-----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, GwecJepVGsO19cwBYHS3MJEaGfZFlnMO3n9VGRm0HATAyjJSoFC70zRo3mSZRFkr mMcV7jgOSKicll8sJFJXEA== 0000815094-97-000009.txt : 19970808 0000815094-97-000009.hdr.sgml : 19970808 ACCESSION NUMBER: 0000815094-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970807 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ABIOMED INC CENTRAL INDEX KEY: 0000815094 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 042743260 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20584 FILM NUMBER: 97652718 BUSINESS ADDRESS: STREET 1: 33 CHERRY HILL DR CITY: DANVERS STATE: MA ZIP: 01923 BUSINESS PHONE: 5087775410 MAIL ADDRESS: STREET 1: 33 CHERRY HILL DRIVE CITY: DANVERS STATE: MA ZIP: 01923 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 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 0-20584 ABIOMED, INC. (Exact name of registrant as specified in its charter) DELAWARE 04-2743260 (State of incorporation) (I.R.S. Employer No.) 33 CHERRY HILL DRIVE DANVERS, MASSACHUSETTS 01923 (Address of principal executive offices, including zip code) (508) 777-5410 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) or 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 [ ] As of June 30, 1997, there were 7,017,872 shares outstanding of the registrant's Common Stock, $.01 par value, and no shares outstanding of the registrant's Class A Common Stock, $.01 par value. ABIOMED, INC. AND SUBSIDIARIES TABLE OF CONTENTS
Page No. Part I - Financial Information: Item 1. Financial Statements Consolidated Balance Sheets June 30, 1997 and March 31, 1997 3-4 Consolidated Statements of Operations Three Months Ended June 30, 1997 and June 30, 1996 5 Consolidated Statements of Cash Flows Three Months Ended June 30, 1997 and June 30, 1996 6 Notes to Consolidated Financial Statements 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 Part II - Other Information 13 Signatures 13
ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS ASSETS
June 30, 1997 March 31, 1997 (unaudited) (audited) Current Assets: Cash and cash equivalents (Note 6) $1,605,276 $1,616,696 Short-term marketable securities (Note 6) 7,160,563 7,744,664 Accounts receivable, net 5,860,089 4,816,500 Inventories (Note 3) 2,013,944 1,820,783 Prepaid expenses and other current assets 203,162 173,172 Total current assets 16,843,034 16,171,815 Property and equipment, at cost: Machinery and equipment 3,620,677 3,147,837 Furniture and fixtures 349,791 241,867 Leasehold improvements 1,186,047 1,118,677 5,156,515 4,508,381 Less: Accumulated depreciation and amortization 2,734,487 2,618,603 2,422,028 1,889,778 Other assets, net (Note 7) 449,462 485,000 $19,714,524 $18,546,593
The accompanying notes are an integral part of these consolidated financial statements. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS (continued) CONSOLIDATED BALANCE SHEETS (continued) LIABILITIES AND STOCKHOLDERS' INVESTMENT
June 30, 1997 March 31, 1997 (unaudited) (audited) Current Liabilities: Accounts payable $1,216,225 $1,289,024 Accrued expenses 2,336,031 2,032,506 Total current liabilities 3,552,256 3,321,530 Stockholders' Investment (Note 4): Class B Preferred Stock, $.01 par value- Authorized 1,000,000 shares Issued and outstanding-none - - - - Common Stock, $.01 par value- Authorized 25,000,000 shares at June 30, 1997 Issued and Outstanding-7,017,872 shares at June 30, 1997 and 7,008,282 shares at March 31, 1997 70,179 70,082 Class A Common Stock $.01 par value Authorized - 2,346,000 shares - None Issued and Outstanding at June 30, 1997 and March 31, 1997 - - - Additional paid-in capital 37,236,040 37,169,893 Accumulated deficit (21,143,951) (22,014,912) Total stockholders' investment 16,162,268 15,225,063 $19,714,524 $18,546,593
The accompanying notes are an integral part of these consolidated financial statements. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS (continued) CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended June 30, 1997 June 30, 1996 Revenues: Products $4,206,743 $2,868,349 Contracts 1,829,045 816,923 6,035,788 3,685,272 Costs and expenses: Cost of products 1,529,278 1,048,699 Research and development 1,643,499 863,975 Selling, general and administrative 2,116,545 1,519,593 5,289,322 3,432,267 Net income from operations 746,466 253,005 Interest and other income 124,495 130,224 Net income 870,961 383,229 Net income per common share (Note 5): $0.12 $0.05 Weighted average number of common and dilutive common equivalent shares outstanding 7,601,273 7,206,261
The accompanying notes are an integral part of these consolidated financial statements. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS (continued) CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
Three Months Ended June 30, 1997 June 30, 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $870,961 $383,229 Adjustments to reconcile net income to net cash provided by (used in) operating activities- Depreciation and amortization 151,422 96,084 Changes in assets and liabilities- Accounts receivable (1,043,589) 194,412 Inventories (193,161) (28,667) Prepaid expenses and other current assets (29,990) (87,077) Accounts payable (72,799) (169,637) Accrued expenses 303,525 (230,653) Net cash provided by (used in) operating activities (13,631) 157,691 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities (purchases) of investments, net 584,101 (1,767,851) Purchases of property and equipment and improvements (648,134) (143,735) Net cash used in investing activities (64,033) (1,911,586) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options and stock issued under employee stock purchase plan 66,244 197,415 Net cash provided by financing activities 66,244 197,415 NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS, EXCLUDING INVESTMENTS (11,420) (1,556,480) CASH AND CASH EQUIVALENTS, EXCLUDING INVEST- MENTS, AT BEGINNING OF PERIOD 1,616,696 2,938,332 CASH AND CASH EQUIVALENTS , EXCLUDING INVEST- MENTS, AT END OF PERIOD $1,605,276 $1,381,852
The accompanying notes are an integral part of these consolidated financial statements. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 1: FINANCIAL STATEMENTS (continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Basis of Preparation The unaudited consolidated financial statements of ABIOMED, Inc. (the Company), presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest audited financial statements, which are contained in the Company's Form 10-K for the year ended March 31, 1997, which was filed with the Securities and Exchange Commission. In the opinion of management, the accompanying consolidated financial statements include all adjustments (consisting only of normal, recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the three months ended June 30, 1997 may not be indicative of the results that may be expected for the full fiscal year. 2. Principles of Consolidation The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and the accounts of its majority- owned subsidiary Abiomed Limited Partnership. All significant intercompany accounts and transactions have been eliminated in consolidation. 3. Inventories Inventories include raw materials, work-in-process, and finished goods and are priced at the lower of cost (first-in, first-out) or market and consist of the following:
June 30, 1997 March 31, 1997 Raw Materials $1,050,941 $896,434 Work-in-Process 266,881 373,383 Finished Goods 696,122 550,966 TOTAL $2,013,944 $1,820,783
Finished goods and work-in-process inventories consist of direct material, labor and overhead. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 1: FINANCIAL STATEMENTS (continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited, continued) 4. Stockholders' Investment During the first quarter of fiscal 1998, options to purchase 141,500 shares of Common Stock were granted at exercise prices ranging from $10.00 to $12.75 per share. Options to purchase 600 shares were canceled during the quarter. Options to purchase 9,590 shares were exercised in the first quarter at exercise prices ranging from $5.75 to $8.00 per share. 5. Net Income Per Common Share Net income per common and common equivalent share is computed by dividing net income by the weighted average number of common and common equivalent shares outstanding during the period using the treasury stock method. 6. Cash and Cash Equivalents The Company classifies any marketable security with a maturity date of 90 days or less at the time of acquisition to be a cash equivalent. Securities, including marketable securities, with original maturities of greater than 90 days are classified as investments. 7. Other Assets Other assets represent the Company's majority interest of the Abiomed Limited Partnership. Abiomed Limited Partnership (the Partnership) was formed in March 1985 and provided initial funding for the design and development of certain of the Company's products. Through August 3, 2000, the Company owes a royalty to the Partnership of 5.5% of certain revenues from these products. Because the Company owns 61.7% of the Partnership, the net royalty expense to the Company is approximately 2.1% of these product revenues. This royalty formula is subject to certain maximum amounts and to certain additional adjustments in the event that the Company sells the technology. The Partnership is inactive except with respect to receiving and distributing proceeds from these royalty rights. 8. Recent Accounting Development On March 3, 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 128, "Earnings Per Share." This statement establishes standards for the computation and presentation of earnings per share and applies to entities with publicly held common stock or potential common stock. This statement, which supersedes APB Opinion No. 15, is effective for financial statements for both interim and annual periods ending after December 15, 1997. This statement when adopted, will require the restatement of prior years' earnings per share. Management expects that the adoption of this new statement will not have a material impact on the Company's previously disclosed earnings per share. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS NET INCOME Net income and income per share for the three months ended June 30, 1997 were approximately $871,000 and $0.12 per share, respectively. These earnings compare to net income and income per share of approximately $383,000 and $0.05 per share, respectively, in the same period of the previous year. REVENUES In the three months ended June 30, 1997, total revenues were approximately $6,036,000, 64% higher than total revenues of approximately $3,685,000 in the same period of the previous year. Product revenues were approximately $4,207,000, 47% higher than product revenues of approximately $2,868,000 in the same period of the previous year. These results primarily reflect increased domestic unit sales of BVS blood pumps and consoles. More than 90% of total product revenues in the quarter were derived from domestic sources. Revenues from research and development contracts and grants for this quarter were approximately $1,829,000, 124% higher than total revenues of approximately $817,000 reported in the same quarter of the previous year. This increase primarily reflects increased activity under the Company's Phase II contract with the National Heart, Lung and Blood Institute (NHLBI) to develop a Total Artificial Heart (TAH). This contract, in the amount of $8.5 million, was awarded to the Company in September 1996 and has a term of four years. As of June 30, 1997, the Company's backlog of research and development contracts and grants totaled approximately $8,905,000, including approximately $5,043,000 under the TAH contract. All such government contracts contain provisions making them subject to government appropriation and are terminable at the convenience of the government. The Company accounts for revenue under its government contracts and grants as work is performed, provided that the government has appropriated sufficient funds for the work. To date, the government has appropriated approximately $4.9 million of the $8.5 million TAH contract amount. The original government appropriation schedule calls for no further appropriations for the TAH contract until October 1998. This schedule is subject to change at the discretion of the government. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued) REVENUES (continued) During the first quarter of fiscal 1998, the Company recognized $1,680,000 of revenue under its TAH contract, reflecting the highest quarterly spending by the Company on the TAH, inception-to-date. As a result of this increased activity, the Company has recognized $3.4 million of the $4.9 million appropriated as revenue through June 30, 1997. The Company anticipates that its rate of spending on TAH development will further increase and that this spending will exceed the remaining currently appropriated balance before the end of the Company's second quarter of fiscal 1998 (the quarter ending September 30, 1997). The Company believes that certain of these excess costs may be reimbursable under the TAH contract, if and when additional appropriation under the TAH contract is made. Due to its accelerated TAH development activity and the timing of government appropriations, the Company believes that it will experience significant quarterly fluctuations in contract revenues. The Company also believes that the Company's total expenses to complete the development of the TAH will significantly exceed the remaining TAH contract amount. COSTS AND EXPENSES Total costs and expenses for the three months ended June 30, 1997 were approximately $5,289,000, 54% higher than total costs and expenses of approximately $3,432,000 in the same fiscal quarter of the previous year. Cost of products sold as a percentage of product sales (36%) decreased from the same quarter of the previous year (37%). This decrease primarily reflects increased operational efficiencies. Selling, general and administrative expenses for the three months ended June 30, 1997 increased to approximately $2,117,000, 39% higher than selling, general and administrative expenses in the same fiscal quarter of the previous year. This increase primarily reflects increased sales and marketing expenses, particularly increased personnel and sales commissions, related to the increase in product revenues. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued) INTEREST AND OTHER Interest and other income was approximately $124,000 in the first quarter of fiscal 1998 and approximately even with interest and other income in the corresponding quarter of the prior year. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1997, the Company's balance sheet included $8,766,000 in cash and short-term investments, a decrease of approximately $596,000 from March 31, 1997. This decrease primarily reflects purchases of equipment and facilities leasehold improvements of approximately $648,000 and cash used in operating activities of approximately $14,000 offset by the proceeds from the exercise of stock options of approximately $66,000. The Company also has a $3,000,000 line of credit from a bank which expires in September 1997, and which was entirely available at June 30, 1997. Net sources of cash provided by operating activities reflects net income of approximately $871,000, including depreciation and amortization expenses of $151,000, and an increase in accrued expenses of approximately $304,000. These sources of cash were offset by an increase in accounts receivable of approximately $1,044,000, a decrease in accounts payable of approximately $73,000 and increases in prepaid expenses and inventory of $30,000 and $193,000 respectively. Net cash used for the three months ended June 1997 was $14,000. Net cash used in investing activities included approximately $584,000 of net maturities of short-term investments and approximately $648,000 of purchases and improvements of property and equipment. Although the Company does not currently have significant capital commitments other than described above, the Company believes that it will continue to make significant investments to support the development and commercialization of its products. Subsequent to the close of the Company's first quarter of fiscal 1998, the Company received approximately $16 million in cash as proceeds from the sale of 1,242,710 shares of its Common Stock in a private offering. Of the shares sold, 88,864 were sold to certain members of the Company's Board of Directors. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued) RISK FACTORS Certain statements in this Quarterly Report constitute "forward-looking statements," such as statements of the Company's plans, objectives, expectations and intentions, including without limitation, statements regarding the Company's anticipated funding and expenditures under its government contracts. All forward-looking statements involve risks and uncertainties, and actual results could differ materially from those set forth in the forward-looking statements. Factors that could cause or contribute to such differences include changes in government funding policies and technical risks associated with development activities, risks associated with attracting and retaining key technical personnel and other risk factors set forth in the Company's Annual Report on Form 10K for its fiscal year ended March 31, 1997. The forward-looking statements contained herein speak only as of the date of this Report. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. *** ABIOMED, INC. AND SUBSIDIARIES 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 Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K a) Exhibits None 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 report to be signed on its behalf by the undersigned thereunto duly authorized. ABIOMED, Inc. Date: August 5, 1997 /s/ David M. Lederman David M. Lederman CEO and President Date: August 5, 1997 /s/ John F. Thero John F. Thero Vice President Finance and Treasurer Chief Financial Officer Principal Accounting Officer 13 EX-27 2
5 This schedule contains financial information extracted from the Company's Consolidated Income Statement, Consolidated Balance Sheet and Consolidated Statement of Cash Flows and is qualified in its entirety by reference to Form 10-Q for the period ending June 30, 1997. 3-MOS MAR-31-1998 JUN-30-1997 1605276 7160563 5860089 223046 2013944 16843034 5156515 2734487 19714524 3552256 0 0 0 70179 16162268 19714524 6035788 6035788 3172777 5289322 0 0 (124495) 870961 870961 870691 0 0 0 870691 0.12 0.12
-----END PRIVACY-ENHANCED MESSAGE-----