x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

Commission File Number: 000-31851

MULTILINK TECHNOLOGY CORPORATION

(Exact Name of Registrant as Specified in its Charter)

California

95-4522566

(State or other jurisdiction of Incorporation or organization)

(I.R.S. Employer Identification No.)

300 Atrium Drive, 2^nd Floor, Somerset, New Jersey

08873

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (732) 537-3700

Yes   x

No   o

Yes   o

No   x

PAGE

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited):

Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002

1

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and 2002

2

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002

3

Notes to Unaudited Financial Statements

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

33

Item 4.

Controls and Procedures

35

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

36

Item 2.

Changes in Securities and Use of Proceeds

36

Item 3.

Defaults Upon Senior Securities

36

Item 4.

Submission of Matters to a Vote of Security Holders

36

Item 5.

Other Information

36

Item 6.

Exhibits and Reports on Form 8-K

36

March 31,
 2003

December 31,
2002

ASSETS

Current assets:

Cash and cash equivalents

$

30,362

$

32,669

Restricted cash

1,307

1,307

Short term investments

5,875

14,973

Accounts receivable, net

432

960

Inventories

2,397

2,189

Prepaid expenses and other current assets

1,370

2,713

Total current assets

41,743

54,811

Property and equipment, net

17,518

19,972

Other assets (including restricted cash of $1,416 and $1,743 at March 31, 2003 and December 31, 2002, respectively)

2,253

3,070

Total assets

$

61,514

$

77,853

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

4,009

$

4,522

Accrued expenses

12,320

14,840

Accrued warranty costs

91

183

Software and equipment financing—current portion

3,601

4,329

Lease obligations—current portion

44

437

Income taxes payable

401

332

Total current liabilities

20,466

24,643

Software and equipment financing—net of current portion

3,513

4,289

Commitments and contingencies

Shareholders’ equity:

Common stock, $.0001 par value:

Class A

—  

—  

Class B

—  

—  

Additional paid-in-capital

182,167

182,283

Deferred stock compensation

(1,276

)

(2,268

)

Accumulated deficit

(143,293

)

(131,098

)

Accumulated other comprehensive (loss) income

55

122

Treasury stock, at cost

(118

)

(118

)

Total shareholders’ equity

37,535

48,921

Total liabilities and shareholders’ equity

$

61,514

$

77,853

Three Months Ended
March 31,

2003

2002

Total revenues

$

959

$

10,091

Cost of revenues

Product

1,096

5,445

Deferred stock compensation

48

564

Total cost of revenues

1,144

6,009

Gross (loss) profit

(185

)

4,082

Operating expenses:

Research and development, excluding deferred stock compensation

7,339

12,789

Sales and marketing, excluding deferred stock compensation

1,839

3,932

General and administrative, excluding deferred stock compensation

1,689

2,398

Deferred stock compensation

701

2,213

Investment impairments and related charges

343

—  

Corporate realignment

189

—  

Total operating expenses

12,100

21,332

Operating loss

(12,285

)

(17,250

)

Other income and expenses:

Interest expense

(105

)

(88

)

Other income, net (including zero and $57 of equity losses in affiliate during the three months ended March 31, 2003 and 2002, respectively)

209

479

Loss before provision (benefit) for income taxes

(12,181

)

(16,859

)

Provision (benefit) for income taxes

14

(6,368

)

Net loss

$

(12,195

)

$

(10,491

)

Net loss per share, basic and diluted

$

(1.62

)

$

(1.48

)

Weighted average shares of common stock, basic and diluted

7,512

7,070

The composition of the amortization of deferred stock compensation is as follows:

Research and development

$

488

$

1,363

Sales and marketing

—  

271

General and administrative

213

579

Total

$

701

$

2,213

Three Months Ended
March  31,

2003

2002

Cash flows from operating activities:

Net loss

$

(12,195

)

$

(10,491

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization.

2,149

2,942

Deferred stock compensation

749

2,777

Investment impairments and related charges

343

—  

Corporate realignment

189

—  

Deferred income taxes

—  

(6,404

)

Equity losses in affiliate

—  

57

Loss on disposal of assets

32

—  

Changes in working capital items, net

(1,579

)

11,152

Other

147

199

Net cash provided by (used in) operating activities

(10,165

)

232

Cash flows from investing activities:

Purchases of property and equipment

(88

)

(1,103

)

Proceeds from sales of fixed assets

223

—  

Proceeds from sales of marketable securities

9,060

10,332

Purchases of marketable securities

—  

(21,102

)

Net cash provided by (used in) investing activities

9,195

(11,873

)

Cash flows from financing activities:

Proceeds from stock option exercises

125

1,076

Payments on lease obligations and software and equipment financing

(1,849

)

(1,064

)

Decrease in restricted cash

327

—  

Shareholder loan

—  

(483

)