UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| (Mark One) | ||
| [X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended June 30, 2002 |
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OR |
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| [ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from ____________ to ____________ .
Commission file number: 001-15957
CAPSTONE TURBINE CORPORATION
| Delaware | 95-4180883 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
21211 Nordhoff Street, Chatsworth, California 91311
818-734-5300
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 [ ]
APPLICABLE ONLY TO CORPORATE REGISTRANTS:
The number of shares outstanding of the registrant’s common stock as of July 31, 2002 was 77,523,466.
CAPSTONE TURBINE CORPORATION
INDEX
PART I — FINANCIAL INFORMATION |
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Item 1. |
Consolidated Financial Statements (Unaudited) |
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Consolidated Balance Sheets as of December 31, 2001 and June 30, 2002
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1 |
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Consolidated Statements of Operations for the Three Months and Six Months Ended
June 30, 2001 and June 30, 2002
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2 |
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Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 30, 2001 and
June 30, 2002
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3 |
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Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001 and June 30, 2002
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4 |
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Notes to Consolidated Financial Statements
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5 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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8 |
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Item 3. |
Qualitative and Quantitative Disclosures About Market Risk
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13 |
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PART II — OTHER INFORMATION |
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Item 1. |
Legal Proceedings
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14 |
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Item 2. |
Changes in Securities and Use of Proceeds
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14 |
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Item 3. |
Defaults Upon Senior Securities
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14 |
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Item 4. |
Submission of Matters to a Vote of Security Holders
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14 |
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Item 5. |
Other Information — Business Risks
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15 |
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Item 6. |
Exhibits and Reports on Form 8-K
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24 |
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Signatures |
26 |
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2
PART I — FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
CAPSTONE TURBINE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| December 31, | June 30, | |||||||||||
| 2001 | 2002 | |||||||||||
| ASSETS | ||||||||||||
Current Assets: |
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Cash and cash equivalents |
$ | 170,868,000 | $ | 155,126,000 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of $163,000 at December 31, 2001
and $310,000 at June 30, 2002 |
8,016,000 | 7,991,000 | ||||||||||
Inventory |
21,973,000 | 16,914,000 | ||||||||||
Prepaid expenses and other current assets |
1,422,000 | 2,931,000 | ||||||||||
Total current assets |
202,279,000 | 182,962,000 | ||||||||||
Equipment and Leasehold Improvements: |
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Machinery, equipment, and furniture |
22,895,000 | 23,974,000 | ||||||||||
Leasehold improvements |
9,235,000 | 9,241,000 | ||||||||||
Molds and tooling |
4,534,000 | 4,728,000 | ||||||||||
| 36,664,000 | 37,943,000 | |||||||||||
Less accumulated depreciation and amortization |
9,362,000 | 12,175,000 | ||||||||||
Total equipment and leasehold improvements |
27,302,000 | 25,768,000 | ||||||||||
Deposits on Fixed Assets |
2,550,000 | 1,900,000 | ||||||||||
Other Assets |
242,000 | 139,000 | ||||||||||
Intangible Assets, Net |
21,881,000 | 3,028,000 | ||||||||||
Total |
$ | 254,254,000 | $ | 213,797,000 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current Liabilities: |
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Accounts payable |
$ | 3,490,000 | $ | 5,443,000 | ||||||||
Accrued salaries and wages |
1,440,000 | 1,915,000 | ||||||||||
Other accrued liabilities |
1,263,000 | 1,064,000 | ||||||||||
Accrued warranty reserve |
4,145,000 | 4,621,000 | ||||||||||
Deferred revenue |
1,471,000 | 1,062,000 | ||||||||||
Current portion of capital lease obligations |
1,308,000 | 1,373,000 | ||||||||||
Total current liabilities |
13,117,000 | 15,478,000 | ||||||||||
Long-Term Portion of Capital Lease Obligations |
2,525,000 | 1,790,000 | ||||||||||
Other Long-Term Liabilities |
1,158,000 | 1,204,000 | ||||||||||
Commitments and Contingencies |
— | — | ||||||||||
Stockholders’ Equity: |
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Common stock, $.001 par value; 415,000,000 shares authorized; 77,207,383 and 77,514,259
shares issued and outstanding at December 31, 2001 and June 30, 2002, respectively |
77,000 | 78,000 | ||||||||||
Additional paid-in capital |
521,668,000 | 522,403,000 | ||||||||||
Accumulated deficit |
(284,291,000 | ) | (327,156,000 | ) | ||||||||
Total stockholders’ equity |
237,454,000 | 195,325,000 | ||||||||||
Total |
$ | 254,254,000 | $ | 213,797,000 | ||||||||
See accompanying notes to consolidated financial statements.
1
CAPSTONE TURBINE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three | Six | |||||||||||||||||
| Months Ended | Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2001 | 2002 | 2001 | 2002 | |||||||||||||||
Revenues |
$ | 13,559,000 | $ | 7,408,000 | $ | 22,465,000 | $ | 11,999,000 | ||||||||||
Cost of Goods Sold |
12,982,000 | 11,631,000 | 21,565,000 | 19,180,000 | ||||||||||||||
Gross Profit (Loss) |
577,000 | (4,223,000 | ) | 900,000 | (7,181,000 | ) | ||||||||||||
Operating Costs and Expenses: |
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Research and development |
2,889,000 | 1,619,000 | 5,659,000 | 3,058,000 | ||||||||||||||
Selling, general and administrative |
10,893,000 | 9,650,000 | 20,805,000 | 18,010,000 | ||||||||||||||
Impairment loss |
— | 15,999,000 | — | 15,999,000 | ||||||||||||||
Total operating costs and expenses |
13,782,000 | 27,268,000 | 26,464,000 | 37,067,000 | ||||||||||||||
Loss from Operations |
(13,205,000 | ) | (31,491,000 | ) | (25,564,000 | ) | (44,248,000 | ) | ||||||||||
Interest Income |
3,082,000 | 756,000 | 6,126,000 | 1,579,000 | ||||||||||||||
Interest Expense |
(153,000 | ) | (105,000 | ) | (320,000 | ) | (219,000 | ) | ||||||||||
Other Income |
13,000 | 5,000 | 27,000 | 25,000 | ||||||||||||||
Loss Before Income Taxes |
(10,263,000 | ) | (30,835,000 | ) | (19,731,000 | ) | (42,863,000 | ) | ||||||||||
Provision for Income Taxes |
— | — | 1,000 | 2,000 | ||||||||||||||
Net Loss |
$ | (10,263,000 | ) | $ | (30,835,000 | ) | $ | (19,732,000 | ) | $ | (42,865,000 | ) | ||||||
Weighted Average Common Shares Outstanding |
76,654,902 | 77,453,602 | 76,351,836 | 77,420,588 | ||||||||||||||
Net Loss Per Share of Common Stock — Basic and Diluted |
$ | (0.13 | ) | $ | (0.40 | ) | $ | (0.26 | ) | $ | (0.55 | ) | ||||||
See accompanying notes to consolidated financial statements.
2
CAPSTONE TURBINE CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
SIX MONTHS ENDED JUNE 30, 2001 and JUNE 30, 2002
(Unaudited)
| Common Stock | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Shares | Paid In | Accumulated | ||||||||||||||||||
| Outstanding | Amount | Capital | Deficit | Total | ||||||||||||||||
Balance, December 31, 2000 |
75,771,303 | $ | 76,000 | $ | 516,738,000 | $ | (237,432,000 | ) | $ | 279,382,000 | ||||||||||
Stock-based compensation |
— | — | 1,058,000 | — | 1,058,000 | |||||||||||||||
Exercise of stock options and
employee stock purchases |
1,073,419 | 1,000 | 1,868,000 | — | 1,869,000 | |||||||||||||||
Stock issuance costs |
— | — | (110,000 | ) | — | (110,000 | ) | |||||||||||||
Net loss |
— | — | — | (19,732,000 | ) | (19,732,000 | ) | |||||||||||||
Balance, June 30, 2001 |
76,844,722 | $ | 77,000 | $ | 519,554,000 | $ | (257,164,000 | ) | $ | 262,467,000 | ||||||||||
Balance, December 31, 2001 |
77,207,383 | $ | 77,000 | $ | 521,668,000 | $ | (284,291,000 | ) | $ | 237,454,000 | ||||||||||
Stock-based compensation |
— | — | 528,000 | — | 528,000 | |||||||||||||||
Exercise of stock options and
employee stock purchases |
306,876 | 1,000 | 207,000 | — | 208,000 | |||||||||||||||
Net loss |
— | — | — | (42,865,000 | ) | (42,865,000 | ) | |||||||||||||
Balance, June 30, 2002 |
77,514,259 | $ | 78,000 | $ | 522,403,000 | $ | (327,156,000 | ) | $ | 195,325,000 | ||||||||||
See accompanying notes to consolidated financial statements.
3
CAPSTONE TURBINE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended | ||||||||||||
| June 30, | ||||||||||||
| 2001 | 2002 | |||||||||||
Cash Flows from Operating Activities: |
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Net loss |
$ | (19,732,000 | ) | $ | (42,865,000 | ) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
4,517,000 | 6,229,000 | ||||||||||
Impairment loss |
— | 15,999,000 | ||||||||||
Provision for doubtful accounts |
30,000 | 125,000 | ||||||||||
Provision for inventory reserves |
955,000 | 2,853,000 | ||||||||||
Loss on disposal of equipment |
57,000 | 86,000 | ||||||||||
Non-employee stock compensation |
185,000 | — | ||||||||||
Employee stock compensation |
873,000 | 528,000 | ||||||||||
Changes in operating assets and liabilities: |
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Accounts receivable |
(11,197,000 | ) | (100,000 | ) | ||||||||
Other assets |
— | 100,000 | ||||||||||
Inventory |
(3,286,000 | ) | 2,206,000 | |||||||||
Prepaid expenses and other current assets |
580,000 | (1,509,000 | ) | |||||||||
Accounts payable |
1,862,000 | 1,953,000 | ||||||||||
Accrued salaries and wages and deferred compensation |
142,000 | 466,000 | ||||||||||
Other accrued liabilities and deferred rent |
1,174,000 | (145,000 | ) | |||||||||
Accrued warranty reserve |
(393,000 | ) | 476,000 | |||||||||
Deferred revenue |
(864,000 | ) | (409,000 | ) | ||||||||
Net cash used in operating activities |
(25,097,000 | ) | (14,007,000 | ) | ||||||||
Cash Flows from Investing Activities: |
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Acquisition of and deposits on equipment and leasehold improvements |
(11,922,000 | ) | (1,289,000 | ) | ||||||||
Intangible assets |
(557,000 | ) | — | |||||||||
Net cash used in investing activities |
(12,479,000 | ) | (1,289,000 | ) | ||||||||
Cash Flows from Financing Activities: |
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Repayment of capital lease obligations |
(740,000 | ) | (654,000 | ) | ||||||||
Exercise of stock options and employee stock purchases |
1,869,000 | 208,000 | ||||||||||
Stock issuance costs |
(110,000 | ) | — | |||||||||
Net cash provided by (used in) financing activities |
1,019,000 | (446,000 | ) | |||||||||
Net Decrease in Cash and Cash Equivalents |
(36,557,000 | ) | (15,742,000 | ) | ||||||||
Cash and Cash Equivalents, Beginning of Period |
236,947,000 | 170,868,000 | ||||||||||
Cash and Cash Equivalents, End of Period |
$ | |||||||||||