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 PERIOD ENDED DECEMBER 31, 2002 |
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 000-23649
ARTISAN COMPONENTS, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE (State or other jurisdiction of incorporation or organization) |
77-0278185 (I.R.S. Employer Identification Number) |
141 Caspian Court
Sunnyvale, California 94089
(Address of principal executive offices)
Telephone Number (408) 734-5600
(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 Securities Exchange Act). YES x NO ¨
The aggregate market value of Common Stock held by non-affiliates of the Registrant as of March 28, 2002 was $241.9 million. As of January 31, 2003 there were 17,524,726 shares of the Registrant’s Common Stock outstanding.
Form 10-Q
| Page No. | ||||
| 1 | ||||
| 2 | ||||
| PART I—Financial Information | ||||
| ITEM 1—Financial Statements |
||||
| Condensed Consolidated Balance Sheets, unaudited, as of December 31, 2002 and September 30, 2002 |
3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| ITEM 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10 | |||
| ITEM 3—Quantitative and Qualitative Disclosures about Market Risk |
37 | |||
| 38 | ||||
| PART II—Other Information | ||||
| 38 | ||||
| 39 | ||||
| 39 | ||||
| 39 | ||||
| 39 | ||||
| 39 | ||||
| 40 | ||||
2
ARTISAN COMPONENTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
| December 31, 2002 |
September 30, 2002 |
|||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
25,981 |
|
$ |
29,159 |
| ||
| Marketable securities |
|
28,765 |
|
|
23,085 |
| ||
| Accounts receivable, net |
|
12,055 |
|
|
7,232 |
| ||
| Prepaid expenses and other current assets |
|
2,275 |
|
|
2,345 |
| ||
| Total current assets |
|
69,076 |
|
|
61,821 |
| ||
| Property and equipment, net |
|
4,142 |
|
|
3,499 |
| ||
| Goodwill |
|
13,741 |
|
|
13,741 |
| ||
| Intangible assets, net |
|
1,779 |
|
|
2,271 |
| ||
| Other assets |
|
1,977 |
|
|
1,116 |
| ||
| Total assets |
$ |
90,715 |
|
$ |
82,448 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
952 |
|
$ |
861 |
| ||
| Accrued liabilities |
|
5,309 |
|
|
4,081 |
| ||
| Deferred revenue |
|
8,048 |
|
|
5,924 |
| ||
| Total current liabilities |
|
14,309 |
|
|
10,866 |
| ||
| Deferred revenue |
|
810 |
|
|
812 |
| ||
| Other liabilities |
|
872 |
|
|
1,610 |
| ||
| Total liabilities |
|
15,991 |
|
|
13,288 |
| ||
| Stockholders’ equity |
||||||||
| Common Stock, $0.001 par value: |
||||||||
| Authorized: 50,000; Issued and outstanding: 17,313 and 16,898 shares at December 31, 2002 and September 30, 2002, respectively |
|
17 |
|
|
17 |
| ||
| Additional paid in capital |
|
80,569 |
|
|
77,170 |
| ||
| Accumulated deficit |
|
(5,862 |
) |
|
(8,027 |
) | ||
| Total stockholders’ equity |
|
74,724 |
|
|
69,160 |
| ||
| Total liabilities and stockholders’ equity |
$ |
90,715 |
|
$ |
82,448 |
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
ARTISAN COMPONENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Three Months Ended December 31, |
|||||||
| 2002 |
2001 |
||||||
| (unaudited) |
|||||||
| Revenue: |
|||||||
| License |
$ |
11,969 |
$ |
5,599 |
| ||
| Net royalty |
|
2,015 |
|
1,969 |
| ||
| Total revenue |
|
13,984 |
|
7,568 |
| ||
| Costs and expenses: |
|||||||
| Cost of revenue |
|
3,906 |
|
1,581 |
| ||
| Product development |
|
2,935 |
|
2,902 |
| ||
| Sales and marketing |
|
3,104 |
|
2,044 |
| ||
| General and administrative |
|
1,395 |
|
608 |
| ||
| Amortization of purchased intangible assets |
|
492 |
|
492 |
| ||
| Total costs and expenses |
|
11,832 |
|
7,627 |
| ||
| Operating income (loss) |
|
2,152 |
|
(59 |
) | ||
| Interest and other income, net |
|
203 |
|
256 |
| ||
| Income before provision for income taxes |
|
2,355 |
|
197 |
| ||
| Provision for income taxes |
|
190 |
|
79 |
| ||
| Net income |
$ |
2,165 |
$ |
118 |
| ||
| Net income per share: |
|||||||
| Basic |
$ |
0.13 |
$ |
0.01 |
| ||
| Diluted |
$ |
0.11 |
$ |
0.01 |
| ||
| Shares used in computing net income per share: |
|||||||
| Basic |
|
17,103 |
|
16,525 |
| ||
| Diluted |
|
18,857 |
|
17,754 |
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
ARTISAN COMPONENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Three Months Ended December 31, |
||||||||
| 2002 |
2001 |
|||||||
| (unaudited) |
||||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ |
2,165 |
|
$ |
118 |
| ||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
|
985 |
|
|
1,134 |
| ||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable, net |
|
(4,823 |
) |
|
(4,913 |
) | ||
| Prepaid expenses and other assets |
|
(791 |
) |
|
97 |
| ||
| Accounts payable |
|
91 |
|
|
36 |
| ||
| Accrued liabilities |
|
1,228 |
|
|
(1,097 |
) | ||
| Deferred revenue |
|
2,122 |
|
|
1,145 |
| ||
| Other liabilities |
|
(738 |
) |
|
151 |
| ||
| Net cash provided by (used in) operating activities |
|
239 |
|
|
(3,329 |
) | ||
| Cash flows from investing activities: |
||||||||
| Purchase of property and equipment |
|
(1,136 |
) |
|
(574 |
) | ||
| Purchase of marketable securities |
|
(19,030 |
) |
|
(5,582 |
) | ||
| Proceeds from the sale of marketable securities |
|
13,350 |
|
|
1,964 |
| ||
| Net cash used in investing activities |
|
(6,816 |
) |
|
(4,192 |
) | ||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock |
|
3,399 |
|
|
683 |
| ||
| Net cash provided by financing activities |
|
3,399 |
|
|
683 |
| ||
| Net decrease in cash and cash equivalents |
|
(3,178 |
) |
|
(6,838 |
) | ||
| Cash and cash equivalents, beginning of period |
|
29,159 |
|
|
31,592 |
| ||
| Cash and cash equivalents, end of period |
$ |
25,981 |
|
$ |
24,754 |
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
ARTISAN COMPONENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)