UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 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 0-22158
NetManage, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 77-0252226 | |
| (State or other jurisdiction of Incorporation or organization) |
(IRS employer identification no.) |
10725 North De Anza Boulevard
Cupertino, California 95014
(Address of principal executive offices, including zip code)
(408) 973-7171
(Registrant’s telephone number, including area code)
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 Act). Yes ¨ No x
Number of shares of registrant’s common stock outstanding as of April 30, 2004: 8,826,573.
Table of Contents
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
| March 31, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 22,301 | $ | 20,160 | ||||
| Short-term investments |
186 | 139 | ||||||
| Accounts receivable, net of allowances of $1,001, and $922, respectively |
8,739 | 12,781 | ||||||
| Prepaid expenses and other current assets |
3,341 | 3,204 | ||||||
| Total current assets |
34,567 | 36,284 | ||||||
| Property and equipment, at cost: |
||||||||
| Computer software and equipment |
1,485 | 1,686 | ||||||
| Furniture and fixtures |
5,321 | 5,501 | ||||||
| Leasehold improvements |
1,363 | 1,356 | ||||||
| 8,169 | 8,543 | |||||||
| Less-accumulated depreciation |
(6,166 | ) | (6,364 | ) | ||||
| Net property and equipment |
2,003 | 2,179 | ||||||
| Goodwill |
1,762 | 1,762 | ||||||
| Other intangibles, net |
1,142 | 1,591 | ||||||
| Other assets |
45 | 35 | ||||||
| Total assets |
$ | 39,519 | $ | 41,851 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 1,610 | $ | 2,328 | ||||
| Accrued liabilities |
3,533 | 5,853 | ||||||
| Accrued payroll and related expenses |
2,828 | 3,079 | ||||||
| Deferred revenue |
15,566 | 15,939 | ||||||
| Income taxes payable |
1,417 | 1,238 | ||||||
| Total current liabilities |
24,954 | 28,437 | ||||||
| Long-term liabilities |
565 | 584 | ||||||
| Total liabilities |
25,519 | 29,021 | ||||||
| Commitments and contingencies (Note 5) |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock, $0.01 par value - |
109 | 108 | ||||||
| Treasury stock, at cost - 2,076,848 and 2,076,848 shares, respectively |
(20,804 | ) | (20,804 | ) | ||||
| Additional paid in capital |
179,152 | 178,080 | ||||||
| Accumulated deficit |
(141,273 | ) | (140,842 | ) | ||||
| Accumulated other comprehensive loss |
(3,184 | ) | (3,712 | ) | ||||
| Total stockholders’ equity |
14,000 | 12,830 | ||||||
| Total liabilities and stockholders’ equity |
$ | 39,519 | $ | 41,851 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Net revenues: |
||||||||
| License fees |
$ | 4,790 | $ | 6,009 | ||||
| Services |
7,090 | 8,109 | ||||||
| Total net revenues |
11,880 | 14,118 | ||||||
| Cost of revenues: |
||||||||
| License fees |
396 | 518 | ||||||
| Services |
914 | 1,321 | ||||||
| Amortization of developed technology |
253 | 310 | ||||||
| Total cost of revenues |
1,563 | 2,149 | ||||||
| Gross margin |
10,317 | 11,969 | ||||||
| Operating expenses: |
||||||||
| Research and development |
1,785 | 2,613 | ||||||
| Sales and marketing |
5,541 | 7,461 | ||||||
| General and administrative |
2,866 | 2,737 | ||||||
| Restructuring charges, net |
(167 | ) | 581 | |||||
| Amortization of intangible assets |
150 | 149 | ||||||
| Total operating expenses |
10,175 | 13,541 | ||||||
| Income (loss) from operations |
142 | (1,572 | ) | |||||
| Loss on investments, net |
— | (32 | ) | |||||
| Interest income and other, net |
49 | 63 | ||||||
| Foreign currency transaction gains (losses) |
(572 | ) | 36 | |||||
| Loss before provision for income taxes |
(381 | ) | (1,505 | ) | ||||
| Provision (benefit) for income taxes |
50 | (317 | ) | |||||
| Net loss |
$ | (431 | ) | $ | (1,188 | ) | ||
| Net loss per share: |
||||||||
| Basic and diluted |
$ | (0.05 | ) | $ | (0.14 | ) | ||
| Weighted average common shares and equivalents: |
||||||||
| Basic and diluted |
8,766 | 8,623 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
| Three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Net loss |
$ | (431 | ) | $ | (1,188 | ) | ||
| Other comprehensive income (loss): |
||||||||
| Unrealized gain on investments, net |
46 | 86 | ||||||
| Foreign currency translation adjustments, net |
482 | (34 | ) | |||||
| Comprehensive income (loss) |
$ | 97 | $ | (1,136 | ) | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (431 | ) | $ | (1,188 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
767 | 719 | ||||||
| Loss on disposal of property, plant and equipment |
1 | 7 | ||||||
| Provision for doubtful accounts and returns |
159 | 5 | ||||||
| Stock compensation expense |
546 | — | ||||||
| Loss on investments, net |
— | 32 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
3,993 | 11,423 | ||||||
| Prepaid expenses and other current assets |
(69 | ) | (219 | ) | ||||
| Other assets |
54 | 18 | ||||||
| Accounts payable |
(685 | ) | (501 | ) | ||||
| Accrued liabilities, payroll and payroll-related expenses |
(2,458 | ) | (2,503 | ) | ||||
| Deferred revenue |
(256 | ) | (2,752 | ) | ||||
| Income taxes payable |
179 | 81 | ||||||
| Long-term liabilities |
(18 | ) | (29 | ) | ||||
| Net cash provided by operating activities |
1,782 | 5,093 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of short-term investments |
(5 | ) | (69 | ) | ||||
| Proceeds from sales and maturities of short-term investments |
8 | — | ||||||
| Purchases of property and equipment |
(149 | ) | (138 | ) | ||||
| Net cash used in investing activities |
(146 | ) | (207 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from sale of common stock |
527 | — | ||||||
| Purchases of common stock |
— | (175 | ) | |||||
| Net cash provided by (used in) financing activities |
527 | (175 | ) | |||||
| Effect of exchange rate changes on cash |
(22 | ) | 27 | |||||
| Net increase in cash and cash equivalents |
2,141 | 4,738 | ||||||
| Cash and cash equivalents, beginning of period |
20,160 | 24,014 | ||||||
| Cash and cash equivalents, end of period |
$ | 22,301 | $ | 28,752 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Interim financial data
The