-----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, USIWeQhIJL5BCukHpNRqjyRLeLgTf+/Qt+Uy2H89oWFf94SrrnfAnK/SVphzJN5u Mz1qdhA1ct35yfE47aWvVg== 0000950135-03-003743.txt : 20030701 0000950135-03-003743.hdr.sgml : 20030701 20030701151948 ACCESSION NUMBER: 0000950135-03-003743 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030630 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLYMEDICA CORP CENTRAL INDEX KEY: 0000878748 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 043033368 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13690 FILM NUMBER: 03767876 BUSINESS ADDRESS: STREET 1: 11 STATE ST CITY: WOBURN STATE: MA ZIP: 01801 BUSINESS PHONE: 6179332020 MAIL ADDRESS: STREET 1: 11 STATE STREET CITY: WOBURN STATE: MA ZIP: 01801 FORMER COMPANY: FORMER CONFORMED NAME: POLYMEDICA INDUSTRIES INC DATE OF NAME CHANGE: 19930328 8-K 1 b47048pce8vk.txt POLYMEDICA CORPORATION SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): June 30, 2003 POLYMEDICA CORPORATION ------------------------------------------------------ (Exact Name of Registrant as Specified in Charter) Massachusetts ------------------------------------------------------ (State or Other Jurisdiction of Incorporation) 0-19842 04-3033368 - --------------------------------- ---------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) 11 State Street, Woburn, Massachusetts 01801 - --------------------------------------- ---------------------------------- (Address of Principal Executive Offices) (Zip Code) (781) 933-2020 -------------------------------- (Registrant's Telephone Number, Including Area Code) -------------------------------- n/a -------------------------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS PolyMedica Corporation (the "Registrant") is filing this Current Report on Form 8-K for the purpose of filing with the Securities and Exchange Commission, as an exhibit hereto, the Registrant's press release, dated June 30, 2003, regarding its financial results. A copy of this press release is attached to this Current Report on Form 8-K as Exhibit 99.1. In addition, the following recent events have occurred in In re: PolyMedica Corp. Shareholder Derivative Litigation, a proceeding described in the Company's Annual Report on Form 10-K for the year ended March 31, 2003 and prior filings. The proceeding had previously been stayed in the Massachusetts Appeals Court while the parties conducted settlement discussions. The current stay expires on July 21, 2003. On June 26, 2003, the parties filed a motion to remand the proceeding to Middlesex Superior Court for the purpose of approving a potential settlement. The settlement agreement recites certain corporate governance changes made by the Company, such as the addition of three new outside directors to its board since September 2001, the appointment of a lead director, and enhancements to the Company's compliance functions. The Company agreed to pay, pursuant to the settlement agreement, plaintiffs' attorneys' fees and expenses in an amount to be determined by the Court. The Company will seek reimbursement of such fees from its insurer. The settlement is subject to approval by the Middlesex Superior Court. We can provide no assurance that the settlement will be approved by the Court. We are unable to express an opinion as to the likely outcome of this litigation. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Businesses Acquired Not Applicable. (b) Pro Forma Financial Information Not Applicable. (c) Exhibits 99.1 Press Release, dated June 30, 2003. ITEM 9. REGULATION FD DISCLOSURE (INFORMATION FURNISHED PURSUANT TO ITEM 12, "DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION"). On June 30, 2003, PolyMedica Corporation issued a press release regarding its financial results. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K. In accordance with the procedural guidance in SEC Release No. 33-8216, the information in this Form 8-K and the Exhibit attached hereto is being furnished under "Item 9. Regulation FD Disclosure" rather than under "Item 12. Disclosure of Results of Operations and Financial Condition." -2- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PolyMedica Corporation Date: July 1, 2003 By: /s/ Stephen C. Farrell ---------------------------- Stephen C. Farrell Senior Vice President and Chief Financial Officer -3- EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press Release, dated June 30, 2003. -4- EX-99.1 3 b47048pcexv99w1.txt PRESS RELEASE DATED JUNE 30, 2003 EXHIBIT 99.1 [POLYMEDICA LOGO] FOR IMMEDIATE RELEASE POLYMEDICA FILES FORM 10K FOR THE YEAR ENDED MARCH 31, 2003 NOTES DISCUSSIONS WITH SEC REGARDING EXPENSING VERSUS CAPITALIZING DIRECT RESPONSE ADVERTISING COSTS WOBURN, MA - JUNE 30, 2003 -- POLYMEDICA CORPORATION (NNM: PLMD) today filed its Form 10-K for its fiscal year ended March 31, 2003 in which it noted that it has been in discussions with the staff of the Securities and Exchange Commission regarding the Company's capitalizing of direct response advertising costs related to the acquisition of new customers rather than expensing them as incurred. Since acquiring Liberty in 1996, PolyMedica has capitalized such costs and amortized them generally over two to four years. "We have always believed that capitalization of our direct response advertising costs in accordance with Statement of Position 93-7 accurately reflects the economics of our business model and does a good job of matching our costs of acquiring new customers with the resulting benefits," said Lead Director and Interim CEO Samuel L. Shanaman. "However, few companies capitalize advertising costs, and some members of the investor community have suggested that fully expensing such costs as incurred would be a better presentation. For that reason, we have always provided extensive disclosure in our filings with the SEC and in our conference calls regarding our direct response advertising expenditures and the amortization of those costs. We recognize the changing environment in which we live, but we also need to conform to generally accepted accounting principles ("GAAP"). We believe our historical accounting is correct. Nevertheless, several months ago the Company and its Directors began discussions to determine whether fully expensing our future advertising costs as incurred could be a GAAP-compliant approach in today's environment." "PolyMedica's objective is, and always has been, to present our financial results accurately in accordance with GAAP," said Stephen Farrell, PolyMedica's Senior Vice President and CFO. "The issue of how to account for direct response advertising is highly technical and, in the final analysis, becomes one of judgment. The facts and circumstances in this discussion are not in dispute. Rather, it is the interpretation of the technical points of SOP 93-7 that is under consideration. We are working closely with the SEC and our auditors to reach a conclusion consistent with best practices in accounting. We had hoped to have the issue resolved by our filing deadline, but unfortunately we have not yet been able to reach a consensus. We have a strong and growing business with superb fundamentals and strong cash flow, on which the outcome of our discussions will have no effect. We are eager to resolve this issue as quickly as possible." The AICPA's Statement of Position 93-7 provides for the capitalization of direct response advertising costs when, among other things, the advertising elicits sales to customers who respond specifically to the advertisement, and the advertisement results in probable future benefit. On June 20, 2003 the SEC informed the Company that it believes the Company's advertising costs do not qualify for capitalization under SOP 93-7 because in its judgment the Company's advertising efforts produce leads, or sales opportunities, rather than purchase orders. PolyMedica has historically taken the view that the steps the Company follows with a customer responding to an advertisement, which are primarily steps necessary to determine a customer's eligibility for Medicare benefits, are primarily administrative in nature and do not disqualify the Company's advertising costs from capitalization. The Company and its auditors, PricewaterhouseCoopers, are currently developing a response to the SEC to serve as a basis for further discussion. If the Company were to revise its financial statements to reflect expensing of advertising costs as incurred on an historical basis, income per share (diluted) before cumulative effect of change in accounting principle for fiscal years 2003 and 2002 would be $2.61 and $1.76, respectively. This compares with the previously reported $3.21 for fiscal 2003 and $2.38 for fiscal 2002. In addition, under historical expensing of advertising costs, the Company's EPS guidance for its fiscal 2004 first quarter ending June 30, 2003 would be $0.66 - $0.72, compared to $0.84 - $0.90.
Fiscal Year Ended March 31, 2003 2002 As Reported If Adjusted As Reported If Adjusted ------------ ----------- ----------- ------------- Income per weighted average share before cumulative effect of change in accounting principle: Basic $ 3.29 $ 2.68 $ 2.43 $ 1.80 Diluted $ 3.21 $ 2.61 $ 2.38 $ 1.76
About PolyMedica (www.polymedica.com) PolyMedica is a rapidly growing national medical products company. The Company is best known through its Liberty brand name and innovative direct-to-consumer television advertising to seniors with diabetes and respiratory disease. Building on its technology-based operating platform and compliance management focus, PolyMedica continues to expand its product offerings in these chronic disease and other categories. This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited to, changing interpretations of generally accepted accounting principles, outcomes of government reviews, inquiries and investigations and related litigation, continued compliance with government regulations, changes in medicare reimbursement, fluctuations in customer demand, management of rapid growth, intensity of competition from other healthcare product vendors, timing and acceptance of new product introductions, general economic conditions, geopolitical events and regulatory changes, as well as other especially relevant risks detailed in the company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the period ended March 31, 2003. The information set forth herein should be read in light of such risks. The company assumes no obligation to update the information contained in this press release. Contact: PolyMedica Corporation Fred ("Skip") Croninger, 781/933-2020 OR Citigate Sard Verbinnen Jim Barron/Denise DesChenes, 212/687-8080 -----END PRIVACY-ENHANCED MESSAGE-----