SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 January 31, 2004
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 000-10761
LTX CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| Massachusetts | 04-2594045 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| LTX Park at University Avenue, Westwood, Massachusetts |
02090 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
Registrant’s Telephone Number, Including Area Code (781) 461-1000
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.
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 of the Exchange Act). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class |
Outstanding at February 27, 2004 | |
| Common Stock, par value $0.05 per share |
60,895,164 |
Index
| Page Number | ||||
| Part I. |
FINANCIAL INFORMATION | |||
| Item 1. |
Consolidated Balance Sheets |
1 | ||
| 2 | ||||
|
Consolidated Statements of Cash Flows |
3 | |||
| Notes to Consolidated Financial Statements | 4-10 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11-21 | ||
| Item 3. |
21 | |||
| Item 4. |
21 | |||
| Part II. |
||||
| Item 4. |
22 | |||
| Item 6. |
22 | |||
| 23 | ||||
CONSOLIDATED BALANCE SHEETS
(In thousands)
| January 31, 2004 |
July 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 72,580 | $ | 73,167 | ||||
| Marketable Securities |
60,249 | 63,416 | ||||||
| Accounts receivable, net of allowances |
25,611 | 12,033 | ||||||
| Accounts receivable – other |
7,371 | 5,192 | ||||||
| Inventories |
62,420 | 66,852 | ||||||
| Prepaid expense |
10,415 | 10,989 | ||||||
| Total current assets |
238,646 | 231,649 | ||||||
| Property and equipment, net |
71,724 | 73,443 | ||||||
| Goodwill and other intangible assets |
15,014 | 14,764 | ||||||
| Other assets |
4,264 | 5,040 | ||||||
| Total assets |
$ | 329,648 | $ | 324,896 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Notes payable |
$ | 19,425 | $ | 19,459 | ||||
| Current portion of long-term debt |
930 | 1,262 | ||||||
| Accounts payable |
25,218 | 13,380 | ||||||
| Deferred revenues and customer advances |
5,634 | 4,738 | ||||||
| Deferred gain on leased equipment |
8,398 | 10,350 | ||||||
| Other accrued expenses |
29,486 | 26,555 | ||||||
| Total current liabilities |
89,091 | 75,744 | ||||||
| Long-term debt, less current portion |
150,000 | 150,064 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
2,750 | 2,721 | ||||||
| Additional paid-in capital |
436,342 | 433,489 | ||||||
| Unrealized gain on marketable securities |
579 | 751 | ||||||
| Accumulated deficit |
(337,334 | ) | (326,093 | ) | ||||
| Less treasury stock, at cost |
(11,780 | ) | (11,780 | ) | ||||
| Total stockholders’ equity |
90,557 | 99,088 | ||||||
| Total liabilities and stockholders’ equity |
$ | 329,648 | $ | 324,896 | ||||
See accompanying Notes to Consolidated Financial Statements
1
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share data)
| Three Months Ended January 31, |
Six Months Ended January 31, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net product sales |
$ | 48,876 | $ | 19,625 | $ | 86,399 | $ | 39,967 | ||||||||
| Net service sales |
9,539 | 7,386 | 18,635 | 17,051 | ||||||||||||
| Net sales |
58,415 | 27,011 | 105,034 | 57,018 | ||||||||||||
| Cost of sales |
35,327 | 22,363 | 67,850 | 47,066 | ||||||||||||
| Gross profit |
23,088 | 4,648 | 37,184 | 9,952 | ||||||||||||
| Engineering and product development expenses |
16,487 | 15,917 | 33,066 | 35,020 | ||||||||||||
| Selling, general and administrative expenses |
6,841 | 7,496 | 13,223 | 13,895 | ||||||||||||
| Reorganization costs |
— | 3,603 | — | 5,593 | ||||||||||||
| Loss from operations |
(240 | ) | (22,368 | ) | (9,105 | ) | (44,556 | ) | ||||||||
| Other income (expense): |
||||||||||||||||
| Interest expense |
(1,714 | ) | (1,643 | ) | (3,428 | ) | (3,314 | ) | ||||||||
| Investment income |
519 | 1,134 | 1,292 | 2,309 | ||||||||||||
| Net loss |
$ | (1,435 | ) | $ | (22,877 | ) | $ | (11,241 | ) | $ | (45,561 | ) | ||||
| Net loss per share: |
||||||||||||||||
| Basic |
$ | (0.03 | ) | $ | (0.46 | ) | $ | (0.22 | ) | $ | (0.93 | ) | ||||
| Diluted |
$ | (0.03 | ) | $ | (0.46 | ) | $ | (0.22 | ) | $ | (0.93 | ) | ||||
| Weighted-average common shares used in computing net loss per share: |
||||||||||||||||
| Basic |
52,069 | 49,253 | 51,936 | 49,226 | ||||||||||||
| Diluted |
52,069 | 49,253 | 51,936 | 49,226 | ||||||||||||
| Comprehensive loss: |
||||||||||||||||
| Net loss |
$ | (1,435 | ) | $ | (22,877 | ) | $ | (11,241 | ) | $ | (45,561 | ) | ||||
| Unrealized gain (loss) on marketable securities |
(1 | ) | 18 | (172 | ) | 272 | ||||||||||
| Comprehensive loss |
$ | (1,436 | ) | $ | (22,859 | ) | $ | (11,413 | ) | $ | (45,289 | ) | ||||
See accompanying Notes to Consolidated Financial Statements
2
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Six Months Ended January 31, |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ | (11,241 | ) | $ | (45,561 | ) | ||
| Add (deduct) non-cash items: |
||||||||
| Depreciation and amortization |
9,128 | 8,541 | ||||||
| Translation (gain) loss |
75 | 148 | ||||||
| (Increase) decrease in: |
||||||||
| Accounts receivable |
(14,652 | ) | (2,893 | ) | ||||
| Inventories |
6,529 | (30,800 | ) | |||||
| Prepaid expenses |
731 | 19,292 | ||||||
| Other assets |
(632 | ) | 1,365 | |||||
| Increase (decrease) in: |
||||||||
| Accounts payable |
9,367 | (10,744 | ) | |||||
| Accrued expenses and restructuring charges |
2,757 | (711 | ) | |||||
| Deferred revenues and customer advances |
(611 | ) | (2,204 | ) | ||||
| Net cash provided by (used in) operating activities |
1,451 | (63,567 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Purchases of marketable securities |
(47,062 | ) | (25,848 | ) | ||||
| Proceeds from sale of marketable securities |
50,229 | 23,884 | ||||||
| Purchases of property and equipment |
(7,380 | ) | (6,234 | ) | ||||
| Net cash used in investing activities |
(4,213 | ) | (8,198 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Exercise of stock options |
2,882 | 178 | ||||||
| Employees’ stock purchase plan |
— | 675 | ||||||
| (Payments) advances of short-term notes payable, net |
(34 | ) | 4,998 | |||||
| Proceeds from lease financing |
— | 9,185 | ||||||
| Purchase of treasury stock |
— | (19 | ) | |||||
| Payments of long-term debt |
(416 | ) | (987 | ) | ||||
| Net cash provided by financing activities |
2,432 | 14,030 | ||||||
| Effect of exchange rate changes on cash |
(257 | ) | (109 | ) | ||||
| Net decrease in cash and cash equivalents |
(587 | ) | 57,844 | |||||
| Cash and cash equivalents at beginning of period |
73,167 | 144,467 | ||||||
| Cash and cash equivalents at end of period |
$ | 72,580 | $ | 86,623 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
||||||||
| Cash paid during the period for interest |
$ | 80 | $ | 3,314 | ||||
See accompanying Notes to Consolidated Financial Statements
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. THE COMPANY
LTX Corporation (“LTX” or the “Company”) designs, manufactures, and markets automatic semiconductor test equipment. Semiconductor designers and manufacturers worldwide use semiconductor test equipment to test devices at different stages during the manufacturing process. These devices are incorporated in a wide range of products, including mobile internet equipment such as wireless access points and interfaces, broadband access products such as cable modems and DSL modems, personal communication products such as cell phones and personal digital assistants, consumer products such as televisions, videogame systems, digital cameras and automobile electronics, and for power management in portable and automotive electronics. The Company also sells hardware and software support and maintenance services for its test systems. The Company is headquartered, and has development and manufacturing facilities, in Westwood, Massachusetts, a development facility in San Jose, California, and worldwide sales and service facilities to support its customer base.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, accordingly, these footnotes condense or omit information and disclosures which substantially duplicate information provided in our latest audited financial statements. These financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended July 31, 2003. In the opinion of our management, these financial statements reflect all adjustments necessary for a fair presentation of the results for the interim periods presented. The accompanying unaudited consolidated financial statements are not necessarily indicative of future trends or our operations for the entire year.