-----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, AAfIJToz2sZMwi61BP3485OKzDGxryXDcifRp+KuWnFBOd4Sut6nR75hbgKbIqJD UlQD9gryx7x3rKQegNThvQ== 0000950134-96-001849.txt : 19960513 0000950134-96-001849.hdr.sgml : 19960513 ACCESSION NUMBER: 0000950134-96-001849 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FISCHER IMAGING CORP CENTRAL INDEX KEY: 0000750901 STANDARD INDUSTRIAL CLASSIFICATION: X-RAY APPARATUS & TUBES & RELATED IRRADIATION APPARATUS [3844] IRS NUMBER: 362756787 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19386 FILM NUMBER: 96560062 BUSINESS ADDRESS: STREET 1: 12300 N GRANT ST CITY: DENVER STATE: CO ZIP: 80241 BUSINESS PHONE: 3034526800 MAIL ADDRESS: STREET 1: 12300 NORTH GRANT STREET CITY: DENVER STATE: CO ZIP: 80241 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 1996 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarter Ended March 31, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___to ___ Commission file number 0-19386 FISCHER IMAGING CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 36-2756787 (State of incorporation) (I.R.S. Employer Identification No.) 12300 North Grant Street Denver, Colorado 80241 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 452-6800 Indicate by check mark whether the Registrant (I) 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 (ii) has been subject to such filing requirements for the past 90 days. Yes X No --- ---
Shares Outstanding as of Title of Class March 31, 1996 - --------------------- ------------------------- Common Stock, $0.01 par value 5,682,410 Series D Convertible Preferred Sto1,333,333 par value 1,333,333
2 FISCHER IMAGING CORPORATION TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Consolidated Financial Statements Consolidated Balance Sheets - March 31, 1996 and December 31, 1995 3 Consolidated Statements of Operations - Three months ended March 31, 1996 and April 2, 1995 4 Consolidated Statements of Cash Flows - Three months ended March 31, 1996 and April 2, 1995 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12
3 FISCHER IMAGING CORPORATION CONSOLIDATED BALANCE SHEETS (Amounts in thousands except share data)
March 31, December 31, 1996 1995 --------- ------------ ASSETS (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 580 $ 968 Trade accounts receivable, net of allowance for doubtful accounts of approximately $421 and $449 at March 31, 1996 and December 31, 1995, respectively 19,190 19,957 Inventories 22,745 20,790 Other current assets 3,370 3,202 -------- -------- Total current assets 45,885 44,917 -------- -------- PROPERTY AND EQUIPMENT (at cost): Manufacturing equipment 7,798 7,591 Office equipment and leasehold improvements 4,598 4,789 -------- -------- 12,396 12,380 Less- Accumulated depreciation and amortization 8,236 8,288 -------- -------- Property and equipment, net 4,160 4,092 -------- -------- INTANGIBLE ASSETS, net 4,833 4,798 DEFERRED COSTS AND OTHER ASSETS 2,019 1,843 -------- -------- Total assets $ 56,897 $ 55,650 ======== ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES: Disbursements in transit $ 725 $ 1,088 Notes payable and current maturities of long-term debt 5,689 4,344 Trade accounts payable 7,658 8,352 Accrued salaries and wages 2,247 2,192 Other current liabilities 4,398 4,973 -------- -------- Total current liabilities 20,717 20,949 LONG-TERM DEBT 181 378 OTHER NONCURRENT LIABILITIES 391 739 -------- -------- Total liabilities 21,289 22,066 -------- -------- STOCKHOLDERS' INVESTMENT: Common Stock, $.01 par value, 25,000,000 shares authorized, 5,682,410 and 5,550,691 shares issued and outstanding at March 31, 1996 and December 31, 1995, respectively 57 56 Series C Junior Participating Preferred Stock, $.01 par value, 500,000 shares authorized, no shares issued and outstanding -- -- Series D Convertible Preferred Stock, $.01 par value, 1,333,333 shares authorized, issued and outstanding at March 31, 1996 and December 31, 1995; liquidation preference of $10,000,000 13 13 Additional paid-in capital 35,600 34,679 Accumulated earnings (deficit) 46 (1,027) Cumulative translation adjustment (108) (137) -------- -------- Total stockholders' investment 35,608 33,584 -------- -------- Total liabilities and stockholders' investment $ 56,897 $ 55,650 ======== ========
The accompanying notes are an integral part of these financial statements. 3 4 FISCHER IMAGING CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands except per share data) (Unaudited)
Three Months Ended ------------------------ March 31, April 2, 1996 1995 --------- -------- NET REVENUES $ 20,073 $ 16,625 COST OF SALES 11,588 10,695 -------- -------- Gross profit 8,485 5,930 -------- -------- OPERATING EXPENSES: Research and development 1,464 1,665 Selling, marketing and service 4,358 3,299 General and administrative 1,131 1,141 -------- -------- Total operating expenses 6,953 6,105 -------- -------- EARNINGS (LOSS) FROM OPERATIONS 1,532 (175) Interest expense (220) (255) Other income (expense), net 111 (39) -------- -------- EARNINGS (LOSS) BEFORE INCOME TAXES 1,423 (469) Provision for income taxes 350 -- -------- -------- NET EARNINGS (LOSS) $ 1,073 $ (469) ======== ======== NET EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE $ 0.15 $ (0.08) ======== ======== WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 7,211 5,548 ======== ========
The accompanying notes are an integral part of these financial statements. 4 5 FISCHER IMAGING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)
Three Months Ended -------------------- March 31, April 2, 1996 1995 --------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings (loss) $ 1,073 $ (469) ------- ------- Adjustments to reconcile net earnings (loss) to net cash (used in ) provided by operating activities- Depreciation and amortization 572 553 Provision for minority interests (36) 7 Other (7) 60 Net changes in assets and liabilities- Decrease in trade accounts receivable 767 1,325 Increase in inventories (1,955) (778) Increase in other current assets (168) (476) (Increase) decrease in deferred costs and other assets (176) 28 (Decrease) increase in disbursements in transit (363) 163 (Decrease) increase in trade accounts payable (694) 506 Increase in accrued salaries and wages 55 120 Decrease in other current liabilities (575) (644) Increase (decrease) in other noncurrent liabilities 19 (25) ------- ------- Total adjustments (2,561) 839 ------- ------- Net cash (used in) provided by operating activities (1,488) 370 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (407) (136) ------- ------- Net cash used in investing activities (407) (136) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of common stock 370 102 Net borrowings (repayments) under line of credit agreements 1,327 (131) Repayments of long-term debt (219) (247) Decrease in cumulative translation adjustment 29 243 ------- ------- Net cash provided by (used in) financing activities 1,507 (33) ------- ------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (388) 201 CASH AND CASH EQUIVALENTS, beginning of period 968 508 ------- ------- CASH AND CASH EQUIVALENTS, end of period $ 580 $ 709 ======= =======
The accompanying notes are an integral part of these financial statements. 5 6 FISCHER IMAGING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. GENERAL In the opinion of management, the accompanying unaudited consolidated balance sheets and statements of operations and cash flows contain all adjustments, consisting only of normal recurring items, necessary to present fairly the financial position of Fischer Imaging Corporation (the "Company") at March 31, 1996, its results of operations for the three months ended March 31, 1996 and April 2, 1995 and cash flows for the three months ended March 31, 1996 and April 2, 1995. The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and note disclosures required by generally accepted accounting principles. The financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company's latest annual report on Form 10-K for the year ended December 31, 1995. 2. INVENTORIES Inventories include costs of materials, direct labor and manufacturing overhead. Inventories are priced at the lower of cost (using primarily the last-in, first-out ("LIFO") method of valuation) or market. Writedowns for excess or obsolete inventories are charged to expense in the period in which conditions giving rise to the writedowns are first recognized. Inventories consisted of the following components (in thousands):
March 31, December 31, 1996 1995 --------- ------------ Raw materials $ 11,372 $ 12,040 Work in process and finished goods 12,575 9,952 LIFO valuation adjustment (1,202) (1,202) -------- -------- Total Inventories $ 22,745 $ 20,790 ======== ========
3. OTHER CURRENT LIABILITIES Other current liabilities consisted of the following (in thousands):
March 31, December 31, 1996 1995 --------- ------------ Customer deposits and deferred revenue $1,692 $2,132 Accrued warranty and installation costs 1,196 1,140 Other 1,510 1,701 ------ ------ Total other current liabilities $4,398 $4,973 ====== ======
6 7 4. NOTES PAYABLE AND LONG-TERM DEBT Notes payable and long-term debt consisted of the following (in thousands):
March 31, December 31, 1996 1995 --------- ------------ Notes payable to banks under revolving line of credit agreement $ 3,970 $ 2,643 Promissory notes payable 260 386 Non-competition note payable 844 829 Capitalized lease obligations 724 791 Other 72 73 ------- ------- 5,870 4,722 Less Current maturities (5,689) (4,344) ------- ------- Long-term debt $ 181 $ 378 ======= =======
The Company currently has a $15.0 million working capital line of credit secured by accounts receivable, inventory and fixed assets. The line of credit expires on February 1, 1997. Borrowings under the line of credit are subject to borrowing base restrictions which, as of March 31, 1996, amounted to approximately $ 15.0 million. See "Management's Discussion & Analysis - Liquidity and Capital Resources" for an additional discussion of the Company's line of credit. 5. ISSUANCE OF PREFERRED STOCK During the second quarter of 1995, the Company issued 1,333,333 shares of Series D Convertible Preferred Stock for $10 million. The preferred stock is non-voting and not redeemable, bears no stated dividend, has a $7.50 per share preference upon liquidation and is convertible into common stock on a one-for-one basis (subject to customary anti- dilution protection) at the option of the holder. 6. NET EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE Net earnings (loss) per share is computed based on results of operations attributable to common stock and the weighted average number of common and common equivalent shares outstanding during each of the periods. The preferred shares issued during the second quarter of 1995 (see Note 5) are treated as common stock equivalents in the calculation of earnings per share. The Company uses the treasury stock method for determining the effect of outstanding stock options on earnings per share. Earnings per share are calculated by dividing the net earnings by the weighted average of common and common equivalent shares outstanding during each of the periods. 7 8 7. FISCHER MIDWEST ACQUISITION During the fourth quarter of 1995, the Company reached an agreement in principle for the acquisition of the 45% minority interest of Fischer Imaging Midwest, Inc. in exchange for 63,162 shares of the Company's stock. The Company accounted for this transaction, which closed in February 1996, as a purchase, acquiring net assets with a net book value of approximately $331,000 and recording goodwill of approximately $221,000. As part of the acquisition agreement, the purchase price may be adjusted based on subsequent realization of certain working capital assets as of June 1, 1996. The Company placed 10,000 of the shares of Company stock in escrow, pending the outcome of this potential purchase price adjustment. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth the percentage of net revenues represented by certain data included in the Company's statement of operations for the periods indicated.
THREE MONTHS ENDED ---------------------- APRIL 2, MARCH 31, 1995 1996 -------- --------- Net revenues.................................... 100.0% 100.0% Cost of sales................................... 64.3 57.7 ----- ----- Gross profit.......................... 35.7 42.3 ----- ----- Operating expenses: Research and development...................... 10.0 7.3 Selling, marketing and service................ 19.8 21.7 General and administrative.................... 6.9 5.6 ----- ----- Total operating expenses.............. 36.7 34.6 ----- ----- Earnings (loss) from operations................. (1.1) 7.6 Interest expense................................ (1.5) (1.1) Other income, net............................... (0.2) 0.6 ----- ----- Earnings (loss) before income taxes (loss)...... (2.8) 7.1 Provision for income taxes...................... 0.0 1.7 ----- ----- Net earnings (loss)............................. (2.8)% 5.3% ===== =====
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED APRIL 2, 1995 Net Revenues. First quarter 1996 net revenues were $20,073,000, an increase of 20.7% from first quarter 1995 revenues of $16,625,000. Revenue growth for the first quarter of 1996 reflects expanded OEM revenues, principally Tilt-C systems sold to GE Medical Systems, improved sales of mammography and general radiography products, principally through the Company's direct sales channel, and service revenue improvements. In the first quarter of 1996, the Company experienced a decline in revenues from international direct and dealer channels compared to the first quarter of 1995 due primarily to a large system sale that occurred in the first quarter of 1995. The Company does not believe the reduced international revenues in the first quarter of 1996 is indicative of international revenues for the entire year. Gross Profit. For the first quarter of 1996, gross profit expressed as a percentage of net revenues was 42.3%, up from 35.7% for the first quarter of 1995, principally due to reductions in manufacturing costs as well as higher absorption of manufacturing costs associated with increased volumes. Gross margins also benefited from increases in high margin service revenues. Research and Development Expenses. Research and development expenses for the first quarter of 1996 and 1995 were $1,464,000 and $1,665,000 respectively, a $201,000, or 12.1%, decrease. As a percentage of net revenues, research and development expenses decreased to 7.3% for the first quarter of 1996 from 10.0% for the first quarter of 1995. The decrease is primarily attributable to engineering efforts temporarily assigned to product enhancement and other production activities during the first quarter of 1996. The Company anticipates that these engineering efforts will be refocused on research and development activities during the second quarter of 1996. Selling, Marketing and Service Expenses. Selling, marketing and service expenses for the first quarter of 1996 and 1995 were $4,358,000 and $3,299,000, respectively, or 21.7% and 19.8% of net revenues, respectively. The increase in selling, marketing and service expense as a percentage of net revenues reflects increases in sales through the direct sales channel, for which the Company incurred commission expenses, as compared to the comparable three months of 1995. General and Administrative Expenses. General and administrative expenses for the first quarter of 1996 were $1,131,000, or approximately the same as the $1,141,000 for the first quarter of 1995. General and administrative expenses declined as a percentage of net revenues from 6.9% to 5.6%, due primarily to an increased level of net revenues. Interest Expense. Interest expense for the first quarter of 1996 and 1995 was $220,000 and $255,000, respectively. The decrease from 1995 to 1996 is principally due to reductions in the outstanding borrowings under the Company's revolving line of credit and other borrowing arrangements. Net Earnings (Loss). For the first quarter of 1996, the Company reported net earnings of $1,073,000 compared with a net loss of $469,000 for the first quarter of 1995. Earnings for the first quarter of 1996 were favorably impacted by the results of ongoing cost reduction efforts and by increased OEM revenues and sales of mammography products, principally through the direct sales channel, as compared to the first quarter of 1995. 9 10 INCOME TAXES Based upon anticipated earnings for the year, an anticipated reduction in the valuation allowance on deferred tax assets, and a review of other factors giving rise to differences between statutory and effective income tax rates, the Company has estimated its effective tax rate for the year ended December 31, 1996 to be approximately 25.0% and, accordingly, has provided income taxes in the first quarter of 1996 of $350,000, against its first quarter earnings before taxes of $1.4 million. 10 11 LIQUIDITY AND CAPITAL RESOURCES Cash used in operations for the three months ended March 31, 1996 was $1.5 million compared to $0.4 million provided from operations in the same period in 1995. The increase in cash used in operations principally reflects higher investment in inventories and reductions in customer deposits and accounts payable, partially offset by $1.6 million of net earnings before depreciation and amortization, as well as improved accounts receivable collection activities which have reduced accounts receivable balances as of March 31, 1996 as compared to April 2, 1995. The Company plans to fund its planned capital expenditures, working capital needs and other cash requirements for the foreseeable future through its operating cash flows and available lines of credit. The Company may also seek additional debt or equity financing in 1996 to the extent it believes beneficial or necessary. As of March 31, 1996, the Company had $0.6 million in cash and cash equivalents and working capital of $25.2 million. The Company has in place a $15.0 million working capital line of credit, which expires February 1, 1997 and is secured by accounts receivable, inventory and fixed assets. The maximum amount available under this line of credit is subject to borrowing base restrictions which are a function of defined balances in accounts receivable, inventory and fixed assets. As of March 31, 1996, borrowing availability under this line of credit was approximately $11.0 million beyond actual borrowings as of that date of $4.0 million. The Company believes its current level of profitability, available borrowing capacity, and potential equity financing currently being pursued will be sufficient to fund foreseeable working capital and capital expenditure needs. 11 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits 27 Financial Data Schedule (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 to be signed on its behalf by the undersigned thereunto duly authorized. FISCHER IMAGING CORPORATION /S/ James A. Newcomb -------------------- James A. Newcomb Vice President Finance / Chief Financial Officer May 11, 1996 12 13 EXHIBIT INDEX Exhibit No. Description Page - ----------- ----------- ---- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1995 MAR-31-1996 580 0 19,611 421 22,745 45,885 12,396 8,236 56,897 20,717 181 0 13 57 35,538 56,897 20,073 20,073 11,588 11,588 6,953 0 220 1,423 350 1,073 0 0 0 1,073 .15 .15
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