UNITED STATES
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 September 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: 000-30615
SIRENZA MICRODEVICES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 77-0073042 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 303 S. Technology Court, Broomfield, CO | 80021 | |
| (Address of principal executive offices) | (Zip Code) |
(303) 327-3030
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
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) had 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 ¨ No x
As of October 31, 2004 there were 34,920,936 shares of registrant’s Common Stock outstanding.
INDEX
| Page | ||||
| 3 | ||||
| Item 1. |
Financial Statements | 3 | ||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | ||
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 29 | ||
| Item 4. |
Controls and Procedures | 30 | ||
| 30 | ||||
| Item 1. |
Legal Proceedings | 30 | ||
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds | 30 | ||
| Item 3. |
Defaults Upon Senior Securities | 31 | ||
| Item 4. |
Submission of Matters to a Vote of Security Holders | 31 | ||
| Item 5. |
Other Information | 31 | ||
| Item 6. |
Exhibits | 31 | ||
| 32 | ||||
SIRENZA MICRODEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
| September 30, 2004 |
December 31, 2003 | |||||
| (unaudited) | ||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 10,522 | $ | 7,468 | ||
| Short-term investments |
— | 1,999 | ||||
| Accounts receivable, net |
8,428 | 7,838 | ||||
| Inventories |
9,831 | 6,497 | ||||
| Other current assets |
707 | 1,093 | ||||
| Total current assets |
29,488 | 24,895 | ||||
| Property and equipment, net |
8,475 | 9,685 | ||||
| Long-term investments |
6,022 | 4,015 | ||||
| Investment in GCS |
4,600 | 4,600 | ||||
| Other assets |
1,408 | 1,189 | ||||
| Acquisition related intangibles, net |
4,364 | 5,529 | ||||
| Goodwill |
4,219 | 4,219 | ||||
| Total assets |
$ | 58,576 | $ | 54,132 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY
| Current liabilities: |
||||||||
| Accounts payable |
$ | 4,519 | $ | 4,379 | ||||
| Accrued expenses |
3,328 | 2,530 | ||||||
| Deferred margin on distributor inventory |
1,301 | 1,042 | ||||||
| Accrued restructuring |
366 | 887 | ||||||
| Capital lease obligations, current portion |
73 | 65 | ||||||
| Total current liabilities |
9,587 | 8,903 | ||||||
| Capital lease obligations and other long-term liabilities |
18 | 56 | ||||||
| Commitments and contigencies |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock |
35 | 34 | ||||||
| Additional paid-in capital |
135,578 | 134,705 | ||||||
| Deferred stock compensation |
— | (3 | ) | |||||
| Treasury stock, at cost |
(165 | ) | (165 | ) | ||||
| Accumulated deficit |
(86,477 | ) | (89,398 | ) | ||||
| Total stockholders’ equity |
48,971 | 45,173 | ||||||
| Total liabilities and stockholders’ equity |
$ | 58,576 | $ | 54,132 | ||||
See accompanying notes.
3
SIRENZA MICRODEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, 2004 |
September 30, 2003 |
September 30, 2004 |
September 30, 2003 |
|||||||||||||
| Net revenues |
$ | 16,737 | $ | 10,358 | $ | 46,191 | $ | 25,215 | ||||||||
| Cost of revenues: |
||||||||||||||||
| Cost of product revenues |
8,219 | 5,728 | 23,607 | 13,319 | ||||||||||||
| Amortization of deferred stock compensation |
— | 22 | — | 68 | ||||||||||||
| Total cost of revenues |
8,219 | 5,750 | 23,607 | 13,387 | ||||||||||||
| Gross profit |
8,518 | 4,608 | 22,584 | 11,828 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development (exclusive of amortization of deferred stock compensation of $0, $2, $10 and $54 for the three and nine months ended September 30, 2004 and three and nine months ended September 30, 2003, respectively) |
2,337 | 2,348 | 6,777 | 6,220 | ||||||||||||
| Sales and marketing (exclusive of amortization of deferred stock compensation of $0, $1, $43 and $130 for the three and nine months ended September 30, 2004 and three and nine months ended September 30, 2003, respectively) |
1,913 | 1,590 | 5,883 | 4,572 | ||||||||||||
| General and administrative (exclusive of amortization of deferred stock compensation of $0, $0, $74 and $230 for the three and nine months ended September 30, 2004 and three and nine months ended September 30, 2003, respectively) |
2,174 | 1,669 | 5,938 | 4,694 | ||||||||||||
| Amortization of deferred stock compensation |
— | 127 | 3 | 414 | ||||||||||||
| Amortization of acquisition related intangible assets |
354 | 431 | 1,165 | 782 | ||||||||||||
| Restructuring |
(98 | ) | — | (98 | ) | 434 | ||||||||||
| Total operating expenses |
6,680 | 6,165 | 19,668 | 17,116 | ||||||||||||
| Income (loss) from operations |
1,838 | (1,557 | ) | 2,916 | (5,288 | ) | ||||||||||
| Interest expense |
4 | 8 | 12 | 31 | ||||||||||||
| Interest and other income, net |
75 | 89 | 152 | 378 | ||||||||||||
| Income (loss) before income taxes |
1,909 | (1,476 | ) | 3,056 | (4,941 | ) | ||||||||||
| Provision for income taxes |
86 | — | 135 | — | ||||||||||||
| Net income (loss) |
$ | 1,823 | $ | (1,476 | ) | $ | 2,921 | $ | (4,941 | ) | ||||||
| Basic net income (loss) per share |
$ | 0.05 | $ | (0.04 | ) | $ | 0.08 | $ | (0.15 | ) | ||||||
| Diluted net income (loss) per share |
$ | 0.05 | $ | (0.04 | ) | $ | 0.08 | $ | (0.15 | ) | ||||||
| Shares used to compute basic net income (loss) per share |
34,696 | 33,541 | 34,446 | 31,889 | ||||||||||||
| Shares used to compute diluted net income (loss) per share |
37,384 | 33,541 | 37,270 | 31,889 | ||||||||||||
See accompanying notes.
4
SIRENZA MICRODEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended |
||||||||
| September 30, 2004 |
September 30, 2003 |
|||||||
| Operating Activities |
||||||||
| Net income (loss) |
$ | 2,921 | $ | (4,941 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
4,394 | 3,459 | ||||||
| Amortization of deferred stock compensation |
3 | 482 | ||||||
| Compensation expense related to employee equity awards |
37 | — | ||||||
| Gain on the sale of property and equipment |
— | (112 | ) | |||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(590 | ) | (3,140 | ) | ||||
| Inventories |
(3,334 | ) | (2,132 | ) | ||||
| Other assets |
167 | 55 | ||||||
| Accounts payable |
140 | 1,713 | ||||||
| Accrued expenses |
816 | (327 | ) | |||||
| Accrued restructuring |
(521 | ) | (844 | ) | ||||
| Deferred margin on distributor inventory |
259 | (1,032 | ) | |||||
| Net cash provided by (used in) operating activities |
4,292 | (6,819 | ) | |||||
| Investing Activities |
||||||||
| Sales/maturities (purchases) of available-for-sale securities, net |
(8 | ) | 12,013 | |||||
| Purchases of property and equipment |
(2,019 | ) | (2,225 | ) | ||||
| Proceeds from the sale of property and equipment |
— | 112 | ||||||
| Purchase of Xemod, net of cash received |
— | 28 | ||||||
| Purchase of Vari-L, net of amounts accrued |
— | (7,556 | ) | |||||
| Increase in restricted cash |
— | (1,100 | ) | |||||
| Net cash provided by (used in) investing activities |
(2,027 | ) | 1,272 | |||||
| Financing Activities |
||||||||
| Principal payments on capital lease obligations |
(48 | ) | (414 | ) | ||||
| Proceeds from employee stock plans |
837 | 472 | ||||||
| Net cash provided by financing activities |
789 | 58 | ||||||
| Increase (decrease) in cash and cash equivalents |
3,054 | (5,489 | ) | |||||
| Cash and cash equivalents at beginning of period |
7,468 | 12,874 | ||||||
| Cash and cash equivalents at end of period |
$ | 10,522 | $ | 7,385 | ||||
| Supplemental disclosures of noncash investing and financing activities |
||||||||
| Cost and accumulated depreciation of equipment retired |
$ | 83 | $ | — | ||||
| Forfeiture of deferred stock compensation |
$ | — | $ | 138 | ||||
| Common stock issued in connection with Vari-L acquisition |
$ | — | $ | 4,654 | ||||
| Assumption of Vari-L loans receivable |
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