-----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, GbxK4FU7W1u17FNn5qH6hYhC3rKjsZLCFaat5w0gFn9NXQRhJ0gGMxlJ02gb/FXB Cfhmo4nWrs5RInzPj3Cxlw== 0000950149-97-002082.txt : 19971115 0000950149-97-002082.hdr.sgml : 19971115 ACCESSION NUMBER: 0000950149-97-002082 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVIVO CORP CENTRAL INDEX KEY: 0000806168 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 770115161 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15963 FILM NUMBER: 97717171 BUSINESS ADDRESS: STREET 1: 4900 HOPYARD RD STE 210 CITY: PLEASANTON STATE: CA ZIP: 94588 BUSINESS PHONE: 5104687600 MAIL ADDRESS: STREET 1: 4900 HOPYARD RD STE 210 CITY: PLEASANTON STATE: CA ZIP: 94588 FORMER COMPANY: FORMER CONFORMED NAME: SAFETYTEK CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SENSOR CONTROL CORP DATE OF NAME CHANGE: 19911023 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED 9/30/97 1 U.S. 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 SEPTEMBER 30, 1997 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 0-15963 INVIVO CORPORATION ---------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 77-0115161 (State or other jurisdiction of (IRS Employer Identification No.) incorporation) 4900 HOPYARD RD. SUITE 210, PLEASANTON, CALIFORNIA 94588 -------------------------------------------------------- (Address of principal executive offices) (Zip Code) TELEPHONE: (510) 468-7600 ------------------------- (Registrant's telephone number) ----------------------------------------------------- Indicate by check whether the registrant (1) 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 ( ) The number of shares outstanding of the issuer's Common Stock, par value $.0008 per share, at September 30, 1997 was 3,258,668 shares. 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INVIVO CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 SEPTEMBER 30, (DERIVED FROM 1997 AUDITED CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS ------------- -------------------- ASSETS Current assets: Cash and cash equivalents $ 201,100 171,100 Trade receivables, net 8,648,200 7,898,800 Inventories 6,660,300 7,100,900 Deferred income taxes 802,300 802,300 Prepaid expenses and other current assets 622,500 516,200 ----------- ---------- Total current assets 16,934,400 16,489,300 Property and equipment, net 4,431,600 4,460,100 Intangible assets 5,403,500 5,442,400 Other assets 219,700 219,700 ----------- ---------- $26,989,200 26,611,500 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,325,300 2,871,000 Accrued expenses 2,307,100 2,153,200 Current portion of long-term debt and bank borrowings 3,320,700 3,487,900 Income taxes payable 988,700 481,200 Other 18,800 21,900 ----------- ---------- Total current liabilities 8,960,600 9,015,200 Long-term debt, excluding current portion 1,550,800 1,584,400 Deferred income taxes 145,400 145,400 Other liabilities 52,000 52,000 ----------- ---------- Total liabilities 10,708,800 10,797,000 ----------- ---------- Stockholders' equity: Common stock 2,600 2,600 Additional paid-in capital 12,823,300 12,817,400 Retained earnings 3,454,500 2,994,500 ----------- ---------- Total stockholders' equity 16,280,400 15,814,500 ----------- ---------- Commitments and contingencies $26,989,200 26,611,500 =========== ==========
See accompanying note to consolidated financial statements. 2 3 INVIVO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 1997 1996 ----------- ---------- Sales $ 9,383,700 7,892,200 Cost of goods sold 4,964,200 3,930,500 ----------- ---------- Gross profit 4,419,500 3,961,700 Operating expenses: Selling, general and administrative 3,085,800 3,333,300 Research and experimental 610,300 593,800 ----------- ---------- Total operating expenses 3,696,100 3,927,100 ----------- ---------- Income from operations 723,400 34,600 Other income (expense): Interest expense (95,800) (53,300) Other, net 31,400 23,200 ----------- ---------- Income before income taxes 659,000 4,500 Income tax expense 199,000 1,500 ----------- ---------- Net income $ 460,000 3,000 =========== ========== Net income per common share $ .14 .00 =========== ========== Weighted average common shares and common share equivalents outstanding 3,371,468 3,417,664 =========== ==========
See accompanying note to consolidated financial statements. 3 4 INVIVO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
1997 1996 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 460,000 3,000 Adjustments to reconcile net income to cash provided by (used in) operating activities: Depreciation and amortization 191,900 162,700 Change in operating assets and liabilities: Trade receivables (749,400) 57,100 Inventories 440,600 (650,200) Prepaid expenses and other current assets (106,300) (158,300) Accrued expenses 153,900 (52,100) Accounts payable (545,700) 255,300 Income taxes payable 507,500 (61,500) Other current liabilities (3,100) (10,200) --------- --------- Net cash provided by (used in) operating activities 349,400 (454,200) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (124,500) (464,900) Other - 37,600 --------- --------- Net cash used in investing activities (124,500) (427,300) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 5,900 46,600 Bank borrowings (repayments), net (186,300) 615,800 Principal payments under acquisition notes payable and long term debt (14,500) (81,300) --------- --------- Net cash (used in) provided by financing activities (194,900) 581,100 --------- --------- Net increase (decrease) in cash and cash equivalents 30,000 (300,400) Cash and cash equivalents at beginning of period 171,100 436,200 --------- --------- Cash and cash equivalents at end of period $ 201,100 135,800 ========= ========= Supplemental disclosures of cash flow information: Cash paid during the period for: Income taxes $ 19,500 63,000 ========= ========= Interest $ 95,800 53,300 ========= =========
See accompanying note to consolidated financial statements. 4 5 INVIVO CORPORATION NOTE TO CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL The consolidated balance sheet as of September 30, 1997 and the related consolidated statements of income for the three month periods ended September 30, 1997 and 1996; and the consolidated statements of cash flows for the three month periods ended September 30, 1997 and 1996 are unaudited. The consolidated financial statements reflect, in the opinion of management, all adjustments necessary to present fairly the financial position and results of operations as of the end of and for the periods indicated. Interim results are not necessarily indicative of results for a full year. The financial statements and note are presented as permitted by Form 10-Q, and do not contain certain information included in the Company's annual consolidated financial statements and notes. 5 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 Sales Sales for the first quarter ended September 30, 1997 were $9,383,700, an increase of 18.9% over sales of $7,892,200 for the same period of fiscal 1997. The sales increase was primarily due to sales of the "Millennia", the new portable multi-parameter vital signs monitor introduced by the Company's patient safety monitoring business in the first quarter of fiscal 1997. Sales for the first quarter ended September 30, 1997 were also positively affected by increased sales at the Company's oxygen monitoring and industrial process control businesses. Gross Profit The gross profit margin declined to 47.1% from 50.2% in the first quarter ended September 30, 1997 as compared to the same period in the prior fiscal year. The decline was primarily due to the product mix of sales at the Company's patient safety monitoring business as the "Millennia" monitor has lower gross margins than the MRI vital signs monitor. Increased sales at the Company's oxygen monitoring business was also a factor as that business has inherently lower gross margins than the Company's other businesses. Operating Expenses Selling, general and administrative expenses for the three month period ended September 30, 1997 decreased 7.4% or $247,500 compared to the previous fiscal period. Selling, general and administrative expenses were 32.9% of sales for the quarter ended September 30, 1997 compared with 42.2% for the same period in fiscal 1997. The decrease in these expenditures in aggregate was largely due to a reduction in selling expenses at the Company's patient safety monitoring business as many of the non-recurring expenses associated with the significant expansion in the Company's direct sales force in fiscal 1997 have decreased. Research and experimental expenses increased slightly to $610,300 in the first quarter of fiscal 1998 from $593,800 in the prior year quarter as the Company continues its efforts in developing and enhancing the "Millennia" and other vital signs monitoring products. Other Income and Expense Interest expense increased to $95,800 for the three month ended September 30, 1997 compared with $53,300 for the same period in fiscal 1997. This increase was the result of increased outstandings on the Company's revolving bank line of credit along with the increased mortgage on the Company's recently expanded patient safety monitoring facility. Provision for Income Taxes The effective tax rate for the first three months of fiscal 1998 was 30.2% compared with 34.0% for the same period in fiscal 1997. This reduction in the effective tax rate was principally due to an adjustment of prior year's taxes. 6 7 LIQUIDITY AND CAPITAL RESOURCES Working capital at September 30, 1997 increased to $7,973,800 compared with $7,474,100 at June 30, 1997. Cash and cash equivalents at September 30, 1997 were $201,100 compared with $171,100 at June 30, 1997. Net cash provided by operating activities was $349,400 for the three months ended September 30, 1997 compared with $454,200 used in operations for the three months ended September 30, 1996. This increase was primarily the result of the increase in net income for the quarter ended September 30, 1997 as compared to the same period in the prior year. Capital expenditures were $124,500 for the three months ended September 30, 1997 compared to $464,900 for the first three months of fiscal 1997 as less demonstration equipment was needed for the direct sales force at the Company's patient safety monitoring business. In fiscal 1993, the Company purchased 80% of the outstanding common stock of Invivo Research, Inc. The agreement provided for a contingent payment resulting in an initial payment of $1,000,000 made on July 15, 1994 and a final payment of $2,000,000 paid on July 15, 1995. In fiscal 1994, the Company entered into an agreement to acquire the remaining 20% of the Invivo Research, Inc. shares. The contingent purchase price for such shares is to be paid in one or more installments. One-fifth of the price "vests" on each of January 1, 1996, 1997 and 1998 and two-fifths vest on January 1, 1999. The former Invivo Research shareholders can make one election each year beginning in 1996 to be paid any vested payment. The amount of any payment is based on the after tax profits of Invivo Research for the calendar year preceding the year that the payment is made, regardless of when the payment vested, subject to a minimum share price if certain milestones are achieved. The former Invivo Research shareholders must, generally, elect to receive a payment in any calendar year by giving notice to the Company by March of that year and the payment so elected is to be made on June 1 of that year. The payments are to be made in cash, but if the shareholders require that more than one-fifth of the payments be made in any year, the Company can elect to make the excess amount of the payment in the form of its shares. The Company was informed in March of 1996 that the former Invivo Research shareholders would elect to be paid on their first installment. Based on the 1995 calendar year results for Invivo Research, payment was made on June 1, 1996, for $987,900. The former Invivo Research shareholders did not elect to be paid on their vested second installment in June of 1997. Bank borrowings decreased $186,300 in the first three months of fiscal 1998. The Company's revolving bank line of credit is collateralized by the Company's accounts receivable, inventory, and equipment. The Company is currently in discussions with its bank regarding the renewal of the line of credit that expires on December 1, 1997. At September 30, 1997, $3,208,700 was outstanding on the line of credit. The Company believes that its cash flow from operations and amounts available from the bank line of credit will be adequate to meet its anticipated cash needs for working capital and capital expenditures throughout fiscal 1998. The Company will continue to explore opportunities for the possible acquisitions of technologies or businesses, which may require the Company to seek additional financing. 7 8 OUTLOOK. The statements contained in this Outlook are based on current expectations. These statements are forward looking, and actual results may differ materially. These forward looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In early fiscal 1997, the Company introduced its new "Millennia" portable multi-parameter vital signs monitor and has substantially increased selling, general and administrative expenses in connection with this product coming on line. The Company believes this product positions it to expand from its MRI monitoring market niche into the much larger mainstream patient monitoring market. The Company expects this product to continue to have a substantial impact on future revenue growth and that its future financial results will to a large extent depend on the success of this product. The success of the "Millennia" will be dependent on a variety of factors, some of which may be beyond the control of the Company. Among the factors that could cause actual results to differ from those anticipated by the Company are: economic conditions affecting the healthcare industry and general economy and competitive factors, such as competitor's new products and pricing pressures. The statements contained in this Outlook are based on current expectations. These statements are forward looking, and actual results may differ materially. 8 9 PART II - OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS: None. ITEM 2: CHANGES IN SECURITIES: None. ITEM 3: DEFAULTS UPON SENIOR SECURITIES: None. ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS: None. ITEM 5: OTHER INFORMATION: None. ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) See Exhibit Index included herein on page 10. (b) Reports on Form 8-K: None. 9 10 SIGNATURES In accordance with requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INVIVO CORPORATION Date: November 14, 1997 By:/S/ JOHN F. GLENN ---------------------------------- Vice President-Finance and Chief Financial Officer (Principal Financial and Accounting Officer) 10 11 INVIVO CORPORATION INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION OF EXHIBIT 11.1 Statement of computation of net income per share 27.0 Financial Data Schedule 11 EX-11.1 2 STATEMENT OF COMPUTATION OF NET INCOME PER SHARE 1 EXHIBIT 11.1 INVIVO CORPORATION AND SUBSIDIARIES STATEMENT OF COMPUTATION OF NET INCOME PER SHARE
THREE MONTHS ENDED SEPTEMBER 30, 1997 1996 ---------- ---------- Net income $ 460,000 3,000 ========== ========== Computation of weighted average common shares and common share equivalents outstanding: Common shares issued and outstanding 3,256,059 3,229,922 Common stock equivalents 115,409 187,742 ---------- ---------- Weighted average common shares and common share equivalents outstanding 3,371,468 3,417,664 ========== ========== Net income per common share $ .14 .00 ========== ==========
EX-27.0 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JUN-30-1998 JUL-01-1997 SEP-30-1997 201 0 9,050 402 6,660 16,934 8,112 3,680 26,989 8,961 0 0 0 3 16,277 26,989 9,384 9,384 4,964 4,964 3,696 0 96 659 199 460 0 0 0 460 .14 .14
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