Form 10Q June 30, 1996
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
Commission file number 0-12405
IMATRON INC.
New Jersey
I.D. No. 94-2880078
389 Oyster Point Blvd, South San Francisco, CA 94080
(415) 583-9964
Indicate by check mark whether the Registrant (1) had 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 periods 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
----- -----
At July 31, 1996, 76,692,822 shares of the Registrant's common stock (no par
value) were issued and outstanding.
Total Number of Pages: 13
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Form 10Q June 30, 1996
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IMATRON INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 1996 (unaudited and restated) and December 31, 1995. 3
Condensed Consolidated Statements of 4
Operations - Three and Six Months Ended
June 30, 1996 (unaudited and restated) and 1995 (unaudited).
Condensed Consolidated Statements of 5
Cash Flows - Six Months Ended
June 30, 1996 (unaudited and restated) and 1995 (unaudited).
Notes to Condensed Consolidated Financial 6
Statements (unaudited).
Item 2. Management's Discussion and Analysis of Financial 11
Condition and Results of Operations.
PART II. OTHER INFORMATION 14
SIGNATURES 15
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Form 10Q June 30, 1996
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IMATRON INC.
Condensed Consolidated Balance Sheets
(Amounts in thousands)
<CAPTION>
Restated
June 30, December 31,
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets
Cash and cash equivalents $ 18,417 $ 7,269
Short-term investments 10,745 1,266
Accounts receivable (net of allowance for doubtful accounts of
$350 at June 30, 1996 and $171 at December 31, 1995):
Trade accounts receivable 4,680 3,083
Accounts receivable from affiliate 2,535 2,957
Notes receivable 250 250
Inventories 9,865 8,937
Prepaid expenses 765 563
-------- --------
Total current assets 47,257 24,325
Property and equipment, net 9,243 6,260
Other assets, net 285 291
-------- --------
Total assets $ 56,785 $ 30,876
======== ========
LIABILITIES & SHAREHOLDERS' EQUITY:
Current liabilities
Borrowings under line of credit $ -- $ 992
Accounts payable 2,393 2,785
Other accrued liabilities 5,656 5,607
Capital lease obligations - due within one year 1,170 689
-------- --------
Total current liabilities 9,219 10,073
Deferred income on sale leaseback transactions 1,670 1,267
Capital lease obligations 5,202 3,311
-------- --------
Total liabilities 16,091 14,651
Minority Interest - Note 9 11,432 --
SHAREHOLDERS' EQUITY
Imatron: Common stock, no par value; authorized - 100,000
shares; issued and outstanding 76,601 shares at 1996 and
68,835 at 1995; 86,995 72,282
Additional paid-in capital 7,390 1,500
Deferred compensation (143) --
Accumulated deficit (64,980) (57,557)
-------- --------
Total shareholders' equity 29,262 16,225
-------- --------
Total liabilities and shareholders' equity $ 56,785 $ 30,876
======== ========
<FN>
The accompanying notes are an integral part of these condensed consolidated financial statements.
</FN>
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Form 10Q June 30, 1996
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IMATRON INC.
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30
---------------------------- ----------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(Restated) (Restated)
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 2,226 $ 6,334 $ 6,017 $ 9,287
Product sale-leaseback
arrangements 1,774 953 1,774 953
Service 821 2,606 1,588 3,502
Development contracts 1,250 1,384 2,500 3,137
Clinic 292 91 574 139
-------- -------- -------- --------
Total revenues 6,363 11,368 12,453 17,018
-------- -------- -------- --------
Cost of revenues:
Product 2,178 4,631 5,371 7,326
Product sale-leaseback
arrangements 1,774 953 1,774 953
Service 774 1,285 1,472 2,274
Development contracts 1,250 1,384 2,500 2,478
Clinic 529 367 966 564
-------- -------- -------- --------
Total cost of revenues 6,505 8,620 12,083 13,595
-------- -------- -------- --------
Gross profit (142) 2,748 370 3,423
Operating expenses:
Research and development 798 776 1,501 1,760
Marketing and sales 898 811 1,981 1,560
Gen. and admin 990 592 1,838 1,169
-------- -------- -------- --------
Total operating expenses 2,686 2,179 5,320 4,489
-------- -------- -------- --------
Total operating income (loss) (2,828) 569 (4,950) (1,066)
Other income, net 110 11 161 4,000
Interest expense (114) (25) (234) (63)
-------- -------- -------- --------
Income (loss)
before income taxes (2,832) 555 (5,023) 2,871
Provision for income taxes -- (36) -- (36)
-------- -------- -------- --------
Income (loss) before
minority interest expense (2,832) 519 (5,023) 2,835
Non-cash return to minority
interest 2,400 -- 2,400 --
-------- -------- -------- --------
Net income (loss) $ (5,232) $ 519 $ (7,423) $ 2,835
======== ======== ======== ========
Net income (loss) per share $ (0.07) $ 0.01 $ (0.10) $ 0.05
======== ======== ======== ========
Number of shares used
in per share calculation 73,980 62,490 71,546 62,519
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these condensed consolidated financial statements.
</FN>
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Form 10Q June 30, 1996
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IMATRON INC.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
<CAPTION>
Six Months Ended June 30,
---------------------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (7,423) $ 2,835
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 555 828
Non cash return to minority interest 2,400 --
Other income -- (4,000)
Changes in operating assets and liabilities:
Accounts and notes receivable (1,175) (1,526)
Inventories (928) 918
Prepaid expenses and deposits (202) (60)
Other assets (11) (59)
Accounts payable (392) (1,200)
Other accrued liabilities 49 1,970
Deferred income 403 --
-------- --------
Net Cash flows from investing activities:
Capital expenditures (835) (744)
Purchases of available-for-sale securities (11,501) --
Maturities of available-for-sale securities 1,013 --
Sales of marketable securities 1,014 --
-------- --------
Net cash used in investing activities (10,309) (744)
Cash flows from financing activities:
Payments of obligations under capital leases (319) --
Payment of notes payable (992) --
Proceeds from issuance of notes payable -- 1,100
Issuance of common and preferred stocks 29,492 218
-------- --------
Net cash provided by financing activities 28,181 1,318
-------- --------
Net increase in cash and cash equivalents 11,148 280
Cash and cash equivalents, at beginning
of the period 7,269 1,694
-------- --------
Cash and cash equivalents, at end of the
period $ 18,417 $ 1,974
======== ========
<FN>
The accompanying notes are an integral part of these condensed consolidated financial statements.
</FN>
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Form 10Q June 30, 1996
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IMATRON INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
consolidated financial statements. In the opinion of management, adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six month
periods ended June 30, 1996 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1996. For further information,
refer to the consolidated financial statements and notes thereto included in the
Company's Annual Report to Shareholders for the year ended December 31, 1995.
2. BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Imatron Inc. and
its wholly-owned subsidiary HeartScan Imaging, Inc (collectively the "Company").
All intercompany accounts and transactions have been eliminated in the
consolidation.
3. SHORT-TERM INVESTMENTS
Short-term investments consist of certificates of deposit and debt securities.
The certificates of deposit have been classified as held to maturity and the
debt securities have been classified as available for sale. The maturity of all
debt securities is less than one year and the unrealized gain/loss of the
securities is immaterial at June 30, 1996.
4. INVENTORIES
Inventories consist of (in thousands of dollars):
June 30, December 31,
1996 1995
-------------------- --------------------
Purchased parts and sub-assemblies $3,250 $2,594
Service parts 720 1,079
Work-in-process 4,454 2,403
Finished goods 1,441 2,861
==================== ====================
$9,865 $8,937
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5. INCOME (LOSS) PER SHARE
Net income per common and common equivalent share is computed using the weighted
average number of common shares outstanding after considering the dilutive
effect of stock options, convertible preferred stock and warrants.
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Net loss per common share is computed using the weighted average number of
common shares outstanding. Stock options, convertible preferred stock and
warrants have not been included in the computation as their effect would have
been antidilutive.
6. TRANSACTIONS WITH SIEMENS CORPORATION
In March 1995, the Company and Siemens Corporation "Siemens" entered into a
Memorandum of Understanding (see Part I - Transaction with Siemens). Under the
terms of the Memorandum, Simens agreed to provide a maximum $15.0 million to the
Company's C-150 Evolution Ultrafast CT scanner research and development program
over a three year period in order to improve and enhance the scanner. No
milestones or other performance related results are tied to the payment of funds
by Siemens. Imatron funds a portion equal to a minimum of fifty percent of
Siemens' contribution or $2,500,000 annually for three years, for the sole
purpose of conducting the collaborative agreement. The Company is not obligated
to return the amount funded by Siemens. However, Siemens has the right to
terminate the collaborative research upon three months written notice in the
event objectives agreed upon by both parties are not achieving reasonable
progress. The results of the collaborative research are jointly owned by the
parties and cross-licensed. In connection with this agreement, Siemens retains
exclusive distribution rights through March 31, 1998, in certain geographical
regions for sales of the C-150/Evolution scanner. The Company is recognizing
revenue ratably over the three year period as its commitment to perform research
and development under the agreement is being incurred ratably over the same
period. The revenues recognized is a non-refundable payment intended to
compensate the Company for its research and development efforts.
The following table represents the percent of revenues attributable to the
development and distribution agreements between the Company and Siemens
Corporation:
Three months ended Six months ended
June 30, June 30,
------------------------- ----------------------
1996 1995 1996 1995
----- ----- ----- -----
Net product sales 5% 22% 4% 16%
Service 17% 38% 16% 40%
Development contracts 100% 100% 100% 100%
Percentage to total revenues 25% 36% 24% 37%
Siemens has asserted a claim against the Company regarding the lapse of certain
foreign registrations of one of the patents assigned to Siemens by the Company
in connection with the March 31, 1995 agreement between the companies. The
technology involved in the patent is not used presently in any of the Company's
products. The Company believes that it can provide a new patent to Siemens to
replace the lapsed patent. While the resolution of the claim is not expected to
have a material effect on the Company's financial position, it could however,
have a material effect on the results of operations of a particular furture
period if resolved unfavorably.
7. JOINT VENTURE
As of June 30, 1996 Imatron's interest in the Joint Venture is carried in the
accompanying condensed consolidated financial statements at no value. The
Company has no financial commitments to the Joint Venture and is prepared to
abandon its interest. The Company intends to carry this investment at no value
until such time as the Joint Venture can demonstrate that it will be able to
sustain profitable operations. Once profitable operations are sustained, the
Company will account for the Joint Venture investment on the equity method.
Summarized financial information for the Joint Venture is not included in the
notes to the consolidated financial
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statements for the period ended or as of June 30, 1996, as such information is
not considered material to the operations of Imatron Inc.
The following table represents the percent of revenues attributable to the Joint
Venture between the Company and Imatron Japan K.K.:
Three months ended Six months ended
June 30, June 30,
------------------------- -----------------------
1996 1995 1996 1995
--------- ------------- ------------ ----------
Net product sales 36% 53% 63% 61%
Service 20% 35% 22% 25%
Percentage to total revenues 25% 41% 42% 42%
8. EQUITY TRANSACTIONS
In May 1996, Imatron sold 4,000,000 shares of common stock in a private
placement offering, netting proceeds of $10,400,000.
In June 1996, Imatron completed a private placement offering whereby 100,000
shares of HeartScan Series A Preferred Stock were sold at $160 per share and
realized net proceeds of $14,798,000. The preferred stock is convertible on a
ten-to-one basis into HeartScan common shares at any time. Mandatory conversion
of the preferred stock into common stock will occur upon the successful
completion of a HeartScan initial public offering. The HeartScan Series A
Preferred Stock may be exchanged at the sole option of the holder into Imatron
common stock at an exchange price of $5.00 per share until the earlier of a) a
two year period following closing of the Preferred Stock offering; or b) a
HeartScan initial public offering. If there is no initial public offering within
24 months of the Preferred Stock closing, holders may convert the HeartScan
Series A Preferred Stock into Imatron common stock, at a conversion price equal
to the greater of $1.50 per share or a 27% discount from the weighted average
closing price of Imatron common stock for the 90 day Period immediately
preceding 24 months of the Preferred Stock closing and each date that is 3
months thereafter to and including the 48th month of the Preferred Stock
closing.
In accordance with the Private Placement Summary Offering Memorandum (including
the supplement thereto) dated March 1996, Imatron and HeartScan covenanted and
agreed with the purchasers of "the Shares", that on the Closing Date no less
than $12,000,000 of the net proceeds from the sale of "the Shares" less all
expenses of the offering, would be contributed to the capital of HeartScan
without additional consideration.
The HeartScan Series A Preferred Stock is held entirely by unaffiliated third
parties and is classified in the accompanying balance sheet at June 30, 1996 as
minority interest.
The terms of the preferred stock provide certain additional rights to the
holders including participation and approval of any future HeartScan equity
financing and approval of transactions with affiliates.
The terms of the Series A Preferred Shares include 1,000,000 authorized shares
and 100,000 issued and outstanding shares at June 30, 1996.
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9. RESTATEMENT
In March 1997, subsequent to the Company finalizing its 1996 consolidated
financial statements, the Securities and Exchange Commission ("SEC") announced
its position on accounting for the issuance of convertible preferred stock with
a nondetachable conversion feature that is deemed "in the money" at the date of
issue (a "beneficial conversion feature"). The beneficial conversion feature is
initially recognized and measured by allocating a portion of the preferred stock
proceeds equal to the intrinsic value of that feature to additional
paid-in-capital. The intrinsic value is calculated at the date of issue as the
difference of the conversion price and the quoted market price of the Company's
common stock, into which the security is convertible, multiplied by the number
of shares into which the security is convertible. The discount resulting from
the allocation of proceeds to the beneficial conversion feature is treated as a
dividend and is recognized as a return to the preferred shareholders over the
minimum period in which the preferred shareholders can realize that return (i.e.
from the date the securities are issued to the date they are first convertible).
The accounting for the beneficial conversion feature requires the use of an
unadjusted quoted market price (i.e. no valuation discounts allowed) as the fair
value used in order to determine the intrinsic value dividend. Additionally,
preferred dividends of a subsidiary are included in minority interest as charge
against income.
Prior to applying the accounting described above in its previously issued
financial statements, the Company had not recognized an intrinsic value dividend
on the HeartScan preferred stock which was issued in June 1996. The discounted
conversion features of this preferred stock into Imatron common stock (the
immediate conversion at $5.00 per share and the conversion in two years from the
date of the preferred stock issuance at a 27% discount) was provided to the
preferred shareholders, in essence to provide them with an exit strategy in the
absence of a HeartScan IPO. Thus, the Company did not believe a discount should
be recognized on a contingently issuable security.
Furthermore, at the time of agreeing to the terms of the transaction the $5 per
share immediate conversion price was above the market price of the Company's
common stock but at the time the HeartScan preferred stock was actually issued,
the market price had increased to $5.75 and thereafter, it dropped below $5
again. Accordingly, the Company did not believe that any calculation of the
discount should include the impact of this short-term market fluctuation.
In December 1997, the staff of the SEC gave a speech further refining its March
1997 announcement. Based on discussions with the staff of the SEC in April 1998,
the staff concluded that the Company should retroactively apply its announcement
because it should be applied to contingently issuable securities and, as
discussed in the December speech, the portion attributable to the discount that
could have been obtained immediately on conversion (even though the shares had
not been registered yet) should be recognized on the day the preferred shares
were issued. The balance of the discount based on a market value of $5.75 per
common share is being recognized over two years from the date of issuance.
The consolidated financial statements as of and for the year ended December 31,
1996 have been restated to give effect to the accounting treatment described
above. The restatement resulted in (1) a reclassification in the consolidated
balance sheet of $5,890,000 reducing minority interests and increasing
additional paid-in capital (equity) and (2) the recognition of a minority
interest charge of $3,272,000 (including $2,400,000 as of the date of the
preferred shares were issued) in the consolidated statement of operations
increasing the Company's net loss from $10,465,000 to $13,737,000. The remaining
discount of $2,618,000 will be charged to minority interests through June 30,
1998.
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Form 10Q June 30, 1996
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The restatement of the previously issued 1996 consolidated financial statements,
in order to apply the accounting described herein for the intrinsic value of the
beneficial conversion features, does not affect the cash flows of the Company.
The minority interest is recognized as an increase in minority interest in the
balance sheet. If the preferred shareholders elect to convert their shares to
Imatron common stock, the minority interest will then convert to Imatron equity.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations:
Three months ended June 30, 1996 versus 1995
Overall revenues for the second quarter ended June 30, 1996 of $ 6,363,000
decreased $ 5,005,000 or 44% compared to 1995 revenues of $ 11,368,000. Net
product revenues, including $1,774,000 under the sale-leaseback arrangements,
decreased 45% to $ 4,000,000 from $7,287,000 in 1995 primarily because of a
decrease in scanner shipments from five in 1995 to three in 1996 and product
upgrade revenues. Service revenues decreased 68% to $821,000 due to a lower
volume of spares shipments. Development contract revenue decreased 10% from
$1,384,000 to $1,250,000 due to the income recognized in 1995 related to the
termination of the previous development agreement with Siemens in March 1995 .
Clinic revenues related to HeartScan Imaging, Inc. ("HeartScan") increased to
292,000 in 1996 from 91,000 in 1995 because of additional coronary artery
disease risk assessment centers ("clinics") operating in 1996.
Total cost of revenues as a percent of revenues for the second quarter of 1996
is higher at 102% as compared to 76% in 1995. Product cost of revenues as a
percent of product revenues increased to 99% in 1996 from 77% in 1995 due to
lower margins resulting from the accounting treatment on the two sale-leaseback
transactions to HeartScan. Service cost of revenues as a percent of service
revenue increased 94% in 1996 from 49% in 1995 due primarily to a lower volume
of spares shipments. Development contract revenue and cost of revenue is equal
due to the terms of the three year Memorandum of Understanding with Siemens.
Clinic cost of revenues as a percent of clinic revenues decreased to 181% as
compared to 403% primarily due to additional revenues related to the
establishment of new HeartScan clinics.
Operating expenses of $2,686,000 increased $507,000 or 23% compared to 1995
expenses of $2,179,000. R&D expenses of $798,000 in 1996 reflect the portion of
R&D spending not covered by the Siemens research and development contract.
Selling expenses increased to $898,000 from $811,000 in 1995 due primarily to
higher marketing costs for HeartScan clinics which was partially offset by lower
commissions on sales of C-150 ultrafast CT systems. Administrative expenses
increased $398,000 to $990,000 due to increases in investor relations expenses
and overhead expenses related to the establishment of new HeartScan clinics.
Interest income increased to $110,000 for the second quarter of 1996 from
$11,000 in the comparable period of 1995. The increase were attributable to
higher cash balances and investments in interest-bearing securities which were
purchased with the proceeds from the private placements and stock option
exercises in 1996. Interest expense increased to 114,000 for the second quarter
of 1996 from $25,000 in the comparable period of 1995 due primarily to an
increase in capital lease obligations related to scanners leased back by
HeartScan.
The Company incurred a non-cash charge to income of $2,400,000 recorded as
return to minority interest in the second quarter of 1996 in connection with
certain beneficial conversion features granted to the holders of the HeartScan
convertible Series A Preferred Stock (see Note 9 to the Notes to the Condensed
Consolidated Financial Statements).
Six months ended June 30, 1996 versus 1995
Overall revenues for the six months ended 1996 of $12,453,000 decreased
$4,565,000 or 27% compared to revenues of $17,018,000 for the same period in
1995. Net product revenues, including $1,774,000 under the sale-leaseback
arrangements, decreased 24% to $7,791,000 in 1996 from $10,240,000 in 1995 due
to five scanners shipped in 1996 compared to seven in 1995. Service revenues
decreased 55% to $1,588,000 in 1996 due primarily to a lower volume of spares
shipments made during the second quarter. The decrease in development contract
revenue of 20% to $2,500,000 in 1996 resulted from lower revenue recognized
under the Memorandum of Understanding entered into with Siemens as compared to
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the previous development agreement terminated in March 1995. Clinic revenues
related to HeartScan Imaging subsidiary increased to $574,000 in 1996 from
$139,000 in 1995 due to an increase in the number of clinics operating in 1996.
Total cost of revenues as a percent of revenues for the first six months of 1996
is higher at 97% in 1996 compared to 80% in 1995. Product cost of revenues as a
percent of product revenues increased to 92% in 1996 from 81% in 1995 due to
lower margins on sale-leaseback scanners and product upgrades. Service cost of
revenues as a percent of service revenues increased to 93% in 1996 from 65% in
1995 due primarily to a decrease in spares shipments. Development contract cost
of revenues is equal to the revenue recognized under the Memorandum of
Understanding with Siemens. Clinic cost of revenues as a percent of clinic
revenues decreased to 168% in 1996 from 406% in 1995 due primarily to revenues
resulting from the additional HeartScan clinics operating in 1996.
Operating expenses of $5,320,000 in 1996 increased $831,000 or 19% compared to
1995 expenses of $4,489,000. R&D expenses of $1,501,000 in 1996 reflect the
portion of R&D spending not related to the Siemens research and development
contract. Selling expenses increased to $1,981,000 in 1996 from $1,560,000 in
1995 due primarily to higher marketing expenses incurred by the HeartScan
Imaging subsidiary. Administrative expenses increased $669,000 to $1,838,000 due
to increases in investor relations expenses and overhead expenses related to the
establishment of new Heartscan clinics.
Other income decreased to $161,000 in 1996 from $4,000,000 in 1995. The
$4,000,000 was received in consideration for the transfer of five Imatron EBT
patents to Siemens and the cancellation of Siemens' existing minimum purchase
obligations under the previous distribution agreement. The increase in interest
expense is related to the capital lease obligations for certain equipment
including four Heartscan clinic scanners entered into by the Company.
The Company incurred a non-cash charge to income of $2,400,000 recorded as
return to minority interest in the second quarter of 1996 in connection with
certain beneficial conversion features granted to the holders of the HeartScan
convertible Series A Preferred Stock (see Note 9 to the Notes to the Condensed
Consolidated Financial Statements).
Liquidity and Capital Resources:
At June 30, 1996, the Company has a working capital of $38,038,000 which was a
167% increase compared to working capital of $14,252,000 at December 31, 1995.
the current ratio increased to 5.1:1 from 2.4:1 at December 31, 1995.
The Company's assets increased in 1996 by 84% to $56,785,000 compared to
December 31, 1995 total assets of $30,876,000 primarily due to proceeds of
$26,400,000 from the second quarter Heartscan private placement and the sale of
4,000,000 shares of Imatron common stock. The increase in cash and investments
was partially offset by the operating loss incurred during the year and payment
of the borrowings under the line of credit with San Paolo Bank. Accounts
receivable also increased by 19% as a result of slow payment by some customers.
Inventories are higher by 10% due to the increase in work in process. Lease
obligations increased to $6,400,000 principally due to the scanner
sale-leaseback transactions for the two new HeartScan clinics.
The Company's management believes that the cash, cash equivalents and short-term
investments existing at June 30, 1996 and the estimated proceeds from ongoing
sales of products and services in 1996 will provide the Company with sufficient
cash for operating activities and capital requirements through December 31,
1996.
The company anticipates that the 1996 capital equipment acquisitions will
increase from 1995 due to the expansion of HeartScan clinics.
To satisfy the Company's capital and operating requirements beyond 1996,
profitable operations or additional public or private financing or the
incurrence of debt may be required. If future public or private financing is
required by the Company, holders of the Company's securities may experience
dilution. There can be no assurance that equity or debt sources, if required,
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Form 10Q June 30, 1996
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will be available or, if available, will be on terms favorable to the Company or
its shareholders.
The Company does not believe that inflation has had a material effect on its
revenues or results of operations.
This Form 10-Q/A contains forward-looking statements which involve risk and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements as a result of certain risk
factors set forth in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a vote of Security Holders
The Company's Annual Meeting of Shareholders was held on
June 28, 1996. At the meeting all existing directors were
re-elected. In addition, a proposal to increase the
additional shares eligible for sale under the Company's 1994
Employee Stock Option Plan from 1,000,000 to 1,800,000
shares was approved. The proposal received 50,150,046 votes
for, 1,403,348 against, and 288,719 abstentions. Item 5.
Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
No. 11 - Computation of per share earnings.
(b) Form 8-K Reports:
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 16, 1998
IMATRON INC.
(Registrant)
/s/Gary H. Brooks
---------------------------------------
Vice President, Finance/Administration,
Chief Financial Officer and Secretary
================================================================================
15
<TABLE>
Form 10Q June 30, 1996
====================================================================================================================================
IMATRON INC.
Computation of Per Share Earnings
(Amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1996 1995 1996 1995
Restated Restated
<S> <C> <C> <C> <C>
PRIMARY:
Average shares outstanding 73,980 54,402 71,546 54,091
Conversion of preferred stock 6,039 6,289
Net effect of dilutive stock options
based on the treasury stock method
using the average market price 1,302 1,379
Net effect of dilutive stock warrants
based on the treasury stock method
using the average market price 747 760
-------- -------- -------- --------
TOTAL 73,980 62,490 71,546 62,519
======== ======== ======== ========
Net income / (loss) $ (5,232) $ 519 $ (7,423) $ 2,835
======== ======== ======== ========
Net income / (loss) per common share $ (0.07) $ 0.01 $ (0.10) $ 0.05
======== ======== ======== ========
====================================================================================================================================
16
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Imatron
Inc.'s consolidated condensed statements of income and consolidated condensed
balance sheets and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000720477
<NAME> Imatron Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 18417
<CASH> 10745
<SECURITIES> 7215
<RECEIVABLES> 0
<ALLOWANCES> 9865
<INVENTORY> 47257
<CURRENT-ASSETS> 15158
<PP&E> 5915
<DEPRECIATION> 56785
<TOTAL-ASSETS> 9219
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
86995
<COMMON> 0
<OTHER-SE> 56785
<TOTAL-LIABILITY-AND-EQUITY> 6363
<SALES> 6363
<TOTAL-REVENUES> 6505
<CGS> 6505
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114
<INCOME-PRETAX> (2832)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5232)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
