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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

(Registrant’s 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 issuer’s classes of common stock, as of the latest practicable date. As of July 23, 2004, approximately 51,071,885 shares of the Registrant’s Common Stock, $0.001 par value per share, were outstanding.

 



Table of Contents

Microtune, Inc.

 

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

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2004 and 2003 (unaudited)

   4

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003 (unaudited)

   5

Notes to Consolidated Financial Statements (unaudited)

   6

Item 2. Management’s 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

Item 2. Changes In Securities and Use of Proceeds

   37

Item 3. Defaults Upon Senior Securities

   37

Item 4. Submission of Matters to a Vote of Security Holders

   38

Item 5. Other Information

   39

Item 6. Exhibits and Reports on Form 8-K

   39

Signatures

   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 management’s 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


Table of Contents

PART I.

Financial Information

 

Item 1. Financial Statements

 

Microtune, Inc.

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


Table of Contents

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


Table of Contents

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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