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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 1999
OR
[ ] 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 0-26268
MINIMED INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware 95-4408171
(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)
12744 SAN FERNANDO ROAD, SYLMAR, CA 91342
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (818) 362-5958
---------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
TITLE OF EACH CLASS OUTSTANDING AT NOVEMBER 10, 1999
---------------------------- --------------------------------
Common Stock, $.01 par value 31,105,235
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INDEX
MINIMED INC.
PAGE
NUMBER
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3
Consolidated Balance Sheets - January 1, 1999 and October 1, 1999 (Unaudited) 3
Consolidated Statements of Income (Unaudited) -- Three months and nine months ended October
2, 1998 and October 1, 1999 4
Consolidated Statements of Cash Flows (Unaudited) - Nine months ended October 2, 1998 and
October 1, 1999 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
PART II. OTHER INFORMATION 19
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURE 20
INDEX TO EXHIBITS 21
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3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
MINIMED INC.
CONSOLIDATED BALANCE SHEETS
JANUARY 1, 1999 AND OCTOBER 1, 1999
ASSETS
1998 1999
------------ ------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents ....................................................... $ 27,303,000 $ 99,044,000
Short-term investments .......................................................... 13,476,000 69,400,000
Accounts receivable, net of allowance for doubtful accounts of $8,844,000 and
$9,467,000 at January 1, 1999 and October 1, 1999, respectively ............... 38,788,000 47,689,000
Inventories ..................................................................... 16,860,000 26,607,000
Deferred income taxes ........................................................... 6,404,000 7,576,000
Income taxes receivable ......................................................... -- 10,975,000
Prepaid expenses and other current assets ....................................... 3,835,000 6,702,000
------------ ------------
Total current assets ................................................ 106,666,000 267,993,000
LONG-TERM INVESTMENTS ............................................................. 4,826,000 6,669,000
NOTE RECEIVABLE FROM AFFILIATE .................................................... 3,600,000 3,600,000
OTHER ASSETS ...................................................................... 11,522,000 18,080,000
LAND, BUILDINGS, PROPERTY AND EQUIPMENT - Net ..................................... 31,038,000 41,303,000
------------ ------------
TOTAL ............................................................................. $157,652,000 $337,645,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes payable ................................................ $ 1,101,000 $ 882,000
Accounts payable ................................................................ 5,447,000 6,158,000
Accrued salaries and related benefits ........................................... 5,231,000 5,827,000
Accrued sales commissions ....................................................... 2,260,000 805,000
Accrued warranties .............................................................. 2,828,000 3,461,000
Income taxes payable ............................................................ 1,155,000 --
Other accrued expenses .......................................................... 3,873,000 2,766,000
------------ ------------
Total current liabilities ............................................ 21,895,000 19,899,000
------------ ------------
Deferred income taxes ........................................................... 865,000 1,857,000
Notes payable ................................................................... 1,059,000 1,000,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $.01; 40,000,000 shares authorized as of January 1, 1999
and 100,000,000 shares authorized as of October 1, 1999; 28,095,274 and
31,065,765 shares issued and outstanding as of January 1, 1999
and October 1, 1999, respectively ............................................ 286,000 323,000
Additional capital ............................................................. 111,683,000 277,162,000
Accumulated other comprehensive income ......................................... 738,000 1,807,000
Retained earnings .............................................................. 21,126,000 35,597,000
------------ ------------
Total stockholders' equity .......................................... 133,833,000 314,889,000
------------ ------------
TOTAL ............................................................................. $157,652,000 $337,645,000
============ ============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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MINIMED INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------ --------------------------------
OCTOBER 2, OCTOBER 1, OCTOBER 2, OCTOBER 1,
1998 1999 1998 1999
------------------------------------------------------------------- -----
(Unaudited)
NET SALES ................................... $ 34,897,000 $ 51,400,000 $ 92,979,000 $ 141,394,000
COST OF SALES ............................... 13,071,000 16,502,000 36,511,000 46,620,000
------------- ------------- ------------- -------------
GROSS PROFIT ................................ 21,826,000 34,898,000 56,468,000 94,774,000
OPERATING EXPENSES:
Selling, general and administrative ....... 14,643,000 22,809,000 37,963,000 60,344,000
Research and development .................. 3,892,000 6,394,000 10,946,000 18,262,000
Research and development contract ......... (1,500,000) (1,500,000) (4,500,000) (4,500,000)
------------- ------------- ------------- -------------
Total operating expenses ........ 17,035,000 27,703,000 44,409,000 74,106,000
------------- ------------- ------------- -------------
OPERATING INCOME ............................ 4,791,000 7,195,000 12,059,000 20,668,000
OTHER INCOME, Including interest income ..... 446,000 2,110,000 1,172,000 2,847,000
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES ................. 5,237,000 9,305,000 13,231,000 23,515,000
PROVISION FOR INCOME TAXES .................. 2,020,000 3,489,000 4,961,000 9,044,000
------------- ------------- ------------- -------------
NET INCOME .................................. $ 3,217,000 $ 5,816,000 $ 8,270,000 $ 14,471,000
============= ============= ============= =============
BASIC EARNINGS PER SHARE .................... $ 0.12 $ 0.19 $ 0.31 $ 0.50
============= ============= ============= =============
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING ... 26,832,000 30,894,000 26,674,000 29,166,000
============= ============= ============= =============
DILUTED EARNINGS PER SHARE .................. $ 0.11 $ 0.18 $ 0.29 $ 0.47
============= ============= ============= =============
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING . 28,316,000 32,758,000 28,092,000 31,028,000
============= ============= ============= =============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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MINIMED INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED OCTOBER 2, 1998 AND NINE MONTHS ENDED OCTOBER 1, 1999
1998 1999
------------- -------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................. $ 8,270,000 $ 14,471,000
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation ......................................................... 2,723,000 5,097,000
Directors' fees paid in common stock ................................. -- 71,000
Deferred income taxes ................................................ (1,564,000) (880,000)
Tax benefit from exercise of non-qualified stock options ............. 3,497,000 18,943,000
Changes in operating assets and liabilities:
Accounts receivable, net ........................................... (4,152,000) (8,901,000)
Inventories ........................................................ (7,407,000) (9,747,000)
Prepaid expenses and other current assets .......................... (2,100,000) (2,867,000)
Other assets ....................................................... 902,000 64,000
Accounts payable ................................................... (1,010,000) 711,000
Income taxes receivable/payable .................................... (88,000) (12,130,000)
Other accrued expenses.............................................. (3,651,000) (1,333,000)
------------- -------------
Net cash provided by (used in) operating activities ................ $ (4,580,000) $ 3,499,000
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES -
Short-term investments ............................................. 16,473,000 (55,924,000)
Long-term investments .............................................. (1,140,000)
Acquisition of Dartec A.B .......................................... (2,625,000)
Purchase of technology license ..................................... -- (7,000,000)
Purchase of land, buildings, property and equipment ................ (14,899,000) (14,905,000)
------------- -------------
Net cash used in investing activities .............................. $ (2,191,000) $ (77,829,000)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES -
Repayment of notes payable ......................................... (2,905,000) (278,000)
Proceeds from public offering, net of expenses ..................... -- 140,588,000
Proceeds from stock option exercises ............................... 1,226,000 5,011,000
Proceeds from issuance of common stock under employee
stock purchase plan ............................................. 467,000 825,000
------------- -------------
Net cash provided by (used in) financing activities .............. $ (1,212,000) $ 146,146,000
------------- -------------
Effect of cumulative foreign currency translation
adjustment on cash and equivalents ............................... 37,000 (75,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ........................................................ (7,946,000) 71,741,000
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD ............................................................. 22,282,000 27,303,000
------------- -------------
CASH AND CASH EQUIVALENTS, END OF
PERIOD ............................................................. $ 14,336,000 $ 99,044,000
============= =============
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest ............................................................. $ 49,000 $ 2,000
Income taxes ......................................................... $ 5,421,000 $ 3,624,000
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITY - MiniMed Inc. ("MiniMed"
or "the Company") recorded an unrealized holding gain of $1,143,000 during the
nine months ended October 1, 1999 and an unrealized holding loss of $1,580,000
during the nine months ended October 2, 1998, net of estimated deferred income
taxes on marketable securities classified as long-term investments available for
sale. On September 1, 1998, we accepted a $3.6 million note receivable from
Medical Research Group, Inc., which we call MRG, in conjunction with the sale of
$3.0 million of net implantable pump inventory components and $600,000 of net
implantable pump fixed assets.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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MINIMED INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED OCTOBER 2, 1998 AND NINE MONTHS ENDED OCTOBER 1, 1999
The fiscal years referenced herein are as follows:
FISCAL YEAR YEAR ENDED
----------- ----------
1999 December 31, 1999
1998 January 1, 1999
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of MiniMed Inc.
("MiniMed") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In our opinion, all normal, recurring adjustments
considered necessary for a fair presentation have been included. The financial
statements should be read in conjunction with the audited financial statements
included in the Annual Report of MiniMed Inc. filed on Form 10-K with the
Securities and Exchange Commission for the year ended January 1, 1999. The
results of operations for the nine months ended October 1, 1999 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1999.
NOTE 2. INCOME TAXES
Net income and earnings per share reflect income taxes which have been
recorded at our estimated effective tax rate for the year. This estimated income
tax rate has been determined by giving consideration to the pretax earnings and
losses applicable to foreign and domestic tax jurisdictions.
NOTE 3. WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES
OUTSTANDING
In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" (SFAS 128), basic earnings per share for the three and nine
months ended October 2, 1998 and October 1, 1999, were computed by dividing net
income by weighted average common shares outstanding during the periods
presented. Diluted earnings per share for the periods presented were computed by
dividing net income by weighted average common and common equivalent shares
outstanding, computed in accordance with the treasury stock method. The
computation of basic and diluted EPS is as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------------- --------------------------------
OCTOBER 2, OCTOBER 1, OCTOBER 2, OCTOBER 1,
1998 1999 1998 1999
----------- ----------- ----------- -----------
(Unaudited)
BASIC EPS COMPUTATION
Numerator:
Net income applicable to common stock $ 3,217,000 $ 5,816,000 $ 8,270,000 $14,471,000
----------- ----------- ----------- -----------
Denominator:
Weighted average common shares outstanding 26,832,000 30,894,000 26,674,000 29,166,000
----------- ----------- ----------- -----------
Basic earnings per share $ 0.12 $ 0.19 $ 0.31 $ 0.50
=========== =========== =========== ===========
DILUTED EPS COMPUTATION
Numerator:
Net income applicable to common stock $ 3,217,000 $ 5,816,000 $ 8,270,000 $14,471,000
----------- ----------- ----------- -----------
Denominator:
Weighted average common shares outstanding 26,832,000 30,894,000 26,674,000 29,166,000
Effect of dilutive securities
Stock options 1,484,000 1,864,000 1,418,000 1,862,000
----------- ----------- ----------- -----------
Diluted weighted average shares outstanding 28,316,000 32,758,000 28,092,000 31,028,000
----------- ----------- ----------- -----------
Diluted earnings per share $ 0.11 $ 0.18 $ 0.29 $ 0.47
=========== =========== =========== ===========
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MINIMED INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED OCTOBER 2, 1998 AND NINE MONTHS ENDED OCTOBER 1, 1999
NOTE 4. CONSOLIDATED BALANCE SHEET COMPONENTS
Certain balance sheet components are as follows:
JANUARY 1, OCTOBER 1,
1999 1999
------------ ------------
(Unaudited)
Inventories:
Raw materials ............... $ 7,064,000 $ 11,334,000
Work-in-progress ............ 3,040,000 1,715,000
Finished goods .............. 6,756,000 13,558,000
------------ ------------
Total ....................... $ 16,860,000 $ 26,607,000
============ ============
Property, plant and equipment:
Land, buildings and
improvements .............. $ 13,244,000 $ 14,967,000
Machinery and equipment ..... 17,332,000 23,048,000
Tooling and molds ........... 2,352,000 2,988,000
Computer software ........... 1,989,000 6,536,000
Furniture and fixtures ...... 5,301,000 7,577,000
------------ ------------
40,218,000 55,116,000
Less accumulated depreciation (9,180,000) (13,813,000)
------------ ------------
Total ....................... $ 31,038,000 $ 41,303,000
============ ============
Other assets:
Technology license .......... $ 145,000 $ 7,107,000
Goodwill in connection with
Dartec acquisition ....... 2,670,000 2,546,000
Goodwill in connection with
DSS acquisition .......... 8,444,000 8,189,000
Other ....................... 263,000 238,000
------------ ------------
Total ....................... $ 11,522,000 $ 18,080,000
============ ============
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MINIMED INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED OCTOBER 2, 1998 AND NINE MONTHS ENDED OCTOBER 1, 1999
NOTE 5. COMPREHENSIVE INCOME
The Company's total comprehensive income is as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------------- -----------------------------------
OCTOBER 2, OCTOBER 1, OCTOBER 2, OCTOBER 1,
1998 1999 1998 1999
------------ ------------ ------------ ------------
(Unaudited)
Net income .............................. $ 3,217,000 $ 5,816,000 $ 8,270,000 $ 14,471,000
Other comprehensive income (loss):
Foreign currency translation
adjustments ....................... 35,000 42,000 37,000 (74,000)
Unrealized gain (loss) on securities . (676,000) 745,000 (2,549,000) 1,843,000
------------ ------------ ------------ ------------
Other comprehensive income (loss),
before tax ........................ (641,000) 787,000 (2,512,000) 1,769,000
Income tax expense related to items of
other comprehensive income ........ (258,000) 283,000 (969,000) 700,000
------------ ------------ ------------ ------------
Other comprehensive income (loss) .... (383,000) 504,000 (1,543,000) 1,069,000
------------ ------------ ------------ ------------
Total comprehensive income .............. $ 2,834,000 $ 6,320,000 $ 6,727,000 $ 15,540,000
============ ============ ============ ============
NOTE 6. CONTINGENCIES
In October 1998, we filed a complaint against Robert Kusher and Craig
Lowy, the former owners of Home Medical Supply, Inc. and related companies, in
the United States District Court for the Southern District of Florida, Ft.
Lauderdale Division. The complaint alleges that Mr. Kusher and Mr. Lowy engaged
in fraudulent misrepresentation, negligent misrepresentation and breach of
contract relating to the sale of HMS to us and specific billing practices
carried on prior to the sale. We are seeking several remedies including
declaratory relief as to our rights under the acquisition and/or indemnification
for any liability arising out of these billing practices. The allegations
regarding billing practices could give rise to claims against us by the State of
Florida.
On February 9, 1999, we were served with a complaint filed in the Civil
District Court For the Parish of Orleans, State of Louisiana, by Diabetes
Resources, Inc., which is also known as Insulin Infusion Specialties, and which
we will refer to as IIS. IIS entered into an Educational Dealer Agreement with
us in July, 1997, relating to the distribution of some of our products by IIS.
We declined to renew that agreement, pursuant to its
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MINIMED INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED OCTOBER 2, 1998 AND NINE MONTHS ENDED OCTOBER 1, 1999
terms as of December 31, 1998. IIS is alleging that we are engaged in unfair
competition and monopolization, price discrimination, breached the agreement,
violated applicable trade secret laws and defamed IIS. IIS did not specify the
amount of damages it is seeking in its complaint. We believe that we have
meritorious defenses to IIS's claims. We removed the action to Federal Court,
and filed an answer denying the material allegations, and filed a counterclaim
seeking damages for unfair trade practices and damages based on IIS's failure to
pay amounts due and owing to MiniMed under the Educational Dealer Agreement.
Trial in the matter has been set for an undetermined date not prior to March
24, 2000. Discovery in this litigation is in its preliminary stages.
During the normal course of business, the Company may be subject to
litigation involving various business matters. Management believes that an
adverse outcome of any such known matters would not have a material adverse
impact on the Company.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the related notes thereto included elsewhere in this quarterly
report. Some of the information in this quarterly report contains
forward-looking statements, including statements relating to anticipated
operating results, margins, growth, financial resources, capital requirements,
adequacy of the Company's capital resources, trends in spending on research and
development, the development of new markets, the development, regulatory
approval, manufacture, distribution, and commercial acceptance of new products,
future product development efforts, our manufacture and distribution of a new
disposable pump, the exercise of an option to purchase certain technologies or
paid-up licenses, new applications for our existing product lines and our
readiness for the Year 2000 are made pursuant to the Safe Harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that forward-looking statements involve risks and uncertainties which may affect
our business and prospects, including changes in economic and market conditions,
acceptance of our products by the health care and reimbursement communities,
health care legislation and regulation, new developments in diabetes therapy,
administrative and regulatory approval and related considerations, competitive
developments, maintenance of strategic alliances, the Year 2000 readiness of
third parties we do business with and other factors discussed in our filings
with the Securities and Exchange Commission.
GENERAL
Our sales and profits have been generated primarily through the sale of
external pumps and related disposable products used to deliver insulin in the
intensive management of diabetes. Additionally, through our acquisitions of Home
Medical Supply, Inc., which we call HMS, Dartec AB, a Swedish distributor which
we call Dartec, and Diabetes Support Systems, Inc., which we call DSS, we also
have broadened our product offerings to include other diabetes supplies and
pharmacy products generally used in the treatment of this disease. We distribute
these products nationally and in some foreign countries.
Current product development and manufacturing operations are focused on
two product lines: external insulin pumps and related disposables and continuous
glucose monitoring systems. Future development of the external pump and
disposable product line will focus upon improving the existing technology for
its current use in diabetes treatment and the utilization of this technology for
the treatment of other medical conditions. On June 15, 1999, we received FDA
approval of the first generation of our continuous glucose monitoring system. We
recently initiated commercial distribution for this product line in a limited
manner, and commercial success will be subject to our ability to implement
successfully manufacturing, sales, marketing and reimbursement plans. Sales of
the implantable pump product line have been and will continue to be limited
until full regulatory approval is obtained.
During 1999, we entered into two strategic relationships which will
affect future product development efforts. In February 1999, we entered into an
agreement with Eli Lilly and Company giving us a worldwide license to package
and sell a new formulation of Lilly's insulin lyspro for use with our
programmable insulin infusion pumps. In June 1999, we entered into agreements
with a division of Elan Corporation, PLC to manufacture and market exclusively
under our name a disposable, constant-flow infusion system developed by Elan to
deliver insulin. We will also manufacture this infusion system for Elan and its
other licensees for use with a variety of other pharmaceutical compounds.
Products related to these agreements are subject to regulatory approval.
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RESULTS OF OPERATIONS
The following table sets forth, for the three and nine month periods
ended October 1, 1999, and October 2, 1998, the percentage relationship to net
sales of some items in our consolidated statements of income and the percentage
change in the dollar amount of these items on a comparative basis.
PERCENTAGE OF NET SALES
------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------- ---------------------------------------
OCTOBER 1, OCTOBER 2, % INCREASE OCTOBER 1, OCTOBER 2, % INCREASE
1999 1998 (DECREASE) 1999 1998 (DECREASE)
---------- ---------- ---------- ---------- ---------- ----------
(Unaudited)
Net sales 100.0% 100.0% 47.3% 100.0% 100.0% 52.1%
Cost of sales 32.1 37.5 26.2 33.0 39.3 27.7
---------- ---------- ---------- ---------- ---------- ----------
Gross profit 67.9 62.5 59.9 67.0 60.7 72.8
Operating expenses:
Selling, general and administrative 44.4 41.9 55.8 42.7 40.8 59.0
Research and development 12.4 11.2 64.3 12.9 11.8 66.8
Research and development contract (2.9) (4.3) -- (3.2) (4.8) --
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 53.9 48.8 62.6 52.4 47.8 66.9
---------- ---------- ---------- ---------- ---------- ----------
Operating income 14.0% 13.7% 50.2% 14.6% 12.9% 71.4%
========== ========== ========== ========== ========== ==========
The following table sets forth domestic and international net sales and
gross profits for our significant business activities for the three and nine
month periods ended October 1, 1999 and October 2, 1998.
DOLLARS IN THOUSANDS % OF NET SALES
THREE MONTHS ENDED NINE MONTHS ENDED THREE MONTHS ENDED NINE MONTHS ENDED
----------------------- ----------------------- ------------------- -------------------
OCT. 1, OCT. 2, OCT. 1, OCT. 2, OCT. 1, OCT. 2, OCT 1, OCT 2,
1999 1998 1999 1998 1999 1998 1999 1998
--------- --------- --------- --------- ------- ------- ------- --------
(Unaudited)
NET SALES:
Diabetes products:
External pumps and
related disposables
Domestic $ 43,935 $ 28,637 $ 119,634 $ 72,965 85.5% 82.1% 84.6% 78.5%
International 3,614 2,688 11,157 7,644 7.0 7.7 7.9 8.2
--------- --------- --------- --------- ------- ------- ------- -------
Subtotal 47,549 31,325 130,791 80,609 92.5 89.8 92.5 86.7
Implantable insulin pumps 393 143 945 482 0.8 0.4 0.7 0.5
Other diabetes supplies 2,510 1,364 6,405 4,334 4.9 3.9 4.5 4.7
--------- --------- --------- --------- ------- ------- ------- -------
Total diabetes products 50,452 32,832 138,141 85,425 98.2 94.1 97.7 91.9
Pharmacy products 948 2,065 3,253 7,554 1.8 5.9 2.3 8.1
--------- --------- --------- --------- ------- ------- ------- -------
Total net sales $ 51,400 $ 34,897 $ 141,394 $ 92,979 100.0% 100.0% 100.0% 100.0%
========= ========= ========= ========= ======= ======= ======= =======
GROSS PROFIT:
External pumps and
related disposables $ 33,978 $ 21,577 $ 92,303 $ 55,544 66.1% 61.8% 65.3% 59.7%
Implantable insulin pumps (357) (294) (717) (1,656) (0.7) (0.8) (0.5) (1.8)
Other diabetes supplies 1,267 481 2,513 1,655 2.5 1.4 1.7 1.8
--------- --------- --------- --------- ------- ------- ------- -------
Total diabetes products 34,888 21,764 94,099 55,543 67.9 62.4 66.5 59.7
Pharmacy products 10 62 675 925 0.0 0.2 0.5 1.0
--------- --------- --------- --------- ----- ----- ----- -----
Total gross profit $ 34,898 $ 21,826 $ 94,774 $ 56,468 67.9% 62.6% 67.0% 60.7%
========= ========= ========= ========= ======= ======= ======= =======
NET SALES
Net sales increased 47.3% during the three months ended October 1, 1999 over the
three months ended October 2, 1998 to $51,400,000 from $34,897,000, and
increased 52.1% to $141,394,000 in the first nine months of 1999 from
$92,979,000 for the first nine months of 1998. This sales growth is principally
the result of an increase in the sales of external pumps and related
disposables. In the third quarter of 1999 sales of these products increased
51.8%, or $16,224,000 over the third quarter of 1998, and $50,182,000 or 62.3%
for the first nine months of 1999 over the corresponding period of 1998.
Domestic sales of these products grew 53.4% or $15,298,000 in the third quarter
of 1999 compared to the third quarter of 1998, while international sales
increased 34.4% or $926,000 during the same period. For the first nine months of
1999, domestic sales of external pumps and related disposable products increased
by 64.0% while foreign sales of these products increased by 46.0% over the
comparable period of 1998.
The domestic net sales growth was derived primarily from increased volume of
external pumps and related disposables combined with an increase in average
prices realized on external pump sales. The higher domestic external pump price
resulted from the continued shift of sales through our direct sales
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organization rather than through independent dealers, which receive discounts on
these products. We have recently launched our next generation external pump
which has a higher list price. However, due to certain contractual obligations
with managed care entities, we do not believe that this price increase will
result in improved margins or sales in the immediate future. International sales
of external pumps and related disposable products grew primarily due to greater
sales volumes of external pumps, while pricing of external pumps in the
international market in the third quarter of 1999 remained consistent with the
comparable periods of 1998. Domestic and international pricing for disposable
products did not change materially from the first nine months of 1998 to the
first nine months of 1999.
Sales of implantable pumps increased 174.8% or $250,000 from the third
quarter of 1998 to the third quarter of 1999, while sales of these products for
the first nine months of 1999 increased 96.1% or $463,000 over the first nine
months of 1998. While we have obtained regulatory approval for the implantable
pump in Europe, the special insulin utilized by the pump has not been approved
in Europe. No approvals have been obtained in the United States. Sales of
implantable pumps to date have been generated mainly in connection with clinical
trials and compassionate use of the pumps. No assurance can be given as to when
these approvals will be received, if at all.
Sales of other diabetes supplies increased by 84.0% or $1,146,000 from
the third quarter of 1998 to the third quarter of 1999, while sales of these
products for the first nine months of 1999 increased by 47.8% or $2,071,000 over
the first nine months of 1998. This increase is volume based as we have added
new customers and expanded our 1999 diabetes customer base through our
acquisition of DSS. Average sales prices, however, have decreased for these
products due to reimbursement trends. Pharmacy products sales decreased by 54.1%
or $1,117,000 from the third quarter of 1998 to the third quarter of 1999, while
sales of these products for the first nine months of 1999 decreased by 56.9% or
$4,301,000 compared to the first nine months of 1998. The pharmacy operation
historically distributed products to treat a number of medical conditions,
including diabetes, HIV/AIDS and renal failure. The 1999 sales decrease resulted
primarily from our continued narrowing and restructuring of the pharmacy
operations.
OPERATING RESULTS
Cost of Sales and Gross Profit--Cost of sales increased 26.2% during
the three months ended October 1, 1999 over the three months ended October 2,
1998 to $16,502,000 from $13,071,000, and increased 27.7% to $46,620,000 from
$36,511,000 for the nine months ended October 1, 1999 as compared to the nine
months ended October 2, 1998. As a percentage of net sales, cost of sales in the
1999 third quarter decreased to 32.1% from 37.5% in the comparable period of
1998, while cost of sales as a percentage of net sales for the first nine months
of 1999 decreased to 33.0% from 39.3% for the comparable period of 1998. Gross
margins on external pumps and disposables increased to 71.5% of pump and
disposable sales during the 1999 third quarter compared to 68.9% for this
product line during the 1998 third quarter. For the first nine months of 1999
gross margins on external pumps and disposables increased to 70.6% compared to
68.9% for the comparable period in 1998. The improvement in year-to-date and
quarterly gross margins on these products was primarily the result of the
increase in average prices on external pump sales, a reduction in the cost of
certain disposable products that we purchase from contract manufacturers due to
rebates and volume discounts, and manufacturing efficiencies due to increased
volumes.
Our overall gross profits continue to be adversely impacted by the
implantable pump product line due to continued limited sales prior to full
commercial release. We sold assets and transferred technology related to this
product line on September 1, 1998 to Medical Research Group, Inc., an affiliate
which we call MRG. MRG has assumed all manufacturing and product development
activities relating to the implantable pump. Implantable pump gross margins as a
percent of implantable pump sales improved during both the 1999 third quarter
and the first nine months of 1999 compared to the comparable periods in 1998 due
to this transaction. We expect this improvement in margins to continue in the
short-term as a result of the MRG transaction, however, in the long-term,
margins may be reduced due to the transfer of the manufacturing operation to MRG
and as our role has been converted to an exclusive distributor of this product.
We are required to purchase minimum quantities of implantable pump units from
MRG at negotiated prices. MiniMed must also purchase minimum quantities beyond
2001 in order to preserve our exclusive distribution rights. The date by which
these purchase commitments must be satisfied may be extended if and to the
extent MRG fails to complete specific technology improvements to the implantable
pump. Current minimum purchase commitments for implantable pumps based upon
current prices are:
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Through December 31, 2000......... $10,354,000
In 2001 .......................... 8,935,000
-----------
Total ....................... $19,289,000
===========
Gross margins for other diabetes supplies increased to 50.5% of
diabetes supplies sales during the 1999 third quarter compared to 35.3% of
diabetes supplies sales during the comparable period in 1998. Gross margins for
this product line increased to 39.2% of diabetes supplies sales during the first
nine months of 1999 compared to 38.2% of diabetes supplies sales during the
comparable period in 1998. The improvement in the 1999 gross margins for other
diabetes supplies resulted from lower costs on several of these products due to
volume rebates earned. Average sales prices of these products continue to
decline due to current reimbursement trends.
Gross profits on pharmacy products decreased 83.9% to $10,000 during
the third quarter of 1999, compared to $62,000 during the third quarter of 1998.
Pharmacy products gross margins also decreased 27.0% to $675,000 for the first
nine months of 1999, compared to $925,000 for the first nine months of 1998.
These fluctuations in pharmacy products gross margins were primarily due to our
restructuring of the pharmacy operations as described above.
Operating Expenses--Selling, general and administrative expenses
increased 55.8% during the three months ended October 1, 1999 as compared to the
three months ended October 2, 1998 to $22,809,000 from $14,643,000. For the nine
months ended October 1, 1999, selling, general and administrative expenses grew
59.0% to $60,344,000 from $37,963,000 for the nine months ended October 2, 1998.
As a percentage of net sales, these expenses increased to 44.4% during the third
quarter of 1999 and to 42.7% during the first nine months of 1999 compared to
42.0% during the third quarter of 1998 and to 40.8% for the first nine months of
1998. These expenses have increased on an overall basis and as a percentage of
sales primarily due to our continued spending to support our worldwide sales
growth. These increases include variable costs related to field sales expenses,
significant increases in marketing and customer support, European expansion
through our subsidiaries and general and administrative staffing increases to
support these activities.
Research and development expenses grew 64.3% during the third quarter
of 1999 over the third quarter of 1998 to $6,394,000 from $3,892,000, with
research and development expenses increasing 66.8% to $18,262,000 for the first
nine months of 1999 compared to $10,946,000 for the first nine months of 1998.
As a percentage of sales, research and development expenses increased to 12.4%
during the third quarter of 1999 from 11.2% during the comparable period in
1998, and increased to 12.9% of net sales for the first nine months of 1999
compared to 11.8% during the first nine months of 1998. The 1999 increase in
research and development costs resulted from greater resources directed to the
development of continuous glucose monitoring systems, start-up manufacturing
operations of the continuous glucose monitoring systems, development of future
generation external insulin pumps and related disposable products and data
communication capabilities for external pumps and continuous glucose monitoring
systems. We anticipate that research and development expenditures for future
periods will continue to increase as we commercialize new products and develop
manufacturing operations for our constant-flow infusion system and the Lilly
insulin lyspro.
During the 1998 first quarter, we signed a research and development
contract with American Medical Instruments, Inc., which we call AMI, a member of
The Marmon Group of companies. Under terms of the agreement, and subject to the
achievement of quarterly performance milestones, we can receive up to $12.0
million in funding, payable in quarterly installments of $1.5 million, for two
research and development projects. Subject to payment of royalties to AMI, we
will have the right to sell products utilizing the technology pursuant to the
agreement on a worldwide basis, with the exception of Japan. We also have the
right to either purchase the technologies developed or acquire a fully paid-up
exclusive worldwide license for these technologies, in either case at prices
ranging from an aggregate of $13.5 million to $19.0 million subject to downward
adjustment during specific periods through April 30, 2002. During the third
quarter of both 1998 and 1999, we recorded $1.5 million from this research and
development contract as a reduction of operating expenses as costs related to
completion of the contractual obligations will be included in research and
development expense.
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From time to time, we invest in new and developing technologies that
may provide improvements to our core technology or that may provide additional
applications for our existing technologies and products. These investments may
be in the form of equity investments, loans, research and development
agreements, and strategic alliance or cooperation agreements. No assurance can
be given as to when these investments will provide useful new technologies or
applications, if at all. Such investments may result in losses that could
adversely affect our future earnings and results of operations.
Other--During the three and nine months ended October 1, 1999 and
during the three and nine months ended October 2, 1998, other income consisted
primarily of interest income generated from our cash, cash equivalents, and
short-term investment balances.
LIQUIDITY AND CAPITAL RESOURCES
We generated cash from operations of $3,499,000 during the nine months
ended October 1, 1999, whereas we used cash in operations of $4,580,000 during
the nine months ended October 2, 1998. Cash flow from operations during the
first nine months of 1999 improved over 1998 due to the effect of the tax
benefit realized from non-qualified stock option exercises. This improvement in
1999 cash flow from operations was partially offset by increases in inventory
and accounts receivable balances during the period. We continued to increase
finished goods inventory levels during the third quarter of 1999 to support the
historically higher sales volumes we have experienced in the fourth quarter and
to support our launch of a new model external insulin pump.
Capital expenditures during the first nine months of 1999 were
$14,905,000 compared to $14,899,000 during the first nine months of 1998. Our
1998 and 1999 capital expenditures related primarily to building manufacturing
capacity for the continuous glucose monitoring systems, as well as other
building improvements, manufacturing expansion, research and development
engineering equipment and information systems upgrades to support growth. We
anticipate that future capital expenditures will continue to increase in support
of our new product activities, including expenditures for start-up manufacturing
operations for our new disposable continuous drug delivery system that we will
exclusively manufacture on a worldwide basis, and to build the infrastructure
necessary to accommodate our anticipated growth. During the third quarter of
1999, we paid $7.0 million to Elan for license fees related to the disposable
continuous drug delivery system. Additional license fees ranging between $8.0
million and $13.0 million will be due in future periods subject to certain
conditions and attainment of certain milestones.
We received $140,588,000 during the first nine months of 1999 in
connection with our recent public offering of 2,172,500 shares of our common
stock net of expenses. There were no significant equity transactions during the
first nine months of 1998.
In May 1999, we entered into a financing transaction pursuant to which
we will construct a corporate headquarters, research and development and
manufacturing facility on the campus of California State University, Northridge,
the first phase of which will be financed with a $65.0 million credit
transaction. The transaction was structured as a synthetic lease financing for
this facility and, in a related transaction, we obtained a revolving line of
credit to borrow up to $15 million. Under the terms of the financing, a special
purpose trust subleases the land to us and leases the improvements to us. In
connection with these financing transactions, we pledged substantially all of
our assets as collateral security, and are subject to various affirmative and
negative covenants regarding the conduct of our business. These arrangements
could adversely affect our ability to obtain additional capital or acquire
additional capital resources. The synthetic lease has a term of five years, with
two one-year renewal options. The underlying ground lease has a term of 40 years
with renewal options for up to an additional 40 years. Under these arrangements,
we are committed to annual payments ranging from $4.5 million to $5.0 million
commencing sometime during the second half of 2000. Additionally, we are
committed to payments of $400,000 during 1999 and to average annual payments in
future periods of approximately $450,000, plus periodic cost of living
adjustments, per the terms of the ground lease for the Northridge property.
These lease payments will be recorded as rent expense in future periods after
construction of our new corporate headquarters is completed. When the synthetic
lease terminates, we will be able to assume the obligations of the special
purpose trust as the lessee under the ground lease if we exercise our option to
purchase.
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In the process of integrating some HMS operations, we discovered
specific business practices relating to charges billed to the State of Florida
which were implemented by prior ownership and that may result in liability.
These billing activities were related to business activities of an affiliated
pharmacy. We have received no notice of any action which is pending or
threatened against HMS in connection with the billing activities. We have
corrected the practices, notified the State of Florida of our findings and have
initiated legal action against the prior owners to seek indemnification for any
related liability that we may incur. The amount of liability, if any, cannot be
determined at this time, although we believe that indemnification for liability
would be available from the prior owners. We also are involved in other
litigation, the financial impact of which is uncertain (see notes to
consolidated financial statements.)
We received $4.5 million during the first nine months of 1998 and 1999
under terms of our research and development contract with AMI. As indicated
above, we have the right to purchase the technologies developed or acquire a
fully paid-up, exclusive worldwide license for these technologies, in either
case at prices ranging from an aggregate of $13.5 million to $19.0 million,
subject to downward adjustment, during specific periods through April 30, 2002,
or may alternatively elect to pay royalties on sales of products utilizing the
technology developed pursuant to the contract. We have also entered into an
agreement by which, among other transactions, we have acquired an option to
purchase the exclusive worldwide marketing rights to a long-term glucose sensor
and related products being developed by MRG for $30.0 million within 90 days of
MRG's first successful human implant in a clinical trial performed in accordance
with applicable regulatory requirements. To retain our exclusive marketing
rights, we are required to purchase minimum quantities of some products from
MRG. We do not anticipate exercising this option prior to 2000. In the event
that we pursue either of these opportunities, additional capital resources may
be required.
Management believes that our current level of our cash and cash
equivalent and short term investments will be sufficient to meet our needs for
working capital and capital expenditures for the next twenty-four months. The
requirements for additional capital and working capital, however, are subject to
change and will depend upon numerous factors, including:
- the level of capital expenditures, especially relating to new
corporate headquarters;
- research and development activities and results;
- competitive and technological developments;
- health care reimbursement trends; and
- the availability for our acquisition of complementary
additional distribution channels, products, and technologies.
During future periods, we may require significant amounts of cash to
pursue opportunities and promote continued growth and expansion.
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YEAR 2000 COMPLIANCE
The Year 2000 problem, or Y2K, refers to the potential of all
electronic devices to improperly calculate dates in and beyond the year 2000. In
the second quarter of 1998, we formed a Year 2000 Oversight Committee to
evaluate our position regarding Y2K. The committee consists of members
representing all of the major operating and administrative departments within
MiniMed including information technology, facilities, manufacturing, research
and development, regulatory, quality assurance, materials, finance and
accounting and legal.
The committee established an Action Plan Program to facilitate our Y2K
compliance and minimize the potential effects of Y2K on our operations. The
components of the plan include the following steps:
- assess Y2K compliance of our products;
- inventory our equipment and software, including
non-information systems equipment and software and prioritize
according to critical business functions;
- implement Y2K compliance testing and remediation according to
priorities developed;
- assess vendor and health care payor compliance;
- develop and implement policies to maintain Y2K compliance
going forward; and
- establish contingency plans.
A timetable for the completion of each of these action steps contained
in the plan has been developed by the committee. The committee meets regularly
to assess our efforts to comply with the plan and to address any outstanding Y2K
issues. The committee is also responsible for coordinating all communications
and responding to all inquiries relating to Y2K.
Products
We have completed our evaluation of the Y2K readiness and impact on our
current and impending product offerings. Such evaluation has shown that Y2K will
not pose operating problems for these products. Products that were manufactured
and distributed prior to the Company's Y2K preparedness efforts (all model
external insulin pumps prior to the model 507C) do not utilize or maintain
month-day-year data. Only day of the week data is utilized for recording event
history and programming for insulin delivery. Current and impending products
that do maintain month-day-year data have been designed and programmed to ensure
year 2000 compatibility. Specifically, the Company has confirmed that such
products will not function abnormally or provide invalid or incorrect results
caused by processing date data up to the year 2000 and beyond.
Inventory
As of the end of the second quarter of 1999, we had completed the
process of creating a master inventory of all equipment and software vulnerable
to Y2K. Additionally, the Company has prioritized the impact of all such
equipment and software on our critical business processes. This process was
coordinated by personnel in the Company's Information Technology Group that are
dedicated to preparing the Company for Y2K. When appropriate, we have engaged
the services of independent consultants to support our internal personnel
working on this project to analyze and develop testing standards and approaches.
Remediation
To date, remediation programs to address problems that had been
identified are substantially complete. We have remediated approximately eleven
hundred (1,100) personal computers, fifty-six (56) servers, manufacturing
systems utilizing embedded chips to process information, as well as the
Company's
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communication systems, security systems, environmental control systems and
various other pieces of equipment and machinery. We have also substantially
completed our remediation efforts relating to our internal software systems and
applications. These include all material software systems utilized on a Company
wide basis, all of our enterprise network applications (including accounting,
control and sales management systems) and material internally developed software
applications. We are currently in the final stages of testing these systems to
insure Y2K functionality.
Vendor Compliance
We have initiated formal communication with our vendors to assess their
compliance with and readiness for Y2K. Questionnaires have been developed and
distributed to vendors. These questionnaires, when returned by a vendor, have
been evaluated to assess the Y2K risk presented by that vendor. A subset of the
Company's vendors have been identified as critical to the Company's continuing
operations. On site evaluations at several of these critical vendors' sites of
operations have been conducted. To date, approximately 98% of the Company's
vendors have returned completed Y2K readiness questionnaires. Included in these
responses are all of the completed Y2K readiness questionnaires relating to the
Company's critical vendors. The Company's focus has been on analyzing the
responses of these critical vendors.
Risks
The Company expects that it has, or will, implement the modifications
necessary to address any Y2K issues that the Company may have. We currently
believe that, with the modifications made to existing software, conversion to
new software and appropriate remediation of effected hardware (including
equipment and machinery), Y2K is not reasonably likely to pose significant
operational problems for the Company. However, if unforeseen difficulties arise
or such modifications, conversions or remediation prove ineffective, Y2K may
have a material adverse impact on the results of operations and financial
condition of the Company.
We suspect that our greatest Y2K risk will be that of vendor
compliance. We rely on our vendors to supply us with critical components
necessary for the manufacture and distribution of our products. The Y2K
compliance of insurance companies, management service organizations, and other
third-party payors who provide revenue to the Company, over which we have no
control, also presents a risk to the operations of the Company. While the
Company has taken steps in evaluating and minimizing these risks, we cannot
assure that there will not be significant operational Y2K issues caused by
unresolved Y2K problems with the systems of third parties over which we have no
control. We believe that the plan, implemented by the committee, has
significantly reduced both our level of uncertainty about the Y2K problem and
the possibility of significant interruptions to normal operations. Although the
Company has not been put on notice of, or discovered any, third party problem
that will not be timely resolved, the Company has limited information and
assurances concerning the Y2K readiness of third parties. The resulting risks to
the Company's business are very difficult to assess due to the large number of
variables involved. If third parties fail to achieve Y2K compliance, Y2K
problems could have a material adverse impact on the Company's operations.
Contingency Plans
The Company believes that our most reasonably likely worst case
scenario would relate to the failure of third party systems over which the
Company has no control and for which the Company has no ready substitute, such
as, but not limited to, systems of critical vendors, utilities and
communications. A failure of such systems may result in an interruption in, or
failure of, normal business activities and could materially impact our results
of operations and financial position. Due to the general uncertainty inherent in
the Y2K problem, resulting primarily from the uncertainty of the Y2K readiness
of our vendors and suppliers, we are unable to determine at this time whether
the consequences of Y2K failures will have a material adverse impact on us.
The Company has, however, instituted a Y2K contingency plan which is
designed to ameliorate the effect of any Y2K problems actually encountered. The
contingency plan contemplates a potential problem with the Company's internal
systems, a problem with continuing availability of certain component parts
provided by
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vendors and possible loss of utility services such as power and communications.
Specifically, inventory policies have been reevaluated to mute the impact of a
loss of a critical vendor, alternative power sources have been dedicated to
critical areas, and contingency communication procedures have been implemented.
The Company has also implemented plans to limit the amount of data that may be
lost in case of a major internal system problem and procedures in all functional
areas have been changed to reflect such plans. While the Company believes that
these plans will lessen the impact of any unforeseen Y2K problem, the Company
cannot assure that such a problem will not have a material adverse impact on our
results of operations and financial position of the Company.
Cost
In the performance of our previously described Y2K compliance
activities we expect to spend less than $1,000,000. Management currently
believes that we have adequate working capital to fund these activities.
Readers are cautioned that forward looking statements contained in this
Year 2000 Compliance section should be read in conjunction with our cautionary
language in the first paragraph of Management's Discussion and Analysis of
Financial Condition and Results of Operations on page 10.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 31, 1999, we entered into a settlement agreement and mutual
release with Fimed, Inc. relating to the litigation then pending in Los
Angeles County Superior Court. Neither Fimed nor MiniMed acknowledged or
admitted any liability as part of the settlement. As stipulated in the
agreement, terms of the settlement will be kept confidential.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Exhibit
- ----------- ----------------------------------------------------------------------
3(ii).1 Amendment to Bylaws of MiniMed Inc.
10.1 First Amendment to Stock Pledge Agreement made by MiniMed in favor of
ING (U.S.) Capital LLC dated as of June 24, 1999.
10.2 Change of Control Agreement dated August 12, 1999 between MiniMed Inc.
and Stephen Bowman.
10.3 Third Amended and Restated 1994 Stock Incentive Plan (Incorporated by
reference from Exhibit 4.1 to Post Effective Amendment No. 2 to the
Company's Registration Statement on Form S-8 filed by the Company on
September 16, 1999, registration no. 33-95630).
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
Current Report on Form 8-K filed August 31, 1999, announcing the execution
of a settlement agreement and mutual release with Fimed, Inc. relating to the
litigation then pending in Los Angeles County Superior Court.
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SIGNATURE
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.
MiniMed Inc.
Date: November 15, 1999 /s/ KEVIN R. SAYER
-------------------------------------
Kevin R. Sayer
Senior Vice President, Finance &
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- ----------------------------------------------------------------------
3(ii).1 Amendment to Bylaws of MiniMed Inc.
10.1 First Amendment to Stock Pledge Agreement made by MiniMed in favor of
ING (U.S.) Capital LLC dated as of June 24, 1999.
10.2 Change of Control Agreement dated August 12, 1999 between MiniMed Inc.
and Stephen Bowman.
10.3 Third Amended and Restated 1994 Stock Incentive Plan (Incorporated by
reference from Exhibit 4.1 to Post Effective Amendment No. 2 to the
Company's Registration Statement on Form S-8 filed by the Company on
September 16, 1999, registration no. 33-95630).
27.1 Financial Data Schedule.
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