-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, h0jPcmyA7AbA2ESf16ek5BEOvC1z7qeCz3UQol+UQXJgM5H60IzKzE85XF9PsQoe 1hmGbBKgcaTXM5srfrdb8A== 0000912057-95-003540.txt : 19950512 0000912057-95-003540.hdr.sgml : 19950512 ACCESSION NUMBER: 0000912057-95-003540 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 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: 1934 Act SEC FILE NUMBER: 000-18053 FILM NUMBER: 95536923 BUSINESS ADDRESS: STREET 1: 3052 ORCHARD DR CITY: SAN JOSE STATE: CA ZIP: 95134 BUSINESS PHONE: 4089430636 10-Q 1 FORM 10-Q 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 March 31,1995 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 April 30, 1995 was 6,983,092. This document consists of 10 pages of which this is page 1. TABLE OF CONTENTS PAGE ---- PART I. FINANCIAL INFORMATION 3 Item 1. Condensed Consolidated Balance Sheet 3 Condensed Consolidated Statement of Income 4 Condensed Consolidated Statement 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 7 Results of Operations 7 Liquidity and Capital Resources 9 PART II. OTHER INFORMATION 10 Item 1. Legal Proceedings 10 Item 2. Changes in Securities 10 Item 3. Defaults upon Senior Securities 10 Item 4. Submission of Matters to a Vote of Security Holders 10 Item 5. Other Items 10 Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 10 2 PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: LASERSCOPE CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
MARCH 31, DECEMBER 31, (thousands) 1995 1994 - ------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 7,019 $ 4,604 Short-term investments 1,014 1,998 Accounts receivable, net 7,675 8,066 Inventories 7,221 7,512 Other current assets 1,033 1,038 ------- ------ Total current assets 23,962 23,218 ------- ------ Property and equipment, net 3,159 3,320 Other assets 761 783 ------- ------ Total assets $27,882 $27,321 ------- ------ ------- ------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,430 $ 1,292 Accrued compensation 448 1,136 Other current liabilities 3,822 3,965 ------- ------ Total current liabilities 6,700 6,393 ------- ------ Obligations under capital leases 25 27 Commitments and contingencies Shareholders' equity: Common stock 37,074 37,074 Accumulated deficit (15,493) (15,744) Translation adjustments (175) (180) Notes receivable from shareholders (249) (249) ------- ------ Total shareholders' equity 21,157 20,901 ------- ------ Total liabilities and shareholders' equity $27,882 $27,321 ______ ______ ______ ______
See notes to condensed consolidated financial statements 3 LASERSCOPE CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, (thousands except per share amounts) 1995 1994 - ------------------------------------------------------------------------------- Net revenues $9,215 $9,124 Cost of products and services sold 4,383 4,046 ------- ------ Gross margin 4,832 5,078 ------- ------ Operating expenses: Research and development 921 938 Selling, general and administrative 3,723 4,003 ------- ------ 4,644 4,941 ------- ------ Operating income 188 137 Interest and other income, net 99 68 ------- ------ Income before income taxes 287 205 Provision for income taxes 36 25 ------- ------ Net income $251 $180 ------- ------ ------- ------ Net income per share $0.04 $0.03 ------- ------ ------- ------ Shares used in per share calculations 6,989 6,963 ------- ------ ------- ------
See notes to condensed consolidated financial statements 4 LASERSCOPE CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, (thousands) 1995 1994 - ------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 251 $ 180 Adjustments to reconcile net income to cash cash provided by operating activities: Depreciation and amortization 403 405 Increase (decrease) from changes in: Accounts receivable 391 100 Inventories 291 (317) Other current assets 5 (89) Other assets 22 27 Accounts payable 138 94 Accrued compensation 312 61 Other current liabilities (149) - ------- ------ Cash provided by operating activities 1,664 461 ------- ------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (242) (171) Purchases of held-to-maturity investments - (2,009) Maturities of held-to-maturity investments 984 2,018 Other 9 (11) ------- ------ Cash provided (used) by investing activities 751 (173) ------- ------ CASH FLOWS FROM FINANCING ACTIVITIES: Payments on obligations under capital leases - (55) Proceeds on sale of common stock, net of payments on shareholder notes receivable - 320 ------- ------ Cash provided by financing activities - 265 ------- ------ Increase in cash and cash equivalents 2,415 553 Cash and cash equivalents, beginning of period 4,604 6,117 ------- ------ Cash and cash equivalents, end of period $7,019 $6,670 ------- ------ ------- ------ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 20 $ 4 Income taxes $ 22 $ 29
See notes to condensed consolidated financial statements 5 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. 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, 1994 included in the Company's annual report. The results of operations for the three month period ended March 31, 1995 are not necessarily indicative of the results to be expected for the full year. 2. Inventory was comprised of the following:
MARCH 31, DECEMBER 31, 1995 1994 ----------------------------- Sub-assemblies and purchased parts $5,006 $4,996 Finished goods 2,215 2,516 ----- ----- $7,221 $7,512 ----- ----- ----- -----
3. Net income 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 high-quality 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. Short- term investments consist of financial instruments with less than one year to maturity. At March 31, 1995 and December 31, 1994 the Company's cash equivalents were in the form of institutional money market accounts and totaled $5.68 million and $3.02 million, respectively. At March 31, 1995 and December 31, 1994 the Company's investment in short-term securities stated at amortized cost, which approximates their fair value, consisted of corporate debt securities of $1.01 million and $2.00 million respectively. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: 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, 1994 contained in the Company's annual report. Net revenues for the quarter ended March 31, 1995 were $9.22 million, an increase of 1% from net revenues of $9.12 million in the corresponding quarter of 1994. Net revenues increased during the first quarter of 1995 relative to the first quarter of 1994 due to higher shipments of the Company's KTP/YAG Surgical Laser Systems, disposable supplies and instrumentation. The higher level of shipments was partially offset by lower average selling prices of its KTP/YAG Surgical Laser Systems due to a greater proportion of its shipments being made to independent international distributors during the first quarter of 1995 than in the corresponding quarter of 1994. Revenues from the sales of disposable supplies, instrumentation and service comprised approximately 65% of total net revenues during the quarter ended March 31, 1995, compared to approximately 67% of total net revenues in the corresponding period in 1994. Although the Company's net revenues increased during the quarter ended March 31, 1995 relative to the same period in 1994, the Company believes that continuing pressure to reduce health care costs in the United States and uncertainty concerning health care reform have been and continue to be factors which negatively impact capital equipment procurement by its customers. The Company also believes that acceptance of lasers in urology, ear, nose and throat surgery, aesthetic surgery and dermatology will continue to be important to its business. In particular, the Company anticipates that the increasing use of the laser in urologic procedures will be a significant factor that will affect the Company's business during 1995 and beyond. 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. Finally, penetration of the international market has been limited and the Company continues to view this as a significant opportunity. Gross margin as a percentage of net revenues for the quarter ended March 31, 1995 was 52.4%, compared to 55.7% for the corresponding quarter in 1994. The decrease is due in part to a higher proportion of revenues from sales to independent international distributors during the first quarter of 1995 than in the corresponding quarter of 1994. These revenues generally generate lower gross margins than those generated by revenues from sales through the Company's direct sales force. In addition, the Company continues to balance its inventories with product demand and it reduced production volumes in the first quarter of 1995 relative the first quarter of 1994 which further negatively impacted gross margins during the first quarter of 1995. Finally, pressures to reduce healthcare costs in the United States have negatively impacted the Company's service pricing structure resulting in lower gross margins from the sales of service in the first quarter of 1995 relative to the first quarter of 1994. The Company expects that gross margin as a percentage of revenues for the remainder of 1995 7 may vary from quarter to quarter as it continues to balance production volumes and inventory levels with product demand and as its proportion of revenues from sales to independent international distributors varies relative to sales through its direct sales force. Research and development expenses, which 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 were at approximately the same levels in absolute amounts and as a percentage of net revenues in the first quarter of 1995 when compared to the corresponding quarter of 1994. The Company expects to continue to make significant investments in research and development during 1995 and beyond. Selling, general and administrative expenses decreased to $3.72 million in the quarter ended March 31, 1995 compared to $4.00 million during the corresponding quarter of 1994. The reduction is due in part to lower direct selling expenses resulting from a higher proportion of its revenues being generated from sales to independent international distributors. As a percentage of revenues, selling, general and administrative expenses are expected to remain at relatively high levels during 1995 since the Company expects to continue to invest significant amounts in international expansion, marketing programs and educational support. During the quarter ended March 31, 1995 the Company recorded $36,000 in income tax provisions representing an effective tax rate of 13%. The amount is below the combined federal and state rates primarily as a result of the utilization of available net operating loss carryforwards. The Company anticipates that many of the market conditions which affected its performance during the first quarter of 1995 may continue to have an impact on sales trends for the next several quarters. In particular, the timing of orders and shipments affects quarterly results and there can be no certainty that revenue growth or profitability can be accomplished on a quarter by quarter basis, or otherwise. 8 LIQUIDITY AND CAPITAL RESOURCES: Total assets and liabilities as of March 31, 1995 were $27.88 million and $6.73 million respectively, compared to assets and liabilities of $27.32 million and $6.42 million at December 31, 1994. Working capital increased $0.44 million from $16.82 million at December 31, 1994 to $17.26 million at March 31, 1995 while cash, cash equivalents and short-term investments increased $1.43 million during the period. The net increase in cash, cash equivalents and short term investments was primarily due to cash provided by operating activities of $1.66 million. The Company anticipates that future changes in cash and working capital will be dependent on the levels of its business. At March 31, 1995 the Company had outstanding commitments of approximately $1.50 million related to its investment in NWL Laser Technologie. At March 31, 1995, cash, cash equivalents and short term investments amounted to approximately $8.03 million. The Company currently has in place a $5.00 million revolving bank line of credit which expires July 1995 and under which no borrowings were outstanding at March 31, 1995. The Company anticipates that current cash resources, internally generated funds, capital leases and bank borrowings will be sufficient to meet anticipated operating needs at least for the next twelve months. The Company's need for capital is principally affected by the current and anticipated demand for its products as well as procurement and production lead times in its manufacturing operations. Changes in these factors can have a significant impact on capital requirements. 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. 9 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 ultimately 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/ Thomas B. Boyd ----------------------------- Thomas B. Boyd Senior Vice President of Operations and Finance (Principal Financial Officer) Date: May 12, 1995 10 EX-27 2 EXHIBIT 27
5 1,000 3-MOS DEC-31-1995 MAR-31-1995 7,019 1,014 8,215 540 7,221 23,962 12,743 9,584 27,882 6,700 0 37,074 0 0 (15,493) 21,157 9,215 9,215 4,383 4,383 4,644 0 (99) 287 36 251 0 0 0 251 .04 .04
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