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 27, 2003
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
Commission file number 0-27231
WIRELESS FACILITIES, INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 13-3818604 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
4810 Eastgate Mall
San Diego, CA 92121
(858) 228-2000
(Address, including zip code, and telephone number, including
area code, of Registrant’s principal executive offices)
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 Exchange Act Rule 12b-2) Yes x No ¨
As of August 4, 2003 there were 53,456,425 shares of the Registrant’s $0.001 par value Common Stock outstanding.
WIRELESS FACILITIES, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 27, 2003
| PART I. FINANCIAL INFORMATION | Page No. | |||
| Item 1. |
Financial Statements |
|||
| Consolidated Balance Sheets at December 31, 2002 (audited) and June 30, 2003 (unaudited) |
3 | |||
| 4 | ||||
| Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2003 (unaudited) |
5 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 | ||
| Item 3. |
33 | |||
| Item 4. |
33 | |||
| PART II. OTHER INFORMATION | ||||
| Item 1. |
34 | |||
| Item 4. |
34 | |||
| Item 6. |
34 | |||
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(in millions, except par value and number of shares)
| December 31, 2002 |
June 30, 2003 |
|||||||
| (Audited) | (Unaudited) | |||||||
| Assets | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 99.1 | $ | 104.2 | ||||
| Short-term investments |
— | 13.0 | ||||||
| Accounts receivable, net |
60.5 | 61.3 | ||||||
| Accounts receivable—related party |
0.4 | 0.7 | ||||||
| Contract management receivables, net |
2.4 | 1.2 | ||||||
| Income taxes receivable |
3.1 | — | ||||||
| Prepaid expenses |
1.6 | 1.5 | ||||||
| Employee loans and advances |
0.2 | 0.6 | ||||||
| Other current assets |
3.5 | 4.3 | ||||||
| Total current assets |
170.8 | 186.8 | ||||||
| Property and equipment, net |
13.0 | 12.6 | ||||||
| Goodwill and other intangibles, net |
41.6 | 47.7 | ||||||
| Deferred tax assets, net |
— | 4.0 | ||||||
| Investments in unconsolidated affiliates |
8.2 | 8.1 | ||||||
| Employee loans and advances, net of current portion |
0.5 | — | ||||||
| Other assets |
0.2 | 0.3 | ||||||
| Total assets |
$ | 234.3 | $ | 259.5 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 6.1 | $ | 10.3 | ||||
| Accrued expenses |
17.2 | 19.8 | ||||||
| Accounts payable—related party |
0.7 | 0.3 | ||||||
| Contract management payables |
5.6 | 2.5 | ||||||
| Billings in excess of costs |
6.4 | 5.0 | ||||||
| Income taxes payable, net |
— | 2.7 | ||||||
| Capital lease obligations |
2.3 | 1.2 | ||||||
| Accrual for unused office space |
1.8 | 1.6 | ||||||
| Total current liabilities |
40.1 | 43.4 | ||||||
| Capital lease obligations, net of current portion |
0.6 | 0.5 | ||||||
| Accrual for unused office space, net of current portion |
7.6 | 6.7 | ||||||
| Deferred tax liabilities, net |
1.6 | — | ||||||
| Other liabilities |
1.2 | 1.4 | ||||||
| Total liabilities |
51.1 | 52.0 | ||||||
| Minority interest in subsidiary |
0.3 | 0.3 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, 5,000,000 shares authorized |
||||||||
| Series A Convertible Preferred Stock, $.001 par value, 63,637 shares issued and outstanding at December 31, 2002 and June 30, 2003 (liquidation preference $35.0) |
— | — | ||||||
| Series B Convertible Preferred Stock, $.001 par value, 90,000 shares outstanding at December 31, 2002 and June 30, 2003 (liquidation preference $45.0) |
— | — | ||||||
| Common Stock, $.001 par value, 195,000,000 shares authorized; 48,842,220 and 52,814,141 shares issued and outstanding at December 31, 2002 and June 30, 2003, respectively |
— | — | ||||||
| Treasury stock, at cost |
— | — | ||||||
| Additional paid-in capital |
266.9 | 283.0 | ||||||
| Accumulated deficit |
(81.0 | ) | (72.2 | ) | ||||
| Accumulated other comprehensive loss |
(3.0 | ) | (3.6 | ) | ||||
| Total stockholders’ equity |
182.9 | 207.2 | ||||||
| Total liabilities and stockholders’ equity |
$ | 234.3 | $ | 259.5 | ||||
See accompanying notes to unaudited consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions, except per share amounts)
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| 2002 |
2003 |
2002 |
2003 |
|||||||||||||
| Revenues |
$ | 46.8 | $ | 56.8 | $ | 86.9 | $ | 110.7 | ||||||||
| Cost of revenues |
35.0 | 39.8 | 64.2 | 78.8 | ||||||||||||
| Gross profit |
11.8 | 17.0 | 22.7 | 31.9 | ||||||||||||
| Selling, general and administrative expenses |
9.0 | 11.2 | 46.1 | 22.5 | ||||||||||||
| Provision for doubtful accounts |
— | (0.9 | ) | 10.0 | (2.2 | ) | ||||||||||
| Depreciation and amortization |
1.6 | 1.7 | 4.3 | 3.4 | ||||||||||||
| Asset impairment charges |
— | — | 21.1 | — | ||||||||||||
| Operating income (loss) |
1.2 | 5.0 | (58.8 | ) | 8.2 | |||||||||||
| Other income (expense), net: |
||||||||||||||||
| Interest income (expense), net |
(0.4 | ) | 0.1 | (1.3 | ) | 0.4 | ||||||||||
| Foreign currency gain (loss) |
1.3 | (0.4 | ) | 0.9 | 0.1 | |||||||||||
| Other, net |
0.1 | 0.1 | (0.2 | ) | 0.1 | |||||||||||
| Other income (expense), net |
1.0 | (0.2 | ) | (0.6 | ) | 0.6 | ||||||||||
| Income (loss) before income taxes |
2.2 | 4.8 | (59.4 | ) | 8.8 | |||||||||||
| Provision for income taxes |
— | — | 10.1 | — | ||||||||||||
| Net income (loss) |
$ | 2.2 | $ | 4.8 | $ | (69.5 | ) | $ | 8.8 | |||||||
| Net income (loss) per common share: |
||||||||||||||||
| Basic |
$ | 0.05 | $ | 0.09 | $ | (1.46 | ) | $ | 0.18 | |||||||
| Diluted |
$ | 0.04 | $ | 0.07 | $ | (1.46 | ) | $ | 0.12 | |||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
47.7 | 51.1 | 47.7 | 50.2 | ||||||||||||
| Diluted |
59.4 | 72.3 | 47.7 | 70.6 | ||||||||||||
See accompanying notes to unaudited consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
| Six months ended June 30, |
||||||||
| 2002 |
2003 |
|||||||
| Net cash provided by operating activities |
$ | 10.1 | $ | 15.0 | ||||
| Investing activities: |
||||||||
| Capital expenditures |
(2.1 | ) | (2.2 | ) | ||||
| Purchase of short-term investments |
— | (14.7 | ) | |||||
| Proceeds from sale of short-term investments |
— | 1.5 | ||||||
| Cash paid for company acquisitions, net of cash received |
— | (7.6 | ) | |||||
| Net cash used in investing activities |
(2.1 | ) | (23.0 | ) | ||||
| Financing activities: |
||||||||
| Proceeds from issuance of Series B Convertible Preferred Stock, net of issuance costs |
44.9 | — | ||||||
| Proceeds from issuance of common stock |
1.1 | 15.9 | ||||||
| Repayment of notes payable |
(0.6 | ) | (0.5 | ) | ||||
| Net repayment under line of credit |
(33.0 | ) | — | |||||
| Repayment of capital lease obligations |
(4.0 | ) | (1.5 | |||||