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
For the transition period from to
Commission file number 0-28030
i2 Technologies, Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 75-2294945 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| One i2 Place | ||
| 11701 Luna Road | ||
| Dallas, Texas | 75234 | |
| (Address of principal executive offices) | (Zip code) | |
(469) 357-1000
(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 30, 2004 the Registrant had 458,169,758 shares of $0.00025 par value Common Stock outstanding.
QUARTERLY REPORT ON FORM 10-Q
June 30, 2004
TABLE OF CONTENTS
| Page | ||||
| Item 1. |
Financial Statements (Unaudited) | |||
| 3 | ||||
| Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |
4 | |||
| 5 | ||||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 | ||
| Item 3. |
Quantitative and Qualitative Disclosures about Market Risk | 40 | ||
| Item 4. |
Controls and Procedures | 40 | ||
| Item 1. |
Legal Proceedings | 41 | ||
| Item 2. |
Changes in Securities and Use of Proceeds | 44 | ||
| Item 3. |
Defaults upon Senior Securities | 45 | ||
| Item 4. |
Submission of Matters to a Vote of Security Holders | 45 | ||
| Item 5. |
Other Information | 45 | ||
| Item 6. |
Exhibits and Reports on Form 8-K | 45 | ||
| 47 | ||||
2
PART I – FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| June 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 279,433 | $ | 288,822 | ||||
| Restricted cash |
9,343 | 15,532 | ||||||
| Short-term investments, at fair value |
29,775 | 5,000 | ||||||
| Accounts receivable, net of allowance for doubtful accounts |
32,310 | 36,746 | ||||||
| Deferred contract costs |
5,864 | 6,995 | ||||||
| Other current assets |
20,375 | 27,529 | ||||||
| Total current assets |
377,100 | 380,624 | ||||||
| Long-term investments, at fair value |
26,543 | — | ||||||
| Premises and equipment, net |
22,212 | 28,483 | ||||||
| Intangible assets, net |
3,602 | 4,647 | ||||||
| Goodwill |
16,620 | 16,620 | ||||||
| Total assets |
$ | 446,077 | $ | 430,374 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 16,366 | $ | 20,853 | ||||
| Accrued liabilities |
51,680 | 109,499 | ||||||
| Accrued compensation and related expenses |
31,783 | 27,380 | ||||||
| Deferred tax liabilities |
9 | 9 | ||||||
| Deferred revenue |
187,323 | 212,753 | ||||||
| Total current liabilities |
287,161 | 370,494 | ||||||
| Other long-term liabilities |
18 | 18 | ||||||
| Long-term debt |
356,800 | 356,800 | ||||||
| Total liabilities |
643,979 | 727,312 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ deficit: |
||||||||
| Preferred stock, $0.001 par value, 5,000 shares authorized, none issued |
— | — | ||||||
| Series A junior participating preferred stock, $0.001 par value, 2,000 shares authorized, none issued |
— | — | ||||||
| Series B 2.5% convertible preferred stock, $1,000 par value, 150,000 shares authorized, 100,000 shares issued and outstanding |
95,364 | — | ||||||
| Common stock, $0.00025 par value, 2,000,000,000 shares authorized, 458,160,000 and 434,133,000 shares issued and outstanding at June 30, 2004 and December 31, 2003, respectively |
115 | 109 | ||||||
| Additional paid-in capital |
10,399,710 | 10,376,937 | ||||||
| Accumulated other comprehensive income (loss) |
(823 | ) | 217 | |||||
| Accumulated deficit |
(10,692,268 | ) | (10,674,201 | ) | ||||
| Net stockholders’ deficit |
(197,902 | ) | (296,938 | ) | ||||
| Total liabilities and stockholders’ deficit |
$ | 446,077 | $ | 430,374 | ||||
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues: |
||||||||||||||||
| Software licenses |
$ | 12,027 | $ | 17,271 | $ | 24,415 | $ | 36,419 | ||||||||
| Development services |
9,192 | 5,571 | 15,809 | 14,860 | ||||||||||||
| Contract |
31,970 | 24,954 | 37,940 | 81,547 | ||||||||||||
| Services |
24,580 | 35,031 | 49,537 | 70,408 | ||||||||||||
| Reimbursable expenses |
3,062 | 4,574 | 5,748 | 7,770 | ||||||||||||
| Maintenance |
29,798 | 34,593 | 60,802 | 68,938 | ||||||||||||
| Total revenues |
110,629 | 121,994 | 194,251 | 279,942 | ||||||||||||
| Cost and expenses: |
||||||||||||||||
| Cost of revenues: |
||||||||||||||||
| Software licenses |
196 | 2,570 | 3,373 | 2,853 | ||||||||||||
| Development services |
4,045 | 5,709 | 10,651 | 11,930 | ||||||||||||
| Contract |
1,025 | (264 | ) | 1,131 | 6,933 | |||||||||||
| Amortization of acquired technology |
134 | 145 | 279 | 290 | ||||||||||||
| Reimbursable expenses |
3,062 | 4,574 | 5,748 | 7,770 | ||||||||||||
| Services and maintenance |
27,207 | 37,864 | 56,498 | 71,442 | ||||||||||||
| Sales and marketing |
21,591 | 23,478 | 41,512 | 47,127 | ||||||||||||
| Research and development |
19,115 | 21,581 | 38,807 | 42,358 | ||||||||||||
| General and administrative |
12,753 | 23,617 | 38,214 | 37,994 | ||||||||||||
| Amortization of intangibles |
— | 39 | 39 | 462 | ||||||||||||
| Restructuring charges and adjustments |
3,670 | 123 | 4,245 | 376 | ||||||||||||
| Total costs and expenses |
92,798 | 119,436 | 200,497 | 229,535 | ||||||||||||
| Operating income (loss) |
17,831 | 2,558 | (6,246 | ) | 50,407 | |||||||||||
| Total non-operating expense, net |
(4,378 | ) | (1,506 | ) | (9,469 | ) | (6,525 | ) | ||||||||
| Income (loss) before income taxes |
13,453 | 1,052 | (15,715 | ) | 43,882 | |||||||||||
| Income tax expense |
1,296 | 38 | 2,105 | 1,536 | ||||||||||||
| Net Income (loss) |
$ | 12,157 | $ | 1,014 | $ | (17,820 | ) | $ | 42,346 | |||||||
| Preferred stock dividends and accretion |
247 | — | 247 | — | ||||||||||||
| Net income (loss) applicable to common stockholders |
$ | 11,910 | $ | 1,014 | $ | (18,067 | ) | $ | 42,346 | |||||||
| Net income (loss) per common share: |
||||||||||||||||
| Basic |
$ | 0.03 | $ | 0.00 | $ | (0.04 | ) | $ | 0.10 | |||||||
| Diluted |
$ | 0.02 | $ | 0.00 | $ | (0.04 | ) | $ | 0.09 | |||||||
| Weighted-average common shares outstanding: |
||||||||||||||||
| Basic |
444,574 | 432,878 | 439,507 | 432,868 | ||||||||||||
| Diluted |
482,838 | 462,315 | 439,507 | 468,163 | ||||||||||||
| Comprehensive income (loss): |
||||||||||||||||
| Net income (loss) applicable to common stockholders |
$ | 11,910 | $ | 1,014 | $ | (18,067 | ) | $ | 42,346 | |||||||
| Other comprehensive income (loss), net of income taxes: |
||||||||||||||||
| Unrealized gain (loss) on available-for-sale securities arising during the period |
(404 | ) | (62 | ) | (390 | ) | 15 | |||||||||
| Foreign currency translation adjustments |
(1,180 | ) | 530 | (649 | ) | 809 | ||||||||||
| Total other comprehensive income (loss) |
(1,584 | ) | 468 | (1,039 | ) | 824 | ||||||||||
| Total comprehensive income (loss) |
$ | 10,326 | $ | 1,482 | $ | (19,106 | ) | |||||||||