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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

 

[ x ]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003

[   ]

TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to                

Commission File Number 0-16376

TIMBERLINE SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)

Oregon
(State or other jurisdiction of incorporation or organization)

93-0748489
(I.R.S. Employer Identification No.)

15195 N.W. Greenbrier Parkway, Beaverton, Oregon 97006-5701
(Address of principal executive offices) (Zip code)

(503) 690-6775
(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 Exchange Act). Yes [ ] No[x]

At May 12, 2003, 11,809,670 common stock of the registrant were outstanding.

 

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TIMBERLINE SOFTWARE CORPORATION
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
     
 

Condensed consolidated balance sheets,
March 31, 2003, and December 31, 2002 (Unaudited)

3
     
 

Condensed consolidated statements of operations for the three months ended
March 31, 2003 and 2002 (Unaudited)

4
     
 

Condensed consolidated statements of cash flows for the three months ended
March 31, 2003 and 2002 (Unaudited)

5

Notes to condensed consolidated financial statements (Unaudited)

6
   

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

11
   

Item 3. Quantitative and Qualitative Disclosures About Market Risk

17
   

Item 4. Controls and Procedures

17
   

PART II. OTHER INFORMATION

  
     

Item 6. Exhibits and Reports on Form 8-K

18
     

SIGNATURES

19
     

 

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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

 

TIMBERLINE SOFTWARE CORPORATION        
CONDENSED CONSOLIDATED BALANCE SHEETS        
MARCH 31, 2003 AND DECEMBER 31, 2002 (Unaudited)        
(Amounts in thousands)        
         
    March 31,   December 31,
    2003   2002
ASSETS        
Current assets:        
Cash and cash equivalents $ 7,263 $ 8,301
Temporary investments   4,519   2,038
Accounts receivable, less allowance for doubtful        
     accounts (March 31, 2003, $116; December 31,        
     2002, $117)   5,494   6,336
Inventories   164   194
Other current assets   2,120   2,004
     Total current assets   19,560   18,873
         
Property and equipment   34,935   34,825
     Less accumulated depreciation and amortization   14,159   13,623
     Property and equipment - net   20,776   21,202
         
Capitalized software costs - net   10,223   10,759
Purchased software costs - net   1,647   1,784
Other assets   660   685
     Total $ 52,866 $ 53,303
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current liabilities:        
Accounts payable $ 1,045 $ 1,169
Deferred revenues   19,588   18,388
Accrued employee expenses   1,019   1,036
Income taxes payable   598   882
Current portion of long-term debt   375   375
Other current liabilities   1,331   1,705
     Total current liabilities   23,956   23,555
         
Accrued rent expense   537   508
Deferred income taxes   3,272   3,621
Long-term debt   375   375
Commitments        
Shareholders' equity:        
Common stock, without par value   354   353
     authorized, 20,000 shares; issued - March 31, 2003,        
     11,798 shares; December 31, 2002, 11,778 shares        
Additional paid in capital   5,863   5,786
Accumulated other comprehensive income   30   27
Retained earnings   18,479   19,078
     Total shareholders' equity   24,726   25,244
     Total $ 52,866 $ 53,303
         
See notes to condensed consolidated financial statements.        
         

 

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TIMBERLINE SOFTWARE CORPORATION        
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (Unaudited)     
(Amounts in thousands, except per share data)        
         
   

Three Months Ended March 31,
    2003   2002
         
Net revenue:        
     Software license fees $ 4,759  $ 4,828 
     Service fees   10,292    8,967 
     Other   498    548 
     Net revenue   15,549    14,343 
Cost and expenses:        
     Cost of revenue   2,469    1,745 
     Client services   3,550    3,290 
     Product development   4,094    3,625 
     Sales and marketing   3,680    3,576 
     General and administrative   1,995    1,865 
     Total cost and expenses   15,788    14,101 
Operating income (loss)   (239)   242 
Other income   50    90 
Income (loss) before income taxes   (189)   332 
Income tax provision (benefit)   (62)   110 
Net income (loss) $ (127) $ 222 
         
Earnings (loss) per share:        
     Basic $ (0.01) $ 0.02 
     Diluted   (0.01)   0.02 
         
See notes to condensed consolidated financial statements.        

 

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TIMBERLINE SOFTWARE CORPORATION 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (Unaudited) 
(Amounts in thousands)    
   

Three Months Ended March 31,
    

2003

  

2002
Cash flows from operating activities:         
Net income (loss)  $ (127) $ 222 
Adjustments to reconcile net income (loss) to net        
  cash provided by operating activities:         
    Depreciation and amortization   1,441    1,067 
    Deferred income taxes   (288)   266 
    Tax benefit on exercise of stock options   21    51 
    Net change in:        
      Accounts receivable   842    257 
      Inventories   30    (3)
      Accounts payable   (124)   331 
      Deferred revenues   1,200    1,410 
      Accrued employee expenses   (17)   (259)
      Income taxes payable   (284)   (259)
      Accrued rent expense   29    (147)
      Other   (525)   (877)
  Net cash provided by operating activities   2,198    2,059 
               
Cash flows from investing activities:         
Payments for property and equipment    (342)   (480)
Capitalized software costs    -    (848)
Purchased software costs    -    (350)
Proceeds from temporary investments   520    519 
Purchase of temporary investments    (2,999)   - 
  Net cash used in investing activities   (2,821)   (1,159)