| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the Quarterly Period Ended September 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 | N.A. | ||||
| (State or other jurisdiction of | (I.R.S. Employer | ||||
| incorporation or organization) | Identification No.) | ||||
| P.O. Box 240, Yokneam, Israel | 20692 | ||||
| (Address of principal executive offices) | (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 November 18, 2003 was 36,942,439 Ordinary Shares, NIS 0.10 par value per share.
| PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements 1) Consolidated Balance Sheets 2) Interim Consolidated Statements of Operations 3) Interim Consolidated Statements of Cash Flows 4) Notes to Unaudited Interim Consolidated Financial Statements ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ITEM 3. Quantitative and Qualitative Disclosure about Market Risk ITEM 4. Controls and Procedures PART II. OTHER INFORMATION ITEM 1. Legal Proceedings ITEM 4. Submission of Matters to a Vote of Security Holders ITEM 6. Exhibits and Reports on Form 8-K |
3 3 4 5 6 8 27 37 37 37 37 38 38 |
INDEPENDENT INVESTIGATION BY THE AUDIT COMMITTEE AND FAILURE TO OBTAIN A REVIEW OF THE INTERIM FINANCIAL STATEMENTS
As previously reported in the Company’s Current Report on Form 8-K for October 14, 2003 filed on October 16, 2003, our independent auditors, Deloitte & Touche Brightman Almagor, have requested the Audit Committee of the Board of Directors to conduct an independent investigation into the Company’s relationship with one of its distributors and the accounting and disclosures related thereto, in connection with the continuing Securities and Exchange Commission investigation. Accordingly, the independent auditors did not conduct a review of the interim financial statements included in this quarterly report, notwithstanding that such review, using professional review standards and procedures, is required by Form 10-Q.
Following completion of the independent investigation and the review of its findings by our independent auditors, and thereafter, a review of our financial statements for the third fiscal quarter of 2003 by our independent auditors, Lumenis intends to file an amended Form 10-Q for the third quarter ended September 30, 2003 to reflect revisions, if any, to the financial statements contained in this Form 10-Q which may be appropriate as a result of such review.
The Audit Committee of the Board of Directors is working expeditiously to complete its investigation. We cannot, however, predict when the investigation will be completed, its ultimate scope or its outcome, or any possible effect on the Company’s financial statements.
- 3 -
| September 30, 2003 |
December 31, 2002 | |||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 16,130 | $ | 18,106 | ||||
| Trade receivables, net | 82,067 | 100,646 | ||||||
| Prepaid expenses and other receivables | 11,220 | 14,265 | ||||||
| Inventories | 57,123 | 82,862 | ||||||
| 166,540 | 215,879 | |||||||
| FINISHED GOODS USED IN OPERATIONS | 6,753 | 9,808 | ||||||
| LONG-TERM INVESTMENTS | ||||||||
| Investments in equity securities | 1,337 | 5,642 | ||||||
| Long term trade receivables | 1,308 | 2,031 | ||||||
| FIXED ASSETS, NET | 15,785 | 18,582 | ||||||
| GOODWILL, NET OF ACCUMULATED AMORTIZATION | ||||||||
| OF $4,627 | 88,039 | 88,039 | ||||||
| OTHER PURCHASED INTANGIBLE ASSETS, NET OF | ||||||||
| ACCUMULATED AMORTIZATION OF $19,259 and $14,921 | 15,008 | 19,346 | ||||||
| OTHER ASSETS, NET | 8,583 | 10,675 | ||||||
| Total assets | $ | 303,353 | $ | 370,002 | ||||
| CURRENT LIABILITIES | ||||||||
| Short-term debt | $ | 48,003 | $ | 38,862 | ||||
| Current maturities of long term loans | 30,000 | 15,000 | ||||||
| Trade payables | 20,921 | 39,224 | ||||||
| Other accounts payable and accrued expenses | 85,385 | 80,940 | ||||||
| Subordinated note | - | 9,679 | ||||||
| 184,309 | 183,705 | |||||||
| LONG TERM LIABILITIES | ||||||||
| Bank loans, net | 127,792 | 142,042 | ||||||
| Deferred income | - | 616 | ||||||
| Accrued severance pay, net | 1,507 | 1,228 | ||||||
| Other long-term liabilities | 3,114 | 2,515 | ||||||
| 132,413 | 146,401 | |||||||
| Total liabilities | 316,722 | 330,106 | ||||||
| COMMITMENTS AND CONTINGENT LIABILITIESSHAREHOLDERS’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 | 328,040 | 325,947 | ||||||
| Accumulated other comprehensive income (loss) | 3 | (76 | ) | |||||
| Accumulated deficit | (342,114 | ) | (286,677 | ) | ||||
| Treasury stock, 14,898 shares at cost: | (103 | ) | (103 | ) | ||||
| Total shareholders' equity | (13,369 | ) | 39,896 | |||||
| Total liabilities and shareholders' equity | $ | 303,353 | $ | 370,002 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
- 4 -
| For the three months ended September 30, |
For the nine months ended September 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2003 |
2002(*) |
2003 |
2002(*) | |||||||||||
| Unaudited | ||||||||||||||
| NET REVENUES | $ | 66,220 | $ | 87,264 | $ | 211,745 | $ | 260,792 | ||||||
| COST OF REVENUES | 39,574 | 41,042 | 131,349 | 119,968 | ||||||||||
| Gross profit | 26,646 | 46,222 | 80,396 | 140,824 | ||||||||||
| OPERATING EXPENSES | ||||||||||||||
| Research and development, net | 4,593 | 6,638 | 15,495 | 19,990 | ||||||||||
| Selling, marketing and administrative | 31,231 | 34,198 | 96,952 | 103,571 | ||||||||||
| Amortization of intangible assets | 1,280 | 1,569 | 4,338 | 5,201 | ||||||||||
| Litigation expenses | - | - | 925 | 5,201 | ||||||||||
| Total operating expenses | 37,104 | 42,405 | 117,710 | 133,963 | ||||||||||
| Operating income (loss) | (10,458 | ) | 3,817 | (37,314 | ) | 6,861 | ||||||||
| Other income (loss), net | (432 | ) | - | (407 | ) | 1,720 | ||||||||
| Financing expenses | 3,489 | 3,951 | 10,400 | 11,194 | ||||||||||
| Loss before income taxes | (14,379 | ) | (134 | ) | (48,121 | ) | (2,613 | ) | ||||||
| Income tax expense | 876 | 586 | 3,219 | 1,718 | ||||||||||
| Loss after income taxes | (15,255 | ) | (720 | ) | (51,340 | ) | (4,331 | ) | ||||||
| Company's share in losses of an affiliate | - | 30 | 492 | 121 | ||||||||||
| LOSS FROM ONGOING OPERATIONS | (15,255 | ) | (750 | ) | (51,832 | ) | (4,452 | ) | ||||||
| Discontinued Operations: | ||||||||||||||
| Income (loss) from discontinued operations | - | (178 | ) | 84 | 52 | |||||||||
| Loss on sale of discontinued operations | - | - | (3,689 | ) | - | |||||||||
| Income (loss) from discontinued operations | - | (178 | ) | (3,605 | ) | 52 | ||||||||
| NET LOSS | $ | (15,255 | ) | $ | (928 | ) | $ | (55,437 | ) | $ | (4,400 | ) | ||
| BASIC AND DILUTED LOSS PER SHARE | ||||||||||||||
| Loss per share before extraordinary items | $ | (0.41 | ) | $ | (0.02 | ) | $ | (1.39 | ) | $ | (0.12 | ) | ||
| Loss from discontinuing operations | - | - | (0.10 | ) | - | |||||||||
| Net loss per share | $ | (0.41 | ) | $ | (0.02 | ) | $ | (1.49 | ) | $ | (0.12 | ) | ||
| WEIGHTED AVERAGE NUMBER OF SHARES | ||||||||||||||
| Basic and diluted | 37,277 | 37,264 | 37,277 | 37,158 | ||||||||||
(*) Restated to reflect the discontinued industrial operations
The accompanying notes are an integral part of these consolidated financial statements
- 5 -
LUMENIS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(In thousands)
| For the nine months ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 | |||||||
| Unaudited | ||||||||
| CASH FLOWS - OPERATING ACTIVITIES | ||||||||
| Net loss for the period | $ | (55,437 | ) | $ | (4,400 | ) | ||
| Income from discontinued operations | (84 | ) | (52 | ) | ||||
| Loss on sale of discontinued operations | 3,689 | - | ||||||
| Loss from continuing operations for the period | $ | (51,832 | ) | $ | (4,452 | ) | ||
| 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 | 52 | ||||||
| Depreciation and amortization | 12,349 | 13,168 | ||||||
| Amortization of stock-based compensation | 865 | - | ||||||
| Company's shares in losses (gains) of an affiliate | 479 | 121 | ||||||
| Extraordinary gain on purchase of Company's convertible notes | - | (92 | ) | |||||
| Amortization of other long-term assets | 3,644 | 2,327 | ||||||
| Loss on sale of investment in an affiliate | 427 | - | ||||||
| Gain on sale of an impaired investment | - | (1,720 | ) | |||||
| Loss on impairment of equity securities | 445 | - | ||||||
| Other | 596 | 28 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (increase) in trade receivables | 17,367 | (8,338 | ) | |||||
| Decrease (Increase) in prepaid expenses and other receivables | 4,185 | (2,950 | ) | |||||
| Decrease (Increase) in inventories (1) | 19,317 | (8,541 | ) | |||||
| Increase (decrease) in accounts payable, accrued expenses and other | ||||||||
| long-term liabilities | (11,168 | ) | 6,385 | |||||
| Decrease in long term deferred income | - | (439 | ) | |||||
| Net-cash - operating activities | (3,242 | ) | (4,451 | ) | ||||
| CASH FLOWS - INVESTING ACTIVITIES | ||||||||
| Purchase of fixed assets | (2,603 | ) | (5,994 | ) | ||||
| Investment in other long term assets | - | (1,250 | ) | |||||
| Investments, deposits and securities, net | - | 970 | ||||||
| Investment in an affiliate | - | (151 | ) | |||||
| Proceeds from sale of Industrial operations | 4,407 | - | ||||||
| Proceeds from sale of subsidiary's operations | - | 144 | ||||||
| Proceeds from sale of impaired investment | - | 1,720 | ||||||
| Payment for business acquired (Appendix A) | - | (1,286 | ) | |||||
| Net-cash - investing activities | 1,804 | (5,847 | ) | |||||
| CASH FLOWS - FINANCING ACTIVITIES | ||||||||
| Purchase of convertible notes | - | (16,447 | ) | |||||
| Repayment of subordinated notes | (9,679 | ) | (54,128 | ) | ||||
| Proceeds from exercise of options | - | 793 | ||||||
| Increase of long term loans | - | 66,667 | ||||||
| Repayment of liability to Coherent | - | (2,859 | ) | |||||
| Increase (decrease) in short-term bank debt, net | 9,141 | 4,905 | ||||||
| Net-cash - financing activities | (538 | ) | (1,069 | ) | ||||
| DECREASE IN CASH AND CASH EQUIVALENTS | ||||||||