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: May 31, 2003
| ¨ | 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: 0-14779
MEDIA 100 INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 04-2532613 | |
| (State or other jurisdiction of organization or incorporation) |
(I.R.S. Employer Identification Number) |
450 DONALD LYNCH BOULEVARD
MARLBOROUGH, MASSACHUSETTS
(Address of principal executive offices)
01752-4748
(Zip code)
(508) 460-1600
(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 by Rule 12b-2 of the Exchange Act). Yes ¨ No x
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 $.01 per share |
13,195,638 shares | |
| Class |
Outstanding at July 10, 2003 |
INDEX TO FORM 10-Q
| PAGE NUMBER | ||||
| PART I—FINANCIAL INFORMATION |
||||
| ITEM 1 |
Consolidated Financial Statements: | |||
| Consolidated Balance Sheets as of May 31, 2003 and November 30, 2002 | 3 | |||
| Consolidated Statements of Operations for the three and six months ended May 31, 2003 and May 31, 2002 | 4 | |||
| Consolidated Statements of Cash Flows for the six months ended May 31, 2003 and May 31, 2002 | 5 | |||
| Notes to Consolidated Financial Statements | 6 - 15 | |||
| ITEM 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 - 28 | ||
| ITEM 3 |
Quantitative and Qualitative Disclosures About Market Risk | 28 | ||
| ITEM 4 |
Controls and Procedures | 28 | ||
| PART II—OTHER INFORMATION |
||||
| ITEM 1 |
Legal Proceedings | 29 - 30 | ||
| ITEM 4 |
Submission of Matters to a Vote of Security Holders | 30 | ||
| ITEM 6 |
Exhibits and Reports on Form 8-K | 30 | ||
| 31 | ||||
| 32 | ||||
2
PART I—FINANCIAL INFORMATION
MEDIA 100 INC.
(in thousands except share and per share data)
(unaudited)
| May 31, 2003 |
November 30, 2002 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 2,802 | $ | 4,573 | ||||
| Available for sale securities, at fair value |
— | 126 | ||||||
| Restricted cash |
250 | 3,184 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $413 in 2003 and $409 in 2002 |
2,407 | 2,435 | ||||||
| Inventories |
1,195 | 2,447 | ||||||
| Prepaid expenses and other current assets |
782 | 516 | ||||||
| Total current assets |
7,436 | 13,281 | ||||||
| Property and equipment, net |
1,517 | 1,870 | ||||||
| Intangible assets, net |
124 | 145 | ||||||
| Total assets |
$ | 9,077 | $ | 15,296 | ||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 973 | $ | 1,295 | ||||
| Accrued expenses |
2,950 | 5,588 | ||||||
| Deferred revenue |
2,887 | 4,504 | ||||||
| Total current liabilities |
6,810 | 11,387 | ||||||
| Contingencies (Note 9) |
||||||||
| Series A convertible preferred stock, $ .01 par value |
1,045 | — | ||||||
| Stockholders’ equity: |
||||||||
| Common stock, $.01 par value, Authorized—25,000,000 shares—13,116,000 and 12,977,000 issued and 13,086,000 and 12,947,000 outstanding at May 31, 2003 and November 30, 2002 |
131 | 130 | ||||||
| Capital in excess of par value |
218,396 | 218,319 | ||||||
| Accumulated deficit |
(216,971 | ) | (214,319 | ) | ||||
| Treasury stock, 30,000 shares at cost |
(78 | ) | (78 | ) | ||||
| Accumulated other comprehensive loss |
(256 | ) | (143 | ) | ||||
| Total stockholders’ equity |
1,222 | 3,909 | ||||||
| Total liabilities and stockholders’ equity |
$ | 9,077 | $ | 15,296 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
3
MEDIA 100 INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Three Months Ended May 31, |
Six Months Ended May 31, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Net sales: |
||||||||||||||||
| Products |
$ | 3,869 | $ | 5,079 | $ | 7,426 | $ | 7,931 | ||||||||
| Services |
1,263 | 1,500 | 2,503 | 3,146 | ||||||||||||
| Total net sales |
5,132 | 6,579 | 9,929 | 11,077 | ||||||||||||
| Cost of sales |
2,489 | 3,303 | 4,951 | 5,541 | ||||||||||||
| Accelerated depreciation and amortization of property and equipment (Note 5) |
— | 84 | — | 331 | ||||||||||||
| Gross profit |
2,643 | 3,192 | 4,978 | 5,205 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
1,789 | 2,559 | 3,562 | 5,126 | ||||||||||||
| Selling and marketing |
1,591 | 2,716 | 3,056 | 4,964 | ||||||||||||
| General and administrative |
541 | 1,427 | 1,186 | 2,534 | ||||||||||||
| Amortization and write-off of intangible assets |
— | 273 | — | 765 | ||||||||||||
| Accelerated depreciation and amortization of property and equipment (Note 5) |
— | 215 | — | 849 | ||||||||||||
| Restructuring expense |
214 | — | 214 | — | ||||||||||||
| Settlement of litigation (Notes 6 and 9) |
— | — | — | 924 | ||||||||||||
| Total operating expenses |
4,135 | 7,190 | 8,018 | 15,162 | ||||||||||||
| Operating loss |
(1,492 | ) | (3,998 | ) | (3,040 | ) | (9,957 | ) | ||||||||
| Interest income, net |
12 | 37 | 36 | 115 | ||||||||||||
| Other income, net |
180 | 270 | 352 | 187 | ||||||||||||
| Loss from operations before benefit from income taxes |
(1,300 | ) | (3,691 | ) | (2,652 | ) | (9,655 | ) | ||||||||
| Benefit from income taxes |
— | (102 | ) | |||||||||||||
| Net loss |
$ | (1,300 | ) | $ | (3,691 | ) | $ | (2,652 | ) | $ | (9,553 | ) | ||||
| Loss per share: |
||||||||||||||||
| Basic |
$ | (0.10 | ) | $ | (0.29 | ) | $ | (0.20 | ) | $ | (0.75 | ) | ||||
| Diluted |
$ | (0.10 | ) | $ | (0.29 | ) | $ | (0.20 | ) | $ | (0.75 | ) | ||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
13,084 | 12,784 | 13,061 | 12,710 | ||||||||||||
| Diluted |
13,084 | 12,784 | 13,061 | 12,710 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
MEDIA 100 INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Six Months Ended |
||||||||
| May 31, 2003 |
May 31, 2002 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ | (2,652 | ) | $ | (9,553 | ) | ||
| Adjustments to reconcile net loss from operations to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
683 | 2,271 | ||||||
| Non-cash settlement of litigation |
— | 924 | ||||||
| Amortization and write-off of intangible assets |
— | 765 | ||||||
| Changes in assets and liabilities: |
||||||||
| Restricted cash |
2,934 | (3,170 | ) | |||||
| Accounts receivable |
28 | (166 | ) | |||||
| Inventories |
1,252 | (1,518 | ) | |||||
| Prepaid expenses and other current assets |
(266 | ) | (146 | ) | ||||
| Accounts payable |
(322 | ) | 884 | |||||
| Accrued expenses |
(2,638 | ) | (1,100 | ) | ||||
| Deferred revenue |
(1,617 | ) | (142 | ) | ||||
| Net cash used in operating activities |
(2,598 | ) | (10,951 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Net purchases of equipment |
(277 | ) | (822 | ) | ||||
| Purchase of intangible assets |
(32 | ) | (33 | ) | ||||
| Net proceeds from sales of marketable securities |
126 | (9 | ) | |||||
| Net cash used in investing activities |
(183 | ) | (864 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Proceeds from issuance of preferred stock |
1,045 | — | ||||||
| Proceeds from issuance of common stock |
78 | 415 | ||||||
| Net cash provided by financing activities |
1,123 | |||||||