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 July 1, 2001
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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: 0-17919
SURGICAL LASER TECHNOLOGIES, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1093148
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
147 Keystone Drive
Montgomeryville, PA 18936
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(Address of principal executive offices)
(Zip Code)
(215) 619-3600
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed
since last report)
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 ( )
On August 3, 2001 the registrant had outstanding 2,327,965 shares of Common
Stock, $.0l par value.
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
INDEX
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PART I. FINANCIAL INFORMATION: PAGE
- ------------------------------ ----
ITEM 1. Financial Statements:
a. Condensed Consolidated Balance Sheets
July 1, 2001 (unaudited) and December 31, 2000 3
b. Condensed Consolidated Statements of Operations and Other
Comprehensive Income (unaudited) for the quarters ended
July 1, 2001 and July 2, 2000 4
c. Condensed Consolidated Statements of Operations and Other
Comprehensive Income (Loss) (unaudited) for the six months
ended July 1, 2001 and July 2, 2000 5
d. Condensed Consolidated Statements of Cash Flows (unaudited)
for the six months ended July 1, 2001 and July 2, 2000 6
e. Notes to Condensed Consolidated Financial Statements (unaudited) 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION:
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SIGNATURES 13
2
PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
July 1, 2001 Dec. 31, 2000
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 59 $ 702
Short-term investments 2,113 1,698
Accounts receivable, net of allowance for doubtful accounts of $441 and $487 1,823 1,825
Inventories 2,729 2,182
Other 332 230
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Total current assets 7,056 6,637
Property and equipment, net 3,153 3,186
Patents and licensed technology, net 396 433
Goodwill, net 615 632
Other assets 75 45
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Total assets $ 11,295 $ 10,933
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 130 $ 58
Accounts payable 681 376
Accrued liabilities 337 516
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Total current liabilities 1,148 950
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Long-term debt 2,653 2,300
Stockholders' equity:
Common stock, $.01 par value, 30,000 shares authorized, 2,328 shares issued
and outstanding 23 23
Additional paid-in capital 33,716 33,716
Accumulated deficit (26,258) (26,080)
Accumulated other comprehensive income 13 24
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Total stockholders' equity 7,494 7,683
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Total liabilities and stockholders' equity $ 11,295 $ 10,933
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
For the Quarter Ended:
July 1, 2001 July 2, 2000
Net sales $2,685 $2,022
Cost of sales 1,262 959
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Gross profit 1,423 1,063
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Operating expenses:
Selling, general and administrative 1,224 884
Product development 156 164
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1,380 1,048
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Operating income 43 15
Interest expense 46 17
Interest income (39) (44)
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Net income $ 36 $ 42
====== ======
Basic and diluted net income per share $ 0.02 $ 0.02
====== ======
Shares used in calculating basic net income per share 2,328 2,101
Shares used in calculating diluted net income per share 2,328 2,132
====== ======
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OTHER COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)
For the Quarter Ended:
July 1, 2001 July 2, 2000
Net income $36 $42
Other comprehensive income:
Unrealized securities gains arising during period 1 --
Less: reclassification for gains included in net income (6) --
--- ---
Decrease in accumulated other comprehensive income (5) --
--- ---
Total comprehensive income $31 $42
=== ===
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
For the Six Months Ended:
July 1, 2001 July 2, 2000
Net sales $4,956 $3,859
Cost of sales 2,442 1,731
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Gross profit 2,514 2,128
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Operating expenses:
Selling, general and administrative 2,383 1,764
Product development 303 310
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2,686 2,074
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Operating income (loss) (172) 54
Interest expense 93 26
Interest income (86) (101)
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Net income (loss) $ (179) $ 129
====== ======
Basic and diluted net income (loss) per share $(0.08) $ 0.06
====== ======
Shares used in calculating basic net income (loss) per share 2,328 2,040
Shares used in calculating diluted net income (loss) per share 2,328 2,081
====== ======
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OTHER COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(In thousands)
For the Six Months Ended:
July 1, 2001 July 2, 2000
Net income (loss) $(179) $129
Other comprehensive income:
Unrealized securities gains arising during period 8 --
Less: reclassification for gains included in net income (loss) (19) --
----- ----
Decrease in accumulated other comprehensive income (11) --
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Total comprehensive income (loss) $(190) $129
===== ====
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
For the Six Months Ended:
July 1, 2001 July 2, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(179) $ 129
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 449 275
Provision for bad debt (46) --
(Increase) decrease in assets, net of acquisition:
Accounts receivable 48 55
Inventories (609) (85)
Other current assets (106) (72)
Other assets (44) 23
Increase (decrease) in liabilities, net of acquisition:
Accounts payable 305 (72)
Accrued liabilities (179) (242)
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Net cash provided by (used in) operating activities (361) 11
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CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchases) sales of short-term investments, net (425) 1,297
Purchases of property and equipment, net (122) (35)
Patent costs (9) (1)
Acquisition costs -- (325)
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Net cash provided by (used in) investing activities (556) 936
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (64) (131)
Net advances on line of credit 338 --
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Net cash provided by (used in) financing activities 274 (131)
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Net increase (decrease) in cash and cash equivalents (643) 816
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 702 277
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 59 $1,093
===== ======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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1 . Basis of Presentation:
The condensed consolidated financial statements of the Company for the quarter
and six-month periods ended July 1, 2001 and July 2, 2000 have been prepared by
the Company without audit by the Company's independent auditors. In the opinion
of the Company's management, all adjustments necessary to present fairly the
financial position, results of operations, and cash flows of the Company as of
July 1, 2001 and for the periods then ended have been made. Those adjustments
consist only of normal and recurring adjustments. The condensed consolidated
balance sheet of the Company as of December 31, 2000 has been derived from the
audited consolidated balance sheet of the Company as of that date.
Certain information and note disclosures normally included in the Company's
annual financial statements prepared in accordance with accounting principles
generally accepted in United States of America have been condensed or omitted.
These condensed consolidated financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's Form
10-K annual report for 2000 filed with the Securities and Exchange Commission.
Interim Financial Information:
While the Company believes that the disclosures presented are adequate to
prevent misleading information, it is suggested that the unaudited condensed
consolidated financial statements be read in conjunction with the audited
consolidated financial statements and notes included in the Company's Form 10-K
report for the fiscal year ended December 31, 2000, as filed with the Securities
and Exchange Commission. Interim results for the quarter ended July 1, 2001 are
not necessarily indicative of the results to be expected for the full year.
2. Supplemental Cash Flow Information:
There were no material income taxes paid for the six months ended July 1, 2001
and July 2, 2000. Interest paid for the six months ended July 1, 2001 and July
2, 2000 was $95,000 and $26,000, respectively. Non-cash investing and financing
activities consisted of the reclassification of lasers to capital lease
agreements for $149,000.
In June 2000, the Company acquired the assets of Surgical Innovations &
Services, Inc. ("SIS") for $300,000 cash and 350,000 shares of the Company's
common stock. In conjunction with the acquisition, liabilities were assumed as
follows (in thousands of dollars):
Fair value of assets acquired $3,809
Cash payment to SIS shareholders (300)
Other cash payments for acquisition costs (25)
Common stock issued (686)
------
Liabilities assumed $2,798
======
3. Inventories:
Inventories are stated at the lower of cost (first-in, first-out basis) or
market. Cost is determined at the latest cost for raw materials and at
production cost (materials, labor and indirect manufacturing cost) for
work-in-process and finished goods.
7
Inventories at July 1, 2001 and December 31, 2000 were as follows (in thousands
of dollars)
July 1, 2001 December 31, 2000
------------ -----------------
Raw material and work-in-process $1,708 $1,300
Finished goods 1,021 882
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$2,729 $2,182
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4. Basic and Diluted Income (Loss) Per Share:
Basic and diluted income (loss) per share have been computed under the
guidelines of Statement of Financial Accounting Standards No. 128 "Earnings per
Share" ("SFAS No. 128") as follows (in thousands except for per share amounts):
For the Quarter Ended For the Six Months Ended
July 1, 2001 July 2, 2000 July 1, 2001 July 2, 2000
------------ ------------ ------------ ------------
Basic EPS Calculation
Net income (loss) $ 36 $ 42 $ (179) $ 129
Denominator:
Common Stock Outstanding 2,328 2,101 2,328 2,040
------ ------ ------ ------
Basic EPS $ 0.02 $ 0.02 $(0.08) $ 0.06
====== ====== ====== ======
Diluted EPS Calculation
Net income (loss) $ 36 $ 42 $ (179) $ 129
Denominator:
Common Stock Outstanding 2,328 2,101 2,328 2,040
Common Stock Options -- 31 -- 41
------ ------ ------ ------
Total Shares 2,328 2,132 2,328 2,081
------ ------ ------ ------
Diluted EPS $ 0.02 $ 0.02 $(0.08) $ 0.06
====== ====== ====== ======
For the quarter and six months ended July 1, 2001, the Company had common stock
options and warrants outstanding of 614,790. The common stock options and
warrants outstanding were excluded from the calculation of diluted earnings per
share because those options' and warrants' exercise prices were greater than the
average market price of the common stock. For the quarter and the six months
ended July 2, 2000, the Company had common stock options and warrants
outstanding of 362,000, of which 31,000 and 41,000 options were included in the
calculation of diluted earnings per share, respectively. The remainder of the
common stock options and warrants outstanding were excluded from the calculation
of diluted earnings per share because those options' and warrants' exercise
prices were greater than the average market price of the common stock.
5. Bank Borrowings:
Concurrent with the acquisition of SIS, SLT obtained a $3 million credit
facility from a bank to replace the term debt of SIS. This $3 million credit
facility has a commitment term of three years expiring June 2003, permits
deferment of principal payments until the end of the commitment term, and is
secured by SLT's business assets, including collateralization of $2 million of
SLT's cash and cash equivalents and short-term investments. The credit facility
has an interest rate of floating LIBOR plus 2.25% (5.99% at July 1, 2001) and is
subject to certain covenants. At July 1, 2001, SLT had $2,653,000 in outstanding
obligations and $347,000 remaining available under the credit facility.
8
6. Income Taxes:
In accordance with Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes", SLT has recorded no current provision for income
taxes due to the availability of net operating loss carryforwards in the quarter
ended July 1, 2001 and due to the loss incurred for the six months ended July 1,
2001. SLT has recorded no benefit from the net loss inasmuch as any such benefit
has been fully reserved due to uncertainties as to the realizability of such
benefit based on SLT's historical results and the general market conditions
which SLT continues to experience.
In the quarter and six months ended July 2, 2000, SLT recorded no current
provision due to the fact that the income for financial accounting purposes in
the quarter was negated by favorable temporary differences realized in the same
period. Changes in the deferred tax asset account were completely offset by
changes in the tax valuation allowance.
7. Business Segment and Geographic Data:
The Company is engaged primarily in one business segment: the design,
development and manufacture of laser products and the marketing of those laser
products as well as other instruments for medical applications. The Company
markets its offering through traditional sales efforts as well as through the
provision of fee-based surgical services. The Company's customers are primarily
hospitals and surgery centers. For the quarters and six months ended July 1,
2001 and July 2, 2000, the Company did not have material net sales to any
individual customer.
The Company reported net sales in the following categories (in thousands of
dollars):
For the Quarter Ended: For the Six Months Ended:
July 1, 2001 July 2, 2000 July 1, 2001 July 2, 2000
------------ ------------ ------------ ------------
Disposables and accessories $1,307 $1,373 $2,510 $2,720
Laser system sales and related maintenance 323 205 497 564
Surgical services 1,055 444 1,949 575
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Total net sales $2,685 $2,022 $4,956 $3,859
====== ====== ====== ======
For the quarters and six months ended July 1, 2001 and July 2, 2000, there were
no material net sales attributed to an individual foreign country. Net sales by
geographic area were as follows (in thousands of dollars):
For the Quarter Ended: For the Six Months Ended:
July 1, 2001 July 2, 2000 July 1, 2001 July 2, 2000
------------ ------------ ------------ ------------
Domestic $2,168 $1,811 $4,183 $3,425
Foreign 517 211 773 434
------ ------ ------ ------
$2,685 $2,022 $4,956 $3,859
====== ====== ====== ======
8. Recent Accounting Pronouncements:
On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 141, Business Combinations,
and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all
business combinations completed after June 30, 2001. SFAS 142 is effective for
fiscal years beginning after December 15, 2001; however, certain provisions of
this Statement apply to goodwill and other intangible assets acquired between
July 1, 2001 and the effective date of SFAS 142. Major provisions of these
Statements and their effective dates for the Company are as follows:
all business combinations initiated after June 30, 2001 must use the
purchase method of accounting. The pooling of interest method of accounting
is prohibited except for transactions initiated before July 1, 2001.
9
intangible assets acquired in a business combination must be recorded
separately from goodwill if they arise from contractual or other legal
rights or are separable from the acquired entity and can be sold,
transferred, licensed, rented or exchanged, either individually or as part
of a related contract, asset or liability.
goodwill, as well as intangible assets with indefinite lives, acquired
after June 30, 2001, will not be amortized. Effective January 1, 2002, all
previously recognized goodwill and intangible assets with indefinite lives
will no longer be subject to amortization.
effective January 1, 2002, goodwill and intangible assets with indefinite
lives will be tested for impairment annually and whenever there is an
impairment indicator.
all acquired goodwill must be assigned to reporting units for purposes of
impairment testing and segment reporting.
The Company will continue to amortize goodwill recognized prior to July 1, 2001,
under its current method until January 1, 2002, at which time annual and
quarterly goodwill amortization of $32,352 and $8,088 will no longer be
recognized. By December 31, 2002 the Company will have completed a transitional
fair value based impairment test of goodwill as of January 1, 2002. Impairment
losses, if any, resulting from the transitional testing will be recognized in
the quarter ended March 31, 2002, as a cumulative effect of a change in
accounting principle.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
- -------------------------------------------------------------------------------
of Operations
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OVERVIEW
The Company is engaged in the development, manufacture and sale of proprietary
laser systems for both contact and non-contact surgery, and in the delivery of
turn-key surgical services which include the provision of technicians, capital
equipment and disposable and reusable products for specific surgical procedures.
The Company's surgical services are performed under contractual agreements with
its customers, or under a non-contracted arrangement. All of the Company's
surgical services customers are charged for the services provided on a
per-procedure basis. The Company supplements its sales of laser systems and
surgical services with certain non-laser product offerings.
The Company's growth strategy includes a continued emphasis on identifying
surgical procedures that benefit from the precision and hemostatic capabilities
of the Company's proprietary technology coupled with the development and
sourcing of products that provide the opportunity to expand the Company's
surgical service offerings.
The Company expanded its surgical service offerings in June 2000 through the
acquisition of SIS. SIS provides surgical services utilizing a variety of laser
technologies to its customer base located mainly in the southeastern United
States.
RESULTS OF OPERATIONS
The Company's net sales are generated primarily by three sources: sales of
Contact Laser Delivery Systems and related accessories; sales of Nd:YAG Laser
Systems, LaserPro CTH holmium laser systems and related maintenance; and the
provision of surgical services. The U.S. market is serviced predominantly by a
direct sales force, while sales outside the United States are derived through a
network of distributors. Net sales for the quarter ended July 1, 2001 of
$2,685,000 increased $663,000 or 33% from the comparable period in 2000. Net
sales for the six months ended July 1, 2001 of $4,956,000 increased $1,097,000
or 28% from the comparable period in 2000.
Net sales of disposables and related accessories were $1,307,000 or 49% of total
net sales for the quarter ended July 1, 2001. This represented a decrease of
$66,000 or 5% compared to net sales of disposables and related accessories of
$1,373,000 for the quarter ended July 2, 2000. Net sales of disposables and
related accessories were $2,510,000
10
or 51% of total net sales for the six months ended July 1, 2001. This
represented a decrease of $210,000 or 8% compared to net sales of disposables
and related accessories of $2,720,000 for the six months ended July 2, 2000.
These decreases were due to a decrease in sales of non-laser disposable products
and the lower level of Contact Laser Delivery System sales in the U.S. markets,
offset in part by higher level sales in international markets.
Net sales of laser systems and related maintenance, which comprised 12% of total
net sales for the quarter ended July 1, 2001, increased $118,000 or 58% from the
quarter ended July 2, 2000. The increase was due to the initial sales of SLT's
new holmium laser, the LaserPro CTH, whose development was finalized during the
second quarter of 2001. Net sales of laser systems and related maintenance,
which comprised 10% of total net sales for the six months ended July 1, 2001,
decreased $67,000 or 12% from the six months ended July 2, 2000. This decrease
was caused primarily by a reduction in service revenue.
The Company provides per-procedure surgical services for customers which include
access to a laser system and related disposables as well as a technician. Prior
to the acquisition of SIS in June 2000, the Company offered the use of its
proprietary Nd:YAG laser system in the provision of surgical services. With the
acquisition of SIS, the Company now has access to several different types of
lasers, significantly expanding the types of surgical procedures that can be
performed through its services. Surgical services revenue was $1,055,000 in the
second quarter of 2001 or 39% of total net sales. This represented an increase
of $611,000 or 138% compared to the second quarter of 2000. Surgical services
revenue was $1,949,000 for the six months ended July 1, 2001 or 39% of total net
sales. This represented an increase of $1,374,000 or 239% compared to the six
months ended July 2, 2000. These increases were the result of the acquisition of
SIS in June 2000; only one month's revenue for SIS was included in the second
quarter and six months ended July 2, 2000.
Gross profits of $1,423,000 for the quarter ended July 1, 2001 increased
$360,000 or 34% from the second quarter of 2000. As a percentage of net sales,
gross profit was 53% in the quarters ended July 1, 2001 and July 2, 2000. Gross
profits of $2,514,000 for the six months ended July 1, 2001 increased $386,000
or 18% from the six months ended July 2, 2000. As a percentage of net sales,
gross profit of 51% for the six months ended July 1, 2001 declined 4% when
compared to a gross profit percentage for the six months ended July 2, 2000 of
55%. This decline was due principally to the impact of the acquisition of SIS.
Operating expenses for the second quarter of 2001 of $1,380,000 increased by
$332,000 or 32% from the second quarter of 2000. Operating expenses for the
first six months of 2001 of $2,686,000 increased by $612,000 or 30% from the
first six months of 2000. These increases were primarily attributable to the
addition of the operating expenses of SIS as a result of the acquisition in June
2000.
Selling, general and administrative expenses of $1,224,000 in the second quarter
of 2001 increased $340,000 or 38% from the comparable prior year period.
Selling, general and administrative expenses of $2,383,000 for the six months
ended July 1, 2001 increased by $619,000 or 35% from the comparable prior year
period. These increases were primarily attributable to selling expenses of the
acquired SIS business. Also included in the selling, general and administrative
expenses for the quarter and six months ended July 1, 2001 was a recovery of bad
debt of $30,000 and $85,000, respectively, related to notes receivable with
former customers.
Product development expenses of $156,000 and $303,000 in the quarter and six
months ended July 1, 2001, respectively, were consistent with the comparable
periods in 2000.
Interest expense of $46,000 for the second quarter of 2001 was $29,000 or 171%
higher than in the second quarter of 2000. Interest expense of $93,000 for the
six months ended July 1, 2001 was $67,000 or 258% higher from the comparable
prior year period. These increases were due to the interest expense on the
Company's outstanding credit facility obligations, for which there was only one
month comparable expense in the quarter and six months ended July 2, 2000.
Interest income of $39,000 and $86,000 for the quarter and six months ended July
1, 2001 declined $5,000 and $15,000, respectively, from the quarter and six
months ended July 2, 2000 due to the lower levels of cash, cash equivalents and
short-term investments.
11
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and short-term investments at July 1, 2001 were
$2,172,000, a decrease of $228,000 from the December 31, 2000 balance of
$2,400,000. The Company invests its excess cash in high-quality, liquid,
short-term investments.
Concurrent with the SIS acquisition, SLT obtained a $3 million credit facility
from a bank to replace the term debt of SIS. This $3 million credit facility has
a commitment term of three years expiring June 2003, permits deferment of
principal payments until the end of the commitment term, and is secured by SLT's
business assets, including collateralization of $2 million of SLT's cash, cash
equivalents and short-term investments. The credit facility has an interest rate
of floating LIBOR plus 2.25% (5.99% at July 1, 2001) and is subject to certain
covenants. At July 1, 2001, SLT had $2,653,000 in outstanding obligations and
$347,000 remaining available under the credit facility.
Net cash used in operating activities was $361,000 for the first six months of
2001 compared to cash provided by operating activities of $11,000 in the
comparable period in 2000. The comparative decrease was due primarily to an
increase in inventory of $609,000 due primarily to the laser inventory build
that followed development of the Company's LaserPro CTH holmium laser. This
increase was partially offset by an increase in accounts payable of $305,000
related to those inventory purchases.
Net cash used in investing activities was $556,000 for the first six months of
2001, compared to cash provided by investing activities of $936,000 for the six
months of 2000. The decrease in cash provided by investing activities was due
principally to the purchase of short-term investments of $425,000 for the first
six months of 2001 as compared to sales of short-term investments of $1,297,000
for the first six months of 2000. The sales of short-term investments in 2000
were offset, in part, by SIS acquisition costs of $325,000.
Net cash provided by financing activities was $274,000 for the first six months
of 2001 compared to cash used in financing activities of $131,000 for the first
six months of 2000. The increase was due to net advances on the line of credit
for the six months of 2001 of $338,000.
Management believes the Company's current cash position and cash flows from
operations and availability under its credit facility will be sufficient to fund
operations and meet commitments for long-term debt, other commitments and
contingencies and capital expenditures.
Management believes that inflation has not had a material effect on operations
for the periods presented.
RISK FACTORS
For information regarding certain risk factors that could cause actual results
to differ materially from those suggested in forward-looking statements
contained herein or otherwise made from time to time by the Company, reference
is made to the Company's Form 10-K, Item 7, "Risk Factors," for the fiscal year
ended December 31, 2000, which is incorporated herein by reference. The risk
factors described in such report continue to be applicable at July 1, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SURGICAL LASER TECHNOLOGIES, INC.
Date: August 14, 2001 By: /s/ Davis Woodward
--------------------
Davis Woodward
Vice President, Finance and
Chief Financial Officer
Signing on behalf of the Company
and as principal financial officer.
13