-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FHgYwkiEZUovKBvM1a29+EBAnYwUW9Ms7W/uqkvodnxuapDE1MIgtP2Ike1l4MeE UMHmDnMFX6YGnSmSvEyLzA== 0000950116-02-002434.txt : 20021031 0000950116-02-002434.hdr.sgml : 20021031 20021031144640 ACCESSION NUMBER: 0000950116-02-002434 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021029 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021031 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEOWARE SYSTEMS INC CENTRAL INDEX KEY: 0000894743 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 232705700 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21240 FILM NUMBER: 02804819 BUSINESS ADDRESS: STREET 1: 400 FEHELEY DR CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6102778300 MAIL ADDRESS: STREET 1: 400 FEHELEY DR CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 FORMER COMPANY: FORMER CONFORMED NAME: INFORMATION SYSTEMS ACQUISITION CORP DATE OF NAME CHANGE: 19930108 FORMER COMPANY: FORMER CONFORMED NAME: HDS NETWORK SYSTEMS INC DATE OF NAME CHANGE: 19950313 8-K 1 eightk.txt 8-K 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): October 29, 2002 ---------------------------------- NEOWARE SYSTEMS, INC. ------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 000-21240 23-2705700 - ------------------------------------------------------------------------------ (State or other jurisdiction of (Commission File No.) (IRS Employer incorporation or organization) Identification No.) 400 Feheley Drive King of Prussia, Pennsylvania 19406 ------------------------------------------------------------------------------ (Address of principal executive offices) (Registrant's telephone number including area code) (610) 277-8300 ---------------------------- Item 5. Other Events. On October 29, 2002, Neoware Systems, Inc. issued a press release announcing its earnings for the quarter ended September 30, 2002, as described in the press release attached hereto as Exhibit 99 and incorporated herein by reference. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) None (b) None (c) Exhibits. 99. Press Release dated October 29, 2002 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 duly authorized. NEOWARE SYSTEMS, INC. Dated: October 31, 2002 By: /S/ Vincent T. Dolan, ---------------------- Vincent T. Dolan, Vice President of Finance and Administration EX-99 3 ex99.txt EXHIBIT 99 Exhibit 99 ---------- PRESS RELEASE FOR RELEASE OCTOBER 29, 2002 Neoware Delivers 157% Revenue Increase and Record Earnings KING OF PRUSSIA, Pa., October 29, 2002 -- Neoware Systems, Inc. (Nasdaq: NWRE), the leading supplier of award-winning software, services, and solutions for the Appliance Computing market, today reported sharply higher revenue and earnings for its fiscal 2003 first quarter ended September 30, 2002. FINANCIAL HIGHLIGHTS o Revenues for the quarter ended September 30, 2002 increased 157% to $13,516,678, from $5,264,729 in the prior year quarter. Pretax income increased 771% to $2,260,986, or $0.15 per fully diluted share, from $259,672, or $0.02 per fully diluted share, in the prior year quarter. o Net income for the quarter ended September 30, 2002 increased 457% to $1,447,031, or $0.10 per fully diluted share, after an income tax provision of $813,955, from $259,672, or $0.02 per fully diluted share, in the prior year quarter, which had no income tax provision. "Appliance Computing is gaining traction as a recognized solution that saves enterprises money," stated Michael Kantrowitz, Neoware's Chairman and CEO. "We see strong demand for our products, and believe that we are very well positioned to continue to gain market share and to deliver revenue and profit growth as we capitalize upon the benefits of our software-powered business model." ADDITIONAL FINANCIAL HIGHLIGHTS o Organic appliance and software revenue grew significantly in the quarter, even during the typically slow summer months. Excluding revenue attributable to sales of ThinSTAR products and to third-party products sold as a result of the ACTIV-e acquisition, revenues in Q1 2003 grew by approximately 116% from the prior year quarter and 10% sequentially from Q4. Since the ThinSTAR and ACTIV-e acquisitions were consummated in the Q2 and Q3 of fiscal 2002, there were no such revenues in the prior year quarter. o Revenue from Neoware's alliance with IBM increased to approximately $2,500,000 in Q1 from zero in the prior year quarter, and from approximately $2,000,000 in the prior sequential quarter. o Revenue from the NCD ThinSTAR product line was approximately $1,500,000 in Q1, compared to approximately $2,500,000 in the prior sequential quarter as the Company discontinued the ThinSTAR hardware products in the United States and began the transition process to move customers to the Company's Eon and Capio products. During this transition process customers typically place purchases on hold as they evaluate the Company's new product offerings. The Company expects this transition to be complete during Q2. o Cash and marketable securities increased to $20,209,006 from $17,214,755 in the prior quarter as a result of positive cash flow from operations and exercises of warrants and employee stock options. o Total gross margin was 42% in Q1 2003, compared to 42% in the prior year quarter and 40% in the prior sequential quarter. o Inventory on hand was $721,431, or 8 days, at September 30, 2002, compared to 12 days in the prior year quarter. o Days sales outstanding (DSOs) were 60 days at the end of Q1 2003, based upon the timing of sales within the quarter, which was within the Company's goal, compared to 45 days in the prior year quarter. DSOs are higher in the current period as a result of increased sales in Europe, via IBM, and via distributors, since these sales typically have payment terms of 45-60 days as opposed to 30 day payment terms with end users. o Total operating expenses decreased to 26% of revenue for Q1 2003, compared to 39% of revenue in the prior year quarter, reflecting the scaling benefits of the Company's software-powered business model. o Annualized revenue per employee increased 67% to approximately $500,000 in Q1 2003 from approximately $300,000 in the prior year quarter, even as employment grew by 51%. During the year, the Company significantly expanded its sales, marketing and executive management ranks to implement its growth plans. CUSTOMER WINS AND MARKET DATA o Specific customers sold during the quarter included Air Canada, Air New Zealand, Ardent Health, Art Van Furniture, California Department of Human Services, Discount Tire, Electrolux, Foxwoods Casino, Ikea, Safeway, Sears, Target Corporation, Total Elf Fina, and Wal-Mart. o According to IDC, the worldwide enterprise thin client appliance market continued to show excellent growth during the quarter, with shipments reaching more than 335,000 units, the highest ever recorded for the market, and representing unit growth of 28.4% compared to the prior year. According to the IDC report, "thin clients are not only surviving, but thriving, as IT managers continue to recognize the excellent long-term value and ROI advantages that thin clients can offer." o According to IDC, Neoware grew at more than four times the market's rate, gained more market share than any other supplier, doubled its market share compared to one year ago, and grew to be the number two supplier of thin client appliances and software worldwide. "Unlike other technology companies, Neoware is delivering significant increases in revenues and profits," Mr. Kantrowitz commented. "The fact that Neoware's products save money - both up-front and in total ownership cost - is resonating with customers given today's IT spending climate." "Looking forward, we are confident that we'll deliver continued, significant year-over-year increases in revenues through the balance of this fiscal year as a result of growth in our markets, our software-powered business model, and our strong industry partnerships, including our alliance with IBM. We're comfortable with consensus analyst estimates for revenue growth for the balance of the fiscal year, and believe that as our top line grows, we can continue to reduce our operating expenses as a percentage of revenue, driving additional profitability. We're very encouraged by our progress, and believe that we are very well positioned to deliver continued growth," Mr. Kantrowitz concluded. About Neoware Neoware provides software, services, and solutions to enable Appliance Computing, a new Internet-based computing architecture targeted at business customers that is designed to be simpler and easier than traditional PC-based computing. Neoware's software and management tools power and manage a new generation of smart computing appliances that utilize the benefits of open, industry-standard technologies to create new alternatives to personal computers used in business and a wide variety of proprietary business devices. Neoware's products are designed to run local applications for specific vertical markets, plus allow access across a network to multi-user Windows servers, Linux servers, mainframes, minicomputers, and the Internet. Computing appliances that run and are managed by Neoware's software offer the cost benefits of industry-standard hardware and software, easier installation, and have lower up-front and administrative costs than proprietary or PC-based alternatives. More information about Neoware can be found on the Web at www.neoware.com or via email at invest@neoware.com. Neoware is based in King of Prussia, PA. # # # This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding: strong demand for our products; our expectation that that our existing customers may purchase through IBM in the future; our expectation of continued, significant increases in revenues during the fiscal year as a result of growth in our markets, our business model and our strong industry partnerships, including the IBM alliance; continued gains in market share and revenue and profit growth due to our business model; our views regarding consensus analyst estimates of revenue growth for the balance of the fiscal year; revenue growth resulting in the reduction of our operating expenses as a percentage of revenue driving growth in our profitability; our position as the leading supplier of software, products, services and solutions for the Appliance Computing market; the benefits of our business model; and our competitive advantage. These forward-looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those predicted in any such forward-looking statement include our ability to continue to lower our costs, our timely development and customers' acceptance of our Appliance Computing products, including acceptance by IBM and NCD customers, NCD's creditworthiness as a distributor of our products in Europe, pricing pressures, rapid technological changes in the industry, growth of the Appliance Computing market, increased competition, our ability to attract and retain qualified personnel, our ability to identify and successfully consummate future acquisitions; adverse changes in customer order patterns, adverse changes in general economic conditions in the U.S. and internationally, risks associated with foreign operations and political and economic uncertainties associated with current world events. These and other risks are detailed from time to time in Neoware's periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its report on Form 10-K for its fiscal year ended June 30, 2002. Neoware is a registered trademark of Neoware Systems, Inc. All other names products and services are trademarks or registered trademarks of their respective holders. CONTACT: Vince Dolan, CFO Neoware Systems, Inc. 610-277-8300 vince.dolan@neoware.com NEOWARE SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS
ASSETS September 30, 2002 (Unaudited) June 30, 2002 ----------------- ---------------- CURRENT ASSETS: Cash and cash equivalents $20,062,339 $17,031,422 Marketable securities 146,667 183,333 Accounts receivable, net 10,188,130 9,520,558 Inventories 721,431 1,040,851 Prepaid expenses and other 658,147 551,598 Deferred income taxes 595,728 1,394,864 ----------------- ---------------- Total current assets 32,372,442 29,722,626 Property and equipment, net 634,454 622,235 Goodwill and other intangibles 11,468,607 11,568,940 Notes receivable 254,269 263,732 Deferred income taxes 173,648 173,648 Capitalized and purchased software, net 40,413 47,779 ----------------- ---------------- $44,943,833 $42,398,960 ================= ================ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $2,934,061 $3,111,164 Accrued expenses 2,019,942 2,136,776 Capital lease obligations 64,597 63,037 Deferred revenue 714,151 582,290 ----------------- ---------------- Total current liabilities 5,732,751 5,893,267 ----------------- ---------------- Capital lease obligations, non-current portion 187,388 204,131 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock - - Common stock 13,556 12,936 Additional paid-in capital 41,616,574 40,291,861 Treasury stock (100,000) (100,000) Accumulated other comprehensive income (166,904) (116,672) Retained earnings (deficit) (2,339,532) (3,786,563) ----------------- ---------------- Total stockholders' equity 39,023,694 36,301,562 ----------------- ---------------- $44,943,833 $42,398,960 ================= ================
NEOWARE SYSTEMS, INC CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Three Months Ended September 30, September 30, 2002 2001 ------------------ ------------------ Net revenues $13,516,678 $ 5,264,729 Cost of revenues 7,822,502 3,060,589 ------------------ ------------------ Gross profit 5,694,176 2,204,140 ------------------ ------------------ Sales and marketing 2,227,333 1,210,108 Research and development 387,763 330,866 General and administrative 908,117 515,447 ------------------ ------------------ Operating expenses 3,523,213 2,056,421 ------------------ ------------------ Operating income 2,170,963 147,719 Interest income, net 90,023 111,953 ------------------ ------------------ Income before income taxes 2,260,986 $ 259,672 Income tax expense (813,955) - ------------------ ------------------ Net income $1,447,031 $259,672 ================== ================== Basic income per share $ 0.11 $ 0.03 ================== ================== Diluted income per share $ 0.10 $ 0.02 ================== ================== Weighted average number of common shares outstanding used in basic earnings per share computation 13,162,589 10,179,851 ================== ================== Weighted average number of common shares outstanding used in diluted earnings per share computation 14,652,096 10,596,720 ================== ==================
NEOWARE SYSTEMS, INC CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Three Months Ended Ended September 30, September 30, 2002 2001 ------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,447,031 $259,672 Adjustments to reconcile net income to net cash provided by operating activities- Deferred income taxes 799,136 - Depreciation and amortization 187,509 50,821 Changes in operating assets and liabilities- (Increase) decrease in: Accounts receivable (667,572) 166,954 Inventories 319,420 43,590 Prepaid expenses and other (120,114) 114,403 Increase (decrease) in: Accounts payable (177,103) 168,587 Accrued expenses (116,934) (348,755) Deferred revenue 131,861 4,694 ------------------------------------------ Net cash provided by operating activities 1,803,234 459,966 ------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of intangible assets (148,592) (12,421) Purchases of property and equipment, net (62,378) (31,336) ------------------------------------------ Net cash provided used in investing activities (210,970) (43,757) ------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of capital leases (15,183) - Exercise of stock options and warrants 1,444,273 6,112 Repayments of officer loans 9,463 30,644 ------------------------------------------ Net cash provided by financing activities 1,438,553 36,756 ------------------------------------------ INCREASE IN CASH AND CASH EQUIVALENTS 3,030,917 452,965 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 17,031,422 11,712,535 ------------------------------------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $20,062,339 $12,165,500 ==========================================
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