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Table of Contents
 
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 period ended June 30, 2002
 
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 000-25315
 
 
SAGENT TECHNOLOGY, INC.
(Exact name of Registrant as specified in its Charter)
 
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
  
94-3225290
(I.R.S. Employer
Identification Number)
 
800 W. El Camino Real, Suite 300
Mountain View, CA 94040
(Address of Principal Executive Offices including Zip Code)
 
(650) 815-3100
(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 reports), and (2) has been subject to such filing requirements for the past 90 days.  YES  x  NO  ¨
 
As of August 8, 2002, Registrant had 46,374,583 shares of common stock issued and outstanding.
 

Table of Contents
 
SAGENT TECHNOLOGY, INC.
 
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED June 30, 2002
 
TABLE OF CONTENTS
 
          
Page No.
PART I.     FINANCIAL INFORMATION
       
Item 1.
  
Financial Statements:
       
        
3
        
4
        
5
        
6
Item 2.
       
16
Item 3.
       
34
PART II.    OTHER INFORMATION
       
Item 1.
       
35
Item 2.
       
36
        
37
        
38

2

Table of Contents
 
PART I    FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
SAGENT TECHNOLOGY, INC.
 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
 
    
June 30,
2002
     
December 31,
2001
  
ASSETS
                  
Current Assets
                  
Cash and cash equivalents
   
$
7,776
 
   
$
15,552
 
Accounts receivable, net of allowance for doubtful accounts of $1,832 in 2002 and $ 1,798 in 2001
   
 
10,135
 
   
 
12,560
 
Other current assets
   
 
2,056
 
   
 
3,700
 
    
  
Total current assets
   
 
19,967
 
   
 
31,812
 
Restricted cash
   
 
775
 
   
 
775
 
Property and equipment, net
   
 
4,656
 
   
 
6,138
 
Goodwill
   
 
7,446
 
   
 
7,514
 
Notes receivable from officers
   
 
2,381
 
   
 
2,409
 
Other assets
   
 
1,103
 
   
 
1,138
 
    
  
Total assets
   
$
36,328
 
   
$
49,786
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
Current Liabilities
                  
Accounts payable
   
$
2,575
 
   
$
3,369
 
Accrued liabilities
   
 
6,083
 
   
 
8,411
 
Deferred revenue
   
 
9,720
 
   
 
8,701
 
Current portion of capital lease obligation
   
 
1,707
 
   
 
2,240
 
    
  
Total current liabilities
   
 
20,085
 
   
 
22,721
 
Long-term portion of capital lease obligation
   
 
626
 
   
 
1,384
 
Other long-term liabilities
   
 
150
 
   
 
170
 
    
  
Total liabilities
   
 
20,861
 
   
 
24,275
 
Minority Interest
   
 
635
 
   
 
658
 
Stockholders’ Equity
                  
Convertible preferred stock, par value $.001 per share; Authorized: 6,011 shares in June 30, 2002 and December 31, 2001; Issued and outstanding: none in 2002 and 2001
   
 
0
 
   
 
0
 
Common stock, par value $.001 per share; Authorized: 70,000 shares in June 30, 2002 and December 31, 2001; Issued and outstanding: 46,375 at June 30, 2002 and 46,245 at December 31, 2001
   
 
46
 
   
 
46
 
Additional paid-in capital
   
 
133,876
 
   
 
133,726
 
Deferred stock compensation
   
 
(912
)
   
 
(1,130
)
Notes receivable from shareholders
   
 
(324
)
   
 
(602
)
Accumulated other comprehensive (loss) income
   
 
(373
)
   
 
17
 
Accumulated deficit
   
 
(117,481
)
   
 
(107,204
)
    
  
Total stockholders’ equity
   
 
14,832
 
   
 
24,853
 
    
  
Total liabilities and stockholders’ equity
   
$
36,328
 
   
$
49,786
 
    
  
 
See accompanying notes to unaudited condensed consolidated financial statements.

3

Table of Contents
 
SAGENT TECHNOLOGY, INC.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
 
    
Three Months Ended
June 30,
     
Six Months Ended
June 30,
  
    
2002
     
2001
     
2002
     
2001
  
Revenue:
                                    
License
   
$
4,779
 
   
$
6,722
 
   
$
10,895
 
   
$
11,469
 
Service
   
 
4,462
 
   
 
5,812
 
   
 
9,629
 
   
 
11,356
 
    
  
  
  
Total net revenue
   
 
9,241
 
   
 
12,534
 
   
 
20,524
 
   
 
22,825
 
    
  
  
  
Cost of net revenue:
                                    
License
   
 
473
 
   
 
921
 
   
 
1,087
 
   
 
1,751
 
Service
   
 
2,008
 
   
 
2,856
 
   
 
4,342
 
   
 
5,990
 
Impairment of licensed technology
   
 
1,240
 
   
 
0
 
   
 
1,240
 
   
 
0
 
    
  
  
  
Total cost of net revenue
   
 
3,721
 
   
 
3,777
 
   
 
6,669
 
   
 
7,741
 
    
  
  
  
Gross profit
   
 
5,520
 
   
 
8,757
 
   
 
13,855
 
   
 
15,084
 
    
  
  
  
Operating expenses:
                                    
Sales and marketing
   
 
7,160
 
   
 
9,670
 
   
 
14,132
 
   
 
18,123
 
Research and development
   
 
3,277
 
   
 
3,553
 
   
 
6,702
 
   
 
7,406
 
General and administrative
   
 
1,241
 
   
 
1,573
 
   
 
2,576
 
   
 
5,532
 
Stock-based compensation
   
 
109
 
   
 
189
 
   
 
298
 
   
 
378
 
Amortization of goodwill
   
 
0
 
   
 
575
 
   
 
0
 
   
 
1,073
 
Restructuring costs
   
 
189
 
   
 
0
 
   
 
139
 
   
 
0
 
    
  
  
  
Total operating expenses
   
 
11,976
 
   
 
15,560
 
   
 
23,847
 
   
 
32,512
 
    
  
  
  
Loss from operations
   
 
(6,456
)
   
 
(6,803
)
   
 
(9,992
)
   
 
(17,428
)
Interest income (expense), net
   
 
9
 
   
 
(123
)
   
 
27
 
   
 
(29
)
Other income, net
   
 
68
 
   
 
15
 
   
 
7
 
   
 
47
 
    
  
  
  
Net loss before income taxes
   
 
(6,379
)
   
 
(6,911
)
   
 
(9,958
)
   
 
(17,410
)
Provision for income taxes
   
 
175
 
   
 
32
 
   
 
319
 
   
 
57
 
    
  
  
  
Net loss
   
($
6,554
)
   
($
6,943
)
   
($
10,277
)
   
($
17,467
)
    
  
  
  
Basic and diluted net loss per share
   
($
0.14
)
   
($
0.19
)
   
($
0.22
)
   
($
0.50
)
    
  
  
  
Shares used in computing basic and diluted net loss per share
   
 
46,224
 
   
 
36,478
 
   
 
46,188
 
   
 
34,918
 
 
See accompanying notes to unaudited condensed consolidated financial statements.

4

Table of Contents
 
SAGENT TECHNOLOGY, INC.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
 
    
Six Months Ended
June 30,
  
    
2002
     
2001
  
Cash flows from operations:
                  
Net loss
   
$
(10,277
)
   
$
(17,467
)
Adjustments to reconcile net loss to net cash used in operating activities:
                  
Depreciation and amortization
   
 
1,594
 
   
 
3,159
 
Asset impairments
   
 
1,254
 
   
 
0
 
Restructuring costs
   
 
139
 
   
 
0
 
Bad debt expense
   
 
777
 
   
 
937
 
Loss on disposal of property and equipment
   
 
80
 
   
 
0
 
Issuance of common stock for services
   
 
80
 
   
 
0