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
o
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 000-23783
MICROMUSE INC.
(Exact name of registrant as specified in its charter)
| DELAWARE (State or other jurisdiction of incorporation or organization) |
94-3288385 (IRS Employer Identification No.) |
139 TOWNSEND STREET
SAN FRANCISCO, CALIFORNIA 94107
(415)
538-9090
(Address, including ZIP code, and telephone number)
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 o
Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act).
Yes o No x
75,767,894 shares of Common Stock, $0.01 par value, were outstanding as of April 30, 2003
MICROMUSE INC.
TABLE OF CONTENTS
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| Part I |
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Financial Information |
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Item 1. |
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Condensed Consolidated Financial Statements (Unaudited): |
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Condensed Consolidated Balance Sheets as of March 31, 2003 and September 30, 2002 |
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Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2003 and 2002 |
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Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2003 and 2002 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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34 | |
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Item 4. |
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35 | |
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| Part II |
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Other Information |
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Item 1. |
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36 | |
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Item 2. |
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36 | |
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Item 3. |
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36 | |
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Item 4. |
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36 | |
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Item 5. |
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36 | |
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Item 6. |
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37 | |
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| 39 |
2
MICROMUSE INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except per share data)
(Unaudited)
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March 31, |
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September 30, |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
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$ |
117,268 |
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$ |
117,218 |
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| Short-term investments |
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48,100 |
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42,126 |
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| Billed receivables, net |
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8,846 |
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18,386 |
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| Prepaid expenses and other current assets |
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6,112 |
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5,760 |
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| Total current assets |
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180,326 |
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183,490 |
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| Property and equipment, net |
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6,776 |
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9,534 |
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| Long-term investments |
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39,059 |
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28,293 |
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| Goodwill and other intangible assets, net |
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40,094 |
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40,666 |
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$ |
266,255 |
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$ |
261,983 |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
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$ |
4,623 |
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$ |
2,374 |
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| Accrued expenses |
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19,783 |
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25,205 |
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| Income taxes payable |
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6,693 |
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6,652 |
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| Deferred revenue |
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48,349 |
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36,524 |
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| Total current liabilities |
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79,448 |
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70,755 |
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| Stockholders’ equity |
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| Preferred stock; $0.01 par value; 5,000 shares authorized no shares issued and outstanding |
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— |
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| Common stock; $0.01 par value; 200,000 shares authorized; 76,008 and 75,194 shares outstanding as of March 31, 2003 and September 30, 2002, respectively |
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760 |
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752 |
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| Additional paid-in capital |
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198,930 |
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196,048 |
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| Treasury stock |
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(2,657 |
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(2,657 |
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| Accumulated other comprehensive loss |
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(1,876 |
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(899 |
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| Accumulated deficit |
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(8,350 |
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(2,016 |
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| Total stockholders’ equity |
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186,807 |
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191,228 |
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$ |
266,255 |
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$ |
261,983 |
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See accompanying notes to the condensed consolidated financial statements
3
MICROMUSE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share
data)
(Unaudited)
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Three months ended |
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Six months ended |
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2003 |
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2002 |
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2003 |
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2002 |
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| Revenues: |
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| License |
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$ |
18,598 |
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$ |
24,639 |
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$ |
32,021 |
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$ |
47,855 |
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| Maintenance and services |
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13,437 |
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14,399 |
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27,111 |
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31,230 |
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| Total revenues |
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32,035 |
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39,038 |
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59,132 |
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79,085 |
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| Cost of revenues: |
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| License |
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1,748 |
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1,506 |
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2,824 |
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3,101 |
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| Maintenance and services |
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2,949 |
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4,605 |
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6,238 |
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9,813 |
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| Total cost of revenues |
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4,697 |
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6,111 |
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9,062 |
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12,914 |
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| Gross profit |
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27,338 |
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32,927 |
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50,070 |
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66,171 |
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| Operating expenses: |
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| Sales and marketing |
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14,478 |
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18,092 |
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28,920 |
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36,177 |
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| Research and development |
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7,096 |
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8,060 |
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14,517 |
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15,630 |
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| General and administrative |
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4,021 |
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4,079 |
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8,087 |
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9,017 |
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| Amortization of goodwill and other intangible assets |
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1,469 |
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2,767 |
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3,021 |
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5,534 |
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| Purchased in process research and development |
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— |
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— |
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142 |
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— |
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| Restructuring costs |
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— |
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— |
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3,329 |
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— |
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| Executive recruiting costs |
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— |
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— |
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— |
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449 |
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| Total operating expenses |
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27,064 |
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32,998 |
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58,016 |
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66,807 |
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| Income (loss) from operations |
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274 |
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(71 |
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(7,946 |
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(636 |
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| Other income, net |
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1,263 |
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1,305 |
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2,643 |
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2,913 |
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| Income (loss) before income taxes |
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1,537 |
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1,234 |
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(5,303 |
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2,277 |
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| Income tax provision |
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546 |
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815 |
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1,031 |
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1,242 |
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| Net income (loss) |
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$ |
991 |
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$ |
419 |
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$ |
(6,334 |
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$ |
1,035 |
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| Per share data: |
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| Basic net income (loss) |
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$ |
0.01 |
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