<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
-------------
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 1-9585
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ABIOMED, Inc.
-------------
(Exact name of registrant as specified in its charter)
Delaware 04-2743260
-------- ----------
(State of incorporation) (I.R.S. Employer No.)
33 Cherry Hill Drive
Danvers, Massachusetts 01923
----------------------------
(Address of principal executive offices, including zip code)
(508) 777-5410
---------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) or 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[ ]
As of June 30, 1995, there were 4,885,852 shares outstanding of the registrant's
Common Stock, $.01 par value, and 2,040,000 shares outstanding of the
registrant's Class A Common Stock, $.01 par value.
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ABIOMED, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page No.
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<S> <C>
Part I - Financial Information:
Item 1. Financial Statements:
Consolidated Balance Sheets
June 30, 1995 and March 31, 1995 3-4
Consolidated Statements of Operations
Three Months Ended June 30, 1995 5
Consolidated Statements of Cash Flows
Three Months Ended June 30, 1995 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-12
Part II - Other Information 13
Signatures 13
</TABLE>
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
<TABLE>
<CAPTION>
June 30, 1995 March 31, 1995
--------------- ----------------
(unaudited) (audited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents (Note 6) $ 614,877 $ 614,091
Short-term investments (Note 6) 5,369,336 3,876,943
Accounts receivable, net 2,014,350 1,775,734
Inventories (Note 3) 1,270,202 1,409,280
Prepaid expense and other current assets 138,726 53,830
----------- -----------
Total current assets 9,407,491 7,729,878
Investments (Note 6):
Long-term marketable securities 5,095,906 6,533,490
Property and Equipment, at cost
Machinery and equipment 2,206,251 2,189,139
Furniture and fixtures 124,058 122,934
Leasehold improvements 290,159 279,181
2,620,468 2,591,254
----------- -----------
Less - Accumulated depreciation
and amortization 2,171,601 2,124,234
----------- -----------
448,867 467,020
Other Assets:
Investment in Abiomed Limited
Partnership (Note 7) 400,000 -
----------- -----------
$15,352,264 $14,730,388
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (Continued)
CONSOLIDATED BALANCE SHEETS
---------------------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
----------------------------------------
<TABLE>
<CAPTION>
June 30, 1995 March 31, 1995
--------------- ----------------
(unaudited) (audited)
<S> <C> <C>
Current Liabilities:
Accounts payable $ 473,890 $ 198,280
Accrued expenses 1,244,584 1,227,379
Purchase of limited partner units (Note 7) 245,000 -
------------ ------------
Total current liabilities 1,963,474 1,425,659
Stockholders' Investment (Note 4):
Class B Preferred Stock, $.01 par value-
Authorized 1,000,000 shares
Issued and outstanding - none - -
Common Stock, $.01 par value-
Authorized - 10,000,000 shares
Issued and outstanding - 4,885,852
shares at June 30, 1995 and
March 31, 1995 48,859 48,859
Class A Common Stock, $01 par value
Authorized - 2,346,000
Issued and outstanding - 2,040,000 20,400 20,400
Additional paid-in capital 36,476,770 36,476,770
Accumulated deficit (23,157,239) (23,241,300)
------------ ------------
Total stockholders' investment 13,388,790 13,304,729
------------ ------------
$ 15,352,264 $ 14,730,388
============ ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (Continued)
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------- -----------------
June 30, 1995 June 30, 1994
----------------- -----------------
<S> <C> <C>
Revenues:
Products and services $2,124,441 $1,298,979
Contracts 619,049 559,724
---------- ----------
2,743,490 1,858,703
Costs and expenses:
Cost of products and services 914,893 538,701
Research and development (including
costs related to contracts) 658,859 591,590
Selling, general and administrative 1,216,914 1,047,455
---------- ----------
2,790,666 2,177,746
---------- ----------
Net loss from operations (47,176) (319,043)
Interest and other income 131,237 102,995
---------- ----------
Net income (loss) 84,061 ($216,048)
========== ==========
Net income (loss) per common share $0.01 ($0.03)
(Note 5):
Weighted average number of common and
dilutive common equivalent shares
outstanding 6,953,312 6,474,168
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (Continued)
Consolidated Statements of Cash Flows
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
June 30, 1995 June 30, 1994
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<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 84,061 $ (216,048)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities-
Depreciation and amortization 47,367 74,975
Noncash transactions related to Abiomed - (57,791)
Limited Partnership
Changes in assets and liabilities-
Accounts receivable (238,616) (650,246)
Inventories 139,078 (218,306)
Prepaid expenses and other current assets (84,896) (182,630)
Accounts payable 275,610 (38,839)
Accrued expenses 17,205 (56,371)
----------- -----------
Net cash (used in) provided by
operating activities 239,809 (1,345,256)
----------- -----------
Cash Flows from Investing Activities:
(Purchases) sales of short-term investments, net (1,492,393) 2,586,852
(Purchases) sales of long-term investments, net 1,437,584 26,887
Purchases and improvements of property
and equipment (29,214) -
Purchases of limited partners units (155,000) -
----------- -----------
Net cash (used in) provided
by investing activities (239,023) 2,613,739
----------- -----------
Cash Flows from Financing Activities:
Proceeds from exercise of stock options
and stock purchase plan, net - 6,001
----------- -----------
Net cash (used in) provided by - 6,001
financing activities ----------- -----------
Net Increase in Cash and Cash Equivalents,
excluding investments 786 1,274,484
Cash and Cash Equivalents, excluding investments,
at beginning of period 614,091 480,058
----------- -----------
Cash and Cash Equivalents, excluding investments,
at end of period $ 614,877 $ 1,754,542
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Preparation
--------------------
The unaudited consolidated financial statements of ABIOMED, Inc. (the
Company), presented herein have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and note
disclosures required by generally accepted accounting principles. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's latest audited financial
statements, which are contained in the Company's Form 10-K for the year ended
March 31, 1995, which was filed with the Securities and Exchange Commission. In
the opinion of management, the accompanying consolidated financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary to summarize fairly the Company's financial position and results of
operations. The results of operations for the three months ended June 30, 1995
may not be indicative of the results that may be expected for the full fiscal
year.
2. Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, ABIOMED Cardiovascular, Inc., ABIOMED
Research and Development, Inc., ABD Holding Company, Inc., ABIOMED R&D, Inc.,
and ABIODENT, Inc. All significant intercompany accounts and transactions have
been eliminated in consolidation.
3. Inventories
-----------
Inventories include raw materials, work-in-process, and finished goods and
are priced at the lower of cost (first-in, first-out) or market and consist of
the following:
<TABLE>
<CAPTION>
June 30, March 31,
1995 1995
----------- -----------
<S> <C> <C>
Raw Materials $ 494,665 $ 339,686
Work-in-Process 453,293 412,956
Finished Goods 322,244 656,638
---------- ----------
TOTAL $1,270,202 $1,409,280
---------- ----------
</TABLE>
Finished goods and work-in-process inventories consist of direct material,
labor, and overhead.
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited, continued)
4. Stockholders' Investment
------------------------
During the first fiscal quarter of fiscal 1995, options to purchase 15,000
shares of Common Stock were granted with exercise prices ranging from $6.25 to
$7.25 per share. Options to purchase 2,940 shares were canceled during the
quarter. No options were exercised during the quarter.
5. Net Income (Loss) Per Common Share
----------------------------------
Net income (loss) per common share has been computed by dividing the net
income (loss) by the weighted average number of common and common equivalent
shares outstanding during the period. Common equivalent shares, such as stock
options, have not been included in the per share calculation where the effect of
their inclusion would be antidilutive. No common equivalent shares are
considered dilutive in periods, such as the three months ended June 30, 1994, in
which a net loss is reported because all such common equivalent shares are
antidilutive.
6. Cash, Cash Equivalents and Investments
--------------------------------------
The Company classifies any marketable security with an original maturity
date of 90 days or less at the time of acquisition to be a cash equivalent.
Securities, including marketable securities, with original maturities of greater
than 90 days are classified as investments. Such investments are classified as
long-term investments when their maturities are greater than one year from the
balance sheet date. The Company reports investments at cost plus accrued
interest.
7. Abiomed Limited Partnership
---------------------------
Background
----------
Abiomed Limited Partnership (the Partnership) was formed in March 1985 and
provided initial funding for the design and development of two of the Company's
products, the BVS(R) and SupraCor(TM) (the Products). Today, the Partnership is
inactive except for certain royalty rights, described below, on the Company's
sales of the Products.
The Partnership consists of a sole general partner, which is the Company's
wholly owned subsidiary, Abiomed Research and Development, Inc.; a special
limited partner, which is the Company's wholly owned subsidiary ABIOMED
Cardiovascular, Inc. (Cardiovascular); and one hundred thirty-five limited
partner units. As of March 31, 1995, each of these limited partner units was
owned by third party investor limited partners. The limited partner units
aggregate to hold an 89.1% interest in the Partnership. As discussed below, the
Company offered to purchase and has purchased certain of these limited partner
units. Prior to the Company's purchase of certain of these limited partner
units, the Company held a 10.9% interest in the Partnership comprised of 1.0% by
the general partner and 9.9% by the special limited partner.
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited, continued)
7. Abiomed Limited Partnership (Continued)
---------------------------
Royalty
-------
In March 1995, the Company satisfied all of its remaining fixed obligations
to the Partnership. Commencing April 1, 1995 and ending August 3, 2000, the
Company owes a royalty to the Partnership of 5.5% of certain revenues from the
Products made during this period. Because the Company owns 10.9% of the
Partnership, the net royalty is approximately 4.9%. This royalty formula is
subject to certain maximum amounts and to certain additional conditions in the
event that the Company elected to sell the technology.
Purchase of Limited Partner Units
---------------------------------
In May 1995, the Company made an offer to purchase each of the one hundred
thirty-five limited partner units for $10,000 each. As of June 30,1995, forty
limited partner units had been tendered to the Company under this offer. The
Company paid $155,000 and has accrued $245,000 with respect to these tenders in
the fiscal quarter ended June 30, 1995. As of July 25, 1995, the date that the
Company's offer was scheduled to expire, a total of sixty six limited partner
units had been tendered to the Company representing 49% of the limited partner
units and a 43.6% interest in the Partnership. Combined with the Company's
initial 10.9% ownership, the Company owns 54.5% of the Partnership reducing the
effective royalty from 5.5% to approximately 2.5%. The Company's purchase of
these limited partner units has been treated as a long-term asset and is being
amortized over five years.
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
---------------------
Net Losses
----------
Net income and income per share for the three months ended June 30, 1995
------------
were approximately $84,000 and $0.01, respectively. These earnings compare to a
net loss and loss per share of approximately $216,000 and $0.03, respectively,
in the same period of the previous year.
Revenues
--------
In the three months ended June 30, 1995, total revenues were approximately
------------
$2,743,000, 48% higher than total revenues of approximately $1,859,000 in the
same period of the previous year.
Product and service revenues were approximately $2,124,000, 64% higher than
product and service revenues of approximately $1,299,000 in the same period of
the previous year. These results primarily reflect continued increased sales of
the disposable products from a user base which continues to expand. The dental
portion of this revenue, though growing, represents less than 10% of total
revenues. More than 90% of total product and service revenues are from
domestic sources.
Revenues from Research & Development (R&D) contracts and grants for this
quarter were approximately $619,000, 11% higher than the amount of approximately
$560,000 reported in the same quarter of the previous year. This increase
primarily reflects timing of scheduled activities under existing contracts and
grants. All such government contracts contain provisions making them
terminable at the convenience of the government.
Costs and Expenses
------------------
Total costs and expenses for the three months ended June 30, 1995 were
------------
approximately $2,791,000, 28% higher than total costs and expenses of
approximately $2,178,000 in the same fiscal quarter of the previous year. The
majority of this increase reflects expenses incurred to support higher revenues.
Cost of products sold as a percentage of product sales (42%) was relatively
unchanged from the same quarter of the previous year (41%) while increasing in
total cost by approximately $375,000. These increased costs primarily reflect
higher revenue levels.
Total research and development costs increased during the first fiscal
quarter of fiscal 1996 to approximately $659,000, 11% higher than total research
and development costs of approximately $592,000 in the same fiscal quarter of
the previous year. This increase primarily reflects the timing of scheduled
expenditures under contracts and grants.
Selling, general and administrative expenses for the three months ended June 30,
1995 increased approximately $1,217,000, 16% higher than selling, general and
administrative expenses in the same
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Costs and Expenses (continued)
------------------------------
fiscal quarter of the previous year. This increase primarily reflects increased
sales and marketing expenses related to increase revenues.
Interest and Other
------------------
Interest and other income increased to approximately $137,000 in the first
fiscal quarter of 1996 compared with $103,000 in the corresponding quarter of
the prior year primarily due to a higher level of cash and investments.
Liquidity and Capital Resources
-------------------------------
As of June 30, 1995, the Company's balance sheet included approximately
$11,080,000 in cash and investments, an increase of approximately $56,000 from
March 31, 1995. The June 30, 1995 balance includes $615,000 in cash, $5,369,000
in short-term investments and $5,096,000 in investments with various maturities,
the latest of which is October 1996. The Company also has a $3,000,000 line of
credit from a bank which expires on December 1, 1995, and which was entirely
available at June 30, 1995.
Net cash provided by operating activities included net income and
depreciation and amortization expenses of $131,000, an increase in accounts
payable of $276,000 and a decrease in inventories of $139,000. These increases
were partially offset by an increase in accounts receivable of $239,000, and an
increase in prepaid expenses and other current assets of $85,000. The decrease
in inventories and the increase in account receivable were primarily
attributable to increased sales with the decrease in finished goods inventory
partially offset by increases in raw materials and work-in process.
Net cash used in investing activities included $1,492,000 of net purchases
of short-term investments, $155,000 of purchases of limited partner units of
Abiomed Limited Partnership (the "Partnership") and $29,000 of purchases and
improvements of property and equipment which were partially offset by $1,438,000
of net maturities of long-term investments. As set forth in Note 7 of the
financial statements included in this report, the Company has offered to
purchase units of limited partner interests from the investor limited partners
in the Partnership at a purchase price of $10,000 per unit. As of June 30, 1995
the Company had accrued $245,000 to be paid to limited partners (in addition to
the $155,000 paid in the first fiscal quarter). Additional limited partner
units were tendered to the Company between June 30, 1995 and July 25, 1995
committing the Company to additional cash payments totaling $260,000. The
Company may, but is not obligated, to purchase limited partner units
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (continued)
-------------------------------------------
tendered after July 25, 1995. In aggregate, payments made in the first fiscal
quarter combined with these additional payments will total $660,000.
Although the Company does not currently have significant capital commitments
other than as described above, the Company believes that it will continue to
make significant investments over the next several years to support the
development and commercialization of its products.
Health Care Reform
------------------
Private and government proposals for significant health care reform are expected
to continue to affect health care expenditures in the United States as well as
internationally where the Company sells or plans to sell its products. The
Company cannot assess at this time the potential impact that healthcare trends
may have on future operating results because of the uncertainties surrounding
any foreseeable changes.
* * *
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<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits
None
b) Reports on Form 8-K
None
--------------------------------------------------------------------------------
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.
ABIOMED, Inc.
Date: July 31, 1995 /s/ David M. Lederman
-----------------------------
David M. Lederman
Chief Executive Officer
and President
Principal Executive Officer
Date: July 31, 1995 /s/ John F. Thero
-----------------------------
John F. Thero
Vice President Finance
and Administration
Chief Financial Officer
Principal Accounting Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 614,877
<SECURITIES> 5,369,336
<RECEIVABLES> 2,101,994
<ALLOWANCES> 87,644
<INVENTORY> 1,270,202
<CURRENT-ASSETS> 9,407,491
<PP&E> 2,620,468
<DEPRECIATION> 2,171,601
<TOTAL-ASSETS> 15,352,264
<CURRENT-LIABILITIES> 1,963,474
<BONDS> 0
<COMMON> 69,259
0
0
<OTHER-SE> 13,319,531
<TOTAL-LIABILITY-AND-EQUITY> 15,352,264
<SALES> 2,743,490
<TOTAL-REVENUES> 2,743,490
<CGS> 1,573,752
<TOTAL-COSTS> 1,573,752
<OTHER-EXPENSES> 1,216,914
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (131,237)
<INCOME-PRETAX> 84,061
<INCOME-TAX> 0
<INCOME-CONTINUING> 84,061
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 84,061
<EPS-PRIMARY> .012
<EPS-DILUTED> .012
</TABLE>
