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: 0-32259
Align Technology, Inc.
(Exact name of registrant as specified in its charter)
| Delaware |
94-3267295 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
881 Martin Avenue
Santa Clara, California 95050
(Address of principal executive offices) (Zip Code)
(408) 470-1000
(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. 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 ¨
The number of shares outstanding of the registrant’s Common Stock, $0.001 par value, as of April 30, 2003 was 57,849,270.
INDEX
| 3 | ||||
| ITEM 1 |
3 | |||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
12 | ||
| ITEM 3. |
29 | |||
| ITEM 4. |
30 | |||
| 30 | ||||
| ITEM 1. |
30 | |||
| ITEM 2. |
32 | |||
| ITEM 3. |
32 | |||
| ITEM 4. |
32 | |||
| ITEM 5. |
32 | |||
| ITEM 6. |
32 | |||
| 33 | ||||
| 34 | ||||
-2-
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
| March 31, 2003 |
December 31, 2002 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
33,997 |
|
$ |
35,552 |
| ||
| Restricted cash |
|
3,265 |
|
|
3,261 |
| ||
| Marketable securities, short-term |
|
— |
|
|
2,693 |
| ||
| Accounts receivable, net |
|
17,078 |
|
|
16,766 |
| ||
| Inventories, net |
|
1,762 |
|
|
1,533 |
| ||
| Deferred costs |
|
1,031 |
|
|
1,139 |
| ||
| Other current assets |
|
6,650 |
|
|
4,888 |
| ||
| Total current assets |
|
63,783 |
|
|
65,832 |
| ||
| Property and equipment, net |
|
23,787 |
|
|
25,078 |
| ||
| Other assets |
|
2,093 |
|
|
1,946 |
| ||
| Total assets |
$ |
89,663 |
|
$ |
92,856 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
2,078 |
|
$ |
1,974 |
| ||
| Other accrued liabilities |
|
13,199 |
|
|
12,112 |
| ||
| Deferred revenue |
|
2,493 |
|
|
2,130 |
| ||
| Current portion of equipment-based term loan |
|
1,667 |
|
|
1,667 |
| ||
| Current portion of capital lease obligations |
|
470 |
|
|
516 |
| ||
| Total current liabilities |
|
19,907 |
|
|
18,399 |
| ||
| Equipment-based term loan, net of current portion |
|
2,917 |
|
|
3,333 |
| ||
| Capital lease obligations, net of current portion |
|
425 |
|
|
504 |
| ||
| Total liabilities |
|
23,249 |
|
|
22,236 |
| ||
| Commitments and contingencies (Note 5) |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock: $0.0001 par value; Authorized: 5,000 shares; Issued and outstanding: none |
|
— |
|
|
— |
| ||
| Common stock: : $0.0001 par value; Authorized: 200,000 shares ; Issued: 57,871 and 57,740 shares at March 31, 2003 and December 31, 2002, respectively; Outstanding: 57,831 and 57,700 shares at March 31, 2003 and December 31, 2002, respectively |
|
6 |
|
|
6 |
| ||
| Additional paid-in capital |
|
365,117 |
|
|
364,691 |
| ||
| Deferred compensation |
|
(14,938 |
) |
|
(19,005 |
) | ||
| Notes receivable from stockholders |
|
(792 |
) |
|
(892 |
) | ||
| Accumulated other comprehensive income |
|
— |
|
|
17 |
| ||
| Accumulated deficit |
|
(282,979 |
) |
|
(274,197 |
) | ||
| Total stockholders’ equity |
|
66,414 |
|
|
70,620 |
| ||
| Total liabilities and stockholders’ equity |
$ |
89,663 |
|
$ |
92,856 |
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
-3-
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Revenues |
$ |
24,735 |
|
$ |
17,141 |
| ||
| Cost of revenues |
|
11,810 |
|
|
12,505 |
| ||
| Gross profit |
|
12,925 |
|
|
4,636 |
| ||
| Operating expenses: |
||||||||
| Sales and marketing |
|
10,630 |
|
|
10,327 |
| ||
| General and administrative |
|
7,894 |
|
|
9,871 |
| ||
| Research and development |
|
2,985 |
|
|
3,346 |
| ||
| Total operating expenses |
|
21,509 |
|
|
23,544 |
| ||
| Loss from operations |
|
(8,584 |
) |
|
(18,908 |
) | ||
| Interest and other income (expense), net |
|
(198 |
) |
|
406 |
| ||
| Net loss |
$ |
(8,782 |
) |
$ |
(18,502 |
) | ||
| Net loss per share, basic and diluted |
$ |
(0.15 |
) |
$ |
(0.40 |
) | ||
| Shares used in computing net loss per share, basic and diluted |
|
57,189 |
|
|
46,152 |
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
-4-
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash Flows from Operating Activities: |
||||||||
| Net loss |
$ |
(8,782 |
) |
$ |
(18,502 |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
|
2,297 |
|
|
2,913 |
| ||
| Amortization of deferred stock compensation |
|
3,641 |
|
|
4,827 |
| ||
| Compensation expense for accelerated vesting of stock options |
|
370 |
|
|
118 |
| ||
| Stock-based compensation expense |
|
252 |
|
|
653 |
| ||
| Loss on retirement, disposal and impairment of fixed assets |
|
145 |
|
|
3 |
| ||
| Allowance for doubtful accounts |
|
(4 |
) |
|
(1 |
) | ||
| Non-cash interest (income) expense on notes receivable from stockholders |
|
(20 |
) |
|
6 |
| ||
| Non-cash accretion on marketable securities |
|
12 |
|
|
25 |
| ||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
|
(308 |
) |
|
(2,916 |
) | ||
| Inventories |
|
(229 |
) |
|
95 |
| ||
| Deferred costs |
|
108 |
|
|
167 |
| ||
| Other current assets |
|
(1,745 |
) |
|
(731 |
) | ||
| Accounts payable |
|
(434 |
) |
|
(1,900 |
) | ||
| Other accrued liabilities |
|
1,087 |
|
|
333 |
| ||
| Deferred revenue |
|
363 |
|
|
227 |
| ||
| Net cash used in operating activities |
|
(3,247 |
) |
|
(14,683 |
) | ||
| Cash Flows from Investing Activities: |
||||||||
| Purchase of property and equipment |
|
(630 |
) |
|
(2,713 |
) | ||
| Restricted cash |
|
(4 |
) |
|
387 |
| ||
| Maturities of marketable securities |
|
2,669 |
|
|||||