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): March 9, 2004
FORGENT NETWORKS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-20008 74-2415696
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
108 Wild Basin Road
Austin, Texas
78746
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (512) 437-2700
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(Former name or former address, if changed since last report)
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The following exhibit to this Current Report on Form 8-K is not being
filed but is being furnished pursuant to Item 12 below:
99.1 Press Release dated March 9, 2004
Item 12. Results of Operations and Financial Condition.
On March 9, 2004, the registrant announced its financial results for
the fiscal quarter ended January 31, 2004 by issuing a press release. The full
text of the press release issued in connection with the announcement is attached
hereto as Exhibit No. 99.1. This information is being furnished under Item 12
(Results of Operations and Financial Condition) of Form 8-K. This information
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by
reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in
such a filing. The press release contains and may implicate, forward-looking
statements regarding the registrant and includes cautionary statements
identifying important factors that could cause actual results to differ
materially from those anticipated.
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SIGNATURE
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, thereunto duly authorized.
Date: March 9, 2004 FORGENT NETWORKS, INC.
By: /s/ Richard N. Snyder
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Name: Richard N. Snyder
Title: Chief Executive Officer
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press Release dated March 9, 2004
Exhibit 99.1
For Immediate Release FORGENT NETWORKS
Press contact: Nelson Duffle Investor contact: Michael Noonan
512.437.2532 512.437.2476
nelson_duffle@forgent.com michael_noonan@forgent.com
Forgent Announces Results for the 2004 Fiscal Second Quarter
AUSTIN, Texas, Mar. 9, 2004-- Forgent(TM) Networks (Nasdaq: FORG) today
announced the results of the 2004 fiscal second quarter ending January 31, 2004.
Revenues increased by approximately 71% to $6.6 million for the 2004 fiscal
second quarter, compared to $3.9 million for the 2004 fiscal first quarter, due
to improved intellectual property revenues.
"Forgent's intellectual property program was successful during the quarter and
the company continues to seek additional opportunities in licensing its `672
patent. The performance for ALLIANCE(TM), however, was below our expectations.
As a result, we made the decision to rapidly implement a leaner cost structure,
as well as simplify and streamline the product development and sales process for
ALLIANCE(TM)," said Richard Snyder, chairman and CEO of Forgent. "We
repositioned ALLIANCE(TM) because we are seeing a positive response to our
Network Simplicity product line, which is driven largely by a lower cost,
telephone and web-based sales strategy. We are focusing on small and
medium-sized businesses, as well as departments and divisions of larger
enterprises, where we see the best immediate prospects."
Fiscal Second Quarter Results
The results of the 2004 fiscal second quarter as well as the future outlook for
the enterprise software business were less than anticipated and consequently,
Forgent was required to take an $11.8 million impairment charge primarily
related to certain software assets. The asset impairment charge is broken out as
follows:
o A charge of $4.8 million was recorded in cost of goods sold for an
impairment of capitalized software development related to ALLIANCE(TM) and
certain pre-paid expenses
o A charge of $7.0 million was recorded in operating expense as an impairment
of goodwill, certain leases and other assets
As a result of these impairments, gross margins were ($1.9) million for the
fiscal second quarter of 2004 compared to $1.6 million for the 2004 fiscal first
quarter. Operating expenses increased to approximately $11.5 million, primarily
due to the impairments. Including the effects of the charge, which was largely
non-cash, the net loss was $13.5 million or $0.55 per share for the second
fiscal quarter of 2004, compared to a net loss of $2.5 million or $0.10 per
share the first fiscal quarter of 2004. Cash, cash equivalents and short-term
investments declined at the end of the second quarter compared to the first
fiscal quarter of 2004 to approximately $25 million.
Intellectual Property
The intellectual property program revenues increased by approximately 104% to
$5.8 million for the fiscal second quarter of 2004 compared to $2.9 million for
the first quarter of fiscal 2004. Since the intellectual property program was
initiated, Forgent has garnered over $88 million in license revenue. The `672
patent program has a wide field of use including licensing opportunities with
any digital still image device used to compress, store, manipulate, print or
transmit digital still images. Forgent has noticed companies in such diverse
geographies as Asia, Europe and North America. The company believes that through
these efforts it will have additional licensing revenue in subsequent quarters,
although we cannot predict the timing and amounts.
Software
Software revenues were $0.8 million for the second quarter of fiscal 2004
compared to $1.0 million for the first quarter of fiscal 2004. Forgent has
realigned its software sales strategy to a more cost efficient distribution
model that streamlines the purchase process and simplifies the overall sale. Our
offerings include Network Simplicity's Meeting Room Manager, which provides room
scheduling, and ALLIANCE(TM), which provides unified scheduling of all meeting
logistics using the corporate calendaring platforms of Lotus Notes and Microsoft
Outlook.
Other Items
The company reported income from discontinued operations of $563,000 or $0.02
per share for the 2004 fiscal second quarter resulting from the settlement of
funds held for purchase price adjustments related to the sale of the
videoconferencing hardware services business.
Conference Call and Webcast
Forgent has scheduled a conference call with the investment community for Tue,
Mar. 9, 2004, at 10:00 a.m. CT (11:00 a.m. ET) to discuss the quarter and
outlook.
To participate, dial 800-884-5695 ten minutes before the conference call begins,
ask for the Forgent event, and use a pass code of 86536175. International
callers should dial 617-786-2960 and use a pass code of 86536175. Investors,
analysts, media and the general public will also have the opportunity to listen
to the conference call over the Internet by visiting the investor relations page
of Forgent's web site at www.forgent.com. To listen to the live call, please
visit the web site at least fifteen minutes early to register, download and
install any necessary audio software. For those who cannot listen to the live
broadcast, a replay will be available shortly after the call on the investor
relations page of our web site at www.forgent.com.
About Forgent
Forgent(TM) Networks provides a spectrum of scheduling software that enables
organizations to streamline the planning and execution of their meetings.
Forgent's offerings include Network Simplicity's Meeting Room Manager, which
provides web-based room scheduling capabilities and ALLIANCE, which provides
unified scheduling of all meeting logistics through corporate calendaring
platforms Microsoft Outlook and Lotus Notes. For additional information visit
www.forgent.com.
Safe Harbor
This release may include projections and other forward-looking statements that
involve a number of risks and uncertainties and as such, actual results in
future periods may differ materially from those currently expected or desired.
Some of the factors that could cause actual results to differ materially include
changes in the general economy and the technology industry, rapid changes in
technology, sales cycle and product implementations, risks associated with
transitioning to a new business model and the subsequent limited operating
history, the possibility of new entrants into the scheduling software market,
the possibility that the market for the sale of certain software and services
may not develop as expected, that development of these software and services may
not proceed as planned, risks associated with the company's license program,
including risks of litigation involving intellectual property, patents and
trademarks, merger activities and acquisition integration. Additional discussion
of these and other risk factors affecting the company's business and prospects
is contained in the company's periodic filings with the SEC.
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FORGENT NETWORKS, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
JANUARY 31, JULY 31,
2004 2003
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(UNAUDITED)
ASSETS
Current Assets:
Cash and equivalents, including restricted cash of $650 and $730
At January 31, 2004 and July 31, 2003, respectively $ 18,497 $ 21,201
Short-term investments 6,403 3,845
Accounts receivable, net of allowance for doubtful accounts of
$125 and $0 at January 31, 2004 and July 31, 2003 1,720 9,457
Notes receivable, net of reserve of $780 and $639 at January 31,
2004 and July 31, 2003 77 74
Prepaid expenses and other current assets 451 415
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Total Current Assets 27,148 34,992
Property and equipment, net 3,406 2,158
Intangible assets, net 358 5,042
Capitalized software, net -- 4,827
Other assets 265 230
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$ 31,177 $ 47,249
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,987 $ 3,178
Accrued compensation and benefits 360 683
Other accrued liabilities 1,392 1,661
Notes payable, current position 362 323
Deferred revenue 538 281
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Total Current Liabilities 4,639 6,126
Long-Term Liabilities:
Deferred revenue 56 59
Other long-term obligations 2,673 1,810
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Total Long-Term Liabilities 2,729 1,869
Stockholders' equity:
Preferred stock, $.01 par value; 10,000 Authorized;
none issued or outstanding -- --
Common stock, $.01 par value; 40,000 authorized; 26,383 and
26,172 shares issued; 24,662 and 24,588 shares outstanding at
January 31, 2004 and July 31, 2003, respectively 263 261
Treasury stock, 1,721 and 1,584 issued at January 31, 2004 and
July 31, 2003, respectively (4,685) (4,231)
Additional paid-in capital 264,346 263,875
Accumulated deficit (236,017) (219,991)
Unearned compensation (102) (28)
Accumulated other comprehensive income 4 (632)
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Total Stockholders' Equity 23,809 39,254
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$ 31,177 $ 47,249
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FORGENT NETWORKS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, JANUARY 31,
2004 2003 2004 2003
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(UNAUDITED) (UNAUDITED)
REVENUES:
Software and professional services $ 793 $ 1,031 $ 1,792 $ 2,245
Intellectual property licensing 5,820 7,255 8,670 13,468
Other -- 88 22 469
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Total revenues 6,613 8,374 10,484 16,182
COST OF SALES:
Software and professional services 5,600 740 6,450 1,473
Intellectual property licensing 2,910 3,628 4,335 6,734
Other -- 37 24 420
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Total cost of sales 8,510 4,405 10,809 8,627
GROSS MARGIN (1,897) 3,969 (325) 7,555
OPERATING EXPENSE:
Selling, general and administrative 3,384 2,524 6,417 5,567
Research and development 1,149 711 2,233 1,883
Amortization of intangible assets 12 17
Impairment of assets 6,989 -- 6,989 (499)
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Total operating expenses 11,534 3,235 15,656 6,951
(LOSS) INCOME FROM OPERATIONS (13,431) 734 (15,981) 604
OTHER (EXPENSES) INCOME:
Interest income 54 28 115 86
Foreign currency translation (633) -- (633) --
Interest expense and other (56) (37) (100) (38)
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Total other (expenses) income (635) (9) (618) 48
(LOSS) INCOME FROM CONTINUING
OPERATIONS, BEFORE INCOME TAXES (14,066) 725 (16,599) 652
Provision for income taxes -- (11) -- (10)
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(LOSS) INCOME FROM CONTINUING OPERATIONS (14,066) 714 (16,599) 642
Income from discontinued operations, net of -- 601 -- 1,598
income taxes
Income on disposal, net of income taxes 563 -- 573 --
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INCOME FROM DISCONTINUED
OPERATIONS, NET OF INCOME TAXES 563 601 573 1,598
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NET (LOSS) INCOME $ (13,503) $ 1,315 $ (16,026) $ 2,240
=============== ============== ================ ==============
BASIC AND DILUTED (LOSS) INCOME PER SHARE:
(Loss) income from continuing operations $ (0.57) $ 0.03 $ (0.67) $ 0.03
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Income from discontinued operations $ 0.02 $ 0.02 $ 0.02 $ 0.06
=============== ============== ================ ==============
Net (loss) income $ (0.55) $ 0.05 $ (0.65) $ 0.09
=============== ============== ================ ==============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 24,639 24,638 24,619 24,725
Diluted 24,639 25,030 24,619 25,272
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