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 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 0-25186
CAPTARIS, INC.
(Name of Registrant as Specified in Its Charter)
| Washington |
91-1190085 | |
| (State of incorporation) |
(I.R.S. Employer Identification Number) |
| 10885 N.E. 4th Street, Suite 400 |
||
| Bellevue, WA |
98004 | |
| (Address of principal executive offices) |
(Zip code) |
Registrant’s telephone number, including area code: (425) 455-6000
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 x No ¨
The number of outstanding shares of the registrant’s common stock as of May 9, 2003 was 30,293,611.
CAPTARIS, INC.
FORM 10-Q
For the Quarter Ended September 30, 2002
| Page | ||||||
| PART I. |
Financial information |
|||||
| Item 1. |
3 | |||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
9 | ||||
| Item 3. |
18 | |||||
| Item 4. |
18 | |||||
| PART II. |
Other Information |
|||||
| Item 6. |
19 | |||||
| 20 | ||||||
2
PART I. FINANCIAL INFORMATION
CAPTARIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| March 31, 2003 |
December 31, 2002 | |||||
| (unaudited) |
||||||
| ASSETS |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ |
24,789 |
$ |
21,971 | ||
| Short-term investments, available for sale |
|
18,926 |
|
30,519 | ||
| Accounts receivable, net |
|
15,570 |
|
17,811 | ||
| Inventories |
|
2,187 |
|
2,928 | ||
| Deferred and income tax receivable |
|
4,419 |
|
4,308 | ||
| Prepaid expenses and other |
|
2,101 |
|
1,544 | ||
| Total current assets |
|
67,992 |
|
79,081 | ||
| Long-term investments, available for sale |
|
28,058 |
|
20,599 | ||
| Equipment and leasehold improvements, net |
|
7,570 |
|
7,595 | ||
| Restricted cash |
|
1,000 |
|
1,000 | ||
| Deferred income taxes |
|
1,553 |
|
1,546 | ||
| Goodwill |
|
9,000 |
|
8,976 | ||
| Intangible and other assets, net |
|
2,365 |
|
2,480 | ||
| Total assets |
$ |
117,538 |
$ |
121,277 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ |
5,492 |
$ |
7,204 | ||
| Accrued compensation and benefits |
|
3,435 |
|
4,186 | ||
| Deferred revenue |
|
8,385 |
|
8,185 | ||
| Other accrued liabilities |
|
2,295 |
|
3,401 | ||
| Total current liabilities |
|
19,607 |
|
22,976 | ||
| Shareholders’ equity: |
||||||
| Preferred stock, par value $.01 per share, 2,000,000 shares authorized; none outstanding |
|
— |
|
— | ||
| Common stock, par value $.01 per share, 120,000,000 shares authorized; 30,268,180 and 30,217,955 outstanding, respectively |
|
303 |
|
302 | ||
| Additional paid-in capital |
|
61,137 |
|
60,539 | ||
| Retained earnings |
|
36,258 |
|
37,148 | ||
| Accumulated other comprehensive income |
|
233 |
|
312 | ||
| Total shareholders’ equity |
|
97,931 |
|
98,301 | ||
| Total liabilities and shareholders equity |
$ |
117,538 |
$ |
121,277 | ||
See the accompanying notes to unaudited condensed consolidated financial statements.
3
CAPTARIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Quarter Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Net sales: |
||||||||
| Software products |
$ |
15,700 |
|
$ |
15,801 |
| ||
| E-document services |
|
5,910 |
|
|
5,742 |
| ||
| Total net sales |
|
21,610 |
|
|
21,543 |
| ||
|
Cost of sales: |
||||||||
| Software products |
|
5,794 |
|
|
6,068 |
| ||
| E-document services |
|
2,108 |
|
|
2,096 |
| ||
| Total cost of sales |
|
7,902 |
|
|
8,164 |
| ||
| Gross profit |
|
13,708 |
|
|
13,379 |
| ||
| Operating expenses: |
||||||||
| Research and development |
|
2,805 |
|
|
2,698 |
| ||
| Selling, general and administrative |
|
12,146 |
|
|
12,043 |
| ||
| Amortization of intangibles |
|
57 |
|
|
439 |
| ||
| Restructuring charges |
|
— |
|
|
2,119 |
| ||
| Stock compensation expense (benefit) |
|
482 |
|
|
(204 |
) | ||
| Other |
|
— |
|
|
875 |
| ||
| Total operating expenses |
|
15,490 |
|
|
17,970 |
| ||
| Operating loss |
|
(1,782 |
) |
|
(4,591 |
) | ||
| Other income (expense): |
||||||||
| Interest |
|
455 |
|
|
736 |
| ||
| Other, net |
|
(43 |
) |
|
(362 |
) | ||
| Other income |
|
412 |
|
|
374 |
| ||
| Loss before income tax benefit and cumulative effect of change in accounting principle |
|
(1,370 |
) |
|
(4,217 |
) | ||
| Income tax benefit |
|
(480 |
) |
|
(2,109 |
) | ||
| Loss before cumulative effect of change in accounting principle |
|
(890 |
) |
|
(2,108 |
) | ||
| Cumulative effect of change in accounting principle |
|
— |
|
|
(2,695 |
) | ||
| Net loss |
$ |
(890 |
) |
$ |
(4,803 |
) | ||
| Basic and diluted loss per common share prior to cumulative effect |
$ |
(0.03 |
) |
$ |
(0.07 |
) | ||
| Cumulative effect of change in accounting principle |
|
— |
|
|
(0.08 |
) | ||
| Basic and diluted loss per common share |
$ |
(0.03 |
) |
$ |
(0.15 |
) | ||
| Weighted average common shares outstanding |
|
30,220 |
|
|
31,824 |
| ||
See the accompanying notes to unaudited condensed consolidated financial statements.
4
CAPTARIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Quarter Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ |
(890 |
) |
$ |
(4,803 |
) | ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
|
1,113 |
|
|
1,420 |
| ||
| Realized loss (gain) on investments, net |
|
6 |
|
|
— |
| ||
| Stock compensation expense |
|
482 |
|
|
(204 |
) | ||
| Deferred income taxes |
|
(118 |
) |
|
(1,142 |
) | ||
| Cumulative effect of change in accounting principle |
|
— |
|
|
2,695 |
| ||
| Restructuring and other charges |
|
— |
|
|
1,561 |
| ||
| Unrealized gain (loss) on investments, net of tax |
|
(63 |
) |
|
— |
| ||
| Foreign currency translation adjustment |
|
(16 |
) |
|
— |
| ||
| Changes in current assets and liabilities: |
||||||||
| Accounts receivable, net |
|
2,241 |
|
|
328 |
| ||
| Inventories |
|
741 |
|
|
205 |
| ||
| Prepaid expenses and other assets |
|
(557 |
) |
|
(883 |
) | ||
| Accounts payable |
|
(1,712 |
) |
|
(1,722 |
) | ||
| Accrued compensation and benefits |
|
(751 |
) |
|
(1,730 |
) | ||
| Other accrued liabilities |
|
(906 |
) |
|
1,772 |
| ||
| Net cash provided (used) by operating activities |
|
(430 |
) |
|
(2,503 |
) | ||