| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2003
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 0-22158
NetManage, Inc.
| Delaware | 77-0252226 | |
| (State or other jurisdiction of | (IRS employer | |
| Incorporation or organization) | identification no.) |
10725 North De Anza Boulevard
Cupertino, California 95014
(Address of principal executive offices, including zip code)
(408) 973-7171
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [ X ]
Number of shares of registrant’s common stock outstanding as of August 5, 2003: 8,664,900.
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NetManage, Inc.
Table of Contents
| Page | ||||||||
| Part I. | Financial Information |
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| Item 1. | Financial Statements |
|||||||
Condensed Consolidated Balance Sheets at June 30, 2003 and December 31, 2002 |
3 | |||||||
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2003 and
June 30, 2002(as restated) |
4 | |||||||
Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months ended June 30,
2003 and June 30, 2002(as restated) |
5 | |||||||
Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2003 and
June 30, 2002(as restated) |
6 | |||||||
Notes to Condensed Consolidated Financial Statements |
7 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
17 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
32 | ||||||
| Item 4 | Controls and Procedures |
32 | ||||||
| PART II. | OTHER INFORMATION |
|||||||
| Item 1. | Legal Proceedings |
34 | ||||||
| Item 2. | Changes in Securities |
34 | ||||||
| Item 3. | Defaults upon Senior Securities |
35 | ||||||
| Item 4. | Submission of Matters to a Vote of Security Holders |
35 | ||||||
| Item 5. | Other Information |
35 | ||||||
| Item 6. | Exhibits and Reports on Form 8-K |
36 | ||||||
Signatures |
37 | |||||||
Certifications |
38 | |||||||
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NetManage, Inc.
| June 30, | December 31, | |||||||||||
| 2003 | 2002 | |||||||||||
ASSETS |
||||||||||||
Current Assets: |
||||||||||||
Cash and cash equivalents |
$ | 25,749 | $ | 24,014 | ||||||||
Short-term investments |
273 | 80 | ||||||||||
Accounts receivable, net of allowances of $919 and $1,077, respectively |
6,204 | 18,332 | ||||||||||
Prepaid expenses and other current assets |
3,219 | 2,933 | ||||||||||
Total current assets |
35,445 | 45,359 | ||||||||||
Property and equipment, at cost |
||||||||||||
Computer software and equipment |
1,317 | 1,106 | ||||||||||
Furniture and fixtures |
5,107 | 4,598 | ||||||||||
Leasehold improvements |
1,354 | 1,273 | ||||||||||
| 7,778 | 6,977 | |||||||||||
Less-accumulated depreciation |
(5,712 | ) | (4,654 | ) | ||||||||
Net property and equipment |
2,066 | 2,323 | ||||||||||
Goodwill, net |
1,762 | 1,762 | ||||||||||
Other intangibles, net |
2,615 | 3,573 | ||||||||||
Other assets |
313 | 221 | ||||||||||
Total assets |
$ | 42,201 | $ | 53,238 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||
Current Liabilities: |
||||||||||||
Accounts payable |
$ | 2,360 | $ | 2,431 | ||||||||
Accrued liabilities |
8,055 | 9,549 | ||||||||||
Accrued payroll and related expenses |
2,990 | 3,693 | ||||||||||
Deferred revenue |
13,674 | 18,551 | ||||||||||
Income taxes payable |
1,567 | 1,346 | ||||||||||
Total current liabilities |
28,646 | 35,570 | ||||||||||
Long-term liabilities |
1,516 | 1,581 | ||||||||||
Total liabilities |
30,162 | 37,151 | ||||||||||
Commitments and contingencies (Note 5) |
||||||||||||
Stockholders’ equity: |
||||||||||||
Common stock, $0.01 par value -
|
||||||||||||
Authorized - 125,000,000 shares
|
||||||||||||
Issued - 10,741,748 and 10,698,025 shares, respectively
|
||||||||||||
Outstanding - 8,664,900 and 8,693,108 shares, respectively |
107 | 107 | ||||||||||
Treasury stock, at cost - 2,076,848 and 2,004,917 shares, respectively |
(20,804 | ) | (20,629 | ) | ||||||||
Additional paid in capital |
177,868 | 177,836 | ||||||||||
Accumulated deficit |
(141,059 | ) | (138,157 | ) | ||||||||
Accumulated other comprehensive loss |
(4,073 | ) | (3,070 | ) | ||||||||
Total stockholders’ equity |
12,039 | 16,087 | ||||||||||
Total liabilities and stockholders’ equity |
$ | 42,201 | $ | 53,238 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
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NetManage, Inc.
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||||
| (As restated, | (As restated, | |||||||||||||||||
| see Note 7) | see Note 7) | |||||||||||||||||
Net revenues: |
||||||||||||||||||
License fees |
$ | 4,227 | $ | 7,890 | $ | 10,236 | $ | 18,053 | ||||||||||
Services |
7,645 | 8,304 | 15,754 | 17,161 | ||||||||||||||
Total net revenues |
11,872 | 16,194 | 25,990 | 35,214 | ||||||||||||||
Cost of revenues: |
||||||||||||||||||
License fees |
558 | 579 | 1,076 | 1,382 | ||||||||||||||
Services |
1,206 | 1,651 | 2,527 | 3,316 | ||||||||||||||
Amortization of developed technology |
349 | 561 | 659 | 1,122 | ||||||||||||||
Total cost of revenues |
2,113 | 2,791 | 4,262 | 5,820 | ||||||||||||||
Gross margin |
9,759 | 13,403 | 21,728 | 29,394 | ||||||||||||||
Operating expenses: |
||||||||||||||||||
Research and development |
2,103 | 3,592 | 4,716 | 7,189 | ||||||||||||||
Sales and marketing |
6,174 | 10,012 | 13,635 | 19,451 | ||||||||||||||
General and administrative |
3,032 | 2,499 | 5,769 | 4,970 | ||||||||||||||
Restructuring charges, net |
909 | — | 1,490 | — | ||||||||||||||
Amortization of intangible assets |
150 | 202 | 299 | 404 | ||||||||||||||
Total operating expenses |
12,368 | 16,305 | 25,909 | 32,014 | ||||||||||||||
Loss from operations |
(2,609 | ) | (2,902 | ) | (4,181 | ) | (2,620 | ) | ||||||||||
Loss on investments, net |
— | — | (32 | ) | — | |||||||||||||
Interest income and other, net |
57 | 121 | 120 | 202 | ||||||||||||||
Foreign currency transaction gains (losses) |
854 | (713 | ) | 890 | (1,308 | ) | ||||||||||||
Loss before income taxes |
(1,698 | ) | (3,494 | ) | (3,203 | ) | (3,726 | ) | ||||||||||
Provision (benefit) for income taxes |
16 | 340 | (301 | ) | 587 | |||||||||||||
Net loss |
$ | (1,714 | ) | $ | (3,834 | ) | $ | (2,902 | ) | $ | (4,313 | ) | ||||||
Net loss per share |
||||||||||||||||||
Basic and diluted |
$ | (0.20 | ) | $ | (0.43 | ) | $ | (0.34 | ) | $ | (0.48 | ) | ||||||
Weighted average common shares |
||||||||||||||||||
Basic and diluted |
8,650 | 8,977 | 8,636 | 9,031 | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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NetManage, Inc.
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
| (As restated, | (As restated, | ||||||||||||||||
| see Note 7) | see Note 7) | ||||||||||||||||
Net loss |
$ | (1,714 | ) | $ | (3,834 | ) | $ | (2,902 | ) | $ | (4,313 | ) | |||||
Other
comprehensive income (loss): |
|||||||||||||||||
Unrealized gain (loss) on investments, net |
(39 | ) | (570 | ) | 47 | (630 | ) | ||||||||||
Foreign currency translation adjustments, net |
(1,016 | ) | 1,802 | (1,050 | ) | 2,011 | |||||||||||
Total comprehensive loss |
$ | (2,769 | ) | $ | (2,602 | ) | $ | (3,905 | ) | $ | (2,932 | ) | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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NetManage, Inc.
| Six Months Ended | ||||||||||||
| June 30, | ||||||||||||
| 2003 | 2002 | |||||||||||
| (As restated, | ||||||||||||
| see Note 7) | ||||||||||||
Cash flows from operating activities: |
||||||||||||
Net loss |
$ | (2,902 | ) | $ | (4,313 | ) | ||||||
Adjustments to reconcile net loss to net cash provided by (used in ) operating activities: |
||||||||||||
Depreciation and amortization |
1,625 | 2,517 | ||||||||||
Provision for doubtful accounts and returns |
25 | 9 | ||||||||||
Loss on disposal of fixed assets |
36 | 265 | ||||||||||
Loss on investments |
32 | — | ||||||||||
Changes in operating assets and liabilities: |
||||||||||||
Accounts receivable |
12,103 | 6,357 | ||||||||||
Prepaid expenses and other current assets |
(186 | ) | (815 | ) | ||||||||
Other assets |
(92 | ) | 261 | |||||||||
Accounts payable |
(173 | ) | (612 | ) | ||||||||
Accrued liabilities, payroll and payroll-related expenses |
(2,506 | ) | (86 | ) | ||||||||
Deferred revenue |
(5,186 | ) | (4,397 | ) | ||||||||
Income taxes payable |
221 | 603 | ||||||||||
Long-term liabilities |
(65 | ) | (615 | ) | ||||||||
Net cash provided by (used in) operating activities |
2,932 | (826 | ) | |||||||||
Cash flows from investing activities: |
||||||||||||
Purchases of short-term investments |
(184 | ) | (11 | ) | ||||||||
Proceeds from maturities of short-term investments |
36 | — | ||||||||||
Purchases of property and equipment |
(261 | ) | (467 | ) | ||||||||
Net cash used in investing activities |
(409 | ) | (478 | ) | ||||||||
Cash flows from financing activities: |
||||||||||||
Proceeds from sale of common stock, net of issuance costs |
32 | 342 | ||||||||||
Repurchase of common stock |
(175 | ) | (1,643 | ) | ||||||||
Net cash used in financing activities |
(143 | ) | (1,301 | ) | ||||||||
Effect of exchange rate changes on cash |
(645 | ) | 454 | |||||||||
Net increase (decrease) in cash and cash equivalents |
1,735 | (2,151 | ) | |||||||||
Cash and cash equivalents, beginning of the period |
24,014 | 33,038 | ||||||||||
Cash and cash equivalents, end of the period |
$ | 25,749 | $ | 30,887 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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NETMANAGE, INC.