COMPUTER ACCESS TECHNOLOGY CORP - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2003

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number: 000-31863

COMPUTER ACCESS TECHNOLOGY CORPORATION

(exact name of registrant as specified in its charter)

Delaware		77-0302527
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2403 Walsh Avenue, Santa Clara California		95051
(Address of principal executive offices)		(Zip Code)

(408) 727-6600

(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 ¨ No x

As of August 1, 2003, there were 19,381,026 shares of the registrant’s Common Stock outstanding.

Part I—FINANCIAL INFORMATION

Item 1. Financial Statements

COMPUTER ACCESS TECHNOLOGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	June 30, 2003			December 31, 2002
ASSETS
Current assets:
Cash and cash equivalents	$	30,698		$	30,846
Short-term investments		12,135			12,905
Trade accounts receivable, net		1,634			1,144
Related party receivable		690			580
Inventories		826			1,032
Other current assets		1,552			2,632

Total current assets		47,535			49,139
Property and equipment, net		872			999
Purchased intangibles		236			305
Other assets		85			87

	$	48,728		$	50,530

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	226		$	1,326
Accrued expenses		1,202			1,247
Accrued restructuring		41			270
Deferred revenue		492			485

Total current liabilities		1,961			3,328

Stockholders’ equity:
Common stock		19			19
Additional paid-in capital		52,941			53,210
Deferred stock-based compensation		(130	)		(324	)
Accumulated deficit		(6,063	)		(5,703	)

Total stockholders’ equity		46,767			47,202

	$	48,728		$	50,530

See accompanying notes.

COMPUTER ACCESS TECHNOLOGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)

	Three Month Period Ended June 30,						Six Month Period Ended June 30,
	2003			2002			2003			2002
Revenue	$	3,856		$	3,493		$	7,118		$	6,915
Cost of revenue (inclusive of amortization of deferred stock-based compensation of $15 and $31 in the three month period ended June 30, 2003 and 2002, respectively, and of $18 and $80 in the six month period ended June 30, 2003 and 2002, respectively)		791			652			1,455			1,336
Amortization of acquired developed technology		9			17			18			17

Gross profit		3,056			2,824			5,645			5,562

Operating expenses:
Research and development (exclusive of amortization of deferred stock-based compensation (recovery) of $53 and $(229) in the three month period ended June 30, 2003 and 2002, respectively, and of $85 and $70 in the six month period ended June 30, 2003 and 2002, respectively)		1,249			1,982			2,557			3,895
Sales and marketing (exclusive of amortization of deferred stock-based compensation (recovery) of $21 and $(32) in the three month period ended June 30, 2003 and 2002, respectively, and of $40 and $(155) in the six month period ended June 30, 2003 and 2002, respectively)		1,193			1,215			2,337			2,480
General and administrative (exclusive of amortization of deferred stock-based compensation of $7 and $59 in the three month period ended June 30, 2003 and 2002, respectively, and of $15 and $191 in the six month period ended June 30, 2003 and 2002, respectively)		585			1,051			1,261			2,173
Acquired in-process research and development		—			410			—			410
Amortization of purchased intangibles		26			12			52			12
Restructuring expenses		—			443			—			443
Amortization of deferred stock-based compensation		81			(202	)		140			106

Total operating expenses		3,134			4,911			6,347			9,519

Loss from operations		(78	)		(2,087	)		(702	)		(3,957	)
Other income, net		198			197			359			370

Income (loss) before benefit from income taxes		120			(1,890	)		(343	)		(3,587	)
Benefit from income taxes		—			(1,081	)		—			(1,771	)

Net income (loss)	$	120		$	(809	)	$	(343	)	$	(1,816	)

Net income (loss) per share:
Basic and diluted	$	0.01		$	(0.04	)	$	(0.02	)	$	(0.10	)

Weighted average shares outstanding:
Basic		19,442			19,083			19,411			18,998

Diluted		19,980			19,083			19,411			18,998

See accompanying notes.

COMPUTER ACCESS TECHNOLOGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Six Month Period Ended June 30,
	2003			2002
Cash flows from operating activities:
Net loss	$	(343	)	$	(1,816	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		397			304
Provision for doubtful accounts		—			(9	)
Write-down of property and equipment in connection with restructuring		—			134
Acquired in-process research and development		—			410
Amortization of acquired developed technology		18			17
Amortization of purchased intangibles		52			12
Amortization of deferred stock-based compensation		158			186
Amortization of premium on short-term investments		262			—
Changes in assets and liabilities:
Trade accounts and related party receivables		(600	)		(122	)
Inventories		206			(177	)
Deferred tax assets		—			(1,034	)
Other assets		962			110
Accounts payable		(1,100	)		(79	)
Accrued expenses		(46	)		200
Accrued restructuring		(229	)		262
Deferred revenue		7			278
Deferred rent		—			(4	)

Net cash used in operating activities		(256	)		(1,328	)

Cash flows from investing activities:
Acquisition of property and equipment		(270	)		(340	)
Other long-term assets		120			(188	)
Purchase of short-term investments		(4,392	)		(10,863	)
Sale of short-term investments		4,900			2,971
Acquisition of subsidiary, net of cash acquired		—			(931	)

Net cash provided by (used in) investing activities		358			(9,351	)

Cash flows from financing activities:
Proceeds from exercise of stock options		145			199
Proceeds from employee stock purchase plan		70			116
Repurchases of common stock		(465	)		—

Net cash provided by (used in) financing activities		(250	)		315

Net decrease in cash and cash equivalents		(148	)		(10,364	)
Cash and cash equivalents at beginning of period		30,846			42,941

Cash and cash equivalents at end of period	$	30,698		$	32,577

See accompanying notes.

NOTE 1 – BUSINESS

Business

Computer Access Technology Corporation is a provider of advanced verification systems for existing and emerging digital communications standards. Our products are used by semiconductor, computer systems, software, data storage, communications, automotive and aerospace companies at each phase of their products’ lifecycles from development through production and market deployment.