<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 SEPTEMBER 30, 1997
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
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)
(978) 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 September 30, 1997, there were 8,264,556 shares outstanding of the
registrant's Common Stock, $.01 par value.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S>
<C>
Part I - Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1997 and March 31, 1997
3-4
Consolidated Statements of Operations
Three and Six Months Ended September 30, 1997
and September 30, 1996
5
Consolidated Statements of Cash Flows
Six Months Ended September 30, 1997 and
September 30, 1996
6
Notes to Consolidated Financial Statements
7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
10-16
Part II - Other Information
17
Signatures
18
</TABLE>
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, 1997
March 31, 1997
(unaudited)
(audited)
<S>
<C>
<C>
Current Assets:
Cash and cash equivalents (Note 6)
$711,425
$1,616,696
Short-term marketable securities (Note 6)
23,600,089
7,744,664
Accounts receivable, net of allowance for
doubtful accounts of $229,000 and
$231,000 at March 31, 1997 and September
30, 1997, respectively
6,257,797
4,816,500
Inventories (Note 3)
1,847,624
1,820,783
Prepaid expenses and other current assets
391,383
173,172
Total current assets
32,808,318
16,171,815
Property and equipment, at cost:
Machinery and equipment
3,981,322
3,147,837
Furniture and fixtures
380,242
241,867
Leasehold improvements
1,262,937
1,118,677
5,624,501
4,508,381
Less: Accumulated depreciation
and amortization
2,988,902
2,618,603
2,635,599
1,889,778
Other assets, net (Notes 1 and 7)
904,286
485,000
$36,348,203
$18,546,593
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
(continued)
CONSOLIDATED BALANCE SHEETS
(continued)
LIABILITIES AND STOCKHOLDERS'
INVESTMENT <TABLE>
<CAPTION>
September 30, 1997
March 31, 1997
(unaudited)
(audited)
<S>
<C>
<C>
Current Liabilities:
Accounts payable
$1,132,730
$1,289,024
Accrued expenses
2,567,027
2,032,506
Total current liabilities
3,699,757
3,321,530
Stockholders' Investment (Note 4):
Class B Preferred Stock, $.01 par
valueAuthorized 1,000,000
shares Issued and outstanding-
none
- -
- -
Common Stock, $.01 par value-
Authorized 25,000,000 shares at September 30,
1997 Issued and Outstanding- 8,264,556 shares
at September 30, 1997 and 7,008,282 shares at
March 31, 1997
82,646
70,082
Additional paid-in capital
53,221,747
37,169,893
Accumulated deficit
(20,655,947)
(22,014,912)
Total stockholders' investment
32,648,446
15,225,063
$36,348,203
$18,546,593
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
(continued)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
Three Months Ended
September 30, 1997
September 30, 1996
September 30, 1997
September 30, 1996
<S>
<C>
<C>
<C>
<C>
Revenues:
Products
$9,324,205
$5,759,555
$5,117,462
$2,891,206
Contracts
3,680,252
1,753,849
1,851,207
936,926
13,004,457
7,513,404
6,968,669
3,828,132
Costs and expenses:
Cost of products
3,437,803
2,122,853
1,908,525
1,074,154
Research and development
3,654,181
1,780,737
2,010,682
916,762
Selling, general and administrative
4,970,150
3,229,235
2,853,605
1,709,642
12,062,134
7,132,825
6,772,812
3,700,558
Net income (loss) from operations
942,323
380,579
195,857
127,574
Interest and other income
416,642
256,537
292,147
126,313
Net income
$1,358,965
$637,116
$488,004
$253,887
Net income per common share (Note 5):
$0.17
$0.09
$0.06
$0.04
Weighted average number of common
and dilutive common equivalent shares
outstanding
7,868,675
7,196,343
8,605,689
7,199,239
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
September 30, 1997
September 30. 1996
<S>
<C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$1,358,965
$637,116
Adjustments to reconcile net income to net cash
provided by (used in) operating activities-
Depreciation and amortization
441,376
192,168
Changes in assets and liabilities-
Accounts receivable
(1,441,297)
(337,286)
Inventories
(26,841)
(164,591)
Prepaid expenses and other assets
(708,574)
(112,073)
Accounts payable
(156,294)
148,932
Accrued expenses
534,521
(252,435)
Net cash provided by operating activities
1,856
111,831
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchases) Maturities of investments, net
(15,855,425)
4,519,658
Purchases of property and equipment and improvements
(1,116,120)
(531,873)
Net cash provided by (used in) investing activities
(16,971,545)
3,987,785
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from private placement of Common Stock, net
15,965,069
- -
Proceeds from exercise of stock options and stock issued
under employee stock purchase plan
99,349
266,401
Net cash provided by financing
activities 16,064,418
266,401
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS,
EXCLUDING INVESTMENTS
(905,271)
4,366,017
CASH AND CASH EQUIVALENTS, EXCLUDING INVEST-
MENTS, AT BEGINNING OF PERIOD
1,616,696
2,938,332
CASH AND CASH EQUIVALENTS , EXCLUDING INVEST-
MENTS, AT END OF PERIOD
$711,425
$7,304,349
</TABLE>
The accompanying notes are an integral part
of these consolidated financial
statements.
<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, 1997, 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 six months ended September 30, 1997 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, and the accounts of its
majority-owned subsidiary Abiomed Limited Partnership. 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>
September 30,
1997
March 31,
1997
<S>
<C>
<C>
Raw Materials
$919,677
$896,433
Work-in-Process
360,025
373,383
Finished Goods
567,922
550,967
TOTAL
$1,847,624
$1,820,783
</TABLE>
Finished goods and work-in-process inventories consist of direct
material, labor and overhead.
<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
In July 1997, the Company completed a private placement of
1,242,710 shares of its Common Stock to Genzyme Corporation and certain of
the Company's directors. Proceeds to the Company from the private
placement, net direct expenses, totaled approximately $15,965,000.
During the three months ended September 30, 1997, options to
purchase 68,250 shares of Common Stock were granted at exercise prices
ranging from $12.50 to $14.00 per share. Options to purchase 21,200 shares
were canceled during the quarter. Options to purchase 2,425 shares were
exercised in the second quarter at exercise prices ranging from $5.625 to
$8.00 per share.
During the three months ended September 30, 1997, 1,549 shares of
Common Stock were issued under the Employee Stock Purchase Plan.
On August 13, 1997, the Company declared a dividend of one Preferred
Share Purchase Right (the "Right") for each outstanding share of Common
Stock to its stockholders of record at August 28, 1997. Each right
entitles the registered holder to purchase from the Company one one-
thousandth of a share of Series A Junior Participating Preferred Stock
with a par value of $0.01 per share, at a price of $90.00 per one one-
thousandth of a share, subject to adjustment.
In accordance with the terms set forth in the Rights Agreement, the
Rights are not exercisable until the occurrence of certain events, as defined.
In addition, the registered holders of the Rights will have no rights as a
Common stockholder of the Company until the Rights are exercised. The
terms of the Rights may be amended by the Board of Directors. The Rights
will expire on August 13, 2007.
5. Net Income Per Common Share
Net income per common and common equivalent share is computed by
dividing net income by the weighted average number of common and common
equivalent shares outstanding during the period using the treasury stock
method.
6. Cash and Cash Equivalents
The Company classifies any marketable security with a 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.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(unaudited,
continued)
7. Other Assets
Other assets includes $414,000 in unamortized purchase cost of
the Company's majority interest of the Abiomed Limited Partnership. The
interest in the Abiomed Limited Partnership is being amortized over five
years, its estimated useful life. Abiomed Limited Partnership (the
Partnership) was formed in March 1985 and provided initial funding for
the design and development of certain of the Company's products.
Through August 3, 2000, the Company owes a royalty to the
Partnership of 5.5% of certain revenues from these products. Because the
Company owns 61.7% of the Partnership, the net royalty expense to the
Company is approximately 2.1% of these product revenues. This royalty
formula is subject to certain maximum amounts and to certain additional
adjustments in the event that the Company sells the technology. The
Partnership is inactive except with respect to receiving and
distributing proceeds from these royalty rights.
Also included in other assets are long term accounts receivable
related to sales-type leases. The terms of these non-cancellable leases are
one to three years. As of September 30, 1997, approximately $490,000 is
included
in other assets.
8. Recent Accounting Development
On March 3, 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 128, "Earnings Per Share." This statement establishes
standards for the computation and presentation of earnings per share and
applies to entities with publicly held common stock or potential common
stock. This statement, which supersedes APD Opinion No. 15, is effective
for financial statements for both interim and annual periods ending after
December 15, 1997. This statement when adopted, will require the
restatement of prior years' earnings per share. Management expects that
the adoption of this new statement will not have a material impact on the
Company's previously disclosed earnings per share.
<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
THREE MONTHS ENDED SEPTEMBER 30, 1997
NET INCOME
Net income and income per share increased to $488,000 and $0.06 per
share, respectively, for the three months ended September 30, 1997 compared
to net income and income per share of $254,000 and $0.04 per share,
respectively, for the three months ended September 30, 1996.
REVENUES
Total revenues, excluding interest income, increased by 82% to $7.0
million in the three months ended September 30, 1997 from $3.8 million in
the three months ended September 30, 1996. This increase was attributable
to an increase in both product and contract revenues.
Product revenues increased by 77% to $5.1 million in the three
months ended September 30, 1997 from $2.9 million in the three months ended
September 30, 1996. This increase was primarily attributable to increased
unit sales of BVS blood pumps, consoles and related accessories. Product
revenues for the three months ended September 30, 1997 included a $230,000
reduction in the Company's BVS blood pump backlog and $250,000 in
revenue from the a single international distributor to be used by that
distributor to conduct BVS clinical trials for that distributor's territory.
As of September 30, 1997, the Company's backlog of unshipped customer orders
was $370,000. More than 90% of total product revenues in the three months
ended September 30, 1997 were derived from domestic sources.
Contract revenues increased by 98% to $1.9 million in the three
months
ended September 30, 1997 from $937,000 in the three months ended
September 30, 1996. This increase primarily reflected increased activity
under the Company's contract to develop a battery-powered Implantable
Total Artificial Heart (TAH). The Company accounts for revenue under its
government contracts and grants as work is performed, provided that the
government has appropriated sufficient funds for the work. Through
September 30, 1997, the government has appropriated $4.9 million of the
$8.5 million of its TAH contract amount. The original government
appropriation schedule calls for no further appropriation for the TAH
contract until October 1998. This schedule is subject to change at the
discretion of the government. During the three months ended September 30,
1997, the Company's expenditures under the TAH contract exceeded the
appropriated amount, resulting in the Company recognizing as revenue all of
the remaining $3.2 million balance of the $4.9 million appropriated under
the TAH contract.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued)
REVENUES (continued)
While the Company currently plans to further increase its
expenditures in connection with the development of the TAH, the Company will
not recognize any further contract revenues under the TAH contract until such
time as additional funds are appropriated under the TAH contract, if ever.
The Company believes that certain of its costs incurred prior to further
appropriation may be reimbursable under the TAH contract, if and when
additional appropriation under the TAH contract is made. Due to the Company's
accelerated TAH development activity and the timing of
government appropriations, the Company believes that it will experience
significant quarterly fluctuations in contract revenues. The Company also
believes that the Company's total expenses to complete the development of
the TAH will significantly exceed the remaining $3.6 million TAH contract
amount. As a result, the Company believes that it likely will incur
losses, potentially as soon as the quarter ending December 31, 1997.
As of September 30, 1997, the Company's total backlog of research
and development contracts and grants was $8.7 million, including $3.6
million for TAH research and development and $3.0 million for Heart Booster
research and development. Funding for the Company's government research
and development contracts is subject to government appropriation, and all of
these contracts contain provisions which make them terminable at the
convenience of the government.
COSTS AND EXPENSES
Total costs and expenses increased to $6.8 million, 97% of total revenues,
for the three months ended September 30, 1997, from $3.7 million, 97% of total
revenues, for the three months ended September 30, 1996. The majority of
this increase in costs and expenses was incurred to support higher
revenues and increased development activities related of the TAH.
Cost of products sold as a percentage of product revenues was
37.3% for the three months ended September 30, 1997 as compared to 37.2%
in the three months ended September 30, 1996.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued)
COSTS AND EXPENSES (continued)
Research and development expenses increased by 119% to $2.0
million, 29% of total revenues, for the three months ended September 30,
1997, from $917,000, 24% of total revenues for the three months ended
September 30, 1996. The increase primarily reflected a higher level of
activity under the Company's cost-plus-fixed-fee research and development
contracts and grants, particularly the TAH contract. Research and
development expenses during the six months ended September 30, 1997 also
included $230,000 of expenses incurred in connection with the Company's
development activities for the TAH in excess of the appropriated amounts
under the TAH contract. The Company anticipates that its research and
development expenses will continue to increase significantly as a result of
its plans to increase its internally funded research and development
efforts for the TAH.
Selling, general and administrative expenses increased by 67% to
$2.9 million, 41% of total revenues, for the three months ended September
30, 1997, from $1.7 million, 45% of total revenues, for the three months
ended September 30, 1996. The increase in absolute dollars primarily
reflected increased sales and marketing expenses, particularly increased
personnel and sales commissions, related to the increase in product revenues
as well as additional administrative personnel. The decrease in selling,
general and administrative expenses as a percentage of total revenue
reflected the Company's higher revenue base to support these increased
costs.
INTEREST AND OTHER
Interest and other income consists primarily of interest on the
Company's investment balances, net of interest and other expenses. Interest
income and other income increased to $292,000, 4% of total revenues, for the
three months ended September 30, 1997 from $126,000, 3% of total revenues,
for the three months ended September 30, 1996. This increase primarily
reflects interest earned on the Company's higher average investment
balances.
Income taxes incurred during these periods were not material and the
Company continues to have significant net tax operating loss carryforwards
and tax credit carryforwards.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued)
SIX MONTHS ENDED SEPTEMBER 30, 1997
NET INCOME
Net income and income per share increased to $1.4 million and
$0.05 per share, respectively, for the six months ended September 30, 1997
compared to net income and income per share of $637,000 and $0.04 per
share, respectively, for the six months ended September 30, 1996.
REVENUES
Total revenues, excluding interest income, increased by 73% to
$13.0 million in the six months ended September 30, 1997 from $7.5 million
in the six months ended September 30, 1996. This increase was attributable
to an increase in both product and contract revenues.
Product revenues increased by 62% to $9.3 million in the six months
ended September 30, 1997 from $5.8 million in the six months ended
September 30, 1996. This increase was primarily attributable to increased
unit sales of BVS blood pumps, consoles and related accessories. Product
revenues during the six months ended September 30, 1997 included a $640,000
reduction in the Company's backlog for BVS blood pumps. This backlog had
primarily resulted from the Company's voluntary recall of certain
production lots of single-use BVS blood pumps during the quarter ended
December 31, 1996. As of September 30, 1997, the Company's backlog of
unshipped customer orders was $370,000. More than 90% of total product
revenues in the six months ended September 30, 1997 were derived from
domestic sources.
Contract revenues increased by 110% to $3.7 million in the six
months ended September 30, 1997 from $1.8 million in the six months ended
September 30, 1996. This increase primarily reflected increased activity
under the Company's TAH contract. The Company accounts for revenue under its
government contracts and grants as work is performed, provided that the
government has appropriated sufficient funds for the work. Through September
30, 1997, the government has appropriated $4.9 million of the $8.5 million
of its TAH contract amount. The original government appropriation schedule
calls for no further appropriation for the TAH contract until October 1998.
This schedule is subject to change at the discretion of the government.
During the six months ended September 30, 1997, the Company's expenditures
under the TAH contract exceeded the appropriated amount, resulting in the
Company recognizing as revenue all of the remaining $3.2 million balance of
the $4.9 million appropriated under the TAH contract.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued)
REVENUES (continued)
As of September 30, 1997, the Company's total backlog of research
and development contracts and grants was $8.7 million, including $3.6
million for TAH research and development and $3.0 million for Heart Booster
research and development. Funding for the Company's government research
and development contracts is subject to government appropriation, and all of
these contracts contain provisions which make them terminable at the
convenience of the government.
COSTS AND EXPENSES
Total costs and expenses increased to $12.1 million, 93% of total revenues,
for the six months ended September 30, 1997 from $7.1 million, 95% of total
revenues, for the six months ended September 30, 1996. The majority of this
increase in costs and expenses was primarily incurred to support higher
revenue levels and increased development activities related to the TAH.
Cost of products sold as a percentage of product revenues remained
unchanged at 36.9% for the six months ended September 30, 1997 and 1996.
Research and development expenses increased by 105% to $3.7 million,
28% of total revenues, for the six months ended September 30, 1997, from
$1.8 million, 24% of total revenues, for the six months ended September
30, 1996. The increase primarily reflected a higher level of activity
under the Company's under cost-plus-fixed-fee research and development
contracts and grants, particularly the TAH contract. Research and
development expenses during the six months ended September 30, 1997 also
included $230,000 of expenses incurred in connection with the Company's
development activities for the TAH in excess of the appropriated amounts
under the TAH contract. The Company anticipates that its research and
development expenses will increase significantly as a result of its plans
to increase its internally funded research and development efforts for the
TAH.
Selling, general and administrative expenses increased by 54% to
$5.0 million, 38% of total revenues, for the six months ended September 30,
1997 from $3.2 million, 43% of total revenues, for the six months ended
September 30, 1996. The increase in absolute dollars primarily reflected
increased sales and marketing expenses, particularly increased personnel
and sales commissions, related to the increase in product revenues, as well
as additional administrative personnel. The decrease in selling, general
and administrative expenses as a percentage of total revenues reflected the
Company's higher revenue base to support these increased costs.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued)
INTEREST AND OTHER
Interest and other income consists primarily of interest on the
Company's investment balances, net of interest and other expenses. Interest
income increased to $417,000, 3% of total revenues, for the six months ended
September 30, 1997, from $257,000, 3% of total revenues, for the six months
ended September 30, 1996. This increase primarily reflects the interest
earned on the Company's higher average investment balances.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1997, the Company had $24.3 million in cash and
short-term marketable securities. The Company also has a $3,000,000 line of
credit from a bank that expires in September 1998, and which was entirely
available at September 30, 1997.
In the six months ended September 30, 1997, operating activities
provided cash of $2,000. Net cash provided by operating activities during
the six months ended September 30, 1997 reflected net income of $1.4
million, including depreciation and amortization expense of $440,000, and an
increase in accrued expenses of $535,000. These sources of cash were
partially offset by an increase in accounts receivable of $2.0 million, a
decrease in accounts payable of $156,000, and increases in prepaid expenses
and inventory of $220,000 and $30,000, respectively. The increase in
accounts receivable was primarily attributable to the Company's increased
sales, including an increase in product revenues attributable to sales-type
lease transactions.
During the six months ended September 30, 1997, investing
activities used $17.0 million of cash. Net cash used by investing
activities included $15.9 million of purchases of short-term investments
and $1.1 million of purchases and improvements of property and equipment.
During the six months ended September 30, 1997, financing
activities provided $16.1 million of cash. Net cash provided by financing
activities
included $16.0 million in net proceeds from the private placement
of Common Stock to Genzyme Corporation and certain of the Company's
directors in July 1997.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
Although the Company does not currently have significant capital
commitments, 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 and the expansion of its manufacturing
facility. On September 29, 1997, the Company filed a registration statement
with the Securities and Exchange Commission for a proposed public offering
of 2,400,000 additional shares of Common Stock. In the proposed offering,
2,250,000 of the shares are expected to be offered by the Company and
150,000 shares are expected to be offered by Selling Shareholders. The
Company has also granted to the underwriters a thirty day option to
purchase up to an additional 360,000 shares of the Company's Common Stock
solely to cover over-allotments.
The Company believes that its revenues and existing resources will
be sufficient to fund its planned operations, including planned increases in
its internally funded TAH development efforts, for at least the next twelve
months.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
No material litigation.
Item 2. Changes in Securities
In July 1997, the Company completed a private placement of a total
of 1,242,710 shares of Common Stock, par value $.01 per share, to Genzyme
Corporation and certain of the Company's directors for a purchase price of
$13.00 per share, for a total purchase price of approximately $16.2 million.
The securities issued in the foregoing transaction were not registered under
the Securities Act of 1933, as amended (the "Act"), in reliance upon the
exemption from registration which is set forth in Section 4(2) of the Act
relating to sales by an issuer not involving any public offering.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Shareholders held on August
13, 1997, the stockholders approved the following:
a) Elected two persons to serve as Class II directors as follows:
Director
Votes For
Votes Withheld
John F. O'Brien
6,210,801
22,870
Henri A. Termeer
6,212,001
21,670
b) A proposal to amend the Company's 1988 Employee
Stock Purchase Plan (the "Plan") to expand the eligibility
criteria to participate in the Plan to include employees who
have completed six months of employment with the Company. The
proposal received 6,169,709 votes for and 49,321 votes against.
There were 14,641 abstentions and 784,170 non-voting.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
10.1 Amendment to ABIOMED, Inc. 1988 Employee Stock
Purchase Plan
10.2 Amendment to ABIOMED, Inc. 1992 Combination
Stock Option Plan
b) Reports on Form 8-K
Form 8-K dated August 13, 1997 reporting the Company's
adoption of a Shareholders' Rights Plan.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
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: October 14, 1997 /s/ David M. Lederman
David M. Lederman
CEO and President
Date: October 14, 1997 /s/ John F. Thero
John F. Thero
Vice President Finance
and Treasurer
Chief Financial Officer
Principal Accounting
Officer
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the Company's
Consolidated Income Statement, Consolidated Balance Sheet and Consolidated
Statement of Cash Flows and is qualified in its entirety by reference to Form
10-Q for the period ended September 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 711425
<SECURITIES> 23600089
<RECEIVABLES> 6257797
<ALLOWANCES> 231000
<INVENTORY> 1847624
<CURRENT-ASSETS> 32808318
<PP&E> 5624501
<DEPRECIATION> 2988902
<TOTAL-ASSETS> 36348203
<CURRENT-LIABILITIES> 3699757
<BONDS> 0
0
0
<COMMON> 82646
<OTHER-SE> 32565800
<TOTAL-LIABILITY-AND-EQUITY> 36348203
<SALES> 13004457
<TOTAL-REVENUES> 13004457
<CGS> 3437806
<TOTAL-COSTS> 12062134
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (416642)
<INCOME-PRETAX> 1358965
<INCOME-TAX> 1358965
<INCOME-CONTINUING> 1358965
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1358965
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
<PAGE>
AMENDMENT
TO
ABIOMED, INC.
1992 COMBINATION STOCK OPTION PLAN, AS AMENDED
ABIOMED, Inc., a Delaware corporation (the "Corporation")
hereby adopts the following Amendment to the ABIOMED, Inc. 1992
Combination Stock Option Plan, as amended (the "1992 Plan"),
effective as of August 14, 1996:
1. Section IV, Paragraph (b) is amended by deleting a
portion of the first sentence of the paragraph, so that the paragraph,
as amended, reads in its entirety as follows:
"(b) Term. Stock Options shall be for such periods as
may be determined by the Committee, provided that in no event
may a 1992 Plan ISO be exercisable (including provisions, if
any, for exercise in installments) subsequent to ten years after
the date of grant, or, in the case of 1992 Plan ISOs granted to
Ten Percent Stockholders, more than five years after the date
of grant.
2. That the number of shares of Common Stock authorized to
be issued under the 1992 Plan be increased from 1,300,000 shares to
1,550,000 shares.
Executed effective as of the date set forth above.
ABIOMED, INC.
By: _______________________________________
Name:
Title:
<PAGE>
AMENDMENT
TO
ABIOMED, INC.
1988 EMPLOYEE STOCK PURCHASE PLAN
ABIOMED, Inc., a Delaware corporation (the "Corporation")
hereby adopts the following Amendment to the ABIOMED, Inc. 1988
Employee Stock Purchase Plan, effective as of November 21, 1996:
1. Section 2, Paragraph (a) is amended by replacing the
word "eighteen" with the word "six" in the first sentence of the
paragraph, so that the first sentence, as amended, reads in its
entirety as follows:
"All employees of the Company or any of its participating
subsidiaries who have completed six months of employment
with the Company or any of its subsidiaries on or before the
first day of the Applicable Payment Period (as defined below)
shall be eligible to receive options under this Plan to purchase
the Company's Common Stock (except employees in countries
whose laws make participation impractical).
Executed effective as of the date set forth above.
ABIOMED, INC.
By: _________________________________
Name:
Title:
