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 JUNE 30, 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 000-31029-40
MICROTUNE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 75-2883117 | |
| (State or other jurisdiction of Incorporation or organization) |
(I.R.S. Employer Identification Number) |
2201 10th Street
Plano, Texas 75074
(Address of principal executive office and zip code)
(972) 673-1600
(Registrants telephone number, including area code)
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, as amended, 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 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 Exchange Act). YES x NO ¨
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. As of July 23, 2004, approximately 51,071,885 shares of the Registrants Common Stock, $0.001 par value per share, were outstanding.
FORM 10-Q
June 30, 2004
INDEX
| Page | ||
| Part I. Financial Information |
||
| Item 1. Financial Statements |
3 | |
| Consolidated Balance Sheets at June 30, 2004 and December 31, 2003 (unaudited) |
3 | |
| 4 | ||
| Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003 (unaudited) |
5 | |
| 6 | ||
| Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |
17 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
34 | |
| Item 4. Controls and Procedures |
34 | |
| Part II. Other Information |
||
| Item 1. Legal Proceedings |
34 | |
| 37 | ||
| Item 3. Defaults Upon Senior Securities |
37 | |
| 38 | ||
| Item 5. Other Information |
39 | |
| Item 6. Exhibits and Reports on Form 8-K |
39 | |
| 40 | ||
Caution Regarding Forward-Looking Statements
Throughout this quarterly report on Form 10-Q, there are forward-looking statements that are based upon our current expectations, estimates and projections about our business and our industry, and that reflect our beliefs and assumptions based upon information available to us at the date of this report. In some cases, you can identify these statements by words such as if, may, might, will, should, expects, plans, anticipates, believes, estimates, predicts, potential, continue, and other similar terms. These forward-looking statements include, among other things, projections of our future financial performance, our anticipated growth, our strategies and the trends we anticipate in our businesses and the markets in which we operate, and the competitive nature and anticipated growth of those markets.
We caution readers that forward-looking statements are only predictions, based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements. In addition to the other information in this report, we encourage you to review the information regarding risk set forth under the caption Factors Affecting Future Operating Results and Stock Price below and in our other filings with the Securities and Exchange Commission (SEC). We caution readers not to rely on these forward-looking statements, which reflect managements analysis only as of the date of this report. We undertake no obligation to revise or update any forward-looking statement for any reason.
2
Financial Information
Consolidated Balance Sheets
(In thousands, except per share data)
(unaudited)
| June 30, 2004 |
December 31, 2003 |
|||||||
| Assets | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 73,160 | $ | 53,337 | ||||
| Short-term investments |
6,045 | 6,045 | ||||||
| Accounts receivable, net |
5,997 | 4,260 | ||||||
| Inventories |
5,131 | 4,165 | ||||||
| Other current assets |
1,994 | 4,309 | ||||||
| Total current assets |
92,327 | 72,116 | ||||||
| Property and equipment, net |
6,499 | 7,504 | ||||||
| Long-term investments |
6,556 | 14,028 | ||||||
| Intangible assets, net |
4,543 | 6,564 | ||||||
| Other assets and deferred charges |
472 | 447 | ||||||
| Total assets |
$ | 110,397 | $ | 100,659 | ||||
| Liabilities and Stockholders Equity | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 8,395 | $ | 7,195 | ||||
| Accrued compensation |
1,325 | 1,182 | ||||||
| Accrued expenses |
4,819 | 3,945 | ||||||
| Deferred revenue |
| 147 | ||||||
| Total current liabilities |
14,539 | 12,469 | ||||||
| Other non-current liabilities |
1,185 | 1,466 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders equity: |
||||||||
| Preferred stock, $0.001 par value Authorized 25,000 shares issued and outstanding shares none |
| | ||||||
| Common stock, $0.001 par value Authorized 150,000 shares issued and outstanding shares 51,071 and 51,157 respectively |
51 | 51 | ||||||
| Additional paid-in capital |
436,190 | 436,025 | ||||||
| Unearned stock compensation |
(593 | ) | (1,124 | ) | ||||
| Loans receivable from stockholders |
| (30 | ) | |||||
| Accumulated other comprehensive loss |
(1,052 | ) | (960 | ) | ||||
| Accumulated deficit |
(339,923 | ) | (347,238 | ) | ||||
| Total stockholders equity |
94,673 | 86,724 | ||||||
| Total liabilities and stockholders equity |
$ | 110,397 | $ | 100,659 | ||||
See accompanying notes.
3
Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net revenue |
$ | 13,470 | $ | 13,976 | $ | 24,509 | $ | 26,598 | ||||||||
| Cost of revenue |
7,917 | 9,086 | 13,840 | 19,487 | ||||||||||||
| Gross margin |
5,553 | 4,890 | 10,669 | 7,111 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development: |
||||||||||||||||
| Stock option compensation |
186 | 477 | 364 | 1,682 | ||||||||||||
| Other |
3,797 | 5,664 | 7,181 | 12,229 | ||||||||||||
| 3,983 | 6,141 | 7,545 | 13,911 | |||||||||||||
| Selling, general and administrative: |
||||||||||||||||
| Stock option compensation |
64 | 1,133 | 144 | 1,546 | ||||||||||||
| Other |
7,818 | 7,730 | 16,061 | 14,177 | ||||||||||||
| 7,882 | 8,863 | 16,205 | 15,723 | |||||||||||||
| Restructuring |
(12 | ) | (1,303 | ) | 99 | 100 | ||||||||||
| Amortization of intangible assets |
1,069 | 1,055 | 2,135 | 2,136 | ||||||||||||
| Total operating expenses |
12,922 | 14,756 | 25,984 | 31,870 | ||||||||||||
| Loss from operations |
(7,369 | ) | (9,866 | ) | (15,315 | ) | (24,759 | ) | ||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
190 | 181 | 405 | 593 | ||||||||||||
| Foreign currency gains (losses), net |
558 | 1,474 | (650 | ) | 1,324 | |||||||||||
| Settlement of patent and anti-trust litigation |
22,500 | | 22,500 | | ||||||||||||
| Other |
268 | 137 | 577 | 215 | ||||||||||||
| Income (loss) before provision for income taxes |
16,147 | (8,074 | ) | 7,517 | (22,627 | ) | ||||||||||
| Income tax expense |
101 | 82 | 201 | 245 | ||||||||||||
| Net income (loss) |
$ | 16,046 | $ | (8,156 | ) | $ | 7,316 | $ | (22,872 | ) | ||||||
| Net income (loss) per common share: |
||||||||||||||||
| Basic |
$ | 0.31 | $ | (0.16 | ) | $ | 0.14 | $ | (0.46 | ) | ||||||
| Diluted |
$ | 0.30 | $ | (0.16 | ) | $ | 0.14 | $ | (0.46 | ) | ||||||
| Weighted-average common shares outstanding: |
||||||||||||||||
| Basic |
51,467 | 50,244 | 51,369 | 50,008 | ||||||||||||
| Diluted |
53,706 | 50,244 | 53,235 | 50,008 | ||||||||||||
See accompanying notes.
4
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
| Six Months Ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Operating activities: |
||||||||
| Net income (loss) |
$ | 7,316 | $ | (22,872 | ) | |||
| Adjustments to reconcile net income (loss) to cash provided (used) in operating activities: |
||||||||
| Depreciation |
1,286 | 3,629 | ||||||
| Amortization of intangible assets |
2,135 | 2,135 | ||||||
| Non-cash restructuring costs |
(35 | ) | 762 | |||||
| Foreign currency (gains) losses, net |
650 | (1,324 | ) | |||||
| Amortization of deferred stock option compensation |
508 | 3,229 | ||||||
| Gain on sale of property and equipment |
(265 | ) | (1,166 | ) | ||||
| Allowance for uncollectible accounts receivable |
18 | | ||||||
| Other non-cash charges |
| 462 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, net |
(1,755 | ) | 5,380 | |||||
| Inventories |
(966 | ) | 538 | |||||
| Other assets |
1,959 | (11 | ) | |||||
| Accounts payable |
1,309 | (3,457 | ) | |||||
| Accrued expenses |
602 | (4,626 | ) | |||||
| Other liabilities |
(281 | ) | 431 | |||||
| Accrued compensation |
143 | 56 | ||||||
| Net cash provided by (used in) operating activities |
12,624 | (16,834 | ) | |||||
| Investing activities: |
||||||||
| Purchases of property and equipment |
(283 | ) | (407 | ) | ||||
| Proceeds from sale of property and equipment |
267 | 199 | ||||||
| Proceeds from sale of Philippine manufacturing assets |
51 | 5,151 | ||||||
| Sale of Netherlands subsidiary |
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