SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| 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
| ¨ | 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: 000-31545
SYNPLICITY, INC.
(Exact name of registrant as specified in its charter)
| California | 77-0368779 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
600 West California Avenue, Sunnyvale, CA 94086
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (408) 215-6000
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 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 Securities Exchange Act of 1934, as amended). Yes x No ¨
As of August 2, 2004, the registrant had 26,089,483 shares of common stock outstanding.
INDEX
| PAGE NO. | ||||
| PART I. |
FINANCIAL INFORMATION | |||
| Item 1. |
||||
| Condensed Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003 |
3 | |||
| 4 | ||||
| Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2003 |
5 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | ||
| Item 3. |
29 | |||
| Item 4. |
30 | |||
| PART II. |
OTHER INFORMATION | |||
| Item 2. |
Changes in Securities Use of Proceeds and Issuer Purchases of Equity Securities |
31 | ||
| Item 4. |
31 | |||
| Item 5. |
32 | |||
| Item 6. |
32 | |||
| 33 | ||||
2
PART I - FINANCIAL INFORMATION
SYNPLICITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| June 30, 2004 |
December 31, 2003(1) |
|||||||
| (unaudited) | ||||||||
| Assets: |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 9,135 | $ | 4,329 | ||||
| Short-term investments |
37,090 | 41,045 | ||||||
| Accounts receivable, net of allowances of $153 and $151 at June 30, 2004 and December 31, 2003, respectively |
8,211 | 8,024 | ||||||
| Other current assets |
1,664 | 2,054 | ||||||
| Total current assets |
56,100 | 55,452 | ||||||
| Property and equipment, net of accumulated depreciation of $8,219 and $7,256 at |
2,781 | 2,941 | ||||||
| Goodwill |
1,272 | 1,272 | ||||||
| Intangible assets, net |
2,792 | 3,237 | ||||||
| Long-term investments |
2,126 | — | ||||||
| Other assets |
757 | 559 | ||||||
| Total assets |
$ | 65,828 | $ | 63,461 | ||||
| Liabilities and Shareholders’ Equity: |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 862 | $ | 1,098 | ||||
| Accrued liabilities |
1,910 | 1,756 | ||||||
| Accrued compensation |
2,415 | 3,328 | ||||||
| Deferred revenue |
17,009 | 15,228 | ||||||
| Total current liabilities |
22,196 | 21,410 | ||||||
| Shareholders’ equity: |
||||||||
| Preferred stock |
— | — | ||||||
| Common stock |
56,289 | 55,601 | ||||||
| Additional paid-in capital |
3,452 | 3,453 | ||||||
| Deferred stock-based compensation |
(155 | ) | (275 | ) | ||||
| Accumulated deficit |
(15,433 | ) | (16,198 | ) | ||||
| Accumulated other comprehensive loss |
(521 | ) | (530 | ) | ||||
| Total shareholders’ equity |
43,632 | 42,051 | ||||||
| Total liabilities and shareholders’ equity |
$ | 65,828 | $ | 63,461 | ||||
| (1) | Derived from the audited consolidated balance sheet of Synplicity, Inc. as of December 31, 2003. However, the condensed consolidated balance sheet amounts at December 31, 2003 do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. |
The accompanying notes are an integral part of the condensed consolidated financial statements.
3
SYNPLICITY, INC.
CONDENSED 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 |
|||||||||||
| Revenue: |
||||||||||||||
| License |
$ | 8,070 | $ | 7,043 | $ | 15,464 | $ | 13,430 | ||||||
| Maintenance |
6,165 | 5,196 | 12,269 | 10,372 | ||||||||||
| Total revenue |
14,235 | 12,239 | 27,733 | 23,802 | ||||||||||
| Cost of revenue: |
||||||||||||||
| Cost of license |
156 | 100 | 359 | 156 | ||||||||||
| Cost of maintenance |
607 | 525 | 1,197 | 1,048 | ||||||||||
| Amortization of intangible assets from acquisitions |
222 | 223 | 445 | 441 | ||||||||||
| Total cost of revenue |
985 | 848 | 2,001 | 1,645 | ||||||||||
| Gross profit |
13,250 | 11,391 | 25,732 | 22,157 | ||||||||||
| Operating expenses: |
||||||||||||||
| Research and development |
5,821 | 5,183 | 11,386 | 10,420 | ||||||||||
| Sales and marketing |
5,607 | 5,492 | 11,025 | 10,378 | ||||||||||
| General and administrative |
1,327 | 1,270 | 2,490 | 2,416 | ||||||||||
| Stock-based compensation (1) |
57 | 130 | 119 | 269 | ||||||||||
| Total operating expenses |
12,812 | 12,075 | 25,020 | 23,483 | ||||||||||
| Income (loss) from operations |
438 | (684 | ) | 712 | (1,326 | ) | ||||||||
| Other income, net |
132 | 215 | 255 | 355 | ||||||||||
| Income (loss) before income taxes |
570 | (469 | ) | 967 | (971 | ) | ||||||||
| Income tax provision |
101 | 130 | 202 | 260 | ||||||||||
| Net income (loss) |
$ | 469 | $ | (599 | ) | $ | 765 | $ | (1,231 | ) | ||||
| Net income (loss) per share: |
||||||||||||||
| Basic and diluted net income (loss) per share |
$ | 0.02 | $ | (0.02 | ) | $ | 0.03 | $ | (0.05 | ) | ||||
| Shares used in basic per share calculation |
26,073 | 25,569 | 25,984 | 25,588 | ||||||||||
| Shares used in diluted per share calculation |
27,623 | 25,569 | 27,756 | 25,588 | ||||||||||
| (1) Amortization of deferred stock-based compensation relates to the following: |
| |||||||||||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||
| Cost of maintenance |
$ | 1 | $ | 3 | $ | 2 | $ | 6 | ||||||
| Research and development |
15 | 42 | 35 | 93 | ||||||||||
| Sales and marketing |
15 | 36 | 31 | 72 | ||||||||||
| General and administrative |
26 | 49 | 51 | 98 | ||||||||||
| Total |
$ | 57 | $ | 130 | $ | 119 | $ | 269 | ||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
4
SYNPLICITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Six Months Ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Operating activities |
||||||||
| Net income (loss) |
$ | 765 | $ | (1,231 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation |
984 | 1,079 | ||||||
| Amortization of deferred stock-based compensation |
119 | 269 | ||||||
| Amortization of intangible assets |
445 | 441 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(187 | ) | 2,015 | |||||
| Other current assets |
390 | 288 | ||||||
| Other assets |
(198 | ) | (29 | ) | ||||
| Accounts payable |
(236 | ) | 377 | |||||
| Accrued liabilities |
154 | (175 | ) | |||||
| Accrued compensation |
(913 | ) | (448 | ) | ||||
| Deferred revenue |
1,781 | 726 | ||||||
| Net cash provided by operating activities |
3,104 | 3,312 | ||||||
| Investing activities |
||||||||
| Purchases of property and equipment |
(824 | ) | (687 | ) | ||||
| Purchases of short-term investments |
(22,736 | ) | (28,270 | ) | ||||
| Purchase of long-term investments |
(2,133 | ) | — | |||||
| Proceeds from maturities of short-term investments |
26,625 | 22,902 | ||||||
| Net cash provided by (used in) investing activities |
932 | (6,055 | ) | |||||
| Financing activities |
||||||||
| Proceeds from sale of common stock |
923 | 775 | ||||||
| Repurchases of common stock |
(235 | ) | (1,606 | ) | ||||
| Proceeds from repayment of notes receivable from officer |
— | 294 | ||||||
| Net cash provided by (used in) financing activities |
688 | (537 | ) | |||||
| Effect of exchange rate changes on cash |
82 | 33 | ||||||