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 quarter ended September 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 000-25375
VIGNETTE CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 74-2769415 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1301 South MoPac Expressway
Austin, Texas 78746
(Address of principal executive offices)
(512) 741-4300
(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 by Rule 12b-2 of the Act). Yes x No ¨
As of October 29, 2004, there were 289,110,086 shares of the registrant’s common stock outstanding.
FORM 10–Q QUARTERLY REPORT
For the quarter ended September 30, 2004
TABLE OF CONTENTS
| Page | ||||
| Item 1. |
||||
| Condensed Consolidated Balance Sheets at September 30, 2004 and December 31, 2003 |
2 | |||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
18 | ||
| Item 3. |
45 | |||
| Item 4. |
46 | |||
| Item 1. |
46 | |||
| Item 6. |
48 | |||
| 48 | ||||
| CERTIFICATIONS |
49 | |||
1
PART I — FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
in thousands
| September 30, 2004 |
December 31, 2003 | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 140,219 | $ | 171,939 | ||
| Short-term investments |
31,816 | 67,574 | ||||
| Accounts receivable, net |
29,832 | 29,987 | ||||
| Prepaid expenses and other current assets |
7,310 | 6,425 | ||||
| Total current assets |
209,177 | 275,925 | ||||
| Property and equipment, net |
11,698 | 16,671 | ||||
| Investments |
12,427 | 12,446 | ||||
| Goodwill |
128,217 | 46,969 | ||||
| Other intangibles, net |
49,789 | 11,355 | ||||
| Other assets |
2,237 | 2,750 | ||||
| Total assets |
$ | 413,545 | $ | 366,116 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: |
||||||
| Accounts payable and accrued expenses |
$ | 41,493 | $ | 30,695 | ||
| Deferred revenue |
34,592 | 34,164 | ||||
| Current portion of capital lease obligations |
— | 67 | ||||
| Other current liabilities |
9,299 | 5,250 | ||||
| Total current liabilities |
85,384 | 70,176 | ||||
| Deferred revenue, less current portion |
918 | 1,303 | ||||
| Other long-term liabilities, less current portion |
7,184 | 13,291 | ||||
| Total liabilities |
93,486 | 84,770 | ||||
| Stockholders’ equity |
320,059 | 281,346 | ||||
| Total liabilities and stockholders’ equity |
$ | 413,545 | $ | 366,116 | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
in thousands, except per share data
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Product license |
$ | 12,313 | $ | 13,405 | $ | 43,843 | $ | 44,806 | ||||||||
| Services |
30,301 | 24,602 | 85,263 | 74,315 | ||||||||||||
| Total revenue |
42,614 | 38,007 | 129,106 | 119,121 | ||||||||||||
| Cost of revenue: |
||||||||||||||||
| Product license |
939 | 886 | 3,685 | 1,966 | ||||||||||||
| Amortization of acquired technology |
2,804 | 800 | 7,578 | 2,400 | ||||||||||||
| Services |
13,618 | 9,558 | 38,322 | 29,966 | ||||||||||||
| Total cost of revenue |
17,361 | 11,244 | 49,585 | 34,332 | ||||||||||||
| Gross profit |
25,253 | 26,763 | 79,521 | 84,789 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development (1) |
10,860 | 8,783 | 31,309 | 31,451 | ||||||||||||
| Sales and marketing (1) |
18,553 | 16,607 | 57,036 | 51,127 | ||||||||||||
| General and administrative (1) |
4,453 | 4,104 | 13,714 | 12,548 | ||||||||||||
| Purchased in-process research and development, acquisition-related and other charges |
270 | — | 7,167 | 2,270 | ||||||||||||
| Business restructuring charges (gain) |
39 | (623 | ) | 8,699 | (2,011 | ) | ||||||||||
| Amortization of deferred stock compensation |
15 | 178 | 381 | 792 | ||||||||||||
| Amortization of other intangibles |
1,379 | 442 | 3,574 | 1,493 | ||||||||||||
| Total operating expenses |
35,569 | 29,491 | 121,880 | 97,670 | ||||||||||||
| Loss from operations |
(10,316 | ) | (2,728 | ) | (42,359 | ) | (12,881 | ) | ||||||||
| Other income, net |
686 | 1,085 | 2,321 | 3,396 | ||||||||||||
| Loss before provision for income taxes |
(9,630 | ) | (1,643 | ) | (40,038 | ) | (9,485 | ) | ||||||||
| Provision for income taxes |
391 | 278 | 886 | 850 | ||||||||||||
| Net loss |
$ | (10,021 | ) | $ | (1,921 | ) | $ | (40,924 | ) | $ | (10,335 | ) | ||||
| Basic net loss per common share |
$ | (0.03 | ) | $ | (0.01 | ) | $ | (0.15 | ) | $ | (0.04 | ) | ||||
| Shares used in computing basic net loss per common share |
288,782 | 253,340 | 282,106 | 252,321 | ||||||||||||
(1) Excludes amortization of deferred stock compensation as follows: |
| |||||||||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Research and development |
$ | (96 | ) | $ | 68 | $ | (48 | ) | $ | 268 | ||||||
| Sales and marketing |
— | 15 | (48 | ) | 56 | |||||||||||
| General and administrative |
111 | 95 | 478 | 468 | ||||||||||||
| $ | 15 | $ | 178 | $ | 382 | $ | 792 | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
in thousands
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Operating activities: |
||||||||
| Net loss |
$ | (40,924 | ) | $ | (10,335 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation |
7,176 | 11,377 | ||||||
| Non-cash compensation expense |
381 | 792 | ||||||
| Amortization of intangible assets |
11,266 | 4,242 | ||||||
| Non-cash restructuring charges |
2,331 | — | ||||||
| Non-cash investment impairments |
— | 76 | ||||||
| Non-cash deferred compensation |
5 | — | ||||||
| Purchased in-process research and development, acquisition-related and other non-cash items |
5,552 | — | ||||||
| Other charges |
(266 | ) | (200 | ) | ||||
| Changes in operating assets and liabilities |
(8,469 | ) | (37,203 | ) | ||||
| Net cash used in operating activities |
(22,948 | ) | (31,251 | ) | ||||
| Investing activities: |
||||||||
| Purchase of property and equipment |
(4,206 | ) | (3,360 | ) | ||||
| Purchase of business, net of cash acquired |
(43,655 | ) | (15,460 | ) | ||||
| Maturity of short-term investments, net |
35,758 | 24,002 | ||||||
| Sale of restricted investments |
183 | 563 | ||||||
| Proceeds from sale of equity securities |
824 | — | ||||||
| Purchase of equity securities |
(165 | ) | (334 | ) | ||||
| Other |
(45 | ) | 82 | |||||
| Net cash provided by (used in) investing activities |
(11,306 | ) | 5,493 | |||||
| Financing activities: |
||||||||
| Payments on capital lease obligations |
(72 | ) | (225 | ) | ||||
| Proceeds from exercise of stock options and purchase of employee stock purchase plan shares |
3,085 | 3,018 | ||||||
| Payments for unvested common stock |
(95 | ) | — | |||||
| Net cash provided by financing activities |
2,918 | 2,793 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
(384 | ) | 1,688 | |||||
| Net change in cash and cash equivalents |
(31,720 | ) | (21,277 | ) | ||||
| Cash and cash equivalents at beginning of period |
171,939 | 216,076 | ||||||
| Cash and cash equivalents at end of period |
$ | 140,219 | $ | 194,799 | ||||