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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10-Q/A
FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1995 COMMISSION FILE NUMBER: 0-7101
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INAMED CORPORATION
State of Incorporation: Florida I.R.S. Employer Identification No.: 59-0920629
3800 Howard Hughes Parkway, Suite #900, Las Vegas, Nevada 89109
Telephone Number: (702) 791-3388
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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
----- -----
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On September 30, 1995 there were 7,677,617 Shares of the Registrant's Common
Stock Outstanding.
This document contains 15 pages.
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INAMED CORPORATION AND SUBSIDIARIES
FORM 10-Q/A
Quarter Ended September 30, 1995
TABLE OF CONTENTS
PAGE
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Balance Sheets 3
Unaudited Consolidated Income Statements 5
Unaudited Consolidated Statements of
Cash Flows 7
Notes to the Unaudited Consolidated
Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART II - OTHER INFORMATION 14
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<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1.
INAMED CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 768,967 $ 673,951
Trade accounts receivable, net of
allowance for doubtful accounts
and returns and allowances of
$6,089,929 at September 30,
1995 and $8,025,827 at
December 31, 1994 13,316,129 11,319,487
Notes receivable 833,113 1,400,503
Related party notes receivable 142,093 -
Inventories 18,773,300 14,879,570
Prepaid expenses and other current
assets 1,144,143 2,548,748
Income tax refund receivable 449,691 462,304
Deferred income taxes 2,517,446 2,648,653
------------ ------------
Total current assets 37,944,882 33,933,216
------------ ------------
Property and equipment, at cost:
Machinery and equipment 8,664,824 7,449,622
Furniture and fixtures 3,375,866 2,620,594
Leasehold improvements 7,690,677 5,469,234
------------ ------------
19,731,367 15,539,450
Less accumulated depreciation
and amortization (8,672,716) (6,819,866)
------------ ------------
Net property and equipment 11,058,651 8,719,584
------------ ------------
Notes receivable 2,478,341 2,215,058
Related party notes receivable 868,847 688,184
Intangible assets, net 1,723,598 1,956,648
Deferred income taxes -- 48,810
Other assets, at cost 256,377 248,901
------------ ------------
$ 54,330,696 $ 47,810,401
------------ ------------
------------ ------------
</TABLE>
(continued)
The Notes to Financial Statements are an integral part of this statement.
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<PAGE>
INAMED CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, 1995 DECEMBER 31, 1994
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LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Current installments of long-
term debt $ 21,715 $ 176,910
Notes payable to bank 1,795,543 1,795,721
Related party notes payable 1,084,814 970,610
Accounts payable 16,289,799 15,780,050
Accrued liabilities:
Salaries and wages 5,972,023 2,251,275
Interest 566,338 567,365
Self-insurance 1,237,032 1,291,605
Stock option compensation 68,714 68,714
Other 2,990,602 3,593,024
Royalties payable 1,975,580 1,053,888
Income taxes payable 4,349,931 4,960,352
Deferred income taxes 109,995 335,777
------------ ------------
Total current liabilities 36,462,086 32,845,291
------------ ------------
Long-term debt, excluding current
installments 39,325 50,801
Deferred grant income 1,026,595 931,387
Deferred income taxes 945,067 352,115
Litigation settlement 9,152,000 9,152,000
Net stockholders' equity:
Common stock, $0.01 par value
Authorized 20,000,000 shares;
issued and outstanding 7,677,617 76,776 74,662
Additional paid-in capital 10,071,635 9,699,345
Cumulative translation adjustment 997,719 437,683
Accumulated deficit (4,440,507) (5,732,863)
------------ ------------
Net stockholders' equity (6,705,623) 4,478,827
Commitments and contingencies ------------ -------------
$ 54,330,696 $ 47,810,401
------------ ------------
------------ ------------
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
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<PAGE>
INAMED CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
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<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Net Sales $ 64,136,586 $59,785,327
Cost of Goods Sold 20,854,509 20,558,935
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Gross Profit 43,282,077 39,226,392
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Operating Expenses:
Marketing 16,772,662 14,653,433
General and administrative 21,587,052 17,778,837
Research and development 3,276,591 2,623,826
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Total operating expenses 41,636,305 35,056,096
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Operating income 1,645,772 4,170,296
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Other income (expense):
Interest income 648,866 279,658
Interest expense (213,229) (210,838)
Royalty income 102,265 237,597
Foreign currency transaction
gains (losses) (414,175) 912,967
Miscellaneous income 238,348 83,673
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Net other income 362,075 1,303,057
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Income (loss) before
income taxes 2,007,847 5,473,353
Income taxes 715,491 1,486,693
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Net income $ 1,292,356 $ 3,986,660
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Net income per share of common stock $ 0.17 $ .54
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Weighted average common shares
outstanding 7,559,073 7,417,458
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------------- ------------
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
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<PAGE>
INAMED CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
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<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Net Sales $ 18,279,111 $ 20,911,187
Cost of Goods Sold 6,839,178 6,825,374
------------- -------------
Gross profit 11,439,933 14,085,793
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Operating expenses:
Marketing 5,233,406 5,412,412
General and administrative 8,159,422 6,005,492
Research and development 1,165,297 1,035,164
------------- -------------
Total operating expenses 14,558,125 12,453,068
------------- -------------
Operating income (loss) (3,118,192) 1,632,725
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Other income (expense):
Interest income 325,790 100,831
Interest expense (72,730) (119,561)
Royalty income 74,287 --
Foreign currency transaction
gains (losses) (580,253) 115,664
Miscellaneous income 94,967 12,971
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Net other income (expense) (157,939) 109,905
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Income (loss) before income
taxes (3,276,131) 1,742,830
Income taxes (683,543) 738,221
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Net income (loss) $ (2,592,588) $ 1,004,409
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Net income (loss) per share of
common stock $ (0.34) $ .14
------------- -------------
------------- -------------
Weighted average common shares
outstanding 7,662,257 7,390,471
------------- -------------
------------- -------------
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
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<PAGE>
INAMED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<TABLE>
<CAPTION>
Nine Months ended September 30, 1995 and 1994
Increase (Decrease) in Cash and Cash Equivalents
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,292,356 $ 3,986,660
------------ ------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation of property and equipment 1,940,954 1,617,254
Amortization of intangible assets 233,057 163,369
Deferred income taxes 532,535 7,791
Changes in assets and liabilities:
Increase in trade accounts receivable (1,772,322) (4,291,099)
(Increase) decrease in notes receivable 304,107 (82,822)
(Increase) decrease in inventories (3,385,739) 1,370,320
(Increase) decrease in prepaid expenses
and other current assets 1,472,731 (122,995)
(Increase) decrease in income tax refund
receivable 20,091 (87,384)
Increase in other assets (7,062) (53,673)
Increase (decrease) in accounts payable 415,305 (1,096,227)
Increase in accrued salaries and wages 3,672,596 800,751
Increase (decrease) in accrued interest (1,027) 11
Decrease in accrued self-insurance (54,573) (1,132,417)
Decrease in other accrued liabilities (452,066) (941,215)
Increase in royalties payable 921,692 73,114
Increase (decrease) in income taxes payable (610,421) 520,643
Foreign currency translation adjustment 560,036 265,881
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Total adjustments 3,789,894 (2,988,698)
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Net cash provided by
operating activities 5,082,250 997,962
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Cash flows from investing activities:
Purchases of property and equipment (3,907,150) (1,590,011)
------------ ------------
Net cash used in investing activities (3,907,150) (1,590,011)
------------ ------------
</TABLE>
(continued)
The Notes to Financial Statements are an integral part of this statement.
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<PAGE>
INAMED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<TABLE>
<CAPTION>
Nine Months ended September 30, 1995 and 1994
Increase (Decrease) in Cash and Cash Equivalents
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from financing activities:
Increases in notes payable and
long-term debt $ 190,580 $ 1,172,315
Principal repayment of notes payable
and long-term debt (452,330) (529,218)
(Increase) decrease in related party
receivables (322,756) 267,464
Increase in related party payables 114,204 411,541
Net change in deferred grant income 51,222 32,353
Repurchases and retirements of common stock (1,346) (480,016)
Proceeds from exercise of stock options 181,250 17,400
Issuance of common stock 29,500 --
Cash overdraft -- 949,103
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Net cash provided by (used in)
financing activities (209,676) 1,840,942
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Effect of exchange rate changes on cash (870,408) (1,248,893)
------------ ------------
Net increase (decrease) in cash
and cash equivalents 95,016 --
Cash and cash equivalents at beginning of period 673,951 --
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Cash and cash equivalents at end of period $ 768,967 $ --
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Supplemental disclosure of cash flow information:
Cash paid during the nine months for:
Interest $ 249,148 $ 256,315
Income taxes $ 853,577 $ 1,177,224
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</TABLE>
Supplemental schedule of non-cash investing and financing activities:
During the nine months ended September 30, 1995, the Company issued 75,000
shares of common stock and recorded a corresponding $165,000 reduction of a
liability which had been incurred in connection with the acquisition of
INAMED, S.A.
Disclosure of accounting policy:
For purposes of the consolidated statement of cash flows, the Company
considers all certificates of deposit to be cash equivalents.
Certain reclassifications were made to the 1994 Consolidated Statement
of Cash Flows to conform to the 1995 presentation.
The Notes to Financial statements are an integral part of this statement.
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<PAGE>
INAMED CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
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NOTE 1 - INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements include all
adjustments (consisting of normal recurring accruals) which are, in the opinion
of management, necessary for fair presentation of the results of operations for
the periods presented. Interim results are not necessarily indicative of the
results to be expected for a full year.
Certain information and footnote disclosures normally included in
financial statements, prepared in accordance with generally accepted accounting
principles, have been condensed or omitted as allowed by Form 10-Q. The
accompanying unaudited consolidated financial statements should be read in
conjunction with the Company's consolidated financial statements for the year
ended December 31, 1994 as filed with the Securities and Exchange Commission on
Form 10-k.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
INAMED Corporation's subsidiaries are McGhan Medical Corporation and CUI
Corporation, which develop, manufacture, and sell medical devices principally
for the plastic and general surgery fields; BioEntrics Corporation which
develops, manufactures and sells medical devices and associated instrumentation
to the bariatric and general surgery fields; Biodermis Corporation which
develops, produces and distributes premium products for dermatology, wound care
and burn treatment; Bioplexus Corporation which is a development company that
develops, produces and distributes specialty medical products for use by the
general surgery profession; Flowmatrix Corporation which manufactures high
quality silicone components and devices for INAMED's wholly-owned subsidiaries
and distributes an international line of proprietary silicone products; Medisyn
Technologies Corporation which focuses on the development and promotion of the
merits of the use of silicone chemistry in the fields of medical devices,
pharmaceuticals, and biotechnology; INAMED Development Company, which is
engaged in the research and development of new medical devices using
silicone-based technology; McGhan Limited, an Irish corporation which
manufactures medical devices principally for the plastic and general surgery
fields; Medisyn Technologies, Ltd. and Chamfield Ltd., Irish corporations
which specialize in the development of silicone materials for use in
INAMED's wholly-owned subsidiaries; and INAMED B.V., a Netherlands corporation,
INAMED B.V.B.A., a Belgium corporation, INAMED GmbH, a German corporation,
INAMED S.R.L., an Italian corporation, and INAMED Ltd., a United Kingdom
corporation, INAMED S.A.R.L., a French corporation, and INAMED S.A.,
a Spanish corporation, which all sell medical devices on a direct sales
basis in the various countries in which they are located.
BASIS OF PRESENTATION
The consolidated financial statements include accounts of INAMED
Corporation and its wholly-owned subsidiaries (collectively referred to as the
Company). All significant intercompany balances and transactions have been
eliminated in consolidation.
NET INCOME PER SHARE
Net income per share is based upon the weighted average number of shares
outstanding during each of the respective periods. Common stock equivalents
are excluded since their inclusion would immaterially affect the calculation
or would be antidilutive.
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<PAGE>
INAMED CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 (CONTINUED)
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NOTE 3 - INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
Raw materials $ 2,583,614 $ 2,187,689
Work in process 3,401,729 3,268,947
Finished goods 12,787,957 9,422,934
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$ 18,773,300 $ 14,879,570
------------ -----------
------------ -----------
</TABLE>
NOTE 4 - COMMITMENTS AND CONTINGENCIES
INAMED and/or its subsidiaries are defendants in numerous State court
actions and a Federal class action suit in the United States District Court,
Northern District of Alabama, Southern Division, under Chief Judge Sam C.
Pointer, Jr., U.S. District Court, regarding Master File No. C892-P-10000-S
(Silicone Gel Breast Implants Product Liability Litigation MDL 926). The claims
are for general and punitive damages substantially exceeding provisions made in
the Company's consolidated financial statements. The accompanying consolidated
financial statements have been prepared assuming that the Company will withstand
the financial results of such litigation.
Several U.S. based manufacturers negotiated a settlement with the
Plaintiffs' Negotiating Committee ("PNC") and on March 29, 1994 filed a Proposed
Non-Mandatory Class Action Settlement in the Silicone Breast Implant Products
Liability (the "Settlement Agreement") providing for settlement of the claims as
to the class (the "Settlement") as described in the Settlement Agreement. The
Settlement Agreement provides for resolution of any existing or future claims,
including claims for injuries not yet known, under Federal or State law, from
any claimant who received a silicone breast implant prior to June 1, 1993. A
fairness hearing for the non-mandatory class was held before Judge Pointer on
August 18, 1994. On September 1, 1994, Judge Pointer gave final approval to the
non-mandatory class action settlement.
The Company was not originally a party to the Settlement Agreement.
However, on April 8, 1994 the Company and the PNC reached an agreement which
would join the Company into the Settlement. The agreement reached between the
Company and the PNC added great value to the Settlement by enabling all
plaintiffs and U.S. based manufacturers to participate in the Settlement, and
facilitating the negotiation of individual contributions by the Company,
Minnesota Mining and Manufacturing Company ("3M"), and Union Carbide Corporation
which total more than $440 million.
Under the terms of the Settlement Agreement, the parties stipulate and
agree that all claims of the Settlement Class against the Company regarding
breast implant materials shall be fully and finally settled and resolved on the
terms and conditions set forth in the Settlement Agreement.
Under the terms of the Settlement Agreement, the Company agreed to pay
$1 million to the Settlement fund for each of 25 years starting three years
after Settlement approval by the Court. The Company recorded a pre-tax charge
of $9.1 million in the fourth quarter of 1993. The charge represents the
present value (discounted at 8%) of the Company's settlement of $25 million
over a payment period of 25 years.
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<PAGE>
INAMED CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 (CONTINUED)
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Under the Settlement, $1.2 billion had been provided for "current claims"
(disease compensation claims). In May 1995, Judge Pointer completed a
preliminary review of current claims which had been filed as of September 1994,
in compliance with deadlines set by the court. Judge Pointer determined that
based on the preliminary review, it appears that projected amounts of eligible
current claims exceed the $1.2 billion provided by the Settlement. The
Settlement provided that in the event of such over subscription, the amounts
to be paid to eligible current claims would be reduced and claimants would
have a right to "opt-out" of the Settlement at that time.
On October 1, 1995, Judge Pointer finalized details of a scaled-back
breast implant injury settlement involving defendants Bristol-Meyers-Squibb,
Baxter International, and 3M, allowing plaintiffs to reject this settlement and
file their own law-suits if they believe the payments are too low. On November
14, 1995, McGhan Medical and Union Carbide were added to this list of settling
defendants to achieve the Bristol, Baxter, 3M, McGhan and Union Carbide Revised
Settlement Program (the "Revised Settlement Program").
At December 31, 1995, the Company's reasonable estimate of its liability
to fund the Revised Settlement Program is a range between $9.1 million, the
original estimate as noted above, and $50 million with no amount within the
range a better estimate. Due to the uncertainty of the ultimate resolution and
acceptance of the Revised Settlement Program by the PNC, as well as a lack of
information related to the total claims, the financial statements do not reflect
any additional provision for litigation settlement.
The Company has opposed the plaintiffs' claims in these complaints and
other similar actions, and continues to deny any wrongdoing or liability to the
plaintiffs of any kind. However, the extensive burdens and expensive litigation
the Company would continue to incur related to these matters prompted the
Company to work toward and enter into the Settlement which insures a more
satisfactory method of resolving claims of women who have received the
Company's breast implants.
Management's commitment to the Settlement does not alter the Company's
need for complete resolution sought under a mandatory ("non-opt-out") settlement
class (the "Mandatory Class"). Therefore, the Company has petitioned the United
States District Court, Northern District of Alabama, Southern Division, for
certification of a Mandatory Class under the provisions of Federal Rule of Civil
Procedure. Upon Judge Pointer's preliminary approval, a notice of a date for
the required fairness hearing for the Mandatory Class will be issued.
The Company was a defendant with 3M in a case involving three plaintiffs
in Houston, Texas, in March 1994, in which the jury awarded the plaintiffs $15
million in punitive damages and $12.9 million in damages plus fees and costs.
However, the decision was reversed in March 1995 resulting in no financial
responsibility on the part of the Company.
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<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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FINANCIAL CONDITION
During the first nine months of 1995 INAMED Corporation has maintained
its position as one of the largest medical device companies serving the plastic,
reconstructive and general surgical markets world-wide. In order to meet
increased international product needs, the Company has increased production of
its products in Europe through expansion at its manufacturing plant in Ireland
which supplies the majority of the products for the Company's international
market. The Irish facility works closely with the Company's subsidiaries in
Europe to develop new products for that market. Internationally, the Company
has significantly increased its market share due to the use of direct sales
methods rather than distributors wherever financially advantageous to do so.
The Company currently has direct marketing subsidiaries in seven
European countries.
The cash balance has increased since December 31, 1994, while the current
ratio at September 30, 1995 of 1.0 to 1 is consistent with the ratio at December
31, 1994 of 1.0 to 1. The majority of the Company's cash flows in the first
nine months of 1995 were generated by product sales which is consistent with
prior periods. Growth, regulatory activities and legal expenses continue to use
a significant amount of available cash resources.
In June of 1990, the Company established a $4.5 million comprehensive
financing package for working capital with a major bank which utilizes the
domestic accounts receivable, inventories and certain other assets as
collateral. In December of 1990, the line of credit was increased to $5.3
million. As of September 30, 1995, approximately $418,366 had been drawn on the
line of credit. The weighted average interest rate during the period was
11.25%.
The Company's line of credit was due for renewal in August, 1993. The
present bank line was not renewable under acceptable terms and conditions, and
was extended until December 31, 1995. The balance due on the credit line as of
December 31, 1995 is projected to be approximately $313,366. At that time, the
Company intends to retire the balance of the credit line. The Company believes
that it can start reasonable discussions with lenders for a new credit facility
now that the Company has entered into global settlement agreements. Although
there are no assurances that the Company will be successful in the engagement
of a lender, the Company has made progress in addressing lender concern
surrounding the breast implant litigation through settlement agreements
which include mandatory class certification.
In April 1994, the Company increased its international line of credit
with a major Dutch bank. The current line is $1,540,000 and is collateralized
by the accounts receivable, inventories and certain other assets of INAMED B.V.
The line of credit expires on December 31, 1995. As of September 30, 1995,
approximately $1,395,000 had been drawn on the line of credit. The interest
rate on the line of credit is European prime discount rate plus 2.5% per annum,
at a minimum 7% percent per annum.
McGhan Limited continues to receive grants from the Irish Industrial
Development Authority ("IDA") which include reimbursement for qualified training
expenses, leasehold improvements and capital improvement costs at the Company's
operation in Ireland. Additionally, McGhan Limited has obtained approval for
additional grants from the European Economic Community "Industry R & D
Initiative" for approved research and development programs for up to $1 million.
The Company believes that additional approvals will be achieved in future years.
-12-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
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RESULTS OF OPERATIONS
Net sales as an aggregate were $64.1 million during the first nine months
of 1995 which represents a 7% increase over the first nine months of 1994. This
increase can be attributed to increases in international sales. Sales during
the third quarter of 1995 were affected by the Company's need for additional
capacity to manufacture product. Management expects the lack of product to
negatively affect sales growth throughout the remainder of 1995.
Gross profit was 67% of net sales for the first nine months and 63% for
the third quarter of 1995 compared to 66% and 67% for the corresponding periods
in 1994. Management expects gross profit to remain consistent throughout the
remaining quarter of 1995.
Marketing expense as a percentage of net sales was 26% in the first nine
months of 1995 which is consistent with 25% in the first nine months of 1994.
General and administrative expenses as a percentage of net sales were 34%
in the first nine months of 1995 compared to 30% in the first nine months of
1994. Management expects future general and administrative expenses to grow
proportionally with sales, and to be reactive to litigation expense.
Research and development expenses increased from $2,623,826 in the first
nine months of 1994 to $3,276,591 in the first nine months of 1995, reflecting
the Company's continuing commitment to developing new and improved medical
products for use by the medical profession and the public. As a percentage of
net sales, this expense has increased from 4.4% in the first nine months of 1994
to 5.1% in the first nine months of 1995. Diversification into other facets of
medical devices through use of new technology remains a goal of the Company.
R & D expenses are expected to increase throughout 1995 as the Company is also
increasing research and development overseas due to the FDA backlog on approval
of new devices in the United States.
Interest expense for the first nine months of 1995 was consistent with
interest expense for the same period of 1994.
The Company continues to incur increased costs related to obtaining FDA
and European Economic Community approvals for the Company's products. The
Company is continuing to address FDA regulations related to pre-market approval
of silicone mammary implants, and anticipates ongoing investment of employee
hours and Company funds to facilitate compliance with all FDA regulations as
determined by PMA studies and any new regulations which may be adopted. The FDA
is expected to issue a call for PMA applications for saline-filled breast
implants in 1998. The Company has agreed to conduct clinical trials and is
collecting data in anticipation of FDA action.
Management anticipates strong market demand, with pressure for added
production capacity both domestically and internationally, to continue
throughout 1995.
-13-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a defendant in breast implant litigation as discussed
in Note 4 to the unaudited consolidated financial statements.
ITEMS 2. through 5.
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
-14-
<PAGE>
INAMED CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INAMED CORPORATION
By /s/Michael D. Farney
---------------------------------
Michael D. Farney
Chief Executive Officer and
Chief Financial Officer
Dated: March 29, 1996
---------------------------
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