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
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 000-27389
INTERWOVEN, INC.
(Exact name of Registrant as Specified in its Charter)
| Delaware |
77-0523543 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
| 803 11th Avenue, Sunnyvale, CA |
94089 | |
| (Address of principal executive offices) |
(Zip Code) |
(408) 774-2000
(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 Exchange Act Rule 12b-2). Yes x No ¨
There were 102,915,202 shares of the Registrant’s common stock, par value $0.001, outstanding on May 1, 2003.
| Page No. | ||||
| PART I FINANCIAL INFORMATION | ||||
| Item 1. |
Financial Statements: |
|||
| Unaudited Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 |
3 | |||
| 4 | ||||
| 5 | ||||
| Notes to the Unaudited Condensed Consolidated Financial Statements |
6 | |||
| Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
14 | ||
| Item 3. |
34 | |||
| Item 4. |
34 | |||
| PART II OTHER INFORMATION | ||||
| Item 1. |
35 | |||
| Item 2. |
35 | |||
| Item 3. |
35 | |||
| Item 4. |
35 | |||
| Item 5. |
35 | |||
| Item 6. |
35 | |||
| 36 | ||||
| 37 | ||||
2
Item 1. Financial Statements
INTERWOVEN, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
47,780 |
|
$ |
58,855 |
| ||
| Short-term investments |
|
127,144 |
|
|
122,814 |
| ||
| Accounts receivable, net of allowances of $1,888 and $1,926, respectively |
|
16,695 |
|
|
22,151 |
| ||
| Prepaid expenses |
|
4,214 |
|
|
3,715 |
| ||
| Other current assets |
|
3,175 |
|
|
3,562 |
| ||
| Total current assets |
|
199,008 |
|
|
211,097 |
| ||
| Property and equipment, net |
|
10,156 |
|
|
11,694 |
| ||
| Goodwill, net |
|
70,564 |
|
|
70,564 |
| ||
| Other intangible assets, net |
|
2,866 |
|
|
3,308 |
| ||
| Restricted cash |
|
378 |
|
|
378 |
| ||
| Other assets |
|
1,616 |
|
|
1,616 |
| ||
| $ |
284,588 |
|
$ |
298,657 |
| |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
3,790 |
|
$ |
3,438 |
| ||
| Accrued liabilities |
|
11,486 |
|
|
13,319 |
| ||
| Restructuring and excess facilities costs |
|
10,051 |
|
|
10,564 |
| ||
| Deferred revenue |
|
34,347 |
|
|
36,331 |
| ||
| Total current liabilities |
|
59,674 |
|
|
63,652 |
| ||
| Other accrued liabilities, net of current portion |
|
2,053 |
|
|
2,070 |
| ||
| Restructuring and excess facilities costs, net of current portion |
|
27,579 |
|
|
29,210 |
| ||
| Total liabilities |
|
89,306 |
|
|
94,932 |
| ||
| Stockholders’ equity: |
||||||||
| Common stock and additional paid-in capital, 500,000 shares authorized, 102,584 and 102,536 shares issued and outstanding, respectively |
|
541,506 |
|
|
541,377 |
| ||
| Deferred stock-based compensation |
|
(1,653 |
) |
|
(2,166 |
) | ||
| Accumulated other comprehensive income |
|
338 |
|
|
323 |
| ||
| Accumulated deficit |
|
(344,909 |
) |
|
(335,809 |
) | ||
| Total stockholders’ equity |
|
195,282 |
|
|
203,725 |
| ||
| $ |
284,588 |
|
$ |
298,657 |
| |||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| (unaudited) |
||||||||
| Revenues: |
||||||||
| License |
$ |
9,151 |
|
$ |
14,927 |
| ||
| Services |
|
16,435 |
|
|
17,745 |
| ||
| Total revenues |
|
25,586 |
|
|
32,672 |
| ||
| Cost of revenues: |
||||||||
| License |
|
702 |
|
|
948 |
| ||
| Services |
|
7,895 |
|
|
9,973 |
| ||
| Total cost of revenues |
|
8,597 |
|
|
10,921 |
| ||
| Gross profit |
|
16,989 |
|
|
21,751 |
| ||
| Operating expenses: |
||||||||
| Research and development |
|
5,884 |
|
|
6,971 |
| ||
| Sales and marketing |
|
14,514 |
|
|
20,747 |
| ||
| General and administrative |
|
4,127 |
|
|
5,083 |
| ||
| Amortization of deferred stock-based compensation |
|
514 |
|
|
3,207 |
| ||
| Amortization of acquired intangible assets |
|
442 |
|
|
1,236 |
| ||
| Restructuring charges |
|
1,066 |
|
|
1,220 |
| ||
| Total operating expenses |
|
26,547 |
|
|
38,464 |
| ||
| Loss from operations |
|
(9,558 |
) |
|
(16,713 |
) | ||
| Interest income and other, net |
|
899 |
|
|
1,503 |
| ||
| Net loss before provision for income taxes |
|
(8,659 |
) |
|
(15,210 |
) | ||
| Provision for income taxes |
|
441 |
|
|
454 |
| ||
| Net loss |
$ |
(9,100 |
) |
$ |
(15,664 |
) | ||
| Basic and diluted net loss per share |
$ |
(0.09 |
) |
$ |
(0.15 |
) | ||
| Shares used in computing basic and diluted net loss per share |
|
102,162 |
|
|
102,625 |
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| (unaudited) |
||||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ |
(9,100 |
) |
$ |
(15,664 |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation |
|
1,795 |
|
|
2,400 |
| ||
| Provisions for doubtful accounts and sales returns |
|
(38 |
) |
|
730 |
| ||
| Amortization of deferred stock-based compensation |
|
514 |
|
|
3,207 |
| ||
| Amortization of acquired intangible assets |
|
442 |
|
|
1,236 |
| ||
| Restructuring and excess facilities charges |
|
(2,144 |
) |
|
(1,942 |
) | ||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
|
5,494 |
|
|
11,688 |
| ||
| Prepaid expenses and other assets |
|
(113 |
) |
|
(1,793 |
) | ||
| Accounts payable |
|
352 |
|
|
430 |
| ||
| Accrued liabilities |
|
(1,850 |
) |
|
924 |
| ||
| Deferred revenue |
|
(1,984 |
) |
|
(1,604 |
) | ||
| Net cash used in operating activities |
|
(6,632 |
) |
|||||