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 March 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 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 April 30, 2004 | |
| Common Stock | 44,874,991 |
SYMMETRICOM, INC.
FORM 10-Q
| Page | ||||||
| PART I. |
FINANCIAL INFORMATION |
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| Item 1. |
Financial Statements: |
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| Consolidated Balance Sheets—March 31, 2004 and June 30, 2003 |
3 | |||||
| Consolidated Statements of Operations—Three and nine months ended March 31, 2004 and 2003 |
4 | |||||
| Consolidated Statements of Cash Flows—Nine months ended March 31, 2004 and 2003 |
5 | |||||
| 6 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 | ||||
| Item 3. |
33 | |||||
| Item 4. |
34 | |||||
| PART II. |
OTHER INFORMATION |
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| Item 1. |
35 | |||||
| Item 2. |
35 | |||||
| Item 3. |
35 | |||||
| Item 4. |
35 | |||||
| Item 5. |
35 | |||||
| Item 6. |
35 | |||||
| 37 | ||||||
PART I. FINANCIAL INFORMATION
| Item 1. | Financial Statements |
SYMMETRICOM, INC.
(In thousands, except par value)
(Unaudited)
| March 31, 2004 |
June 30, 2003 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 22,288 | $ | 32,284 | ||||
| Restricted cash |
3,000 | 3,396 | ||||||
| Short-term investments |
10,886 | 735 | ||||||
| Cash and investments |
36,174 | 36,415 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $793 as of March 2004 and $974 as of June 2003 |
27,958 | 23,776 | ||||||
| Inventories |
29,359 | 29,070 | ||||||
| Prepaids and other current assets |
5,014 | 4,183 | ||||||
| Deferred taxes, current |
9,670 | 9,670 | ||||||
| Total current assets |
108,175 | 103,114 | ||||||
| Property, plant and equipment, net |
28,291 | 31,222 | ||||||
| Goodwill, net |
49,248 | 50,200 | ||||||
| Other intangible assets, net |
15,758 | 19,128 | ||||||
| Deferred taxes, non-current |
29,840 | 28,311 | ||||||
| Other assets |
1,160 | 1,415 | ||||||
| Note receivable from employee |
500 | 500 | ||||||
| Total assets |
$ | 232,972 | $ | 233,890 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 11,864 | $ | 12,246 | ||||
| Accrued compensation |
8,279 | 12,191 | ||||||
| Accrued warranty |
3,529 | 4,021 | ||||||
| Other accrued liabilities |
9,537 | 10,528 | ||||||
| Current maturities of long-term obligations |
1,108 | 996 | ||||||
| Total current liabilities |
34,317 | 39,982 | ||||||
| Long-term obligations |
9,102 | 10,057 | ||||||
| Deferred income taxes |
416 | 419 | ||||||
| Total liabilities |
43,835 | 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, 45,429 shares issued and 44,869 shares outstanding as of March 2004; 43,051 shares issued and 42,491 outstanding as of June 2003 |
169,183 | 159,194 | ||||||
| Stockholder note receivable |
(555 | ) | (555 | ) | ||||
| Accumulated other comprehensive loss |
(16 | ) | (178 | ) | ||||
| Deferred stock-based compensation |
(1,189 | ) | (1,133 | ) | ||||
| Retained earnings |
21,714 | 26,104 | ||||||
| Total stockholders’ equity |
189,137 | 183,432 | ||||||
| Total liabilities and stockholders’ equity |
$ | 232,972 | $ | 233,890 | ||||
See notes to the consolidated financial statements.
3
SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
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| Net revenue |
$ | 43,748 | $ | 36,861 | $ | 123,179 | $ | 95,111 | ||||||||
| Cost of product and services |
25,624 | 21,697 | 73,031 | 57,303 | ||||||||||||
| Amortization of purchased technology |
978 | 1,057 | 2,940 | 2,176 | ||||||||||||
| Write-off of Telmax royalty |
— | — | — | 567 | ||||||||||||
| Integration and restructuring charges |
— | 160 | 5,641 | 203 | ||||||||||||
| Gross profit |
17,146 | 13,947 | 41,567 | 34,862 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
3,798 | 6,027 | 12,600 | 14,781 | ||||||||||||
| Selling, general and administrative |
10,740 | 13,179 | 32,887 | 32,254 | ||||||||||||
| Amortization of intangibles |
218 | 229 | 619 | 953 | ||||||||||||
| Integration and restructuring charges |
— | 2,223 | 1,890 | 3,231 | ||||||||||||
| Impairment of goodwill |
— | — | — | 15,335 | ||||||||||||
| Acquired in-process research and development |
— | — | — | 1,561 | ||||||||||||
| Operating earnings (loss) |
2,390 | (7,711 | ) | (6,429 | ) | (33,253 | ) | |||||||||
| Loss on equity securities |
— | — | — | (450 | ) | |||||||||||
| Interest income |
95 | 158 | 260 | 516 | ||||||||||||
| Interest expense |
(143 | ) | (169 | ) | (448 | ) | (465 | ) | ||||||||
| Earnings (loss) before income taxes |
2,342 | (7,722 | ) | (6,617 | ) | (33,652 | ) | |||||||||
| Income tax provision (benefit) |
592 | (2,322 | ) | (2,244 | ) | (5,791 | ) | |||||||||
| Net earnings (loss) from continuing operations |
1,750 | (5,400 | ) | (4,373 | ) | (27,861 | ) | |||||||||
| Loss from discontinued operations, net of tax |
(1 | ) | (694 | ) | (17 | ) | (1,184 | ) | ||||||||
| Net earnings (loss) |
$ | 1,749 | $ | (6,094 | ) | $ | (4,390 | ) | $ | (29,045 | ) | |||||
| Earnings (loss) per share—basic: |
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| Earnings (loss) from continuing operations |
$ | 0.04 | $ | (0.13 | ) | $ | (0.10 | ) | $ | (0.83 | ) | |||||
| Loss from discontinued operations |
— | (0.01 | ) | — | (0.04 | ) | ||||||||||
| Net earnings (loss) |
$ | 0.04 | $ | (0.14 | ) | $ | (0.10 | ) | $ | (0.87 | ) | |||||
| Weighted average shares outstanding—basic |
44,226 | 42,131 | 43,386 | 33,465 | ||||||||||||
| Earnings (loss) per share—diluted: |
||||||||||||||||
| Earnings (loss) from continuing operations |
$ | 0.04 | $ | (0.13 | ) | $ | (0.10 | ) | $ | (0.83 | ) | |||||
| Loss from discontinued operations |
— | (0.01 | ) | — | (0.04 | ) | ||||||||||
| Net earnings (loss) |
$ | 0.04 | $ | (0.14 | ) | $ | (0.10 | ) | $ | (0.87 | ) | |||||
| Weighted average shares outstanding—diluted |
46,014 | 42,131 | 43,386 | 33,465 | ||||||||||||
See notes to the consolidated financial statements.
4
SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended March 31, |
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| 2004 |
2003 |
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| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (4,390 | ) | $ | (29,045 | ) | ||
| 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 |
8,853 | 8,277 | ||||||
| Deferred income taxes |
(248 | ) | (4,613 | ) | ||||
| Loss on equity securities |
— | 45 | ||||||