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.
| ¨ | 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 000-30293
EMBARCADERO TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 68-0310015 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
100 CALIFORNIA STREET, SUITE 1200
SAN FRANCISCO, CA 94111
(415) 834-3131
(Address of principal executive offices)
Indicate by check mark whether the registrant (1) 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 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. x Yes ¨ No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2 of the Act). x Yes ¨ No
The number of shares outstanding of the Registrant’s Common Stock as of July 31, 2004 was 27,512,533.
EMBARCADERO TECHNOLOGIES, INC.
INDEX
2
EMBARCADERO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(unaudited)
| June 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 51,152 | $ | 45,066 | ||||
| Short-term investments |
14,592 | 12,901 | ||||||
| Trade accounts receivable, net |
8,135 | 8,237 | ||||||
| Prepaid expenses and other current assets |
2,026 | 1,670 | ||||||
| Deferred income taxes |
465 | 465 | ||||||
| Total current assets |
76,370 | 68,339 | ||||||
| Property and equipment, net |
3,132 | 3,259 | ||||||
| Goodwill |
10,337 | 10,337 | ||||||
| Other intangible assets, net |
288 | 692 | ||||||
| Deferred income taxes |
3,711 | 3,711 | ||||||
| Other assets, net |
2,689 | 3,692 | ||||||
| Total assets |
$ | 96,527 | $ | 90,030 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: |
||||||||
| Accounts payable |
$ | 180 | $ | 1,011 | ||||
| Accrued liabilities |
5,451 | 5,098 | ||||||
| Capital lease obligations |
176 | — | ||||||
| Deferred revenue |
14,005 | 13,219 | ||||||
| Total current liabilities |
19,812 | 19,328 | ||||||
| Long-term deferred revenue |
252 | 251 | ||||||
| Long-term capital lease obligations |
309 | — | ||||||
| Long-term restructuring accrual |
2,067 | 203 | ||||||
| Total liabilities |
22,440 | 19,782 | ||||||
| Stockholders’ Equity: |
||||||||
| Common stock at $0.001 par value |
28 | 28 | ||||||
| Treasury stock |
(6,875 | ) | (6,287 | ) | ||||
| Additional paid-in capital |
84,631 | 80,145 | ||||||
| Accumulated other comprehensive income |
304 | 374 | ||||||
| Deferred stock-based compensation |
(2,880 | ) | (1,519 | ) | ||||
| Accumulated deficit |
(1,121 | ) | (2,493 | ) | ||||
| Total stockholders’ equity |
74,087 | 70,248 | ||||||
| Total liabilities and stockholders’ equity |
$ | 96,527 | $ | 90,030 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
EMBARCADERO TECHNOLOGIES, INC.
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 |
$ | 6,730 | $ | 6,421 | $ | 14,109 | $ | 12,768 | |||||||
| Maintenance |
7,123 | 6,024 | 14,169 | 11,885 | |||||||||||
| Total revenues |
13,853 | 12,445 | 28,278 | 24,653 | |||||||||||
| Cost of revenues: |
|||||||||||||||
| License |
213 | 105 | 422 | 205 | |||||||||||
| Amortization of acquired technology |
556 | 556 | 1,111 | 1,111 | |||||||||||
| Maintenance |
620 | 565 | 1,242 | 1,153 | |||||||||||
| Total cost of revenues |
1,389 | 1,226 | 2,775 | 2,469 | |||||||||||
| Gross profit |
12,464 | 11,219 | 25,503 | 22,184 | |||||||||||
| Operating expenses: |
|||||||||||||||
| Research and development |
3,906 | 4,016 | 7,680 | 7,806 | |||||||||||
| Sales and marketing |
5,096 | 4,844 | 10,207 | 9,739 | |||||||||||
| General and administrative |
1,543 | 1,308 | 2,756 | 2,610 | |||||||||||
| Restructuring and impairment charges |
4,068 | — | 4,068 | — | |||||||||||
| Total operating expenses |
14,613 | 10,168 | 24,711 | 20,155 | |||||||||||
| Income (loss) from operations |
(2,149 | ) | 1,051 | 792 | 2,029 | ||||||||||
| Other income, net |
168 | 159 | 319 | 285 | |||||||||||
| Income (loss) before provision for income taxes |
(1,981 | ) | 1,210 | 1,111 | 2,314 | ||||||||||
| Benefit from (provision for) income taxes |
1,127 | (463 | ) | 261 | (671 | ) | |||||||||
| Net income (loss) |
$ | (854 | ) | $ | 747 | $ | 1,372 | $ | 1,643 | ||||||
| Net income (loss) per share: |
|||||||||||||||
| Basic |
$ | (0.03 | ) | $ | 0.03 | $ | 0.05 | $ | 0.06 | ||||||
| Diluted |
$ | (0.03 | ) | $ | 0.03 | $ | 0.05 | $ | 0.06 | ||||||
| Shares used in per share calculation: |
|||||||||||||||
| Basic |
27,394 | 26,488 | 27,260 | 26,569 | |||||||||||
| Diluted |
27,394 | 28,212 | 29,184 | 28,244 | |||||||||||
| Non-cash stock-based compensation included in the above expenses: |
|||||||||||||||
| Cost of revenues |
$ | 2 | $ | — | $ | 2 | $ | — | |||||||
| Research and development |
55 | 3 | 55 | 6 | |||||||||||
| Sales and marketing |
181 | 77 | 330 | 182 | |||||||||||
| General and administrative |
171 | 97 | 317 | 247 | |||||||||||
| $ | 409 | $ | 177 | $ | 704 | $ | 435 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
EMBARCADERO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Six Months Ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash from Operating Activities: |
||||||||
| Net income |
$ | 1,372 | $ | 1,643 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities |
||||||||
| Depreciation and amortization |
940 | 1,065 | ||||||
| Recovery of doubtful accounts |
(24 | ) | (57 | ) | ||||
| Impairment charges |
680 | — | ||||||
| Amortization of developed technology |
977 | 735 | ||||||
| Amortization of other intangible assets |
404 | 404 | ||||||
| Amortization of deferred stock-based compensation |
646 | 435 | ||||||
| Issuance of options in exchange for services |
58 | — | ||||||
| Changes in assets and liabilities: |
||||||||
| Trade accounts receivable |
162 | 191 | ||||||
| Prepaid expenses and other assets |
(538 | ) | (199 | ) | ||||
| Restructuring accrual |
3,789 | — | ||||||
| Accounts payable and accrued liabilities |
(2,305 | ) | 641 | |||||
| Deferred revenue |
507 | 1,706 | ||||||