Current Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 29, 2009
Openwave Systems Inc.
(Exact name of Registrant as specified in its charter)
| Delaware | 001-16073 | 94-3219054 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
|
2100 Seaport Boulevard Redwood City, CA |
94063 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (650) 480-8000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition |
On October 29, 2009, Openwave Systems Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended September 30, 2009. A copy of the press release is attached as Exhibit 99.1 to this report.
The information in this Item 2.02 and in Exhibit 99.1 attached hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and \) of the Securities Act of 1933, as amended. The information contained in this Item 2.02 and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
| Item 2.05. | Costs Associated with Exit or Disposal Activities. |
On October 29, 2009, Openwave Systems Inc. committed to a restructuring plan to consolidate the Company’s resources, primarily in development, and improve operating efficiencies (the “Restructuring Plan”). The Restructuring Plan contemplates an approximate 5% reduction in workforce, which will be partially offset by additional headcount added at the Company’s remaining corporate offices. The Company expects to incur approximately $2.3 million in restructuring and related charges associated with this restructuring plan during the six months ending March 31, 2010. Included in the restructuring and related charges are (i) approximately $1.0 million related to the closure of a leased facility (ii) approximately $0.3 million related to accelerated depreciation of tenant improvements at the site selected for closure; and (iii) approximately $1.0 million related to employee severance arrangements for certain employees impacted by the Restructuring Plan.
The Company expects to complete the activities related to the Restructuring Plan by March 31, 2010. The associated charges are expected to be recorded in the Company’s second and third quarter results for fiscal year 2010. However, this estimate may change depending on actual sublease activity over the next several months.
The estimated pre-tax restructuring charges of approximately $2.0 million represent the Company’s estimate of future cash outlays for employee termination benefits and facility exit costs. The estimated charges of $0.3 million associated with accelerated depreciation represent non-cash charges. The activities related to the Restructuring Plan are expected to result in negligible annual costs savings.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, regarding the Company’s cost reduction plans, including the anticipated costs and timing of such plans. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including problems or delays in implementing the cost reduction plans, delays in subleasing the closed site, economic conditions and other factors described in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 9, 2009, under the item “Risk Factors”. The Company assumes no obligation to update forward-looking statements, except as required by law.
| Item 9.01 | Financial Statements and Exhibits. |
| 99.1 | Press Release issued by Openwave Systems Inc. on October 29, 2009. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| OPENWAVE SYSTEMS INC. | ||
| By: |
/s/ K AREN W ILLEM |
|
| Name: | Karen Willem | |
| Title: | Chief Financial Officer | |
Date: October 29, 2009
EXHIBIT INDEX
|
Exhibit No. |
Description |
|
| 99.1 | Press Release issued by Openwave Systems Inc. on October 29, 2009. |
Exhibit 99.1
OPENWAVE REPORTS FIRST QUARTER FISCAL 2010 FINANCIAL RESULTS
REDWOOD CITY, CA – October 29, 2009 – Openwave Systems Inc. (Nasdaq: OPWV), one of the world’s leading software innovators enabling revenue-generating personalized services which converge the mobile and broadband experience, today announced that revenues for the first fiscal quarter ended September 30, 2009 were $49.8 million, compared with $47.9 million in the prior quarter ended June 30, 2009 and $51.0 million in the September quarter in the preceding fiscal year. Bookings for the first quarter of fiscal 2010 were $47.3 million. The company ended the quarter with $121.6 million in cash and investments.
“The data tsunamis we have long talked about are rolling in and carriers are looking to Openwave for leadership and as a result we are seeing increasing demand for our mobile Internet products,” said Ken Denman, CEO of Openwave. “In what is traditionally a seasonally weaker quarter for sales activity, we saw a strong bookings level. We believe Openwave entered the second quarter of fiscal 2010 as a stable, efficient company and that our healthy pipeline will lead to future bookings and ultimately return Openwave to growth.”
On a GAAP basis, net income for the first fiscal quarter ended September 30, 2009 was $990,000, or $0.01 per share, compared with a net loss of $3.4 million, or $0.04 per share, in the prior quarter and a net loss of $10.5 million, or $0.13 per share, in the September quarter in the preceding year.
On a non-GAAP basis, net loss for the first fiscal quarter ended September 30, 2009 was $380,000, or $0.00 per share, compared with net loss of $278,000 or $0.00 per share, in the prior quarter and net loss of $1.0 million, or $0.01 per share, during the September quarter of the prior year. Non-GAAP net loss excludes discontinued operations, amortization of intangibles and other acquisition-related costs, stock-based compensation, professional fees associated with certain unusual events, impairments, restructuring and other costs.
| Openwave Reports First Quarter Financial Results | Page 2 |
A reconciliation between net income (loss) on a GAAP basis and a non-GAAP basis is provided below in a table immediately following the Condensed Consolidated Statements of Operations.
Non-GAAP Measure
The company’s stated results include the non-GAAP measures, non-GAAP net loss and non-GAAP net loss per share. These non-GAAP measures exclude certain items that generally are non-recurring events, such as costs associated with the stock option lawsuit. Additionally, these non-GAAP measures exclude other items that are non-cash items that many other companies exclude, in order to compare Openwave with other companies, such as stock-based compensation, amortization of intangibles and acquisition-related costs, and other expenses. These non-GAAP measures also exclude items which management does not consider to evaluate Openwave’s on-going business, such as restructuring costs and discontinued operations. Openwave considers non-GAAP net loss to be an important measure because it provides a useful measure of the operational performance of Openwave and is used by Openwave’s management for that purpose. In addition, investors often use measures such as these to evaluate the financial performance of a company. These non-GAAP measures are presented for supplemental informational purposes only for understanding Openwave’s operating results. These non-GAAP results should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies.
Conference Call Information
Openwave has scheduled a conference call for 5:00 p.m. eastern time today to discuss its financial results for its first quarter ended September 30, 2009. Interested parties may access the conference call over the Internet through Openwave’s Web site at www.openwave.com or by telephone at (877) 941-8416 or (480) 629-9808 (international). A replay of the conference call will be available for two weeks beginning at approximately 8:00 p.m. eastern time today by calling 800-406-7325. The replay can be accessed internationally by calling 303-590-3030. Reservation number: 4171901.
| Openwave Reports First Quarter Financial Results | Page 3 |
A live webcast of the call, together with supplemental financial information, will also be available on the Earnings & Metrics section of Openwave’s Web site at http://investor.Openwave.com. A replay will be available on the Web site for at least three months.
About Openwave
Openwave Systems Inc. (Nasdaq: OPWV) is one of the world’s leading software innovators, offering a proactive mediation platform and tools to mobilize the Internet.
As the communications industry intersects with the Internet, Openwave software enables service providers to converge services, increasing the value of their networks by accelerating time to market and reducing the cost and complexity associated with new service deployment. Openwave’s unique product portfolio provides a complete range of mobile internet service management, messaging, and location based solutions. Openwave is a global company with a blue chip customer base spanning North America, Latin America, Australia and New Zealand, Asia, Africa, Europe, and the Middle East. Openwave is headquartered in Redwood City, California. For more information please visit www.openwave.com .
Openwave is the trademark of Openwave Systems Inc. All other trademarks are the properties of their respective owners.
Cautionary Note Regarding Forward Looking Statements
The statements in this press release in Mr. Denman’s quote with respect to future events or expectations, including the belief that the company’s pipeline will lead to future bookings and ultimately return Openwave to growth, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1943 and Section 27A of the Securities Act of 1933. These forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from those projected. Notwithstanding changes that may occur with respect to matters relating to any forward looking statements, Openwave assumes no obligation to update the forward-looking statements included in this press release.
In particular, the following factors, among others, could cause actual results to differ materially from those projected: (a) the current economic climate may impede the growth of wireless data demand; and (b) Openwave may not be able to make changes in business strategy, development plans and product offerings to respond to any changes in wireless demand needs of its customers.
For a detailed discussion of these and other factors that may cause these forward looking statements not to come true, please refer to the risk factors discussed in the Openwave’s filings with the U.S. Securities and Exchange Commission (“SEC”), including the company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009. These documents are available through the SEC’s Electronic Data Gathering Analysis and Retrieval system (EDGAR) at www.sec.gov or from Openwave’s website at www.openwave.com.
(more)
| Openwave Reports First Quarter Financial Results | Page 4 |
|
For More Information:
Investor Relations
Mike Bishop
The Blueshirt Group
mike@blueshirtgroup.com
Tel: 415-217-4968 |
Public Relations
Vikki Herrera
Openwave Systems Inc.
vikki.Herrera@openwave.com
Tel: 650-480-6753 |
(more)
OPENWAVE SYSTEMS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED
(In thousands)
|
September 30,
2009 |
June 30,
2009 |
|||||
|
Assets |
||||||
|
Current Assets: |
||||||
|
Cash, cash equivalents and short-term investments |
$ | 104,834 | $ | 109,082 | ||
|
Accounts receivable, net |
36,397 | 31,107 | ||||
|
Prepaid and other current assets |
19,119 | 26,801 | ||||
|
Total current assets |
160,350 | 166,990 | ||||
|
Property and equipment, net |
10,487 | 11,566 | ||||
|
Long-term investments and restricted cash and investments |
16,798 | 17,618 | ||||
|
Deposits and other assets |
8,459 | 8,313 | ||||
|
Goodwill |
267 | — | ||||
|
Intangible assets, net |
3,461 | 3,880 | ||||
|
Total assets |
$ | 199,822 | $ | 208,367 | ||
|
Liabilities and Stockholders’ Equity |
||||||
|
Current Liabilities: |
||||||
|
Accounts payable |
$ | 3,427 | $ | 5,348 | ||
|
Accrued liabilities |
19,325 | 23,079 | ||||
|
Accrued restructuring costs |
13,929 | 15,327 | ||||
|
Deferred revenue |
39,968 | 38,349 | ||||
|
Total current liabilities |
76,649 | 82,103 | ||||
|
Accrued restructuring costs, less current portion |
32,093 | 34,843 | ||||
|
Deferred revenue, less current portion |
9,881 | 11,901 | ||||
|
Deferred rent obligations and long-term taxes payable |
5,625 | 6,824 | ||||
|
Total liabilities |
124,248 | 135,671 | ||||
|
Stockholders’ equity |
75,574 | 72,696 | ||||
|
Total liabilities and stockholders’ equity |
$ | 199,822 | $ | 208,367 | ||
OPENWAVE SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED
(In thousands, except per share data)
| Three Months Ended | ||||||||||||
|
September 30,
2009 |
June 30,
2009 |
September 30,
2008 |
||||||||||
|
Revenues: |
||||||||||||
|
License |
$ | 10,425 | $ | 13,091 | $ | 14,327 | ||||||
|
Maintenance and support |
15,798 | 16,224 | 16,378 | |||||||||
|
Services |
23,619 | 18,622 | 20,340 | |||||||||
|
Total revenues |
49,842 | 47,937 | 51,045 | |||||||||
|
Cost of revenues: |
||||||||||||
|
License |
230 | 323 | 1,154 | |||||||||
|
Maintenance and support |
4,316 | 4,075 | 4,241 | |||||||||
|
Services |
17,773 | 13,878 | 14,447 | |||||||||
|
Amortization of intangible assets |
420 | 420 | 1,129 | |||||||||
|
Total cost of revenues |
22,739 | 18,696 | 20,971 | |||||||||
|
Gross profit |
27,103 | 29,241 | 30,074 | |||||||||
|
Operating Expenses: |
||||||||||||
|
Research and development |
9,864 | 11,025 | 12,160 | |||||||||
|
Sales and marketing |
10,711 | 11,768 | 10,744 | |||||||||
|
General and administrative |
7,925 | 6,539 | 10,620 | |||||||||
|
Restructuring and other related costs |
422 | 2,274 | 1,903 | |||||||||
|
Acquisition-related costs and amortization |
— | — | 152 | |||||||||
|
Total operating expenses |
28,922 | 31,606 | 35,579 | |||||||||
|
Operating loss from continuing operations |
(1,819 | ) | (2,365 | ) | (5,505 | ) | ||||||
|
Interest and other income (expense), net |
(1,209 | ) | (172 | ) | (6,496 | ) | ||||||
|
Pre-tax loss from continuing operations |
(3,028 | ) | (2,537 | ) | (12,001 | ) | ||||||
|
Income taxes |
498 | 907 | 503 | |||||||||
|
Net loss from continuing operations |
(3,526 | ) | (3,444 | ) | (12,504 | ) | ||||||
|
Gain on sale of discontinued operations |
4,516 | — | 2,000 | |||||||||
|
Net income (loss) |
$ | 990 | $ | (3,444 | ) | $ | (10,504 | ) | ||||
|
Basic and diluted net income (loss) per share from: |
||||||||||||
|
Continuing operations |
$ | (0.04 | ) | $ | (0.04 | ) | $ | (0.15 | ) | |||
|
Discontinued operations |
0.05 | — | 0.02 | |||||||||
|
Net income (loss) per share |
$ | 0.01 | $ | (0.04 | ) | $ | (0.13 | ) | ||||
|
Shares used in basic and diluted net income (loss) per share |
83,295 | 83,177 | 82,773 | |||||||||
|
Stock-based compensation by category: |
||||||||||||
|
Maintenance and support |
$ | 38 | $ | 32 | $ | 72 | ||||||
|
Services |
76 | 60 | 166 | |||||||||
|
Research and development |
98 | 154 | 250 | |||||||||
|
Sales and marketing |
146 | 125 | 132 | |||||||||
|
General and administrative |
189 | 179 | 351 | |||||||||
| $ | 547 | $ | 550 | $ | 971 | |||||||
OPENWAVE SYSTEMS INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET LOSS
(In thousands, except per share data)
| Three Months Ended | ||||||||||||
|
September 30,
2009 |
June 30,
2009 |
September 30,
2008 |
||||||||||
|
Reconciliation between GAAP and Non-GAAP net income (loss): |
||||||||||||
|
Net income (loss) |
$ | 990 | $ | (3,444 | ) | $ | (10,504 | ) | ||||
|
Exclude: |
||||||||||||
|
Restructuring and other related costs |
422 | 2,274 | 1,903 | |||||||||
|
Acquisition-related costs and amortization(a) |
420 | 420 | 1,281 | |||||||||
|
Amortization of stock-based compensation |
547 | 550 | 971 | |||||||||
|
Professional fees associated with unusual events(b) |
344 | (44 | ) | 2,004 | ||||||||
|
Discontinued operations, net of tax(c) |
(4,516 | ) | — | (2,000 | ) | |||||||
|
Other-than-temporary impairments of investments |
1,464 | — | 5,632 | |||||||||
|
Tax impact of reconciling items(d) |
(51 | ) | (34 | ) | (293 | ) | ||||||
|
Non-GAAP net loss |
$ | (380 | ) | $ | (278 | ) | $ | (1,006 | ) | |||
|
GAAP net income (loss) per share |
$ | 0.01 | $ | (0.04 | ) | $ | (0.13 | ) | ||||
|
Exclude: |
||||||||||||
|
Restructuring and other related costs |
$ | — | $ | 0.02 | $ | 0.02 | ||||||
|
Acquisition-related costs and amortization(a) |
$ | 0.01 | $ | 0.01 | $ | 0.02 | ||||||
|
Amortization of stock-based compensation |
$ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||
|
Professional fees associated with unusual events(b) |
$ | — | $ | — | $ | 0.02 | ||||||
|
Discontinued operations, net of tax(c) |
$ | (0.05 | ) | $ | — | $ | (0.02 | ) | ||||
|
Other-than-temporary impairments of investments |
$ | 0.02 | $ | — | $ | 0.07 | ||||||
|
Tax impact of reconciling items(d) |
$ | — | $ | — | $ | — | ||||||
|
Non-GAAP net loss per share |
$ | — | $ | — | $ | (0.01 | ) | |||||
|
Shares used in computing diluted earnings per share |
83,295 | 83,177 | 82,773 | |||||||||
| (a) | Acquisition-related costs relates to retention-based consideration under the terms of the Widerweb and Solomio acquisitions. Amortization relates to acquired intangible assets. |
| (b) | Relates to legal fees regarding the stock option lawsuits and other unusual events, net of insurance reimbursements. |
| (c) | Relates to the release of escrowed funds associated with the previous sale of Musiwave. |
| (d) | The tax impact relates to tax benefits related to amortization of intangibles and stock-based compensation. |
OPENWAVE SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)
| Three Months Ended | ||||||||||||
|
September 30,
2009 |
June 30,
2009 |
September 30,
2008 |
||||||||||
|
Operating activities: |
||||||||||||
|
Net income (loss) |
$ | 990 | $ | (3,444 | ) | $ | (10,504 | ) | ||||
|
Gain on sale of discontinued operation |
(4,516 | ) | — | (2,000 | ) | |||||||
|
Reconciling items: |
||||||||||||
|
Depreciation, amortization of intangibles and stock-based compensation |
2,449 | 2,519 | 3,770 | |||||||||
|
Non-cash restructuring charges |
391 | 390 | 447 | |||||||||
|
Accelerated depreciation on restructured property and equipment |
— | 128 | 235 | |||||||||
|
Provision for (recovery of) doubtful accounts |
31 | (595 | ) | 37 | ||||||||
|
Other non-cash items, net |
64 | (8 | ) | 147 | ||||||||
|
Other-than-temporary impairments of investments |
1,464 | — | 5,632 | |||||||||
|
Changes in operating assets and liabilities |
(9,662 | ) | 5,487 | (687 | ) | |||||||
|
Net cash provided by (used for) operating activities |
(8,789 | ) | 4,477 | (2,923 | ) | |||||||
|
Investing activities: |
||||||||||||
|
Purchases of property and equipment, net |
(607 | ) | (1,161 | ) | (477 | ) | ||||||
|
Sale of discontinued operation, net |
4,516 | — | 9,718 | |||||||||
|
Proceeds of investments, net |
(700 | ) | (70 | ) | 8,969 | |||||||
|
Maturities of restricted cash and investments, net |
419 | 213 | — | |||||||||
|
Net cash provided by (used for) investing activities |
3,628 | (1,018 | ) | 18,210 | ||||||||
|
Financing activities: |
||||||||||||
|
Payment on notes payable |
— | — | (150,000 | ) | ||||||||
|
Net proceeds from issuance of common stock |
81 | 20 | — | |||||||||
|
Employee stock purchase plan |
— | 66 | — | |||||||||
|
Cash provided by (used for) financing activities |
81 | 86 | (150,000 | ) | ||||||||
|
Net increase (decrease) in cash and cash equivalents |
(5,080 | ) | 3,545 | (134,713 | ) | |||||||
|
Cash and cash equivalents at beginning of period |
91,545 | 88,000 | 196,150 | |||||||||
|
Cash and cash equivalents at end of period, including discontinued operations |
$ | 86,465 | $ | 91,545 | $ | 61,437 | ||||||