EXHIBIT 99.1
i2 Reports Third Quarter 2004 Results
DALLAS – October 27, 2004 – i2 Technologies, Inc. (OTC: ITWO), a leading provider of closed-loop supply chain management solutions, today announced results for its third quarter, which ended September 30, 2004.
Total revenue for the third quarter was $111 million, as compared to $111 million in the previous quarter and $117 million in the third quarter of 2003.
License revenue in the third quarter was $17 million, up from $12 million of license revenue in the second quarter of 2004 and $14 million of license revenue in the third quarter of 2003.
Development services revenue was $8 million in the third quarter, as compared to $9 million in the prior quarter and $5 million in the third quarter of 2003.
Contract revenue recognized in the quarter was $29 million, down from $32 million in the prior quarter and $31 million in the third quarter of 2003. Contract revenue reflects amounts deferred as a result of the Company’s July 2003 restatement and is not typically associated with current business and cash collections.
Companies selecting i2 during the third quarter included General Motors and Kia Motors America in automotive, South Africa’s AngloGold and China’s BAO Steel in metals, Avnet in high tech, Italian aerospace and defense company Galileo Avionica, and Mexico’s brand leader in casual footwear, Distribuidora Flexi, in consumer goods and retail.
“We continue to make progress toward our goals of achieving operating profitability and long-term growth,” said Sanjiv Sidhu, i2 CEO. “In the third quarter, we strengthened many key fundamentals of our business including revenue growth from operations, strengthening our next generation supply chain products and adding new customers.”
Total costs and operating expenses for the third quarter of 2004 were $90 million, which included approximately $3 million of legal expenses related to the class action and derivative litigation settlement and the ongoing governmental investigations as well as $2 million of costs associated with the contract revenue recognized. In addition, there was a reduction to the Company’s restructuring accrual of approximately $700,000. This compares to $93 million in the previous quarter, which included approximately $4 million of restructuring costs, $2 million of operating expense related to employees no longer with the company and $1 million of legal expenses related to the settlement of the class action and derivative litigation and the SEC enforcement proceedings. During the second quarter of 2004, the Company also had $1 million of costs associated with the contract revenue recognized and reduced expense of $3 million in cost of license due to the reversal of some accruals for potential customer claims that were taken in earlier periods and were no longer needed. Total costs and operating expenses in the third quarter of 2003 were $103 million, which included approximately $4 million of costs associated with the contract revenue recognized.
Operating income for the third quarter of 2004 totaled $21 million, as compared to operating income of $18 million in the prior quarter and operating income of $14 million in the third quarter of 2003.
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i2 Reports Third Quarter 2004 Results
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Net income applicable to common stockholders for the third quarter totaled $17 million, or $0.04 earnings per diluted share. This compares to a net income applicable to common stockholders of $12 million, or $0.02 per diluted share, in the second quarter of 2004 and net income applicable to common stockholders of $7 million, or $0.02 earnings per diluted share, for the third quarter of 2003.
Cash and investments decreased by $64 million in the third quarter. i2 finished the quarter with $281 million in total cash and investments. During the quarter the Company used approximately $37 million of cash for the repurchase of $40 million in aggregate principal amount of the Company’s outstanding convertible debt.
Earnings Conference Call Information
i2 management will host a live conference call and Webcast with investors today, October 27, 2004 at 5:00 p.m. Eastern Time to discuss the third quarter financial results. Investors and other interested parties may access the call via web cast through the Company’s web site at www.i2.com/investor. A telephone replay of the event will also be available for approximately 24 hours following the call. To access the replay, dial 800-475-6701 and enter pass code 750153. In addition to the financial tables attached to this release, investors and other interested parties can access a schedule of supplemental financial information on the investor relations section of the Company’s website at www.i2.com/investor.
About i2
A leading provider of closed-loop supply chain management solutions, i2 designs and delivers software that helps customers optimize and synchronize activities involved in successfully managing supply and demand. i2’s global customer base consists of some of the world’s market leaders - including seven of the Fortune global top 10. Founded in 1988 with a commitment to customer success, i2 remains focused on delivering value by implementing solutions designed to provide a rapid return on investment. Learn more at www.i2.com.
i2 is a registered trademark of i2 Technologies US, Inc. and i2 Technologies, Inc.
i2 Cautionary Language
This press release contains forward-looking statements that involve risks and uncertainties including forward-looking statements regarding the company’s goals of operating profitability and long-term growth. These forward-looking statements involve risks and uncertainties that may cause actual results to differ from those projected. For a discussion of factors which could impact i2’s financial results and cause actual results to differ materially from those in forward-looking statements, please refer to i2’s recent filings with the SEC, particularly the Annual Report on Form 10-K/A filed on March 17, 2004 and the Quarterly Report on Form 10-Q filed on August 9, 2004. i2 assumes no obligation to update the forward-looking information contained in this news release.
For Media Inquiries Contact: | For Investor and Analyst Inquiries Contact: | |
Melanie Ofenloch | Barry Sievert | |
i2 Corporate Communications | Shelton Investor Relations for i2 | |
469-357-3027 | 972-239-5119, ext. 134 | |
melanie_ofenloch@i2.com | bsievert@sheltongroup.com |
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i2 TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
September 30, 2004 | December 31, 2003 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 245,992 | $ | 288,822 | ||||
Restricted cash | 8,831 | 15,532 | ||||||
Short-term investments, at fair value | 14,645 | 5,000 | ||||||
Accounts receivable, net | 39,458 | 36,746 | ||||||
Deferred contract costs | 3,785 | 6,995 | ||||||
Other current assets | 20,091 | 27,529 | ||||||
Total current assets | 332,802 | 380,624 | ||||||
Long-term investments, at fair value | 11,953 | — | ||||||
Premises and equipment, net | 20,568 | 28,483 | ||||||
Intangible assets, net | 2,772 | 4,647 | ||||||
Goodwill | 16,620 | 16,620 | ||||||
Total assets | $ | 384,715 | $ | 430,374 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 15,662 | $ | 20,853 | ||||
Accrued liabilities | 51,123 | 109,499 | ||||||
Accrued compensation and related expenses | 27,408 | 27,380 | ||||||
Deferred tax liabilities | 2 | 9 | ||||||
Deferred revenue | 153,612 | 212,753 | ||||||
Total current liabilities | 247,807 | 370,494 | ||||||
Non-current deferred tax liabilities | — | 18 | ||||||
Long-term debt | 316,800 | 356,800 | ||||||
Total liabilities | 564,607 | 727,312 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity deficit: | ||||||||
Preferred Stock, $0.001 par value, 5,000 shares authorized, none issued and outstanding | — | — | ||||||
Series A junior participating preferred stock, $0.001 par value, 2,000 shares authorized, none issued and outstanding | — | — | ||||||
Series B 2.5% convertible preferred stock, $1,000 par value, 150,000 shares authorized, 100,000 issued and outstanding | 95,481 | — | ||||||
Common stock, $0.00025 par value, 2,000,000 shares authorized, 458,189 and 434,133 shares issued and outstanding | 114 | 109 | ||||||
Additional paid-in capital | 10,400,053 | 10,376,937 | ||||||
Accumulated other comprehensive income (loss) | (402 | ) | 217 | |||||
Accumulated deficit | (10,675,138 | ) | (10,674,201 | ) | ||||
Net stockholders’ deficit | (179,892 | ) | (296,938 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 384,715 | $ | 430,374 | ||||
I2 TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenues: | ||||||||||||||||
Software licenses | $ | 17,441 | $ | 14,199 | $ | 41,856 | $ | 50,619 | ||||||||
Development services | 7,510 | 5,185 | 23,319 | 20,045 | ||||||||||||
Contract | 29,130 | 30,999 | 67,070 | 112,546 | ||||||||||||
Services | 26,781 | 28,920 | 76,318 | 99,328 | ||||||||||||
Reimbursable expenses | 2,458 | 2,900 | 8,206 | 10,670 | ||||||||||||
Maintenance | 27,742 | 35,116 | 88,544 | 104,054 | ||||||||||||
Total revenues | 111,062 | 117,319 | 305,313 | 397,262 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenues: | ||||||||||||||||
Software licenses | 3,816 | (693 | ) | 7,189 | 2,160 | |||||||||||
Development services | 3,353 | 5,697 | 14,004 | 17,627 | ||||||||||||
Contract | 2,079 | 4,078 | 3,210 | 11,011 | ||||||||||||
Amortization of acquired technology | 90 | 145 | 369 | 435 | ||||||||||||
Reimbursable expenses | 2,458 | 2,900 | 8,206 | 10,670 | ||||||||||||
Services and maintenance | 25,915 | 31,982 | 82,413 | 103,424 | ||||||||||||
Sales and marketing | 19,326 | 20,915 | 60,838 | 68,042 | ||||||||||||
Research and development | 16,612 | 20,318 | 55,418 | 62,676 | ||||||||||||
General and administrative | 17,253 | 12,708 | 55,467 | 50,703 | ||||||||||||
Amortization of intangibles | — | 39 | 39 | 501 | ||||||||||||
Restructuring charges and adjustments | (670 | ) | 5,202 | 3,575 | 5,578 | |||||||||||
Total costs and expenses | 90,232 | 103,291 | 290,728 | 332,827 | ||||||||||||
Operating income | 20,830 | 14,028 | 14,585 | 64,435 | ||||||||||||
Other income (expense), net | (1,788 | ) | (4,126 | ) | (11,257 | ) | (10,651 | ) | ||||||||
Income before income taxes | 19,042 | 9,902 | 3,328 | 53,784 | ||||||||||||
Income tax expense | 1,176 | 2,765 | 3,281 | 4,301 | ||||||||||||
Net income | $ | 17,866 | $ | 7,137 | $ | 47 | $ | 49,483 | ||||||||
Preferred stock dividend and accretion of discount | 742 | — | 989 | — | ||||||||||||
Net income (loss) applicable to common shareholders | $ | 17,124 | $ | 7,137 | $ | (942 | ) | $ | 49,483 | |||||||
Income (loss) per common share: | ||||||||||||||||
Basic | $ | 0.04 | $ | 0.02 | $ | (0.00 | ) | $ | 0.11 | |||||||
Diluted | $ | 0.04 | $ | 0.02 | $ | (0.00 | ) | $ | 0.11 | |||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 459,148 | 433,428 | 446,054 | 433,062 | ||||||||||||
Diluted | 461,104 | 436,417 | 446,054 | 451,739 | ||||||||||||
Comprehensive income (loss): | ||||||||||||||||
Net income (loss) applicable to common shareholders | $ | 17,124 | $ | 7,137 | $ | (942 | ) | $ | 49,483 | |||||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized gain (loss) on available-for-sale securities arising during the period | 281 | (22 | ) | (109 | ) | (7 | ) | |||||||||
Foreign currency translation adjustments | 139 | 720 | (510 | ) | 1,529 | |||||||||||
Tax effect of other comprehensive (income) loss | ||||||||||||||||
Total other comprehensive income (loss) | 420 | 698 | (619 | ) | 1,522 | |||||||||||
Total comprehensive income (loss) | $ | 17,544 | $ | 7,835 | $ | (1,561 | ) | $ | 51,005 | |||||||
i2 TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30, | ||||||||
2004 | 2003 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 47 | $ | 49,483 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Write-off of in-process research and development | — | |||||||
Depreciation and amortization | 10,053 | 19,545 | ||||||
Write-down of equipment | — | 557 | ||||||
Impairment of intangible assets | ||||||||
Recovery from bad debts charged to costs and expenses | (1,443 | ) | (3,999 | ) | ||||
Deferred compensation | 991 | 1,069 | ||||||
Litigation settlements | ||||||||
Net (gain) loss realized on investments | ||||||||
Loss on assets disposed in restructuring | ||||||||
Deferred income taxes | (2,193 | ) | ||||||
Tax benefit from stock option exercises | ||||||||
Loss on disposal of assets | 330 | |||||||
Gain on extinguishment of debt | (2,223 | ) | (3,435 | ) | ||||
Net loss realized on investments | 1 | |||||||
Changes in operating assets and liabilities: | ||||||||
Restricted cash | 6,701 | 517 | ||||||
Accounts receivable, net | (1,255 | ) | 13,400 | |||||
Deferred contract costs | 3,210 | 6,402 | ||||||
Other assets | 7,392 | 12,222 | ||||||
Accounts payable | (5,180 | ) | (2,678 | ) | ||||
Accrued liabilities | (59,212 | ) | (44,706 | ) | ||||
Accrued compensation and related expenses | 57 | (12,302 | ) | |||||
Deferred revenue | (58,944 | ) | (95,109 | ) | ||||
Income taxes payable | ||||||||
Net cash (used in) operating activities | (99,476 | ) | (61,226 | ) | ||||
Cash flows from investing activities: | ||||||||
Net cash acquired (paid) in acquisitions | ||||||||
Short-term loan to RightWorks prior to acquisition | ||||||||
Contingent consideration paid related to a 2001 acquisition | — | (712 | ) | |||||
Purchases of premises and equipment | (1,642 | ) | (915 | ) | ||||
Proceeds from sale of premises and equipment | ||||||||
Purchases of short-term investments | ||||||||
Maturities of short-term investments | ||||||||
Purchases of long-term investments | ||||||||
Proceeds from sale of assets | 620 | — | ||||||
Purchase of short-term investments | (30,000 | ) | ||||||
Proceeds from sales of short-term investments | 35,000 | 5,000 | ||||||
Proceeds from sales of long-term investments | — | 33,000 | ||||||
Purchases of long-term investments | (26,708 | ) | ||||||
Maturities of long-term debt securities | ||||||||
Proceeds from settlement of hedges | ||||||||
Investments designated as restricted cash | ||||||||
Return of capital received on equity investment | ||||||||
Net cash provided by (used in) investing activities | (22,730 | ) | 36,373 | |||||
Cash flows from financing activities: | ||||||||
Payment of note acquired in acquisition of TSC | ||||||||
Repayment of principal on debt | ||||||||
Payment of note issued in acquisition of TSC | (57,495 | ) | ||||||
Repurchase of convertible subordinate notes | (37,400 | ) | ||||||
Proceeds from sale of series B preferred stock, net of issuance costs | 95,325 | |||||||
Proceeds from sale of common stock, net of issuance costs | 19,733 | |||||||
Net proceeds from option exercises and stock issued under employee stock purchase plans | 2,399 | 8 | ||||||
Net cash provided by (used in) financing activities | 80,057 | (57,487 | ) | |||||
Effect of exchange rates on cash | (681 | ) | 619 | |||||
Net change in cash and cash equivalents | (42,830 | ) | (81,721 | ) | ||||
Cash and cash equivalents at beginning of period | 288,822 | 402,177 | ||||||
Cash and cash equivalents at end of period | $ | 245,992 | $ | 320,456 | ||||