<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1997 Commission File Number 0-13617
LIFELINE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2537528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
640 Memorial Drive
Cambridge, Massachusetts 02139
(Address of principal executive offices) (Zip Code)
(617) 679-1000
(Registrant's telephone number, including area code)
------------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common stock $0.02 par value
----------------------------
(Title of Class)
Indicate by check mark whether the registrant (i) 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 (ii) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Number of shares outstanding of this issuer's class of common stock as of July
25, 1997: 5,749,069
<PAGE>
LIFELINE SYSTEMS, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets- June 30, 1997
and December 31, 1996 3
Consolidated Statements of Income - Three and six months
ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows - Six months
ended June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
ITEM 2.
Management's Discussion and Analysis of Results of
Operations and Financial Condition 7-11
PART II. OTHER INFORMATION
ITEM 4.
Submission of Matters to a Vote of Security Holders 12
ITEM 6.
Exhibits and Reports on Form 8-K 12
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<PAGE>
LIFELINE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,727 $ 3,030
Short-term investments 5,702 7,140
Accounts receivable, net 6,307 6,062
Inventories 1,904 1,450
Net investment in sales-type leases 1,308 1,278
Other current assets 1,607 1,675
Deferred income taxes 961 1,046
-------- --------
Total current assets 19,516 21,681
Long-term investments 5,767 3,178
Property and equipment, net 9,982 7,127
Goodwill, net 2,289 2,568
Net investment in sales-type leases 3,769 3,160
Other assets 195 195
-------- --------
Total assets $ 41,518 $ 37,909
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 982 $ 1,063
Accrued expenses 3,661 2,520
Accrued payroll and payroll taxes 1,333 1,743
Accrued income taxes 1,196 854
Deferred revenues 856 812
Product warranty 558 639
Current portion of obligations under capital lease 7 7
Other current liabilities 55 40
-------- --------
Total current liabilities 8,648 7,678
Obligations under capital lease 21 25
Deferred income taxes 1,935 1,690
Deferred compensation 1,097 896
Commitments:
Stockholders' equity:
Common stock, $.02 par value, 10,000,000 shares
authorized, 6,281,617 shares issued at
June 30, 1997 and 6,217,192 shares issued
at December 31, 1996 126 124
Additional paid-in capital 15,900 15,618
Retained earnings 17,332 15,151
-------- --------
33,358 30,893
Less: treasury stock at cost, 562,548 shares
at June 30, 1997 and 532,348 shares at
December 31, 1996 (3,443) (2,923)
Notes receivable - officers (100) (350)
Cumulative translation adjustment 2 --
-------- --------
Total stockholders' equity 29,817 27,620
-------- --------
Total liabilities and stockholders' equity $ 41,518 $ 37,909
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
LIFELINE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except for per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Services $ 7,771 $ 5,807 $ 15,120 $ 11,226
Net product sales 6,192 6,980 12,110 12,446
Finance and rental income 280 256 569 527
-------- -------- -------- --------
Total revenues 14,243 13,043 27,799 24,199
-------- -------- -------- --------
Costs and expenses
Cost of services 3,676 2,499 7,038 4,946
Cost of sales 1,551 2,273 3,361 4,209
Selling, general, and administrative 6,717 6,185 13,254 11,465
Research and development 459 471 888 954
-------- -------- -------- --------
Total costs and expenses 12,403 11,428 24,541 21,574
-------- -------- -------- --------
Income from operations 1,840 1,615 3,258 2,625
-------- -------- -------- --------
Other income (expense)
Interest income 186 185 348 353
Interest expense (1) (2) (3) (4)
-------- -------- -------- --------
Total other income, net 185 183 345 349
-------- -------- -------- --------
Income before income taxes 2,025 1,798 3,603 2,974
Provision for income taxes 799 733 1,422 1,219
-------- -------- -------- --------
Net income $ 1,226 $ 1,065 $ 2,181 $ 1,755
======== ======== ======== ========
Net income per common share:
Primary $ 0.20 $ 0.17 $ 0.35 $ 0.28
==== ==== ==== ====
Fully diluted $ 0.20 $ 0.17 $ 0.35 $ 0.28
==== ==== ==== ====
Weighted average common and
common equivalent shares outstanding:
Primary 6,239 6,186 6,248 6,189
======== ======== ======== ========
Fully diluted 6,265 6,186 6,275 6,210
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
LIFELINE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
-----------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,181 $ 1,755
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,895 1,470
Deferred compensation 201 200
Deferred income tax provision 330 -
Changes in operating assets and liabilities:
Accounts receivable (249) 780
Inventories (454) (507)
Net investment in sales-type leases (639) (406)
Prepaid expenses, other current assets and other assets 67 48
Other current liabilities 632 2,402
Income taxes payable 342 383
------------- ------------
Net cash provided by operating activities 4,306 6,125
------------- ------------
Cash flows from investing activities:
Purchases of investments (6,663) (7,495)
Sales and maturities of investments 5,512 6,280
Additions to property and equipment (4,495) (1,969)
------------- ------------
Net cash used in investing activities (5,646) (3,184)
------------- ------------
Cash flows from financing activities:
Principal payments under capital lease obligations (4) (49)
Proceeds from issuance of common stock 278 204
Purchase of treasury stock (522) (709)
Issuance of treasury stock 8 6
Repayment of note receivable, officer 250 -
------------- ------------
Net cash provided by (used in) financing activities 10 (548)
------------- ------------
Effect of foreign exchange on cash 27 -
Net increase (decrease) in cash and cash equivalents (1,303) 2,393
Cash and cash equivalents at beginning of period 3,030 3,490
------------- ------------
Cash and cash equivalents at end of period $ 1,727 $ 5,883
============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
LIFELINE SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The information furnished has been prepared from the accounts without audit.
In the opinion of the Company, the accompanying consolidated financial
statements contain all adjustments necessary, consisting only of those of a
normal recurring nature, to present fairly its consolidated financial
position as of June 30, 1997, the consolidated results of its operations for
the three and six months ended June 30, 1997 and 1996, and its cash flows for
the six months ended June 30, 1997 and 1996.
While the Company believes that the disclosures presented are adequate to
make the information not misleading, these statements should be read in
conjunction with the consolidated financial statements and the related notes
included in the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission on March 31, 1997, for the year ended
December 31, 1996.
The results of operations for the three and six month periods ended June
30, 1997 are not necessarily indicative of the results expected for the full
year.
2. Details of certain balance sheet captions are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- -----------
Inventories:
<S> <C> <C>
Purchased parts and subassemblies $ 882 $ 797
Work-in-process 578 392
Finished goods 444 261
------------ ------------
$ 1,904 $ 1,450
============ ============
Property and equipment:
Equipment $ 9,550 $ 9,099
Equipment leased to others 6,381 5,218
Capital in progress 3,450 687
Equipment under capital leases 1,035 1,035
Leasehold improvements 751 692
Furniture and fixtures 603 574
------------ ------------
21,770 17,305
Less accumulated depreciation and amortization (11,788) (10,178)
------------ ------------
$ 9,982 $ 7,127
============ ============
</TABLE>
3. In February, 1997, the Financial Accounting Standards Board issued Statement
No. 128 ("SFAS 128"), "Earnings per Share," which is effective for fiscal
years ending after December 15, 1997, including interim periods. SFAS 128
requires the presentation of basic and diluted earnings per share (EPS).
Basic EPS, which replaces primary EPS, excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common
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<PAGE>
stock or resulted in the issuance of common stock that then shared in the
earnings of the entity. Diluted EPS is computed similarly to fully diluted EPS
under the existing rules. SFAS 128 requires restatement of all prior-period
earnings per share data presented after the effective date. The Company will
adopt SFAS 128 for the fiscal year ended December 31, 1997. Had the Company
computed EPS consistent with the provisions of SFAS 128, there would be no
material impact in the calculation of basic and diluted EPS to the earnings per
share amount reported for the three and six months ended June 30, 1997 and 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
This and other reports, proxy statements, and other communications to
stockholders, as well as oral statements by the Company's officers or its
agents, may contain forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended, with respect to, among other
things, the Company's future revenues, operating income, or earnings per share.
Without limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," and similar expressions are intended to identify forward-looking
statements. There are a number of factors of which the Company is aware that
may cause the Company's actual results to vary materially from those forecast or
projected in any such forward-looking statement. These factors include, without
limitation, those set forth below under the caption "Certain Factors That May
Affect Future Results." The Company's failure to successfully address any of
these factors could have a material adverse effect on the Company's future
results of operations.
RESULTS OF OPERATIONS
Total revenues for the quarter ended June 30, 1997 were $14.2 million, an
increase of 9% compared with total revenues of $13.0 million for the quarter
ended June 30, 1996. For the six months ended June 30, 1997, total revenues
were $27.8 million, up 15% as compared to revenues of $24.2 million during the
same period in 1996.
Service revenues continue to represent more than half of total revenues during
1997. For the quarter ended June 30, 1997, service revenues grew 34% to $7.8
million from $5.8 million for the same period in 1996. For the six months ended
June 30, 1997 service revenues were $15.1 million as compared to $11.2 million
for the six months ended June 30, 1996, an increase of 35%. The Company is now
monitoring 176,000 subscribers as of June 30, 1997 with service revenues
comprising 54% of the Company's total revenues for the six months ended June 30,
1997. This represents a 28% growth in the number of monitored subscribers, from
137,000 at June 30, 1996 and is directly related to the 8 point increase in the
service revenue composition as a percentage of total revenues, which was up from
46% for the six months ended June 30, 1996. The Company's ability to sustain or
increase the current level of service revenue growth in the long run depends on
its ability to expand the market for its personal response services and convert
additional locally monitored programs to service provided by Lifeline. The
Company believes that the high quality of its services and its commitment to
providing caring and rapid response to the at-risk elderly and physically
challenged will be a factor in meeting this challenge.
Product sales for the second quarter of 1997 decreased 11% to $6.2 million from
$7.0 million for the second quarter of 1996. For the six months ended June 30,
1997, product sales totaled $12.1 million, a 3% decrease from the $12.4 million
for the six months ended June 30, 1996. Equipment sales have declined as a
result of the Company's strategy of combining service and hardware offerings to
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<PAGE>
support the transition to a service-oriented business. The Company expects
continued declining product sales in future periods as it proceeds with the
strategy of packaging products and services into a single service offering.
Finance and rental income, representing revenue earned from the Company's
portfolio of sales-type leases, increased 9% for the second quarter of 1997 to
$280,000, from $256,000 for the second quarter of 1996. For the six months
ended June 30, 1997, finance and rental income rose 8% to $569,000 from $527,000
for the same period in 1996. The increase is a result of the continued
acceptance of the Company's internally managed and funded leasing program which
has been in effect since January, 1996. The Company believes its customers will
continue to take advantage of its leasing program, and the retention of new
leases in its own portfolio is expected to result in an increase in finance
income for the remainder of 1997.
As a percentage of service revenues, cost of services increased to 47% for the
quarter and six months ended June 30, 1997, as compared to 43% and 44% for the
same periods respectively, last year. As the Company grows its subscriber base
and develops its monitoring capabilities, it has continued to invest in its
current service infrastructure to enhance its ability to provide caring service
for its subscribers. These expenditures have been directed primarily toward
systems enhancements and improvements. The Company is also continuing to make
capital expenditures on its headquarters' response center infrastructure and
systems. Total expenditures for the Company's primary monitoring facility are
expected to be approximately $9 million, the majority of which is expected to be
expended during 1997. These expenditures are not expected to have an impact on
1997 results of operations as the systems are not expected to be placed in
service until 1998. However, cost of services in 1998 and in future years is
expected to be impacted by the depreciation of these investments. As previously
reported, the Company has established goals for productivity improvements and
other cost reductions and is exploring other opportunities to offset the impact
of these investments.
Cost of sales was 25% of product sales for the three months ended June 30, 1997,
compared with 33% for the same period a year ago. For the six months ended June
30, 1997, cost of sales was 28% of product sales, compared with 34% for the six
months ended June 30, 1996. The significant improvement is largely attributable
to continued utilization of new technology which reduced product costs,
improvements in manufacturing processes, and the enhanced reliability of the
Company's product which reduced the warranty costs compared to 1996 levels. The
Company does not expect to maintain cost of sales as a percentage of product
sales at this level for the remainder of 1997 but expects an improved
performance over 1996.
Selling, general, and administrative expenses remained constant at 47% of total
revenues during the three months ended June 30, 1997 and 1996. For the six
months ended June 30, 1997 selling, general, and administrative expenses
increased to 48% of total revenues from 47% for the same period in 1996. Actual
second quarter selling, general, and administrative expenditures increased $0.5
million to $6.7 million from $6.2 million for the same period in 1996, and for
the six months ended June 30, 1997, selling, general, and administrative
expenses were $13.3 million, an increase of $1.8 million from $11.5 million for
year to date 1996. The overall increase was due to increased salaries and
related fringe benefits from the Company's larger employee base, in support of
the growth of the Company, up nearly 120 employees from the same period in 1996;
the inclusion of administrative costs associated with the July, 1996 acquisition
of CareTel, Inc. of Ontario, Canada; and increased spending associated with
sales and marketing strategies.
-8-
<PAGE>
Research and development expenses were 3% of total revenues for the three and
six months ended June 30, 1997 as compared to 4% for the three and six month
periods ended June 30, 1996. Research and development efforts are focused on
ongoing product improvements and developments. The Company expects to maintain
these expenses at approximately a consistent percentage of total revenues
through 1997.
The Company's effective tax rate was 39.5% for the three and six months ended
June 30, 1997, versus 41% for the comparable periods in 1996. The decrease is
due to tax benefits from tax-exempt securities, however the Company believes
that its tax rate will increase in future periods as a result of lower amounts
invested in such securities due to the Company's anticipated use of cash in
1997.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997, cash and cash equivalents decreased
$1.3 million to $1.7 million at June 30, 1997 from $3.0 million at December 31,
1996. The net decrease in cash and cash equivalents resulted from the continued
investment of excess cash in longer-term marketable securities consistent with
the Company's investment policy for its cash and temporary investments. The
Company's portfolio of cash, cash equivalents, and investments remained
relatively consistent at $13.2 million and $13.3 million at June 30, 1997 and
December 31, 1996, respectively. The Company's profitable results of operations
and the repayment of a $250,000 note by the Company's Chief Executive Officer in
February, 1997 helped to offset the expenditures for additional investments in
property and equipment of $4.5 million and $.5 million of treasury stock.
In January, 1997, the Company's Board of Directors approved the repurchase of up
to 100,000 shares of the Company's common stock from time to time in the open
market for general corporate purposes. The Company has purchased 30,700 shares
directly from the Company's Chief Executive Officer through June 30, 1997 for
$0.5 million and an additional 30,000 shares in July, 1997 for $0.6 million, as
part of this program. These shares were purchased from the Chief Executive
Officer partly in connection with the repayment of the $250,000 note and
associated tax expenses.
In November, 1995 the Company secured a $4.0 million line of credit effective in
January, 1996. During 1996, the term of the credit facility was extended until
December, 1997. This credit agreement contains a number of covenants, including
requirements that the Company maintain certain levels of financial performance
and capital structure, limitations on the Company's capital and other
expenditures, and restrictions on the Company's capacity to secure additional
debt financing. No amounts were outstanding as of June 30, 1997.
In 1997, the Company expects to use a significant amount of its cash and
marketable securities as it continues to invest in its information systems
infrastructure. The Company anticipates it will spend approximately $9 million
as it develops a flexible, scaleable, and fault tolerant response center
platform at its headquarters to support its growing subscriber base. While the
new platform is anticipated to be placed in service after 1997, the majority of
the outlays will be expended during 1997, principally pursuant to development
agreements entered into with third party vendors.
Given the Company's current cash, marketable securities, credit availability,
and revenue levels, funding requirements for operations and in support of future
growth are expected to be met primarily from existing liquid assets, operating
cash flow, and existing borrowing facilities. The Company expects these sources
will be sufficient to finance the requirements of its investments in its
information systems infrastructure, its internally funded lease financing
program, stock repurchases,
-9-
<PAGE>
other investments in support of its current business, and any potential
acquisitions through 1997. Additional financing alternatives are currently being
evaluated and may be pursued if deemed appropriate.
In February, 1997, the Financial Accounting Standards Board issued Statement No.
128 ("SFAS 128"), "Earnings per Share," which is effective for fiscal years
ending after December 15, 1997, including interim periods. SFAS 128 requires
the presentation of basic and diluted earnings per share (EPS). Basic EPS,
which replaces primary EPS, excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity. Diluted EPS is computed
similarly to fully diluted EPS under the existing rules. SFAS 128 requires
restatement of all prior-period earnings per share data presented after the
effective date. The Company will adopt SFAS 128 for the fiscal year ended
December 31, 1997. Had the Company computed EPS consistent with the provisions
of SFAS 128, there would be no material impact in the calculation of basic and
diluted EPS to the earnings per share amount reported for the three and six
months ended June 30, 1997 and 1996.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
The following important factors, among others, could cause actual results to
differ materially from those indicated by forward-looking statements made in
this Quarterly Report on Form 10-Q and presented elsewhere by management from
time to time.
The Company's results are partially dependent on its ability to develop services
and products that keep pace with continuing technological changes, evolving
industry standards, changing client preferences and new service and product
introductions by the Company's competitors. Lifeline's future success will
depend on its ability to enhance its existing services and products (including
accessories), to introduce new service and product offerings to meet and adapt
to changing customer requirements and emerging technologies on a timely basis
and to offer such products and services at competitive prices. There can be no
assurance that Lifeline will be successful in identifying, developing,
manufacturing or marketing new services and products or enhancing its existing
services and products on a timely basis or that Lifeline will be able to offer
such services and products at competitive prices. Also, there can be no
assurance that services, products or technologies developed by others will not
render Lifeline's services or products noncompetitive or obsolete.
The Company's growth is dependent on its ability to increase the number of
subscribers served by its monitoring centers. The Company's ability to continue
to increase service revenue is a key factor in its long-term growth, and there
can be no assurance that the Company will be able to do so. The Company's
failure to increase service revenue could have a material adverse effect on the
Company's results of operations.
The Company may experience risks and uncertainties associated with the
development of new information technology. These include the risks that such
development effort may not be completed on schedule, or at all, or within
budget, or that future developments in information technology will not render
the Company's system non-competitive; the risks that the Company does not
realize the intended benefits from the new system, once completed; and the
uncertainty associated with the substantial commitment of funds to the
development effort, including the risks that the Company
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<PAGE>
will have available significantly less cash to finance its operations, other
capital expenditures and future growth, including acquisitions.
The Company may expand its operations through the acquisition of additional
businesses. There can be no assurance that the Company will be able to
identify, acquire or profitably manage additional businesses or successfully
integrate any acquired businesses into the Company without substantial expenses,
delays or other operational or financial problems. In addition, acquisitions
may involve a number of special risks, including diversion of management's
attention, failure to retain key acquired personnel, unanticipated events,
contingent liabilities and amortization of acquired intangible assets. There can
be no assurance that the acquired businesses, if any, will achieve anticipated
revenues or earnings.
The Company sells a significant portion of its products to healthcare providers
which establish their own Lifeline programs. These healthcare providers
typically rent, rather than sell, the Lifeline products to subscribers and
accordingly following such time as a product is no longer used by a subscriber,
it is returned to the healthcare provider and becomes available for rent to
another subscriber. As a result of this use and reuse of the Company's
products, sales of such products are dependent on growth in the number of
subscribers and on the ability of the Company to encourage its healthcare
provider customers to replace their existing inventory by continuing to enhance
its products with new features.
The Company's monitoring operations are concentrated principally in its
Cambridge, Massachusetts headquarters facility. Although the Company believes
that it has constructed safeguards to protect against system failures, the
disruption of service at its monitoring facility, whether due to telephone or
electrical failures, earthquakes, fire or other similar events or for any other
reason, could have a material adverse effect on the Company's results of
operations.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the stockholders of the Company was held on May 21, 1997.
The stockholders of the Company elected members of the Board of Directors and
ratified the selection of Coopers and Lybrand L.L.P. as the Company's auditors
for 1997.
NUMBER OF SHARES OF COMMON STOCK
--------------------------------
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAINED NON-VOTES
--------- ------- --------- ---------
<S> <C> <C> <C> <C>
Ronald Feinstein 5,041,927 -0- 47,222 N/A
Joseph E. Kasputys, Ph.D 5,041,248 -0- 47,901 N/A
Selection of Coopers & Lybrand L.L.P. 5,072,039 9,872 7,238 N/A
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K-No reports on Form 8-K were filed for the three
months ended June 30, 1997.
(b) Exhibits - The Exhibit which is filed with this Report or which is
incorporated herein by reference is set forth in the Exhibit Index which
appears on page 14 hereof.
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<PAGE>
LIFELINE SYSTEMS, INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
August 7, 1997 LIFELINE SYSTEMS, INC.
- -------------- ----------------------
Date Registrant
/s/ Ronald Feinstein
--------------------
Ronald Feinstein
Chief Executive Officer
/s/ Dennis M. Hurley
--------------------
Dennis M. Hurley
Vice President of Finance and
Administration
Principal Financial and
Accounting Officer
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<PAGE>
EXHIBIT INDEX
The following designated exhibits are, as indicated below, either filed
herewith or have heretofore been filed with the Securities and Exchange
Commission under the Securities Act of 1933 or the Securities and Exchange Act
of 1934 and are referred to and incorporated herein by reference to such
filings.
Exhibit No. Exhibit SEC Document Reference
- ----------- ------- ----------------------
Exhibit 11. COMPUTATION RE EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
Primary:
--------
<S> <C> <C> <C> <C>
Weighted average shares outstanding 5,726 5,683 5,716 5,732
Net effect of dilutive common stock
equivalents based on the treasury method 526 503 538 480
Effect of treasury shares purchased (13) - (6) (24)
Effect of treasury shares issued - - - 1
------ ------ ------ ------
Total 6,239 6,186 6,248 6,189
====== ====== ====== ======
Net income $1,226 $1,065 $2,181 $1,755
====== ====== ====== ======
Net income per common share $ 0.20 $ 0.17 $ 0.35 $ 0.28
====== ====== ====== ======
Fully diluted:
--------------
Weighted average shares outstanding 5,726 5,683 5,716 5,732
Net effect of dilutive common stock
equivalents based on the treasury method 552 503 565 501
Effect of treasury shares purchased (13) - (6) (24)
Effect of treasury shares issued - - - 1
------ ------ ------ ------
Total 6,265 6,186 6,275 6,210
====== ====== ====== ======
Net income $1,226 $1,065 $2,181 $1,755
====== ====== ====== ======
Net income per common share $ 0.20 $ 0.17 $ 0.35 $ 0.28
====== ====== ====== ======
</TABLE>
Exhibit 27. FINANCIAL DATA SCHEDULE FILED ELECTRONICALLY
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,727
<SECURITIES> 5,702
<RECEIVABLES> 6,545
<ALLOWANCES> 238
<INVENTORY> 1,904
<CURRENT-ASSETS> 19,516
<PP&E> 21,770
<DEPRECIATION> 11,788
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0
0
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</TABLE>
