<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 JULY 2, 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
--------------
N/A
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes 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.
Class Outstanding at July 29, 1994
------------------------------ ----------------------------
Common Stock, $.0001 par value 28,394,495 shares
<PAGE>
_______________________________________________________________________________
FORM 10Q
ACUSON CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets
as of July 2, 1994 and December 31, 1993 1
Condensed Consolidated Statements of Operations
for the Three Months Ended July 2, 1994 and
July 3, 1993 and for the Six Months Ended
July 2, 1994 and July 3, 1993 3
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended July 2, 1994
and July 3, 1993 4
Notes to Unaudited Condensed Consolidated
Financial Statements 5
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 8
ITEM 6. Exhibits and Reports on Form 8-K 8
Signature 9
</TABLE>
<PAGE>
________________________________________________________________________________
ACUSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
JULY 2, DECEMBER 31,
ASSETS 1994 1993
(Unaudited)
- - ---------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 51,970 $ 11,184
Short-term investments 21,018 48,103
-------- --------
Total cash and short-term
investments 72,988 59,287
Accounts receivable, net 78,080 62,976
Inventories 45,776 41,964
Other current assets 25,838 37,095
-------- --------
Total current assets 222,682 201,322
PROPERTY AND EQUIPMENT
At cost, net of accumulated
depreciation and amortization
of $83,829 in 1994 and
$75,700 in 1993 47,734 44,307
OTHER ASSETS
Net investment in leases 5,763 19,502
Other long-term assets 8,018 5,950
-------- --------
Total Assets $284,197 $271,081
======== ========
</TABLE>
________________________________________________________________________________
See accompanying notes to unaudited condensed consolidated financial statements.
1
<PAGE>
_______________________________________________________________________________
ACUSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
JULY 2, DECEMBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
(Unaudited)
- - ---------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 22,102 $ 12,644
Other accrued liabilities 67,481 75,176
-------- --------
Total current liabilities 89,583 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 - 28,389 shares
in 1994 and 28,279 shares
in 1993 71,196 69,115
Cumulative translation adjustment (1,480) (2,259)
Unrealized holding loss (359) --
Retained earnings 125,257 116,405
-------- --------
Total stockholders' equity 194,614 183,261
-------- --------
Total Liabilities and
Stockholders' Equity $284,197 $271,081
======== ========
</TABLE>
_______________________________________________________________________________
See accompanying notes to unaudited condensed consolidated financial statements.
2
<PAGE>
________________________________________________________________________________
ACUSON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-----------------------------------------
JULY 2, JULY 3, JULY 2, JULY 3,
1994 1993 1994 1993
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES
Product $69,568 $ 55,572 $144,256 $122,031
Service 18,446 16,528 36,583 32,364
------- -------- -------- --------
Total net sales 88,014 72,100 180,839 154,395
------- -------- -------- --------
COST OF SALES
Product 29,720 21,299 60,852 47,214
Service 8,749 8,705 17,510 17,272
------- -------- -------- --------
Total cost of sales 38,469 30,004 78,362 64,486
------- -------- -------- --------
Gross profit 49,545 42,096 102,477 89,909
------- -------- -------- --------
OPERATING EXPENSES
Selling, general and
administrative 25,550 26,422 52,190 53,460
Product development 18,499 15,162 35,816 29,385
Restructuring expense --- 12,000 --- 12,000
------- -------- -------- --------
Total operating expenses 44,049 53,584 88,006 94,845
------- -------- -------- --------
Income (loss) from operations 5,496 (11,488) 14,471 (4,936)
INTEREST INCOME, NET 795 1,146 1,950 2,310
------- -------- -------- --------
Income (loss) before income
taxes 6,291 (10,342) 16,421 (2,626)
PROVISION FOR (BENEFIT FROM) INCOME
TAXES 2,202 (3,620) 5,748 (919)
------- -------- -------- --------
Net income (loss) $ 4,089 $ (6,722) $ 10,673 $ (1,707)
======= ======== ======== ========
EARNINGS (LOSS) PER SHARE $0.14 $(0.23) $0.37 $(0.06)
======= ======= ======== ========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 29,494 28,991 29,436 29,293
======= ======= ======== ========
</TABLE>
________________________________________________________________________________
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
________________________________________________________________
ACUSON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
JULY 2, JULY 3,
1994 1993
- - ---------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 10,673 $ (1,707)
Adjustments to reconcile net income
(loss) to cash provided by
operating activities:
Depreciation and amortization 9,679 8,884
Changes in:
Accounts receivable (15,919) 10,202
Inventories (3,991) 2,143
Other current assets 5,712 (3,601)
Accounts payable 9,399 3,876
Other accrued liabilities (8,492) (2,611)
-------- --------
Net cash provided by
operating activities 7,061 17,186
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in short-term investments 27,086 3,039
Investment in property and
equipment (12,547) (6,547)
Decrease (increase) in
investment in leases 19,641 (6,678)
Increase in other assets (1,981) (1,373)
-------- --------
Net cash provided by (used
in) investing activities 32,199 (11,559)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock (1,458) (16,008)
Issuance of common stock under
stock option and stock
purchase plans 2,558 3,086
-------- --------
Net cash provided by (used
in) financing activities 1,100 (12,922)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 426 (89)
-------- --------
Net increase (decrease) in cash
and cash equivalents 40,786 (7,384)
CASH AND CASH EQUIVALENTS, BEGINNING OF 11,184 21,483
PERIOD -------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 51,970 $ 14,099
======== ========
</TABLE>
________________________________________________________________________________
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE>
________________________________________________________________________________
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 July 2, 1994 and its condensed
consolidated results of operations and cash flows for the periods ended July 2,
1994 and July 3, 1993. The results of operations for the three and six months
ended July 2, 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 July 2, 1994, the securities' gross unrealized holding loss was
approximately $553,000. The unrealized holding loss of approximately $359,000,
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 six months
ended July 2, 1994, the Company sold certain of its available-for-sale
securities for proceeds of approximately $5,100,000. The Company realized a gain
of approximately $15,000 on those sales.
NOTE 3 - INVENTORIES
The components of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
JULY 2, DEC. 31,
1994 1993
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $24,215 $17,093
Work-in-process 7,026 5,820
Finished goods 14,535 19,051
------- -------
Total inventories $45,776 $41,964
======= =======
</TABLE>
NOTE 4 - LEGAL CONTINGENCIES
On July 1, 1993 and July 30, 1993, individuals purporting to represent a class
of persons who purchased Acuson common stock during the period between October
24, 1990 and July 22, 1992 filed two separate, but related, actions against the
Company, 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.
________________________________________________________________________________
5
<PAGE>
________________________________________________________________________________
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the quarter ended July 2, 1994 increased from $72.1 million in
the quarter ended July 3, 1993 to $88.0 million. For the first six months of
1994, net sales were $180.8 million, an increase of 17.1% compared to the first
six months of 1993. The increased revenues were primarily the result of
increased worldwide product shipments in response to the release of Acoustic
Response Technology (ART) and increased international shipments that were
favorably impacted in particular by the Acuson (R) 128XP/4. The increased sales
were offset by lower average unit selling prices resulting from competitive
pricing pressures and by more sales of lower priced product configurations.
Service revenue for the quarter ended July 2, 1994 increased 11.6% to $18.5
million from $16.5 million in the quarter ended July 3, 1993, primarily due to
growing service contract revenue from a larger base of installed systems.
The Company believes that its results for the six months ended July 2, 1994
may not be indicative of the results for the entire year. Acuson expects that
future revenues may 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.
The gross profit for the second quarter of 1994 was 56.3% of net sales,
compared to 58.4% in the comparable 1993 period. For the six months ended July
2, 1994, gross profit was 56.7% of net sales, compared to 58.2% in the first six
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 $25.6 million in the
quarter ended July 2, 1994, down from $26.4 million in the comparable prior
year's period. For the six months ended July 2, 1994, selling, general and
administrative expenses were $52.2 million compared to $53.5 million in the
first six months of 1993. As a percentage of sales, such expenses in the current
year totaled 28.9% compared to 34.6% in 1993. Expenditures as a percentage of
sales decreased as a result of a reduction in the Company's work force following
the restructuring in the second quarter of 1993.
Product development costs in the second quarter of 1994 totaled $18.5 million
or 21.0% of sales, compared to $15.2 million or 21.0% of sales in the second
quarter of 1993. For the six months ended July 2, 1994, product development
costs were $35.8 million or 19.8% of net sales compared to $29.4 million or
19.0% of net sales in the first six months of 1993. The increase in product
development expense resulted from increased costs for 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 $12,000,000 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 six months
ended July 2, 1994. The actual costs of the restructuring were substantially in
alignment with original expectations.
The provision for income taxes was $2.2 million in the second quarter of 1994
versus a benefit of $3.6 million in 1993. For the six months ended July 2, 1994
the tax provision was $5.7 million versus a benefit of $0.9 million in 1993. The
benefits in 1993 resulted from the loss reported in the quarter ended July 3,
1993. The effective tax rate for the quarter ended July 2, 1994 remained
constant at approximately 35.0%.
6
<PAGE>
________________________________________________________________________________
LIQUIDITY AND CAPITAL RESOURCE
The Company's cash and short-term investments balance has increased $13.7
million during the six months ended July 2, 1994 to $73.0 million as of July 3,
1993. During the six months ended July 2, 1994, the Company generated $7.1
million in cash from operations, as compared to 1993 when operations generated
$17.2 million in cash. The Company's financing and investing activities for the
six months ended July 2, 1994 have generated $32.2 million in cash, with $21.6
million provided by the sale of the Company's lease portfolio. The Company also
has raised $2.6 million in cash for the six months ended July 2, 1994 through
employee participation in the Company's stock option and stock purchase plans,
compared to $3.1 million in the comparable six-month period in 1993.
The Board of Directors had previously authorized the repurchase of a total of
12,000,000 shares of the Company's common stock over an unspecified period of
time. Through December 31, 1993, the Company completed the repurchase of a total
of 8,000,000 shares. Of the remaining 4,000,000 share authorization, as of July
2, 1994, the Company had repurchased 165,000 shares. There were 28,389,142
shares of Acuson common stock outstanding as of July 2, 1994.
At July 2, 1994, the Company's working capital totaled $133.1 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 investment 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.
________________________________________________________________________________
7
<PAGE>
______________________________________________________________________________
PART II
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) The Annual Meeting of Stockholders of the Company was held on May 17, 1994.
c) The result of Stockholders' votes at the Annual Meeting were as follows:
(i) All nominees for director of the Company were elected by the following
vote:
<TABLE>
<CAPTION>
Name Votes For Votes Withheld Broker Non-Votes/Abstentions
---- --------- -------------- ----------------------------
<S> <C> <C> <C>
Royce Diener 26,631,535 142,139 0
Robert J. Gallagher 26,641,639 132,035 0
Samuel H. Maslak 26,642,382 131,292 0
Thomas J. Perkins 26,640,960 132,714 0
</TABLE>
(ii) The appointment of Arthur Andersen & Co. as independent public
accountants of the Company was ratified by the following vote:
<TABLE>
<S> <C>
For 26,671,181
Against 50,536
Abstain 51,957
Broker Non-Votes 0
</TABLE>
================================================================================
________________________________________________________________________________
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
--------
10.1 The Company's Employee Stock Purchase Plan (1)
10.2 The Company's 1982 Incentive Stock Option Plan (1)
10.3 The Company's 1986 Supplemental Stock Option Plan (1)
11.1 Statement regarding computation of per share earnings for
the quarter ended July 2, 1994
(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
July 2, 1994.
______________________________________________________________________________
8
<PAGE>
________________________________________________________________________________
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)
August 15, 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)
9
<PAGE>
ACUSON CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
-------
(a) The purpose of the Plan is to provide a means by which employees of
ACUSON CORPORATION, a Delaware corporation (the "Company"), and its Affiliates,
as defined in subparagraph 1(b), which are designated as provided in
subparagraph 2(b), may be given an opportunity to purchase stock of the Company.
(b) The word "affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company, as those terms are defined in Sections
425(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of its
employees, to secure and retain the services of new employees, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company by providing eligible employees with an opportunity to participate as
shareholders in the Company's future growth.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION
--------------
(a) The Plan shall be administered by the Board of Directors (the "Board")
of the Company unless and until the Board delegates the administration to a
committee, as provided in subparagraph 2(c). Whether or not the board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(i) To determine how rights to purchase stock of the Company shall be
granted and the provisions of each offering of such rights (which need not be
identical) consistent with the provisions of the Plan.
(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan, in a manner and to the extent it shall deem necessary
or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee shall be persons who in the opinion of counsel to the Company
are "disinterested persons," within the meaning of Rule 16b-3(d)(2) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any such
person shall otherwise comply with the requirements of Rule 16b-3 promulgated
under the Exchange Act. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be
-1-
<PAGE>
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan.
3. SHARES SUBJECT TO THE PLAN
--------------------------
(a) Subject to the provisions of paragraph 12 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to rights granted under
the Plan shall not exceed in the aggregate two million four hundred fifty
thousand (2,450,000) shares of the Company's common stock, par value $0.001 per
share (the "Common Stock"). If any right granted under the Plan shall for any
reason terminate without having been exercised, the Common Stock not purchased
under such right shall again become available for the Plan.
(b) The Common Stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. GRANTS OF RIGHTS; OFFERING
--------------------------
The Board or the Committee may from time to time grant or provide for the
grant of rights to purchase stock of the Company under the Plan to eligible
employees (an "Offering") on a date or dates (the "Offering Date(s)") selected
by the Board or the Committee. Each Offering shall be in such form and shall
contain such terms and conditions as the Board or the Committee shall deem
appropriate. If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreement or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his rights under the Plan, and (2) a right with a
lower exercise price (or an earlier-granted right, if two rights have identical
exercise prices), will be exercised to the fullest possible extent before a
right with a higher exercise price (or later-granted, if two rights have
identical exercise prices) will be exercised. The provisions of separate
Offerings need not be identical, but each Offering shall include (through
incorporation of the provisions of this Plan by reference in the Offering or
otherwise) the substance of the provisions contained in paragraphs 5 through 8,
inclusive.
5. ELIGIBILITY
-----------
(a) Rights may be granted only to employees of the Company or, as the Board
or the Committee may designate as provided in subparagraph 2(b), to employees of
any Affiliate of the Company. Except as provided in subparagraph 5(b), an
employee of the Company or any Affiliate shall not be eligible to be granted
rights under the Plan, unless, on the Offering Date, such employee has been in
the employ of the Company or any Affiliate for such continuous period preceding
such grant as the Board or the Committee may require, but in no event shall the
required period of continuous employment be equal to or greater than two (2)
years. In addition, unless otherwise determined by the Board or the Committee,
no employee of the Company or any Affiliate shall be eligible to be granted
rights under the Plan, unless, on the Offering Date, such employee's customary
employment with the Company or such Affiliate is at least twenty (20) hours per
week and at least five (5) months per calendar year.
(b) Unless otherwise determined by the Board or the Committee, each person
who, during the course of an Offering with multiple Exercise Dates, first
becomes an eligible employee of the Company or designated Affiliate will, on the
first Exercise Date (as defined in the Offering) which coincides with the day on
which such person becomes an eligible employee or occurs thereafter, receive a
right under that Offering, which right shall be deemed to be a part of that
Offering. Such right shall have the same characteristics as any rights
originally granted under that Offering, as described herein, except that:
(i) the date on which such right is granted shall be the "Offering Date"
of such right for all purposes, including determination of the exercise price of
such right;
(ii) the Purchase Period (as defined below) for such right shall begin
on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board or Committee may provide that if such person first
becomes an eligible employee within a specified period of time before the end of
the Purchase Period (as defined below) for such Offering, he or she will not
receive any right under that Offering.
-2-
<PAGE>
(c) If necessary to comply with Rule 16b-3 promulgated under the Exchange
Act, a director shall not be eligible for the benefits of the Plan unless and
until such director is expressly declared eligible to participate in the Plan by
action of the Board or Committee, and only if, at any time discretion is
exercised by the Board in the selection of a director as a person to whom rights
may be granted, or in the determination of the number of shares which may be
covered by rights granted to a director, a majority of the Board and a majority
of the directors acting in such a matter are disinterested persons, as defined
in subparagraph 2(d). The Board shall otherwise comply with the requirements of
Rule 16b-3 promulgated under the Exchange Act, as from time to time in effect.
(d) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or of any Affiliate. For purposes
of this subparagraph 5(d), the rules of Section 425(d) of the Code shall apply
in determining the stock ownership of any employee, and stock which such
employee may purchase under all outstanding rights and options shall be treated
as stock owned by such employee.
(e) An eligible employee may be granted rights under the Plan only if such
rights, together with any other rights granted under "employee stock purchase
plans" of the Company and any Affiliates, as specified by Section 423(b)(8) of
the Code, do not permit such employee's rights to purchase stock of the Company
or any Affiliate to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) of fair market value of such stock (determined at the time such rights
are granted) for each calendar year in which such rights are outstanding at any
time.
6. RIGHTS; PURCHASE PRICE
----------------------
(a) On each Offering Date, each eligible employee, pursuant to an Offering
made under the Plan, shall be granted the right to purchase the number of shares
of Common Stock of the Company purchasable with up to fifteen percent (15%) of
such employee's Compensation [as defined in subparagraph 7(a)] for the period
that begins on the Offering Date and ends on the date stated in the Offering,
which date shall be no more than twenty-seven months after the Offering Date
(the "Purchase Period"). In connection with each Offering made under this Plan,
the Board or the Committee shall specify a maximum number of shares which may be
purchased by any employee as well as a maximum aggregate number of shares which
may be purchased by all eligible employees pursuant to such Offering. In
addition, in connection with each Offering with multiple Exercise Dates, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Exercise Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(b) The purchase price of Common Stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of an amount equal to eighty-
five percent (85%) of the fair market value of the Common Stock on:
(i) the relevant Offering Date, as specified in paragraph 4; or
(ii) the Exercise Date, as defined in subparagraph 8(a).
7. PARTICIPATION; WITHDRAWAL; TERMINATION
--------------------------------------
(a) An eligible employee may become a participant in an Offering by
delivering an agreement to the Company within the time specified in the
Offering, in such form as the Company provides. Each such agreement shall
authorize payroll deductions of up to fifteen percent (15%) of such employee's
total compensation paid during the applicable period, including amounts elected
to be deferred under the Company's 401(k) plan ("Compensation") and shall remain
effective under subsequent Offerings unless and until such employee terminates
his or her payroll deductions. At any time a participant may reduce or
terminate his or her payroll deductions by delivering a written notice or
agreement to the Company on such form as the Company provides. A
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<PAGE>
participant may increase (or an employee may begin) such payroll deductions
effective for a given Offering after the beginning of the Purchase Period for
that Offering only as provided in the Offering. Unless otherwise provided at
time of offering, payroll deductions may be elected in whole percentages only.
The payroll deductions made for each participant shall be credited to an account
maintained for such participant under the Plan, but all funds shall be retained
with the general funds of the Company. A participant may not make any additional
payments into his or her account.
(b) If a participant terminates his or her payroll deductions, such
participant may withdraw from the Offering by delivering to the Company a notice
of withdrawal in such form as the Company provides. Such withdrawal may be
elected at any time prior to the end of the Purchase Period for which it is to
be effective. Upon such withdrawal from the Offering by a participant, the
Company shall distribute as soon as practical to such participant an amount
equal to all of his or her accumulated payroll deductions (reduced to the extent
such deductions have been used to acquire stock for the participant) under the
Offering without interest, and such person's participation in that Offering
shall be automatically terminated. A participant's withdrawal from an Offering
will have no effect upon such participant's eligibility to participate in any
other Offerings under the Plan, but such participant will be required to deliver
a new participation agreement in order to participate in other Offerings under
the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon cessation of any participating employee's employment with the
Company or an Affiliate, for any reason other than death or retirement, and the
Company shall distribute as soon as practical to such employee an amount equal
to all of his or her accumulated payroll deductions (reduced to the extent such
deductions have been used to acquire stock for the participant), without
interest.
(d) In the event of the retirement, if such retirement occurs three (3)
months or less prior to the next Exercise Date (as defined in subparagraph
8(a)), or death of a participant during the Purchase Period, the retired
participant or his or her transferee pursuant to subparagraph 7(e) shall have
the option of withdrawing from the ongoing Offering as provided in subparagraph
7(b) or taking no action and thereby continuing participation in the ongoing
Offering. If retirement occurs more than three (3) months prior to the next
Exercise Date (as defined in subparagraph 8(a)) all rights granted pursuant to
the Offering shall terminate immediately and as soon as practical the Company
shall distribute to such retired participant an amount equal to all of his or
her accumulated payroll deductions (reduced to the extent such deductions have
been used to acquire stock for the participant) without interest.
(e) Rights granted under the Plan shall not be transferable, other than by
will or the laws of descent and distribution, and shall be exercisable during
the lifetime of the person to whom such rights are granted only by such person.
8. EXERCISE
--------
(a) On each exercise date, as defined in the relevant Offering (an
"Exercise Date"), each participant's accumulated payroll deductions (without any
increase for interest) will be applied to the purchase of whole shares of Common
Stock of the Company, up to the maximum number of shares permitted pursuant to
the terms of the Plan and the applicable Offering, at the purchase price
specified in the Offering. No fractional shares shall be issued upon the
exercise of rights granted under the Plan. The amount, if any, of accumulated
payroll deductions remaining in any participant's account at the end of the
Purchase Period (after the purchase of shares) which is equal to the amount
required to purchase whole shares of Common Stock on the final Exercise Date
shall be distributed in full to such participant as soon as practical after the
Purchase Period, without interest. Any remaining amount of accumulated payroll
deductions in each participant's account at the end of the Purchase Period
(after the purchase of shares and the distribution referred to in the preceding
sentence, if any) which is less than the amount required to purchase one share
of Common Stock on the final Exercise Date shall be held in each such
participant's account for the purchase of shares under the next Offering under
the Plan, unless such participant withdraws from such next Offering, as provided
in subparagraph 7(b), or is no longer eligible to be granted rights under the
Plan, as provided in paragraph 5, in which case such amount shall be distributed
to such participant as soon as practical after the Purchase Period, without
interest.
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<PAGE>
(b) No rights granted under the Plan may be exercised to any extent unless
the Plan (including rights granted thereunder) is covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended (the
"Securities Act"). If, on an Exercise Date of any Offering hereunder, the Plan
is not so registered, no rights granted under the Plan or any Offering shall be
exercised and all payroll deductions accumulated during the Purchase Period
shall be distributed to the participants, without interest.
9. COVENANTS OF THE COMPANY
------------------------
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such rights.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of Common Stock upon exercise of the rights granted under
the Plan. If, after reasonable efforts, the Company is unable to obtain from
any such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of Common Stock under
the Plan, the Company shall be relieved from any liability for failure to issue
and sell Common Stock upon exercise of such rights unless and until such
authority is obtained.
10. USE OF PROCEEDS
---------------
Proceeds from the sale of Common Stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
11. MISCELLANEOUS
-------------
(a) A participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until certificates representing such shares shall have
been issued.
(b) Throughout the term of any Offering, the Company shall make available
to each participant, not later than 120 days after the close of each of the
Company's fiscal years during the Offering, upon request, such financial and
other information regarding the Company as comprises the annual report to the
shareholders of the Company provided for in the bylaws of the Company.
(c) Nothing in the Plan or any instrument executed or Offering granted
pursuant thereto shall confer upon any eligible employee or participant any
right to continue in the employ of the Company or any Affiliate or shall affect
the right of the Company or any Affiliate to terminate the employment of any
eligible employee or participant with or without cause.
12. ADJUSTMENTS UPON CHANGES IN STOCK
---------------------------------
(a) If any change is made in the Common Stock subject to the Plan, or
subject to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Board shall make
appropriate adjustments in the maximum number of shares subject to the Plan and
the number of shares and price per share subject to outstanding rights.
(b) In the event of: (1) a dissolution or liquidation of the Company in
which another corporation succeeds to the assets of the Company; (2) a merger or
consolidation in which the Company is not the surviving corporation; (3) a
reverse merger in which the Company is the surviving corporation but the shares
of the Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; or (4) any other capital reorganization in which
more than 50% of the shares of the Company entitled to vote are exchanged, then
the surviving corporation shall either assume any options outstanding under the
Plan or shall substitute similar options for those outstanding under the Plan or
the outstanding options shall remain in full force and effect.
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<PAGE>
13. AMENDMENT OF THE PLAN
---------------------
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in Common Stock, no amendment shall be effective unless approved by the vote of
the holders of a majority of the voting power of the shares of the Company
represented in person or by proxy and entitled to vote at a duly held
stockholders meeting, within twelve (12) months before or after the adoption of
the amendment, where the amendment will:
(i) increase the number of shares reserved for rights under the Plan;
(ii) materially modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to satisfy the requirements of Section 423 of the
Code); or
(iii) modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 423 of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Exchange Act.
It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible employees
with the maximum benefits provided or intended to be provided under the
provisions of the Code and the regulations promulgated thereunder relating to
employee stock purchase plans and/or to bring the Plan and/or rights granted
under it into compliance therewith.
(b) Rights and obligations under any rights granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan, except with
the consent of the person to whom such rights were granted.
14. TERMINATION OR SUSPENSION OF THE PLAN
-------------------------------------
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate ten years from the date the Plan is adopted
by the Board or approved by the stockholders of the Company, whichever is
earlier. No rights may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom such rights were granted.
15. EFFECTIVE DATE OF PLAN
----------------------
The Plan shall become effective as determined by the Board, but no rights
granted under the Plan shall be exercised unless and until the Plan has been
approved by the vote of the holders of a majority of the outstanding shares of
the Company entitled to vote or by the written consent of the outstanding shares
entitled to vote to the extent necessary to obtain employee stock purchase plan
treatment under Section 423 of the Code, and, if required, an appropriate permit
has been issued by the Commissioner of Corporations of the State of California.
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<PAGE>
ACUSON CORPORATION
1982 INCENTIVE STOCK OPTION PLAN
--------------------------------
1. PURPOSE.
--------
(a) The purpose of the Plan is to provide a means by which selected employees
of Acuson Corporation (the "Company") and its affiliates, as defined in
subparagraph l(b), may be given an opportunity to purchase shares of the Common
Stock of the Company (the "Stock").
(b) The word "Affiliate" as used in the Plan means any parent corporation or
subsidiary corporation of the Company, as those terms are defined in Sections
425(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of persons
now holding positions, to secure and retain the services of persons capable of
filling such positions, and to provide incentives for such persons to exert
maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the Plan be incentive
stock options as that term is used in Section 422A of the Code.
2. ADMINISTRATION.
--------------
(a) The Plan shall be administered by the Board of Directors (the "Board") of
the Company unless and until the Board delegates administration to a committee,
as provided in subparagraph 2(c). Whether or not the Board has delegated
administration, the Board shall have the final power to determine all questions
of policy and expediency that may arise in the administration of the Plan.
(b) The Board shall have the power, subject to, and within the limitations of,
the express provisions of the Plan:
(l) To determine from time to time which of the persons eligible under the
Plan shall be granted options; when and how the option shall be granted; the
provisions of each option granted (which need not be identical), including the
time or times during the term of each option within which all or portions of
such option may be exercised; and the number of shares for which an option shall
be granted to each such person.
(2) To construe and interpret the Plan and options granted under it, and to
establish, amend and revoke rules and regulations for its administration. The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any option agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company.
(c) The Board may delegate administration of the Plan to a committee composed
of not fewer than two (2) members (the "Committee"), all of the members of which
Committee shall be persons who in the opinion of counsel to the Company are
"disinterested persons," within the meaning of Rule 16b-3(d)(2) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any such
person shall otherwise comply with the requirements of Rule 16b-3 promulgated
under the Exchange Act. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by
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<PAGE>
the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.
Subject to paragraph 2(d) the Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.
(d) Notwithstanding anything in this paragraph 2 to the contrary, the Board
may delegate to a committee of one or more members of the Board the authority to
grant options to eligible persons who are not officers of the Company or members
of the Board.
3. SHARES SUBJECT TO THE PLAN.
--------------------------
(a) Subject to the provisions of paragraph 9 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options granted under
the Plan shall not exceed in the aggregate eleven million two hundred fifty
thousand (11,250,000) shares of the Stock; provided, however, that such
aggregate number of shares shall be reduced to reflect the number of shares of
the Stock which has been sold under, or may be sold pursuant to outstanding
options granted under, the Company's 1986 Supplemental Stock Option Plan to the
same extent as if such sales had been made or options had been granted pursuant
to this Plan. If any option granted under the Plan shall for any reason expire
or otherwise terminate without having been exercised in full, the Stock not
purchased under such option shall again become available for the Plan.
(b) The Stock subject to the Plan may be unissued shares or reacquired shares,
bought on the market or otherwise.
(c) For options granted before January 1, 1987, an option may be granted to an
eligible person under the Plan only if such option, and any other options
specified by Section 422A(b)(8) of the Internal Revenue Code of 1954, as
amended, which were previously granted to such person during the calendar year
in which such option is proposed to be granted, are for the purchase of shares
of stock of the Company having an aggregate fair market value (determined as of
the times the respective options are granted) not in excess of one hundred
thousand dollars ($100,000) plus any unused limit carryover (as defined in
Section 422A(c)(4) of the Internal Revenue Code of 1954, as amended) to such
calendar year. For options granted after December 31, 1986, an option may be
granted to an eligible person under the Plan only if the aggregate fair market
value (determined at the time the option is granted) of the stock with respect
to which incentive stock options are exercisable for the first time by such
optionee during any calendar year under all such plans of the Company and its
Affiliates does not exceed one hundred thousand dollars ($100,000). Should it be
determined that any option granted under the Plan exceeds such maximum, such
option shall be considered not to qualify for treatment as an incentive stock
option under Section 422A of the Code to the extent, but only to the extent, of
such excess.
4. ELIGIBILITY.
-----------
(a) Options may be granted to employees (including officers) of the Company or
its Affiliates. A director of the Company shall not be eligible for the
benefits of the Plan unless such director is also an employee (including an
officer) of the Company or any Affiliate.
(b) A director shall in no event be eligible for the benefits of the Plan
unless and until such director is expressly declared eligible to participate in
the Plan by action of the Board or the committee, and only if, at any time
discretion is exercised by the Board in the selection of a director as a person
to whom options may be granted, or in the determination of the number of shares
which may be covered by options granted to a director, a majority of the Board
and a majority of the directors acting in such matter are disinterested persons,
as defined in subparagraph 2(d). The Board shall otherwise comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act, as from time to
time in effect. This subparagraph 4(b) shall not apply prior to the date of the
first registration of an equity security of the Company under Section 12 of the
Exchange Act.
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<PAGE>
(c) No person shall be eligible for the grant of an option under the Plan if,
at the time of grant, such person owns (or is deemed to own pursuant to Section
425(d) of the Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any of its
Affiliates unless the option price is at least one hundred ten percent (110%) of
the fair market value of the Stock at the date of grant and the term of the
option does not exceed five (5) years from the date of grant.
5. OPTION PROVISIONS.
-----------------
Each option shall be in such form and shall contain such terms and conditions
as the Board or the committee shall deem appropriate. The provisions of
separate options need not be identical, but each option shall include (through
incorporation of provisions hereof by reference in the option or otherwise) the
substance of each of the following provisions:
(a) The term of any option shall not be greater than ten (10) years from the
date it was granted.
(b) The exercise price of each option shall be not less than one hundred
percent (100%) of the fair market value of the Stock subject to the option on
the date the option is granted.
(c) The purchase price of Stock acquired pursuant to an option shall be paid
as specified in the option either (i) in cash at the time the option is
exercised, or (ii) at the discretion of the Board or the committee, (A) by
delivery to the Company of other shares of the Stock, (B) according to a
deferred payment or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other shares of the Stock) with the
person to whom the option is granted or to whom the option is transferred
pursuant to subparagraph 5(d), or (C) in any other form of legal consideration
that may be acceptable to the Board or the committee in their discretion, either
at the time of grant or exercise of the option.
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.
(d) An option shall not be transferable except by will or by the laws of
descent and distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person.
(e) The total number of shares of the Stock subject to an option may, but need
not, be allotted in periodic installments (which may, but need not, be equal).
From time to time during each of such installment periods, the option may be
exercised with respect to some or all of the shares allotted to that period,
and/or with respect to some or all of the shares allotted to any prior period as
to which the option was not fully exercised. During the remainder of the term
of the option (if its term extends beyond the end of the installment periods),
the option may be exercised from time to time with respect to any shares then
remaining subject to the option. The provisions of this subparagraph 5(e) are
subject to any option provisions governing the time of vesting of installments,
the dates on which options may be exercised, and the minimum number of shares as
to which an option may be exercised.
(f) Notwithstanding anything to the contrary contained in the Plan, no option
granted prior to January 1, 1987 shall be exercisable to any extent while there
is outstanding (within the meaning of Section 422A(c)(7) of the Internal Revenue
Code of 1954, as amended) any incentive stock option (within the meaning of
Section 422A of the Code) which was granted before the granting of such later
option to the holder of such later option to purchase stock of the Company, or
of any corporation which at the time of the granting of such later option was an
Affiliate of the Company, or of a predecessor corporation of any such
corporation.
(g) The Company may require any optionee, or any person to whom the option is
transferred under subparagraph 5(d), as a condition of exercising any such
option, to give written assurances satisfactory to the Company stating that such
person is acquiring the Stock subject to the option for such person's own
account and
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<PAGE>
not with any present intention of selling or otherwise distributing the Stock.
The requirement of providing written assurances, and any assurances given
pursuant to the requirement, shall be inoperative if (i) the issuance of the
shares upon the exercise of the option has been registered under a then
currently effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii) a determination is made by counsel for
the Company that such written assurances are not required in the circumstances
under the then applicable federal securities laws.
(h) An option shall terminate three (3) months after termination of the
optionee's employment with the Company or an Affiliate, unless (i) the
termination of employment of the optionee is due to such person's permanent and
total disability, within the meaning of Section 422A(c)(7) of the Code, in which
case the option may, but need not, provide that it may be exercised at any time
within one (l) year following such termination of employment; or (ii) the
optionee dies while in the employ of the Company or an Affiliate, or within not
more than three (3) months after termination of such employment, in which case
the option may, but need not, provide that it may be exercised at any time
within eighteen (18) months following the death of the optionee by the person or
persons to whom the optionee's rights under such option pass by will or by the
laws of descent and distribution; or (iii) the option by its terms specifies
either (a) that it shall terminate sooner than three (3) months after
termination of employment, or (b) that it may be exercised more than three (3)
months after termination of the optionee's employment with the Company or an
Affiliate. This subparagraph 5(h) shall not be construed to extend the term of
any option or to permit anyone to exercise the option after expiration of its
terms, nor shall it be construed to increase the number of shares as to which
any option is exercisable from the amount exercisable on the date of termination
of the optionee's employment.
(i) The option may, but need not, include a provision whereby the optionee
may elect at any time during the term of his or her employment with the Company
or any Affiliate to exercise the option as to any part or all of the shares
subject to the option prior to the stated vesting date of the option or of any
installment or installments specified in the option. Any shares so purchased
from any unvested installment or option may be subject to a repurchase right in
favor of the Company or to any other restriction the Board or the committee
determines to be appropriate.
(j) If and to the extent authorized by the Board or the committee in its
discretion, a person who has received options may make an election to have
shares of stock of the Company withheld by the Company or to tender any such
stock to the Company upon any exercise of an option to pay the amount of tax
that the Board or the committee in its discretion determines to be required by
law to be withheld by the Company.
Any shares of stock so withheld or tendered will be valued by the Board or
the committee at their fair market value as of the date they are withheld or
tendered. The value of the shares withheld or tendered may not exceed the
required federal, state and local and foreign withholding tax obligations as
computed by the Company. Unless the Board or the committee otherwise permits,
the optionee shall pay to the Company in cash, promptly when the amount of such
obligations become determinable, all applicable federal, state, local and
foreign withholding taxes that the Board or the committee determines to result
from the lapse of restrictions imposed on exercise of an option, from a transfer
or other disposition of shares acquired upon exercise of an option or otherwise
related to the option or the shares acquired upon exercise of the option.
6. COVENANTS OF THE COMPANY.
------------------------
(a) During the terms of the options granted under the Plan, the Company shall
keep available at all times the number of shares of the Stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to issue and
sell shares of the Stock upon exercise of the options granted under the Plan;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan or any shares of the Stock issued or issuable pursuant to any such option.
If the Company is unable to obtain from any such regulatory commission or agency
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<PAGE>
the authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell shares of the Stock upon exercise of
such options unless and until such authority is obtained.
7. USE OF PROCEEDS FROM STOCK.
--------------------------
Proceeds from the sale of shares of the Stock pursuant to options granted
under the Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
-------------
(a) The Board or the committee shall have the power to accelerate the time
during which an option may be exercised, notwithstanding the provisions in the
option stating the time during which it may be exercised.
(b) Neither an optionee nor any person to whom an option is transferred under
subparagraph 5(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such option unless and
until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(c) Throughout the term of any option granted pursuant to the Plan, the
Company will make available to the holder of such option, not later than 120
days after the close of each of the Company's fiscal years during the option
term, upon request, such financial and other information regarding the Company
as comprises the annual report to the stockholders of the Company provided for
in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or option granted pursuant
thereto shall confer upon any eligible participant or optionee any right to
continue in the employ of the Company or any Affiliate or shall affect the right
of the Company or any Affiliate to terminate the employment of any eligible
participant or optionee with or without cause.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
---------------------------------
(a) If any change is made in the Stock subject to the Plan or subject to any
option granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Board shall make appropriate
adjustments in the class(es) and maximum number of shares subject to the Plan
and the number of shares and price per share of stock subject to outstanding
options.
(b) In the event of: (l) a dissolution or liquidation of the Company; (2) a
merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Stock outstanding immediately preceding the merger are converted
by virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) any other capital reorganization in which more than
fifty percent (50%) of the shares of the Company entitled to vote are exchanged,
then, at the sole discretion of the Board and to the extent permitted by
applicable law, (i) any surviving corporation shall assume any options
outstanding under the Plan or shall substitute similar options for those
outstanding under the Plan, or (ii) the time during which such options may be
exercised shall be accelerated and the options terminated if not exercised prior
to such event, or (iii) such options shall continue in full force and effect.
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<PAGE>
10. AMENDMENT OF THE PLAN.
---------------------
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 9 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the vote of the
holders of a majority of the voting power of the shares of the Company
represented in person or by proxy and entitled to vote at a duly held
stockholders meeting, within twelve (12) months before or after the adoption of
the amendment, where the amendment will:
(i) Increase the number of shares reserved for options under the Plan;
(ii) Materially modify the requirements as to eligibility for participation
in the Plan (to the extent such modification requires stockholder approval in
order for the Plan to satisfy the requirements of Section 422A(b) of the Code);
or
(iii) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 422A(b) of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Exchange Act.
It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock options and/or
to bring the Plan and/or options granted under it into compliance therewith.
(b) Rights and obligations under any option granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan, except with
the consent of the person to whom the option was granted.
11. TERMINATION OR SUSPENSION OF THE PLAN.
-------------------------------------
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate within ten (10) years from the date the
Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No options may be granted under the Plan while the Plan
is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
12. EFFECTIVE DATE OF PLAN.
----------------------
The Plan shall become effective as determined by the Board, but no options
granted under the Plan shall be exercised unless and until the Plan has been
approved by the vote of the holders of a majority of the outstanding shares of
the Company entitled to vote or by the unanimous written consent of the holders
of all outstanding shares of the Company entitled to vote, and, if required, an
appropriate permit has been issued by the Commissioner of Corporations of the
State of California.
-6-
<PAGE>
ACUSON CORPORATION
1986 SUPPLEMENTAL STOCK OPTION PLAN
-----------------------------------
1. PURPOSE.
-------
(a) The purpose of the Plan is to provide a means by which selected
employees and directors (if declared eligible under paragraph 4) of and
consultants to Acuson Corporation (the "Company") and its Affiliates, as defined
in subparagraph l(b), may be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company as those terms are defined in Sections
425(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now holding key positions, to secure and retain the services of persons
capable of filling such positions, and to provide incentives for such persons to
exert maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the Plan not be
incentive stock options as that term is used in Section 422A of the Code.
2. ADMINISTRATION.
--------------
(a) The Plan shall be administered by the Board of Directors (the "Board")
of the Company unless and until the Board delegates administration to a
committee, as provided in subparagraphs 2(c) and 2(e). Whether or not the Board
has delegated administration, the Board shall have the final power to determine
all questions of policy and expediency that may arise in the administration of
the Plan.
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(l) To determine from time to time which of the persons eligible under
the Plan shall be granted options; when and how the option shall be granted; the
provisions of each option granted (which need not be identical), including the
time or times during the term of each option within which all or portions of
such option may be exercised; and the number of shares for which an option shall
be granted to each such person.
(2) To construe and interpret the Plan and options granted under it, and
to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any option agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee shall be persons who in the opinion of counsel to the Company
are "disinterested persons," within the meaning of Rule 16b-3(d)(2) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any such
person shall otherwise comply with the requirements of Rule 16b-3 promulgated
under the Exchange Act. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by
-1-
<PAGE>
the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.
Subject to paragraph 2(d) the Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.
(d) Notwithstanding anything in this paragraph 2 to the contrary, the Board
may delegate to a committee of one or more members of the Board the authority to
grant options to eligible persons who are not officers of the Company or members
of the Board.
3. SHARES SUBJECT TO THE PLAN.
--------------------------
(a) Subject to the provisions of paragraph 9 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options granted under
the Plan shall not exceed in the aggregate eleven million two hundred fifty
thousand (11,250,000) shares of the Company's common stock; provided, however,
that such aggregate number of shares shall be reduced to reflect the number of
shares of the Company's common stock which have been sold under, or may be sold
pursuant to outstanding options granted under, the Company's 1982 Incentive
Stock Option Plan to the same extent as if such sales had been made or options
had been granted pursuant to this Plan. If any option granted under the Plan
shall for any reason expire or otherwise terminate without having been exercised
in full, the stock not purchased under such option shall again become available
for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
(c) There is no maximum limit on the aggregate fair market value
(determined as of the times the respective options are granted) of the stock for
which any eligible person may be granted options under the Plan in any calendar
year.
4. ELIGIBILITY.
-----------
(a) Options may be granted only to selected employees (including officers)
of, directors of or consultants to the Company or its Affiliates. A director of
the Company shall not be eligible for the benefits of the Plan unless such
director is also a selected employee (including an officer) of or consultant to
the Company or any Affiliate.
(b) A director shall in no event be eligible for the benefits of the Plan
unless and until such director is expressly declared eligible to participate in
the Plan by action of the Board or the Committee, and only if, at any time
discretion is exercised by the Board in the selection of a director as a person
to whom options may be granted, or in the determination of the number of shares
which may be covered by options granted to a director, a majority of the Board
and a majority of the directors acting in such matter are disinterested persons,
as defined in subparagraph 2(d). The Board shall otherwise comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act, as from time to
time in effect.
(c) No person shall be eligible for the grant of an option under the Plan
if, at the time of grant, such person owns stock possessing more than ten
percent (10%) of the total combined voting power or value of all classes of
stock of the Company or of any of its Affiliates unless the option price is at
least one hundred ten percent (110%) of the fair market value of such stock at
the date of grant and the term of the option does not exceed five (5) years from
the date of grant.
-2-
<PAGE>
5. OPTION PROVISIONS.
-----------------
Each option shall be in such form and shall contain such terms and
conditions as the Board or the Committee shall deem appropriate. The provisions
of separate options need not be identical, but each option shall include
(through incorporation of provisions hereof by reference in the option or
otherwise) the substance of each of the following provisions:
(a) The term of any option shall not be greater than ten (10) years from
the date it was granted.
(b) The exercise price of each option shall be not less than ten percent
(10%) of the fair market value of the stock subject to the option on the date
the option is granted.
(c) 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 grant or exercise of the option
(A) by delivery to the Company of other common stock of the Company, (B)
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 5(d), or (C) 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, an interest rate shall
be stated which is not less than the 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.
(d) An option shall not be transferable except by will or by the laws of
descent and distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person.
(e) The total number of shares of stock subject to an option may, but need
not, be allotted in periodic installments (which may, but need not, be equal).
From time to time during each of such installment periods, the option may be
exercised with respect to some or all of the shares allotted to that period,
and/or with respect to some or all of the shares allotted to any prior period as
to which the option was not fully exercised. During the remainder of the term
of the option (if its term extends beyond the end of the installment periods),
the option may be exercised from time to time with respect to any shares then
remaining subject to the option. The provisions of this subparagraph 5(e) are
subject to any option provisions governing the minimum number of shares as to
which an option may be exercised.
(f) The Company may require any optionee, or any person to whom an option
is transferred under subparagraph 5(d), as a condition of exercising any such
option: (l) to give written assurances satisfactory to the Company as to the
optionee's knowledge and experience in financial and business matters and/or to
employ a purchaser representative who has such knowledge and experience in
financial and business matters that he is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising
the option; and (2) to give written assurances satisfactory to the Company
stating that such person is acquiring the stock subject to the option for such
person's own account and not with any present intention of selling or otherwise
distributing the stock. These requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (i) the issuance of the shares
upon the exercise of the option has been registered under a then currently
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), or (ii), as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.
(g) An option shall terminate three (3) months after termination of the
optionee's employment with the Company or an Affiliate, unless (i) the
termination of employment of the optionee is due to such person's permanent and
total disability, within the meaning of Section 422A(c)(7) of the Code, in which
case the option may, but need not, provide that it may be exercised at any time
within one (1) year following such termination of employment; or (ii) the
optionee dies while in the employ of the Company or an Affiliate, or within not
more than
-3-
<PAGE>
three (3) months after termination of such employment, in which case the option
may, but need not, provide that it may be exercised at any time within eighteen
(18) months following the death of the optionee by the person or persons to whom
the optionee's rights under such option pass by will or by the laws of descent
and distribution; or (iii) the option by its terms specifies either (a) that it
shall terminate sooner than three (3) months after termination of the optionee's
employment, or (b) that it may be exercised more than three (3) months after
termination of the optionee's employment with the Company or an Affiliate. This
subparagraph 5(g) shall not be construed to extend the term of any option or to
permit anyone to exercise the option after expiration of its term, nor shall it
be construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of the
optionee's employment.
(h) The option may, but need not, include a provision whereby the optionee
may elect at any time during the term of his or her employment with the Company
or any Affiliate to exercise the option as to any part or all of the shares
subject to the option prior to the stated vesting date of the option or of any
installment or installments specified in the option. Any shares so purchased
from any unvested installment or option may be subject to a repurchase right in
favor of the Company or to any other restriction the Board or the Committee
determines to be appropriate.
(i) If and to the extent authorized by the Board or the Committee in its
discretion, a person who has received options may make an election to have
shares of stock of the Company withheld by the Company or to tender any such
stock to the Company upon any exercise of an option to pay the amount of tax
that the Board or the Committee in its discretion determines to be required by
law to be withheld by the Company.
Any shares of stock so withheld or tendered will be valued by the Board
or the Committee at their fair market value as of the date they are withheld or
tendered. The value of the shares withheld or tendered may not exceed the
required federal, state, local and foreign withholding tax obligations as
computed by the Company. Unless the Board or the Committee otherwise permits,
the optionee shall pay to the Company in cash, promptly when the amount of such
obligations become determinable, all applicable federal, state, local and
foreign withholding taxes that the Board or the Committee determines to result
from the lapse of restrictions imposed on exercise of an option, from a transfer
or other disposition of shares acquired upon exercise of an option or otherwise
related to the option or the shares acquired upon exercise of the option.
6. COVENANTS OF THE COMPANY.
------------------------
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan or any stock issued or issuable pursuant to any such option. If the Company
is unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such options unless and until
such authority is obtained.
7. USE OF PROCEEDS FROM STOCK.
--------------------------
Proceeds from the sale of stock pursuant to options granted under the Plan
shall constitute general funds of the Company.
-4-
<PAGE>
8. MISCELLANEOUS.
-------------
(a) The Board or the Committee shall have the power to accelerate the time
during which an option may be exercised or the time during which an option or
any portion thereof will vest pursuant to subparagraph 5(e), notwithstanding the
provisions in the option stating the time during which it may be exercised or
the time during which it will vest.
(b) Neither an optionee nor any person to whom an option is transferred
under subparagraph 5(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(c) Throughout the term of any option granted pursuant to the Plan, the
Company shall make available to the holder of such option, not later than one
hundred twenty (120) days after the close of each of the Company's fiscal years
during the option term, upon request, such financial and other information
regarding the Company as comprises the annual report to the stockholders of the
Company provided for in the bylaws of the Company and such other information
regarding the Company as the holder of such option may reasonably request.
(d) Nothing in the Plan or any instrument executed or option granted
pursuant thereto shall confer upon any eligible participant or optionee any
right to continue in the employ of the Company or any Affiliate or shall affect
the right of the Company or any Affiliate to terminate the employment of any
eligible participant or optionee with or without cause.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
---------------------------------
(a) If any change is made in the stock subject to the Plan, or subject to
any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Board shall
appropriately adjust the class(es) and maximum number of shares subject to the
Plan and the class(es) and number of shares and price per share of stock subject
to outstanding options.
(b) In the event of: (l) a dissolution or liquidation of the Company; (2) a
merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation (through
merger, consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate structure or
otherwise), the Board shall appropriately adjust the class(es) and maximum
number of shares subject to the Plan and the class(es) and number of shares and
price per share of stock subject to outstanding options.
(c) In the event of: (l) a dissolution or liquidation of the Company; (2) a
merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, then, at the sole discretion of the Board and to the extent
permitted by applicable law: (i) any surviving corporation shall assume any
options outstanding under the Plan or shall substitute similar options for those
outstanding under the Plan, or (ii) the time during which such options may be
exercised shall be accelerated and the options terminated if not exercised prior
to such event, or (iii) such options shall continue in full force and effect.
10. AMENDMENT OF THE PLAN.
---------------------
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 9 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the
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<PAGE>
vote of the holders of a majority of the voting power of the shares of the
Company represented in person or by proxy and entitled to vote at a duly held
stockholders meeting, within twelve (12) months before or after the adoption of
the amendment, where the amendment will:
(1) Increase the number of shares reserved for options under the Plan;
(2) Materially modify the requirements as to eligibility for
participation in the Plan; or
(3) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to comply with the requirements of
Rule 16b-3 promulgated under the Exchange Act.
(b) Rights and obligations under any option granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan, except with
the consent of the person to whom the option was granted.
11. TERMINATION OR SUSPENSION OF THE PLAN.
-------------------------------------
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate ten (10) years from the date the Plan was
adopted by the Board or approved by the stockholders of the Company, whichever
is earlier. No options may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
12. EFFECTIVE DATE OF PLAN.
----------------------
The Plan shall become effective as determined by the Board, but no options
granted under the Plan shall be exercised unless and until the Plan has been
approved by the vote or written consent of the holders of a majority of the
outstanding shares of the Company entitled to vote, and, if required, an
appropriate permit has been issued by the Commissioner of Corporations of the
State of California.
13. CANCELLATION AND RE-GRANT OF OPTIONS.
------------------------------------
The Board or the Committee shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, (i) the
repricing of any or all outstanding options under the Plan and/or (ii) the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an exercise price per share not
less than ten percent (10%) of the fair market value per share of Common Stock
on the new grant date.
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<PAGE>
________________________________________________________________________________
ACUSON CORPORATION EXHIBIT 11.1
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
FOR THE QUARTER ENDED JULY 2, 1994
In accordance with Accounting Principles Board Opinion No. 15, the Company
used the modified treasury stock method in computing the second quarter 1994
earnings per share.
The following is the computation of earnings per share:
<TABLE>
<S> <C>
Number of shares outstanding at July 2, 1994..................... 28,389,142
Number of shares assumed to be repurchased (limited to 20%
of number of shares outstanding).............................. 5,677,828
Multiply by market value per common share........................ $ 13.79
-----------
Cost to repurchase............................................... $78,306,719
Assumed proceeds to the Company had everyone exercised........... 82,054,633
-----------
Excess assumed proceeds available................................ 3,747,914
Multiply by average interest rate for the period................. 1.25%
-----------
Assumed interest on excess funds................................. 46,849
Less: tax provision.............................................. 16,397
-----------
Adjustment to net income......................................... 30,452
Add: net income................................................. 4,089,000
-----------
Adjusted net income.............................................. $ 4,119,452
===========
Divided by weighted shares outstanding, including common stock
equivalents................................................... 29,493,986
Fiscal period earnings per share................................. $ 0.14
======
</TABLE>
________________________________________________________________________________
