FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2001
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-20584
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ABIOMED, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2743260
-------- ----------
(State of incorporation) (IRS Employer No.)
22 CHERRY HILL DRIVE
DANVERS, MASSACHUSETTS 01923
(Address of principal executive offices, including zip code)
(978) 777-5410
(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) or 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 [ ]
As of July 20, 2001, there were 20,825,354 shares outstanding of the
registrant's Common Stock, $.01 par value.
ABIOMED, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
Part I - Financial Information:
Item 1. Condensed Consolidated Financial Statements
Consolidated Balance Sheets
June 30, 2001 and March 31, 2001 3-4
Consolidated Statements of Operations
Three Months Ended June 30, 2001
and June 30, 2000 5
Consolidated Statements of Cash Flows
Three Months Ended June 30, 2001 and
June 30, 2000 6
Notes to Consolidated Financial Statements 7-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12-16
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 17
Part II - Other Information 18
Signatures 19
2
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
---------------------------
(in thousands)
ASSETS
June 30, 2001 March 31, 2001
(unaudited) (audited)
Current Assets:
Cash and cash equivalents (Note 7) $ 60,287 $ 90,462
Short-term marketable securities (Note 8) 27,805 2,036
Accounts receivable, net of allowance for doubtful accounts
of $184 at June 30, 2001 and March 31, 2001 (Note 3) 8,001 10,028
Inventories (Note 4) 3,602 3,674
Prepaid expenses and other current assets 1,435 766
------------ -----------
Total current assets 101,130 106,966
------------ -----------
Property and Equipment, at cost:
Machinery and equipment 7,917 7,546
Furniture and fixtures 858 807
Leasehold improvements 1,883 3,528
------------ -----------
10,658 11,881
Less: Accumulated depreciation and amortization 5,858 7,129
------------ -----------
4,800 4,752
------------ -----------
Intellectual Property and Other Assets, net (Note 9) 5,641 6,295
------------ -----------
$111,571 $118,013
============ ===========
The accompanying notes are an integral part
of these consolidated financial statements.
3
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (continued)
CONSOLIDATED BALANCE SHEETS (CONTINUED)
---------------------------------------
(in thousands, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, 2001 March 31, 2001
(unaudited) (audited)
Current Liabilities:
Accounts payable $ 2,236 $ 2,129
Accrued expenses 5,700 5,600
Current portion of long-term liabilities 77 242
Deferred revenues 862 996
----------- ----------
Total current liabilities 8,875 8,967
----------- ----------
Long-Term Liabilities 91 368
Stockholders' Equity (Note 5 and 9):
Class B Preferred Stock, $.01 par value-
Authorized 1,000,000 shares
Issued and outstanding-none
- -
Common Stock, $.01 par value-
Authorized 100,000,000 shares
Issued and outstanding- 20,816,872 shares at
June 30, 2001 and 20,770,714 shares at
March 31, 2001 208 208
Additional paid-in capital 158,643 158,415
Paid-in capital - warrants 3,145 3,145
Accumulated deficit (59,391) (53,090)
----------- ----------
Total stockholders' equity 102,605 108,678
----------- ----------
$111,571 $118,013
=========== ==========
The accompanying notes are an integral part
of these consolidated financial statements.
4
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(in thousands, except per share and share data)
(unaudited)
THREE MONTHS ENDED
June 30, 2001 June 30, 2000
Revenues:
Products $ 5,747 $ 5,504
Funded research and development 245 355
--------- ---------
5,992 5,859
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Costs and expenses:
Cost of product revenues 1,991 1,935
Research and development (Note 10) 7,144 4,491
Selling, general and administrative 4,144 2,977
--------- ---------
13,279 9,403
--------- ---------
Loss from operations (7,287) (3,544)
Interest and other income 986 1,559
--------- ---------
Net loss $(6,301) $(1,985)
========= =========
Basic and diluted net loss per share (Note 6): $ (0.30) $ (0.10)
Weighted average shares outstanding (Note 6): 20,791,903 20,463,894
The accompanying notes are an integral part
of these consolidated financial statements.
5
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(in thousands)
(unaudited)
THREE MONTHS ENDED
June 30, 2001 June 30, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,301) $ (1,985)
Adjustments to reconcile net loss to net cash
used in operating activities-
Depreciation and amortization 999 504
Changes in assets and liabilities-
Accounts receivable, net 2,027 197
Inventories 72 (203)
Prepaid expenses and other assets (582) (311)
Accounts payable 107 (157)
Accrued expenses (34) (845)
Long-term liabilities (7) -
----------- ----------
Net cash used in operating activities (3,719) (2,800)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of short-term marketable securities - 2,350
Purchases of short-term marketable securities (25,769) (8,949)
Purchases of property and equipment (480) (676)
----------- ----------
Net cash used by investing activities (26,249) (7,275)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 228 127
Repayment of long-term debt and capital lease obligation (435) (59)
----------- ----------
Net cash (used) provided by financing activities (207) 68
----------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (30,175) (10,007)
CASH AND CASH EQUIVALENTS, EXCLUDING
MARKETABLE SECURITIES, AT BEGINNING OF PERIOD 90,462 101,917
----------- ----------
CASH AND CASH EQUIVALENTS, EXCLUDING
MARKETABLE SECURITIES, AT END OF PERIOD $ 60,287 $ 91,910
=========== ==========
The accompanying notes are an integral part
of these consolidated financial statements.
6
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PREPARATION
The unaudited consolidated financial statements of ABIOMED, Inc. (the
Company), presented herein have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and note
disclosures required by generally accepted accounting principles. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in our latest audited financial
statements. These audited statements are contained in our Form 10-K for the year
ended March 31, 2001 and have been filed with the Securities and Exchange
Commission.
In our opinion, the accompanying consolidated financial statements
include all adjustments (consisting only of normal, recurring adjustments)
necessary to summarize fairly the financial position and results of operations
as of June 30, 2001 and for the three months then ended. The results of
operations for the three months ended June 30, 2001 may not be indicative of the
results that may be expected for the full fiscal year.
2. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company, and its wholly owned subsidiaries, and the accounts of its
majority-owned subsidiary, Abiomed Limited Partnership. All significant
intercompany accounts and transactions have been eliminated in consolidation.
3. ACCOUNTS RECEIVABLE
Accounts receivable include amounts due from customers, net of
allowance for doubtful accounts. Accounts receivable also include amounts due
from government and other third party sources related to the Company's research
and development contracts and grants. These research and development contracts
and grants generally provide for payment on a cost-plus-fixed-fee basis. The
Company recognizes revenues under its government contracts and grants as work is
performed, provided that the government has appropriated sufficient funds for
the work. The Company retains rights to all technological discoveries and
products resulting from these efforts.
4. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market and consist of the following (in thousands):
7
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)
4. INVENTORIES (CONTINUED)
June 30, March 31,
2001 2001
------------------- ------------------
Raw materials $ 1,406 $ 1,418
Work-in-process 845 737
Finished goods 1,351 1,519
--------- ---------
$ 3,602 $ 3,674
========= =========
Finished goods and work-in-process inventories consist of direct material, labor
and overhead. Inventories do not currently include any costs associated with
AbioCor(TM) or other products under development.
5. STOCKHOLDERS' EQUITY
During the three months ended June 30, 2001, options to purchase
385,500 shares of Common Stock were granted at prices ranging from $11.563 to
$23.480. During that same period options to purchase 58,875 shares were
canceled and options to purchase 55,650 shares of Common Stock were exercised
at prices ranging from $3.500 to $8.000 per share.
6. NET LOSS PER COMMON SHARE
Basic net loss per share is computed by dividing net loss by the
weighted average number of common shares outstanding during the period. Diluted
net loss per share is computed by dividing net loss by the weighted average
number of dilutive common shares outstanding during the period. Diluted weighted
average shares reflect the dilutive effect, if any, of potential common stock
such as options and warrants based on the treasury stock method. No potential
common stock is considered dilutive in periods in which a loss is reported, such
as the three month periods ended June 30, 2001 and 2000, because all such common
equivalent shares would be antidilutive. The calculation of diluted weighted
average shares outstanding for the three months ended June 30, 2001 and June 30,
2000 excludes 1,664,178 and 1,686,142 options to purchase common stock,
respectively. The calculation of diluted weighted average shares outstanding for
the three months ended June 30, 2001 also excludes warrants to purchase 400,000
shares of common stock issued in connection with the purchase of intellectual
property (see Note 9).
8
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)
7. CASH AND CASH EQUIVALENTS
The Company classifies any marketable security with a maturity date of
90 days or less at the time of purchase as a cash equivalent.
8. MARKETABLE SECURITIES
The Company classifies any security with a maturity date of greater
than 90 days at the time of purchase as marketable securities and classifies
marketable securities with a maturity of greater than one year from the balance
sheet date as long-term investments. Under Statement of Financial Accounting
Standards (SFAS) No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES, securities that the Company has the positive intent and ability to
hold to maturity are reported at amortized cost and classified as
held-to-maturity securities. At June 30, 2001, the amortized cost of these
securities approximated market value.
9. INTELLECTUAL PROPERTY AND OTHER ASSETS
In September 2000, the Company acquired the exclusive rights to The
Pennsylvania State University implantable replacement heart (referred to as the
Penn State Heart). The terms of these transactions consisted of payment of
110,000 shares of the Company's common stock, plus the issuance of warrants to
purchase up to 400,000 additional shares of the Company's common stock at an
exercise price of $0.01 per share. Exercise of the warrants is contingent on the
achievement of certain clinical and regulatory milestones with the Penn State
Heart by specified dates. In connection with this acquisition, the Company
capitalized the purchase cost totaling $6,361,000, which consists of acquisition
costs of approximately $70,000, the fair market value of the 110,000 shares of
common stock issued and the fair market value of the first traunch of warrants
to purchase 110,000 shares of common stock. This amount is classified as
intellectual property, a long-term asset in the accompanying consolidated
balance sheet. The Company is amortizing this asset ratably over a period of
three years, its estimated useful life. The unamortized cost of this asset as of
June 30, 2001 and March 31, 2001 was approximately $4,771,000 and $5,300,000,
respectively. Beyond the initial 110,000 warrants to purchase common stock, to
the extent that the designated milestones are achieved, the Company intends to
expense the value of the remaining 290,000 warrants in the period that the
milestone is achieved and such warrants become exercisable. None of these
remaining warrants had become exercisable as of June 30, 2001.
9
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)
9. INTELLECTUAL PROPERTY AND OTHER ASSETS (CONTINUED)
Also included in other assets are long-term accounts receivable related
to sales-type leases. The terms of these non-cancelable leases are one to three
years. As of June 30, 2001, the long-term amount due from these sales-type
leases approximated $143,000. As of March 31, 2001, the long-term amount due
from these sales-type leases approximated $215,000.
Other assets also include the unamortized cost of a number of awarded
and pending patents. As of June 30, 2001, the unamortized cost of these patents
approximated $723,000. As of March 31, 2001, the unamortized cost of these
patents approximated $773,000.
10. RESEARCH AND DEVELOPMENT
Research and development costs are expensed when incurred and include
direct materials and labor, depreciation, contracted services and other costs
associated with developing and testing new products and improving existing
products, including amortized costs of purchased technology. Research and
development costs consist of the following amounts (in thousands).
Three Months Ended
June 30, June 30,
2001 2000
--------------- ----------------
Internally funded $ 6,408 $ 4,211
Incurred under government contracts and grants 206 280
Amortization of purchased technology 530 -
-------- --------
Total research and development $ 7,144 $ 4,491
======== ========
11. COMPREHENSIVE INCOME
SFAS No. 130, REPORTING COMPREHENSIVE INCOME, requires disclosure of
all components of comprehensive income and loss on an annual and interim basis.
Comprehensive income and loss is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. Other than the reported net loss, there were no
components of comprehensive income or loss that require disclosure for the three
months ending June 30, 2001 or June 30, 2000.
10
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)
12. SEGMENT AND ENTERPRISE WIDE DISCLOSURES
SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, requires certain financial and supplementary information to be
disclosed on an annual and interim basis for each reportable segment of an
enterprise. The Company believes that it operates in one business segment-- the
research, development and sale of medical devices to assist or replace the
pumping function of the failing heart.
13. ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, as amended by SFAS No. 137, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES--DEFERRAL OF THE EFFECTIVE DATE OF FASB STATEMENT NO.
133, and SFAS No. 138, ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND CERTAIN
HEDGING ACTIVITIES, AN AMENDMENT OF SFAS NO. 133 require companies to reflect
the fair value of all derivative instruments, including those embedded in other
contracts, as assets or liabilities in an entity's balance sheet. Changes in
fair value may be accounted for as a component of other comprehensive income,
provided that certain criteria are met as specified in these pronouncements. The
Company had no such derivative or hedging instruments for the three months ended
June 30, 2001 and June 30, 2000.
11
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2001
PRODUCT REVENUES
Product revenues increased by $0.2 million, or 4%, to $5.7 million
in the three months ended June 30, 2001 from $5.5 million in the three months
ended June 30, 2000. The increase in product revenues is primarily
attributable to increased international sales of BVS(R) blood pumps. Domestic
sales accounted for 88% and 98% of total product revenue during the three
months ended June 30, 2001 and 2000, respectively.
FUNDED RESEARCH AND DEVELOPMENT REVENUES
Funded research and development revenues were $0.2 million in the three
months ended June 30, 2001, a decrease of 31% from revenues of $0.4 million in
the three months ended June 30, 2000. Revenues from government contracts and
grants continue to decline as we focus our resources more on product development
activities and less on the types of early-stage research activities that are
often supported by the government.
We account for funded research and development revenues under our
government contracts and grants as work is performed, provided that the
government has appropriated sufficient funds for the work. As of June 30, 2001,
our total backlog of research and development contracts and grants was $0.9
million. All of these contracts and grants contain provisions that make them
terminable at the convenience of the government. ABIOMED retains rights to
commercialize all technological discoveries and products resulting from these
efforts.
COST OF PRODUCT REVENUES
Cost of product revenues as a percentage of product revenues was 35%
for both the three months ended June 30, 2001 and 2000. Costs reductions during
the current period approximating 2.1% of BVS product revenues resulting from the
discontinuation after August 3, 2000 of royalty obligations due to the Abiomed
Limited Partnership were offset by production inefficiencies resulting from
starting up our new BVS blood pump manufacturing facility and to a higher
proportion of relatively lower margin BVS console sales, including sales of our
12
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
COST OF PRODUCT REVENUES (CONTINUED)
new backup/transport console, in the June 30, 2001 quarter compared to the prior
year.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased by $2.6 million, or 59% to
$7.1 million in the three months ended June 30, 2001, from $4.5 million in the
three months ended June 30, 2000. Research and development expenses were 119% of
total revenues for the quarter ended June 30, 2001 and 77% of total revenues for
the quarter ended June 30, 2000. The increase in expenditures during the quarter
just ended was primarily due to increased spending for the AbioCor and Penn
State Heart implantable replacement hearts.
Research and development expenses during the three months ended June
30, 2001 included $4.8 million of expenses incurred in connection with
development activities for the AbioCor, compared to $3.7 million for the same
period of the prior year. The increase in AbioCor spending was primarily
attributable to increased manufacturing, testing, and documentation activities
associated with preparation for our initial clinical trials that began in early
July 2001. The Company is currently expensing as research and development
expense all inventory costs associated with the AbioCor. Quarterly costs related
to AbioCor inventory is highly variable depending upon the timing of receipts of
materials from vendors. These costs have been increasing in preparation for the
clinical trials.
Included in research and development expenses during the three
months ended June 30, 2001 were $1.4 million in costs related to development
of the Penn State Heart of which $0.5 million represented amortization of
technology capitalized in connection with its acquisition. There were no
research and development expenses incurred by the Company in connection with
the Penn State Heart in the three months ended June 30, 2000.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased by $1.1 million,
or 39%, to $4.1 million in the three months ended June 30, 2001, from $3.0
million in the three months ended June 30, 2000. Expenditures increased to 69%
of total revenues from 51% of total revenues in the same period a year earlier.
The increase was primarily attributable to increased staffing, public relations
activities and sales commissions.
13
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
INTEREST AND OTHER INCOME
Interest and other income consist primarily of interest earned on our
investment balances, net of interest and other expenses. Interest and other
income decreased by $0.6 million to $1.0 million for the three months ended June
30, 2001 from $1.6 million for the three months ended June 30, 2000. The
decrease was due to lower average funds available for investment during the
quarter just ended and reduced yields on investments resulting from lower
interest rates.
NET LOSS
Net loss for the three months ended June 30, 2001 was approximately
$6.3 million, or $0.30 per share. This compares to a net loss of approximately
$2.0 million, or $0.10 per share, in the same period of the previous year. The
losses for both periods are primarily attributable to the Company's development
and pre-clinical testing costs associated with the AbioCor.
LIQUIDITY AND CAPITAL RESOURCES
We have supported our operations primarily with net revenues from sales
of our BVS product line, government contracts and proceeds from our equity
financings. As of June 30, 2001, our cash, cash equivalents and marketable
securities totaled $88.1 million.
During the three months ended June 30, 2001, operating activities used
$3.7 million of cash. Net cash used by operating activities during this period
reflected a net loss of $6.3 million, including non-cash depreciation and
amortization expense of $1.0 million, and an increase in prepaid expenses and
other assets of $0.6 million. These uses of cash were partially offset by a
decrease in accounts receivable and inventory of $2.0 million and $0.1 million,
respectively, and an increase in accounts payable of $0.1 million.
During the three months ended June 30, 2001, investing activities used
$26.3 million of cash. Approximately $25.8 million in cash was used for the
acquisition of short-term marketable securities. We also expended cash for
capital equipment and leasehold improvements of $0.5 million during the three
months ended June 30, 2001.
Financing activities used $0.2 million of cash during the quarter ended
June 30, 2001. Cash used to pay off equipment term loans of $0.4 million was
partially offset by $0.2 million of cash received as a result of stock options
exercised during the period.
14
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Income taxes incurred during the three months ended June 30, 2001 were
not material, and we continue to have significant net tax operating loss and tax
credit carryforwards.
We believe that our revenue from product sales and government
contracts, together with existing resources will be sufficient to fund our
planned operations, including the planned increases in our internally funded
AbioCor, Penn State Heart and new BVS development and product extension efforts,
for more than the next twelve months. However, we may require significant
additional funds in order to complete the development, conduct clinical trials,
and achieve regulatory approvals of the AbioCor, Penn State Heart and other
products under development over the next several years. We may also need
additional funds for possible future strategic acquisitions of businesses,
products or technologies complementary to our business. If additional funds are
required, we may raise such funds from time to time through public or private
sales of equity or from borrowings.
RISK FACTORS WHICH MAY AFFECT FUTURE RESULTS
This document contains forward-looking statements, including statements
regarding new products under development and adequacy of existing resources. The
Company's actual results, including our AbioCor and Penn State Heart
development, BVS enhancements and adequacy of resources may differ materially
based on a number of factors, both known and unknown, including: uncertainty of
product development, clinical trials and commercial acceptance; complex
manufacturing; high quality requirements; the need to demonstrate required
reliability of products under development; dependence on key personnel; risks
associated with a growing number of employees; difficulties in recruiting
required human resources on schedule; competition and technological change,
government regulations including the FDA and other regulatory agencies; risks
associated with international expansion; dependence on limited sources of
supply; future capital needs and uncertainty of additional funding; dependence
on third-party reimbursement; potential inadequacy of product liability
insurance; dependence on patents and proprietary rights; and other risks
detailed in our Form 10-K for the year ended March 31, 2001 which was filed with
the Securities and Exchange Commission. Investors are cautioned that all such
statements involve risks and uncertainties. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date of this document. We undertake no obligation to publicly release the
results of any revisions to these forward-looking statements
15
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
RISK FACTORS WHICH MAY AFFECT FUTURE RESULTS (CONTINUED)
that may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
16
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK
The Company does not use derivative financial instruments for
speculative or trading purposes. However, it is exposed to market risk related
to changes in interest rates. The Company maintains an investment portfolio
consisting mainly of federal agency obligations, state and municipal bonds, and
U.S. Treasury notes with maturities of one year or less. These held-to-maturity
securities are subject to interest rate risk and will fall in value if market
interest rates increase. If market interest rates were to increase immediately
and uniformly by 10 percent from levels at June 30, 2001, the fair market value
of the portfolio would decline by an immaterial amount. The Company has the
ability to hold the majority of its fixed income investments until maturity, and
therefore the Company would not expect its operating results or cash flows to be
affected to any significant degree by the effect of a sudden change in market
interest rates on its securities portfolio.
17
ABIOMED, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
No material change.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
None
b) REPORTS ON FORM 8-K
None
18
ABIOMED, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABIOMED, Inc.
Date: July 25, 2001 /s/ David M. Lederman
--------------------------------
David M. Lederman
CEO and President
Date: July 25, 2001 /s/ John F. Thero
--------------------------------
John F. Thero
Senior Vice President Finance
and Treasurer
Chief Financial Officer
Principal Accounting Officer
19