| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the Quarterly Period Ended June 30, 2003
| o | 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 0-13012
LUMENIS LTD.
(Exact name of registrant as specified in its charter)
|
Israel (State or other jurisdiction of incorporation or organization) P.O. Box 240, Yokneam, Israel (Address of principal executive offices) |
N.A.
(I.R.S. Employer Identification No.) 20692 (Zip Code) |
Registrant’s telephone number, including area code: 972-4-959-9000
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 o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o
The number of shares outstanding of the registrant’s common stock as of August 11, 2003 was 36,942,439 Ordinary Shares, NIS 0.10 par value per share.
| PART I. FINANCIAL INFORMATION | 1 |
| ITEM 1. Financial Statements | 1 |
| 1) Independent Accountant's Review Report | 1 |
| 2) Consolidated Balance Sheets | 2 |
| 3) Interim Consolidated Statements of Operations | 3 |
| 4) Interim Consolidated Statements of Cash Flows | 4 |
| 5) Notes to Unaudited Interim Consolidated Financial Statements | 6 |
| ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| ITEM 3. Quantitative and Qualitative Disclosure about Market Risk | 32 |
| ITEM 4. Controls and Procedures | 32 |
| PART II. OTHER INFORMATION | 32 |
| ITEM 1. Legal Proceedings | 32 |
| ITEM 4. Submission of Matters to a Vote of Security Holders | 37 |
| ITEM 6. Exhibits and Reports on Form 8-K | 39 |
Brightman Almagor
1 Azrieli Center
Tel Aviv 67021
P.O.B. 16593, Tel Aviv 61164
Israel
Tel: +972 (3) 6085555
Fax: +972 (3) 6094022
info@deloitte.co.il
www.deloitte.co.il
[Deloitte & Touche LOGO]
Brightman Almagor
Independent Accountant’s Review Report
The Board of Directors
Lumenis Ltd.
Yokneam
We have reviewed the accompanying consolidated balance sheet of Lumenis Ltd. (the “Company”) and its subsidiaries as of June 30, 2003, the related consolidated statements of operations for the six-month and three-month periods ended June 30, 2003 and the statement of cash flows for the six-month period ended June 30, 2003. These financial statements are the responsibility of the Company’s management.
We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
Brightman Almagor & Co.
Certified Public Accountants
A member of Deloitte Touche Tohmatsu
Tel Aviv
August 19, 2003
|
Deloitte Touche Tohmatsu |
Tel aviv | Jerusalem | Haifa | Eilat |
| June 30, 2003 |
December 31, 2002 | |||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 19,165 | $ | 18,106 | ||||
| Trade receivables, net | 90,841 | 100,646 | ||||||
| Prepaid expenses and other receivables | 10,041 | 14,265 | ||||||
| Inventories | 54,885 | 82,862 | ||||||
| 174,932 | 215,879 | |||||||
| FINISHED GOODS USED IN OPERATIONS | 7,262 | 9,808 | ||||||
| LONG-TERM INVESTMENTS | ||||||||
| Investments in non marketable equity securities | 2,506 | 5,642 | ||||||
| Long term trade receivables | 1,885 | 2,031 | ||||||
| FIXED ASSETS, NET | 16,316 | 18,582 | ||||||
| GOODWILL, NET OF ACCUMULATED AMORTIZATION | ||||||||
| OF $4,627 | 88,039 | 88,039 | ||||||
| OTHER PURCHASED INTANGIBLE ASSETS, NET OF | ||||||||
| ACCUMULATED AMORTIZATION OF $17,979 and $14,921 | 16,288 | 19,346 | ||||||
| OTHER ASSETS, NET | 9,223 | 10,675 | ||||||
| Total assets | $ | 316,451 | $ | 370,002 | ||||
| CURRENT LIABILITIES | ||||||||
| Short-term debt | $ | 48,007 | $ | 38,862 | ||||
| Current maturities of long term loans | 30,000 | 15,000 | ||||||
| Trade payables | 20,796 | 39,224 | ||||||
| Other accounts payable and accrued expenses | 82,438 | 80,940 | ||||||
| Subordinated note | 1,383 | 9,679 | ||||||
| 182,624 | 183,705 | |||||||
| LONG TERM LIABILITIES | ||||||||
| Bank loans, net | 127,542 | 142,042 | ||||||
| Deferred income | 791 | 616 | ||||||
| Accrued severance pay, net | 1,151 | 1,228 | ||||||
| Other long-term liabilities | 2,903 | 2,515 | ||||||
| 132,387 | 146,401 | |||||||
| Total liabilities | 315,011 | 330,106 | ||||||
| COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Ordinary shares of NIS 0.1 par value: Authorized - | ||||||||
| 100,000,000 shares; Issued and outstanding | ||||||||
| 36,942,439 and 36,941,914 shares, respectively | 805 | 805 | ||||||
| Additional paid-in capital | 327,845 | 325,947 | ||||||
| Accumulated other comprehensive loss | (248 | ) | (76 | ) | ||||
| Accumulated deficit | (326,859 | ) | (286,677 | ) | ||||
| Treasury stock, 14,898 shares at cost: | (103 | ) | (103 | ) | ||||
| Total shareholders' equity | 1,440 | 39,896 | ||||||
| Total liabilities and shareholders' equity | $ | 316,451 | $ | 370,002 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
2
| For the three months ended |
For the six months ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2003 |
June 30, 2002 |
June 30, 2003 |
June 30, 2002 | |||||||||||
| Unaudited | ||||||||||||||
| NET REVENUES | $ | 68,120 | $ | 89,864 | $ | 145,525 | $ | 173,527 | ||||||
| COST OF REVENUES | 50,700 | 39,718 | 91,775 | 78,926 | ||||||||||
| Gross profit | 17,420 | 50,146 | 53,750 | 94,601 | ||||||||||
| OPERATING EXPENSES | ||||||||||||||
| Research and development, net | 5,148 | 6,577 | 10,902 | 13,352 | ||||||||||
| Selling, marketing and administrative | 34,301 | 36,742 | 65,721 | 69,372 | ||||||||||
| Amortization of intangible assets | 1,404 | 1,816 | 3,058 | 3,632 | ||||||||||
| Litigation expenses | 925 | 5,201 | 925 | 5,201 | ||||||||||
| Total operating expenses | 41,778 | 50,336 | 80,606 | 91,557 | ||||||||||
| Operating income (loss) | (24,358 | ) | (190 | ) | (26,856 | ) | 3,044 | |||||||
| Other income, net | 25 | 1,720 | 25 | 1,720 | ||||||||||
| Financing expenses, net | 3,594 | 3,659 | 6,911 | 7,244 | ||||||||||
| Loss before income taxes | (27,927 | ) | (2,129 | ) | (33,742 | ) | (2,480 | ) | ||||||
| Income tax expense | 1,062 | 416 | 2,343 | 1,132 | ||||||||||
| Loss after income taxes | (28,989 | ) | (2,545 | ) | (36,085 | ) | (3,612 | ) | ||||||
| Company's share in losses of an affiliate | 483 | - | 492 | 91 | ||||||||||
| LOSS FROM CONTINUING OPERATIONS | (29,472 | ) | (2,545 | ) | (36,577 | ) | (3,703 | ) | ||||||
| Discontinued Operations: | ||||||||||||||
| Income (loss) from discontinued operations | (103 | ) | (284 | ) | 84 | 231 | ||||||||
| Loss on sale of discontinued operations | (3,689 | ) | - | (3,689 | ) | - | ||||||||
| Income (loss) from discontinued operations | (3,792 | ) | (284 | ) | (3,605 | ) | 231 | |||||||
| NET LOSS | ($ 33,264 | ) | ($ 2,829 | ) | ($ 40,182 | ) | ($ 3,472 | ) | ||||||
| BASIC AND DILUTED LOSS PER SHARE | ||||||||||||||
| Loss per share from continuing operation | ($ 0.79 | ) | ($ 0.07 | ) | ($ 0.98 | ) | ($ 0.10 | ) | ||||||
| Income (loss) from discontinuing | ||||||||||||||
| operations | (0.10 | ) | (0.01 | ) | (0.10 | ) | 0.01 | |||||||
| Net loss per share | ($ 0.89 | ) | ($ 0.08 | ) | ($ 1.08 | ) | ($ 0.09 | ) | ||||||
| Weighted Average Number of Shares | 37,277 | 36,798 | 37,277 | 36,756 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements
3
| For the six months ended June 30, |
||||||||
|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 |
|||||||
| CASH FLOWS - OPERATING ACTIVITIES | ||||||||
| Net loss for the period | ($40,182 | ) | ($ 3,472 | ) | ||||
| Income from discontinued operations | (84 | ) | (231 | ) | ||||
| Loss on sale of discontinued operations | 3,689 | |||||||
| Loss from continuing operations for the period | ($36,577 | ) | ($ 3,703 | ) | ||||
| Adjustment to reconcile net loss to net cash used in operating activities | ||||||||
| Income and expenses not affecting operating cash-flows: | ||||||||
| Income from discontinued operations | 84 | 231 | ||||||
| Decrease in long-term deferred income | - | (260 | ) | |||||
| Depreciation and amortization | 8,582 | 8,826 | ||||||
| Gain on purchase of Company's convertible notes | - | (92 | ) | |||||
| Amortization of stock-based compensation | 670 | - | ||||||
| Company's shares in losses of an affiliate | 492 | 91 | ||||||
| Amortization of other long-term assets | 2,452 | 1,483 | ||||||
| Loss (gain) on sale of investment in an affiliate | 427 | (1,720 | ) | |||||
| Other | 153 | 12 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (increase) in trade receivables | 8,016 | (10,169 | ) | |||||
| Decrease (increase) in prepaid expenses and other receivables | 5,772 | (2,060 | ) | |||||
| Decrease in inventories | 22,373 | 2,803 | ||||||
| Increase (decrease) in accounts payable, accrued expenses and other | ||||||||
| long-term liabilities | (14,667 | ) | 3,300 | |||||
| Net-cash - operating activities | (2,223 | ) | (1,258 | ) | ||||
| CASH FLOWS - INVESTING ACTIVITIES | ||||||||
| Purchase of fixed assets | (1,974 | ) | (5,177 | ) | ||||
| Investment in other long-term assets | - | (1,250 | ) | |||||
| Investments, deposits and securities, net | - | 970 | ||||||
| Proceeds from sale of subsidiary's operations | - | 144 | ||||||
| Proceeds from sale of an investment in an affiliate | - | 1,720 | ||||||
| Investment in an affiliate | - | (151 | ) | |||||
| Payment for business acquired (Appendix A) | - | (1,286 | ) | |||||
| Proceeds from sale of Industrial operations | 4,407 | - | ||||||
| Net-cash - investing activities | 2,433 | (5,030 | ) | |||||
| CASH FLOWS - FINANCING ACTIVITIES | ||||||||
| Purchase of convertible notes | - | (16,770 | ) | |||||
| Proceeds from exercise of options | - | 686 | ||||||
| Repayment of liability to Coherent | - | (347 | ) | |||||
| Repayment of subordinated notes | (8,296 | ) | - | |||||
| Increase in short-term bank debt, net | 9,145 | |||||||