SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
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For the quarterly period ended June 30, 2004 |
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OR
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
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For the transition period from to to |
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Commission file number 0-23791
SONOSITE, INC.
(Exact name of registrant as specified in its charter)
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Washington |
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91-1405022 |
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(State or Other Jurisdiction |
(I.R.S. Employer |
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of Incorporation or Organization) |
Identification Number) |
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21919 30th Drive SE, Bothell, WA |
98021-3904 |
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(425) 951-1200
(Registrant's Telephone Number, 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 filing requirements for the past 90 days. Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
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Common Stock, $0.01 par value |
14,821,364 |
SonoSite, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 2004
Table of Contents
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No. |
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PART I |
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Item 1. |
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Condensed Consolidated Balance Sheets--June 30, 2004 and December 31, 2003 |
3 |
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4 |
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Condensed Consolidated Statements of Cash Flows--Six Months Ended June 30, 2004 and 2003 |
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6 |
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Item 2. |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
12 |
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Item 3. |
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29 |
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Item 4. |
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30 |
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PART II |
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Item 1. |
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30 |
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Item 6. |
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31 |
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32 |
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2
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
SonoSite, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
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(In thousands, except share data) |
June 30, |
December 31, |
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Assets |
2004 |
2003 |
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Current assets: |
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Cash and cash equivalents |
$ |
14,139 |
$ |
13,683 |
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Short-term investment securities |
5,334 |
13,094 |
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Accounts receivable, less allowance for doubtful accounts of $972 and $933 |
23,421 |
25,849 |
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Inventories |
13,510 |
14,148 |
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Prepaid expenses and other current assets |
2,030 |
1,520 |
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Total current assets |
58,434 |
68,294 |
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Property and equipment, net |
6,362 |
5,564 |
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Investment securities |
42,271 |
34,239 |
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Goodwill |
266 |
-- |
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Identifiable intangible assets, net |
1,983 |
-- |
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Other assets |
1,715 |
993 |
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Total assets |
$ |
111,031 |
$ |
109,090 |
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Liabilities and Shareholders' Equity |
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Current liabilities: |
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Accounts payable |
$ |
3,431 |
$ |
3,054 |
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Accrued expenses |
7,534 |
6,503 |
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Current portion of long-term obligations |
-- |
88 |
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Deferred revenue |
3,854 |
3,840 |
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Total current liabilities |
14,819 |
13,485 |
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Deferred rent |
252 |
275 |
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Total liabilities |
15,071 |
13,760 |
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Commitments and contingencies |
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Shareholders' equity: |
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Preferred stock, $1.00 par value |
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Authorized shares--6,000,000 |
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Issued and outstanding shares--none |
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-- |
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Common stock, $.01 par value |
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Authorized shares--50,000,000 |
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Issued and outstanding shares: |
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As of June 30, 2004--14,813,050 |
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As of December 31, 2003--14,572,524 |
148 |
146 |
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Additional paid-in-capital |
183,626 |
180,839 |
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Accumulated deficit |
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88,880 |
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87,416 |
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Accumulated other comprehensive income |
1,066 |
1,761 |
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Total shareholders' equity |
95,960 |
95,330 |
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Total liabilities and shareholders' equity |
$ |
111,031 |
$ |
109,090 |
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See accompanying notes to condensed consolidated financial statements.
3
SonoSite, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
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(In thousands, except loss per share) |
Three Months Ended |
Six Months Ended |
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June 30, |
June 30, |
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2004 |
2003 |
2004 |
2003 |
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Revenue |
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$ |
26,076 |
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$ |
20,120 |
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$ |
49,590 |
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$ |
37,278 |
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Cost of revenue |
8,746 |
7,494 |
17,031 |
13,861 |
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Gross margin |
17,330 |
12,626 |
32,559 |
23,417 |
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Operating expenses: |
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Research and development |
3,047 |
2,875 |
6,120 |
5,708 |
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Sales and marketing |
12,163 |
9,618 |
23,748 |
18,508 |
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General and administrative |
2,147 |
1,739 |
4,379 |
3,744 |
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Total operating expenses |
17,357 |
14,232 |
34,247 |
27,960 |
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Other income (expense): |
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Interest income |
221 |
250 |
439 |
520 |
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Interest expense |
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1 |
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7 |
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( |
2 |
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( |
14 |
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Other income (expense) |
( |
257 |
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66 |
( |
213 |
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176 |
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Total other income (expense) |
( |
37 |
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309 |
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224 |
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682 |
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Net loss |
$ |
( |
64 |
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$ |
( |
1,297 |
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$ |
( |
1,464 |
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$ |
( |
3,861 |
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Basic and diluted net loss per share |
$ |
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0.00 |
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$ |
( |
0.09 |
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$ |
( |
0.10 |
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$ |
( |
0.27 |
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Weighted average common shares used in computing net loss per share |
14,757 |
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14,268 |
14,694 |
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14,237 |
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See accompanying notes to condensed consolidated financial statements.
4
SonoSite, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
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Six Months Ended |
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June 30, |
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(In thousands) |
2004 |
2003 |
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Operating activities: |
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Net loss |
$ |
( |
1,464 |
) |
$ |
( |
3,861 |
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
1,416 |
1,227 |
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Equity in losses of affiliates |
5 |
-- |
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Net gain on investments |
( |
42 |
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( |
17 |
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Amortization of premiums on investment securities |
351 |
346 |
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Stock-based compensation to non-employees |
51 |
-- |
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Changes in operating assets and liabilities: |
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Accounts receivable |
2,322 |
3,391 |
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Inventories |
638 |
( |
1,730 |
) |
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Prepaid expenses and other assets |
( |
1,522 |
) |
( |
396 |
) |
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Accounts payable |
383 |
( |
2,280 |
) |
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Accrued expenses |
1,057 |
610 |
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Deferred liabilities |
( |
11 |
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261 |
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Net cash provided by (used in) operating activities |
3,184 |
( |
2,449 |
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Investing activities: |
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Purchase of investment securities |
( |
20,470 |
) |
( |
18,626 |
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Proceeds from sales/maturities of investment securities |
19,554 |
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6,895 |
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Purchase of SonoMetric Health, Inc. |
( |
2,036 |
) |
-- |
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Purchase of property and equipment |
( |
2,174 |
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( |
733 |
) |
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Net cash used in investing activities |
( |
5,126 |
) |
( |
12,464 |
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Financing activities: |
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Exercise of stock options |
2,738 |
1,492 |
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Repayment of long-term obligations |
( |
88 |
) |
( |
66 |
) |
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Net cash provided by financing activities |
2,650 |
1,426 |
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Effect of exchange rate changes on cash and cash equivalents |
( |
252 |
) |
452 |
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Net change in cash and cash equivalents |
456 |
( |
13,035 |
) |
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Cash and cash equivalents at beginning of period |
13,683 |
26,381 |
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Cash and cash equivalents at end of period |
$ |
14,139 |
$ |
13,346 |
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Supplemental disclosure of cash flow information: |
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