UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 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 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: 000-50838
NETLOGIC MICROSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 77-0455244 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1875 Charleston Rd.
Mountain View, CA 94043
(650) 961-6676
(Address and telephone number of principal executive offices)
Indicate by check mark whether 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 Exchange Act Rule 12b-2). Yes ¨ No x
The number of shares outstanding of the Registrant’s Common Stock, $0.01 par value, was 17,578,125 as of November 1, 2004.
FORM 10-Q
TABLE OF CONTENTS
| Page No. | ||||
| PART I: | INTERIM FINANCIAL INFORMATION | |||
| Item 1. |
3 | |||
| Condensed Balance Sheets as of September 30, 2004 and December 31, 2003 |
3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | ||
| Item 3. |
31 | |||
| Item 4. |
32 | |||
| PART II: | OTHER INFORMATION | |||
| Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
32 | ||
| Item 6. |
32 | |||
| 33 | ||||
2
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
| September 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 39,636 | $ | 13,155 | ||||
| Restricted cash |
— | 5,000 | ||||||
| Short-term investments |
— | 2,995 | ||||||
| Accounts receivable, net |
3,634 | 4,062 | ||||||
| Inventory |
8,471 | 3,584 | ||||||
| Prepaid expenses and other current assets |
1,731 | 560 | ||||||
| Total current assets |
53,472 | 29,356 | ||||||
| Property and equipment, net |
2,105 | 2,031 | ||||||
| Other assets |
50 | 457 | ||||||
| Total assets |
$ | 55,627 | $ | 31,844 | ||||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) |
||||||||
| Current liabilities: |
||||||||
| Revolving line of credit |
$ | — | $ | 9,910 | ||||
| Accounts payable |
3,961 | 3,581 | ||||||
| Accrued liabilities |
4,152 | 8,118 | ||||||
| Deferred revenue |
— | 500 | ||||||
| Capital lease obligations, current |
276 | 351 | ||||||
| Total current liabilities |
8,389 | 22,460 | ||||||
| Capital lease obligations, long-term |
6 | 135 | ||||||
| Other liabilities |
72 | — | ||||||
| Total liabilities |
8,467 | 22,595 | ||||||
| Redeemable convertible preferred stock |
— | 91,600 | ||||||
| Stockholders’ equity (deficit): |
||||||||
| Common stock |
176 | 36 | ||||||
| Additional paid-in capital |
150,932 | 10,686 | ||||||
| Notes receivable from stockholders |
(515 | ) | (1,620 | ) | ||||
| Deferred stock-based compensation |
(4,326 | ) | (4,300 | ) | ||||
| Accumulated deficit |
(99,107 | ) | (87,153 | ) | ||||
| Total stockholders’ equity (deficit) |
47,160 | (82,351 | ) | |||||
| Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
$ | 55,627 | $ | 31,844 | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Product revenue |
$ | 12,441 | $ | 2,594 | $ | 31,456 | $ | 5,106 | ||||||||
| License and engineering service revenue |
— | 8 | 1,128 | 3,013 | ||||||||||||
| Total revenue |
12,441 | 2,602 | 32,584 | 8,119 | ||||||||||||
| Cost of revenue: |
||||||||||||||||
| Cost of product revenue (1) |
6,861 | 8,248 | 18,766 | 10,015 | ||||||||||||
| Cost of license and engineering service revenue |
— | 2 | — | 5 | ||||||||||||
| Total cost of revenue |
6,861 | 8,250 | 18,766 | 10,020 | ||||||||||||
| Gross profit |
5,580 | (5,648 | ) | 13,818 | (1,901 | ) | ||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
3,891 | 4,634 | 12,365 | 12,346 | ||||||||||||
| Selling, General and Administrative |
1,735 | 1,201 | 4,895 | 3,256 | ||||||||||||
| Stock-based compensation (2) |
1,090 | 683 | 4,616 | 1,495 | ||||||||||||
| Total operating expenses |
6,716 | 6,518 | 21,876 | 17,097 | ||||||||||||
| Loss from operations |
(1,136 | ) | (12,166 | ) | (8,058 | ) | (18,998 | ) | ||||||||
| Other income (expense), net: |
||||||||||||||||
| Interest income |
94 | 71 | 207 | 305 | ||||||||||||
| Interest expense |
(2,564 | ) | (21 | ) | (3,996 | ) | (82 | ) | ||||||||
| Other income (expense), net |
(32 | ) | (12 | ) | (108 | ) | (62 | ) | ||||||||
| Total interest and other income (expense), net |
(2,502 | ) | 38 | (3,897 | ) | 161 | ||||||||||
| Net loss |
$ | (3,638 | ) | $ | (12,128 | ) | $ | (11,955 | ) | $ | (18,837 | ) | ||||
| Net loss per share - Basic and Diluted |
$ | (0.22 | ) | $ | (3.68 | ) | $ | (1.50 | ) | $ | (5.23 | ) | ||||
| Shares used in calculation - Basic and Diluted |
16,243 | 3,292 | 7,954 | 3,599 | ||||||||||||
| (1) Stock-based compensation included in cost of product revenue |
$ | 67 | $ | 11 | $ | 168 | $ | 71 | ||||||||
| (2) Components of stock-based compensation included in operating expenses: |
||||||||||||||||
| Research and development |
$ | 410 | $ | 447 | $ | 1,843 | $ | 974 | ||||||||
| Selling, general and administrative |
680 | 236 | 2,773 | 521 | ||||||||||||
| Total |
$ | 1,090 | $ | 683 | $ | 4,616 | $ | 1,495 | ||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
| Nine months ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (11,955 | ) | $ | (18,837 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
1,223 | 1,766 | ||||||
| Issuance of stock options for services |
11 | 6 | ||||||
| Non-cash interest expense |
3,445 | 22 | ||||||
| Provision for allowance for doubtful accounts |
192 | 102 | ||||||
| Amortization of deferred stock-based compensation |
4,784 | 1,566 | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
236 | (831 | ) | |||||
| Inventory |
(4,887 | ) | (2,294 | ) | ||||
| Prepaid expenses and other assets |
(616 | ) | (4,802 | ) | ||||
| Accounts payable |
380 | (945 | ) | |||||
| Accrued liabilities |
(3,966 | ) | 7,125 | |||||
| Deferred revenue |
(500 | ) | (550 | ) | ||||
| Other long-term liabilities |
72 | — | ||||||
| Net cash used in operating activities |
(11,581 | ) | (17,672 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Purchase of fixed assets |
(1,034 | ) | (1,070 | ) | ||||