|
(Mark
One)
|
DELAWARE
|
|
48-1100390
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(IRS
employer identification number)
|
|
|
|
Six
Concourse Parkway, Suite 1900
Atlanta,
Georgia
|
|
30328
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
|
|
|
Registrant’s
telephone
number, including area code:
|
||
(678)
987-1700
|
Title
of Each Class
|
Number
of Shares Outstanding
at September
1, 2007
|
|
Common
Stock, $0.01 Par Value
|
29,240,175
|
Form
10-Q Item
|
Page
|
|||
3 | ||||
3 | ||||
3
|
||||
4
|
||||
5
|
||||
6
|
||||
11
|
||||
18
|
||||
18
|
||||
19
|
||||
19
|
||||
|
||||
19
|
||||
19
|
||||
19
|
||||
19
|
||||
|
||||
19
|
||||
19
|
||||
20
|
|
March
31,
2007
|
December
31,
2006
|
|||||
Assets:
|
|
|
|||||
|
|
|
|||||
Current
assets:
|
|
|
|||||
Cash
and cash equivalents
|
$
|
16,412
|
$
|
19,675
|
|||
Accounts
receivable, net of allowance of $252 and $162
|
10,929
|
11,001
|
|||||
Other
receivables
|
3,168
|
2,771
|
|||||
Inventory,
net
|
11,247
|
11,311
|
|||||
Prepaid
expenses
|
2,061
|
2,128
|
|||||
Total
current assets
|
43,817
|
46,886
|
|||||
|
|||||||
Property
and equipment, net
|
7,630
|
7,944
|
|||||
Developed
technology, net of accumulated amortization of $2,309 and
$2,107
|
5,761
|
5,963
|
|||||
Goodwill
|
5,934
|
5,934
|
|||||
Covenant
not-to-compete, net of accumulated amortization of $866 and
$726
|
4,734
|
4,874
|
|||||
Other
assets
|
191
|
174
|
|||||
|
|||||||
Total
assets
|
$
|
68,067
|
$
|
71,775
|
|||
|
|||||||
Liabilities
and Stockholders' Equity:
|
|||||||
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
8,574
|
$
|
9,200
|
|||
Accrued
expenses
|
3,651
|
3,103
|
|||||
Future
installments due on covenants not-to-compete and additional
consideration
for
assets acquired
|
3,879
|
3,793
|
|||||
Deferred
revenue
|
3,445
|
2,977
|
|||||
Accrued
warranty
|
2,223
|
1,889
|
|||||
Deferred
rent
|
247
|
247
|
|||||
Total
current liabilities
|
22,019
|
21,209
|
|||||
|
|||||||
Future
installments due on covenants not-to-compete and additional
consideration
for
assets acquired, non-current
|
3,599
|
3,550
|
|||||
Deferred
rent, non-current
|
1,157
|
1,218
|
|||||
Other
liabilities
|
94
|
93
|
|||||
|
|||||||
Total
liabilities
|
26,869
|
26,070
|
|||||
|
|||||||
Commitments
and contingencies
|
|||||||
|
|||||||
Stockholders'
equity:
|
|||||||
Preferred
stock, $1 par value, authorized 5,000,000 shares, 0 shares
issued
|
--
|
--
|
|||||
Preferred
membership units exchangeable for shares of TurboChef common
stock
|
384
|
384
|
|||||
Common
stock, $.01 par value, authorized 100,000,000 shares, issued 29,238,484
and 29,197,145 shares at March 31, 2007 and December 31, 2006,
respectively
|
292
|
292
|
|||||
Additional
paid-in capital
|
170,231
|
169,821
|
|||||
Accumulated
deficit
|
(129,709
|
)
|
(124,792
|
)
|
|||
Total
stockholders' equity
|
41,198
|
45,705
|
|||||
|
|||||||
Total
liabilities and stockholders' equity
|
$
|
68,067
|
$
|
71,775
|
|
Three
Months Ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
|
|
|
|||||
Revenues:
|
|
|
|||||
Product
sales
|
$
|
17,939
|
$
|
9,107
|
|||
Royalties
and services
|
392
|
429
|
|||||
Total
revenues
|
18,331
|
9,536
|
|||||
|
|||||||
Costs
and expenses:
|
|||||||
Cost
of product sales
|
11,533
|
6,637
|
|||||
Research
and development expenses
|
1,487
|
1,159
|
|||||
Selling,
general and administrative expenses
|
10,293
|
6,971
|
|||||
Restructuring
costs
|
--
|
(41
|
)
|
||||
Total
costs and expenses
|
23,313
|
14,726
|
|||||
|
|||||||
Operating
loss
|
(4,982
|
)
|
(5,190
|
)
|
|||
|
|||||||
Other
income (expense):
|
|||||||
Interest
income
|
221
|
369
|
|||||
Interest
expense and other
|
(156
|
)
|
(111
|
)
|
|||
|
65
|
258
|
|||||
Net
loss
|
$
|
(4,917
|
)
|
$
|
(4,932
|
)
|
|
|
|||||||
Per
share data:
|
|||||||
Net
loss per share - basic and diluted
|
$
|
(0.17
|
)
|
$
|
(0.17
|
)
|
|
Weighted
average number of common shares outstanding - basic and
diluted
|
29,223,104
|
28,665,275
|
|
Three
Months Ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
Cash
flows from operating activities:
|
|
|
|||||
Net
loss
|
$
|
(4,917
|
)
|
$
|
(4,932
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||
Depreciation
and amortization
|
952
|
892
|
|||||
Amortization
of deferred rent
|
(60
|
)
|
(61
|
)
|
|||
Amortization
of deferred loan costs and non-cash interest
|
145
|
87
|
|||||
Non-cash
compensation expense
|
144
|
--
|
|||||
Provision
for doubtful accounts
|
90
|
45
|
|||||
Other
|
--
|
8
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(18
|
)
|
1,083
|
||||
Inventories
|
(52
|
)
|
418
|
||||
Prepaid
expenses and other assets
|
(345
|
)
|
(63
|
)
|
|||
Accounts
payable and other payables
|
(626
|
)
|
(1,753
|
)
|
|||
Accrued
expenses and warranty
|
882
|
(1,599
|
)
|
||||
Deferred
revenue
|
468
|
(444
|
)
|
||||
Net
cash used in operating activities
|
(3,337
|
)
|
(6,319
|
)
|
|||
|
|||||||
Cash
flows from investing activities:
|
|||||||
Purchases
of property and equipment, net
|
(167
|
)
|
(923
|
)
|
|||
Net
cash used in investing activities
|
(167
|
)
|
(923
|
)
|
|||
|
|||||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from the exercise of stock options and warrants
|
266
|
396
|
|||||
Payment
of deferred loan costs
|
(25
|
)
|
(25
|
)
|
|||
Net
cash provided by financing activities
|
241
|
371
|
|||||
|
|||||||
Net
decrease in cash and cash equivalents
|
(3,263
|
)
|
(6,871
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
19,675
|
40,098
|
|||||
Cash
and cash equivalents at end of period
|
$
|
16,412
|
$
|
33,227
|
|||
|
|||||||
NON
CASH INVESTING AND FINANCING ACTIVITIES:
|
|||||||
|
|||||||
Issuance
of common stock in exchange for Enersyst preferred membership
units
|
$
|
--
|
$
|
457
|
|||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|||||||
Cash
paid for interest
|
$
|
12
|
$
|
15
|
|||
Cash
paid for income taxes
|
--
|
--
|
|
March
31,
2007
|
December
31,
2006
|
|||||
Parts
inventory, net
|
$
|
6,439
|
$
|
6,933
|
|||
Finished
goods - ovens
|
4,578
|
4,154
|
|||||
Demonstration
inventory, net
|
230
|
224
|
|||||
|
$
|
11,247
|
$
|
11,311
|
|
Estimated
Useful
Lives
(Years)
|
March
31,
2007
|
December
31,
2006
|
|||||||
Tooling
and equipment
|
3-7
|
$
|
6,608
|
$
|
6,471
|
|||||
Furniture
and fixtures
|
5
|
1,369
|
1,369
|
|||||||
Leasehold
improvements
|
5-7.5
|
3,075
|
3,044
|
|||||||
|
11,052
|
10,884
|
||||||||
Less
accumulated depreciation and amortization
|
(3,422
|
)
|
(2,940
|
)
|
||||||
|
$
|
7,630
|
$
|
7,944
|
|
Three
Months Ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
Balance
at beginning of period
|
$
|
1,889
|
$
|
2,482
|
|||
Provision
for warranties
|
1,002
|
946
|
|||||
Warranty
expenditures
|
(668
|
)
|
(1,613
|
)
|
|||
|
|||||||
Balance
at end of period
|
$
|
2,223
|
$
|
1,815
|
|||
|
Number
of
RSUs
|
Weighted
Average
Grant-Date
Fair
Value
|
|||||
|
|
|
|||||
Balance
at January 1, 2007
|
77,826
|
$
|
12.82
|
||||
RSUs
granted
|
545,000
|
15.20
|
|||||
RSUs
vested
|
(2,286
|
)
|
13.08
|
||||
RSUs
forfeited
|
--
|
--
|
|||||
Balance
at March 31, 2007
|
620,540
|
$
|
14.92
|
||||
|
Three
Months Ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
Commercial:
|
|
|
|||||
Revenues
|
$
|
18,331
|
$
|
9,536
|
|||
Net
income (loss)
|
1,400
|
(1,124
|
)
|
||||
Residential:
|
|||||||
Revenues
|
$
|
--
|
$
|
--
|
|||
Net
loss
|
(3,038
|
)
|
(1,815
|
)
|
|||
Corporate:
|
|||||||
Revenues
|
$
|
--
|
$
|
--
|
|||
Net
loss
|
(3,279
|
)
|
(1,993
|
)
|
|||
Totals:
|
|||||||
Revenues
|
$
|
18,331
|
$
|
9,536
|
|||
Net
loss
|
(4,917
|
)
|
(4,932
|
)
|
REGION
|
Three
Months Ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
North
America
|
$
|
15,316
|
$
|
7,119
|
|||
Europe
and Asia
|
3,015
|
2,417
|
|||||
Totals
|
$
|
18,331
|
$
|
9,536
|
|
Three
Months Ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
Revenues
|
100
|
%
|
100
|
%
|
|||
Cost
of product sales
|
63
|
70
|
|||||
Research
and development expenses
|
8
|
12
|
|||||
Selling,
general and administrative expenses
|
56
|
73
|
|||||
Total
costs and expenses
|
127
|
155
|
|||||
|
|||||||
Operating
loss
|
(27
|
)
|
(55
|
)
|
|||
Interest
income
|
1
|
4
|
|||||
Interest
expense and other
|
(1
|
)
|
(1
|
)
|
|||
Total
other income, net
|
--
|
3
|
|||||
Net
loss
|
(27
|
)%
|
(52
|
)%
|
|
·
|
During
the three months ended March 31, 2007, our non-Subway product
sales increased $9.3 million, or 189%, from $5.0 million to $14.3
million, over the comparable period in 2006. We expect our non-Subway
revenue to continue to increase in 2007. Two customers other than
Subway
accounted for 41% of our total revenues during the three months
ended
March 31, 2007.
|
|
|
|
·
|
Subway
sales accounted for 20% and 44% of our total revenues during the
three
months ended March 31, 2007 and 2006, respectively. We expect Subway
to be
a meaningful contributor to future revenues, however, we expect
Subway
sales as a percentage of our total revenues to continue to decline
as our
customer base continues to expand.
|
|
|
|
|
|
·
|
In
the first quarter of 2007 compared to the fourth quarter of 2006,
our
gross margin percentages remained stable. We expect gross profit
percentages to remain at these levels through the remainder of
2007.
|
|
||
|
·
|
During
the first quarter of 2007, we continued to invest in the development
of
our residential oven and commercial ovens and expect this trend
to
continue through the first half of 2007.
|
|
||
|
·
|
During
the three months ended March 31, 2007, we increased our selling,
general
and administrative expenses, excluding depreciation and amortization,
by
$3.3 million from the comparable period in 2006. These increases
are the
result of increased legal and professional costs related to the
Company’s
review of its stock option grants and practices and increased selling,
marketing and related expenses. We continue to expect increases
in 2007 as
compared to 2006, primarily due to increased marketing costs related
to
the residential product launch.
|
|
|
|
·
|
increase
our commercial revenue across our customer base;
|
|
|
|
|
·
|
manage
costs related to commercial business segment;
|
|
·
|
successfully
launch our residential product line;
|
|
|
|
|
·
|
manage
costs related to the residential product
launch.
|
|
Increase
in
Research
and Development
Expenses
for the Three
Months
Ended
March
31, 2006 to 2007
|
|||
General
and administrative expenses
|
$
|
197
|
||
Payroll
and related expenses
|
114
|
|||
Design,
prototype and other related expenses
|
17
|
|||
Total
increase
|
$
|
328
|
|
Increase
(Decrease) in
General
and Administrative
Expenses
for the Three Months Ended March 31, 2006 to 2007
|
|||
Selling,
marketing and related expenses
|
$
|
1,712
|
||
Payroll
and related expenses
|
694
|
|||
Legal
and professional fees
|
691
|
|||
Rent
and occupancy costs
|
174
|
|||
Depreciation
and amortization
|
59
|
|||
Restructuring
charges
|
41
|
|||
Other
|
(8
|
)
|
||
Total
increase
|
$
|
3,363
|
Payments
Due By Period
|
|||||||||||||||||||||
|
|
Total
|
April
- December
2007
|
2008
|
2009
|
2010
|
2011
|
Thereafter
|
|||||||||||||
Installment
Payments for Covenants Not-to-Compete
|
|
$
|
2,665
|
|
$
|
1,335
|
|
$
|
1,330
|
|
$
|
--
|
|
$
|
--
|
|
$
|
--
|
|
$
|
--
|
Installment
Payments for Contingent Consideration Due Under Asset Purchase
Agreement
|
5,333
|
2,668
|
*
|
2,665
|
*
|
--
|
--
|
--
|
--
|
||||||||||||
Operating
Leases
|
|
|
4,813
|
|
|
888
|
|
|
1,130
|
|
|
956
|
|
|
613
|
|
|
613
|
|
|
613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
12,811
|
|
$
|
4,891
|
|
$
|
5,125
|
|
$
|
956
|
|
$
|
613
|
|
$
|
613
|
|
$
|
613
|
|
•
|
|
The
adoption of a policy requiring that all equity awards to executive
officers and other employees be granted and priced according
to a
pre-determined, fixed schedule each year;
|
|
•
|
|
Revisions
and clarifications of the parameters of the Compensation Committee’s
delegation of authority to our Chairman and Chief Executive Officer
to
make equity awards;
|
|
•
|
|
Establishment
of improved processes and procedures for the documentation of
corporate
actions approving the grant of stock options, including the use
of
unanimous written consents; and
|
|
•
|
|
Improvements
to our processes and procedures with respect to the timing of
recording
and processing equity awards.
|
10.1*
|
2007
Incentive-Based Compensation Plan
|
31.1
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
31.2
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
32
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant
to
Section 906 of the Sarbanes-Oxley Act of
2002
|
TURBOCHEF
TECHNOLOGIES, INC.
|
||
|
|
|
By: | /s/ James A. Cochran | |
James
A. Cochran
Chief
Financial Officer
(Duly
Authorized Officer and
Principal
Financial Officer)
|