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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM ________ TO __________
COMMISSION FILE NUMBER 000-24677
BINDVIEW DEVELOPMENT CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 76-0306721
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5151 SAN FELIPE, 25th FLOOR, HOUSTON, TX 77056
(Address of principal executive offices) (Zip code)
(713) 561-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] No [X]
As of May 13, 2003, the Company had 46,574,500 shares of Common Stock, no par
value, outstanding.
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1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BINDVIEW DEVELOPMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, DECEMBER 31,
ASSETS 2003 2002
------------ ------------
(UNAUDITED)
Current assets:
Cash and cash equivalents $ 37,382 $ 37,760
Accounts receivable, net of allowance of $1,237 7,463 11,199
Other 1,474 2,052
----------- -----------
Total current assets 46,319 51,011
Property and equipment, net 7,150 7,816
Other 4,743 4,729
----------- -----------
Total assets $ 58,212 $ 63,556
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 997 $ 1,990
Accrued liabilities 6,066 6,341
Accrued compensation 1,417 3,907
Deferred revenues 13,174 12,464
-------- --------
Total current liabilities 21,654 24,702
Deferred revenues 2,002 2,213
Other liabilities 1,234 1,215
Commitments and contingencies
Shareholders' equity:
Preferred stock, $0.01 par value, 20,000 shares authorized,
none issued -- --
Common stock, no par value, 100,000 shares authorized,
46,575 and 46,278 shares issued and outstanding 1 1
Additional paid-in capital 104,579 104,332
Notes receivable from shareholders (731) (892)
Accumulated deficit (71,099) (68,398)
Accumulated other comprehensive income 572 383
----------- -----------
Total shareholders' equity 33,322 35,426
----------- -----------
Total liabilities and shareholders' equity $ 58,212 $ 63,556
=========== ===========
See notes to unaudited consolidated financial statements.
2
BINDVIEW DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
------------------------
2003 2002
-------- --------
Revenues:
Licenses $ 5,196 $ 9,542
Services 7,851 7,263
-------- --------
13,047 16,805
Cost of revenues:
Licenses 116 156
Services 1,432 1,570
-------- --------
1,548 1,726
Gross profit 11,499 15,079
Operating costs and expenses:
Sales and marketing 7,758 10,363
Research and development 4,235 5,019
General and administrative 1,777 1,909
Restructuring 549 --
-------- --------
Operating loss (2,820) (2,212)
Other income 119 1,559
-------- --------
Loss before income taxes (2,701) (653)
Benefit for income taxes -- (229)
-------- --------
Net loss $ (2,701) $ (424)
======== ========
Loss per common share - basic and
diluted $ (0.06) $ (0.01)
======== ========
Reconciliation of net loss to comprehensive loss:
Net loss $ (2,701) $ (424)
Gain (loss) from foreign currency translation 189 (534)
-------- --------
Comprehensive loss $ (2,512) $ (958)
======== ========
See notes to unaudited consolidated financial statements.
3
BINDVIEW DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
--------------------------
2003 2002
-------- --------
Cash flows from operating activities:
Net loss $ (2,701) $ (424)
Adjustments to reconcile net loss to net cash from
operating activities:
Depreciation and amortization 969 1,037
Deferred income tax benefit -- (229)
Other 74 74
Changes in operating assets and liabilities:
Accounts receivable 3,747 2,080
Other assets 570 29
Accounts payable (999) 551
Accrued liabilities (2,682) (2,820)
Deferred revenues 499 2,691
-------- --------
Net cash provided by (used in) operating activities (523) 2,989
-------- --------
Cash flows from investing activities:
Capital expenditures (299) (892)
Net proceeds from maturity (purchase) of investments -- 3,253
-------- --------
Net cash provided by (used in) investing activities (299) 2,361
-------- --------
Cash flows from financing activities:
Net proceeds from sale of common stock 248 367
-------- --------
Net cash provided by financing activities 248 367
Effect of exchange rate changes on cash 196 (120)
-------- --------
Net increase (decrease) in cash and cash equivalents (378) 5,597
Cash and cash equivalents at beginning of year 37,760 39,791
-------- --------
Cash and cash equivalents at end of period $ 37,382 $ 45,388
======== ========
Non-cash financing and investing activities:
Reduction of shareholder note in lieu of guaranteed bonus $ 161 $ --
See notes to unaudited consolidated financial statements.
4
BINDVIEW DEVELOPMENT CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying consolidated financial statements of BindView
Development Corporation, a Texas corporation (the "Company" or "BindView"),
included herein have been prepared without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly, certain
information and disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been omitted.
The Company believes that the presentations and disclosures herein are adequate
to make the information not misleading. The consolidated financial statements
reflect all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of the interim periods.
The results of operations for the interim periods are not necessarily
indicative of the results of operations to be expected for the full year. These
consolidated financial statements should be read in conjunction with the
Company's audited consolidated financial statements included in its Annual
Report on Form 10-K, as amended, for the year ended December 31, 2002.
2. LOSS PER SHARE
The following table sets forth the computation of basic and diluted
loss per share (in thousands, except per share amounts):
THREE MONTHS ENDED
MARCH 31,
------------------------
2003 2002
-------- --------
Numerator:
Net loss - numerator for
loss per share - basic and
diluted $ (2,701) $ (424)
======== ========
Denominator:
Denominator for basic loss per
share - weighted-average shares 46,342 51,587
Effect of dilutive securities:
Effect of stock options -- --
-------- --------
Total diluted shares 46,342 51,587
======== ========
Loss per common share - basic and
diluted $ (0.06) $ (0.01)
======== ========
Options and warrants to purchase 7.0 million shares of common stock for
the three months ended March 31, 2003 and 7.9 million shares of common stock for
the three months ended March 31, 2002 were outstanding, but were not included in
the computation of diluted loss per share as their inclusion would have been
anti-dilutive.
3. STOCK BASED COMPENSATION
The Company accounts for all stock-based employee compensation plans
under the recognition and measurement provisions of APB Opinion 25, "Accounting
for Stock Issued to Employees," ("APB 25") and related interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the Company's common shares at the date of
the grant over the amount an employee must pay to acquire the common shares. The
Company grants options at prices equal to the market price of common shares on
the date of the grant and therefore does not record compensation costs related
to these grants. Statement of Financial Accounting Standards ("SFAS") No. 148,
"Accounting for Stock-Based Compensation - an Amendment to FAS 123," requires
companies that continue to account for stock-based compensation in accordance
with APB 25 to disclose certain information using tabular presentation as
presented below. This table illustrates the effect on net loss and loss per
share (in thousands, except per share amounts) as if the Company had applied the
fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation", to stock-based employee compensation:
BINDVIEW DEVELOPMENT CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
THREE MONTHS ENDED
MARCH 31,
-----------------------------
2003 2002
------------- -------------
Net loss as reported $ (2,701) $ (424)
Deduct: Total stock-based employee
compensation expense determined under
fair value method for all awards, net
of related tax effects (1,440) (1,866)
------------- -------------
Pro forma net loss $ (4,141) $ (2,290)
============= =============
Loss per common share (basic and
diluted):
- - As reported $ (0.06) $ (0.01)
- - Pro forma $ (0.09) $ (0.04)
4. RESTRUCTURING EXPENSES AND ASSET IMPAIRMENTS
In January 2003, the Company approved a sales and marketing
reorganization plan. The cost of this plan totaled approximately $0.6 million
and consisted primarily of (i) involuntary employee separation for approximately
20 employees (a reduction in workforce of approximately 4 percent), (ii) closing
the Company's Netherlands sales office, and (iii) reserves for leasehold
abandonment.
The accrued restructuring expenses and amounts charged against the
provision as of March 31, 2003 were as follows (in thousands):
REMAINING
RESTRUCTURING CASH ACCRUAL
CHARGES EXPENDITURES 3/31/2003
-------- ------------ ---------
Employee severance $ 442 $ (261) $ 181
Lease commitments 27 -- 27
Office closure costs 80 (80) --
-------- ------- ------
$ 549 $ (341) $ 208
======== ======= ======
In July 2002, the Company approved a restructuring plan to improve
operating efficiency and improve sales and marketing productivity (the "2002
Restructuring Plan"). The cost of this plan totaled approximately $1.9 million
and consisted primarily of (i) involuntary employee separation for approximately
30 employees (a reduction in workforce of approximately 5 percent), (ii) closing
the Company's Boston development center and certain European sales offices,
(iii) reserves for leasehold abandonment, and (iv) various non-personnel related
cuts.
The 2002 Restructuring Plan activity from December 31, 2002 to March
31, 2003 was as follows (in thousands):
REMAINING REMAINING
ACCRUAL CASH ACCRUAL
12/31/2002 EXPENDITURES 3/31/2003
---------- ------------ ---------
Employee severance $ 238 $ (106) $ 132
Lease commitments 944 (120) 824
-------- ------- ------
$ 1,182 $ (226) $ 956
======== ======= ======
6
BINDVIEW DEVELOPMENT CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In 2001, we completed a corporate reorganization and implemented a
number of cost-cutting measures to improve operating efficiency and to
accelerate our return to profitability. The cost of this plan totaled
approximately $7.7 million and consisted primarily of: (i) involuntary employee
separation expenses for approximately 160 employees (a reduction in workforce of
approximately 21 percent), (ii) downsizing or closing of our Boston and
Arlington development centers and certain of our European sales offices, (iii)
reserves for leasehold abandonment, and (iv) various non-personnel related
costs. The restructuring costs included a $1.2 million charge related to asset
impairments of leasehold improvements, equipment and other assets of the closed
or downsized offices. At December 31, 2002, the remaining accrual totaled $1.4
million, which related to an accrual for lease commitments. During the three
months ended March 31, 2003, approximately $46 thousand was charged against that
accrual.
5. INCOME TAXES
In 2002, the Company provided a full valuation allowance against
deferred tax assets of $19.6 million in accordance with Financial Accounting
Standard No. 109, "Accounting for Income Taxes". Management remains optimistic
about the future prospects of the Company's business and the industry and
continues to believe that over time, as the market improves, the Company should
generate sufficient taxable income to utilize a substantial portion of its net
operating loss carryforwards. Until such time as a consistent pattern of
sufficient profitability is established, no tax benefit will be recognized
associated with the Company's pre-tax accounting losses and a full income tax
provision will not be provided on any future pre-tax accounting income.
6. RECENT PRONOUNCEMENTS
In April 2003, the FASB issued SFAS No. 149, "Amendment of SFAS No. 133
on Derivative Instruments and Hedging Activities" ("SFAS No. 149"). SFAS No. 149
amends and clarifies accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities
under SFAS No. 133. SFAS No. 149 is effective for contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after June
30, 2003, and should be applied prospectively. The provisions of SFAS No. 149
that relate to SFAS No. 133 implementation issues that have been effective for
fiscal quarters that began prior to June 15, 2003 should continue to be applied
in accordance with their respective effective dates. The Company does not expect
the impact of adoption of SFAS No. 149 to have a material effect on the
Company's financial position or results of operations.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations contain forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include those discussed in the "Cautionary Statements" set
forth in the Company's Annual Report on Form 10-K, as amended, for the year
ended December 31, 2002, as well as other factors such as, for example: the
risks associated with lower customer demand in a weak economy; increased
competition within the network management software industry; the effects of
recently-implemented cost reductions on the Company's business; transitional
inefficiencies that may arise during the Company's implementation of
recently-announced reorganization plans; and the management challenges of
implementing those plans while attempting to maintain employee motivation and
effectiveness. The following discussion should be read in conjunction with the
Company's consolidated financial statements included with this report and our
consolidated financial statements and related Management's Discussion and
Analysis of Financial Condition and Results of Operations for the year ended
December 31, 2002 included in our Annual Report of Form 10-K, as amended.
OVERVIEW
See discussion under Item 1, "General" in our Annual Report on Form
10-K, as amended, for the year ended December 31, 2002 for an overview of our
business.
CRITICAL ACCOUNTING POLICIES
There have been no significant changes to our critical accounting
policies and estimates during the three months ended March 31, 2003 compared to
those disclosed in Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations included in our annual report on Form 10-K,
as amended, for the year ended December 31, 2002.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2003 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
2002
REVENUES. Revenues for the current quarter were $13.0 million compared
with $16.8 million for the first quarter of 2002. The year-over-year decline
related to the decrease in license sales, partially offset by increased services
revenues. License revenues for the current quarter were $5.2 million compared
with $9.5 million in the first quarter of 2002. This decline was due to: (i)
fewer large transactions being closed during the quarter, (ii) customer budget
sensitivities, which we believe were driven by the weak economic outlook, and
(iii) the effects of major organizational and go-to-market changes in sales and
marketing that took place during the quarter. Services revenues for the current
quarter were up 8.1 percent to $7.8 million, from $7.3 million in the first
quarter of 2002.
During the three months ended March 31, 2003, we closed 12 transactions
over $130 thousand, having an average sales price of $230 thousand, compared
with 17 transactions over $130 thousand in the first quarter of 2002, having an
average sales price of $372 thousand. The fewer number of large transactions in
the first quarter of 2003 reflected the low number of large prospects in the
first quarter pipeline, as well as the deferral of certain large transactions by
customers due to budget sensitivities.
During the first quarter of 2003, revenues from our products for
Microsoft-based platforms totaled $8.7 million, a decrease of 14 percent over
the first quarter of 2002. Revenues from these products accounted for
approximately 67 percent of total revenues in the current quarter, up from 60
percent of total revenues for the same quarter in the prior year. Revenues from
our products for Novell-based platforms for the current quarter were $2.7
million, or 21 percent of total revenues, compared with 4.2 million in the first
quarter of 2002, or 25 percent of total revenues. Revenues from these products
have been declining over the past year, reflecting both the maturity and our
penetration of the Novell market. We expect revenues from our software products
on Microsoft-based platforms will continue to grow as a percentage of total
revenues.
Sales of our security focused bv-Control product line accounted for
approximately 80 percent of our license revenue in the current quarter compared
with 85 percent in the first quarter of 2002. Sales of our system administration
focused bv-Admin product line accounted for approximately 20 percent of our
license revenue in the
8
first quarter of 2003 compared with 11 percent in the first quarter of 2002.
No customer accounted for more than 10 percent of our revenues in the
first quarter of 2003 or 2002. Revenues recognized from sales to customers
outside North America, primarily in Europe, accounted for approximately 9
percent of total revenues in the current quarter compared with 7 percent in the
first quarter of 2002.
GROSS PROFIT. Gross profit for the current quarter decreased 23.7
percent to $11.5 million, from $15.1 million for the first quarter of 2002.
Gross margin for the current quarter was 88.1 percent compared with 89.7 percent
in the first quarter of 2002. The decline in gross profit and gross margin is
primarily due to the decrease in license revenue noted above.
OPERATING COSTS AND EXPENSES. Operating costs and expenses for the
current quarter totaled $14.3 million, down from $17.3 million for the first
quarter of 2002. The improvement was the result of the reduction in operating
costs and expenses related to the Company's 2002 corporate reorganization and
restructuring.
Sales and marketing expenses for the current quarter decreased 25.1
percent to $7.8 million, from $10.4 million for the first quarter of 2002
primarily related to actions taken to improve sales efficiency and marketing
effectiveness and lower commissions and incentive based compensation. We expect
sales and marketing expenses as a percentage of revenues to be lower for the
remainder of 2003 as a result of our initiatives to improve operating leverage
and sales and marketing effectiveness and anticipated revenue growth.
Research and development expenses for the current quarter decreased
15.6 percent to $4.2 million, from $5.0 million for the first quarter of 2002.
This decrease primarily related to the closing or downsizing of our development
offices in Boston, Massachusetts and Arlington, Virginia and transferring those
activities to our lower-cost development centers in Houston, Texas and Pune,
India. We also transferred development responsibilities for certain of our
legacy products from Houston, Texas to Pune, India and expect to continue
leveraging that development center in the future. As a result of these
initiatives and anticipated revenue growth, we expect future research and
development expenses to decrease as a percentage of revenues.
General and administrative expenses for the current quarter decreased
6.9 percent to $1.8 million, from $1.9 million for the first quarter of 2002. We
expect future general and administrative expenses to decrease as a percentage of
revenues as a result of our restructuring initiatives to date to improve
operating efficiencies, as well as anticipated revenue growth.
In January 2003, we approved a sales and marketing reorganization plan.
The cost of this plan totaled approximately $0.6 million and consisted primarily
of (i) involuntary employee separation for approximately 20 employees (a
reduction in workforce of approximately 4 percent), (ii) closing our Netherlands
sales office, and (iii) reserves for leasehold abandonment.
The accrued restructuring expenses and amounts charged against the
provision as of March 31, 2003 were as follows (in thousands):
REMAINING
RESTRUCTURING CASH ACCRUAL
CHARGES EXPENDITURES 3/31/2003
------------- ------------ ---------
Employee severance........... $ 442 $ (261) $ 181
Lease commitments............ 27 -- 27
Office closure costs......... 80 (80) --
-------- ------- ------
$ 549 $ (341) $ 208
======== ======= ======
In July 2002, we approved a restructuring plan to improve operating
efficiency and improve sales and marketing productivity (the "2002 Restructuring
Plan"). The cost of this plan totaled approximately $1.9 million and consisted
primarily of (i) involuntary employee separation for approximately 30 employees
(a reduction in workforce of approximately 5 percent), (ii) closing our Boston
development center and certain European sales offices, (iii) reserves for
leasehold abandonment, and (iv) various non-personnel related cuts.
9
The 2002 Restructuring Plan activity from December 31, 2002 to March
31, 2003 was as follows (in thousands):
REMAINING REMAINING
ACCRUAL CASH ACCRUAL
12/31/2002 EXPENDITURES 3/31/2003
---------- ------------ ---------
Employee severance $ 238 $ (106) $ 132
Lease commitments 944 (120) 824
-------- ------- ------
$ 1,182 $ (226) $ 956
======== ======= ======
In 2001, we completed a corporate reorganization and implemented a
number of cost-cutting measures to improve operating efficiency and to
accelerate our return to profitability. The cost of this plan totaled
approximately $7.7 million and consisted primarily of: (i) involuntary employee
separation expenses for approximately 160 employees (a reduction in workforce of
approximately 21 percent), (ii) downsizing or closing of our Boston and
Arlington development centers and certain of our European sales offices, (iii)
reserves for leasehold abandonment, and (iv) various non-personnel related
costs. The restructuring costs included a $1.2 million charge related to asset
impairments of leasehold improvements, equipment and other assets of the closed
or downsized offices. At December 31, 2002, the remaining accrual totaled $1.4
million, which related to an accrual for lease commitments. During the three
months ended March 31, 2003, approximately $46 thousand was charged against that
accrual.
OTHER INCOME. Other income totaled $0.1 million and $1.6 million for
the three months ended March 31, 2003 and 2002, respectively. The decrease in
other income was primarily due to the receipt of a $1.3 million settlement of a
business interruption claim in the first quarter of 2002 related to the flooding
that occurred in June 2001.
BENEFIT FOR INCOME TAXES. We provided a full valuation allowance
against our deferred tax assets during the second quarter of 2002. Until such
time as a consistent pattern of sufficient profitability is established, no tax
benefit will be recognized associated with our pre-tax accounting losses and a
full income tax provision will not be provided on any future pre-tax accounting
income. The benefit for income taxes was $0.2 million (an effective tax rate of
35.0 percent) for the first quarter of 2002.
NET LOSS. Due to the factors described above, net loss for the quarter
ended March 31, 2003 was $2.7 million compared with $0.4 million for the quarter
ended March 31, 2002.
OUTLOOK. BindView expects revenues for the second quarter of 2003 to
range between $15.0 million and $17.0 million. The operating loss, before
restructuring costs, for the second quarter is expected to range between $1.0
million and $2.5 million. For the full-year 2003, we expect revenues will exceed
$67 million, at which level we will generate positive cash flow before the
effects of any restructuring charges.
LIQUIDITY AND CAPITAL RESOURCES
Our capital requirements have principally related to working capital
needs and capital expenditures. These requirements have been met through a
combination of issuances of securities and internally generated funds.
We had cash, cash equivalents and short-term investments of $37.4
million at March 31, 2003 compared with $37.8 million at December 31, 2002. The
decline primarily related to our use of cash to fund its working capital
requirements during the quarter.
Cash flows provided by (used in) operating activities were $(0.5)
million in the first quarter of 2003 and $3.0 million in the first quarter of
2002. The decrease in cash provided by operating activities in 2003 was
primarily the result of a $0.6 million increase in our operating loss during the
current quarter to $2.8 million, from $2.2 million during the first quarter of
2002.
Cash flows provided by (used in) investing activities were $(0.3)
million in the first quarter of 2003 and $2.4 million in the first quarter of
2002. The decrease in cash generated from investing activities was primarily
10
attributable to proceeds of $3.3 million generated from maturity of investments
during 2002 that were not reinvested. This was partially offset by a $0.6
million reduction in capital expenditures during the current quarter to $0.3
million, from $0.9 million during the first quarter of 2002.
Cash flows provided by financing activities were $0.2 million in the
first quarter of 2003 and $0.4 million in the first quarter of 2002. Cash
provided by financing activities during both quarters was primarily attributable
to cash provided by the issuance of common stock under our Employee Stock
Purchase Plan.
We conduct operations in leased facilities under operating leases
expiring at various dates through 2011. The remaining contractual obligations
under these lease commitments were comprised of the following as of March 31,
2003 (in thousands):
CONTRACTUAL 2009 AND
OBLIGATION TOTAL 2003 2004 -- 2006 2007 - 2008 BEYOND
---------- ----- ---- ------------ ----------- ------
Operating leases $ 34,120 $ 1,869 $11,769 $8,929 $11,553
Sub-leasing arrangements* (1,396) (833) (563) -- --
------- ------- ------- ------ -------
$ 32,724 $ 1,036 $11,206 $8,929 $11,553
======== ======= ======= ====== =======
* We have sub-leased portions of these facilities under operating leases.
Anticipated cash receipts from these executed sub-lease arrangements have been
taken into account when deriving expected cash outflow on operating lease
commitments in the preceding table.
Our expected principal cash requirements for the remainder of 2003 are:
(i) capital expenditures between $1.0 and $1.5 million, primarily for computer
and software equipment, (ii) working capital requirements, (iii) net payments on
operating leases of approximately $1.0 million, and (iv) payment of accrued
restructuring expenses of approximately $0.2 million. We believe there is
sufficient cash on hand to meet these cash requirements, as well as its cash
requirements for the foreseeable future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes since December 31, 2002. See the
Company's Annual Report on Form 10-K, as amended.
ITEM 4. CONTROLS AND PROCEDURES
The management of the Company, including the Chief Executive Officer
and the Chief Financial Officer, have conducted an evaluation of the
effectiveness of the Company's disclosure controls and procedures pursuant to
Rule 13a-14 under the Securities Exchange Act of 1934 as of a date (the
"Evaluation Date") within 90 days prior to the filing date of this report. Based
on that evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that, as of the Evaluation Date, the Company's disclosure controls and
procedures were effective in ensuring that all material information relating to
the Company, including our consolidated subsidiaries, required to be filed in
this quarterly report has been made known to them in a timely manner. There have
been no significant changes made in the Company's internal controls or in other
factors that could significantly affect internal controls subsequent to the
Evaluation Date.
11
PART II. OTHER INFORMATION
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical facts included in this Report, including
without limitation, statements regarding the Company's future financial
position, revenue and expense projections, business strategy, planned products,
products under development, markets, budgets and plans and objectives of
management for future operations, are forward-looking statements. Although we
believe that the expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that those expectations will prove to have been
correct. Important factors that could cause actual results to differ materially
from the Company's expectations are disclosed in statements set forth under
"Cautionary Statements" in our Annual Report on Form 10-K, as amended, as well
as other factors such as, for example: the risks associated with lower customer
demand in a weak economy; increased competition within the network management
software industry; the effects of recently-implemented cost reductions on the
Company's business; transitional inefficiencies that may arise during the
Company's implementation of recently-announced reorganization plans; and the
management challenges of implementing those plans while attempting to maintain
employee motivation and effectiveness. All subsequent written and oral
forward-looking statements attributable to us, or persons acting on our behalf,
are expressly qualified in their entirety by these Cautionary Statements, the
other example factors listed in the previous sentence, and such other
statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits are filed with this Quarterly Report.
Exhibit 10.1 Executive Employment Agreement entered into effective
December 31, 2002, between the Company and David S.
Flame
Exhibit 10.2 Change of Control Agreement entered into effective
December 31, 2002, between the Company and David S.
Flame
Exhibit 10.3* Nonqualified Stock Option Agreement dated January 8,
2003, between the Company and David S. Flame,
granting an option to purchase up to 200,000 shares
of the Company's common stock at an exercise price of
$1.395 per share
Exhibit 99.1 Certification of the Company's Chief Executive
Officer, Eric J. Pulaski, pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
Exhibit 99.2 Certification of the Company's Chief Financial
Officer, Edward L. Pierce, pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
* Incorporated by reference to the form of agreement filed as Exhibit 10.2
to the Company's report on Form 10-Q filed September 30, 2002).
(b) Reports on Form 8-K.
In a Report on Form 8-K dated February 3, 2003, the Company reported it had
issued a press release announcing (i) financial results for the quarter and year
ended December 31, 2002, (ii) the appointment of Robert D. Repass as a member of
the Board of Directors, (iii) the Company's current estimates of revenues and
earnings for 2003 and (iv) the Company's upcoming conference call and Webcast.
12
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 thereunto duly authorized.
BINDVIEW DEVELOPMENT CORPORATION
May 15, 2003 By: /s/ Kevin P. Cohn
-----------------------------------------------
Kevin P. Cohn
Vice President, Controller and Chief Accounting
Officer (Principal Accounting Officer)
13
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Eric J. Pulaski, certify that:
1. I have reviewed this quarterly report on Form 10-Q of BindView Development
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ ERIC J. PULASKI
- -------------------------------------------
Eric J. Pulaski
Chairman of the Board, Chief Executive
Officer and President
14
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Edward L. Pierce, certify that:
1. I have reviewed this quarterly report on Form 10-Q of BindView Development
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ EDWARD L. PIERCE
- -------------------------------------------
Edward L. Pierce
Director, Senior Vice President and
Chief Financial Officer
15
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------------------------------------------------
Exhibit 10.1 Executive Employment Agreement entered into effective
December 31, 2002, between the Company and David S.
Flame
Exhibit 10.2 Change of Control Agreement entered into effective
December 31, 2002, between the Company and David S.
Flame
Exhibit 99.1 Certification of the Company's Chief Executive
Officer, Eric J. Pulaski, pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
Exhibit 99.2 Certification of the Company's Chief Financial
Officer, Edward L. Pierce, pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
16