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 to .
Commission file number 0-17111
PHOENIX TECHNOLOGIES LTD.
(Exact name of Registrant as specified in its charter)
| Delaware |
04-2685985 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
411 East Plumeria Drive, San Jose, California 95134
(Address of principal executive offices, including zip code)
(408) 570-1000
(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 ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Common Stock, par value $0.001 |
24,224,623 | |
| Class |
Number of Shares Outstanding at March 31, 2003 |
PHOENIX TECHNOLOGIES LTD.
FORM 10-Q
| Page | ||||
| PART I |
FINANCIAL INFORMATION |
|||
| Item 1. |
Financial Statements |
|||
| Condensed Consolidated Balance Sheets as of March 31, 2003 and September 30, 2002 |
3 | |||
| 4 | ||||
| Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2003 and 2002 |
5 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 | ||
| Item 3. |
27 | |||
| Item 4. |
28 | |||
| PART II. |
OTHER INFORMATION |
|||
| Item 1. |
29 | |||
| Item 2. |
29 | |||
| Item 3. |
29 | |||
| Item 4. |
29 | |||
| Item 5. |
30 | |||
| Item 6. |
||||
| 30 | ||||
| 30 |
Page 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHOENIX TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
| March 31, 2003 |
September 30, 2002 |
|||||||
| (unaudited) |
||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
26,263 |
|
$ |
25,156 |
| ||
| Short-term investments |
|
28,337 |
|
|
51,156 |
| ||
| Accounts receivable, net of allowances of $1,489 and $1,903 at March 31, 2003 and September 30, 2002, respectively |
|
19,997 |
|
|
14,612 |
| ||
| Prepaid royalties and maintenance |
|
2,573 |
|
|
2,410 |
| ||
| Deferred income taxes |
|
2,503 |
|
|
2,503 |
| ||
| Other current assets |
|
2,702 |
|
|
2,261 |
| ||
| Total current assets |
|
82,375 |
|
|
98,098 |
| ||
| Property and equipment, net |
|
7,669 |
|
|
8,212 |
| ||
| Computer software costs, net |
|
12,952 |
|
|
14,628 |
| ||
| Goodwill and intangible assets, net |
|
13,565 |
|
|
13,600 |
| ||
| Deferred income taxes |
|
10,117 |
|
|
10,104 |
| ||
| Prepaid royalties—non current |
|
5,265 |
|
|
6,470 |
| ||
| Other assets |
|
2,321 |
|
|
2,174 |
| ||
| Total assets |
$ |
134,264 |
|
$ |
153,286 |
| ||
| Liabilities and stockholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
2,017 |
|
$ |
1,691 |
| ||
| Accrued compensation and related liabilities |
|
6,975 |
|
|
7,670 |
| ||
| Deferred revenue |
|
5,380 |
|
|
4,180 |
| ||
| Income taxes payable |
|
1,505 |
|
|
8,620 |
| ||
| Accrued restructuring charges—current |
|
1,314 |
|
|
— |
| ||
| Other accrued liabilities |
|
4,379 |
|
|
4,442 |
| ||
| Total current liabilities |
|
21,570 |
|
|
26,603 |
| ||
| Long-term obligations |
|
1,370 |
|
|
726 |
| ||
| Total liabilities |
|
22,940 |
|
|
27,329 |
| ||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.100 par value, 500 shares authorized, none issued or outstanding |
|
— |
|
|
— |
| ||
| Common stock, $0.001 par value, 60,000 shares authorized, 31,405 and 31,283 shares issued, 24,225 and 26,299 shares outstanding at March 31, 2003 and September 30, 2002, respectively |
|
31 |
|
|
31 |
| ||
| Additional paid-in capital |
|
179,509 |
|
|
178,427 |
| ||
| Deferred compensation |
|
(856 |
) |
|
(626 |
) | ||
| Retained earnings |
|
25,147 |
|
|
30,998 |
| ||
| Accumulated other comprehensive loss |
|
(2,134 |
) |
|
(2,127 |
) | ||
| Less: Cost of treasury stock (7,180 and 4,984 shares at March 31, 2003 and September 30, 2002, respectively) |
|
(90,373 |
) |
|
(80,746 |
) | ||
| Total stockholders’ equity |
|
111,324 |
|
|
125,957 |
| ||
| Total liabilities and stockholders’ equity |
$ |
134,264 |
|
$ |
153,286 |
| ||
See notes to consolidated financial statements
Page 3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Three months ended March 31, |
Six months ended March 31, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Revenues |
$ |
21,717 |
|
$ |
25,381 |
|
$ |
43,611 |
|
$ |
50,470 |
| ||||
| Cost of revenues |
|
4,339 |
|
|
3,042 |
|
|
8,721 |
|
|
6,519 |
| ||||
| Gross margin |
|
17,378 |
|
|
22,339 |
|
|
34,890 |
|
|
43,951 |
| ||||
| Operating expenses: |
||||||||||||||||
| Research and development |
|
6,572 |
|
|
7,427 |
|
|
14,202 |
|
|
15,001 |
| ||||
| Sales and marketing |
|
8,329 |
|
|
8,667 |
|
|
16,966 |
|
|
16,658 |
| ||||
| General and administrative |
|
3,413 |
|
|
3,506 |
|
|
6,766 |
|
|
7,178 |
| ||||
| Amortization of goodwill and acquired intangible assets |
|
17 |
|
|
791 |
|
|
35 |
|
|
1,358 |
| ||||
| Stock-based compensation |
|
48 |
|
|
332 |
|
|
131 |
|
|
388 |
| ||||
| Restructuring and related charges |
|
549 |
|
|
— |
|
|
6,014 |
|
|
3,925 |
| ||||
| Total operating expenses |
|
18,928 |
|
|
20,723 |
|
|
44,114 |
|
|
44,508 |
| ||||
| Operating income (loss) from continuing operations |
|
(1,550 |
) |
|
1,616 |
|
|
(9,224 |
) |
|
(557 |
) | ||||
| Interest and other income, net |
|
133 |
|
|
(152 |
) |
|
222 |
|
|
55 |
| ||||
| Income (loss) from continuing operations before income taxes |
|
(1,417 |
) |
|
1,464 |
|
|
(9,002 |
) |
|
(502 |
) | ||||
| Income tax expense (benefit) from continuing operations |
|
(496 |
) |
|
488 |
|
|
(3,151 |
) |
|
(227 |
) | ||||
| Income (loss) from continuing operations |
|
(921 |
) |
|
976 |
|
|
(5,851 |
) |
|
(275 |
) | ||||
| Discontinued operations: |
||||||||||||||||
| Loss from inSilicon, net of income taxes |
|
— |
|
|
(962 |
) |
|
— |
|
|
(3,935 |
) | ||||
| Net income (loss) |
$ |
(921 |
||||||||||||||