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 ended March 31, 2003
or
| ¨ | 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: 1-13828
MEMC ELECTRONIC MATERIALS, INC.
(Exact name of registrant as specified in its charter)
| Delaware |
56-1505767 | |
| (State or other jurisdiction of incorporation or organization) |
(I. R. S. Employer Identification No.) |
| 501 Pearl Drive (City of O’Fallon) St. Peters, Missouri |
63376 | |
| (Address of principal executive offices) |
(Zip Code) |
(636) 474-5000
(Registrant’s telephone number, including area code)
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 Act). x Yes ¨ No
The number of shares of the registrant’s common stock outstanding at April 30, 2003 was 196,012,524.
TABLE OF CONTENTS
| PART I—FINANCIAL INFORMATION |
||
| 3 | ||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
9 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
13 | |
| 13 | ||
| PART II—OTHER INFORMATION |
||
| 14 | ||
| 16 | ||
| 19 |
PART I—FINANCIAL INFORMATION
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Dollars in thousands, except share data)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Net sales |
$ |
188,345 |
|
$ |
136,651 |
| ||
| Cost of goods sold |
|
134,143 |
|
|
114,984 |
| ||
| Gross margin |
|
54,202 |
|
|
21,667 |
| ||
| Operating expenses: |
||||||||
| Marketing and administration |
|
14,094 |
|
|
17,428 |
| ||
| Research and development |
|
7,390 |
|
|
6,816 |
| ||
| Restructuring |
|
— |
|
|
2,174 |
| ||
| Operating income (loss) |
|
32,718 |
|
|
(4,751 |
) | ||
| Nonoperating (income) expense: |
||||||||
| Interest expense |
|
4,007 |
|
|
5,055 |
| ||
| Interest income |
|
(1,991 |
) |
|
(1,988 |
) | ||
| Royalty income |
|
(794 |
) |
|
(565 |
) | ||
| Other, net |
|
2,164 |
|
|
900 |
| ||
| Total nonoperating expense |
|
3,386 |
|
|
3,402 |
| ||
| Income (loss) before income taxes, equity in income (loss) of joint ventures and minority interests |
|
29,332 |
|
|
(8,153 |
) | ||
| Income taxes |
|
8,213 |
|
|
1,454 |
| ||
| Income (loss) before equity in income (loss) of joint ventures and minority interests |
|
21,119 |
|
|
(9,607 |
) | ||
| Equity in income (loss) of joint ventures |
|
1,063 |
|
|
(282 |
) | ||
| Minority interests |
|
(2,442 |
) |
|
(308 |
) | ||
| Net income (loss) |
$ |
19,740 |
|
($ |
10,197 |
) | ||
| Cumulative preferred stock dividends |
$ |
— |
|
$ |
7,927 |
| ||
| Net income (loss) allocable to common stockholders |
$ |
19,740 |
|
($ |
18,124 |
) | ||
| Basic income (loss) per share |
$ |
0.10 |
|
($ |
0.26 |
) | ||
| Diluted income (loss) per share |
$ |
0.09 |
|
($ |
0.26 |
) | ||
| Weighted average shares used in computing basic income (loss) per share |
|
195,448,914 |
|
|
69,658,319 |
| ||
| Weighted average shares used in computing diluted income (loss) per share |
|
210,663,215 |
|
|
69,658,319 |
| ||
See accompanying notes to consolidated financial statements.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (Unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
115,461 |
|
$ |
119,651 |
| ||
| Short-term investments |
|
45,338 |
|
|
45,995 |
| ||
| Accounts receivable, less allowance for doubtful accounts of $3,341 and $3,294 |
|
87,986 |
|
|
95,022 |
| ||
| Inventories |
|
90,638 |
|
|
85,106 |
| ||
| Prepaid and other current assets |
|
19,123 |
|
|
17,934 |
| ||
| Total current assets |
|
358,546 |
|
|
363,708 |
| ||
| Property, plant and equipment, net of accumulated depreciation of $151,829 and
$143,821 |
|
191,547 |
|
|
184,875 |
| ||
| Investments in joint ventures |
|
17,883 |
|
|
16,820 |
| ||
| Goodwill, net of accumulated amortization of $736 in 2003 and 2002 |
|
3,761 |
|
|
3,761 |
| ||
| Deferred tax assets, net |
|
32,146 |
|
|
33,668 |
| ||
| Other assets |
|
30,787 |
|
|
28,850 |
| ||
| Total assets |
$ |
634,670 |
|
$ |
631,682 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Short-term borrowings and current portion of long-term debt |
$ |
100,259 |
|
$ |
123,640 |
| ||
| Accounts payable |
|
63,889 |
|
|
68,014 |
| ||
| Accrued liabilities |
|
30,907 |
|
|
33,986 |
| ||
| Customer deposits |
|
14,771 |
|
|
15,055 |
| ||
| Provision for restructuring costs |
|
6,051 |
|
|
7,808 |
| ||
| Income taxes |
|
17,918 |
|
|
14,183 |
| ||
| Accrued wages and salaries |
|
22,122 |
|
|
23,387 |
| ||
| Total current liabilities |
|
255,917 |
|
|
286,073 |
| ||
| Long-term debt, less current portion |
|
170,382 |
|
|
160,998 |
| ||
| Pension and similar liabilities |
|
106,313 |
|
|
104,866 |
| ||
| Customer deposits |
|
16,762 |
|
|
19,617 |
| ||
| Other liabilities |
|
27,773 |
|
|
26,812 |
| ||
| Total liabilities |
|
577,147 |
|
|
598,366 |
| ||
| Minority interests |
|
60,438 |
|
|
57,996 |
| ||
| Commitments and contingencies |
||||||||
| Stockholders’ equity (deficiency): |
||||||||
| Preferred stock, $.01 par value, 50,000,000 shares authorized, 0 issued
and |
|
— |
|
|
— |
| ||
| Common stock, $.01 par value, 300,000,000 shares authorized, 196,819,450 |
|
1,968 |
|
|
1,965 |
| ||
| Additional paid-in capital |
|
27,541 |
|
|
26,965 |
| ||
| Accumulated deficit |
|
(14,727 |
) |
|
(34,467 |
) | ||
| Accumulated other comprehensive loss |
|
(7,118 |
) |
|
(7,329 |
) | ||
| Deferred compensation |
|
(5,859 |
) |
|
(7,094 |
) | ||
| Treasury stock, 929,205 in 2003 and 2002 |
|
(4,720 |
) |
|
(4,720 |
) | ||
| Total stockholders’ deficiency |
|
(2,915 |
) |
|
(24,680 |
) | ||
| Total liabilities and stockholders’ deficiency |
$ |
634,670 |
|
$ |
631,682 |
| ||
See accompanying notes to consolidated financial statements.
MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ |
19,740 |
|
$ |
(10,197 |
) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
|
8,757 |
|
|
9,038 |
| ||
| Minority interests |
|
2,442 |
|
|
308 |
| ||
| Deferred compensation |
|
1,235 |
|
|
977 |
| ||
| Equity in (income) loss of joint ventures |
|
(1,063 |
) |
|
282 |
| ||
| Gain on sale of property, plant and equipment |
|
(79 |
) |
|
— |
| ||
| Working capital and other |
|
(6,537 |
) |
|
(6,964 |
) | ||
| Net cash provided by (used in) operating activities |
|
24,495 | ||||||