UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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, 2003 |
| ¨ | TRANSITION PERIOD PURSUANT TO SECTION 13 OR 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934. |
| For the transition period from to . |
0-20727
(Commission File Number)
Novoste Corporation
(Exact Name of Registrant as Specified in Its Charter)
| Florida | 59-2787476 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| 3890 Steve Reynolds Blvd. Norcross, GA | 30093 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(770) 717-0904
(Registrant’s telephone, including area code)
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 requirements for the past 90 days.
(Item 1) Yes x No ¨
(Item 2) Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of August 4, 2003 there were 16,498,688 shares of the Registrant’s Common Stock outstanding.
FORM 10-Q
INDEX
| PAGE NO. | ||||
| PART I. FINANCIAL INFORMATION | ||||
| Item 1. | Consolidated Financial Statements |
|||
| Consolidated Balance Sheets as of June 30, 2003 (unaudited) and December 31, 2002 |
3 | |||
| 4 | ||||
| Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2003 and 2002 |
5 | |||
| 6-13 | ||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14-24 | ||
| Item 3. | 25 | |||
| Item 4. | 25 | |||
| PART II. OTHER INFORMATION | ||||
| Item 1. | 26 | |||
| Item 2. | 26 | |||
| Item 3 | 26 | |||
| Item 4. | 26 | |||
| Item 5. | 26 | |||
| Item 6. | 27-28 | |||
| SIGNATURES | 29 | |||
2
PART I. FINANCIAL INFORMATION
| Item 1. | Consolidated Financial Statements |
NOVOSTE CORPORATION
(in thousands, except number of shares data)
| June 30, 2003 |
December 31, 2002 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 27,330 | $ | 21,928 | ||||
| Short-term investments |
8,355 | 11,647 | ||||||
| Accounts receivable, net of allowance of $643 and $1,135 respectively |
8,658 | 6,758 | ||||||
| Inventory, net |
3,768 | 3,927 | ||||||
| Prepaid expenses and other current assets |
864 | 986 | ||||||
| Total current assets |
48,975 | 45,246 | ||||||
| Property and equipment, net |
8,489 | 9,542 | ||||||
| Radiation and transfer devices, net |
8,217 | 11,353 | ||||||
| Receivable from officers |
— | 283 | ||||||
| Other assets |
650 | 1,096 | ||||||
| $ | 66,331 | $ | 67,520 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 1,245 | 2,176 | |||||
| Accrued expenses |
7,368 | 9,967 | ||||||
| Unearned revenue |
657 | 2,429 | ||||||
| Capital lease obligations |
38 | 178 | ||||||
| Total current liabilities |
9,308 | 14,750 | ||||||
| Long-term liabilities |
||||||||
| Capital lease obligations |
5 | 5 | ||||||
| Total liabilities |
9,313 | 14,755 | ||||||
| Shareholders’ equity: |
||||||||
| Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares issued and outstanding |
— | — | ||||||
| Common stock, $.01 par value, 25,000,000 shares authorized; 16,362,017 and 16,351,953 shares issued, respectively |
164 | 164 | ||||||
| Additional paid-in capital |
187,865 | 187,813 | ||||||
| Accumulated other comprehensive income |
364 | 190 | ||||||
| Accumulated deficit |
(131,145 | ) | (134,434 | ) | ||||
| 57,248 | 53,733 | |||||||
| Less: Treasury stock, 18,329 and 118,077 shares of common stock at cost |
(66 | ) | (445 | ) | ||||
| Unearned compensation |
(164 | ) | (523 | ) | ||||
| Total shareholders’ equity |
57,018 | 52,765 | ||||||
| $ | 66,331 | $ | 67,520 | |||||
See accompanying notes.
3
NOVOSTE CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share data)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Net sales |
$ | 17,608 | $ | 16,824 | $ | 38,314 | $ | 39,757 | ||||||||
| Cost of sales |
6,318 | 6,214 | 13,386 | 12,893 | ||||||||||||
| Impairment charge |
— | 6,900 | — | 6,900 | ||||||||||||
| Gross margin |
11,290 | 3,710 | 24,928 | 19,964 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
2,806 | 3,464 | 6,164 | 6,123 | ||||||||||||
| Sales and marketing |
5,147 | 6,545 | 11,081 | 14,763 | ||||||||||||
| General and administrative |
2,246 | 2,293 | 4,565 | 4,491 | ||||||||||||
| Total operating expenses |
10,199 | 12,302 | 21,810 | 25,377 | ||||||||||||
| Income (loss) from operations |
1,091 | (8,592 | ) | 3,118 | (5,413 | ) | ||||||||||
| Interest income |
70 | 143 | 183 | 514 | ||||||||||||
| Interest expense |
(2 | ) | (69 | ) | (9 | ) | ||||||||||
| Other income (expense) |
2 | (33 | ) | 5 | (114 | ) | ||||||||||
| Total other income |
70 | 41 | 179 | 314 | ||||||||||||
| Income (loss) before taxes |
1,161 | (8,551 | ) | 3,297 | (5,099 | ) | ||||||||||
| Income taxes |
8 | 8 | 50 | |||||||||||||
| Net income (loss) |
$ | 1,153 | $ | (8,551 | ) | $ | 3,289 | $ | (5,149 | ) | ||||||
| Net income (loss) per share—Basic |
$ | 0.07 | $ | (0.52 | ) | $ | 0.20 | $ | (0.32 | ) | ||||||
| Weighted average shares outstanding—Basic |
16,321 | 16,311 | 16,295 | 16,296 | ||||||||||||
| Net income (loss) per share—Diluted |
$ | 0.07 | $ | (0.52 | ) | $ | 0.19 | $ | (0.32 | ) | ||||||
| Weighted average shares outstanding—Diluted |
16,951 | 16,311 | 16,893 | 16,296 | ||||||||||||
See accompanying notes.
4
NOVOSTE CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Six Months Ended June 30, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | 3,289 | $ | (5,149 | ) | |||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
1,765 | 1,100 | ||||||
| Issuance (cancellation) of stock for services or compensation |
(3 | ) | 197 | |||||
| Amortization of deferred compensation and variable stock awards |
75 | 97 | ||||||
| Amortization of radiation and transfer devices |
4,748 | 6,030 | ||||||
| Provision for doubtful accounts |
(256 | ) | 241 | |||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
(1,604 | ) | 2,988 | |||||
| Inventory |
168 | (260 | ) | |||||
| Prepaid expenses |
122 | (220 | ) | |||||
| Accounts payable |
(968 | ) | (1,504 | ) | ||||
| Accrued expenses |
(2,620 | ) | (4,825 | ) | ||||
| Unearned revenue |
(1,783 | ) | (553 | ) | ||||
| Impairment charge |
— | 5,065 | ||||||
| Other |
757 | 397 | ||||||
| Net cash provided by operations |
3,690 | 3,604 | ||||||
| Cash flows from investing activities: |
||||||||