UNITED STATES
Form 10-Q
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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended December 29, 2002 | ||
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o
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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 000-26911
THERMA-WAVE, INC.
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Delaware
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94-3000561 | |
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification Number) |
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1250 Reliance Way Fremont, California 94539 (Address of Principal Executive Offices Including Zip Code) |
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(510) 668-2200
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 reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ
Indicate the number of shares of the issuer’s class of common stock, as of the latest practical date:
| Class | Outstanding as of April 30, 2003 | |
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Common stock, $.01 par value
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29,359,413 |
THERMA-WAVE, INC.
TABLE OF CONTENTS
| Page No. | ||||||
| PART I. FINANCIAL INFORMATION | ||||||
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ITEM 1.
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Financial Statements | 1 | ||||
| Condensed Consolidated Balance Sheets as of December 31, 2002 and March 31, 2002 | 1 | |||||
| Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2002 and 2001 | 2 | |||||
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2002 and 2001 | 3 | |||||
| Notes to Condensed Consolidated Financial Statements | 4 | |||||
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ITEM 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 | ||||
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ITEM 3.
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Quantitative and Qualitative Disclosures About Market Risk | 14 | ||||
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ITEM 4.
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Controls and Procedures | 14 | ||||
| PART II. OTHER INFORMATION | ||||||
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ITEM 1.
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Legal Proceedings | 16 | ||||
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ITEM 2.
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Changes in Securities and Use of Proceeds | 16 | ||||
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ITEM 3.
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Defaults Upon Senior Securities | 16 | ||||
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ITEM 4.
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Submission of Matters to a Vote of Security Holders | 16 | ||||
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ITEM 5.
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Other Information | 16 | ||||
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ITEM 6.
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Exhibits and Reports on Form 8-K | 16 | ||||
| SIGNATURES | 17 | |||||
| CERTIFICATIONS | 18 | |||||
Explanatory note regarding the late filing of this Form 10-Q
This quarterly report on Form 10-Q is being filed late as a result of the restatement of our condensed consolidated financial statements for the quarterly periods ended September 30, 2001, December 31, 2001, June 30, 2002 and September 30, 2002 and the year ended March 31, 2002.
i
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
THERMA-WAVE, INC.
| December 31, | March 31, | |||||||||
| 2002 | 2002 | |||||||||
| ASSETS | ||||||||||
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Current assets:
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Cash and cash equivalents
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$ | 22,016 | $ | 46,484 | ||||||
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Short-term investments
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4,572 | 12,575 | ||||||||
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Accounts receivable, net
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9,712 | 15,635 | ||||||||
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Inventories
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28,059 | 34,677 | ||||||||
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Other current assets
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1,290 | 3,415 | ||||||||
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Total current assets
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65,649 | 112,786 | ||||||||
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Property and equipment, net
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10,859 | 14,041 | ||||||||
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Goodwill and intangible assets, net
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2,390 | 70,096 | ||||||||
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Other assets
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4,869 | 4,723 | ||||||||
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Total assets
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$ | 83,767 | $ | 201,646 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
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Current liabilities:
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Accounts payable
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$ | 3,372 | $ | 6,297 | ||||||
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Accrued warranty costs
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732 | 1,777 | ||||||||
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Deferred revenue
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9,352 | 9,493 | ||||||||
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Income tax payable
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4,892 | 4,903 | ||||||||
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Other current liabilities
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8,242 | 9,303 | ||||||||
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Total current liabilities
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26,590 | 31,773 | ||||||||
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Long term debt
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— | 16 | ||||||||
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Other liabilities
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2,058 | 2,358 | ||||||||
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Total liabilities
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28,648 | 34,147 | ||||||||
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Stockholders’ equity:
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Common stock
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293 | 291 | ||||||||
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Treasury stock
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(848 | ) | — | |||||||
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Additional paid-in capital
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322,352 | 321,466 | ||||||||
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Notes receivable from stockholders
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(196 | ) | (200 | ) | ||||||
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Accumulated deficit
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(263,804 | ) | (149,325 | ) | ||||||
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Accumulated other comprehensive loss
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(1,305 | ) | (1,790 | ) | ||||||
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Deferred stock-based compensation
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(1,373 | ) | (2,943 | ) | ||||||
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Total stockholders’ equity
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55,119 | 167,499 | ||||||||
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Total liabilities and stockholders’ equity
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$ | 83,767 | $ | 201,646 | ||||||
See accompanying notes to condensed consolidated financial statements.
1
THERMA-WAVE, INC.
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||||
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Net revenues
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Product
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$ | 4,789 | $ | 6,401 | $ | 20,188 | $ | 56,461 | ||||||||||
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Service and parts
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5,460 | 4,653 | 15,956 | 13,074 | ||||||||||||||
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Total net revenues
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10,249 | 11,054 | 36,144 | 69,535 | ||||||||||||||
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Cost of revenues
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10,233 | 9,522 | 40,074 | 42,410 | ||||||||||||||
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Gross profit (loss)
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16 | 1,532 | (3,930 | ) | 27,125 | |||||||||||||
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Operating expenses:
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Research and development
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6,872 | 7,643 | 22,975 | 21,157 | ||||||||||||||
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Selling, general and administrative
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6,097 | 5,213 | 18,877 | 15,841 | ||||||||||||||
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Impairment of goodwill and other intangible assets
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— | — | 66,977 | — | ||||||||||||||
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Severance charge
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35 | 30 | 1,200 | 407 | ||||||||||||||
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Stock-based compensation
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359 | — | 1,411 | — | ||||||||||||||
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Total operating expenses
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13,363 | 12,886 | 111,440 | 37,405 | ||||||||||||||
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Operating loss
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(13,347 | ) | (11,354 | ) | (115,370 | ) | (10,280 | ) | ||||||||||
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Other income (expense):
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Interest expense
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(52 | ) | (70 | ) | (154 | ) | (177 | ) | ||||||||||
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Interest income
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118 | 449 | 883 | 2,032 | ||||||||||||||
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Other, net
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(9 | ) | 8 | 162 | 36 | |||||||||||||
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Total other income
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57 | 387 | 891 | 1,891 | ||||||||||||||
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Loss before income tax benefit
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(13,290 | ) | (10,967 | ) | (114,479 | ) | (8,389 | ) | ||||||||||
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Income tax benefit
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— | — | — | — | ||||||||||||||
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Net loss
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$ | (13,290 | ) | $ | (10,967 | ) | $ | (114,479 | ) | $ | (8,389 | ) | ||||||
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Net loss per share:
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Basic
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$ | (0.47 | ) | $ | (0.45 | ) | $ | (4.02 | ) | $ | (0.35 | ) | ||||||
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Diluted
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$ | (0.47 | ) | $ | (0.45 | ) | $ | (4.02 | ) | $ | (0.35 | ) | ||||||
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Weighted average common shares outstanding:
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Basic
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28,404 | 24,114 | 28,485 | 23,995 | ||||||||||||||
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Diluted
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28,404 | 24,114 | 28,485 | 23,995 | ||||||||||||||
See accompanying notes to condensed consolidated financial statements.
2
THERMA-WAVE, INC.
| Nine Months Ended | |||||||||||
| December 31, | |||||||||||
| 2002 | 2001 | ||||||||||
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Operating activities:
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Net loss
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$ | (114,479 | ) | $ | (8,389 | ) | |||||
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Adjustments to reconcile net loss to net cash
used by operating activities:
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Depreciation and amortization
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4,499 | 3,836 | |||||||||
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Amortization of intangible assets
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1,315 | — | |||||||||
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Amortization of deferred stock-based compensation
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1,449 | — | |||||||||
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Impairment of goodwill and other intangible assets
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66,977 | — | |||||||||
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Inventory charge
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7,425 | — | |||||||||
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Loss on disposal of fixed assets
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55 | — | |||||||||
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Issuance of treasury stock in connection with
payment of consulting services
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50 | — | |||||||||
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Changes in assets and liabilities:
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Accounts receivable
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5,923 | 25,984 | |||||||||
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Inventories
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(807 | ) | 1,834 | ||||||||
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Other assets
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2,243 | (379 | ) | ||||||||
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Liabilities
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(5,499 | ) | (27,833 | ) | |||||||
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Net cash used by operating activities
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(30,849 | ) | (4,947 | ) | |||||||
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Investing activities:
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Purchases of property and equipment
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(1,372 | ) | (2,034 | ) | |||||||
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(Purchase) sale of short-term investments
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8,003 | 1,525 | |||||||||
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Other
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(850 | ) | (619 | ) | |||||||
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Net cash provided (used) by investing
activities
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5,781 | (1,128 | ) | ||||||||
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Financing activities:
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Proceeds from issuance of common stock
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1,049 | 2,291 | |||||||||
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Proceeds from note receivable from stockholders
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4 | — | |||||||||
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Purchase of treasury stock
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(938 | ) | — | ||||||||
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Principal payments under capital lease obligations
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— | (65 | ) | ||||||||
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Net cash provided by financing activities
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115 | 2,226 | |||||||||
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Effect of exchange rates on cash
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485 | (153 | ) | ||||||||
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Net decrease in cash and cash equivalents
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(24,468 | ) | (4,002 | ) | |||||||
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Cash and cash equivalents at beginning of period
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46,484 | 55,725 | |||||||||
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Cash and cash equivalents at end of period
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$ | 22,016 | $ | 51,723 | |||||||
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Supplementary disclosures:
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Cash paid for interest
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$ | 42 | $ | 77 | |||||||
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Cash paid for taxes
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$ | 130 | $ | 2,466 | |||||||
See accompanying notes to condensed consolidated financial statements.
3
THERMA-WAVE, INC.
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and include the accounts of Therma-Wave, Inc. and its wholly-owned subsidiaries. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations. In our opinion, the financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial position at December 31, 2002, and the operating results and cash flows for the three and nine months ended December 31, 2002 and 2001. These financial statements and notes should be read in conjunction with our audited financial statements and notes thereto for the year ended March 31, 2002.
The Company has sustained significant losses for the last four quarters. The Company expects to limit its capital spending to essential items and to make further operating expense reductions, as discussed in Note 11, Subsequent Events. The Company believes that its existing capital will be sufficient to fund its operations and its capital investments for at least the next twelve months. No assurance can be given, however, that this will be the case. The Company may require additional equity or debt financing to meet its working capital requirements or to fund its research and development activities. The financing activities may involve substantial dilution to the Company’s stockholders, restrictive covenants, or high interest costs. There can be no assurance that additional financing will be available when required or, if available, will be on terms satisfactory to the Company.
The results of operations for the interim periods are not necessarily indicative of the results of operations that may be expected for any other period or for the fiscal year, which ends on March 30, 2003. Certain costs and expenses in the three and nine months ended December 31, 2001 have been reclassified to conform to the presentation in the three months ended December 29, 2002.
The third quarters of fiscal years 2003 and 2002 and the entire fiscal year 2002 ended on December 29, 2002, December 30, 2001 and March 31, 2002, respectively. For presentation purposes, the accompanying financial statements have been shown as ending on the last day of the calendar quarter closest to each of these dates.
2. Inventories
Inventories are summarized as follows (in thousands):
| December 31, | March 31, | |||||||
| 2002 | 2002 | |||||||
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Purchased materials
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$ | 3,148 | $ | 11,172 | ||||
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Systems in process
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15,144 | 12,657 | ||||||
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Finished systems
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9,767 | 10,848 | ||||||
| $ | 28,059 | $ | 34,677 | |||||