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
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
0-16096
(Commission File Number)
Borland Software Corporation
(Exact Name of Registrant as Specified in its Charter)
| Delaware |
94-2895440 | |
| (State or Other Jurisdiction of |
(I.R.S. Employer |
100 ENTERPRISE WAY
SCOTTS VALLEY, CALIFORNIA 95066-3249
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (831) 431-1000
(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 common stock outstanding as of April 30, 2003, the most recent practicable date prior to the filing of this report, was 80,594,563.
| Page | ||||
| PART I |
1 | |||
| Item 1. |
1 | |||
| Condensed Consolidated Balance Sheets at March 31, 2003 and December 31, 2002 |
1 | |||
| Condensed Consolidated Statements of Operations for the three months ended March 31, 2003 and 2002 |
2 | |||
| 3 | ||||
| Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002 |
4 | |||
| 5 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 | ||
| Item 3. |
41 | |||
| Item 4. |
42 | |||
| PART II |
43 | |||
| Item 1. |
43 | |||
| Item 6. |
43 | |||
| 46 | ||||
| 47-48 | ||||
FINANCIAL INFORMATION
| Item 1. | Financial Statements |
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
| March 31, |
December 31, |
|||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
202,575 |
|
$ |
239,771 |
| ||
| Short-term investments |
|
14,547 |
|
|
56,385 |
| ||
| Accounts receivable, net of allowances of $17,652 and $17,538 |
|
56,744 |
|
|
47,238 |
| ||
| Deferred tax—current |
|
8,077 |
|
|
1,490 |
| ||
| Other current assets |
|
17,186 |
|
|
19,586 |
| ||
| Total current assets |
|
299,129 |
|
|
364,470 |
| ||
| Property and equipment, net |
|
9,850 |
|
|
7,966 |
| ||
| Property held for sale |
|
9,935 |
|
|
9,935 |
| ||
| Goodwill and intangible assets |
|
229,648 |
|
|
45,000 |
| ||
| Deferred tax—non-current |
|
8,693 |
|
|
239 |
| ||
| Other non-current assets |
|
5,376 |
|
|
5,516 |
| ||
| Total assets |
$ |
562,631 |
|
$ |
433,126 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
16,182 |
|
$ |
12,490 |
| ||
| Accrued expenses |
|
50,614 |
|
|
45,804 |
| ||
| Short-term restructuring |
|
10,507 |
|
|
6,734 |
| ||
| Income taxes payable |
|
7,165 |
|
|
6,932 |
| ||
| Deferred revenues |
|
49,047 |
|
|
35,619 |
| ||
| Other current liabilities |
|
18,062 |
|
|
10,160 |
| ||
| Total current liabilities |
|
151,577 |
|
|
117,739 |
| ||
| Long-term deferred tax liabilities |
|
8,460 |
|
|
— |
| ||
| Long-term restructuring |
|
4,422 |
|
|
1,794 |
| ||
| Other long-term liabilities |
|
7,888 |
|
|
7,844 |
| ||
|
|
172,347 |
|
|
127,377 |
| |||
| Commitments and contingencies (Notes 8 and 10) |
||||||||
| Minority interest |
|
— |
|
|
5,018 |
| ||
| Stockholders’ equity: |
||||||||
| Common stock; $.01 par value; 200,000,000 shares authorized; 80,542,623 and 72,183,463 shares issued and outstanding |
|
805 |
|
|
721 |
| ||
| Additional paid-in capital |
|
610,410 |
|
|
500,241 |
| ||
| Accumulated deficit |
|
(187,344 |
) |
|
(169,652 |
) | ||
| Deferred compensation |
|
(1,472 |
) |
|
(663 |
) | ||
| Cumulative comprehensive income |
|
6,761 |
|
|
6,078 |
| ||
|
|
429,160 |
|
|
336,725 |
| |||
| Less common stock in treasury at cost, 6,000,401 and 5,700,600 shares |
|
(38,876 |
) |
|
(35,994 |
) | ||
|
|
390,284 |
|
|
300,731 |
| |||
| Total liabilities and stockholders’ equity |
$ |
562,631 |
|
$ |
433,126 |
| ||
See Notes to the Condensed Consolidated Financial Statements.
1
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts, unaudited)
| Three Months Ended March 31, | |||||||
| 2003 |
2002 | ||||||
| Licenses and other revenues |
$ |
56,809 |
|
$ |
47,668 | ||
| Service revenues |
|
17,561 |
|
|
9,409 | ||
| Net revenues |
|
74,370 |
|
|
57,077 | ||
| Cost of licenses and other revenues |
|
3,099 |
|
|
3,520 | ||
| Cost of service revenues |
|
6,599 |
|
|
5,035 | ||
| Cost of revenues |
|
9,698 |
|
|
8,555 | ||
| Gross profit |
|
64,672 |
|
|
48,522 | ||
| Research and development |
|
17,971 |
|
|
11,949 | ||
| Sales, general and administrative |
|
46,247 |
|
|
31,033 | ||
| Restructuring, amortization of intangibles, acquisition-related expenses and other charges |
|
17,872 |
|
|
1,522 | ||
| Total operating expenses |
|
82,090 |
|
|
44,504 | ||
| Operating income (loss) |
|
(17,418 |
) |
|
4,018 | ||
| Interest income, net and other |
|
1,234 |
|
|
1,730 | ||
| Income (loss) before income taxes |
|
(16,184 |
) |
|
5,748 | ||
| Income tax provision |
|
1,508 |
|
|
1,151 | ||
| Net income (loss) |
$ |
(17,692 |
) |
$ |
4,597 | ||
| Net income (loss) per share: |
|||||||
| Income (loss) per share—basic |
$ |
(0.22 |
) |
$ |
0.07 | ||
| Income (loss) per share—diluted |
$ |
(0.22 |
) |
$ |
0.06 | ||
| Shares used in computing basic income (loss) per share |
|
78,910 |
|
|
70,188 | ||
| Shares used in computing diluted income (loss) per share |
|
78,910 |
|
|
76,040 | ||
See Notes to the Condensed Consolidated Financial Statements.
2
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Net income (loss) |
$ |
(17,692 |
) |
$ |
4,597 |
| ||
| Other comprehensive income (loss): |
||||||||
| Foreign currency translation adjustments |
|
685 |
|
|
(387 |
) | ||
| Fair market value adjustment for available-for-sale securities |
|
(2 |
) |
|
(233 |
) | ||
| Comprehensive income (loss) |
$ |
(17,009 |
) |
$ |
3,977 |
| ||
See Notes to the Condensed Consolidated Financial Statements.
3
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| CASH FLOWS OPERATING ACTIVITIES: |
||||||||
| Net income (loss) |
$ |
(17,692 |
) |
$ |
4,597 |
| ||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
|
7,458 |
|
|
1,642 |
| ||
| Write-off of loan receivable |
|
2,209 |
|
|||||