<PAGE>
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 September 30, 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 0-26206
---------------------------------------------------------
Norland Medical Systems, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 06-1387931
- -------------------------------------------------------------- ------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
106 Corporate Park Drive, Suite 106
White Plains, New York 10604
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(914) 694-2285
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 October 31, 1996, 6,904,781 shares of the registrant's Common Stock,
sssssssssssssssssssssssss$0.0005 par value, were outstanding.
<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
TABLE OF CONTENTS FOR FORM 10-Q
-------------------------------
Page
----
Title Page.....................................................................1
Document Table of Contents.....................................................2
PART I FINANCIAL
INFORMATION....................................................................3
Item 1. Condensed Consolidated Financial Statements...........................3
Condensed Consolidated Balance Sheets.................................3
Condensed Consolidated Statements of Income...........................4
Condensed Consolidated Statements of Changes in Stockholders' Equity..5
Condensed Consolidated Statements of Cash Flows.......................6
Notes to Condensed Consolidated Financial Statements..................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................9
PART II OTHER INFORMATION....................................................12
Item 1. Legal Proceedings....................................................12
Item 2. Changes in Securities................................................12
Item 3. Defaults Upon Senior Securities......................................12
Item 4. Submission of Matters to a Vote of Security Holders..................12
Item 5. Other Information....................................................12
Item 6. Exhibits and Reports on Form 8-K.....................................12
Signatures....................................................................13
Exhibit Index.................................................................14
-2-
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
------------------------------
NORLAND MEDICAL SYSTEMS, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 9,766,267 $19,218,865
Account receivable - trade, less allowance for
doubtful accounts of $220,000 at September 30, 1996
and $150,000 at December 31, 1995 10,981,142 4,571,520
Accounts receivable - affiliates 349,581 180,253
Inventories, net 1,421,861 798,484
Loans to officers 1,108,754 --
Prepaid expenses and other current assets 352,745 68,989
----------- -----------
Total current assets 23,980,350 24,838,111
----------- -----------
Investment in Vitel, Inc. 260,000 --
Property and equipment, net 315,990 --
Product development loan receivable - affiliate 81,257 48,519
Patent, net 386,840 --
Goodwill, net 3,176,565 --
Other intangible assets, net 2,909,923 --
----------- -----------
Total assets $31,110,925 $24,886,630
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - Norland $ 3,231,060 $ 493,424
Accounts payable - Stratec 1,491,119 2,139,656
Accounts payable - trade 202,727 32,000
Accrued expenses 472,008 361,003
Income taxes (recoverable) payable (87,623) 1,305,037
Customer deposits 15,500 34,664
----------- -----------
Total current liabilities 5,324,791 4,365,784
----------- -----------
Stockholders' equity:
Common stock, par value of $0.0005 per share,
10,000,000 shares authorized, 6,895,781 shares issued
at September 30, 1996 3,448 3,000
Additional paid-in capital 21,658,170 18,349,813
Retained earnings 4,124,516 2,168,033
----------- -----------
Total stockholders' equity 25,786,134 20,520,846
----------- -----------
Total liabilities and stockholders' equity $31,110,925 $24,886,630
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------------- --------------------------------------
September 30, 1996 September 30, 1995 September 30, 1996 September 30, 1995
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenue $ 8,066,882 $ 5,230,527 $20,234,288 $13,129,758
Cost of revenue 5,414,587 3,711,107 13,210,628 9,060,786
----------- ----------- ----------- -----------
Gross profit 2,652,295 1,519,420 7,023,660 4,068,972
Sales and marketing expense 941,743 471,440 2,400,263 1,092,822
General and administrative expense 592,302 328,169 1,492,074 724,821
Stock offering charge 397,697 -- 397,697 --
----------- ----------- ----------- -----------
Operating income 720,553 719,811 2,733,626 2,251,329
Other income 146,782 130,848 560,480 138,012
----------- ----------- ----------- -----------
Income before taxes 867,335 850,659 3,294,106 2,389,341
Provision for taxes 352,000 345,295 1,337,459 970,000
----------- ----------- ----------- -----------
Net income $ 515,335 $ 505,364 $ 1,956,647 $ 1,419,341
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per share $ 0.07 $ 0.08 $ 0.27 $ 0.30
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average number of common
and common equivalent shares 7,214,920 5,965,598 7,176,061 4,663,725
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
Condensed Consolidated Statements of Changes in Stockholders' Equity
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Common Pain-In Stock Retained
Total Shares Stock Capital Subscriptions Earnings
----- ------ ------ ------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
December 31, 1994 $ 68,044 3,000,000 $ 1,500 $ -- $ (1,000) $ 67,544
Proceeds from common
stock subscription 1,000 -- -- -- 1,000 --
Issuance of 3,000,000
shares of common stock
on August 2, 1995 net of
costs and expenses directly
related to the offering 18,390,985 3,000,000 1,500 18,389,485 -- --
Net income 1,419,341 -- -- -- -- 1,419,341
----------- --------- ------ ----------- --------- ----------
Balance as of
September 30, 1995 $19,879,370 6,000,000 $3,000 $18,389,485 $ -- $1,486,885
----------- --------- ------ ----------- --------- ----------
----------- --------- ------ ----------- --------- ----------
Balance as of
December 31, 1995 $20,520,846 6,000,000 $ 3,000 $18,349,813 $ -- $2,168,033
Issuance of shares for
stock options exercised 288 734,250 367 (79) -- --
Issuance of shares to
acquire Dove Medical
Systems 3,311,519 161,538 81 3,311,438 -- --
Costs and expenses
directly related to the
stock offering (3,002) -- -- (3,002) -- --
Cash paid in lieu of
fractional shares on 3- for
2- split on June 14, 1996 (164) (7) -- -- -- (164)
Net income 1,956,647 -- -- -- -- 1,956,647
----------- --------- ------ ----------- --------- ----------
Balance as of
September 30, 1996 $25,786,134 6,895,781 $ 3,448 $21,658,170 $ -- $4,124,516
----------- --------- --------- ----------- --------- ----------
----------- --------- --------- ----------- --------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-5-
<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------------------
September 30, 1996 September. 30, 1995
------------------ -------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $1,956,647 $ 1,419,341
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for doubtful accounts 70,000 100,000
Inventory obsolescence expense 30,000 --
Amortization expense 228,138 6,966
Depreciation expense 36,044 --
Change in:
Accounts receivable (6,509,776) (443,706)
Inventories (469,992) (612,261)
Prepaid expenses (267,910) (20,821)
Accounts payable 2,100,891 434,778
Accrued expenses (36,394) 591,965
Income taxes payable (1,392,660) 870,361
Customer deposits (43,664) (118,000)
---------- -----------
Total adjustments (6,255,323) 809,282
----------- -----------
Net cash (used in) provided by operating activities (4,298,676) 2,228,623
----------- -----------
Cash flows from investing activities:
Payment for purchase of certain intangible assets of Dove
Medical Systems, net of cash acquired (3,432,937) --
Investment in Vitel, Inc. (260,000) --
Purchases of property and equipment (316,615) --
Loans to officers (1,108,754) --
Product development loan to affiliate (32,738) --
---------- -----------
Net cash used in investing activities (5,151,044) --
---------- -----------
Cash flows from financing activities:
Proceeds from stock options exercised 288 --
Notes payable to stockholders -- (750,000)
Costs and expenses of issuing common stock (3,002) --
Proceeds from issuance of common stock, net -- 18,390,985
Cash paid for fractional shares (164) --
Proceeds from common stock subscriptions -- 1,000
---------- -----------
Net cash (used in) provided by financing activities (2,878) 17,614,985
---------- -----------
Net (decrease) increase in cash (9,452,598) 19,870,608
Cash at beginning of period 19,218,856 554,732
---------- -----------
Cash at end of period $9,766,267 $20,425,340
---------- -----------
---------- -----------
</TABLE>
The $18,390,985 net proceeds of the initial public offering represents the
$21,000,000 of gross proceeds less the costs and expenses directly related to
the offering of $2,609,015.
Non-cash investing activities:
On April 2, 1996, the Company acquired Dove Medical Systems, issuing 161,538
shares of common stock valued at $3,311,519.
See accompanying notes to condensed consolidated financial statements.
-6-
<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The condensed consolidated financial statements of Norland Medical Systems, 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 footnote disclosures required by
generally accepted accounting principles. These statements should be read in
conjunction with the financial statements and notes thereto for the year ended
December 31, 1995, which were audited by Coopers & Lybrand L.L.P., and included
in the Company's Form 10-K as filed with the Securities and Exchange Commission
on March 28, 1996. The figures in these statements have been restated to
reflect the 3-for-2 stock split which was effective June 14, 1996.
The condensed consolidated balance sheet as of September 30, 1996, the condensed
consolidated statements of income for the three and nine months ended September
30, 1996, and changes in stockholders' equity and cash flows for the nine months
then ended 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 nine months ended September 30, 1996
are not necessarily indicative of the results to be expected for the entire
fiscal year ending December 31, 1996.
(2) INVENTORIES
As of September 30, 1996, inventories consist of the following:
Demonstration systems,
less accumulated amortization
of $67,716 $ 639,583
Rental systems 177,712
Raw materials, product kits
spare parts and sub-assemblies,
less an obsolescence reserve
of $34,000 409,743
Finished goods 162,692
Work in progress 32,131
----------
$1,421,861
----------
----------
-7-
<PAGE>
Notes to Condensed Consolidated Financial Statements, continued:
(2) INVENTORIES, continued:
Systems used in the Company's short-term rental and pay-per-scan programs are
carried in inventory at the lower of cost or net realizable value until the time
of sale.
The Company maintains an inventory of demonstration systems used for marketing
and customer service purposes. Such systems are carried in inventory at the
lower of cost or net realizable value until the time of sale. From time to
time, the Company may judge it desirable for marketing purposes to provide a
device to a prominent scientist or research institution specializing in the
study of bone disease. In such cases, the Company will carry the device in
demonstration system inventory at cost less amortization expense calculated on a
straight-line basis over thirty-six months.
Parts and sub-assemblies inventories are stated at the lower of cost or market;
cost is determined principally by the first-in, first-out method.
(3) ACQUISITION OF DOVE MEDICAL SYSTEMS
On April 2, 1996, the Company acquired Dove Medical Systems (Dove) in a
transaction accounted for under the purchase method of accounting. The
condensed consolidated financial statements reflect the issuance of 161,538
shares of Company Common Stock in exchange for all outstanding Dove shares. In
addition, the statements reflect a payment by the Company of $3,600,000 in
exchange for certain patent and other intangible assets owned by the Dove
majority shareholder and other investors. The goodwill, patent and other
intangible assets are amortized over their useful lives of 20, 10 and 20 years,
respectively.
(4) INVESTMENT IN VITEL, INC.
On May 31, 1996, the Company entered into a distribution agreement with Vitel,
Inc. of Dallas, Texas (Vitel), pursuant to which the Company has the worldwide
rights to all products that may be developed by Vitel. The Company also made a
$260,000 investment in Vitel which represents a minority interest that is
accounted for according to the cost method. Vitel has not yet developed any
products which are marketed. Vitel is currently developing bone diagnostic
devices that use technology called Ultrasound Critical Angle Reflection under an
exclusive license from the University of Texas Southwestern Medical Center of
Dallas.
(5) NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Primary income per share is calculated by dividing net income by the average
shares of common stock and common stock equivalents outstanding during the
period. Common stock equivalents are stock options which have been included
using the treasury stock method only when their effect is dilutive.
-8-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
RESULTS OF OPERATIONS
Revenue for the three months ended September 30, 1996 increased $2,836,355
(54.2%) to $8,066,882 from $5,230,527 for the comparable period of 1995.
Revenue for the nine months ended September 30, 1996 increased $7,104,530
(54.1%) to $20,234,288 from $13,129,758 for the comparable period in 1995. The
increases were largely a result of increased sales of pDEXA systems in the
United States following its introduction in the fourth quarter of 1995,
increased sales of the Company's other products and sales by Dove (which was
acquired by the Company on April 2, 1996). Sales of pDEXA systems in Japan
declined due in part to increased competition, reductions in reimbursement for
certain densitometry sales in Japan and operational difficulties experienced
earlier in 1996 with pDEXA units installed in Japan and the southeastern United
States related to the effects of humidity on one component. The Company
believes that these operational difficulties have been addressed. Sales in
Japan and the United States represented 10.1% and 71.2%, respectively, of total
revenue for the three months ended September 30, 1996 and 68.9% and 6.5%
respectively, of total revenue for the three months ended September 30, 1995.
Sales in Japan and the United States represented 28.0% and 50.5%, respectively,
of total revenue for the nine months ended September 30, 1996 and 70.6% and
6.5%, respectively, of total revenue for the nine months ended September 30,
1995. Sales of complete bone densitometry systems represented 95.1% and 94.6%
of total revenue for the three months ended September 30, 1996 and 1995,
respectively, and 94.2% and 94.5% of total revenues for the nine months ended
September 30, 1996 and 1995, respectively. Sales of parts and services and
rental income comprised the balance of revenues for such periods.
Cost of revenue as a percentage of revenue was 67.1% and 71.0% for the three
months ended September 30, 1996 and 1995, respectively, resulting in a gross
margin of 32.9% for the three months ended September 30, 1996 compared to 29.0%
for the comparable period of 1995. Cost of revenue as a percentage of revenue
was 65.3% and 69.0% for the nine months ended September 30, 1996 and 1995,
respectively, resulting in a gross margin of 34.7% for the nine months ended
September 30, 1996 compared to 31.0% for the comparable period of 1995. The
increases in gross margin are attributed to the product mix in the current
periods which consisted of a relatively greater proportion of revenues from
higher margin products such as the pDEXA when sold directly by the Company to
customers in the United States. In an effort to further increase system sales
volume in the United States, the Company has been establishing a network of
third party distributors. Most sales of pDEXA and traditional DXA systems are
now made through such distributors. Such sales are at lower gross margins than
sales that were made directly by the Company to customers. Second and third
quarter sales of OsteoAnalyzer systems manufactured by Dove, for which the
Company receives the entire margin between the manufacturer's cost and the
Company's sale price, also contributed to the increases in the Company's gross
margins. A portion of the margins on the Company's other products is paid to
the manufacturers.
Sales and marketing expense increased $470,303 (99.8%) to $941,743 for the three
months ended September 30, 1996 from $471,440 for the three months ended
September 30, 1995, and increased
-9-
<PAGE>
as a percentage of revenue to 11.7% from 9.0%. Sales and marketing expense
increased $1,307,441 (119.6%) to $2,400,263 for the nine month period ended
September 30, 1996, from $1,092,822 for the nine months ended September 30,
1995, and increased as a percentage of revenue to 11.9% from 8.3%. The
increases were primarily due to increased salaries and commissions related to
increased sales staff and sales volume, increased expenses related to customer
service, marketing expenses related to penetration of the United States market,
and inclusion of the sales and marketing expenses of Dove for the second and
third quarters of 1996.
General and administrative expense (before the stock offering charge referred to
below) increased $264,133 (80.5%) to $592,302 for the three months ended
September 30, 1996 from $328,169 for the three months ended September 30, 1995
and increased as a percentage of revenue to 7.3% from 6.3%. General and
administrative expense (before the stock offering charge) increased $767,253
(105.9%) to $1,492,074 for the nine months period ended September 30, 1996 from
$724,821 for the nine months ended September 30, 1995 and increased as a
percentage of revenue to 7.4% from 5.5%. These increases were primarily due to
increased expenses of new and existing personnel; to legal, accounting and other
expenses attributable to the Company having become a public company and to
increased levels of business; and to the inclusion of Dove's operations for the
second and third quarters of 1996. In the quarter ended September 30, 1996, the
Company also recognized a $397,697 charge for the expenses incurred in
connection with the Company's stock offering that was withdrawn in August as a
result of the general stock market decline and the decline in the price of the
Company's common stock.
Other income in 1996 and 1995 consisted primarily of interest earned on the
proceeds of the Company's initial public offering and on other cash balances,
reduced by other expenses consisting primarily of bank charges and other fees
related to bank transfers.
The provision for taxes for the three months ended September 30, 1996 increased
by $6,705 (1.9%) to $352,000 from $345,295 for the three months ended September
30, 1995. The provision for taxes for the nine months ended September 30, 1996
increased by $367,459 (37.9%) to $1,337,459 from $970,000 for the nine months
ended September 30, 1996. The Company has provided for income taxes at its
current effective tax rate of 40.6% for both the three months and nine months
ended September 30, 1996 and 1995. The increases in the provision for taxes
were entirely due to the relative changes in income before taxes.
The Company had net income of $515,335 for the three months ended September 30,
1996 compared to net income of $505,364 for the three months ended September 30,
1995, an increase of $9,971 (2.0%). The Company had net income of $1,956,647
for the nine months ended September 30, 1996 compared to net income of
$1,419,341 for the nine months ended September 30, 1995, an increase of $537,306
(37.9%). The increases were due primarily to increased sales and interest
earned on cash balances. The stock offering charge of $397,697 recognized in
the quarter ended September 30, 1996 reduced net income on an after tax basis by
$236,094. Excluding the after tax effect of this charge, net income for the
quarter ended September 30, 1996 would be $751,429 and net income for the nine
months ended September 30, 1996 would be $2,192,931 representing increases of
48.7% and 54.5%, respectively over the comparable periods in 1995. The charge
on an after tax basis reduced earnings per share for the periods by $.03.
-10-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash decreased $9,452,598 to $9,766,267 in the nine months ended September 30,
1996. The decrease in cash was primarily the result of the Company acquiring
Dove and certain intangible assets used by Dove in exchange for shares of
Company common stock and $3.6 million in cash, increased accounts receivable
relative to accounts payable, the payment of $2.7 million in corporate income
taxes, and loans of $1.1 million to officers of the Company. The Company has
made a $1,025,000 loan to Reynald G. Bonmati, President, and an $80,000 loan to
Kurt W. Streams, Chief Financial Officer. The loan to Mr. Bonmati is payable on
demand and bears interest at 6% per annum. The loan to Mr. Streams is due in
September 1997 and bears interest at 6% per annum.
The Company's accounts receivable increased 138.5% to $11,330,723 at September
30, 1996 from $4,751,773 at December 31, 1995. The increase in accounts
receivable reflects both higher sales volume and less prompt payments by the
Company's customers. At September 30, 1996, the largest balance, 25.8% of total
outstanding trade receivables, was owed by Nissho Iwai, the Company's
distributor in Japan.
At December 31, 1995, the Company employed no fixed assets other than leased
computers and office furniture. Property and equipment as of September 30, 1996
consisted of computer and telephone equipment, a management information system,
office furniture and improvements to leased facilities. The Company expects to
expand its management information and telephone systems and provide additional
financing under its Product Development Loan Agreement with Norland Corporation
and Stratec Medizintechnik GmbH.
Management believes that its current cash position, together with cash flow from
operations, will be adequate to fund the Company's growth and operations for at
least the next twelve months. However, the nature of the Company's business is
that it is subject to changes in technology, government approval and regulation,
and changes in third-party reimbursement in numerous foreign markets and the
United States. Significant changes in one or more of these factors in a major
market for the Company's products could significantly affect the Company's
ability to meet its cash needs through internal sources.
-11-
<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits furnished:
(11) Statements Regarding Computation of Earnings for Share
(27) Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during the quarter ended
September 30, 1996.
-12-
<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
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.
NORLAND MEDICAL SYSTEMS, INC.
(Registrant)
Date: November 13, 1996 /s/ Reynald G. Bonmati
---------------------------------------------
Reynald G. Bonmati
President
Date: November 13, 1996 /s/ Kurt W. Streams
---------------------------------------------
Kurt W. Streams
Vice President, Finance
(Principal Financial and Accounting Officer)
-13-
<PAGE>
EXHIBIT INDEX
NUMBER DESCRIPTION
- ------ -----------
11 Statement Regarding Computation of Earnings Per Share
27 Financial Data Schedules
-14-
<PAGE>
NORLAND MEDICAL SYSTEMS, INC. Exhibit 11
Statement Regarding Computation of Earnings Per Share
Primary Basis
(Unaudited)
Three Months Ended
---------------------------------------
September 30, 1996 September 30, 1995
------------------ ------------------
Net income $515,335 $505,364
Weighted average shares
outstanding 6,895,781 3,304,348
Stock options 319,139 672,717
Weighted average number of
common and common equivalent
shares outstanding 7,214,920 5,965,598
Earnings per share $0.07 $0.08
Nine Months Ended
---------------------------------------
September 30, 1996 September 30, 1995
------------------ ------------------
Net income $1,956,647 $1,419,341
Weighted average shares
outstanding 6,706,326 2,439,560
Stock options 469,735 669,590
Weighted average number of
common and common equivalent
shares outstanding 7,176,061 4,663,725
Earnings per share $0.27 $0.30
-15-
<PAGE>
NORLAND MEDICAL SYSTEMS, INC. Exhibit 11
Statement Regarding Computation of Earnings Per Share
Fully Diluted Basis
(Unaudited)
Three Months Ended
---------------------------------------
September 30, 1996 September 30, 1995
------------------ ------------------
Net income $515,335 $505,364
Weighted average shares
outstanding 6,895,781 3,304,348
Stock options 365,723 672,717
Weighted average number of
common and common equivalent
shares outstanding 7,261,504 5,965,598
Earnings per share $0.07 $0.08
Nine Months Ended
---------------------------------------
September 30, 1996 September 30, 1995
------------------ ------------------
Net income $1,956,647 $1,419,341
Weighted average shares
outstanding 6,706,326 2,439,560
Stock options 497,064 669,590
Weighted average number of
common and common equivalent
shares outstanding 7,203,390 4,663,725
Earnings per share $0.27 $0.30
-16-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Financial Statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 9,966,267
<SECURITIES> 0
<RECEIVABLES> 12,659,477
<ALLOWANCES> 220,000
<INVENTORY> 1,421,861
<CURRENT-ASSETS> 23,980,350
<PP&E> 352,034
<DEPRECIATION> 36,044
<TOTAL-ASSETS> 31,110,925
<CURRENT-LIABILITIES> 5,324,791
<BONDS> 0
0
0
<COMMON> 3,448
<OTHER-SE> 25,782,686
<TOTAL-LIABILITY-AND-EQUITY> 31,110,925
<SALES> 20,097,116
<TOTAL-REVENUES> 20,234,288
<CGS> 13,210,628
<TOTAL-COSTS> 13,210,628
<OTHER-EXPENSES> 4,290,034
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,294,106
<INCOME-TAX> 1,337,459
<INCOME-CONTINUING> 2,733,626
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,956,647
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
