<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Quarter Ended July 2, 2000
[__] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission file number 0-19386
FISCHER IMAGING CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 36-2756787
(State of incorporation) (I.R.S. Employer Identification No.)
12300 North Grant Street
Denver, Colorado 80241
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 452-6800
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 ______
----
The number of shares of Registrant's Common Stock outstanding as of July 2, 2000
was 7,075,000.
<PAGE>
FISCHER IMAGING CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets (unaudited) --
July 2, 2000 and December 31, 1999 3
Consolidated Statements of Operations (unaudited) --
Three and six months ended July 2, 2000 and July 4, 1999 4
Consolidated Statements of Cash Flows (unaudited) --
Six months ended July 2, 2000 and July 4, 1999 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities and Use of Proceeds 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
</TABLE>
<PAGE>
FISCHER IMAGING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)
(Unaudited)
<TABLE>
<CAPTION>
July 2, December 31,
2000 1999
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,119 $ 1,056
Trade accounts receivable, net of allowance for doubtful
accounts of approximately $1,844 and $1,741 at July 2, 2000
and December 31, 1999, respectively 14,682 15,897
Inventories 14,943 15,064
Prepaid expenses and other current assets 827 912
------- -------
Total current assets 31,571 32,929
------- -------
PROPERTY AND EQUIPMENT
Manufacturing equipment 8,192 9,641
Office equipment and leasehold improvements 6,039 5,963
------- -------
14,231 15,604
Less- Accumulated depreciation and amortization 11,423 11,730
------- -------
Property and equipment, net 2,808 3,874
------- -------
INTANGIBLE ASSETS, net 2,120 2,399
DEFERRED COSTS AND OTHER ASSETS 1,583 1,807
------- -------
TOTAL ASSETS $38,082 $41,009
======= =======
</TABLE>
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT LIABILITIES
Notes payable and current maturities of long-term debt $ 4,128 $ 6,031
Trade accounts payable 3,378 3,671
Accrued salaries and wages 1,763 1,792
Customer deposits 1,009 1,289
Accrued warranty and installation costs 1,566 1,672
Deferred service revenue 963 1,156
Accrued sales, property and other state and local taxes 578 636
Other current liabilities 1,528 1,943
-------- --------
Total current liabilities 14,913 18,190
LONG-TERM DEBT 863 1,103
-------- --------
TOTAL LIABILITIES 15,776 19,293
-------- --------
STOCKHOLDERS' INVESTMENT
Common Stock, $.01 par value, 25,000,000 shares authorized,
7,074,867 and 7,028,855 shares issued and outstanding at
July 2, 2000 and December 31, 1999, respectively 71 70
Preferred Stock, 5,000,000 shares authorized:
Series C Junior Participating Preferred Stock, $.01 par value,
500,000 shares authorized, no shares issued and outstanding -- --
Series D Convertible Preferred Stock, $.01 par value, 506,667
shares authorized, issued and outstanding at
July 2, 2000 and December 31, 1999, respectively;
liquidation preference of $3.8 million at July 2, 2000
and December 31, 1999, respectively (Note 5) 5 5
Additional paid-in capital 43,351 43,264
Accumulated deficit (20,987) (21,802)
Accumulated other comprehensive income (foreign
currency translation adjustments) (134) 179
-------- --------
TOTAL STOCKHOLDERS' INVESTMENT 22,306 21,716
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 38,082 $ 41,009
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
FISCHER IMAGING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- ----------------------------
July 2, July 4, July 2, July 4,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Products and services $ 11,946 $ 16,695 $ 25,689 $ 30,860
Sale of manufacturing license (Note 5) -- -- -- 6,200
--------- --------- --------- ---------
Total 11,946 16,695 25,689 37,060
COST OF SALES
Products and services 5,993 10,748 13,546 19,849
Sale of manufacturing license -- -- -- 400
--------- --------- --------- ---------
Total 5,993 10,748 13,546 20,249
--------- --------- --------- ---------
Gross profit 5,953 5,947 12,143 16,811
OPERATING EXPENSES
Research and development 976 1,663 2,017 3,078
Selling, marketing and service 3,316 3,976 6,699 7,451
General and administrative 1,105 1,356 2,314 3,579
Restructuring provision (Note 6) -- 750 -- 750
--------- --------- --------- ---------
Total operating expenses 5,397 7,745 11,030 14,858
--------- --------- --------- ---------
-- 750 -- 750
INCOME (LOSS) FROM OPERATIONS 556 (1,798) 1,113 1,953
Interest expense (177) (129) (345) (409)
Interest income 10 12 30 69
Other income (expense), net 76 (46) 17 (224)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 465 (1,961) 815 1,389
Provision for income taxes -- -- -- --
--------- --------- --------- ---------
NET INCOME (LOSS) $ 465 $ (1,961) $ 815 $ 1,389
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE
Basic $ 0.07 $ (0.28) $ 0.12 $ 0.20
========= ========= ========= =========
Diluted $ 0.06 $ (0.28) $ 0.10 $ 0.17
========= ========= ========= =========
SHARES USED TO CALCULATE
INCOME (LOSS) PER SHARE
Basic 7,075 7,029 7,075 7,029
========= ========= ========= =========
Diluted 7,781 7,029 7,788 7,944
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FISCHER IMAGING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
------------------------------
July 2, July 4,
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 815 $ 1,389
------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities--
Noncash sale of manufacturing license -- (6,200)
Restructuring provision -- 750
Depreciation 832 1,077
Amortization of intangible assets 279 279
Provision for doubtful accounts 753 20
Provision for excess and obsolete inventories 270 453
Sales and retirements of assets 355 --
Foreign exchange losses 1 187
Restructuring payments -- (754)
Other changes in current assets and liabilities--
Decrease in trade accounts receivable 462 35
(Increase) Decrease in inventories (149) 3,891
Decrease in prepaid expenses and other current assets 85 264
Decrease in deferred costs and other assets 224 383
Decrease in trade accounts payable (293) (316)
Decrease in accrued salaries and wages (29) (153)
Decrease in customer deposits (280) (81)
(Decrease) Increase in accrued warranty and installation costs (106) 505
Decrease in deferred service revenue (193) (324)
(Decrease) Increase in other current liabilities (474) 175
Other -- (50)
------------ ------------
Total adjustments 1,737 141
------------ ------------
Net cash provided by operating activities 2,552 1,530
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (121) (380)
------------ ------------
Net cash used in investing activities (121) (380)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sales of common stock, net 88 90
Net repayments under line of credit agreement (1,776) (965)
Repayments of long-term debt (367) (119)
------------ ------------
Net cash used in financing activities (2,055) (994)
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (313) 24
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 63 180
CASH AND CASH EQUIVALENTS, beginning of period 1,056 929
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 1,119 $ 1,109
============ ============
</TABLE>
5
<PAGE>
FISCHER IMAGING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) GENERAL
In management's opinion, the accompanying unaudited consolidated balance sheets
and statements of operations and cash flows contain all adjustments, consisting
only of normal recurring items, necessary to present fairly the financial
position of Fischer Imaging Corporation (the "Company") on July 2, 2000, its
results of operations for the three and six months ended July 2, 2000 and July
4, 1999 and its cash flows for the six months ended July 2, 2000 and July 4,
1999. Results of operations and cash flows for the interim periods may not be
indicative of the results of operations and cash flows for the full fiscal year.
These unaudited consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all the
information and note disclosures required by generally accepted accounting
principles. The financial statements should be read in conjunction with the
audited financial statements and notes thereto contained in the Company's latest
annual report on Form 10-K for the year ended December 31, 1999.
Typically, and for the year ending December 31, 2000, the Company closes its
first three fiscal quarters as of the Sunday closest to the end of March, June
and September.
(2) INVENTORIES
Inventories include costs of materials, direct labor and manufacturing overhead.
Inventories are priced at the lower of cost (using primarily the last-in, first-
out ("LIFO") method of valuation) or market. Writedowns for excess or obsolete
inventories are charged to expense in the period in which conditions giving rise
to the writedowns are first recognized.
Inventories consisted of the following components (in thousands):
July 2, December 31,
2000 1999
------- -------
FIFO cost--
Raw materials $ 7,182 $ 6,878
Work in process and finished goods 8,068 8,493
LIFO valuation adjustment (307) (307)
------- -------
Inventories, net $14,943 $15,064
======= =======
6
<PAGE>
FISCHER IMAGING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(3) NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consisted of the following (in thousands):
July 2, December 31,
2000 1999
------- -------
Borrowing under bank revolving line of credit $ 4,027 $ 5,803
Capitalized lease obligations 145 475
Other 819 856
------- -------
4,991 7,134
Less--Current maturities (4,128) (6,031)
------- -------
Long-term debt $ 863 $ 1,103
======= =======
See "Management's Discussion & Analysis - Liquidity and Capital Resources" for
further discussion of the Company's line of credit.
(4) NET INCOME (LOSS) PER SHARE
Basic income or loss per share is computed by dividing the net income or loss by
the weighted average number of shares of common stock outstanding. Diluted
income or loss per share is determined by dividing the net income or loss by the
sum of: (1) the weighted average number of common shares outstanding; (2) if
dilutive, the number of shares of convertible preferred stock as if converted
upon issuance; and (3) if dilutive, the effect of outstanding stock options
determined utilizing the treasury stock method.
A reconciliation between the number of securities used to calculate basic and,
if dilutive, diluted income per share is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
July 2, July 4, July 2, July 4,
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted average number of common shares outstanding
(Shares used in Basic Earnings Per Share Computation) .............. 7,075 7,029 7,075 7,029
------- ------- ------- -------
Shares of convertible preferred stock (as if converted) ............ 507 507 507 915
Effect of stock options (treasury stock method) .................... 199 -- 206 --
------- ------- ------- -------
Shares used in Diluted Earnings Per Share Computation, if dilutive... 7,781 7,536 7,788 7,944
======= ======= ======= =======
</TABLE>
For the three and six months ended July 4, 1999 the effects of the convertible
preferred stock and stock options were excluded from the calculation of diluted
income per share in the accompanying Consolidated Statements of Operations since
the result would have been anti-dilutive. As of July 2, 2000 and July 4, 1999,
there were, respectively, 1,277,450 and 1,058,925 outstanding options to
purchase shares of Common Stock under the Company's current stock option plans.
(5) SALE OF MANUFACTURING LICENSE
On March 29, 1999, the Company announced and agreement with General Electric
Company, on behalf of GE Medical Systems, under which 826,666, or 62%, of the
1,333,333 shares of Convertible Preferred Stock then owned by GE Medical Systems
("GEMS") were exchanged for a non-exclusive right to manufacture the Tilt-C
system, which the Company has manufactured
7
<PAGE>
for GEMS since 1994. The sale of the manufacturing rights to the Tilt-C system
was recorded at fair value, estimated to be $6.2 million. The Company completed
its manufacturing for GEMS during the first quarter of 2000.
(6) RESTRUCTURING PROVISION AND PAYMENTS
During the third quarter of 1997, the Company decided to close its Addison,
Illinois manufacturing facility and, accordingly, recorded a $2.9 million
restructuring provision for the remaining lease obligations (net of estimated
sublease payments), facility closing costs, severance and other non-recurring
costs associated with this decision. In January 1999, the Company fulfilled its
remaining facility obligations by agreeing to a $1.0 million lease buyout, over
an eight month period, completing the closure within the original $2.9 million
provision.
During the second quarter of 1999, the Company decided to discontinue a product
line previously produced in its Addison facility. Accordingly, the Company
accrued an additional $750,000 provision for the closure of the Addison
facility, principally for the discontinuing of this product line and related
product acceptance issues.
(7) COMPREHENSIVE INCOME
Comprehensive income is defined as the change in equity of an enterprise other
than the change resulting from investments by or distributions to its owners.
For the Company, comprehensive income includes only net earnings or loss and
foreign currency translation adjustments, as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------- ----------------------------------
July 2, July 4, July 2, July 4,
2000 1999 2000 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net income (loss) $ 465 $ (1,961) $ 815 $ 1,389
Foreign currency translation adjustments (318) 73 (313) 210
-------------- -------------- -------------- --------------
Comprehensive (loss) income $ 147 $ (1,888) $ 502 $ 1,599
============== ============== ============== ==============
</TABLE>
8
<PAGE>
FISCHER IMAGING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(8) OPERATING AND GEOGRAPHIC SEGMENT INFORMATION
The Company operates in a single industry segment: the design, manufacture, and
marketing of x-ray imaging systems. Because of differences in distribution
costs, strategies, and aftermarket potential, the Company separately manages and
reports operating results for products sold by the Company (proprietary) from
those manufactured for sale to other medical products companies under Original
Equipment Manufacturer ("OEM") contracts. The Company's manufacturing and most
distribution activities are in the United States, including export sales to
Europe, primarily, and elsewhere. The Company also has marketing operations in
Europe and Australia. The following is a summary of the Company's operations by
segment (in thousands):
<TABLE>
<CAPTION>
United States
----------------------------------
Proprietary International
----------------- ------------------ Internal
Domestic Export OEM Total Australia Europe Sales Total
-------- ------- ----- -------- ---------- ------ --------- --------
Three Months Ended July 2, 2000
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Product ............................. $ 7,463 $ 1,648 $ 248 $ 9,359 $ -- $ 278 $ (440) $ 9,197
Service ............................. 2,643 -- -- 2,643 55 51 -- 2,749
-------- ------- ----- -------- ---------- ------ --------- --------
10,106 1,648 248 12,002 55 329 (440) 11,946
-------- ------- ----- -------- ---------- ------ --------- --------
Costs of sales:
Product ............................. 4,127 910 11 5,048 -- -- (165) 4,883
Service ............................. 304 -- -- 304 30 20 2 356
-------- ------- ----- -------- ---------- ------ --------- --------
Allocated ........................... 4,431 910 11 5,352 30 20 (163) 5,239
-------- ------- -----
Unallocated ......................... 754 -- -- -- 754
-------- ---------- ------ --------- --------
6,106 30 20 (163) 5,993
-------- ---------- ------ --------- --------
Gross profit ......................... 5,896 25 309 (277) 5,953
Operating expenses..................... 5,305 117 252 (277) 5,397
-------- ---------- ------ --------- --------
Income (loss) from operations ........ 591 (92) 57 -- 556
Interest expense ..................... (177) -- -- -- (177)
Interest income ...................... 5 5 -- -- 10
Other (expense) income, net .......... 88 (28) 16 -- 76
-------- ---------- ------ --------- --------
Net income (loss) .................... $ 507 $ (115) $ 73 $ -- $ 465
======== ========== ====== ========= ========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended July 4, 1999
-------------------------------
Revenues:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Product ............................. $ 8,131 $ 2,542 $ 3,413 $ 14,086 $ -- $ 116 $ (180) $ 14,022
Service ............................. 2,447 -- -- 2,447 53 173 -- 2,673
-------- ------- ------- -------- ---------- ------ --------- --------
10,578 2,542 3,413 16,533 53 289 (180) 16,695
-------- ------- ------- -------- ---------- ------ --------- --------
Costs of sales:
Product ............................. 4,339 1,677 2,808 8,824 -- 96 (160) 8,760
Service ............................. 566 -- -- 566 20 10 (20) 576
-------- ------- ------- -------- ---------- ------ --------- --------
Allocated ........................... 4,905 1,677 2,808 9,390 20 106 (180) 9,336
-------- ------- -------
Unallocated ......................... 1,412 -- -- -- 1,412
-------- ---------- ------ --------- --------
10,802 20 106 (180) 10,748
-------- ---------- ------ --------- --------
Gross profit ......................... 5,731 33 183 -- 5,947
Operating expenses, including
restructuring provision ... 7,639 124 (18) -- 7,745
-------- ---------- ------ --------- --------
(Loss) income from operations ........ (1,908) (91) 201 -- (1,798)
Interest expense ..................... (75) -- (54) -- (129)
Interest income ...................... 10 2 -- -- 12
Other expense, net ................... (6) 120 (160) -- (46)
Income taxes ......................... -- -- -- -- --
-------- ---------- ------ --------- --------
Net (loss) income .................... $ (1,979) $ 31 $ (13) $ -- $ (1,961)
======== ========== ====== ========= ========
</TABLE>
9
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FISCHER IMAGING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
<TABLE>
<CAPTION>
United States
-------------------------------------
Proprietary International
----------------- ------------------- Internal
Domestic Export OEM Total Australia Europe Sales Total
-------- ------- ------- --------- ---------- ------- --------- ---------
Six Months Ended July 2, 2000
-----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Product .............................. $14,247 $4,636 $1,300 $20,183 $ -- $ 533 $(712) $20,004
Service .............................. 5,468 -- -- 5,468 114 103 -- 5,685
------- ------- ------- ------- ------ ------ ----- -------
19,715 4,636 1,300 25,651 114 636 (712) 25,689
------- ------- ------- ------- ------ ------ ----- -------
Costs of sales:
Product .............................. 7,652 2,503 635 10,790 -- -- (175) 10,615
Service .............................. 706 -- -- 706 42 29 (5) 772
------- ------- ------- ------- ------ ------ ----- -------
Allocated ............................ 8,358 2,503 635 11,496 42 29 (180) 11,387
------- ------- ------- -------
Unallocated .......................... 2,159 -- -- -- 2,159
------- ------ ------ ----- -------
13,655 42 29 (180) 13,546
------- ------ ------ ----- -------
Gross profit .......................... 11,996 72 607 (532) 12,143
Operating expenses...................... 10,865 200 497 (532) 11,030
------- ------ ------ ----- -------
Income (loss) from operations ......... 1,131 (128) 110 -- 1,113
Interest expense ...................... (343) -- (2) -- (345)
Interest income ....................... 21 9 -- -- 30
Other (expense) income, net ........... 226 (221) 12 -- 17
------- ------ ------ -------
Net income (loss) ..................... $ 1,035 $ (340) $ 120 $ -- $ 815
======= ====== ====== ===== =======
Other information:
Identifiable assets......... $35,978 $1,100 $1,004 $38,082
Capital expenditures........ 121 -- -- $ 121
Depreciation................ 832 -- -- $ 832
Amortization................ 279 -- -- $ 279
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended July 4, 1999
-----------------------------
Revenues:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Product ............................. $13,971 $6,226 $5,638 $25,835 $ 21 $ 231 $(354) $25,733
Service ............................. 4,716 -- -- 4,716 92 319 -- 5,127
Sale of manufacturing license ....... 6,200 -- -- 6,200 -- -- -- 6,200
------- ------- ------- ------- ----- ----- ----- -------
24,887 6,226 5,638 36,751 113 550 (354) 37,060
------- ------- ------- ------- ----- ----- ----- -------
Costs of sales:
Product ............................. 7,404 4,333 3,964 15,701 13 159 (278) 15,595
Service ............................. 1,122 -- -- 1,122 44 30 (76) 1,120
Sale of manufacturing license ....... 400 -- -- 400 -- -- -- 400
------- ------- ------- ------- ----- ----- ----- -------
Allocated ........................... 8,926 4,333 3,964 17,223 57 189 (354) 17,115
------- ------- -------
Unallocated ......................... 3,134 -- -- -- 3,134
------- ----- ----- ----- -------
20,357 57 189 (354) 20,249
------- ----- ----- ----- -------
Gross profit .......................... 16,394 56 361 -- 16,811
Operating expenses, including
restructuring provision ........... 14,578 216 64 -- 14,858
------- ----- ----- ----- -------
Income (loss) from operations ......... 1,816 (160) 297 -- 1,953
Interest expense ...................... (304) -- (105) -- (409)
Interest income ....................... 66 3 -- -- 69
Other expense, net .................... (31) 199 (392) -- (224)
Income taxes .......................... -- -- -- -- --
------- ----- ----- ----- -------
Net income (loss) .................... $ 1,547 $ 42 $(200) $ -- $ 1,389
======= ===== ===== ===== =======
Other information:
Identifiable assets ................. $43,171 $ 996 $ 610 $44,777
Capital expenditures ................ 380 -- -- 380
Depreciation ........................ 1,064 13 -- 1,077
Amortization.......................... 279 -- -- 279
</TABLE>
Internal sales from the United States to Australia and Europe are recorded on
the basis of transfer pricing established by the Company. International sales to
OEM customers are managed and, therefore, reported as part of OEM business
results.
10
<PAGE>
(9) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 133 and No. 137. In June 1998,
the Financial Accounting Standards Board, or FASB, issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS 133 establishes accounting and reporting standards for
derivative financial instruments and hedging activities related to those
instruments as well as other hedging activities. It requires an entity to
recognize all derivatives as either assets or liabilities in the statement of
financial position and measures those instruments at fair value. In June 1999,
the FASB issued Statement of Financial Accounting Standards 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
No. 137 delays the effective date of SFAS No. 133 to financial quarters and
financial years beginning after June 15, 2000. The Company does not typically
enter into arrangements that would fall under the scope of Statement No. 133 and
thus, management believes that Statement No. 133 will not significantly affect
our financial condition and results of operations.
Staff Accounting Bulletin No. 101. In December 1999, the Securities and
Exchange Commission staff released Staff Accounting Bulletin No. 101, "Revenue
Recognition." SAB 101 provides interpretive guidance on the recognition,
presentation and disclosure of revenue in financial statements. The accounting
impact of SAB 101 is required to be determined no later than the Company's
fourth fiscal quarter of 2000. If the Company determines that its revenue
recognition policies must change to be in compliance with SAB 101, the
implementation of SAB 101 will require the Company to restate its previously
reported quarterly results for 2000 to reflect a cumulative effect of change in
accounting principle as if SAB 101 had been implemented on January 1, 2000. The
Company is currently reviewing SAB 101 to determine what impact, if any, the
adoption of SAB 101 will have on its financial position and results of
operations.
FIN No. 44. In March 2000, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 44, "Accounting for Certain Transactions
Involving Stock Compensation" ("FIN No. 44"). The Interpretation clarifies the
application of APB No. 25 for certain issues related to equity based instruments
issued to employees. FIN No. 44 is effective on July 1, 2000, except for certain
transactions, and will be applied on a prospective basis. The implementation of
FIN No. 44 did not have a significant impact on the Company's financial
statements.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of financial condition and results of operations should
be read in conjunction with the company's Consolidated Financial Statements and
Notes thereto appearing in the company's Annual Report on Form 10-K for the year
ended December 31, 1999 (the "Form 10-K"). This Form 10-Q, including the
information incorporated by reference herein, contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
For this purpose, statements contained herein that are not statements of
historical fact may be considered forward-looking statements. Without limiting
the foregoing, the words "believes", "expects", "anticipates", "plans",
"estimates", and similar words and expressions are intended to identify such
statements. These forward-looking statements include statements about:
. resolutions of deficiencies noted by the FDA;
. the adequacy of financial resources;
. future revenues, expenses, and other operating results;
. sales under the company's strategic alliances, marketing arrangements, and
other agreements pertaining to Mammotest, digital radiography, and other
products;
. the status of SenoScan and other new products in development;
. the size and growth of the company's markets;
. the success of efforts to reduce manufacturing and other costs;
. manufacturing capacity and capabilities;
. submissions to the FDA and receipt of FDA approvals and clearances;
. the availability of raw materials and components; and
. other matters.
These forward-looking statements involve risks and uncertainties. The actual
results that the company achieves may differ materially from those discussed in
such forward-looking statements due to the risks and uncertainties set forth:
(1) in the Business section of the Form 10-K under the headings: "Risks
Associated with OEM Agreements," "Sales and Marketing," "International
Operations," "Strategic Alliances," "Risks of Technological Change and New
Products," "Risks of New Product Development and Market Acceptance,"
"Competition," "Government Regulation," "Government Reimbursement,"
`Manufacturing and Operating Risks," "Product Liability, Market Withdrawal,
and Product Recalls," "Patents and Intellectual Property," "Risk of
Dependence on Key Personnel,"
(2) in the Market for Registrant's Common Equity and Related Stockholder
Matters under the headings "Risk of Price Volatility of Common Stock,"
`Risks of Fluctuations in Quarterly Results of Operations," "Risks of
Fluctuations in Quarterly Results of Operations," Risks Associated with
Shares Eligible for Future Sale," "Risks Associated with Control by
Management and Certain Stockholders," and "Certain Anti-Takeover Effects,"
(3) in the Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") section of the Form 10-K under the
"Overview," "Quantitative and Qualitative Disclosures About Market Risk,"
"FDA Regulations," and "Recent Developments" headings,
12
<PAGE>
(4) elsewhere in the Business, MD&A, and other sections of the Form 10-K,
(5) and in this Form 10-Q under the "Overview," section of MD&A and elsewhere.
Overview
Risk of Operating Losses
The Company designs, manufactures and markets specialty and general purpose
medical imaging systems for the diagnosis and treatment of disease. The
Company's newer products are directed towards medical specialties, such as
diagnosing and treating breast cancer, heart disease and vascular disease, in
which image-guided, minimally invasive therapies are replacing open surgical
procedures.
The Company has experienced annual losses from operations for four of the past
five fiscal years. Significant factors giving rise to these losses include:
costs associated with excessive manufacturing capacity; intense competition for
some of the Company's products; declining margins and demand for OEM products;
and a general slowdown in capital expenditures by hospitals. The Company has
taken significant steps to reduce costs and improve sales, including:
. entering into distribution partnerships in 1997 and 1998 with Ethicon
Endo-Surgery for the marketing and sale of Mammotest breast biopsy systems in
the United States and in Europe;
. entering into a strategic alliance with Analogic Corporation for the marketing
and sale of digital radiography products under Kodak's name and distribution
system;
. closure of the Company's Addison, Illinois manufacturing facility;
. a workforce reduction of approximately 20% in the third and fourth quarters of
1999; and
. other actions to reduce operating expenses and manufacturing costs.
As a result, the Company has reported net income for the three and six month
periods ended July 2, 2000. Sustained return to profitability will depend on
many factors, including:
. sufficient demand for the Company's products to offset the effects of
the reductions in OEM business;
. the adequacy of financial resources;
. the Company's ability to maintain or improve gross margins;
. the effectiveness of efforts to control manufacturing and other costs;
. effective negotiation and implementation of product distribution arrangements;
. effective implementation of domestic and international marketing and sales
strategies; and
. the development and introduction of new products that compete successfully.
The Company expects continued fluctuations in quarterly and annual revenues,
operating results and net income, depending on factors such as:
. delays in the development projects;
. the timing of large system product orders;
. new product introductions or marketing initiatives by the Company or its
competitors;
. the effects of managed healthcare on capital expenditures and reimbursement;
. increases in marketing, research, and other costs in relation to sales;
13
<PAGE>
. regulatory clearance of new products;
. the effect of general economic conditions of the Company's markets;
. seasonal patterns and other timing issues affecting customer purchasing
decisions; and
. the outcome of claims against the Company.
These factors can occur unexpectedly and, because many of the Company's costs
are fixed, the Company may not be able to sufficiently reduce its costs in
periods when revenues are less than anticipated and may, as a result, suffer
unexpected losses.
Over the past several years, the Company has attempted to expand its
international sales and marketing efforts. The Company's exposure to foreign
currency and other international business risk may increase as its international
business grows. The Company attempts to minimize these risks by: (1) generally
requiring payments in U.S. dollars; (2) using letters of credit; and (3)
requiring advance deposits and through other means. There can be no assurance,
however, that international sales efforts will be successful or that associated
risks can be minimized.
In November 1999, Kodak announced that Analogic Corp., in conjunction with the
Company and Direct Radiography Corp., would build digital radiography products
for Kodak. In February 2000, Analogic provided a $5.4 million purchase order
for more than 50 systems. The Company delivered ten systems under this purchase
order during the first six months of 2000. While the Company, Kodak and
Analogic continue to work together to deliver these systems, there is no formal
agreement between the companies at this time. The Company is currently
negotiating an agreement with the companies and believes that such an agreement
will be reached in the near future.
The Company is also a party to litigation from time to time, as both plaintiff
and defendant. As plaintiff, the Company is pursuing a substantial patent
infringement case and certain other matters. As defendant, the Company is
involved in several litigation matters with OEM and other customers, among
others, and accrued $866,000 in the first quarter of 1999 in relation to several
of these matters. As of July 2, 2000, the Company has made payments of $337,000
relating to settlement of these lawsuits.
FDA Regulation
The Company is subject to periodic inspections by the Food and Drug
Administration, whose primary purpose is to audit the Company's compliance with
Quality System Regulations, which include testing, quality control and
documentation procedures. In March 1995, the Company's Denver facility received
a Warning Letter from the FDA concerning documentation and other deficiencies.
The Company rectified these deficiencies and resolved the matter with the FDA in
June 1995. In December 1996, following an inspection of the Denver facility, the
FDA issued Inspectional Observations Form 483 and a subsequent Warning Letter
regarding manufacturing practices. As required, the Company responded as to
planned corrective actions and obtained a favorable third-party certification of
manufacturing and quality systems. In October 1998, following a subsequent
inspection, the FDA issued a Form 483 regarding possible deficiencies in
manufacturing, quality, and documentation practices. The Company submitted its
response to the Form 483 and is instituting corrective actions. The Company
continues to implement corrective actions and anticipates that an inspection of
the Denver facility by the FDA will take place in the near future. The recent
issuance of another Form 483 increases the possibility that one or more of the
sanctions described below could be imposed.
14
<PAGE>
Failure to satisfy FDA requirements can result in: (1) the Company's inability
to receive awards of federal government contracts; (2) an inability to receive
new marketing or export clearances; or (3) FDA enforcement actions including,
among other things, product seizure, injunction, and/or criminal or civil
proceedings which could be initiated without further notice. Although the
Company believes it has instituted policies and procedures allowing it to
operate within FDA requirements, however, there can be no assurance that
deficiencies can be corrected or that the Company can satisfy future FDA
compliance concerns. Sanctions resulting from FDA compliance reviews or related
delays in product clearances could have a material adverse effect on the
Company.
Results of Operations, Excluding Restructuring Charge and Other One-Time Items
The Company's results of operations on a normalized basis for the three and six
months ended July 2, 2000 and July 4, 1999, respectively, are as follows (in
thousands):
<TABLE>
<CAPTION>
Increase (Decrease)
--------------------------------------------------
Gross Operating Net Income
Revenues Profit Expenses (Loss)
-------- -------- --------- ----------
<S> <C> <C> <C> <C>
Three Months Ended July 2, 2000:
Reported results of operations $ 11,946 $ 5,953 $ 5,397 $ 465
======== ======== ======== ========
Three Months Ended July 4, 1999:
Reported results of operations $ 16,695 $ 5,947 $ 7,745 $ (1,961)
Restructuring provision (1) -- -- (750) 750
-------- -------- -------- --------
Normalized results of operations $ 16,695 $ 5,947 $ 6,995 $ (1,211)
======== ======== ======== ========
Six Months Ended July 2, 2000:
Reported results of operations $ 25,689 $ 12,143 $ 11,030 $ 815
======== ======== ======== ========
Six Months Ended July 4, 1999:
Reported results of operations $ 37,060 $ 16,811 $ 14,858 $ 1,389
Restructuring provision (1) -- -- (750) 750
Sale of manufacturing license (2) (6,200) (5,800) -- (5,800)
Accruals for contractual issues (3) -- -- (886) 886
-------- -------- -------- --------
Normalized results of operations $ 30,860 $ 11,011 $ 13,222 $ (2,775)
======== ======== ======== ========
</TABLE>
(1) During the second quarter of 1999, the Company decided to discontinue a
product line previously produced in its Addison, Illinois manufacturing
facility and recorded an additional facility closing charge of $750,000,
primarily for related product acceptance issues. See Note 6 to these
unaudited consolidated financial statements.
(2) During the first quarter of 1999, the company sold to G. E. Medical Systems
a non-exclusive right to manufacture the Tilt-C system, in exchange for
826,666 shares of Series D Convertible Preferred Stock previously owned by
G. E. Medical Systems. See Note 5 to Notes to Consolidated Financial
Statements.
(3) Based upon legal activities occurring during the first quarter of 1999,
management concluded that it was probable that the Company will incur
settlement costs to resolve contractual issues with respect to two product
installations.
The remainder of Management's Discussion and Analysis of Results of Operations
will be based on results of operations for the six months ended July 2, 2000 and
normalized results of operations for the six months ended July 4, 1999.
Results of Operations
Overview. Second quarter 2000 revenues and net income were $11,946,000 and
$465,000, respectively, as compared to revenues of $16,695,000 and a normalized
net loss of $1,211,000 for the second quarter of 1999. The revenue decrease
reflected primarily the planned reductions
15
<PAGE>
in OEM product shipments. Gross margin as a percentage of revenues increased
from 35.6% in the second quarter of 1999 to 49.8% in the second quarter of 2000,
primarily due to three factors: (1) efficiencies derived from our corporate
right-sizing and reorganization, as well as the implementation of a flattened
manufacturing process, (2) a continued shift towards higher margin direct sales
versus dealer and OEM sales and (3) an increase in production of higher margin
mammography and digital radiology products. Operating expenses were
significantly lower in the second quarter of 2000, as compared to the second
quarter of 1999 due to lower legal, marketing and headcount expenses. As a
result of these factors, the net income increased to $465,000 in the second
quarter of 2000 as compared to a normalized net loss of $1,211,000 in the second
quarter of 1999.
The following table sets forth the percentage of revenues represented by certain
data included in the Company's statements of operations for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------------- ------------------------------------
July 2, July 4, July 2, July 4,
2000 1999* 2000 1999*
------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Gross margin 49.8 35.6 47.3 35.7
Research and development 8.2 10.0 7.9 10.0
Selling, marketing and service 27.8 23.8 26.1 24.1
General and administrative 9.3 8.1 9.0 8.7
Income (Loss) from Operations 4.7 (6.3) 4.3 (7.2)
Benefit for income taxes ----- ----- ----- -----
Net income (loss) 3.9 (7.3) 3.2 (9.0)
</TABLE>
* Based on normalized results of operations. See "Results of Operations,
Excluding Restructuring Charge and Other One-Time Items" on Page 16 of this
Form 10-Q.
Revenues. Second quarter 2000 revenues were $11,946,000, a 28% decrease from
second quarter 1999 revenues of $16,695,000. The decrease reflects planned
reductions in OEM product shipments. OEM shipments decreased from $3,413,000 in
the second quarter of fiscal 1999 to $248,000 in the second quarter of fiscal
2000. There was also a decrease in the domestic, and export sales channels,
partly offset by an increase in the international direct sales channels.
For the six months ended July 2, 2000, revenues were $25,689,000, or about 17%
lower than normalized revenues of $30,860,000 for the six months ended July 4,
1999. This decrease reflected decreases in OEM and electrophysiology, partly
offset by an increase in mammography, service, and general radiography revenues.
The decrease in product sales were in the international dealer and OEM channels
of distribution, partly offset by increase in international direct, U. S.
direct, dealer and service channels.
Gross Profit. For the second quarter of 2000, gross profit expressed as a
percentage of revenues was 49.8%, as compared to 35.6% for the second quarter of
1999. For the six months ended July 2, 2000, gross profit as a percentage of
revenues was 47.3%, as compared to normalized gross profit of 35.7% for the six
months ended July 4, 1999. The increase in gross profit was primarily due to
efficiencies derived from our corporate right-sizing and reorganization, the
implementation of a flattened manufacturing process, a continued shift towards
higher margin direct sales versus dealer and OEM sales and an increase in
production of higher margin mammography and digital radiology products.
16
<PAGE>
Research and Development Expenses. Research and development expenses for the
second quarters of 2000 and 1999 were $976,000 and $1,663,000, respectively, or
8.2% and 10.0% of revenues, respectively. For the six months ended July 2, 2000
and July 4, 1999, research and development expenses were $2,017,000 and
$3,078,000, respectively, or 7.9% and 10.0%, respectively, of revenues. The
decrease in the three and six month periods ended July 2, 2000 and July 4, 1999
reflect reductions in staffing and related engineering expenses. Although the
Company continues to aggressively pursue new product development, it has
significantly reduced its customization of existing products and has delivered a
more standard product to its customers. This has driven the reduction in
engineering staffing and costs.
Selling, Marketing and Service Expenses. Selling, marketing and service expenses
for the second quarters of 2000 and 1999 were $3,316,000 and $3,976,000,
respectively, or 27.8% and 23.8%, respectively, of revenues. For the six months
ended July 2, 2000 and July 4, 1999, selling, marketing and service expenses
were $6,699,000 and $7,451,000, respectively, or 26.1% and 24.1%, respectively,
of revenues. As compared to the same three and six month period in 1999,
selling, marketing and service expenses decreased as a result of lower
headcount, reduced commissions and reduced travel expenses.
General and Administrative Expenses. General and administrative expenses for
the second quarters of 2000 and 1999 were $1,105,000 and $1,356,000,
respectively, or 9.2% and 8.1%, respectively, of revenue. For the six months
ended July 2, 2000 and July 4, 1999, general and administrative expenses were
$2,314,000, and $2,693,000, respectively, or 9.0% and 8.7% of revenues,
respectively. For both the three and six month periods, the reduction was
primarily due to high legal costs in the first quarter of 1999 related to the
Company's patent infringement lawsuit against Trex Medical Corporation as well
as the reduction in headcount of certain general and administrative staff.
Interest Expense / Interest Income. Interest expense for the three months ended
July 2, 2000 and July 4, 1999 was $177,000 and $129,000, respectively and, for
the six month periods then ended was $345,000 and $409,000, respectively.
Interest income for the second quarters of 2000 and 1999 was $10,000 and
$12,000, respectively and, for the six months ended July 2, 2000 and July 4,
1999 was $30,000 and $69,000, respectively. The increase in interest expense,
in the three and six months ended July 2, 2000 as compared to the three and six
months ended July 4, 1999 is due primarily to higher levels of borrowings under
the Company's working capital line of credit during the second quarter ending
July 2, 2000.
Net Income/Loss. The Company's net income for the second quarter of 2000 was
$465,000 as compared to a normalized net loss for the second quarter of 1999 of
$1,211,000. For the six months ended July 2, 2000, the Company's net income was
$815,000 as compared to a $2,775,000 normalized net loss for the six months
ended July 4, 1999. For the three and six months ended July 2, 2000, net income
increased relative to the three and six months ended July 4, 1999 primarily as
the result of an increase in production of higher margin mammography and digital
radiology products and efficiencies and cost savings derived from corporate
right-sizing and reorganization.
17
<PAGE>
Income Taxes
The Company's estimated effective tax rate for the year ended December 31, 2000
is currently 0%. Accordingly, no income tax benefit or provision has been
recorded for the three or six month periods ended July 2, 2000. This rate was
determined based upon the anticipated 2000 results of operations includable in
the domestic consolidated tax return and upon projected net temporary
differences between operating results reflected in the financial statements and
those required to be reflected in the 2000 domestic consolidated tax return. As
of December 31, 1999, the Company had valuation allowances of approximately
$10.3 million, reducing net deferred tax assets to $0. The realizability of net
deferred tax assets is dependent on the Company's ability to generate future
taxable income, and the Company's estimate of realizable deferred tax assets may
change in the near future.
No income tax provisions have been recognized for foreign tax jurisdictions and
no income tax benefits have been recognized for subsidiary losses outside the
domestic consolidated return because they are not expected to reverse in the
foreseeable future.
Liquidity and Capital Resources
Net cash provided by operating activities for the six months ended July 2, 2000
was $2.6 million compared to $1.5 million provided by operations in the
comparable six-month period of 1999. The change in cash provided by operations
was due primarily to net income of $815,000 increased by non-cash expenses of
approximately $1.9 million offset by changes in working capital of approximately
$752,000.
Net cash used in investing activities was $121,000 for the six months ended July
2, 2000, down $159,000 from the comparable six-month period in 1999. The Company
anticipates that the level of spending for capital expenditures in the second
quarter of 2000 will continue, although there currently are no material
commitments for capital expenditures.
Net cash used in financing activities for the six months ended July 2, 2000 was
$2.1 million, principally resulting from the reduction in borrowings under the
Company's bank revolving line of credit, made possible by the decrease in
accounts receivable and improved profitability discussed above.
As of July 2, 2000, the Company had $1.1 million in cash and cash equivalents,
working capital of $16.7 million, and a $8.0 million bank revolving line of
credit facility, which is subject to restrictions as to availability based on
eligible receivables and inventory, as defined. As of July 2, 2000, $3.9
million was available under this line. The agreement is secured by the
Company's tangible assets and is for a term of three years. The borrowings
under the agreement are subject to interest at the bank's prime rate of
interest, 9.5%, at July 2, 2000.
The Company has experienced significant losses in four of the last five years
ended December 31, 1999 and has also had negative cash flows from operations in
three of those years. The Company has taken actions to improve its liquidity
and reduce the level of operating losses. Most notably, the Company has entered
into a line of credit with a bank for $8.0 million and has significantly reduced
the workforce in the third and fourth quarters of 1999. These efforts have
resulted in a return to profitability and management believes the benefits of
the workforce reductions will continue to be seen in the remainder of fiscal
2000.
18
<PAGE>
The company believes its current cash and cash equivalent balances, its
available borrowings under the line of credit, and cash generated from
operations will be sufficient to satisfy its liquidity needs for the remainder
of 2000. The company may need to obtain additional debt or equity financing to
fund its long-term growth needs.
Item 3. Quantitative and Qualitative Disclosures About Market Risk:
--------------------------------------------------------------------
Market risk represents the risk of loss that may impact the financial position,
results of operations or cash flows of the Company due to adverse changes in
financial and commodity market prices and rates. The Company is exposed to
market risk in the areas of changes in United States interest rates and changes
in foreign currency exchange rates as measured against the United States dollar.
These exposures are directly related to its normal operating and funding
activities. Historically and as of July 2, 2000, the Company has not used
derivative instruments or engaged in hedging activities.
Interest Rate Risk
The interest payable on the Company's revolving line of credit is variable based
on the prime rate and, is therefore, affected by changes in market interest
rates. At July 2, 2000, approximately $4.1 million was outstanding with an
interest rate of 9.5% (prime). The Company attempts to manage its interest rate
risk by aggressively reducing its borrowings with cash generated from
operations.
Foreign Currency Risk
The Company has wholly owned subsidiaries in Australia, Germany and France.
Local assets and liabilities, principally intercompany debt to the parent
company, are recorded in local currencies, thereby creating exposures to changes
in exchange rates. These changes may positively or negatively affect the
Company's operating results. As disclosed in Note 8 to Notes to Consolidated
Financial Statements, revenues in foreign currency through all foreign
subsidiaries constituted less than 3% of the Company's total revenues for the
six month periods ended July 2, 2000 and July 4, 1999. The Company therefore
does not believe that foreseeable near-term changes in exchange rates will have
in a material effect on future earnings, fair values or cash flows of the
Company and has chosen not to enter into foreign currency hedging instruments.
There can be no assurance that such an approach will prove to have been
successful, especially in the event of a significant and sudden decline in the
value of any of the applicable local currencies.
19
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
---------------------------
Not applicable.
Item 2. Changes in Securities and Use of Proceeds:
---------------------------------------------------
Not applicable.
Item 3. Defaults Upon Senior Securities:
-----------------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders:
-------------------------------------------------------------
Not applicable.
Item 5. Other Information:
---------------------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K:
-----------------------------------------
(a) Documents filed as part of this report:
1. Financial Statements.
See pages 3 through 5 of this Form 10-Q.
2. Financial Statement Schedules.
None
3. Exhibits.
The following are filed as part of this report:
<TABLE>
<CAPTION>
Exhibit -----------------------------------------------------------------------------------------------------
Number Description of Exhibit
-------- -----------------------------------------------------------------------------------------------------
<S> <C>
3.1 Certificate of Incorporation of the Company(1)
3.2 Bylaws of the Company(1)
4.1 Amended and Restated Rights Agreement, dated as of November 3, 1994, between the Company and
American Securities Transfer, Inc. which includes the Certificate of Designation for the Series C
Junior Participating Preferred Stock as Exhibit A and the form of Right Certificate as Exhibit B(4)
4.2 Certificate of Designation for the Series D Convertible Preferred Stock(4)
10.1 Agreement, dated October 5, 1990, between the Company and Dornier Medizintechnik GmbH(1)
</TABLE>
20
<PAGE>
10.2 Purchase Agreement, dated August 29, 1994, between the Company and
General Electric Company on behalf of GE Medical Systems(4)
10.3 Nonemployee Director Stock Option Plan, as amended(5)
10.4 Stock Option Plan(1)
10.5 Retention Bonus Plan(3)
10.6 Lease Agreement, dated July 31, 1992, between the Company and JN
Properties(2)
10.7 Stock Purchase Agreement, dated as of June 20, 1995, between the
Company and General Electric Company, acting through its GE Medical
Systems Division ("GEMS")(4)
10.8 Registration Rights Agreement, dated as of June 20, 1995, between
the Company and GEMS(4)
10.9 Manufacturing and License Agreement, dated as of June 20, 1995,
between the Company and GEMS(4)
10.10 Amendment, dated as of June 20, 1995, to Purchase Agreement, dated
as of August 29, 1994, between the Company and GEMS(4)
10.11 Agreement dated October 10, 1997, between the Company and Ethicon
Endo-Surgery, Inc. with Addendum dated January 28, 1998.(5)
27 Financial Data Schedule(6)
----------------
(1) Incorporated by reference to the Company's Registration Statement on
Form S-1, File No. 33-41537, as filed with the Securities and Exchange
Commission (the "Commission") on July 3, 1991.
(2) Incorporated by reference to the Company's Form 10-K for the year
ended December 31, 1992, as filed with the Commission.
(3) Incorporated by reference to the Company's Form 10-K for the year
ended December 31, 1994, as filed with the Commission on April 14,
1995.
(4) Incorporated by reference to the Company's Form 8-K, as filed with the
Commission on July 3, 1995.
(5) Incorporated by reference to the Company's Form 10-K for the year
ended December 31, 1997, as filed with the Commission on March 31,
1998.
(6) Filed herewith.
(b) Reports on Form 8-K
None
(c) Exhibits
See Item 6(a)(3) of this Form 10-Q.
(d) Financial Statement Schedules
None
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter
ended July 2, 2000 to be signed on its behalf by the undersigned thereunto duly
authorized.
FISCHER IMAGING CORPORATION
/s/ LOUIS E. RIVELLI
--------------------
Louis E. Rivelli
President and Chief Operating Officer
August 16, 2000
22