UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the Quarter Ended June 30, 2004
Commission File Number 000-26299
ARIBA, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 77-0439730 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
807 11th Avenue
Sunnyvale, California 94089
(Address of principal executive offices)
(650) 390-1000
(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 described in Exchange Act Rule 12b-2).
Yes x No ¨
On July 31, 2004, approximately 63,088,636 shares of the registrant’s common stock were issued and outstanding.
INDEX
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
| June 30, 2004 |
September 30, 2003 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 110,193 | $ | 70,819 | ||||
| Short-term investments |
13,659 | 56,323 | ||||||
| Restricted cash |
45,190 | 1,123 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $1,364 and $1,356 as of June 30, 2004 and September 30, 2003, respectively |
17,125 | 8,669 | ||||||
| Prepaid expenses and other current assets |
14,440 | 10,747 | ||||||
| Total current assets |
200,607 | 147,681 | ||||||
| Property and equipment, net |
19,052 | 21,767 | ||||||
| Long-term investments |
26,029 | 78,329 | ||||||
| Restricted cash, net of current portion |
27,312 | 28,579 | ||||||
| Goodwill, net |
190,710 | 181,033 | ||||||
| Other intangible assets, net |
5,635 | — | ||||||
| Other assets |
2,202 | 1,741 | ||||||
| Total assets |
$ | 471,547 | $ | 459,130 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 10,464 | $ | 10,767 | ||||
| Accrued compensation and related liabilities |
25,093 | 26,674 | ||||||
| Accrued liabilities |
80,950 | 35,513 | ||||||
| Restructuring obligations |
10,533 | 13,764 | ||||||
| Deferred revenue |
49,595 | 57,470 | ||||||
| Total current liabilities |
176,635 | 144,188 | ||||||
| Restructuring obligations, less current portion |
27,181 | 34,112 | ||||||
| Deferred revenue, less current portion |
27,247 | 43,954 | ||||||
| Total liabilities |
231,063 | 222,254 | ||||||
| Minority interests |
20,500 | 20,019 | ||||||
| Commitments and contingencies (Note 3) |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock (1) |
92 | 90 | ||||||
| Additional paid-in capital (1) |
4,511,696 | 4,501,424 | ||||||
| Deferred stock-based compensation |
(4,421 | ) | (314 | ) | ||||
| Accumulated other comprehensive income |
2,187 | 2,856 | ||||||
| Accumulated deficit |
(4,289,570 | ) | (4,287,199 | ) | ||||
| Total stockholders’ equity |
219,984 | 216,857 | ||||||
| Total liabilities and stockholders’ equity |
$ | 471,547 | $ | 459,130 | ||||
| (1) | Reflects the Company’s one-for-six reverse stock split effected July 1, 2004. |
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Three Months Ended June 30, |
Nine Months Ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues: |
||||||||||||||||
| License |
$ | 15,148 | $ | 16,597 | $ | 47,890 | $ | 64,963 | ||||||||
| License—related party |
327 | 4,691 | 2,201 | 14,523 | ||||||||||||
| Maintenance and service |
36,870 | 34,146 | 109,562 | 94,805 | ||||||||||||
| Maintenance and service—related party |
638 | 1,129 | 2,069 | 3,275 | ||||||||||||
| Total revenues |
52,983 | 56,563 | 161,722 | 177,566 | ||||||||||||
| Cost of revenues: |
||||||||||||||||
| License |
744 | 1,784 | 2,421 | 3,663 | ||||||||||||
| Maintenance and service |
14,553 | 11,889 | 42,053 | 33,942 | ||||||||||||
| Amortization of acquired technology |
340 | — | 340 | 4,000 | ||||||||||||
| Total cost of revenues |
15,637 | 13,673 | 44,814 | 41,605 | ||||||||||||
| Gross profit |
37,346 | 42,890 | 116,908 | 135,961 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
22,621 | 19,199 | 65,449 | 60,320 | ||||||||||||
| Research and development |
13,811 | 13,123 | 38,932 | 40,955 | ||||||||||||
| General and administrative |
6,650 | 8,745 | 16,114 | 29,578 | ||||||||||||
| Amortization of other intangible assets |
149 | — | 225 | 113,464 | ||||||||||||
| Stock-based compensation (1) |
771 | 364 | 1,639 | 1,836 | ||||||||||||
| Restructuring and integration costs |
1,820 | 5,350 | (97 | ) | 5,350 | |||||||||||
| Total operating expenses |
45,822 | 46,781 | 122,262 | 251,503 | ||||||||||||
| Loss from operations |
(8,476 | ) | (3,891 | ) | (5,354 | ) | (115,542 | ) | ||||||||
| Interest income |
695 | 1,163 | 2,527 | 4,105 | ||||||||||||
| Interest expense |
(2 | ) | (74 | ) | (7 | ) | (87 | ) | ||||||||
| Other income (loss) |
30 | 97 | (26 | ) | 494 | |||||||||||
| Net loss before income taxes and minority interests |
(7,753 | ) | (2,705 | ) | (2,860 | ) | (111,030 | ) | ||||||||
| Provision (benefit) for income taxes |
174 | (116 | ) | (353 | ) | 327 | ||||||||||
| Minority interests in net income (loss) of consolidated subsidiaries |
(296 | ) | 858 | (136 | ) | 2,335 | ||||||||||
| Net loss |
$ | (7,631 | ) | $ | (3,447 | ) | $ | (2,371 | ) | $ | (113,692 | ) | ||||
| Net loss per share—basic and diluted (2) |
$ | (0.17 | ) | $ | (0.08 | ) | $ | (0.05 | ) | $ | (2.57 | ) | ||||
| Weighted average shares used in computing net loss per share—basic and diluted (2) |
45,454 | 44,500 | 45,256 | 44,239 | ||||||||||||
| (1) | For the three and nine month periods ended June 30, 2004 and 2003, stock-based compensation expense (benefit), net of the effects of cancellations, is attributable to various operating expense categories as follows (in thousands): |
| Three Months Ended June 30, |
Nine Months Ended June 30, |
|||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||
| Cost of revenues |
$ | 71 | $ | (42 | ) | $ | 225 | $ | (751 | ) | ||||
| Sales and marketing |
478 | 239 | 1,078 | 1,446 | ||||||||||
| Research and development |
98 | 26 | 126 | 258 | ||||||||||
| General and administrative |
124 | 141 | 210 | 883 | ||||||||||
| Total |
$ | 771 | $ | 364 | $ | 1,639 | $ | 1,836 | ||||||
| (2) | Reflects the Company’s one-for-six reverse stock split effected July 1, 2004. |
See accompanying notes to condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months Ended June 30, |
||||||||
| 2004 |
2003 |
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| Operating activities: | ||||||||
| Net loss |
$ | (2,371 | ) | $ | (113,692 | ) | ||