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 June 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 0-26206
Norland Medical Systems, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 06-1387931
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
106 Corporate Park Drive, Suite 106
White Plains, New York 10604
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(Address of principal executive offices)
(Zip Code)
(914) 694-2285
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(Registrant's telephone number, including area code)
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(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 July 31, 1997, 7,150,031 shares of the registrant's Common Stock,
$0.0005 par value, were outstanding.
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<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 Statement 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.............................................10
PART II OTHER INFORMATION.....................................................13
Item 1. Legal Proceedings.....................................................13
Item 2. Changes in Securities.................................................13
Item 3. Defaults Upon Senior Securities.......................................13
Item 4. Submission of Matters to a Vote of Security Holders...................13
Item 5. Other Information.....................................................13
Item 6. Exhibits and Reports on Form 8-K......................................14
Signatures ...................................................................15
Exhibit Index.................................................................16
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<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Norland Medical Systems, Inc.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,133,254 $ 8,133,468
Investment -- 1,949,039
Accounts receivable - trade, less allowance
for doubtful accounts of $250,000 at June
30, 1997 and $221,000 at December 31, 1996 11,455,816 9,182,488
Income taxes recoverable 192,999 794,285
Inventories, net 2,006,563 616,865
Officers' loans receivable 1,971,827 581,704
Current portion of product development loan
receivable - affiliate 100,000 38,685
Prepaid expenses and other current assets 541,464 361,902
----------- -----------
Total current assets 21,401,923 21,658,436
----------- -----------
Demonstration systems inventory, net 1,211,667 1,234,848
Investment in Vitel, Inc 260,000 260,000
Property and equipment, net 434,068 406,375
Product development loan receivable - affiliate 400,000 251,100
Goodwill, net 3,101,260 3,183,961
Other intangible assets, net 3,154,305 3,248,658
----------- -----------
Total assets $29,963,223 $30,243,378
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - Norland $ 201,172 $ 2,220,816
Accounts payable - Stratec 521,757 714,127
Accounts payable - trade 467,230 81,416
Accrued expenses 1,139,601 658,304
Customer deposits 7,700 47,850
----------- -----------
Total current liabilities 2,337,460 3,722,513
----------- -----------
Stockholders' equity:
Common stock, par value of $0.0005 per share,
10,000,000 shares authorized, 7,150,031
shares issued at June 30, 1997 3,575 3,452
Additional paid-in capital 22,158,189 22,158,170
Retained earnings 5,463,999 4,359,243
----------- -----------
Total stockholders' equity 27,625,763 26,520,865
----------- -----------
Total liabilities and stockholders' equity $29,963,223 $30,243,378
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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Norland Medical Systems, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
---------------------------- ----------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue $7,184,624 $6,949,116 $13,130,909 $12,167,406
Cost of revenue 4,046,339 4,380,130 7,431,211 7,796,041
---------- ---------- ----------- -----------
Gross profit 3,138,285 2,568,986 5,699,698 4,371,365
Sales and marketing expense 1,493,605 883,172 2,680,347 1,458,520
General and administrative expense 694,602 594,056 1,409,069 899,772
---------- ---------- ----------- -----------
Operating income 950,078 1,091,758 1,610,282 2,013,073
Other income 113,580 170,757 250,474 413,698
---------- ---------- ----------- -----------
Income before income taxes 1,063,658 1,262,515 1,860,756 2,426,771
Provision for income taxes 432,000 512,458 756,000 985,458
---------- ---------- ----------- -----------
Net income $ 631,658 $ 750,057 $ 1,104,756 $ 1,441,313
========== ========== =========== ===========
Earnings per share $ 0.09 $ 0.10 $ 0.15 $ 0.20
Weighted average number of common
and common equivalent shares 7,188,847 7,263,912 7,175,780 7,157,296
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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Norland Medical Systems, Inc.
Condensed Consolidated Statement of Changes in Stockholders' Equity
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Paid-In Retained
Total Shares Stock Capital Earnings
------------ ---------- ------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance as of
December 31, 1996 $ 26,520,865 6,904,781 $3,452 $ 22,158,170 $ 4,359,243
Issuance of shares for
stock options exercised 142 245,250 123 19 --
Net income 1,104,756 -- -- -- 1,104,756
------------ ---------- ------ ------------ -----------
Balance as of
June 30, 1997 $ 27,625,763 7,150,031 $3,575 $ 22,158,189 $ 5,463,999
============ ========== ====== ============ ===========
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 --
Cost and expenses
directly related to the
stock offering (3,002) -- -- (3,002) --
Cash paid in lieu of fractional
shares on 3-for-2 stock split
on June 14, 1996 (164) (7) -- -- (164)
Net income 1,441,313 -- -- -- 1,441,313
------------ ---------- ------ ------------ -----------
Balance as of
June 30, 1996 $ 25,270,800 6,895,781 $3,448 $ 21,658,170 $ 3,609,182
============ ========== ====== ============ ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
Norland Medical Systems, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
----------------------------
June 30, 1997 June 30, 1996
------------- -------------
Cash flows from operating activities:
Net income $ 1,104,756 $ 1,441,313
Adjustments to reconcile net income to net cash
used in operating activities:
Inventory obsolescence expense -- 116,200
Amortization expense 213,462 10,612
Depreciation expense 58,861 --
Provision for doubtful accounts receivable 29,000 --
Changes in:
Accounts receivable (2,302,328) (3,703,846)
Inventories (1,450,290) (380,055)
Prepaid expenses and other current
assets (179,562) (138,680)
Accounts payable (1,826,200) 217,280
Accrued expenses 481,297 (32,304)
Income taxes 601,286 (1,181,792)
Customer deposits (40,150) (28,424)
----------- ------------
Total adjustments (4,414,624) (5,091,009)
----------- ------------
Net cash used in
operating activities (3,309,868) (3,649,696)
----------- ------------
Cash flows from investing activities:
Purchases of property and equipment (86,554) (179,269)
Loans to officers (1,890,123) --
Repayments of loans to officers 500,000 --
Sale of investment 1,996,403 --
Product development loan to affiliate (242,261) (27,387)
Repayment of product development loan
to affiliate 32,046 --
Payment for purchase of certain intangible
assets of Dove Medical Systems, net of cash
acquired -- (3,432,937)
Investment in Vitel, Inc. -- (250,000)
----------- ------------
Net cash provided by
(used in) investing activities 309,511 (3,889,593)
----------- ------------
Cash flows from financing activities:
Proceeds from stock options exercised 143 288
Cost and expenses of issuance of common stock -- (3,002)
Cash paid for fractional share -- (164)
----------- ------------
Net cash provided by (used in)
financing activities 143 (2,878)
----------- ------------
Net decrease in cash (3,000,214) (7,542,167)
Cash at beginning of period 8,133,468 19,218,865
----------- ------------
Cash at end of period $ 5,133,254 $ 11,676,698
=========== ============
See accompanying notes to condensed consolidated financial statements.
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<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, 1996, 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 31, 1997. 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 June 30, 1997 and the condensed
consolidated statements of income, changes in stockholders' equity and cash
flows for the three and six 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 six months ended June 30, 1997 are
not necessarily indicative of the results to be expected for the entire fiscal
year ending December 31, 1997.
(2) INVENTORIES
As of June 30, 1997, inventories consist of the following:
Raw materials, product kits
spare parts and sub-assemblies $ 612,825
Work in progress 33,962
Rental systems, net of accumulated
amortization of $26,840 195,844
Finished goods 1,205,827
Obsolescence reserve (41,895)
-----------
$ 2,006,563
===========
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<PAGE>
Notes to Condensed Consolidated Financial Statements, continued:
(2) INVENTORIES, continued:
Inventories are stated at the lower of cost or market; cost is determined
principally by the first-in, first-out method.
Systems used in the Company's short-term rental program are carried in inventory
at cost less amortization expense calculated on a straight-line basis over
thirty-six months.
(3) DEMONSTRATION SYSTEMS INVENTORY
The Company maintains an inventory of demonstration systems used for marketing
and customer service purposes. Such systems are carried 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 systems inventory
at cost less amortization expense calculated on a straight-line basis over
thirty-six months.
As of June 30, 1997, demonstration systems inventories consist of the following:
Demonstration systems inventory $ 1,330,718
Less accumulated amortization (119,051)
-----------
$ 1,211,667
===========
(4) ACQUISITION OF DOVE MEDICAL SYSTEMS
On April 2, 1996, the Company acquired all of the outstanding shares of Dove
Medical Systems (Dove) and a certain patent and other intangible assets owned by
the Dove majority shareholder and certain other investors. The Company paid
consideration of $6,911,529, consisting of $3,600,000 in cash and 161,538 shares
of the Company Common Stock valued at $3,311,529. The acquisition has been
accounted for using the purchase method of accounting, and, accordingly, the
purchase price has been allocated to the assets purchased and the liabilities
assumed based on the fair values at the date of acquisition. The excess purchase
price over the fair values of the net assets was $3,308,011 and has been
recorded as goodwill. The goodwill and other intangible assets are being
amortized using the straight-line method over twenty years. The patent is being
amortized using the straight-line method over the remaining patent period which
is ten years as of the date of its acquisition.
(5) ACQUISITION OF NORLAND CORPORATION
On February 26, 1997, the Company signed an agreement to acquire all of the
issued and outstanding stock of Norland Corporation for $17.5 million with a
possible additional purchase price of up to $2.5 million based on the level of
the Company's 1997 revenues. For each full $1,000,000 of 1997 revenues above
$32,000,000, the purchase price will be increased by
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<PAGE>
$312,500 (up to the maximum increase of $2.5 million). The $17.5 million will be
payable at closing as follows: $1,250,000 in cash and a $16,250,000 Purchase
Note which will bear interest at the rate of 7% per annum. A $1,250,000 portion
of the principal will be payable six months after closing, and the remaining
principal will be due and payable on the fifth anniversary of the closing. The
Company may prepay the Purchase Note at any time. The amount of any additional
purchase price will be determined following the completion of the audit of the
Company's financial statements for the year ending December 31, 1997. This
amount will be paid by an Additional Note which will bear interest at 7% per
annum and which will be due five years after the closing. The transaction is
subject to approval by the Company's stockholders at its 1997 Annual Meeting.
(6) 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.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128), which
is effective for the Company's year ending December 31, 1997. The Company does
not expect a material impact on its net income per share resulting from the
implementation of this Statement.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the Financial Statements and the
related Notes thereto included elsewhere in this Report. The following
discussion contains forward-looking statements which involve risks and
uncertainties, some of which are described in the Introduction to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996. Such
Introduction is incorporated herein by reference. The Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors.
RESULTS OF OPERATIONS
Revenue for the three months ended June 30, 1997 increased $235,508 (3.4%) to
$7,184,624 from $6,949,116 for the comparable period of 1996. Revenue for the
six months ended June 30, 1997 increased $963,503 (7.9%) to $13,130,909 from
$12,167,406 for the comparable period in 1996. The increases were largely a
result of increases in sales in the United States, Europe and Latin America,
offset by a decrease in sales to the Pacific Rim and to Japan in particular.
First quarter 1997 sales by Dove (which was acquired by the Company on April 2,
1996) contributed to the increase in sales for the six months ended June 30,
1997. Sales in Japan declined due in part to increased competition, reductions
in reimbursement for certain densitometry tests in Japan and the effects of
operational difficulties experienced with pDEXA units during part of 1996. The
Company believes that these operational difficulties have been addressed. Sales
in the United States and Japan represented 69.8% and 2.0%, respectively, of
total revenue for the three months ended June 30, 1997 and 31.7% and 43.1%
respectively, of total revenue for the three months ended June 30, 1996. Sales
in the United States and Japan represented 74.0% and 1.8%, respectively, of
total revenue for the six months ended June 30, 1997, and 36.8% and 40.0%,
respectively, of total revenue for the six months ended June 30, 1996. Sales of
complete bone densitometry systems represented 91.1% and 94.1% of total revenue
for the three months ended June 30, 1997 and 1996, respectively, and 91.6% and
93.6% of total revenues for the six months ended June 30, 1997 and 1996,
respectively. Sales of parts and services and rental income comprised the
balance of revenues for such periods. Revenues have been affected by the
reduction in the Medicare reimbursement rate for peripheral bone densitometry
tests announced in November 1996. The mix of products sold has changed in that
the majority of the Company's revenues are now derived from sales of larger
Eclipse and XR36 systems that can scan the hip and spine and for which the
Medicare reimbursement rate was not significantly decreased, as compared to the
pDEXA system that performs peripheral bone densitometry tests. Revenues and the
mix of products sold are expected to continue to be influenced by the degree of
difference in Medicare reimbursement rate levels for peripheral and larger
systems. They will also be influenced by the Company's ability to bring to the
market lower cost peripheral systems that can be operated more profitably by end
users at lower reimbursement levels. The Health Care Financing Administration
(HCFA) recently published proposed changes to the Medicare reimbursement rates
that would increase the reimbursement rate for peripheral systems and reduce the
reimbursement rate for the larger systems. No new rates will be adopted until
after the comment period on the proposed changes.
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<PAGE>
Cost of revenue as a percentage of revenue was 56.3% and 63.0% for the three
months ended June 30, 1997 and 1996 respectively, resulting in a gross margin of
43.7% for the three months ended June 30, 1997 compared to 37.0% for the
comparable period of 1996. Cost of revenue as a percentage of revenue was 56.6%
and 64.1% for the six months ended June 30, 1997 and 1996, respectively,
resulting in a gross margin of 43.4% for the six months ended June 30, 1997
compared to 35.9% for the comparable period of 1996. The increase in gross
margin is primarily attributed to the impact of price reductions under the
Distribution Agreement with Norland Corporation and Stratec Medizintechnik GmbH
which became effective during the fourth quarter of 1996.
Sales and marketing expense increased $610,433 (69.1%) to $1,493,605 for the
three months ended June 30, 1997 from $883,172 for the three months ended June
30, 1996, and increased as a percentage of revenue to 20.8% from 12.7%. Sales
and marketing expense increased $1,221,827 (83.8%) to $2,680,347 for the six
month period ended June 30, 1997 from $1,458,520 for the six months ended June
30, 1996, and increased as a percentage of revenue to 20.4% from 12.0%. The
increases were primarily due to increased expenses of new sales and marketing
personnel, the cost of expanded marketing efforts, and increased expenses
related to customer service.
General and administrative expense increased $100,546 (16.9%) to $694,602 for
the three months ended June 30, 1997 from $594,056 for the three months ended
June 30, 1996 and increased as a percentage of revenue to 9.7% from 8.6%.
General and administrative expense increased $509,297 (56.6%) to $1,409,069 for
the six month period ended June 30, 1997 from $899,772 for the six months ended
June 30, 1996, and increased as a percentage of revenue to 10.7% from 7.4%.
These increases were primarily due to expenses of new personnel and increased
expenses of existing personnel, other expenses attributed to increased levels of
business (including, in the quarter ended June 30, 1997, increased provision for
doubtful accounts receivable), and the inclusion of Dove's operations for the
quarter ended March 31, 1997.
Other income in the three and six month periods ended June 30, 1997 and 1996
consisted primarily of interest earned on the proceeds of the Company's initial
public offering and on other cash and loan balances, reduced by other expenses
consisting primarily of bank charges and other fees related to bank transfers.
The decrease in other income in the three and six month periods ended June 30,
1997 as compared to June 30, 1996 reflects reduced interest income resulting
from utilization of such offering proceeds.
The provision for taxes for the three months ended June 30, 1997 decreased by
$80,458 (15.7%) to $432,000 from $512,458 for the three months ended June 30,
1996. The provision for taxes for the six months ended June 30, 1997 decreased
by $229,458 (23.3%) to $756,000 from $985,458 for the six months ended June 30,
1996. The Company has provided for income taxes at its current effective tax
rate of 40.6% for the three and six months ended June 30, 1997 and 1996. The
decrease in the provision for taxes was entirely due to the relative change in
income before taxes.
The Company had net income of $631,658 for the three months ended June 30, 1997
compared to net income of $750,057 for the three months ended June 30, 1996, a
decrease of $118,399
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<PAGE>
(15.8%). The Company had net income of $1,104,756 for the six months ended June
30, 1997 compared to net income of $1,441,313 for the six months ended June 30,
1996, a decrease of $336,557 (23.4%). The decrease was due primarily to the
factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, the Company had cash of $8,133,468 and a $1,949,039 U.S.
Treasury bill. The Treasury bill was converted to cash during the quarter ended
June 30, 1997. At June 30, 1997, the Company had cash of $5,133,254. The
decrease in cash was primarily the result of increased accounts receivable,
decreased accounts payable, increased pDEXA and OsteoAnalyzer inventories, and
increased officer loans, and to a lesser extent cash loaned to Norland
Corporation under the product development loan.
The Company's accounts receivable increased 24.8% to $11,455,816 at June 30,
1997 from $9,182,488 at December 31, 1996 which reflects both higher sales
volume and less prompt payment by the Company's customers. At June 30, 1997, the
two largest balances, 18.8% and 9.6% of total outstanding trade receivables,
were owed by U. S. distributors.
Property and equipment as of June 30, 1997 consisted of computer and telephone
equipment, a management information system, office furniture and improvements to
leased facilities. At the present time, no significant expenditures for
additional equipment or systems are planned for 1997.
Should the proposed acquisition of Norland Corporation be approved by the
Company's stockholders, the Company's cash requirements with respect to the
transaction will consist of a $1,250,000 cash payment at close, a second
$1,250,000 cash payment six months thereafter, plus interest payments on the
Purchase Note and the Additional Note which will range from approximately
$250,000 to $300,000 per quarter, depending upon the final amount of the
purchase price. Following the acquisition, the Company will receive the entire
margin on systems manufactured by Norland Corporation and will become
responsible for financing manufacturing and research and development on the
Norland Corporation product line. Any sales growth of the OsteoAnalyzer product
line will also be financed by the Company.
The Company believes that its current cash position, together with cash flow
from operations, will be adequate to fund the Company's operations, including
the proposed acquisition of Norland Corporation, for at least the next twelve
months. However, the nature of the Company's business is such that it is subject
to changes in technology, government approval and regulation, and changes in
third-party reimbursement in the United States and numerous foreign markets.
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. Moreover, the Company will also continue to
consider the possibility of obtaining funds from other sources, including bank
credit arrangements and stock offerings.
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<PAGE>
Norland Medical Systems, Inc.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
A purported shareholder's class action and derivative complaint entitled
Irwin J. Miller v. Reynald G. Bonmati et. al. Defendants, and Norland
Medical Systems, Inc., Nominal Defendant (Civil Action No. 15849), was
filed in the Court of Chancery of the State of Delaware, New Castle
County, on August 1, 1997, against four members of the Company's Board
of Directors (the "Individual Defendants"), Norland Medical Systems B.V.
("NMS BV"), and the Company. The action relates to the proposed
acquisition (the "Acquisition") by the Company from NMS BV of all the
outstanding stock of Norland Corporation. The Acquisition is subject to
the approval of the Company's stockholders at a stockholders' meeting
scheduled for August 20, 1997. The complaint alleges that the Individual
Defendants have breached their fiduciary duties of loyalty, candor and
care in connection with the pending Acquisition, and that the Company's
proxy statement relating to the stockholders' meeting does not contain
full and fair disclosure with respect to the Acquisition. Plaintiff
seeks, among other things: to enjoin the consummation of the
Acquisition; to require that the Company make additional disclosures to
its stockholders in connection with the Acquisition; damages in
unspecified amounts; and costs, disbursements and counsel and expert
fees.
The Company has reached an agreement in principal to settle this action.
The Settlement will be subject to approval by the Court of Chancery. The
plaintiff has withdrawn his application for a perliminary injunction
against the Acquisition.
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
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<PAGE>
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:
The Company filed a report on Form 8-K on August 8, 1997 reporting the
commencement of the litigation referred to in Part II, Item 1.
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<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: August 13, 1997 /s/ Reynald G. Bonmati
---------------------------------------------
Reynald G. Bonmati
President
Date: August 13, 1997 /s/ Kurt W. Streams
---------------------------------------------
Kurt W. Streams
Vice President, Finance
(Principal Financial and Accounting Officer)
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<PAGE>
Norland Medical Systems, Inc.
Exhibit Index
Number Description
- ------ -----------
11 Statement Regarding Computation of Earnings Per Share
27 Financial Data Schedule
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Norland Medical Systems, Inc. Exhibit 11
Statement Regarding Computation of Earnings Per Share
(Unaudited)
Primary Basis Three Months Ended
------------------------------
June 30, 1997 June 30, 1996
------------- -------------
Net income $ 631,658 $ 750,057
Weighted average shares
outstanding 7,149,800 6,838,320
Stock options 39,047 425,592
Weighted average number of
common and common equivalent
shares outstanding 7,188,847 7,263,912
Earnings per share $ 0.09 $ 0.10
Primary Basis Six Months Ended
--------------------------------
June 30, 1997 June 30, 1996
------------- -------------
Net income $1,104,756 $1,441,313
Weighted average shares
outstanding 7,132,909 6,582,532
Stock options 42,871 574,764
Weighted average number of
common and common equivalent
shares outstanding 7,175,780 7,157,296
Earnings per share $ 0.15 $ 0.20
Fully Diluted Basis Three Months Ended
------------------------------
June 30, 1997 June 30, 1996
------------- -------------
Net income $ 631,658 $ 750,057
Weighted average shares
outstanding 7,149,800 6,838,320
Stock options 70,573 425,592
Weighted average number of
common and common equivalent
shares outstanding 7,220,373 7,263,912
Earnings per share $ 0.09 $ 0.10
Fully Diluted Basis Six Months Ended
--------------------------------
June 30, 1997 June 30, 1996
------------- -------------
Net income $1,104,756 $1,441,313
Weighted average shares
outstanding 7,132,909 6,582,532
Stock options 71,400 574,764
Weighted average number of
common and common equivalent
shares outstanding 7,204,309 7,157,296
Earnings per share $ 0.15 $ 0.20
- 17 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Financial Statements and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,133,254
<SECURITIES> 0
<RECEIVABLES> 13,870,642
<ALLOWANCES> 250,000
<INVENTORY> 2,006,563
<CURRENT-ASSETS> 21,401,923
<PP&E> 567,975
<DEPRECIATION> 133,907
<TOTAL-ASSETS> 29,963,223
<CURRENT-LIABILITIES> 2,337,460
<BONDS> 0
0
0
<COMMON> 3,575
<OTHER-SE> 27,622,188
<TOTAL-LIABILITY-AND-EQUITY> 29,963,223
<SALES> 12,552,118
<TOTAL-REVENUES> 13,130,909
<CGS> 7,431,211
<TOTAL-COSTS> 7,431,211
<OTHER-EXPENSES> 4,089,416
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,860,756
<INCOME-TAX> 756,000
<INCOME-CONTINUING> 1,104,756
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,104,756
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
