UNITED STATES
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 November 30, 2003
Commission File No. 0-24414
RF Monolithics, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 75-1638027 | |
| (State or other jurisdiction of incorporation of organization) |
(I.R.S. Employer Identification) | |
| 4441 Sigma Road, Dallas, Texas | 75244 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code (972) 233-2903
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. x Yes ¨ No
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No
As of December 31, 2003: 7,458,339 shares of the Registrant’s Common Stock, $.001 par value, were outstanding.
FORM 10-Q
QUARTER ENDED NOVEMBER 30, 2003
TABLE OF CONTENTS
-1-
PART I. CONDENSED FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS
(In Thousands)
| November 30, 2003 |
August 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 155 | $ | 216 | ||||
| Trade receivables - net |
7,230 | 6,913 | ||||||
| Inventories |
7,742 | 7,894 | ||||||
| Prepaid expenses and other |
318 | 322 | ||||||
| Total current assets |
15,445 | 15,345 | ||||||
| PROPERTY AND EQUIPMENT - Net |
8,714 | 9,201 | ||||||
| OTHER ASSETS - Net |
263 | 277 | ||||||
| TOTAL |
$ | 24,422 | $ | 24,823 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Current portion of long-term debt |
$ | 1,355 | $ | 3,206 | ||||
| Accounts payable - trade |
2,369 | 1,768 | ||||||
| Accrued expenses and other current liabilities |
1,775 | 1,477 | ||||||
| Total current liabilities |
5,499 | 6,451 | ||||||
| LONG-TERM DEBT - Less current portion |
866 | 892 | ||||||
| OTHER LIABILITIES |
185 | 190 | ||||||
| STOCKHOLDERS’ EQUITY: |
||||||||
| Common stock: 7,310 and 7,260 shares issued |
7 | 7 | ||||||
| Additional paid-in capital |
33,800 | 33,487 | ||||||
| Common stock warrants |
695 | 842 | ||||||
| Treasury stock, 36 common shares at cost |
(227 | ) | (227 | ) | ||||
| Accumulated deficit |
(16,149 | ) | (16,550 | ) | ||||
| Unearned compensation |
(254 | ) | (269 | ) | ||||
| Total stockholders’ equity |
17,872 | 17,290 | ||||||
| TOTAL |
$ | 24,422 | $ | 24,823 | ||||
See notes to condensed financial statements.
-2-
CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED
(In Thousands, Except Per-Share Amounts)
| Three Months Ended November 30, |
||||||||
| 2003 |
2002 |
|||||||
| SALES |
$ | 11,139 | $ | 10,628 | ||||
| COST OF SALES |
7,833 | 7,752 | ||||||
| GROSS PROFIT |
3,306 | 2,876 | ||||||
| OPERATING EXPENSES: |
||||||||
| Research and development |
854 | 788 | ||||||
| Sales and marketing |
1,269 | 1,220 | ||||||
| General and administrative |
713 | 665 | ||||||
| Total operating expenses |
2,836 | 2,673 | ||||||
| INCOME FROM OPERATIONS |
470 | 203 | ||||||
| OTHER INCOME (EXPENSE): |
||||||||
| Interest income |
— | 3 | ||||||
| Interest expense |
(114 | ) | (177 | ) | ||||
| Other expense |
50 | 31 | ||||||
| Total other income (expense) |
(64 | ) | (143 | ) | ||||
| INCOME BEFORE INCOME TAXES |
406 | 60 | ||||||
| INCOME TAX EXPENSE |
5 | 6 | ||||||
| NET INCOME |
$ | 401 | $ | 54 | ||||
| EARNINGS PER SHARE |
||||||||
| Basic |
$ | 0.06 | $ | 0.01 | ||||
| Diluted |
$ | 0.05 | $ | 0.01 | ||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
||||||||
| Basic |
7,278 | 7,132 | ||||||
| Diluted |
7,752 | 7,177 | ||||||
See notes to condensed financial statements.
-3-
CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED
(In Thousands)
| Three Months Ended November 30, |
||||||||
| 2003 |
2002 |
|||||||
| OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 401 | $ | 54 | ||||
| Noncash items included in net income: |
||||||||
| Depreciation and amortization |
743 | 1,042 | ||||||
| Provision for trade receivable allowance |
3 | 2 | ||||||
| Amortization of unearned compensation |
46 | 47 | ||||||
| Gain on disposal of property and equipment |
— | (14 | ) | |||||
| Sub-total |
792 | 1,077 | ||||||
| Cash provided by (used in) operating working capital: |
||||||||
| Trade receivables |
(320 | ) | 779 | |||||
| Inventories |
152 | (157 | ) | |||||
| Prepaid expenses and other |
4 | 12 | ||||||
| Accounts payable - trade |
601 | (608 | ) | |||||
| Accrued expenses and other liabilities |
293 | 72 | ||||||
| Sub-total |
730 | 98 | ||||||
| Net cash provided by operating activities |
1,923 | 1,229 | ||||||
| INVESTING ACTIVITIES: |
||||||||
| Acquisition of property and equipment |
(271 | ) | (106 | ) | ||||
| Proceeds from disposition of property and equipment |
32 | 14 | ||||||
| Change in other assets |
(3 | ) | 57 | |||||
| Net cash used in investing activities |
(242 | ) | (35 | ) | ||||
| FINANCING ACTIVITIES: |
||||||||
| Borrowings on line of credit |
9,279 | 10,393 | ||||||
| Repayments of notes payable |
(11,156 | ) | (11,766 | ) | ||||
| Proceeds from common stock issued |
135 | — | ||||||
| Net cash used in financing activities |
(1,742 | ) | (1,373 | ) | ||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS |
(61 | ) | (179 | ) | ||||
| CASH AND CASH EQUIVALENTS: |
||||||||
| Beginning of period |
216 | 273 | ||||||
| End of period |
$ | 155 | $ | 94 | ||||
| SUPPLEMENTAL INFORMATION: |
||||||||
| Interest paid |
$ | 45 | $ | 115 | ||||
| Income taxes paid |
$ | 3 | $ | — | ||||
See notes to condensed financial statements.
-4-
NOTES TO CONDENSED FINANCIAL STATEMENTS - UNAUDITED
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed financial statements include all adjustments, consisting only of normal recurring adjustments and accruals, that in the opinion of the management of RF Monolithics, Inc., or the Company, or RFM, are necessary for a fair presentation of our financial position as of November 30, 2003, and the results of operations and cash flows for the three months ended November 30, 2003 and 2002. These unaudited interim condensed financial statements should be read in conjunction with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended August 31, 2003, filed with the Securities and Exchange Commission. We did not have any subsidiaries in the periods covered by this report.
Operating results for the three months ended November 30, 2003, are not necessarily indicative of the results to be achieved for the full fiscal year ending August 31, 2004.
2. INVENTORIES
Inventories consist of the following (in thousands):
| Nov. 30, 2003 |
Aug. 31, 2003 |
|||||||
| Raw materials and supplies |
$ | 3,218 | $ | 3,116 | ||||
| Work in process |
2,286 | 2,641 | ||||||
| Finished goods |
3,900 | 3,823 | ||||||
| Total gross inventories |
9,404 | 9,580 | ||||||
| Less inventory reserves |
(1,662 | ) | (1,686 | ) | ||||
| Total inventories |
$ | 7,742 | $ | 7,894 | ||||
In the third quarter of fiscal 2003, we increased inventory reserves by recording a $2.6 million charge related to obsolescence and write-down of inventory associated with our product line modification and rationalization program. The charge was recorded as cost of sales in our statement of operations. In the fourth quarter of fiscal 2003 and first quarter of fiscal 2004, approximately $2.0 million and $.2 million respectively, of inventory was disposed of and charged to this reserve, leaving approximately $0.4 million related to this particular obsolete inventory, most of which will be disposed of in the balance of fiscal 2004.
3. PROPERTY AND EQUIPMENT
Property and equipment includes construction in progress of $359,000 at November 30, 2003, and $109,000 at August 31, 2003, which is composed of equipment and other assets not yet placed in service.
-5-
4. CREDIT FACILITIES
Balances outstanding under our credit facilities were as follows (in thousands):
| November 30, 2003 |
August 31, 2003 |
|||||||
| Revolving line-of-credit |
$ | 984 | $ | |||||