SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 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: 0-21031
QUADRAMED CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| DELAWARE | 52-1992861 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(IRS Employer Identification No.) | |
| 12110 SUNSET HILLS ROAD, SUITE 600 RESTON, VIRGINIA |
20190 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(703) 709-2300
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.01 Par Value Per Share
Securities registered pursuant to Section 12(g) of the Act: NONE
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 x No ¨
As of October 29, 2004, there were 40,098,200 shares of the Registrant’s common stock outstanding, par value -$0.01.
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2004
TABLE OF CONTENTS
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except percentages and per share amounts)
| September 30, 2004 |
December 31, 2003 |
|||||||
| (unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 26,032 | $ | 36,944 | ||||
| Accounts receivable, net |
25,040 | 30,872 | ||||||
| Unbilled and other receivables |
6,590 | 6,218 | ||||||
| Prepaid expenses and other current assets |
10,588 | 11,268 | ||||||
| Total current assets |
68,250 | 85,302 | ||||||
| Restricted cash |
3,963 | 5,523 | ||||||
| Property and equipment, net |
7,227 | 5,643 | ||||||
| Goodwill |
32,436 | 18,445 | ||||||
| Capitalized software development costs, net |
1,747 | 3,219 | ||||||
| Other intangible assets, net |
9,112 | 6,992 | ||||||
| Other long-term assets |
7,019 | 8,031 | ||||||
| Total assets |
$ | 129,754 | $ | 133,155 | ||||
| Current liabilities |
||||||||
| Accounts payable and accrued expenses |
$ | 4,089 | $ | 2,914 | ||||
| Accrued payroll and related |
8,418 | 11,100 | ||||||
| Accrued interest |
— | 1,912 | ||||||
| Accrued dividends payable |
15,772 | — | ||||||
| Other accrued liabilities |
7,770 | 7,866 | ||||||
| Deferred revenue |
45,472 | 48,502 | ||||||
| Total current liabilities |
81,521 | 72,294 | ||||||
| 10% Senior Secured Notes due 2008, net |
— | 61,233 | ||||||
| 5.25% Convertible Subordinated Notes due 2005 |
— | 11,931 | ||||||
| Other long-term liabilities |
4,833 | 4,580 | ||||||
| Total liabilities |
86,354 | 150,038 | ||||||
| Stockholders’ equity (deficit) |
||||||||
| Preferred stock, $0.01 par, 5,000 shares authorized, 4,000 and 0 shares issued and outstanding, respectively |
81,931 | — | ||||||
| Common stock, $0.01 par, 150,000 shares authorized; 40,007 and 28,871 shares issued, respectively |
400 | 290 | ||||||
| Treasury stock at cost, 0 and 200 shares, respectively |
— | (822 | ) | |||||
| Additional paid-in-capital |
301,198 | 292,716 | ||||||
| Deferred compensation and accumulated other comprehensive loss |
(2,088 | ) | (2,884 | ) | ||||
| Accumulated deficit |
(338,041 | ) | (306,183 | ) | ||||
| Total stockholders’ equity (deficit) |
43,400 | (16,883 | ) | |||||
| Total liabilities and stockholders’ equity (deficit) |
$ | 129,754 | $ | 133,155 | ||||
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 September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenue |
||||||||||||||||
| Services |
$ | 4,219 | $ | 4,603 | $ | 13,494 | $ | 14,065 | ||||||||
| Maintenance |
11,342 | 9,170 | 31,572 | 26,935 | ||||||||||||
| Installation and other |
4,772 | 4,657 | 14,414 | 13,213 | ||||||||||||
| Services and other revenue |
20,333 | 18,430 | 59,480 | 54,213 | ||||||||||||
| Licenses |
9,562 | 10,362 | 33,236 | 30,079 | ||||||||||||
| Hardware |
2,175 | 910 | 7,723 | 4,081 | ||||||||||||
| Total revenues |
32,070 | 29,703 | 100,439 | 88,373 | ||||||||||||
| Cost of revenue |
||||||||||||||||
| Cost of services and other revenue |
9,548 | 9,802 | 28,704 | 31,189 | ||||||||||||
| Cost of licenses revenue |
2,553 | 1,754 | 9,109 | 5,363 | ||||||||||||
| Cost of hardware revenue |
1,829 | 492 | 5,435 | 2,930 | ||||||||||||
| Total cost of revenue |
13,930 | 12,048 | 43,248 | 39,482 | ||||||||||||
| Gross margin |
18,140 | 17,654 | 57,191 | 48,891 | ||||||||||||
| Operating expenses |
||||||||||||||||
| General and administration |
8,125 | 7,200 | 25,653 | 28,011 | ||||||||||||
| Software development |
7,137 | 6,027 | 21,082 | 17,371 | ||||||||||||
| Sales and marketing |
5,970 | 5,715 | 17,825 | 15,617 | ||||||||||||
| Amortization of intangible assets and depreciation |
1,304 | 1,475 | 3,713 | 4,503 | ||||||||||||
| Total operating expenses |
22,536 | 20,417 | 68,273 | 65,502 | ||||||||||||
| Loss from operations |
(4,396 | ) | (2,763 | ) | (11,082 | ) | (16,611 | ) | ||||||||
| Other income (expense) |
||||||||||||||||
| Interest expense |
(292 | ) | (2,662 | ) | (5,195 | ) | (6,766 | ) | ||||||||
| Interest income |
107 | 152 | 351 | 438 | ||||||||||||
| Other income (expense), net |
17 | 42 | 134 | 756 | ||||||||||||
| Loss on retirement of debt |
(11,726 | ) | — | (14,871 | ) | — | ||||||||||
| Provision (benefit) for income taxes |
1 | 10 | (161 | ) | 10 | |||||||||||
| Other income (expense) |
(11,895 | ) | (2,458 | ) | (19,420 | ) | (5,562 | ) | ||||||||
| Net loss |
$ | (16,291 | ) | $ | (5,241 | ) | $ | (30,502 | ) | $ | (22,193 | ) | ||||
| Preferred stock accretion |
(1,348 | ) | — | (1,348 | ) | — | ||||||||||
| Net loss attributable to common shareholders |
(17,639 | ) | $ | (5,241 | ) | (31,850 | ) | $ | (22,193 | ) | ||||||
| Loss per share |
||||||||||||||||
| Basic and diluted |
$ | (0.44 | ) | $ | (0.19 | ) | $ | (0.92 | ) | $ | (0.82 | ) | ||||
| Weighted average shares outstanding |
||||||||||||||||
| Basic and diluted |
39,779 | 27,171 | 34,621 | 27,094 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(unaudited)
| (Share #) Preferred Stock |
Preferred Stock |
(Share #) Common and Treasury Stock |
Common and Treasury Stock |
Additional Paid-in Capital |
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