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 December 31, 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 0-02287
SYMMETRICOM, INC.
(Exact name of registrant as specified in our charter)
| Delaware | No. 95-1906306 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
2300 Orchard Parkway, San Jose, California 95131-1017
(Address of principal executive offices)
Registrant’s telephone number: (408) 433-0910
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 Act). Yes x No ¨
Indicate number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:
| Class |
Outstanding as of January 31, 2004 | |
| Common Stock | 44,294,967 |
FORM 10-Q
INDEX
| Page | ||||
| PART I. |
||||
| Item 1. |
||||
| Consolidated Balance Sheets—December 31, 2003 and June 30, 2003 |
3 | |||
| Consolidated Statements of Operations—Three and six months ended December 31, 2003 and 2002 |
4 | |||
| Consolidated Statements of Cash Flows—Six months ended December 31, 2003 and 2002 |
5 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 | ||
| Item 3. |
32 | |||
| Item 4. |
33 | |||
| PART II. |
||||
| Item 1. |
34 | |||
| Item 2. |
34 | |||
| Item 3. |
34 | |||
| Item 4. |
34 | |||
| Item 5. |
35 | |||
| Item 6. |
35 | |||
| 36 | ||||
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| December 31, 2003 |
June 30, 2003 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 15,160 | $ | 32,284 | ||||
| Restricted cash |
3,000 | 3,396 | ||||||
| Short-term investments |
10,760 | 735 | ||||||
| Cash and investments |
28,920 | 36,415 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $786 and $974 |
24,756 | 23,776 | ||||||
| Inventories |
29,845 | 29,070 | ||||||
| Prepaids and other current assets |
6,104 | 4,183 | ||||||
| Deferred taxes, current |
9,670 | 9,670 | ||||||
| Total current assets |
99,295 | 103,114 | ||||||
| Property, plant and equipment, net |
29,626 | 31,222 | ||||||
| Goodwill, net |
49,248 | 50,200 | ||||||
| Other intangible assets, net |
16,894 | 19,128 | ||||||
| Deferred taxes, non-current |
32,526 | 28,311 | ||||||
| Other assets |
1,272 | 1,415 | ||||||
| Note receivable from employee |
500 | 500 | ||||||
| Total assets |
$ | 229,361 | $ | 233,890 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 11,237 | $ | 12,246 | ||||
| Accrued compensation |
8,870 | 12,191 | ||||||
| Accrued warranty |
4,141 | 4,021 | ||||||
| Other accrued liabilities |
10,618 | 10,528 | ||||||
| Current maturities of long-term obligations |
1,068 | 996 | ||||||
| Total current liabilities |
35,934 | 39,982 | ||||||
| Long-term obligations |
10,064 | 10,057 | ||||||
| Deferred income taxes |
411 | 419 | ||||||
| Total liabilities |
46,409 | 50,458 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.0001 par value; 500 shares authorized, none issued |
— | — | ||||||
| Common stock, $0.0001 par value; 70,000 shares authorized, 44,361 shares issued and 43,801 shares outstanding in December 2003; 43,051 shares issued and 42,491 outstanding in June 2003 |
164,460 | 159,194 | ||||||
| Stockholder note receivable |
(555 | ) | (555 | ) | ||||
| Accumulated other comprehensive income (loss) |
102 | (178 | ) | |||||
| Deferred stock-based compensation |
(1,020 | ) | (1,133 | ) | ||||
| Retained earnings |
19,965 | 26,104 | ||||||
| Total stockholders’ equity |
182,952 | 183,432 | ||||||
| Total liabilities and stockholders’ equity |
$ | 229,361 | $ | 233,890 | ||||
See notes to the consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Net revenue |
$ | 40,953 | $ | 39,967 | $ | 79,431 | $ | 58,250 | ||||||||
| Cost of product and services |
24,174 | 23,727 | 47,407 | 35,606 | ||||||||||||
| Amortization of purchased technology |
975 | 861 | 1,962 | 1,119 | ||||||||||||
| Write-off of Telmax royalty |
— | 567 | — | 567 | ||||||||||||
| Integration and restructuring charges |
5,199 | 43 | 5,641 | 43 | ||||||||||||
| Gross profit |
10,605 | 14,769 | 24,421 | 20,915 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
4,043 | 5,561 | 8,802 | 8,754 | ||||||||||||
| Selling, general and administrative |
10,670 | 12,025 | 22,147 | 19,075 | ||||||||||||
| Amortization of intangibles |
208 | 659 | 401 | 724 | ||||||||||||
| Integration and restructuring charges |
1,562 | 884 | 1,890 | 1,008 | ||||||||||||
| Impairment of goodwill |
— | 15,335 | — | 15,335 | ||||||||||||
| Acquired in-process research and development |
— | 1,561 | — | 1,561 | ||||||||||||
| Operating loss |
(5,878 | ) | (21,256 | ) | (8,819 | ) | (25,542 | ) | ||||||||
| Loss on equity securities |
— | (252 | ) | — | (450 | ) | ||||||||||
| Interest income |
91 | 169 | 165 | 358 | ||||||||||||
| Interest expense |
(154 | ) | (147 | ) | (305 | ) | (296 | ) | ||||||||
| Loss before income taxes |
(5,941 | ) | (21,486 | ) | (8,959 | ) | (25,930 | ) | ||||||||
| Income tax benefit |
(2,074 | ) | (2,122 | ) | (2,836 | ) | (3,469 | ) | ||||||||
| Loss from continuing operations |
(3,867 | ) | (19,364 | ) | (6,123 | ) | (22,461 | ) | ||||||||
| Gain (loss) from discontinued operations, net of tax |
18 | (490 | ) | (16 | ) | (490 | ) | |||||||||
| Net loss |
$ | (3,849 | ) | $ | (19,854 | ) | $ | (6,139 | ) | $ | (22,951 | ) | ||||
| Loss per share—basic and diluted: |
||||||||||||||||
| Loss from continuing operations |
$ | (0.09 | ) | $ | (0.54 | ) | $ | (0.14 | ) | $ | (0.77 | ) | ||||
| Loss from discontinued operations |
— | (0.01 | ) | — | (0.02 | ) | ||||||||||
| Net loss |
$ | (0.09 | ) | $ | (0.55 | ) | $ | (0.14 | ) | $ | (0.79 | ) | ||||
| Weighted average shares outstanding—basic and diluted |
43,416 | 36,213 | 42,965 | 29,133 | ||||||||||||
See notes to the consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended December 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (6,139 | ) | $ | (22,951 | ) | ||
| Adjustments to reconcile net loss to net cash used for operating activities: |
||||||||
| Impairment of goodwill |
— | 15,335 | ||||||
| Acquired in-process research and development |
— | 1,561 | ||||||
| Depreciation and amortization |
5,953 | 4,932 | ||||||
| Deferred income taxes |
(2,939 | ) | (1,765 | ) | ||||
| Loss on equity securities |
— | 450 | ||||||
| Amortization of deferred stock-based compensation |
113 | — | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
(980 | ) | (3,358 | ) | ||||
| Inventories |
(803 | ) | 4,869 | |||||
| Prepaids and other current assets |
(1,778 | ) | (387 | ) | ||||
| Accounts payable |
(1,009 | ) | 588 | |||||
| Accrued compensation |
(3,321 | ) | 1,329 | |||||
| Accrued warranty |
120 | 372 | ||||||
| Other accrued liabilities |
689 | (3,051 | ) | |||||
| Net cash used for operating activities |
(10,094 | ) | (2,076 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Change in restricted cash |
396 | — | ||||||
| Purchases of short-t | ||||||||