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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 quarterly period ended June 30, 2004

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 000-29357

Chordiant Software, Inc.  

(Exact name of Registrant as specified in its Charter)

 

Delaware

93-1051328

  (State or Other Jurisdiction of Incorporation or Organization) 

(I.R.S. Employer Identification Number)

20400 Stevens Creek Boulevard, Suite 400
Cupertino, CA    95014
(Address of Principal Executive Offices including Zip Code)

(408) 517-6100
(Registrant's Telephone Number, Including Area Code)

(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 [  ]

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 shares of the Registrant's common stock outstanding as of August 4, 2004 was 72,103,696.

 

 

CHORDIANT SOFTWARE, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2004
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION 

Page No.
Item 1. Financial Statements

 
  Condensed Consolidated Balance Sheets - June 30, 2004 and December 31, 2003 3
  Condensed Consolidated Statements of Operations and Comprehensive Loss - Three and Six Months ended June 30, 2004 and 2003 4
  Condensed Consolidated Statements of Cash Flows - Six Months ended June 30, 2004 and 2003 5
  Notes to Condensed Consolidated Financial Statements   6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16
Item 3. Quantitative and Qualitative Disclosures about Market Risk 30
Item 4. Controls and Procedures 31
     
PART II. OTHER INFORMATION 32
Item 1. Legal Proceedings 32
Item 4. Submission of Matters to a Vote of Security Holders 32
Item 6. Exhibits and Reports on Form 8-K 33
 
SIGNATURES   34

 

 

 

 

 

Table of Contents

PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements

 CHORDIANT SOFTWARE,  INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

 
  
June 30, 2004 		  December 31, 2003  
 
  
 
 
ASSETS              
Current assets:
 
 
 
 
 
 
 
  Cash and cash equivalents   $ 62,943   $ 36,218  
Short-term investments and restricted cash     588     581  
  Accounts receivable, net     17,993     11,974  
  Prepaid expenses and other current assets     3,963     2,675  
   
 
 
    Total current assets     85,487     51,448  
Restricted cash     1,500     1,500  
Property and equipment, net     2,685     3,071  
Goodwill     24,874     24,874  
Intangible assets, net 366 1,414
Other assets     1,357     1,504  
   
 
 
    Total assets   $ 116,269   $ 83,811  
   
 
 

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 

Current liabilities:
 
 
 
 
 
 
 
Accounts payable   $ 4,862   $ 3,931  
  Accrued expenses     11,911     13,038  
Deferred revenue     21,622     14,548  
   
 
 
    Total current liabilities     38,395     31,517  
Deferred revenue, long-term

3,043

 3,848
   
 
 
    Total liabilities     41,438     35,365  
   
 
 
Stockholders' equity:              
  Common stock     72     65  
Additional paid-in capital     263,488

  235,911  
  Deferred stock-based compensation     (599 )   (1,665 )
  Accumulated deficit     (190,947 )   (188,906 ) 
  Accumulated other comprehensive income     2,817     3,041  
   
 
 
    Total stockholders' equity     74,831     48,446  
   
 
 
  Total liabilities and stockholders' equity   $ 116,269   $ 83,811  
   
 
 

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

3


Table of Contents

 CHORDIANT SOFTWARE,  INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share data)
(Unaudited)

Three Months Ended

Six Months Ended

  
       
   
 

June 30, 2004

June 30, 2003

June 30, 2004

June 30, 2003

  

 
 

Revenues:

          

License

$

5,395

$

6,486

$

14,681

$

10,624

 

Service

 11,435

10,599

22,367

20,276

 
     
   
   
   
 
Total revenues

16,830

17,085

37,048

30,900

  
 

Cost of revenues:

  

License

 301

319

 693

580

  

Service

 6,501

6,024

12,794

11,950

 

Stock-based compensation

(42 )

314

167

778

 
  Amortization of intangible assets   252    

793

     938    

1,585

  
     
   
   
   
 

Total cost of revenues

 7,012 7,450 14,592 14,893  
     
   
   
   
 

Gross profit

9,818

9,635

 22,456

16,007

  
     
   
   
   
 

Operating expenses:

  

Sales and marketing

5,783

4,717

11,723

10,733

  

Research and development

 4,218

3,895

 8,660

7,965

  

General and administrative

1,783

    

1,675

    

3,634

    

3,053

  
  Stock-based compensation  

(79

 )  

1,159

    

421

    

2,534

  

Amortization of intangible assets

 16

98

 110

196

  
  Restructuring expense   --    

1,161

     --    

1,161

  
     
   
   
   
 
Total operating expenses

11,721

12,705

24,548

25,642

  
     
   
   
   
 

Loss from operations

(1,903

 )

(3,070

 ) (2,092 )

(9,635

 )
 

Interest income, net

 146  

75

   356  

210

  

Foreign exchange and other expenses, net

 120

(121

 ) (54 )

(455

 )
     
   
   
   
 

Net loss before income taxes

$

(1,637

 )

$

(3,116

 )

$

(1,790 )

$

(9,880

 )

Provision for income taxes

100

275

   251  

457

  
     
   
   
   
 

Net loss

$

(1,737

 )

$

(3,391

 )

$

(2,041

 )

$

(10,337

 )
     
   
   
   
 

Other comprehensive income (loss):

                      
  Foreign currency translation gain (loss)  

(201

 )  

727

    

(224

 )  

947

  
     
   
   
   
 

Comprehensive loss

$

(1,938

 )

$

(2,664

 )

$

(2,265

 )

$

(9,390

 )
     
   
   
   
 

Net loss per share:

  

Basic and diluted

$

(0.02

 )

$

(0.06

 )

$

(0.03

 )

$

(0.18

 )
     
   
   
   
 

Weighted average shares used in computing net loss per share - basic and diluted

 70,345     58,567     69,005     57,894  

 
   
   
   
 

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

4

Table of Contents

 CHORDIANT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 
   Six Months Ended  
   
 
 
   June 30, 2004   June 30, 2003  
   
 
 
Cash flows from operating activities:              
Net loss   $ (2,041 )  $ (10,337 )
  Adjustments to reconcile net loss to net cash used in operating activities:              
Depreciation and amortization     800   1,492  
    Amortization of intangibles     1,048     1,781  
    Non-cash stock-based compensation expense     267     3,312  
    Provision for doubtful accounts     22     21  
    Warrants issued to customers     39     21  
    Loss on disposal of assets     --     49  
    Other non-cash charges     (42 )   --  
    Changes in assets and liabilities:              
      Accounts receivable     (6,100 )   (3,389 )
      Prepaid expenses and other current assets     (1,271 )   (1,101 )
      Other assets     142     438  
      Accounts payable     907     (2,549 )
Accrued expenses     (894 )   (3,774 )
      Deferred revenue     6,200     2,352  
   
 
 
Net cash used in operating activities     (923 )   (11,684 ) 
   
 
 
Cash flows from investing activities:              
Property and equipment purchases     (398 )   (218 )
  Proceeds from disposal of property and equipment     --     18  
Purchases of short-term investments     (588 )   (576 )
  Proceeds from maturities of short-term investments     581     8,724  
   
 
 
Net cash provided by (used in) investing activities     (405 )   7,948