BroadVision, Inc. (Pink Sheets:BVSN), a global provider
of web self-service solutions, today reported financial results for
its fourth quarter and full fiscal year ended December 31, 2005.
Revenue for the quarter was $14.2 million, compared with revenue of
$14.1 million for the third quarter ended September 30, 2005 and $19.8
million for the fourth quarter of 2004. License revenue for the
most-recent quarter totaled $3.8 million, up from $3.1 million for the
prior quarter and down from $7.3 million for the comparable quarter of
2004. Revenue for the year ended December 31, 2005, was $60.1 million,
down from $78.0 million for the prior year.
For the fourth quarter, BroadVision posted a net loss on a generally accepted accounting principles (GAAP) basis of $27.8 million, or $0.81 per share, as compared with a GAAP net loss of $15.5 million, or $0.45 per share (as restated, see discussion below), for the third quarter of 2005 and a GAAP net loss of $2.5 million, or $0.07 per share (as restated, see discussion below) for the fourth quarter of 2004. The GAAP loss for the most-recent quarter included a charge related to the impairment of goodwill of $18.2 million, business combination costs of $1.8 million related to the terminated acquisition agreement with Vector Capital, a $3.6 million charge related to the discount amortization and revaluation of the Company's convertible notes and a $7.0 million charge for the extinguishment of the notes. The GAAP loss for the prior quarter included a charge related to the impairment of goodwill of $13.2 million, a $1.9 million charge related to the discount amortization of the Company's convertible notes, business combination costs of $977,000 related to the Vector Capital acquisition agreement, a restructuring charge of $245,000 and $1.5 million of credits related to the revaluation of derivatives and the reversal of income tax accruals. The GAAP loss for the fourth quarter of 2004 included a $824,000 charge related to the discount amortization of the Company's convertible notes, a restructuring charge of $660,000 and a $2.4 million charge related to the revaluation of derivatives.
The GAAP net loss for the year ended December 31, 2005, was $39.0 million, or $1.14 per share, which compares to GAAP net income of $18.6 million, or $0.54 per diluted share (as restated, see discussion below) for the prior year.
Pro forma net income for the fourth quarter of 2005 was $2.2 million, or $0.05 per diluted share, compared with a pro forma net loss of $698,000, or $0.02 per share (as restated, see discussion below) for the third quarter of 2005 and pro forma net income of $1.4 million, or $0.04 per diluted share (as restated, see discussion below) for the fourth quarter of 2004. These pro forma results exclude goodwill impairment charges, business combination costs, restructuring charges and credits, gains and losses from the revaluation of convertible notes and common stock warrants, amortization of the discount related to the convertible debt and credits from the reversal of income tax accruals. A reconciliation of pro forma results to GAAP results is provided in the financial information attached to this press release. The Company believes its pro forma results provide useful information because they reflect the Company's financial performance excluding certain charges, credits, gains and losses that the Company believes are not indicative of its ongoing operations.
The pro forma net loss for the year ended December 31, 2005, was $2.9 million, or $0.08 per share, which compares to a pro forma net loss of $1.7 million, or $0.05 per share (as restated, see discussion below), for the prior year.
Major new and installed base license customers for the fourth quarter of 2005 include Yomiuri Shinbun, Japan's largest newspaper group, Mead Johnson, Hewlett-Packard, Red Envelope, Air France, France Telecom, and Iberia Airlines.
During the course of its 2005 annual audit, the Company determined that a portion of the proceeds from the convertible notes issued in 2004 should be allocated to two derivatives embedded in the notes, specifically the conversion feature and additional investment right of the notes. In Company's 2004 annual report on Form 10-K and 2005 quarterly reports on Form 10-Q, no such allocation was made. Therefore, the Company has restated its operating results for the three-month period and year ended December 31, 2004 and for the three-month periods ended March 31, June 30 and September 30, 2005 to reflect the recording of the embedded derivatives as liabilities, the allocation of a portion of the purchase price to these liabilities and the periodic revaluation of the liabilities.
Tables summarizing the impact of the restatements are provided at the end of this press release. These restatements had no impact on previously reported operating income (loss), cash or total assets. Further, the convertible notes were cancelled in connection with the equity issuance described below, with all related balances being eliminated, in March 2006.
The following previously announced transactions have recently been completed:
-- In November 2005, we announced the termination of the merger agreement that was entered into with Vector Capital Corporation in July 2005.
-- Also in November 2005, we announced that Dr. Pehong Chen, our chairman and CEO, through a wholly owned company, purchased from Vector all of our outstanding convertible notes, having a principal balance of $15.4 million.
-- In December 2005, we announced an agreement under which the outstanding convertible notes and unpaid accrued interest then due to Dr. Chen's company would be cancelled in exchange for the issuance of 34,500,000 shares of the Company's common stock at a price of $0.45 per share, a 25% discount from the closing price of BroadVision common stock on the date of the announcement. For accounting purposes, the Notes were considered cancelled in December upon the agreement to issue common shares in exchange for the notes, and a new note was considered reissued. Accordingly, a $7.0 million loss on debt extinguishment was recorded in the quarter ended December 31, 2005.
-- In March 2006, we announced that the previously announced debt exchange agreement was closed, the notes were cancelled and the shares of common stock were issued. At the same time, BroadVision paid Dr. Chen's company approximately $180,000 in cash, representing the portion of the accrued interest on the notes that was not exchanged. The common share issuance, representing approximately 50% of the post-exchange shares outstanding, increased Dr. Chen's ownership interest to approximately 59% of the total shares outstanding. No gain or loss is expected to be recorded in the quarter ended March 31, 2006, related to this transaction.
-- Also in March 2006, we announced that, in order to complete the share issuance to Dr. Chen's company without violating applicable listing standards, we voluntarily delisted our common stock from the Nasdaq National Market. Quotations for BroadVision's common stock are currently available through the "Pink Sheets" (www.pinksheets.com) under the trading symbol "BVSN.PK."
As also previously announced, the Company intends to effect, as soon as practicable, a rights offering under which all stockholders of record at the close of business on December 20, 2005 will receive nontransferable rights to purchase approximately 5.9 additional common shares at $0.45 per share for each common share then held. Dr. Chen and his affiliates have waived any right to purchase shares in the rights offering. The rights offering will be made only by means of a prospectus, a preliminary copy of which was filed with the Securities and Exchange Commission as part of a registration statement on February 3, 2006 but which has not been completed or declared effective. This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the rights offering, nor shall there be any sale of any securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.
"After a challenging 2005, we are pleased to have completed a restructuring that leaves us a standalone company with no long-term debt," commented Dr. Pehong Chen, chairman and CEO of BroadVision. "Despite tremendous adversities, we accomplished two main objectives during the fourth quarter. First, we relieved our near-term cash pressure by successfully terminating the merger process and signing an agreement to convert the debt into equity. With the March conversion, we have strengthened our balance sheet considerably. Second, we significantly reduced our core operating expenses. Excluding merger, debt-related and goodwill impairment charges, we were able to generate 15% pro forma profit margin from our business operations." Dr. Chen continued: "Going forward, we believe we have sufficient resources to effectively compete in the marketplace. We look forward to a 2006 focused on rebuilding our company by deploying our proven technology and talented people to help drive customer success."
Further information about our operating results and the prior period restatements and revisions may be found in our Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC today.
About BroadVision
BroadVision (Pink Sheets:BVSN) is a global provider of web self-service solutions. Its agile commerce and portal applications enable customers to quickly create and adapt online processes to keep pace with changing business requirements. Over 1,000 organizations, serving nearly 75 million registered users, rely on BroadVision's open solutions to power and personalize their mission-critical web initiatives. Additional information about BroadVision can be obtained at www.broadvision.com.
Information Concerning Forward-Looking Statements
Information in this release that involves expectations, beliefs, hopes, plans, intentions or strategies regarding the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which forward-looking statements involve risk and uncertainties. Examples of these forward-looking statements include access to resources and ability to compete effectively in future periods and the completion of the Company's planned rights offering. All forward-looking statements included in this release are based upon information available to BroadVision as of the date of this release, and BroadVision assumes no obligation to update or correct any such forward-looking statements. These statements are not guarantees of future performance, and actual results could differ materially from BroadVision's current expectations. Factors and risks associated with BroadVision's business are discussed in its most recent annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission.
For more information about BroadVision, Inc., call 650-542-5100, email info@broadvision.com or visit www.broadvision.com. -0- BROADVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) December 31, 2005 2004 ------------------ ASSETS (restated) Current assets: Cash and cash equivalents $4,849 $41,851 Accounts receivable, less receivable reserves of $731 and $1,409 as of December 31, 2005 and 2004, respectively 12,640 14,370 Restricted cash and investments, current portion -- 21,933 Prepaids and other 1,914 2,232 ------------------ Total current assets 19,403 80,386 Property and equipment, net 2,334 3,566 Restricted cash and investments, net of current portion 1,997 2,323 Equity investments - 574 Goodwill 25,066 56,434 Other assets 1,142 1,370 ------------------ Total assets $49,942 $144,653 ================== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Current portion of bank borrowings $389 $20,637 Current portion of convertible debentures -- 10,214 Current portion of convertible debentures due to related party 20,535 -- Accounts payable 4,396 7,470 Accrued expenses 16,090 40,745 Warrant liability 277 4,899 Unearned revenue 2,678 3,573 Deferred maintenance 10,910 13,121 ------------------ Total current liabilities 55,275 100,659 Convertible debentures, net of current portion -- 3,837 Bank borrowings, net of current portion -- 390 Other non-current liabilities 4,390 11,426 ------------------ Total liabilities 59,665 116,312 Commitments and contingencies Stockholders' equity (deficit) (9,723) 28,341 ------------------ Total liabilities and stockholders' equity (deficit) $49,942 $144,653 ================== BROADVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three Months Ended (unaudited) Years Ended Dec 31, Sep. 30, Dec 31, Dec 31, Dec 31, 2005 2005 2004 2005 2004 ----------------------------- ------------------- Revenues: (restated)(restated) (restated) Software licenses $3,780 $3,134 $7,292 $14,721 $26,883 Services 10,383 10,943 12,471 45,400 51,121 ----------------------------- ------------------- Total revenues 14,163 14,077 19,763 60,121 78,004 Cost of revenues: Cost of (credit for) software licenses 99 106 156 (38) 1,303 Cost of services 4,696 5,641 6,008 21,931 24,978 ----------------------------- ------------------- Total cost of revenues 4,795 5,747 6,164 21,893 26,281 ----------------------------- ------------------- Gross profit 9,368 8,330 13,599 38,228 51,723 Operating expenses: Research and development 2,494 3,095 4,027 13,831 18,024 Sales and marketing 2,389 2,948 6,974 16,208 27,340 General and administrative 1,953 2,162 2,386 9,479 9,538 Goodwill write- offs 18,170 13,198 - 31,368 - Restructuring (reversals) charges (312) 245 660 (462) (23,545) Business combination charges 1,840 977 - 2,817 - ----------------------------- ------------------- Total operating expenses 26,534 22,625 14,047 73,241 31,357 ----------------------------- ------------------- Operating (loss) income (17,166) (14,295) (448) (35,013) 20,366 Other income (expense), net (10,714) (1,757) (2,457) (6,564) (2,109) ----------------------------- ------------------- Income (loss) before benefit (provision) for income taxes (27,880) (16,052) (2,905) (41,577) 18,257 Benefit (provision) for income taxes 109 540 450 2,611 309 ----------------------------- ------------------- Net income (loss) $(27,771) $(15,512) $(2,455) $(38,966) $18,566 ============================= =================== Basic net income (loss) per share $(0.81) $(0.45) $(0.07) $(1.14) $0.55 Diluted net income (loss) per share $(0.81) $(0.45) $(0.07) $(1.14) $0.54 Shares used in computing basic net income (loss) per share 34,430 34,320 33,768 34,228 33,539 Shares used in computing diluted net income (loss) per share 34,430 34,320 33,768 34,228 34,321 BROADVISION, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended Years Ended Dec 31, Sep. 30, Dec 31, Dec 31, Dec 31, 2005 2005 2004 2005 2004 --------------------------- ------------------ Revenues: (restated)(restated) (restated) Software licenses $3,780 $3,134 $7,292 $14,721 $26,883 Services 10,383 10,943 12,471 45,400 51,121 --------------------------- ------------------ Total revenues 14,163 14,077 19,763 60,121 78,004 Cost of revenues: Cost of (credit for) software licenses 99 106 156 (38) 1,303 Cost of services 4,696 5,641 6,008 21,931 24,978 --------------------------- ------------------ Total cost of revenues 4,795 5,747 6,164 21,893 26,281 --------------------------- ------------------ Gross profit 9,368 8,330 13,599 38,228 51,723 Operating expenses: Research and development 2,494 3,095 4,027 13,831 18,024 Sales and marketing 2,389 2,948 6,974 16,208 27,340 General and administrative 1,953 2,162 2,386 9,479 9,538 --------------------------- ------------------ Total operating expenses 6,836 8,205 13,387 39,518 54,902 --------------------------- ------------------ Pro forma operating (loss) income 2,532 125 212 (1,290) (3,179) Interest (expense) income, net (199) (176) (93) (652) 195 Other income (expense), net (288) (478) 881 (850) 941 --------------------------- ------------------ Pro forma income (loss) before benefit (provision) for income taxes 2,045 (529) 1,000 (2,792) (2,043) Benefit (provision) for income taxes 109 (169) 450 (97) 309 --------------------------- ------------------ Pro forma net income (loss) $2,154 $(698) $1,450 $(2,889) $(1,734) =========================== ================== Basic pro forma net income (loss) per share $0.06 $(0.02) $0.04 $(0.08) $(0.05) Diluted pro forma net income (loss) per share $0.05 $(0.02) $0.04 $(0.08) $(0.05) Shares used in computing basic pro forma net income (loss) per share 34,430 34,320 33,768 34,228 33,539 Shares used in computing diluted pro forma net income (loss) per share 39,550 34,320 39,893 34,228 33,539 BROADVISION, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO PRO FORMA NET INCOME (LOSS) (unaudited; in thousands, except per share amounts) Three Months Ended Years Ended Dec 31, Sep. 30, Dec 31, Dec 31, Dec 31, 2005 2005 2004 2005 2004 ----------------------------- ------------------- (restated)(restated) (restated) Net (loss) income, generally accepted accounting principles $(27,771) $(15,512) $(2,455) $(38,966) $18,566 Pro forma adjustments: Goodwill write- offs 18,170 13,198 -- 31,368 -- Restructuring (reversals) charges (312) 245 660 (462) (23,545) Business combination charges 1,840 977 -- 2,817 -- Amortization of discount and revaluation of convertible notes (1) 3,566 1,898 824 9,442 824 (Income) expense from derivatives (2) (306) (795) 2,421 (11,347) 2,421 Loss on debt extinguishment 6,967 -- -- 6,967 -- Reversal of income tax accruals (3) -- (709) -- (2,708) -- ----------------------------- ------------------- Pro forma net income (loss) $2,154 $(698) $1,450 $(2,889) $(1,734) ============================= =================== (1) Included as a component of interest (expense) income, net, for each period presented. (2) Included as a component of other income (expense), net, for each period presented. (3) Included as a component of benefit (provision) for income taxes for each period presented. BROADVISION, INC. AND SUBSIDIARIES RESTATED AND REVISED RESULTS SUMMARY (in thousands, except per share amounts) As of and for the Year Ended: December 31, 2004 Previously Reported Restated ------------------------ Interest expense, net $(228) $(629) Other income (expense), net (753) (2,421) Net income 20,635 18,566 Basic net income per share $0.62 $0.55 Diluted net income per share $0.60 $0.54 Total liabilities $114,243 $116,312 Total stockholders' equity 30,410 28,341 As of and for the Three Months Ended (unaudited): December 31, 2004 March 31, 2005 Previously Previously Reported Restated Reported Revised ------------------------------------------------ Interest expense, net $(516) $(917) $(744) $(1,723) Income (expense) from derivatives (753) (2,421) 2,517 7,991 Net (loss) income (386) (2,455) 2,919 7,413 Basic net (loss) income per share $(0.01) $(0.07) $0.09 $0.22 Diluted net (loss) income per share $(0.01) $(0.07) $0.07 $0.19 Total liabilities $114,243 $116,312 $85,099 $82,673 Total stockholders' equity 30,410 28,341 33,743 36,167 June 30, 2005 September 30, 2005 Previously Revised Previously Revised Reported Reported ------------------------------------------------- Interest expense, net $(1,090) $(2,532) $(1,002) $(2,073) Income (expense) from derivatives 997 2,257 698 794 Net (loss) income (2,914) (3,095) (14,538) (15,512) Basic net (loss) income per share $(0.09) $(0.09) $(0.42) $(0.45) Diluted net (loss) income per share $(0.09) $(0.09) $(0.42) $(0.45) Total liabilities $75,424 $73,179 $50,963 $49,694 Total stockholders' equity 30,959 32,205 16,480 17,749
For the fourth quarter, BroadVision posted a net loss on a generally accepted accounting principles (GAAP) basis of $27.8 million, or $0.81 per share, as compared with a GAAP net loss of $15.5 million, or $0.45 per share (as restated, see discussion below), for the third quarter of 2005 and a GAAP net loss of $2.5 million, or $0.07 per share (as restated, see discussion below) for the fourth quarter of 2004. The GAAP loss for the most-recent quarter included a charge related to the impairment of goodwill of $18.2 million, business combination costs of $1.8 million related to the terminated acquisition agreement with Vector Capital, a $3.6 million charge related to the discount amortization and revaluation of the Company's convertible notes and a $7.0 million charge for the extinguishment of the notes. The GAAP loss for the prior quarter included a charge related to the impairment of goodwill of $13.2 million, a $1.9 million charge related to the discount amortization of the Company's convertible notes, business combination costs of $977,000 related to the Vector Capital acquisition agreement, a restructuring charge of $245,000 and $1.5 million of credits related to the revaluation of derivatives and the reversal of income tax accruals. The GAAP loss for the fourth quarter of 2004 included a $824,000 charge related to the discount amortization of the Company's convertible notes, a restructuring charge of $660,000 and a $2.4 million charge related to the revaluation of derivatives.
The GAAP net loss for the year ended December 31, 2005, was $39.0 million, or $1.14 per share, which compares to GAAP net income of $18.6 million, or $0.54 per diluted share (as restated, see discussion below) for the prior year.
Pro forma net income for the fourth quarter of 2005 was $2.2 million, or $0.05 per diluted share, compared with a pro forma net loss of $698,000, or $0.02 per share (as restated, see discussion below) for the third quarter of 2005 and pro forma net income of $1.4 million, or $0.04 per diluted share (as restated, see discussion below) for the fourth quarter of 2004. These pro forma results exclude goodwill impairment charges, business combination costs, restructuring charges and credits, gains and losses from the revaluation of convertible notes and common stock warrants, amortization of the discount related to the convertible debt and credits from the reversal of income tax accruals. A reconciliation of pro forma results to GAAP results is provided in the financial information attached to this press release. The Company believes its pro forma results provide useful information because they reflect the Company's financial performance excluding certain charges, credits, gains and losses that the Company believes are not indicative of its ongoing operations.
The pro forma net loss for the year ended December 31, 2005, was $2.9 million, or $0.08 per share, which compares to a pro forma net loss of $1.7 million, or $0.05 per share (as restated, see discussion below), for the prior year.
Major new and installed base license customers for the fourth quarter of 2005 include Yomiuri Shinbun, Japan's largest newspaper group, Mead Johnson, Hewlett-Packard, Red Envelope, Air France, France Telecom, and Iberia Airlines.
During the course of its 2005 annual audit, the Company determined that a portion of the proceeds from the convertible notes issued in 2004 should be allocated to two derivatives embedded in the notes, specifically the conversion feature and additional investment right of the notes. In Company's 2004 annual report on Form 10-K and 2005 quarterly reports on Form 10-Q, no such allocation was made. Therefore, the Company has restated its operating results for the three-month period and year ended December 31, 2004 and for the three-month periods ended March 31, June 30 and September 30, 2005 to reflect the recording of the embedded derivatives as liabilities, the allocation of a portion of the purchase price to these liabilities and the periodic revaluation of the liabilities.
Tables summarizing the impact of the restatements are provided at the end of this press release. These restatements had no impact on previously reported operating income (loss), cash or total assets. Further, the convertible notes were cancelled in connection with the equity issuance described below, with all related balances being eliminated, in March 2006.
The following previously announced transactions have recently been completed:
-- In November 2005, we announced the termination of the merger agreement that was entered into with Vector Capital Corporation in July 2005.
-- Also in November 2005, we announced that Dr. Pehong Chen, our chairman and CEO, through a wholly owned company, purchased from Vector all of our outstanding convertible notes, having a principal balance of $15.4 million.
-- In December 2005, we announced an agreement under which the outstanding convertible notes and unpaid accrued interest then due to Dr. Chen's company would be cancelled in exchange for the issuance of 34,500,000 shares of the Company's common stock at a price of $0.45 per share, a 25% discount from the closing price of BroadVision common stock on the date of the announcement. For accounting purposes, the Notes were considered cancelled in December upon the agreement to issue common shares in exchange for the notes, and a new note was considered reissued. Accordingly, a $7.0 million loss on debt extinguishment was recorded in the quarter ended December 31, 2005.
-- In March 2006, we announced that the previously announced debt exchange agreement was closed, the notes were cancelled and the shares of common stock were issued. At the same time, BroadVision paid Dr. Chen's company approximately $180,000 in cash, representing the portion of the accrued interest on the notes that was not exchanged. The common share issuance, representing approximately 50% of the post-exchange shares outstanding, increased Dr. Chen's ownership interest to approximately 59% of the total shares outstanding. No gain or loss is expected to be recorded in the quarter ended March 31, 2006, related to this transaction.
-- Also in March 2006, we announced that, in order to complete the share issuance to Dr. Chen's company without violating applicable listing standards, we voluntarily delisted our common stock from the Nasdaq National Market. Quotations for BroadVision's common stock are currently available through the "Pink Sheets" (www.pinksheets.com) under the trading symbol "BVSN.PK."
As also previously announced, the Company intends to effect, as soon as practicable, a rights offering under which all stockholders of record at the close of business on December 20, 2005 will receive nontransferable rights to purchase approximately 5.9 additional common shares at $0.45 per share for each common share then held. Dr. Chen and his affiliates have waived any right to purchase shares in the rights offering. The rights offering will be made only by means of a prospectus, a preliminary copy of which was filed with the Securities and Exchange Commission as part of a registration statement on February 3, 2006 but which has not been completed or declared effective. This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the rights offering, nor shall there be any sale of any securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.
"After a challenging 2005, we are pleased to have completed a restructuring that leaves us a standalone company with no long-term debt," commented Dr. Pehong Chen, chairman and CEO of BroadVision. "Despite tremendous adversities, we accomplished two main objectives during the fourth quarter. First, we relieved our near-term cash pressure by successfully terminating the merger process and signing an agreement to convert the debt into equity. With the March conversion, we have strengthened our balance sheet considerably. Second, we significantly reduced our core operating expenses. Excluding merger, debt-related and goodwill impairment charges, we were able to generate 15% pro forma profit margin from our business operations." Dr. Chen continued: "Going forward, we believe we have sufficient resources to effectively compete in the marketplace. We look forward to a 2006 focused on rebuilding our company by deploying our proven technology and talented people to help drive customer success."
Further information about our operating results and the prior period restatements and revisions may be found in our Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC today.
About BroadVision
BroadVision (Pink Sheets:BVSN) is a global provider of web self-service solutions. Its agile commerce and portal applications enable customers to quickly create and adapt online processes to keep pace with changing business requirements. Over 1,000 organizations, serving nearly 75 million registered users, rely on BroadVision's open solutions to power and personalize their mission-critical web initiatives. Additional information about BroadVision can be obtained at www.broadvision.com.
Information Concerning Forward-Looking Statements
Information in this release that involves expectations, beliefs, hopes, plans, intentions or strategies regarding the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which forward-looking statements involve risk and uncertainties. Examples of these forward-looking statements include access to resources and ability to compete effectively in future periods and the completion of the Company's planned rights offering. All forward-looking statements included in this release are based upon information available to BroadVision as of the date of this release, and BroadVision assumes no obligation to update or correct any such forward-looking statements. These statements are not guarantees of future performance, and actual results could differ materially from BroadVision's current expectations. Factors and risks associated with BroadVision's business are discussed in its most recent annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission.
For more information about BroadVision, Inc., call 650-542-5100, email info@broadvision.com or visit www.broadvision.com. -0- BROADVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) December 31, 2005 2004 ------------------ ASSETS (restated) Current assets: Cash and cash equivalents $4,849 $41,851 Accounts receivable, less receivable reserves of $731 and $1,409 as of December 31, 2005 and 2004, respectively 12,640 14,370 Restricted cash and investments, current portion -- 21,933 Prepaids and other 1,914 2,232 ------------------ Total current assets 19,403 80,386 Property and equipment, net 2,334 3,566 Restricted cash and investments, net of current portion 1,997 2,323 Equity investments - 574 Goodwill 25,066 56,434 Other assets 1,142 1,370 ------------------ Total assets $49,942 $144,653 ================== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Current portion of bank borrowings $389 $20,637 Current portion of convertible debentures -- 10,214 Current portion of convertible debentures due to related party 20,535 -- Accounts payable 4,396 7,470 Accrued expenses 16,090 40,745 Warrant liability 277 4,899 Unearned revenue 2,678 3,573 Deferred maintenance 10,910 13,121 ------------------ Total current liabilities 55,275 100,659 Convertible debentures, net of current portion -- 3,837 Bank borrowings, net of current portion -- 390 Other non-current liabilities 4,390 11,426 ------------------ Total liabilities 59,665 116,312 Commitments and contingencies Stockholders' equity (deficit) (9,723) 28,341 ------------------ Total liabilities and stockholders' equity (deficit) $49,942 $144,653 ================== BROADVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three Months Ended (unaudited) Years Ended Dec 31, Sep. 30, Dec 31, Dec 31, Dec 31, 2005 2005 2004 2005 2004 ----------------------------- ------------------- Revenues: (restated)(restated) (restated) Software licenses $3,780 $3,134 $7,292 $14,721 $26,883 Services 10,383 10,943 12,471 45,400 51,121 ----------------------------- ------------------- Total revenues 14,163 14,077 19,763 60,121 78,004 Cost of revenues: Cost of (credit for) software licenses 99 106 156 (38) 1,303 Cost of services 4,696 5,641 6,008 21,931 24,978 ----------------------------- ------------------- Total cost of revenues 4,795 5,747 6,164 21,893 26,281 ----------------------------- ------------------- Gross profit 9,368 8,330 13,599 38,228 51,723 Operating expenses: Research and development 2,494 3,095 4,027 13,831 18,024 Sales and marketing 2,389 2,948 6,974 16,208 27,340 General and administrative 1,953 2,162 2,386 9,479 9,538 Goodwill write- offs 18,170 13,198 - 31,368 - Restructuring (reversals) charges (312) 245 660 (462) (23,545) Business combination charges 1,840 977 - 2,817 - ----------------------------- ------------------- Total operating expenses 26,534 22,625 14,047 73,241 31,357 ----------------------------- ------------------- Operating (loss) income (17,166) (14,295) (448) (35,013) 20,366 Other income (expense), net (10,714) (1,757) (2,457) (6,564) (2,109) ----------------------------- ------------------- Income (loss) before benefit (provision) for income taxes (27,880) (16,052) (2,905) (41,577) 18,257 Benefit (provision) for income taxes 109 540 450 2,611 309 ----------------------------- ------------------- Net income (loss) $(27,771) $(15,512) $(2,455) $(38,966) $18,566 ============================= =================== Basic net income (loss) per share $(0.81) $(0.45) $(0.07) $(1.14) $0.55 Diluted net income (loss) per share $(0.81) $(0.45) $(0.07) $(1.14) $0.54 Shares used in computing basic net income (loss) per share 34,430 34,320 33,768 34,228 33,539 Shares used in computing diluted net income (loss) per share 34,430 34,320 33,768 34,228 34,321 BROADVISION, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended Years Ended Dec 31, Sep. 30, Dec 31, Dec 31, Dec 31, 2005 2005 2004 2005 2004 --------------------------- ------------------ Revenues: (restated)(restated) (restated) Software licenses $3,780 $3,134 $7,292 $14,721 $26,883 Services 10,383 10,943 12,471 45,400 51,121 --------------------------- ------------------ Total revenues 14,163 14,077 19,763 60,121 78,004 Cost of revenues: Cost of (credit for) software licenses 99 106 156 (38) 1,303 Cost of services 4,696 5,641 6,008 21,931 24,978 --------------------------- ------------------ Total cost of revenues 4,795 5,747 6,164 21,893 26,281 --------------------------- ------------------ Gross profit 9,368 8,330 13,599 38,228 51,723 Operating expenses: Research and development 2,494 3,095 4,027 13,831 18,024 Sales and marketing 2,389 2,948 6,974 16,208 27,340 General and administrative 1,953 2,162 2,386 9,479 9,538 --------------------------- ------------------ Total operating expenses 6,836 8,205 13,387 39,518 54,902 --------------------------- ------------------ Pro forma operating (loss) income 2,532 125 212 (1,290) (3,179) Interest (expense) income, net (199) (176) (93) (652) 195 Other income (expense), net (288) (478) 881 (850) 941 --------------------------- ------------------ Pro forma income (loss) before benefit (provision) for income taxes 2,045 (529) 1,000 (2,792) (2,043) Benefit (provision) for income taxes 109 (169) 450 (97) 309 --------------------------- ------------------ Pro forma net income (loss) $2,154 $(698) $1,450 $(2,889) $(1,734) =========================== ================== Basic pro forma net income (loss) per share $0.06 $(0.02) $0.04 $(0.08) $(0.05) Diluted pro forma net income (loss) per share $0.05 $(0.02) $0.04 $(0.08) $(0.05) Shares used in computing basic pro forma net income (loss) per share 34,430 34,320 33,768 34,228 33,539 Shares used in computing diluted pro forma net income (loss) per share 39,550 34,320 39,893 34,228 33,539 BROADVISION, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO PRO FORMA NET INCOME (LOSS) (unaudited; in thousands, except per share amounts) Three Months Ended Years Ended Dec 31, Sep. 30, Dec 31, Dec 31, Dec 31, 2005 2005 2004 2005 2004 ----------------------------- ------------------- (restated)(restated) (restated) Net (loss) income, generally accepted accounting principles $(27,771) $(15,512) $(2,455) $(38,966) $18,566 Pro forma adjustments: Goodwill write- offs 18,170 13,198 -- 31,368 -- Restructuring (reversals) charges (312) 245 660 (462) (23,545) Business combination charges 1,840 977 -- 2,817 -- Amortization of discount and revaluation of convertible notes (1) 3,566 1,898 824 9,442 824 (Income) expense from derivatives (2) (306) (795) 2,421 (11,347) 2,421 Loss on debt extinguishment 6,967 -- -- 6,967 -- Reversal of income tax accruals (3) -- (709) -- (2,708) -- ----------------------------- ------------------- Pro forma net income (loss) $2,154 $(698) $1,450 $(2,889) $(1,734) ============================= =================== (1) Included as a component of interest (expense) income, net, for each period presented. (2) Included as a component of other income (expense), net, for each period presented. (3) Included as a component of benefit (provision) for income taxes for each period presented. BROADVISION, INC. AND SUBSIDIARIES RESTATED AND REVISED RESULTS SUMMARY (in thousands, except per share amounts) As of and for the Year Ended: December 31, 2004 Previously Reported Restated ------------------------ Interest expense, net $(228) $(629) Other income (expense), net (753) (2,421) Net income 20,635 18,566 Basic net income per share $0.62 $0.55 Diluted net income per share $0.60 $0.54 Total liabilities $114,243 $116,312 Total stockholders' equity 30,410 28,341 As of and for the Three Months Ended (unaudited): December 31, 2004 March 31, 2005 Previously Previously Reported Restated Reported Revised ------------------------------------------------ Interest expense, net $(516) $(917) $(744) $(1,723) Income (expense) from derivatives (753) (2,421) 2,517 7,991 Net (loss) income (386) (2,455) 2,919 7,413 Basic net (loss) income per share $(0.01) $(0.07) $0.09 $0.22 Diluted net (loss) income per share $(0.01) $(0.07) $0.07 $0.19 Total liabilities $114,243 $116,312 $85,099 $82,673 Total stockholders' equity 30,410 28,341 33,743 36,167 June 30, 2005 September 30, 2005 Previously Revised Previously Revised Reported Reported ------------------------------------------------- Interest expense, net $(1,090) $(2,532) $(1,002) $(2,073) Income (expense) from derivatives 997 2,257 698 794 Net (loss) income (2,914) (3,095) (14,538) (15,512) Basic net (loss) income per share $(0.09) $(0.09) $(0.42) $(0.45) Diluted net (loss) income per share $(0.09) $(0.09) $(0.42) $(0.45) Total liabilities $75,424 $73,179 $50,963 $49,694 Total stockholders' equity 30,959 32,205 16,480 17,749