-----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, T95sF4U/lAcZ/9Av5wFac4wgCy1vVITSFmK9epNvtMXI6FREbmLbq2WXj/4IG1p4 LhTVwBk6zLCY1Phv4KOunA== 0000815094-96-000004.txt : 19960725 0000815094-96-000004.hdr.sgml : 19960725 ACCESSION NUMBER: 0000815094-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960724 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: 001-09585 FILM NUMBER: 96598088 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 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, 1996 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 1-9585 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, 1996, there were 5,537,266 shares outstanding of the registrant's Common Stock, $.01 par value, and 1,428,000 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, 1996 and March 31, 1996 3-4 Consolidated Statements of Operations Three Months Ended June 30, 1996 and June 30, 1995 5 Consolidated Statements of Cash Flows Three Months Ended June 30, 1996 and June 30, 1995 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, 1996 March 31, 1996 (unaudited) (audited) Current Assets: Cash and cash equivalents (Note 6) $1,381,852 $2,938,332 Short-term marketable securities (Note 6) 9,476,961 7,709,110 Accounts receivable, net 2,411,877 2,606,289 Inventories (Note 3) 1,682,179 1,653,512 Prepaid expenses and other current assets 179,357 92,280 Total current assets 15,132,226 14,999,523 Property and equipment, at cost: Machinery and equipment 2,516,545 2,378,851 Furniture and fixtures 163,445 156,048 Leasehold improvements 377,642 378,998 3,057,632 2,913,897 Less: Accumulated depreciation and amortization 2,391,690 2,331,145 665,942 582,752 Other assets, net (Note 7) 591,615 627,154 $16,389,783 $16,209,429
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, 1996 March 31, 1996 (unaudited) (audited) Current Liabilities: Accounts payable $608,306 $777,943 Accrued expenses 1,256,328 1,486,981 Total current liabilities 1,864,634 2,264,924 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, 1996 Issued and Outstanding-5,537,266 shares at June 30, 1996 and 5,518,054 shares at March 31, 1996 55,373 55,180 Class A Common Stock $.01 par value Authorized - 2,346,000 shares Issued and Outstanding - 1,428,000 shares at June 30, 1996 and March 31, 1996 14,280 14,280 Additional paid-in capital 36,822,443 36,625,221 Accumulated deficit (22,366,947) (22,750,176) Total stockholders' investment 14,525,149 13,944,505 $16,389,783 $16,209,429
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, 1996 June 30, 1995 Revenues: Products $2,868,349 $2,124,441 Contracts 816,923 619,049 3,685,272 2,743,490 Costs and expenses: Cost of products 1,048,699 914,893 Research and development 863,975 658,859 Selling, general and administrative 1,519,593 1,216,914 3,432,267 2,790,666 Net income (loss) from operations 253,005 (47,176) Interest and other income 130,224 131,237 Net income 383,229 84,061 Net income per common share (Note 5): $0.05 $0.01 Weighted average number of common and dilutive common equivalent shares outstanding 7,206,261 6,953,312
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, 1996 June 30, 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $383,229 $84,061 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities- Depreciation and amortization 96,084 47,367 Changes in assets and liabilities- Accounts receivable 194,412 (238,616) Inventories (28,667) 139,078 Prepaid expenses and other current assets (87,077) (84,896) Accounts payable (169,637) 275,610 Accrued expenses (230,653) 17,205 Net cash provided by (used in) operating activities 157,691 239,809 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments, net (1,767,851) (54,809) Purchases of property and equipment and improvements (143,735) (29,214) Purchases of Abiomed Limited Partnership units from limited partners (Note 7) - - (155,000) Net cash provided by (used in) investing activities (1,911,586) (239,023) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options and stock issued under employee stock purchase plan 197,415 - - Net cash provided by financing activities 197,415 - - NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS, EXCLUDING INVESTMENTS (1,556,480) 786 CASH AND CASH EQUIVALENTS, EXCLUDING INVEST- MENTS, AT BEGINNING OF PERIOD 2,938,332 614,091 CASH AND CASH EQUIVALENTS , EXCLUDING INVEST- MENTS, AT END OF PERIOD $1,381,852 $614,877
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, 1996, 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, 1996 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 and its wholly-owned subsidiaries, ABIOMED Cardiovascular, Inc., ABIOMED R&D Inc., ABIODENT, Inc., Abiomed Research and Development, Inc., ABD Holding Company, Inc., and the accounts of its majority-owned subsidiary Abiomed Limited Partnership (see Note 7). 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, 1996 March 31, 1996 Raw Materials $851,662 $799,548 Work-in-Process 419,942 428,287 Finished Goods 410,575 425,677 TOTAL $1,682,179 $1,653,512
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 1997, options to purchase 30,000 shares of Common Stock were granted at an exercise price of $13.25 per share. Options to purchase 24,313 shares were canceled during the quarter. Options to purchase 19,212 shares were exercised in the first quarter at exercise prices ranging from $5.75 to $11.25 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. Such investments are classified as long- term investments when their maturities are greater than one year from the balance sheet date. The Company reports investments at cost plus accrued interest. 7. Other Assets Other assets represent the purchase of the 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. 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, 1996 were approximately $383,000 and $0.05 per share, respectively. These earnings compare to net income and income per share of approximately $84,000 and $0.01 per share, respectively, in the same period of the previous year. REVENUES In the three months ended June 30, 1996, total revenues were approximately $3,685,000, 34% higher than total revenues of approximately $2,743,000 in the same period of the previous year. Product revenues were approximately $2,868,000, 35% higher than product revenues of approximately $2,124,000 in the same period of the previous year. These results primarily reflect increased domestic unit sales and increased average selling prices of the disposable cardiovascular product to the expanded installed customer base. More than 90% of total product and service revenues in the quarter were derived from domestic sources. Revenues from Research and Development (R&D) contracts and grants for this quarter were approximately $817,000, 32% higher than total revenues of approximately $619,000 reported in the same quarter of the previous year. This increase primarily reflects timing of scheduled activities under existing contracts and grants. In aggregate, as of June 30, 1996, the Company's backlog of research and development contracts and grants totaled approximately $4,844,000 including approximately $269,000 from the National Heart, Lung and Blood Institute (NHLBI) relating to the current phase of funding for the Company's total artificial heart (TAH) research and development which expires September 30, 1996. All such contracts contain provisions making them terminable at the convenience of the government. A significant portion of the Company's contract revenues, approximately 40% for the first quarter of fiscal 1997, was earned in connection with research for the Company's TAH under the first phase of a contract awarded in September 1993 and expiring in September 1996, by the NHLBI. As of June 30, 1996 approximately $269,000 in funding remained 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) available to the Company under this phase of the TAH contract. The NHLBI has indicated that it has approximately $17 million to be awarded in October 1996 for continued phase two development of a total artificial heart. The NHLBI has indicated that only two of the three scientific teams presently receiving TAH research funding from the NHLBI will qualify for funding of the second phase. The second phase is anticipated to be a four year contract. ABIOMED has asked for $8.6 million to be awarded for its continued TAH research and development. There can be no assurance that ABIOMED will receive its requested amount or any amount from the NHLBI for this continued TAH research and development. COSTS AND EXPENSES Total costs and expenses for the three months ended June 30, 1996 were approximately $3,432,000, 23% higher than total costs and expenses of approximately $2,791,000 in the same fiscal quarter of the previous year. The majority of this increase reflects expenses incurred to support higher revenues. Cost of products sold as a percentage of product sales (37%) decreased from the same quarter of the previous year (43%). This decrease primarily reflects greater proportionate sales of higher margin products and increased operational efficiencies. Total research and development costs increased during the first fiscal quarter of 1997 to approximately $864,000, a 31% increase over research and development costs of approximately $659,000 incurred during the same fiscal period of the previous year. The increase primarily reflects the timing of scheduled expenditures under contracts and grants. Selling, general and administrative expenses for the three months ended June 30, 1996 increased to approximately $1,520,000, 25% 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 $130,000 in the first quarter of 1997 and approximately even with interest and other income in the corresponding quarter of the prior year. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1996, the Company's balance sheet included $10,859,000 in cash and short-term investments, an increase of approximately $211,000 from March 31, 1996. This increase reflects proceeds from the exercise of stock options of approximately $197,000 and cash generated from operations and other activities of approximately $158,000 offset by purchases of equipment and facility improvements of approximately $144,000. The June 30, 1996 balance includes approximately $1,382,000 in cash, and $9,477,000 in short-term investments. The Company also has a $3,000,000 line of credit from a bank which expires on December 1, 1996, and which was entirely available at June 30, 1996. Net cash provided by operating activities included net income of approximately $383,000, including depreciation and amortization expenses of $96,000, and a decrease in accounts receivable of approximately $194,000. These sources of cash were partially offset by a decrease in accrued expenses of approximately $231,000, a decrease in accounts payable of approximately $170,000 and increases in prepaid expenses and inventory of $87,000 and $29,000, respectively. Net cash used in investing activities included approximately $1,768,000 of net purchases of short-term investments and approximately $144,000 of purchases and improvements of property and equipment. During the first quarter of fiscal 1997, the Company received proceeds of approximately $197,000 from the exercise of stock options under the 1992 Combination Stock Option Plan. 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 in the coming years to support the development and commercialization of its products. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued) HEALTH CARE REFORM Private and government proposals for significant health care reform are expected to continue to affect healthcare expenditures in the United States as well as internationally where the company sells or plans to sell its products. The Company cannot assess at this time the potential impact that healthcare trends may have on future results because of uncertainties surrounding any unforseeable changes. *** 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: July 24, 1996 /s/ David M. Lederman David M. Lederman CEO and President Date: July 24, 1996 /s/ John F. Thero John F. Thero Vice President Finance and Administration; and Treasurer Chief Financial Officer Principal Accounting Officer 13 EX-27 2
5 This schedule contains summary financial information extracted from the 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 ended June 30, 1996. 1-MO MAR-31-1997 JUN-30-1996 1381852 9476961 2530726 118849 1682179 15132226 3057632 2391690 16389783 1864634 0 0 0 69653 14455496 16389783 3685272 3685272 1912674 1912674 0 0 (130224) 383229 0 383229 0 0 0 383229 .05 .05
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