-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, K/xqnq5SzLEPnPR9Yb/VRkK7TZjRVdBws8N2fyRLBknpe6OiBGde2vbSQLWXComv zeAjiC/T62bX1NT+b4snyA== 0000898430-94-000870.txt : 19941116 0000898430-94-000870.hdr.sgml : 19941116 ACCESSION NUMBER: 0000898430-94-000870 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACUSON CORP CENTRAL INDEX KEY: 0000717014 STANDARD INDUSTRIAL CLASSIFICATION: 3845 IRS NUMBER: 942784998 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10068 FILM NUMBER: 94559822 BUSINESS ADDRESS: STREET 1: 1220 CHARLESTON RD STREET 2: PO BOX 7393 CITY: MOUNTAIN VIEW STATE: CA ZIP: 94039 BUSINESS PHONE: 4159699112 MAIL ADDRESS: STREET 1: P O BOX 7393 STREET 2: 1220 CHARLESTON RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 74039 10-Q 1 THIRD QUARTER REPORT 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 OCTOBER 1, 1994 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 0-14953 ------- ACUSON CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 94-2784998 -------------------- --------------------------------- (State of Incorporation) (IRS Employer Identification No.) 1220 CHARLESTON ROAD P. O. BOX 7393 MOUNTAIN VIEW, CA 94039-7393 (Address of principal executive offices) Registrant's telephone number, including area code, is (415) 969-9112 -------------- 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 --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.0001 par value 28,969,574 shares ------------------------------- ------------------------------- (Class) Outstanding at October 28, 1994 - ------------------------------------------------------------------------------- FORM 10-Q ACUSON CORPORATION INDEX
PAGE NUMBER PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Condensed Consolidated Balance Sheets as of October 1, 1994 and December 31, 1993 1 Condensed Consolidated Statements of Operations for the Three Months Ended October 1, 1994 and October 2, 1993 and for the Nine Months Ended October 1, 1994 and October 2, 1993 3 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 1, 1994 and October 2, 1993 4 Notes to Unaudited Condensed Consolidated Financial Statements 5 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 9 ITEM 6. Exhibits and Reports on Form 8-K 9 Signature 10
- ------------------------------------------------------------------------------- ACUSON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
OCTOBER 1, DECEMBER 31, ASSETS 1994 1993 (Unaudited) - -------------------------------------------------------------------------------- CURRENT ASSETS Cash and cash equivalents $ 38,897 $ 11,184 Short-term investments 39,041 48,103 ------- ------- Total cash and short-term investments 77,938 59,287 Accounts receivable, net 78,987 62,976 Inventories 50,783 41,964 Other current assets 27,481 37,095 ------- ------- Total current assets 235,189 201,322 PROPERTY AND EQUIPMENT At cost, net of accumulated depreciation and amortization of $87,995 in 1994 and $75,700 in 1993 47,145 44,307 OTHER ASSETS Net investment in leases 7,975 19,502 Other long-term assets 7,072 5,950 ------- ------- Total Assets $297,381 $271,081 ======== ========
- -------------------------------------------------------------------------------- See accompanying notes to unaudited condensed consolidated financial statements. 1 - -------------------------------------------------------------------------------- ACUSON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
OCTOBER 1, DECEMBER 31, LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993 (Unaudited) - -------------------------------------------------------------------------------- CURRENT LIABILITIES Accounts payable $20,444 $12,644 Other accrued liabilities 72,793 75,176 ------- ------- Total current liabilities 93,237 87,820 ------- ------- Commitments and contingencies (Note 4) STOCKHOLDERS' EQUITY Preferred stock, par value $.0001 authorized - 10,000 shares outstanding - none -- -- Common stock, par value $.0001 authorized - 50,000 shares outstanding - 28,876 shares in 1994 and 28,279 shares in 1993 76,955 69,115 Cumulative translation adjustment (1,215) (2,259) Unrealized holding loss (327) -- Retained earnings 128,731 116,405 ------- ------- Total stockholders' equity 204,144 183,261 ------- ------- Total Liabilities and Stockholders' Equity $297,381 $271,081 ======== ========
- -------------------------------------------------------------------------------- See accompanying notes to unaudited condensed consolidated financial statements. 2 - ------------------------------------------------------------------------------- ACUSON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED ------------------------------------------------------ OCTOBER 1, OCTOBER 2, OCTOBER 1, OCTOBER 2, 1994 1993 1994 1993 - -------------------------------------------------------------------------------------------------------------------- NET SALES Product $ 67,410 $ 50,383 $ 211,666 $ 172,414 Service 18,976 16,684 55,559 49,048 -------- -------- -------- -------- Total net sales 86,386 67,067 267,225 221,462 -------- -------- -------- -------- COST OF SALES Product 27,786 20,085 88,638 67,299 Service 9,256 7,839 26,766 25,111 -------- -------- -------- -------- Total cost of sales 37,042 27,924 115,404 92,410 -------- -------- -------- -------- Gross profit 49,344 39,143 151,821 129,052 -------- -------- -------- -------- OPERATING EXPENSES Selling, general and administrative 26,977 24,000 79,167 77,460 Product development 18,486 14,448 54,302 43,833 Restructuring expense --- --- --- 12,000 -------- -------- -------- -------- Total operating expenses 45,463 38,448 133,469 133,293 -------- -------- -------- -------- Income (loss) from operations 3,881 695 18,352 (4,241) INTEREST INCOME, NET 770 1,118 2,720 3,428 -------- -------- -------- -------- Income (loss) before income taxes 4,651 1,813 21,072 (813) PROVISION FOR (BENEFIT FROM) INCOME TAXES 917 (466) 6,665 (1,385) -------- -------- -------- -------- Net income $ 3,734 $ 2,279 $ 14,407 $ 572 ======== ======== ======== ======== EARNINGS PER SHARE $ 0.13 $ 0.08 $ 0.49 $ 0.02 ======== ======== ======== ======== WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 29,276 29,070 29,318 29,219 ======== ======== ======== ========
- -------------------------------------------------------------------------------- See accompanying notes to unaudited condensed consolidated financial statements. 3 - -------------------------------------------------------------------------------- ACUSON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
NINE MONTHS ENDED ---------------------------- OCTOBER 1, OCTOBER 2, 1994 1993 - ----------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 14,407 $ 572 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 15,725 13,973 Changes in: Accounts receivable (16,027) 10,271 Inventories (8,414) 1,177 Other current assets 4,139 (5,859) Accounts payable 7,721 2,345 Other accrued liabilities (2,550) 3,807 -------- ------- Net cash provided by operating activities 15,001 26,286 -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Decrease (increase) in short-term investments 8,559 (1,557) Investment in property and equipment (17,793) (10,249) Decrease (increase) in investment in leases 17,547 (6,582) Increase in other assets (1,003) (1,861) -------- -------- Net cash provided by (used in) investing activities 7,310 (20,249) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Repurchase of common stock (2,610) (21,717) Issuance of common stock under stock option and stock purchase plans 7,437 5,063 -------- -------- Net cash provided by (used in) financing activities 4,827 (16,654) -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 575 (107) ------- -------- Net increase (decrease) in cash and cash equivalents 27,713 (10,724) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 11,184 21,483 ------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 38,897 $ 10,759 ======== =========
- -------------------------------------------------------------------------------- See accompanying notes to unaudited condensed consolidated financial statements. 4 - ------------------------------------------------------------------------------- ACUSON CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - INTERIM STATEMENTS In the opinion of management, the unaudited interim condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary to summarize fairly the Company's condensed consolidated financial position as of October 1, 1994 and its condensed consolidated results of operations and cash flows for the periods ended October 1, 1994 and October 2, 1993. The results of operations for the three and nine months ended October 1, 1994 are not necessarily indicative of the results to be expected for the entire year ending December 31, 1994. Certain information reported in prior years has been reclassified to conform to the 1994 presentation. The Company's principle accounting policies are set forth in the financial statements for the year ended December 31, 1993 and notes thereto contained in the Company's Annual Report filed with the Securities and Exchange Commission. NOTE 2 - INVESTMENTS Under Statement of Financial Accounting Standards No. 115, the Company's investments, which consisted entirely of debt securities, were classified as available-for-sale. These securities mature at various dates through the year 1995. As of October 1, 1994, the securities' gross unrealized holding loss was approximately $503,000. The unrealized holding loss of approximately $327,000, net of the tax effect, was reported as a separate component of stockholders' equity. The Company has determined that the unrealized holding loss is not a permanent impairment of the fair value of its investments. During the nine months ended October 1, 1994, the Company sold certain of its available-for- sale securities for proceeds of approximately $18,945,000. The Company sold these securities for approximately original cost. NOTE 3 - INVENTORIES The components of inventories were as follows (in thousands):
OCTOBER 1, DEC. 31, 1994 1993 ---------------------------- Raw materials $25,757 $17,093 Work-in-process 8,820 5,820 Finished goods 16,206 19,051 ------- ------- Total inventories $50,783 $41,964 ======= =======
5 NOTE 4 - LEGAL CONTINGENCIES On September 14, 1994, the Company filed an action in the United States District Court for the Northern District of California against Advanced Technology Laboratories, Inc. (ATL) of Bothell, Washington. In the action, the Company accuses ATL of infringing U.S. Letters Patent No. 4,058,003 for "Ultrasonic Electronic Lens with Reduced Delay Range," a patent licensed exclusively to the Company. In addition, the Company seeks a declaration that it infringes no valid claim of four ATL patents: U.S. Letters Patent No. 4,543,960 for "Transesophageal Echocardiography Scanhead," No. 5,050,610 for "Transesophageal Ultrasonic Scanhead," No. 5,207,225 for "Transesophageal Ultrasonic Scanhead," or No. 5,226,422 for "Transesophageal Echocardiography Scanner with Rotating Image Plane." No dollar amount is specified as damages in the Company's action, but the complaint seeks an accounting for damages, treble damages and an assessment of interests and costs against ATL. In addition, the Company is informed that, in August 1994, ATL filed an action against the Company in the United States District Court for the Western District of Washington, in which ATL sought a declaration that it infringes no valid claim of U.S. Letters Patent No. 4,058,003. On October 31, 1994, ATL amended that action and added claims accusing the Company of infringing U.S. Patent Nos. 4,543,960; 5,050,610; 5,207,225; and 5,226,422. No dollar amount is specified as damages in ATL's action, but the complaint seeks an injunction against alleged infringement, an accounting for damages, treble damages, and an assessment of interest and costs against the Company. Management believes that the ultimate outcome of this matter will not have a material adverse effect on the Company's financial condition. On July 1, 1993 and July 30, 1993, individuals purporting to represent a class of persons who purchased Acuson common stock during the period between October 24, 1990 and July 22, 1992 filed two separate, but related, actions against the Company, twelve of its officers and one former officer in the Federal District Court for the Northern District of California alleging that the defendants' statements about the Company were incomplete or inaccurate, in violation of federal securities laws. Plaintiffs seek damages in an unspecified amount, as well as equitable relief or injunctive relief and attorneys' fees, experts' fees and costs. The Company intends to defend the suits vigorously. Management believes that the ultimate outcome of this matter will not have a material adverse effect on the Company's financial condition. - -------------------------------------------------------------------------------- 6 - -------------------------------------------------------------------------------- ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales for the quarter ended October 1, 1994 increased from $67.1 million in the quarter ended October 2, 1993 to $86.4 million. For the first nine months of 1994, net sales were $267.2 million, an increase of 20.7% compared to the first nine months of 1993. The increase in worldwide revenues was primarily the result of increased unit shipments of ultrasound systems and shipments of the Acoustic Response Technology (ART) and Color Doppler Energy (CDE) options. Increased unit sales, however, were partially offset by lower average unit selling prices resulting from competitive pricing pressures and by higher volume of lower priced product configurations. Service revenue for the quarter ended October 1, 1994 increased 13.7% to $19.0 million from $16.7 million in the quarter ended October 2, 1993, primarily due to growing service contract revenue from a larger base of installed systems. International revenue increased to $27.8 million or 32.1% of net sales for the three months ended October 1, 1994 compared to $17.4 million or 26.0% of net sales in the comparable 1993 period. For the first nine months of 1994, international revenue increased to $82.6 million or 30.9% of net sales compared to $57.3 million or 25.9% of net sales for the nine months ended October 2, 1993. International shipments were favorably impacted in particular by the Acuson(R) 128XP/4. The Company believes that its results for the nine months ended October 1, 1994 may not be indicative of the results for future periods. Acuson expects that future revenues may continue to be impacted for an indeterminate period by market uncertainties regarding the purchase of hospital equipment due to ongoing worldwide medical cost containment pressures and concern about the potential impacts of U.S. health care reform. Acuson believes that as a result of these uncertainties, the domestic ultrasound market has not improved from the weak 1993 levels. Although portions of the international ultrasound markets are experiencing some economic recovery, it is uncertain whether this is temporary or permanent. The gross profit for the third quarter of 1994 was 57.1% of net sales, compared to 58.4% in the comparable 1993 period. For the nine months ended October 1, 1994, gross profit was 56.8% of net sales, compared to 58.3% in the first nine months of 1993. The percentage decrease reflected a reduction in selling prices and an increased proportion of products which have a lower gross margin. Selling, general and administrative expenses totaled $27.0 million in the quarter ended October 1, 1994, up from $24.0 million in the comparable prior year's period. For the nine months ended October 1, 1994, selling, general and administrative expenses were $79.2 million compared to $77.5 million in the first nine months of 1993. However, as a percentage of sales, such expenses in the first nine months in 1994 totaled 29.6% of net sales compared to 35.0% in 1993. The dollar increase is primarily due to higher international operating expenses supporting the higher in international sales. Product development costs in the third quarter of 1994 totaled $18.5 million or 21.4% of net sales, compared to $14.4 million or 21.5% of net sales in the third quarter of 1993. For the nine months ended October 1, 1994, product development costs were $54.3 million or 20.3% of net sales compared to $43.8 million or 19.8% of net sales in the first nine months of 1993. The increase in product development expense resulted from increased spending on multiple product development programs. In 1993, the Company restructured its worldwide operations in order to address a reduction in worldwide demand for medical diagnostic ultrasound products. The restructuring consisted of a series of planned actions, including a reduction of approximately 15% of the Company's worldwide work force, the restructuring of facilities and the write-down of certain assets. In connection with these actions, the Company recorded a one-time pre-tax charge of $12.0 million during the second quarter of 1993. Substantially all of the $1.1 million restructuring balance which remained at December 31, 1993, was used during the nine months ended October 1, 1994. The actual costs of the restructuring were substantially in alignment with original expectations. 7 - -------------------------------------------------------------------------------- The provision for income taxes was $0.9 million in the third quarter of 1994 versus a benefit of $0.5 million in 1993. For the nine months ended October 1, 1994, the tax provision was $6.7 million versus a benefit of $1.4 million in 1993. The benefits in 1993 resulted from the operating loss reported in the nine months ended October 2, 1993 and the effects of the tax law changes, principally the retroactive research and development credit. The effective tax rate for the nine months ended October 1, 1994 was 32%. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and short-term investments balance has increased $18.7 million during the nine months ended October 1, 1994 to $77.9 million. During the nine months ended October 1, 1994, the Company generated $15.0 million in cash from operations, as compared to 1993 when operations generated $26.3 million in cash. The Company's financing and investing activities for the nine months ended October 1, 1994 have generated $12.1 million in cash, with $21.6 million provided by the sale of the Company's lease portfolio. Included in the financing activities was $7.4 million raised through employee participation in the Company's stock option and stock purchase plans, compared to $5.1 million in the comparable nine-month period in 1993. In 1992, the Board of Directors authorized the repurchase of 8,000,000 shares of the Company's common stock. This program was completed in 1993. On October 26, 1993, the Board of Directors authorized the repurchase of an additional 4,000,000 shares over an unspecified period of time. As of October 1, 1994, the Company had repurchased 186,200 shares toward this authorization and there were 28,875,846 shares of Acuson common stock outstanding. At October 1, 1994, the Company's working capital totaled $142.0 million. The Company also has a revolving unsecured credit facility for $50 million which is in effect through July 1995. No compensating balances are required and the full amount is available under this credit facility. Based on its current operating plan, the Company believes that the liquidity provided by its existing cash and short-term investments balances, the borrowing arrangements described above, and cash generated from operations will be sufficient to meet the Company's operating and capital requirements for fiscal 1994. - -------------------------------------------------------------------------------- 8 - -------------------------------------------------------------------------------- PART II ITEM 1 LEGAL PROCEEDINGS On September 14, 1994, the Company filed an action in the United States District Court for the Northern District of California against Advanced Technology Laboratories, Inc. (ATL) of Bothell, Washington. In the action, the Company accuses ATL of infringing U.S. Letters Patent No. 4,058,003 for "Ultrasonic Electronic Lens with Reduced Delay Range," a patent licensed exclusively to the Company. In addition, the Company seeks a declaration that it infringes no valid claim of four ATL patents: U.S. Letters Patent No. 4,543,960 for "Transesophageal Echo-cardiography Scanhead," No. 5,050,610 for "Transesophageal Ultrasonic Scanhead," No. 5,207,225 for "Transesophageal Ultrasonic Scanhead," or No. 5,226,422 for "Transesophageal Echocardiography Scanner with Rotating Image Plane." No dollar amount is specified as damages in the Company's action, but the complaint seeks an accounting for damages, treble damages and an assessment of interests and costs against ATL. In addition, the Company is informed that, in August 1994, ATL filed an action against the Company in the United States District Court for the Western District of Washington, in which ATL sought a declaration that it infringes no valid claim of U.S. Letters Patent No. 4,058,003. On October 31, 1994, ATL amended that action and added claims accusing the Company of infringing U.S. Patent Nos. 4,543,960; 5,050,610; 5,207,225; and 5,226,422. No dollar amount is specified as damages in ATL's action, but the complaint seeks an injunction against alleged infringement, an accounting for damages, treble damages, and an assessment of interest and costs against the Company. Management believes that the ultimate outcome of this matter will not have a material adverse effect on the Company's financial condition. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits -------- 10.1 Form of Amendment Number 1 to Supplemental Stock Option Terms under the Company's 1986 Supplemental Stock Plan and 1991 Stock Incentive Plan (1) 10.2 Form of Supplemental Stock Option Terms Under the Company's 1991 Stock Incentive Plan (1) 10.3 Consulting Agreement, dated June 20, 1994, between William H. Abbott and the Company (1) 11.1 Statement regarding computation of per share earnings for the quarter ended October 1, 1994 27.1 Financial Data Schedule ------------------------------------------------------------------- (1) Management contract or compensatory plan required to be filed as an exhibit. b) Reports on Form 8-K ------------------- The Company filed no reports on Form 8-K during the quarter ended October 1, 1994. - -------------------------------------------------------------------------------- 9 - -------------------------------------------------------------------------------- SIGNATURE 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 thereunto duly authorized. ACUSON CORPORATION (Registrant) November 14, 1994 By /s/ Stephen T. Johnson ------------------------------ Stephen T. Johnson Vice President, Chief Financial Officer and Treasurer (duly authorized Officer and Principal Financial and Accounting Officer) 10 EXHIBITS INDEX Exhibits -------- 10.1 Form of Amendment Number 1 to Supplemental Stock Option Terms under the Company's 1986 Supplemental Stock Plan and 1991 Stock Incentive Plan (1) 10.2 Form of Supplemental Stock Option Terms Under the Company's 1991 Stock Incentive Plan (1) 10.3 Consulting Agreement, dated June 20, 1994, between William H. Abbott and the Company (1) 11.1 Statement regarding computation of per share earnings for the quarter ended October 1, 1994 27.1 Financial Data Schedule EX-10.1 2 AMENDMENT 1 TO STOCK OPTION TERMS EXHIBIT 10.1 ACUSON CORPORATION FORM OF AMENDMENT NUMBER 1 TO SUPPLEMENTAL STOCK OPTION TERMS UNDER THE COMPANY'S 1986 SUPPLEMENTAL STOCK PLAN AND 1991 STOCK INCENTIVE PLAN AMENDMENT NO. 1 TO SUPPLEMENTAL STOCK OPTION TERMS This Amendment No. 1 to Supplemental Stock Option Terms (this "Amendment"), dated as of ____________, 1994, is made by and between Acuson Corporation, a Delaware corporation (the "Company"), and _______________________________________________ ("Optionee"). A. The Company and Optionee have entered into one or more Notice of Grant of Stock Options and Grant Agreement(s) as set forth on Exhibit A hereto (the "Grant Agreement(s)"). B. The Grant Agreement(s) incorporates by reference the Acuson Corporation Supplemental Stock Option Terms attached thereto (the "Option Terms"). C. The Company and Optionee mutually desire to amend the Option Terms as set forth in this Amendment, and to cause such Option Terms, as so amended (the "Amended Option Terms"), to be incorporated by reference into the Grant Agreement(s). Accordingly, the Company and Optionee agree as follows: 1. Amendment of Option Terms. The Option Terms are hereby amended by the ------------------------- insertion therein of new Subsections 1(c) and 1(d), which shall read in their entirety as follows: "(c) Notwithstanding anything to the contrary contained in this Section 1, the total number of shares subject to this option shall be allocated hereto and shall vest fully, automatically and without any further action by the parties hereto on the twenty-second day after any Share Acquisition Date, unless prior to such twenty-second day a majority of the Continuing Directors then in office has determined that the transaction pursuant to which a Person has become an Acquiring Person is an Approved Transaction. (d) For purposes of Section 1(c), the following definitions shall apply: "Acquiring Person" means any Person who or which, together with all ---------------- Affiliates and Associates of such Person, shall be the Beneficial Owner of 20% or more of the Common Stock then outstanding, but shall not include the Company, any Subsidiary of the Company or any employee benefit plan of the Company or any Subsidiary of the Company, or any entity holding Common Stock for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no Person shall become an Acquiring Person as the result of an acquisition of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more of the Common Stock of the Company then outstanding; provided, however, that if a Person becomes -------- ------- the Beneficial Owner of 20% or more of the Common Stock of the Company then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional Common Stock of the Company, then such Person shall be deemed to be an Acquiring Person. "Affiliate" and "Associate" have the respective meanings ascribed to such --------- --------- terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Amendment. Amendment No. 1 to Supplemental Stock Option Terms "Approved Transaction" means any transaction that occurs at a time when -------------------- Continuing Directors are in office and a majority of the Continuing Directors then in office has determined that the transaction is in the best interest of the Company and its stockholders. A Person shall be deemed the "Beneficial Owner" of and shall be deemed to ---------------- "beneficially own" any securities: (i) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; (ii) which such Person or any of such Person's Affiliates or Associates has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the -------- ------- Beneficial Owner of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (B) the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a -------- ------- Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy or consent given to such person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to clause (ii) (B) of this definition) or disposing of any securities of the Company; provided further, however, that nothing in this -------- ------- ------- paragraph shall cause a Person to be the Beneficial Owner of, or to beneficially own, any securities (x) acquired through such Person's participation in the business of underwriting securities in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition or (y) which such Person has reported on Schedule 13G under the Exchange Act and has not ceased to be eligible to report on Schedule 13G pursuant to Rule 13d-1 under the Exchange Act. "Common Stock" means the shares of common stock, par value $.0001 per ------------ share, of the Company. "Continuing Director" means (i) any member of the Board of Directors of ------------------- the Company, while such Person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and who was, if applicable, a member of the Board prior to the time that any Person becomes an Acquiring Person, or (ii) any Person who subsequently becomes a member of the Board, while such Person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if such Person's nomination for election or election to the Board is recommended or approved by a majority of Continuing Directors. -2- Amendment No. 1 to Supplemental Stock Option Terms "Exchange Act" means the Securities Exchange Act of 1934, as amended, and ------------ the rules and regulations promulgated thereunder. "Person" means any individual, firm, partnership, corporation or other ------ entity, and shall include any successor (by merger or otherwise) of such entity. "Rights" means the rights granted to the Company's shareholders to ------ purchase additional Common Stock under certain circumstances, as described in that certain Rights Agreement, dated as of May 5, 1988, by and between the Company and The First National Bank of Boston, as rights agent. "Share Acquisition Date" means the first date of public announcement by ---------------------- the Company or an Acquiring Person that a Person has become an Acquiring Person. "Subsidiary" of any Person means any corporation or other entity of which ---------- a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person, or which is otherwise controlled by such Person." 2. Incorporation by Reference. The Amended Option Terms are hereby -------------------------- incorporated by reference into the Grant Agreement(s) with full force and effect as if they were originally made a part thereof. 3. Remaining Option Terms. Except as expressly amended herein, the Option ---------------------- Terms remain binding and in full force and effect. 4. Counterparts. This Amendment may be executed in counterparts, each of ------------ which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first noted above. ACUSON CORPORATION, a Delaware corporation By: --------------------------------------- Name: ---------------------------------- Title: ------------------------------------ OPTIONEE: ------------------------------------------ Signature Amendment No. 1 to Supplemental Stock Option Terms ------------------------------------------ Printed Name -3- EX-10.2 3 STOCK OPTION TERMS EXHIBIT 10.2 ACUSON CORPORATION FORM OF SUPPLEMENTAL STOCK OPTION TERMS UNDER THE COMPANY'S 1991 STOCK INCENTIVE PLAN THIS DOCUMENT CONSTITUTES PART OF THE PROSPECTUS COVERING THESE SECURITIES, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. ACUSON CORPORATION SUPPLEMENTAL STOCK OPTION TERMS Acuson Corporation (the "Company"), pursuant to its 1991 Stock Incentive Plan (the "Plan") has this day granted to you, the optionee named on the Notice of Grant of Stock Options and Grant Agreement to which these Supplemental Stock Option Terms are attached (the "Agreement"), an option to purchase shares of the common stock of the Company ("Common Stock"). This option is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). Whenever used herein, "this option" refers to the Agreement together with these Supplemental Stock Option Terms. The details of your option are as follows: 1. The total number of shares subject to this option is set forth in the Agreement. Subject to the limitations contained herein, this option shall be exercisable with respect to each installment shown below on or after the date of vesting applicable to such installment, as follows: (a) [Commencing on the date specified as the "Beginning Vesting Date" in the Agreement, installments of _____of the total number of shares subject to this option shall be allocated to this option daily until the earlier of (i) the date on which all such shares have been allocated hereto or (ii) the date of termination of your employment or relationship as a consultant or director with the Company (as defined in the Plan) for any reason or no reason, including your death or disability.] [Other allocation/vesting provisions and/or restrictions on allocation/vesting.] You shall have no right to exercise this option as to any share, irrespective of whether the share has been allocated hereto under the provisions of this subparagraph until such share has vested under the provisions of subparagraph 1(b). (b) [All installments allocated hereto during the six (6) month period commencing on the date on which the first installment is allocated hereto, shall vest at the end of that period, and] [A]ll installments [thereafter] [allocated hereto] shall vest immediately, except that the fractional share, if any, included in an installment shall not vest before such time as additional fractional shares, or portions thereof, included in other installments allocated to this option can be combined with the existing fractional share to constitute one or more whole shares. [Other vesting provisions and/or restrictions on vesting.] (c) Notwithstanding anything to the contrary contained in this Section 1, the total number of shares subject to this option shall be allocated hereto and shall vest fully, automatically and without any further action by the parties hereto on the twenty-second day after any Share Acquisition Date, unless prior to such twenty-second day a majority of the Continuing Directors then in office has determined that the transaction pursuant to which a Person has become an Acquiring Person is an Approved Transaction. (d) For purposes of Section 1(c), the following definitions shall apply: "Acquiring Person" means any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 20% or more of the Common Stock then outstanding, but shall not include the Company, any Subsidiary of the Company or any employee benefit plan of the Company or any Subsidiary of the Company, or any entity holding Common Stock for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no Person shall become an Acquiring Person as the result of an acquisition of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more of the Common Stock of the Company then outstanding; provided, however, that if a Person becomes the Beneficial Owner of 20% or more of the Common Stock of the Company then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional Common Stock of the Company, then such Person shall be deemed to be an Acquiring Person. "Affiliate" and "Associate" have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this grant. "Approved Transaction" means any transaction that occurs at a time when Continuing Directors are in office and a majority of the Continuing Directors then in office has determined that the transaction is in the best interest of the Company and its stockholders. A Person shall be deemed the "Beneficial Owner" of and shall be deemed to "beneficially own" any securities: (i) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; (ii) which such Person or any of such Person's Affiliates or Associates has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (B) the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy or consent given to such person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to clause (ii) (B) of this definition) or disposing of any securities of the Company; provided further, however, that nothing in this paragraph shall cause a Person to be the Beneficial Owner of, or to beneficially own, any securities (x) acquired through such Person's participation in the business of underwriting securities in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition or (y) which such Person has reported on Schedule 13G under the Exchange Act and has not ceased to be eligible to report on Schedule 13G pursuant to Rule 13d-1 under the Exchange Act. "Common Stock" means the shares of common stock, par value $.0001 per share, of the Company. "Continuing Director" means (i) any member of the Board of Directors of the Company, while such Person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and who was, if applicable, a member of the Board prior to the time that any Person becomes an Acquiring Person, or (ii) any Person who subsequently becomes a member of the Board, while such Person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if such Person's nomination for election or election to the Board is recommended or approved by a majority of Continuing Directors. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Person" means any individual, firm, partnership, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity. "Rights" means the rights granted to the Company's shareholders to purchase additional Common Stock under certain circumstances, as described in that certain Rights Agreement, dated as of May 5, 1988, by and between the Company and The First National Bank of Boston, as rights agent. "Share Acquisition Date" means the first date of public announcement by the Company or an Acquiring Person that a Person has become an Acquiring Person. 2 "Subsidiary" of any Person means any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person, or which is otherwise controlled by such Person. 2. (a) The exercise price per share of this option is set forth in the Agreement, being not less than ten percent (10%) of the fair market value of the Common Stock on the date of grant of this option. (b) The purchase price of stock acquired pursuant to an option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the option is exercised, or (ii) at the discretion of the Board or the Committee, either at the time of the grant or exercise of the option, (x) by delivery to the Company of shares of common stock of the Company that have been held for the requisite period necessary to avoid a charge to the Company's reported earnings and valued at the fair market value on the date of exercise (determined by the closing sale price per share of Common Stock for such date as reported by the New York Stock Exchange), (y) according to a deferred payment or other arrangement (which may include, without limiting the generality of the foregoing, the use of other common stock of the Company) with the person to whom the option is granted or to whom the option is transferred pursuant to subparagraph 7(d) of the Plan, or (z) in any other form of legal consideration that may be acceptable to the Board or the Committee. In the case of any deferred payment arrangement, interest shall be payable at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement. 3. The minimum number of shares with respect to which this option may be exercised at any one time is ten (10), except as to an installment subject to exercise, as set forth in paragraph 1, which amounts to fewer than ten (10) shares, in which case, as to the exercise of that installment, the number of such shares in such installment shall be the minimum number of shares. In no event may this option be exercised for any number of shares which would require the issuance of anything other than whole shares. 4. Notwithstanding anything to the contrary contained herein, this option may not be exercised unless the shares issuable upon exercise of this option are then registered under the Securities Act of 1933, as amended (the "Securities Act"), or, if such shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. 5. The term of this option commences on the grant date as set forth in the Agreement and, unless sooner terminated as set forth below or in the Plan, terminates on the date set forth in the Agreement (which date shall be no more than ten (10) years from the date this option is granted). In no event may this option be exercised on or after the date on which it terminates. This option shall terminate prior to the expiration of its term as follows: three (3) months after the termination of your employment or relationship as a consultant or director with the Company or an affiliate of the Company (as defined in the Plan) for any reason or for no reason unless: (a) such termination of employment or relationship as a consultant or director is due to your permanent and total disability (within the meaning of Section 422(c)(6) of the Code), in which event the option shall terminate on the earlier of the termination date set forth above or one (1) year following such termination of employment or relationship as a consultant or director; or (b) such termination of employment or relationship as a consultant or a director is due to your death, or your death occurs within three (3) months after such termination of employment or relationship as a consultant or director, in which event the option shall terminate on the earlier of the termination date set forth above or eighteen (18) months after your death; or (c) during any part of such three (3) month period the option is not exercisable solely because of the condition set forth in paragraph 4 above, in which event the option shall not terminate until the earlier of the termination date set forth above or until it shall have been exercisable for an aggregate period of three (3) months after the termination of your employment or relationship as a consultant or a director; or 3 (d) exercise of the option within three (3) months after termination of your employment or relationship as a consultant or a director with the Company or with an affiliate of the Company (as defined in the Plan) would result in liability under section 16(b) of the Securities Exchange Act of 1934, in which case the option will terminate on the earlier of (i) the termination date set forth above, (ii) the tenth (10th) day after the last date upon which exercise would result in such liability or (iii) six (6) months and ten (10) days after the termination of your employment or relationship as a consultant or a director with the Company or an affiliate of the Company (as defined in the Plan). However, this option may be exercised following termination of employment or relationship as a consultant or a director only as to that number of shares as to which it was exercisable on the date of termination of employment or relationship as a consultant or a director under the provisions of paragraph 1 of this option. 6. (a) This option may be exercised, to the extent specified above, by delivering a notice of exercise together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require pursuant to subparagraph 7(f) of the Plan. (b) By exercising this option you agree that the Company may require you to enter into an arrangement providing for the cash payment by you to the Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of this option; (ii) the lapse of any substantial risk of forfeiture to which the shares are subject at the time of exercise; or (iii) the disposition of shares acquired upon such exercise. 7. This option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you. 8. This option is not an employment contract and nothing in this option shall confer upon any eligible employee or consultant or director any right to continue in the employ (or to continue acting as a consultant or director) of the Company or any affiliate of the Company (as defined in the Plan) or shall affect the right of the Company or any affiliate of the Company (as defined in the Plan) to terminate the employment or consulting relationship or directorship of any eligible employee or consultant or director with or without cause. 9. Any notices provided for in this option or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the address specified in the Company's records or at such other address as you may designate by written notice to the Company. 10. This option is subject to all the provisions of the Plan, a copy of which is attached hereto and its provisions are hereby made a part of this option, including without limitation the provisions of paragraph 7 of the Plan relating to option provisions, and is further subject to all interpretations, amendments, rules, and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this option and those of the Plan, the provisions of the Plan shall control. This option is dated and effective as of the date of grant as set forth in the Agreement. 4 EX-10.3 4 CONSULTING AGREEMENT EXHIBIT 10.3 ACUSON CORPORATION CONSULTING AGREEMENT, DATED JUNE 20, 1994, BETWEEN WILLIAM H. ABBOTT AND THE COMPANY CONSULTING AGREEMENT -------------------- THIS AGREEMENT ("Agreement") is entered into by and between Acuson Corporation, a Delaware corporation, having a principal place of business at 1220 Charleston Road, Mountain View, California 94043 ("Acuson"), and William H. Abbott ("Abbott"), a resident of Palo Alto, California, as of June 20, 1994. 1. ENGAGEMENT OF SERVICES Abbott agrees to perform consulting services ("Services") for Acuson as Acuson may reasonably request from time to time during the term of this Agreement. Subject to the terms of this Agreement, Abbott will render the Services to the best of Abbott's ability. 2. COMPENSATION During the term of this Agreement, Acuson will pay Abbott as follows: For the period June 20, 1994 through and including June 19, 1995, the sum of $ 234,000, and for the period June 20, 1995 through and including June 19, 1996, the sum of $ 156,000. Such amounts will be paid to Abbott monthly. In addition to the foregoing sums, Abbott will be reimbursed for reasonable out-of-pocket expenses incurred by Abbott in performing the Services, within forty-five (45) days of receipt of Abbott's invoice, provided Abbott has furnished such documentation for such expenses as Acuson may reasonably request. 3. CONFIDENTIAL INFORMATION 3.1 INFORMATION. (a) INFORMATION. Abbott shall hold in trust and confidence all information, documents and other materials, regardless of form, relating to Acuson, its business, suppliers and customers supplied to Abbott or learned by Abbott in the course of performing the Services ("Information"). (b) LIMITATIONS ON USE. Abbott will use Information solely to perform the Services for the benefit of Acuson and will not disclose Information to any person not an employee of Acuson. 3.2 ACUSON PROPERTY. All work performed by Abbott for Acuson under this Agreement and all documents and other material, whether delivered to Abbott by Acuson or made or received by Abbott in the performance of Services (the "Acuson Property") are the sole and exclusive property of Acuson. Abbott agrees to deliver promptly the original and any copies of the Acuson Property to Acuson at any time upon Acuson's request. Upon termination of this Agreement by either party for any reason, Abbott agrees to deliver promptly to Acuson or destroy, at Acuson's option, the original and any copies of the Acuson Property (including any copies stored in any computer memory or other storage medium). 4. OUTSTANDING OPTIONS 4.1 VESTING. As of June 20, 1994, all vesting under Abbott's outstanding options granted under the Company's 1986 Supplemental Stock Option Plan and 1991 Stock Incentive Plan (collectively "Outstanding Options") shall cease, except that, (a) with respect to Abbott's Outstanding Option for 75,038 shares granted on June 4, 1993, options for an additional 18,760 shares shall be deemed vested as of June 20, 1994; (b) with respect to Abbott's Outstanding Options for 60,030 shares granted on June 4, 1993, options for an additional 15,008 shares shall be deemed vested as of June 20, 1994, (c) with respect to Abbott's Outstanding Options for 40,000 shares granted on October 26, 1993, options for an additional 8,000 shares shall be deemed vested as of June 20, 1994. 4.2 OPTION EXERCISABILITY. Acuson and Abbott acknowledge that Abbott's Outstanding Options shall remain exercisable only during the term of this Agreement, except as provided in Section 4.3 below. 4.3 OPTION AGREEMENT. Except as set forth in Sections 4.1, 4.2 and this 4.3, the Supplemental Stock Option Terms governing Abbott's Outstanding Options shall remain in full force and effect. Paragraph 5 of Abbott's Supplemental Stock Option Terms granted under the Company's 1986 Supplemental Stock Option Plan and paragraph 5 of Abbott's Supplemental Stock Option Terms granted under the Company's 1991 Stock Incentive Plan are hereby amended to read as follows: "The term of this option commences on the grant date set forth in the Agreement and, unless sooner terminated as set forth in the Plan, terminates on the date that your consulting agreement with the Company terminates, unless (a) The termination of your relationship as a consultant is due to your permanent and total disability (within the meaning of Section 422(c)(6) of the Code), in which case this option shall terminate one (1) year following such termination; or (b) The termination of your relationship as a consultant is due to your death, in which case this option shall terminate eighteen (18) months after your death; or (c) In connection with the termination of your consulting agreement, you become an employee of the Company, in which case this amended Paragraph 5 shall be of no force and effect and Paragraph 5 as in effect prior to this amendment shall become in full force and effect. However, notwithstanding the foregoing, in no event shall this option be exercisable more than ten (10) years from the date the option is granted and in no event may this option be exercised on or after the date on which it terminates. This option may be exercised following termination of your relationship as a consultant only as to that number of shares as to which it was exercisable on the date of termination." 5. TERM AND TERMINATION 5.1 TERM. This Agreement is effective June 20, 1994 and will terminate on June 19, 1996, unless terminated earlier as set forth below. 5.2 TERMINATION BY ACUSON. Acuson may terminate this Agreement immediately upon Abbott's breach of Section 3 ("Confidential Information") and/or upon any acts of gross misconduct by Abbott directly affecting this Agreement or which in any way adversely reflects upon Acuson. 5.3 TERMINATION BY ABBOTT. Abbott may terminate this Agreement, with or without cause, at any time upon fifteen (15) days prior written notice to Acuson. 6. INDEPENDENT RELATIONSHIP Abbott's relationship with Acuson is that of an independent contractor, and nothing in this Agreement is intended to, or should be construed to, create a partnership, agency or employment relationship. Except as otherwise agreed between Abbott and Acuson, Abbott will not be entitled to any of the benefits which Acuson may make available to its employees. Abbott is solely responsible for, and will file, all tax returns and payments required to be filed with, or made to, any federal, state or local tax authority with respect to the performance of Services and receipt of fees under this Agreement. No part of Abbott's compensation will be subject to withholding by Acuson for the payment of any social security, federal, state or any other employee payroll taxes. 7. GENERAL PROVISIONS 7.1 GOVERNING LAW. This Agreement will be governed by and construed in accordance with the laws of California as applied to agreements entered into and to be performed entirely within California between California residents. 7.2 WAIVER. The waiver by either party of a breach of any provision of this Agreement by the other party will not operate, or be interpreted, as a waiver of any other or subsequent breach. 7.3 SUCCESSORS AND ASSIGNS. This Agreement is not assignable by either party hereto without the consent of the other party. Subject to the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 7.4 SURVIVAL. Section 3 ("Confidential Information") shall survive termination of this Agreement. 7.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral, except that nothing in this Agreement shall amend, modify or supersede in any way Abbott's obligations under any other agreement with Acuson with respect to Acuson confidential or proprietary information. This Agreement may be amended or supplemented, and any right hereunder may be waived, only by a writing that is signed by both parties. ACUSON CORPORATION: ABBOTT: By: ----------------------------- ----------------------------- Samuel H. Maslak William H. Abbott EX-11.1 5 COMPUTATION OF EARNINGS PER SHARE - -------------------------------------------------------------------------------- ACUSON CORPORATION EXHIBIT 11.1 STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS FOR THE QUARTER ENDED OCTOBER 1, 1994 In accordance with Accounting Principles Board Opinion No. 15, the Company used the modified treasury stock method in computing the third quarter 1994 earnings per share. The following is the computation of earnings per share: Number of shares outstanding at October 1, 1994.................................. 28,875,846 Number of shares assumed to be repurchased (limited to 20% of number of shares outstanding)................................................ 5,775,169 Multiply by market value per common share........................................ $ 13.57 ----------- Cost to repurchase............................................................... $78,369,046 Assumed proceeds to the Company had everyone exercised outstanding stock options. 80,647,856 ----------- Excess assumed proceeds available................................................ 2,278,810 Multiply by average interest rate for the period................................. 1.25% ----------- Assumed interest on excess funds................................................. 28,485 Less: tax provision.............................................................. 5,612 ----------- Adjustment to net income......................................................... 22,873 Add: net income................................................................. 3,734,000 ----------- Adjusted net income.............................................................. $ 3,756,873 =========== Divided by weighted shares outstanding, including common stock equivalents..................................................................... 29,275,715 Fiscal period earnings per share................................................. $0.13 =====
- -------------------------------------------------------------------------------- EX-27 6 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1994 JAN-01-1994 OCT-01-1994 38,897 39,041 82,855 3,868 50,783 253,189 135,140 87,995 297,381 93,237 0 76,955 0 0 127,189 297,381 211,666 267,225 88,638 115,404 133,469 1,010 (2,720) 21,072 6,665 14,407 0 0 0 14,407 $0.49 $0.49
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