================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 1O-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 27, 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 000-21517
---------
XOMED SURGICAL PRODUCTS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 06-1393528
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6743 SOUTHPOINT DRIVE N., JACKSONVILLE, FL 32216-0980
- ------------------------------------------ -----------
(Address of principal executive offices) (Zip Code)
(904) 296-9600
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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, $.01 par value - 7,334,149 shares as of October 30, 1997
================================================================================
<PAGE>
XOMED SURGICAL PRODUCTS, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
- ----------------------------- -----------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
September 27, 1997 and December 31, 1996..................... 2
Condensed Consolidated Statements Of Operations
Three Months Ended September 27, 1997
and September 28, 1996, and Nine Months Ended
September 27, 1997 and September 28, 1996.................... 3
Condensed Consolidated Statements Of Cash Flows
Nine Months Ended September 27, 1997 and September 28, 1996.. 4
Notes To Condensed Consolidated Financial Statements
September 27, 1997........................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 7
PART II. OTHER INFORMATION
- --------------------------
Item 1. Legal Proceedings................................................ 10
Item 6. Exhibits and Reports on Form 8-K................................. 10
SIGNATURES 11
- ---------- --
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
XOMED SURGICAL PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
SEPTEMBER 27, DECEMBER 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................. $ 206 $ 629
Accounts receivable, less allowance ....................... 11,717 9,935
Other receivables ......................................... 644 1,056
Inventories ............................................... 16,461 14,846
Prepaid expenses .......................................... 1,102 853
Income taxes receivable ................................... 443 217
Deferred income taxes ..................................... 1,471 1,721
-------- --------
Total current assets ............................................ 32,044 29,257
Notes receivable from officers .................................. 724 724
Property, plant and equipment, net .............................. 15,282 15,377
Cost in excess of net assets acquired, net ...................... 42,896 44,389
Other assets .................................................... 2,375 3,273
Deferred income taxes ........................................... 477 1,036
-------- --------
Total assets .................................................... $ 93,798 $ 94,056
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable .......................................... $ 5,515 $ 4,848
Accrued expenses .......................................... 3,364 4,835
Accrued restructuring costs ............................... 106 1,155
Current portion long-term debt and capital lease obligation 438 88
-------- --------
Total current liabilities ....................................... 9,423 10,926
Long-term debt and capital lease obligation, less current portion -- 3,563
Redeemable preferred stock - -0- shares issued and outstanding . -- --
Shareholders' equity :
Common stock, voting, $.01 par value; 30,000,000 shares
authorized,7,334,149 shares issued and outstanding ...... 73 73
Common stock, non-voting, $.01 par value; 4,000,000
shares authorized,-0- shares issues and outstanding ..... -- --
Retained deficit ................................................ (5,806) (9,589)
Additional paid-in capital ...................................... 90,416 89,475
Unearned compensation ........................................... (308) (392)
-------- --------
Total shareholders' equity ...................................... 84,375 79,567
======== ========
Total liabilities and shareholders' equity ...................... $ 93,798 $ 94,056
======== ========
</TABLE>
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
XOMED SURGICAL PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------ -----------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
1997 1996 1997 1996
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sales, net ........................................... $ 18,650 $ 15,846 $ 55,657 $ 48,788
Cost of sales ........................................ 7,413 6,283 22,141 18,973
-------- -------- -------- --------
Gross margin ......................................... 11,237 9,563 33,516 29,815
Operating expenses:
Selling, general and administrative .................. 7,367 6,122 22,412 20,251
Research and development ............................. 1,015 857 3,018 2,576
Amortization of intangibles .......................... 585 656 1,789 1,824
Write-off of acquired research and development ....... -- -- -- 2,380
Restructuring charges ................................ -- -- -- 3,093
-------- -------- -------- --------
Total operating expenses ............................. 8,967 7,635 27,219 30,124
-------- -------- -------- --------
Operating income (loss) .............................. 2,270 1,928 6,297 (309)
Interest expense, net ................................ (14) (661) (121) (2,140)
Other income, net .................................... 20 88 120 95
-------- -------- -------- --------
Income (loss) before income tax expense .............. 2,276 1,355 6,296 (2,354)
Income tax expense ................................... 907 542 2,513 48
-------- -------- -------- --------
Net income (loss) .................................... $ 1,369 $ 813 $ 3,783 $ (2,402)
======== ======== ======== ========
Pro forma:
Net income (loss) .................................... $ 813 $ (2,478)
Preferred stock dividends ............................ 538 1,077
-------- --------
Net income (loss) available to common shareholders ... 275 (3,555)
Interest expense, net of taxes ....................... 379 1,137
Preferred stock dividends ............................ 538 1,077
-------- --------
Supplementary net income (loss) ...................... $ 1,192 $ (1,341)
======== ========
Per share:
Net income (loss) (pro forma in 1996) ............... $ 0.18 $ 0.06 $ 0.50 $ (0.77)
======== ======== ======== ========
Supplementary pro forma net income (loss) ............ $ 0.16 $ (0.18)
======== ========
Weighted average common shares outstanding
(pro forma in 1996) .................................. 7,569 4,623 7,495 4,621
======== ======== ======== ========
Supplementary pro forma weighted average common shares
outstanding .......................................... -- 7,498 -- 7,496
======== ======== ======== ========
</TABLE>
3
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
XOMED SURGICAL PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NINE MONTHS ENDED
----------------------------
SEPTEMBER 27, SEPTEMBER 28,
1997 1996
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by operating activities .................. $ 3,805 $ 2,518
INVESTING ACTIVITIES
Purchases of property and equipment ........................ (1,800) (2,066)
Proceeds from sale of property and equipment ............... 11 --
Proceeds from certificates of deposit ...................... 140 330
Purchase of business (including cash received) ............. -- 2,000
-------- --------
Net cash (used in) provided by investing activities ........ (1,649) 264
FINANCING ACTIVITIES
Proceeds from revolving line of credit ..................... 10,109 21,793
Payments on revolving line of credit ....................... (13,245) (20,352)
Payments on term notes payable and capital lease obligations (77) (4,096)
Proceeds from exercise of stock option ..................... 634 --
Proceeds from issuance of stock ............................ -- 140
-------- --------
Net cash (used in) provided by financing activities ........ (2,579) (2,515)
-------- --------
Net increase (decrease) in cash and cash equivalents ....... (423) 267
Cash and cash equivalents at beginning of period ........... 629 417
-------- --------
Cash and cash equivalents at end of period ................. $ 206 $ 684
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest .......................................... $ 202 $ 2,836
======== ========
Taxes ............................................. $ 736 $ 100
======== ========
</TABLE>
4
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
XOMED SURGICAL PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X and should be read in conjunction with the audited
financial statements for the years ended December 31, 1996, 1995, and 1994 of
Xomed Surgical Products, Inc. (the Company) which were included as part of the
Company's 1996 Annual Report on Form 10-K. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the nine-month
period ended September 27, 1997 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997.
NOTE B - INVENTORIES
The components of inventory consist of the following:
SEPTEMBER 27, DECEMBER 31,
1997 1996
------------- ------------
Raw Materials $ 5,795 $ 5,601
Work-In-Process 1,375 2,006
Finished Products 9,291 7,239
======= =======
$16,461 $14,846
======= =======
5
<PAGE>
XOMED SURGICAL PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(in thousands, except per share data)
NOTE C - PRO FORMA STATEMENT OF OPERATIONS
The following unaudited pro forma statement of operations for the nine
months ended September 28, 1996 reflects the statement of operations of the
Company for the period presented as if TreBay Medical Corporation ("TreBay") was
purchased on January 1, 1996. The pro forma statement of operations should be
read in conjunction with the financial statements of the Company which were
included as part of the Company's 1996 Annual Report on Form 10-K.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 28, 1996
----------------------
PRO
XOMED TREBAY ADJUSTMENTS FORMA
-------- -------- ------------ --------
<S> <C> <C> <C> <C>
Sales, net .................................. $ 48,788 $ 279 $ -- $ 49,067
Cost of sales ............................... 18,973 219 -- 19,192
-------- -------- -------- --------
Gross margin ................................ 29,815 60 -- 29,875
Operating Expenses:
Selling, general and administrative ...... 20,251 299 (154) (a) 20,396
Research and development ................. 2,576 138 (66) (a) 2,648
Amortization of intangibles .............. 1,824 -- -- 1,824
Write-off of acquired research development 2,380 -- -- 2,380
Restructuring charges .................... 3,093 -- -- 3,093
-------- -------- -------- --------
Total operating expenses .................... 30,124 437 (220) 30,341
-------- -------- -------- --------
Operating income (loss) ..................... (309) (377) 220 (466)
Interest expense ............................ (2,140) -- -- (2,140)
Other income, net ........................... 95 54 -- 149
-------- -------- -------- --------
Income (loss) before income tax
expense (benefit) ........................ (2,354) (323) 220 (2,457)
Income tax expense (benefit) ................ 48 -- (27) (a) (21)
-------- -------- -------- --------
Net income (loss) ........................... $ (2,402) $ (323) $ 247 $ (2,478)
======== ======== ======== ========
Pro forma net loss per share ................ $ (0.77)
========
Pro forma weighted average shares outstanding 4,621
========
</TABLE>
(a) Elimination of general and administrative expenses which are duplicative and
will not be incurred subsequent to the purchase date, amortization of acquired
developed research and development, non-cash compensation expense related to
stock options granted, closing of the TreBay facility and calculation of income
tax benefit on the TreBay loss after adjustments.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, INCLUDING RISK ASSOCIATED WITH THE EAR, NOSE AND THROAT ("ENT")
SURGICAL PRODUCTS INDUSTRY AND OTHER RISKS DETAILED FROM TIME TO TIME IN THE
FILINGS OF XOMED SURGICAL PRODUCTS, INC. (THE "COMPANY") WITH THE SECURITIES AND
EXCHANGE COMMISSION.
RESULTS OF OPERATIONS
SALES BY MARKET. The Company derives sales from various markets within
the ENT industry. Sinus and rhinology, head and neck and otology are the three
core markets in which the Company operates. In addition to products for these
markets, the Company has other product offerings, including lines of ophthalmic,
orthopaedic and other products. The following table summarizes the Company's
worldwide product line sales during the periods indicated (in thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------- -----------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sinus & Rhinology .... $ 7,021 $ 5,407 $20,235 $16,327
Head & Neck .......... 4,551 4,080 12,582 11,911
Otology .............. 3,018 3,069 10,879 10,674
------- ------- ------- -------
Total Core Business 14,590 12,556 43,696 38,912
Ophthalmic & Other ... 4,060 3,290 11,961 9,876
======= ======= ======= =======
Total Company ..... $18,650 $15,846 $55,657 $48,788
======= ======= ======= =======
</TABLE>
NET SALES. For the three months ended September 27, 1997, net sales
increased 17.7% to $18.7 million from $15.8 million in the comparable quarter of
1996. Net sales increased 14.1% to $55.7 million in the first nine months of
1997 from $48.8 million in the comparable period in 1996. Total domestic sales
increased 18.8% and 18.3% for the three months and nine months ended September
27, 1997, respectively, and international sales increased 15.1% and 5.3% during
the same periods from comparable periods of 1996. On a sequential quarter basis,
the Company generated overall sales growth of 9.2% in the first quarter of 1997,
15.4% in the second quarter and 17.7% in the third quarter when compared to the
prior year's comparable quarters. The improvement in sales growth during the
first three quarters of 1997 relates principally to accelerating growth in Sinus
and Rhinology as a result of the Company's introduction of its XPS
StraightShot(TM) system used in endoscopic sinus procedures and an overall
improvement in the Company's international business due to recent new product
introductions and improving availability of funding in certain international
healthcare systems in which the Company competes. In the core business of sinus
and rhinology, head and neck and otology, sales increased 16.2% and 12.3% for
the three and nine-month periods ended September 27, 1997, respectively,
compared to the 1996 comparable periods. Domestic sales within in the core
business, increased 19.7% and 17.9% for the three and nine month periods ended
September 27, 1997, respectively, as compared with the comparable periods of
1996, and international sales increased 8.3% and 1.2% in the same periods of
1997 from the 1996 comparable periods. Total sales in the ophthalmic and other
category increased 23.4% and 21.1% in the three and nine-month periods ended
September 27, 1997, respectively, compared to the comparable periods in 1996.
The increases in ophthalmic and other related primarily to sales of orthopaedic
instruments in 1997, which were not present in 1996.
GROSS MARGIN. Gross margin as a percent of sales was 60.3% and 60.2%
for the three and nine-month periods ended September 27, 1997, respectively,
compared to 60.3% and 61.1% in the comparable periods of 1996. The decrease in
the gross margin percentage on a year-to-date basis relates primarily to a
higher mix of somewhat lower margin products during the current periods such as
the orthopaedic instrument line.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 20.3% and 10.7% to $7.4 million and $22.4
million in the three-month and nine-month periods ended September 27, 1997,
respectively, from the comparable periods in 1996. As a percent of sales,
selling, general and administrative expenses were 39.5% and 40.3% in the three
and nine-month periods ended September 27, 1997, respectively, as compared to
38.6% and 41.5%, respectively, in the comparable periods of 1996.
7
<PAGE>
RESEARCH AND DEVELOPMENT. Research and development expenses increased
18.4% and 17.2% to $1.0 million and $3.0 million in the three-month and
nine-month periods ended September 27, 1997, respectively, from the comparable
periods in 1996. As a percent of sales, research and development expenses for
1997 were 5.4% and 5.4%, respectively, as compared to 5.3% and 5.4% in the
comparable periods of 1996. Major project spending during the current periods
includes expenses related to cutter blades and other new products.
OPERATING INCOME (LOSS). Operating income (loss) reflected income of
$2.3 million and $6.3 million for the three and nine-month periods ended
September 27, 1997, respectively, compared to income of $1.9 million and a loss
of $309,000 for the comparable periods of 1996. The increase in operating income
of $6.6 million for the nine months ended September 27, 1997 from the comparable
period in 1996 relates to the discussion above, but also to a $3.1 million
restructuring charge and the write-off of in-process research and development of
$2.4 million in conjunction with the purchase of TreBay Medical Corporation
which were both recorded in the second quarter of 1996.
INTEREST AND OTHER. Interest expense, net decreased 94.3% to $121,000
for the nine month period ended September 27, 1997 from $2.1 million in the
comparable period of 1996 due to lower average debt levels during the current
period. Other income, net was $20,000 and $120,000 for the three and nine-month
periods ended September 27, 1997, respectively, compared to other income, net of
$88,000 and $95,000 for the comparable periods of 1996. Other income, net for
the fourth quarter of 1997, is not expected to keep pace with the 1996 fourth
quarter amount of $430,000 due to the expiration of a royalty agreement in late
1996.
INCOME TAXES. The Company's effective tax rate was 39.9% on the
Company's net income for the first nine months of 1997 compared to an effective
tax rate of 2% on the Company's net loss for the comparable period of 1996. The
1996 rate varied from an effective rate of approximately 40.0% due primarily to
the lack of tax benefit related to the write-off of in-process research and
development in the second quarter. Approximately 2% of the 1997 rate relate to a
provision for a valuation account for operating losses incurred principally in
Germany.
LIQUIDITY AND CAPITAL RESOURCES
The Company historically has financed its operations (including capital
expenditures) through cash flows from operations. Since the Company's
acquisition of Xomed, Inc. in April 1994, which was financed in part by the
incurrence of $45.9 million of debt under the Company's secured term loan
facility (the "Term Loan") and its secured revolving credit facility (the
"Revolving Credit Facility"), all cash flow generated from operations had been
applied to repay the outstanding principal on the Term Loan or the Revolving
Credit Facility. In October 1996 the Company completed its initial public stock
offering, the proceeds of which were used to repay the entire Term Loan and the
majority of the Revolving Credit Facility. As of September 27, 1997, total
long-term debt consisted only of a long-term capital lease with a balance of
$438,000, which is due at the end of 1997, as compared to $3.7 million at
December 31, 1996. Consequently, interest expense has been substantially
reduced.
During the nine months ended September 27, 1997, the Company generated
cash of $3.8 million in operating activities as compared with $2.5 million cash
generated from operating activities in the prior comparable period. In the first
nine months of 1997, the Company had a net use of cash of approximately $3.8
million within inventory, accounts receivable and accounts payable as compared
to a net use of cash within these components of operations (after deduction of a
$1.7 million cash flow related to one customer, which receipt is non-recurring)
of approximately $2.5 million in the comparable 1996 period. Accounts payable
and accrued expenses comprised a significant amount of this use of cash during
1997, due to a $800,000 decrease from December 31, 1996, related principally to
payments of amounts related to the Company's initial public offering. The
balance of the use of cash within these working capital accounts stems from the
Company's growth in sales and related increase in accounts receivable and
inventories. In addition, payments related to the $3.1 million restructuring
charge recorded during the second quarter of 1996 lowered cash flow from
operations in the first nine months of 1997 by $1.0 million which was entirely
offset by a reduction of deferred tax assets.
Cash used in investing activities was $1.6 million in the first nine
months of 1997 as compared to cash used in investing activities of $1.7 million
(after eliminating the effects of cash acquired in a business combination) in
the prior comparable period. Capital expenditures were $1.8 million and $2.1
million in the first nine months of 1997 and 1996, respectively. Cash used to
purchase capital assets for the start-up of the Company's subsidiary in Germany
contributed to the larger amount expended in the first nine months of 1996.
8
<PAGE>
Cash used in financing activities was $2.6 million in the first nine
months of 1997 as compared with a use of cash of $2.5 million in the comparable
period of 1996. The Company received cash from the exercise of stock options of
$634,000 in the first quarter of 1997 and reduced its long-term debt during the
first nine months of 1997 by approximately $3.1 million. In the first nine
months of 1996, the Company made payments under the then outstanding Term Loan
and its capital lease obligation of $4.1 million, and borrowed a net $1.4
million from its line of credit.
NEW STATEMENT OF FINANCIAL ACCOUNTING
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 earnings per
share in all prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options will be excluded.
Dilutive stock options and other dilutive equity instruments will be included in
a separate presentation of "earnings per share - assuming dilution." The impact
is not expected to be material, as shown below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- ----------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Earnings (loss) per share as presented $ 0.18 $ 0.06 $ 0.50 $ (0.77)
Restated
Earnings (loss) per share ......... $ 0.19 $ 0.06 $ 0.52 $ (0.79)
Earnings (loss) per share assuming
dilution .......................... $ 0.18 $ 0.06 $ 0.50 $ (0.77)
</TABLE>
9
<PAGE>
XOMED SURGICAL PRODUCTS, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is currently involved in certain legal proceedings
incidental to the normal conduct of its business. The Company does not believe
that any liabilities relating to the legal proceedings to which it is a party
are likely to be, individually or in the aggregate, material to its consolidated
financial position or results of operations.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the three
months ended September 27, 1997.
10
<PAGE>
XOMED SURGICAL PRODUCTS, INC. AND SUBSIDIARIES
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 on the dates indicated.
XOMED SURGICAL PRODUCTS, INC.
-----------------------------
(Registrant)
Date NOVEMBER 10, 1997 /s/ JAMES T. TREACE
------------------------------------
James T. Treace, Chairman, President
and Chief Executive Officer
(duly authorized officer)
Date NOVEMBER 10, 1997 /s/ THOMAS E. TIMBIE
-------------------------------------
Thomas E. Timbie, Vice President and
Chief Financial Officer
(principal financial officer)
11
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
- ------- ----
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
EXHIBIT 11
<TABLE>
<CAPTION>
XOMED SURGICAL PRODUCTS, INC. AND SUBSIDIARIES
Exhibit (11) - Statement Re: Computation of Earnings Per Share
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- --------------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
1997 1996 1997 1996
-------------- ------------- ------------- -------------
(in thousands except per share data)
<S> <C> <C> <C> <C>
Average common shares outstanding ................ 7,334 1,108 7,319 1,078
Net effect of conversion of convertible
preferred stock .................................. -- 3,258 -- 3,258
Net effect of dilutive stock options - based
on the treasury stock method ..................... 235 257 176 285
------- -------- ------- ---------
Totals ........................................... 7,569 4,623 7,495 4,621
======= ======== ======= =========
Net income (loss) (pro forma in 1996) available to
common shareholders .............................. $ 1,369 $ 275 $ 3,783 $ (3,555)
======= ======== ======= =========
Net income (loss) per share (pro forma in 1996) .. $ 0.18 $ 0.06 $ 0.50 $ (0.77)
======= ======== ======= =========
Supplementary net income (loss) .................. $ 1,192 $ (1,341)
======== =========
Supplementary net income (loss) per share ........ $ 0.16 $ (0.18)
======== =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-27-1997
<CASH> 206
<SECURITIES> 0
<RECEIVABLES> 12,310
<ALLOWANCES> 593
<INVENTORY> 16,461
<CURRENT-ASSETS> 32,044
<PP&E> 23,820
<DEPRECIATION> 8,538
<TOTAL-ASSETS> 93,798
<CURRENT-LIABILITIES> 9,423
<BONDS> 0
0
0
<COMMON> 73
<OTHER-SE> 84,302
<TOTAL-LIABILITY-AND-EQUITY> 93,798
<SALES> 55,657
<TOTAL-REVENUES> 55,657
<CGS> 22,141
<TOTAL-COSTS> 22,141
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 193
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<INCOME-TAX> 2,513
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<EPS-PRIMARY> 0.50
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</TABLE>
