-----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, VFliYM3uw5MQzAdrRqyXPOayr2jg6zRPE6wIAxImeTpzAV/KeK2JjjuYZG+qT1B+ Q6ix55kX1uBKacUZo/w8GA== 0000806086-97-000014.txt : 19970808 0000806086-97-000014.hdr.sgml : 19970808 ACCESSION NUMBER: 0000806086-97-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970627 FILED AS OF DATE: 19970807 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: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15160 FILM NUMBER: 97652669 BUSINESS ADDRESS: STREET 1: 22100 BOTHELL EVERETT HWY SE STREET 2: PO BOX 3003 CITY: BOTHELL STATE: WA ZIP: 98041-3003 BUSINESS PHONE: 2064877000 FORMER COMPANY: FORMER CONFORMED NAME: ADVANCED TECHNOLOGY LABORATORIES INC/ DATE OF NAME CHANGE: 19930414 10-Q 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 Quarterly Period Ended June 27, 1997 [ ] 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 ATL ULTRASOUND, INC. (Exact name of registrant as specified in its charter) Washington 91-1353386 (State of incorporation) (IRS Employee Identification No.) 22100 Bothell-Everett Highway Post Office Box 3003 Bothell, Washington 98041-3003 (Address of principal executive offices) (Zip Code) (425) 487-7000 (Telephone number) Common stock, $0.01 par value; 14,204,455 shares outstanding as of July 25, 1997 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 [ ] ATL ULTRASOUND, INC. TABLE OF CONTENTS PART I Financial Information Page No. - ------ --------------------- -------- Item 1. Financial Statements Condensed Consolidated Balance Sheets - June 27, 1997 (Unaudited) and December 31, 1996............3 Condensed Consolidated Statements of Operations (Unaudited) - Three Months and Six Months Ended June 27, 1997 and June 28, 1996............................4 Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 27, 1997 and June 28, 1996............................................5 Notes to Condensed Consolidated Financial Statements......6 Item 2. Management's Discussion and Analysis of Financial - ------- ------------------------------------------------- Condition and Results of Operations........................8 ----------------------------------- PART II Other Information - ------- ----------------- Item 1. Legal Proceedings...........................................14 Item 2. Changes in Securities.......................................14 Item 3. Defaults Upon Senior Securities.............................14 Item 4. Submission of Matters to a Vote of Security Holders.........14 Item 5. Other Information...........................................15 Item 6. Exhibits and Reports on Form 8-K........................... 15 2 PART I Financial Information - ------ --------------------- Item 1. Financial Statements -------------------- ATL ULTRASOUND, INC. CONDENSED CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------- (In thousands) 6/27/97 12/31/96 - -------------------------------------------------------------------------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 81,528 $ 63,262 Receivables, net 106,357 126,924 Inventories 89,493 89,911 Prepaid expenses 4,111 2,777 Deferred income taxes, net 18,283 18,246 -------------------------------- Total current assets 299,772 301,120 PROPERTY, PLANT AND EQUIPMENT, NET 71,358 72,400 OTHER ASSETS, NET 5,703 6,681 -------------------------------- $ 376,833 $ 380,201 ================================ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term borrowings $ 1,473 $ 507 Current portion of long-term debt 525 584 Accounts payable and accrued expenses 68,206 69,855 Accrual for litigation claim 36,635 35,636 Deferred revenue 14,715 19,351 Taxes on income 7,029 8,893 -------------------------------- Total current liabilities 128,583 134,826 LONG-TERM DEBT 12,532 12,936 OTHER LONG-TERM LIABILITIES 23,036 21,189 SHAREHOLDERS' EQUITY 212,682 211,250 ================================ $ 376,833 $ 380,201 - ------------------------------------------------------------------------- Common shares outstanding 14,215 14,023 - ------------------------------------------------------------------------- See accompanying notes to condensed consolidated financial statements. 3 ATL ULTRASOUND, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months Six months ended ended - ---------------------------------------------------------------------------- (In thousands, except per 6/27/97 6/28/96 6/27/97 6/28/96 share data) - ---------------------------------------------------------------------------- REVENUES Product sales $ 78,148 $76,450 $ 155,862 $ 149,927 Service 22,660 22,143 45,064 43,465 ---------------------------------------- 100,808 98,593 200,926 193,392 ---------------------------------------- COST OF SALES Cost of product sales 37,657 38,072 77,473 75,170 Cost of service 13,725 12,768 26,247 25,372 ---------------------------------------- 51,382 50,840 103,720 100,542 ---------------------------------------- GROSS PROFIT 49,426 47,753 97,206 92,850 OPERATING EXPENSES, NET Selling, general and administrative 31,140 30,490 61,346 59,517 Research and development 15,216 12,898 29,980 25,123 Provision for litigation claim - 29,557 - 29,557 Other expense, net 60 303 416 657 --------------------------------------- 46,416 73,248 91,742 114,854 --------------------------------------- INCOME (LOSS) FROM OPERATIONS 3,010 (25,495) 5,464 (22,004) Interest income 1,083 864 1,937 1,532 Interest expense (908) (579) (1,650) (1,026) --------------------------------------- INCOME (LOSS) BEFORE INCOME TAXES 3,185 (25,210) 5,751 (21,498) Income tax expense (benefit) 636 (6,031) 1,150 (5,289) --------------------------------------- NET INCOME (LOSS) $ 2,549 $(19,179) $ 4,601 $(16,209) ======================================= Net income (loss) per share $ .17 $(1.37) $ .30 $(1.17) Weighted average common shares and equivalents outstanding 15,162 14,026 15,179 13,885 - ---------------------------------------------------------------------------- See accompanying notes to condensed consolidated financial statements. 4 ATL ULTRASOUND, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months ended - ---------------------------------------------------------------------------- (In thousands) 6/27/97 6/28/96 - ---------------------------------------------------------------------------- OPERATING ACTIVITIES Net income (loss) $ 4,601 $(16,209) Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 8,040 7,284 Deferred income tax benefit (37) (7,014) Changes in operating assets and liabilities, excluding the effects of the sale of image management business: Receivables, net 16,474 18,873 Inventories (4,506) (1,243) Accounts payable and accrued expenses 679 (8,485) Accrual for litigation claim 999 29,632 Deferred revenue (2,691) (947) Taxes on income (1,774) (1,130) Other (914) (36) ---------------------- Cash provided by operations 20,871 20,725 INVESTING ACTIVITIES Investment in property, plant and equipment (7,096) (6,098) Proceeds from sale of image management business 4,500 - Proceeds from maturing short-term investments - 4,988 ---------------------- Cash used by investing activities (2,596) (1,110) FINANCING ACTIVITIES Increase (decrease) in short-term borrowings 965 (236) Repayment of long-term debt (463) (377) Repurchase of common shares (4,393) - Exercise of stock options 3,983 6,950 ---------------------- Cash provided by financing activities 92 6,337 Effect of exchange rate changes (101) (45) ---------------------- Increase in cash and cash equivalents 18,266 25,907 Cash and cash equivalents, beginning of period 63,262 30,666 ---------------------- Cash and cash equivalents, end of period $ 81,528 $ 56,573 ====================== - ---------------------------------------------------------------------------- See accompanying notes to condensed consolidated financial statements. 5 ATL ULTRASOUND, 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 Ultrasound, Inc. (ATL), which includes its subsidiaries and is referred to as the "Company." The Company develops, manufactures, markets and services diagnostic medical ultrasound systems worldwide. The Company sells its products to hospitals, clinics and physicians for use in radiology, cardiology, women's health care, vascular, musculoskeletal and intraoperative applications. On July 2, 1997, ATL announced it had completed its name change to ATL Ultrasound, Inc. to better reflect the Company's dedicated focus on diagnostic ultrasound. The Company was formerly known as Advanced Technology Laboratories, Inc. ATL will continue to trade under the NASDAQ symbol ATLI. The action by the Company is a corporate name change only. 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 incorporated by reference in the Company's 1996 Form 10-K. The information furnished reflects, in the opinion of 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. Cash and Cash Equivalents 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. 3. Inventories 6/27/97 12/31/96 --------- ---------- Materials and work in process $32,747 $30,132 Finished products 16,845 20,481 Demonstrator equipment 20,918 19,643 Customer service 18,983 19,655 --------- ---------- $89,493 $89,911 ========= ========== 6 ATL ULTRASOUND, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) 4.Accrual for Litigation Claim The Company accrued a provision for a patent litigation claim of $29,557 in the second quarter of 1996 in addition to $5,000 previously accrued in 1994. The underlying lawsuit was filed by SRI International (SRI) on July 15, 1991 in the U.S. District Court for the Northern District of California and concerns a patent on an electrical circuit allegedly used in three of ATL's discontinued products. The patent expired in 1994 and the circuit in dispute has never been used in any of ATL's current product lines. The court granted a motion by SRI requesting partial summary judgment on liability in November 1992 and the U.S. Court of Appeals for the Federal Circuit affirmed the summary judgment in December 1994. In May 1996, the District Court awarded damages to SRI of $27,948 plus interest and legal fees. The Company has appealed the amount of damages awarded and has posted a supersedeas bond secured by a letter of credit collateralized by cash and cash equivalents. The Company will continue accruing interest during the appeal process. 5. 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. Primary and fully diluted earnings per share are substantially equal for all periods presented. 6. Sale of Image Management Business Effective May 12, 1997, the Company sold its image management business, Nova MicroSonics, to Eastman Kodak. The sale did not result in a material financial impact to the consolidated operating results of the Company during the quarter. 7. Reclassifications Certain amounts reported in previous years have been reclassified to conform to the 1997 presentation. 7 Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations ----------------------------------- RESULTS OF OPERATIONS --------------------- Three months ended Six months ended - ----------------------------------------------------------------------------- (In millions except per share data) 6/27/97 6/28/96 % Change 6/27/97 6/28/96 % Change - ----------------------------------------------------------------------------- Revenues $100.8 $98.6 2.2% $200.9 $193.4 3.9% Gross Profit $49.4 $47.8 3.4% $97.2 $92.9 4.7% Operating Expenses; excluding non- recurring items $46.4 $43.7 6.2% $91.7 $85.3 7.6% Provision for litigation claim - $29.6 - $29.6 Net Income (Loss) $2.5 $(19.2) $4.6 $(16.2) Net Income (Loss) per $0.17 $(1.37) $0.30 $(1.17) - ----------------------------------------------------------------------------- Net Income, excluding non-recurring items $2.5 $3.5 $4.6 $6.4 Net Income per Share, excluding non- recurring items $0.17 $0.23 $0.30 $0.43 - ----------------------------------------------------------------------------- The Company reported net income of $2.5 million or $0.17 per share in the second quarter of 1997 compared with a net loss of $19.2 million or $1.37 per share in the second quarter of 1996. Excluding non-recurring items, net income would have been $3.5 million or $0.23 per share for the second quarter of 1996. For the first six months, the Company reported net income of $4.6 million or $0.30 per share in 1997 compared with a net loss of $16.2 million or $1.17 per share in 1996. Excluding non- recurring items, net income for the first six months would have been $6.4 million or $0.43 per share for 1996. There were no non- recurring items during the first six months of 1997. REVENUES AND GROSS PROFIT - ------------------------- The Company's worldwide revenues increased 2.2% to $100.8 million in the second quarter of 1997 compared with $98.6 million in the second quarter of 1996. The majority of this growth was attributable to product sales which increased by $1.7 million or 2.2% in the second quarter of 1997 over the same period in the prior year. The increase in product revenues resulted primarily from the continued success of the Company's HDI(R) 3000 product family in both the U.S. and international markets as well as the introduction of the HDI 1000 system in the second quarter of 1997. The worldwide installed base of HDI 3000 systems now exceeds 3,500 systems. 8 Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations (Continued) ----------------------------------- The two factors described above helped offset the transition of older products (Apogee CX/CX200 and UM9 HDI) from the product line as well as the loss of revenues caused by the sale of the Company's image management business to Eastman Kodak. Service revenues increased $0.5 million or 2.3% compared with the second quarter of 1996, primarily due to growth in international markets. International service revenues continue to increase as a result of growth in the worldwide installed base of ATL's products. For the first six months of 1997, worldwide revenues increased 3.9% to $200.9 million compared with $193.4 million in the prior year for the reasons noted above. Gross profit was $49.4 million in the second quarter of 1997, an increase of $1.6 million compared with gross profit of $47.8 million in the same quarter of the prior year. Total gross margin for the second quarter of 1997 increased to 49.0% compared with 48.4% in the prior year. Expanding gross margins reflect continued efficiency gains resulting from product cost reductions in the HDI product family as well as a favorable shift in product mix to the Company's higher margin product lines. For the first six months of 1997, gross profit was $97.2 million compared to $92.9 million for the same period of 1996. Year-to-date gross margin increased to 48.4% from 48.0% in 1996 for the reasons noted above. In October 1996, the Company announced a technology transfer agreement with Shantou Institute of Ultrasonic Instruments (SIUI), a major manufacturer of ultrasound systems in the People's Republic of China (PRC). In accordance with the agreement, the Company will transfer the Apogee 800PLUS ultrasound system manufacturing technology and exclusive distribution rights of the ultrasound system in the PRC to SIUI. The technology transfer began in fourth quarter 1996 and will continue throughout 1997. The Company will continue to manufacture and distribute the Apogee 800PLUS system for worldwide distribution outside of China. OPERATING EXPENSES, NET - ----------------------- Operating expenses, excluding non-recurring items, increased to $46.4 million in the second quarter of 1997 from $43.7 million in the same period of 1996. Selling, general and administrative expenses were $31.1 million, an increase of 2.1% over the second quarter of 1996, primarily due to increased personnel and selling expenses as well as some additional HDI 1000 product launch costs. Research and development expenses increased 18.0% to $15.2 million in the second quarter of 1997 compared with $12.9 million in the second quarter of 1996. The increase in R&D expenses is primarily a result of new product development programs, including costs related to the premium performance HDI 5000 introduced on July 14, 1997, as well as the HDI 1000 and handheld systems. For the first six months of 1997, operating expenses, excluding non-recurring items, increased to $91.7 million or 45.7% of total revenues compared with operating expenses of $85.3 million or 44.1% of total revenues in 1996. 9 Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations (Continued) ----------------------------------- ACCRUAL FOR LITIGATION CLAIM - ---------------------------- ATL accrued a non-recurring provision for a patent litigation claim of $29.6 million in the second quarter of 1996 in addition to $5.0 million which had been accrued in 1994. The underlying lawsuit was filed by SRI International (SRI) on July 15, 1991 in the U.S. District Court for the Northern District of California and concerns a patent on an electrical circuit allegedly used in three of ATL's discontinued products. The patent expired in 1994 and the circuit in dispute has never been used in any of ATL's current product lines. The court granted a motion by SRI requesting partial summary judgment in November 1992 and the U.S. Court of Appeals for the Federal Circuit affirmed the summary judgment in December 1994. In May 1996, the District Court awarded damages to SRI of $27.9 million plus interest and legal fees. The Company has appealed the amount of damages awarded and posted a supersedeas bond in June, 1996 secured by a letter of credit collateralized by cash and cash equivalents. INTEREST INCOME AND EXPENSE - --------------------------- The Company earned net interest income of $0.2 million during the second quarter of 1997 compared with net interest income of $0.3 million during the same period in 1996. Net interest income includes interest income earned on cash balances available for investment and extended term receivables, offset by post-judgment interest expense accrued on the damages awarded for the patent litigation claim discussed above as well as interest expense on long-term debt. Interest expense will continue to be accrued on the patent litigation claim until the SRI appeal is completed and the final claim is paid. TAXES AND NET INCOME (LOSS) - --------------------------- For the second quarter of 1997, the Company reported income tax expense of $0.6 million, which represents a 20% effective tax rate for U.S. federal, state and foreign income. For the second quarter of 1996, the Company reported an income tax benefit of $6.0 million, which represents the net of a 20% effective tax rate for U.S. federal, state and foreign income taxes and a $6.9 million deferred income tax benefit related to the previously discussed accrual for litigation claim. 10 Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations (Continued) ----------------------------------- CAPITAL RESOURCES AND LIQUIDITY ------------------------------- ---------------------------------------------------- (In millions) 6/27/97 12/31/96 ---------------------------------------------------- Cash and cash equivalents $81.5 $ 63.3 Total Assets $376.8 $380.2 Long-term Debt $12.5 $ 12.9 Shareholders' Equity $212.7 $211.3 ---------------------------------------------------- Cash and cash equivalents totaled $81.5 million at June 27, 1997 compared with $63.3 million at December 31, 1996 and $75.2 million at the end of the first quarter of 1997. As shown in the Condensed Consolidated Statement of Cash Flows, during the first six months of 1997, the Company generated $20.9 million from operating activities. At June 27, 1997, receivables, net, decreased $16.5 million from December 31, 1996 reflecting the Company's committment to developing strong asset management programs as well as seasonally high activity levels in the fourth quarter of 1996. The exercise of employee stock options, included on the Condensed Consolidated Statement of Cash Flows as a financing activity, generated $4.0 million for the Company during the first six months of 1997. During the quarter ended June 27, 1997, the Company repurchased 95,000 shares of its own stock bringing total shares repurchased to 436,800 as of the first half of 1997. No further repurchases will be made under this May 6, 1996 authorization. On May 7, 1997, the Company's Board of Directors authorized a new repurchase program to acquire up to 1,000,000 shares of common stock. No new shares were repurchased under this new program during the second quarter of 1997. The Company has an accrued liability of $36.6 million as of June 27, 1997 for the patent litigation claim discussed previously. The supersedeas bond posted by the Company during the appeal process is secured by a letter of credit collateralized by cash and cash equivalents. The Company will utilize its cash and cash equivalents to pay the damages from the patent litigation claim after the appeal process is completed. In addition to its cash balances, the Company has available domestic 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 credit lines and funds from operations to be sufficient to meet the Company's operating requirements for 1997 (see Forward Looking Information). 11 Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations (Continued) ----------------------------------- The Company is scheduled to begin groundbreaking for a new 101,000 square foot building on its corporate campus in August 1997. The building's projected completion date is slated for June 1998 and has an estimated cost of $15-16 million. Initial funding for the project will come from working capital with a transition to long-term debt as the building reaches completion in 1998. FORWARD LOOKING INFORMATION - --------------------------- As an update to the forward looking information provided in the Company's 1996 Annual Report to Shareholders and the first quarter of 1997 Form 10-Q, the Company provides the following information. As a result of the recent introduction of the HDI 5000 in July 1997, the Company believes that third quarter revenues may fall within the $90-95 million range as customers pause to review their purchasing decisions. In addition, operating expenses are expected to rise in the third quarter over the second quarter of 1997 primarily due to new product introductions. The Company therefore expects to report a loss in the third quarter of approximately $0.10 to $0.20 per share. While the third quarter is projected to be transitional as customers make purchase decisions in response to ATL's new products, the Company believes it will continue to make progress towards its goal of achieving a return on equity of 15.0% by the end of 1998. The above statements and other statements herein identified by cross reference to this section are forward looking statements that involve a number of risks and uncertainties and should be read in conjunction with the Company's 1996 Annual Report to Shareholders, which is incorporated by reference to the Company's 1996 Form 10-K, the Company's news releases, the Company's Report on Form 8-K filed July 9, 1997 and the Company's Quarterly Report on Form 10-Q for the Quarterly Period Ended March 28, 1997. There are certain important factors that could cause actual results to differ materially from those anticipated by the Company, which include the following factors. Several of the Company's competitors announced new ultrasound products in 1996 and may announce additional new ultrasound products in 1997, which may cause potential customers to alter or defer their buying plans and intentions. Increased competition in the ultrasound market may adversely impact the Company's sales order volume or timing or selling prices or all of these factors. Unanticipated events, such as delays in the Company's product development and cost reduction programs, the unavailability of vendor supplied components critical to the Company's products, a stronger U.S. dollar, delays or disruptions in obtaining regulatory approvals or from other regulatory actions, delays in contractual payments due the Company, or changes in the Company's strategy resulting from competitive pressures, reallocation of research and development or other priorities and resources, or reallocation of resources for unanticipated opportunities also could affect operating results. 12 Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations (Continued) ----------------------------------- IMPACT OF NEW ACCOUNTING STANDARD - --------------------------------- In February 1997, the Financial Accounting Standards Board issued FAS 128, Earnings Per Share, which establishes standards for the computation, presentation, and disclosure of earnings per share (EPS). FAS 128 is designed to improve the EPS information provided in financial statements by simplifying the existing computational guidelines, revising the disclosure requirements and increasing the comparability of EPS data. FAS 128 is effective for financial statements for periods ending after December 15, 1997. The adoption of FAS 128 is not expected to have a material effect on the Company's consolidated financial statements. 13 PART II Other Information - ------- ----------------- Item 1. Legal Proceedings - The Company is awaiting the decision ----------------- of the Federal Circuit Court in its appeal of the damages awarded to SRI on a patent litigation claim. See Part I - Item 2 above, ACCRUAL FOR LITIGATION CLAIM. The Company's appeal was briefed and argued to a three judge panel of the Federal Circuit Court in January, 1997. The court's decision may be rendered at any time. Item 2. Changes in Securities - None. --------------------- Item 3. Defaults Upon Senior Securities - None. ------------------------------- Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- (a) The Annual General Meeting of Shareholders was held on May 7, 1997. (c) At the Annual General Meeting of Shareholders there were four matters submitted to a vote of security holders. Proxies were solicited pursuant to Regulation 14 of the Securities and Exchange Act of 1934 and there was no solicitation in opposition to management's nominees as listed in the proxy statement. Each director nominated and proposal submitted to a vote passed and the voting outcome of each proposal is as follows: (1) Election of Directors: Kirby L. Cramer For: 12,826,361 Withheld: 72,530 Harvey Feigenbaum For: 12,828,234 Withheld: 70,657 Dennis C. Fill For: 12,830,525 Withheld: 68,366 Eugene A. Larson For: 12,766,720 Withheld: 132,171 Ernest Mario For: 12,826,917 Withheld: 71,974 John R. Miller For: 12,826,760 Withheld: 72,131 Phillip M. Nudelman For: 12,831,452 Withheld: 67,439 Harry Woolf For: 12,821,727 Withheld: 77,164 (2) The adoption of the Employee Stock Purchase Plan to reserve for purchase up to 300,000 shares of common stock: For: 11,074,027 Opposed: 1,770,572 Abstained: 54,292 Broker Non-votes: None (3) Ratification of Auditors - The Company proposal to approve the appointment of KPMG Peat Marwick LLP as independent auditors for the Company for 1997: For: 12,839,417 Opposed: 15,465 Abstained: 44,009 14 PART II Other Information (Continued) - ------- ----------------- Item 5. Other Information - None. ----------------- Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits - Financial Data Schedule (b) Reports of Form 8-K: A report on Form 8-K was filed on July 9, 1997 related to the change of the Company's corporate name from Advanced Technology Laboratories, Inc. to ATL Ultrasound,Inc. 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. ATL ULTRASOUND, INC. (Registrant) DATE: August 6, 1997 BY:/s/ Harvey N. Gillis _______________________ Harvey N. Gillis Senior Vice President Finance and Administration and Chief Financial Officer EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXPRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 27, 1997 AND THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 27, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-27-1997 81,528 0 106,357 0 89,493 299,772 71,358 0 376,833 128,583 12,532 0 0 0 0 376,833 155,862 200,926 77,473 103,720 91,742 0 1,650 5,751 1,150 4,601 0 0 0 4,601 .31 .30
-----END PRIVACY-ENHANCED MESSAGE-----