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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(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, 2000
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-2287
SYMMETRICOM, INC.
(Exact name of registrant as specified in our charter)
California No. 95-1906306
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2300 Orchard Parkway, San Jose, CA 95131-1017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 943-9403
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 X No_____
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Applicable Only to Issuers Involved in Bankruptcy Proceedings
During the Preceding Five Years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes_______ No ________
Applicable Only to Corporate Issuers:
Indicate number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
CLASS OUTSTANDING AS OF November 7, 2000
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Common Stock 23,513,260
(adjusted proforma for the three-for two stock split effective August 18,2000)
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Symmetricom, Inc. (the Company), by this Form 10-Q/A, Amendment No.1 to Form 10-
Q, hereby amends and restates Part I, Item 1.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SYMMETRICOM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,011 $ 19,283
Short-term investments 39,506 36,016
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Cash and investments 62,517 55,299
Accounts receivable, net 24,124 19,588
Inventories 27,796 22,357
Other current assets 918 909
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Total current assets 115,355 98,153
Property, plant and equipment, net 19,068 19,960
Other assets, net 16,107 16,556
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$ 150,530 $ 134,669
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,521 $ 8,407
Accrued liabilities 25,114 22,969
Current maturities of long-term obligations 416 391
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Total current liabilities 37,051 31,767
Long-term obligations 7,562 7,679
Deferred income taxes 369 203
Shareholders' equity:
Preferred stock, no par value; 500,000 shares authorized, none issued -- --
Common stock, no par value; 32,000,000 shares authorized,
23,362,001 and 22,913,510 shares issued and outstanding 22,856 20,503
Unrealized gain on securities, net 12,896 10,204
Retained earnings 69,796 64,313
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Total shareholders' equity 105,548 95,020
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$ 150,530 $ 134,669
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</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
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<S> <C> <C>
Net sales $ 35,999 $ 19,617
Cost of sales 20,579 10,578
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Gross profit 15,420 9,039
Operating expenses:
Research and development 3,155 3,303
Selling, general and administrative 7,198 5,057
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Operating income 5,067 679
Gain on sale of investment 1,821 --
Interest income 592 677
Interest expense (169) (176)
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Earnings before income taxes 7,311 1,180
Income taxes 1,828 295
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Net earnings $ 5,483 $ 885
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Earnings per share - basic $ .24 $ .04
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Weighted average shares outstanding - basic 23,115 22,508
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Earnings per share - diluted $ .22 $ .04
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Weighted average shares outstanding - diluted 24,967 23,118
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</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION> Three Months Ended
September 30,
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net earnings 5,483 885
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 1,660 1,197
Deferred income taxes 166 113
Gain on disposition of assets (1,920) --
Changes in assets and liabilities:
Accounts receivable (3,872) 275
Inventories (5,439) (282)
Accounts payable 3,114 (133)
Accrued liabilities (1,156) 118
Other 1,270 170
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Net cash provided by (used for) operating activities $ (694) $ 2,343
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Cash flows from investing activities:
Purchases of short-term investments (11,057) (10,096)
Maturities of short-term investments 10,586 13,000
Proceeds from sale of Parthus stock 3,288 --
Purchases of plant and equipment, net (589) (889)
Other (67) (210)
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Net cash provided by investing activities $ 2,161 $ 1,805
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Cash flows from financing activities:
Proceeds from issuance of common stock 2,353 1,085
Repayment of long-term obligations (92) (68)
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Net cash provided by financing activities $ 2,261 $ 1,017
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Net increase in cash and cash equivalents 3,728 5,165
Cash and cash equivalents at beginning of period 19,283 44,897
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Cash and cash equivalents at end of period $ 23,011 $ 50,062
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Non-cash investing and financing activities:
Unrealized gain on securities, net $ 2,692 $ 860
Deferred taxes on unrealized gain (1,794) (1,110)
Cash payments for:
Interest $ 169 $ 176
Income taxes 386 219
</TABLE>
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<TABLE>
<S> <C> <C>
Detail of sale of antenna division:
Cash to be received subject to escrow 664 $ --
Equity interest in Sarantel Limited -- --
Tangible assets sold (337) --
Liabilities incurred (228) --
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Gain on sale 99 $ --
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</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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SYMMETRICOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation. The consolidated financial statements included herein
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have been prepared by Symmetricom, Inc. ("Symmetricom", the "Company"), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such rules and
regulations. Although we believe that the disclosures, which are made, are
adequate to fairly present the financial information, it is suggested that these
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended June 30, 2000.
In the opinion of the management, these unaudited statements contain all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial position of the Company at September 30, 1999 and
2000, the results of operations for the three-month period then ended and our
cash flows for the three-month period then ended. The results of operations for
the periods presented are not necessarily indicative of those that may be
expected for the full year.
Fiscal period. Symmetricom presents each fiscal quarter on a calendar quarter
ending basis. However our fiscal quarter ends on the Sunday closest to the
quarter ending month. All references to calendar quarter refer to our fiscal
quarter, namely, fiscal quarter ended September 2000 ended on October 1, 2000,
September 1999 ended on September 26, 1999, and fiscal year ended June 2000
ended on July 2, 2000.
2. Net Earnings (Loss)per share. Basic earnings (loss) per share is computed by
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dividing net earnings (loss) by the weighted average number of common shares
outstanding during the period. Diluted earnings (loss) per share is calculated
by dividing net earnings (loss) by the weighted average number of common shares
outstanding and common equivalent shares from dilutive stock options using the
treasury method except when antidilutive.
The following table reconciles the number of shares utilized in the earnings
(loss) per share calculations.
<TABLE>
<CAPTION>
Three months ended
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September 30,
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(In thousands, except per share amounts) 2000 1999
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<S> <C> <C>
Earnings from continuing operations $ 5,483 $ 885
Earnings (loss) from discontinued operations -- --
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Net earnings (loss) $ 5,483 $ 885
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Weighted average shares outstanding - basic 23,115 22,508
Dilutive stock options 1,852 610
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Weighted average shares outstanding - diluted 24,967 23,118
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Basic earnings (loss) per share $ 0.24 $ 0.04
Diluted earnings (loss) per share $ 0.22 $ 0.04
</TABLE>
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On August 18, 2000, the company effected a three-for-two stock split in the form
of a common stock dividend. Shareholders of record as of August 7, 2000 received
three shares of common stock for every two shares they owned on the record date.
Share and per share data for all periods presented herein have been adjusted to
give effect to the three-for-two stock split
Reclassifications. Certain reclassifications have been made to the prior
year consolidated financial statements to conform to the fiscal year 2001
presentation. Such reclassifications have no effect on previously reported
results of operations, or retained earnings.
3. Acquisition. On September 30, 1999 Symmetricom acquired certain assets of
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Hewlett-Packard Company's Communications Synchronization Business ("HP Product
Line business") for $19.4 million in cash. The acquisition has been accounted
for under the purchase method of accounting. The net purchase price of $19.8
million, which includes cash paid of $19.0 million, transaction costs of $0.4
million and assumed liabilities of $0.4 million was allocated to tangible assets
acquired of $1.4 million, capitalized developed technology of $8.0 million,
other intangible assets of $6.9 million and in-process research and development
("IP R&D") of $3.5 million. Approximately $14.9 million of goodwill and other
intangible assets are being amortized as follows; $0.4 million over five years,
$9.9 million over seven years, and $4.6 million over ten years, and is included
in general and administrative expense. Pursuant to this transaction, Symmetricom
recorded $6.8 million of non-recurring charges, $3.5 million for IP R&D and $3.3
million for recruiting and employee expenses.
4. Sale. On September 29, 2000, we sold our United Kingdom based dielectric
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Antenna Division to a joint venture called Sarantel Limited for approximately
$0.6 million cash subject to an escrow agreement. Symmetricom maintains a nearly
19% investment stake in Sarantel Limited. We realized a gain of $0.1 million or
$0.08 million after taxes related to the sale of the Antenna Division.
On March 30, 2000, we sold our GPS division to Silicon Systems, Ltd., ("SSL")
for $9.5 million in cash. Additionally, Symmetricom made an irrevocable
application for subscription shares of SSL for $3.0 million. We realized a gain
of $6.7 million, or $4.2 million after taxes related to the sale of the GPS
division. SSL changed its name to Parthus Technologies plc ("Parthus") prior to
completing an initial public offering in May 2000.
On April 14, 1999, we sold our Linfinity Microelectronics Inc. ("Linfinity")
semiconductor subsidiary to Microsemi Corporation for $24.1 million in cash, of
which $1.1 million is subject to an escrow agreement. The per share
consideration paid to shareholders of Linfinity was $2.96 per preferred share
and $1.46 per common share. The outstanding capital stock of Linfinity comprised
of 6,000,000 shares of preferred stock and 4,197,824 shares of common stock.
There were stock options outstanding to purchase 121,449 and 109,000 shares of
Linfinity's common stock at the option exercise of $0.50 and $0.80 per share,
respectively. The holders of these options were entitled to receive in cash the
difference between $1.46 and the option exercise price. Of the $24.1 million
aggregate purchase price, $23.6 million was paid to Symmetricom (including
amounts currently held in escrow) and $0.5 million was paid to former minority
shareholders and option holders of Linfinity.
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5. Inventories. Inventories are stated at the lower of cost (first-in, first-
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out) or market. Inventories consist of (in thousands):
September 30, June 30,
2000 2000
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Raw materials $15,634 $12,094
Work-in-process 6,516 4,710
Finished goods 5,646 5,553
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$27,796 $22,357
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6. Recent Accounting Pronouncements. In March 2000 the FASB issued
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Interpretation No. 44 (FIN No. 44), Accounting for Certain Transactions
Involving Stock Compensation - an Interpretation of APB 25. FIN No. 44 clarifies
(i) the definition of employee for purposes of applying APB Opinion No. 25, (ii)
the criteria for determining whether a plan qualifies as a non compensatory
plan, (iii) the accounting consequences of various modifications to the terms of
a previously fixed stock option or award, and (iv) the accounting for an
exchange of stock compensation awards in a business combination. FIN No. 44 was
effective July 1, 2000, but certain conclusions in this interpretation cover
specific events that occur after either December 15, 1998, or January 12, 2000.
The adoption of certain of the conclusions of FIN No. 44 covering events
occurring during the period after December 15, 1998 or January 12, 2000 did not
materially affect our business. Management does not expect that the adoption of
the remaining conclusions will materially affect our business.
In December 1999, the Securities and Exchange Commission staff released Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB
No. 101), which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. Management does not expect that
SAB No. 101 will materially impact its revenue recognition policies. However,
there is no guarantee that future events, industry practices, or future
interpretations of SAB 101 will not impact our revenues.
In June 1998, Statement of Financial Accounting Standards No. 133 (SFAS 133),
"Accounting for Derivative Instruments and Hedging Activities," was issued,
which defines derivatives, requires all derivatives be carried at fair value,
and provides for hedging accounting when certain conditions are met. The
adoption of this statement in July 2000 did not have a material impact on our
financial position and results of operations.
7. Contingencies. In January 1994, a securities class action complaint was filed
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against us and certain of our present and former officers or directors in the
United States District Court, Northern District of California. The action was
filed on behalf of a putative class of purchasers of the Company's stock during
the period April 6, 1993 through November 10, 1993. The complaint sought
unspecified money damages and alleges that we and certain of our former officers
or directors violated federal securities laws in connection with various public
statements made during the putative class period. The Court granted summary
judgment to us and our former officers and directors in August 2000. The
plaintiff has filed a notice of appeal to the United States Court of Appeals for
the Ninth Circuit. The Company and its former officers believe that the
complaint is without merit, and will continue to defend the action vigorously if
necessary. We are also a party to certain other claims in the normal course of
our operations. While the results of such claims cannot be predicted with any
certainty, we believe that the final outcome of such matters will not have an
adverse effect on our financial position and results of operations.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on our behalf by the
undersigned thereunto duly authorized.
SYMMETRICOM, INC.
(Registrant)
DATE: November 17, 2000 By:
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/s/ William Slater
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William Slater
Chief Financial Officer
(for Registrant and as Principal Financial
and Accounting Officer)
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