SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 April 30, 2003
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 000-10761
LTX CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| Massachusetts | 04-2594045 | |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
| LTX Park at University Avenue, Westwood, Massachusetts | 02090 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, Including Area Code | (781) 461-1000 | |
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report.
Indicate by check x 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 the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class |
Outstanding at May 14, 2003 | |
| Common Stock, par value $0.05 per share |
49,542,637 |
LTX CORPORATION
| Page Number | ||||
| Part I. |
FINANCIAL INFORMATION |
|||
| Item 1. |
Consolidated Balance Sheets—April 30, 2003 and July 31, 2002 |
1 | ||
| Consolidated Statements of Operations and Comprehensive Income Three Months and Nine Months Ended April 30, 2003 and April 30, 2002 | 2 | |||
| Consolidated Statements of Cash Flows—Nine Months Ended April 30, 2003 and April 30, 2002 |
3 | |||
| 4-9 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
9-21 | ||
| Item 3. |
21 | |||
| Item 4. |
21 | |||
| Part II. |
OTHER INFORMATION |
|||
| Item 6. |
22 | |||
| 23 | ||||
| 24-26 | ||||
LTX CORPORATION
(In thousands)
| April 30, 2003 |
July 31, 2002 |
|||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash equivalents |
$ | 71,477 | $ | 144,467 | ||||
| Short-term investments |
75,507 | 72,691 | ||||||
| Accounts receivable, net of allowances |
22,407 | 19,308 | ||||||
| Accounts receivable—other |
3,459 | 10,269 | ||||||
| Inventories |
120,398 | 95,152 | ||||||
| Prepaid expense |
10,278 | 30,694 | ||||||
| Total current assets |
303,526 | 372,581 | ||||||
| Property and equipment, net |
75,972 | 76,171 | ||||||
| Other assets |
14,474 | 15,237 | ||||||
| Total assets |
$ | 393,972 | $ | 463,989 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Notes payable |
$ | 19,868 | $ | 14,870 | ||||
| Current portion of long-term debt |
1,468 | 2,059 | ||||||
| Accounts payable |
16,841 | 25,714 | ||||||
| Deferred revenues and customer advances |
5,225 | 5,229 | ||||||
| Deferred gain on leased equipment |
11,495 | 10,248 | ||||||
| Accrued restructuring charges |
1,021 | 225 | ||||||
| Other accrued expenses |
24,493 | 28,818 | ||||||
| Total current liabilities |
80,411 | 87,163 | ||||||
| Long-term debt, less current portion |
150,365 | 151,293 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
2,611 | 2,599 | ||||||
| Additional paid in capital |
415,725 | 414,829 | ||||||
| Other comprehensive income |
1,202 | 891 | ||||||
| Accumulated deficit |
(244,562 | ) | (181,025 | ) | ||||
| Less treasury stock, at cost |
(11,780 | ) | (11,761 | ) | ||||
| Total stockholders’ equity |
163,196 | 225,533 | ||||||
| Total liabilities and stockholders’ equity |
$ | 393,972 | $ | 463,989 | ||||
See accompanying Notes to Consolidated Financial Statements
1
LTX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share data)
| Three Months Ended April 30, |
Nine Months Ended April 30, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Net sales |
$ | 28,777 | $ | 28,055 | $ | 85,795 | $ | 88,643 | ||||||||
| Cost of sales |
23,481 | 23,298 | 70,547 | 69,830 | ||||||||||||
| Inventory related provision |
— | — | — | 42,200 | ||||||||||||
| Gross profit |
5,296 | 4,757 | 15,248 | (23,387 | ) | |||||||||||
| Engineering and product development expenses |
15,393 | 18,182 | 50,413 | 52,827 | ||||||||||||
| Selling, general and administrative expenses |
7,186 | 6,781 | 21,081 | 21,319 | ||||||||||||
| Reorganization costs |
— | — | 5,593 | — | ||||||||||||
| Loss from operations |
(17,283 | ) | (20,206 | ) | (61,839 | ) | (97,533 | ) | ||||||||
| Other income (expense): |
||||||||||||||||
| Interest expense |
(1,654 | ) | (1,540 | ) | (4,968 | ) | (5,145 | ) | ||||||||
| Interest income |
961 | 1,200 | 3,270 | 5,645 | ||||||||||||
| Loss before income taxes |
(17,976 | ) | (20,546 | ) | (63,537 | ) | (97,032 | ) | ||||||||
| Income tax benefit |
— | (8,218 | ) | — | (37,471 | ) | ||||||||||
| Net loss |
$ | (17,976 | ) | $ | (12,328 | ) | $ | (63,537 | ) | $ | (59,561 | ) | ||||
| Net loss per share: |
||||||||||||||||
| Basic |
$ | (0.36 | ) | $ | (0.25 | ) | $ | (1.29 | ) | $ | (1.23 | ) | ||||
| Diluted |
$ | (0.36 | ) | $ | (0.25 | ) | $ | (1.29 | ) | $ | (1.23 | ) | ||||
| Weighted-average common shares used in computing net loss per share: |
||||||||||||||||
| Basic |
49,429 | 48,825 | 49,294 | 48,580 | ||||||||||||
| Diluted |
49,429 | 48,825 | 49,294 | 48,580 | ||||||||||||
| Comprehensive income: |
||||||||||||||||
| Net loss |
$ | (17,976 | ) | $ | (12,328 | ) | $ | (63,537 | ) | $ | (59,561 | ) | ||||
| Unrealized gain (loss) on marketable securities |
39 | 91 | 311 | (195 | ) | |||||||||||
| Comprehensive loss |
$ | (17,937 | ) | $ | (12,237 | ) | $ | (63,226 | ) | $ | (59,756 | ) | ||||
See accompanying Notes to Consolidated Financial Statements
2
LTX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Nine Months Ended April 30, |
||||||||
| 2003 |
2002 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ | (63,537 | ) | $ | (59,561 | ) | ||
| Add (deduct) non-cash items: |
||||||||
| Depreciation and amortization |
12,511 | 12,834 | ||||||
| Charge for excess inventory |
— | 42,200 | ||||||
| Net gain from Ando Settlement |
— | (778 | ) | |||||
| Deferred tax benefit |
— | (36,863 | ) | |||||
| Translation (gain) loss |
233 | (69 | ) | |||||
| (Increase) decrease in: |
||||||||
| Accounts receivable |
3,670 | 14,077 | ||||||
| Inventories |
(26,636 | ) | (10,975 | ) | ||||
| Prepaid expenses |
20,416 | 2,762 | ||||||
| Other assets |
1,100 | (694 | ) | |||||
| Increase (decrease) in: |
||||||||
| Accounts payable |
(8,875 | ) | 11,782 | |||||
| Accrued expenses and restructuring charges |
(3,533 | ) | (2,579 | ) | ||||
| Deferred revenues and customer advances |
(3,210 | ) | (34,121 | ) | ||||
| Net cash used in operating activities |
(67,861 | ) | (61,985 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Expenditures for property and equipment |
(15,659 | ) | (19,989 | ) | ||||
| Purchases of marketable securities |
(62,079 | ) | (53,446 | ) | ||||
| Proceeds from sale of marketable securities |
53,263 | 21,477 | ||||||
| Net cash used in investing activities |
(18,475 | ) | (51,958 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Proceeds from stock plans: |
||||||||
| Employees’ stock purchase plan |
675 | 1,111 | ||||||
| Exercise of stock options |
231 | 3,395 | ||||||
| Advances (payments) of short-term notes payable, net |
4,998 | (900 | ) | |||||
| Proceeds from convertible subordinated notes |
— | 145,566 | ||||||
| Proceeds from lease financing |
9,185 | 1,744 | ||||||
| Purchase of treasury stock |
(19 | ) | — | |||||
| Payments of long-term debt |
(1,520 | ) | (3,282 | ) | ||||