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 March 31, 2005
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 April 26, 2005 the Registrant had 18,660,025 shares of $0.00025 par value Common Stock outstanding.
i2 TECHNOLOGIES, INC.
QUARTERLY REPORT ON FORM 10-Q
March 31, 2005
| Page | ||||
| PART I |
FINANCIAL INFORMATION | |||
| Item 1. |
Financial Statements (Unaudited) |
|||
| 3 | ||||
| Condensed Consolidated Statements of Operations and Comprehensive Loss |
4 | |||
| 5 | ||||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 | ||
| Item 3. |
35 | |||
| Item 4. |
35 | |||
| PART II |
OTHER INFORMATION | |||
| Item 1. |
36 | |||
| Item 2. |
36 | |||
| Item 3. |
36 | |||
| Item 4. |
36 | |||
| Item 5. |
36 | |||
| Item 6. |
36 | |||
| 37 | ||||
2
PART 1 – FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value or stated value)
| March 31, 2005 |
December 31, 2004 |
|||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 244,669 | $ | 251,273 | ||||
| Restricted cash |
5,997 | 7,717 | ||||||
| Short-term investments, at fair value |
26,536 | 26,532 | ||||||
| Accounts receivable, net |
33,823 | 37,439 | ||||||
| Deferred contract costs |
1,886 | 1,886 | ||||||
| Other current assets |
22,457 | 22,034 | ||||||
| Total current assets |
335,368 | 346,881 | ||||||
| Long-term investments, at fair value |
500 | — | ||||||
| Premises and equipment, net |
17,872 | 18,987 | ||||||
| Intangible assets, net |
2,157 | 2,473 | ||||||
| Goodwill |
16,620 | 16,620 | ||||||
| Non-current deferred tax asset |
4,364 | 5,712 | ||||||
| Total assets |
$ | 376,881 | $ | 390,673 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 14,978 | $ | 13,988 | ||||
| Accrued liabilities |
55,676 | 39,152 | ||||||
| Accrued compensation and related expenses |
22,246 | 27,227 | ||||||
| Deferred revenue |
166,629 | 165,362 | ||||||
| Total current liabilities |
259,529 | 245,729 | ||||||
| Non current deferred tax liability |
— | 1,177 | ||||||
| Long-term debt |
316,800 | 316,800 | ||||||
| Total liabilities |
576,329 | 563,706 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ deficit: |
||||||||
| Preferred Stock, $0.001 par value, 5,000 shares authorized, none issued and outstanding |
— | — | ||||||
| Series A junior participating preferred stock, $0.001 par value, 2,000 shares authorized, none issued and outstanding |
— | — | ||||||
| Series B 2.5% convertible preferred stock, $1,000 stated value, 150 shares authorized, 101 issued and outstanding |
97,163 | 97,045 | ||||||
| Common stock, $0.00025 par value, 2,000,000 shares authorized, 18,660 and 18,608 shares issued and outstanding at March 31, 2005 and December 31, 2004, respectively |
5 | 5 | ||||||
| Additional paid-in capital |
10,403,711 | 10,403,515 | ||||||
| Accumulated other comprehensive income |
2,183 | 3,675 | ||||||
| Accumulated deficit |
(10,702,510 | ) | (10,677,273 | ) | ||||
| Net stockholders’ deficit |
(199,448 | ) | (173,033 | ) | ||||
| Total liabilities and stockholders’ deficit |
$ | 376,881 | $ | 390,673 | ||||
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| Revenues: |
||||||||
| Software licenses |
$ | 12,906 | $ | 12,388 | ||||
| Development services |
20,065 | 6,617 | ||||||
| Contract |
3,056 | 5,970 | ||||||
| Services |
23,823 | 24,973 | ||||||
| Reimbursable expenses |
2,634 | 2,670 | ||||||
| Maintenance |
25,818 | 31,004 | ||||||
| Total revenues |
88,302 | 83,622 | ||||||
| Costs and expenses: |
||||||||
| Cost of revenues: |
||||||||
| Software licenses |
2,703 | 3,177 | ||||||
| Development services |
4,601 | 6,606 | ||||||
| Contract |
— | 106 | ||||||
| Amortization of acquired technology |
— | 145 | ||||||
| Reimbursable expenses |
2,634 | 2,670 | ||||||
| Services and maintenance |
24,768 | 29,307 | ||||||
| Sales and marketing |
18,828 | 19,921 | ||||||
| Research and development |
15,130 | 19,691 | ||||||
| General and administrative |
25,643 | 25,461 | ||||||
| Amortization of intangibles |
— | 39 | ||||||
| Restructuring charges and adjustments |
12,141 | 575 | ||||||
| Total costs and expenses |
106,448 | 107,698 | ||||||
| Operating loss |
(18,146 | ) | (24,076 | ) | ||||
| Other expense, net |
(4,766 | ) | (5,091 | ) | ||||
| Loss before income taxes |
(22,912 | ) | (29,167 | ) | ||||
| Income tax expense |
1,582 | 809 | ||||||
| Net loss |
$ | (24,494 | ) | $ | (29,976 | ) | ||
| Preferred stock dividend and accretion of discount |
743 | — | ||||||
| Net loss applicable to common shareholders |
$ | (25,237 | ) | $ | (29,976 | ) | ||
| Net Loss per common share: |
||||||||
| Basic |
$ | (1.36 | ) | $ | (1.72 | ) | ||
| Diluted |
$ | (1.36 | ) | $ | (1.72 | ) | ||
| Weighted-average common shares outstanding: |
||||||||
| Basic |
18,613 | 17,378 | ||||||
| Diluted |
18,613 | 17,378 | ||||||
| Comprehensive loss: |
||||||||
| Net loss applicable to common shareholders |
$ | (25,237 | ) | $ | (29,976 | ) | ||
| Other comprehensive income (loss): |
||||||||
| Unrealized gain on available-for-sale securities arising during the period |
6 | 22 | ||||||
| Foreign currency translation adjustments |
(1,496 | ) | 531 | |||||
| Tax effect of other comprehensive loss |
(2 | ) | (8 | ) | ||||
| Total other comprehensive income (loss) |
(1,492 | ) | 545 | |||||
| Total comprehensive loss |
$ | (26,729 | ) | $ | (29,431 | ) | ||
See accompanying notes to condensed consolidated financial statements
4
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (24,494 | ) | $ | (29,976 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
1,713 | 4,036 | ||||||
| Write-down of equipment |
718 | 282 | ||||||
| Provision (credit) for bad debts charged to expense |
163 | (784 | ) | |||||
| Amortization of deferred compensation |
188 | 338 | ||||||
| Deferred income taxes |
230 | (3 | ) | |||||
| Changes in assets and liabilities: |
||||||||
| Restricted cash |
1,720 | 4,635 | ||||||
| Accounts receivable, net |
3,431 | (3,680 | ) | |||||
| Deferred contract costs |
— | 106 | ||||||
| Other assets |
(489 | ) | 2,666 | |||||
| Accounts payable |
964 | (1,809 | ) | |||||
| Accrued liabilities |
15,873 | 4,502 | ||||||
| Accrued compensation and related expenses |
(4,991 | ) | (479 | ) | ||||
| Deferred revenue |
1,189 | 3,995 | ||||||
| Net cash used in operating activities |
(3,785 | ) | (16,171 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Purchase of premises and equipment |
(1,008 | ) | (544 | ) | ||||
| Purchase of long-term investments |
(500 | ) | (14,705 | ) | ||||
| Net cash used in investing activities |
(1,508 | ) | (15,249 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Net proceeds from common stock issuance from options and employee stock purchase plans |
8 | 365 | ||||||
| Net cash provided by financing activities |
8 | 365 | ||||||
| Effect of exchange rates on cash |
(1,319 | ) | 1,309 | |||||
| Net change in cash and cash equivalents |
(6,604 | ) | (29,746 | ) | ||||
| Cash and cash equivalents at beginning of period |
251,273 | 288,822 | ||||||
| Cash and cash equivalents at end of period |
$ | 244,669 | ||||||