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Table of Contents
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q
 
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 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 NO. 000-23767
 
 
SYMPHONIX DEVICES, INC.
(Exact name of registrant as specified in its charter)
 
DELAWARE
  
77-0376250
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)
 
2331 ZANKER ROAD
SAN JOSE, CALIFORNIA 95131-1107
(Address of principal executive offices, including zip code)
 
(408) 232-0710
(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 ¨
 
As of June 30, 2002; 35,827,000 shares of the Registrant’s Common Stock were outstanding.
 

Table of Contents
 
SYMPHONIX DEVICES, INC.
 
TABLE OF CONTENTS
 
PART I.     FINANCIAL INFORMATION
     
Item 1.
   
Financial Statements (unaudited)
     
       
1
       
2
       
3
       
4
       
5
Item 2.
      
7
Item 3.
      
20
PART II.    OTHER INFORMATION
     
Item 1.
      
20
Item 2.
      
20
Item 3.
      
20
Item 4.
      
20
Item 5.
      
21
Item 6.
      
21
 

i

Table of Contents
 
PART I.    FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
SYMPHONIX DEVICES, INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
    
June 30,
2002
     
December 31,
2001
  
    
(unaudited)
         
ASSETS
  
Current assets:
                  
Cash and cash equivalents
   
$
1,636
 
   
$
1,343
 
Short-term investments
   
 
4,060
 
   
 
10,774
 
Restricted cash
   
 
549
 
   
 
—  
 
Accounts receivable, net
   
 
274
 
   
 
329
 
Inventories
   
 
794
 
   
 
656
 
Prepaid expenses and other current assets
   
 
580
 
   
 
566
 
    
  
Total current assets
   
 
7,893
 
   
 
13,668
 
Property and equipment, net
   
 
1,002
 
   
 
1,313
 
Restricted cash
   
 
385
 
   
 
174
 
    
  
Total assets
   
$
9,280
 
   
$
15,155
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
  
Current liabilities:
                  
Accounts payable
   
$
526
 
   
$
451
 
Accrued compensation
   
 
444
 
   
 
976
 
Other accrued liabilities
   
 
1,786
 
   
 
2,708
 
Current portion of bank borrowings
   
 
500
 
   
 
500
 
    
  
Total current liabilities
   
 
3,256
 
   
 
4,635
 
Deferred revenue
   
 
549
 
   
 
732
 
Bank borrowings, less current portion
   
 
250
 
   
 
500
 
    
  
Total liabilities
   
 
4,055
 
   
 
5,867
 
    
  
Stockholders’ equity:
                  
Common stock
   
 
36
 
   
 
36
 
Notes receivable from stockholders
   
 
(400
)
   
 
(400
)
Additional paid-in capital
   
 
92,109
 
   
 
92,107
 
Accumulated other comprehensive income
   
 
68
 
   
 
260
 
Accumulated deficit
   
 
(86,588
)
   
 
(82,715
)
    
  
Total stockholders’ equity
   
 
5,225
 
   
 
9,288
 
    
  
Total liabilities and stockholders’ equity
   
$
9,280
 
   
$
15,155
 
    
  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

1

Table of Contents
 
SYMPHONIX DEVICES, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
    
Three months ended
June 30,
     
Six months ended
June 30,
  
    
2002
     
2001
     
2002
     
2001
  
Revenue
   
$
513
 
   
$
435
 
   
$
993
 
   
$
1,011
 
    
  
  
  
Costs and expenses:
                                    
Cost of goods sold
   
 
233
 
   
 
1,135
 
   
 
869
 
   
 
2,323
 
Research and development
   
 
502
 
   
 
1,870
 
   
 
1,378
 
   
 
3,521
 
Selling, general and administrative
   
 
1,649
 
   
 
2,658
 
   
 
2,972
 
   
 
5,501
 
    
  
  
  
Total costs and expenses
   
 
2,384
 
   
 
5,663
 
   
 
5,219
 
   
 
11,345
 
    
  
  
  
Operating loss
   
 
(1,871
)
   
 
(5,228
)
   
 
(4,226
)
   
 
(10,334
)
Interest income
   
 
121
 
   
 
190
 
   
 
387
 
   
 
476
 
Interest expense
   
 
(12
)
   
 
(29
)
   
 
(34
)
   
 
(62
)
    
  
  
  
Net loss
   
$
(1,762
)
   
$
(5,067
)
   
$
(3,873
)
   
$
(9,920
)
    
  
  
  
Basic and diluted net loss per common share
   
$
(0.05
)
   
$
(0.24
)
   
$
(0.11
)
   
$
(0.47
)
    
  
  
  
Shares used in computing basic and diluted net loss per common share
   
 
35,730
 
   
 
21,061
 
   
 
35,663
 
   
 
21,018
 
    
  
  
  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Table of Contents
 
SYMPHONIX DEVICES, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
 
    
Three months ended
June 30,
     
Six months ended
June 30,
  
    
2002
     
2001
     
2002
     
2001
  
Net loss
   
$
(1,762
)
   
$
(5,067
)
   
$
(3,873
)
   
$
(9,920
)
Change in unrealized gain on short-term investments
   
 
(44
)
   
 
42
 
   
 
(174
)
   
 
105
 
Translation adjustments
   
 
(9
)
   
 
1
 
   
 
(18
)
   
 
8
 
    
  
  
  
Comprehensive loss
   
$
(1,815
)
   
$
(5,024
)
   
$
(4,065
)
   
$
(9,807
)
    
  
  
  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents
 
SYMPHONIX DEVICES, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
    
Six months ended
June 30,
  
    
2002
     
2001
  
Cash flows from operating activities:
                  
Net loss
   
$
(3,873
)
   
$
(9,920
)
    
  
Adjustments to reconcile net loss to cash used in operating activities:
                  
Amortization of deferred compensation
   
 
—  
 
   
 
34
 
Depreciation and amortization
   
 
328
 
   
 
398
 
Amortization of premium on short-term investments
   
 
46
 
   
 
76
 
Gain on sale of short-term investments
   
 
(48
)
   
 
—  
 
Changes in operating assets and liabilities:
                  
Accounts receivable
   
 
55
 
   
 
(56
)
Inventories
   
 
(138
)
   
 
340
 
Prepaid expenses and other current assets
   
 
(14
)
   
 
(77
)
Accounts payable
   
 
75
 
   
 
(164
)
Accrued compensation
   
 
(532
)
   
 
(371
)
Deferred revenue
   
 
(183
)
   
 
(189
)
Other accrued liabilities
   
 
(922
)
   
 
(535
)
    
  
Net cash used in operating activities
   
 
(5,206
)
   
 
(10,464
)
    
  
Cash flows from investing activities
                  
Purchases of short-term investments
   
 
—  
 
   
 
(26,879
)
Sales and maturities of short-term and long-term investments
   
 
6,542
 
   
 
12,010
 
Purchases of property and equipment
   
 
(17
)
   
 
(613
)
Increase in restricted cash
   
 
(760
)
   
 
(222
)
Change in other assets
   
 
—  
 
   
 
2
 
    
  
Net cash provided by (used in) investing activities
   
 
5,765
 
   
 
(15,702
)
    
  
Cash flows from financing activities
                 <