-----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, NRfvXYGraVZ8yIr4wQBwznLn3HSGXTjuPuTdxPNbdSTG04F42sA019QaYUtRC1oS nMbdau9nhTqsY5RJ/bbszA== 0000806086-95-000002.txt : 19950517 0000806086-95-000002.hdr.sgml : 19950516 ACCESSION NUMBER: 0000806086-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCED TECHNOLOGY LABORATORIES INC/ CENTRAL INDEX KEY: 0000806086 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 911353386 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15160 FILM NUMBER: 95537277 BUSINESS ADDRESS: STREET 1: 22100 BOTHELL EVERETT HWY SE STREET 2: PO BOX 3003 CITY: BOTHELL STATE: WA ZIP: 98041-3003 BUSINESS PHONE: 2064877000 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1995 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 0-15160 ADVANCED TECHNOLOGY LABORATORIES, INC. (Exact name of registrant as specified in its charter) Delaware 91-1353386 (State of incorporation) (IRS Employer Identification No.) 22100 Bothell Everett Highway Post Office Box 3003 98041-3003 Bothell, Washington (Zip Code) (Address of principal executive offices) (206) 487-7000 (Telephone number) Common stock, $0.01 par value; 13,355,797 shares outstanding as of April 28, 1995 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 Page 1 ADVANCED TECHNOLOGY LABORATORIES, INC. TABLE OF CONTENTS PART I Financial Information: Page No. Item 1. Financial Statements Condensed Consolidated Balance Sheets - March 31, 1995 (unaudited) and December 31, 1994 3 Condensed Consolidated Statements of Operations (Unaudited) -Three Months Ended March 31, 1995 and April 1, 1994 4 Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months ended March 31, 1995 and April 1, 1994 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II Other Information: Item 1. Legal Proceedings 12 Item 2. Changes in Securities 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security Holders. 12 Item 5. Other Items. 12 Item 6. Exhibits and Reports on Form 8-K . 12 Page 2 PART I Financial Information Item 1. Financial Statements ADVANCED TECHNOLOGY LABORATORIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) 3/31/95 12/31/94 (unaudited) ASSETS CURRENT ASSETS Cash and short-term investments $ 22,900 $ 22,901 Receivables 117,132 115,871 Inventories 98,357 96,065 Prepaid expenses 2,989 2,261 Deferred income taxes 8,577 8,577 ------- ------- 249,955 245,675 MARKETABLE DEBT SECURITY -- 4,988 PROPERTY, PLANT AND EQUIPMENT, NET 70,153 70,338 OTHER ASSETS, NET 10,064 10,520 -------- -------- $330,172 $331,521 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term borrowings $ 1,443 $ 1,842 Current portion of long-term debt 1,976 1,976 Accounts payable and accrued expenses 67,522 75,704 Deferred revenue 40,169 36,309 Taxes on income 2,821 2,354 ------- ------- 113,931 118,185 LONG-TERM DEBT 17,610 17,688 DEFERRED INCOME TAXES 4,472 4,472 SHAREHOLDERS' EQUITY 194,159 191,176 -------- -------- $330,172 $331,521 ======== ======== Common shares outstanding 13,355 13,330 See accompanying notes to condensed consolidated financial statements. Page 3 ADVANCED TECHNOLOGY LABORATORIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months ended (In thousands except per share data) 3/31/95 4/1/94 REVENUES Product sales $74,200 $70,686 Service 20,162 18,670 ------ ------ 94,362 89,356 COST OF SALES Cost of product sales 38,426 38,866 Cost of service 12,525 11,650 ------ ------ 50,951 50,516 GROSS PROFIT 43,411 38,840 OPERATING EXPENSES Selling, general and administrative 28,607 25,256 Research and development 12,612 12,625 Restructuring charge 2,500 -- Other (income) expense, net (557) 430 ------ ------ 43,162 38,311 ------ ------ INCOME FROM OPERATIONS 249 529 Investment income 363 623 Interest expense (538) (431) ------ ------ INCOME BEFORE INCOME TAXES 74 721 Income tax expense 348 420 ------ ------ NET INCOME (LOSS) ($ 274) $ 301 ======== ======== Net income (loss) per share ($0.02) $0.02 ======= ====== Weighted average common shares and equivalents outstanding 13,340 13,182 See accompanying notes to condensed consolidated financial statements. Page 4 ADVANCED TECHNOLOGY LABORATORIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three months ended (In thousands) 3/31/95 4/1/94 OPERATING ACTIVITIES Net income (loss) $ (274) $ 301 Non-cash charges to income (loss): Depreciation and amortization 4,126 3,641 Gain on sale of property -- (105) Changes in: Receivables 673 (1,198) Inventories (761) 2,591 Accounts payable and accrued expenses (9,067) (8,220) Deferred revenue 3,766 371 Taxes on income 491 (270) Other (716) (93) ------- ------- Cash used by operations (1,762) (2,982) INVESTING ACTIVITIES Increase in short-term investments -- (3,953) Investment in property, plant and equipment (3,063) (1,894) Proceeds from sale of property -- 3,224 Other -- (306) ------ ------- Cash used by investing activities (3,063) (2,929) FINANCING ACTIVITIES Increase (decrease) in short-term borrowings (399) 794 Repayment of long-term debt (78) (117) Repurchase of common shares -- (369) Exercise of stock options 360 52 ------- ------- Cash provided (used) by financing activities (117) 360 Effect of exchange rate changes (47) (247) ------- ------- Decrease in cash and cash equivalents (4,989) (5,798) Cash and cash equivalents, beginning of period 22,901 52,713 ------- ------- Cash and cash equivalents, end of period $17,912 $46,915 ======== ======== See accompanying notes to condensed consolidated financial statements. Page 5 ADVANCED TECHNOLOGY LABORATORIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) 1.Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of ATL (Advanced Technology Laboratories, Inc.) and its wholly owned subsidiaries, collectively referred to as the "Company." The Company develops, manufactures, markets and services diagnostic medical ultrasound imaging systems worldwide. These systems are used in radiology, cardiology, obstetrics and gynecology, vascular, musculoskeletal and intraoperative applications. The accompanying condensed consolidated financial statements and related notes have been prepared pursuant to the Securities and Exchange Commission rules and regulations for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The accompanying condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1994 Form 10-K Annual Report to Shareholders. The information furnished reflects, in the opinion of the management, all adjustments necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. 2. Acquisition of Interspec, Inc. On May 17, 1994, the Company completed its merger with Interspec, Inc. ("Interspec"). Interspec develops, manufactures, markets, and services diagnostic medical ultrasound imaging systems and related supplies and accessories for physicians' offices, clinics and hospitals. To effect the merger, the Company issued approximately 2.6 million shares of common stock for all of the outstanding common stock of Interspec, based on an exchange ratio of 0.413 share of the Company's stock for each share ofInterspec stock. The merger has been accounted for as a pooling of interests business combination; therefore, the Company's financial statements and information as reported prior to the merger have been restated to include Interspec as if the companies had been combined for all periods presented. 3. Restructuring Charge On February 15, 1995, the Company announced a new corporate structure that will consolidate the Interspec operations located in Ambler, Pennslyvania with the Company's Page 6 ADVANCED TECHNOLOGY LABORATORIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) 3. Restructuring Charge (continued) headquarters operations in Bothell, Washington. The Company reported a restructuring charge of $2,500 in the first quarter of 1995 related to the consolidation of the Ambler operations. The restructuring charge provides for severance, outplacement, and employee retention incentives for employees not relocating to Bothell. The Company estimates the consolidation of the Ambler operations will result in a net reduction in full-time positions of approximately 4% of the Company's workforce. The Company also expects to incur approximately $2,500 of expenses during the remainder of 1995 for employee relocation and asset moving costs. These costs will be expensed as they are incurred. The Company expects to have manufacturing and administrative functions transferred to Bothell by the third quarter of 1995. Some research and development functions will continue in Ambler until late 1995 or early 1996. The Company currently intends to hold the land and building used for the Ambler operations. 4.Cash, Short-Term Investments, and Marketable Debt Security The Company considers short-term investments with maturity dates of three months or less at the date of purchase to be cash equivalents for purposes of the statement of cash flows. The Company holds a marketable debt security issued by the U.S. government which matures in February 1996. The Company intends to hold the investment until maturity and it is reported at cost. Beginning in February 1995, the marketable debt security was classified as a short-term investment. 3/31/95 12/31/94 -------- -------- Cash and cash equivalents $17,912 $22,901 Short-term investment 4,988 -- -------- -------- 22,900 22,901 Long-term marketable debt security -- 4,988 -------- -------- $22,900 $27,889 ======== ======== 5.Inventories 3/31/95 12/31/94 -------- -------- Materials and work in process $32,167 $33,477 Finished products 16,167 15,561 Demonstration 30,054 29,190 Customer service 19,969 17,837 ------- -------- $98,357 $96,065 ======= ======== Page 7 ADVANCED TECHNOLOGY LABORATORIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) 6.Share Repurchase Program In February 1993, the Board of Directors authorized a plan to repurchase up to 1,000,000 shares of the Company's common stock in the open market subject to certain criteria to be used in servicing the Company's employee benefit plans. In the first quarter of 1994, the Company repurchased 22,500 shares totaling $369 under this program. The Company has repurchased a total of 816,500 shares under this program. 7.Per Share Data Per share data is based on the weighted average number of common shares and dilutive common share equivalents outstanding during each period as presented in the condensed consolidated Statements of Operations. Dilutive common share equivalents are calculated under the treasury stock method and consist of unexercised employee stock options. Page 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS (In millions) 3/31/95 4/1/94 % Change ------- ------- -------- Revenues $94.4 $89.4 5.6% Gross Profit $43.4 $38.8 11.8% Operating Expenses; excluding restructuring charge and benefit for state tax audit $42.0 $38.3 9.5% Restructuring Charge $2.5 - Benefit related to state tax audit ($1.3) - Net Income (Loss) ($0.3) $0.3 Net Income (Loss) per Share ($0.02) $0.02 The Company reported a net loss of $0.3 million or $0.02 per share in the first quarter of 1995, compared with net income of $0.3 million or $0.02 per share in the first quarter of 1994. The 1995 net loss included a $2.5 million restructuring charge related to the consolidation of the Company's operations in Ambler, Pennsylvania to the Company's headquarters in Bothell, Washington. The net loss also includes an operating expense benefit of $1.3 million resulting from a favorable Washington State tax audit. The Company's revenues increased 5.6% to $94.4 million in the first quarter of 1995 compared with $89.4 million in the first quarter of 1994. Product sales increased by $3.5 million and service revenues were $1.5 million higher than the prior year. Favorable changes in product mix from older to newer product lines, including the HDI(TM) 3000, the Company's high performance, premium priced system which was introduced in October 1994, and the mid- ranged Apogee(R) products contributed to the growth in revenues. In addition, the Company experienced changes in product configurations which benefited product sales. The increase in revenue was due to growth in international markets, partially the result of the weakening of the U.S. dollar compared with early 1994. Revenues in the U.S. market decreased slightly, as the U.S. medical equipment market continued to reflect constrained and competitive market conditions. Gross profit was $43.4 million in the first quarter of 1995, compared with $38.8 million in the first quarter of 1994. As a percent of revenues, gross margin increased to 46.0%, compared with 43.5% in the prior year. Gross margins have improved sequentially each quarter since the first quarter of 1994. The improvement in gross profit primarily reflects the impact of the increased product sales of the Company's higher margin product lines in the HDI and Apogee product families. Improved manufacturing efficiencies and costs also Page 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) contributed to the increase in product gross margins from 45.0% in the first quarter of 1994 to 48.2% in the first quarter of 1995. Gross margin on service revenues increased slightly over the first quarter of 1994 from 37.6% to 37.9%. Excluding the restructuring charge of $2.5 million and the $1.3 million benefit related to a favorable Washington State tax audit, operating expenses in the first quarter of 1995 increased 9.5% to $42.0 million from $38.3 million in the first quarter in 1994. Including the restructuring charge and the operating expense benefit related to the state tax audit, operating expenses were $43.2 million. Selling, general and administrative expenses increased 13.3% to $28.6 million compared with $25.3 million in the prior year, primarily due to the continued expansion of the Company's international sales activities and corporate marketing functions. Research and development expenses of $12.6 million were comparable to the 1994 first quarter levels. As a percent of revenues, research and development expenses were 13.4%, down from 14.1% in the prior year. Research and development expenses decreased from the fourth quarter of 1994, following the fourth quarter 1994 introduction of the HDI 3000. In the first quarter of 1995, the Company reported a $1.3 million benefit in operating expenses, primarily in other (income) expense, net, related to the conclusion of a Washington State Business & Occupation ("B&O tax") tax audit. B&O tax is a tax imposed on gross receipts for products manufactured in the State of Washington and is not considered an income tax. On February 15, 1995, the Company announced a new corporate structure that will consolidate the Interspec operations located in Ambler, Pennslyvania with the Company's headquarters operations in Bothell, Washington. The Company reported a restructuring charge of $2.5 million in the first quarter of 1995 related to the consolidation of the Ambler operations. The restructuring charge provides for severance, outplacement, and employee retention incentives for employees not relocating to Bothell. The Company estimates the consolidation of the Ambler operations will result in a net reduction in full-time positions of approximately 4% of the Company's workforce. The Company also expects to incur approximately $2.5 million of expenses during the remainder of 1995 for employee relocation and asset moving costs. These costs will be expensed as they are incurred. The Company expects to have manufacturing and administrative functions transferred to Bothell by the fourth quarter of 1995. Some research and development functions will continue in Ambler until late 1995 or early 1996. The Company currently intends to hold the land and building used for the Ambler operations. The Company incurred net interest expense during the quarter of $0.2 million, compared with net interest income of $0.2 million in the first quarter of 1995. Net interest expense in the first quarter of 1995 includes interest expense on the $11.5 million in long-term debt incurred in December 1994 to finance the purchase of land and a building adjacent to its corporate headquarters. Page 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Income tax expense for the first quarter of 1995 includes primarily foreign and state income tax expense. U.S. federal income tax benefits were not recognized under the provisions of Statement of Financial Account Standards No.109, "Accounting for Income Taxes." Excluding the $2.5 million restructuring charge and the $1.3 million operating expense benefit related to the Washington State tax audit, the Company would have reported net income of $0.9 million or $0.07 per share in the first quarter of 1995. CAPITAL RESOURCES AND LIQUIDITY (In millions) 3/31/95 12/31/94 Cash and investments Cash and short-term investments $22.9 $22.9 Long-term marketable debt security -- 5.0 ------- -------- Total $22.9 $27.9 Total Assets $330.2 $331.5 Long-term Debt $17.6 $17.7 Shareholders' Equity $194.2 $191.2 Cash and investments totalled $22.9 million at March 31, 1995 compared with $27.9 million at December 31, 1994. The marketable debt security which was classified as a non-current asset at December 31, 1994 matures in February 1996 and is now classified with Cash and short-term investments. As shown in the Statement of Cash Flows, the Company used $1.8 million for operating activities during the first quarter of 1995. Accounts payable and accrued expenses decreased $9.1 million during the quarter, reflecting the seasonally high activity levels in the fourth quarter of 1994. Depreciation and amortization was $4.1 million during the quarter. The Company invested $3.1 million in normal additions to property, plant and equipment during the first quarter of 1995. In May 1995, subsequent to the end of the first quarter, the Company retired $1.7 million of its 11% subordinated convertible debentures. The debentures were retired at the face value with no gain or loss on the transaction. In addition to its cash balances, the Company has available domestic unsecured credit facilities of $25 million, including a committed line of credit of $15 million. Barring any unforeseen circumstances or events, management expects existing cash, available Page 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) credit lines and funds from operations should be sufficient to meet the Company's operating requirements for 1995. PART II Other Information Item 1. Legal Proceedings - Not applicable. Item 2. Changes in Securities - Not applicable. Item 3. Defaults Upon Senior Securities - Not applicable. Item 4. Submission of Matters to a Vote of Security Holders - Not applicable. Item 5. Other Items On May 10, 1995 the shareholders of the Company approved the Articles of Incorporation and Plan and Agreement of Merger (the "Plan") between the Company and ATLI Washington Corporation (the "Surviving Corporation"), a wholly owned subsidiary of the Company, for the purpose of changing the corporate domicile from Delaware to Washington. Pursuant to the Plan, dated May 10, 1995, the Company reincorporated in the State of Washington on May 11, 1995, by way of a Merger with the Surviving Corporation which then changed its name to Advanced Technology Laboratories, Inc. Each outstanding certificate representing a share or shares of the Company Common Stock continue to represent the same number of shares of the Surviving Corporation and it will not be necessary for the shareholders of the Company to exchange their existing certificates for shares of the Surviving Corporation, Advanced Technology Laboratories, Inc. As the successor registrant, the Surviving Corporation assumes the Section 13 reporting obligations of the Company, under the Securities Act of 1934. Item 6. Exhibits and Reports on Form 8-K - Not applicable. Page 12 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. ADVANCED TECHNOLOGY LABORATORIES, INC. (Registrant) DATE: May 11, 1995 BY: /s/ Harvey N. Gillis ------------------- Harvey N. Gillis Senior Vice President Finance and Administration and Chief Financial Officer Page 13 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1995 AND THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1995 JAN-1-1995 MAR-31-1995 17,912 4,988 117,132 0 98,357 249,955 70,153 0 330,172 113,931 17,610 0 0 0 0 330,172 74,200 94,362 38,426 50,951 43,162 0 175 74 348 (274) 0 0 0 (274) (0.02) (0.02)
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