-----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, GVUN6ZC0qyU9BXpsn0kbs7D7itAJNv/Iq1CEHgfrcF9aD3gGHcQ4Vwfvy8WfoKis kH+6ZN71uFr2S0QRMCHmFA== 0000815094-97-000020.txt : 19971015 0000815094-97-000020.hdr.sgml : 19971015 ACCESSION NUMBER: 0000815094-97-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971014 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: SEC FILE NUMBER: 001-09585 FILM NUMBER: 97695313 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 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 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) (978) 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 September 30, 1997, there were 8,264,556 shares outstanding of the registrant's 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 September 30, 1997 and March 31, 1997 3-4 Consolidated Statements of Operations Three and Six Months Ended September 30, 1997 and September 30, 1996 5 Consolidated Statements of Cash Flows Six Months Ended September 30, 1997 and September 30, 1996 6 Notes to Consolidated Financial Statements 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-16 Part II - Other Information 17 Signatures 18
ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS ASSETS
September 30, 1997 March 31, 1997 (unaudited) (audited) Current Assets: Cash and cash equivalents (Note 6) $711,425 $1,616,696 Short-term marketable securities (Note 6) 23,600,089 7,744,664 Accounts receivable, net of allowance for doubtful accounts of $229,000 and $231,000 at March 31, 1997 and September 30, 1997, respectively 6,257,797 4,816,500 Inventories (Note 3) 1,847,624 1,820,783 Prepaid expenses and other current assets 391,383 173,172 Total current assets 32,808,318 16,171,815 Property and equipment, at cost: Machinery and equipment 3,981,322 3,147,837 Furniture and fixtures 380,242 241,867 Leasehold improvements 1,262,937 1,118,677 5,624,501 4,508,381 Less: Accumulated depreciation and amortization 2,988,902 2,618,603 2,635,599 1,889,778 Other assets, net (Notes 1 and 7) 904,286 485,000 $36,348,203 $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
September 30, 1997 March 31, 1997 (unaudited) (audited) Current Liabilities: Accounts payable $1,132,730 $1,289,024 Accrued expenses 2,567,027 2,032,506 Total current liabilities 3,699,757 3,321,530 Stockholders' Investment (Note 4): Class B Preferred Stock, $.01 par valueAuthorized 1,000,000 shares Issued and outstanding- none - - - - Common Stock, $.01 par value- Authorized 25,000,000 shares at September 30, 1997 Issued and Outstanding- 8,264,556 shares at September 30, 1997 and 7,008,282 shares at March 31, 1997 82,646 70,082 Additional paid-in capital 53,221,747 37,169,893 Accumulated deficit (20,655,947) (22,014,912) Total stockholders' investment 32,648,446 15,225,063 $36,348,203 $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)
Six Months Ended Three Months Ended September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996 Revenues: Products $9,324,205 $5,759,555 $5,117,462 $2,891,206 Contracts 3,680,252 1,753,849 1,851,207 936,926 13,004,457 7,513,404 6,968,669 3,828,132 Costs and expenses: Cost of products 3,437,803 2,122,853 1,908,525 1,074,154 Research and development 3,654,181 1,780,737 2,010,682 916,762 Selling, general and administrative 4,970,150 3,229,235 2,853,605 1,709,642 12,062,134 7,132,825 6,772,812 3,700,558 Net income (loss) from operations 942,323 380,579 195,857 127,574 Interest and other income 416,642 256,537 292,147 126,313 Net income $1,358,965 $637,116 $488,004 $253,887 Net income per common share (Note 5): $0.17 $0.09 $0.06 $0.04 Weighted average number of common and dilutive common equivalent shares outstanding 7,868,675 7,196,343 8,605,689 7,199,239
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)
Six Months Ended September 30, 1997 September 30. 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,358,965 $637,116 Adjustments to reconcile net income to net cash provided by (used in) operating activities- Depreciation and amortization 441,376 192,168 Changes in assets and liabilities- Accounts receivable (1,441,297) (337,286) Inventories (26,841) (164,591) Prepaid expenses and other assets (708,574) (112,073) Accounts payable (156,294) 148,932 Accrued expenses 534,521 (252,435) Net cash provided by operating activities 1,856 111,831 CASH FLOWS FROM INVESTING ACTIVITIES: (Purchases) Maturities of investments, net (15,855,425) 4,519,658 Purchases of property and equipment and improvements (1,116,120) (531,873) Net cash provided by (used in) investing activities (16,971,545) 3,987,785 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from private placement of Common Stock, net 15,965,069 - - Proceeds from exercise of stock options and stock issued under employee stock purchase plan 99,349 266,401 Net cash provided by financing activities 16,064,418 266,401 NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS, EXCLUDING INVESTMENTS (905,271) 4,366,017 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 $711,425 $7,304,349
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 six months ended September 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, and 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:
September 30, 1997 March 31, 1997 Raw Materials $919,677 $896,433 Work-in-Process 360,025 373,383 Finished Goods 567,922 550,967 TOTAL $1,847,624 $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 In July 1997, the Company completed a private placement of 1,242,710 shares of its Common Stock to Genzyme Corporation and certain of the Company's directors. Proceeds to the Company from the private placement, net direct expenses, totaled approximately $15,965,000. During the three months ended September 30, 1997, options to purchase 68,250 shares of Common Stock were granted at exercise prices ranging from $12.50 to $14.00 per share. Options to purchase 21,200 shares were canceled during the quarter. Options to purchase 2,425 shares were exercised in the second quarter at exercise prices ranging from $5.625 to $8.00 per share. During the three months ended September 30, 1997, 1,549 shares of Common Stock were issued under the Employee Stock Purchase Plan. On August 13, 1997, the Company declared a dividend of one Preferred Share Purchase Right (the "Right") for each outstanding share of Common Stock to its stockholders of record at August 28, 1997. Each right entitles the registered holder to purchase from the Company one one- thousandth of a share of Series A Junior Participating Preferred Stock with a par value of $0.01 per share, at a price of $90.00 per one one- thousandth of a share, subject to adjustment. In accordance with the terms set forth in the Rights Agreement, the Rights are not exercisable until the occurrence of certain events, as defined. In addition, the registered holders of the Rights will have no rights as a Common stockholder of the Company until the Rights are exercised. The terms of the Rights may be amended by the Board of Directors. The Rights will expire on August 13, 2007. 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. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 1: FINANCIAL STATEMENTS (continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(unaudited, continued) 7. Other Assets Other assets includes $414,000 in unamortized purchase cost of the Company's majority interest of the Abiomed Limited Partnership. The interest in the Abiomed Limited Partnership is being amortized over five years, its estimated useful life. 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. Also included in other assets are long term accounts receivable related to sales-type leases. The terms of these non-cancellable leases are one to three years. As of September 30, 1997, approximately $490,000 is included in other assets. 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 APD 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 THREE MONTHS ENDED SEPTEMBER 30, 1997 NET INCOME Net income and income per share increased to $488,000 and $0.06 per share, respectively, for the three months ended September 30, 1997 compared to net income and income per share of $254,000 and $0.04 per share, respectively, for the three months ended September 30, 1996. REVENUES Total revenues, excluding interest income, increased by 82% to $7.0 million in the three months ended September 30, 1997 from $3.8 million in the three months ended September 30, 1996. This increase was attributable to an increase in both product and contract revenues. Product revenues increased by 77% to $5.1 million in the three months ended September 30, 1997 from $2.9 million in the three months ended September 30, 1996. This increase was primarily attributable to increased unit sales of BVS blood pumps, consoles and related accessories. Product revenues for the three months ended September 30, 1997 included a $230,000 reduction in the Company's BVS blood pump backlog and $250,000 in revenue from the a single international distributor to be used by that distributor to conduct BVS clinical trials for that distributor's territory. As of September 30, 1997, the Company's backlog of unshipped customer orders was $370,000. More than 90% of total product revenues in the three months ended September 30, 1997 were derived from domestic sources. Contract revenues increased by 98% to $1.9 million in the three months ended September 30, 1997 from $937,000 in the three months ended September 30, 1996. This increase primarily reflected increased activity under the Company's contract to develop a battery-powered Implantable Total Artificial Heart (TAH). 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. Through September 30, 1997, the government has appropriated $4.9 million of the $8.5 million of its TAH contract amount. The original government appropriation schedule calls for no further appropriation for the TAH contract until October 1998. This schedule is subject to change at the discretion of the government. During the three months ended September 30, 1997, the Company's expenditures under the TAH contract exceeded the appropriated amount, resulting in the Company recognizing as revenue all of the remaining $3.2 million balance of the $4.9 million appropriated under the TAH contract. 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) While the Company currently plans to further increase its expenditures in connection with the development of the TAH, the Company will not recognize any further contract revenues under the TAH contract until such time as additional funds are appropriated under the TAH contract, if ever. The Company believes that certain of its costs incurred prior to further appropriation may be reimbursable under the TAH contract, if and when additional appropriation under the TAH contract is made. Due to the Company's 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 $3.6 million TAH contract amount. As a result, the Company believes that it likely will incur losses, potentially as soon as the quarter ending December 31, 1997. As of September 30, 1997, the Company's total backlog of research and development contracts and grants was $8.7 million, including $3.6 million for TAH research and development and $3.0 million for Heart Booster research and development. Funding for the Company's government research and development contracts is subject to government appropriation, and all of these contracts contain provisions which make them terminable at the convenience of the government. COSTS AND EXPENSES Total costs and expenses increased to $6.8, 97% of total revenues, for the three months ended September 30, 1997, from $3.7, 97% of total revenues, for the three months ended September 30, 1996. The majority of this increase in costs and expenses was incurred to support higher revenues and increased development activities related of the TAH. Cost of products sold as a percentage of product revenues was 37.3% for the three months ended September 30, 1997 as compared to 37.2% in the three months ended September 30, 1996. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued) COSTS AND EXPENSES (continued) Research and development expenses increased by 119% to $2.0 million, 29% of total revenues, for the three months ended September 30, 1997, from $917,000, 24% of total revenues for the three months ended September 30, 1996. The increase primarily reflected a higher level of activity under the Company's cost-plus-fixed-fee research and development contracts and grants, particularly the TAH contract. Research and development expenses during the six months ended September 30, 1997 also included $230,000 of expenses incurred in connection with the Company's development activities for the TAH in excess of the appropriated amounts under the TAH contract. The Company anticipates that its research and development expenses will continue to increase significantly as a result of its plans to increase its internally funded research and development efforts for the TAH. Selling, general and administrative expenses increased by 67% to $2.9 million, 41% of total revenues, for the three months ended September 30, 1997, from $1.7 million, 45% of total revenues, for the three months ended September 30, 1996. The increase in absolute dollars primarily reflected increased sales and marketing expenses, particularly increased personnel and sales commissions, related to the increase in product revenues as well as additional administrative personnel. The decrease in selling, general and administrative expenses as a percentage of total revenue reflected the Company's higher revenue base to support these increased costs. INTEREST AND OTHER Interest and other income consists primarily of interest on the Company's investment balances, net of interest and other expenses. Interest income and other income increased to $292,000, 4% of total revenues, for the three months ended September 30, 1997 from $126,000, 3% of total revenues, for the three months ended September 30, 1996. This increase primarily reflects interest earned on the Company's higher average investment balances. Income taxes incurred during these periods were not material and the Company continues to have significant net tax operating loss carryforwards and tax credit carryforwards. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued) SIX MONTHS ENDED SEPTEMBER 30, 1997 NET INCOME Net income and income per share increased to $1.4 million and $0.05 per share, respectively, for the six months ended September 30, 1997 compared to net income and income per share of $637,000 and $0.04 per share, respectively, for the six months ended September 30, 1996. REVENUES Total revenues, excluding interest income, increased by 73% to $13.0 million in the six months ended September 30, 1997 from $7.5 million in the six months ended September 30, 1996. This increase was attributable to an increase in both product and contract revenues. Product revenues increased by 62% to $9.3 million in the six months ended September 30, 1997 from $5.8 million in the six months ended September 30, 1996. This increase was primarily attributable to increased unit sales of BVS blood pumps, consoles and related accessories. Product revenues during the six months ended September 30, 1997 included a $640,000 reduction in the Company's backlog for BVS blood pumps. This backlog had primarily resulted from the Company's voluntary recall of certain production lots of single-use BVS blood pumps during the quarter ended December 31, 1996. As of September 30, 1997, the Company's backlog of unshipped customer orders was $370,000. More than 90% of total product revenues in the six months ended September 30, 1997 were derived from domestic sources. Contract revenues increased by 110% to $3.7 million in the six months ended September 30, 1997 from $1.8 million in the six months ended September 30, 1996. This increase primarily reflected increased activity under the Company's TAH contract. 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. Through September 30, 1997, the government has appropriated $4.9 million of the $8.5 million of its TAH contract amount. The original government appropriation schedule calls for no further appropriation for the TAH contract until October 1998. This schedule is subject to change at the discretion of the government. During the six months ended September 30, 1997, the Company's expenditures under the TAH contract exceeded the appropriated amount, resulting in the Company recognizing as revenue all of the remaining $3.2 million balance of the $4.9 million appropriated under the TAH contract. 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) As of September 30, 1997, the Company's total backlog of research and development contracts and grants was $8.7 million, including $3.6 million for TAH research and development and $3.0 million for Heart Booster research and development. Funding for the Company's government research and development contracts is subject to government appropriation, and all of these contracts contain provisions which make them terminable at the convenience of the government. COSTS AND EXPENSES Total costs and expenses increased to $12.1, 93% of total revenues, for the six months ended September 30, 1997 from $7.1 million, 95% of total revenues, for the six months ended September 30, 1996. The majority of this increase in costs and expenses was primarily incurred to support higher revenue levels and increased development activities related to the TAH. Cost of products sold as a percentage of product revenues remained unchanged at 36.9% for the six months ended September 30, 1997 and 1996. Research and development expenses increased by 105% to $3.7 million, 28% of total revenues, for the six months ended September 30, 1997, from $1.8 million, 24% of total revenues, for the six months ended September 30, 1996. The increase primarily reflected a higher level of activity under the Company's under cost-plus-fixed-fee research and development contracts and grants, particularly the TAH contract. Research and development expenses during the six months ended September 30, 1997 also included $230,000 of expenses incurred in connection with the Company's development activities for the TAH in excess of the appropriated amounts under the TAH contract. The Company anticipates that its research and development expenses will increase significantly as a result of its plans to increase its internally funded research and development efforts for the TAH. Selling, general and administrative expenses increased by 54% to $5.0 million, 38% of total revenues, for the six months ended September 30, 1997 from $3.2 million, 43% of total revenues, for the six months ended September 30, 1996. The increase in absolute dollars primarily reflected increased sales and marketing expenses, particularly increased personnel and sales commissions, related to the increase in product revenues, as well as additional administrative personnel. The decrease in selling, general and administrative expenses as a percentage of total revenues reflected the Company's higher revenue base to support these increased costs. 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 consists primarily of interest on the Company's investment balances, net of interest and other expenses. Interest income increased to $417,000, 3% of total revenues, for the six months ended September 30, 1997, from $257,000, 3% of total revenues, for the six months ended September 30, 1996. This increase primarily reflects the interest earned on the Company's higher average investment balances. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1997, the Company had $24.3 million in cash and short-term marketable securities. The Company also has a $3,000,000 line of credit from a bank that expires in September 1998, and which was entirely available at September 30, 1997. In the six months ended September 30, 1997, operating activities provided cash of $2,000. Net cash provided by operating activities during the six months ended September 30, 1997 reflected net income of $1.4 million, including depreciation and amortization expense of $440,000, and an increase in accrued expenses of $535,000. These sources of cash were partially offset by an increase in accounts receivable of $2.0 million, a decrease in accounts payable of $156,000, and increases in prepaid expenses and inventory of $220,000 and $30,000, respectively. The increase in accounts receivable was primarily attributable to the Company's increased sales, including an increase in product revenues attributable to sales-type lease transactions. During the six months ended September 30, 1997, investing activities used $17.0 million of cash. Net cash used by investing activities included $15.9 million of purchases of short-term investments and $1.1 million of purchases and improvements of property and equipment. During the six months ended September 30, 1997, financing activities provided $16.1 million of cash. Net cash provided by financing activities included $16.0 million in net proceeds from the private placement of Common Stock to Genzyme Corporation and certain of the Company's directors in July 1997. ABIOMED, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued) LIQUIDITY AND CAPITAL RESOURCES (continued) Although the Company does not currently have significant capital commitments, the Company believes that it will continue to make significant investments over the next several years to support the development and commercialization of its products and the expansion of its manufacturing facility. On September 29, 1997, the Company filed a registration statement with the Securities and Exchange Commission for a proposed public offering of 2,400,000 additional shares of Common Stock. In the proposed offering, 2,250,000 of the shares are expected to be offered by the Company and 150,000 shares are expected to be offered by Selling Shareholders. The Company has also granted to the underwriters a thirty day option to purchase up to an additional 360,000 shares of the Company's Common Stock solely to cover over-allotments. The Company believes that its revenues and existing resources will be sufficient to fund its planned operations, including planned increases in its internally funded TAH development efforts, for at least the next twelve months. ABIOMED, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION Item 1. Legal Proceedings No material litigation. Item 2. Changes in Securities In July 1997, the Company completed a private placement of a total of 1,242,710 shares of Common Stock, par value $.01 per share, to Genzyme Corporation and certain of the Company's directors for a purchase price of $13.00 per share, for a total purchase price of approximately $16.2 million. The securities issued in the foregoing transaction were not registered under the Securities Act of 1933, as amended (the "Act"), in reliance upon the exemption from registration which is set forth in Section 4(2) of the Act relating to sales by an issuer not involving any public offering. Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders At the Company's Annual Meeting of Shareholders held on August 13, 1997, the stockholders approved the following: a) Elected two persons to serve as Class II directors as follows: Director Votes For Votes Withheld John F. O'Brien 6,210,801 22,870 Henri A. Termeer 6,212,001 21,670 b) A proposal to amend the Company's 1988 Employee Stock Purchase Plan (the "Plan") to expand the eligibility criteria to participate in the Plan to include employees who have completed six months of employment with the Company. The proposal received 6,169,709 votes for and 49,321 votes against. There were 14,641 abstentions and 784,170 non-voting. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K a) Exhibits 10.1 Amendment to ABIOMED, Inc. 1988 Employee Stock Purchase Plan 10.2 Amendment to ABIOMED, Inc. 1992 Combination Stock Option Plan b) Reports on Form 8-K Form 8-K dated August 13, 1997 reporting the Company's adoption of a Shareholders' Rights Plan. ABIOMED, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION 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: October 14, 1997 /s/ David M. Lederman David M. Lederman CEO and President Date: October 14, 1997 /s/ John F. Thero John F. Thero Vice President Finance and Treasurer Chief Financial Officer Principal Accounting Officer 18 EX-27 2 FINANCIAL DATA SHEET
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 ended September 30, 1997. 6-MOS MAR-31-1998 SEP-30-1997 711425 23600089 6257797 231000 1847624 32808318 5624501 2988902 36348203 3699757 0 0 0 82646 32565800 36348203 13004457 13004457 3437806 12062134 0 0 (416642) 1358965 1358965 1358965 0 0 0 1358965 0.17 0.17
EX-10 3 AMENDMENT TO ABIOMED, INC. 1992 COMBINATION STOCK OPTION PLAN, AS AMENDED ABIOMED, Inc., a Delaware corporation (the "Corporation") hereby adopts the following Amendment to the ABIOMED, Inc. 1992 Combination Stock Option Plan, as amended (the "1992 Plan"), effective as of August 14, 1996: 1. Section IV, Paragraph (b) is amended by deleting a portion of the first sentence of the paragraph, so that the paragraph, as amended, reads in its entirety as follows: "(b) Term. Stock Options shall be for such periods as may be determined by the Committee, provided that in no event may a 1992 Plan ISO be exercisable (including provisions, if any, for exercise in installments) subsequent to ten years after the date of grant, or, in the case of 1992 Plan ISOs granted to Ten Percent Stockholders, more than five years after the date of grant. 2. That the number of shares of Common Stock authorized to be issued under the 1992 Plan be increased from 1,300,000 shares to 1,550,000 shares. Executed effective as of the date set forth above. ABIOMED, INC. By: _______________________________________ Name: Title: EX-10 4 AMENDMENT TO ABIOMED, INC. 1988 EMPLOYEE STOCK PURCHASE PLAN ABIOMED, Inc., a Delaware corporation (the "Corporation") hereby adopts the following Amendment to the ABIOMED, Inc. 1988 Employee Stock Purchase Plan, effective as of November 21, 1996: 1. Section 2, Paragraph (a) is amended by replacing the word "eighteen" with the word "six" in the first sentence of the paragraph, so that the first sentence, as amended, reads in its entirety as follows: "All employees of the Company or any of its participating subsidiaries who have completed six months of employment with the Company or any of its subsidiaries on or before the first day of the Applicable Payment Period (as defined below) shall be eligible to receive options under this Plan to purchase the Company's Common Stock (except employees in countries whose laws make participation impractical). Executed effective as of the date set forth above. ABIOMED, INC. By: _________________________________ Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----