-----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, LZWQ7uagzkT4JpSsuHksLGiwofVpdudKUQzFGB2US4Olye3dQNJU8lIYkNDZZ6Ek nCmBDe9MFXvEpNeSNgLTVQ== 0000891618-97-004520.txt : 19971114 0000891618-97-004520.hdr.sgml : 19971114 ACCESSION NUMBER: 0000891618-97-004520 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LASERSCOPE CENTRAL INDEX KEY: 0000851737 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 770049527 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18053 FILM NUMBER: 97712596 BUSINESS ADDRESS: STREET 1: 3052 ORCHARD DR CITY: SAN JOSE STATE: CA ZIP: 95134 BUSINESS PHONE: 4089430636 10-Q 1 FORM 10-Q FOR PERIOD ENDED SEPTEMBER 30, 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------- FORM 10-Q (Mark One) [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 0-18053 LASERSCOPE (Exact name of Registrant as specified in its charter) CALIFORNIA 77-0049527 (State of Incorporation) (I.R.S. Employer Identification No.) 3052 ORCHARD DRIVE, SAN JOSE, CALIFORNIA 95134-2011 (Address of principal executive offices) Registrant's telephone number: (408) 943-0636 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 ----- ----- The number of shares of Registrant's common stock issued and outstanding as of October 31, 1997 was 12,304,559. 2 TABLE OF CONTENTS
PAGE ---- PART I. FINANCIAL INFORMATION......................................................... 3 Item 1. Condensed Consolidated Balance Sheets..................................... 3 Condensed Consolidated Statements of Operations........................... 4 Condensed Consolidated Statements of Cash Flows........................... 5 Notes to Condensed Consolidated Financial Statements...................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................. 9 Results of Operations..................................................... 9 Liquidity and Capital Resources........................................... 12 Item 3. Qualitative and Quantitative Disclosures About Market Risk................ 14 PART II. OTHER INFORMATION........................................................... 14 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 Items.............................................................. 14 Item 6. Exhibits and Reports on Form 8-K........................................ 14 SIGNATURES ......................................................................... 14
2 3 PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: LASERSCOPE CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, DECEMBER 31, (thousands) 1997 1996 - -------------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 2,905 $ 3,917 Accounts receivable, net 16,685 13,286 Inventories 21,616 17,407 Other current assets 893 926 -------- -------- Total current assets 42,099 35,536 Property and equipment, net 5,590 3,109 Investment in NWL -- 1,681 Developed technology and other intangibles, net 5,083 3,473 Other assets 668 670 -------- -------- Total assets $ 53,440 $ 44,469 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 7,542 $ 9,246 Accrued compensation 2,321 2,947 Bank loans 4,863 -- Other current liabilities 4,955 4,899 -------- -------- Total current liabilities 19,681 17,092 Obligations under capital leases 203 202 Mortgages & other long term loans 1,701 -- Commitments and contingencies Minority interest in net assets of NWL 529 -- Shareholders' equity: Common stock 50,855 48,798 Accumulated deficit (18,450) (20,988) Translation adjustments (704) (260) Notes receivable from shareholders (375) (375) -------- -------- Total shareholders' equity 31,326 27,175 -------- -------- Total liabilities and shareholders' equity $ 53,440 $ 44,469 ======== ========
See notes to condensed consolidated financial statements 3 4 LASERSCOPE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, (thousands except per share amounts) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------- Net revenues $15,704 $ 10,561 $ 46,674 $ 26,764 Cost of sales 8,104 5,226 24,969 13,366 ------- -------- -------- -------- Gross margin 7,600 5,335 21,705 13,398 Operating expenses: Research and development 893 620 2,258 1,771 Purchased in-process research and development -- 2,376 -- 2,376 Selling, general and administrative 5,382 4,285 16,060 10,778 Other non-recurring charges -- 872 -- 872 ------- -------- -------- -------- 6,275 8,153 18,318 15,797 Operating income (loss) 1,325 (2,818) 3,387 (2,399) Interest and other income (expense), net -- 7 (24) 29 ------- -------- -------- -------- Income (loss) before income taxes and minority interest 1,325 (2,811) 3,363 (2,370) Provision for income taxes 310 -- 637 53 ------- -------- -------- -------- Income (loss) before minority interest 1,015 (2,811) 2,726 (2,423) Minority interest 114 -- 188 -- ------- -------- -------- -------- Net income (loss) $ 901 $ (2,811) $ 2,538 $ (2,423) ======= ======== ======== ======== Net income (loss) per share $ 0.07 $ (0.32) $ 0.20 $ (0.32) ======= ======== ======== ======== Shares used in per share calculations 12,986 8,731 13,007 7,629 ======= ======== ======== ========
See notes to condensed consolidated financial statements 4 5 LASERSCOPE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, (thousands) 1997 1996 - ------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 2,538 $(2,423) Adjustments to reconcile net income (loss) to cash provided (used) by operating activities: Depreciation and amortization 1,656 940 Purchased in-process research and development -- 2,376 Increase (decrease) from changes in: Accounts receivable (1,975) (877) Inventories (714) 1,709 Other current assets 157 216 Other assets -- (100) Accounts payable (3,355) 276 Accrued compensation (626) 338 Other current liabilities 30 126 Minority interest 188 -- ------- ------- Cash provided (used) by operating activities (2,101) 2,581 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (2,240) (223) Cash paid for Heraeus Surgical acquisition, net of cash received -- (1,430) Cash paid for NWL acquisition, net of cash received (960) -- Other (264) (111) ------- ------- Cash used by investing activities (3,464) (1,764) ------- ------- CASH USED BY FINANCING ACTIVITIES: Payments on obligations under capital leases & mortgages (70) (10) Proceeds from the sale of common stock under stock plans 2,057 329 Proceeds from short-term bank loans 3,866 -- Repayment of short-term bank loans (1,300) -- ------- ------- Cash provided by financing activities 4,553 319 Increase (decrease) in cash and cash equivalents (1,012) 1,136 Cash and cash equivalents, beginning of period 3,917 2,278 ------- ------- Cash and cash equivalents, end of period $ 2,905 $ 3,414 ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $223 $ 10 Income taxes $118 $76
5 6 See notes to condensed consolidated financial statements NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: 1. The accompanying condensed consolidated financial statements include Laserscope (the "Company") and its wholly and majority-owned subsidiaries. All intercompany transactions and balances have been eliminated. While the financial information in this report is unaudited, in the opinion of management, all adjustments (which included only normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the periods indicated have been recorded. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those reported. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 1996 included in the Company's annual report on Form 10-K/A for the year ended December 31, 1996. The results of operations for the three and nine month periods ended September 30, 1997 are not necessarily indicative of the results expected for the full year. 2. Inventory was comprised of the following (in thousands):
SEPTEMBER 30, DECEMBER 31, 1997 1996 ------- ------- Sub-assemblies and purchased parts $14,855 $12,015 Finished goods 6,761 5,392 ------- ------- $21,616 $17,407 ======= =======
(See note 7 for a description of the impact from the NWL Laser-Technologie acquisition.) 3. Net income (loss) per share is based upon the weighted average number of shares of common stock outstanding and dilutive common equivalent shares from stock options (using the treasury stock method). 4. The Company invests its excess cash in investment grade debt instruments. The Company considers cash equivalents to be financial instruments that are readily convertible to cash, subject to no more than insignificant interest rate risk and that have original maturities of three months or less. At September 30, 1997 and December 31, 1996 the Company's cash equivalents were in the form of institutional money market accounts and totaled $1.0 million and $1.8 million, respectively. At September 30, 1997 and December 31, 1996 the Company had no investment in debt securities. 5. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings Per Share", which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock 6 7 options will be excluded. The impact of Statement 128 is expected to have no material effect in the three month period ended September 30, 1997; to increase primary earnings per share in the nine month period ended September 30, 1997 by $0.01 per share and to have no material effect on the primary earnings per share for the corresponding periods in 1996. The impact of Statement 128 on the calculation of fully diluted earnings per share for these periods is not material. 6. On August 30, 1996 the Company completed the acquisition of Heraeus Surgical, Inc. ("HSI"). The acquisition was accounted for as a purchase. Accordingly, the operating results of HSI are included in the Company's consolidated results of operations for the quarter and nine months ended September 30, 1997; however, the Company's consolidated results of operations for the corresponding periods in 1996 only include HSI results from August 30, 1996 through the end of the respective period. 7. In March 1995, the Company entered into an agreement with NWL Laser-Technologie ("NWL") whereby the Company paid approximately $1.6 million in exchange for a cross-distribution and development agreement, minority equity position in NWL and an option to purchase all of the ownership interests in NWL. On June 13, 1997, the Company exercised its option and increased its ownership interest to 52% of NWL. The purchase price was allocated to the acquired assets and liabilities based on Company estimates of their respective fair values. The consolidation of the acquired assets and liabilities significantly impacted the Company's Balance Sheet at September 30, 1997 as depicted in the following tables: The approximate purchase price for the NWL acquisition was (in thousands): Laserscope investment prior to June 1997 $1,640 Cash paid in June 1997 1,000 ------ Total $2,640 ======
The allocation of the approximate purchase price was determined as follows: Net tangible assets acquired: Accounts receivable, net $ 1,430 Inventories 3,500 Property, plant & equipment 1,100 Other assets 380 Less: Accounts payable and other current liabilities (3,950) Mortgages and other long term debt (1,750) ------- Total net tangible assets 710 Minority interest in net tangible assets (340) ------- Laserscope interest in net tangible assets 370 Intangible assets acquired: Developed technology & workforce 2,270 ------- $ 2,640
7 8 8. The following unaudited pro forma combined results of operations of the Company and NWL for the three and nine months ended September 30, 1997 and September 30, 1996 have been prepared assuming that the NWL acquisition had occurred at the beginning of the period presented. The following pro forma information is not necessarily indicative of the results that would have occurred had the acquisition been completed at the beginning of the period indicated, nor is it indicative of future operating results (in thousands, except per share data):
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------- Net revenues $15,704 $ 12,983 $48,429 $ 30,043 Income (loss) from operations $ 1,325 $ (2,899) $ 3,027 $ (2,771) Net income (loss) $ 901 $ (3,038) $ 2,351 $ (2,861) Net income (loss) per share $ 0.07 $ (0.35) $ 0.18 $ (0.37) Shares used in per share calculations 12,986 8,731 13,007 7,629
8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: Except for the historical information contained in this Quarterly Report on Form 10-Q, the matters discussed herein are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially from those projected. Factors that could cause actual results to differ materially include, but are not limited to, the risks associated with the acquisitions of Heraeus Surgical, Inc. ("HSI") and NWL Laser-Technologie, GmbH ("NWL"), including the integration of the operations and assets acquired and the assumption of the liabilities assumed by Laserscope, the timing of orders and shipments, the Company's ability to balance its inventory and production schedules, the timely development, clearance by the F.D.A. and other regulatory agencies and market acceptance of new products and surgical/therapeutic procedures, the impact of competitive products and pricing, the Company's ability to raise capital on terms acceptable to the Company, or at all, the Company's ability to expand further into international markets, and public policy relating to health care reform in the United States and other countries. The Company desires to continue expansion of its operations outside of the United States and to enter additional international markets, requiring significant management attention and financial resources and further subjecting the Company to the risks of operating internationally. These risks include unexpected changes in regulatory requirements, delays resulting from difficulty in obtaining export licenses for certain technology, customs, tariffs and other barriers and restrictions, and the burdens of complying with a variety of foreign laws. The Company is also subject to general geopolitical risks in connection with its international operations, such as political and economic instability and changes in diplomatic and trade relationships. The Company cannot predict whether quotas, duties, taxes or other charges or restrictions will be imposed by the United States, Japan, countries in the European Union or other countries upon the import or export of the Company's products in the future, or what effect any such actions would have on its business, financial condition or results of operations. In addition, fluctuations in currency exchange rates may negatively impact the Company's ability to compete in terms of price against products denominated in local currencies. In addition, there can be no assurance that regulatory, geopolitical and other factors will not adversely impact the Company's operations in the future or require the Company to modify its current business practices. Other risks are detailed from time to time in the Company's press releases and other public disclosure filings with the U.S. Securities and Exchange Commission (SEC), copies of which are available upon request from the Company. The forward-looking statements included herein speak only as of the date hereof. The Company assumes no obligation to update any forward-looking statements included herein. RESULTS OF OPERATIONS: The following discussion should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in Part I -- Item 1 of this Quarterly Report and the audited financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 1996 contained in the Company's Annual Report on Form 10-K/A. 9 10 The following table contains selected income statement information which serves as the basis of the discussion of the Company's results of operations for the quarter and nine months ended September 30, 1997 compared with the corresponding periods in 1996 (in thousands except for percentages):
THREE MONTHS ENDED NINE MONTHS ENDED SEPT. 30, 1997 SEPT. 30, 1996 % SEPT. 30, 1997 SEPT. 30, 1996 % AMOUNT %(a) AMOUNT %(a) CHANGE AMOUNT %(a) AMOUNT %(a) CHANGE ------ ---- ------ ---- ------ ------ ---- ------ ---- ------ Revenues from sales of: Lasers $ 8,298 53% $ 5,292 50% 57% $22,202 48% $12,270 46% 81% Ascent medical systems 2,225 14% 550 5% 305% 7,763 17% 550 2% 1,311% Instruments & supplies 3,298 21% 3,331 32% (1)% 10,953 23% 10,092 38% 9% Service 1,883 12% 1,388 13% 36% 5,756 12% 3,852 14% 49% ------- --- ------- --- --- ------- --- ------- --- -- Total net revenues $15,704 100% $10,561 100% 49% $46,674 100% $26,764 100% 74% Gross margin $ 7,600 48% $ 5,335 51% 42% $21,705 47% $13,398 50% 62% Research & development $ 893 6% $ 620 6% 44% $ 2,258 5% $ 1,771 7% 27% Selling, general & admin. $ 5,382 34% $ 4,285 41% 26% $16,060 34% $10,778 40% 49%
(a) expressed as a percentage of total net revenues. The Company's results for the quarter and nine month period ended September 30, 1997 were favorably impacted by the acquisition of a majority interest in NWL which closed June 13, 1997. NWL contributed approximately $1.0 million in revenue and $80 thousand in net income after distribution to minority interests during the period from the closing date until June 30, 1997 and $1.9 million in revenue and $124 thousand in net income after distribution to minority interests during the quarter ended September 30, 1997. Net revenues increased during the three and nine months ended September 30, 1997 relative to the corresponding periods of 1996 as a combined result of higher unit shipments of the Company's laser systems at lower average selling prices, and shipments of products and sales of services acquired in the acquisition of HSI completed in August 1996 and shipments of products acquired in the acquisition of NWL completed in June 1997. Revenues from the sales of laser systems increased during the quarter and nine month periods ended September 30, 1997 relative to the same periods in 1996 primarily due to higher unit shipments of the Company's Aura office lasers and to a lesser extent, sales of lasers acquired in the acquisitions of HSI and NWL. Average unit prices decreased during these periods as a combined result of the greater shipments of lower priced Aura office laser units as well as increased shipments to independent international distributors. The Company believes that the continuing trend toward reduced health care costs in the United States is still a factor which continues to impact negatively capital equipment procurement by its hospital customers in the United States. As a result, the Company expects that its revenue mix trends for laser equipment in the U.S. market will continue to shift toward its lower priced Aura office laser. During the three months ended September 30, 1997 revenues from sales of instrumentation and disposable supplies were at approximately the same level as in the corresponding period in 1996. This is due principally to the combined effect of increased shipments of scanning devices sold as accessories to the Aura office laser system offset by lower shipments of side-firing devices which the Company sells for use in prostate surgeries. The increase in revenues from the sales of these products during the nine months ended September 30, 1997 compared to the corresponding periods in 1996 is due principally to the same reasons as 10 11 those which affected the three months ended September 30, 1997 with the decline in sales of side firing devices increasing as the year progressed. The decreases in percentage of net revenues were primarily the result of revenues from the sales of lasers and AMS equipment increasing at a faster rate than revenues from the sales of instrumentation and disposable supplies. The Company believes that acceptance of lasers in aesthetic surgery, dermatology, urology, and ear, nose and throat surgery will continue to be important to its business. In addition, the adoption of photodynamic therapy by medical practitioners will be important. The Company continues to invest in developing new instrumentation for emerging surgical applications and to educate surgeons in the United States and internationally to encourage the adoption of such new applications. However, there can be no assurance that such investments will encourage adoption of the Company's products. Finally, penetration of the international market, although increasing, has been limited. The decrease in gross margin as a percentage of net sales during the quarter and nine months ended September 30, 1997 relative to the corresponding periods of 1996 is due in part to revenues generated from sales of AMS products. These products generally generate lower gross margins than product lines that the Company manufactures. In addition, a higher proportion of revenues from sales to independent international distributors were generated during the first nine months of 1997 than in the first nine months of 1996. These revenues generally generate lower gross margins than those generated by revenues from sales through the Company's direct sales force. The Company expects that gross margin as a percentage of revenues for the remainder of 1997 may vary from previous quarters as it continues to balance production volumes and inventory levels with product demand and as product and distribution mix varies. Research and development expenses, are the result of activities related to the development of new laser, instrumentation and disposable products and the enhancement of the Company's existing products. The decrease in spending as a percentage of net revenues during the quarter and nine months ended September 30, 1997 was due principally to the increase in revenues resulting from the acquisition of HSI without comparable increases in spending on research and development. The Company acts as a distributor for the majority of the AMS product line, and, as such, the research and development activity required to support these products is minimal. The Company expects to increase amounts spent in research and development on non-AMS products during the remainder of 1997. The increase in selling, general and administrative expenses during the quarter and nine months ended September 30, 1997 primarily results from new personnel acquired by the Company in the HSI and NWL acquisitions. The Company expects these amounts to remain at similar levels during the remainder of 1997 as the Company continues to invest in international expansion, marketing programs and educational support. During the quarter ended September 30, 1996, the Company recorded non-recurring charges directly attributable to the acquisition of HSI consisting of a $2.38 million charge to write off purchased in-process research and development which arose from the acquisition and of $0.87 million in charges to write off certain inventory and fixed assets which became redundant as a result of the acquisition. During the quarter and nine months ended September 30, 1997 the Company recorded income tax provisions representing effective tax rates of 23% and 19%, respectively. The 1997 tax rates are higher than the 1996 rates due to the combined effect of higher tax rates on 11 12 the income generated by NWL partially offset by lower effective rates in 1997 than in 1996 due to the impact of non-deductible acquisition related charges in 1996. Both years' tax rates are below the combined federal and state statutory rates due to the utilization of available net operating loss carryforwards. LIQUIDITY AND CAPITAL RESOURCES: The following table contains selected balance sheet information which serves as the basis of the discussion of the Company's liquidity and capital resources at September 30, 1997 and for the nine months then ended (in thousands):
SEPTEMBER 30, DECEMBER 31, 1997 1996 ------------------------------- Cash and cash equivalents $ 2,905 $ 3,917 Total assets $53,440 $44,469 Net working capital $22,418 $18,444
The net decrease in cash and cash equivalents during the nine month period was due principally to the combination of cash used by operating activities of $2.1 million, capital expenditures of $2.2 million and the $1.0 million paid for the acquisition of a majority interest in NWL, offset by proceeds from the sale of common stock pursuant to option exercises of $2.1 million and net short-term bank borrowings of $2.6 million. Significant components of cash used by operating activities included an increase in accounts receivable of $2.0 million, an increase in inventory of $0.7 million and decreases to accounts payable and accrued compensation of $3.4 million and $0.6 million, respectively. The Company believes that the increase to accounts receivable was due to longer collection cycles for sales by its international subsidiaries, particularly in France and similarly long collection cycles for sales to its AMS customers while decreases to accounts payable principally resulted from payments to AMS product suppliers to which HSI was in arrears at the time of the acquisition. The Company anticipates that future changes in cash and working capital will be dependent on a number of factors. As a result of the acquisitions of HSI and NWL, the Company's Balance Sheet liquidity ratios changed and the Company's ability to generate cash will be partially dependent on management's ability to manage effectively non-cash assets such as inventory and accounts receivable. In addition, the level of profitability of the Company will have a significant impact on cash resources. From time to time, the Company may also consider the acquisition of, or evaluate investments in, certain products and businesses complementary to the Company's business. Any such acquisition or investment may require additional capital resources. The Company anticipates that current cash resources, internally generated funds, capital and operating lease lines and available bank borrowings will be sufficient to meet liquidity and capital needs at least through the next twelve months. The Company financed the HSI and NWL acquisitions using its existing cash resources. While the Company believes its remaining cash resources will be sufficient to fund its short term operating needs, additional financing either through its bank line of credit or otherwise will be required for the Company's currently envisioned long term needs. There can be no assurance that such additional financing will be available on terms acceptable to the Company, or at all. The Company has in place a $5.0 million revolving bank line of credit which expires in November 1997, under which $2.6 million in borrowings were outstanding at September 30, 12 13 1997. In addition, NWL has in place various revolving bank lines totaling approximately $2.5 million which expire at various dates within the next year and under which approximately $2.3 million in borrowings were outstanding at September 30, 1997. The Company expects to renew its primary line of credit with terms similar to those currently existing before its expiration in November 1997 and to renew NWL's revolving bank lines prior to their respective expirations. 13 14 ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is a party to a number of legal proceedings arising in the ordinary course of business. While it is not feasible to predict or determine the outcome of the actions brought against it, the Company believes that the ultimate resolution of these claims will not have a material adverse effect on its financial position or results of operations. 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 Not applicable. 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. LASERSCOPE Registrant /s/ Dennis LaLumandiere -------------------------------------------- Dennis LaLumandiere Vice President of Finance and Chief Financial Officer (Principal Financial and Accounting Officer) Date: November 12, 1997 14 15 INDEX TO EXHIBITS
Exhibit Number Description - ------ ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1997 SEP-30-1997 2,905 0 16,685 1,007 21,616 42,099 18,913 13,323 53,440 19,681 1,701 0 0 50,855 (19,529) 53,440 46,674 46,674 24,969 24,969 18,318 0 24 3,363 637 2,726 0 0 0 2,538 .20 .20
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