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 000-31103
LEXAR MEDIA, INC.
(Exact name of registrant as specified in its charter)
| Delaware |
33-0723123 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 47421 Bayside Parkway Fremont, California |
94538 | |
| (Address of principal executive offices) |
(Zip Code) |
(510) 413-1200
(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 Exchange Act Rule 12b-2). Yes x No ¨
Number of shares of common stock outstanding as of May 2, 2003: 66,996,197
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2003
TABLE OF CONTENTS
| Page | ||||
| PART I FINANCIAL INFORMATION |
||||
| Item 1. |
3 | |||
| Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 (unaudited) |
3 | |||
| 4 | ||||
| 5 | ||||
| Notes to Condensed Consolidated Financial Statements (unaudited) |
6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 | ||
| Item 3. |
35 | |||
| Item 4. |
36 | |||
| PART II OTHER INFORMATION |
||||
| Item 1. |
37 | |||
| Item 2. |
39 | |||
| Item 3. |
39 | |||
| Item 4. |
39 | |||
| Item 5. |
39 | |||
| Item 6. |
39 | |||
| 40 | ||||
| 41 | ||||
2
PART I—FINANCIAL INFORMATION
| 1. | Financial Statements |
LEXAR MEDIA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
| March 31, 2003 |
December 31, 2002 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
33,165 |
|
$ |
47,383 |
| ||
| Restricted cash |
|
5,100 |
|
|
5,000 |
| ||
| Accounts receivable, net |
|
33,371 |
|
|
42,609 |
| ||
| Inventories |
|
24,235 |
|
|
25,604 |
| ||
| Prepaid expenses and other current assets |
|
2,337 |
|
|
2,397 |
| ||
| Total current assets |
|
98,208 |
|
|
122,993 |
| ||
| Property and equipment, net |
|
2,965 |
|
|
2,887 |
| ||
| Intangible and other assets, net |
|
926 |
|
|
1,041 |
| ||
| Total assets |
$ |
102,099 |
|
$ |
126,921 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
16,522 |
|
$ |
24,271 |
| ||
| Accrued liabilities |
|
17,399 |
|
|
19,392 |
| ||
| Deferred license revenue and product margin |
|
20,489 |
|
|
22,352 |
| ||
| Notes payable to bank |
|
— |
|
|
14,568 |
| ||
| Total current liabilities |
|
54,410 |
|
|
80,583 |
| ||
| Deferred license revenue, net of current portion |
|
1,080 |
|
|
4,724 |
| ||
| Other non-current liabilities |
|
— |
|
|
49 |
| ||
| Total liabilities |
|
55,490 |
|
|
85,356 |
| ||
| Stockholders’ equity: |
||||||||
| Common stock, $0.0001 par value: |
||||||||
| 200,000,000 shares authorized; 66,829,442 and 66,361,715 shares issued and outstanding |
|
7 |
|
|
7 |
| ||
| Additional paid-in capital |
|
175,668 |
|
|
175,120 |
| ||
| Unearned stock-based compensation |
|
(261 |
) |
|
(493 |
) | ||
| Notes receivable from stockholders |
|
(1,001 |
) |
|
(1,001 |
) | ||
| Accumulated deficit |
|
(127,574 |
) |
|
(131,847 |
) | ||
| Accumulated other comprehensive loss |
|
(230 |
) |
|
(221 |
) | ||
| Total stockholders’ equity |
|
46,609 |
|
|
41,565 |
| ||
| Total liabilities and stockholders’ equity |
$ |
102,099 |
|
$ |
126,921 |
| ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
LEXAR MEDIA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Net revenues: |
||||||||
| Product revenues |
$ |
50,267 |
|
$ |
24,901 |
| ||
| License and royalty revenues |
|
4,369 |
|
|
3,913 |
| ||
| Total net revenues |
|
54,636 |
|
|
28,814 |
| ||
| Cost of product revenues |
|
39,966 |
|
|
20,677 |
| ||
| Gross margin |
|
14,670 |
|
|
8,137 |
| ||
| Operating expenses: |
||||||||
| Research and development |
|
1,923 |
|
|
1,486 |
| ||
| Sales and marketing |
|
5,373 |
|
|
3,704 |
| ||
| General and administrative |
|
3,091 |
|
|
2,300 |
| ||
| Total operating expenses |
|
10,387 |
|
|
7,490 |
| ||
| Income from operations |
|
4,283 |
|
|
647 |
| ||
| Other income (expense): |
||||||||
| Interest and other expense |
|
(75 |
) |
|
(240 |
) | ||
| Interest and other income |
|
196 |
|
|
79 |
| ||
| Foreign exchange loss, net |
|
(57 |
) |
|
(158 |
) | ||
| Total other income (expense) |
|
64 |
|
|
(319 |
) | ||
| Income before income taxes |
|
4,347 |
|
|
328 |
| ||
| Income taxes |
|
74 |
|
|
5,251 |
| ||
| Net income (loss) |
$ |
4,273 |
|
$ |
(4,923 |
) | ||
| Net income (loss) per common share: |
||||||||
| Basic |
$ |
0.06 |
|
$ |
(0.08 |
) | ||
| Diluted |
$ |
0.06 |
|
$ |
(0.08 |
) | ||
| Shares used in net income (loss) per common share calculation: |
||||||||
| Basic |
|
66,404 |
|
|
59,301 |
| ||
| Diluted |
|
75,573 |
|
|
59,301 |
| ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
LEXAR MEDIA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ |
4,273 |
|
$ |
(4,923 |
) | ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
|
365 |
|
|
348 |
| ||
| Amortization of stock-based compensation |
|
207 |
|
|
500 |
| ||
| Imputed and other non-cash interest |
|
— |
|
|
2 |
| ||
| Change in operating assets and liabilities: |
||||||||
| Accounts receivable, net |
|
9,238 |
|
|
(1,937 |
) | ||
| Inventories |
|
1,369 |
|
|
(1,717 |
) | ||
| Prepaid expenses and other assets |
|
136 |
|
|
(71 |
) | ||
| Accounts payable and accrued liabilities |
|
(9,686 |
) |
|
(1,327 |
) | ||
| Other non-current liabilities |
|
(49 |
) |
|
— |
| ||
| Deferred license revenue and product margin |
|
(5,519 |
) |
|
28,226 |
| ||
| Net cash provided by operating activities |
|
334 |
|
|
19,101 |
|||