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: 000-49793
ALTIRIS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 87-0616516 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
588 West 400 South
Lindon, Utah 84042
(Address, including zip code, of Registrant’s principal executive offices)
Registrant’s telephone number, including area code: (801) 805-2400
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 ¨
There were 26,933,879 shares of the Registrant’s common stock, par value $0.0001, outstanding on November 5, 2004.
| PART I. FINANCIAL INFORMATION | ||||
| Item 1. | Financial Statements | 3 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13 | ||
| Item 3. | Quantitative and Qualitative Disclosure about Market Risk | 25 | ||
| Item 4. | Controls and Procedures | 25 | ||
| PART II. OTHER INFORMATION | ||||
| Item 1. | Legal Proceedings | 27 | ||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 27 | ||
| Item 4. | Submission of Matters to a Vote of Security Holders | 27 | ||
| Item 5. | Other Information | 27 | ||
| Item 6. | Exhibits | 28 | ||
| Signatures | 30 | |||
2
ALTIRIS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, 2004 |
December 31, 2003 |
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| ASSETS | ||||||||
| Currents assets: |
||||||||
| Cash and cash equivalents |
$ | 127,822,000 | $ | 61,581,000 | ||||
| Available-for-sale securities |
43,568,000 | 77,450,000 | ||||||
| Accounts receivable, net of allowances of $2,077,000 and $2,195,000, respectively |
31,820,000 | 23,479,000 | ||||||
| Prepaid expenses and other current assets |
4,459,000 | 4,131,000 | ||||||
| Deferred tax asset |
1,021,000 | 852,000 | ||||||
| Total current assets |
208,690,000 | 167,493,000 | ||||||
| Property and equipment, net |
5,223,000 | 4,517,000 | ||||||
| Intangible assets, net |
23,237,000 | 22,951,000 | ||||||
| Goodwill |
16,897,000 | 15,698,000 | ||||||
| Other assets |
131,000 | 128,000 | ||||||
| Total assets |
$ | 254,178,000 | $ | 210,787,000 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Current portion of capital lease obligations |
$ | 1,009,000 | $ | 1,008,000 | ||||
| Accounts payable |
2,541,000 | 2,769,000 | ||||||
| Accrued salaries and benefits |
9,278,000 | 7,220,000 | ||||||
| Other accrued expenses |
7,800,000 | 4,172,000 | ||||||
| Deferred revenue |
33,488,000 | 21,620,000 | ||||||
| Total current liabilities |
54,116,000 | 36,789,000 | ||||||
| Capital lease obligations, net of current portion |
914,000 | 818,000 | ||||||
| Deferred tax liability, non-current |
1,922,000 | 1,921,000 | ||||||
| Deferred revenue, non-current |
5,275,000 | 4,409,000 | ||||||
| Total liabilities |
62,227,000 | 43,937,000 | ||||||
| Commitments and contingencies (Note 5) |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.0001 par value; 5,000,000 shares authorized; no shares designated and outstanding |
— | — | ||||||
| Common stock, $0.0001 par value; 100,000,000 shares authorized; 26,853,270 and 25,983,659, shares outstanding, respectively |
3,000 | 3,000 | ||||||
| Additional paid-in capital |
191,567,000 | 177,185,000 | ||||||
| Deferred compensation |
(412,000 | ) | (899,000 | ) | ||||
| Accumulated other comprehensive income |
114,000 | 58,000 | ||||||
| Retained earnings (Accumulated deficit) |
679,000 | (9,497,000 | ) | |||||
| Total stockholders’ equity |
191,951,000 | 166,850,000 | ||||||
| Total liabilities and stockholders’ equity |
$ | 254,178,000 | $ | 210,787,000 | ||||
See accompanying notes to condensed consolidated financial statements.
3
ALTIRIS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Software |
$ | 24,768,000 | $ | 16,598,000 | $ | 75,046,000 | $ | 44,459,000 | ||||||||
| Services |
15,928,000 | 8,756,000 | 43,085,000 | 24,554,000 | ||||||||||||
| Total revenue |
40,696,000 | 25,354,000 | 118,131,000 | 69,013,000 | ||||||||||||
| Cost of revenue: |
||||||||||||||||
| Software |
292,000 | 445,000 | 839,000 | 794,000 | ||||||||||||
| Amortization of acquired intellectual property |
1,341,000 | 169,000 | 3,409,000 | 466,000 | ||||||||||||
| Services |
5,587,000 | 2,597,000 | 14,779,000 | 7,441,000 | ||||||||||||
| Total cost of revenue |
7,220,000 | 3,211,00 | 19,027,000 | 8,701,000 | ||||||||||||
| Gross profit |
33,476,000 | 22,143,000 | 99,104,000 | 60,312,000 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing (exclusive of stock-based compensation of $87,000, $189,000, $263,000 and $567,000, respectively) |
15,921,000 | 9,677,000 | 46,361,000 | 27,004,000 | ||||||||||||
| Research and development (exclusive of stock-based compensation of $16,000, $34,000, $48,000 and $102,000, respectively) |
7,916,000 | 6,176,000 | 23,573,000 | 17,446,000 | ||||||||||||
| General and administrative (exclusive of stock-based compensation of $50,000, $98,000, $145,000 and $316,000, respectively) |
3,600,000 | 1,759,000 | 10,184,000 | 5,593,000 | ||||||||||||
| Stock-based compensation |
153,000 | 321,000 | 456,000 | 985,000 | ||||||||||||
| Amortization of intangible assets |
687,000 | — | 2,032,000 | 41,000 | ||||||||||||
| Total operating expenses |
28,277,000 | 17,933,000 | 82,606,000 | 57,069,000 | ||||||||||||
| Income from operations |
5,199,000 | 4,210,000 | 16,498,000 | 9,243,000 | ||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income (expense), net |
547,000 | 554,000 | 1,364,000 | 1,068,000 | ||||||||||||
| Other income (expense), net |
75,000 | 404,000 | (330,000 | ) | 1,103,000 | |||||||||||
| Other income, net |
622,000 | 958,000 | 1,034,000 | 2,171,000 | ||||||||||||
| Income before income taxes |
5,821,000 | 5,168,000 | 17,532,000 | 11,414,000 | ||||||||||||
| Provision for income taxes |
(2,432,000 | ) | (1,320,000 | ) | (7,356,000 | ) | (1,784,000 | ) | ||||||||
| Net income |
3,389,000 | 3,848,000 | 10,176,000 | 9,630,000 | ||||||||||||
| Basic net income per common share |
$ | 0.13 | $ | 0.16 | $ | 0.39 | $ | 0.44 | ||||||||
| Diluted net income per common share |
$ | 0.12 | $ | 0.15 | $ | 0.37 | $ | 0.42 | ||||||||
| Basic weighted average common shares outstanding |
26,695,000 | 23,556,000 | 26,385,000 | 21,788,000 | ||||||||||||
| Diluted weighted average common shares outstanding |
27,840,000 | 24,976,000 | 27,591,000 | 23,063,000 | ||||||||||||
| Other comprehensive income: |
||||||||||||||||
| Net income |
$ | 3,389,000 | $ | 3,848,000 | $ | 10,176,000 | $ | 9,630,000 | ||||||||
| Unrealized gain (loss) on available-for-sale securities |
146,000 | (87,000 | ) | (84,000 | ) | 51,000 | ||||||||||
| Foreign currency translation adjustments |
124,000 | 12,000 | 140,000 | 8,000 | ||||||||||||
| Comprehensive income |
$ | 3,659,000 | $ | 3,773,000 | $ | 10,232,000 | $ | 9,689,000 | ||||||||
See accompanying notes to condensed consolidated financial statements.
4
ALTIRIS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 10,176,000 | $ | 9,630,000 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
7,602,000 | 1,981,000 | ||||||
| Stock-based compensation |
456,000 | 985,000 | ||||||
| Provision for doubtful accounts and other allowances |
2,486,000 | 1,179,000 | ||||||
| Reduction of income taxes payable as a result of stock option exercises |
7,340,000 | — | ||||||
| Deferred income taxes |
(1,275,000 | ) | — | |||||
| Gain on sale of available-for-sale securities |
(7,000 | ) | — | |||||
| Changes in operating assets and liabilities, net of acquisitions: |
||||||||
| Accounts receivable |
(10,993,000 | ) | < | |||||