<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: MARCH 31, 2000
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: 0-16937
SUMMIT TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2897945
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
21 Hickory Drive, Waltham, Massachusetts 02451
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(781) 890-1234
----------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock and Common Share Purchase Rights
---------------------------------------------
(Title of Class)
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.
[X] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.
On March 31, 2000, 47,032,406 shares of common stock, par value $0.01 per share
were outstanding.
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SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 58,104 $ 69,303
Short-term investments 4,401 5,730
Receivables, net of allowances 25,335 18,391
Inventories 28,303 20,869
Other current assets 2,997 3,204
---------------------------------------
Total current assets 119,140 117,497
Long-term investments 33,630 30,948
Property and equipment, net 21,102 19,122
Patents and other intangibles, net 8,181 8,502
Purchased technologies, net 26,383 26,851
Goodwill, net 53,305 53,859
Other assets 3,716 5,139
Net assets of discontinued operations (Note 4) 1,803 470
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $267,260 $262,388
=====================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,588 $ 6,353
Accrued expenses 21,313 8,062
Current maturities of long-term debt 1,113 1,093
Deferred revenue 3,619 3,291
---------------------------------------
Total current liabilities 32,633 18,799
Deferred revenue - noncurrent 772 677
Deferred tax liabilities - noncurrent 5,805 4,786
Long-term debt, less current maturities 2,346 1,958
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities $ 41,556 $ 26,220
- ---------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 5,000,000 shares; none
issued - -
Common stock, $.01 par value. Authorized 100,000,000 shares;
issued 47,032,406 shares in 2000 and 46,992,169 shares in 1999;
outstanding 46,867,691 shares in 2000 and 46,827,454 shares in 1999 470 470
Additional paid-in capital 271,633 271,414
Accumulated deficit (55,590) (43,244)
Accumulated other comprehensive income 9,999 8,336
Treasury stock, at cost, 164,715 shares
in 2000 and 1999 (808) (808)
- ---------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 225,704 236,168
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $267,260 $262,388
=====================================================================================================================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
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SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
2000 1999
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Systems $ 9,040 $ 3,335
License fees, service and other 11,678 10,185
----------------------------------------
Total revenues 20,718 13,520
----------------------------------------
Cost of revenues:
Systems 5,498 3,300
License fees, service and other 5,180 2,717
----------------------------------------
Total cost of revenues 10,678 6,017
----------------------------------------
Gross profit 10,040 7,503
----------------------------------------
Operating expenses:
Selling, general and administrative 9,338 4,738
Research, development and regulatory 4,171 2,086
Restructuring costs 2,992 --
Termination of strategic alliance 8,103 --
----------------------------------------
Total operating expenses 24,604 6,824
----------------------------------------
Operating income (loss) from continuing operations (14,564) 679
Interest income 1,018 1,038
Interest expense (84) (106)
Other income (expense) 21 (98)
----------------------------------------
Income (loss) from continuing operations
before provision (benefit) for income taxes (13,609) 1,513
Provision (benefit) for income taxes
(437) (291)
----------------------------------------
Income (loss) from continuing operations (13,172) 1,804
Income from discontinued operations, net of taxes
of $507 in 2000 and $356 in 1999. 826 582
-----------------------------------------------------------------------------------------------------
Net income (loss) $(12,346) $ 2,386
=====================================================================================================
Basic and diluted earnings (loss) per share:
Income (loss) per share from continuing operations $ (0.28) $ 0.06
Income per share from discontinued operations 0.02 0.02
-----------------------------------------------------------------------------------------------------
Net income (loss) per share $ (0.26) $ 0.08
=====================================================================================================
Weighted average number of common shares:
Basic 46,849 31,165
Effect of dilutive securities outstanding -- 293
----------------------------------------
Diluted 46,849 31,458
=====================================================================================================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
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SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
2000 1999
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income (loss) $ (12,346) $ 2,386
Net unrealized gain on investment, net of tax 1,663 18,644
----------------------------------------------------------------------------------------------------
Comprehensive income (loss) $ (10,683) $ 21,030
====================================================================================================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
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SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
2000 1999
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(12,346) $ 2,386
Income from discontinued operations (826) (582)
-------------- --------------
Income from continuing operations (13,172) 1,804
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation and amortization 3,220 939
Provision for losses on accounts receivables 88 13
Other non-cash items -- 24
Changes in operating assets and liabilities:
Receivables (7,032) (272)
Inventories (9,809) 1,019
Prepaid and other assets 1,631 (291)
Accounts payable 235 (963)
Accrued expenses 13,251 1,048
Deferred revenue 422 (321)
Change in net assets of discontinued operations (507) (356)
-------------- --------------
Net cash provided (used) by operating activities (11,673) 2,644
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments -- (754)
Purchases of long-term investments -- (1,797)
Maturities of short-term investments -- 3,575
Maturities of long-term investments -- 5,669
Sales of short-term investments 1,329 --
Additions to property and equipment (763) (956)
Loan to Autonomous and deferred acquisition costs -- (352)
Notes receivable and other -- (149)
-------------- --------------
Net cash provided by investing activities 566 5,236
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (268) (1,250)
Payments of capital lease obligations (43) (16)
Proceeds from exercise of stock options 219 52
-------------- --------------
Net cash used by financing activities (92) (1,214)
-------------- --------------
Increase (decrease) in cash and cash equivalents (11,199) 6,666
Cash and cash equivalents, beginning of year 69,303 28,876
-------------- --------------
Cash and cash equivalents, end of period $ 58,104 $35,542
============== ==============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 84 $ 88
Income taxes paid 21 35
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
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SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. NATURE OF BUSINESS
The operations of Summit Technology, Inc. and subsidiaries (the
"Company" or "Summit") presently consist of one operating segment: laser vision
correction which includes manufacturing, selling and servicing laser systems and
related products to correct vision disorders and collecting per procedure
license fees from users of its systems. As discussed in Note 4, the Company has
committed to a formal plan to sell its mail order contact lens business operated
by its wholly-owned subsidiary, Lens Express, Inc. ("Lens").
On April 29, 1999, the Company completed its acquisition of Autonomous
Technologies Corporation ("Autonomous"). Results of operations include the
effects of operations of Autonomous from the date of the acquisition.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The accompanying unaudited condensed consolidated
financial statements have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of the
Company, these unaudited condensed consolidated financial statements contain all
adjustments (consisting of only normal, recurring adjustments) necessary to
present fairly the consolidated financial position, results of operations,
comprehensive income (loss) and cash flows of the Company for the interim
periods.
The accompanying consolidated financial statements and related notes should
be read in conjunction with the Company's Annual Report on Form 10-K for the
year ended December 31, 1999. The results of operations for the three months
ended March 31, 2000 are not necessarily indicative of the results to be
expected for the full year.
Earnings Per Share: Basic earnings per share amounts are based on the
weighted-average number of common shares outstanding during the period. Diluted
earnings per share amounts include the effect of all potential common shares, if
dilutive, that were outstanding during the period.
Reclassifications: Certain prior period information has been reclassified
to conform to current period presentation of data.
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3. INVENTORIES
Inventories consist of the following:
March 31, December 31,
2000 1999
-------------------------------------------------------------------
Raw materials and subassemblies $ 14,690 $ 11,444
Work in process 4,965 5,666
Finished goods 8,648 3,759
-------------------------------------------------------------------
Total $ 28,303 $ 20,869
===================================================================
4. DISCONTINUED OPERATIONS
On May 4, 2000, the Company announced that it entered into a definitive
agreement to sell Lens for $31 million cash, plus an interest in the acquiror of
approximately 10%. Accordingly, the results of Lens' operations have been
classified as discontinued operations. Lens sells contact lenses and related
products by mail order. This transaction, which is subject to customary closing
conditions, is expected to close on or before July 31, 2000.
5. RESTRUCTURING AND TERMINATION OF STRATEGIC ALLIANCE
On March 28, 2000, the Company's Board of Directors voted to approve a
restructuring of the Company to fully integrate its laser vision correction
businesses. In the first quarter of 2000, the Company recorded a pretax
restructuring charge of $2,992 for involuntary employee severance payments for
approximately 20 personnel. In a separate matter, the Company also recorded a
one-time charge of $8,103 to terminate a strategic alliance agreement with Ciba
Vision Group Management, Inc. which was assumed as part of the acquisition of
Autonomous.
6. CONTINGENCIES
The Company is a party to various litigation matters as described below.
The Company has denied, or will deny, the substantive allegations in each of
these actions, and intends to defend them vigorously. The Company may be served
with additional complaints of a similar nature in the future. The Company may
not prevail in the pending or any possible additional actions, and the
resolutions of the actions, individually or in the aggregate, may have a
material adverse effect on the Company's financial position, results of
operations, or cash flows. The Company has not made any provision for any loss
that may result upon resolution of these matters in the accompanying
consolidated financial statements. Dollar amounts below are in thousands.
Antitrust Litigation
The Company, VISX, and certain of their affiliates (including Pillar Point
Partners, a partnership between affiliates of the Company and VISX) are involved
in a number of antitrust lawsuits which, among other things, allege price-fixing
in connection with per-procedure patent royalties charged by the Company and
VISX. These suits are pending in both federal and state court, on behalf of both
direct purchasers from the Company and VISX and patients/consumers, and include
both purported class actions and individual actions. Most of the federal
lawsuits have been transferred for pretrial purposes to the U.S. District Court
for the District of Arizona by the Judicial Panel on Multidistrict Litigation as
In re: Pillar Point Partners Antitrust and Patent Litigation.
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<PAGE> 8
Federal Antitrust Litigation
Cases Consolidated for Pre-Trial Proceedings
- --------------------------------------------
In April 1998, The Eye Professionals, P.A. commenced an action in the U.S.
District Court for the District of New Jersey against the Company and VISX. The
case purported to be a class action on behalf of all individuals or entities
that have paid a per-procedure fee directly to either defendant for use of a
Summit or VISX laser to perform laser vision correction surgery at any time
after November 1, 1995. The complaint alleged, inter alia, price-fixing in
violation of Section 1 of the Sherman Act. The action sought treble damages,
costs of suit, attorneys' fees, and various forms of declaratory and injunctive
relief. Similar actions were also filed in May 1998 by Metropolitan Eye Center
and Outpatient Surgical Facility, Inc. in the U.S. District Court for the
Northern District of California against the Company, VISX, Summit Partner and
VISX Partner and by New England Laser Vision, Inc. in the U.S. District Court
for the District of New Jersey against the Company and VISX. In August 1998,
David R. Shapiro, M.D., filed another similar purported class action against the
Company and VISX in the U.S. District Court for the District of Arizona.
Plaintiffs in these cases have agreed to consolidation of the four purported
class actions and filed a single consolidated amended complaint in the U.S.
District Court for the District of Arizona. It purports to be a class action on
behalf of all persons and entities (excluding governmental entities, defendants
subsidiaries and affiliates of defendants) in the United States who paid a
per-procedure royalty to any defendant or any alleged co-conspirator or any
subsidiary or affiliate thereof, at any time after September 1995. The
Consolidated Amended Class Action Complaint seeks, among other things,
unspecified treble damages on behalf of plaintiffs and the alleged class, along
with attorneys' fees, costs, and injunctive and declaratory relief.
In September 1998, Laser Eye Center of Texas, L.L.P. and Warren D. Cross,
M.D., filed a purported class action against the Company, Summit Partner, VISX,
VISX Partner and Pillar Point Partners in the U.S. District Court for the
Southern District of Texas. The suit purports to be a class action on behalf of
all persons and entities who have paid money to defendants, or any of their
subsidiaries, on a per-procedure basis for the ability to use defendants' laser
equipment or technology to perform laser vision correction surgery. Plaintiffs
allege, among other things, price-fixing and monopolization in violation of
Sections 1 and 2 of the Sherman Act. They seek, among other things, treble
damages on behalf of the alleged class, costs of suit, including attorneys'
fees, and declaratory and injunctive relief. This case was transferred to the
District of Arizona for consolidated pre-trial proceedings.
In February 1999, Carolina Eye Associates, P.A. and Carolina-South Eye
Associates filed suit against VISX and the Company in the U.S. District Court
for the District of New Jersey. This action, like the consolidated federal
actions described above, purports to be a class action on behalf of all persons
and entities (excluding governmental entities, defendants, subsidiaries and
affiliates of defendants) in the United States who paid a per-procedure royalty
to any defendant or any alleged co-conspirator or any subsidiary or affiliate
thereof, at any time after September 1995. The complaint alleges, among other
things, price-fixing in violation of Section 1 of the Sherman Act and seeks,
among other things, compensatory damages of at least $100,000 plus $8,300 per
month from the filing of the complaint until the date of judgment, trebling of
those damages, attorneys' fees, costs, and declaratory and injunctive relief.
This case was transferred to the District of Arizona for consolidated pre-trial
proceedings.
Plaintiffs in the various class actions described above have now moved for
certification of a class including all persons in the United States who paid a
per-use royalty to any defendant or any co-conspirator or any subsidiary or
affiliate thereof, at any time after September 1995.
In June 1996, a Texas ophthalmologist, Robert G. Burlingame, sued the
Company, Summit Partner, VISX, VISX Partner and Pillar Point Partners in U.S.
District Court for the Northern District of California alleging price-fixing in
violation of Section 1 of the
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<PAGE> 9
Sherman Act and state antitrust laws and fraud and deceit in connection with
certain of the Company's sales and marketing activities. The plaintiff seeks,
among other things, compensatory damages of at least $30 plus $2 to $3 per month
until the date of judgment, trebling of those damages, compensatory and punitive
damages on the fraud claim against the Company of at least $500 plus $2 to $3
per month until the date of judgment, attorneys' fees, costs and declaratory and
injunctive relief. This case was transferred to the District of Arizona for
consolidated pre-trial proceedings.
In September 1996, a Nevada ophthalmologist, John R. Shepherd, through his
professional corporation, commenced a similar lawsuit against the same parties,
in the same court, alleging substantially similar antitrust claims and seeking
substantially similar relief, including damages before trebling of at least $125
plus $13 per month until the date of judgment. This case was transferred to the
District of Arizona for consolidated pre-trial proceedings.
In May 1999, Freedom Vision Laser Center, L.P. filed suit in the United
States District Court for the Central District of California against the
Company, Autonomous, Summit Partner, VISX, VISX Partner and Pillar Point
Partners. The complaint alleges, among other things, price-fixing,
monopolization, attempted monopolization, and conspiracy to monopolize, in
violation of Sections 1 and 2 of the Sherman Act, as well as violations of the
California Business and Professions Code. Plaintiff seeks, among other things,
damages that are alleged to be more than $1,000 before trebling, disgorgement of
alleged illegal and ill-gotten gains, declaratory and injunctive relief, and
attorneys' fees and costs. This case has been transferred to the District of
Arizona for consolidated pre-trial proceedings.
Cases Not Consolidated for Pre-Trial Proceedings
- -------------------------------------------------
In April 1999, Antoine L. Garabet, M.D., Inc. and Abraham V. Shammas, M.D.,
Inc., d/b/a The Laser Eye Center, filed suit in the U.S. District Court for the
Central District of California against the Company and Autonomous. The suit
alleges, among other things, that the Company's acquisition of Autonomous may
substantially lessen competition or tend to create a monopoly in violation of
Section 7 of the Clayton Act, Section 1 of the Sherman Act, and the California
Business and Professions Code. The complaint seeks, among other things,
unspecified compensatory damages, trebling of those damages, declaratory and
injunctive relief, divestiture in the event that the acquisition of Autonomous
is consummated, restitutionary relief, including disgorgement of alleged
unlawful profits and the imposition of a constructive trust over alleged
ill-gotten gains, and attorneys' fees and costs. Plaintiffs also threatened to
seek a temporary restraining order, preliminary injunction, and other
unspecified preliminary injunctive relief directed at the acquisition. The
Company filed a counterclaim for copyright infringement and unfair competition
against the plaintiffs and Antoine L. Garabet, M.D. and Abraham V. Shammas,
M.D., individually. The parties have agreed to a dismissal of this counterclaim,
without prejudice.
Counterclaims
The Company is the subject of additional Federal antitrust litigation as a
result of counterclaims to patent litigation initiated by Pillar Point Partners
and the Company. A discussion of those counterclaims is presented below under
"Patent Litigation."
State Antitrust Litigation
Beginning in March 1998, a number of actions brought by individuals under
the Cartwright Act and the California Business and Professions Code were
commenced against the Company, Summit Partner, VISX and VISX Partner in Superior
Court of Santa Clara County. In May 1998, these actions were consolidated as In
re PRK/LASIK Consumer Litigation. In June 1998, plaintiffs B.J. Snyder, Donna
McMahan, Paula Mobsby, Helen Thomas, Carmen Ocariz, Martin Hermans, Ken
Bartlett, Jackie Kirk, Grace Geniusz, Jocelyn Joseph, Andrew Stoddard, and
Cynthia Brubecker filed an Amended Consolidated Master Complaint for Damages
("Amended Complaint") in this matter against the Company, Summit Partner, VISX,
and VISX Partner. The Amended Complaint purports to be filed on behalf of all
natural persons in the United States who underwent excimer laser surgery with a
laser
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<PAGE> 10
manufactured by the Company or VISX during the period beginning October 1995,
and paid a per-procedure fee indirectly to a defendant, excluding defendants,
any unnamed co-conspirators of defendants, defendants' predecessors,
successors, parents, subsidiaries, affiliates, officers and directors,
governmental entities, and any and all judges and justices assigned to hear any
aspect of the litigation. The Amended Complaint seeks unspecified compensatory
damages, restitution and/or disgorgement of alleged ill-gotten gains,
prejudgment and postjudgment interest, costs of suit, and attorneys' fees, as
well as various forms of declaratory and injunctive relief, including an order
permitting any person or entity with which the Company or VISX or both have
entered into any agreement since June 3, 1992, for the purchase, license, or use
of any of the Pillar Point Patents to withdraw from such agreement without
penalty or obligation. James Ballard filed a similar suit against the Company,
Summit Partner, VISX, VISX Partner, Pillar Point Partners, and other individual
defendants in Superior Court of San Diego County. This suit has been transferred
to Santa Clara County and consolidated as part of In re PRK/LASIK Consumer
Litigation. The parties have stipulated to the conditional certification of a
class of natural persons in California, Alabama, Arizona, the District of
Columbia, Florida, Kansas, Maine, Michigan, Minnesota, Mississippi, New Mexico,
New York, North Carolina, North Dakota, South Dakota, Tennessee, West Virginia,
and Wisconsin who have undergone ophthalmic refractive surgery with an excimer
laser manufactured by the Company or VISX.
In April 1998, Penny S. Marks, an individual who allegedly has had laser
vision correction surgery performed, commenced an action in Florida state court
against the Company and VISX. The case purports to be a class action on behalf
of all persons who have had a PRK procedure in the State of Florida from October
20, 1995 up to and including the date the class certification hearing begins.
The complaint alleges various violations of the Florida Deceptive and Unfair
Trade Practices Act, the Florida Antitrust Act and Section 5 of the Federal
Trade Commission Act. The complaint seeks unspecified compensatory damages,
costs and attorneys' fees, as well as declaratory and injunctive relief.
Plaintiff filed a motion seeking class certification. Thereafter, the parties
filed a joint motion to stay this action pending resolution of In re PRK/LASIK
Consumer Litigation, the consolidated class action litigation described
immediately above. The court has granted this motion to stay.
In June 1998, Barbara Worcester, an individual who allegedly has had laser
vision correction surgery performed, filed an action in Wisconsin state court
against the Company, Summit Partner, VISX, VISX Partner and Pillar Point
Partners. The case purports to be a class action on behalf of all Wisconsin
purchasers of refractive laser surgery procedures. The complaint alleges
violations of the antitrust laws of the State of Wisconsin. The complaint seeks
unspecified damages, trebling of those damages, attorneys' fees and costs, and
declaratory and injunctive relief. Defendants removed this action to federal
court, and it has been transferred to the District of Arizona. Plaintiff has
filed a motion seeking class certification.
In January 1999, Karen Frankson, Virginia Harmes, and Beth Luetschwager,
three individuals who allegedly have had laser vision correction surgery
performed, filed a similar purported class action in Wisconsin state court.
Defendants removed this action to federal district court in Wisconsin, and it
was transferred to the District of Arizona. The parties recently agreed to a
dismissal of this action, without prejudice.
In May 1999, Linda Brisson, an individual who allegedly has had laser
vision correction surgery performed, commenced an action in Minnesota state
court against the Company, Summit Partner, VISX, VISX Partner and Pillar Point
Partners. The case purports to be a class action on behalf of all Minnesota
purchasers of refractive laser surgery procedures. The complaint alleges, among
other things, price-fixing in violation of Minnesota antitrust law. The
complaint seeks, among other things, compensatory damages alleged to be at least
in the millions of dollars, trebling of those damages, attorneys' fees and
costs, and injunctive and other relief.
In January 2000, Antoine L. Garabet, M.D. and Abraham V. Shammas, M.D.
filed an action individually and on behalf of the general public against the
Company and VISX in Superior Court of the State of California, Santa Clara
County. The suit alleges violations of the California Unfair Business Practices
Act in connection with, among other things, per procedure fees charged by the
Company and VISX. The action seeks, among
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<PAGE> 11
other things, disgorgement of alleged ill-gotten gains and monies that
defendants have earned by means of alleged unlawful, unfair, and fraudulent
business practices (with defendants' per procedure revenues elsewhere alleged to
be in the millions of dollars annually), a constructive trust over such gains
and monies, declaratory and injunctive relief, and attorneys' fees and costs.
Shareholder Litigation
Between August 1996 and February 1997 various shareholder actions were
commenced against the Company and certain of its present or former officers in
the U.S. District Court for the District of Massachusetts claiming, among other
things, violations of Sections 10(b) and 20(a) of the Securities Exchange Act of
1934 arising out of public statements made by defendants and violations of
Section 20A of the Securities Exchange Act of 1934 arising out of alleged
insider trading by certain defendants. The actions were consolidated, by order
of the Court entered December 2, 1996, as In re Summit Technology Securities
Litigation. By order dated August 11, 1998, the Court certified the action as a
class action on behalf of all purchasers of Summit common stock, other than
defendants and certain affiliated persons and entities, between March 31, 1995
and July 3, 1996. Plaintiffs seek unspecified damages, interest, costs and
expenses, attorneys' fees and extraordinary and/or injunctive relief. Discovery
was completed in February 2000. On March 14, 2000 defendants filed a motion for
summary judgment on certain claims. Additional motions for summary judgment may
be filed as well.
In October 1996, an additional class action was commenced in the U.S.
District Court for the District of Massachusetts against the Company, its
directors, certain of the Company's present or former officers and the four
underwriters of the Company's October 1995 common stock offering claiming
violations of Sections 11, 12(2) and 15 of the Securities Act of 1933 arising
out of alleged material misstatements of fact in the Registration Statement
issued in connection with the offering. By order dated August 11, 1998, the
Court certified the action as a class action on behalf of all purchasers of
Summit stock in the offering other than defendants and certain affiliates. The
action was coordinated with the securities litigation by order of the court
dated December 2, 1996. The action seeks unspecified compensatory damages,
interest, costs and expenses, attorneys' fees and extraordinary and/or
injunctive relief. Cross motions for summary judgment were filed in November
1999 and February 2000 with respect to certain claims. Additional motions for
summary judgment may be filed as well.
In December 1996, one of the Company's shareholders filed in the U.S.
District Court for the District of Massachusetts a derivative action,
purportedly on behalf of the Company, against the Company as nominal defendant,
directors of the Company and certain present or former officers of the Company.
This action was consolidated with the securities litigation by order of the
Court entered July 22, 1997. The complaint alleges that the conduct of the
individual defendants has exposed the Company to the liability, expense and
inconvenience of the securities litigation and has harmed the Company's
reputation, thereby limiting its access to capital markets. It also alleges
breach of fiduciary duty, gross negligence and insider trading against
individual defendants. It seeks damages, interest, costs and expenses and
attorneys' fees.
Patent Litigation
Pillar Point Partners, Summit Partner and VISX Partner commenced patent
infringement litigation against an ophthalmologist believed to have used or be
using homemade laser systems not licensed under patents held by Pillar Point
Partners and one alleged manufacturer of such laser systems. These actions were
originally pending as Pillar Point Partners, et al. v. Jon G. Dishler, et al.
(U.S. District Court, District of Colorado) and Pillar Point Partners, et al. v.
Jui-Teng Lin, et al. (U.S. District Court, Middle District of Florida). Each
action was transferred to the District of Arizona. The defendants in the Dishler
action have asserted counterclaims against Summit Partner, VISX Partner, and
Pillar Point Partners seeking declarations that the patents in suit are invalid
and unenforceable. They have also raised antitrust counterclaims alleging
price-fixing, tying, monopolization, concerted refusal to deal, conspiracy to
monopolize, and attempted monopolization. Defendants seek unspecified actual
damages, trebling of those damages, attorneys' fees, costs and injunctive
relief. The parties have agreed to a resolution of the Jui-Teng Lin litigation.
-11-
<PAGE> 12
In December 1998, the Company filed a patent infringement lawsuit in the
U.S. District Court for the District of Massachusetts against Nidek, whose laser
system received FDA approval in December, 1998. The suit alleges that Nidek's
excimer laser system infringes certain of the Company's U.S. patents and seeks
damages and injunctive relief. On January 29, 1999, a district court in Tokyo,
Japan ruled against the Company in a patent infringement lawsuit which the
Company initiated against Nidek in 1996. The Japanese lawsuit involved the
Japanese counterpart of one of the two U.S. patents which the Company has
alleged Nidek infringes in the U.S. lawsuit. The Tokyo district court's decision
was upheld on appeal.
In June 1999, the Company commenced a patent infringement lawsuit against
George I. Bekov in the U.S. District Court for the District of Massachusetts.
The suit alleges that Bekov has induced infringement of certain of the Company's
patents, including by disabling card readers and maintaining systems which are
not licensed by the Company, and seeks damages and injunctive relief. This case
has been transferred to the District of Arizona for consolidated pre-trial
proceedings.
In February 1999, the Company asserted patent infringement claims against
Antoine L. Garabet, M.D., Antoine L. Garabet, M.D., Inc., Abraham V. Shammas,
M.D., Abraham V. Shammas, M.D., Inc., and the Laser Eye Center in a case then
pending in the District of Arizona. The suit alleges that these parties have
infringed certain of the Company's patents by using excimer laser systems
manufactured by the Company without having a license to do so, and seeks damages
and injunctive relief. In June 1999, the Company commenced a similar patent
infringement lawsuit against Robert T. Lin, Ferzaad Moosa, and Randa M.R.
Garrana in the U.S. District Court for the Central District of California. This
case has been transferred to the District of Arizona, and the parties have
stipulated to consolidation of these two cases. In November 1999, the parties
opposing the Company in these two actions filed a counterclaim against the
Company for declaratory relief and for fraud and deceit. The counterclaim seeks,
among other things, judgment that the patents in suit are not infringed and, in
any event, not enforceable as a result of the Company's alleged inequitable
conduct, unclean hands, and patent misuse; judgment enjoining the Company from
attempting to enforce the Pillar Point patents, including the patents in suit;
attorneys' fees and costs; judgment that the Company has committed fraud and
deceit in connection with the sale of a Summit laser system; compensatory
damages on the fraud claim of at least $49, plus prejudgment interest; and
punitive damages.
In October 1999, the Company commenced a patent infringement lawsuit
against Icon Laser Centers (U.S.), Inc. in the U.S. District Court for the
District of Delaware. The suit alleges that the defendant has infringed and/or
contributed to and/or induced infringement of certain of the Company's patents
by using the Nidek EC-5000 Excimer Laser System without having a license to do
so, and seeks damages and injunctive relief.
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<PAGE> 13
7. Supplemental Cash Flow Information
For the first quarter ended March 31, 2000, non-cash transactions included
$2,375 of net transfers from inventory to property, plant and equipment related
to laser equipment leased to customers under operating leases and $719 for
capital lease obligations incurred. For the first quarter ended March 31, 1999,
non-cash transactions included $456 of net transfers from property, plant and
equipment to inventory related to laser equipment leased to customers under
operating leases.
PART I: FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
We currently operate in one principal segment: laser vision correction
which includes manufacturing, selling and servicing laser systems and related
products to correct vision disorders and collecting per procedure license fees
from users of our systems.
On May 4, 2000, we entered into a definitive agreement to sell our
wholly-owned subsidiary, Lens Express, Inc. ("Lens") for $31 million cash, plus
a 10% interest in the acquiror. Accordingly, the results of Lens' operations
have been classified as discontinued operations. Lens sells contact lenses and
related products by mail order. This transaction is subject to customary closing
conditions.
On April 29, 1999, we completed our acquisition of Autonomous Technologies
Corporation ("Autonomous"). Results of operations discussed in this section
include the effects of operations of Autonomous from the date of the
acquisition.
On February 22, 2000, our competitor, VISX, Inc. ("VISX") announced that it
was lowering its U.S. per procedure licensing fee to $100. For obvious
competitive reasons, we responded by lowering our own U.S. per procedure
licensing fee. Effective February 23, 2000, we instituted a tiered pricing
program for our customers. Our Apex Plus(TM)/Infinity(TM) excimer laser system
will be value priced and will carry a per procedure licensing fee of $100. Prior
to February 23, 2000, the list price of the licensing fee for the Apex
Plus(TM)/Infinity(TM) System was $250 per procedure, with actual pricing
variable based on factors including volume discounts and promotions,
participation in one of our innovative bundled pricing programs which combine
license fees with other products and services, and whether the customer is or
was one of our clinical investigators. The emphasis(R) disc used in conjunction
with the Apex Plus(TM)/Infinity(TM) System for astigmatism and farsightedness
corrections will be priced at $25 in the U.S. and $75 in international markets.
LADARVision(R) system procedures will be premium priced at $150 per procedure
for purchased units. Customers who have acquired Apex Plus(TM)/Infinity(TM)
and/or LADARVision(R) Systems utilizing a program which bundles the licensing
fee with other products and services will receive adjustments to their programs
to reflect the reduced pricing. As part of the new pricing structure, the
Company also adopted a new retreatment policy. Prior to February 23, 2000, the
Company did not charge for bona fide retreatments. Under the new program, there
will be no charge for retreatments related to procedures originally performed
before February 23, 2000. Retreatments related to procedures performed after
that date will be charged at the same rate as other procedures. Actual pricing
for procedures and retreatments may continue to vary based on factors such as
volume discounts and promotions, and participation in one of our bundled pricing
programs which combine license fees with other products and services. We expect
that these reductions in per procedure pricing will materially reduce our
revenues and revenue growth in 2000.
Information about U.S. procedure volume is based on our sale of OmniCards
to U.S. customers and procedures performed on the LADARVision(R) excimer laser
system and includes retreatments under our new retreatment program described
above. OmniCards are
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<PAGE> 14
credit card-sized, data encrypted plastic cards that must be inserted into the
Apex Plus(TM)/Infinity(TM) excimer laser system to enable customers to perform a
procedure. OmniCards may be encoded with a single procedure or with several
procedures, and they are priced based on the number of procedures they permit.
We may bundle the OmniCard price with other products and services, and/or offer
volume discounts to our customers that cause them to purchase an inventory of
procedures in advance. As a result, our per procedure pricing can vary and
procedure volume data do not necessarily reflect the actual number of procedures
performed during a particular period. Procedures are tracked on the
LADARVision(R) system by internal software that enables billing information to
be processed via modem, and are thus likely to offer a more direct correlation
to actual procedure volume in any given period.
FIRST QUARTER RESULTS OF OPERATIONS
Revenues: Revenues for the three months ended March 31, 2000 increased 53%
to $20.7 million from $ 13.5 million for the three months ended March 31, 1999.
Revenues from system sales increased 171% in the first quarter of 2000 compared
to the same period a year ago. We placed 41 laser systems in the first quarter
of 2000 compared to 12 laser systems in the first quarter of 1999 and 36 laser
systems in the fourth quarter of 1999. Revenues from license fees, service and
other increased 15% in the first quarter of 2000 compared to the first quarter
of 1999.
Aggregate first quarter 2000 procedure volume in the US, as measured by our
sales of OmniCards, actual LADARVision(R) procedures and OmniCard shipments
after February 23, 2000 for retreatments under our new retreatment program,
increased 17% over the fourth quarter of 1999, paced by a 113% growth in
LADARVision procedures. Procedure volume for the first quarter of 2000,
similarly measured, increased 63% over the first quarter of 1999.
On February 23, 2000, we reduced our per procedure licensing fee to $100 on
the Apex Plus(TM)/Infinity(TM) system and $150 on the LADARVision(R) system. In
connection with the price reduction, we introduced a new program for
retreatments. This program provides that the new pricing will apply to
retreatments if the original procedure was after February 23, 2000, and that
free retreatments will continue to be provided for cases originally performed
before that date. Our first quarter procedure volume, exclusive of OmniCard
shipments after February 23, 2000 for retreatments under our new retreatment
program, increased 12% over the fourth quarter of 1999 and 55% over the first
quarter of 1999.
Cost of Revenues: Cost of revenues as a percentage of revenues increased to
52% in the first quarter of 2000 from 45% in the first quarter of 1999. This
increase was primarily attributable to the increase in the infrastructure of the
customer service organization partially offset by the favorable impact from
lower cost of revenues associated with license fee revenues. Cost of revenues in
the first quarter of 2000 also includes the amortization of purchased
technologies related to the Autonomous acquisition.
Operating Expenses: Selling, general and administrative expenses as a
percentage of revenues were 45% in the first quarter of 2000 and 35% in the
first quarter of 1999. Selling, general and administrative expenses in the first
quarter of 2000 were $9.3 million compared to $4.7 million in the first quarter
of 1999, a 97% increase. The expenses in the first quarter of 2000 reflect the
effects of the Autonomous acquisition, increased sales and marketing costs to
grow laser vision correction procedure volume and increased legal fees. The
effects of the Autonomous acquisition includes Autonomous' operations and
amortization of goodwill and other intangible assets.
Research, development and regulatory expenses in the first quarter of 2000
increased to $4.2 million from $2.1 million in the first quarter of 1999. The
increased spending is primarily related to the development of our
CustomCornea(TM) wavefront measurement device and engineering improvements on
our LADARVision(R) and Infinity laser systems and SKBM microkeratome.
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<PAGE> 15
On March 28, 2000, our Board of Directors voted to approve a restructuring
to fully integrate our laser vision correction businesses. In the first quarter
of 2000, we recorded a pretax restructuring charge of $3.0 million for
involuntary employee severance payments for approximately 20 personnel. Of this
$3.0 million, $2.7 million relates to severance payments and related benefits in
selling, general and administrative departments. The annualized benefit of the
restructuring is expected to be $3.0 million. In a separate matter, we also
recorded a one-time charge of $8.1 million to terminate a strategic alliance
agreement with Ciba Vision Group Management, Inc. ("Ciba") which was assumed as
part of last year's acquisition of Autonomous. This payment will be made early
in the third quarter. In addition to the charges, we have also identified
approximately $5.0 million in expense reductions in our planned year 2000
spending.
After weighing the impact of recent changes that have taken place in the
laser vision correction industry, the Board of Directors decided to accelerate
the integration of the Summit and Autonomous operations. This process had begun
in January when we consolidated our sales operation into a single group. Also,
many Autonomous manufacturing activities had already been transitioned to the
our Cork, Ireland facility in 1999.
Under the restructuring, we have been realigned into three operational
groups: (1) the commercial organization encompassing sales, marketing, after
sales support and clinical education; (2) the operations organization comprised
of research and development, quality, regulatory, clinical affairs and
operations; and (3) the administrative organization encompassing finance, human
resources, information technology, corporate communications and investor
relations.
Other Income (Expense): Interest income was $1.0 million in the first
quarter of 2000 and 1999. Interest expense was $84 thousand in the first quarter
of 2000 compared to $106 thousand in the first quarter of 1999.
Net Income (Loss): Excluding one-time charges related to the restructuring
and the termination of the strategic alliance with Ciba, the loss from
continuing operations for the first quarter of 2000 was $2.1 million, or $0.04
per diluted share compared to income from continuing operations of $1.8 million,
or $0.06 per diluted share for the first quarter of 1999. Including these
one-time charges, the loss from continuing operations for the first quarter of
2000 was $13.2 million, or $0.28 per diluted share. Income from discontinued
operations was $.8 million, or $0.02 per diluted share in the first quarter of
2000 compared to $.6 million in the first quarter of 1999, or $0.02 per diluted
share. The net loss for the first quarter of 2000 was $12.3 million, or $0.26
per diluted share compared to net income of $2.4 million, or $0.08 per diluted
share, for the first quarter of 1999.
Income Taxes: The benefit for income taxes in the first quarter of 2000 and
1999 was $.4 million and $.3 million, respectively. We have continued to provide
a 100% valuation allowance against our net deferred tax asset as of March 31,
2000.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity requirements have been met through external debt and equity
financing. As of March 31, 2000, our cash and cash equivalent balances and short
and long-term investments decreased to $96.1 million from $106.0 million as of
December 31, 1999. Shares of LCA Vision Inc. common stock included in long-term
investments as of March 31, 2000 and December 31, 1999 were valued at $33.6
million and $30.9 million, respectively. Working capital decreased to $86.5
million as of March 31, 2000 from $98.7 million as of December 31, 1999. In the
first quarter of 2000, net cash used by operating activities was $11.7 million
compared to net cash provided by operating activities of $2.2 million in the
first quarter of 1999.
In the first quarter of 2000, net cash provided by investing activities of
$.6 million resulted from the sale of short-term investments partially offset by
capital expenditures of $.8 million. In the first quarter of 1999, net cash
provided by investing activities of $5.2 million resulted primarily from a net
decrease in short and long-term investments of $6.7 million offset by capital
expenditures of $1.0 million, deferred acquisition costs of $.4 million and
issuance of a note for $.1 million.
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<PAGE> 16
In the first quarter of 2000, net cash used by financing activities of $.1
million was primarily attributable to repayments of long-term debt and capital
lease obligations of $.3 million offset by proceeds of $.2 million from option
exercises. In the first quarter of 1999, net cash used by financing activities
of $1.2 million was primarily attributable to repayments of long-term debt of
$1.3 million. We are currently discussing with our existing and other
institutions a new line of credit of approximately $20 million to $25 million.
We believe that our existing corporate resources are adequate for at least
the next twelve months to meet working capital needs and to fund corporate
requirements.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We, in the normal course of doing business, are exposed to the risks
associated with fluctuations in the market value of our available-for-sale
investment securities, changes in foreign currency exchange rates and changes in
interest rates. Our market risk sensitive instruments are entered into for other
than trading purposes.
Our available-for-sale investment securities consist of debt securities,
primarily corporate bonds and mortgage-backed securities, and 6.6 million shares
of LCA Vision Inc. common stock. The fair value of these investment securities
at March 31, 2000 was $38.0 million, which included $4.4 million of debt
securities and $33.6 million of LCA Vision Inc. common stock with a
corresponding accumulated unrealized gain of $15.8 million. Substantially all of
the unrealized gain relates to the LCA Vision Inc. common stock, which is
subject to much more market risk than our debt securities and which has been
more volatile than most market indices. A 10 percent change in the quoted market
price of one share of LCA Vision Inc. common stock as of March 31, 2000 would
have a pre-tax impact of approximately $3.4 million on the fair value of our
investment in LCA Vision Inc. common stock. This impact would be recognized net
of tax in our statement of comprehensive income. At March 31, 2000, our debt
securities consist of highly rated debt instruments. Our investment goal
surrounding debt securities is to meet liquidity needs and to preserve the
principal.
In November 1999, we issued a $3.0 million secured promissory note. The
note bears interest at 10% per annum and requires a fixed monthly payment of $97
thousand over three years. The note is collateralized by certain laser equipment
leased to customers and payments due to us under these leases. Changes in
interest rates may affect the fair market value of this fixed rate debt,
however, they will not affect our cash flow or earnings.
NEW ACCOUNTING STANDARDS
In December 1999, the Securities and Exchange Commission ("SEC") released
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements." This bulletin summarizes certain views of the SEC staff on applying
generally accepted accounting principles to revenue recognition in financial
statements. We have not completed our assessment of the consolidated financial
statement impact of this bulletin. This bulletin is effective beginning the
second quarter of fiscal 2000.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"),
which establishes standards for derivative instruments and hedging activities.
It requires an entity to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. It requires that changes in the derivative's fair value be
recognized currently in the earnings unless specific hedge accounting criteria
are met. A company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting. SFAS 133 is
currently effective for fiscal years beginning after June 15, 2000. We will
adopt SFAS 133 in the first quarter of fiscal 2001. We are currently evaluating
this statement, but do not expect the adoption of SFAS 133 to have a material
effect on our consolidated financial position or results of operations.
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<PAGE> 17
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs that are not able to
differentiate between the year 1900 and the year 2000 because they were written
using two digits instead of four digits to define the applicable year.
Currently, we are not aware of any Year 2000 issues that have had a
significant interruption in service or delays in business operations. A review
of our internal computer systems and software packages was performed to identify
the systems and software that could be affected by this issue. Installation of
and testing of Year 2000 compliant hardware and software was completed. The
costs related to these upgrades were not material and have been incurred in the
normal course of operations. Our products, which were Year 2000 compliant, have
not experienced any Year 2000 related problems. We are not aware of any of our
supplier's inability to remediate their Year 2000 issues. However, not all
vendors have been used at this date and future problems could develop.
We will continue to monitor our internal and external sources for delayed
complications or disruptions arising from the Year 2000 issue. In the event of
unforeseen or unanticipated issues related to the Year 2000, these issues may
have material adverse effect on our results of operations, financial position or
cash flow.
EURO CONVERSION
On January 1, 1999, eleven of fifteen member countries of the European
Union adopted the conversion of their national currencies to the European
Union's common currency ("Euro"). A permanent fixed conversion rate between the
existing national currencies of these countries and the Euro was established on
that date. The Euro may be used in business transactions; however, national
currencies will still remain legal tender through June 30, 2002. We do not
believe that adoption of the Euro will have a material adverse effect on our
results of operations, financial position or cash flow.
CAUTIONARY STATEMENTS AND RISK FACTORS AFFECTING FUTURE OPERATING RESULTS
Cautionary Statement under "Safe harbor" Provisions of the Private
Securities Litigation Reform Act of 1995: Statements made in this filing contain
information about the Company's future business prospects. These statements may
be considered "forward looking". These statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
set forth in or implied by such forward looking statements. Among these risks
and uncertainties are: competition from other manufacturers and vision
correction technologies, delays in obtaining regulatory approvals, challenges to
patents owned and licensed by the Company affecting per procedure revenues,
adverse litigation results, difficulties in commercializing the LADARVision
system and dependence on sole source suppliers. For additional information and
risks associated with the Company's business prospects and future operating
results, please refer to the Company's public filings with the Securities and
Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information relating to quantitative and qualitative disclosure about
market risk is included in Item 2 of Part I of this Report, entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
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<PAGE> 18
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
a) See Note 6 to Notes to Condensed Consolidated Financial
Statements above (Part I, Item 1 of this filing), for
description of pending material litigation
b) Material developments: In April, 2000, the Company settled the
case of PILLAR POINT PARTNERS ET AL. V. JON G. DISHLER ET AL.,
MDL Docket No. 1202, Case No. 99-1363-PHX-PGR. Other parties to
the settlement were Visx, Inc., Visx Partner, Inc., Summit
Partner, Inc., Pillar Point Partners, Jon G. Dishler, DTC Eye
Surgery Center, Inc., D.T.C. Eye Associates, P.C., Laser
Institute of the Rockies, LLC and Telco The Excimer Laser
Company PTY LTD. The settlement resolves all of the patent
infringement and antitrust claims asserted in that action. The
terms of the settlement are confidential.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a.) Exhibits:
27 Financial Data Schedule (For EDGAR Filing Purposes Only)
b.) Reports of Form 8-K:
On March 29, 2000, the Company filed a report on Form 8-K related
to the Company's adoption of a shareholder rights plan (the
"Rights Plan"). The Rights Plan maintains the protections
afforded the Company's stockholders under its former rights plan,
adopted in March 1990, which expired pursuant to its terms on
March 29, 2000.
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<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUMMIT TECHNOLOGY, INC.
Date: May 12, 2000 By: /s/ Robert J. Palmisano
------------------------------
Robert J. Palmisano
Chief Executive Officer
Date: May 12, 2000 By: /s/ Robert J. Kelly
------------------------------
Robert J. Kelly
Executive Vice President,
Chief Financial Officer and
Treasurer
-19-
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