================================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 January 22, 2004 (January 22, 2004) Date of Report (Date of earliest event reported) FILENET CORPORATION (Exact name of registrant as specified in its charter) Delaware 000-15997 95-3757924 (State or other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification Number) 3565 Harbor Boulevard 92626 Costa Mesa, California (Zip Code) (Address of principal executive offices) (714) 327-3400 (Registrant's telephone number, including area code) N/A (Former Name or Former Address, if Changed Since Last Report) ================================================================================================Item 7. Financial Statements and Exhibits. (c) Exhibits Exhibits: Description of Document 99.1 Press Release dated January 22, 2004.* * This exhibit 99.1 is being furnished pursuant to Item 12, and is not deemed filed pursuant to Item 7. Item 12. Disclosure of Results of Operations and Financial Condition. On January 22, 2004, we issued a press release, which sets forth the results of our operations for the quarter ended December 31, 2003. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. 2 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. FILENET CORPORATION Date: January 22,2004 By: /s/ Sam M. Auriemma Name: Sam M. Auriemma Title: Senior Vice President and Chief Financial Officer 3 EXHIBIT INDEX Exhibits: Description of Document 99.1 Press Release dated January 22, 2004. 4 EXHIBIT 99.1 [FileNet Logo] FOR IMMEDIATE RELEASE FileNet Reports Fourth Quarter 2003 Results o 27 Percent Sequential Software Revenue Growth; 23 Percent Year-Over-Year Software Revenue Growth o Company Exceeds Guidance for Revenue and EPS o Cash and Investments Reach Record Level of $248.2 Million COSTA MESA, Calif.--January 22, 2004--FileNet Corporation (Nasdaq: FILE), the leading provider of Enterprise Content Management (ECM) solutions, today announced financial results for its fourth quarter and year ended December 31, 2003. Total revenues for the fourth quarter of 2003 were $101.0 million compared to total revenues of $89.4 million for the same period in 2002 and $89.4 million for the third quarter of 2003. Software revenues for the fourth quarter of 2003 were $44.8 million compared to $36.4 million for the same period in 2002 and $35.3 million for the third quarter of 2003. Net income was $5.6 million in the fourth quarter of 2003, compared to net income of $3.8 million in the fourth quarter of 2002 and $2.5 million in the third quarter of 2003. Earnings per basic and diluted share were $0.15 and $0.14, respectively, for the fourth quarter of 2003, compared to earnings per basic and diluted share of $0.11 and $0.10, respectively, for the fourth quarter of 2002. For the third quarter of 2003, earnings per basic and diluted share were $0.07 and $0.06, respectively. For the year ended December 31, 2003, total revenues were $364.5 million, compared to revenues of $347.0 million reported for the year ended December 31, 2002. Software revenues for 2003 were $149.2 million, compared to software revenues of $132.5 million reported for 2002. For 2003, net income was $10.9 million, compared to net income of $8.3 million for 2002. For fiscal year 2003, earnings per basic and diluted share were $0.30 and $0.29, respectively, compared to earnings per basic and diluted share of $0.23 for fiscal year 2002. As of December 31, 2003, FileNet had cash and investments of $248.2 million, compared to $217.5 million at September 30, 2003. The company has no long-term debt. "Our performance in the fourth quarter was outstanding - exceeding our guidance for revenue and earnings per share. License revenue showed strong year-over-year growth reflecting the continued, strong adoption of FileNet's P8 Enterprise Content and Business Process Management offerings," said Lee Roberts, FileNet's chairman and CEO. "Our success in achieving higher license revenue drove improved operating margins and earnings per share." Quarterly Conference Call with Management Lee Roberts, Chairman and Chief Executive Officer, and Sam Auriemma, Chief Financial Officer, will host a conference call for investors at 7:00 a.m. PT today. The call and presentation will be broadcast live over the Internet. To listen to the event via the Internet, please follow the instructions that will be available on the investor relations' section of FileNet's Web site. A replay of the Web cast will be available for an extended period of time. Alternatively, to listen to the call live, dial (800) 901-5241. The conference call ID number for the call is 45335179. A replay of the call will be available from approximately 9:00 a.m. PT on January 22 through midnight PT on January 29. To listen to the replay, dial (888) 286-8010. The conference call ID number for the replay is 36939450. About FileNet FileNet Corporation helps organizations make better decisions by managing the content and processes that drive their business. FileNet's Enterprise Content Management (ECM) solutions allow customers to build and sustain competitive advantage by managing content throughout their organizations, automating and streamlining their business processes, and providing the full spectrum of connectivity needed to simplify their critical and everyday decision-making. FileNet ECM solutions deliver a comprehensive set of capabilities that integrate with existing information systems to provide cost-effective solutions that solve real-world business problems. Since the Company's founding in 1982, more than 4,000 organizations, including 81 of the Fortune 100, have taken advantage of FileNet solutions for help in managing their mission-critical content and processes. Headquartered in Costa Mesa, Calif., the Company markets its innovative ECM solutions in more than 90 countries through its own global sales, professional services and support organizations, as well as via its ValueNet(R)Partner network of resellers, system integrators and application developers. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements that are based on our current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by us. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will" and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference for FileNet include, but are not limited to, the volume of our sales and pricing concessions on volume sales; our ability to specify, develop or acquire, complete, introduce, market, distribute and gain market acceptance for new products and technologies in a timely manner; the mix of products and services sold by us; the timing, rescheduling or cancellation of significant customer orders; the loss of a key customer; our ability to control expenses; announcements of technological innovations, new products or product enhancements by the company or its competitors; the emerging nature of the Enterprise Content Management market; key management changes; changes in joint marketing and development programs; developments relating to patents or other intellectual property rights or disputes; changing relationships with customers, distributors, suppliers and strategic partners; potential contractual or employment issues; our ability to integrate acquired businesses; and general conditions in the worldwide economy and the software/technology sector and other factors. Our Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current Reports on Forms 8-K and other Securities and Exchange Commission filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Note to editors: FileNet and ValueNet are registered trademarks of FileNet Corporation. All other company or product names referenced in this release may be trademarks or registered trademarks of their respective owners. # # # Investor Contact: Greg Witter, Director, Investor Relations FileNet Corporation Phone: 714-327-3405 Email: gwitter@filenet.com Media Contact: Tom Hennessey, Director, Corporate Communications FileNet Corporation Phone: 714-327-5050 Email: thennessey@filenet.com FILENET CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Quarter Ended December 31, Twelve Months Ended Dec. 31, 2003 2002 2003 2002 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue: Software $ 44,817 $ 36,380 $ 149,214 $ 132,508 Service 55,714 52,046 212,833 206,806 Hardware 419 1,021 2,458 7,703 Total revenue 100,950 89,447 364,505 347,017 Costs: Cost of software revenue 3,384 3,326 13,800 10,565 Cost of service revenue 21,317 21,514 81,462 89,016 Cost of hardware revenue 787 1,148 3,669 5,995 Total cost of revenue 25,488 25,988 98,931 105,576 Gross profit 75,462 63,459 265,574 241,441 Operating expenses: Sales and Marketing 41,315 34,721 144,975 132,109 Research and development 19,019 17,742 77,050 71,735 In-process research and - - - 400 development General and administrative 8,073 7,408 32,466 31,656 Total operating expenses 68,407 59,871 254,491 235,900 Operating income 7,055 3,588 11,083 5,541 Other income, net 787 1,335 4,084 5,209 Income before income taxes 7,842 4,923 15,167 10,750 Provision for income taxes 2,196 1,138 4,247 2,478 Net income $ 5,646 $ 3,785 $ 10,920 $ 8,272 Earnings per share: Basic $ 0.15 $ 0.11 $ 0.30 $ 0.23 Diluted $ 0.14 $ 0.10 $ 0.29 $ 0.23 Weighted average shares outstanding: Basic 37,426 35,827 36,532 35,590 Diluted 39,944 36,426 38,089 36,709 Note: Certain reclassifications have been made to prior-years' balances to conform to the current year's presentation. FILENET CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 31, December 31, 2003 2002 (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 203,305 $ 130,154 Short-term investments 32,286 29,188 Accounts receivable, net 38,096 44,839 Inventories, net 528 2,568 Prepaid expenses and other assets 12,646 13,317 Deferred income taxes 3,551 802 Total current assets 290,412 220,868 Property, net 26,922 34,641 Long-term investments 12,672 25,864 Goodwill 26,170 16,907 Intangible assets, net 7,979 3,029 Deferred income taxes 23,001 21,792 Other assets 4,692 4,935 Total assets $ 391,848 $ 328,036 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 11,006 $ 7,706 Customer deposits/advances 5,217 2,962 Accrued compensation and benefits 27,648 20,729 Unearned maintenance revenue 40,691 38,945 Other accrued liabilities 16,524 15,224 Total current liabilities 101,086 85,566 Other liabilities and unearned maintenance revenue 1,614 3,565 Total liabilities 102,700 89,131 Stockholders' equity 289,148 238,905 Total liabilities and stockholders' equity $ 391,848 $ 328,036
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