-----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, NtrveOcQcv7eRwxg5M0lDGX1Dg2e6gAdF5EWGTiyxTr5ZJ/ejt8u34UYb1k6quLJ stMVto3zoZyWwPnlC1f/Og== 0000898430-96-001893.txt : 19960515 0000898430-96-001893.hdr.sgml : 19960515 ACCESSION NUMBER: 0000898430-96-001893 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960330 FILED AS OF DATE: 19960514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACUSON CORP CENTRAL INDEX KEY: 0000717014 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 942784998 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10068 FILM NUMBER: 96564528 BUSINESS ADDRESS: STREET 1: 1220 CHARLESTON RD STREET 2: PO BOX 7393 CITY: MOUNTAIN VIEW STATE: CA ZIP: 94039 BUSINESS PHONE: 4159699112 MAIL ADDRESS: STREET 1: P O BOX 7393 STREET 2: 1220 CHARLESTON RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 74039 10-Q 1 FORM 10-Q 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 30, 1996 or -------------- [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____________ to ___________ Commission file number 0-14953 ACUSON CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 94-2784998 - ----------------------------- ----------------------------------------------- (State of Incorporation) (IRS Employer Identification No.) 1220 CHARLESTON ROAD P. O. BOX 7393 MOUNTAIN VIEW, CA 94039-7393 (Address of principal executive offices) Registrant's telephone number, including area code, is (415) 969-9112 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 --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.0001 par value 26,873,413 shares ------------------------------- ----------------------------- (Class) Outstanding at April 26, 1996 ________________________________________________________________________________ FORM 10-Q ACUSON CORPORATION INDEX PAGE NUMBER PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets as of March 30, 1996 and December 31, 1995 1 Condensed Consolidated Statements of Operations for the Three Months Ended March 30, 1996 and April 1, 1995 2 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 30, 1996 and April 1, 1995 3 Notes to Unaudited Condensed Consolidated Financial Statements 4 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 8 Signature 9 - -------------------------------------------------------------------------------- ACUSON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
MARCH 30, DECEMBER 31, 1996 1995 (Unaudited) - -------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 35,604 $ 46,135 Short-term investments 5,997 10,000 -------- -------- Total cash and short-term investments 41,601 56,135 Accounts receivable, net 77,393 77,992 Inventories 58,920 50,484 Other current assets 38,965 36,655 -------- -------- Total current assets 216,879 221,266 PROPERTY AND EQUIPMENT, at cost, net of accumulated depreciation and amortization of $109,804 and $106,647 in 1996 and 1995, respectively 52,422 50,244 OTHER ASSETS, NET 27,683 24,343 -------- -------- Total Assets $296,984 $295,853 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 25,019 $ 16,295 Other accrued liabilities 82,604 83,561 -------- -------- Total current liabilities 107,623 99,856 -------- -------- Commitments and contingencies (Note 4) STOCKHOLDERS' EQUITY Preferred stock, par value $.0001: authorized, 10,000 shares, outstanding, none -- -- Common stock and additional paid-in capital, common stock par value $.0001: authorized, 50,000 shares; outstanding; 26,839 shares and 27,275 shares in 1996 and 1995, respectively 80,912 79,702 Cumulative translation adjustment 134 206 Unrealized holding loss on investment securities 2 37 Retained earnings 108,313 116,052 -------- -------- Total stockholders' equity 189,361 195,997 -------- -------- Total Liabilities and Stockholders' Equity $296,984 $295,853 ======== ========
- -------------------------------------------------------------------------------- See accompanying notes to unaudited condensed consolidated financial statements. 1 ________________________________________________________________________________ ACUSON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts, unaudited)
THREE MONTHS ENDED ------------------------- MARCH 30, APRIL 1, 1996 1995 - -------------------------------------------------------------------------------- NET SALES Product $64,337 $68,645 Service 20,489 19,321 ------- ------- Total net sales 84,826 87,966 ------- ------- COST OF SALES Product 30,950 31,846 Service 9,833 8,637 ------- ------- Total cost of sales 40,783 40,483 ------- ------- Gross profit 44,043 47,483 ------- ------- OPERATING EXPENSES Selling, general and administrative 26,767 27,262 Product development 16,372 18,059 ------- ------- Total operating expenses 43,139 45,321 ------- ------- Income from operations 904 2,162 INTEREST INCOME, NET 899 991 ------- ------- Income before income taxes 1,803 3,153 PROVISION FOR INCOME TAXES 541 914 ------- ------- Net income $ 1,262 $ 2,239 ======= ======= EARNINGS PER SHARE $ 0.05 $ 0.08 ======= ====== WEIGHTED AVERAGE COMMON AND COMMON 27,197 29,953 EQUIVALENT SHARES OUTSTANDING ====== ======
- ------------------------------------------------------------------------------- See accompanying notes to unaudited condensed consolidated financial statements. 2 - -------------------------------------------------------------------------------- ACUSON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited)
THREE MONTHS ENDED ------------------------ MARCH 30, APRIL 1, 1996 1995 - -------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,262 $ 2,239 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 4,784 4,154 Changes in: Accounts receivable 641 1,308 Leases receivable (6,524) (3,613) Inventories (8,475) 1,578 Other current assets 338 1,923 Accounts payable 8,740 2,564 Other accrued liabilities (2,376) 2,743 -------- ------- Net cash (used in) provided (1,610) 12,896 by operating activities -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Decrease in short-term investments 3,948 4,929 Investment in property and equipment (7,098) (4,325) Decrease (increase) in other assets 717 (87) -------- ------- Net cash (used in) provided (2,433) 517 by investing activities -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Repurchase of common stock (9,930) (5,091) Issuance of common stock under stock option and stock purchase plans 3,475 3,484 -------- ------- Net cash (used in) financing (6,455) (1,607) activities -------- ------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (33) 324 -------- ------- Net (decrease) increase in cash and (10,531) 12,130 cash equivalents CASH AND CASH EQUIVALENTS, BEGINNING OF 46,135 28,671 PERIOD -------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 35,604 $40,801 ======== =======
- -------------------------------------------------------------------------------- See accompanying notes to unaudited condensed consolidated financial statements. 3 ________________________________________________________________________________ ACUSON CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - INTERIM STATEMENTS In the opinion of management, the unaudited interim condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary to summarize fairly Acuson Corporation's (the "Company's") condensed consolidated financial position as of March 30, 1996 and its condensed consolidated results of operations and cash flows for the periods ended March 30, 1996 and April 1, 1995. The results of operations for the three months ended March 30, 1996 are not necessarily indicative of the results to be expected for the entire year ending December 31, 1996. Certain information reported in the prior year has been reclassified to conform to the 1996 presentation. The Company's principle accounting policies are set forth in the financial statements for the year ended December 31, 1995 and notes thereto, contained in the Company's Annual Report filed with the Securities and Exchange Commission. NOTE 2 - INVESTMENTS Under Statement of Financial Accounting Standards No. 115, the Company's investments, which consisted entirely of debt securities (the "securities"), were classified as available-for-sale. These securities mature at various dates through the year 1997. As of March 30, 1996, the securities' gross unrealized holding loss was approximately $3,000. The unrealized holding loss of approximately $2,000, net of the tax effect, was reported as a separate component of stockholders' equity. The Company has determined that the unrealized holding loss is not a permanent impairment of the fair value of its investments. During the three months ended March 30, 1996, the Company did not sell any of its securities prior to maturity. NOTE 3 - INVENTORIES The components of inventories were as follows (in thousands):
MARCH 30, DEC. 31, 1996 1995 --------- --------- Raw materials $30,882 $26,906 Work-in-process 8,984 5,981 Finished goods 19,054 17,597 ------- ------- Total inventories $58,920 $50,484 ======= =======
NOTE 4 - LEGAL CONTINGENCIES On July 1, 1993 and July 30, 1993, individuals purporting to represent a class of persons who purchased Acuson common stock during the period between October 24, 1990, and July 22, 1992, filed two separate, but related, actions against the Company and twelve of its officers and one former officer in the Federal District Court for the Northern District of California alleging that the defendants' statements about the Company were incomplete or 4 inaccurate, in violation of Federal securities laws. Plaintiffs sought damages in an unspecified amount, as well as equitable relief or injunctive relief and attorneys' fees, experts' fees and costs. In September 1995, the parties agreed in principal to settle the pending litigation, subject to the Court's approval. The proposed settlement would not have a material adverse effect on the Company's financial condition. On October 27, 1994, the Company was sued in Ghent, Belgium, by Cormedica NV, in connection with the Company's termination of its distributor relationship with Cormedica. In the suit, Cormedica seeks indemnities and damages in the amount of approximately $2.5 million. The Company intends to defend this suit vigorously. Management believes that the ultimate outcome of this matter will not have a material adverse effect on the Company's financial condition. ________________________________________________________________________________ 5 ________________________________________________________________________________ ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales for the quarter ended March 30, 1996, were $84.8 million compared to $88.0 million in the quarter ended April 1, 1995. The change in revenue was primarily because of a decrease in domestic product revenue. The Company's average unit selling prices were lower in this quarter as a result of an increase in sales of lower-priced configurations and intense competitive pricing pressures. Worldwide service revenue increased 6.1% to $20.5 million from $19.3 million in the quarter ended April 1, 1995, primarily due to a larger base of installed systems. Geographically, international revenue increased to $34.8 million, totalling 41.0% of the Company's sales as compared to 37.2% in the comparable 1995 period. The Company believes that the trends of health-care-provider consolidation, medical cost containment and intense competitive pressures which existed in 1995, will continue into 1996. The Company believes that future revenues may continue to be impacted by these uncertainties, especially in the domestic ultrasound market. Although portions of the international ultrasound markets are experiencing some economic recovery, it is uncertain whether this is temporary or permanent. The gross profit for the first quarter of 1996 was 51.9% of net sales, compared to 54.0% in the first quarter of 1995. The percentage change was primarily a reflection of reduced product prices, increased sales of lower- priced product configurations and lower service margins. The lower service margins are primarily due to pricing pressures as a result of medical cost containment. Selling, general and administrative costs were $26.8 million in the quarter ended March 30, 1996, as compared to $27.3 million in the prior year's period. As a percentage of sales, such expenses in the first three months in 1996 totalled 31.6% of net sales compared to 31.0% in 1995. Dollar spending decreased primarily due to the decrease in domestic selling expenses. Product development costs in the first quarter of 1996 totalled $16.4 million or 19.3% of net sales, compared to $18.1 million or 20.5% of net sales in the first quarter of 1995. The decrease in product development expense results from a planned reduction in the level of product development. The provision for income taxes was $0.5 million in the first quarter of 1996 versus $0.9 million in the first quarter of 1995. The effective tax rate for the three months ended March 30, 1996 was 30% versus 29% in the same period in the prior year. On April 29, 1996 the Company introduced its new Sequoia 512 and Sequoia C256 ultrasound systems. The Company plans to begin shipments of the Sequoia products in the third quarter of 1996. As a result of this new product introduction, the Company expects to incur substantial additional selling expenses and manufacturing costs. The introduction may also negatively impact revenues from existing products. Currently, the Company expects the impact to be in the range of $0.25 to $0.40 per share for the second quarter of 1996. Accordingly, the Company expects to report a loss for the second quarter of 1996. 6 ________________________________________________________________________________ LIQUIDITY AND CAPITAL RESOURCES The Company's cash and short-term investments balance has decreased $14.5 million during the three months ended March 30, 1996 to $41.6 million. During the quarter, the Company used $1.6 million in cash for operations, as compared to the first quarter of 1995 when operations generated $12.9 million in cash. Inventories increased $8.5 million during the quarter as a result of the planned introduction of the new Sequoia product line. The increase in inventories resulted in a similar increase in accounts payable which increased $8.7 million during the quarter. The Company's investing and financing activities for the three months ended March 30, 1996 have used $8.9 million. The Company purchased $7.1 million of equipment during the quarter, primarily related to the development and manufacture of the new product line. Included in the financing activities for the first quarter of 1996 is $3.5 million raised through employee participation in the Company's stock option and stock purchase plans and $9.9 million used for share repurchases. In the same period a year ago, employee participation in the Company's stock plans also generated $3.5 million while share repurchases used $5.1 million. In 1993, the Board of Directors authorized the repurchase of 4,000,000 shares of common stock over an unspecified period of time. During the first quarter the Company repurchased 750,000 shares, for a total repurchase of 3,464,800 shares to date toward the Board authorization. As of March 30, 1996, there were 26,839,225 shares of Acuson common stock outstanding. At April 1, 1995, the Company's working capital totalled $109.3 million. The Company also has a revolving unsecured credit facility for $50 million which is in effect through March 1997. No compensating balances are required and the full amount is available under this credit facility. There were no draws on this line of credit during the quarter. Based on its current operating plan, the Company believes that the liquidity provided by its existing cash and short-term investments, the borrowing arrangements described above, and cash generated from operations will be sufficient to meet the Company's operating and capital requirements for fiscal 1996. ________________________________________________________________________________ 7 ________________________________________________________________________________ PART II ITEM 1 LEGAL PROCEEDINGS Previously reported in Company's Form 10-K for the fiscal year ended December 31, 1995. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits -------- 27.1 Financial Data Schedule b) Reports on Form 8-K ------------------- The Company filed a report on Form 8-K on April 29, 1996. ________________________________________________________________________________ 8 ________________________________________________________________________________ SIGNATURE 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. ACUSON CORPORATION (Registrant) May 14, 1996 By /s/ Stephen T. Johnson ----------------------- Stephen T. Johnson Vice President, Chief Financial Officer and Treasurer (duly authorized Officer and Principal Financial and Accounting Officer) 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1995 JAN-01-1996 MAR-30-1996 35,604 5,997 80,317 2,924 58,920 216,879 162,226 109,804 296,984 107,623 0 0 0 80,912 108,449 296,984 64,337 84,826 30,950 40,783 43,139 0 (899) 1,803 541 1,262 0 0 0 1,262 0.05 0.05
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