UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ending March 31, 2003
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 000-29101
SEQUENOM, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE (State or other jurisdiction of |
77-0365889 (I.R.S. Employer | |
| 3595 John Hopkins Court San Diego, California (Address of principal executive offices) |
92121 (Zip Code) |
Registrant’s telephone number, including area code: (858) 202-9000
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. x Yes ¨ No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The number of shares of the Registrant’s Common Stock outstanding as of May 12, 2003 was 39,448,382.
SEQUENOM, INC.
| Page No. | ||||
| 3 | ||||
| Item 1. |
Financial Statements |
|||
|
Condensed Consolidated Balance Sheets—as of March 31, 2003 (unaudited) and |
3 | |||
| 4 | ||||
| 5 | ||||
| Notes to the unaudited Condensed Consolidated Financial Statements |
6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10 | ||
| Item 3. |
29 | |||
| Item 4. |
29 | |||
| 31 | ||||
| Item 1. |
31 | |||
| Item 2. |
31 | |||
| Item 5. |
31 | |||
| Item 6. |
32 | |||
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value and share information)
| March 31 2003 |
December 31, 2002 |
|||||||
| (Unaudited) |
||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
33,014 |
|
$ |
32,052 |
| ||
| Short-term investments, available-for-sale |
|
44,490 |
|
|
57,570 |
| ||
| Restricted cash and investments |
|
6,710 |
|
|
5,977 |
| ||
| Accounts receivable, net |
|
7,113 |
|
|
7,714 |
| ||
| Inventories, net |
|
11,778 |
|
|
7,710 |
| ||
| Other current assets and prepaid expenses |
|
3,717 |
|
|
3,320 |
| ||
| Total current assets |
|
106,822 |
|
|
114,343 |
| ||
| Equipment and leasehold improvements, net |
|
14,965 |
|
|
15,926 |
| ||
| Intangible assets, net |
|
13,624 |
|
|
14,590 |
| ||
| Restricted cash and investments |
|
7,692 |
|
|
6,951 |
| ||
| Other assets |
|
798 |
|
|
798 |
| ||
| Total assets |
$ |
143,901 |
|
$ |
152,608 |
| ||
| Liabilities and stockholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
9,806 |
|
$ |
8,345 |
| ||
| Accrued expenses |
|
7,999 |
|
|
7,940 |
| ||
| Accrued acquisition and integration costs |
|
1,847 |
|
|
3,926 |
| ||
| Deferred revenue |
|
2,999 |
|
|
3,107 |
| ||
| Current portion of long-term bank debt |
|
5,696 |
|
|
4,942 |
| ||
| Current portion of capital lease obligations |
|
540 |
|
|
713 |
| ||
| Total current liabilities |
|
28,887 |
|
|
28,973 |
| ||
| Deferred revenue, less current portion |
|
566 |
|
|
733 |
| ||
| Capital lease obligations, less current portion |
|
374 |
|
|
508 |
| ||
| Long-term debt, less current portion |
|
9,694 |
|
|
9,234 |
| ||
| Long-term deferred tax liability |
|
4,583 |
|
|
4,911 |
| ||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock, par value $0.001; 75,000,000 shares authorized, 39,448,526 and 39,395,262 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively |
|
39 |
|
|
39 |
| ||
| Additional paid-in capital |
|
452,797 |
|
|
452,725 |
| ||
| Deferred compensation related to stock options |
|
(130 |
) |
|
(187 |
) | ||
| Accumulated other comprehensive income |
|
353 |
|
|
389 |
| ||
| Accumulated deficit |
|
(353,262 |
) |
|
(344,717 |
) | ||
| Total stockholders’ equity |
|
99,797 |
|
|
108,249 |
| ||
| Total liabilities and stockholders’ equity |
$ |
143,901 |
|
$ |
152,608 |
| ||
See accompanying notes.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share and share information)
| Three months ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| (Unaudited) |
||||||||
| Revenues: |
||||||||
| Product related |
$ |
6,595 |
|
$ |
6,773 |
| ||
| Services |
|
583 |
|
|
1,786 |
| ||
| Research |
|
265 |
|
|
41 |
| ||
| Total revenues |
|
7,443 |
|
|
8,600 |
| ||
| Costs and expenses: |
||||||||
| Cost of product and service revenue |
|
3,966 |
|
|
4,792 |
| ||
| Research and development |
|
5,882 |
|
|
8,069 |
| ||
| Selling, general and administrative |
|
5,949 |
|
|
7,039 |
| ||
| Amortization of acquired intangibles |
|
859 |
|
|
935 |
| ||
| Amortization of deferred stock compensation |
|
58 |
|
|
145 |
| ||
| Total costs and expenses |
|
16,714 |
|
|
20,980 |
| ||
| Loss from operations |
|
(9,271 |
) |
|
(12,380 |
) | ||
| Net interest income |
|
407 |
|
|
1,028 |
| ||
| Other (expense) income, net |
|
(8 |
) |
|
73 |
| ||
| Net loss before income taxes and cumulative effect of accounting change |
|
(8,872 |
) |
|
(11,279 |
) | ||
| Deferred income tax benefit |
|
327 |
|
|
327 |
| ||
| Net loss before cumulative effect of accounting change |
|
(8,545 |
) |
|
(10,952 |
) | ||
| Cumulative effect of accounting change |
|
— |
|
|
(116,947 |
) | ||
| Net loss |
$ |
(8,545 |
) |
$ |
(127,899 |
) | ||
| Net loss per share, basic and diluted: |
||||||||
| Before cumulative effect of accounting change |
$ |
(0.22 |
) |
$ |
(0.29 |
) | ||
| Cumulative effect of accounting change |
|
— |
|
$ |
(3.12 |
) | ||
| Net loss per share, basic and diluted |
$ |
(0.22 |
) |
$ |
(3.41 |
) | ||
| Weighted average shares outstanding, basic and diluted |
|
39,430,807 |
|
|
37,456,377 |
| ||
See accompanying notes.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
| Three months ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| (Unaudited) |
||||||||
| Operating activities |
||||||||
| Net loss |
$ |
(8,545 |
) |
$ |
(127,899 |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Cumulative effect of accounting change |
|
— |
|
|
116,947 |
| ||
| Other non-cash items |
|
2,907 |
|
|
1,210 |
| ||
| Deferred income tax benefit |
|
(327 |
) |
|
(327 |
) | ||
| Changes in operating assets and liabilities: |
||||||||
| Inventories |
|
(4,045 |
) |
|
981 |
| ||
| Accounts receivable |
|
701 |
|
|
1,461 |
| ||
| Other current assets |
|
(397 |
) |
|
(1,516 |
) | ||
| Other assets |
|
1 |
|
|
2,585 |
| ||
| Accounts payable and accrued expenses |
|
(1,291 |
) |
|
(8,021 |
) | ||
| Deferred revenue |
|
(257 |
) |
|
(2,766 |
) | ||
| Other liabilities |
|
647 |
|
|
2,942 |
| ||
| Net cash used in operating activities |
|
(10,606</ | ||||||