<PAGE>
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 OCTOBER 1, 1994 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 28,969,574 shares
------------------------------- -------------------------------
(Class) Outstanding at October 28, 1994
<PAGE>
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FORM 10-Q
ACUSON CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of
October 1, 1994 and December 31, 1993 1
Condensed Consolidated Statements of Operations
for the Three Months Ended October 1, 1994 and
October 2, 1993 and for the Nine Months Ended
October 1, 1994 and October 2, 1993 3
Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended October 1, 1994 and
October 2, 1993 4
Notes to Unaudited Condensed Consolidated
Financial Statements 5
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 9
ITEM 6. Exhibits and Reports on Form 8-K 9
Signature 10
</TABLE>
<PAGE>
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ACUSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
OCTOBER 1, DECEMBER 31,
ASSETS 1994 1993
(Unaudited)
- --------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 38,897 $ 11,184
Short-term investments 39,041 48,103
------- -------
Total cash and short-term investments 77,938 59,287
Accounts receivable, net 78,987 62,976
Inventories 50,783 41,964
Other current assets 27,481 37,095
------- -------
Total current assets 235,189 201,322
PROPERTY AND EQUIPMENT
At cost, net of accumulated depreciation
and amortization of $87,995 in 1994
and $75,700 in 1993 47,145 44,307
OTHER ASSETS
Net investment in leases 7,975 19,502
Other long-term assets 7,072 5,950
------- -------
Total Assets $297,381 $271,081
======== ========
</TABLE>
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See accompanying notes to unaudited condensed consolidated financial statements.
1
<PAGE>
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ACUSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
OCTOBER 1, DECEMBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
(Unaudited)
- --------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $20,444 $12,644
Other accrued liabilities 72,793 75,176
------- -------
Total current liabilities 93,237 87,820
------- -------
Commitments and contingencies (Note 4)
STOCKHOLDERS' EQUITY
Preferred stock, par value $.0001
authorized - 10,000 shares
outstanding - none -- --
Common stock, par value $.0001
authorized - 50,000 shares
outstanding - 28,876 shares in 1994
and 28,279 shares in 1993 76,955 69,115
Cumulative translation adjustment (1,215) (2,259)
Unrealized holding loss (327) --
Retained earnings 128,731 116,405
------- -------
Total stockholders' equity 204,144 183,261
------- -------
Total Liabilities and Stockholders' Equity $297,381 $271,081
======== ========
</TABLE>
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See accompanying notes to unaudited condensed consolidated financial statements.
2
<PAGE>
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ACUSON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------------------------
OCTOBER 1, OCTOBER 2, OCTOBER 1, OCTOBER 2,
1994 1993 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES
Product $ 67,410 $ 50,383 $ 211,666 $ 172,414
Service 18,976 16,684 55,559 49,048
-------- -------- -------- --------
Total net sales 86,386 67,067 267,225 221,462
-------- -------- -------- --------
COST OF SALES
Product 27,786 20,085 88,638 67,299
Service 9,256 7,839 26,766 25,111
-------- -------- -------- --------
Total cost of sales 37,042 27,924 115,404 92,410
-------- -------- -------- --------
Gross profit 49,344 39,143 151,821 129,052
-------- -------- -------- --------
OPERATING EXPENSES
Selling, general and administrative 26,977 24,000 79,167 77,460
Product development 18,486 14,448 54,302 43,833
Restructuring expense --- --- --- 12,000
-------- -------- -------- --------
Total operating expenses 45,463 38,448 133,469 133,293
-------- -------- -------- --------
Income (loss) from operations 3,881 695 18,352 (4,241)
INTEREST INCOME, NET 770 1,118 2,720 3,428
-------- -------- -------- --------
Income (loss) before income taxes 4,651 1,813 21,072 (813)
PROVISION FOR (BENEFIT FROM) INCOME TAXES 917 (466) 6,665 (1,385)
-------- -------- -------- --------
Net income $ 3,734 $ 2,279 $ 14,407 $ 572
======== ======== ======== ========
EARNINGS PER SHARE $ 0.13 $ 0.08 $ 0.49 $ 0.02
======== ======== ======== ========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 29,276 29,070 29,318 29,219
======== ======== ======== ========
</TABLE>
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See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
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ACUSON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
OCTOBER 1, OCTOBER 2,
1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 14,407 $ 572
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 15,725 13,973
Changes in:
Accounts receivable (16,027) 10,271
Inventories (8,414) 1,177
Other current assets 4,139 (5,859)
Accounts payable 7,721 2,345
Other accrued liabilities (2,550) 3,807
-------- -------
Net cash provided by operating activities 15,001 26,286
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in short-term investments 8,559 (1,557)
Investment in property and equipment (17,793) (10,249)
Decrease (increase) in investment in leases 17,547 (6,582)
Increase in other assets (1,003) (1,861)
-------- --------
Net cash provided by (used in) investing activities 7,310 (20,249)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock (2,610) (21,717)
Issuance of common stock under stock option and
stock purchase plans 7,437 5,063
-------- --------
Net cash provided by (used in) financing activities 4,827 (16,654)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 575 (107)
------- --------
Net increase (decrease) in cash and cash equivalents 27,713 (10,724)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 11,184 21,483
------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 38,897 $ 10,759
======== =========
</TABLE>
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See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE>
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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 the Company's condensed
consolidated financial position as of October 1, 1994 and its condensed
consolidated results of operations and cash flows for the periods ended October
1, 1994 and October 2, 1993. The results of operations for the three and nine
months ended October 1, 1994 are not necessarily indicative of the results to be
expected for the entire year ending December 31, 1994. Certain information
reported in prior years has been reclassified to conform to the 1994
presentation.
The Company's principle accounting policies are set forth in the financial
statements for the year ended December 31, 1993 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, were classified as
available-for-sale. These securities mature at various dates through the year
1995.
As of October 1, 1994, the securities' gross unrealized holding loss was
approximately $503,000. The unrealized holding loss of approximately $327,000,
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 nine
months ended October 1, 1994, the Company sold certain of its available-for-
sale securities for proceeds of approximately $18,945,000. The Company sold
these securities for approximately original cost.
NOTE 3 - INVENTORIES
The components of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
OCTOBER 1, DEC. 31,
1994 1993
----------------------------
<S> <C> <C>
Raw materials $25,757 $17,093
Work-in-process 8,820 5,820
Finished goods 16,206 19,051
------- -------
Total inventories $50,783 $41,964
======= =======
</TABLE>
5
<PAGE>
NOTE 4 - LEGAL CONTINGENCIES
On September 14, 1994, the Company filed an action in the United States
District Court for the Northern District of California against Advanced
Technology Laboratories, Inc. (ATL) of Bothell, Washington. In the action, the
Company accuses ATL of infringing U.S. Letters Patent No. 4,058,003 for
"Ultrasonic Electronic Lens with Reduced Delay Range," a patent licensed
exclusively to the Company. In addition, the Company seeks a declaration that it
infringes no valid claim of four ATL patents: U.S. Letters Patent No. 4,543,960
for "Transesophageal Echocardiography Scanhead," No. 5,050,610 for
"Transesophageal Ultrasonic Scanhead," No. 5,207,225 for "Transesophageal
Ultrasonic Scanhead," or No. 5,226,422 for "Transesophageal Echocardiography
Scanner with Rotating Image Plane." No dollar amount is specified as damages in
the Company's action, but the complaint seeks an accounting for damages, treble
damages and an assessment of interests and costs against ATL. In addition, the
Company is informed that, in August 1994, ATL filed an action against the
Company in the United States District Court for the Western District of
Washington, in which ATL sought a declaration that it infringes no valid claim
of U.S. Letters Patent No. 4,058,003. On October 31, 1994, ATL amended that
action and added claims accusing the Company of infringing U.S. Patent Nos.
4,543,960; 5,050,610; 5,207,225; and 5,226,422. No dollar amount is specified as
damages in ATL's action, but the complaint seeks an injunction against alleged
infringement, an accounting for damages, treble damages, and an assessment of
interest and costs against the Company. Management believes that the ultimate
outcome of this matter will not have a material adverse effect on the Company's
financial condition.
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, 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 inaccurate, in
violation of federal securities laws. Plaintiffs seek damages in an
unspecified amount, as well as equitable relief or injunctive relief and
attorneys' fees, experts' fees and costs. The Company intends to defend the
suits vigorously. Management believes that the ultimate outcome of this matter
will not have a material adverse effect on the Company's financial condition.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the quarter ended October 1, 1994 increased from $67.1
million in the quarter ended October 2, 1993 to $86.4 million. For the first
nine months of 1994, net sales were $267.2 million, an increase of 20.7%
compared to the first nine months of 1993. The increase in worldwide revenues
was primarily the result of increased unit shipments of ultrasound systems and
shipments of the Acoustic Response Technology (ART) and Color Doppler Energy
(CDE) options. Increased unit sales, however, were partially offset by lower
average unit selling prices resulting from competitive pricing pressures and by
higher volume of lower priced product configurations. Service revenue for the
quarter ended October 1, 1994 increased 13.7% to $19.0 million from $16.7
million in the quarter ended October 2, 1993, primarily due to growing service
contract revenue from a larger base of installed systems. International revenue
increased to $27.8 million or 32.1% of net sales for the three months ended
October 1, 1994 compared to $17.4 million or 26.0% of net sales in the
comparable 1993 period. For the first nine months of 1994, international revenue
increased to $82.6 million or 30.9% of net sales compared to $57.3 million or
25.9% of net sales for the nine months ended October 2, 1993. International
shipments were favorably impacted in particular by the Acuson(R) 128XP/4.
The Company believes that its results for the nine months ended October 1,
1994 may not be indicative of the results for future periods. Acuson expects
that future revenues may continue to be impacted for an indeterminate period by
market uncertainties regarding the purchase of hospital equipment due to ongoing
worldwide medical cost containment pressures and concern about the potential
impacts of U.S. health care reform. Acuson believes that as a result of these
uncertainties, the domestic ultrasound market has not improved from the weak
1993 levels. 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 third quarter of 1994 was 57.1% of net sales,
compared to 58.4% in the comparable 1993 period. For the nine months ended
October 1, 1994, gross profit was 56.8% of net sales, compared to 58.3% in the
first nine months of 1993. The percentage decrease reflected a reduction in
selling prices and an increased proportion of products which have a lower gross
margin.
Selling, general and administrative expenses totaled $27.0 million in the
quarter ended October 1, 1994, up from $24.0 million in the comparable prior
year's period. For the nine months ended October 1, 1994, selling, general and
administrative expenses were $79.2 million compared to $77.5 million in the
first nine months of 1993. However, as a percentage of sales, such expenses in
the first nine months in 1994 totaled 29.6% of net sales compared to 35.0% in
1993. The dollar increase is primarily due to higher international operating
expenses supporting the higher in international sales.
Product development costs in the third quarter of 1994 totaled $18.5
million or 21.4% of net sales, compared to $14.4 million or 21.5% of net sales
in the third quarter of 1993. For the nine months ended October 1, 1994, product
development costs were $54.3 million or 20.3% of net sales compared to $43.8
million or 19.8% of net sales in the first nine months of 1993. The increase in
product development expense resulted from increased spending on multiple product
development programs.
In 1993, the Company restructured its worldwide operations in order to
address a reduction in worldwide demand for medical diagnostic ultrasound
products. The restructuring consisted of a series of planned actions, including
a reduction of approximately 15% of the Company's worldwide work force, the
restructuring of facilities and the write-down of certain assets. In connection
with these actions, the Company recorded a one-time pre-tax charge of $12.0
million during the second quarter of 1993. Substantially all of the $1.1 million
restructuring balance which remained at December 31, 1993, was used during the
nine months ended October 1, 1994. The actual costs of the restructuring were
substantially in alignment with original expectations.
7
<PAGE>
- --------------------------------------------------------------------------------
The provision for income taxes was $0.9 million in the third quarter of
1994 versus a benefit of $0.5 million in 1993. For the nine months ended October
1, 1994, the tax provision was $6.7 million versus a benefit of $1.4 million in
1993. The benefits in 1993 resulted from the operating loss reported in the nine
months ended October 2, 1993 and the effects of the tax law changes, principally
the retroactive research and development credit. The effective tax rate for the
nine months ended October 1, 1994 was 32%.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and short-term investments balance has increased $18.7
million during the nine months ended October 1, 1994 to $77.9 million. During
the nine months ended October 1, 1994, the Company generated $15.0 million in
cash from operations, as compared to 1993 when operations generated $26.3
million in cash. The Company's financing and investing activities for the nine
months ended October 1, 1994 have generated $12.1 million in cash, with $21.6
million provided by the sale of the Company's lease portfolio. Included in the
financing activities was $7.4 million raised through employee participation in
the Company's stock option and stock purchase plans, compared to $5.1 million in
the comparable nine-month period in 1993.
In 1992, the Board of Directors authorized the repurchase of 8,000,000
shares of the Company's common stock. This program was completed in 1993. On
October 26, 1993, the Board of Directors authorized the repurchase of an
additional 4,000,000 shares over an unspecified period of time. As of October 1,
1994, the Company had repurchased 186,200 shares toward this authorization and
there were 28,875,846 shares of Acuson common stock outstanding.
At October 1, 1994, the Company's working capital totaled $142.0 million.
The Company also has a revolving unsecured credit facility for $50 million which
is in effect through July 1995. No compensating balances are required and the
full amount is available under this credit facility.
Based on its current operating plan, the Company believes that the
liquidity provided by its existing cash and short-term investments balances, the
borrowing arrangements described above, and cash generated from operations will
be sufficient to meet the Company's operating and capital requirements for
fiscal 1994.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
PART II
ITEM 1
LEGAL PROCEEDINGS
On September 14, 1994, the Company filed an action in the United States
District Court for the Northern District of California against Advanced
Technology Laboratories, Inc. (ATL) of Bothell, Washington. In the action, the
Company accuses ATL of infringing U.S. Letters Patent No. 4,058,003 for
"Ultrasonic Electronic Lens with Reduced Delay Range," a patent licensed
exclusively to the Company. In addition, the Company seeks a declaration that it
infringes no valid claim of four ATL patents: U.S. Letters Patent No. 4,543,960
for "Transesophageal Echo-cardiography Scanhead," No. 5,050,610 for
"Transesophageal Ultrasonic Scanhead," No. 5,207,225 for "Transesophageal
Ultrasonic Scanhead," or No. 5,226,422 for "Transesophageal Echocardiography
Scanner with Rotating Image Plane." No dollar amount is specified as damages in
the Company's action, but the complaint seeks an accounting for damages, treble
damages and an assessment of interests and costs against ATL. In addition, the
Company is informed that, in August 1994, ATL filed an action against the
Company in the United States District Court for the Western District of
Washington, in which ATL sought a declaration that it infringes no valid claim
of U.S. Letters Patent No. 4,058,003. On October 31, 1994, ATL amended that
action and added claims accusing the Company of infringing U.S. Patent Nos.
4,543,960; 5,050,610; 5,207,225; and 5,226,422. No dollar amount is specified as
damages in ATL's action, but the complaint seeks an injunction against alleged
infringement, an accounting for damages, treble damages, and an assessment of
interest and costs against the Company. Management believes that the ultimate
outcome of this matter will not have a material adverse effect on the Company's
financial condition.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
--------
10.1 Form of Amendment Number 1 to Supplemental Stock Option
Terms under the Company's 1986 Supplemental Stock Plan and
1991 Stock Incentive Plan (1)
10.2 Form of Supplemental Stock Option Terms Under the
Company's 1991 Stock Incentive Plan (1)
10.3 Consulting Agreement, dated June 20, 1994, between William
H. Abbott and the Company (1)
11.1 Statement regarding computation of per share earnings for
the quarter ended October 1, 1994
27.1 Financial Data Schedule
-------------------------------------------------------------------
(1) Management contract or compensatory plan required to be filed
as an exhibit.
b) Reports on Form 8-K
-------------------
The Company filed no reports on Form 8-K during the quarter ended
October 1, 1994.
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9
<PAGE>
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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)
November 14, 1994 By /s/ Stephen T. Johnson
------------------------------
Stephen T. Johnson
Vice President, Chief Financial
Officer and Treasurer
(duly authorized Officer and Principal
Financial and Accounting Officer)
10
<PAGE>
EXHIBITS INDEX
Exhibits
--------
10.1 Form of Amendment Number 1 to Supplemental Stock Option
Terms under the Company's 1986 Supplemental Stock Plan and
1991 Stock Incentive Plan (1)
10.2 Form of Supplemental Stock Option Terms Under the
Company's 1991 Stock Incentive Plan (1)
10.3 Consulting Agreement, dated June 20, 1994, between William
H. Abbott and the Company (1)
11.1 Statement regarding computation of per share earnings for
the quarter ended October 1, 1994
27.1 Financial Data Schedule
<PAGE>
EXHIBIT 10.1
ACUSON CORPORATION
FORM OF AMENDMENT NUMBER 1 TO SUPPLEMENTAL STOCK OPTION
TERMS UNDER THE COMPANY'S 1986 SUPPLEMENTAL STOCK
PLAN AND 1991 STOCK INCENTIVE PLAN
AMENDMENT NO. 1 TO SUPPLEMENTAL STOCK OPTION TERMS
This Amendment No. 1 to Supplemental Stock Option Terms (this "Amendment"),
dated as of ____________, 1994, is made by and between Acuson Corporation, a
Delaware corporation (the "Company"), and
_______________________________________________ ("Optionee").
A. The Company and Optionee have entered into one or more Notice of Grant
of Stock Options and Grant Agreement(s) as set forth on Exhibit A hereto (the
"Grant Agreement(s)").
B. The Grant Agreement(s) incorporates by reference the Acuson Corporation
Supplemental Stock Option Terms attached thereto (the "Option Terms").
C. The Company and Optionee mutually desire to amend the Option Terms as
set forth in this Amendment, and to cause such Option Terms, as so amended (the
"Amended Option Terms"), to be incorporated by reference into the Grant
Agreement(s).
Accordingly, the Company and Optionee agree as follows:
1. Amendment of Option Terms. The Option Terms are hereby amended by the
-------------------------
insertion therein of new Subsections 1(c) and 1(d), which shall read in their
entirety as follows:
"(c) Notwithstanding anything to the contrary contained in this Section
1, the total number of shares subject to this option shall be allocated
hereto and shall vest fully, automatically and without any further action
by the parties hereto on the twenty-second day after any Share Acquisition
Date, unless prior to such twenty-second day a majority of the Continuing
Directors then in office has determined that the transaction pursuant to
which a Person has become an Acquiring Person is an Approved Transaction.
(d) For purposes of Section 1(c), the following definitions shall apply:
"Acquiring Person" means any Person who or which, together with all
----------------
Affiliates and Associates of such Person, shall be the Beneficial Owner of
20% or more of the Common Stock then outstanding, but shall not include
the Company, any Subsidiary of the Company or any employee benefit plan of
the Company or any Subsidiary of the Company, or any entity holding Common
Stock for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall become an Acquiring Person as the result of an
acquisition of Common Stock by the Company which, by reducing the number
of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 20% or more of the Common Stock of
the Company then outstanding; provided, however, that if a Person becomes
-------- -------
the Beneficial Owner of 20% or more of the Common Stock of the Company
then outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of
any additional Common Stock of the Company, then such Person shall be
deemed to be an Acquiring Person.
"Affiliate" and "Associate" have the respective meanings ascribed to such
--------- ---------
terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Amendment.
<PAGE>
Amendment No. 1 to Supplemental Stock Option Terms
"Approved Transaction" means any transaction that occurs at a time when
--------------------
Continuing Directors are in office and a majority of the Continuing
Directors then in office has determined that the transaction is in the
best interest of the Company and its stockholders.
A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
----------------
"beneficially own" any securities: (i) which such Person or any of such
Person's Affiliates or Associates beneficially owns, directly or
indirectly; (ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
-------- -------
Beneficial Owner of, or to beneficially own, securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote pursuant
to any agreement, arrangement or understanding; provided, however, that a
-------- -------
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent given to
such person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations
of the Exchange Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor report); or (iii)
which are beneficially owned, directly or indirectly, by any other Person
with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except to the extent contemplated by the
proviso to clause (ii) (B) of this definition) or disposing of any
securities of the Company; provided further, however, that nothing in this
-------- ------- -------
paragraph shall cause a Person to be the Beneficial Owner of, or to
beneficially own, any securities (x) acquired through such Person's
participation in the business of underwriting securities in good faith in
a firm commitment underwriting until the expiration of forty days after
the date of such acquisition or (y) which such Person has reported on
Schedule 13G under the Exchange Act and has not ceased to be eligible to
report on Schedule 13G pursuant to Rule 13d-1 under the Exchange Act.
"Common Stock" means the shares of common stock, par value $.0001 per
------------
share, of the Company.
"Continuing Director" means (i) any member of the Board of Directors of
-------------------
the Company, while such Person is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or
a representative of an Acquiring Person or of any such Affiliate or
Associate, and who was, if applicable, a member of the Board prior to the
time that any Person becomes an Acquiring Person, or (ii) any Person who
subsequently becomes a member of the Board, while such Person is a member
of the Board, who is not an Acquiring Person, or an Affiliate or Associate
of an Acquiring Person, or a representative of an Acquiring Person or of
any such Affiliate or Associate, if such Person's nomination for election
or election to the Board is recommended or approved by a majority of
Continuing Directors.
-2-
<PAGE>
Amendment No. 1 to Supplemental Stock Option Terms
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated thereunder.
"Person" means any individual, firm, partnership, corporation or other
------
entity, and shall include any successor (by merger or otherwise) of such
entity.
"Rights" means the rights granted to the Company's shareholders to
------
purchase additional Common Stock under certain circumstances, as described
in that certain Rights Agreement, dated as of May 5, 1988, by and between
the Company and The First National Bank of Boston, as rights agent.
"Share Acquisition Date" means the first date of public announcement by
----------------------
the Company or an Acquiring Person that a Person has become an Acquiring
Person.
"Subsidiary" of any Person means any corporation or other entity of which
----------
a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person, or which is
otherwise controlled by such Person."
2. Incorporation by Reference. The Amended Option Terms are hereby
--------------------------
incorporated by reference into the Grant Agreement(s) with full force and effect
as if they were originally made a part thereof.
3. Remaining Option Terms. Except as expressly amended herein, the Option
----------------------
Terms remain binding and in full force and effect.
4. Counterparts. This Amendment may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first noted above.
ACUSON CORPORATION, a Delaware corporation
By:
---------------------------------------
Name:
----------------------------------
Title:
------------------------------------
OPTIONEE:
------------------------------------------
Signature
Amendment No. 1 to Supplemental Stock Option Terms
------------------------------------------
Printed Name
-3-
<PAGE>
EXHIBIT 10.2
ACUSON CORPORATION
FORM OF SUPPLEMENTAL STOCK OPTION TERMS UNDER
THE COMPANY'S 1991 STOCK INCENTIVE PLAN
THIS DOCUMENT CONSTITUTES PART OF THE PROSPECTUS COVERING THESE SECURITIES,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
ACUSON CORPORATION
SUPPLEMENTAL STOCK OPTION TERMS
Acuson Corporation (the "Company"), pursuant to its 1991 Stock Incentive
Plan (the "Plan") has this day granted to you, the optionee named on the Notice
of Grant of Stock Options and Grant Agreement to which these Supplemental Stock
Option Terms are attached (the "Agreement"), an option to purchase shares of the
common stock of the Company ("Common Stock"). This option is not intended to
qualify as an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). Whenever used herein,
"this option" refers to the Agreement together with these Supplemental Stock
Option Terms.
The details of your option are as follows:
1. The total number of shares subject to this option is set forth in the
Agreement. Subject to the limitations contained herein, this option shall be
exercisable with respect to each installment shown below on or after the date of
vesting applicable to such installment, as follows:
(a) [Commencing on the date specified as the "Beginning Vesting Date" in
the Agreement, installments of _____of the total number of shares subject to
this option shall be allocated to this option daily until the earlier of (i) the
date on which all such shares have been allocated hereto or (ii) the date of
termination of your employment or relationship as a consultant or director with
the Company (as defined in the Plan) for any reason or no reason, including your
death or disability.] [Other allocation/vesting provisions and/or restrictions
on allocation/vesting.] You shall have no right to exercise this option as to
any share, irrespective of whether the share has been allocated hereto under the
provisions of this subparagraph until such share has vested under the provisions
of subparagraph 1(b).
(b) [All installments allocated hereto during the six (6) month period
commencing on the date on which the first installment is allocated hereto, shall
vest at the end of that period, and] [A]ll installments [thereafter] [allocated
hereto] shall vest immediately, except that the fractional share, if any,
included in an installment shall not vest before such time as additional
fractional shares, or portions thereof, included in other installments allocated
to this option can be combined with the existing fractional share to constitute
one or more whole shares. [Other vesting provisions and/or restrictions on
vesting.]
(c) Notwithstanding anything to the contrary contained in this Section 1,
the total number of shares subject to this option shall be allocated hereto and
shall vest fully, automatically and without any further action by the parties
hereto on the twenty-second day after any Share Acquisition Date, unless prior
to such twenty-second day a majority of the Continuing Directors then in office
has determined that the transaction pursuant to which a Person has become an
Acquiring Person is an Approved Transaction.
(d) For purposes of Section 1(c), the following definitions shall apply:
"Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 20%
or more of the Common Stock then outstanding, but shall not include the Company,
any Subsidiary of the Company or any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Stock for or pursuant to
the terms of any such plan. Notwithstanding the foregoing, no Person shall
become an Acquiring Person as the result of an acquisition of Common Stock by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the Common Stock of the Company then outstanding; provided, however, that if
a Person becomes the Beneficial Owner of 20% or more of the Common Stock of the
Company then outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any
additional Common Stock of the Company, then such Person shall be deemed to be
an Acquiring Person.
<PAGE>
"Affiliate" and "Associate" have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act, as in effect on the date of this grant.
"Approved Transaction" means any transaction that occurs at a time when
Continuing Directors are in office and a majority of the Continuing Directors
then in office has determined that the transaction is in the best interest of
the Company and its stockholders.
A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities: (i) which such Person or any of such
Person's Affiliates or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or Associates has (A)
the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange;
or (B) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other Person
with which such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to clause (ii) (B) of
this definition) or disposing of any securities of the Company; provided
further, however, that nothing in this paragraph shall cause a Person to be the
Beneficial Owner of, or to beneficially own, any securities (x) acquired through
such Person's participation in the business of underwriting securities in good
faith in a firm commitment underwriting until the expiration of forty days after
the date of such acquisition or (y) which such Person has reported on Schedule
13G under the Exchange Act and has not ceased to be eligible to report on
Schedule 13G pursuant to Rule 13d-1 under the Exchange Act.
"Common Stock" means the shares of common stock, par value $.0001 per
share, of the Company.
"Continuing Director" means (i) any member of the Board of Directors of
the Company, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, and who was, if
applicable, a member of the Board prior to the time that any Person becomes an
Acquiring Person, or (ii) any Person who subsequently becomes a member of the
Board, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board is recommended or approved by a
majority of Continuing Directors.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Person" means any individual, firm, partnership, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
"Rights" means the rights granted to the Company's shareholders to
purchase additional Common Stock under certain circumstances, as described in
that certain Rights Agreement, dated as of May 5, 1988, by and between the
Company and The First National Bank of Boston, as rights agent.
"Share Acquisition Date" means the first date of public announcement by
the Company or an Acquiring Person that a Person has become an Acquiring Person.
2
<PAGE>
"Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person, or which is otherwise
controlled by such Person.
2. (a) The exercise price per share of this option is set forth in the
Agreement, being not less than ten percent (10%) of the fair market value of the
Common Stock on the date of grant of this option.
(b) The purchase price of stock acquired pursuant to an option shall be
paid, to the extent permitted by applicable statutes and regulations, either (i)
in cash at the time the option is exercised, or (ii) at the discretion of the
Board or the Committee, either at the time of the grant or exercise of the
option, (x) by delivery to the Company of shares of common stock of the Company
that have been held for the requisite period necessary to avoid a charge to the
Company's reported earnings and valued at the fair market value on the date of
exercise (determined by the closing sale price per share of Common Stock for
such date as reported by the New York Stock Exchange), (y) according to a
deferred payment or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other common stock of the Company) with
the person to whom the option is granted or to whom the option is transferred
pursuant to subparagraph 7(d) of the Plan, or (z) in any other form of legal
consideration that may be acceptable to the Board or the Committee.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at the minimum rate of interest necessary
to avoid the treatment as interest, under any applicable provisions of the Code,
of any amounts other than amounts stated to be interest under the deferred
payment arrangement.
3. The minimum number of shares with respect to which this option may be
exercised at any one time is ten (10), except as to an installment subject to
exercise, as set forth in paragraph 1, which amounts to fewer than ten (10)
shares, in which case, as to the exercise of that installment, the number of
such shares in such installment shall be the minimum number of shares. In no
event may this option be exercised for any number of shares which would require
the issuance of anything other than whole shares.
4. Notwithstanding anything to the contrary contained herein, this option may
not be exercised unless the shares issuable upon exercise of this option are
then registered under the Securities Act of 1933, as amended (the "Securities
Act"), or, if such shares are not then so registered, the Company has determined
that such exercise and issuance would be exempt from the registration
requirements of the Securities Act.
5. The term of this option commences on the grant date as set forth in the
Agreement and, unless sooner terminated as set forth below or in the Plan,
terminates on the date set forth in the Agreement (which date shall be no more
than ten (10) years from the date this option is granted). In no event may this
option be exercised on or after the date on which it terminates. This option
shall terminate prior to the expiration of its term as follows: three (3)
months after the termination of your employment or relationship as a consultant
or director with the Company or an affiliate of the Company (as defined in the
Plan) for any reason or for no reason unless:
(a) such termination of employment or relationship as a consultant or
director is due to your permanent and total disability (within the meaning of
Section 422(c)(6) of the Code), in which event the option shall terminate on the
earlier of the termination date set forth above or one (1) year following such
termination of employment or relationship as a consultant or director; or
(b) such termination of employment or relationship as a consultant or a
director is due to your death, or your death occurs within three (3) months
after such termination of employment or relationship as a consultant or
director, in which event the option shall terminate on the earlier of the
termination date set forth above or eighteen (18) months after your death; or
(c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 4 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your employment or
relationship as a consultant or a director; or
3
<PAGE>
(d) exercise of the option within three (3) months after termination of
your employment or relationship as a consultant or a director with the Company
or with an affiliate of the Company (as defined in the Plan) would result in
liability under section 16(b) of the Securities Exchange Act of 1934, in which
case the option will terminate on the earlier of (i) the termination date set
forth above, (ii) the tenth (10th) day after the last date upon which exercise
would result in such liability or (iii) six (6) months and ten (10) days after
the termination of your employment or relationship as a consultant or a director
with the Company or an affiliate of the Company (as defined in the Plan).
However, this option may be exercised following termination of employment
or relationship as a consultant or a director only as to that number of shares
as to which it was exercisable on the date of termination of employment or
relationship as a consultant or a director under the provisions of paragraph 1
of this option.
6. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise together with the exercise price to the
Secretary of the Company, or to such other person as the Company may designate,
during regular business hours, together with such additional documents as the
Company may then require pursuant to subparagraph 7(f) of the Plan.
(b) By exercising this option you agree that the Company may require you to
enter into an arrangement providing for the cash payment by you to the Company
of any tax withholding obligation of the Company arising by reason of (i) the
exercise of this option; (ii) the lapse of any substantial risk of forfeiture to
which the shares are subject at the time of exercise; or (iii) the disposition
of shares acquired upon such exercise.
7. This option is not transferable, except by will or by the laws of descent
and distribution, and is exercisable during your life only by you.
8. This option is not an employment contract and nothing in this option shall
confer upon any eligible employee or consultant or director any right to
continue in the employ (or to continue acting as a consultant or director) of
the Company or any affiliate of the Company (as defined in the Plan) or shall
affect the right of the Company or any affiliate of the Company (as defined in
the Plan) to terminate the employment or consulting relationship or directorship
of any eligible employee or consultant or director with or without cause.
9. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
in the Company's records or at such other address as you may designate by
written notice to the Company.
10. This option is subject to all the provisions of the Plan, a copy of which
is attached hereto and its provisions are hereby made a part of this option,
including without limitation the provisions of paragraph 7 of the Plan relating
to option provisions, and is further subject to all interpretations, amendments,
rules, and regulations which may from time to time be promulgated and adopted
pursuant to the Plan. In the event of any conflict between the provisions of
this option and those of the Plan, the provisions of the Plan shall control.
This option is dated and effective as of the date of grant as set forth in
the Agreement.
4
<PAGE>
EXHIBIT 10.3
ACUSON CORPORATION
CONSULTING AGREEMENT, DATED JUNE 20, 1994, BETWEEN
WILLIAM H. ABBOTT AND THE COMPANY
CONSULTING AGREEMENT
--------------------
THIS AGREEMENT ("Agreement") is entered into by and between Acuson
Corporation, a Delaware corporation, having a principal place of business at
1220 Charleston Road, Mountain View, California 94043 ("Acuson"), and William H.
Abbott ("Abbott"), a resident of Palo Alto, California, as of June 20, 1994.
1. ENGAGEMENT OF SERVICES
Abbott agrees to perform consulting services ("Services") for Acuson as
Acuson may reasonably request from time to time during the term of this
Agreement. Subject to the terms of this Agreement, Abbott will render the
Services to the best of Abbott's ability.
2. COMPENSATION
During the term of this Agreement, Acuson will pay Abbott as follows:
For the period June 20, 1994 through and including June 19, 1995, the sum of $
234,000, and for the period June 20, 1995 through and including June 19, 1996,
the sum of $ 156,000. Such amounts will be paid to Abbott monthly. In addition
to the foregoing sums, Abbott will be reimbursed for reasonable out-of-pocket
expenses incurred by Abbott in performing the Services, within forty-five (45)
days of receipt of Abbott's invoice, provided Abbott has furnished such
documentation for such expenses as Acuson may reasonably request.
3. CONFIDENTIAL INFORMATION
3.1 INFORMATION.
(a) INFORMATION. Abbott shall hold in trust and confidence all
information, documents and other materials, regardless of form, relating to
Acuson, its business, suppliers and customers supplied to Abbott or learned by
Abbott in the course of performing the Services ("Information").
(b) LIMITATIONS ON USE. Abbott will use Information solely to
perform the Services for the benefit of Acuson and will not disclose Information
to any person not an employee of Acuson.
3.2 ACUSON PROPERTY. All work performed by Abbott for Acuson under
this Agreement and all documents and other material, whether delivered to Abbott
by Acuson or made or received by Abbott in the performance of Services (the
"Acuson Property") are the sole and exclusive property of Acuson. Abbott agrees
to deliver promptly the original and any copies of the Acuson Property to Acuson
at any time upon Acuson's request. Upon termination of this Agreement by either
party for any reason, Abbott agrees to deliver promptly to Acuson or destroy, at
Acuson's option, the original and any copies of the Acuson Property (including
any copies stored in any computer memory or other storage medium).
4. OUTSTANDING OPTIONS
4.1 VESTING. As of June 20, 1994, all vesting under Abbott's
outstanding options granted under the Company's 1986 Supplemental Stock Option
Plan and 1991 Stock Incentive Plan (collectively "Outstanding Options") shall
cease, except that, (a) with respect to Abbott's Outstanding Option for 75,038
shares granted on June 4, 1993, options for an additional 18,760 shares shall be
deemed vested as of June 20, 1994; (b) with respect to Abbott's Outstanding
Options for 60,030 shares granted on June 4, 1993, options for an additional
15,008 shares shall be deemed vested as of June 20, 1994, (c) with respect to
Abbott's Outstanding Options for 40,000 shares granted on October 26, 1993,
options for an additional 8,000 shares shall be deemed vested as of June 20,
1994.
4.2 OPTION EXERCISABILITY. Acuson and Abbott acknowledge that
Abbott's Outstanding Options shall remain exercisable only during the term of
this Agreement, except as provided in Section 4.3 below.
4.3 OPTION AGREEMENT. Except as set forth in Sections 4.1, 4.2 and
this 4.3, the Supplemental Stock Option Terms governing Abbott's Outstanding
Options shall remain in full force and effect. Paragraph 5 of Abbott's
Supplemental Stock Option Terms granted under the Company's 1986 Supplemental
Stock Option Plan and paragraph 5 of Abbott's Supplemental Stock Option Terms
granted under the Company's 1991 Stock Incentive Plan are hereby amended to read
as follows:
<PAGE>
"The term of this option commences on the grant date set forth in
the Agreement and, unless sooner terminated as set forth in the
Plan, terminates on the date that your consulting agreement with the
Company terminates, unless
(a) The termination of your relationship as a consultant is due to
your permanent and total disability (within the meaning of Section
422(c)(6) of the Code), in which case this option shall terminate
one (1) year following such termination; or
(b) The termination of your relationship as a consultant is due to
your death, in which case this option shall terminate eighteen (18)
months after your death; or
(c) In connection with the termination of your consulting agreement,
you become an employee of the Company, in which case this amended
Paragraph 5 shall be of no force and effect and Paragraph 5 as in
effect prior to this amendment shall become in full force and
effect.
However, notwithstanding the foregoing, in no event shall this
option be exercisable more than ten (10) years from the date the
option is granted and in no event may this option be exercised on or
after the date on which it terminates. This option may be exercised
following termination of your relationship as a consultant only as
to that number of shares as to which it was exercisable on the date
of termination."
5. TERM AND TERMINATION
5.1 TERM. This Agreement is effective June 20, 1994 and will terminate on
June 19, 1996, unless terminated earlier as set forth below.
5.2 TERMINATION BY ACUSON. Acuson may terminate this Agreement immediately
upon Abbott's breach of Section 3 ("Confidential Information") and/or upon any
acts of gross misconduct by Abbott directly affecting this Agreement or which in
any way adversely reflects upon Acuson.
5.3 TERMINATION BY ABBOTT. Abbott may terminate this Agreement, with or
without cause, at any time upon fifteen (15) days prior written notice to
Acuson.
6. INDEPENDENT RELATIONSHIP
Abbott's relationship with Acuson is that of an independent contractor, and
nothing in this Agreement is intended to, or should be construed to, create a
partnership, agency or employment relationship. Except as otherwise agreed
between Abbott and Acuson, Abbott will not be entitled to any of the benefits
which Acuson may make available to its employees. Abbott is solely responsible
for, and will file, all tax returns and payments required to be filed with, or
made to, any federal, state or local tax authority with respect to the
performance of Services and receipt of fees under this Agreement. No part of
Abbott's compensation will be subject to withholding by Acuson for the payment
of any social security, federal, state or any other employee payroll taxes.
7. GENERAL PROVISIONS
7.1 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of California as applied to agreements entered into and
to be performed entirely within California between California residents.
7.2 WAIVER. The waiver by either party of a breach of any provision of
this Agreement by the other party will not operate, or be interpreted, as a
waiver of any other or subsequent breach.
7.3 SUCCESSORS AND ASSIGNS. This Agreement is not assignable by either
party hereto without the consent of the other party. Subject to the preceding
sentence, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
<PAGE>
7.4 SURVIVAL. Section 3 ("Confidential Information") shall survive
termination of this Agreement.
7.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties relating to this subject matter and supersedes all prior or
simultaneous representations, discussions, negotiations, and agreements, whether
written or oral, except that nothing in this Agreement shall amend, modify or
supersede in any way Abbott's obligations under any other agreement with Acuson
with respect to Acuson confidential or proprietary information. This Agreement
may be amended or supplemented, and any right hereunder may be waived, only by
a writing that is signed by both parties.
ACUSON CORPORATION: ABBOTT:
By:
----------------------------- -----------------------------
Samuel H. Maslak William H. Abbott
<PAGE>
- --------------------------------------------------------------------------------
ACUSON CORPORATION EXHIBIT 11.1
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
FOR THE QUARTER ENDED OCTOBER 1, 1994
In accordance with Accounting Principles Board Opinion No. 15, the Company
used the modified treasury stock method in computing the third quarter 1994
earnings per share.
The following is the computation of earnings per share:
<TABLE>
<S> <C>
Number of shares outstanding at October 1, 1994.................................. 28,875,846
Number of shares assumed to be repurchased (limited to 20%
of number of shares outstanding)................................................ 5,775,169
Multiply by market value per common share........................................ $ 13.57
-----------
Cost to repurchase............................................................... $78,369,046
Assumed proceeds to the Company had everyone exercised outstanding stock options. 80,647,856
-----------
Excess assumed proceeds available................................................ 2,278,810
Multiply by average interest rate for the period................................. 1.25%
-----------
Assumed interest on excess funds................................................. 28,485
Less: tax provision.............................................................. 5,612
-----------
Adjustment to net income......................................................... 22,873
Add: net income................................................................. 3,734,000
-----------
Adjusted net income.............................................................. $ 3,756,873
===========
Divided by weighted shares outstanding, including common stock
equivalents..................................................................... 29,275,715
Fiscal period earnings per share................................................. $0.13
=====
</TABLE>
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> OCT-01-1994
<CASH> 38,897
<SECURITIES> 39,041
<RECEIVABLES> 82,855
<ALLOWANCES> 3,868
<INVENTORY> 50,783
<CURRENT-ASSETS> 253,189
<PP&E> 135,140
<DEPRECIATION> 87,995
<TOTAL-ASSETS> 297,381
<CURRENT-LIABILITIES> 93,237
<BONDS> 0
<COMMON> 76,955
0
0
<OTHER-SE> 127,189
<TOTAL-LIABILITY-AND-EQUITY> 297,381
<SALES> 211,666
<TOTAL-REVENUES> 267,225
<CGS> 88,638
<TOTAL-COSTS> 115,404
<OTHER-EXPENSES> 133,469
<LOSS-PROVISION> 1,010
<INTEREST-EXPENSE> (2,720)
<INCOME-PRETAX> 21,072
<INCOME-TAX> 6,665
<INCOME-CONTINUING> 14,407
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,407
<EPS-PRIMARY> $0.49
<EPS-DILUTED> $0.49
</TABLE>
