================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
---------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1996
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 0-26268
MINIMED INC.
(Exact Name of Registrant as Specified in its Charter)
---------------
Delaware 95-4408171
(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)
12744 San Fernando Road, Sylmar, CA 91342
(818) 362-5958
---------------
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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Title of each class Outstanding at October 30, 1996
------------------- -------------------------------
Common Stock, $.01 par value 11,608,593
================================================================================
<PAGE>
INDEX
MINIMED INC.
Page
Number
-------------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements and Notes
(Unaudited) 3
Consolidated Balance Sheets--December 29, 1995 and
September 27, 1996 3
Consolidated Statements of Operations--Three months
and nine months ended September 27, 1996 and
September 29, 1995 4
Consolidated Statements of Cash Flows--Nine months
ended September 27, 1996 and September 29, 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION 12
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURE 13
Index to Exhibits 14
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements and Notes
<TABLE>
MINIMED INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
A S S E T S
December 29, September 27
1995 1996
------------- -------------
<S> <C> <C>
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents.......................... $14,762,000 10,779,000
Short-term investments............................. $8,724,000 9,846,000
Accounts receivable, net of allowance for doubtful
accounts of $1,327,000 and $2,227,000 at December
29, 1995 and Sepember 27, 1996, respectively..... 10,562,000 11,906,000
Receivables due from related entities.............. 23,000 -
Inventories........................................ 5,165,000 7,603,000
Deferred tax assets, net........................... 789,000 789,000
Prepaid expenses and other current assets.......... 1,065,000 1,134,000
------------- ------------
Total current assets....................... 41,090,000 42,057,000
PROPERTY AND EQUIPMENT - NET......................... 10,553,000 11,914,000
------------- ------------
TOTAL ASSETS......................................... $51,643,000 $53,971,000
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................... $1,895,000 $1,471,000
Current portion of notes payable................... 600,000 -
Accrued payroll related expenses................... 1,966,000 2,353,000
Accrued warranties................................. 3,243,000 3,032,000
Other accrued expenses............................. 1,577,000 432,000
------------- ------------
Total current liabilities.................. 9,281,000 7,288,000
------------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01;
20,000,000 shares authorized; 11,405,933 and
11,607,793 shares issued and outstanding as of
December 29, 1995 and (unaudited) September 27,
1996, respectively............................... 114,000 116,000
Additional capital................................. 43,912,000 45,410,000
Retained earnings (accumulated deficit)............ (1,664,000) 1,157,000
------------- ------------
Total stockholders' equity................. 42,362,000 46,683,000
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......... $51,643,000 $53,971,000
============= ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
MINIMED INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 27 Sept. 29 Sept. 27 Sept. 29
------------------------ ------------------------
1996 1995 1996 1995
------------------------ ------------------------
(Unaudited)
<S> <C> <C> <C> <C>
NET SALES...................... $14,709,000 $11,007,000 $40,261,000 $30,297,000
COST OF SALES.................. 5,220,000 3,963,000 14,103,000 11,048,000
----------- ----------- ----------- ------------
Gross profit.............. 9,489,000 7,044,000 26,158,000 19,249,000
OPERATING EXPENSES:
Selling, general and
administrative.............. 6,156,000 4,842,000 17,298,000 14,033,000
Research and development..... 1,896,000 1,700,000 5,671,000 5,074,000
----------- ----------- ----------- ------------
Total operating expenses 8,052,000 6,542,000 22,969,000 19,107,000
INCOME FROM OPERATIONS......... 1,437,000 502,000 3,189,000 142,000
OTHER:
Interest expense.......... - (50,000) - (361,000)
Other income.............. 322,000 251,000 819,000 571,000
----------- ----------- ----------- ------------
INCOME BEFORE INCOME TAXES..... 1,759,000 703,000 4,008,000 352,000
Provision for income taxes..... (497,000) - (1,187,000) -
----------- ----------- ----------- ------------
NET INCOME..................... $1,262,000 $703,000 $2,821,000 $352,000
=========== =========== =========== ============
Net income per share........... $0.10 $0.06 $0.23 $0.03
=========== =========== =========== ============
Weighted average common and
common-equivalent shares
outstanding.................... 12,250,000 11,756,000 12,200,000 10,532,000
=========== =========== =========== ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
MINIMED INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended
------------------------
Sept. 27, Sept. 29,
------------ -----------
1996 1995
------------ -----------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $2,821,000 $352,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.................................... 1,457,000 877,000
Changes in operating assets and liabilities:
Accounts receivable, net................... (1,344,000) 95,000
Receivables due from related entities...... 23,000 (4,000)
Inventories................................ (2,438,000) 2,016,000)
Prepaid expenses and other current assets.. (69,000) 242,000
Accounts payable........................... (424,000) 538,000
Accrued expenses........................... (969,000) 1,123,000
------------ -----------
Net cash provided by (used in) operating
activities...................................... (943,000) 1,207,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments............................. (1,122,000) 0
Purchase of property and equipment................. (2,818,000) (6,904,000)
------------ -----------
Net cash used in investing activities........... (3,940,000) (6,904,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable......................... (600,000) (7,000,000)
Proceeds from the exercise of stock options........ 1,500,000 134,000
Proceeds from issuance of stock, net of expenses... 0 29,797,000
------------ -----------
Net cash provided by financing activities....... 900,000 22,931,000
NET INCREASE (DECREASE) IN CASH......................... (3,983,000) 17,234,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD......... 14,762,000 10,348,000
------------ -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD...............$10,779,000 $27,582,000
============ ===========
See notes to consolidated financial statements.
- -------------
<FN>
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $1,549,000 $0
============ ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITY:
The Company has recognized a reduction in income taxes payable of $520,000
during the nine months ended September 27, 1996 related to the exercise of
nonqualified stock options.
During the nine months ended September 29, 1995, the Company recorded
$219,000 in accretion of preferred stock to redemption value and $292,000
in accrued preferred stock dividends directly to accumulated deficit.
</FN>
</TABLE>
<PAGE>
MINIMED INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 27, 1996
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all normal, recurring adjustments
considered necessary for a fair presentation have been included. The financial
statements should be read in conjunction with the audited financial statements
included in the Annual Report of MiniMed Inc. (the Company) filed on Form 10-K
with the Securities and Exchange Commission for the year ended December 29,
1995. The results of operations for the three months and nine months ended
September 27, 1996 are not necessarily indicative of the results that may be
expected for the fiscal year ending December 27, 1996.
Note 2. Income Taxes
Net income and earnings per share for the three months and nine months
ended September 27, 1996 reflect income taxes which have been recorded at the
Company's estimated effective income tax rate for the year. This estimated
income tax rate has been determined by giving consideration to the pretax
earnings and losses applicable to foreign and domestic tax jurisdictions and the
estimated reduction of valuation allowances which offset deferred tax assets of
the Company under the provisions of FASB Statement No. 109, "Accounting for
Income Taxes". No provision for income taxes was recorded in the Company's
operating results for the three months and nine months ended September 29, 1995
as its taxable income for these periods was offset by net operating loss
carryovers.
Note 3. Weighted Average Number of Common and Common Equivalent Shares
Outstanding
Earnings per common and common equivalent share for the three months
and nine months ended September 27, 1996, and September 29, 1995, were computed
by dividing net income by the weighted average common and common equivalent
shares outstanding during the periods presented, computed in accordance with the
treasury stock method. As required by rules promulgated by the Securities and
Exchange Commission, shares, options, warrants or convertible preferred shares
issued at prices below the initial public offering price in the twelve months
prior to the initial public offering have been included in the calculations as
if outstanding using the treasury stock method for the three months and nine
months ended September 29, 1995.
<PAGE>
Note 4. Consolidated Balance Sheet Components
Certain balance sheet components are as follows:
<TABLE>
<CAPTION>
December 29, September 27,
1995 1996
-------------- --------------
(Unaudited)
<S> <C> <C>
Inventories:
Raw materials $2,994,000 $4,237,000
Work-in-progress 929,000 1,036,000
Finished goods 1,242,000 2,330,000
-------------- --------------
$5,165,000 $7,603,000
============== ==============
Property, plant and equipment
Land, buildings and improvements $6,028,000 $6,546,000
Machinery and equipment 4,987,000 6,281,000
Tooling and molds 2,299,000 2,812,000
Furniture and fixtures 1,131,000 1,624,000
-------------- --------------
14,445,000 17,263,000
Less accumulated depreciation (3,892,000) (5,349,000)
============== ==============
Total $10,553,000 $11,914,000
============== ==============
</TABLE>
Note 5. Contingencies
On June 7, 1996, Disetronic Medical Systems, Inc. ("Disetronic"), a
competitor to the Company, filed a lawsuit in the United States District Court
in Tampa, Florida, alleging that the Company and a named sales representative
engaged in improper sales tactics and false and misleading advertising. The
complaint was amended on June 14, 1996. On July 1, 1996, the Company filed its
answer to the lawsuit in which the Company denied the allegations of improper
conduct. In addition to filing the answer, the Company filed a counterclaim
against Disetronic alleging, among other things, that Disetronic has
disseminated false and misleading statements regarding the Company, its business
and its products, and has disseminated false and misleading statements about the
insulin infusion pumps Disetronic markets in the United States. Both the Company
and Disetronic, in their respective claims, seek monetary damages in unspecified
amounts and injunctive relief. No trial date has been set and discovery has not
yet commenced. While the Company believes that the Disetronic claims are without
merit and the Company is entitled to relief on its counterclaims, because of the
preliminary status of the litigation, the Company is unable to predict what
financial impact the lawsuit may have.
On September 11, 1996, the Company filed a lawsuit in Superior Court of
the State of California, County of Los Angeles (Case No. BC 157124), seeking
declaratory relief and rescission with respect to a contract by which FiMed,
Inc. ("FiMed"). FiMed was appointed the Company's exclusive authorized
distributor of certain products to customers using third party consumer
financing. The Company is claiming that it is entitled to such relief because
it was fraudulently induced by FiMed to enter into the agreement. On or about
October 29, 1996, FiMed answered the complaint and filed a cross-complaint
against the Company alleging breach of contract, promissory fraud, unfair
competition, intentional interference with prospective business relationships,
defamation (libel and slander) and abuse of process, and is seeking damages of
$100 million on each cause of action of the counterclaim and treble damages of
$300 million on the unfair competition counterclaim. Because of the preliminary
status of the litigation, the Company's counsel are unable to predict the
outcome of this action.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following table summarizes the Company's results of operations as a
percentage of net sales for the three months and nine months ended September 27,
1996 and September 29, 1995:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 27, Sept. 29, Sept. 27, Sept. 29,
1996 1995 1996 1995
------------------- --------------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 35.5 36.0 35.0 36.5
------------------- --------------------
Gross profit 64.5 64.0 65.0 63.5
Operating expenses:
Selling, general and administrative 41.9 44.0 43.0 46.4
Research and development 12.9 15.4 14.1 16.7
------------------- --------------------
Total operating expenses 54.8 59.4 57.1 63.1
------------------- --------------------
Operating income (loss) 9.7% 4.6% 7.9% 0.4%
=================== ====================
</TABLE>
Net Sales
The following table summarizes net sales by product line for the
three-month and nine-month periods ended September 27, 1996 and September 29,
1995:
<TABLE>
<CAPTION>
Dollars in thousands % of Net Sales
-------------------------------- -------------------------------
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
-------------------------------- -------------------------------
Sept.27 Sept.29 Sept.27 Sept.29 Sept.27 Sept.29 Sept.27 Sept.29
1996 1995 1996 1995 1996 1995 1996 1995
-------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales:
External pumps
and related
disposables:
Domestic $12,995 $8,804 $34,102 $24,556 88.3% 79.9% 84.7% 81.1%
International 1,362 1,647 4,756 4,368 9.3 15.0 11.8 14.4
-------------------------------- -------------------------------
Subtotal 14,357 10,451 38,858 28,924 97.6 94.9 96.5 95.5
Implantable
pumps 352 556 1,403 1,373 2.4 5.1 3.5 4.5
-------------------------------- -------------------------------
Net sales $14,709 $11,007 $40,261 $30,297 100.0% 100.0% 100.0% 100.0%
================================ ===============================
</TABLE>
<PAGE>
Net sales increased $3,702,000 or 33.6% during the three months ended
September 27, 1996 over the three months ended September 29, 1995 to $14,709,000
from $11,007,000. Net sales increased 32.9% during the nine months ended
September 27, 1996 over the nine months ended September 29, 1995 to $40,261,000
from $30,297,000. The increase is the result of an increase in the sales of
external pumps and related disposables, a 37.4% increase in the three months
ended September 27, 1996 and a 34.3% increase in the nine months ended September
29, 1996 over the comparable periods in 1995. These increases in net sales
represent a volume increase in pump and disposable units sold, a customer shift
to more expensive disposable products offered by the Company since June 1995 and
a price increase with the introduction of the model 507 external pump in June
1996.
Included in international net sales for prior periods are sales of
external insulin pumps in Europe pursuant to a pre-existing contractual
arrangement with Novo Nordisk, a leading international supplier of insulin. For
the nine-month period ended September 27, 1996, 19.0% of international sales of
external pumps and related disposables pertained to this agreement, while
approximately 50.0% and 29.3% of international sales of external pumps and
related disposables for the three-month and nine-month periods ended September
29, 1995, respectively, related to sales under the Novo agreement. The Company
completed its obligations under the contract with Novo Nordisk during the
quarter ended June 28, 1996.
Sales of implantable pumps decreased by $204,000 during the three-month
period ended September 27, 1996 over the three-month period ended September 29,
1995 to $352,000 from $556,000. Implantable pump sales were relatively static
for the nine-month period ended September 27, 1996 compared to the nine-month
period ended September 29, 1995, increasing to $1,403,000 from $1,373,000.
Business activity for the implantable pump product line remains sporadic due to
the lack of regulatory approval for this device in the United States and
uncertainty regarding the availability and regulatory status of the special
insulin required for the pump.
Future sales of the Company's implantable insulin pumps may be
adversely affected by the availability of the special insulin utilized in the
implantable pumps as well as the ability to receive regulatory approval for the
insulin, seasonality, and overall market acceptance of this product line.
Cost of Sales and Gross Profits
The following table summarizes gross profit by product line:
<TABLE>
<CAPTION>
Dollars in thousands % of Net Sales
-------------------------------- -------------------------------
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
-------------------------------- -------------------------------
Sept.27 Sept.29 Sept.27 Sept.29 Sept.27 Sept.29 Sept.27 Sept.29
1996 1995 1996 1995 1996 1995 1996 1995
-------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross Profits:
External pumps
and related
disposables $9,757 $6,891 $26,610 $19,142 66.3% 62.6% 66.1% 63.5%
Implantable
pumps (268) 153 (452) 107 (1.8) 1.4 (1.1) -
================================ ===============================
Total $9,489 $7,044 $26,158 $19,249 64.5% 64.0% 65.0% 63.5%
================================ ===============================
</TABLE>
<PAGE>
Cost of sales increased 31.7% during the three-month period ended
September 27, 1996 over the three-month period ended September 29, 1995 to
$5,220,000 from $3,963,000. Cost of sales as a percentage of sales decreased to
35.5% in the three-month period ended September 27, 1996 from 36.0% in the
three-month period ended September 29, 1995. Cost of sales increased 27.7%
during the nine-month period ended September 27, 1996 over the nine-month period
ended September 29, 1995 to $14,103,000 from $11,048,000. Cost of sales as a
percentage of sales decreased to 35.0% in the nine-month period ended September
27, 1996 from 36.5% in the nine-month period ended September 29, 1995. The
decrease in cost of sales as a percentage of sales for the three months and nine
months ended September 27, 1996 compared to the same periods in 1995 is the
result of continued cost improvements and economies of scale related to
increased sales volume combined with decreases in the warranty accrual due to a
better than expected return rate. Cost of sales for the nine months ended
September 27, 1996 included manufacturing start-up expenses related to the
Company's release of its latest generation external insulin pump, the model 507,
in June 1996. The Company's gross profits have been adversely impacted by the
implantable pump product line during 1996 due to low volumes and development
issues. The Company expects this trend to continue for the forseeable future.
Selling, General and Administrative
Selling, general and administrative expenses increased 27.1% in the
three months ended September 27, 1996 over the three months ended September 29,
1995 to $6,156,000 from $4,842,000. Selling, general and administrative expenses
as a percentage of sales decreased to 41.9% in the three-month period ended
September 27, 1996 from 44.0% in the three-month period ended September 29,
1995. Selling, general and administrative expenses increased 23.3% in the nine
months ended September 27, 1996 over the nine months ended September 29, 1995 to
$17,298,000 from $14,033,000. Selling, general and administrative expenses as a
percentage of sales decreased to 43.0% in the nine-month period ended September
27, 1996 from 46.3% in the nine-month period ended September 29, 1995. This
reduction as a percentage of sales indicates that with increased sales the
Company has achieved a degree of leverage with its fixed selling, general and
administrative expenses. The overall increase in selling expenses in the three
months and nine months ended September 27, 1996 over the comparable periods
ended September 29, 1995 relates primarily to increased sales volume and a
corresponding increase in commission expense, marketing expenses related to the
introduction of the Model 507 external insulin pump, increased marketing efforts
to educate patients, professionals and payors in the intensive management of
diabetes and increased spending in international sales and marketing efforts.
The international expense increase is primarily associated with bringing
in-house to the Company's French subsidiary certain administrative functions
that had been previously performed by various third parties and the organization
and continuing start-up costs of the Company's German subsidiary, which was
formed in December 1995. Additionally, the Company has added sales
representatives and support staff to enhance its selling, marketing and
educational efforts. General and administrative expenses increased in the three
months and nine months ended September 27, 1996 over the comparable periods
ended September 29, 1995 due to costs associated with staff increases necessary
to support increased business volume.
<PAGE>
Research and Development
Research and development expenses decreased 11.5% in the three months
ended September 27, 1996 over the three months ended September 29, 1995 to
$1,896,000 from $1,700,000. As a percentage of sales, research and development
expenses decreased to 12.9% of sales for the three months ended September 27,
1996 from 15.4% for the three months ended September 29, 1995. Research and
development expenses increased 11.8% in the nine months ended September 27, 1996
over the nine months ended September 29, 1995 to $5,671,000 from $5,074,000. As
a percentage of sales, research and development expenses decreased to 14.1% of
sales for the nine months ended September 27, 1996 from 16.7% for the nine
months ended September 29, 1995. The increases in certain of the research and
development activities for the three and nine month periods ended September 27,
1996 compared to the relevant periods in the prior year for the external pumps
and disposables product line was primarily related to expenses incurred in
connection with the development and introduction of the new model external
micro-infusion insulin pump which was released commercially in June. Partially
offsetting this increase were decreases in spending relative to the Company's
implantable pump. The following table summarizes the Company's estimated
research and development expense by product line based upon the Company's
internal records:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 27, Sept. 29, Sept. 27, Sept. 29,
1996 1995 1996 1995
------------------------ -------------------------
<S> <C> <C> <C> <C>
External pumps and related
disposables $ 893 $ 550 $ 2,549 $1,452
Implantable pumps 680 761 1,915 2,401
Glucose sensor 323 389 1,207 1,221
------------------------ -------------------------
Total: $1,896 $1,700 $ 5,671 $ 5,074
======================== =========================
</TABLE>
Interest and Other
Other income consists primarily of interest income generated from the
Company's increased cash and cash equivalent balances as a result of the initial
public offering. The Company incurred interest expense in the three months and
nine months ended September 29, 1995, however no interest expense was incurred
during the comparable periods in 1996 as all debt was retired in connection with
the Company's July 1995 initial public offering.
Operating results for the three months and nine months ended September
27, 1996 reflect income tax expense at the Company's estimated effective rate
for fiscal 1996. This effective tax has been computed giving consideration to
the pretax earnings and losses applicable to the Company's foreign and domestic
tax jurisdictions and a continual decrease in the Company's valuation allowance
against net deferred tax assets due to the Company's continued improved
operating results.
Liquidity and Capital Resources
During the nine months ended September 27, 1996, the Company had cash
flow used in operations of $943,000 compared to cash flow provided by operations
of $1,207,000 in the comparable period in 1995. Cash provided by operations
decreased primarily due to the Company's increased accounts receivable and
inventories associated with the new product launch. The Company's capital
expenditures decreased to $2,818,000 during the nine months ended September 27,
1996 compared to $6,904,000 for the nine months ended September 29, 1995, which
decrease was attributable to the Company's purchase of its operating facilities
in 1995. The Company also is involved in certain litigation, the financial
impact of which is uncertain. See "Notes to Consolidated Financial Statements"
and "Legal Proceedings" herein.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On September 11, 1996, the Company filed a lawsuit in Superior Court of
the State of California, County of Los Angeles (Case No. BC 157124), seeking
declaratory relief and rescission with respect to a contract by which FiMed was
appointed the Company's exclusive authorized distributor for the distribution of
certain products using third party consumer financing. The Company is claiming
that it is entitled to such relief because it was fraudulently induced by FiMed
to enter into the agreement. On or about October 29, 1996, FiMed answered the
complaint and filed a cross-complaint against the Company alleging breach of
contract, promissory fraud, unfair competition, intentional interference with
prospective business relationships, defamation (libel and slander) and abuse of
process, and is seeking damages of $100 million on each cause of action of the
counterclaim and treble damages of $300 million on the unfair competition
counterclaim. Because of the preliminary status of the litigation, the Company's
counsel are unable to predict the outcome of this action.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Exhibit
- ----------- ----------------------------------------------------------
11.1 Calculation of earnings per share
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed by the Company during the
quarterly period ended September 27, 1996.
<PAGE>
SIGNATURE
Pursuant to 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.
MiniMed Inc.
Date: November 8, 1996 /s/ Kevin R. Sayer
--------------------------------
Kevin R. Sayer
Senior Vice President, Finance &
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description Page No.
- ----------- ---------------------------------- ---------
11.1 Calculation of earnings per share. 15
<PAGE>
<TABLE>
MINIMED INC.
STATEMENT OF COMPUTATION OF
NET INCOME PER SHARE
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- ----------------------
Sept. 27, Sept. 29, Sept. 27, Sept. 29,
1996 1995 1996 1995
---------------------- ----------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Weighted average common shares
outstanding 11,606,000 10,690,000 11,566,000 9,465,000
Common equivalent shares from
stock options and warrants 644,000 1,066,000 634,000 1,067,000
---------------------- ----------------------
Shares used in per share
calculation 12,250,000 11,756,000 12,200,000 10,532,000
====================== ======================
Net income $1,262,000 $703,000 $2,821,000 $352,000
====================== ======================
Net income per share $0.10 $0.06 $0.23 $0.03
====================== ======================
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at September 27, 1996 (Unaudited)
and the Consolidated Statement of Operations for the Three and Nine Months Ended
September 27, 1996, and September 29, 1995 (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000945801
<NAME> MiniMed Inc.
<MULTIPLIER> 1
<CURRENCY> <blank>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-27-1996
<PERIOD-START> DEC-30-1995
<PERIOD-END> SEP-27-1996
<CASH> 10,779,000
<SECURITIES> 9,846,000
<RECEIVABLES> 14,133,000
<ALLOWANCES> 2,227,000
<INVENTORY> 7,603,000
<CURRENT-ASSETS> 42,057,000
<PP&E> 17,263,000
<DEPRECIATION> 5,349,000
<TOTAL-ASSETS> 53,971,000
<CURRENT-LIABILITIES> 7,288,000
<BONDS> 0
0
0
<COMMON> 116,000
<OTHER-SE> 46,567,000
<TOTAL-LIABILITY-AND-EQUITY> 53,971,000
<SALES> 40,261,000
<TOTAL-REVENUES> 41,080,000
<CGS> 14,103,000
<TOTAL-COSTS> 37,072,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 900,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,008,000
<INCOME-TAX> 1,187,000
<INCOME-CONTINUING> 2,821,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,821,000
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
</TABLE>
