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 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: 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 No.) |
588 West 400 South
Lindon, Utah 84042
(Address, including zip code, of Registrant’s principal executive offices)
(801) 805-2400
(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 ¨
There were 27,414,722 shares of the registrant’s common stock, par value $0.0001, outstanding as of May 6, 2005.
| PART I. FINANCIAL INFORMATION | ||||
| Item 1. | 3 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | ||
| Item 3. | 26 | |||
| Item 4. | 26 | |||
| PART II. OTHER INFORMATION | ||||
| Item 1. | 27 | |||
| Item 2. | 27 | |||
| Item 5. | 27 | |||
| Item 6. | 28 | |||
| Signatures | 30 | |||
| Exhibit Index | 31 | |||
2
ALTIRIS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
| March 31, 2005 |
December 31, 2004 |
|||||||
| ASSETS | ||||||||
| Currents assets: | ||||||||
| Cash and cash equivalents |
$ | 71,027,000 | $ | 122,988,000 | ||||
| Available-for-sale securities |
53,453,000 | 60,459,000 | ||||||
| Accounts receivable, net of allowances of $2,848,000 and $2,722,000, respectively |
37,967,000 | 40,056,000 | ||||||
| Prepaid expenses and other current assets |
3,519,000 | 4,171,000 | ||||||
| Deferred tax asset |
1,077,000 | 1,757,000 | ||||||
| Total current assets |
167,043,000 | 229,431,000 | ||||||
| Property and equipment, net |
6,267,000 | 5,713,000 | ||||||
| Intangible assets, net |
43,898,000 | 26,516,000 | ||||||
| Goodwill |
67,325,000 | 16,425,000 | ||||||
| Other assets |
301,000 | 157,000 | ||||||
| Total assets |
$ | 284,834,000 | $ | 278,242,000 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Current portion of capital lease obligations |
$ | 1,069,000 | $ | 994,000 | ||||
| Accounts payable |
3,766,000 | 2,661,000 | ||||||
| Accrued salaries and benefits |
9,757,000 | 12,106,000 | ||||||
| Other accrued expenses |
9,742,000 | 13,951,000 | ||||||
| Deferred revenue |
40,551,000 | 38,007,000 | ||||||
| Total current liabilities |
64,885,000 | 67,719,000 | ||||||
| Capital lease obligations, net of current portion |
1,013,000 | 871,000 | ||||||
| Other accrued expenses, non-current |
57,000 | — | ||||||
| Deferred tax liability, non-current |
1,876,000 | 2,755,000 | ||||||
| Deferred revenue, non-current |
4,393,000 | 4,689,000 | ||||||
| Total liabilities |
72,224,000 | 76,034,000 | ||||||
| Commitments and contingencies (Note 5) |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding |
— | — | ||||||
| Common stock, $0.0001 par value; 100,000,000 shares authorized; 27,392,009 and 27,155,998 shares outstanding, respectively |
3,000 | 3,000 | ||||||
| Additional paid-in capital |
207,256,000 | 194,789,000 | ||||||
| Deferred compensation |
(3,873,000 | ) | (255,000 | ) | ||||
| Accumulated other comprehensive income |
(61,000 | ) | 444,000 | |||||
| Retained earnings |
9,285,000 | 7,227,000 | ||||||
| Total stockholders’ equity |
212,610,000 | 202,208,000 | ||||||
| Total liabilities and stockholders’ equity |
$ | 284,834,000 | $ | 278,242,000 | ||||
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 March 31, |
||||||||
| 2005 |
2004 |
|||||||
| Revenue: |
||||||||
| Software |
28,726,000 | $ | 24,717,000 | |||||
| Services |
18,206,000 | 12,695,000 | ||||||
| Total revenue |
46,932,000 | 37,412,000 | ||||||
| Cost of revenue: |
||||||||
| Software |
152,000 | 321,000 | ||||||
| Amortization of acquired core technology |
1,817,000 | 1,048,000 | ||||||
| Services |
5,964,000 | 4,204,000 | ||||||
| Total cost of revenue |
7,933,000 | 5,573,000 | ||||||
| Gross profit |
38,999,000 | 31,839,000 | ||||||
| Operating expenses: |
||||||||
| Sales and marketing (exclusive of stock-based compensation of $27,000 and $89,000, respectively) |
17,566,000 | 15,096,000 | ||||||
| Research and development (exclusive of stock-based compensation of $6,000 and $16,000, respectively) |
9,497,000 | 7,891,000 | ||||||
| General and administrative (exclusive of stock-based compensation of $21,000 and $53,000, respectively) |
6,038,000 | 3,067,000 | ||||||
| Stock-based compensation |
54,000 | 158,000 | ||||||
| Amortization of intangible assets |
1,065,000 | 664,000 | ||||||
| Write-off of in-process research and development |
1,600,000 | — | ||||||
| Total operating expenses |
35,820,000 | 26,876,000 | ||||||
| Income from operations |
3,179,000 | 4,963,000 | ||||||
| Other income (expense): |
||||||||
| Interest income, net |
875,000 | 426,000 | ||||||
| Other expense, net |
(826,000 | ) | (205,000 | ) | ||||
| Other income, net |
49,000 | 221,000 | ||||||
| Income before income taxes |
3,228,000 | 5,184,000 | ||||||
| Provision for income taxes |
(1,170,000 | ) | (2,091,000 | ) | ||||
| Net income |
$ | 2,058,000 | $ | 3,093,000 | ||||
| Basic net income per common share |
$ | 0.08 | $ | 0.12 | ||||
| Diluted net income per common share |
$ | 0.07 | $ | 0.11 | ||||
| Basic weighted average common shares outstanding |
27,295,000 | 26,108,000 | ||||||
| Diluted weighted average common shares outstanding |
28,303,000 | 27,540,000 | ||||||
| Other comprehensive income, net of tax effects: |
||||||||
| Net income |
$ | 2,058,000 | $ | 3,093,000 | ||||
| Unrealized gain (loss) on available-for-sale securities |
(168,000 | ) | 159,000 | |||||
| Foreign currency translation adjustments |
(337,000 | ) | (44,000 | ) | ||||
| Comprehensive income |
$ | 1,553,000 | $ | 3,208,000 | ||||
See accompanying notes to condensed consolidated financial statements.
4
ALTIRIS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 2,058,000 | $ | 3,093,000 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
3,708,000 | 2,402,000 | ||||||
| Stock-based compensation |
54,000 | 158,000 | ||||||
| Provision for doubtful accounts and other allowances |
870,000 | 1,102,000 | ||||||
| Write-off of in-process research and development |
1,600,000 | — | ||||||
| Reduction of income taxes payable as a result of stock option exercises |
3,333,000 | 2,834,000 | ||||||
| Deferred income taxes |
(2,771,000 | ) | (1,106,000 | ) | ||||
| Gain on sale of available-for-sale securities |
(14,000 | ) | (12,000 | ) | ||||
| Changes in operating assets and liabilities, net of acquisitions: |
||||||||
| Accounts receivable |
705,000 | (2,654,000 | ) | |||||
| Prepaid expenses and other current assets |
655,000 | (814,000 | ) | |||||
| Other assets |
(7,000 | ) | 1,000 | |||||
| Accounts payable |
823,000 | 445,000 | ||||||
| Accrued salaries and benefits |
(3,276,000 | ) | 62,000 | |||||
| Other accrued expenses |
(437,000 | ) | (534,000 | ) | ||||
| Deferred revenue |
1,670,000 | 3,742,000 | ||||||
| Net cash provided by operating activities |
8,971,000 | 8,719,000 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchase of property and equipment |
(751,000 | ) | (494,000 | ) | ||||
| Purchase of available-for-sale securities |
(6,771,000 | ) | (13,831,000 | ) | ||||
| Disposition of available-for-sale securities |
13,622,000 | 31,753,000 | ||||||
| Cash paid in acquisitions, net of cash received |
(69,661,000 | ) | (952,000 | ) | ||||
| Net cash (used in) provided by investing activities |
(63,561,000 | ) | 16,476,000 | |||||
| Cash flows from financing activities: |
||||||||
| Principal payments under capital lease obligations |
(285,000 | ) | (319,000 | ) | ||||
| Net proceeds from the issuance of common shares |
2,828,000 | 1,739,000 | ||||||
| Net cash provided by financing activities |
2,543,000 | 1,420,000 | ||||||
| Net increase (decrease) in cash and cash equivalents |
(52,047,000 | ) | 26,615,000 | |||||
| Effect of foreign exchange rates on cash and cash equivalents |
86,000 | 36,000 | ||||||
| Cash and cash equivalents, beginning of period |
122,988,000 | 61,581,000 | ||||||
| Cash and cash equivalents, end of period |
$ | 71,027,000 | $ | 88,232,000 | ||||
| Supplemental disclosure of cash flow information: |
||||||||
| Cash paid for interest |
$ | 165,000 | $ | 67,000 | ||||
| Cash paid for income taxes |
$ | 493,000 | $ | 128,000 | ||||
| Supplemental disclosure of non-cash investing and financing activities: |
||||||||
| Equipment acquired under capital lease obligations |
$ | 501,000 | $ | 681,000 | ||||
| Unrealized gain (loss) on available-for-sale securities |
$ | (168,000 | ) | $ | 159,000 | |||
| Supplemental disclosure of acquisition activity: |
||||||||
| Fair value of assets acquired, excluding cash acquired |
$ | 78,484,000 | ||||||