SEC report prepared by Stürtz AG

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

Intershop Q3 03 Press Release

INTERSHOP Communications Aktiengesellschaft

(Name of Registrant)

INTERSHOP Communications Stock Corporation
(Translation of registrant’s Name into English)

Intershop Tower
07740 Jena
Federal Republic of Germany
(011) 49-3641-50-0
(Address and Telephone Number of registrant’s Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F [X]

Form 40-F [_]

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the SEC pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes [ ]

No [X]

If “Yes”is marked, indicate the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

Intershop Communications Announces Third Quarter 2003 Financial Results

-- Positive Operating Cash Flow Improves Cash Position –

Jena, Germany –October 30, 2003 - Intershop Communications AG (Prime Standard: ISH1, Nasdaq: ISHP), the market leader in Unified Commerce Management software, today announced financial results for the third quarter of 2003, ended September 30, 2003.

Total revenue rose 16% sequentially, from Euro 5.6 million in the second quarter of 2003 to Euro 6.5 million in the third quarter of 2003, as compared to Euro 8.9 million in the third quarter of 2002. License revenue increased 43% sequentially, from Euro 1.5 million in the second quarter of 2003 to Euro 2.2 million in the third quarter of 2003, as compared to Euro 3.5 million in the third quarter of 2002. Service revenue in the third quarter of 2003 totaled Euro 4.3 million, compared to Euro 4.1 million in the second quarter of 2003 and Euro 5.4 million in the third quarter of 2002.

Intershop further reduced its total operational cost (cost of revenue plus operating expense) during the third quarter of 2003, with total operational cost excluding restructuring costs declining 32% sequentially, to Euro 8.4 million. Compared to the third quarter of 2002, Intershop reduced its total operational cost excluding restructuring costs by Euro 7.2 million or 46%. Intershop incurred restructuring costs of Euro 2.3 million in the third quarter of 2003, as compared to Euro 0.2 million in the second quarter of 2003 and Euro 1.1 million in the third quarter of 2002.

As a result of increased revenues and the continued reduction in total operational cost, Intershop reduced its net loss in the third quarter of 2003 by 43%, from Euro 6.6 million or Euro 0.33 per share in the second quarter of 2003 to Euro 3.8 million or Euro 0.17 per share in the third quarter of 2003. In comparison, Intershop’s net loss in the third quarter of 2002 was Euro 7.5 million or Euro 0.39 per share.

Total cash including cash, cash equivalents, marketable securities, and restricted cash rose modestly from Euro 10.8 million as of June 30, 2003 to Euro 10.9 million as of September 30, 2003. Included in total cash was freely available cash which rose 12% sequentially, from Euro 3.8 million as of June 30, 2003 to Euro 4.2 million as of September 30, 2003.

 

Operational Highlights for the Third Quarter of 2003

Nasdaq Delisting

Separately, Intershop announced today its intention to terminate its American Depositary Share (ADS) facility and the listing of its ADSs on the Nasdaq National Market (Nasdaq) in the United States within the next six months.

The ADS facility accounts for a relatively low volume of total holdings of Intershop’s equity securities, and that low volume is also relatively illiquid. Intershop believes that the low trading volume of ADSs on the Nasdaq reflects that institutional investors prefer to hold Intershop common bearer shares directly and to trade such shares on the more liquid Prime Standard trading segment of the Frankfurt Stock Exchange, resulting in low institutional ownership in the United States of the ADSs. Therefore, the Board of Directors of Intershop sees no significant benefit to continuing either the Company’s ADS program or the Nasdaq listing.

Moreover, in light of the limited existing shareholder base for Intershop ADSs and shares in the United States and the increasing costs and complexity of complying with the US reporting and other obligations under the Securities Exchange Act of 1934 (the “Exchange Act”), Intershop will seek to deregister the shares underlying the ADSs and the ADSs under the Exchange Act within the next six months.

The Company has carefully reviewed a number of possible means of realizing a delisting and deregistration. As an intermediate step in the delisting and deregistration process, Intershop may amend its Deposit Agreement to adjust the ratio of its ADSs to Intershop common bearer shares. Any fractional ADSs thus created would be redeemed by the depositary bank for the price that the depositary bank is able to obtain for the underlying Intershop common bearer shares on the Frankfurt Stock Exchange. This ratio adjustment would likely take effect prior to December 31, 2003.

Intershop’s plans to withdraw from the US capital markets do not reflect its commitment to its US operations, which it plans to continue. Intershop’s total number of shares outstanding and the listing of its common bearer shares on the Prime Standard will not be affected by the planned actions.

Management Review

Dr. Jürgen Schöttler, Chief Executive Officer commented: “Despite a challenging market environment and seasonally low summer demand for IT products in our primary European market, Intershop was able to increase its third quarter 2003 license sales by 43% sequentially. At the same time, the Company reduced its total operational costs in the third quarter of 2003 by 32% and lowered its net loss by 43% sequentially. While Euro 5 million in restricted cash could not be unrestricted as planned, Intershop successfully stabilized its cash position during the third quarter of 2003. In parallel to these positive developments, we are currently in active negotiations with a number of international financial and strategic investors in order to improve our cash position and capital resources. Today’s announcement of our intention to withdraw the listing of Intershop’s ADSs from Nasdaq and to deregister the Company’s ADSs is another important step towards further reducing overall operating costs.”

Business Outlook

Against the backdrop of a weak global IT spending environment and weaker than expected first half of 2003 financial results, Intershop expects estimated full-year 2003 total revenue in the range of approximately Euro 23 million to Euro 25 million. Total operational costs including restructuring costs are expected to be approximately Euro 44 million for fiscal year 2003, with fourth quarter 2003 total operational costs further reduced sequentially to about Euro 6.5 million.

About Intershop

Intershop Communications (Nasdaq: ISHP; Prime Standard: ISH1) is the market leader in Unified Commerce Management, which can create strategic differentiation for companies by integrating online commerce processes across the extended enterprise. Intershop’s Enfinity MultiSite, based on the best practices of Unified Commerce Management, enables companies to manage multiple business units from a single commerce platform, optimize their business relationships, improve business efficiencies and cut costs to increase profit margins. By streamlining business processes, companies can achieve a higher return on investment at a lower total cost of ownership, increasing the lifetime value of customers and partners. Intershop has more than 300 enterprise customers worldwide in a broad range of industries, including multi-channel retail and high technology. Customers including Deutsche Telekom, HP, Bosch, BMW, TRW, Bertelsmann, Otto, and Homebase have selected Intershop's Enfinity as the cornerstone of their global online commerce strategies. More information about Intershop can be found on the Web at http://www.intershop.com.

Investor Relations:

Klaus F. Gruendel

T: +49-40-23709-128

F: +49-3641-50-1002

k.gruendel@intershop.com

Press:

Dana Schmidt

T: +49-3641-50-1000

F: +49-3641-50-1002

d.schmidt@intershop.com

This news release contains forward-looking statements regarding future events or the future financial and operational performance of Intershop. Actual events or performance may differ materially from those contained or implied in such forward-looking statements. Risks and uncertainties that could lead to such difference could include, among other things: Intershop's limited operating history, the unpredictability of future revenues and expenses and potential fluctuations in revenues and operating results, significant dependence on large single customer deals, consumer trends, the level of competition, seasonality, risks related to electronic security, possible governmental regulation, and general economic conditions. Additional information regarding factors that potentially could affect Intershop's business, financial condition and operating results is included in Intershop's filings with the Securities and Exchange Commission, including the Company's Form 20-F dated June 6, 2003.

 

Intershop Communications AG

 

 

Consolidated Balance Sheets (U.S.GAAP)

 

 

(in thousands €, except share and per-share amounts)

 

 

 

 

 

September 30,

December 31,

 

2003

2002

(unaudited)

 

ASSETS

€

€

Current assets

 

 

Cash and cash equivalents

4,223

11,303

Marketable securities

-

4,172

Restricted cash

6,701

7,073

Trade receivables, net of allowances for doubtful accounts of

 

 

€5,929 at September 30, 2003 and €7,511 at December 31, 2002, respectively

4,437

11,131

Prepaid expenses and other current assets

7,561

7,427

Total current assets

22,922

41,106

Property and equipment, net

1,821

4,301

Other assets

570

2,268

Goodwill

4,473

4,473

Total assets

29,786

52,148

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

Current liabilities

 

 

Current debt and current maturities of long-term debt

5

98

Accounts payable

911

840

Accrued restructuring costs

3,725

4,881

Other accrued liabilities

11,525

13,472

Deferred revenue

6,054

6,295

Total current liabilities

22,220

25,586

Long-term liabilities, net of current portion

-

152

Deferred revenue

25

38

Total liabilities

22,245

25,776

 

 

 

Shareholders' equity

 

 

Common share, stated value €1-authorized: 78,567,219 shares;

 

 

outstanding: 22,035,299 shares at September 30, 2003 and 19,306,400

 

 

shares at December 31, 2002, respectively

22,035

19,306

Accumulated deficit

(17,329)

4,124

Accumulated other comprehensive income

2,835

2,942

Total shareholders' equity

7,541

26,372

Total liabilities and shareholders' equity

29,786

52,148

 

 

Intershop Communications AG

 

 

 

 

Consolidated Statements of Operations (U.S.-GAAP)

 

 

 

 

(In thousands €, except per-share amounts, unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Nine Months Ended

 

September 30,

September 30,

 

2003

2002

2003

2002

 

 

 

 

 

 

€

€

€

€

Revenues

 

 

 

 

Licenses

2,195

3,517

5,021

15,969

Services, maintenance, and other

4,342

5,395

13,520

17,173

Total revenues

6,537

8,912

18,541

33,142

 

 

 

 

 

Cost of revenues

 

 

 

 

Licenses

140

463

396

1,173

Services, maintenance, and other

2,670

4,156

9,383

14,063

Total costs of revenues

2,810

4,619

9,779

15,236

 

 

 

 

 

Gross profit

3,727

4,293

8,762

17,906

 

 

 

 

 

Operating expenses

 

 

 

 

Research and development

1,497

1,526

4,985

5,804

Sales and marketing

2,660

6,502

12,873

22,389

General and administrative

1,411

2,959

6,980

11,446

Restructuring costs and asset impairment

2,261

1,067

3,218

5,441

Total operating expenses

7,829

12,054

28,056

45,080

 

 

 

 

 

Operating loss

(4,102)

(7,761)

(19,294)

(27,174)

 

 

 

 

 

Other income (expense)

 

 

 

 

Interest income

47

201

202

433

Interest expense

(8)

(21)

(25)

(23)

Other income (expense), net

310

101

393

246

Total other income (expense)

349

281

570

656

 

 

 

 

 

Net loss

(3,753)

(7,480)

(18,724)

(26,518)

Basic and diluted loss per share

(0.17)

(0.39)

(0.92)

(1.39)

 

 

 

 

 

Shares used in computing:

 

 

 

 

For basic and diluted loss per share

22,035

19,306

20,347

19,010

 

 

Intershop Communications AG

 

 

Consolidated Statements of Cashflows (U.S.GAAP)

 

 

(in thousands €, unaudited)

 

 

 

Nine months ended

 

September 30,

 

2003

2002

 

 

 

 

€

€

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

Net loss

(18,724)

(26,518)

Adjustments to reconcile net loss to cash used in operating activities

 

 

Depreciation and amortization

2,893

7,258

Provision for doubtful accounts

(1,292)

(711)

(Gain) loss on disposal of marketable securities

(40)

152

(Gain) Loss on disposal of property and equipment

(35)

251

Changes in operating assets and liabilities

 

 

Accounts receivable

7,739

204

Prepaid expenses and other current assets

(273)

3,261

Other assets

1,609

286

Accounts payable

89

(2,129)

Deferred revenue

(73)

(1,502)

Accrued restructuring costs

(1,156)

(3,317)

Accrued expenses and other liabilities

(1,797)

(2,817)

Net cash used in operating activities

(11,060)

(25,582)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

Restricted cash

371

-

Proceeds on disposal of equipment

116

536

Purchases of property and equipment, net of capital leases

(494)

(648)

Proceeds from sale of marketable securities

8,294

42,327

Purchases of marketable securities

(4,162)

(28,328)

Net cash (used in) provided by investing activities

4,125

13,887

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

Cash received for unregistered stock

-

10,009

Net cash provided by financing activities

-

10,009

Effect of change in exchange rates on cash

(145)

(140)

Net change in cash and cash equivalents

(7,080)

(1,826)

Cash and cash equivalents, beginning of period

11,303

9,107

Cash and cash equivalents, end of period

4,223

7,281

 

 

 

 

 

 

Intershop Communications AG

 

 

 

 

 

Consolidated Statement of Shareholders’ Equity

 

 

 

 

 

(in thousands €, except share data)

 

 

Common

Common Shares

 

Accumulated

Accumulated Other Comprehensive

Total Shareholders`

 

Shares

Stated Value

APIC

Deficit

Income

Equity

Balance, January 1, 2001

88,003,016

88,003

168,585

(84,329)

1,709

173,969

Other comprehensive loss:

 

 

 

 

 

 

Net loss

 

 

 

(131,798)

 

(131,798)

Foreign currency translation adjustments

 

 

 

 

837

837

Unrealized gain (loss) on available for sale security, net

 

 

 

 

348

348

Comprehensive loss

 

 

 

 

 

(130,613)

Exercise of stock options

188,306

188

330

 

 

518

Appropriation of paid in capital

 

 

(155,495)

155,495

 

 

Balance, December 31, 2001

88,191,322

88,191

13,420

(60,632)

2,894

43,874

Other comprehensive loss:

 

 

 

 

 

 

Net loss

 

 

 

(27,555)

 

(27,555)

Foreign currency translation adjustments

 

 

 

 

157

157

Unrealized gain (loss) on available for sale security, net

 

 

 

 

(109)

(109)

Comprehensive loss

 

 

 

 

 

(27,507)

Exercise of stock options

6,678

7

(3)

 

 

4

Private placement of common stock, net

8,334,000

8,334

1,667

 

 

10,001

Allocation of par value resulting from reverse stock split

(77,225,600)

(77,226)

77,226

 

 

 

Appropriation of additional paid-in capital

 

 

(92,310)

92,310

 

 

Balance, December 31, 2002

19,306,400

19,306

-

4,124

2,942

26,372

Other comprehensive loss:

 

 

 

 

 

 

Net loss (unaudited)

 

 

 

(18,724)

 

(18,724)

Foreign currency translation adjustments (unaudited)

 

 

 

 

(105)

(105)

Unrealized gain (loss) on available for sale security, net (unaudited)

 

 

 

 

(2)

(2)

Comprehensive loss

 

 

 

 

 

(18,831)

Conversion of common stock of subsidiary

 

 

 

 

 

 

to common stock of parent (unaudited)

2,499,999

2,500

 

(2,500)

 

 

Conversion of preferred stock of subsidiary

 

 

 

 

 

 

to common stock of parent (unaudited)

228,900

229

 

(229)

 

 

Balance, September 30, 2003

22,035,299

22,035

 

(17,329)

2,835

7,541

 

 

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.

INTERSHOP Communications Aktiengesellschaft

Date: October 30, 2003

By: /s/ Dr. Juergen Schoettler


Dr. Juergen Schoettler

Chief Executive Officer

(Vorstandsvorsitzender)