高级财务管理(三)：高级财务管理(三)

1 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, 1998 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: 0-27310 RED BRICK SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 77-0145392 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 485 Alberto Way Los Gatos, California 95032 (Address of principal executive offices, including zip code) (408) 399-3200 (Registrant’s Telephone No., 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 As of April 30, 1998, there were 12,542,171 shares of the Registrant’s Common Stock outstanding. 2 RED BRICK SYSTEMS, INC. INDEX PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Condensed Consolidated Balance Sheets As of March 31, 1998 and December 31, 1997.......................................................... 3 Condensed Consolidated Statements of Operations For the Three Months Ended March 31, 1998 and 1997............................................ 4 Condensed Consolidated Statements of Cash Flows For the Three Months Ended March 31, 1998 and 1997............................................ 5 Notes to Condensed Consolidated Financial Statements ........................................... 6 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ............................................................................................... 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ...................................................................... 21 SIGNATURES .......................................................................................................................... 22 3 PART I. FINANCIAL INFORMATION Item 1. Financial Statements RED BRICK SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) March 31, December 31, 1998 1997 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 15,302 $ 12,358 Short-term investments 12,497 14,551 Accounts receivable, net 7,854 12,291 Prepaid expenses and other current assets 1,572 955 Total current assets 37,225 40,155 Property and equipment, net 2,673 2,677 Intangible assets, net 315 361 Deposits and other assets 720 372 Total assets $ 40,933 $ 43,565 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 702 $ 518 Accrued expenses 2,389 3,719 Accrued compensation 2,316 2,031 Deferred revenue 8,527 7,370 Capital lease obligations due within one year 242 385 Total current liabilities 14,176 14,023 Capital lease obligations 53 60 Commitments and contingencies Stockholders’ equity: Common stock 1 1 Additional paid-in capital 57,178 56,055 Accumulated deficit (30,468) (26,530) Accumulated other comprehensive income 13 26 26,724 29,552 Notes receivable from stockholders (20) (70) Total stockholders’ equity 26,704 29,482 Total liabilities and stockholders’ equity $ 40,933 $ 43,565 See accompanying notes to Condensed Consolidated Financial Statements 4 RED BRICK SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data; unaudited) Three Months Ended March 31, 1998 1997 Revenues: Software license $ 4,635 $ 3,645 Maintenance and service 4,791 2,878 Total revenues 9,426 6,523 Cost of revenues: Software license 409 382 Maintenance and service 2,442 1,839 Total cost of revenues 2,851 2,221 Gross margin 6,575 4,302 Operating expenses: Sales and marketing 6,586 7,276 Research and development 3,236 2,711 General and administrative 903 980 Total operating expenses 10,725 10,967 Loss from operations (4,150) (6,665) Interest and other income (expense), net 373 466 Loss before provision for income taxes and minority interest (3,777) (6,199) Provision for income taxes 161 100 Loss before minority interest (3,938) (6,299) Minority interest -- (63) Net loss $ (3,938) $ (6,362) Basic loss per share $ (0.32) $ (0.57) Diluted loss per share $ (0.32) $ (0.57) Shares used to compute basic loss per share 12,326 11,206 Shares used to compute diluted loss per share 12,326 11,206 See accompanying notes to Condensed Consolidated Financial Statements 5 RED BRICK SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands; unaudited) Three Months Ended March 31, 1998 1997 Cash flows from operating activities: Net loss $ (3,938) $ (6,362) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 419 370 Amortization 46 41 Minority interest in subsidiary -- 63 Changes in assets and liabilities: Accounts receivable 4,437 5,383 Prepaid expenses and other current assets (617) 29 Accounts payable 184 251 Accrued expenses and compensation (1,045) 638 Deferred revenue 1,157 2,942 Net cash provided by operating activities 643 3,355 Cash flows from investing activities: Purchases of short-term investments (5,016) (12,641) Proceeds from sales of short-term investments 7,070 17,318 Acquisition of property and equipment (415) (303) Deposits and other assets (348) (132) Net cash provided by investing activities 1,291 4,242 Cash flows from financing activities: Proceeds from issuance of common stock, net of issuance costs 1,123 1,609 Payment on notes receivable 50 26 Principle payments on capital lease obligations (150) (218) Unrealized losses on marketable securities (13) (19) Net cash provided by financing activities 1,010 1,398 Net increase in cash and cash equivalents 2,944 8,995 Cash and cash equivalents at beginning of period 12,358 14,552 Cash and cash equivalents at end of period $ 15,302 $ 23,547 See accompanying notes to Condensed Consolidated Financial Statements 6 RED BRICK SYSTEMS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Basis of Presentation The unaudited condensed consolidated financial statements included herein reflect all adjustments, consisting only of normal recurring accruals, which in the opinion of management are necessary to fairly present the Company’s consolidated financial position, results of operations, and cash flows for the periods presented. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s fiscal year 1997 Annual Report on Form 10-K. The consolidated results of operations for the three months ended March 31, 1998, are not necessarily indicative of the results to be expected for any subsequent period or for the entire fiscal year ending December 31, 1998. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Such estimates are related to the useful lives of fixed assets, allowances for doubtful accounts and customer returns, other reserves, and income tax valuation allowances. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. On July 1, 1996, the Company entered into an agreement with Productivity Software Group Limited (“PSG”) to form a joint venture to distribute the Company’s products and services in Australia and New Zealand. The Company owns approximately 50.1% of the voting stock of the joint venture and is consolidating this entity. The minority interest shown on the financial statements represents PSG’s proportionate share in the net assets and operating activity of the Australian subsidiary. Beginning in 1999, the Company may be obligated to purchase the remaining stock owned by PSG at a pre-determined price based on 1998 revenue for the joint venture, not to exceed $5 million. Certain prior amounts have been reclassified to conform to the 1998 presentation. 2. Net Loss Per Share In 1997, the Financial Accounting Standards Board (“FASB”) issued Statement No. 128, “Earnings Per Share” (“FAS 128”). FAS 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share exclude any dilutive effects of options, warrants and convertible securities. Diluted earnings per share are very similar to the previously reported fully diluted earnings per share. Loss per share amounts for all periods have been presented and, where appropriate, restated to conform to the FAS 128 requirements. Options to purchase 2,059,477 and 369,132 shares of common stock were outstanding at March 31, 1998 and 1997, respectively, but were not included in the computation of diluted loss per share because the options exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. 7 Additionally, potential common shares of 517,052 and 1,543,146, using the treasury stock method, were not included in the computation of diluted loss per share for the three month periods ended March 31, 1998 and 1997, because the Company incurred losses in those periods and, therefore, the effect would be antidilutive. 3. Recent Pronouncements As of January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (“FAS 130”). FAS 130 establishes standards for the reporting and display of comprehensive income and its components; however, the adoption of FAS 130 had no impact on the Company’s net loss or stockholders’ equity. Total comprehensive loss for the three months ended March 31, 1998 and 1997 amounted to approximately $3,951,000 and $6,381,000, respectively. As of January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (“FAS 131”). FAS 131 will change the way companies report selected segment information in annual financial statements and also requires those companies to report selected segment information in interim financial reports to stockholders. The Company has not yet reached a conclusion as to the appropriate segments, if any, it will be required to report to comply with FAS 131. In 1997, the American Institute of Certified Public Accountants issued Statement of Position No. 97-2, "Software Revenue Recognition" (“SOP 97-2”) which is effective for the Company beginning in fiscal 1998. Based on its reading and interpretation of SOP 97-2, the Company believes it is currently in compliance with the final standard. However, detailed implementation guidelines for this standard have not yet been issued. Once issued, such detailed implementation guidance could lead to unanticipated changes in the Company’s current revenue accounting practices, and such changes could be material to the Company’s revenues and earnings. 4. Litigation On March 25, 1998, two purported class action lawsuits were filed in the United States District Court for the Northern District of California by or on behalf of persons who purchased the Company’s Common Stock between January 15, 1997 and April 15, 1997. The Company expects these complaints to be amended and consolidated in the near future. These actions name as defendants, among others, the Company and certain of its present and former officers and directors. The complaints allege violations of the federal securities laws and seek unspecified monetary damages. The Company believes both complaints are without merit and is vigorously defending itself against both complaints. 8 RED BRICK SYSTEMS, INC. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The discussion in this report contains forward-looking statements that involve risks and uncertainties including, without limitation, statements made in the sections entitled “Results of Operations --Revenues”, “--Cost of Revenues”, “--Operating Expenses”, “--Interest and Other Income (Expense)”, “--Provision for Income Taxes”, “--Minority Interest, Net Loss and Net Loss Per Share”, “Liquidity and Capital Resources”, “Year 2000 Compliance”, and “Risk Factors That May Affect Future Results” regarding the Company’s revenues and associated costs and expenses. The Company’s actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Risk Factors That May Affect Future Results,” as well as those risks discussed in this section and elsewhere in this report. RESULTS OF OPERATIONS Revenues Three Months Ended March 31, 1998 Change 1997 (dollars in thousands) Software license $ 4,635 27% $ 3,645 Percentage of total revenues 49% 56% Maintenance and service $ 4,791 66% $ 2,878 Percentage of total revenues 51% 44% Total revenues $ 9,426 45% $ 6,523 The Company’s revenues are derived from (i) license fees for its software products and (ii) fees for services complementing its products, including software maintenance and support, training, consulting and development agreements. Fees for service revenues are charged separately from the Company’s software products. Through December 31, 1997, the Company recognized revenue in accordance with the American Institute of Certified Public Accountants Statement of Position (“SOP”) No. 91-1, “Software Revenue Recognition.” In 1997, the American Institute of Certified Public Accountants issued SOP No. 97-2, "Software Revenue Recognition," which is effective for the Company beginning in fiscal 1998. The Company has adopted SOP 97-2 as of January 1, 1998. Revenue from software licensing is generally recognized after execution of a licensing agreement and shipment of the product. Maintenance revenue is recognized over the term of the maintenance period, which is typically 12 months. Consulting and training revenues are generally recognized at the time the services are performed. Revenue under software development agreements is recognized using the percentage-of-completion method, based on the ratio that incurred costs bear to total estimated costs. The Company's license agreements generally do not provide a right of return; however, reserves are maintained for potential credit losses. Software License Revenues. The Company currently derives substantially all of its software license revenues from licenses of Red Brick Warehouse, a relational database management system that is specifically designed for enabling data warehouse applications, and typically has a selling price in excess of $100,000. Software license revenues increased for the three months ended March 9 31, 1998, compared to the three months ended March 31, 1997, because of an increase in licensing activity. Prior growth rates of the Company’s software license revenues may not be indicative of future software license revenue and may not be sustainable in the future. The Company intends to continue to enhance its current software products, as well as to develop new products. The Company expects that prior growth rates of the Company's software license revenues, particularly those growth rates experienced in years prior to 1997, may not be sustainable in the future. See “Risk Factors That May Affect Future Results.” Maintenance and Service Revenues. The growth in maintenance and service revenues for the three month period ended March 31, 1998, was primarily attributable to the renewal of maintenance contracts and additional professional services engagements. The Company has invested considerable resources in enhancing its consulting staff and capabilities. In addition, the Company is planning to expand the services business internationally and is also transitioning its consulting and services organizations with respect to supporting new products that are the culmination of the acquisition of in-process technology from Engage in September 1997. With the costs associated with international expansion and lower revenue-generating activity due to the re-training of personnel, the Company anticipates that prior growth rates of the Company’s maintenance and service revenues and margins may not be sustainable in the future, and service revenues and margins will likely return to historical levels in the second quarter of 1998. For the three month period ended March 31, 1998, sales to Holiday Hospitality Corp. and WorldCom, Inc., each accounted for 10% of total revenue. For the three month period ended March 31, 1997, no one customer accounted for 10% or more of total revenue. The Company expects that licenses of its products to a limited number of customers and resellers will continue to account for a significant percentage of revenue for the foreseeable future. There can be no assurance that any customer or reseller will continue to license the Company's products. The loss of a major customer or reseller or any reduction in orders by such customers or resellers, including reductions due to market or competitive conditions, would have a materially adverse effect on the Company's business, financial condition, and results of operations. The Company's international revenues for the three month periods ended March 31, 1998 and 1997, were 9% and 24% of total revenues, respectively. As the Company continues to strengthen its international presence, fluctuations in international revenues may occur. The Company intends to continue to expand its international operations and to enter additional international markets. Cost of Revenues Three Months Ended March 31, 1998 Change 1997 (dollars in thousands) Software license $ 409 7% $ 382 Percentage of total revenues 4% 6% Maintenance and service $ 2,442 33% $ 1,839 Percentage of total revenues 26% 28% Total cost of revenues $ 2,851 28% $ 2,221 Percentage of total revenues 30% 34% Cost of Software License Revenues. Cost of software license revenues consisted primarily of the cost of royalties paid to third-party vendors, product media and duplication, shipping expenses, manuals and packaging materials. 10 Cost of Maintenance and Service Revenues. Cost of maintenance and service revenues consisted primarily of personnel-related costs incurred in providing telephone support, consulting services, and training to customers. Cost of maintenance and service revenues for the three month period ended March 31, 1998, increased over such costs for the same periods ended March 31, 1997, as a result of increased personnel-related costs as the Company continued to expand its customer service and consulting organizations to support an expected increase in sales. The Company believes that the cost of maintenance and service revenues will increase in dollar amount and may increase as a percentage of total revenues in the future as the Company continues to build its customer ser