UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended March 29, 2003 |
| ¨ | 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 0-12751
Corvis Corporation
(Exact name of registrant as specified in its charter)
| Delaware |
52-2041343 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
7015 Albert Einstein Drive, Columbia, Maryland 21046-9400
(Address of principal executive offices) (Zip Code)
(443) 259-4000
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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 such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Number of shares of Common Stock, $0.01 par value, outstanding at April 30, 2003: 413,248,834.
| Item 1. |
Financial Statements |
|||
| Unaudited condensed consolidated balance sheets as of December 28, 2002 and March 29, 2003 |
3 | |||
| 4 | ||||
| 5 | ||||
| Notes to unaudited condensed consolidated financial statements |
6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 | ||
| Item 3. |
23 | |||
| Item 4. |
23 | |||
| Part II—Other Information |
||||
| Item 1. |
24 | |||
| Item 2. |
26 | |||
| Item 3. |
26 | |||
| Item 4. |
26 | |||
| Item 5. |
26 | |||
| Item 6. |
26 | |||
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
CORVIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| December 28, 2002 |
March 29, 2003 |
|||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
457,833 |
|
$ |
403,860 |
| ||
| Short-term investments |
|
24,133 |
|
|
16,247 |
| ||
| Trade accounts receivable |
|
1,781 |
|
|
336 |
| ||
| Inventory, net |
|
26,491 |
|
|
30,384 |
| ||
| Other current assets |
|
14,406 |
|
|
13,635 |
| ||
| Total current assets |
|
524,644 |
|
|
464,462 |
| ||
| Restricted cash, long-term |
|
2,329 |
|
|
2,329 |
| ||
| Long-term investments |
|
22,450 |
|
|
28,504 |
| ||
| Property and equipment, net |
|
45,760 |
|
|
38,345 |
| ||
| Goodwill and other intangible assets, net |
|
13,965 |
|
|
12,181 |
| ||
| Other long-term assets, net |
|
1,170 |
|
|
1,066 |
| ||
| Total assets |
$ |
610,318 |
|
$ |
546,887 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Notes payable, current portion |
$ |
107 |
|
$ |
110 |
| ||
| Capital lease obligations, current portion |
|
1,982 |
|
|
730 |
| ||
| Accounts payable |
|
14,973 |
|
|
11,787 |
| ||
| Accrued expenses |
|
31,609 |
|
|
25,458 |
| ||
| Accrual for restructuring charges |
|
16,130 |
|
|
9,514 |
| ||
| Total current liabilities |
|
64,801 |
|
|
47,599 |
| ||
| Noncurrent liabilities: |
||||||||
| Notes payable, net of current portion |
|
2,672 |
|
|
2,695 |
| ||
| Capital lease obligations, net of current portion |
|
74 |
|
|
17 |
| ||
| Other long-term liabilities |
|
2,693 |
|
|
2,514 |
| ||
| Total liabilities |
|
70,240 |
|
|
52,825 |
| ||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock—$0.01 par value; 1,900,000,000 shares authorized; 413,113,603 shares issued and 407,199,303 shares outstanding as of December 28, 2002; 414,655,681 shares issued and 402,373,881 shares outstanding as of March 29, 2003 |
|
4,126 |
|
|
4,141 |
| ||
| Shareholder note receivable |
|
(32 |
) |
|
(32 |
) | ||
| Treasury Stock, 5,914,300 and 12,281,800 shares, at cost |
|
(4,405 |
) |
|
(9,512 |
) | ||
| Additional paid-in capital |
|
2,809,267 |
|
|
2,815,201 |
| ||
| Accumulated other comprehensive income (loss): |
||||||||
| Foreign currency translation adjustment |
|
(8,215 |
) |
|
(8,080 |
) | ||
| Unrealized investment gains |
|
24 |
|
|
61 |
| ||
| Accumulated deficit |
|
(2,260,687 |
) |
|
(2,307,717 |
) | ||
| Total stockholders’ equity |
|
540,078 |
|
|
494,062 |
| ||
| Total liabilities and stockholders’ equity |
$ |
610,318 |
|
$ |
546,887 |
| ||
See accompanying notes to unaudited condensed consolidated financial statements.
3
CORVIS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share amounts)
| Three Months Ended |
||||||||
| March 30, 2002 |
March 29, 2003 |
|||||||
| Revenue: |
||||||||
| Products |
$ |
7,212 |
|
$ |
1,233 |
| ||
| Services |
|
1,505 |
|
|
284 |
| ||
| Total revenue |
|
8,717 |
|
|
1,517 |
| ||
| Cost of sales: |
||||||||
| Products |
|
9,736 |
|
|
967 |
| ||
| Services |
|
1,060 |
|
|
194 |
| ||
| Total cost of sales |
|
10,796 |
|
|
1,161 |
| ||
| Gross profit (loss) |
|
(2,079 |
) |
|
356 |
| ||
| Operating expenses: |
||||||||
| Research and development, exclusive of equity-based expense |
|
29,058 |
|
|
25,288 |
| ||
| Sales and marketing, exclusive of equity-based expense |
|
11,205 |
|
|
4,715 |
| ||
| General and administrative, exclusive of equity-based expense |
|
6,045 |
|
|
8,228 |
| ||
| Equity-based expense: |
||||||||
| Research and development |
|
8,593 |
|
|
3,354 |
| ||
| Sales and marketing |
|
3,182 |
|
|
590 |
| ||
| General and administrative |
|
8,181 |
|
|
1,437 |
| ||
| Amortization of intangible assets |
|
2,917 |
|
|
1,784 |
| ||
| Restructuring, impairment and other charges |
|
2,559 |
|
|
3,784 |
| ||
| Total operating expenses |
|
71,740 |
|
|
49,180 |
| ||
| Operating loss |
|
(73,819 |
) |
|
(48,824 |
) | ||
| Interest income, net |
|
2,783 |
|
|
1,794 |
| ||
| Net loss |
$ |
(71,036 |
) |
$ |
(47,030 |
) | ||
| Other comprehensive income (loss): |
||||||||
| Foreign currency translation adjustment |
|
(853 |
) |
|
(135 |
) | ||
| Unrealized investment gains |
|
— |
|
|
(38 |
) | ||
| Comprehensive loss |
$ |
(71,889 |
) |
$ |
(47,203 |
) | ||
| Basic and diluted net loss per common share |
$ |
(0.20 |
) |
$ |
(0.12 |
) | ||
| Weighted average number of common shares outstanding |
|
360,710 |
|
|
402,463 |
| ||
See accompanying notes to unaudited condensed consolidated financial statements.
4
CORVIS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Three Months Ended |
||||||||
| March 30, 2002 |
March 29, 2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ |
(71,036 |
) |
$ |
(47,030 |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
|
11,449 |
|
|
9,198 |
| ||
| Equity-based expense |
|
19,956 |
|
|
5,381 |
| ||
| Restructuring and other charges |
|
5,082 |
|
|
278 |
| ||
| Changes in operating assets and liabilities: |
||||||||
| Decrease (increase) in accounts receivable |
|
(3,477 |
||||||