<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 DECEMBER 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 December 31, 1999 was 4,362,999 shares.
================================================================================
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INVIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1999 JUNE 30,
(UNAUDITED) 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 338,600 $ 207,800
Short term investments 6,597,800 8,219,100
Trade receivables, net 14,636,900 12,173,800
Inventories 9,170,200 8,177,200
Deferred income taxes 1,289,000 1,289,000
Prepaid expenses and other current assets 743,700 577,800
----------- -----------
Total current assets 32,776,200 30,644,700
Property and equipment, net 5,801,200 5,026,200
Intangible assets 8,559,600 8,700,300
Other assets 281,700 269,800
----------- -----------
$47,418,700 $44,641,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,607,700 $ 2,914,800
Accrued expenses 2,559,400 3,574,300
Current portion of long-term debt and
bank borrowings 234,000 140,200
Income taxes payable 1,369,600 1,066,500
----------- -----------
Total current liabilities 7,770,700 7,695,800
Long-term debt, excluding current portion 1,449,500 1,526,700
Deferred income taxes 200,000 200,000
Other liabilities 52,000 52,000
----------- -----------
Total liabilities 9,472,200 9,474,500
----------- -----------
Stockholders' equity:
Common stock 43,600 42,800
Additional paid-in capital 26,255,500 26,076,600
Retained earnings 11,444,500 9,074,000
Accumulated other comprehensive Income (loss) 202,900 (27,800)
----------- -----------
Total stockholders' equity 37,946,500 35,166,500
----------- -----------
Commitments and contingencies $47,418,700 $44,641,000
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
INVIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
---------------------------- ---------------------------
1999 1998 1999 1998
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 13,027,700 $11,910,300 $25,891,500 $23,410,800
Cost of goods sold 6,851,200 5,929,400 13,256,600 11,665,300
------------ ----------- ----------- -----------
Gross profit 6,176,500 5,980,900 12,634,900 11,745,500
Operating expenses:
Selling, general
and administrative 3,763,700 3,862,000 7,775,100 7,707,200
Research and experimental 638,700 722,200 1,412,200 1,413,100
------------ ----------- ----------- -----------
Total operating expenses 4,402,400 4,584,200 9,187,300 9,120,300
------------ ----------- ----------- -----------
Income from operations 1,774,100 1,396,700 3,447,600 2,625,200
Other income (expense):
Interest income 95,900 -- 205,700 --
Interest expense (33,300) (77,300) (64,600) (159,900)
Other, net (1,200) (5,900) 1,700 (1,300)
------------ ----------- ----------- -----------
Income before income taxes 1,835,500 1,313,500 3,590,400 2,464,000
Income tax expense 624,200 420,300 1,220,900 811,500
------------ ----------- ----------- -----------
Net income $ 1,211,300 $ 893,200 $ 2,369,500 $ 1,652,500
============ =========== =========== ===========
Basic net income per common share $ .28 $ .27 $ .55 $ .50
============ =========== =========== ===========
Weighted average common
Shares outstanding (basic) 4,309,084 3,277,386 4,294,882 3,273,667
============ =========== =========== ===========
Diluted net income per common
Share $ .27 $ .25 $ .53 $ .47
============ =========== =========== ===========
Weighted average common
Shares outstanding (diluted) 4,500,029 3,586,518 4,511,343 3,551,454
============ =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
INVIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,369,500 1,652,500
Adjustments to reconcile net income to
cash (used in) provided by operating activities:
Depreciation and amortization 647,100 437,000
Loss on sale of property and equipment -- 9,200
Change in operating assets and liabilities:
Trade receivables (2,463,100) (306,800)
Inventories (993,000) (212,900)
Prepaid expenses and other current assets (165,900) (19,000)
Accrued expenses (1,014,900) 240,900
Accounts payable 692,900 (785,200)
Income taxes payable 303,100 (235,000)
----------- ----------
Net cash provided by (used in)operating activities (624,300) 780,700
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of short-term investments 1,852,000 --
Capital expenditures (1,281,300) (777,300)
Intangible assets -- (232,600)
Other assets (11,900) 16,400
----------- ----------
Net cash provided by (used in) investing activities 558,800 (993,500)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 179,700 108,200
Bank borrowings 41,500 209,000
Principal payments under long-term debt and other liabilities (24,900) (52,000)
----------- ----------
Net cash provided by financing activities 196,300 265,200
----------- ----------
Net increase in cash and cash equivalents 130,800 52,400
Cash and cash equivalents at beginning of period 207,800 554,100
----------- ----------
Cash and cash equivalents at end of period $ 338,600 606,500
=========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 1,035,700 1,033,300
=========== ==========
Interest $ 64,600 157,000
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
INVIVO CORPORATION
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The consolidated balance sheet as of December 31, 1999 and the related
consolidated statements of income for the three and six month periods ended
December 31, 1999 and 1998; and the consolidated statements of cash flows for
the six month periods ended December 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 notes 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. SEGMENT INFORMATION
The Company has adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 131, Disclosure About Segments of an Enterprise and Related
Information. SFAS 131 establishes standards for the reporting by public business
enterprises of information about operating segments, products and services,
geographic areas, and major customers. The method for determining what
information to report is based on the way that management organizes the
operating segments within the Company for making operating decisions and
assessing financial performance.
The Company's chief operating decision-maker is considered to be the Chief
Executive Officer (CEO). The CEO reviews financial information presented on a
consolidated basis accompanied by information by business segment. The Company
operates in two business segments: (i) patient safety monitoring, which designs,
manufactures, and markets monitoring systems that measure and display vital
signs of patients in medical settings; and (ii) safety and industrial
instrumentation, which is engaged in the design, manufacture, and marketing of
sensor-based instruments for safety and industrial process control applications.
These segments are managed separately because of different customers and
products which require different business strategies. The Company evaluates the
operating performance of its segments based on net sales and income from
operations.
Summarized financial information concerning the Company's business segments
is shown in the following table. The "Corporate" column includes general and
administrative and corporate-related expenses not allocated to reportable
segments (in thousands).
<TABLE>
<CAPTION>
SAFETY AND
PATIENT SAFETY INDUSTRIAL
MONITORING INSTRUMENTATION CORPORATE TOTAL
-------------- --------------- --------- ------
<S> <C> <C> <C> <C>
For the three months ended December 31, 1999
Net sales .................................... $ 8,097 4,931 -- 13,028
Income from operations ....................... 1,241 802 (269) 1,774
Depreciation and amortization ................ 173 75 13 261
For the three months ended December 31, 1998
Net sales .................................... $ 7,451 4,459 -- 11,910
Income from operations ....................... 1,019 666 (288) 1,397
Depreciation and amortization ................ 96 74 2 172
For the six months ended December 31, 1999
Net sales .................................... $16,051 9,840 -- 25,891
Income from operations ....................... 2,473 1,665 (690) 3,448
Depreciation and amortization ................ 336 148 22 506
Total assets ................................. 28,110 10,542 8,767 47,419
For the six months ended December 31, 1998
Net sales .................................... $14,562 8,849 -- 23,411
Income from operations ....................... 1,970 1,366 (711) 2,625
Depreciation and amortization ................ 211 136 5 352
Total assets ................................. 20,434 8,609 2,058 31,101
</TABLE>
3. DEBT AND BANK BORROWINGS
The Company's bank line of credit of $7,500,000 was renewed on December 1,
1999 to December 1, 2000. The Company's revolving bank line of credit is
collateralized by the Company's accounts receivable, inventory, and equipment.
At December 31, 1999, $7,406,200 was available under the line of credit.
4. COMPREHENSIVE INCOME
The components of comprehensive income, net of tax, are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
31-Dec. 99 31-Dec. 98 31-Dec. 99 31-Dec. 98
<S> <C> <C> <C> <C>
Net Income 1,211,300 893,200 2,369,500 1,652,500
Charge in unrealized
gain (loss) on ST Inv. 232,500 - 230,700 -
--------- ------- --------- ---------
Comprehensive income 1,443,800 893,200 2,800,200
========= ======= ========= =========
</TABLE>
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998
Sales
Sales for the second quarter ended December 31, 1999 were $13,027,700, an
increase of 9.4% over sales of $11,910,300 for the same period in fiscal 1999.
Sales for the six months ended December 31, 1999 increased 10.6% to $25,891,500
compared with $23,410,800 for the same period last year. The sales increase for
the three and six month periods was primarily due to sales growth at the
Company's patient safety monitoring business and oxygen monitoring business.
Sales of the "Millennia" portable vital signs monitor and MRI vital signs
monitor contributed to the sales increase. Sales for the three and six month
periods ended December 31, 1999 were also positively affected by increased sales
at the Company's gas detection businesses.
Gross Profit
The gross profit margin decreased for the three and six month periods ended
December 31, 1999 to 47.4% and 48.8% from 50.2% and 50.1%, respectively, from
the previous fiscal periods. The decrease was attributable to price discounting
at the patient safety monitoring business due to competitive pricing pressures.
In addition, costs associated with retrofitting previously sold monitors for
year 2000 compliance were higher than expected. The increase in sales at the
oxygen monitoring business also contributed to the gross margin decrease as that
business has inherently lower gross margins than the Company's other businesses.
Operating Expenses
Selling, general and administrative expenses for the three month period ended
December 31, 1999 decreased 2.6% or $98,300 compared to the second quarter of
fiscal 1999, but increased $68,900 for the six months ended December 31, 1999
compared to the same period in fiscal 1999. Selling, general and administrative
expenses were 28.9% and 30.0% of sales for the three and six month periods ended
December 31, 1999 compared with 32.4% and 32.9%, respectively, for the same
periods in fiscal 1999. The decrease in these expenditures in aggregate and as a
percentage of sales for the three months ended December 31, 1999 was due to
lower administrative expenses primarily at the Company's patient safety
monitoring and industrial instrumentation businesses. The aggregate increase in
selling, general and administrative expenses for the six months ended December
31, 1999 was due to higher selling and administrative expenses on the higher
sales volume at the patient safety monitoring business.
Research and experimental expenses were 4.9% and 5.5% of sales for the three
and six month periods ended December 31, 1999 compared to 6.1% and 6.0% for the
same periods in fiscal 1999. The decrease was attributable to a decline in the
amount of research and experimental expenses on behalf of the patient safety
monitoring business as a portion of the expenditures related to equipment for
the production of the Company's proprietary anesthetic agent module for the
"Millennia" was capitalized in the second quarter of fiscal 2000. The Company
plans to continue its efforts in developing new products and enhancing its
existing ones and expects future aggregate research and experimental
expenditures will be more consistent with historic levels.
Other Income and Expense
Interest income was $95,900 for the second quarter of fiscal 2000. Interest
expense decreased to $33,300 in the second quarter of fiscal 2000 compared with
$77,300 for the comparable period in fiscal 1999. These changes were the result
of the investment of, and 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.
6
<PAGE> 7
Provision for Income Taxes
The effective tax rate for the second quarter of fiscal 2000 remained at 34%.
The effective rate differs from the statutory rate due principally to the
benefit of a foreign sales corporation 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 $12,100,000 prior to the repayment of its outstanding bank
borrowings of approximately $2,500,000. Working capital at December 31, 1999
increased to $25,005,500 from $22,948,900 at June 30, 1999. Net cash used in
operating activities was $624,300 for the six months ended December 31, 1999
compared with $780,700 provided by operations for the six months ended December
31, 1998. This decrease was largely the result of changes in operating assets
and liabilities, particularly inventories, accounts receivable, and accrued
expenses.
Capital expenditures were $1,281,300 for the first six months of fiscal 2000
compared to $777,300 for the prior year period. The increase was primarily the
result of the purchase of new manufacturing equipment for the Company's patient
safety monitoring business and oxygen monitoring business.
The Company's bank line of credit of $7,500,000 was renewed on December 1,
1999 to December 1, 2000. The Company's revolving bank line of credit is
collateralized by the Company's accounts receivable, inventory, and equipment.
At December 31, 1999, $7,406,200 was available under the line of credit.
The Company believes that its cash flow from operations and proceeds from its
recent secondary 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.
RECENT ACCOUNTING PRONOUNCEMENTS
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. In June 1998,
the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities (as amended by SFAS No. 137), 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 and fiscal years beginning after June
15, 2000. As the Company does not currently have any derivative instruments for
hedging activities, the Company believes that SFAS No. 133 will have no impact
on its consolidated financial statements.
YEAR 2000
The Company made the transition to the calendar year 2000 without
interruptions. The Company had contracted with outside information consulting
companies both to install new hardware and to replace its current mission-
critical software systems with year 2000 compliant software. All information
system upgrades and conversions were completed prior to December 31, 1999 and
are fully operational. Through December 31, 1999, the Company incurred
approximately $350,000 of costs associated with its new information systems, of
which approximately $325,000 has been capitalized.
The Company believes that its currently marketed products are year 2000
compliant. Some of its products were not affected because they do not contain a
date field in the software. On some previously sold products which were not
year 2000 compliant, the Company made an upgrade available to its customers to
ensure year 2000 compliance.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure is that of currency risk.
During the six months ended December 31, 1999, 21% 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. Currently, the Company is not engaged in any
financial transactions for hedging or trading purposes.
7
<PAGE> 8
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS:
The Company's medical device subsidiary, Invivo Research, was one of two
third-party defendants named in a lawsuit in June of 1994 by Southern Nevada
Surgical Center and Surgex Southern Nevada, Inc. in Nevada State District Court.
The underlying action in this matter stemmed 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 ("SNSC") and Surgex
were 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 this procedure. SNSC and Surgex
alleged that both the anesthetic gas machine and the vital signs monitor were
defective. The Company believes that the vital signs monitor operated properly
and was properly designed for its intended function.
On August 18, 1999, the Nevada District Court granted the Company's Motion to
Dismiss for Failure to Prosecute. The Order granted dismissal of the SNSC and
Surgex contribution claims, without prejudice, based upon Nevada law which
provides that an action must be brought to trial within five years of the date
of the filing of the original action. The dismissal is being appealed.
In April of 1997, the plaintiff's insurer, CNA, filed an action with
identical causes in the same Nevada State Court. This second action was removed
by the Company to U.S. District Court. The action by CNA was dismissed by the
District Court on January 19, 2000. This decision remains subject to appeal.
Any judgment against the Company that exceeds the amount that its insurer is
required to pay could have a material adverse effect on its 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:
At the Annual Meeting of Stockholders of the Company held on December 9, 1999
the Stockholders:
1. Elected all of the nominees for Director for the ensuing year as
follows:
<TABLE>
<CAPTION>
NAME FOR AGAINST ABSTAIN
---- --- ------- -------
<S> <C> <C> <C>
Ernest Goggio 3,502,143 0 100,710
James Hawkins 3,502,143 0 100,710
George Sarlo 3,502,143 0 100,710
Laureen DeBuono 3,502,143 0 100,710
Roger Susi 3,502,143 0 100,710
</TABLE>
2. Amended the 1994 Stock Option Plan to increase by 200,000 the number
of shares covered by the Plan. The number of shares voted in favor was
3,251,395; number of shares voting against was 324,110; and abstentions
were 27,618.
3. Ratified the selection of KPMG LLP as independent auditors for the
Company. The number of shares voted in favor of the ratification was
3,580,773.
8
<PAGE> 9
ITEM 5: OTHER INFORMATION:
Not Applicable.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a)
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page
----------- ---------------------- ----
<S> <C> <C>
Exhibit 10.15 Second Amendment to credit Agreement between
Wells Fargo Band and Invivo Corporation dated
December 1, 1999. p. 12
Exhibit 11.1 Statement of Computation of Net Income Per Share p. 13
Exhibit 27.0 Financial Data Schedule p. 14
</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: February 14, 2000 By: /s/ JOHN F. GLENN
-------------------------------
Vice President-Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
10
<PAGE> 1
EXHIBIT 10.15
SECOND AMENDMENT TO CREDIT AGREEMENT
THE SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered
into as of December 1, 1999 by and between INVIVO CORPORATION, a Delaware
corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
WHEREAS, Borrower is currently indebted to Bank pursuant to the terms
and conditions of that certain Credit Agreement between Borrower and Bank dated
as of October 6, 1998, as amended from time to time ("Credit Agreement").
WHEREAS, Bank and borrower have agreed to certain changes in the terms
and conditions set forth in the Credit Agreement and have agreed to amend the
Credit Agreement to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree that the Credit Agreement
shall be amended as follows:
1. Section 1.2(a) is hereby deleted in its entirety, and the
following substituted therefor:
"(a) Line of Credit. Subject to the terms and
conditions of this Agreement, Bank hereby agrees to make
advances to Borrower from time to time up to and including
December 1, 2000, not to exceed at any time the aggregate
principal amount of Seven Million Five Hundred Thousand
Dollars ($7,5000,000.00) ("Line of Credit"), the proceeds
of which shall be sued (I) to provide working capital for
Borrower and for Borrower's wholly owned subsidiaries,
Linear Laboratories Corp., Lumidor Safety Corporation,
Sierra Precision and Invivo Research, Inc. (each, a
"Subsidiary" and collectively, the "subsidiaries"), and
(ii) to finance Borrower's repurchase of its stock in
amounts not to exceed an aggregate of One Million Dollars
($1,000,000.00) during the term of the Line of Credit.
Borrower" obligation to repay advances under the Line of
Credit shall be evidenced by a promissory note
substantially in the form of Exhibit A attached hereto
("Line of Credit Note"), all terms of which are
incorporated herein by this reference."
2. Section 1.2(a) is hereby deleted in its entirety, and the
following substituted therefor:
"1.7 GUARANTIES. All indebtedness of
Borrower to Bank shall be guaranteed by each
Subsidiary in the principal amount of Seven Million
Five Hundred Ten thousand Dollars ($7,510,000.00)
each, as evidenced by and subject to the terms of
guaranties in form and substance satisfactory to
Bank".
11
<PAGE> 2
3. Section 4.8 (a) and (b) are hereby deleted in their entirety, and
the following substituted therefor:
"(a) Working Capital not at anytime less
than $9,000,000.00, with "Working Capital" defined
as total current assets minus total current
liabilities;
(b) Tangible Net Worth not at any time less
than $25,000,000.00, with "Tangible Net Worth"
defined as the aggregate of total stockholders'
equity plus subordinated debt less any intangible
assets."
4. Section 4.8 (e) is hereby deleted in its entirety, without
substitution.
5. Except as specifically provided herein, all terms and conditions
of the Credit Agreement remain in full force and effect, without
waiver or modification. All terms defined in the Credit Agreement
shall have the same remaining when used in this Amendment. This
Amendment and the Credit agreement shall be read together, as on
document.
6. Borrower hereby remakes all representations and warranties
contained in the Credit Agreement and reaffirms all covenants set
forth therein. Borrower further certifies that as of the date of
this Amendment there exists no Event of Default as defined in the
Credit Agreement, nor any condition, act or event which with the
giving of notice or the passage of time or both would constitute
any such Event of Default.
IN WITNESS WHEREOF, the parties hereto have caused this amendment
to be executed as of the day and year first written above.
WELLS FARGO BANK,
INVIVO CORPORATION NATIONAL ASSOCIATION
By: _________________________ By: _________________________
James B. Hawkins Dean Adansi
President Vice President
By: _________________________
John F. Glenn
Vice President-Finance
12
<PAGE> 1
EXHIBIT 11.1
INVIVO CORPORATION AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ----------------------
1999 1998 1999 1998
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
BASIC:
Weighted average common
shares outstanding .............. 4,309,084 3,277,386 4,294,882 3,273,667
========== ========== ========= =========
Net Income ........................ $1,211,300 $ 893,200 2,369,500 1,652,500
========== ========== ========= =========
Basic net income per common share . $ 0.28 $ 0.27 0.55 0.50
========== ========== ========= =========
DILUTED:
Weighted average common
shares outstanding (basic) ...... 4,309,084 3,277,386 4,294,882 3,273,667
Dilutive stock options ............ 190,945 309,132 216,461 133,102
---------- ---------- --------- ---------
Weighted average common
shares outstanding (diluted) .... 4,500,029 3,586,518 4,511,343 3,551,454
========== ========== ========= =========
Net Income ........................ $1,211,300 $ 893,200 2,369,500 1,652,500
========== ========== ========= =========
Diluted net income per common share $ 0.27 $ 0.25 0.53 0.47
========== ========== ========= =========
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 339
<SECURITIES> 6,598
<RECEIVABLES> 14,922
<ALLOWANCES> 285
<INVENTORY> 9,170
<CURRENT-ASSETS> 32,776
<PP&E> 11,133
<DEPRECIATION> 5,332
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<BONDS> 0
0
0
<COMMON> 44
<OTHER-SE> 38,022
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<SALES> 25,892
<TOTAL-REVENUES> 25,892
<CGS> 13,257
<TOTAL-COSTS> 13,257
<OTHER-EXPENSES> 9,187
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 3,590
<INCOME-TAX> 1,221
<INCOME-CONTINUING> 2,370
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,370
<EPS-BASIC> .55
<EPS-DILUTED> .53
</TABLE>
