Shares. In addition, this method assumes the dilutive effect if Class A stock options were converted to Class A shares and the undistributed earnings are allocated evenly to both Class A and B shares including Class A shares issued pursuant to those converted stock options. This allocation is based on management’s judgment after considering the dividend rights of the two classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B shares into Class A shares.

The following tables set forth the computation of basic earnings per common share and diluted earnings per common share (in thousands except for per share amounts):

Basic earnings per common share:

	Three Months Ended October 31, 2013				Six Months Ended October 31, 2013
	Class A		Class B		Class A		Class B
Distributed earnings	$	0.10	$	0.10	$	0.10	$	0.10
Undistributed earnings		0.03		0.03		0.09		0.09
Total	$	0.13	$	0.13	$	0.19	$	0.19
Distributed earnings	$	2,492	$	259	$	2,492	$	259
Undistributed earnings		853		89		2,296		239
Total	$	3,345	$	348	$	4,788	$	498
Basic weighted average common shares outstanding		24,861		2,587		24,819		2,587
	Three Months Ended October 31, 2012				Six Months Ended October 31, 2012
	Class A		Class B		Class A		Class B
Distributed earnings	$	0.09	$	0.09	$	0.18	$	0.18
Undistributed earnings		0.01		0.01		0.01		0.01
Total	$	0.10	$	0.10	$	0.19	$	0.19
Distributed earnings	$	2,211	$	233	$	4,420	$	466
Undistributed earnings		296		31		278		29
Total	$	2,507	$	264	$	4,698	$	495
Basic weighted average common shares outstanding		24,564		2,587		24,525		2,587

Diluted EPS for Class A Common Shares Using the If-Converted Method

Three Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	3,345		24,861	$	0.13
Common Stock Equivalents		—		426		—
		3,345		25,287		0.13
Class B Conversion		348		2,587		—
Diluted EPS for Class A	$	3,693		27,874	$	0.13

Six Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	4,788		24,818	$	0.19
Common Stock Equivalents		—		436		—
		4,788		25,254		0.19
Class B Conversion		498		2,587		—
Diluted EPS for Class A	$	5,286		27,841	$	0.19

Three Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	2,507		24,564	$	0.10
Common Stock Equivalents		—		476		—
		2,507		25,040		0.10
Class B Conversion		264		2,587		—
Diluted EPS for Class A	$	2,771		27,627	$	0.10

Six Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	4,698		24,525	$	0.19
Common Stock Equivalents		—		484		—
		4,698		25,009		0.19
Class B Conversion		495		2,587		—
Diluted EPS for Class A	$	5,193		27,596	$	0.19

Diluted EPS for Class B Common Shares Using the Two-Class Method

Three Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	348			2,587	$	0.13
Reallocation of undistributed earnings to Class A shares from Class B shares		(1	)		—		—
Diluted EPS for Class B	$	347			2,587	$	0.13

Six Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	498			2,587	$	0.19
Reallocation of undistributed earnings to Class A shares from Class B shares		(4	)		—		—
Diluted EPS for Class B	$	494			2,587	$	0.19

Three Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	264			2,587	$	0.10
Reallocation of undistributed earnings to Class A shares from Class B shares		(1	)		—		—
Diluted EPS for Class B	$	263			2,587	$	0.10

Six Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	495			2,587	$	0.19
Reallocation of undistributed earnings to Class A shares from Class B shares		(1	)		—		—
Diluted EPS for Class B	$	494			2,587	$	0.19

For the three and six months ended October 31, 2013, we excluded options to purchase 1,434,477 and 1,390,965 Class A Common Shares, respectively, and for the three and six months ended October 31, 2012, we excluded options to purchase 1,516,668 and 1,428,223 Class A Common Shares, respectively, from the computation of diluted earnings per Class A Common Shares. We excluded these option share amounts because the exercise prices of those options were greater than the average market price of the Class A Common Shares during the applicable period. As of October 31, 2013, we had a total of 3,281,087 options outstanding and, as of October 31, 2012, we had a total of 3,681,440 options outstanding.

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Revenue Recognition - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012	Apr. 30, 2013
Revenue Recognition [Line Items]
Amounts received for reimbursement of travel and other out-of-pocket expenses	$ 606,000.0	$ 682,000.0	$ 1,200,000	$ 1,200,000
Unbilled amounts	4,406,000		4,406,000		3,741,000
Unbilled License Fees
Revenue Recognition [Line Items]
Unbilled amounts	2,300,000		2,300,000		1,100,000
Unbilled Services Revenues
Revenue Recognition [Line Items]
Unbilled amounts	$ 2,100,000		$ 2,100,000		$ 2,700,000
Minimum
Revenue Recognition [Line Items]
Contractual period of maintenance contract			1 year
Maximum
Revenue Recognition [Line Items]
Contractual period of maintenance contract			3 years

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Subsequent Event

6 Months Ended

Oct. 31, 2013

Subsequent Event

L. Subsequent Event

On November 14, 2013, our Board of Directors declared a quarterly cash dividend of $0.10 per share of our Class A and Class B common stock. The cash dividend is payable on February 24, 2014 to Class A and Class B shareholders of record at the close of business on February 7, 2014.

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Industry Segments - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Oct. 31, 2012	Oct. 31, 2013 Customer	Oct. 31, 2012	Apr. 30, 2013
Segment Reporting Information [Line Items]
Number of major business segments		3
Number of major product and service groups		4
Home Depot
Segment Reporting Information [Line Items]
Number of major customers		1
Percentage of total revenue	10.60%	10.00%	12.20%
Total revenue	$ 2.8	$ 5.0	$ 6.4
Accounts receivable balance		$ 1.1		$ 1.6

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Basic Earnings Per Common Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Oct. 31, 2013		Oct. 31, 2012		Oct. 31, 2013		Oct. 31, 2012
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Total	$ 0.13	[1]	$ 0.10	[1]	$ 0.19	[1]	$ 0.19	[1]
Basic weighted average common shares outstanding	27,448		27,151		27,406		27,112
Class A Common Shares
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Distributed earnings	$ 0.10		$ 0.09		$ 0.10		$ 0.18
Undistributed earnings	$ 0.03		$ 0.01		$ 0.09		$ 0.01
Total	$ 0.13		$ 0.10		$ 0.19		$ 0.19
Distributed earnings	$ 2,492		$ 2,211		$ 2,492		$ 4,420
Undistributed earnings	853		296		2,296		278
Total	3,345		2,507		4,788		4,698
Basic weighted average common shares outstanding	24,861		24,564		24,818		24,525
Class B Common Shares
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Distributed earnings	$ 0.10		$ 0.09		$ 0.10		$ 0.18
Undistributed earnings	$ 0.03		$ 0.01		$ 0.09		$ 0.01
Total	$ 0.13		$ 0.10		$ 0.19		$ 0.19
Distributed earnings	259		233		259		466
Undistributed earnings	89		31		239		29
Total	$ 348		$ 264		$ 498		$ 495
Basic weighted average common shares outstanding	2,587		2,587		2,587		2,587

[1] Basic per share amounts are the same for Class A and Class B shares. Diluted per share amounts for Class A shares are shown above. Diluted earnings per share for Class B shares under the two-class method are $0.13 and $0.10 for the three months ended October 31, 2013 and 2012 and $0.19 for the six months ended October 31, 2013 and 2012, respectively. See Note D to the Condensed Consolidated Financial Statements.

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Earnings Per Common Share - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Earnings Per Share [Line Items]
Options to Purchase Excluded	1,434,477	1,516,668	1,390,965	1,428,223
Options to Purchase Outstanding	3,281,087	3,681,440	3,281,087	3,681,440
Class A Common Shares
Earnings Per Share [Line Items]
Dividends preference, per share			$ 0.05

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Fair Value of Financial Instruments - Additional Information (Detail) (USD $)	Oct. 31, 2013	Apr. 30, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity method investment valued	$ 269,000	$ 271,000
Held-to-maturity investments	$ 0	$ 226,000

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Subsequent Event - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		1 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012	Aug. 20, 2013 Class A Common Shares	Nov. 14, 2013 Class A Common Shares Subsequent Event	Aug. 20, 2013 Class B Common Shares	Nov. 14, 2013 Class B Common Shares Subsequent Event
Subsequent Event [Line Items]
Cash dividends declared per common share	$ 0.10	$ 0.09	$ 0.10	$ 0.18	$ 0.10	$ 0.10	$ 0.10	$ 0.10

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Preliminary Allocation of Total Purchase Price (Detail) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013	Apr. 30, 2013	Aug. 14, 2013 Taylor Manufacturing Systems, USA, LLC
Business Acquisition [Line Items]
Current Assets			$ 130
Goodwill	13,819	12,601	1,218
Current Technology			472
Total Assets Acquired			1,820
Current Liabilities			(213)
Long Term liabilities			(366)
Net Assets Acquired			$ 1,241

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Declaration of Dividend Payable - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		1 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012	Aug. 20, 2013 Class A Common Shares	Aug. 20, 2013 Class B Common Shares
Dividends Payable [Line Items]
Cash dividends declared per common share	$ 0.10	$ 0.09	$ 0.10	$ 0.18	$ 0.10	$ 0.10
Cash dividends declared, payment date					Dec. 09, 2013	Dec. 09, 2013
Cash dividends declared, record date					Nov. 15, 2013	Nov. 15, 2013

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Condensed Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Oct. 31, 2013	Oct. 31, 2012
Cash flows from operating activities:
Net earnings	$ 5,286,000	$ 5,193,000
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	1,462,000	2,085,000
Stock-based compensation expense	700,000	775,000
Bond amortization	1,000	11,000
Tax benefit of stock options exercised	88,000	86,000
Excess tax benefits from stock-based compensation	(68,000)	(70,000)
Net loss on investments	350,000	183,000
Retirement of property and equipment		15,000
Deferred income taxes	(103,000)	(294,000)
Changes in operating assets and liabilities:
Purchases of trading securities	(7,412,000)	(8,074,000)
Proceeds from maturities and sales of trading securities	11,152,000	9,732,000
Accounts receivable, net	(118,000)	1,436,000
Prepaid expenses and other assets	(429,000)	(91,000)
Accounts payable and other liabilities	165,000	(3,269,000)
Deferred revenue	(1,438,000)	(1,474,000)
Net cash provided by operating activities	9,636,000	6,244,000
Cash flows from investing activities:
Capitalized computer software development costs	(1,641,000)	(1,811,000)
Purchases of property and equipment, net of disposals	(155,000)	(521,000)
Proceeds from maturities of investments	225,000	693,000
Purchase of business, net of cash acquired	(1,191,000)
Net cash used in investing activities	(2,762,000)	(1,639,000)
Cash flows from financing activities:
Repurchase of common stock		(254,000)
Excess tax benefits from stock based compensation	68,000	70,000
Proceeds from exercise of stock options	1,120,000	912,000
Dividends paid		(4,887,000)
Net cash provided by (used in) financing activities	1,188,000	(4,159,000)
Net change in cash and cash equivalents	8,062,000	446,000
Cash and cash equivalents at beginning of period	41,164,000	39,111,000
Cash and cash equivalents at end of period	$ 49,226,000	$ 39,557,000

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Revenue Recognition

6 Months Ended

Oct. 31, 2013

Revenue Recognition

B. Revenue Recognition

We recognize revenue in accordance with the Software Revenue Recognition Topic of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification.

License. We recognize license revenue in connection with license agreements for standard proprietary software upon delivery of the software, provided we consider collection to be probable, the fee is fixed or determinable, there is evidence of an arrangement, and VSOE exists with respect to any undelivered elements of the arrangement. For multiple-element arrangements, we recognize revenue under the residual method, whereby (1) the total fair value of the undelivered elements, as indicated by VSOE, is deferred and subsequently recognized and (2) the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as revenue related to the delivered elements. We record revenues from sales of third-party products in accordance with Principal Agent Considerations within the Revenue Recognition Topic of the FASB’s Accounting Standards Codification. Furthermore, we evaluate sales through our indirect channel on a case-by-case basis to determine whether the transaction should be recorded gross or net, including but not limited to assessing whether or not we: (1) act as principal in the transaction, (2) take title to the products, (3) have risks and rewards of ownership, such as the risk of loss for collection, delivery, or returns, and (4) act as an agent or broker with compensation on a commission or fee basis. Accordingly, in most cases we record our sales through the Demand Management, Inc. (“DMI”) channel on a gross basis.

Maintenance. Revenue derived from maintenance contracts primarily includes 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. We recognize maintenance revenue ratably over the term of the maintenance agreement. In situations where we bundle all or a portion of the maintenance fee with the license fee, VSOE for maintenance is determined based on prices when sold separately.

Services. Revenue derived from services primarily includes consulting, implementation, and training. We primarily bill fees under time and materials arrangements and recognize them as we perform the services. In accordance with the other presentation matters within the Revenue Recognition Topic of the FASB’s Accounting Standards Codification, we recognize amounts received for reimbursement of travel and other out-of-pocket expenses incurred as revenue in the condensed consolidated statements of operations under services and other. These amounts totaled approximately $606,000 and $1.2 million for the three and six months ended October 31, 2013, respectively, and $682,000 and $1.2 million for the three and six months ended October 31, 2012, respectively.

Indirect Channel Revenue. We recognize revenues for sales made through indirect channels principally when the distributor makes the sale to an end-user, the license fee is fixed or determinable, the license fee is nonrefundable, and the sale meets all other conditions for revenue recognition.

Deferred Revenue. Deferred revenue represents advance payments or billings for software licenses, services, and maintenance billed in advance of the time revenue is recognized.

Sales Taxes. We account for sales taxes collected from customers on a net basis.

Unbilled Accounts Receivable. The unbilled receivable balance consists of amounts generated from license fee and services revenues. At October 31, 2013 and April 30, 2013, unbilled license fees were approximately $2.3 million and $1.1 million, respectively, and unbilled services revenues were approximately $2.1 million and $2.7 million, respectively. Unbilled license fee accounts receivable represents revenue that has been recognized, but under the terms of the license agreement, which include specified payment terms that are considered normal and customary, certain payments have not yet been invoiced to the customers. Unbilled services revenues primarily occur due to the timing of the respective billings, which occur subsequent to the end of each reporting period.

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Acquisitions

6 Months Ended

Oct. 31, 2013

Acquisitions

E. Acquisitions

We account for business combinations using the acquisition method of accounting and accordingly, the identifiable assets acquired and liabilities assumed are recorded based upon management’s estimates of current fair values as of the acquisition date. The estimation process includes analyses based on income and market approaches. Goodwill represents the excess purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. The goodwill generated is due in part to the synergies that are not included in the fair value of identifiable intangible assets. Goodwill recorded in an acquisition is assigned to applicable reporting units based on expected revenues. Identifiable intangible assets with finite lives are amortized over there useful lives. Amortization of current technology is recorded in Cost of Revenue-License and amortization of all other intangible assets is recorded in Amortization of acquisition-related intangibles. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in general and administrative expenses in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

On August 14, 2013, the Company completed the acquisition of certain assets of privately-held Taylor Manufacturing Systems, USA, LLC (“TMS”) an Atlanta-based provider in the advance planning systems (“APS”) area. The acquisition of TMS will allow the Company to expand its software product offerings.

Under the terms of the purchase agreement, the Company acquired the assets in exchange for a purchase price of $1,841,000. The purchase price consisted of $1,191,000 paid in cash at closing, subject to certain adjustments, and three additional cash payments of $200,000, generally payable on the anniversary date of the transaction in each of the three years following closing. The additional cash payments resulted in the Company recording a short-term liability of $200,000 for the payment due on the first anniversary and a long-term liability of $366,000 for the payments due on the second and third anniversaries. The Company incurred acquisition costs of approximately $68,500 during the three and six months ended October 31, 2013. The operating results of TMS are not material for proforma disclosure. We allocated $1,218,000 of the total purchase price to goodwill, which has been assigned to the Supply Chain Management segment and is deductible for income tax purposes.

The following preliminary allocation of the total purchase price reflects the fair value of the assets acquired and liabilities assumed as of August 14, 2013 (in thousands):

Current Assets	$	130
Goodwill		1,218
Current Technology		472
Total Assets Acquired		1,820
Current Liabilities		(213	)
Long Term liabilities		(366	)
Net Assets Acquired	$	1,241

Current technology is being amortized on a straight line basis over the remaining estimated economic life of the product (4 years), including the period being reported. The fair value of deferred revenues in a business combination is considered to be an assumed liability (which must arise from a legal performance obligation) and, accordingly, is estimated based on the direct cost of fulfilling the obligation plus a normal profit margin, which approximates fair value. Also, in practice, the normal profit margin is limited to the profit margin on the costs to provide the product or service (that is, the fulfillment effort).

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Declaration of Dividend Payable

6 Months Ended

Oct. 31, 2013

Declaration of Dividend Payable

C. Declaration of Dividend Payable

On August 20, 2013, our Board of Directors declared a quarterly cash dividend of $0.10 per share of our Class A and Class B common stock. The cash dividend is payable on December 9, 2013 to Class A and Class B shareholders of record at the close of business on November 15, 2013.

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Diluted Earnings Per Share for Class A Common Shares Using If-Converted Method (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Oct. 31, 2013		Oct. 31, 2012		Oct. 31, 2013		Oct. 31, 2012
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Undistributed & distributed earnings, Per Basic	$ 3,693		$ 2,771		$ 5,286		$ 5,193
Basic weighted average common shares outstanding	27,448		27,151		27,406		27,112
Diluted, Class A Common Shares	27,874		27,627		27,841		27,596
Basic, EPS	$ 0.13	[1]	$ 0.10	[1]	$ 0.19	[1]	$ 0.19	[1]
Diluted, EPS	$ 0.13	[1]	$ 0.10	[1]	$ 0.19	[1]	$ 0.19	[1]
Class A Common Shares
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Undistributed & distributed earnings, Per Basic	3,345		2,507		4,788		4,698
Undistributed & distributed earnings, Class B Conversion	348		264		498		495
Net Income (Loss) Available to Common Stockholders, Diluted, Total	$ 3,693		$ 2,771		$ 5,286		$ 5,193
Basic weighted average common shares outstanding	24,861		24,564		24,818		24,525
Common Stock Equivalents	426		476		436		484
Weighted Average Number of Shares Including Common Stock Equivalents, Diluted	25,287		25,040		25,254		25,009
Class B Conversion	2,587		2,587		2,587		2,587
Diluted, Class A Common Shares	27,874		27,627		27,841		27,596
Basic, EPS	$ 0.13		$ 0.10		$ 0.19		$ 0.19
Diluted, EPS	$ 0.13		$ 0.10		$ 0.19		$ 0.19

[1] Basic per share amounts are the same for Class A and Class B shares. Diluted per share amounts for Class A shares are shown above. Diluted earnings per share for Class B shares under the two-class method are $0.13 and $0.10 for the three months ended October 31, 2013 and 2012 and $0.19 for the six months ended October 31, 2013 and 2012, respectively. See Note D to the Condensed Consolidated Financial Statements.

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Stock-Based Compensation - Additional information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option for common stock			313,000	343,000
Stock-based compensation expense	$ 361,000	$ 384,000	$ 700,000	$ 775,000
Income tax benefit	117,000	110,000	228,000	215,000
Excess tax benefits from stock based compensation			68,000	70,000
Stock option exercised			180,340	167,704
Intrinsic value of options exercised			450,000	472,000
Unrecognized compensation cost related to unvested stock option	$ 3,600,000		$ 3,600,000
Weighted average period for Unrecognized compensation cost			1 year 9 months 18 days

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Stock Repurchases - Additional Information (Detail) (Class A Common Shares, USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Oct. 31, 2013
Equity, Class of Treasury Stock [Line Items]
Common stock shares repurchased	4,444,815
Cost of common stock repurchased	$ 24.3
Shares Stock Repurchase Plan, August 19, 2002
Equity, Class of Treasury Stock [Line Items]
Approved number of shares to be repurchased	2,000,000
Common stock shares repurchased	909,862
Cost of common stock repurchased	$ 4.9

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Oct. 31, 2013	Apr. 30, 2013
Allowance for doubtful accounts receivable	$ 127	$ 337
Property and equipment, accumulated depreciation	30,012	29,489
Capitalized software, accumulated amortization	8,289	7,664
Other intangibles, accumulated amortization	$ 2,570	$ 2,256
Class A treasury stock, shares	4,444,815	4,444,815
Class A Common Shares
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	29,365,186	29,184,846
Class B Common Shares
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	2,587,086	2,587,086
Common stock, shares outstanding	2,587,086	2,587,086

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Stock Repurchases

6 Months Ended

Oct. 31, 2013

Stock Repurchases

H. Stock Repurchases

On August 19, 2002, our Board of Directors approved a resolution authorizing the repurchase of up to an additional 2.0 million shares of our Class A common stock. We have made and will make these repurchases through open market purchases at prevailing market prices. The timing of any repurchase will depend upon market conditions, the market price of our common stock and management’s assessment of our liquidity and cash flow needs. Under this repurchase plan, through October 31, 2013, we have repurchased 909,862 shares of common stock at a cost of approximately $4.9 million. As of October 31, 2013, under all repurchase plans previously authorized, including this most recent plan, we have repurchased a total of 4,444,815 shares of common stock at a cost of approximately $24.3 million.

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Condensed Consolidated Statements of Operations (Parenthetical) (USD $)	3 Months Ended				6 Months Ended
	Oct. 31, 2013		Oct. 31, 2012		Oct. 31, 2013		Oct. 31, 2012
Diluted	$ 0.13	[1]	$ 0.10	[1]	$ 0.19	[1]	$ 0.19	[1]
Class B Common Shares
Diluted	$ 0.13		$ 0.10		$ 0.19		$ 0.19

[1] Basic per share amounts are the same for Class A and Class B shares. Diluted per share amounts for Class A shares are shown above. Diluted earnings per share for Class B shares under the two-class method are $0.13 and $0.10 for the three months ended October 31, 2013 and 2012 and $0.19 for the six months ended October 31, 2013 and 2012, respectively. See Note D to the Condensed Consolidated Financial Statements.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013	Apr. 30, 2013
Current assets:
Cash and cash equivalents	$ 49,226	$ 41,164
Investments	12,539	18,602
Trade accounts receivable, less allowance for doubtful accounts of $127 at October 31, 2013 and $337 at April 30, 2013
Billed	12,759	13,179
Unbilled	4,406	3,741
Prepaid expenses and other current assets	3,551	3,162
Total current assets	82,481	79,848
Investments-Noncurrent	8,405	6,658
Property and equipment, net of accumulated depreciation of $30,012 at October 31, 2013 and $29,489 at April 30, 2013	4,114	4,482
Capitalized software, net of accumulated amortization of $8,289 at October 31, 2013 and $7,664 at April 30, 2013	9,724	8,708
Goodwill	13,819	12,601
Other intangibles, net of accumulated amortization of $2,570 at October 31, 2013 and $2,256 at April 30, 2013	845	687
Other assets	129	86
Total assets	119,517	113,070
Current liabilities:
Accounts payable	455	1,207
Accrued compensation and related costs	2,959	2,961
Dividends payable	2,752
Other current liabilities	4,138	2,969
Deferred income taxes	218	332
Deferred revenue	19,361	21,291
Total current liabilities	29,883	28,760
Deferred income taxes	1,330	1,066
Long-term deferred revenue	505
Other long-term liabilities	366
Total liabilities	32,084	29,826
Shareholders' equity:
Additional paid-in capital	100,583	98,947
Retained earnings	7,932	5,398
Class A treasury stock, 4,444,815 shares at October 31, 2013 and April 30, 2013, at cost	(24,278)	(24,278)
Total shareholders' equity	87,433	83,244
Commitments and contingencies
Total liabilities and shareholders' equity	119,517	113,070
Class A Common Shares
Shareholders' equity:
Common stock value	2,937	2,918
Class B Common Shares
Shareholders' equity:
Common stock value	$ 259	$ 259

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Diluted Earnings Per Share for Class B Common Shares Using Two-Class Method (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Oct. 31, 2013		Oct. 31, 2012		Oct. 31, 2013		Oct. 31, 2012
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net earnings	$ 3,693		$ 2,771		$ 5,286		$ 5,193
Basic weighted average common shares outstanding	27,448		27,151		27,406		27,112
Weighted Average Number of Shares Outstanding, Diluted	27,874		27,627		27,841		27,596
Basic, EPS	$ 0.13	[1]	$ 0.10	[1]	$ 0.19	[1]	$ 0.19	[1]
Diluted, EPS	$ 0.13	[1]	$ 0.10	[1]	$ 0.19	[1]	$ 0.19	[1]
Class B Common Shares
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Undistributed & distributed earnings, Class B Conversion	348		264		498		495
Reallocation of Undistributed Earnings	(1)		(1)		(4)		(1)
Net earnings	$ 347		$ 263		$ 494		$ 494
Basic weighted average common shares outstanding	2,587		2,587		2,587		2,587
Weighted Average Number of Shares Outstanding, Diluted	2,587		2,587		2,587		2,587
Basic, EPS	$ 0.13		$ 0.10		$ 0.19		$ 0.19
Diluted, EPS	$ 0.13		$ 0.10		$ 0.19		$ 0.19

[1] Basic per share amounts are the same for Class A and Class B shares. Diluted per share amounts for Class A shares are shown above. Diluted earnings per share for Class B shares under the two-class method are $0.13 and $0.10 for the three months ended October 31, 2013 and 2012 and $0.19 for the six months ended October 31, 2013 and 2012, respectively. See Note D to the Condensed Consolidated Financial Statements.

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Industry Segments (Tables)

6 Months Ended

Oct. 31, 2013

Segment Operating Profit or Loss

In the following table, we have broken down the intersegment transactions applicable to the three and six months ended October 31, 2013 and 2012:

	Three Months Ended October 31,						Six Months Ended October 31,
	2013			2012			2013			2012
Revenues:
Enterprise Resource Planning	$	3,296		$	3,470		$	6,048		$	6,908
Collaborative Supply Chain Management		16,934			16,356			31,135			31,805
IT Consulting		6,701			6,437			13,066			13,464
	$	26,931		$	26,263		$	50,249		$	52,177
Operating income (loss) before intersegment eliminations:
Enterprise Resource Planning	$	(666	)	$	(947	)	$	(2,160	)	$	(2,180	)
Collaborative Supply Chain Management		5,315			4,708			8,636			9,131
IT Consulting		743			475			1,299			1,006
	$	5,392		$	4,236		$	7,775		$	7,957
Intersegment eliminations:
Enterprise Resource Planning	$	(413	)	$	(600	)	$	(893	)	$	(996	)
Collaborative Supply Chain Management		394			570			844			943
IT Consulting		19			30			49			53
	$	—		$	—		$	—		$	—
Operating income (loss) after intersegment eliminations:
Enterprise Resource Planning	$	(1,079	)	$	(1,547	)	$	(3,053	)	$	(3,176	)
Collaborative Supply Chain Management		5,709			5,278			9,480			10,074
IT Consulting		762			505			1,348			1,059
	$	5,392		$	4,236		$	7,775		$	7,957
Capital expenditures:
Enterprise Resource Planning	$	93		$	40		$	93		$	317
Collaborative Supply Chain Management		23			141			52			177
IT Consulting		5			—			10			27
	$	121		$	181		$	155		$	521
Capitalized Software:
Enterprise Resource Planning	$	—		$	—		$	—		$	—
Collaborative Supply Chain Management		924			948			1,641			1,811
IT Consulting		—			—			—			—
	$	924		$	948		$	1,641		$	1,811
Depreciation and amortization:
Enterprise Resource Planning	$	220		$	232		$	441		$	469
Collaborative Supply Chain Management		210			808			1,015			1,612
IT Consulting		3			2			6			4
	$	433		$	1,042		$	1,462		$	2,085
Earnings (loss) before income taxes:
Enterprise Resource Planning	$	(310	)	$	(706	)	$	(1,737	)	$	(1,614	)
Collaborative Supply Chain Management		5,380			4,776			8,677			9,147
IT Consulting		739			475			1,296			1,006
	$	5,809		$	4,545		$	8,236		$	8,539

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Segment Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Segment Reporting Information [Line Items]
Revenues	$ 26,931	$ 26,263	$ 50,249	$ 52,177
Operating income (loss)	5,392	4,236	7,775	7,957
Capital expenditures	121	181	155	521
Capitalized Software	924	948	1,641	1,811
Depreciation and amortization	433	1,042	1,462	2,085
Earnings (loss) before income taxes	5,809	4,545	8,236	8,539
Enterprise Resource Planning
Segment Reporting Information [Line Items]
Revenues	3,296	3,470	6,048	6,908
Operating income (loss)	(1,079)	(1,547)	(3,053)	(3,176)
Capital expenditures	93	40	93	317
Depreciation and amortization	220	232	441	469
Earnings (loss) before income taxes	(310)	(706)	(1,737)	(1,614)
Collaborative Supply Chain Management
Segment Reporting Information [Line Items]
Revenues	16,934	16,356	31,135	31,805
Operating income (loss)	5,709	5,278	9,480	10,074
Capital expenditures	23	141	52	177
Capitalized Software	924	948	1,641	1,811
Depreciation and amortization	210	808	1,015	1,612
Earnings (loss) before income taxes	5,380	4,776	8,677	9,147
IT Consulting
Segment Reporting Information [Line Items]
Revenues	6,701	6,437	13,066	13,464
Operating income (loss)	762	505	1,348	1,059
Capital expenditures	5		10	27
Depreciation and amortization	3	2	6	4
Earnings (loss) before income taxes	739	475	1,296	1,006
Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	5,392	4,236	7,775	7,957
Operating Segments | Enterprise Resource Planning
Segment Reporting Information [Line Items]
Operating income (loss)	(666)	(947)	(2,160)	(2,180)
Operating Segments | Collaborative Supply Chain Management
Segment Reporting Information [Line Items]
Operating income (loss)	5,315	4,708	8,636	9,131
Operating Segments | IT Consulting
Segment Reporting Information [Line Items]
Operating income (loss)	743	475	1,299	1,006
Intersegment Eliminations | Enterprise Resource Planning
Segment Reporting Information [Line Items]
Operating income (loss)	(413)	(600)	(893)	(996)
Intersegment Eliminations | Collaborative Supply Chain Management
Segment Reporting Information [Line Items]
Operating income (loss)	394	570	844	943
Intersegment Eliminations | IT Consulting
Segment Reporting Information [Line Items]
Operating income (loss)	$ 19	$ 30	$ 49	$ 53

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Held to Maturity Investments Which are Not Recorded at Fair Value (Detail) (USD $)	Oct. 31, 2013	Apr. 30, 2013
Schedule of Held-to-maturity Securities [Line Items]
Carrying value	$ 0	$ 226,000
Unrealized Gain		1,000
Unrealized Loss
Fair value		227,000
Certificates of Deposit
Schedule of Held-to-maturity Securities [Line Items]
Carrying value
Unrealized Gain
Tax-exempt state and municipal bonds
Schedule of Held-to-maturity Securities [Line Items]
Carrying value		226,000
Unrealized Gain		1,000
Fair value		$ 227,000

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Contractual Maturities of Debt Securities Classified as Held to Maturity (Detail) (USD $)	Oct. 31, 2013	Apr. 30, 2013
Schedule of Held-to-maturity Securities [Line Items]
Due within one year		$ 226,000
Due within two years
Due within three years
Due after three years
Total Due	$ 0	$ 226,000

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Fair Value of Financial Instruments

6 Months Ended

Oct. 31, 2013

Fair Value of Financial Instruments

G. Fair Value of Financial Instruments

We measure our investments based on a fair value hierarchy disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. A number of factors affect market price observability, including the type of asset or liability and its characteristics. This hierarchy prioritizes the inputs into three broad levels as follows:

• Level 1—Quoted prices in active markets for identical instruments.

• Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The following is a general description of the valuation methodologies we use for financial assets and liabilities measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Cash Equivalents—Cash equivalents include investments in government obligation based money-market funds, other money market instruments and interest-bearing deposits with initial terms of three months or less. The fair value of cash equivalents approximates its carrying value due to the short-term nature of these instruments.

Marketable Securities—Marketable securities utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. Government debt securities, as these securities all have quoted prices in active markets. Marketable securities utilizing Level 2 inputs include municipal bonds. We value these securities using market-corroborated pricing or other models that use observable inputs such as yield curves.

The following tables present our assets and liabilities that we measured at fair value on a recurring basis as of October 31, 2013 and April 30, 2013, respectively, and indicates the fair value hierarchy of the valuation techniques we used to determine such fair value (in thousands):

	October 31, 2013
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	47,274	$	—	$	—	$	47,274
Marketable securities		7,454		13,222		—		20,676
Total	$	54,728	$	13,222	$	—	$	67,950
	April 30, 2013
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	37,716	$	—	$	—	$	37,716
Marketable securities		11,215		13,548		—		24,763
Total	$	48,931	$	13,548	$	—	$	62,479

In addition to cash equivalents and marketable securities classified as trading securities, we also have an equity method investment valued at approximately $269,000 and $271,000 as of October 31, 2013 and April 30, 2013, respectively, and approximately $0 and $226,000 in held-to-maturity investments as of October 31, 2013 and April 30, 2013, respectively, which are not recorded at fair value and thus are not included in the tables above. The held-to-maturity investments consist of certificates of deposits and tax-exempt state and municipal bonds and are recorded at amortized cost. We obtain fair values for these securities from third-party broker statements. We derive the fair value amounts primarily from quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These investments consisted of the following at October 31, 2013 and April 30, 2013 (in thousands):

	October 31, 2013
	Carrying value		Unrealized Gain		Unrealized Loss		Fair value
Held-to-maturity:
Certificates of Deposit	$	—	$	—	$	—	$	—
Tax-exempt state and municipal bonds		—		—		—		—
	$	—	$	—	$	—	$	—
	April 30, 2013
	Carrying value		Unrealized Gain		Unrealized Loss		Fair value
Held-to-maturity:
Certificates of Deposit	$	—	$	—	$	—	$	—
Tax-exempt state and municipal bonds		226		1		—		227
	$	226	$	1	$	—	$	227

The contractual maturities of debt securities classified as held to maturity at October 31, 2013 and April 30, 2013 were as follows (in thousands):

	October 31, 2013		April 30, 2013
Due within one year	$	—	$	226
Due within two years		—		—
Due within three years		—		—
Due after three years		—		—
	$	—	$	226

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Acquisitions - Additional Information (Detail) (USD $)			1 Months Ended	3 Months Ended	6 Months Ended	1 Months Ended
	Oct. 31, 2013	Apr. 30, 2013	Aug. 14, 2013 Taylor Manufacturing Systems, USA, LLC	Oct. 31, 2013 Taylor Manufacturing Systems, USA, LLC	Oct. 31, 2013 Taylor Manufacturing Systems, USA, LLC	Aug. 14, 2013 Taylor Manufacturing Systems, USA, LLC Current Technology
Business Acquisition [Line Items]
Business acquisition, purchase price			$ 1,841,000
Business acquisition, purchase price paid in cash			1,191,000
Business acquisition, additional cash payments payable in each of three years following closing			200,000
Current Liabilities			213,000
Long Term liabilities			366,000
Business acquisition costs incurred				68,500	68,500
Goodwill	$ 13,819,000	$ 12,601,000	$ 1,218,000
Remaining estimated economic life of product						4 years

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Industry Segments

6 Months Ended

Oct. 31, 2013

Industry Segments

J. Industry Segments

We provide our software solutions through three major business segments, which are further broken down into a total of four major product and service groups. The three business segments are (1) Supply Chain Management (“SCM”), (2) Enterprise Resource Planning (“ERP”), and (3) Information Technology (“IT”) Consulting.

The SCM segment consists of Logility, a wholly-owned subsidiary, as well as its subsidiary, DMI, which provide collaborative supply chain solutions to streamline and optimize the forecasting, production, distribution and management of products between trading partners. The ERP segment consists of (i) American Software ERP, which provides purchasing and materials management, customer order processing, financial, e-commerce and traditional manufacturing solutions, and (ii) New Generation Computing (“NGC”), which provides industry-specific business software to both retailers and manufacturers in the apparel, sewn products and furniture industries. The IT Consulting segment consists of The Proven Method, Inc., an IT staffing and consulting services firm. We also provide support for our software products, such as software enhancements, documentation, updates, customer education, consulting, systems integration services, and maintenance.

Our chief operating decision maker is the President and Chief Executive Officer (“CEO”). While the CEO is apprised of a variety of financial metrics and information, we manage our business primarily on a segment basis, with the CEO evaluating performance based upon segment operating profit or loss that includes an allocation of common expenses, but excludes certain unallocated expenses.

In the following table, we have broken down the intersegment transactions applicable to the three and six months ended October 31, 2013 and 2012:

	Three Months Ended October 31,						Six Months Ended October 31,
	2013			2012			2013			2012
Revenues:
Enterprise Resource Planning	$	3,296		$	3,470		$	6,048		$	6,908
Collaborative Supply Chain Management		16,934			16,356			31,135			31,805
IT Consulting		6,701			6,437			13,066			13,464
	$	26,931		$	26,263		$	50,249		$	52,177
Operating income (loss) before intersegment eliminations:
Enterprise Resource Planning	$	(666	)	$	(947	)	$	(2,160	)	$	(2,180	)
Collaborative Supply Chain Management		5,315			4,708			8,636			9,131
IT Consulting		743			475			1,299			1,006
	$	5,392		$	4,236		$	7,775		$	7,957
Intersegment eliminations:
Enterprise Resource Planning	$	(413	)	$	(600	)	$	(893	)	$	(996	)
Collaborative Supply Chain Management		394			570			844			943
IT Consulting		19			30			49			53
	$	—		$	—		$	—		$	—
Operating income (loss) after intersegment eliminations:
Enterprise Resource Planning	$	(1,079	)	$	(1,547	)	$	(3,053	)	$	(3,176	)
Collaborative Supply Chain Management		5,709			5,278			9,480			10,074
IT Consulting		762			505			1,348			1,059
	$	5,392		$	4,236		$	7,775		$	7,957
Capital expenditures:
Enterprise Resource Planning	$	93		$	40		$	93		$	317
Collaborative Supply Chain Management		23			141			52			177
IT Consulting		5			—			10			27
	$	121		$	181		$	155		$	521
Capitalized Software:
Enterprise Resource Planning	$	—		$	—		$	—		$	—
Collaborative Supply Chain Management		924			948			1,641			1,811
IT Consulting		—			—			—			—
	$	924		$	948		$	1,641		$	1,811
Depreciation and amortization:
Enterprise Resource Planning	$	220		$	232		$	441		$	469
Collaborative Supply Chain Management		210			808			1,015			1,612
IT Consulting		3			2			6			4
	$	433		$	1,042		$	1,462		$	2,085
Earnings (loss) before income taxes:
Enterprise Resource Planning	$	(310	)	$	(706	)	$	(1,737	)	$	(1,614	)
Collaborative Supply Chain Management		5,380			4,776			8,677			9,147
IT Consulting		739			475			1,296			1,006
	$	5,809		$	4,545		$	8,236		$	8,539

Major Customer

For the three months ended October 31, 2013, there were no major customers that accounted for more than 10% of total revenues. For the six months ended October 31, 2013, we had one major customer, The Home Depot, which accounted for approximately 10.0%, or $5.0 million of total revenues. For the three and six months ended October 31, 2012, this major customer accounted for approximately 10.6%, or $2.8 million, and 12.2%, or $6.4 million, of total revenues, respectively. Revenues from our major customer for the periods reported are primarily attributable to our IT consulting segment. The related accounts receivable balance for this customer was approximately $1.1 million as of October 31, 2013, and $1.6 million as of April 30, 2013.

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Stock-Based Compensation

6 Months Ended

Oct. 31, 2013

Stock-Based Compensation

F. Stock-Based Compensation

During the six months ended October 31, 2013 and 2012, we granted options for 313,000 and 343,000 shares of common stock, respectively. We recorded stock option compensation cost of approximately $361,000 and $384,000 and related income tax benefits of approximately $117,000 and $110,000 during the three months ended October 31, 2013 and 2012, respectively. We recorded stock option compensation cost of approximately $700,000 and $775,000 and related income tax benefits of approximately $228,000 and $215,000 during the six months ended October 31, 2013 and 2012, respectively. We record stock-based compensation expense on a straight-line basis over the vesting period directly to additional paid-in capital.

We classify cash flows resulting from the tax deductions in excess of the tax benefits initially recognized for those options (excess tax benefits) as financing cash flows. During the six months ended October 31, 2013 and 2012, we realized excess tax benefits of approximately $68,000 and $70,000, respectively.

During the six months ended October 31, 2013 and 2012, we issued 180,340 and 167,704 shares of common stock, respectively, resulting from the exercise of stock options. The total intrinsic value of options exercised during the six months ended October 31, 2013 and 2012 based on market value at the exercise dates was approximately $450,000 and $472,000, respectively. As of October 31, 2013, unrecognized compensation cost related to unvested stock option awards approximated $3.6 million, which we expect to recognize over a weighted average period of 1.8 years.

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Basis of Presentation and Principles of Consolidation

6 Months Ended

Oct. 31, 2013

Basis of Presentation and Principles of Consolidation

A. Basis of Presentation and Principles of Consolidation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of our management, these condensed consolidated financial statements contain all normal recurring adjustments considered necessary for a fair presentation of the financial position at October 31, 2013, the results of operations for the three and six months ended October 31, 2013 and 2012 and cash flows for the six months ended October 31, 2013 and 2012. The results for the three and six months ended October 31, 2013 are not necessarily indicative of the results expected for the full year. You should read these statements in conjunction with our audited consolidated financial statements and management’s discussion and analysis and results of operations included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2013.

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for the fiscal year ended April 30, 2013 describes the significant accounting policies that we have used in preparing our financial statements. On an ongoing basis, we evaluate our estimates, including but not limited to those related to revenue/vendor specific objective evidence (“VSOE”), bad debts, capitalized software costs, goodwill, intangible assets, stock-based compensation, income taxes and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results could differ materially from these estimates under different assumptions or conditions.

Principles of Consolidation

The consolidated financial statements include the accounts of American Software, Inc. (“American Software” or the “Company”), and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

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Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013	Apr. 30, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 47,274	$ 37,716
Marketable securities	20,676	24,763
Total	67,950	62,479
Quoted Prices in Active Markets for Identical Assets, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	47,274	37,716
Marketable securities	7,454	11,215
Total	54,728	48,931
Significant Other Observable Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	13,222	13,548
Total	$ 13,222	$ 13,548

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Basis of Presentation and Principles of Consolidation (Policies)

6 Months Ended

Oct. 31, 2013

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of our management, these condensed consolidated financial statements contain all normal recurring adjustments considered necessary for a fair presentation of the financial position at October 31, 2013, the results of operations for the three and six months ended October 31, 2013 and 2012 and cash flows for the six months ended October 31, 2013 and 2012. The results for the three and six months ended October 31, 2013 are not necessarily indicative of the results expected for the full year. You should read these statements in conjunction with our audited consolidated financial statements and management’s discussion and analysis and results of operations included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2013.

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for the fiscal year ended April 30, 2013 describes the significant accounting policies that we have used in preparing our financial statements. On an ongoing basis, we evaluate our estimates, including but not limited to those related to revenue/vendor specific objective evidence (“VSOE”), bad debts, capitalized software costs, goodwill, intangible assets, stock-based compensation, income taxes and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results could differ materially from these estimates under different assumptions or conditions.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of American Software, Inc. (“American Software” or the “Company”), and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Revenue Recognition

We recognize revenue in accordance with the Software Revenue Recognition Topic of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification.

License. We recognize license revenue in connection with license agreements for standard proprietary software upon delivery of the software, provided we consider collection to be probable, the fee is fixed or determinable, there is evidence of an arrangement, and VSOE exists with respect to any undelivered elements of the arrangement. For multiple-element arrangements, we recognize revenue under the residual method, whereby (1) the total fair value of the undelivered elements, as indicated by VSOE, is deferred and subsequently recognized and (2) the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as revenue related to the delivered elements. We record revenues from sales of third-party products in accordance with Principal Agent Considerations within the Revenue Recognition Topic of the FASB’s Accounting Standards Codification. Furthermore, we evaluate sales through our indirect channel on a case-by-case basis to determine whether the transaction should be recorded gross or net, including but not limited to assessing whether or not we: (1) act as principal in the transaction, (2) take title to the products, (3) have risks and rewards of ownership, such as the risk of loss for collection, delivery, or returns, and (4) act as an agent or broker with compensation on a commission or fee basis. Accordingly, in most cases we record our sales through the Demand Management, Inc. (“DMI”) channel on a gross basis.

Maintenance. Revenue derived from maintenance contracts primarily includes 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. We recognize maintenance revenue ratably over the term of the maintenance agreement. In situations where we bundle all or a portion of the maintenance fee with the license fee, VSOE for maintenance is determined based on prices when sold separately.

Services. Revenue derived from services primarily includes consulting, implementation, and training. We primarily bill fees under time and materials arrangements and recognize them as we perform the services. In accordance with the other presentation matters within the Revenue Recognition Topic of the FASB’s Accounting Standards Codification, we recognize amounts received for reimbursement of travel and other out-of-pocket expenses incurred as revenue in the condensed consolidated statements of operations under services and other. These amounts totaled approximately $606,000 and $1.2 million for the three and six months ended October 31, 2013, respectively, and $682,000 and $1.2 million for the three and six months ended October 31, 2012, respectively.

Indirect Channel Revenue. We recognize revenues for sales made through indirect channels principally when the distributor makes the sale to an end-user, the license fee is fixed or determinable, the license fee is nonrefundable, and the sale meets all other conditions for revenue recognition.

Deferred Revenue. Deferred revenue represents advance payments or billings for software licenses, services, and maintenance billed in advance of the time revenue is recognized.

Sales Taxes. We account for sales taxes collected from customers on a net basis.

Unbilled Accounts Receivable. The unbilled receivable balance consists of amounts generated from license fee and services revenues. At October 31, 2013 and April 30, 2013, unbilled license fees were approximately $2.3 million and $1.1 million, respectively, and unbilled services revenues were approximately $2.1 million and $2.7 million, respectively. Unbilled license fee accounts receivable represents revenue that has been recognized, but under the terms of the license agreement, which include specified payment terms that are considered normal and customary, certain payments have not yet been invoiced to the customers. Unbilled services revenues primarily occur due to the timing of the respective billings, which occur subsequent to the end of each reporting period.

Earnings Per Common Share

We have two classes of common stock of which Class B Common Shares are convertible into Class A Common Shares at any time, on a one-for-one basis. Under our Articles of Incorporation, if we declare dividends, holders of Class A Common Shares shall receive a $.05 dividend per share prior to the Class B Common Shares receiving any dividend and holders of Class A Common Shares shall receive a dividend at least equal to Class B Common Shares dividends on a per share basis. As a result, we have computed the earnings per share in accordance with Earnings Per Share within the Presentation Topic of the FASB’s Accounting Standards Codification, which requires companies that have multiple classes of equity securities to use the “two-class” method in computing earnings per share.

For our basic earnings per share calculation, we use the “two-class” method. Basic earnings per share are calculated by dividing net earnings attributable to each class of common stock by the weighted average number of shares outstanding. All undistributed earnings are allocated evenly between Class A and B Common Shares in the earnings per share calculation to the extent that earnings equal or exceed $.05 per share. This allocation is based on management’s judgment after considering the dividend rights of the two classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B shares to Class A shares.

The calculation of diluted earnings per share is similar to the calculation of basic earnings per share, except that the calculation includes the dilutive effect of the assumed exercise of options issuable under our stock incentive plans. For our diluted earnings per share calculation for Class A shares, we use the “if-converted” method. This calculation assumes that all Class B Common Shares are converted into Class A Common Shares and, as a result, assumes there are no holders of Class B Common Shares to participate in undistributed earnings.

For our diluted earnings per share calculation for Class B shares, we use the “two-class” method. This calculation does not assume that all Class B Common Shares are converted into Class A Common Shares. In addition, this method assumes the dilutive effect if Class A stock options were converted to Class A shares and the undistributed earnings are allocated evenly to both Class A and B shares including Class A shares issued pursuant to those converted stock options. This allocation is based on management’s judgment after considering the dividend rights of the two classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B shares into Class A shares.

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Comprehensive Income

6 Months Ended

Oct. 31, 2013

Comprehensive Income

I. Comprehensive Income

We have not included condensed consolidated statements of comprehensive income in the accompanying unaudited condensed consolidated financial statements since comprehensive income and net earnings presented in the accompanying condensed consolidated statements of operations would be substantially the same.

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Oct. 31, 2013

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables present our assets and liabilities that we measured at fair value on a recurring basis as of October 31, 2013 and April 30, 2013, respectively, and indicates the fair value hierarchy of the valuation techniques we used to determine such fair value (in thousands):

	October 31, 2013
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	47,274	$	—	$	—	$	47,274
Marketable securities		7,454		13,222		—		20,676
Total	$	54,728	$	13,222	$	—	$	67,950
	April 30, 2013
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	37,716	$	—	$	—	$	37,716
Marketable securities		11,215		13,548		—		24,763
Total	$	48,931	$	13,548	$	—	$	62,479

Held to Maturity Investments Which are Not Recorded at Fair Value

These investments consisted of the following at October 31, 2013 and April 30, 2013 (in thousands):

	October 31, 2013
	Carrying value		Unrealized Gain		Unrealized Loss		Fair value
Held-to-maturity:
Certificates of Deposit	$	—	$	—	$	—	$	—
Tax-exempt state and municipal bonds		—		—		—		—
	$	—	$	—	$	—	$	—
	April 30, 2013
	Carrying value		Unrealized Gain		Unrealized Loss		Fair value
Held-to-maturity:
Certificates of Deposit	$	—	$	—	$	—	$	—
Tax-exempt state and municipal bonds		226		1		—		227
	$	226	$	1	$	—	$	227

Contractual Maturities of Debt Securities Classified as Held to Maturity

The contractual maturities of debt securities classified as held to maturity at October 31, 2013 and April 30, 2013 were as follows (in thousands):

	October 31, 2013		April 30, 2013
Due within one year	$	—	$	226
Due within two years		—		—
Due within three years		—		—
Due after three years		—		—
	$	—	$	226

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Earnings Per Common Share (Tables)

6 Months Ended

Oct. 31, 2013

Basic Earnings Per Common Share

Basic earnings per common share:

	Three Months Ended October 31, 2013				Six Months Ended October 31, 2013
	Class A		Class B		Class A		Class B
Distributed earnings	$	0.10	$	0.10	$	0.10	$	0.10
Undistributed earnings		0.03		0.03		0.09		0.09
Total	$	0.13	$	0.13	$	0.19	$	0.19
Distributed earnings	$	2,492	$	259	$	2,492	$	259
Undistributed earnings		853		89		2,296		239
Total	$	3,345	$	348	$	4,788	$	498
Basic weighted average common shares outstanding		24,861		2,587		24,819		2,587
	Three Months Ended October 31, 2012				Six Months Ended October 31, 2012
	Class A		Class B		Class A		Class B
Distributed earnings	$	0.09	$	0.09	$	0.18	$	0.18
Undistributed earnings		0.01		0.01		0.01		0.01
Total	$	0.10	$	0.10	$	0.19	$	0.19
Distributed earnings	$	2,211	$	233	$	4,420	$	466
Undistributed earnings		296		31		278		29
Total	$	2,507	$	264	$	4,698	$	495
Basic weighted average common shares outstanding		24,564		2,587		24,525		2,587

Diluted Earnings Per Share for Class A Common Shares Using If-Converted Method

Diluted EPS for Class A Common Shares Using the If-Converted Method

Three Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	3,345		24,861	$	0.13
Common Stock Equivalents		—		426		—
		3,345		25,287		0.13
Class B Conversion		348		2,587		—
Diluted EPS for Class A	$	3,693		27,874	$	0.13

Six Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	4,788		24,818	$	0.19
Common Stock Equivalents		—		436		—
		4,788		25,254		0.19
Class B Conversion		498		2,587		—
Diluted EPS for Class A	$	5,286		27,841	$	0.19

Three Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	2,507		24,564	$	0.10
Common Stock Equivalents		—		476		—
		2,507		25,040		0.10
Class B Conversion		264		2,587		—
Diluted EPS for Class A	$	2,771		27,627	$	0.10

Six Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class A Common		Class A Common Shares		EPS
Per Basic	$	4,698		24,525	$	0.19
Common Stock Equivalents		—		484		—
		4,698		25,009		0.19
Class B Conversion		495		2,587		—
Diluted EPS for Class A	$	5,193		27,596	$	0.19

Diluted Earnings Per Share for Class B Common Shares Using Two-Class Method

Diluted EPS for Class B Common Shares Using the Two-Class Method

Three Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	348			2,587	$	0.13
Reallocation of undistributed earnings to Class A shares from Class B shares		(1	)		—		—
Diluted EPS for Class B	$	347			2,587	$	0.13

Six Months Ended October 31, 2013

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	498			2,587	$	0.19
Reallocation of undistributed earnings to Class A shares from Class B shares		(4	)		—		—
Diluted EPS for Class B	$	494			2,587	$	0.19

Three Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	264			2,587	$	0.10
Reallocation of undistributed earnings to Class A shares from Class B shares		(1	)		—		—
Diluted EPS for Class B	$	263			2,587	$	0.10

Six Months Ended October 31, 2012

	Undistributed & Distributed earnings to Class B Common			Class B Common Shares		EPS
Per Basic	$	495			2,587	$	0.19
Reallocation of undistributed earnings to Class A shares from Class B shares		(1	)		—		—
Diluted EPS for Class B	$	494			2,587	$	0.19

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Document and Entity Information	6 Months Ended
	Oct. 31, 2013	Dec. 02, 2013 Class A Common Shares	Dec. 02, 2013 Class B Common Shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 31, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	AMSWA
Entity Registrant Name	AMERICAN SOFTWARE INC
Entity Central Index Key	0000713425
Current Fiscal Year End Date	--04-30
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		24,920,679	2,587,086

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Acquisitions (Tables)

6 Months Ended

Oct. 31, 2013

Preliminary Allocation of Total Purchase Price

The following preliminary allocation of the total purchase price reflects the fair value of the assets acquired and liabilities assumed as of August 14, 2013 (in thousands):

Current Assets	$	130
Goodwill		1,218
Current Technology		472
Total Assets Acquired		1,820
Current Liabilities		(213	)
Long Term liabilities		(366	)
Net Assets Acquired	$	1,241