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): June 14, 2004
FORGENT NETWORKS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-20008 74-2415696
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(State or other jurisdiction (Commission File Number) (IRS Employer
of 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)
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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 June 14, 2004
Item 12. Results of Operations and Financial Condition.
On June 14, 2004, the registrant announced its financial results for the
fiscal quarter ended April 30, 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: June 14, 2004 FORGENT NETWORKS, INC.
By: /s/ Richard N. Snyder
Name: Richard N. Snyder
Title: Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release dated June 14, 2004
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EX-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 Third Quarter
AUSTIN, Texas, Jun. 14, 2004 - Forgent/TM/ Networks (Nasdaq: FORG) today
announced the results of the 2004 fiscal third quarter ending April 30, 2004.
Highlights for the quarter include:
o Initiated litigation against 31 technology companies for infringement of
United States Patent No. 4,698,672 (the '672 Patent)
o Achieved a significant reduction in operating expenses from the 2004 fiscal
second quarter with additional reductions planned for the 2004 fiscal
fourth quarter
o Grew NetSimplicity software revenues by more than 50% sequentially
o Maintained healthy cash balances
"Forgent initiated litigation against some of the largest global technology
firms during the quarter. We took this step after seeking to reach license
agreements with these companies. We are committed to developing and protecting
all of our assets, and will devote the efforts necessary to prevail in this
litigation," said Richard Snyder, chairman and CEO of Forgent. "We have also
moved quickly to reduce headcount and expenses to reflect our go-forward focus
on intellectual property licensing and the NetSimplicity product line. This will
be a smaller, lighter-weight company that will only invest where we see
profitable growth."
Fiscal Third Quarter Results.
Revenues were $0.8 million for the 2004 fiscal third quarter, compared to $6.6
million for the 2004 fiscal second quarter, due to lower intellectual property
and software revenues. The company initiated a significant reduction in
headcount in the third quarter due to the implementation of a new software
business model, which requires less staff. As of the end of the third quarter
Forgent had approximately 44 full time employees, a 58% reduction since the end
of the 2004 fiscal second quarter. As a result, Forgent was required to take a
$0.6 million restructuring charge related to employee severance payments and
certain lease payments.
Including the effects of the charge, the net loss was $4.4 million or $0.18 per
share for the third fiscal quarter of 2004. Cash, cash equivalents and
short-term investments were approximately $21 million at the end of the third
quarter of 2004.
Intellectual Property.
The intellectual property program revenues decreased to $0.3 million for the
fiscal third quarter of 2004 compared to $5.8 million for the second quarter of
fiscal 2004. As an evolution of the Company's intellectual property program, and
as always anticipated by Forgent, after working actively to license the '672
Patent, Forgent has initiated litigation against 31 companies for infringement
of the '672 Patent in the United States District Court for the Eastern District
of Texas, Marshall Division. Over the last two years the intellectual property
business has generated approximately $90 million from licensing the '672 Patent
to 30 different companies in Asia, Europe and the United States. The '672 Patent
relates to digital image compression, and fields of use include any digital
still image device used to compress, store, manipulate, print or transmit
digital still images such as digital cameras. However, the '672 Patent extends
beyond digital cameras and includes many digital still image devices such as
personal digital assistants, cellular telephones, printers, scanners, and other
devices used to compress, store, manipulate, print or transmit digital still
images. Forgent has the exclusive right to license and enforce all the claims
under the '672 Patent in all fields of use involving digital still image
compression.
Software. Software revenues were $0.5 million for the third quarter of fiscal
2004 compared to $0.8 million for the second quarter of fiscal 2004. The
decrease is due to lower ALLIANCE/TM/ revenues as Forgent realigns its software
sales focus to the NetSimplicity product line, which has shown significant sales
growth. In addition, NetSimplicity's telesales model is a more cost efficient
distribution approach that streamlines the
purchase process and simplifies the overall sale. Forgent's software division
offerings include Meeting Room Manager, it's flagship product that provides room
scheduling capabilities.
Although the company continues to see interest in ALLIANCE(TM), the interest has
not been sufficient to meet sales targets. Forgent will continue to support the
software and its customers and will determine the future of the ALLIANCE(TM)
Scheduler and Media Manager over the next few months. The company is focusing on
NetSimplicity's Meeting Room Manager, which is the strategic scheduling platform
of the future.
Outlook.
Subsequent to the end of the third quarter, Forgent has continued efforts to
license the '672 Patent and expects to recover additional license revenues in
the fourth fiscal quarter of 2004 based on results achieved in this quarter to
date. As a result, Forgent anticipates that there will be additional IP
licensing revenues during the pendency of the recently filed patent litigation,
although predicting the timing and amounts will be complicated because of
licensing negotiations and the pending litigation. Forgent believes that
NetSimplicity software revenue for the fourth fiscal quarter of 2004 will grow.
"We will continue our efforts to license and enforce the '672 Patent, with the
objective of achieving significant license revenues in the future," added
Snyder. "We will focus on revenue, profitability, and managing our expenses so
that we improve our cash position. As we grow cash we will look for attractive
opportunities to expand the business."
Conference Call and Webcast
Forgent has scheduled a conference call with the investment community for Mon,
Jun. 14, 2004, at 10:00 a.m. CT (11:00 a.m. ET) to discuss the quarter and
outlook.
To participate, dial 888-482-0024 ten minutes before the conference call begins,
ask for the Forgent event, and use a pass code of 13144208. International
callers should dial 617-801-9702 and use a pass code of 13144208. 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 15 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 (Nasdaq: FORG) develops and licenses intellectual property
and provides scheduling software to a wide variety of customers. Forgent's
intellectual property licensing program is related to communication technologies
developed from a diverse and growing patent portfolio. Forgent's software
division, NetSimplicity provides a spectrum of scheduling software that enables
all sizes of organizations to streamline the scheduling of people, places and
things. For additional information please 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 associated with 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)
APRIL 30, JULY 31,
2004 2003
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(UNAUDITED)
ASSETS
Current Assets:
Cash and equivalents, including
restricted cash of $650 and $730 $ 17,434 $ 21,201
at April 30, 2004 and July 31, 2003
Short-term investments 3,675 3,845
Accounts receivable, net of allowance
for doubtful accounts of
$145 and $0 at April 30, 2004
and July 31, 2003 634 9,457
Notes receivable, net of reserve of
$780 and $639 at April 30, 2004 and
July 31, 2003 77 74
Prepaid expenses and other current assets 432 415
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Total Current Assets 22,252 34,992
Property and equipment, net 3,478 2,158
Intangible assets, net 308 5,042
Capitalized software, net -- 4,827
Other assets 266 230
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$ 26,304 $ 47,249
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,268 $ 3,178
Accrued compensation and benefits 315 683
Other accrued liabilities 1,585 1,661
Notes payable, current position 355 323
Deferred revenue 531 281
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Total Current Liabilities 4,054 6,126
Long-Term Liabilities:
Deferred revenue 41 59
Other long-term obligations 2,511 1,810
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Total Long-Term Liabilities 2,552 1,869
Stockholders' equity:
Preferred stock, $.01 par value; 10,000 authorized;
none issued or outstanding -- --
Common stock, $.01 par value; 40,000 authorized;
26,581 and 26,172 shares issued; 24,860 and
24,588 shares outstanding at April 30, 2004
and July 31, 2003, respectively 265 261
Treasury stock, 1,721 and 1,584 issued at
April 30, 2004 and July 31, 2003,
respectively (4,685) (4,231)
Additional paid-in capital 264,540 263,875
Accumulated deficit (240,433) (219,991)
Unearned compensation (3) (28)
Accumulated other comprehensive income 14 (632)
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Total Stockholders' Equity $ 19,698 $ 39,254
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$ 26,304 $ 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 NINE MONTHS ENDED
APRIL 30, APRIL 30,
2004 2003 2004 2003
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(UNAUDITED) (UNAUDITED)
REVENUES:
Software and professional $ 549 $ 1,134 $ 2,341 $ 3,379
services
Intellectual property licensing 267 12,150 8,937 25,618
Other ........................ -- 97 22 566
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Total revenues 816 13,381 11,300 29,563
COST OF SALES:
Software and professional 269 945 6,719 2,418
services
Intellectual property licensing 134 6,075 4,469 12,809
Other -- 77 24 497
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Total cost of sales 403 7,097 11,212 15,724
GROSS MARGIN 413 6,284 88 13,839
OPERATING EXPENSES:
Selling, general and administrative 3,292 2,459 9,708 8,025
Research and development 918 901 3,152 2,784
Amortization of intangible assets 12 -- 29 --
Restructuring Charge 628 -- 628 --
Impairment of assets -- 1,211 6,989 712
------ ------ ------ ------
Total operating expenses 4,850 4,571 20,506 11,521
(LOSS) INCOME FROM OPERATIONS (4,437) 1,713 (20,418) 2,318
OTHER INCOME (EXPENSES):
Interest income 49 37 164 123
Foreign currency translation (22) -- (655) --
Interest expense and other (6) (36) (106) (75)
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Total other income (expenses) 21 1 (597) 48
(LOSS) INCOME FROM CONTINUING
OPERATIONS, BEFORE INCOME TAXES (4,416) 1,714 (21,015) 2,366
Provision for income taxes -- (59) -- (69)
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(LOSS) INCOME FROM CONTINUING
OPERATIONS (4,416) 1,655 (21,015) 2,297
Income from discontinued operations, -- 68 -- 1,666
net of income taxes
Income on disposal, -- -- 573 --
net of income taxes
-------- ------- -------- -------
INCOME FROM DISCONTINUED
OPERATIONS, NET OF INCOME TAXES -- 68 573 1,666
-------- ------ -------- ------
NET (LOSS) INCOME $ (4,416) $ 1,723 $(20,442) $ 3,963
======== ======= ======== ======
BASIC AND DILUTED (LOSS)
INCOME PER SHARE:
(Loss) income from
continuing operations $ (0.18) $ 0.07 $ (0.85) $ 0.09
========== ===== ========= ======
Income from discontinued $ 0.00 $ 0.00 $ 0.02 $ 0.07
operations
========== ======= ========= =====
Net (loss) income $ (0.18) $ 0.07 $ (0.83) $ 0.16
========= ======= ========= =====
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 24,802 24,629 24,679 24,693
Diluted 24,802 24,715 24,679 25,144