<PAGE> 1
================================================================================
U.S. Securities And Exchange Commission
Washington, D.C. 20549
---------------
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 MARCH 31, 1999
OR
[ ] 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 0-15963
INVIVO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0115161
(State or other jurisdiction (IRS Employer Identification No.)
Of incorporation)
4900 HOPYARD RD. SUITE 210, PLEASANTON, CALIFORNIA 94588
(Address of principal executive offices) (Zip Code)
TELEPHONE: (925) 468-7600
(Registrant's telephone number)
---------------
Indicate by check whether the registrant (1) 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 [ ]
The number of shares outstanding of the issuer's Common Stock, par value $.01
per share, at March 31, 1999 was 4,193,318 shares.
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<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INVIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
1999 JUNE 30,
(UNAUDITED) 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 626,700 554,100
Short term investments 9,919,500 --
Trade receivables, net 11,023,100 10,277,000
Inventories 7,581,600 7,282,400
Deferred income taxes 1,138,000 1,138,000
Prepaid expenses and other current assets 569,500 451,400
----------- -----------
Total current assets 30,858,400 19,702,900
Property and equipment, net 4,913,600 4,441,100
Intangible assets 8,765,100 5,748,700
Other assets 278,000 302,600
----------- -----------
$44,815,100 30,195,300
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,716,000 3,139,100
Accrued expenses 2,965,800 2,679,700
Current portion of long-term debt and
bank borrowings 3,283,500 3,087,200
Income taxes payable 979,900 1,433,200
----------- -----------
Total current liabilities 9,945,200 10,339,200
Long-term debt, excluding current portion 1,573,900 1,479,800
Deferred income taxes 156,000 156,000
Other liabilities 52,000 52,000
----------- -----------
Total liabilities 11,727,100 12,027,000
----------- -----------
Stockholders' equity:
Common stock 41,934 32,694
Additional paid-in capital 25,149,366 12,878,606
Retained earnings 7,896,700 5,257,000
----------- -----------
Total stockholders' equity 33,088,000 18,168,300
----------- -----------
Commitments and contingencies
$44,815,100 30,195,300
=========== ===========
</TABLE>
See accompanying note to consolidated financial statements.
2
<PAGE> 3
INVIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------------- -----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 12,382,400 10,424,600 35,793,200 29,532,000
Cost of goods sold 6,170,500 5,533,200 17,835,800 15,481,300
------------ ------------ ------------ ------------
Gross profit 6,211,900 4,891,400 17,957,400 14,050,700
Operating expenses:
Selling, general
and administrative 3,891,500 3,322,800 11,598,700 9,578,800
Research and experimental 783,100 585,200 2,196,200 1,835,400
------------ ------------ ------------ ------------
Total operating expenses 4,674,600 3,908,000 13,794,900 11,414,200
------------ ------------ ------------ ------------
Income from operations 1,537,300 983,400 4,162,500 2,636,500
Other income (expense):
Interest expense (60,900) (96,200) (220,800) (291,400)
Other, net (18,400) (16,800) (19,800) 7,300
------------ ------------ ------------ ------------
Income before income taxes 1,458,000 870,400 3,921,900 2,352,400
Income tax expense 470,700 295,900 1,282,200 774,800
------------ ------------ ------------ ------------
Net income $ 987,300 574,500 2,639,700 1,577,600
============ ============ ============ ============
Basic net income per common share $ .29 .18 .79 .48
============ ============ ============ ============
Weighted average common
shares outstanding (basic) 3,459,933 3,269,143 3,335,689 3,263,478
============ ============ ============ ============
Diluted net income per common
Share $ .26 .17 .73 .46
============ ============ ============ ============
Weighted average common
shares outstanding (diluted) 3,788,909 3,428,914 3,628,373 3,405,470
============ ============ ============ ============
</TABLE>
See accompanying note to consolidated financial statements.
3
<PAGE> 4
INVIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,639,700 1,577,600
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
Depreciation and amortization 624,700 599,700
Loss on sale of property and equipment 46,100 --
Change in operating assets and liabilities:
Trade receivables (746,100) (2,618,500)
Inventories (299,200) 693,300
Prepaid expenses and other current assets (118,100) 68,100
Accrued expenses 286,100 76,600
Accounts payable (423,100) (139,700)
Income taxes payable (453,300) 504,600
Other liabilities -- 345,900
------------ ------------
Net cash provided by operating activities 1,556,800 1,107,600
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short term investments (9,919,500) --
Capital expenditures (808,300) (324,700)
Intangible assets -- (99,800)
Other assets 24,600 (465,300)
------------ ------------
Net cash used in investing activities (10,703,200) (889,800)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 12,280,000 76,900
Bank borrowings (repayments), net (2,982,800) (222,100)
Principal payments under acquisition notes
payable and long term debt (78,200) (68,300)
------------ ------------
Net cash (used in) provided by financing activities 9,219,000 (211,500)
------------ ------------
Net increase in cash and cash equivalents 72,600 6,300
Cash and cash equivalents at beginning of period 554,100 171,100
------------ ------------
Cash and cash equivalents at end of period $ 626,700 177,400
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 1,849,000 598,100
============ ============
Interest $ 220,800 272,200
============ ============
Non-cash investing and financing activities:
Acquisition of property and equipment through
capital lease $ 208,100 --
============= ============
Issuance of debt to purchase intangible asset $ 3,143,300 --
============= ============
</TABLE>
See accompanying note to consolidated financial statements.
4
<PAGE> 5
INVIVO CORPORATION
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The consolidated balance sheet as of March 31, 1999 and the related
consolidated statements of income for the three and nine month periods ended
March 31, 1999 and 1998, and the consolidated statements of cash flows for the
nine month periods ended March 31, 1999 and 1998 are unaudited. The consolidated
financial statements reflect, in the opinion of management, all adjustments
necessary to present fairly the financial position and results of operations as
of and for the periods indicated. Interim results are not necessarily indicative
of results for a full year.
The financial statements and note are presented as permitted by Form 10-Q,
and do not contain certain information included in the Company's annual
consolidated financial statements and notes.
2. SECONDARY STOCK OFFERING AND PAYDOWN OF DEBT
On March 15, 1999, the Company completed the sale of 900,000 additional
shares of common stock at a price of $14.75 per share. The Company netted
approximately $12,280,000 prior to the repayment of its outstanding bank
borrowings of approximately $2,500,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE AND NINE MONTH PERIODS ENDED MARCH 31, 1999 AND 1998
Sales
Sales for the third quarter ended March 31, 1999 were $12,382,400, an
increase of 18.8% over sales of $10,424,600 for the comparable period of fiscal
1998. Sales for the nine months ended March 31, 1999 increased 21.2% to
$35,793,200 compared with $29,532,000 for the comparable period last year. The
sales increase for the three and nine month periods was primarily due to sales
growth at the Company's patient safety monitoring business. Continued strong
demand for the Company's next generation MRI vital signs monitor was largely
responsible for the sales increase. Sales for the three and nine month periods
ended March 31, 1999 were also positively affected by increased sales at the
Company's gas detection and oxygen monitoring businesses.
Gross Profit
The gross profit margin increased for the three and nine month periods
ended March 31, 1999 to 50.2% from 46.9% and 47.6%, respectively, in the prior
three and nine month fiscal periods. The increase was largely attributable to
the sales growth of the MRI vital signs monitoring product line which has higher
margins than the "Millennia" vital signs monitor and other monitoring products.
Operating Expenses
Selling, general and administrative expenses for the three and nine month
periods ended March 31, 1999 increased 17.1% or $568,700 and 21.1% or $2,019,900
respectively, over the previous fiscal periods. Selling, general and
administrative expenses were 31.4% and 32.4% of sales for the three and nine
month periods ended March 31, 1999 compared with 31.9% and 32.4%, respectively,
for the comparable periods in fiscal 1998. The increase in these expenditures in
aggregate was largely due to higher sales commission expenses on the higher
sales volume at the Company's patient safety monitoring and gas detection
businesses. Increased administrative expenses in support of the higher sales
volume at the patient safety monitoring business also contributed to the
increase.
Research and experimental expenses were 6.3% and 6.1% of sales for the
three and nine month periods ended March 31, 1999 compared to 5.6% and 6.2% for
the comparable periods in fiscal 1998. A substantial amount of the aggregate
research and experimental expenses are on behalf of the patient safety
monitoring business as the Company continues to develop additions to its
"Millennia" line designed for specialized market areas and to enhance existing
models.
5
<PAGE> 6
Other Income and Expense
Interest expense decreased to $60,900 and $220,800 for the three and nine
months ended March 31, 1999 compared with $96,200 and $291,400 for the same
periods in fiscal 1998. This decrease was the result of the payoff of the
outstanding balances on the Company's revolving bank line of credit and term
loan with the proceeds from its secondary stock offering in March, 1999.
Provision for Income Taxes
The effective tax rate for the quarter ended March 31, 1999 was 32.3%
compared with 34.0% for the prior year period. This reduction in the effective
tax rate was principally due to an adjustment of prior year's taxes. The
effective tax rate for the first nine months of fiscal 1999 was 32.7% compared
with 32.9% for the same period in fiscal 1998. The effective rate differs from
the statutory rate due principally to the benefit of a foreign sales corporation
and utilization of research, experimental, and other credits.
LIQUIDITY AND CAPITAL RESOURCES
On March 15, 1999, the Company completed the sale of 900,000 additional
shares of common stock at a price of $14.75 per share. The Company netted
approximately $12,280,000 prior to the repayment of its outstanding bank
borrowings of approximately $2,500,000. Working capital at March 31, 1999
therefore increased to $20,913,200 from $9,363,700 at June 30, 1998. Net cash
provided by operating activities was $1,556,800 for the nine months ended March
31, 1999 compared with $1,107,600 provided by operations for the nine months
ended March 31, 1998. This increase was largely the result of the increase in
net income offset by changes in operating assets and liabilities, particularly
inventories, accounts receivable, accounts payable and income taxes payable.
Capital expenditures were $808,300 for the first nine months of fiscal 1999
compared to $324,700 for the prior year period. The increase was primarily the
result of costs associated with the Company's new information systems and sales
demonstration equipment at the Company's patient safety monitoring business.
In fiscal 1993, the Company purchased 80% of the outstanding common stock
of Invivo Research, Inc. In fiscal 1994, the Company entered into an agreement
to acquire the remaining 20% of the Invivo Research, Inc. shares. The contingent
purchase price for such shares is to be paid in one or more installments.
One-fifth of the price vested on January 1, 1996, 1997 and 1998 and two-fifths
vested on January 1, 1999. The former Invivo Research shareholders can make an
election each year beginning in 1996 to be paid any vested payment. The amount
of any payment is based on the after tax profits of Invivo Research for the
calendar year preceding the year that the payment is made, regardless of when
the payment vested, subject to a minimum share price if certain milestones are
achieved. The former Invivo Research shareholders must, generally, elect to
receive a payment in any calendar year by giving notice to the Company by March
of that year and the payment so elected is to be made on June 1 of that year.
The payments are to be made in cash, but if the shareholders require that more
than one-fifth of the payments be made in any year, the Company can elect to
make the excess amount of the payment in the form of its shares. The Company was
informed in March of 1996 that the former Invivo Research shareholders would
elect to be paid on their first installment. Based on the 1995 calendar year
results for Invivo Research, payment was made on June 1, 1996, for $987,900. In
March of 1998, the former Invivo Research shareholders elected to be paid on the
second vested installment which amounted to $465,342. The Company was informed
in March of 1999 that the former Invivo Research shareholders would elect to be
paid on their final three installments. Based on 1998 calendar results for
Invivo Research, the amount to be paid is $3,143,300 which is included in
current portion of long-term debt and bank borrowings at March 31, 1999. Payment
is to be made on June 1, 1999. The Company has the right to make one-third of
that payment in the form of its Common Stock. The Company has not yet determined
whether it will choose to do so.
In October 1998, the Company increased its bank line of credit to
$7,500,000 from $5,000,000 and added a $1,000,000 three-year term loan. The
Company also renewed the line of credit from December 1, 1998 to December 1,
1999. The Company's revolving bank line of credit is collateralized by the
Company's accounts receivable, inventory, and equipment. On March 15, 1999 the
Company repaid the outstandings on the line of credit and term loan.
The Company believes that its cash flow from operations and proceeds from
its recent stock offering will be adequate to meet its anticipated cash needs
for working capital and capital expenditures throughout fiscal 2000. The Company
will continue to explore opportunities for the possible acquisitions of
technologies or businesses, which may require the Company to seek additional
financing.
6
<PAGE> 7
NEWLY ADOPTED ACCOUNTING PRONOUNCEMENTS
REPORTING COMPREHENSIVE INCOME. In 1997, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 130,
Reporting Comprehensive Income, which establishes standards for reporting and
displaying comprehensive income and its components. The statement is effective
for fiscal years beginning after December 15, 1997 and has been adopted by
Invivo Corporation in fiscal year 1999. The Company does not currently have any
of the reconciling components defined; therefore, net income equals
comprehensive income.
RECENT ACCOUNTING PRONOUNCEMENTS
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. In
1997, the FASB issued SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information, which establishes standards for the way the public
business enterprises are to report selected information about operating segments
in interim financial reports issued to stockholders. The statement is effective
for years beginning after December 15, 1997, and will be adopted by Invivo
Corporation in its annual reporting for fiscal year 1999.
EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS. In
February 1998, the FASB issued SFAS No. 132, Employers' Disclosures about
Pensions and Other Postretirement Benefits. SFAS No. 132 revises SFAS 87
Employers' Accounting For Pensions. SFAS No. 132 is effective for fiscal years
beginning after December 15, 1997 and requires restatement of disclosures for
earlier periods provided for comparative purposes, if available. Because the
Company does not have any of these type of plans, it believes that SFAS No. 132
will have no impact on the consolidated financial statements.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. In June 1998,
the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. The statement is effective for fiscal
quarters of fiscal years beginning after June 15, 1999. As the Company does not
currently have any derivative instruments for hedging activities engaged, the
Company believes that SFAS No. 133 will have no impact on its consolidated
financial statements.
FORWARD-LOOKING STATEMENTS
This report and other written and oral statements that the Company makes
regarding its business may contain forward-looking statements. These statements
are identified by words such as "believe", "plan", "anticipate," "expect,"
"intend," "will," and "may" and would also include other characterizations of
future events or circumstances. The Company's actual operating results, or the
other future events or circumstances that are the subject of these
forward-looking statements, may differ materially from those discussed in or
implied by any such forward-looking statements. Factors that could cause actual
results, events or circumstances to differ from forward -looking statements made
in this report include those set forth under "Risk Factors" in the prospectus
included in the Company's Registration Statement on Form S-2 as declared
effective by the Securities and Exchange Commission on March 9, 1999. These
risks include risks related to dependence on a concentrated line of products,
increasing competition, possible fluctuations in operating results, dependence
on capital spending in, and government funding of, the medical industry,
technological change, ongoing legal proceedings, enforcement of intellectual
property right, international operations, product liability claims and product
recalls, year 2000 compliance matters and government regulation.
YEAR 2000
READINESS FOR YEAR 2000
Many existing computer systems and related software applications use only two
digits to identify a year in the date field, without considering the impact of
the upcoming change in the century. Such systems and applications could fail or
create incorrect or unintended results unless corrected so that they can process
data related to the year 2000 and thereafter. The Company relies on such
computer systems and applications in operating and monitoring most major aspects
of our business. The Company has evaluated the impact of the year 2000 issue on
its business and the related expenses incurred in attempting to remedy such
impact. The year 2000 issue could affect the Company in at least three different
ways:
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<PAGE> 8
o The software or the chips embedded within computers and other systems
used in the Company's offices and manufacturing facilities could be
affected.
o The software or the chips used in the products the Company sells could
be affected.
o Third parties who do business with the Company may not be prepared for
the year 2000.
The Company determined that regardless of the year 2000 issue, replacement of
existing office and other systems would provide more efficient operations and
added functionality. The Company contracted with outside information consulting
companies both to install new hardware and to replace its current
mission-critical software systems with off-the-shelf year 2000 compliant
software. All information system upgrades and conversions are completed and
fully operational. The Company is currently assessing its electronic office and
manufacturing equipment to determine if such equipment is dated-sensitive and
will require upgrades. If after this assessment the Company determines that some
of its equipment needs to be upgraded or replaced, it plans to finish the
required work by September 1999.
The Company believes that its currently marketed products are, or will be by
July 1, 1999, year 2000 compliant. Some of its products are not affected because
they do not contain a date field in the software. On some previously marketed
products which are not year 2000 compliant, the Company will make an upgrade
available to its customers to ensure year 2000 compliance.
The Company cannot predict the effect of year 2000 problems on its vendors,
customers and other entities with which it transacts business, or with whose
products its products interact. The Company has undertaken a survey of the year
2000 readiness of these third parties and plans to complete this assessment by
mid-calendar 1999.
COSTS
Through December 31, 1998, the Company incurred approximately $325,000 of costs
associated with our new information systems, of which approximately $300,000 has
been capitalized. Of this, approximately $225,000 has been spent on replacing
old hardware, and approximately $100,000 has been spent on replacing old
software. The Company currently estimates that the costs associated with the new
systems will ultimately total approximately $350,000 and should not have a
material adverse effect on its result of operations or financial position in
fiscal 1999. The Company expects that most of the remaining $25,000 will be
spent on replacing existing hardware. Because the Company would have replaced
these systems even without the year 2000 problem, its year 2000 expenditures
have not deferred other projects that the Company otherwise would have
undertaken.
RISKS
The Company expects to make the changes required to address the year 2000
problems for the software and embedded chips in its offices and manufacturing
facilities and in the products it makes. The Company presently believes that the
new software and hardware it purchased and with any required modifications to
its office and other systems which its assessment shows to be needed, the year
2000 issues is not reasonably likely to pose significant problems with respect
to the Company's operations or products. However, if unforeseen difficulties
arise, such modifications, conversions and replacements are not completed on
time, or if or customers' or suppliers' systems are not modified to become year
2000 compliant, the year 2000 issue may have a material adverse effect on the
Company's business, financial condition and results of operations.
The Company cannot presently assess the likelihood that it will experience
significant problems due to the unresolved year 2000 problems of third parties
with which it does business. Although the Company has not been put on notice
that any known third party problem will not be timely resolved, it has limited
information and no assurance can be made concerning the year 2000 readiness of
third parties. If third parties fail to achieve year 2000 compliance, the year
2000 issue may have a material adverse effect on the Company's business,
financial condition and results of operations. Similarly, there can be no
assurance that the Company can timely mitigate its risks related to a third
party's failure to resolve its year 2000 issues. If it fails to timely mitigate
such risks, that failure may have a material adverse effect on the Company's
business and results of operations.
8
<PAGE> 9
CONTINGENCY PLANS
The Company has not attempted to quantify its most likely year 2000 worst-case
scenario nor has it considered any contingency plans in case the installations
by its outside information consulting companies are not satisfactory for year
2000 compliance, as it believes that the installations will prove sufficient to
address the year 2000 issue.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure is that of currency risk.
During the nine months ended March 31, 1999, 23% of the Company's total sales
came from non-United States domiciled customers. The Company requires payment
in United States (U.S.) currency. If these customers currency devalues against
the U.S. dollar, the customers could potentially encounter difficulty in making
the U.S. dollar denominated payments.
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS:
The Company's medical device subsidiary, Invivo Research, Inc., is one of
two third-party defendants named in a lawsuit by Southern Nevada Surgical Center
and Surgex southern Nevada, Inc. in Nevada state court. The underlying action in
this matter stems from an incident involving a surgical patient undergoing a
procedure at the Southern Nevada Surgical Center. The patient suffered a serious
permanent brain injury. A lawsuit was filed on behalf of the patient against the
surgical center and the anesthesiologist who monitored the patient. A
substantial settlement was made to the patient by the defendants in that action.
Southern Nevada Surgical Center and Surgex are now seeking indemnity and
contribution of approximately $14 million from the manufacturer of the
anesthetic gas machine and Invivo Research, which manufactured the vital signs
monitor used in the procedure. Southern Nevada Surgical Center and Surgex are
alleging that both the anesthetic gas machine and the vital signs monitor were
defective. This matter is scheduled to commence trial on October 5, 1999. Any
judgment against us that exceeds the amount that our insurer is required to pay
could have a material adverse effect on our business and results of operations.
ITEM 2: CHANGES IN SECURITIES:
Not Applicable.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES:
Not Applicable.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS:
Not Applicable.
ITEM 5: OTHER INFORMATION:
Not Applicable.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a)
Exhibit No. Description of Exhibit Page
----------- ---------------------- ----
<S> <C> <C> <C>
Exhibit 11.1 Statement on Computation of Net Income Per Share p. 11
Exhibit 27.0 Financial Data Schedule p. 12
</TABLE>
(b) Reports on Form 8-K:
None.
9
<PAGE> 10
SIGNATURES
In accordance with requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
INVIVO CORPORATION
Date: May 14, 1999 By: /s/ JOHN F. GLENN
-------------------------------------
Vice President-Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
(a)
Exhibit No. Description of Exhibit Page
----------- ---------------------- ----
<S> <C> <C> <C>
Exhibit 11.1 Statement on Computation of Net Income Per Share p. 11
Exhibit 27.0 Financial Data Schedule p. 12
</TABLE>
11
<PAGE> 1
EXHIBIT 11.1
INVIVO CORPORATION AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------ ------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BASIC:
Weighted average common
Shares outstanding 3,459,933 3,269,143 3,335,689 3,263,478
========== ========== ========== ==========
Net Income $ 987,300 574,500 2,639,700 1,577,600
========== ========== ========== ==========
Basic net income per common share $ 0.29 0.18 0.79 0.48
========== ========== ========== ==========
DILUTED:
Weighted average common
Shares outstanding (basic) 3,459,933 3,269,143 3,335,689 3,263,478
Dilutive stock options 328,976 159,771 292,684 141,992
---------- ---------- ---------- ----------
Weighted average common
Shares outstanding (diluted) 3,788,909 3,428,914 3,628,373 3,405,470
========== ========== ========== ==========
Net Income $ 987,300 574,500 2,639,700 1,577,600
========== ========== ========== ==========
Diluted net income per common share $ 0.26 0.17 0.73 0.46
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 627
<SECURITIES> 9,920
<RECEIVABLES> 11,023
<ALLOWANCES> 491
<INVENTORY> 7,582
<CURRENT-ASSETS> 30,858
<PP&E> 9,338
<DEPRECIATION> 4,626
<TOTAL-ASSETS> 44,815
<CURRENT-LIABILITIES> 9,945
<BONDS> 0
42
0
<COMMON> 33,046
<OTHER-SE> 33,088
<TOTAL-LIABILITY-AND-EQUITY> 44,815
<SALES> 12,382
<TOTAL-REVENUES> 12,382
<CGS> 6,171
<TOTAL-COSTS> 6,171
<OTHER-EXPENSES> 4,675
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61
<INCOME-PRETAX> 1,458
<INCOME-TAX> 471
<INCOME-CONTINUING> 987
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 987
<EPS-PRIMARY> .29
<EPS-DILUTED> .26
</TABLE>
