<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 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 0-18053
LASERSCOPE
(Exact name of Registrant as specified in its charter)
CALIFORNIA 77-0049527
(State of Incorporation) (I.R.S. Employer Identification No.)
3052 ORCHARD DRIVE, SAN JOSE, CALIFORNIA 95134-2011
(Address of principal executive offices)
Registrant's telephone number: (408) 943-0636
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.
Yes X No
----- -----
The number of shares of Registrant's common stock issued and outstanding as of
October 31, 1997 was 12,304,559.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION......................................................... 3
Item 1. Condensed Consolidated Balance Sheets..................................... 3
Condensed Consolidated Statements of Operations........................... 4
Condensed Consolidated Statements of Cash Flows........................... 5
Notes to Condensed Consolidated Financial Statements...................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............................. 9
Results of Operations..................................................... 9
Liquidity and Capital Resources........................................... 12
Item 3. Qualitative and Quantitative Disclosures About Market Risk................ 14
PART II. OTHER INFORMATION........................................................... 14
Item 1. Legal Proceedings........................................................ 14
Item 2. Changes in Securities.................................................... 14
Item 3. Defaults upon Senior Securities.......................................... 14
Item 4. Submission of Matters to a Vote of Security Holders...................... 14
Item 5. Other Items.............................................................. 14
Item 6. Exhibits and Reports on Form 8-K........................................ 14
SIGNATURES ......................................................................... 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
LASERSCOPE
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(thousands) 1997 1996
- --------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,905 $ 3,917
Accounts receivable, net 16,685 13,286
Inventories 21,616 17,407
Other current assets 893 926
-------- --------
Total current assets 42,099 35,536
Property and equipment, net 5,590 3,109
Investment in NWL -- 1,681
Developed technology and other intangibles, net 5,083 3,473
Other assets 668 670
-------- --------
Total assets $ 53,440 $ 44,469
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,542 $ 9,246
Accrued compensation 2,321 2,947
Bank loans 4,863 --
Other current liabilities 4,955 4,899
-------- --------
Total current liabilities 19,681 17,092
Obligations under capital leases 203 202
Mortgages & other long term loans 1,701 --
Commitments and contingencies
Minority interest in net assets of NWL 529 --
Shareholders' equity:
Common stock 50,855 48,798
Accumulated deficit (18,450) (20,988)
Translation adjustments (704) (260)
Notes receivable from shareholders (375) (375)
-------- --------
Total shareholders' equity 31,326 27,175
-------- --------
Total liabilities and shareholders' equity $ 53,440 $ 44,469
======== ========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE> 4
LASERSCOPE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(thousands except per share amounts) 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $15,704 $ 10,561 $ 46,674 $ 26,764
Cost of sales 8,104 5,226 24,969 13,366
------- -------- -------- --------
Gross margin 7,600 5,335 21,705 13,398
Operating expenses:
Research and development 893 620 2,258 1,771
Purchased in-process
research and development -- 2,376 -- 2,376
Selling, general and administrative 5,382 4,285 16,060 10,778
Other non-recurring charges -- 872 -- 872
------- -------- -------- --------
6,275 8,153 18,318 15,797
Operating income (loss) 1,325 (2,818) 3,387 (2,399)
Interest and other income (expense), net -- 7 (24) 29
------- -------- -------- --------
Income (loss) before income
taxes and minority interest 1,325 (2,811) 3,363 (2,370)
Provision for income taxes 310 -- 637 53
------- -------- -------- --------
Income (loss) before minority interest 1,015 (2,811) 2,726 (2,423)
Minority interest 114 -- 188 --
------- -------- -------- --------
Net income (loss) $ 901 $ (2,811) $ 2,538 $ (2,423)
======= ======== ======== ========
Net income (loss) per share $ 0.07 $ (0.32) $ 0.20 $ (0.32)
======= ======== ======== ========
Shares used in per share calculations 12,986 8,731 13,007 7,629
======= ======== ======== ========
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE> 5
LASERSCOPE
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(thousands) 1997 1996
- ------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 2,538 $(2,423)
Adjustments to reconcile net income (loss) to
cash provided (used) by operating activities:
Depreciation and amortization 1,656 940
Purchased in-process research and development -- 2,376
Increase (decrease) from changes in:
Accounts receivable (1,975) (877)
Inventories (714) 1,709
Other current assets 157 216
Other assets -- (100)
Accounts payable (3,355) 276
Accrued compensation (626) 338
Other current liabilities 30 126
Minority interest 188 --
------- -------
Cash provided (used) by operating activities (2,101) 2,581
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,240) (223)
Cash paid for Heraeus Surgical acquisition, net of cash received -- (1,430)
Cash paid for NWL acquisition, net of cash received (960) --
Other (264) (111)
------- -------
Cash used by investing activities (3,464) (1,764)
------- -------
CASH USED BY FINANCING ACTIVITIES:
Payments on obligations under capital leases & mortgages (70) (10)
Proceeds from the sale of common stock under stock plans 2,057 329
Proceeds from short-term bank loans 3,866 --
Repayment of short-term bank loans (1,300) --
------- -------
Cash provided by financing activities 4,553 319
Increase (decrease) in cash and cash equivalents (1,012) 1,136
Cash and cash equivalents, beginning of period 3,917 2,278
------- -------
Cash and cash equivalents, end of period $ 2,905 $ 3,414
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $223 $ 10
Income taxes $118 $76
</TABLE>
5
<PAGE> 6
See notes to condensed consolidated financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
1. The accompanying condensed consolidated financial statements include
Laserscope (the "Company") and its wholly and majority-owned
subsidiaries. All intercompany transactions and balances have been
eliminated. While the financial information in this report is unaudited,
in the opinion of management, all adjustments (which included only
normal recurring adjustments) necessary to present fairly the financial
position and results of operations as of and for the periods indicated
have been recorded.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those reported.
It is suggested that these consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes
thereto for the year ended December 31, 1996 included in the Company's
annual report on Form 10-K/A for the year ended December 31, 1996. The
results of operations for the three and nine month periods ended
September 30, 1997 are not necessarily indicative of the results
expected for the full year.
2. Inventory was comprised of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------- -------
<S> <C> <C>
Sub-assemblies and purchased parts $14,855 $12,015
Finished goods 6,761 5,392
------- -------
$21,616 $17,407
======= =======
</TABLE>
(See note 7 for a description of the impact from the NWL
Laser-Technologie acquisition.)
3. Net income (loss) per share is based upon the weighted average number of
shares of common stock outstanding and dilutive common equivalent shares
from stock options (using the treasury stock method).
4. The Company invests its excess cash in investment grade debt
instruments. The Company considers cash equivalents to be financial
instruments that are readily convertible to cash, subject to no more
than insignificant interest rate risk and that have original maturities
of three months or less.
At September 30, 1997 and December 31, 1996 the Company's cash
equivalents were in the form of institutional money market accounts and
totaled $1.0 million and $1.8 million, respectively. At September 30,
1997 and December 31, 1996 the Company had no investment in debt
securities.
5. In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share", which is required to be adopted
on December 31, 1997. At that time, the Company will be required to
change the method currently used to compute earnings per share and to
restate all prior periods. Under the new requirements for calculating
primary earnings per share, the dilutive effect of stock
6
<PAGE> 7
options will be excluded. The impact of Statement 128 is expected to
have no material effect in the three month period ended September 30,
1997; to increase primary earnings per share in the nine month period
ended September 30, 1997 by $0.01 per share and to have no material
effect on the primary earnings per share for the corresponding periods
in 1996. The impact of Statement 128 on the calculation of fully diluted
earnings per share for these periods is not material.
6. On August 30, 1996 the Company completed the acquisition of Heraeus
Surgical, Inc. ("HSI"). The acquisition was accounted for as a purchase.
Accordingly, the operating results of HSI are included in the Company's
consolidated results of operations for the quarter and nine months ended
September 30, 1997; however, the Company's consolidated results of
operations for the corresponding periods in 1996 only include HSI
results from August 30, 1996 through the end of the respective period.
7. In March 1995, the Company entered into an agreement with NWL
Laser-Technologie ("NWL") whereby the Company paid approximately $1.6
million in exchange for a cross-distribution and development agreement,
minority equity position in NWL and an option to purchase all of the
ownership interests in NWL.
On June 13, 1997, the Company exercised its option and increased its
ownership interest to 52% of NWL. The purchase price was allocated to
the acquired assets and liabilities based on Company estimates of their
respective fair values. The consolidation of the acquired assets and
liabilities significantly impacted the Company's Balance Sheet at
September 30, 1997 as depicted in the following tables:
The approximate purchase price for the NWL acquisition was (in
thousands):
<TABLE>
<S> <C>
Laserscope investment prior to June 1997 $1,640
Cash paid in June 1997 1,000
------
Total $2,640
======
</TABLE>
The allocation of the approximate purchase price was determined as
follows:
<TABLE>
<S> <C>
Net tangible assets acquired:
Accounts receivable, net $ 1,430
Inventories 3,500
Property, plant & equipment 1,100
Other assets 380
Less: Accounts payable and other current liabilities (3,950)
Mortgages and other long term debt (1,750)
-------
Total net tangible assets 710
Minority interest in net tangible assets (340)
-------
Laserscope interest in net tangible assets 370
Intangible assets acquired:
Developed technology & workforce 2,270
-------
$ 2,640
</TABLE>
7
<PAGE> 8
8. The following unaudited pro forma combined results of operations of the
Company and NWL for the three and nine months ended September 30, 1997
and September 30, 1996 have been prepared assuming that the NWL
acquisition had occurred at the beginning of the period presented. The
following pro forma information is not necessarily indicative of the
results that would have occurred had the acquisition been completed at
the beginning of the period indicated, nor is it indicative of future
operating results (in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $15,704 $ 12,983 $48,429 $ 30,043
Income (loss) from operations $ 1,325 $ (2,899) $ 3,027 $ (2,771)
Net income (loss) $ 901 $ (3,038) $ 2,351 $ (2,861)
Net income (loss) per share $ 0.07 $ (0.35) $ 0.18 $ (0.37)
Shares used in per share calculations 12,986 8,731 13,007 7,629
</TABLE>
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
Except for the historical information contained in this Quarterly Report on Form
10-Q, the matters discussed herein are forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that all forward-looking statements are subject to
certain risks and uncertainties that could cause the actual results to differ
materially from those projected. Factors that could cause actual results to
differ materially include, but are not limited to, the risks associated with the
acquisitions of Heraeus Surgical, Inc. ("HSI") and NWL Laser-Technologie, GmbH
("NWL"), including the integration of the operations and assets acquired and the
assumption of the liabilities assumed by Laserscope, the timing of orders and
shipments, the Company's ability to balance its inventory and production
schedules, the timely development, clearance by the F.D.A. and other regulatory
agencies and market acceptance of new products and surgical/therapeutic
procedures, the impact of competitive products and pricing, the Company's
ability to raise capital on terms acceptable to the Company, or at all, the
Company's ability to expand further into international markets, and public
policy relating to health care reform in the United States and other countries.
The Company desires to continue expansion of its operations outside of the
United States and to enter additional international markets, requiring
significant management attention and financial resources and further subjecting
the Company to the risks of operating internationally. These risks include
unexpected changes in regulatory requirements, delays resulting from difficulty
in obtaining export licenses for certain technology, customs, tariffs and other
barriers and restrictions, and the burdens of complying with a variety of
foreign laws. The Company is also subject to general geopolitical risks in
connection with its international operations, such as political and economic
instability and changes in diplomatic and trade relationships. The Company
cannot predict whether quotas, duties, taxes or other charges or restrictions
will be imposed by the United States, Japan, countries in the European Union or
other countries upon the import or export of the Company's products in the
future, or what effect any such actions would have on its business, financial
condition or results of operations. In addition, fluctuations in currency
exchange rates may negatively impact the Company's ability to compete in terms
of price against products denominated in local currencies. In addition, there
can be no assurance that regulatory, geopolitical and other factors will not
adversely impact the Company's operations in the future or require the Company
to modify its current business practices.
Other risks are detailed from time to time in the Company's press releases and
other public disclosure filings with the U.S. Securities and Exchange Commission
(SEC), copies of which are available upon request from the Company. The
forward-looking statements included herein speak only as of the date hereof. The
Company assumes no obligation to update any forward-looking statements included
herein.
RESULTS OF OPERATIONS:
The following discussion should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included in Part I -- Item 1
of this Quarterly Report and the audited financial statements and notes thereto
and Management's Discussion and Analysis of Financial Condition and Results of
Operations for the year ended December 31, 1996 contained in the Company's
Annual Report on Form 10-K/A.
9
<PAGE> 10
The following table contains selected income statement information which serves
as the basis of the discussion of the Company's results of operations for the
quarter and nine months ended September 30, 1997 compared with the corresponding
periods in 1996 (in thousands except for percentages):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30, 1997 SEPT. 30, 1996 % SEPT. 30, 1997 SEPT. 30, 1996 %
AMOUNT %(a) AMOUNT %(a) CHANGE AMOUNT %(a) AMOUNT %(a) CHANGE
------ ---- ------ ---- ------ ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues from sales of:
Lasers $ 8,298 53% $ 5,292 50% 57% $22,202 48% $12,270 46% 81%
Ascent medical systems 2,225 14% 550 5% 305% 7,763 17% 550 2% 1,311%
Instruments & supplies 3,298 21% 3,331 32% (1)% 10,953 23% 10,092 38% 9%
Service 1,883 12% 1,388 13% 36% 5,756 12% 3,852 14% 49%
------- --- ------- --- --- ------- --- ------- --- --
Total net revenues $15,704 100% $10,561 100% 49% $46,674 100% $26,764 100% 74%
Gross margin $ 7,600 48% $ 5,335 51% 42% $21,705 47% $13,398 50% 62%
Research & development $ 893 6% $ 620 6% 44% $ 2,258 5% $ 1,771 7% 27%
Selling, general & admin. $ 5,382 34% $ 4,285 41% 26% $16,060 34% $10,778 40% 49%
</TABLE>
(a) expressed as a percentage of total net revenues.
The Company's results for the quarter and nine month period ended September 30,
1997 were favorably impacted by the acquisition of a majority interest in NWL
which closed June 13, 1997. NWL contributed approximately $1.0 million in
revenue and $80 thousand in net income after distribution to minority interests
during the period from the closing date until June 30, 1997 and $1.9 million in
revenue and $124 thousand in net income after distribution to minority interests
during the quarter ended September 30, 1997.
Net revenues increased during the three and nine months ended September 30, 1997
relative to the corresponding periods of 1996 as a combined result of higher
unit shipments of the Company's laser systems at lower average selling prices,
and shipments of products and sales of services acquired in the acquisition of
HSI completed in August 1996 and shipments of products acquired in the
acquisition of NWL completed in June 1997.
Revenues from the sales of laser systems increased during the quarter and nine
month periods ended September 30, 1997 relative to the same periods in 1996
primarily due to higher unit shipments of the Company's Aura office lasers and
to a lesser extent, sales of lasers acquired in the acquisitions of HSI and NWL.
Average unit prices decreased during these periods as a combined result of the
greater shipments of lower priced Aura office laser units as well as increased
shipments to independent international distributors. The Company believes that
the continuing trend toward reduced health care costs in the United States is
still a factor which continues to impact negatively capital equipment
procurement by its hospital customers in the United States. As a result, the
Company expects that its revenue mix trends for laser equipment in the U.S.
market will continue to shift toward its lower priced Aura office laser.
During the three months ended September 30, 1997 revenues from sales of
instrumentation and disposable supplies were at approximately the same level as
in the corresponding period in 1996. This is due principally to the combined
effect of increased shipments of scanning devices sold as accessories to the
Aura office laser system offset by lower shipments of side-firing devices which
the Company sells for use in prostate surgeries. The increase in revenues from
the sales of these products during the nine months ended September 30, 1997
compared to the corresponding periods in 1996 is due principally to the same
reasons as
10
<PAGE> 11
those which affected the three months ended September 30, 1997 with the decline
in sales of side firing devices increasing as the year progressed. The decreases
in percentage of net revenues were primarily the result of revenues from the
sales of lasers and AMS equipment increasing at a faster rate than revenues from
the sales of instrumentation and disposable supplies.
The Company believes that acceptance of lasers in aesthetic surgery,
dermatology, urology, and ear, nose and throat surgery will continue to be
important to its business. In addition, the adoption of photodynamic therapy by
medical practitioners will be important. The Company continues to invest in
developing new instrumentation for emerging surgical applications and to educate
surgeons in the United States and internationally to encourage the adoption of
such new applications. However, there can be no assurance that such investments
will encourage adoption of the Company's products. Finally, penetration of the
international market, although increasing, has been limited.
The decrease in gross margin as a percentage of net sales during the quarter and
nine months ended September 30, 1997 relative to the corresponding periods of
1996 is due in part to revenues generated from sales of AMS products. These
products generally generate lower gross margins than product lines that the
Company manufactures. In addition, a higher proportion of revenues from sales to
independent international distributors were generated during the first nine
months of 1997 than in the first nine months of 1996. These revenues generally
generate lower gross margins than those generated by revenues from sales through
the Company's direct sales force. The Company expects that gross margin as a
percentage of revenues for the remainder of 1997 may vary from previous quarters
as it continues to balance production volumes and inventory levels with product
demand and as product and distribution mix varies.
Research and development expenses, are the result of activities related to the
development of new laser, instrumentation and disposable products and the
enhancement of the Company's existing products. The decrease in spending as a
percentage of net revenues during the quarter and nine months ended September
30, 1997 was due principally to the increase in revenues resulting from the
acquisition of HSI without comparable increases in spending on research and
development. The Company acts as a distributor for the majority of the AMS
product line, and, as such, the research and development activity required to
support these products is minimal. The Company expects to increase amounts spent
in research and development on non-AMS products during the remainder of 1997.
The increase in selling, general and administrative expenses during the quarter
and nine months ended September 30, 1997 primarily results from new personnel
acquired by the Company in the HSI and NWL acquisitions. The Company expects
these amounts to remain at similar levels during the remainder of 1997 as the
Company continues to invest in international expansion, marketing programs and
educational support.
During the quarter ended September 30, 1996, the Company recorded non-recurring
charges directly attributable to the acquisition of HSI consisting of a $2.38
million charge to write off purchased in-process research and development which
arose from the acquisition and of $0.87 million in charges to write off certain
inventory and fixed assets which became redundant as a result of the
acquisition.
During the quarter and nine months ended September 30, 1997 the Company recorded
income tax provisions representing effective tax rates of 23% and 19%,
respectively. The 1997 tax rates are higher than the 1996 rates due to the
combined effect of higher tax rates on
11
<PAGE> 12
the income generated by NWL partially offset by lower effective rates in 1997
than in 1996 due to the impact of non-deductible acquisition related charges in
1996. Both years' tax rates are below the combined federal and state statutory
rates due to the utilization of available net operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES:
The following table contains selected balance sheet information which serves as
the basis of the discussion of the Company's liquidity and capital resources at
September 30, 1997 and for the nine months then ended (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
-------------------------------
<S> <C> <C>
Cash and cash equivalents $ 2,905 $ 3,917
Total assets $53,440 $44,469
Net working capital $22,418 $18,444
</TABLE>
The net decrease in cash and cash equivalents during the nine month period was
due principally to the combination of cash used by operating activities of $2.1
million, capital expenditures of $2.2 million and the $1.0 million paid for the
acquisition of a majority interest in NWL, offset by proceeds from the sale of
common stock pursuant to option exercises of $2.1 million and net short-term
bank borrowings of $2.6 million.
Significant components of cash used by operating activities included an increase
in accounts receivable of $2.0 million, an increase in inventory of $0.7 million
and decreases to accounts payable and accrued compensation of $3.4 million and
$0.6 million, respectively. The Company believes that the increase to accounts
receivable was due to longer collection cycles for sales by its international
subsidiaries, particularly in France and similarly long collection cycles for
sales to its AMS customers while decreases to accounts payable principally
resulted from payments to AMS product suppliers to which HSI was in arrears at
the time of the acquisition.
The Company anticipates that future changes in cash and working capital will be
dependent on a number of factors. As a result of the acquisitions of HSI and
NWL, the Company's Balance Sheet liquidity ratios changed and the Company's
ability to generate cash will be partially dependent on management's ability to
manage effectively non-cash assets such as inventory and accounts receivable. In
addition, the level of profitability of the Company will have a significant
impact on cash resources.
From time to time, the Company may also consider the acquisition of, or evaluate
investments in, certain products and businesses complementary to the Company's
business. Any such acquisition or investment may require additional capital
resources. The Company anticipates that current cash resources, internally
generated funds, capital and operating lease lines and available bank borrowings
will be sufficient to meet liquidity and capital needs at least through the next
twelve months. The Company financed the HSI and NWL acquisitions using its
existing cash resources. While the Company believes its remaining cash resources
will be sufficient to fund its short term operating needs, additional financing
either through its bank line of credit or otherwise will be required for the
Company's currently envisioned long term needs. There can be no assurance that
such additional financing will be available on terms acceptable to the Company,
or at all.
The Company has in place a $5.0 million revolving bank line of credit which
expires in November 1997, under which $2.6 million in borrowings were
outstanding at September 30,
12
<PAGE> 13
1997. In addition, NWL has in place various revolving bank lines totaling
approximately $2.5 million which expire at various dates within the next year
and under which approximately $2.3 million in borrowings were outstanding at
September 30, 1997. The Company expects to renew its primary line of credit with
terms similar to those currently existing before its expiration in November 1997
and to renew NWL's revolving bank lines prior to their respective expirations.
13
<PAGE> 14
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to a number of legal proceedings arising in the
ordinary course of business. While it is not feasible to predict or determine
the outcome of the actions brought against it, the Company believes that the
ultimate resolution of these claims will not have a material adverse effect on
its financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER ITEMS
Not applicable.
ITEM 6. 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.
LASERSCOPE
Registrant
/s/ Dennis LaLumandiere
--------------------------------------------
Dennis LaLumandiere
Vice President of Finance
and Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: November 12, 1997
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,905
<SECURITIES> 0
<RECEIVABLES> 16,685
<ALLOWANCES> 1,007
<INVENTORY> 21,616
<CURRENT-ASSETS> 42,099
<PP&E> 18,913
<DEPRECIATION> 13,323
<TOTAL-ASSETS> 53,440
<CURRENT-LIABILITIES> 19,681
<BONDS> 1,701
0
0
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<INCOME-TAX> 637
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<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
