Washington, D.C. 20549
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 than 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 [ ]
As of July 31, 2004, there were 37,004,622 shares of the registrant’s Common Stock, par value $.01 per share, outstanding.
NETWORK ENGINES, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in thousands, except share data)
|
| |
| | | |
| |
| | | |
| | | June 30,
| | September 30,
|
| | | 2004
| | 2003
|
ASSETS
| | (unaudited)
| | |
| | | | | |
Current assets:
| | | | |
Cash and cash equivalents
|
| $ 35,290
|
| $ 36,788
|
Short-term investments
| | 2,485
| | -
|
Restricted cash
|
| 47
|
| 47
|
Accounts receivable, net of allowances
|
| 14,393
|
| 13,948
|
Inventories
|
| 16,567
|
| 14,937
|
Prepaid expenses and other current assets
|
| 839
|
| 1,946
|
| |
| |
| |
Total current assets
|
| 69,621
|
| 67,666
|
| |
| |
| |
Property and equipment, net
|
| 1,632
|
| 1,849
|
Goodwill
| | 7,769
| | 7,786
|
Intangible assets, net
| | 430
| | 4,310
|
Other assets
|
| 165
|
| 121
|
| | | |
| |
Total assets
|
| $ 79,617
|
| $ 81,732
|
| | | |
| |
LIABILITIES AND STOCKHOLDERS' EQUITY
| | | | |
| | | | | |
Current liabilities:
| | | | |
Accounts payable
|
| $ 9,831
|
| $ 13,864
|
Accrued compensation and other related benefits
|
| 1,346
|
| 1,365
|
Other accrued expenses
|
| 2,105
|
| 1,398
|
Current portion of accrued restructuring and other charges
|
| -
| | 218
|
Deferred revenue
|
| 526
|
| 603
|
| | | |
| |
Total current liabilities
|
| 13,808
|
| 17,448
|
| | | |
| |
Long-term portion of accrued restructuring and other charges
|
| -
|
| 60
|
Commitments and contingencies (Note 7)
| | | | |
| | | | | |
Stockholders' equity:
| | |
| |
Common stock, $0.01 par value, 100,000,000 shares authorized; 39,554,069 and 38,183,158 shares issued; 36,992,211 and 35,621,300 shares outstanding at June 30, 2004 and September 30, 2003, respectively
|
| 396
|
| 382
|
Additional paid-in capital
|
| 177,603
|
| 176,061
|
Unrealized gain on short-term investments
| | 3
| | -
|
Accumulated deficit
|
| (109,319)
|
| (108,948)
|
Deferred stock compensation
|
| (36)
|
| (433)
|
Treasury stock, at cost, 2,561,858 shares at June 30, 2004 and September 30, 2003
|
| (2,838)
|
| (2,838)
|
| |
| |
| |
Total stockholders' equity
|
| 65,809
|
| 64,224
|
| |
| |
| |
Total liabilities and stockholders' equity
|
| $ 79,617
|
| $ 81,732
|
| |
| | | |
| |
| | | |
The accompanying notes are an integral part of the condensed consolidated financial statements.
|
NETWORK ENGINES, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands, except per share data)
|
(unaudited)
|
| | | | | | | | | |
| | | Three months ended June 30,
| | Nine months ended June 30,
|
| |
| 2004
| | 2003
|
| 2004
| | 2003
|
| |
| | | |
| | | |
| | | | | | | | | |
Net revenues
|
| $ 34,381
| | $ 27,003
|
| $ 105,851
| | $ 52,418
|
| | | | | | | | | |
Cost of revenues:
|
| | | |
| | | |
Cost of revenues
|
| 28,596
| | 21,434
|
| 86,646
| | 41,408
|
Cost of revenues stock compensation
|
| 13
| | 14
|
| 40
| | 42
|
| | | | | | | | | |
Total cost of revenues
|
| 28,609
| | 21,448
|
| 86,686
| | 41,450
|
| |
| | | |
| | | |
Gross profit
|
| 5,772
| | 5,555
|
| 19,165
| | 10,968
|
| |
| | | |
| | | |
Operating expenses:
|
| | | |
| | | |
Research and development
|
| 1,492
| | 1,096
|
| 4,207
| | 2,807
|
Selling and marketing
|
| 2,177
| | 1,933
|
| 6,570
| | 4,372
|
General and administrative
|
| 1,497
| | 1,741
|
| 4,837
| | 4,623
|
Stock compensation
|
| 28
| | 229
|
| 366
| | 700
|
Amortization of intangible assets
| | 31
| | 254
| | 265
| | 508
|
Impairment of intangible assets
| | -
| | -
| | 3,614
| | -
|
Restructuring and other charges
|
| (107)
| | -
|
| (107)
| | 884
|
| |
| | | |
| | | |
Total operating expenses
|
| 5,118
| | 5,253
|
| 19,752
| | 13,894
|
| |
| | | |
| | | |
| |
| | | |
| | | |
Income (loss) from operations
|
| 654
| | 302
|
| (587)
| | (2,926)
|
Interest and other income, net
|
| 72
| | 106
|
| 216
| | 471
|
| |
| | | |
| | | |
Net income (loss)
|
| $ 726
| | $ 408
|
| $ (371)
| | $ (2,455)
|
| |
| | | |
| | | |
Net income (loss) per share - basic
|
| $ 0.02
| | $ 0.01
|
| $ (0.01)
| | $ (0.08)
|
Net income (loss) per share - diluted
| | $ 0.02
| | $ 0.01
| | $ (0.01)
| | $ (0.08)
|
| | | | | | | | | |
Shares used in computing basic net income (loss) per share
|
| 36,886
| | 33,749
|
| 36,445
| | 32,576
|
Shares used in computing diluted net income (loss) per share
| | 40,042
| | 38,953
| | 36,445
| | 32,576
|
| |
| | | |
| | | |
| | | | | | | | | |
The accompanying notes are an integral part of the condensed consolidated financial statements.
|
NETWORK ENGINES, INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in thousands)
|
(unaudited)
|
| | | | | |
| | | Nine months ended June 30,
|
| |
| 2004
| | 2003
|
| |
| | | |
Cash flows from operating activities:
|
| | | |
Net loss
|
| $ (371)
| | $ (2,455)
|
Adjustments to reconcile net loss to net cash provided by (used in)
|
| | | |
operating activities:
|
| | | |
Depreciation and amortization
|
| 1,191
| | 1,751
|
Provision for doubtful accounts
|
| 12
| | 123
|
Reversal of provision for stockholder notes receivable
| | -
| | (228)
|
Provision for uncollectible sub-tenant receivables
| | -
| | 138
|
Stock compensation
|
| 406
| | 742
|
Interest on notes receivable from stockholders
|
| -
| | (7)
|
Impairment of intangible assets
| | 3,614
| | -
|
Reversal of restructuring and other charges
| | (107)
| | -
|
Changes in operating assets and liabilities, net of effects of acquisition:
|
| | | |
Accounts receivable
|
| (457)
| | (3,249)
|
Inventories
|
| (1,630)
| | (5,189)
|
Prepaid expenses and other current assets
|
| 1,107
| | 327
|
Accounts payable
|
| (4,033)
| | 3,359
|
Accrued expenses
|
| 534
| | 900
|
Deferred revenue
|
| (77)
| | 144
|
| |
| | | |
Net cash provided by (used in) operating activities
|
| 189
| | (3,644)
|
| |
| | | |
Cash flows from investing activities:
|
| | | |
Purchases of property and equipment
|
| (709)
| | (329)
|
Purchases of short-term investments
| | (2,482)
| | -
|
Sales of short-term investments
| | -
| | 8,546
|
Refunds of restricted cash under guarantee agreement
| | -
| | 540
|
Changes in other assets
|
| (44)
| | 2
|
Acquisition of TidalWire, net of cash acquired
| | -
| | (11,101)
|
Payments of transaction costs for the acquisition of TidalWire
|
| -
| | (2,129)
|
| |
| | | |
Net cash used in investing activities
|
| (3,235)
| | (4,471)
|
| |
| | | |
Cash flows from financing activities:
|
| | | |
Payments on capital lease obligations and notes payable
|
| -
| | (12)
|
Collection of notes receivable from stockholders
|
| -
| | 4
|
Proceeds from issuance of common stock
|
| 1,133
| | 468
|
Net proceeds from settlement of lawsuit
| | 415
| | -
|
Acquisition of treasury stock
|
| -
| | (312)
|
| |
| | | |
Net cash provided by financing activities
|
| 1,548
| | 148
|
| |
| | | |
Net decrease in cash and cash equivalents
|
| (1,498)
| | (7,967)
|
Cash and cash equivalents, beginning of period
|
| |