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Table of Contents
 
 
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 September 30, 2002
 
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  ¨
 
Number of shares of common stock outstanding as of November 6, 2002:  60,557,740
 

Table of Contents
 
LEXAR MEDIA, INC.
 
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2002
 
TABLE OF CONTENTS
 
           
Page
PART I    FINANCIAL INFORMATION
     
Item 1.
        
3
         
3
         
4
         
5
         
6
Item 2.
        
12
Item 3.
        
35
Item 4.
        
36
PART II    OTHER INFORMATION
     
Item 1.
        
37
Item 2.
        
38
Item 3.
        
38
Item 4.
        
38
Item 5.
        
38
Item 6.
        
38
  
39

Table of Contents
 
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)
 
    
September 30,
2002
     
December 31,
2001
  
ASSETS
                  
Current assets:
                  
Cash and cash equivalents
   
$
26,220
 
   
$
8,656
 
Restricted cash
   
 
5,000
 
   
 
2,333
 
Accounts receivable, net
   
 
31,255
 
   
 
14,188
 
Inventories
   
 
21,247
 
   
 
6,827
 
Prepaid expenses and other current assets
   
 
2,244
 
   
 
1,074
 
    
  
Total current assets
   
 
85,966
 
   
 
33,078
 
Property and equipment, net
   
 
2,995
 
   
 
2,341
 
Intangible and other assets, net
   
 
1,054
 
   
 
1,033
 
    
  
Total assets
   
$
90,015
 
   
$
36,452
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
Current liabilities:
                  
Accounts payable
   
$
27,528
 
   
$
12,245
 
Accrued liabilities
   
 
10,451
 
   
 
7,813
 
Deferred revenue
   
 
21,896
 
   
 
6,033
 
Notes payable to stockholders
   
 
—
 
   
 
168
 
Notes payable
   
 
13,980
 
   
 
2,237
 
    
  
Total current liabilities
   
 
73,855
 
   
 
28,496
 
Deferred revenue
   
 
9,020
 
   
 
1,748
 
Notes payable, net
   
 
120
 
   
 
—
 
    
  
Total liabilities
   
 
82,995
 
   
 
30,244
 
Stockholders’ equity:
                  
Common stock, $0.0001 par value:
                  
200,000,000 shares authorized; 60,427,279 and 59,759,518 shares issued and outstanding
   
 
6
 
   
 
6
 
Additional paid-in capital
   
 
146,383
 
   
 
147,609
 
Unearned stock-based compensation
   
 
(738
)
   
 
(1,969
)
Notes receivable from stockholders
   
 
(1,001
)
   
 
(3,453
)
Accumulated deficit
   
 
(137,421
)
   
 
(135,856
)
Accumulated other comprehensive loss
   
 
(209
)
   
 
(129
)
    
  
Total stockholders’ equity
   
 
7,020
 
   
 
6,208
 
    
  
Total liabilities and stockholders’ equity
   
$
90,015
 
   
$
36,452
 
    
  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents
 
LEXAR MEDIA, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
    
Three Months Ended
     
Nine Months Ended
  
    
September 30,
2002
     
September 30,
2001
     
September 30,
2002
     
September 30,
2001
  
Net revenues:
                                    
Product revenues
   
$
41,329
 
   
$
14,319
 
   
$
95,571
 
   
$
43,870
 
License and royalty revenues
   
 
4,400
 
   
 
3,829
 
   
 
12,927
 
   
 
7,838
 
    
  
  
  
Total net revenues
   
 
45,729
 
   
 
18,148
 
   
 
108,498
 
   
 
51,708
 
Cost of product revenues (excludes stock-based compensation of $6, $(16), $28, and $35)
   
 
34,295
 
   
 
12,942
 
   
 
80,163
 
   
 
53,061
 
    
  
  
  
Gross margin
   
 
11,434
 
   
 
5,206
 
   
 
28,335
 
   
 
(1,353
)
    
  
  
  
Operating expenses:
                                    
Research and development (excludes stock-based compensation of $152, $322, $554 and $1,028)
   
 
1,306
 
   
 
1,215
 
   
 
3,784
 
   
 
4,421
 
Sales and marketing (excludes stock-based compensation of $99, $87, $131 and $232)
   
 
4,564
 
   
 
4,167
 
   
 
12,008
 
   
 
16,151
 
General and administrative (excludes stock-based compensation of $170, $(459), $628 and $554)
   
 
2,259
 
   
 
2,500
 
   
 
6,635
 
   
 
10,171
 
Goodwill impairment
   
 
—
 
   
 
—
 
   
 
—
 
   
 
2,854
 
Restructuring charge
   
 
—
 
   
 
—
 
   
 
—
 
   
 
2,086
 
Stock-based compensation
   
 
427
 
   
 
(66
)
   
 
1,341
 
   
 
1,849
 
    
  
  
  
Total operating expenses
   
 
8,556
 
   
 
7,816
 
   
 
23,768
 
   
 
37,532
 
    
  
  
  
Income (loss) from operations
   
 
2,878
 
   
 
(2,610
)
   
 
4,567
 
   
 
(38,885
)
Other income (expense):
                                    
Interest and other expense
   
 
(115
)
   
 
(545
)
   
 
(571
)
   
 
(3,911
)
Interest and other income
   
 
123
 
   
 
144
 
   
 
319
 
   
 
868
 
Foreign exchange gain (loss)
   
 
10
 
   
 
194
 
   
 
224
 
   
 
(198
)
    
  
  
  
Total other income (expense)
   
 
18
 
   
 
(207
)
   
 
(28
)
   
 
(3,241
)
    
  
  
  
Income (loss) before income taxes
   
 
2,896
 
   
 
(2,817
)
   
 
4,539
 
   
 
(42,126
)
Income taxes
   
 
853
 
   
 
676
 
   
 
6,104
 
   
 
2,276
 
    
  
  
  
Net income (loss)
   
$
2,043
 
   
$
(3,493
)
   
$
(1,565
)
   
$
(44,402
)
    
  
  
  
Net income (loss) per common share:
                                    
Basic
   
$
0.03
 
   
$
(0.06
)
   
$
(0.03
)
   
$
(0.77
)
    
  
  
  
Diluted
   
$
0.03
 
   
$
(0.06
)
   
$
(0.03
)
   
$
(0.77
)
    
  
  
  
Shares used in net income (loss) per common share calculation:
                                    
Basic
   
 
59,654
 
   
 
58,547
 
   
 
59,356
 
   
 
57,912
 
    
  
  
  
Diluted
   
 
68,517
 
   
 
58,547
 
   
 
59,356
 
   
 
57,912