SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 28, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _____ to _____
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Commission File Number 0-15160
ADVANCED TECHNOLOGY LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Washington 91-1353386
(State of incorporation) (IRS Employee Identification No.)
22100 Bothell-Everett Highway
Post Office Box 3003
Bothell, Washington 98041-3003
(Address of principal executive offices) (Zip Code)
(206) 487-7000
(Telephone number)
Common stock, $0.01 par value; 14,184,202 shares outstanding as
of July 26, 1996
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO
1
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ADVANCED TECHNOLOGY LABORATORIES, INC.
TABLE OF CONTENTS
PART I Financial Information Page No.
- ------ --------------------- -------
Item 1. Financial Statements
--------------------
Condensed Consolidated Balance Sheets -
June 28, 1996 (Unaudited) and December 31, 1995.......3
Condensed Consolidated Statements of Operations
(Unaudited) - Three Months and Six Months Ended
June 28, 1996 and June 30,1995........................4
Condensed Consolidated Statements of Cash Flows
(Unaudited) - Six Months Ended June 28, 1996 and
June 30, 1995.........................................5
Notes to Condensed Consolidated Financial Statements....6
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations...................9
-----------------------------------
PART II Other Information
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Item 1. Legal Proceedings.......................................14
-----------------
Item 2. Changes in Securities...................................14
---------------------
Item 3. Defaults Upon Senior Securities.........................14
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders.....14
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Item 5. Other Information.......................................15
-----------------
Item 6. Exhibits and Reports on Form 8-K........................15
--------------------------------
2
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PART I Financial Information
- ------ ---------------------
Item 1. Financial Statements
--------------------
ADVANCED TECHNOLOGY LABORATORIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
- -----------------------------------------------------------------------
(In thousands) 6/28/96 12/31/95
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(Unaudited)
ASSETS
CURRENT ASSETS
Cash and short-term investments $ 56,573 $ 35,654
Receivables, net 109,291 129,226
Inventories 95,244 94,877
Prepaid expenses 3,021 3,007
Deferred income taxes, net 16,062 9,048
--------------------------
Total current assets 280,191 271,812
PROPERTY, PLANT AND EQUIPMENT, NET 70,792 71,130
OTHER ASSETS, NET 11,175 10,506
---------------------------
$ 362,158 $ 353,448
===========================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 2,675 $ 2,911
Current portion of long-term debt 577 555
Accounts payable and accrued expenses 65,884 74,903
Accrual for litigation claim 34,632 5,000
Deferred revenue 18,687 21,038
Taxes on income 4,705 5,824
-------------------------
Total current liabilities 127,160 110,231
LONG-TERM DEBT 13,225 14,837
OTHER LONG-TERM LIABILITIES 19,960 17,457
SHAREHOLDERS' EQUITY 201,813 210,923
-------------------------
$ 362,158 $ 353,448
=========================
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COMMON SHARES OUTSTANDING 14,210 13,610
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See accompanying notes to condensed consolidated financial statements.
3
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ADVANCED TECHNOLOGY LABORATORIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
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(In thousands, except per share data) 6/28/96 6/30/95 6/28/96 6/30/95
- -----------------------------------------------------------------------------
REVENUES
Product sales $76,450 $70,870 $149,927 $145,070
Service 22,143 20,406 43,465 40,568
--------------------------------------
98,593 91,276 193,392 185,638
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COST OF SALES
Product sales 38,072 36,030 75,170 74,456
Service 12,768 12,679 25,372 25,204
--------------------------------------
50,840 48,709 100,542 99,660
--------------------------------------
GROSS PROFIT 47,753 42,567 92,850 85,978
OPERATING EXPENSES, NET
Selling, general and
administrative 30,904 29,249 60,386 57,856
Research and development 12,484 12,247 24,254 24,859
Provision for litigation claim 29,557 -- 29,557 --
Restructuring and relocation expenses -- 335 -- 2,835
Other (income) expense, net 303 (515) 657 (1,072)
--------------------------------------
73,248 41,316 114,854 84,478
--------------------------------------
INCOME (LOSS) FROM OPERATIONS (25,495) 1,251 (22,004) 1,500
Interest income 864 408 1,532 771
Interest expense (579) (506) (1,026) (1,044)
--------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (25,210) 1,153 (21,498) 1,227
Income Tax Expense (Benefit) (6,031) 317 (5,289) 665
--------------------------------------
NET INCOME (LOSS) $ (19,179) $ 836 $(16,209) $ 562
======================================
Net Income (loss) per share $(1.37) $0.06 $(1.17) $0.04
Weighted average common shares and
equivalents outstanding 14,026 13,474 13,885 13,464
- ----------------------------------------------------------------------
See accompanying notes to condensed consolidated financial statements.
4
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ADVANCED TECHNOLOGY LABORATORIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
- -----------------------------------------------------------------
(In thousands) 6/28/96 6/30/95
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OPERATING ACTIVITIES
Net income (loss) $ (16,209) $ 562
Adjustments to reconcile net income
(loss) to cash provided by
operating activities:
Depreciation and amortization 7,284 7,925
Deferred income tax benefit (7,014) (54)
Changes in:
Receivables, net 18,873 8,621
Inventories (1,243) (5,740)
Accounts payable and accrued
expenses (8,485) (10,051)
Accrual for litigation claim 29,632 --
Deferred revenue (947) 1,766
Taxes on income (1,130) 1,049
Other (36) (230)
-----------------------
Cash provided by operating
activities 20,725 3,848
INVESTING ACTIVITIES
Investment in property, plant
and equipment (6,098) (6,664)
Proceeds from maturing short-term
investments 4,988 --
----------------------
Cash used by investing
activities (1,110) (6,664)
FINANCING ACTIVITIES
Decrease in short-term borrowings (236) (619)
Repayment of long-term debt (377) (2,479)
Exercise of stock options 6,950 567
----------------------
Cash provided (used) by
financing activities 6,337 (2,531)
Effect of exchange rate changes (45) (449)
----------------------
Increase (decrease) in cash and cash
equivalents 25,907 (5,796)
Cash and cash equivalents, beginning of
period 30,666 22,901
----------------------
Cash and cash equivalents, end of period $ 56,573 $ 17,105
======================
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See accompanying notes to condensed consolidated financial statements.
5
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ADVANCED TECHNOLOGY LABORATORIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
1. Basis of Presentation
The accompanying condensed consolidated financial statements
include the accounts of Advanced Technology Laboratories, Inc.
(ATL), which includes its subsidiaries and is referred to as the
"Company." ATL develops, manufactures, markets and services
diagnostic medical ultrasound systems worldwide. The Company
sells its products to hospitals, clinics and physicians for use
in radiology, cardiology, women's health care, vascular,
musculoskeletal and intraoperative applications.
The accompanying condensed consolidated financial statements and
related notes have been prepared pursuant to the Securities and
Exchange Commission rules and regulations for Form 10-Q.
Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. The
accompanying condensed consolidated financial statements and
related notes should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's
1995 Form 10-K.
The information furnished reflects, in the opinion of the
management, all adjustments necessary for a fair presentation of
the results for the interim periods presented. Interim results
are not necessarily indicative of results for a full year.
2. Cash and Short-Term Investments
The Company considers short-term investments with maturity dates
of three months or less at the date of purchase to be cash
equivalents for purposes of the statement of cash flows.
6/28/96 12/31/95
--------- ----------
Cash and cash equivalents $56,573 $30,666
Short-term investment -- 4,988
--------- ----------
$56,573 $35,654
========= ==========
3. Inventories
6/28/96 12/31/95
--------- ----------
Materials and work in process $31,010 $33,198
Finished products 23,294 22,007
Demonstrator equipment 20,162 19,825
Customer service 20,778 19,847
--------- ----------
$95,244 $94,877
========= ==========
6
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ADVANCED TECHNOLOGY LABORATORIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
4. Long-term debt
On February 1, 1996, the remaining 11% subordinated convertible
debentures totaling $1,213 were converted by the Company into
71,577 shares of the Company's common stock in accordance with
the conversion ratio stated in the debenture agreements.
5. Accrual for Litigation Claim
The Company accrued a provision for a patent litigation claim of
$29,557 in the second quarter of 1996 in addition to the $5,000
previously accrued in 1994. The claim was filed by SRI
International (SRI) on July 15, 1991 in the U.S. District Court
for the Northern District of California and concerns a patent on
an electrical circuit allegedly used in three of ATL's
discontinued products. The patent expired in 1994 and the
circuit in dispute has never been used in any of ATL's current
product lines. The court granted a motion by SRI requesting
partial summary judgment on liability in November 1992 and the
U.S. Court of Appeals for the Federal Circuit affirmed the
summary judgment in December 1994. In May 1996, the U.S.
District Court for the Northern District of California awarded
damages to SRI of $27,948 plus interest and legal fees. The
Company has posted a supersedeas bond and appealed the amount of
damages awarded. The bond is secured by an $18,450 letter of
credit which is secured by an equal amount of cash and short-term
investments. The Company will continue to accrue interest on the
full award during the appeal process. Details of the claim were
reported in the Company's annual reports and Form 10-Q and 10-K
filings dating from August 8, 1991.
6. Restructuring and Relocation Expenses
During 1995, the Company implemented a new corporate structure
which consolidated the Company's operations located in Ambler,
Pennsylvania with the Company's headquarters operations in
Bothell, Washington. The consolidation has been implemented as
planned and has resulted in the relocation of Ambler
manufacturing, administrative and research and development (R&D)
functions to Bothell and a net reduction of approximately 100
full-time positions. The Company incurred restructuring expenses
for severance, outplacement and employee retention incentives of
$2,500 in the first quarter of 1995 and relocation expenses of
$335 in the second quarter of 1995.
7
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ADVANCED TECHNOLOGY LABORATORIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
7. Per Share Data
Per share data is based on the weighted average number of common
shares and dilutive common share equivalents outstanding during
each period as presented in the condensed consolidated Statements
of Operations. Dilutive common share equivalents are calculated
under the treasury stock method and consist of unexercised
employee stock options. Primary and fully diluted earnings per
share are equivalent for all periods presented.
8. Reclassifications
Certain reclassifications of prior period balances have been made
to conform to the 1996 presentation.
8
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Item 2. Management's Discussion and Analysis of Financial
-----------------------------------------------------
Condition and Results of Operations
-----------------------------------
RESULTS OF OPERATIONS
----------------------
Three months ended Six months ended
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(In millions except
per share data) 6/28/96 6/30/95 % Change 6/28/96 6/30/95 % Change
- -----------------------------------------------------------------------------
Revenues $98.6 $91.3 8.0% $193.4 $185.6 4.2%
Gross Profit $47.8 $42.6 12.2% $92.9 $86.0 8.0%
Operating Expenses;
excluding non-
recurring items $43.7 $41.0 6.6% $85.3 $83.0 2.8%
Provision for
litigation claim $29.6 -- $29.6 --
Restructuring and
relocation expenses -- $0.3 -- $2.8
Benefit related to
state tax audit -- -- -- $(1.3)
Net Income (Loss) $(19.2) $0.8 $(16.2) $0.6
Net Income (Loss) per
Share $(1.37) $0.06 $(1.17) $0.04
- ----------------------------------------------------------------------------
Net Income, excluding
non-recurring items $3.5 $1.2 $6.4 $2.1
Net Income per Share,
excluding non-
recurring items $0.23 $0.09 $0.43 $0.16
- -----------------------------------------------------------------------------
The Company reported a net loss of $19.2 million or $1.37 per
share in the second quarter of 1996 compared with net income of
$0.8 million or $0.06 per share in the second quarter of 1995.
Excluding non-recurring items, net income would have been $3.5
million or $0.23 per share for the second quarter of 1996 and net
income of $1.2 million or $0.09 per share for the second quarter
of 1995. For the first six months, the Company reported a net
loss of $16.2 million or $1.17 per share in 1996 compared with
net income of $0.6 million or $0.04 per share in 1995. Excluding
non-recurring items, net income for the first six months would
have been $6.4 million or $0.43 per share for 1996 and $2.1
million or $0.16 per share for 1995.
REVENUES AND GROSS PROFIT
- -------------------------
The Company's worldwide revenues increased 8.0% to $98.6 million
in the second quarter of 1996 compared with $91.3 million in the
second quarter of 1995. Product sales increased by $5.6 million
or 7.9% and service revenues increased $1.7 million or 8.5% over
the same period in the prior year. The second quarter of 1995
included approximately $4.0 million of sales of the Ultramark(TM)
4 which was phased out of production at the end of 1995. Revenues
from the sale of the Ultramark 4 for the same period in 1996
were nominal. The increase in product revenues
9
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Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations (Continued)
-----------------------------------
primarily resulted from the continued worldwide success of the
Company's HDI(R) 3000 product family. Service revenues increased
in the second quarter of 1996 in both the United States and
international markets as a result of the increased installed
base. Total U.S. sales were comparable with the second quarter
of 1995 reflecting continued constrained U.S. market conditions.
International sales continued to increase for both product and
service. The increase in international sales is a result of the
success of the HDI 3000 product family and the first quarter of
1996 introduction of the Apogee(R) 800PLUS system. For the
first six months of 1996, total revenues increased 4.2% to $193.4
million compared with $185.6 million in the prior year. Revenues
from the sale of the Ultramark 4 were approximately $8.0 million
for the first six months of 1995; for the same period in 1996,
revenues from the sale of the Ultramark 4 were nominal. The
increase in revenues for the first six months of 1996 over the
prior year is primarily due to the shift in product mix to the
Company's newer products.
Gross profit was $47.8 million in the second quarter of 1996, an
increase of $5.2 million compared with the gross profit of $42.6
million in the same quarter of the prior year. Total gross margin
for the second quarter of 1996 increased to 48.4% compared with
46.6% in the prior year. The increase in gross margin is due to
the favorable shift in product mix to the Company's higher margin
product lines, the consolidation of the Company's manufacturing
operations, as well as progress on the Company's initiatives to
reduce product and service costs. Lower unit volumes due to the
phase out of the Company's older products partially offset the
improvement to gross profit mentioned above. For the first six
months of 1996, gross profit was $92.9 million compared to $86.0
million for the same period of 1995. Year-to-date gross margin
increased to 48.0% from 46.3% in 1995, reflecting the impact of
the same factors discussed above.
OPERATING EXPENSES, NET
- -----------------------
Operating expenses, excluding non-recurring items in both periods
discussed below, increased to $43.7 million in the second quarter
of 1996 from $41.0 million in the same period of 1995. Selling,
general and administrative expenses were $30.9 million, an
increase of 5.7% over the second quarter of 1995, primarily due
to the timing of new programs, including marketing expenses
related to the promotion of the High Definition(TM) Imaging (HDI)
system for differentiation of solid breast tumors. This clinical
application received premarket approval from the Food and Drug
Administration in April 1996. Research and development expenses
increased 1.9% to $12.5 million in the second quarter of 1996
compared with $12.2 million in the second quarter of 1995. For
the first six months of 1996, operating expenses, excluding non-
recurring items in both periods discussed below, increased to
$85.3 million or 44.1% of total revenues compared with operating
expenses of $83.0 million or 44.7% of total revenues in 1995.
Other (income) expense, net, for the first six months of 1995
includes a non-recurring credit of $1.0 million for a Washington
State Business and Occupation (B&O) tax refund which resulted
from a favorable tax audit. B&O tax is imposed on gross receipts
for products manufactured in the State of Washington and is
included in other operating expenses.
10
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Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations (Continued)
-----------------------------------
ACCRUAL FOR LITIGATION CLAIM
- ----------------------------
The Company accrued a non-recurring provision for a patent
litigation claim of $29.6 million in the second quarter of 1996
in addition to the $5.0 million previously accrued in 1994. The
claim was filed by SRI International (SRI) on July 15, 1991 in
the U.S. District Court for the Northern District of California
and concerns a patent on an electrical circuit allegedly used in
three of ATL's discontinued products. The patent expired in 1994
and the circuit in dispute has never been used in any of ATL's
current product lines. The court granted a motion by SRI
requesting partial summary judgment on liability in November 1992
and the U.S. Court of Appeals for the Federal Circuit affirmed
the summary judgment in December 1994. In May 1996, the U.S.
District Court for the Northern District of California awarded
damages to SRI of $27.9 million plus interest and legal fees.
The Company has posted a supersedeas bond and appealed the amount
of damages awarded. The Company will continue to accrue interest
on the full award during the appeal process. Details of the claim
were reported in the Company's annual reports and Form 10-Q and
10-K filings dating from August 8, 1991.
RESTRUCTURING AND RELOCATION EXPENSES
- -------------------------------------
During 1995, the Company implemented a new corporate structure
which consolidated the Company's operations located in Ambler,
Pennsylvania with the Company's headquarters operations in
Bothell, Washington. The consolidation has been implemented as
planned and resulted in the relocation of Ambler manufacturing,
administrative and R&D functions to Bothell and a net reduction
of approximately 100 full-time positions. The Company incurred
non-recurring restructuring expenses for severance, outplacement
and employee retention incentives of $2.5 million in the first
quarter of 1995 and relocation expenses of $0.3 million in the
second quarter of 1995. The Company incurred no corresponding
expenses in 1996.
INTEREST INCOME AND EXPENSE
- ---------------------------
The Company earned net interest income of $0.3 million during the
second quarter of 1996 compared with net interest expense of $0.1
million during the same period in 1995. The increase is
primarily due to higher cash balances available for investment,
partially offset by the post-judgment interest expense incurred
on the damages awarded for the patent litigation claim in May
1996, as discussed previously.
TAXES AND NET INCOME (LOSS)
- ---------------------------
For the second quarter of 1996, the Company reported an income
tax benefit of $6.0 million, which represents the net of a 20%
effective tax rate for U.S. federal, state and foreign income
taxes and a $6.9 million deferred income tax benefit related to
the previously discussed accrual for litigation claim. For the
second quarter of 1995, income tax expense of $0.3 million
included primarily foreign and state income taxes.
11
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Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations (Continued)
-----------------------------------
CAPITAL RESOURCES AND LIQUIDITY
-------------------------------
------------------------------------------------------
(In millions) 6/28/96 12/31/95
------------------------------------------------------
Cash and short-term investments $56.6 $35.7
Total Assets $362.2 $353.4
Long-term Debt $13.2 $14.8
Shareholders' Equity $201.8 $210.9
------------------------------------------------------
Cash and short-term investments totaled $56.6 million at June 28,
1996 compared with $35.7 million at December 31, 1995 and $52.2
million at the end of the first quarter of 1996. The increase in
cash and short-term investments resulted from net income,
excluding non-recurring items, in the first six months in 1996,
the Company's progress with asset management programs and a
receipt of $2.3 million from Hitachi Medical Corporation based on
the achievement of a product development milestone under an R&D
joint venture project in the first quarter of 1996. During the
first six months of 1996, the Company generated $20.7 million
from operating activities. At June 28, 1996, receivables, net,
decreased $18.9 million from December 31, 1995 which reflects the
seasonally high activity levels in the fourth quarter of 1995.
Normal additions to property, plant and equipment used $6.1
million of cash in investing activities. The exercise of
employee stock options, included on the Statement of Cash Flows
as a financing activity, generated $6.9 million for the Company
during the first six months of 1996.
On February 1, 1996, the Company converted the remaining $1.2
million of its 11% subordinated convertible debentures into
71,577 shares of the Company's common shares.
In May 1996, the Board of Directors authorized the repurchase of
up to 1,000,000 shares of the Company's common stock on the open
market, intended to service the Company's benefit plans.
The Company will utilize its cash and short-term investments to
pay any damages from the patent litigation claim after the appeal
process is completed. The Company will be filing its appeal
briefs during the third and fourth quarters of 1996. The Federal
circuit will schedule oral arguments on the appeal after the
briefs have been filed. In June 1996, the Company posted a
supersedeas bond secured by an $18.5 million letter of credit for
the patent litigation claim. The letter of credit is secured by
cash and short-term investments. As of the end of the second
quarter of 1996, the Company had $56.6 million in cash and short-
term investments. Shareholders' equity at the end of the same
period was $201.8 million, which incorporates the non-recurring
accrual for the patent litigation claim.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations (Continued)
-----------------------------------
In addition to its cash and short-term investment balances, the
Company has available domestic credit facilities of $25 million,
including a committed line of credit of $15 million. Barring any
unforeseen circumstances or events, management expects that cash,
available credit lines and funds from operations should be
sufficient to meet the Company's operating requirements for 1996.
FORWARD LOOKING INFORMATION
- ---------------------------
As an update to the forward looking information provided in the
Company's 1995 Annual Report to Shareholders and the first
quarter of 1996 Form 10-Q, the Company provides the following
information.
For the third quarter of 1996, the Company anticipates that
general operating results should not be significantly different
from results of the second quarter of 1996 with the exception of
interest expense. Interest expense will increase from the second
quarter by approximately $0.5 million as the result of the
accrual of interest on the patent litigation claim.
The above statements are forward looking statements that involve
a number of risks and uncertainties and should be read in
conjunction with the 1995 Annual Report which is incorporated by
reference in the Company's 1995 Form 10-K, the Company's news
releases of February 15, April 23, May 8, May 20 and July 23,
1996, the Company's Report on Form 8-K filed July 30, 1996 and
the Company's Quarterly Report on Form 10-Q for the Quarterly
Period Ended March 29, 1996. There are certain important factors
that could cause actual results to differ materially from those
anticipated by the Company, which include the following factors.
The U.S. ultrasound market remains sluggish and may cause revenue
growth to be less than expected. Several of the Company's
competitors have announced new ultrasound products in the past
six months, including two competitors who announced new
ultrasound products in April 1996. Buying plans and intentions
of customers may change or be deferred. These factors could
increase competition in the ultrasound market, which may
adversely impact the Company's sales order volume or timing or
selling prices or all of these factors. Unanticipated events,
such as delays in the Company's product development and cost
reduction programs, the unavailability of components critical to
the Company's products due to natural disasters, changes in
vendor relationships, a stronger U.S. dollar, changes in interest
rates, delays or disruptions resulting from delays in obtaining
regulatory approvals or from other regulatory actions, changes in
the Company's strategy resulting from competitive pressures,
reallocation of research and development or other priorities and
resources, or reallocation of resources for unanticipated
opportunities and events also may affect operating results.
13
<PAGE>
PART II Other Information
- ------- -----------------
Item 1. Legal Proceedings - The Company accrued a provision for
-----------------
a patent litigation claim of $29.6 million in the second
quarter of 1996 in addition to the $5.0 million
previously accrued in 1994. The claim was filed by SRI
International (SRI) on July 15, 1991 in the U.S.
District Court for the Northern District of California
and concerns a patent on an electrical circuit allegedly
used in three of ATL's discontinued products. The
patent expired in 1994 and the circuit in dispute has
never been used in any of ATL's current product lines.
The court granted a motion by SRI requesting partial
summary judgment on liability in November 1992 and the
U.S. Court of Appeals for the Federal Circuit affirmed
the summary judgment in December 1994. In May 1996, the
U.S. District Court for the Northern District of
California awarded damages to SRI of $27.9 million plus
interest and legal fees. The Company has posted a
supersedeas bond and appealed the amount of damages
awarded. The Company will continue to accrue interest on
the full award during the appeal process.
Item 2. Changes in Securities - None.
---------------------
Item 3. Defaults Upon Senior Securities - None.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders -
---------------------------------------------------
(a) The Annual General Meeting of Shareholders was held
on May 8, 1996.
(c) At the Annual General Meeting of Shareholders, four
matters were submitted to a vote of security holders.
Proxies were solicited pursuant to Regulation 14 of the
Securities and Exchange Act of 1934 and there was no
solicitation in opposition to management's nominees as
listed in the proxy statement. Each director nominated
and proposal submitted to a vote passed and the voting
outcome of each proposal is as follows:
(1) Election of Directors:
Kirby L. Cramer For: 12,864,637 Withheld: 103,548
Harvey Feigenbaum For: 12,859,824 Withheld: 108,361
Dennis C. Fill For: 12,663,419 Withheld: 304,766
Eugene A. Larson For: 12,668,483 Withheld: 299,702
John R. Miller For: 12,864,243 Withheld: 103,942
Phillip M. Nudelman For: 12,855,351 Withheld: 112,834
Harry Woolf For: 12,855,719 Withheld: 112,466
14
<PAGE>
PART II Other Information (continued)
- ------- -----------------
(2) The adoption of an amendment to the 1992
Option, Stock Appreciation Right, Restricted Stock,
Stock Grant and Performance Unit Plan to increase the
number of shares issuable under the plan by 550,000:
For: 9,248,890 Opposed:3,602,817 Abstained: 56,124 Broker Non-votes: 60,354
(3) The adoption of an amendment to the
Nonemployee Director Stock Option Plan to increase the
number of shares issuable under the plan by 55,000:
For: 10,467,363 Opposed: 2,377,691 Abstained: 62,777 Broker Non-votes: 60,354
(4) Ratification of Auditors - The Company
proposal to approve the appointment of KPMG Peat Marwick
LLP as independent auditors for the Company for 1996:
For: 12,922,388 Withheld: 14,374 Abstained: 31,423
Item 5. Other Information - None.
-----------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits - Financial Data Schedule
(b) Reports of Form 8-K
Reports on Form 8-K were filed on May 22, 1996 and July
30, 1996 related to an award of damages of $27.9 million
plus interest and legal fees to SRI International (SRI)
in a patent lawsuit by the U.S. District Court for the
Northern District of California and the filing of an
appeal of the amount of damages awarded to SRI.
15
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ADVANCED TECHNOLOGY LABORATORIES, INC.
(Registrant)
DATE: August 8, 1996 BY:/s/ Harvey N. Gillis
_______________________________
Harvey N. Gillis
Senior Vice President
Finance and Administration
and Chief Financial Officer
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 28, 1996 AND THE
CONDENSED CONSOLIDATED STATEMENT OF OPERATION FOR THE SIX MONTHS ENDED
JUNE 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> JUN-28-1996
<CASH> 56,573
<SECURITIES> 0
<RECEIVABLES> 109,291
<ALLOWANCES> 0
<INVENTORY> 95,244
<CURRENT-ASSETS> 280,191
<PP&E> 70,792
<DEPRECIATION> 0
<TOTAL-ASSETS> 362,158
<CURRENT-LIABILITIES> 127,160
<BONDS> 13,225
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 362,158
<SALES> 149,927
<TOTAL-REVENUES> 193,392
<CGS> 75,170
<TOTAL-COSTS> 100,542
<OTHER-EXPENSES> 114,854<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,026
<INCOME-PRETAX> (21,498)
<INCOME-TAX> (5,289)
<INCOME-CONTINUING> (16,209)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,209)
<EPS-PRIMARY> (1.17)
<EPS-DILUTED> (1.17)
<FN>
<F1>
Other Expenses included a $29,557 nonrecurring provision for a patent
litigation claim.
</FN>
</TABLE>
