8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)  July 24, 2003

IMPAC Medical Systems, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-50082	94-3109238
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

100 West Evelyn Avenue, Mountain View, CA	94041
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code  (650) 623-8800

(Former name or former address if changed since last report)

Item 9.    Regulation FD Disclosure.

The following information is furnished pursuant to Item 12, “Results of Operations and Financial Condition,” under Item 9 as directed by the SEC in Release No. 33-8216.

On July 24, 2003, IMPAC Medical Systems, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2003. A copy of the press release is attached as Exhibit 99.1.

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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 its behalf by the undersigned hereunto duly authorized.

IMPAC MEDICAL SYSTEMS, INC
By:	/s/    KENDRA A. BORREGO
	Kendra A. Borrego Chief Financial Officer

Date:  July 24, 2003

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EXHIBIT INDEX

Exhibit No.	Description
99.1	IMPAC Medical Systems, Inc. Press Release dated July 24, 2003

EX-99.1

FOR IMMEDIATE RELEASE

IMPAC Medical Systems

Kendra A. Borrego, CFO

(650) 623-8870

kborrego@impac.com

IMPAC MEDICAL SYSTEMS, INC. ACHIEVES

HIGHER THIRD FISCAL QUARTER RESULTS

Sales Increase 34%, Operating Income Increases 44%

MOUNTAIN VIEW, CA, July 24, 2003 – IMPAC Medical Systems, Inc. (NASDAQ:IMPC), a leading provider of information technology solutions for cancer care, today reported strong growth in operating results for its third fiscal quarter ended June 30, 2003.

Third Quarter Highlights:

• Net sales increased 34.1% to $16.3 million in the third fiscal quarter of 2003 compared with $12.2 million in the same prior year period.

• Operating income increased 44.4% to $3.7 million in the third fiscal quarter of 2003 compared with $2.5 million in the same prior year period.

• Pre-tax income increased 44.1% to $3.8 million in the third fiscal quarter of 2003 compared to $2.7 million in the same prior year period.

• Diluted net income (loss) available to common stockholders per share improved to $0.24 in the third fiscal quarter from $(0.26) in the same prior year period.

• Pro forma diluted net income per share improved 41.2% to $0.24 in the third fiscal quarter of 2003 compared with $0.17 in the same prior year period.

• No accretion charges related to redeemable convertible preferred stock were recorded in the third fiscal quarter as these are no longer applicable.

Nine Month Highlights:

• Net sales have increased 34.5% to $43.9 million for the nine months ending June 30, 2003 from $32.6 million in the same prior year period.

• Operating income increased 65.9% to $9.3 million for the nine months ending June 30, 2003 from $5.6 million in the same prior year period.

• Pre-tax income increased 63.7% to $9.7 million for the nine months ending June 30, 2003 from $5.9 million in the same prior year period.

• Diluted net income (loss) available to common stockholders per share improved to $0.41 for the nine months ending June 30, 2003 from $(0.75) in the same prior year period.

• Pro forma diluted net income per share improved 59.0% to $0.62 for the nine months ending June 30, 2003 from $0.39 in the same prior year period.

• Balance sheet strength achieved a new high, with net working capital of $47.5 million, including cash and cash equivalents of $57.6 million and $131,000 debt.

Pro forma net income in the third quarter of fiscal 2003 totaled $2.4 million, up 44.1% from $1.7 million in the corresponding prior year period. Year to date pro forma net income for fiscal 2003 was $6.1 million compared to $3.7 million last year. Pro forma figures represent adjustments to reflect the effect of our initial public offering of common stock on November 20,

PAGE 2 OF 7 – IMPAC ACHIEVES HIGHER THIRD FISCAL QUARTER RESULTS

2002 as if it had happened at the beginning of fiscal year 2002 and the elimination of the non-cash accretion charges relating to the redeemable convertible preferred stock, which converted into common stock on the date of the closing of the initial public offering (see below for a reconciliation of the results reported under U.S. generally accepted accounting principles [GAAP] to pro forma results). The related pro forma diluted net income per share for the third quarter of fiscal 2003 totaled $0.24 as compared to $0.17 in the same prior year period calculated with pro forma diluted weighted-average shares outstanding of approximately 10.1 million and 9.7 million in the respective periods.

“IMPAC continued to achieve strong sales and earnings growth during the third quarter,” said Joseph K. Jachinowski, Chairman and Chief Executive Officer. “Our sales gain reflects higher software license sales to both existing and new customers, as well as steady growth in maintenance and service revenues. By carefully controlling our selling, general and administrative and marketing costs, we were able to contribute meaningful growth to our operating margin. We also made a considerable investment in further expanding our maintenance and service network in order to support continued growth in this area.”

Our total backlog on June 30, 2003 amounted to $36.8 million compared with $28.6 million a year ago, a 28.7% increase. The increase in orders reflects new systems licenses and additional orders for new product from both new and existing oncology customers. We had very strong demand for our imaging systems software. Maintenance and service revenues reflected continued high customer retention, plus additional training and installations.

As we continue to grow our service business, we have made investments in our service offering for both our application service provider delivery option and direct international customer installation and support. This has resulted in a contraction of our gross margin for the nine months ended June 30, 2003 of 70.9% compared with 73.4% in the corresponding prior year period. The planned investments in our client service offerings are important in maintaining the quality of our service while providing a variety of delivery options. Research and development expenses increased 25.6% in the nine months ended June 30, 2003 to $7.1 million compared with $5.6 million a year earlier, and as a percentage of sales equaled 16.2% and 17.3%, respectively. Our investment in research and development underscores the continuing commitment to expand and add to our technological offerings. Sales and marketing expenses, as a percentage of sales, equaled 23.6% for the nine months ended June 30, 2003 compared with 27.6% in the corresponding period a year ago. As a percentage of sales, general and administrative expenses equaled 9.3% for the nine months ending June 30, 2003 compared to 9.7% in the corresponding period a year ago. Operating income for the nine months ended June 30, 2003 totaled $9.3 million compared to $5.6 million in the corresponding prior year period, which, as a percentage of sales, equaled 21.3% and 17.3%, respectively.

Cash flow from operating activities for the third fiscal quarter of 2003 contributed $5.1 million, bringing the year to date total to $6.3 million. The balance sheet remained strong, with working capital on June 30, 2003 of $47.5 million. Cash and cash equivalents totaled $57.6 million. We continue to have a positive credit experience with customers and have improved days’ sales outstanding to 70 days from 79 days for the sequential prior quarter.

PAGE 3 OF 7 – IMPAC ACHIEVES HIGHER THIRD FISCAL QUARTER RESULTS

Pro Forma vs. GAAP Results

Prior to our initial public offering on November 2002, we were required, under GAAP, to increase the carrying value of our Series A redeemable convertible preferred stock by periodic non-cash accretion charges that reflected the increase in the preferred stock’s deemed fair market value. This had the effect of reducing the amount of net income available to common stockholders. Accordingly, net income available to common stockholders for the nine months ended June 30, 2003 was $3.9 million, or $0.41 per share, fully diluted, after a first quarter preferred stock accretion charge of $2.2 million, compared to a net loss attributable to common stockholders of $4.5 million, or ($0.75) per share, fully diluted, after a preferred stock accretion charge of approximately $8.2 million in the corresponding prior year period. Upon the closing of the IPO, the preferred stock automatically converted into common stock; therefore, these non-cash accretion charges are no longer required under GAAP.

The decision to present the pro forma results is based on management’s belief that they represent a better basis for analysis than GAAP results since the potential liability associated with the redeemable convertible preferred stock no longer exists. By removing these non-cash charges, we are conforming the financial statements presentation to our post-IPO GAAP financial results. This improves quarter to quarter comparability on a pro forma basis.

A reconciliation of the numerator and denominator used in calculating pro forma diluted earnings per share is as follows:

	Three Months Ended June 30,					Nine Month Ended June 30,
		2003		2002			2003		2002
	(Unaudited)
(in thousands, except per share amounts)
Net income (loss) available to common stockholders	$	2,407	$	(1,594	)	$	3,882	$	(4,513	)
Accretion of redeemable convertible preferred stock		—		3,264			2,229		8,246
Pro forma net income	$	2,407	$	1,670		$	6,111	$	3,733
Weighted-average shares outstanding, diluted		10,050		6,043			9,581		6,032
Adjustment to reflect the IPO shares as if they had been outstanding the entire period		—		1,875			351		1,875
Adjustment to reflect the preferred stock conversion as if it had happened at the beginning of the period		—		1,238			—		1,238
Dilutive effect of outstanding options		—		508			—		413
Pro forma diluted weighted-average shares outstanding		10,050		9,664			9,932		9,558
Pro forma diluted earnings per share	$	0.24	$	0.17		$	0.62	$	0.39

PAGE 4 OF 7 – IMPAC ACHIEVES HIGHER THIRD FISCAL QUARTER RESULTS

Conference Call Scheduled

A conference call will be held tomorrow, Friday, July 25, 2003 at 7:00 AM (PT) to discuss operating results for the third fiscal quarter ended June 30, 2003. Individuals are invited to listen to the call by dialing 1-800-901-5231. International callers can dial 1-617-786-2961. The PIN number, 97331103, is the same for both domestic and international participants. Dial in approximately ten minutes prior to the scheduled teleconference time. The conference call can also be accessed live over the Internet through the IMPAC website, www.impac.com. Please go to the website at least 15 minutes early to register, download and install any necessary audio software. A replay on the Company website will be available for two weeks after the original broadcast.

About IMPAC Medical Systems

IMPAC Medical Systems, Inc. is a leading provider of specialized IT solutions that streamline both clinical and business operations to help improve the process of delivering quality patient care. With open integration to multiple healthcare data and imaging systems, IMPAC offers a comprehensive IT solution that includes specialized electronic charting, full-featured practice management, clinical laboratory management, and outcomes reporting. Supporting over 1,500 installations worldwide, IMPAC delivers practical solutions that deliver better overall communication, process efficiency and quality patient care. For more information about IMPAC Medical Systems’ products and services, please call 650-623-8800 or visit www.impac.com.

The statements contained in this press release that are not purely historical are forward looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, including statements regarding the Company’s expectations, beliefs, hopes, intentions or strategies regarding the future. Forward looking statements include statements regarding the Company’s business strategy, timing of, and plans for, the introduction of new products and enhancements, future sales, market growth and direction, competition, market share, revenue growth, operating margins and profitability. All forward looking statements included in this document are based upon information available to the Company as of the date hereof, and the Company assumes no obligation to update any such forward looking statement. Actual results could differ materially from the Company’s current expectations. Factors that could cause or contribute to such differences include the Company’s ability to expand outside the radiation oncology market or expand into international markets, lost sales or lower sales prices due to competitive pressures, ability to integrate its products successfully with related products and systems in the medical services industry, reliance on distributors and manufacturers of oncology equipment to market its products, and other factors and risks discussed in the Company’s Final Prospectus dated May 12, 2003 and other reports filed by the Company from time to time with the Securities and Exchange Commission.

PAGE 5 OF 7 – IMPAC ACHIEVES HIGHER THIRD FISCAL QUARTER RESULTS

IMPAC MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended June 30,						Nine Months Ended June 30,
	2003			2002			2003			2002
(in thousands, except per share amounts)
Sales:
Software license and other, net	$	11,440		$	8,425		$	29,916		$	22,190
Maintenance and services		4,875			3,745			13,945			10,416
Total net sales		16,315			12,170			43,861			32,606
Cost of sales:
Software license and other, net		2,875			2,025			7,453			5,760
Maintenance and services		1,919			1,128			5,294			2,926
Total cost of sales		4,794			3,153			12,747			8,686
Gross profit		11,521			9,017			31,114			23,920
Operating expenses:
Research and development		2,620			1,909			7,090			5,644
Sales and marketing		3,761			3,059			10,352			8,991
General and administrative		1,396			1,228			4,058			3,159
Write-off of purchased in-process research and development		—			116			—			116
Amortization of goodwill and other intangible assets		70			161			275			382
Total operating expenses		7,847			6,473			21,775			18,292
Operating income		3,674			2,544			9,339			5,628
Interest expense		(4	)		(7	)		(15	)		(21	)
Interest and other income		150			114			376			318
Income before provision for income taxes		3,820			2,651			9,700			5,925
Provision for income taxes		(1,413	)		(981	)		(3,589	)		(2,192	)
Net income		2,407			1,670			6,111			3,733
Accretion of redeemable convertible preferred stock		—			(3,264	)		(2,229	)		(8,246	)
Net income (loss) available to common stockholders	$	2,407		$	(1,594	)	$	3,882		$	(4,513	)
Net income (loss) per common share:
Basic	$	0.25		$	(0.26	)	$	0.44		$	(0.75	)
Diluted	$	0.24		$	(0.26	)	$	0.41		$	(0.75	)
Weighted-average shares used in computing net income (loss) per common share:
Basic		9,526			6,043			8,771			6,032
Diluted		10,050			6,043			9,581			6,032
Pro forma net income	$	2,407		$	1,670		$	6,111		$	3,733
Pro forma net income per share, diluted	$	0.24		$	0.17		$	0.62		$	0.39
Weighted-average shares used in computing diluted pro forma net income per common share		10,050			9,664			9,932			9,558

PAGE 6 OF 7 – IMPAC ACHIEVES HIGHER THIRD FISCAL QUARTER RESULTS

IMPAC MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30, 2003			September 30, 2002
(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	57,602		$	23,432
Available-for-sale securities		222			385
Accounts receivable, net		11,699			7,791
Inventories		84			86
Deferred income taxes		712			712
Income tax refund receivable		620			686
Prepaid expenses and other current assets		2,700			3,281
Total current assets		73,639			36,373
Available-for-sale securities		2,615			3,156
Property and equipment, net		3,782			3,379
Deferred income taxes		864			864
Goodwill and other intangible assets, net		1,642			1,892
Other assets		458			341
Total assets	$	83,000		$	46,005
Liabilities, Redeemable Convertible Preferred Stock, Common Stock Subject to Rescission Rights and Stockholders’ Equity
Current liabilities:
Customer deposits	$	9,481		$	9,829
Accounts payable		1,285			872
Accrued liabilities		2,756			3,252
Income taxes payable		2,048			1,950
Deferred revenue		10,466			8,194
Capital lease obligations		71			65
Total current liabilities		26,107			24,162
Customer deposits		114			92
Capital lease obligations		60			114
Total liabilities		26,281			24,368
Redeemable convertible preferred stock		—			14,489
Common stock subject to rescission rights		98			—
Stockholders’ equity:
Common stock		10			6
Additional paid-in capital		46,765			1,144
Accumulated other comprehensive loss		(35	)		(1	)
Retained earnings		9,881			5,999
Total stockholders’ equity		56,621			7,148
Total liabilities, redeemable convertible preferred stock, common stock subject to rescission rights and stockholders’ equity	$	83,000		$	46,005

PAGE 7 OF 7 – IMPAC ACHIEVES HIGHER THIRD FISCAL QUARTER RESULTS

IMPAC MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended June 30,
	2003			2002
(in thousands)
Cash flows from operating activities:
Net income	$	6,111		$	3,733
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		1,239			940
Amortization of goodwill and other intangible assets		275			382
Write-off of purchased in-process research and development		—			116
Provision for doubtful accounts		167			107
Deferred income taxes		—			51
Loss on disposal of property and equipment		92			—
Gain from sale of investment		—			(8	)
Stock-based compensation		—			50
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(4,100	)		(856	)
Inventories		2			—
Prepaid expenses and other current assets		581			(650	)
Other assets		(116	)		(4	)
Customer deposits		(325	)		932
Accounts payable		413			565
Accrued liabilities		(494	)		(1,055	)
Income tax payable/refund receivable		163			872
Deferred revenue		2,274			1,446
Net cash provided by operating activities		6,282			6,621
Cash flows from investing activities:
Acquisition of property and equipment		(1,828	)		(868	)
Payments for MC2 acquisition, net		—			(500	)
Payments for Intellidata acquisition, net		—			(1,391	)
Disposal of property and equipment		94			—
Proceeds from sale of investment		—			44
Purchases of available-for-sale securities		(26,622	)		(6,926	)
Proceeds from sales of available-for-sale securities		27,261			6,189
Proceeds from maturities of available-for-sale securities		66			1,439
Net cash used in investing activities		(1,029	)		(2,013	)
Cash flows from financing activities:
Principal payments on capital leases		(48	)		(42	)
Proceeds from the issuance of common stock, net		29,005			180
Repurchase of common stock		—			(21	)
Net cash provided by financing activities		28,957			117
Effects of exchange rates on cash		(40	)		—
Net increase in cash and cash equivalents		34,210			4,725
Cash and cash equivalents at beginning of period		23,432			12,456
Cash and cash equivalents at end of period	$	57,602		$	17,181