UNITED STATES
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 AND 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 000-50812
MULTI-FINELINE ELECTRONIX, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 95-3947402 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
3140 East Coronado Street, Suite A
Anaheim, CA 92806
(Address of principal executive offices, Zip Code)
(714) 238-1488
(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 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 ¨ No x
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Act) Yes ¨ No x
The number of outstanding shares of the registrant’s Common Stock, $0.0001 par value, as of July 31, 2004 was 23,257,835.
Multi-Fineline Electronix, Inc.
| PART I. FINANCIAL INFORMATION | ||||
| Item 1. |
Consolidated Financial Statements (unaudited) | 1 | ||
| Consolidated Balance Sheets | 1 | |||
| Consolidated Statements of Income | 2 | |||
| Consolidated Statements of Cash Flows | 3 | |||
| Notes to Consolidated Financial Statements | 4 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 | ||
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 32 | ||
| Item 4. |
Controls and Procedures | 32 | ||
| PART II. OTHER INFORMATION | ||||
| Item 1. |
Not Applicable | |||
| Item 2. |
Changes in Securities and Use of Proceeds | 32 | ||
| Item 3. |
Not Applicable | |||
| Item 4. |
Submission of Matters to a Vote of Security Holders | 33 | ||
| Item 5. |
Not Applicable | |||
| Item 6. |
Exhibits and Reports on Form 8-K | 34 | ||
MULTI-FINELINE ELECTRONIX, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
(unaudited)
| June 30, 2004 |
September 30, 2003 |
|||||||
| ASSETS | ||||||||
| Cash and cash equivalents |
$ | 55,507 | $ | 5,211 | ||||
| Restricted cash |
13 | 133 | ||||||
| Accounts receivable, net of allowances of $483 and $379 |
50,766 | 20,987 | ||||||
| Inventories |
39,819 | 21,929 | ||||||
| Due from affiliates |
1 | 1 | ||||||
| Deferred taxes |
2,018 | 1,826 | ||||||
| Other current assets |
1,004 | 393 | ||||||
| Total current assets |
149,128 | 50,480 | ||||||
| Property, plant and equipment, net |
55,825 | 42,340 | ||||||
| Restricted cash |
121 | 121 | ||||||
| Other assets |
1,359 | 5,788 | ||||||
| Total assets |
$ | 206,433 | $ | 98,729 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable |
$ | 34,026 | $ | 21,015 | ||||
| Accrued liabilities |
9,767 | 4,838 | ||||||
| Due to affiliates |
4,441 | 1,334 | ||||||
| Line of credit |
22,357 | 5,085 | ||||||
| Current portion of note payable |
— | 253 | ||||||
| Income taxes payable |
2,725 | 299 | ||||||
| Total current liabilities |
73,316 | 32,824 | ||||||
| Deposits from Wearnes for purchase of common stock |
— | 15,000 | ||||||
| Note payable, net of current portion |
— | 4,358 | ||||||
| Other liabilities |
96 | 78 | ||||||
| Deferred taxes |
1,085 | 983 | ||||||
| Total liabilities |
74,497 | 53,243 | ||||||
| Commitments and contingencies (Note 2) |
||||||||
| Stockholders’ equity |
||||||||
| Preferred stock, $0.0001 par value, 5,000,000 and zero shares authorized; none issued or outstanding |
— | — | ||||||
| Common stock-par value $0.0001; 100,000,000 and 150,000,000 shares authorized; 23,257,835, and 11,720,295 shares issued and outstanding |
1 | 1 | ||||||
| Additional paid-in capital |
89,084 | 8,429 | ||||||
| Unearned deferred compensation |
— | (14 | ) | |||||
| Retained earnings |
42,902 | 37,139 | ||||||
| Accumulated other comprehensive loss |
(51 | ) | (69 | ) | ||||
| Total stockholders’ equity |
131,936 | 45,486 | ||||||
| Total liabilities and stockholders’ equity |
$ | 206,433 | $ | 98,729 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
1
MULTI-FINELINE ELECTRONIX, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(unaudited)
| Three Months Ended June 30, |
Nine Months Ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net sales |
$ | 71,497 | $ | 29,514 | $ | 181,463 | $ | 93,503 | ||||||||
| Cost of sales |
54,108 | 23,831 | 142,803 | 75,766 | ||||||||||||
| Gross profit |
17,389 | 5,683 | 38,660 | 17,737 | ||||||||||||
| Operating expenses |
||||||||||||||||
| Sales and marketing |
1,974 | 1,470 | 5,752 | 4,150 | ||||||||||||
| General and administrative (includes stock-based compensation expense of $0, $14, $14, and $116 for the three and nine months ended June 30, 2004 and 2003, respectively.) |
3,382 | 2,005 | 9,055 | 6,191 | ||||||||||||
| Total operating expenses |
5,356 | 3,475 | 14,807 | 10,341 | ||||||||||||
| Operating income |
12,033 | 2,208 | 23,853 | 7,396 | ||||||||||||
| Other (income) expense, net |
||||||||||||||||
| Loss from equity method investee, net |
— | 100 | 205 | 305 | ||||||||||||
| Interest expense |
121 | 76 | 527 | 193 | ||||||||||||
| Interest income |
(12 | ) | (7 | ) | (40 | ) | (8 | ) | ||||||||
| Other (income) expense |
(97 | ) | (8 | ) | (43 | ) | 51 | |||||||||
| Income before provision for income taxes |
12,021 | 2,047 | 23,204 | 6,855 | ||||||||||||
| Provision for income taxes |
(3,286 | ) | (684 | ) | (6,567 | ) | (2,289 | ) | ||||||||
| Net income |
$ | 8,735 | $ | 1,363 | $ | 16,637 | $ | 4,566 | ||||||||
| Net income per share |
||||||||||||||||
| Basic |
$ | 0.47 | $ | 0.12 | $ | 0.92 | $ | 0.39 | ||||||||
| Diluted |
$ | 0.44 | $ | 0.11 | $ | 0.87 | $ | 0.38 | ||||||||
| Shares used in computing net income per share |
||||||||||||||||
| Basic |
18,532,560 | 11,720,295 | 17,994,109 | 11,720,295 | ||||||||||||
| Diluted |
19,769,925 | 12,610,286 | 19,029,947 | 12,172,737 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
2
MULTI-FINELINE ELECTRONIX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(unaudited)
| Nine Months Ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities |
||||||||
| Net income |
$ | 16,637 | $ | 4,566 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities |
||||||||
| Depreciation and amortization |
4,502 | 3,060 | ||||||
| Loss from equity method investee |
205 | 305 | ||||||
| Provision for doubtful accounts |
116 | 25 | ||||||
| Deferred taxes |
(90 | ) | (43 | ) | ||||
| Stock-based compensation expense |
14 | 116 | ||||||
| Loss on disposal of equipment |
32 | 54 | ||||||
| Changes in operating assets and liabilities |
||||||||
| Accounts receivable |
(29,895 | ) | (1,275 | ) | ||||
| Inventories |
(17,890 | ) | (835 | ) | ||||
| Due to/from affiliates, net |
(3,107 | ) | (285 | ) | ||||
| Other current assets |
(611 | ) | 51 | |||||
| Other assets |
3,852 | (2,675 | ) | |||||
| Accounts payable |
13,011 | (316 | ) | |||||
| Accrued liabilities |
4,929 | (1,034 | ) | |||||
| Income tax payable |
2,426 | (116 | ) | |||||
| Other liabilities |
(18 | ) | (774 | ) | ||||
| Net cash provided by (used in) operating activities |
363 | 824 | ||||||
| Cash flows from investing activities |
||||||||
| Cash paid for property and equipment |
(17,473 | ) | (10,835 | ) | ||||
| Purchases of software and capitalized internal-use software |
(62 | ) | — | |||||
| Deposits on property and equipment |
(379 | ) | (1,431 | ) | ||||
| Cash advances to equity method investee |
(242 | ) | (295 | ) | ||||
| Proceeds from sale of equipment |
509 | 124 | ||||||
| Decrease (increase) in restricted cash, net |
120 | (3 | ) | |||||
| Net cash used in investing activities |
(17,527 | ) | (12,440 | ) | ||||
| Cash flows from financing activities |
||||||||
| Borrowings on line of credit |
30,972 | 5,729 | ||||||
| Payments on line of credit |
(13,700 | ) | (500 | ) | ||||
| Proceeds from note payable |
— | 4,800 | ||||||
| Principal payments on note payable |
(4,611 | ) | (124 | ) | ||||
| Proceeds from issuance of common stock, net of issuance costs of $5,488 |
54,781 | — | ||||||
| Net cash provided by (used in) financing activities |
67,445 | |||||||