UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| [X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2002
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 1-10694
VISX, INCORPORATED
| Delaware | 06-1161793 | |
|
|
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| (State or other Jurisdiction of Incorporation or Organization) |
(IRS Employer Identification No.) |
3400 Central Expressway, Santa Clara, California |
95051-0703 |
|
(Address of principal executive offices) |
(Zip Code) |
(Registrant’s telephone number, including area code): (408) 733-2020
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 [ ]
Total number of shares of common stock outstanding as of July 24, 2002: 53,359,507
VISX, INCORPORATED
TABLE OF CONTENTS
| Page | ||||||||
| PART I. | FINANCIAL INFORMATION | |||||||
| Item 1. | Condensed Consolidated Interim Financial Statements | |||||||
| Condensed Consolidated Interim Balance Sheets as of June 30, 2002 and December 31, 2001 | 3 | |||||||
| Condensed Consolidated Interim Statements of Operations for the Three Months Ended June 30, 2002 and 2001 and for the Six Months Ended June 30, 2002 and 2001 | 4 | |||||||
| Condensed Consolidated Interim Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001 | 5 | |||||||
| Notes to Condensed Consolidated Interim Financial Statements | 6 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||||
| Overview | 11 | |||||||
| Results of Operations | 11 | |||||||
| Liquidity and Capital Resources | 13 | |||||||
| Item 3. | Quantitative and Qualitative Disclosure about Market Risk | 17 | ||||||
| PART II. | OTHER INFORMATION | |||||||
| Item 1. | Legal Proceedings | 17 | ||||||
| Item 6. | Exhibits and Reports on Form 8-K | 18 | ||||||
| SIGNATURES | 20 | |||||||
Page 2
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Interim Financial Statements
VISX, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(In thousands, except share and per share amounts)
ASSETS
| June 30, | December 31, | ||||||||||||||||||
| 2002 | 2001 | ||||||||||||||||||
| (unaudited) | |||||||||||||||||||
Current Assets: |
|||||||||||||||||||
Cash and cash equivalents |
$ | 23,718 | $ | 15,349 | |||||||||||||||
Short-term investments |
104,450 | 108,458 | |||||||||||||||||
Accounts receivable, net of allowance
for doubtful accounts of $4,491 and
$4,567, respectively |
25,940 | 32,490 | |||||||||||||||||
Inventories |
13,466 | 14,071 | |||||||||||||||||
Deferred tax assets and prepaid expenses |
26,135 | 33,214 | |||||||||||||||||
Total current assets |
193,709 | 203,582 | |||||||||||||||||
Property and Equipment, net |
5,559 | 4,152 | |||||||||||||||||
Long-Term Deferred Tax and Other Assets |
10,767 | 12,191 | |||||||||||||||||
| $ | 210,035 | $ | 219,925 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||||||||||||||
Current Liabilities: |
|||||||||||||||||||
Accounts payable |
$ | 4,947 | $ | 3,270 | |||||||||||||||
Accrued liabilities |
36,700 | 40,377 | |||||||||||||||||
Total current liabilities |
41,647 | 43,647 | |||||||||||||||||
Stockholders’ Equity: |
|||||||||||||||||||
Common stock: $.01 par value,
180,000,000 shares authorized;
64,990,089 shares issued |
650 | 650 | |||||||||||||||||
Additional paid-in capital |
201,237 | 208,130 | |||||||||||||||||
Treasury stock, at cost 11,357,182 and
10,436,238 shares, respectively |
(190,809 | ) | (178,347 | ) | |||||||||||||||
Accumulated comprehensive income |
1,566 | 2,520 | |||||||||||||||||
Retained earnings |
155,744 | 143,325 | |||||||||||||||||
Total stockholders’ equity |
168,388 | 176,278 | |||||||||||||||||
| $ | 210,035 | $ | 219,925 | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Page 3
VISX, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
| Three months ended | Six months ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||||
| (unaudited) | ||||||||||||||||||
Revenues: |
||||||||||||||||||
System revenues |
$ | 12,804 | $ | 17,239 | $ | 22,719 | $ | 34,335 | ||||||||||
License, service and other revenues |
23,835 | 31,022 | 50,505 | 64,391 | ||||||||||||||
Total revenues |
36,639 | 48,261 | 73,224 | 98,726 | ||||||||||||||
Costs and Expenses: |
||||||||||||||||||
Cost of system revenues |
7,176 | 11,325 | 15,338 | 24,303 | ||||||||||||||
Cost of license, service and other revenues |
4,809 | 4,484 | 9,251 | 9,334 | ||||||||||||||
Selling, general, and administrative |
11,661 | 10,488 | 22,179 | 21,157 | ||||||||||||||
Research, development and regulatory |
4,779 | 4,592 | 9,024 | 9,142 | ||||||||||||||
Total costs and expenses |
28,425 | 30,889 | 55,792 | 63,936 | ||||||||||||||
Income From Operations |
8,214 | 17,372 | 17,432 | 34,790 | ||||||||||||||
Interest and other income |
1,561 | 2,759 | 3,092 | 6,201 | ||||||||||||||
Litigation settlement |
— | (37,821 | ) | — | (37,821 | ) | ||||||||||||
Income (Loss) Before Provision For Income Taxes |
9,775 | (17,690 | ) | 20,524 | 3,170 | |||||||||||||
Provision for income taxes |
(3,859 | ) | 6,988 | (8,105 | ) | (1,252 | ) | |||||||||||
Net Income (Loss) |
$ | 5,916 | $ | (10,702 | ) | $ | 12,419 | $ | 1,918 | |||||||||
Earnings (Loss) Per Share |
||||||||||||||||||
Basic |
$ | 0.11 | $ | (0.19 | ) | $ | 0.23 | $ | 0.03 | |||||||||
Diluted |
$ | 0.11 | $ | (0.19 | ) | $ | 0.23 | $ | 0.03 | |||||||||
Shares Used For Earnings Per Share |
||||||||||||||||||
Basic |
53,889 | 56,536 | 54,197 | 58,021 | ||||||||||||||
Diluted |
54,809 | 56,536 | 55,191 | 59,735 | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Page 4
VISX, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(In thousands)
| Six months ended | |||||||||||
| June 30, | |||||||||||
| 2002 | 2001 | ||||||||||
| (unaudited) | |||||||||||
Cash flows from operating activities: |
|||||||||||
Net income |
$ | 12,419 | $ | 1,918 | |||||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
|||||||||||
Depreciation and amortization |
1,690 | 1,996 | |||||||||
Provision for doubtful accounts receivable |
569 | 897 | |||||||||
Changes in operating assets and liabilities: |
|||||||||||
Accounts receivable |
5,981 | (9,059 | ) | ||||||||
Inventories |
(994 | ) | (2,887 | ) | |||||||
Deferred tax assets and prepaid expenses |
7,079 | (683 | ) | ||||||||
Long-term deferred tax and other assets |
1,424 | (107 | ) | ||||||||
Accounts payable |
1,677 | (3,290 | ) | ||||||||
Accrued liabilities |
(3,677 | ) | 27,979 | ||||||||
Net cash provided by operating activities |
26,168 | 16,764 | |||||||||
Cash flows from investing activities: |
|||||||||||
Capital expenditures, net |
(1,498 | ) | (895 | ) | |||||||
Purchase of short-term investments |
(33,398 | ) | (23,368 | ) | |||||||
Proceeds from maturities of short-term investments |
36,432 | 95,471 | |||||||||
Net cash provided by investing activities |
1,536 | 71,208 | |||||||||
Cash flows from financing activities: |
|||||||||||
Exercise of stock options |
4,352 | 4,413 | |||||||||
Repurchase of common stock |
(23,707 | ) | (89,408 | ) | |||||||
Net cash used in financing activities |
(19,355 | ) | (84,995 | ) | |||||||
Effect of exchange rate changes on cash |
20 | 169 | |||||||||
Net increase in cash and cash equivalents |
8,369 | 3,146 | |||||||||
Cash and cash equivalents, beginning of period |
15,349 | 19,686 | |||||||||
Cash and cash equivalents, end of period |
$ | 23,718 | $ | 22,832 | |||||||
Non-Cash Investing Activities: |
|||||||||||
Inventory transferred to property and equipment
under operating leases |
$ | 1,599 | $ | — | |||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Page 5
VISX, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
June 30, 2002
(Unaudited)
1. Basis of Presentation:
We prepared our Condensed Consolidated Interim Financial Statements in conformity with Securities and Exchange Commission rules and regulations. Accordingly, we condensed or omitted certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles. Please read our 2001 Annual Report on Form 10-K to gain a more complete understanding of these interim financial statements.
We included in these interim financial statements all adjustments (consisting primarily only of normal recurring adjustments) necessary to present fairly our results for the interim period. Our interim financial statements have not been audited.
2. Earnings (Loss) Per Share:
Basic earnings per share (“EPS”) equals net income (loss) divided by the weighted average number of common shares outstanding. Diluted EPS equals net income (loss) divided by the weighted average number of common shares outstanding plus dilutive potential common shares calculated in accordance with the treasury stock method. The calculation of diluted net loss per share excludes potential common shares if the effect is antidilutive. All amounts in the following table are in thousands, except per share data.
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||
NET INCOME (LOSS) |
$ | 5,916 | $ | (10,702 | ) | $ | 12,419 | $ | 1,918 | ||||||||
BASIC EARNINGS (LOSS) PER SHARE |
|||||||||||||||||
Income (Loss) available to common shareholders |
$ | 5,916 | $ | (10,702 | ) | $ | 12,419 | $ | 1,918 | ||||||||
Weighted average common shares outstanding |
53,889 | 56,536 | 54,197 | 58,021 | |||||||||||||
Basic Earnings (Loss) Per Share |
$ | 0.11 | $ | (0.19 | ) | $ | 0.23 | $ | 0.03 | ||||||||
DILUTED EARNINGS (LOSS) PER SHARE |
|||||||||||||||||
Income (Loss) available to common shareholders |
$ | 5,916 | $ | (10,702 | ) | $ | 12,419 | $ | 1,918 | ||||||||
Weighted average common shares outstanding |
53,889 | 56,536 | 54,197 | 58,021 | |||||||||||||
Dilutive potential common shares from stock options |
920 | — | 994 | 1,714 | |||||||||||||
Weighted average common shares and dilutive potential common shares |
54,809 | 56,536 | 55,191 | 59,735 | |||||||||||||
Diluted Earnings (Loss) Per Share |
$ | 0.11 | $ | (0.19 | ) | $ | 0.23 | $ | 0.03 | ||||||||
At June 30, 2002 and 2001, options for the purchase of 6,058,000 and 4,033,000, respectively, were exercisable at weighted average purchase price per share of $14.99 and $15.25, respectively, and were excluded from the computation of diluted EPS because exercise prices for these options were greater than the average market price of the VISX’s common stock during these periods.
Page 6
3. Inventories (in thousands):
| June 30, | December 31, | ||||||||
| 2002 | 2001 | ||||||||
Raw materials and subassemblies |
$ | 7,751 | $ | 8,901 | |||||
Work in process |
1,419 | 1,491 | |||||||
Finished goods |
4,296 | 3,679 | |||||||
Total |
$ | 13,466 | $ | 14,071 | |||||
4. Comprehensive Income (Loss) (in thousands):