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 June 30, 2004
OR
| ¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission File Number: 000-27389
INTERWOVEN, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 77-0523543 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
803 11TH Avenue
Sunnyvale, California 94089
(Address of principal executive offices)
(408) 774-2000
(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 Exchange Act): Yes x No ¨
As of July 29, 2004, there were approximately 40,574,000 shares of the registrant’s common stock outstanding.
Table of Contents
1
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| June 30, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 50,572 | $ | 43,566 | ||||
| Short-term investments |
91,862 | 96,921 | ||||||
| Accounts receivable, net |
24,299 | 33,834 | ||||||
| Prepaid expenses and other current assets |
8,982 | 8,629 | ||||||
| Total current assets |
175,715 | 182,950 | ||||||
| Property and equipment, net |
6,649 | 7,403 | ||||||
| Goodwill, net |
186,208 | 185,991 | ||||||
| Other intangible assets, net |
35,589 | 43,134 | ||||||
| Other assets |
2,299 | 2,347 | ||||||
| Total assets |
$ | 406,460 | $ | 421,825 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: |
||||||||
| Bank borrowings |
$ | 759 | $ | 1,213 | ||||
| Accounts payable |
4,391 | 4,576 | ||||||
| Accrued liabilities |
18,489 | 22,961 | ||||||
| Restructuring and excess facilities accrual |
16,461 | 15,733 | ||||||
| Deferred revenues |
46,872 | 44,066 | ||||||
| Total current liabilities |
86,972 | 88,549 | ||||||
| Accrued liabilities |
2,538 | 912 | ||||||
| Restructuring and excess facilities accrual |
32,212 | 31,430 | ||||||
| Total liabilities |
121,722 | 120,891 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock |
40 | 40 | ||||||
| Additional paid-in capital |
695,008 | 693,773 | ||||||
| Deferred stock-based compensation |
(3,891 | ) | (9,564 | ) | ||||
| Accumulated other comprehensive income (loss) |
(509 | ) | 25 | |||||
| Accumulated deficit |
(405,910 | ) | (383,340 | ) | ||||
| Total stockholders’ equity |
284,738 | 300,934 | ||||||
| Total liabilities and stockholders’ equity |
$ | 406,460 | $ | 421,825 | ||||
See accompanying notes to condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues: |
||||||||||||||||
| License |
$ | 16,502 | $ | 10,192 | $ | 33,178 | $ | 19,343 | ||||||||
| Support and service |
22,993 | 16,003 | 43,711 | 32,438 | ||||||||||||
| Total revenues |
39,495 | 26,195 | 76,889 | 51,781 | ||||||||||||
| Cost of revenues: |
||||||||||||||||
| License |
3,318 | 465 | 6,477 | 1,167 | ||||||||||||
| Support and service |
9,500 | 8,182 | 18,938 | 16,582 | ||||||||||||
| Total cost of revenues |
12,818 | 8,647 | 25,415 | 17,749 | ||||||||||||
| Gross profit |
26,677 | 17,548 | 51,474 | 34,032 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
17,557 | 13,344 | 35,285 | 28,267 | ||||||||||||
| Research and development |
7,713 | 6,082 | 15,287 | 12,004 | ||||||||||||
| General and administrative |
3,033 | 3,306 | 5,970 | 6,479 | ||||||||||||
| Amortization of stock-based compensation |
806 | 493 | 3,411 | 1,007 | ||||||||||||
| Amortization of intangible assets |
1,207 | 444 | 2,414 | 888 | ||||||||||||
| In-process research and development |
— | 599 | — | 599 | ||||||||||||
| Restructuring and excess facilities charges |
11,837 | 1,311 | 11,837 | 2,377 | ||||||||||||
| Total operating expenses |
42,153 | 25,579 | 74,204 | 51,621 | ||||||||||||
| Loss from operations |
(15,476 | ) | (8,031 | ) | (22,730 | ) | (17,589 | ) | ||||||||
| Interest income and other, net |
133 | 1,035 | 646 | 1,934 | ||||||||||||
| Loss before provision for income taxes |
(15,343 | ) | (6,996 | ) | (22,084 | ) | (15,655 | ) | ||||||||
| Provision for income taxes |
243 | 198 | 486 | 639 | ||||||||||||
| Net loss |
$ | (15,586 | ) | $ | (7,194 | ) | $ | (22,570 | ) | $ | (16,294 | ) | ||||
| Basic and diluted net loss per common share |
$ | (0.39 | ) | $ | (0.28 | ) | $ | (0.56 | ) | $ | (0.64 | ) | ||||
| Shares used in computing basic and diluted net loss per common share |
40,420 | 25,660 | 40,278 | 25,601 | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (22,570 | ) | $ | (16,294 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
2,311 | 3,469 | ||||||
| Amortization of stock-based compensation |
3,411 | 1,007 | ||||||
| Amortization of intangible assets and purchased technology |
7,594 | 888 | ||||||
| Reduction in allowance for doubtful accounts and sales returns |
(485 | ) | (78 | ) | ||||
| In-process research and development |
— | 599 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
9,772 | 6,105 | ||||||
| Prepaid expenses and other assets |
(305 | ) | 66 | |||||
| Accounts payable and accrued liabilities |
(3,080 | ) | (3,517 | ) | ||||
| Restructuring and excess facilities accrual |
1,293 | (4,296 | ) | |||||
| Deferred revenues |
2,806 | (4,110 | ) | |||||
| Net cash provided by (used in) operating activities |
747 | (16,161 | ) | |||||
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
(1,557 | ) | (516 | ) | ||||
| Cash paid for business acquired, net |
— | (4,198 | ) | |||||
| Purchases of investments |
(7,159 | ) | (50,065 | ) | ||||
| Maturities and sales of investments |
11,932 | 70,487 | ||||||
| Net cash provided by investing activities |
3,216 | 15,708 | ||||||
| Cash flows from financing activities: |
||||||||
| Payment of bank borrowings |
(454 | ) | — | |||||
| Net proceeds from issuance of common stock |
3,497 | 866 | ||||||
| Repurchases of common stock |
— | (5 | ) | |||||
| Net cash provided by financing activities |
3,043 | 861 | ||||||
| Net increase in cash and cash equivalents |
7,006 | < | ||||||