-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PDvgy5XrnNO2IJmZ/uTatJWdo3zV/pDrk4dSXNXCSZKmdH88oxAh793X/IhMlbqg UppaGvTJwjX9gEifymnrcQ== 0000748618-96-000025.txt : 19960517 0000748618-96-000025.hdr.sgml : 19960517 ACCESSION NUMBER: 0000748618-96-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFRASONICS INC CENTRAL INDEX KEY: 0000748618 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 953797283 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12998 FILM NUMBER: 96564662 BUSINESS ADDRESS: STREET 1: 3911 SORRENTO VALLY BLVD CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6194509898 MAIL ADDRESS: STREET 1: 3911 SORRENTO VALLEY BLVD CITY: SAN DIEGO STATE: CA ZIP: 92121 10-Q 1 10-Q FOR 3RD QTR 96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 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 0-12998 INFRASONICS, INC (Exact name of registrant as specified in its charter) California 95-3797283 (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification Number) 3911 Sorrento Valley Blvd. San Diego, California 92121 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (619) 450-9898 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 10,554,100 shares of Common Stock as of April 10, 1996. Infrasonics, Inc. Index to Form 10-Q
PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements PAGE Condensed Consolidated Balance Sheets (unaudited) March 31, 1996 and June 30, 1995 3 Condensed Consolidated Statements of Income (unaudited) Three and Nine-Months Ended March 31, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows (unaudited) Nine Months Ended March 31, 1996 and 1995 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION 8 SIGNATURES 8 Exhibit 27. Financial Data Schedule 9
Item 1. Condensed Consolidated Financial Statements
INFRASONICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) March 31, June 30, 1996 1995 ___________ ___________ Current assets: Cash and equivalents $ 6,044,600 $ 4,748,900 Short-term investments 971,000 989,300 Accounts receivable, net 6,358,200 6,355,300 Inventories 7,995,600 6,313,000 Other current assets 420,100 203,500 ___________ ___________ Total current assets 21,789,500 18,610,000 Equipment, furniture and fixtures, net of accumulated depreciation 2,587,700 2,538,500 Computer software costs, net of accumulated amortization 2,049,600 2,231,500 Intangible assets and other assets 3,789,000 3,573,800 ___________ ___________ Total assets $30,215,800 $26,953,800 =========== =========== Liabilities & Shareholders' Equity Current liabilities: Accounts payable $ 450,600 $ 274,100 Accrued liabilities 2,253,000 1,119,700 ___________ ___________ Total current liabilities 2,703,600 1,393,800 Shareholders' Equity: Preferred shares, none issued - - Common shares, no par value; 10,554,100 shares issued and outstanding ( 10,339,400 at June 30, 1995) 26,646,800 26,083,700 Deferred consulting expense (27,800) (110,800) Retained earnings 893,200 (412,900) __________ __________ Total shareholders' equity 27,512,200 25,560,000 Total liability and shareholders' equity $30,215,800 $26,953,800 =========== ===========
See accompanying notes.
INFRASONICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three months ended Nine months ended March 31, March 31, 1996 1995 1996 1995 ___________ ___________ ___________ ___________ Revenues Net sales $ 7,147,300 $ 5,426,000 $19,270,500 $15,668,900 Interest income 86,900 55,700 250,600 155,600 ___________ ___________ ___________ __________ Total revenues 7,234,200 5,481,700 19,521,100 15,824,500 Costs and expenses Cost of sales 3,230,600 3,365,900 9,074,800 9,136,800 Engineering, research and development 506,900 528,500 1,458,900 1.503,300 Selling, general and administrative 2,733,800 2,268,300 7,121,500 6,939,100 ___________ ___________ ___________ ___________ Total costs and expenses 6,471,300 6,162,700 17,655,200 17,579,200 Income before income taxes 762,900 (681,000) 1,865,900 (1,754,700) Provision for (benefit from income taxes) 162,700 (257,000) 559,800 (257,000) ___________ ___________ ___________ ___________ Net income $ 600,200 $ (424,000) $ 1,306,100 $(1,497,700) =========== =========== =========== =========== Net income per share $ .06 $ <.04> $ .12 $ <.14> =========== =========== =========== =========== Shares used in calculation of net income per share 10,900,100 10,339,400 10,829,800 10,339,400
See accompanying notes.
INFRASONICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine months ended March 31, 1996 1995 ___________ ___________ Operating activities: Net income $ 1,306,100 $(1,497,700) Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 1,263,300 1,140,900 Deferred income taxes - (257,000) Changes in operating assets and liabilities (601,400) 2,398,500 ___________ ___________ Net cash flows from operating activities 1,968,000 1,784,700 Investment activities: Changes in short-term investments 18,300 1,002,700 Additions to equipment, furniture and fixtures (631,300) (453,600) Additions to computer software costs (189,400) (304,600) Changes in other assets (433,000) (132,800) ___________ ___________ Net cash flows from (used in) investing activities (1,235,400) 111,700 Financing activities: Exercise of stock options and warrants 563,100 8,200 ___________ ___________ Net changes in cash and cash equivalents 1,295,700 1,904,600 Cash and cash equivalents at beginning of period 4,748,900 2,697,300 ___________ ___________ Cash and cash equivalents at end of period $ 6,044,600 $ 4,601,900 =========== ===========
See accompanying notes. INFRASONICS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The condensed consolidated financial statements of Infrasonics, Inc. (the "Company") for the three and nine- month periods ended March 31, 1996 and 1995 are unaudited. These financial statements reflect all adjustments, consisting of only normal recurring adjustments which in the opinion of management, are necessary to fairly present the financial position at March 31, 1996 and the results of operations for the three and nine-month periods ended March 31, 1996 and 1995. The results of operations for the three and nine-months ended March 31, 1996 are not necessarily indicative of the results to be expected for the year ending June 30, 1996. For more complete financial information, these financial statements, and the notes thereto, should be read in conjunction with the audited financial statements for the year ended June 30, 1995 included in the Company's Form 10-K filed with the Securities and Exchange Commission.
2. Inventories: March 31, June 30, 1996 1995 ___________ ___________ Raw Materials $ 3,459,500 $ 2,864,500 Work in Process 1,252,900 947,000 Finished Goods 3,283,200 2,501,500 ___________ ___________ $ 7,995,600 $ 6,313,000 =========== ===========
3. Per Share Information Net income (loss) per common share has been computed using the weighted average number of common shares and dilutive common share equivalents outstanding during each period presented unless the effect of such would be antidilutive. Common share equivalents result from outstanding options and warrants to purchase common shares. 4. Merger Agreement A Form 8-K was filed on March 13, 1996 to report the execution of a merger agreement with Nellcor Puritan Bennett("NPB"), pursuant to which the Company would be acquired by NPB. Consumation of the transaction contemplated by the merger agreement is subject to the satisfaction of a number of conditions, including shareholder approval. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales and cost of sales were $7,147,300 and $3,230,600, respectively, for the quarter ended March 31, 1996, as compared to $5,426,000 and $3,365,900, respectively, for the corresponding quarter of the prior fiscal year. For the nine-months ended March 31, 1996 and 1995, net sales were $19,270,500 and $15,668,900, respectively, and the cost of sales for those periods were $9,074,800 and $9,136,800, respectively. The growth in sales was due to the increased number of units sold. The Company believes that healthcare reform issues continue to impact sales growth (as compared to historical trends) although to a lesser degree than prior years. For the three-month period ended March 31, 1996, cost of sales were 45% of sales, down from 62% for the same period last year. For the nine-month period ended March 31, 1996, cost of sales were 47% of sales, down freom 58% in the same period for fiscal year 1995. The decrease in cost of sales as a percentage of sales resulted from the mix of products sold, improved manufacturing processes and a decrease in material costs. Engineering, research and development expenses decreased to $506,900 and $1,458,900 for the three and nine-months ended March 31, 1996, respectively,as compared to $528,500 and $1,503,300 for the corresponding periods ended March 31, 1995. The decrease in expense was due to completion of some product improvement projects. Selling, general and administrative expenses were $2,733,800 and $7,121,500 for the three and nine-month periods ending March 31, 1996, respectively. For the corresponding periods in the prior fiscal year, selling, general and administrative expenses were $2,268,300 and $6,939,100. The increase in spending for both periods over the prior year is the result of the increased commission costs due to increased sales. Costs associated with the proposed merger with Nellcor Puritan Bennett will be expensed when the merger is completed or abandoned. Pending completion of required reviews and receipt of required approvals by shareholders, this merger is currently scheduled to be completed late in the quarter ending June 30, 1996. Liquidity and Capital Resources At March 31, 1996, the Company had working capital of $19,085,900 which is up $1,869,700 from the $17,216,200 on June 30, 1995. For the period, cash and cash flows from operating activities were positive primarily due to the increase in profitability and liabilities, partially offset by an increase in inventories. The increase in inventories resulted from an increase in the level of manufacturing as well as changes made in purchasing procedures. A Form 8-K was filed on March 13, 1996 to report the execution of a merger agreement with Nellcor Puritan Bennett("NPB"), pursuant to which the Company would be acquired by NPB. Consumation of the transaction contemplated by the merger agreement is subject to the satisfaction of a number of conditions, including shareholder approval. Through March 31, 1996, the Company has incurred expenses for this transaction amounting to $78,300, which have been accounted for as deferred acquisition costs. Additional expenses related to this transaction will be incurred for investment banking and professional services leading to a shareholder vote. Management believes that its present sources of liquidity should be sufficient to finance operations over the next year and may be used to fund acquisitions of complimentary businesses, products or technologies in related industries. Long-term liquidity is dependent upon results of operations and the level of funding necessary to market existing and new products. The need for additional equity or debt financing at some point in the future is therefore possible. Business Risks In addition to the factors addressed in the preceding sections, certain dynamics of the Company's markets, technologies and operations create fluctuations in the Company's results. The current health care reform climate consisting of cost containment pressures and consolidation trends may continue to affect product sales adversely, although the Company is unable to determine the potential effect on revenues and profits at this time. In addition, variances in quarterly results, government regulation, competitive conditions, and changes in third-party reimbursement present certain other risks to operating results which are more fully described in the Company's 1995 10-K and Annual Report to Shareholders. Part II OTHER INFORMATION 6.(b) Exhibits and Reports on Form 8-K. A Form 8-K was filed on March 13, 1996 to report the execution of a merger agreement with Nellcor Puritan Bennett("NPB"), pursuant to which the Company would be acquired by NPB. Consumation of the transaction contemplated by the merger agreement is subject to the satisfaction of a number of conditions, including shareholder approval. 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 thereunto duly authorized. INFRASONICS, INC. Date: April 15, 1996 /s/ Jim Hitchin Jim Hitchin President, Treasurer, Chairman of the Board /s/ Fred McGee Fred McGee Vice President, Chief Financial Officer EX-27 2 ART 5 FDS FOR 3RD Q FY96
5 1 9-MOS JUN-30-1996 MAR-31-1996 6,044,600 971,000 6,358,200 0 7,995,600 21,789,500 2,587,700 0 30,215,800 2,703,600 0 26,646,800 0 0 865,400 30,215,800 19,270,500 19,521,100 9,074,800 17,655,200 0 0 0 1,865,900 559,800 1,306,100 0 0 0 1,306,100 .12 .12
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