UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 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 27, 1999
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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: 0-18281
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Hologic, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 04-2902449
------------------------ ----------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
35 Crosby Drive, Bedford, Massachusetts 01730
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(Address of principal executive offices) (Zip Code)
(781) 999-7300
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(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) 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 __
As of May 5, 1999 13,415,940 shares of the registrant's Common Stock,
$.01 par value, were outstanding.
HOLOGIC, INC. AND SUBSIDIARIES
INDEX
Page
PART I - FINANCIAL INFORMATION ----
Item 1. Financial Statements
Consolidated Balance Sheets
March 27, 1999 and September 26, 1998.............. 3
Consolidated Statements of Operations
Three and Six Months Ended March 27, 1999
and March 28, 1998................................. 4
Consolidated Statements of Cash Flows
Six Months Ended March 27, 1999
and March 28, 1998................................. 5
Notes to Consolidated Financial Statements......... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 9
PART II - OTHER INFORMATION.................................. 13
SIGNATURES................................................... 15
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HOLOGIC, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except per share data)
ASSETS
<TABLE>
<CAPTION>
March 27, September 26,
1999 1998
--------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................... $36,582 $48,423
Short-term investments....................... 28,271 27,479
Accounts receivable, less reserves
of $2,600 and $2,100, respectively......... 31,703 29,287
Inventories.................................. 19,089 20,438
Prepaid expenses and other current assets.... 6,287 6,221
------- --------
Total current assets....................... 121,932 131,848
------- -------
PROPERTY AND EQUIPMENT, at cost:
Equipment.................................... 10,065 8,633
Furniture and fixtures....................... 2,963 1,910
Land......................................... 8,502 -
Building and improvements.................... 17,307 -
Leasehold improvements....................... 609 1,729
Construction in progress..................... - 20,066
------ ------
39,446 32,338
Less- Accumulated depreciation
and amortization....................... 6,387 6,440
------ ------
33,059 25,898
------ ------
Other assets, net............................. 14,819 14,851
------- --------
$169,810 $172,597
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
March 27, September 26,
1999 1998
--------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Line of credit.............................. $ 1,523 $ 3,799
Accounts payable............................ 6,342 5,497
Accrued expenses............................ 10,602 12,453
Deferred revenue............................ 10,199 10,466
------- -------
Total current liabilities................ 28,666 32,215
------- -------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value-
Authorized - 1,623
Issued and outstanding - none ............ - -
Common stock, $.01 par value-
Authorized - 30,000 shares
Issued - 13,415 and 13,378
shares, respectively..................... 134 134
Capital in excess of par value............. 95,452 95,100
Retained earnings.......................... 47,136 46,187
Cumulative translation adjustment.......... (1,114) (575)
Treasury stock, at cost, 45 shares......... (464) (464)
-------- -------
Total stockholders' equity............... 141,144 140,382
-------- --------
$169,810 $172,597
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
HOLOGIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 27, March 28, March 27, March 28,
1999 1998 1999 1998
-------- --------- --------- --------
<S> <C> <C> <C> <C>
REVENUES:
Product sales................ $18,797 $29,455 $42,711 $54,594
Other revenues............... 565 742 1,285 1,724
------ ------- ------- -------
19,362 30,197 43,996 56,318
------ ------- ------ -------
COSTS AND EXPENSES:
Cost of product sales........ 11,533 14,662 24,324 27,402
Research and development..... 2,643 2,506 5,101 4,845
Selling and marketing........ 4,711 7,840 9,970 14,589
General and administrative... 2,877 2,282 5,047 4,577
------- ------ ------ ------
21,764 27,290 44,442 51,413
------- ------ ------ ------
(Loss) income
from operations......... (2,402) 2,907 (446) 4,905
Interest income.............. 991 1,476 2,244 2,781
Other expense................ (297) (113) (329) (203)
------- ------ ------ ------
(Loss) income before
(benefit) provision
for income taxes.......... (1,708) 4,270 1,469 7,483
(BENEFIT) PROVISION
FOR INCOME TAXES............ ( 620) 1,550 520 2,700
------- ----- ----- -----
Net (loss) income......... $(1,088) $2,720 $ 949 $4,783
======== ====== ====== ======
NET (LOSS) INCOME PER COMMON AND
COMMON EQUIVALENT SHARE:
Basic earnings per share.. $ (.08) $ .21 $ .07 $ .36
========= ======= ====== ======
Diluted earnings per share. $ (.08) $ .20 $ .07 $ .35
======== ====== ====== =======
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING..... 13,365 13,197 13,353 13,165
====== ====== ====== ======
WEIGHTED AVERAGE NUMBER OF
COMMON AND DILUTIVE POTENTIAL
COMMON SHARES OUTSTANDING..... 13,365 13,759 13,628 13,774
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
HOLOGIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
----------------
March 27, March 28,
1999 1998
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $949 $4,783
Adjustments to reconcile net income to net cash
(used in) provided by operating activities-
Depreciation and amortization................. 1,248 756
Compensation expense related
to issuance of stock options.................. 126 138
Changes in assets and liabilities-
Accounts receivable......................... (1,434) (733)
Inventories................................. 1,350 (5,237)
Prepaid expenses and other current assets... (30) 320
Accounts payable............................ 845 1,074
Accrued expenses............................ (1,849) 1,365
Deferred revenue............................ (267) 4,965
------ ------
Net cash provided by
operating activities..................... 936 7,431
------- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of held-to-maturity investments......... (19,517) (41,645)
Sales of held-to-maturity investments............ 17,183 50,095
Purchases of property and equipment.............. (8,069) (1,079)
Decrease (increase) in other assets.............. 256 (1,124)
------ -------
Net cash (used in) provided
by investing activities..................... (10,147) 6,247
-------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in line of credit........ (2,276) 698
Issuance of common stock pursuant to options
and employee stock purchase plans................ 159 1,058
Tax benefit from stock option exercises.......... 38 340
------ -----
Net cash (used in) provided
by financing activities.................... (2,079) 2,096
------- ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH............ (551) (207)
------- ------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS................................. (11,841) 15,565
CASH AND CASH EQUIVALENTS, beginning of period..... 48,423 28,092
-------- ------
CASH AND CASH EQUIVALENTS, end of period........... $36,582 $43,657
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes..... $356 $ 1,922
==== =======
Cash paid during the period for interest......... $80 $71
== ===
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
HOLOGIC, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation
The consolidated financial statements of Hologic, Inc. (the
Company) presented herein have been prepared pursuant to the rules of
the Securities and Exchange Commission for quarterly reports on 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 for the year ended September
26, 1998, included in the Company's Form 10-K as filed with the
Securities and Exchange Commission on December 23, 1998.
The consolidated balance sheet as of March 27, 1999, the
consolidated statements of operations for the three and six months
ended March 27, 1999 and March 28, 1998 and the consolidated
statements of cash flows for the six months ended March 27, 1999 and
March 28, 1998, are unaudited but, in the opinion of management,
include all adjustments (consisting of normal, recurring adjustments)
necessary for a fair presentation of results for these interim
periods.
The results of operations for the three and six months ended
March 28, 1999 are not necessarily indicative of the results to be
expected for the entire fiscal year ending September 25, 1999.
(2) Summary of Significant Accounting Policies
The accompanying consolidated financial statements reflect the
application of certain accounting policies described in this and other
notes to the consolidated financial statements.
(a) Inventories: Inventories are stated at the lower of cost
(first-in, first-out) or market and consist of the following:
March 27, September 26,
1999 1998
--------- -----------
(in thousands)
Raw materials and work-in-process........ $11,680 $13,859
Finished goods........................... 7,409 6,579
------- -------
$19,089 $20,438
======= =======
Work-in-process and finished goods inventories consist of
material, labor and manufacturing overhead.
(b) Earnings Per Share: A reconciliation of basic and dilutive
share amounts are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 27, March 28, March 27, March 28,
1999 1998 1999 1998
--------- --------- --------- --------
(in thousands)
<S> <C> <C> <C> <C>
Weighted average common
shares outstanding............. 13,365 13,197 13,353 13,165
Common stock equivalents
outstanding pursuant to the
treasury stock method.......... -- 562 275 609
------- ------- ------ ------
Weighted average number of
common and dilutive potential
common shares outstanding...... 13,365 13,759 13,628 13,774
====== ====== ====== ======
</TABLE>
Anti-dilutive shares of 1,173 and 799 for the three and six
months ended March 27, 1999, respectively, and 426 and 305 for the
three and six months ended March 28, 1998, respectively, have been
excluded from the weighted average number of common and dilutive
potential common shares outstanding.
(3) Line of Credit
The Company has an international line of credit with a bank for
the equivalent of $3.0 million, which bears interest at PIBOR plus
1.50%. The borrowings under this line are denominated in the local
currency of its European subsidiaries and are primarily used by these
subsidiaries to settle intercompany sales.
(4) Concentration of Credit Risk
The Company sells certain of its systems to a leasing
company, which in turn leases the systems to third parties. The
leasing company accounted for 9% and 38% of product sales in the six
months ended March 27, 1999 and March 28, 1998, respectively. The
Company finances certain sales to Latin America over a two-to-three
year time-frame. At March 27, 1999, the Company had total accounts
receivable outstanding of approximately $7.7 million relating to these
sales, of which $1.9 million were long-term and included in other
assets. As of March 27, 1999, the Company has not experienced any
significant change in these receivables, however, the economic and
currency related uncertainties in these countries may increase the
likelihood of non-payment. As a result, the Company increased its bad
debt reserve in the second quarter of fiscal 1999.
(5) Recent Accounting Pronouncements
In July 1997, the FASB issued Statement of Financial Accounting
Standards ("SFAS No. 131") , Disclosures About Segments of an
Enterprise and Related Information. SFAS No. 131 requires certain
financial and supplementary information to be disclosed on an annual
and interim basis for each reportable segment of an enterprise, as
defined. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997. Unless impracticable, companies would be required
to disclose similar prior period information upon adoption. The
Company will adopt this statement in their fiscal 1999 year-end
financial statements.
In June 1998, the FASB issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments investments
embedded in other contracts (collectively referred to as derivatives)
and for hedging activities. SFAS No. 133 is effective for fiscal
years beginning after June 15, 1999. The Company does not expect the
adoption of this statement to have a material impact on its
consolidated financial position or results of operations.
(6) Land, Building and Improvements
In fiscal 1998, the Company purchased a 200,000 square foot
building for approximately $20 million in cash, and has incurred
approximately $5 million for renovations. The Company moved its
headquarters and manufacturing into this facility on January 25, 1999.
The Company began to amortize the cost of the building straight-line
over 40 years in the second quarter of fiscal 1999.
(7) Comprehensive (Loss) Income
The Company adopted SFAS 130, Reporting Comprehensive Income,
effective September 27, 1998. SFAS 130 established standards for
reporting and display of comprehensive income and its components in
the financial statements. The Company's only item of other
comprehensive income relates to foreign currency translation
adjustments, and is presented separately on the balance sheet as
required. A reconciliation of comprehensive (loss) income is as
follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ --------------------
March 27, March 28, March 27, March 28,
1999 1998 1999 1998
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
(in thousands)
Net (loss) income as reported...... $(1,088) $2,720 $949 $4,783
Foreign currency translation
adjustment..................... (530) (165) (539) (208)
-------- ------- ---- -------
Comprehensive (loss) income........ $(1,618) $2,555 $410 $4,575
======== ====== ===== ======
</TABLE>
(8) Subsequent Event - Purchase and Sale Agreement
On April 28, 1999, Hologic signed a purchase and sale agreement
to acquire Delaware-based Direct Radiography Corporation ("DRC"), a
wholly-owned subsidiary of Sterling Diagnostic Imaging, Inc. Under
the terms of the agreement, Hologic will purchase DRC for
approximately $30 million, comprised of $10 million in cash and 2.5
million shares of Hologic common stock. In addition, Hologic may be
required to pay additional monies if the market value of the Company's
common stock issued pursuant to the terms of this agreement falls
below $20 million. The closing of this acquisition is subject to
satisfaction of certain terms and conditions. DRC manufactures
digital X-ray systems for medical imaging and non-destructive testing
applications. Hologic will use the purchase accounting method to
account for the acquisition of DRC.
PART I - FINANCIAL INFORMATION (Continued)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
HOLOGIC, INC. AND SUBSIDIARIES
Results of Operations
The Company's results of operations have and may continue to be
subject to significant quarterly variation. The results for a
particular quarter may vary due to a number of factors, including the
Company's proposed acquisition of Direct Radiography Corp. ("DRC"),
the introduction of new products or product enhancements by the
Company or its competitors, the timing of FDA approvals or clearances
for such introductions, the overall state of health care and cost
containment efforts, the development status and demand for drug
therapies to treat osteoporosis, the status and amount of
reimbursement for approved procedures, the use of mini c-arms in
minimally-invasive surgical procedures, the availability of financing
alternatives, including fee-per-scan programs, for the Company's
products, dependence on Physician Sales and Service, Inc. to broaden
the sales of the Company's product to the primary care market,
economic conditions in the Company's markets, the timing of orders,
the timing of expenditures in anticipation of future sales, the mix of
products sold by the Company, and pricing and other competitive
conditions.
Revenues. Total revenues for the second quarter of fiscal 1999
decreased 36% to $19.4 million from $30.2 million in the second
quarter of fiscal 1998. Total revenues for the current six month
period decreased 22% to $44.0 million from $56.3 million for the first
six months of fiscal 1998. These decreases were primarily due to a
decrease in the total number of domestic DXA bone densitometer product
shipments, especially to the primary care market including strategic
alliance sales to a leasing company. The decrease in DXA sales was
partially offset by an increase in the number of mini c-arm and Sahara
(the Company's ultrasound bone sonometer) product sales in both the
current quarter and current six month periods. The increase in sales
of mini c-arms were primarily from the Company's recently introduced
Premier system. Sahara sales increased in the current quarter due
primarily to sales in the United States, where the Company received
marketing clearance from the FDA in March 1998. The Company did not
have marketing clearance for Sahara until late in the second quarter
of fiscal 1998. Other revenues decreased for the current three month
period, as compared to the same period of the previous year, primarily
due to a decrease in royalties from the license of the Company's
technology to Vivid Technologies, Inc. Other revenues decreased for
the current six month period due to a decrease in royalties from the
license of the Company's technology to Vivid Technologies, Inc. and a
decrease in revenues received under a development agreement for a
biochemical marker strip test. Partially offsetting these decreases
was an increase in additional fee-per-scan revenues.
Total revenues for the second quarter of fiscal 1999 decreased
21% from $24.6 million in the immediately preceding quarter primarily
due to (i) a decrease in the number of DXA systems sold in the United
States (ii) a decrease in the number of mini c-arms sold and (iii) a
decrease in Sahara product sales.
In the first six months of fiscal 1999, approximately 62% of
product sales were generated in the United States, 24% in Europe, 8%
in Asia, and 6% in other international markets. In the first six
months of fiscal 1998, approximately 71% of product sales were
generated in the United States, 18% in Europe, 7% in other
international markets, and 4% in Asia.
Costs and Expenses. The cost of product sales increased as a
percentage of product sales to 61% in the current quarter from 50% in
the same quarter of fiscal 1998. The cost of product sales increased
as a percentage of product sales to 57% in the current six month
period of fiscal 1999 from 50% in the same six month period of fiscal
1998. In the current quarter and six month periods, these costs
increased as a percentage of product sales primarily due to a decrease
of approximately 50% in the number of DXA bone densitometers sold and,
to a lesser extent, lower average selling prices. The reduction in
DXA sales volume resulted in the under absorption of fixed
manufacturing costs.
Research and development expenses increased 5% to $2.6 million
(14% of total revenues) in the current quarter from $2.5 million (8%
of total revenues) in the second quarter of fiscal 1998. For the
current six month period, research and development expenses increased
5% to $5.1 million (12% of total revenues) from $4.8 million (9% of
total revenues) for the first six months of 1998. The increase in
research and development expenses in 1999 is primarily due to the
addition of engineering personnel and outside consultants working on
the development of new products and product enhancements.
Selling and marketing expenses decreased 40% to $4.7 million (25%
of product sales) in the current quarter from $7.8 million (27% of
product sales) in the second quarter of fiscal 1998. For the current
six month period, selling and marketing expenses decreased 32% to $10
million (23% of product sales) from $14.6 million (27% of product
sales) for the first six months of 1998. The decrease in selling and
marketing expenses in 1999 is primarily due to a decrease in sales
commissions paid to PSS based on the lower sales volume in the primary
care market in the United States.
General and administrative expenses increased 26% to $2.9 million
(15% of total revenues) in the current quarter from $2.3 million (8%
of total revenues) in the second quarter of fiscal 1998. During the
first six months of fiscal 1999, general and administrative expenses
increased 10% to $5 million (11% of total revenues) from $4.6 million
(8% of total revenues) in the first six months of 1998. These
increases in general and administrative expenses in fiscal 1999 were
primarily due to an increase in the accounts receivable reserve
related to the Company's foreign receivables, especially in Brazil.
In April 1999, Company implemented a cost-reduction strategy in
an effort to reduce operating expenses. The Company reduced its U.S.
workforce by approximately 10% through attrition and a corporate
downsizing. A strategy to streamline operations and reduce
discretionary spending for its existing business was also implemented.
The Company expects that the severance expenses incurred in connection
with the downsizing will be offset by the cost savings achieved
through the reduction in decretionary spending in the third quarter of
fiscal 1999. Additionally, the Company may incur additional expenses
in the third quarter relating to the proposed acquisition of DRC.
Interest Income. Interest income decreased to $991,000 in the
current quarter from $1.5 million in the same quarter of fiscal 1998
and decreased to $2.2 million in the current six month period from
$2.8 million in the comparable period in fiscal 1998 as the Company
held a lower investment base than in the prior year, due to the
Company's use of funds to purchase a new facility.
Other Expense. The Company incurred other expense of $297,000 and
$113,000 for the second quarter of fiscal 1999 and 1998, respectively.
For the first six months of fiscal 1999 and 1998, the Company incurred
other expense of $329,000 and $203,000 respectively. In the current
quarter and six month periods, these expenses include interest costs
on the line of credit established for use by the Company's European
subsidiaries to borrow funds in their local currencies to pay for
intercompany sales, thereby reducing the foreign currency exposure on
those transactions and to foreign currency transaction losses. For
the second quarter and first six months of fiscal 1998, these expenses
were primarily attributable to the interest costs on the line of
credit and, to a lesser extent, to foreign currency transaction
losses. To the extent that foreign currency exchange rates fluctuate
in the future, the Company may be exposed to continued financial risk.
Although the Company has established a borrowing line denominated in
the two foreign currencies (the French Franc and the Belgian Franc) in
which the subsidiaries currently conduct business to minimize this
risk, there can be no assurance that the Company will be successful or
can fully hedge its outstanding exposure.
Provision for Income Taxes. The Company's effective tax rate was
approximately 35% and 36% in the first six months of fiscal 1999 and
1998, respectively. The effective tax rate is less than the combined
Federal and state statutory rates due primarily to the favorable
Federal and state tax treatment afforded the Company's foreign sales
corporation and the favorable state tax treatment of certain of the
Company's interest income.
Liquidity and Capital Resources
At March 27, 1999, working capital was approximately $93 million,
and cash, cash equivalents and short-term investments totaled $65
million. The cash, cash equivalents and short-term investments
balance decreased approximately $11 million from September 26, 1998
primarily due to payments for facility renovations and payments
against the European line of credit. The Company finances certain
sales to Latin America over a two-to-three year time-frame. At March
27, 1999, the Company had total accounts receivable outstanding of
approximately $7.7 million relating to these sales, of which $1.9
million were long-term and included in other assets. As of March 27,
1999, the Company has not experienced any significant change in these
receivables, however, the economic and currency related uncertainties
in these countries may increase the likelihood of non-payment. As a
result, the Company increased it's bad debt reserve in the second
quarter. In the first six months of 1999, the Company purchased
approximately $8.1 million of property and equipment, which consisted
primarily of building improvements, furniture and fixtures for the new
building and, to a lesser extent, computers. The Company purchased
this 200,000 square foot building for approximately $20 million in
cash in fiscal 1998 and moved its headquarters into this
facility on January 25, 1999.
On April 28, 1999, the Company signed a purchase and sale
agreement to acquire DRC. DRC is a development stage company that
manufactures digital X-ray systems for medical imaging and non-
destructive testing applications. In connection with the acquisition,
the Company expects to incur monthly expenditures of approximately
$1-1.5 million to fund DRC's ongoing operations and commercialization
of its products until meaningful revenue is achieved. Under the terms
of the agreement, Hologic will purchase DRC for approximately $30
million, comprised of $10 million in cash and 2.5 million shares of
Hologic common stock. In addition, Hologic may be required to pay
additional monies if the market value of the Company's common stock
issued pursuant to the terms of this agreement falls below $20
million. The closing of this acquisition is subject to satisfaction
of certain terms and conditions.
Except as set forth above, the Company does not have any
significant capital commitments. The Company believes that existing
sources of liquidity will provide adequate cash to fund the Company's
anticipated working capital and other cash needs for the foreseeable
future.
Year 2000 Readiness Disclosure
The year 2000 (Y2K) issue is the potential for system and
processing failure of date-related data and the result of computer-
controlled systems using two digits rather than four to define the
applicable year. For example, computer programs that have date-
sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. Systems that do not properly recognize date-
sensitive information when the year changes to 2000 could generate
system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process
transactions, send invoices or engage in similar ordinary business
activities. The Company has defined Y2K compliance as the ability for
the Company, its products and suppliers to continue normal business
activities in the year 2000 and beyond.
The Company is evaluating the Y2K issue with respect to its
financial and management information systems, its products and its
suppliers. At this point in its assessment, the Company is not
currently aware of any Y2K problems that are reasonably likely to have
a material effect on the Company's business, results of operations or
financial condition, without taking into account the Company's efforts
to avoid such problems.
The Company is completing its review of its management and
information systems for Y2K compliance and has identified other
application software and hardware which must be upgraded to become Y2K
compliant. The Company believes that its accounting and information
systems are currently compliant as a result of installing an upgrade
version of the software made available through the annual maintenance
contract. However, the Company uses other application hardware and
software which may not be Y2K complaint. Most upgrades for these
programs are also available as part of an annual maintenance program.
The Company believes that it already has and installed most of the
necessary upgrades for these programs or that the upgrades for the
programs are otherwise available without material expenditure by the
Company. The Company anticipates that it will be able to complete,
test and implement all upgrades of this software that may be material
to its business on a timely basis. There is a risk that,
notwithstanding its internal review, if the Company has not properly
identified all year 2000 compliance issues with respect to its
management and information systems, the Company may not be able to
implement all necessary changes to these systems on a timely basis and
within budget. Such a failure could result in a material disruption to
the Company's business, including the inability to track and fill
orders on a timely basis, which could have a material adverse effect
on its business, results of operations and financial condition.
The Company has evaluated its DXA products in production and they
are currently Y2K compliant as of the end of January 1999. The
Company has also identified certain older models of its DXA products
that will need computer hardware upgrades to become Y2K compliant. The
Company plans to make this software available, at the Company's
expense, to its customers by the end of May 1999 as this software is
currently in beta testing. These costs are not expected to be
material. The Company believes that its Sahara ultrasound bone
sonometer is currently Y2K compliant.
The Company is also exposed to the risk that it could experience
material shipment delays from its major component suppliers or
material sales delays from its major customers due to year 2000 issues
relating either to their management information or production systems.
The Company has inquired of these suppliers in an attempt to ascertain
their year 2000 readiness. At this time, the Company is unable to
estimate the nature or extent of any potential adverse impact
resulting from the failure of third parties, such as its suppliers and
customers, to achieve year 2000 compliance. Moreover, such third
parties, even if year 2000 compliant, could experience difficulties
resulting from year 2000 issues that may affect their suppliers,
service providers and customers. As a result, although the Company
does not currently anticipate that it will experience any material
shipment delays from their major product suppliers or any material
sales delays from its major customers due to year 2000 issues, these
third parties could experience year 2000 problems that could have a
material adverse effect on the Company's business, results of
operations and financial condition.
Apart from its activities described above, the Company does not
have and does not plan to develop a contingency plan to address Y2K
issues. Should any unanticipated significant Y2K issues arise, the
Company's failure to implement such a contingency plan could have a
material adverse affect on its business, financial condition and
results of operations.
To the extent that the Company does not identify any material non-
compliant year 2000 issues affecting the Company or third parties,
such as the Company's suppliers, service providers and customers, the
most reasonably likely worst case year 2000 scenario is a systemic
failure beyond the control of the Company, such as a prolonged
telecommunications or electrical failure, or a general disruption in
United States or global business activities that could result in a
significant economic downturn. The Company believes that the primary
business risks, in the event of such failure or other disruption,
would include but not be limited to, loss of customers or orders,
increased operating costs, inability to obtain inventory on a timely
basis, disruptions in product shipments, or other business
interruptions of a material nature, as well as claims of
mismanagement, misrepresentation, or breach of contract, any of which
could have a material adverse effect on the Company's business,
results of operations and financial condition.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Not applicable.
PART II - OTHER INFORMATION
HOLOGIC, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings.
No material litigation.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security-Holders.
The Company held its Annual Meeting of Stockholders on February
23, 1999 and adjourned the meeting until March 9, 1999 for the purpose
of voting on proposal 2. At the February 23rd meeting, a total of
11,258,486 shares or 84% of the Common Stock issued and outstanding as
of the record date, were represented at the meeting in person or by
proxy. Set forth below is a brief description of each matter voted
upon at the meetings and the voting results with respect to each
matter.
1. A proposal to elect the following seven persons to serve as
members of the Company's Board of Directors for the ensuing year
and until their successors are duly elected:
Name For Withheld Abstain
------------------- ---------- -------- -------
S. David Ellenbogen 11,150,034 108,452 0
Irwin Jacobs 11,148,572 109,914 0
Steve L. Nakashige 11,148,012 110,474 0
William A. Peck 11,150,034 108,452 0
Gerald Segel 11,148,341 110,145 0
Jay A. Stein 11,150,034 108,452 0
Elaine Ullian 11,150,034 108,452 0
2. A proposal to approve the Company's 1999 Equity Incentive Plan.
For: 5,291,707 Against: 4,373,001 Abstain: 43,229
3. A proposal to ratify the appointment of Arthur Andersen, LLP
as independent public accountants of the Company.
For: 11,182,460 Against: 54,337 Abstain: 21,198
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits furnished:
(10) Hologic, Inc. Amended and Restated 1999 Equity
Incentive Plan
(27) Financial Data Schedule
(b) Reports on Form 8-K:
None.
HOLOGIC, INC. AND SUBSIDIARIES
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.
Hologic, Inc.
(Registrant)
May 11, 1999 /s/ S. David Ellenbogen
- ------------ ------------------------
Date S. David Ellenbogen
Chairman and Chief Executive Officer
May 11, 1999 /s/ Glenn P. Muir
- ------------ --------------------------
Date Glenn P. Muir
Vice President, Finance and Treasurer
(Principal Financial and Chief
Accounting Officer)
HOLOGIC, INC.
AMENDED AND RESTATED
1999 EQUITY INCENTIVE PLAN
Section 1. Purpose
The purpose of the Hologic, Inc. Amended and Restated
1999 Equity Incentive Plan (the "Plan") is to attract and
retain employees and directors, to provide an incentive for
them to assist Hologic, Inc. (the "Corporation") to achieve
long-range performance goals, and to enable them to
participate in the long-term growth of the Corporation.
Section 2. Definitions
(a) "Affiliate" means any business entity in which the
Corporation owns directly or indirectly 50% or more of the
total combined voting power or has a significant financial
interest as determined by the Committee.
(b) "Annual Meeting" means the annual meeting of
shareholders or special meeting in lieu of annual meeting of
shareholders at which one or more directors are elected.
(c) "Award" means any Option awarded under the Plan.
(d) "Board" means the Board of Directors of the
Corporation.
(e) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(f) "Committee" means the Compensation Committee of the
Board, or such other committee of not less than two members
of the Board appointed by the Board to administer the Plan,
provided that the members of such Committee must be Non-
Employee Directors as defined in Rule 16b-3(b) promulgated
under the Securities Exchange Act of 1934, as amended.
(g) "Common Stock" or "Stock" means the Common Stock, par
value $.01 per share, of the Corporation.
(h) "Corporation" means Hologic, Inc.
(i) "Designated Beneficiary" means the beneficiary
designated by a Participant, in a manner determined by the
Board, to receive amounts due or exercise rights of the
Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant,
Designated Beneficiary shall mean the Participant's estate.
(j) "Eligible Director" means each director of the
Corporation who is not then an employee of the Corporation
or affiliated with any holder of more than 5% of the
outstanding voting stock of the Corporation.
(k) "Fair Market Value" means, with respect to Common
Stock, the last sale price of the Common Stock as reported
on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or on a national securities
exchange on which the Common Stock may be traded on the date
of the granting of the Award, or if such date is not a
business day, the first business day preceding such grant.
If the Common Stock is not publicly traded, the fair market
value shall mean the fair market value of the Common Stock
as determined by the Board of Directors.
(l) "Incentive Stock Option" means an option to purchase
shares of Common Stock, awarded to a Participant under
Section 6, which is intended to meet the requirements of
Section 422 of the Code or any successor provision.
(m) "Nonqualified Stock Option" means an option to purchase
shares of Common Stock, awarded to a Participant under
Section 6 or Section 7, which is not intended to be an
Incentive Stock Option.
(n) "Option" means an Incentive Stock Option or a
Nonqualified Stock Option.
(o) "Participant" means a person selected by the Board to
receive an Award under the Plan.
Section 3. Administration
The Plan shall be administered by the Board, or if the
Board so determines, by the Committee. The Committee shall
serve at the pleasure of the Board, which may from time to
time, and in its sole discretion, discharge any member,
appoint additional new members in substitution for those
previously appointed and/or fill vacancies however caused.
A majority of the Committee shall constitute a quorum and
the acts of a majority of the members present at any meeting
at which a quorum is present shall be deemed the action of
the Committee. The Board, including the Committee, shall
have authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time consider
advisable, and to interpret the provisions of the Plan. The
Board's decisions shall be final and binding. To the extent
permitted by applicable law, the Board may delegate to the
Committee the power to make Awards to Participants and all
determinations under the Plan with respect thereto.
Administration of the automatic option grant provisions of
the Plan shall be self-executing in accordance with the
provisions of Section 7 hereof, and neither the Board nor
the Committee shall exercise any discretionary functions
with respect to the Option grants made pursuant to those
provisions of the Plan, except in the event that the Board
approves the grant of Awards in addition to, or in
substitution for, those provided for in Section 7.
Section 4. Eligibility
All employees and, in the case of Awards other than
Incentive Stock Options, directors of the Corporation or any
Affiliate capable of contributing significantly to the
successful performance of the Corporation, other than a
person who has irrevocably elected not to be eligible, are
eligible to be Participants in the Plan.
Section 5. Stock Available for Awards
(a) Subject to adjustment under subsection (b), the maximum
aggregate number of shares of Common Stock available for
issuance under the Plan is 300,000 shares, plus an annual
increase to be made on the first day of each fiscal year
equal to the lesser of (a) 2 1/2% of the Issued Shares (as
defined below) on the last day of the immediately preceding
fiscal year, (b) 500,000 shares, or (c) an amount determined
by the Board. "Issued Shares" shall mean the number of
shares of Common Stock of the Company outstanding on the
last day of the immediately preceding fiscal year, plus any
shares reacquired by the Company during the fiscal year that
ends on such date. If any Award in respect of shares of
Common Stock expires or is terminated unexercised or is
forfeited for any reason or settled in a manner that results
in fewer shares outstanding than were initially awarded,
including without limitation the surrender of shares in
payment for the Award or any tax obligation thereon, the
shares subject to such Award or so surrendered, as the case
may be, to the extent of such expiration, termination,
forfeiture or decrease, shall again be available for award
under the Plan, subject, however, in the case of Incentive
Stock Options, to any limitation required under the Code.
Common Stock issued through the assumption or substitution
of outstanding grants from an acquired corporation shall not
reduce the shares available for Awards under the Plan.
Shares issued under the Plan may consist in whole or in part
of authorized but unissued shares or treasury shares.
(b) In the event that the Board determines that any stock
dividend, extraordinary cash dividend, creation of a class
of equity securities, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination,
exchange of shares, warrants or rights offering to purchase
Common Stock at a price substantially below fair market
value, or other similar transaction affects the Common Stock
such that an adjustment is required in order to preserve the
benefits or potential benefits intended to be made available
under the Plan, then the Board, subject, in the case of
Incentive Stock Options, to any limitation required under
the Code, shall equitably adjust any or all of (i) the
number and kind of shares in respect of which Awards may be
made under the Plan, (ii) the number and kind of shares
subject to outstanding Awards, (iii) the number and kind of
shares for which automatic option grants are to be made
pursuant to Section 7 hereof, and (iv) the award, exercise
or conversion price with respect to any of the foregoing,
and if considered appropriate, the Board may make provision
for a cash payment with respect to an outstanding Award,
provided that the number of shares subject to any Award
shall always be a whole number.
Section 6. Stock Options
(a) Subject to the provisions of the Plan, the Board may
award Incentive Stock Options and Nonqualified Stock Options
and determine the number of shares to be covered by each
Option, the option price therefor and the conditions and
limitations applicable to the exercise of the Option. The
terms and conditions of Incentive Stock Options shall be
subject to and comply with Section 422 of the Code, or any
successor provision, and any regulations thereunder.
(b) The Board shall establish the option price at the time
each Option is awarded, which shall not be less than 100% of
the Fair Market Value of the Common Stock on the date of
award.
(c) Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may
specify in the applicable Award or thereafter. The Board
may impose such conditions with respect to the exercise of
Options, including conditions relating to applicable federal
or state securities laws, as it considers necessary or
advisable.
(d) No shares shall be delivered pursuant to any exercise
of an Option until payment in full of the option price
therefor is received by the Corporation. Such payment may
be made in whole or in part in cash or, to the extent
permitted by the Board at or after the award of the Option,
by delivery of a note or shares of Common Stock owned by the
optionholder, provided, however, that the optionholder must
have owned at least such number of shares for at least six
months, valued at their Fair Market Value on the date of
delivery, by the reduction of the shares of Common Stock
that the optionholder would be entitled to receive upon
exercise of the Option provided, however, that the
optionholder must have owned at least the number of shares
by which the Common Stock is being reduced for at least six
months, such shares to be valued at their Fair Market Value
on the date of exercise, less their option price (a so-
called "cashless exercise"), or such other lawful
consideration as the Board may determine. In addition, to
the extent permitted by the Board, an optionholder may
engage in a successive exchange (or series of exchanges) in
which the shares of Common Stock that such optionholder is
entitled to receive upon the exercise of an Option may be
simultaneously utilized as payment for the exercise of an
additional Option or Options, provided, however, that the
optionholder must have owned at least the number of shares
to be used as payment for at least six months.
(e) The Board may provide for the automatic award of an
Option upon the delivery of shares to the Corporation in
payment of an Option for up to the number of shares so
delivered.
(f) In the case of Incentive Stock Options the following
additional conditions shall apply to the extent required
under Section 422 of the Code for the options to qualify as
Incentive Stock Options:
(i) Such options shall be granted only to employees of the
Corporation, and shall not be granted to any person who owns
stock that possesses more than ten percent of the total
combined voting power of all classes of stock of the
Corporation or of its parent or subsidiary corporation (as
those terms are defined in Section 422(b) of the Internal
Revenue Code of 1986, as amended, and the regulations
promulgated thereunder), unless, at the time of such grant,
the exercise price of such option is at least 110% of the
fair market value of the stock that is subject to such
option and the option shall not be exercisable more than
five years after the date of grant;
(ii) The option price with respect to Incentive Stock
Options shall not be less than 100% of the Fair Market Value
of the Common Stock on the date of award.
(iii) Such options shall, by their terms, be
transferable by the optionholder only by the laws of descent
and distribution, and shall be exercisable only by such
optionholder during his lifetime.
(iv) Such options shall not be granted more than ten years
from the effective date of the Plan and shall not be
exercisable more than ten years from the date of grant.
(v) To the extent that the aggregate Fair Market Value of
Common Stock with respect to which Incentive Stock Options
(determined without regard to this section) are exercisable
for the first time by any employee Participant during any
calendar year exceeds $100,000 (or such other amount as may
be proscribed by the Code), such Incentive Stock Options
shall be treated as options which are not Incentive Stock
Options.
Section 7. Options Granted to Non-Employee Directors
(a) Each Eligible Director shall automatically be granted a
Nonqualified Option to acquire 25,000 shares of Common Stock
effective as of the date he or she is first elected to the
Board or, with respect to Eligible Directors serving on the
Board as of the Effective Date of the Plan, as of the date
of the 1999 Annual Meeting of the Corporation, in each case,
the option price for which shall be the Fair Market Value of
the Common Stock on such date and the expiration of which
shall be the tenth anniversary thereof. Each Nonqualified
Option issued pursuant to this Section 7(a) shall become
exercisable in 20% installments beginning on January 1 of
the first year after the grant date, and on January 1 of
each year thereafter, until such option is fully exercisable
on January 1 of the fifth year following the grant date.
(b) Each Eligible Director who has served as a Director for
six months shall automatically be granted a Nonqualified
Option to acquire 3,000 shares of Common Stock as of January
1 of each year, beginning with January 1, 2000, the option
price for which shall be the Fair Market Value of the Common
Stock on such date and the expiration of which shall be the
tenth anniversary thereof. Each Nonqualified Option granted
pursuant to this Section 7(b) may be exercised on and after
the date that is six months after the date of grant.
(c) In addition, the Board may provide for such other terms
and conditions of the Options granted pursuant to this
Section 7 as it may determine in its sole discretion and as
shall be set forth in the applicable Option agreements,
including, without limitation, acceleration of exercise upon
a change of control, termination of the Options, and the
effect on such Options of the death, retirement or other
termination of service as a director of the option holder.
Notwithstanding anything to the contrary in this Plan,
nothing herein shall permit the Board to grant Awards to
such non-employee directors in addition to those provided
for in this Section 7.
Section 8. General Provisions Applicable to Awards
(a) Documentation. Each Award under the Plan shall be
evidenced by a written document delivered to the Participant
specifying the terms and conditions thereof and containing
such other terms and conditions not inconsistent with the
provisions of the Plan as the Board considers necessary or
advisable to achieve the purposes of the Plan or comply with
applicable tax and regulatory laws and accounting
principles.
(b) Securities Laws. The Participant shall make such
representations and furnish such information as may, in the
opinion of counsel for the Corporation, be appropriate to
permit the Corporation to issue or transfer the Stock in
compliance with the provisions of applicable federal or
state securities laws. The Corporation, in its discretion,
may postpone the issuance and delivery of any Stock until
completion of such registration or other qualification of
such shares under any federal or state laws, or stock
exchange listing as the Corporation may consider
appropriate. The Corporation may require that prior to the
issuance or transfer of Stock, the Participant enter into a
written agreement to comply with any restrictions on
subsequent disposition that the Corporation deems necessary
or advisable under any applicable federal and state
securities laws. Certificates of Stock issued hereunder may
be legended to reflect such restrictions.
(c) Board Discretion. Each type of Award may be made
alone, in addition to or in relation to any other type of
Award. The terms of each type of Award need not be
identical, and the Board need not treat Participants
uniformly. Except as otherwise provided by the Plan or a
particular Award, any determination with respect to an Award
may be made by the Board at the time of award or at any time
thereafter. Without limiting the foregoing, an Award may be
made by the Board, in its discretion, to any 401(k),
savings, pension, profit sharing or other similar plan of
the Corporation in lieu of or in addition to any cash or
other property contributed or to be contributed to such
plan.
(d) Settlement. The Board shall determine whether Awards
are settled in whole or in part in cash, Common Stock, other
securities of the Corporation, Awards, other property or
such other methods as the Board may deem appropriate. The
Board may permit a Participant to defer all or any portion
of a payment under the Plan, including the crediting of
interest on deferred amounts denominated in cash and
dividend equivalents on amounts denominated in Common Stock.
If shares of Common Stock are to be used in payment pursuant
to an Award and such shares were acquired upon the exercise
of a stock option (whether or not granted under this Plan),
such shares must have been held by the Participant for at
least six months.
(e) Dividends and Cash Awards. In the discretion of the
Board, any Award under the Plan may provide the Participant
with (i) dividends or dividend equivalents payable currently
or deferred with or without interest, and (ii) cash payments
in lieu of or in addition to an Award.
(f) Termination of Employment. The Board shall determine
the effect on an Award of the disability, death, retirement
or other termination of employment of a Participant and the
extent to which, and the period during which, the
Participant's legal representative, guardian or Designated
Beneficiary may receive payment of an Award or exercise
rights thereunder. The Board shall have complete
discretion, exercisable either at the time the Award is made
or at any time while the Award remains outstanding, to
accelerate the vesting of any Award or any part of any Award
remaining unvested upon the termination of employment of a
Participant or to extend the period of time for which an
Option is to remain exercisable following the termination of
employment of a Participant, provided, however, that in no
event shall such Option be exercisable after the specified
expiration date of such Option.
(g) Change in Control. In order to preserve a
Participant's rights under an Award in the event of a Change
in Control of the Corporation, the Board in its discretion
may, at the time an Award is made or at any time thereafter,
take one or more of the following actions: (i) provide for
the acceleration of any time period relating to the exercise
or realization of the Award, (ii) provide for the purchase
of the Award for an amount of cash or other property that
could have been received upon the exercise or realization of
the Award had the Award been currently exercisable or
payable, (iii) adjust the terms of the Award in a manner
determined by the Board to reflect the Change in Control,
(iv) cause the Award to be assumed, or new rights
substituted therefor, by another entity, or (v) make such
other provision as the Board may consider equitable and in
the best interests of the Corporation, provided that, in the
case of an action taken with respect to an outstanding
Award, the Participant's consent to such action shall be
required unless the Board determines that the action, taking
into account any related action, would not materially and
adversely affect the Participant. Unless otherwise provided
in any Award, for purposes hereof a "Change in Control" of
the Corporation shall mean: (i) the acquisition by any
individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the then outstanding shares
of common stock of the Corporation (the "Outstanding
Corporation Common Stock"); provided, however, that any
acquisition by the Corporation or its subsidiaries, or any
employee benefit plan (or related trust) of the Corporation
or its subsidiaries of 20% or more of Outstanding
Corporation Common Stock shall not constitute a Change in
Control; and provided, further, that any acquisition by a
corporation with respect to which, following such
acquisition, more than 50% of the then outstanding shares of
common stock of such corporation, is then beneficially
owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial
owners of the Outstanding Corporation Common Stock
immediately prior to such acquisition in substantially the
same proportion as their ownership, immediately prior to
such acquisition, of the Outstanding Corporation Common
Stock, shall not constitute a Change in Control; or (ii) any
transaction which results in the Continuing Directors (as
defined in the Certificate of Incorporation of the
Corporation) constituting less than a majority of the Board;
or (iii) consummation by the Corporation of (i) a
reorganization, merger or consolidation, in each case, with
respect to which all or substantially all of the individuals
and entities who were the beneficial owners of the
Outstanding Corporation Common Stock immediately prior to
such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 50% of
the then outstanding shares of common stock of the
corporation resulting from such a reorganization, merger or
consolidation or (ii) the sale or other disposition of all
or substantially all of the assets of the Corporation,
excluding a sale or other disposition of assets to a
subsidiary of the Corporation.
(h) Withholding. The Corporation shall have the power and
the right to deduct or withhold, or require a Participant to
remit to the Corporation an amount sufficient to satisfy
federal, state and local taxes (including the Participant's
FICA obligation) required to be withheld with respect to an
Award or any dividends or other distributions payable with
respect thereto. In the Board's discretion, such tax
obligations may be paid in whole or in part in shares of
Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market
Value on the date of delivery, provided, however, that the
optionholder must have owned at least such number of shares
for at least six months. The Corporation and its Affiliates
may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to
the Participant.
(i) Amendment of Award. The Board may amend, modify or
terminate any outstanding Award, including substituting
therefor another Award of the same or a different type,
changing the date of exercise or realization and converting
an Incentive Stock Option to a Nonqualified Stock Option,
provided that the Participant's consent to such action shall
be required unless the Board determines that the action,
taking into account any related action, would not materially
and adversely affect the Participant.
(j) Awards Not Transferable. Except as otherwise provided
by the Board, Awards under the Plan are not transferable
other than as designated by the participant by will or by
the laws of descent and distribution.
Section 9. Miscellaneous
(a) No Right To Employment. No person shall have any claim
or right to be granted an Award, and the grant of an Award
shall not be construed as giving a Participant the right to
continued employment. The Corporation expressly reserves
the right at any time to dismiss a Participant free from any
liability or claim under the Plan, except as expressly
provided in the applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of
the applicable Award, no Participant or Designated
Beneficiary shall have any rights as a shareholder with
respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof.
A Participant to whom Common Stock is awarded shall be
considered the holder of the Stock at the time of the Award
except as otherwise provided in the applicable Award.
(c) Effective Date. Subject to the approval of the
shareholders of the Corporation, the Plan shall be effective
on March 9, 1999 (the "Effective Date"). Prior to such
approval, Awards may be made under the Plan expressly
subject to such approval. Awards under the Plan may be made
for a period of ten years commencing on the Effective Date.
The period during which an Award may be exercise may extend
beyond that time as provided herein.
(d) Amendment of Plan. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time,
provided that no amendment shall be made without shareholder
approval if such approval is necessary to comply with any
applicable requirement of the laws of the jurisdiction of
incorporation of the Corporation, any applicable tax
requirement, any applicable rules or regulation of the
Securities and Exchange Commission, including Rule 16(b)-3
(or any successor rule thereunder), or the rules and
regulations of The Nasdaq Stock Market or any other exchange
or stock market over which the Corporation's securities are
listed.
(e) Governing Law. The provisions of the Plan shall be
governed by and interpreted in accordance with the laws of
the jurisdiction of incorporation of the Corporation.
Indemnity. Neither the Board nor the Committee, nor any
members of either, nor any employees of the Corporation or
any parent, subsidiary, or other affiliate, shall be liable
for any act, omission, interpretation, construction or
determination made in good faith in connection with their
responsibilities with respect to this Plan, and the
Corporation hereby agrees to indemnify the members of the
Board, the members of the Committee, and the employees of
the Corporation and its parent or subsidiaries in respect of
any claim, loss, damage, or expense (including reasonable
counsel fees) arising from any such act, omission,
interpretation, construction or determination to the full
extent permitted by law.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements included in the Company's quarterly report on form
10-Q for the quarter ended March 27, 1999.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-25-1999
<PERIOD-END> MAR-27-1999
<CASH> 36,582
<SECURITIES> 28,271
<RECEIVABLES> 31,703
<ALLOWANCES> 2,600
<INVENTORY> 19,089
<CURRENT-ASSETS> 121,932
<PP&E> 39,446
<DEPRECIATION> 6,387
<TOTAL-ASSETS> 169,810
<CURRENT-LIABILITIES> 28,666
<BONDS> 0
0
0
<COMMON> 134
<OTHER-SE> 141,010
<TOTAL-LIABILITY-AND-EQUITY> 169,810
<SALES> 18,797
<TOTAL-REVENUES> 19,362
<CGS> 11,533
<TOTAL-COSTS> 21,764
<OTHER-EXPENSES> 297
<LOSS-PROVISION> (620)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,708)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,088)
<DISCONTINUED> 0
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<NET-INCOME> (1,088)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
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