CAPTIVA SOFTWARE CORP - 10-Q Quarterly Report

UNITED STATES
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

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For The Transition Period From ____________ To ____________

Commission file number 0-22292



Captiva Software Corporation
(Exact name of Registrant as specified in its charter)

Delaware		77-0104275
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

10145 Pacific Heights Blvd.
San Diego, CA 92121
(858) 320-1000
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o

No x

As of April 30, 2003, there were 8,934,796 shares of the registrant’s common stock, par value $0.01, outstanding.

CAPTIVA SOFTWARE CORPORATION

FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2003
INDEX

			Page No.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

		Consolidated Condensed Balance Sheets at March 31, 2003 and December 31, 2002 (unaudited)	3

		Consolidated Condensed Statements of Operations for the Three-Month Periods Ended March 31, 2003 and 2002 (unaudited)	4

		Consolidated Condensed Statement of Stockholders’ Equity and Other Comprehensive Income for the Three-Month Period Ended March 31, 2003 (unaudited)	5

		Consolidated Condensed Statements of Cash Flows for the Three-Month Periods Ended March 31, 2003 and 2002 (unaudited)	6

		Notes to Consolidated Condensed Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27

Item 4.	Controls and Procedures		27

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		28

Item 2.	Changes in Securities and Use of Proceeds		28

Item 3.	Defaults Upon Senior Securities		28

Item 4.	Submission of Matters to a Vote of Security Holders		28

Item 5.	Other Information		28

Item 6.	Exhibits and Reports on Form 8-K		28

Signatures			29

Certifications			30

Part I - Financial Information
Item 1 - Financial Statements

CAPTIVA SOFTWARE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS*
(UNAUDITED)
(IN THOUSANDS)

	March 31, 2003			December 31, 2002

ASSETS
Current assets:
Cash and cash equivalents	$	8,058		$	7,453
Accounts receivable, net		9,550			11,764
Deferred tax assets		1,107			839
Prepaid expenses and other current assets		1,905			1,725

Total current assets		20,620			21,781
Property and equipment, net		1,047			1,014
Other assets		386			402
Goodwill		6,082			6,082
Other intangible assets, net		5,334			5,857

Total assets	$	33,469		$	35,136

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	669		$	699
Deferred revenue		10,405			10,371
Accrued compensation and related liabilities		2,233			2,914
Other liabilities		3,676			4,439
Line of credit		2,000			2,145

Total current liabilities		18,983			20,568

Deferred revenue		810			956
Other liabilities		425			521
Commitments
Stockholders’ equity:
Preferred stock		—			—
Common stock		89			89
Additional paid in capital		15,509			15,499
Accumulated deficit		(2,467	)		(2,549	)
Accumulated other comprehensive income		120			52

Total stockholders’ equity		13,251			13,091

Total liabilities and stockholders’ equity	$	33,469		$	35,136

*The accompanying notes are an integral part of these consolidated condensed financial statements.

CAPTIVA SOFTWARE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS*
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	Three Months Ended March 31,

	2003			2002

Net revenues:
Software licenses	$	5,467		$	3,700
Services		5,611			2,092
Third party products		1,526			—

Total revenues		12,604			5,792
Cost of revenues:
Software licenses		320			218
Services		2,427			848
Third party products		1,284			—
Amortization of purchased intangible assets		524			—

Total cost of revenues		4,555			1,066

Gross profit		8,049			4,726
Operating expenses:
Research and development		2,111			1,085
Sales and marketing		4,362			2,996
General and administrative		1,476			641
Merger costs		(44	)		—

Total operating expenses		7,905			4,722

Operating income		144			4
Other income (expense), net		(7	)		13

Income before income taxes		137			17
Provision for income taxes		55			—

Net income	$	82		$	17

Net income per share	$	0.01		$	0.00

Diluted net income per share	$	0.01		$	0.00

Basic common equivalent shares		8,860			4,375

Diluted common equivalent shares		9,336			4,429

*The accompanying notes are an integral part of these consolidated condensed financial statements.

CAPTIVA SOFTWARE CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY AND OTHER COMPREHENSIVE INCOME*
(UNAUDITED)
(IN THOUSANDS)

	Common Stock				Additional Paid in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income		Total Stockholders’ Equity		Total Comprehensive Income

	Number of Shares		Amount

Balance at December 31, 2002		8,860	$	89	$	15,499	$	(2,549	)	$	52	$	13,091	$	(480	)
Exercise of stock options		4		—		10							10
Foreign currency translation adjustment											68		68		68
Net income								82					82		82

Balance at March 31, 2003		8,864	$	89	$	15,509	$	(2,467	)	$	120	$	13,251	$	150

*The accompanying notes are an integral part of these consolidated condensed financial statements.

CAPTIVA SOFTWARE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS*
(UNAUDITED)
(IN THOUSANDS)

	Three Months Ended March 31,

	2003			2002

Cash flows from operating activities:
Net income	$	82		$	17
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		692			164
Deferred income taxes		(268	)		—
Changes in operating assets and liabilities: