<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1996
Commission File Number 0-23628
FUSION SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 52-0915080
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7600 Standish Place, Rockville, MD 20855
-----------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (301) 251-0300
--------------
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 August 2, 1996, 7,791,886 shares of registrant's Common Stock, par value
$.01 per share, were outstanding.
<PAGE> 2
FUSION SYSTEMS CORPORATION AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JUNE 28, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements 3
Consolidated Balance Sheets at June 28, 1996
and December 31, 1995 3
Consolidated Statements of Income for the three-months
and six-months ended June 28, 1996 and June 30, 1995 4
Consolidated Statements of Cash Flows for the
six-months ended June 28, 1996 and June 30, 1995 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
Items 1-3 - Not applicable -
Item 4 - Submission of Matters to a Vote of Security Holders 14
Item 5 - Not applicable -
Item 6 - Exhibits and Reports on Form 8-K 15
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FUSION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
June 28, December 31,
1996 1995
---------- ----------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 9,443 $12,054
Short-term marketable securities 17,294 25,866
Accounts receivable, net of allowance for doubtful
accounts of $243 and $144 as of June 28, 1996,
and December 31, 1995, respectively 31,987 22,948
Inventories 25,663 20,063
Prepaid expenses and other current assets 1,647 1,214
Receivable from related party 229 230
---------- ----------
Total current assets 86,263 82,375
Fixed Assets, net of accumulated depreciation 17,713 10,588
Deferred Income Taxes 3,122 2,022
Other Assets 770 619
Intangible Assets, net of accumulated amortization 3,049 3,661
---------- ----------
Total assets $110,917 $99,265
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,484 $ 5,127
Accrued expenses 8,952 6,398
Income taxes 248 1,294
Customer deposits 1,016 713
---------- ----------
Total current liabilities 14,700 13,532
---------- ----------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized,
none issued and outstanding - -
Common stock, $0.01 par value; 40,000,000 shares authorized,
7,791,189 and 7,758,057 shares outstanding as of
June 28, 1996 and December 31, 1995, respectively 78 78
Additional paid-in capital 39,706 38,899
Retained earnings 56,078 46,079
Accumulated translation adjustment 355 677
---------- ----------
Total stockholders' equity 96,217 85,733
---------- ----------
Total liabilities and stockholders' equity $110,917 $99,265
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
3
<PAGE> 4
FUSION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------- ------------------------
June 28, June 30, June 28, June 30,
1996 1995 1996 1995
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Revenues $40,058 $27,998 $78,696 $54,141
Cost of Sales 17,593 12,254 35,216 24,350
--------- ---------- ---------- ----------
Gross Profit 22,465 15,744 43,480 29,791
--------- ---------- ---------- ----------
Operating Expenses:
Selling, general and administrative 9,113 6,610 18,536 12,712
Research, development and engineering 5,554 3,255 9,973 5,540
--------- ---------- ---------- ----------
Total operating expenses 14,667 9,865 28,509 18,252
--------- ---------- ---------- ----------
Operating Income 7,798 5,879 14,971 11,539
--------- ---------- ---------- ----------
Other Income:
Interest income, net 412 576 893 1,119
Foreign exchange gains (losses) 74 (16) 81 80
Other, net 7 - 54 5
--------- ---------- ---------- ----------
Total other income, net 493 560 1,028 1,204
--------- ---------- ---------- ----------
Income before income taxes 8,291 6,439 15,999 12,743
Provision for Income Taxes 3,109 2,480 6,000 4,906
--------- ---------- ---------- ----------
Net Income $ 5,182 $ 3,959 $ 9,999 $ 7,837
========= ========== ========== ==========
Earnings Per Share: $ 0.64 $ 0.49 $ 1.24 $ 0.97
========= ========== ========== ==========
Weighted-Average Shares Outstanding 8,119 8,140 8,089 8,106
========= ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE> 5
FUSION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-------------------------
June 28, June 30,
1996 1995
---------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 9,999 $ 7,837
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 2,406 1,167
Loss on disposal of fixed assets 4 8
Cash provided by (used in) changes in assets
and liabilities:
Accounts receivable (9,039) (601)
Receivable from affiliate, net 1 242
Inventories (5,600) (1,016)
Prepaid expenses and other assets (584) (321)
Deferred income taxes (1,100) (228)
Accounts payable (643) 696
Accrued expenses and other liabilities 2,857 (2,297)
Income taxes accrued (1,046) 1,318
Cash provided by changes in assets of
discontinued operations - 493
---------- ---------
Net Cash (Used in) Provided by Operating Activities (2,745) 7,298
---------- ---------
Cash Flows from Investing Activities:
Purchases of fixed assets (8,944) (2,672)
Proceeds from disposal of fixed assets 21 33
Net sales (purchases) of marketable securities 8,572 (698)
Foreign currency translation adjustments (322) 510
---------- ---------
Net Cash Used in Investing Activities (673) (2,827)
---------- ---------
Cash Flows from Financing Activities:
Cash proceeds from exercise of stock options and stock sale, net 473 578
Income tax benefit from exercise of stock options 334 262
---------- ---------
Net Cash Provided by Financing Activities 807 840
---------- ---------
Net (Decrease) Increase in Cash and Cash Equivalents (2,611) 5,311
Cash and Cash Equivalents, beginning of period 12,054 24,262
---------- ---------
Cash and Cash Equivalents, end of period $ 9,443 $ 29,573
========== =========
Supplemental Disclosure of Cash Flow Information-
Cash paid during the period for:
Interest $ 2 -
Income taxes $ 7,572 $ 3,819
========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE> 6
FUSION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION:
Fusion Systems Corporation, together with its subsidiaries (the "Company"),
designs, manufactures, markets and services photostabilizers and ashers used to
make semiconductor devices. The Company also designs, manufactures, markets
and services ultraviolet curing systems used in manufacturing, printing and
coating applications in numerous industries. The Company's operations are
conducted primarily through two wholly owned subsidiaries, Fusion Semiconductor
Systems Corporation ("Fusion Semiconductor") and Fusion UV Curing Systems
Corporation ("Fusion UV").
The accompanying consolidated financial statements include the accounts of the
Company and all of its subsidiaries, after elimination of significant
intercompany transactions and balances.
The accompanying unaudited financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission regarding interim financial reporting. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements and should be read in
conjunction with the financial statements and notes thereto for the year ended
December 31, 1995 included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995. The accompanying financial statements
reflect all adjustments (consisting solely of normal, recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation of
results for the interim periods presented. The results of operations for the
three and six month periods ended June 28, 1996 are not necessarily indicative
of the results to be expected for the full fiscal year.
2. SHORT-TERM MARKETABLE SECURITIES:
At June 28, 1996, short-term marketable securities consisted of investment
grade commercial paper, U.S. government agency discount notes and Treasury
bills, and are considered by management to be available-for-sale. These
investments mature at various dates from July 1996 to October 1996. Because
amortized cost approximates market, no adjustment has been made to
stockholders' equity as a result of changes in market value to these
securities.
6
<PAGE> 7
3. INVENTORIES:
Inventories are valued at the lower of cost (using the first-in, first-out
method) or market. Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 28, December 31,
1996 1995
------------ -----------
<S> <C> <C>
Raw materials and purchased parts $11,830 $ 6,833
Work in process and finished subassemblies 10,897 11,299
Finished goods 2,936 1,931
------------ -----------
Total inventories $25,663 $20,063
============ ===========
</TABLE>
4. EARNINGS PER SHARE:
Earnings per common and equivalent share are based on the weighted-average
number of common equivalent shares outstanding during the periods. Common
equivalent shares includes the dilutive effect of all options outstanding.
Fully diluted earnings per share are not presented because the difference
between these amounts and the amounts presented is not material.
5. INFORMATION CONCERNING BUSINESS SEGMENTS:
Net Revenues by Business Segment
<TABLE>
<CAPTION>
Six Months Ended
--------------------------------
June 28, June 30,
1996 1995
------------ -----------
<S> <C> <C>
Fusion Semiconductor $50,020 $28,165
Fusion UV 28,676 25,976
------------ -----------
Total net revenues $78,696 $54,141
============ ===========
</TABLE>
Net Revenues by Geographic Region
The Company sells its products in several geographic regions. Net revenues
relating to each region are as follows (in thousands):
<TABLE>
<CAPTION>
Six Months Ended
----------------------------
June 28, June 30,
1996 1995
------------ -----------
<S> <C> <C>
North America $45,597 $27,955
Europe 15,741 11,696
Pacific Rim 8,747 8,447
Japan 8,000 5,534
Other 611 509
------------ -----------
Total net revenues $78,696 $54,141
============ ===========
</TABLE>
7
<PAGE> 8
Operating Locations
The Company manufactures its products domestically. Japanese, Korean and
European operations consist primarily of sales and service activities. A
significant portion of the Company's revenues from its sales and service
offices in Japan, Korea and Europe represent equipment sales shipped directly
from U.S. facilities. A summary of net revenues by operating location is as
follows (in thousands):
<TABLE>
<CAPTION>
Six Months Ended
------------------------------------
June 28, June 30,
1996 1995
----------- ----------
<S> <C> <C>
Domestic $56,693 $39,294
Europe 15,465 11,447
Japan 5,170 3,400
Korea 1,368 -
----------- ----------
Total net revenues $78,696 $54,141
=========== ==========
</TABLE>
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fusion Systems Corporation, together with its subsidiaries (the "Company"),
designs, manufactures, markets and services photostabilizers and ashers used to
make semiconductor devices. The Company also designs, manufactures, markets
and services ultraviolet curing systems used in manufacturing, printing and
coating applications in numerous industries. The Company's operations are
conducted primarily through two wholly owned subsidiaries, Fusion Semiconductor
Systems Corporation ("Fusion Semiconductor") and Fusion UV Curing Systems
Corporation ("Fusion UV").
NET REVENUES. Net revenues, consisting of revenues from system sales, spare
parts and service revenues, increased to $40,058,000 in the quarter ended June
28,1996 from $27,998,000 in the quarter ended June 30, 1995, an increase of
43%. For the first six months of 1996, net revenue increased 45% to $78,696,000
compared to $54,141,000 for the first six months of 1995. The increases were
primarily due to increased shipments rather than price increases.
Fusion Semiconductor net revenues increased to $25,252,000 in the quarter ended
June 28, 1996 from $14,664,000 in the quarter ended June 30, 1995, an increase
of 72%. Net revenues for the six month periods ended June 28, 1996 and June 30,
1995 were $50,020,000 and $28,165,000 respectively, an increase of 78%. The
increases were primarily the result of increased sales of the Company's
Gemini(TM) asher products in North America, Europe and the Pacific Rim.
Fusion UV net revenues increased to $14,806,000 in the quarter ended June 28,
1996 from $13,334,000 in the quarter ended June 30, 1995, an increase of 11%.
Net revenues for the six month periods ended June 28, 1996 and June 30, 1995
were $28,676,000 and $25,976,000, respectively, an increase of 10%. The
increases were primarily due to increased sales of ultraviolet curing
equipment in Europe and Japan.
GROSS PROFIT. The Company's gross profit as a percentage of net revenues were
56.1% for the quarter ended June 28, 1996 and 56.2% for the quarter ended June
30, 1995. Gross profit as a percentage of net revenues for the six month
periods ended June 28, 1996 and June 30, 1995, were 55.3% and 55.0%,
respectively.
9
<PAGE> 10
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased 38%, to $9,113,000 in the quarter ended June 28, 1996 from
$6,610,000 in the quarter ended June 30, 1995. Selling, general and
administrative expenses increased 46%, to $18,536,000 in the six month period
ended June 28, 1996 from $12,712,000 in the six month period ended June 30,
1995. The increases were primarily due to increased expenditures attributable
to the addition of staff, increases in commissions due to increased sales, and
additional occupancy costs associated with the expansion of its Maryland
facilities. Selling, general and administrative expenses decreased as a
percentage of net revenues in the quarter ended June 28, 1996 to 22.8% from
23.6% in the quarter ended June 30, 1995. For the six month period ended June
28, 1996, selling, general and administrative expenses increased as a
percentage of net revenues to 23.6% compared to 23.5% for the six month period
ended June 30, 1995.
RESEARCH, DEVELOPMENT AND ENGINEERING. Research, development and engineering
expenses increased 71%, to $5,554,000 in the quarter ended June 28, 1996 from
$3,255,000 in the quarter ended June 30, 1995 and to 13.9% from 11.6% of net
revenues, respectively. Research, development and engineering expenses
increased 80%, to $9,973,000 in the six month period ended June 28, 1996 from
$5,540,000 in the six month period ended June 30, 1995 and to 12.7% from 10.2%
of net revenues, respectively. For both the quarter and the six month period,
the increases were primarily attributable to increased staffing for support and
improvement of existing products and the development of the new Gemini(TM)
photostabilizer and advanced Gemini(TM) ashers.
OTHER INCOME, NET. Other income, net of expenses, was $493,000 and $560,000 in
the quarters ended June 28, 1996 and June 30, 1995, respectively, and
$1,028,000 and $1,204,000 in the six month periods ended June 28, 1996 and June
30, 1995, respectively. The reduction in interest income was due to the use of
cash for working capital and the Company's capital expansion program along with
a reduction in the available investment rates for excess cash.
PROVISION FOR INCOME TAXES. The Company's effective tax rate decreased to
approximately 37.5% for the quarter and six month periods ended June 28, 1996
from 38.5% for the quarter and six month periods ended June 30, 1995. The
decrease was primarily due to the benefit provided by the utilization of a
Foreign Sales Corporation.
NET INCOME. Net income and earnings per share each increased 31%, to
$5,182,000 and $.64 for the quarter ended June 28, 1996 from $3,959,000 and
$.49 for the quarter ended June 30, 1995. Net income and earnings per share
each increased 28%, to $9,999,000 and $1.24 for the six month period ended June
28, 1996 from $7,837,000 and $.97 for the six month period ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and securities were $26.7 million as of June 28, 1996, $11.2
lower than the $37.9 million available at December 31, 1995. The Company's cash
needs are primarily to fund growth in inventory and accounts receivable and to
fund its capital expenditure program. The Company's accounts receivable and
inventory have grown due to the increase in sales volume over the prior year.
10
<PAGE> 11
The Company's capital requirements typically consist of manufacturing
equipment, research and development equipment, office equipment, leasehold
improvements, computers, furniture and fixtures. Capital expenditures were
$8,944,000 and $2,672,000, in the six month periods ended June 28, 1996 and
June 30, 1995, respectively.
The Company is in the process of expanding its facilities and adding
specialized manufacturing, engineering and research and development
capabilities. During the first quarter, Fusion UV completed its relocation to
a new facility near the Company's existing facility. Fusion Semiconductor is
continuing its expansion program in the existing facility made available by
Fusion UV's relocation. Fusion Semiconductor's expansion is presently expected
to be completed by the third quarter of 1996. The Company is continuing to
develop its plan for expanson in Korea in 1997.
Management expects that existing working capital and cash from operations will
be sufficient to meet its working capital and other operating expenditure
requirements for the foreseeable future.
OUTLOOK
The outlook for sales of the Company's products in the second half of 1996
remains strong for the UV Curing business but is weaker than the first half for
the Semiconductor business.
The semiconductor capital equipment market has recently been experiencing a
slowdown in the rate of orders, as well as order cancellations and shipment
delays from customers due to market conditions. The Company is not immune to
these market conditions and currently expects some weakness in sales and, as a
result, pressure on its operating margins in the second half of the year.
Management believes the Semiconductor business is well positioned with its new
product lines and presently believes that these general market conditions will
improve some time in 1997.
CAUTIONARY STATEMENTS
In addition to the other information in this Quarterly Report on Form
10-Q, the following cautionary statements should be considered carefully in
evaluating the Company and its business. Information provided by the Company
from time to time may contain certain "forward-looking" information, as that
term is defined by (i) the Private Securities Litigation Reform Act of 1995
(the "Act") and (ii) in releases made by the Securities and Exchange
Commission (the "SEC"). The factors discussed in these cautionary statements,
among other factors, could cause actual results to differ materially from those
contained in forward-looking statements made in this report and presented
elsewhere by management from time to time. These cautionary statements are
being made pursuant to the provisions of the Act and with the intention of
obtaining the benefits of the "safe harbor" provisions of the Act. Reference
is also made to the "Risk Factors" described in the Company's Prospectus dated
October 5, 1994.
VARIABILITY OF QUARTERLY OPERATING RESULTS. The Company's quarterly operating
results may vary significantly from quarter to quarter, depending upon factors
such as the timing of product sales and the receipt of orders from major
customers, production difficulties causing delayed shipments, the proportion of
international sales, specific economic conditions in the semiconductor
industry, the mix of products sold by the Company and competitive pricing
pressures. Because a high percentage of the Company's expenses are relatively
fixed in the
11
<PAGE> 12
near term, minor variations in the timing of orders and shipments can cause
significant variations in quarterly operating results. All orders are subject
to cancellation or rescheduling by the customer with limited or no penalties,
and the Company's ability to accurately forecast future revenues and income for
any period is necessarily limited. Industry trends in the semiconductor markets
can sometimes cause sudden and significant order cancellations or pushouts of
orders. Any forward-looking information provided from time to time by the
Company represents only management's then-best current estimate of future
results or trends, and actual results may differ materially from those
contained in the Company's estimates.
POTENTIAL VOLATILITY OF STOCK PRICE. There has been significant volatility in
the market price of securities of high technology companies. The Company
believes factors such as announcements of new product enhancements by the
Company or its competitors, quarterly fluctuations in the Company's financial
results or other manufacturer's financial results, shortfalls in the Company's
actual financial results compared to results previously forecasted by stock
market analysts, general conditions in the semiconductor industry and other
industries in which the Company participates, and conditions in the financial
markets could cause the market price of the Common Stock to fluctuate
substantially. These market fluctuations may adversely affect the price of the
Company's Common Stock.
CYCLICALITY OF THE SEMICONDUCTOR INDUSTRY. The Company's semiconductor
equipment business, which in 1995 accounted for approximately 53% of total net
revenues and approximately 61% of total operating income before corporate
expenses, depends in large part upon the capital equipment expenditures of
semiconductor manufacturers which, in turn, depend on the current and
anticipated market demand for integrated circuits and products utilizing
integrated circuits. The semiconductor industry is highly cyclical and has
historically experienced periodic downturns, which often have had a severe
adverse effect on capital equipment expenditures by semiconductor
manufacturers. Semiconductor industry downturns have adversely affected the
sales, gross profit, and operating results of semiconductor equipment
suppliers, including Fusion Semiconductor.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. Sales outside North America
accounted for approximately 47% of the Company's total net revenues in fiscal
1995, approximately 43% of the Company's total net revenues in fiscal 1994 and
approximately 44% of the Company's total net revenues in fiscal 1993, and may
continue to represent a significant portion of the Company's revenues. Any
decrease in sales outside North America may have a material adverse effect on
the Company's operating results. The Company's international business and
financial performance may be affected by fluctuations in interest and currency
exchange rates, by trade restrictions, longer payment cycles typically
associated with international sales and changes in tariffs and taxes, among
other factors.
RAPID TECHNOLOGICAL CHANGE; COMPETITION. Equipment and processes used in UV
curing and semiconductor manufacturing are subject to rapid technological
development and product innovation. The Company, to remain successful, must be
responsive to new developments in photostabilization and asher technology,
"white space" product technology and enhanced process capabilities. The
Company's financial results may be negatively impacted by the failure of new or
existing products in both segments to be favorably received by manufacturers
and other customers due to price, availability, features, other product choices
or the level and quality of support for the Company's products.
12
<PAGE> 13
RELIANCE ON ATTRACTING AND RETAINING KEY EMPLOYEES. The Company's continued
success will depend in large part on its ability to attract and retain
highly-qualified technical, managerial, sales and marketing, and other
personnel. Competition for such personnel in the Company's industry is
intense. None of the senior management of the Company is subject to an
employment contract. There can be no assurance that the Company will be able
to continue to attract or retain such personnel.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEMS 1 - 3. NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders was held on June 20, 1996. Three proposals
were submitted to stockholders as described in the Company's proxy statement
dated May 6, 1996. The following is a brief description of the matters voted
upon, the number of votes cast for and against each proposal, and the number of
abstentions.
1. To fix the number of Directors of the Company at six and to elect two
Class II Directors to serve for three year terms and one Class III
Director to serve for a two year term or until their successors are
elected and qualified.
<TABLE>
<S> <C>
Nominee: Charles J. Coulter - Class II Director
Votes for the Nominee: 6,292,600
Votes Witheld from the Nominee: 104,495
Nominee: Jon D. Tompkins - Class II Director
Votes for the Nominee: 6,356,304
Votes Witheld from the Nominee: 40,791
Nominee: Andrea Geisser - Class III Director
Votes for the Nominee: 6,353,564
Votes Witheld from the Nominee: 43,531
Continuing Directors:
Leslie S. Levine
Daniel Tessler
Gordon S. Macklin
</TABLE>
2. To approve an amendment to the Company's 1994 Stock Option Plan to
increase the number of shares reserved for issuance thereunder by 600,000
shares to 1,250,000 shares.
<TABLE>
<S> <C>
Votes for: 3,251,501
Votes against: 1,641,562
Abstain: 23,913
No Vote: 1,480,119
</TABLE>
3. To ratify the selection of Arthur Andersen LLP as independent auditors
for the fiscal year ending December 31, 1996.
<TABLE>
<S> <C>
Votes for: 6,376,864
Votes against: 9,687
Abstain: 10,544
</TABLE>
ITEM 5. NOT APPLICABLE
14
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 11 Statement Regarding Computation of Per Share Earnings
B. Reports on Form 8-K
None
15
<PAGE> 16
SIGNATURE
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.
FUSION SYSTEMS CORPORATION
August 7, 1996 By: /s/Joseph F. Greeves
--------------------
Joseph F. Greeves
Vice President and Chief Financial Officer
16
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Description Page
----------- -------------------------------------------------------- ----------
<S> <C>
11 Statement Regarding Computation of Per Share Earnings
</TABLE>
17
<PAGE> 1
EXHIBIT 11
FUSION SYSTEMS CORPORATION AND SUBSIDIARIES
EARNINGS PER SHARE
CALCULATION OF WEIGHTED-AVERAGE SHARES OUTSTANDING
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
June 28, June 30, June 28, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common Stock 7,769 7,634 7,765 7,616
Options to acquire Common Stock (treasury stock method) 350 506 324 490
---------- ---------- ---------- ----------
Weighted-Average Shares Outstanding 8,119 8,140 8,089 8,106
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT JUNE 28, 1996
(UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-28-1996
<CASH> 9,443
<SECURITIES> 17,294
<RECEIVABLES> 32,230
<ALLOWANCES> 243
<INVENTORY> 25,663
<CURRENT-ASSETS> 86,263
<PP&E> 29,499
<DEPRECIATION> 11,786
<TOTAL-ASSETS> 110,917
<CURRENT-LIABILITIES> 14,700
<BONDS> 0
0
0
<COMMON> 78
<OTHER-SE> 96,139
<TOTAL-LIABILITY-AND-EQUITY> 110,917
<SALES> 78,696
<TOTAL-REVENUES> 78,696
<CGS> 35,216
<TOTAL-COSTS> 35,216
<OTHER-EXPENSES> 28,509
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> 15,999
<INCOME-TAX> 6,000
<INCOME-CONTINUING> 15,999
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,999
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
</TABLE>
