FORM 10-Q IMATRON INC. MARCH 31, 2000
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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 QUARTERLY PERIOD ENDED MARCH 31, 2000.
Commission file number 0-12405
IMATRON INC.
New Jersey
I.D. No. 94-2880078
389 Oyster Point Blvd, South San Francisco, CA 94080
(650) 583-9964
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 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 April 21, 2000, 101,209,771 shares of the Registrant's common stock (no par
value) were issued and outstanding.
Total Number of Pages: 15
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FORM 10-Q IMATRON INC. MARCH 31, 2000
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IMATRON INC.
Table of Contents
PART I. FINANCIAL INFORMATION PAGE
Item 1. Condensed Consolidated Financial Statements
Consolidated Balance Sheets
March 31, 2000 (Unaudited) and December 31, 1999 3
Consolidated Statements of Operations
Three-Month Periods Ended
March 31, 2000 and 1999 (Unaudited) 4
Consolidated Statements of Cash Flows - Three-Month Periods Ended
March 31, 2000 and 1999 (Unaudited) 5
Notes to Consolidated Financial Statements. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 10
Item 3. Quantitative and Qualitative Disclosures about Market
Risks. 13
PART II.OTHER INFORMATION 14
SIGNATURES 15
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2
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<TABLE>
FORM 10-Q IMATRON INC. MARCH 31, 2000
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IMATRON INC.
Consolidated Balance Sheets
(In thousands)
<CAPTION>
March 31, December 31,
ASSETS 2000 1999
------------------ ------------------
<S> <C> <C>
(Unaudited)
Current assets
Cash and cash equivalents $ 9,402 $ 9,198
Short-term investments 1,998 1,999
Accounts receivable (net of allowance for doubtful accounts of $2,412
and $2,876 at March 31, 2000 and December 31, 1999):
Trade accounts receivable 8,282 8,570
Accounts receivable from joint venture 652 582
Inventories 16,957 12,965
Prepaid expenses 527 1,030
Net current assets of discontinued operations 981 1,019
------------------ ------------------
Total current assets 38,799 35,363
Property and equipment, net 2,698 2,900
Other assets 1,822 1,911
Net long-term assets of discontinued operations 486 469
------------------ ------------------
Total assets $ 43,805 $ 40,643
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,445 $ 2,998
Other accrued liabilities 10,881 10,118
Capital lease obligations: due within one year 31 30
------------------ ------------------
Total current liabilities 13,357 13,146
Deferred income on sale leaseback transactions 344 367
Deferred income on service contract 150 180
Capital lease obligations 117 125
------------------ ------------------
Total liabilities 13,968 13,818
------------------ ------------------
Minority interest 83 93
------------------ ------------------
Shareholders' equity
Common stock, no par value; 150,000 shares authorized; 101,120 and 100,042
Additional paid-in capital 9,440 9,399
Notes receivable from shareholders (113) (150)
Accumulated deficit (103,835) (104,083)
------------------ ------------------
Total shareholders' equity 29,754 26,732
------------------ ------------------
Total liabilities and shareholders' equity $ 43,805 $ 40,643
================== ==================
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
FORM 10-Q IMATRON INC. MARCH 31, 2000
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IMATRON INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
<CAPTION>
Years ended March 31,
2000 1999
----------------- ------------------
<S> <C> <C>
(Unaudited)
Revenues
Product sales s 9,608 $ 3,348
Service 1,615 1,617
Other products sales 125 265
----------------- ------------------
Total revenue 11,348 5,230
----------------- ------------------
Cost of revenues
Product sales 5,045 3,233
Service 1,047 1,470
Other products sales 132 259
----------------- ------------------
Total cost of revenues 6,224 4,962
----------------- ------------------
Gross profit 5,124 268
----------------- ------------------
Operating expenses
Research and development 1,881 1,808
Marketing and sales 1,945 1,168
General and administrative 953 806
Goodwill amortization 35 20
Restructuring charges 0 282
----------------- ------------------
Total operating expenses 4,814 4,084
----------------- ------------------
Operating income (loss) 310 (3,816)
Interest and other income 107 12
Interest expense (6) (41)
----------------- ------------------
Income (loss) from continuing operations before provision for income taxes 411 (3,845)
Provision for income taxes 0 0
----------------- ------------------
Income (loss) from continuing operations 411 (3,845)
Income (loss) from discontinued operations (163) 802
----------------- ------------------
Net income (loss) $ 248 $ (3,043)
================= ==================
Net income (loss) per common share:
Income (loss) from continuing operations: basic and diluted $ 0.00 s (0.04)
================= ==================
Income (loss) from discontinued operations: basic and diluted $ 0.00 $ 0.01
================= ==================
Net income (loss) - basic and diluted $ 0.00 $ (0.03)
Number of shares used in basic per share calculations 100,679 89,798
================= ==================
Number of shares used in diluted per share calculations 107,676 89,798
================= ==================
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
FORM 10-Q IMATRON INC. MARCH 31, 2000
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IMATRON INC.
Consolidated Statements of Cash Flows
(In thousands)
<CAPTION>
Three Months Ended March 31,
2000 1999
------------------ -----------------
<S> <C> <C>
(Unaudited)
Net income (loss) $ 248 $ (3,043)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 185 221
Net income (loss) from discontinued operations 163 (802)
Goodwill amortization 35 20
Common stock issued for services 203 340
Options issued for services 41 0
Changes in operating assets and liabilities:
Accounts receivable 218 2,035
Inventories (3,755) 1,395
Prepaid expenses 503 (356)
Other assets 54 221
Accounts payable (553) (1,863)
Other accrued liabilities 763 (21)
Deferred income (53) (169)
------------------ -----------------
Net cash used in continuing operations (1,948) (2,022)
Net cash (used in) provided by discontinued operations (152) 78
------------------ -----------------
Net cash used in operating activities (2,100) (1,944)
------------------ -----------------
Cash flows from investing activities:
Capital expenditures (220) (158)
Acquisition of subsidiary, net of cash acquired 0 (273)
Purchases of available-for-sale securities (2,062) 0
Maturities of available-for-sale securities 2,063 0
------------------ -----------------
Net cash (used in) provided by investing activities: (219) 1,069
------------------ -----------------
Cash flows from financing activities:
Payments of obligations under capital leases (7) (26)
Repayment of loans by stockholders 37 0
Proceeds from issuance of common stock 2,493 925
------------------ -----------------
Net cash provided by financing activities 2,523 899
------------------ -----------------
Net increase in cash and cash equivalents 204 24
Cash and cash equivalents, at beginning of the period 9,198 1,445
------------------ -----------------
Cash and cash equivalents, at end of the period $ 9,402 $ 1,469
================== =================
Supplemental Disclosure of Noncash Investing and Financing Activities:
Cash paid for interest on capital lease obligations:
Continuing operations $ 6 $ 14
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Discontinued operations $ 5 $ 176
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Cash paid for income taxes $ 0 $ 0
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<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
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FORM 10-Q IMATRON INC. MARCH 31, 2000
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IMATRON INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
Note 1 - BASIS OF PRESENTATION
The accompanying unaudited 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 month period
ended March 31, 2000 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2000. These interim financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report to
Shareholders for the year ended December 31, 1999.
Certain reclassifications have been made to the 1999 amounts to conform to the
current period presentation.
Note 2 - BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Imatron Inc.
("Imatron") and all its subsidiaries (collectively, the "Company"), after
elimination of all intercompany transactions and accounts.
On July 13, 1998, the Company adopted a formal plan to sell its HeartScan
subsidiary in order for the Company to focus more comprehensively on the core
business of manufacturing and servicing quality EBT scanners. For all
periods presented, the financial statements reflect the Company's HeartScan
segment as a discontinued operation.
On January 6, 1999, Imatron acquired a 100% interest in Caral Manufacturing
("Caral") in an acquisition accounted for under the purchase method of
accounting. Beginning January 6, 1999, the financial position and operating
results of Caral were consolidated with those of the Company.
Note 3 - NEW ACCOUNTING PRONOUNCEMENTS
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No, 44, "Accounting for Certain Transactions Involving Stock
Compensation" (FIN 44), an interpretation of APB Opinion No. 25, "Accounting for
Stock Issued to Employees." The application of this interpretation is effective
July 1, 2000. The Company does not believe that the impact of this statement
will have a material effect on the financial position or results of operations
upon the adoption of this interpretation.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
(SAB 101), summarizing the staff's views in applying generally accepted
accounting principles to revenue recognition in financial statements.
In March 2000, the SEC issued Staff Accounting Bulletin No. 101A (SAB 101A),
delaying the implementation date of SAB 101 for registrants with fiscal years
that begin between December 16, 1999 and March 15, 2000 for fiscal years
beginning after June 15, 2000. The Company is currently reviewing the impact
of SAB 101 on its financial position and results of operations.
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FORM 10-Q IMATRON INC. MARCH 31, 2000
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In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No.133, "Accounting for Derivative Instruments
and Hedging Activities"(SFAS-133), and in July 1999 issued Financial Accounting
Standard No. 137, "Accounting For Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133, an
Amendment of FASB Statement No. 133" (SFAS 137). SFAS 137 delayed the effective
date for SFAS 133 for fiscal years beginning after June 15, 2000. The Company
does not believe that the impact of this statement will have a material effect
on the financial position or results of operations upon the adoption of this
accounting standard.
Note 4 - INVENTORIES
Inventories were as follows:
March 31, December 31,
2000 1999
----------------- ----------------
(In thousands)
Purchased parts and sub-assemblies $4,828 $ 4,272
Service parts 1,859 1,747
Work-in-progress 7,150 4,718
Finished products 3,120 2,228
----------------- ----------------
$ 16,957 $ 12,965
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Note 5 - NET INCOME (LOSS) PER SHARE
The Company computes and discloses its per share calculations in accordance
with SFAS No.128, "Earnings per share." SFAS No. 128 establishes standards
for computing and presenting earnings per share. Basic earnings per share is
computed based on the weighted average number of common shares outstanding, and
diluted earnings per share is computed based on the weighted average number of
common shares and dilutive potential common shares outstanding during the
period.
Stock options and warrants have not been included in the loss per share
calculations as their effect would have been antidilutive. The computation of
basic and diluted earnings per share for both continuing and discontinued
operations for the periods ended March 31, 2000 and 1999, are as follows:
2000 1999
---------------------- ----------------------
(In thousands, except per share amounts)
Income(loss)from continuing
operations $ 411 $ (3,845)
====================== ======================
Income (loss) from
discontinued operations $ (163) $ 802
====================== ======================
Net income (loss) $ 248 $ (3,043)
====================== ======================
Weighted average
common shares - basic 100,679 89,798
====================== ======================
Options and warrants
included in the diluted
calculation 6,997 0
====================== ======================
Weighted average
common shares - diluted 107,676 89,798
====================== ======================
Basic income (loss) per share:
Income (loss) from
continuing operations $ 0.00 $ (0.04)
====================== ======================
Income (loss) from
discontinued operations $ 0.00 $ 0.01
====================== ======================
Net income (loss) $ 0.00 $ (0.03)
====================== ======================
Diluted income (loss) per share:
Income (loss) from
continuing operations $ 0.00 $ (0.04)
====================== ======================
Income (loss) from
discontinued operations $ 0.00 $ 0.01
====================== ======================
Net income (loss) $ 0.00 $ (0.03)
====================== ======================
Antidilutive options and warrants
not included in calculation - 102
====================== ======================
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7
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FORM 10-Q IMATRON INC. MARCH 31, 2000
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Note 6 - ENTERPRISE WIDE SEGMENT DISCLOSURES
The Company operates in three industry segments. Imatron operates in one
industry segment in which it designs, manufactures, services and markets a
computed tomography scanner;HeartScan operates centers that perform the coronary
artery scan procedures; and Caral engages in the business of machining and
fabrication of metal and plastic components. The Company is currently selling
its interests in HeartScan (see Note 7).
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies included in the Company's
consolidated financial statements and notes thereto for the year ended
December 31,1999. The Company evaluates performance based on profit or loss from
operations before income taxes not including non-recurring gains and losses.
The Company accounts for intersegment sales and transfers as if the sales or
transfers were to third parties, that is, at current market prices.
The following table summarizes the results of operations for the Company's
two major continuing business segments for the three month periods
ended March 31, (in thousands):
<TABLE>
<CAPTION>
Imatron Caral Eliminations Consolidated
------------------ ---------------- -------------- -----------------
<S> <C> <C> <C> <C>
2000:
Revenues from external customers $ 11,223 $ 125 $ - $ 11,348
Intersegment revenues - 476 (476) -
Total revenue 11,223 601 (476) 11,348
Operating income 291 19 - 310
Total assets as of March 31, 2000 41,787 812 (261) 42,338
1999:
Revenues from external customers $ 4,965 $ 265 $ - $ 5,230
Intersegment revenues - 111 (111) -
Total revenue 4,965 376 (111) 5,230
Operating loss (3,742) (47) (27) (3,816)
Total assets as of March 31, 1999 28,374 601 (544) 28,431
</TABLE>
Note 7 - DISCONTINUED OPERATION - SALE OF HEARTSCAN SUBSIDIARY
On July 13, 1998 (the measurement date), the Company adopted a formal plan to
sell its HeartScan subsidiary in order for the Company to focus on its core
business of manufacturing, marketing/selling, and servicing the Company's
proprietary EBT scanners. Accordingly, the operating results of the HeartScan
operations are reflected as discontinued operations for all periods presented
in the Company's statements of operations and as net assets (liabilities)
of discontinued operations in the March 31,2000 and December 31,1999 balance
sheets.
HeartScan statements of operations data for the periods ended March 31, 2000
and 1999 are as follows (in thousands):
2000 1999
------------------- ------------------
Revenues $ - $ 710
Costs and expenses 163 1,304
------------------- ------------------
Loss before income taxes (163) (594)
Gain on sale of assets of
discontinued operations - 1,396
Provision for income taxes - -
------------------- ------------------
Income/(loss) from
discontinued operations $ (163) $ 802
=================== ==================
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FORM 10-Q IMATRON INC. MARCH 31, 2000
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The HeartScan statements of operations include costs of sales of $70,000
in 1999, related to transactions with Imatron. There were no such transactions
in 2000.
A summary of the net assets of discontinued operation is as follows:
March 31, December 31,
2000 1999
---------------------- ----------------------
(In thousands, except per share amounts)
Cash and cash equivalent $ 1,220 $ 1,245
Accounts receivable - net
and other current assets 93 110
Other current liabilities (13) (21)
Lease obligations - current (319) (315)
---------------------- ----------------------
Net current assets (liabilities)
of discontinued operation 981 1,019
====================== ======================
Property, plant and
equipment, net 1,322 1,360
Lease obligations -
long-term portion (836) (891)
---------------------- ----------------------
Long-term net assets of
discontinued operation 486 469
$ $
====================== ======================
The Company expects that the discontinued operation will continue to operate
at a loss through the disposal date.
On February 10, 1999, the Company sold its HeartScan, San Francisco center
and related C-150 scanner and other equipment. Proceed from the sale were
$1,500,000 resulting in a net gain of approximately $1,396,000.
On June 17, 1999, the Company sold its HeartScan,Pittsburgh center and related
C-150 scanner and other equipment for $650,000 resulting in a net loss of
approximately $237,000.
On July 8, 1999, the Company sold the C-150 scanner formerly used by HeartScan,
Seattle for $625,000. The sale resulted in a net loss of approximately $617,000.
On November 19, 1999, the Company sold its HeartScan, Houston and Washington DC
centers and the related C-150 scanners and other equipment for $2,200,000.
The sale resulted in a net gain of approximately $507,000.
The Company is selling the remaining center located in Cascais, Portugal.
At the measurement date, the Company estimated that although a gain would be
realized upon the ultimate sale, HeartScan would continue to incur operating
losses through the disposal date. In the fourth quarter of 1998, the Company
changed its strategy from selling HeartScan to a single buyer to that of
selling the individual centers to buyers located in cities where the
centers were located. At December 31, 1998, the Company reassessed its
estimate of the gain on disposal to reflect the Company's change in strategy.
As of March 31, 2000, the Company adjusted its accrued loss and expected gain
to reflect 2000 losses to be incurred of approximately $250,000 through the
disposal date and net gain on disposal of approximately $90,000.
Note 8 - EQUITY TRANSACTIONS
During the first quarter of 2000,the Company raised $2,493,000 from exercises of
stock options, warrants, and sale of its common stock, at an average of $2.49
per share. The Company issued a total of 1,001,794 shares of its common stock
in relation to these transactions.
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FORM 10-Q IMATRON INC. MARCH 31, 2000
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Company's Condensed Consolidated Financial Statements and related Notes thereto
contained elsewhere with this document. Operating results for the three month
period ended March 31, 2000 are not necessarily indicative of the results that
may be expected for any future periods, including the full fiscal year.Reference
should also be made to the Annual Consolidated Financial Statements, Notes
thereto, and Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999.
This Form 10-Q contains forward-looking statement which are subject to risks
and uncertainties. The Company's actual results may differ significantly from
the results projected 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
fiscal year ended December 31, 1999. The Company expressly disclaims any
obligation to update any forward-looking statements.
Results of Continuing Operations:
Three months ended March 31, 2000 versus 1999
Total revenue for the three months ended March 31, 2000 of $11,348,000 increased
$6,118,000 or 117% compared to revenues of $5,230,000 for the same period in
1999. Net product revenues increased to $9,608,000 in 2000 from $3,348,000 in
1999 due to shipment of 7 scanners in 2000 compared to 2 in 1999. Scanners sold
in 2000 include 3 refurbished scanners which resulted in a lower average selling
price as compared to the average selling price in 1999. Service revenues
decreased in 2000 to $1,615,000 from $1,617,000 in 1999 due to a slight decrease
in service contract revenues offset by an increase in spare parts shipped. Other
product sales represent revenues from Caral's machining and fabrication
services. Other product sale decreased to $125,000 in 2000 from $265,000 in
1999 due to a decrease in sales to external customers and an increase in
intercompany sales.
Total cost of revenues as a percent of revenues for the three months of 2000 was
55% as compared with 95% in 1999. Product cost of revenues as a percent of
product revenues decreased to 53% in 2000 from 97% in 1999 due to shipment of 7
scanners with higher gross margins compared to 2 scanners in 1999. The decrease
in cost of product sales was partly due to an increase in scanner production
levels in 2000 as compared to 1999, resulting in a higher absorption of factory
overhead expenses. Service cost of revenues as a percent of service revenues
decreased to 65% in 2000 as compared to 91% in 1999 due to improved margins on
spare parts shipped and decreased warranty costs. Other product cost of revenues
as a percent of other product revenues increased to 106% in 2000 from 98% in
1999 due to decreased sales to external customers.
Operating expenses for the three months of 2000 increased to $4,814,000, or 42%
of revenues, compared to $4,084,000, or 78% of revenues in 1999. Research and
development expenses of $1,881,000 in 2000 increased from $1,808,000 in 1999
due an increase in materials for new product development programs. Marketing and
sales expenses increased to $1,945,000 in 2000 from $1,168,000 in 1999 primarily
due to increases in promotional activities and headcount to establish a larger
sales and marketing organization to better serve the growing EBT market.
Administrative expenses increased to $953,000 in 2000 from $806,000 in 1999 due
primarily to an increase in investor relations expenses. Goodwill amortization
amounting to $35,000 and $20,000 in 2000 and 1999, respectively, represent the
amortized portion of goodwill related to the acquisition of Caral. Restructuring
charges of $282,000 in 1999 relates to severance and related benefits paid by
the Company during the first quarter of 1999 as part of its reorganization
plan.
Other income increased to $107,000 for the three months ending March 31, 2000
from $12,000 in the comparable period of 1999. The increase was attributable to
higher cash balances and investments in interest-bearing securities. Interest
expense represents interest incurred on capital lease obligations on certain
office equipment.
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FORM 10-Q IMATRON INC. MARCH 31, 2000
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Discontinued operation:
On July 13, 1998, the Company announced its intention to divest its HeartScan
subsidiary. Accordingly, the Company restated its financial statements to
reflect the classification of HeartScan as a discontinued operation for all
periods presented.
During the three months of 2000 and 1999, the Company reported a loss from its
discontinued operation of $163,000 and income of $802,000, respectively,
which relates to the discontinued operations of the HeartScan subsidiary. Income
from discontinued operations in 1999 was due to the gain on sale of the San
Francisco center amounting to $802,000.
At the measurement date, the Company estimated that although a gain would be
realized upon the ultimate sale, HeartScan would continue to incur operating
losses through the disposal date. In the fourth quarter of 1998, the Company
changed its strategy from selling HeartScan to a single buyer to that of selling
the individual centers to buyers located in cities where the centers were
located. As such, the Company reassessed its estimate of the gain on disposal
to reflect the Company's change in strategy.
The Company expects that the discontinued operations will continue to operate at
a loss through the disposal of its final center in Cascais, Portugal. However,
management's current best estimate indicates that the disposal of the Cascais
center will result in a gain. As of March 31, 2000, the Company adjusted its
accrued loss and expected gain to reflect 2000 losses to be incurred of
approximately $250,000 through the disposal date and a realized net gain on
disposal of approximately $90,000.
Liquidity and Capital Resources:
At March 31,2000, working capital increased to $25,442,000 compared to December
31, 1999 working capital of $22,217,000. The current ratio increased to 2.9:1
at March 31, 2000 from 2.7:1 at December 31, 1999.
The Company's total assets increased to $43,805,000 for the three month period
ending March 31, 2000 compared to December 31, 1999 total assets of $40,643,000.
Cash, cash equivalents, and other short-term investments increased to
$11,400,000 in 2000 from $11,197,000 in 1999 due primarily to proceeds realized
from private placement, exercises of warrants and stock options, and an increase
in scanner deposits, partially offset by an increase in inventory. Cash used by
continuing operations was $1,948,000 for three months ended March 31, 2000
compared to cash used of $2,022,000 for the same period in 1999. Cash generated
from net income, increase in scanner deposits, and a decrease in accounts
receivable were offset by an increase in inventory purchases and reduction in
accounts payable. Other primary sources of non-cash items included loss on
discontinued operations and common stock issued for services in lieu of cash.
The increase in inventory was due to increased production levels to meet
anticipated shipments in the current fiscal year. The decrease in accounts
payable resulted from accelerated payments to vendors to maintain balances on a
more current basis. In 1999, cash generated from receivables and decreased
inventory purchases were offset by a reduction in accounts payable. The decrease
in accounts receivables was primarily due to payment of outstanding invoices.
Accounts payable decreased as a result of a decrease in inventory purchases.
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FORM 10-Q IMATRON INC. MARCH 31, 2000
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Cash used by discontinued operations was $152,000 for the three months ended
March 31, 2000 compared to cash provided by discontinued operations of $78,000
during the same period in 1999. Loss from discontinued operations for the three
month period ended March 31, 2000 was $163,000 compared to income of $802,000
for the same period in 1999. Income from discontinued operations in 1999 was due
to the gain on sale of the San Francisco center, partially offset by a loss from
operations of $594,000.
The Company's investing activities for the three months ended March 31, 2000
included purchases of marketable securities and equipment amounting to
$2,062,000 and $220,000, respectively, offset by maturities of marketable
securities amounting to $2,063,000. The Company's investing activities in 1999
included the acquisition of Caral amounting to $273,000 (net of cash acquired)
and purchase of equipment totaling $158,000.
Cash provided by financing activities was $2,523,000 for the three month period
ended March 31, 2000 as compared with $899,000 for the same period in 1999.
Significant sources of cash in financing activities were proceeds of $2,493,000
and $925,000 from issuance of common stock through private placements and
exercises of the Company's stock option and employee stock purchase plans during
the three month period ended March 31, 2000 and 1999, respectively.
The Company's liquidity is affected by many factors, some based on the normal
ongoing operations of the business and others related to the uncertainties of
the industry and global economies. Although the cash requirements will fluctuate
based on timing and extent of these factors, management believes that cash, and
cash equivalents existing at March 31, 2000 and the estimated proceeds from
ongoing sales of products and services in 2000 will provide the Company with
sufficient cash for operating activities and capital requirements through
December 31, 2000.
The Company expects to devote substantial capital resources to research and
development, to support a direct sales force and marketing operations and to
continue to support its manufacturing capacity and facilities. To satisfy the
Company's capital and operating requirements beyond 2000, profitable operations,
additional public or private financing or the incurrence of debt may be
required. If future public or private financing is required by the Company,
holder of the Company's securities may experience dilution. There can be no
assurance that equity or debt sources, if required, 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.
YEAR 2000 COMPLIANCE
The Company successfully completed the final phase of its conversion to MK in
August 1999.The Company has not experienced any significant business disruptions
as a result of Year 2000 issues, nor has it incurred material expenditures.
The Company will continue to monitor its internal operating systems as well as
third parties with whom the Company does business, to identify and address any
potential risk situations related to Year 2000. However, there can be no
assurance that the Company will not be adversely affected by these suppliers
and service providers in the future, and that these expenditures will not be
material.
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12
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FORM 10-Q IMATRON INC. MARCH 31, 2000
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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
In the past the Company has held investments consisting of interest bearing
investment grade instruments consistent with the Company's investment portfolio.
The Company has also entered into credit facilities and leasing arrangements.
At March 31, 2000, the Company had money market mutual funds, certificates of
deposit and commercial paper which mature in less than twelve months.
Additionally, the Company maintained leases for other equipment that have been
accounted for as capital leases with a total obligation of $148,000 as of
March 31, 2000.
The Company's foreign sales are denominated in U.S. Dollars.
The Company does not believe that it is subject to any material exposure to
interest rate, foreign currency or other market risks.
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13
<PAGE>
FORM 10-Q IMATRON INC. MARCH 31, 2000
================================================================================
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
None.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K Exhibits:
No. 27 - Financial Data Schedule as of March 31, 2000.
Form 8-K Reports: None.
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14
<PAGE>
FORM 10-Q IMATRON INC. MARCH 31, 2000
================================================================================
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: May 8, 2000
IMATRON INC.
(Registrant)
_________
Frank Cahill
Chief Financial Officer/
Vice President - Finance & Administration
================================================================================
15
<PAGE>
<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-31-2000
<PERIOD-START> Jan-1-2000
<PERIOD-END> Mar-31-2000
<EXCHANGE-RATE> 1
<CASH> 9,402
<SECURITIES> 1,998
<RECEIVABLES> 11,346
<ALLOWANCES> (2,412)
<INVENTORY> 16,957
<CURRENT-ASSETS> 38,799
<PP&E> 10,107
<DEPRECIATION> (7,409)
<TOTAL-ASSETS> 43,805
<CURRENT-LIABILITIES> 13,357
<BONDS> 0
0
0
<COMMON> 124,262
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 43,805
<SALES> 9,608
<TOTAL-REVENUES> 11,348
<CGS> 5,045
<TOTAL-COSTS> 11,038
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 411
<INCOME-TAX> 0
<INCOME-CONTINUING> 411
<DISCONTINUED> (163)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 248
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
