UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 30, 2003
Commission File Number 0-29811
NEW FOCUS, INC.
(Exact Name of Registrant as Specified in its Charter)
Incorporated in the State of Delaware
I.R.S. Employer Identification Number 33-0404910
2584 Junction Avenue, San Jose, California 95134-1902
Telephone: (408) 919-1500
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 ¨
On April 30, 2003, 63,622,727 shares of the Registrant’s common stock, $0.001 par value, were issued and outstanding.
NEW FOCUS, INC.
| Page No. | ||||
| PART I. |
FINANCIAL INFORMATION |
|||
| Item 1. |
||||
| Consolidated Balance Sheets—March 30, 2003 and December 29, 2002 |
3 | |||
| Consolidated Statements of Operations—Three months ended March 30, 2003 and March 31, 2002 |
4 | |||
| Consolidated Statements of Cash Flows—Three months ended March 30, 2003 and March 31, 2002 |
5 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10 | ||
| Item 3. |
15 | |||
| Item 4. |
24 | |||
| PART II. |
OTHER INFORMATION |
|||
| Item 1. |
25 | |||
| Item 2. |
26 | |||
| Item 3. |
26 | |||
| Item 4. |
26 | |||
| Item 5. |
26 | |||
| Item 6. |
26 | |||
| 27 | ||||
| 28 | ||||
2
Item 1. Consolidated Financial Statements (Unaudited)
NEW FOCUS, INC.
(In thousands)
| March 30, 2003 |
December 29, 2002 |
|||||||
| (unaudited) |
(see note) |
|||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ |
166,534 |
|
$ |
178,430 |
| ||
| Short-term investments |
|
91,036 |
|
|
100,928 |
| ||
| Trade accounts receivable, less allowances of $787 in 2003 and $552 in 2002 |
|
3,082 |
|
|
3,048 |
| ||
| Inventories: |
||||||||
| Raw materials |
|
1,307 |
|
|
1,597 |
| ||
| Work in progress |
|
614 |
|
|
356 |
| ||
| Finished goods |
|
1,361 |
|
|
1,169 |
| ||
| Total inventories |
|
3,282 |
|
|
3,122 |
| ||
| Prepaid expenses and other current assets |
|
1,656 |
|
|
3,480 |
| ||
| Total current assets |
|
265,590 |
|
|
289,008 |
| ||
| Property, plant and equipment: |
||||||||
| Asset held for sale |
|
15,675 |
|
|
15,675 |
| ||
| Manufacturing and development equipment |
|
7,392 |
|
|
7,727 |
| ||
| Computer software and equipment |
|
4,327 |
|
|
4,303 |
| ||
| Office equipment |
|
985 |
|
|
984 |
| ||
| Leasehold improvements |
|
1,976 |
|
|
1,903 |
| ||
|
|
30,355 |
|
|
30,592 |
| |||
| Less allowances for depreciation and amortization |
|
(8,242 |
) |
|
(7,525 |
) | ||
| Net property, plant and equipment |
|
22,113 |
|
|
23,067 |
| ||
| Intangible assets, net of accumulated amortization of $1,538 in 2003 and $1,365 in 2002 |
|
1,221 |
|
|
1,394 |
| ||
| Other assets |
|
3,864 |
|
|
3,895 |
| ||
| Total assets |
$ |
292,788 |
|
$ |
317,364 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
982 |
|
$ |
1,522 |
| ||
| Accrued compensation and related benefits |
|
1,829 |
|
|
4,252 |
| ||
| Other accrued expenses |
|
3,880 |
|
|
3,201 |
| ||
| Restructuring accrual |
|
6,158 |
|
|
6,534 |
| ||
| Total current liabilities |
|
12,849 |
|
|
15,509 |
| ||
| Restructuring accrual—long-term |
|
13,730 |
|
|
14,854 |
| ||
| Deferred rent |
|
449 |
|
|
447 |
| ||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.001 par value: |
||||||||
| Authorized shares—10,000,000 |
||||||||
| Issued and outstanding—none |
|
— |
|
|
— |
| ||
| Common stock, $0.001 par value: |
||||||||
| Authorized shares—250,000,000 |
||||||||
| Issued and outstanding—63,622,194 in 2003 and 68,297,798 in 2002 |
|
64 |
|
|
68 |
| ||
| Additional paid-in capital |
|
925,392 |
|
|
941,505 |
| ||
| Notes receivable from stockholders |
|
(1,401 |
) |
|
(1,401 |
) | ||
| Deferred compensation |
|
(1,924 |
) |
|
(2,546 |
) | ||
| Accumulated other comprehensive income |
|
446 |
|
|
647 |
| ||
| Accumulated deficit |
|
(656,817 |
) |
|
(651,719 |
) | ||
| Total stockholders’ equity |
|
265,760 |
|
|
286,554 |
| ||
| Total liabilities and stockholders’ equity |
$ |
292,788 |
|
$ |
317,364 |
| ||
Note: The December 29, 2002 consolidated balance sheet has been derived from audited financial statements.
See notes to consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended |
||||||||
| March 30, 2003 |
March 31, 2002 |
|||||||
| Net revenues |
$ |
6,138 |
|
$ |
10,096 |
| ||
| Cost of net revenues (1) |
|
4,833 |
|
|
13,921 |
| ||
| Gross profit (loss) |
|
1,305 |
|
|
(3,825 |
) | ||
| Operating Expenses: |
||||||||
| Research and development (2) |
|
2,222 |
|
|
8,379 |
| ||
| Less funding received from research and development contracts |
|
(51 |
) |
|
(1,017 |
) | ||
| Net research and development |
|
2,171 |
|
|
7,362 |
| ||
| Sales and marketing (3) |
|
1,520 |
|
|
2,578 |
| ||
| General and administrative (4) |
|
3,177 |
|
|
3,902 |
| ||
| Amortization of intangible assets |
|
173 |
|
|
1,346 |
| ||
| Restructuring and impairment charges |
|
36 |
|
|
24,022 |
| ||
| Amortization of deferred compensation |
|
527 |
|
|
3,442 |
| ||
| Total operating expenses |
|
7,604 |
|
|
42,652 |
| ||
| Operating loss |
|
(6,299 |
) |
|
(46,477 |
) | ||
| Interest income |
|
1,182 |
|
|
2,530 |
| ||
| Interest expense |
|
— |
|
|
(1 |
) | ||
| Other income (expense), net |
|
19 |
|
|
(32 |
) | ||
| Loss before provision for income taxes |
|
(5,098 |
) |
|
(43,980 |
) | ||
| Provision for income taxes |
|
— |
|
|
— |
| ||
| Net loss |
$ |
(5,098 |
) |
$ |
(43,980 |
) | ||
| Basic and diluted net loss per share |
$ |
(0.08 |
) |
$ |
(0.58 |
) | ||
| Shares used to compute basic and diluted net loss per share |
|
63,928 |
|
|
75,259 |
| ||
| (1) | Excluding amortization of deferred stock compensation of $38 and $31 for the three months ended March 30, 2003 and March 31, 2002, respectively. |
| (2) | Excluding amortization of deferred stock compensation of $160 and $3,089 for the three months ended March 30, 2003 and March 31, 2002, respectively. |
| (3) | Excluding amortization of deferred stock compensation of $0 and $41 for the three months ended March 30, 2003 and March 31, 2002, respectively. |
| (4) | Excluding amortization of deferred stock compensation of $329 and $281 for the three months ended March 30, 2003 and March 31, 2002, respectively. |
See notes to consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended |
||||||||
| March 30, 2003 |
March 31, 2002 |
|||||||
| Operating activities |
||||||||
| Net loss |
$ |
(5,098 |
) |
$ |
(43,980 |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
|
717 |
|
|
3,870 |
| ||
| Restructuring and impairment charges |
|
74 | ||||||