UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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: 0-26832
Lumisys Incorporated
(Exact name of registrant as specified in its charter)
Delaware 77-0133232
(State of incorporation) (I.R.S. Employer Identification No.)
225 Humboldt Court, Sunnyvale, CA 94089
(Address of principal executive offices) (Zip Code)
(408) 733-6565
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes / X / No / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of May 2, 1997, 6,459,265 shares of the registrant's Common
Stock, $.001 par value, were outstanding.
Lumisys Incorporated
Index
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated balance sheets at March 31, 1997
and December 31, 1996 3
Consolidated statements of income for the three
months ended March 31, 1997 and 1996 4
Consolidated statements of cash flow for the
three months ended March 31, 1997 and 1996 5
Notes to financial statements 6
Item 2. Management's discussion and Analysis of
Financial Condition and Results of Operations 7
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Lumisys Incorporated
Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share amounts)
March 31, December 31,
1997 1996
---------- ------------
ASSETS
Current assets:
Cash and cash equivalents $19,912 $18,438
Accounts receivable, net of allowances
of $301 and $296 3,380 3,199
Inventories 2,801 3,053
Deferred tax assets 1,429 1,429
Other current assets 334 453
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Total current assets 27,856 26,572
Property and equipment, net 317 345
Other assets 177 173
---------- ------------
$28,350 $27,090
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 745 $ 823
Accrued expenses 2,120 1,604
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Total current liabilities 2,865 2,427
---------- ------------
Stockholders' equity
Preferred stock, $0.001 par value;
5,000 shares authorized; no shares
issued and outstanding --- ---
Common stock, $0.001 par value; 25,000
shares authorized; 6,459 and 6,415
shares issued and outstanding 6 6
Additional paid-in capital 23,917 23,887
Retained earnings 1,706 918
Notes receivable from stockholders (114) (114)
Deferred compensation related to stock
options (30) (34)
---------- ------------
Total stockholders' equity 25,485 24,663
---------- ------------
$28,350 $27,090
========== ============
The accompanying notes are an integral part of these financial
statements.
Lumisys Incorporated
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three months ended
---------------------
March 31, March 31,
1997 1996
--------- --------
Sales $ 5,818 $ 5,110
Cost of sales 2,598 2,395
--------- --------
Gross profit 3,220 2,715
--------- --------
Operating expenses:
Sales and marketing 636 483
Research and development 1,033 999
General and administrative 510 628
--------- --------
Total operating expenses 2,179 2,110
--------- --------
Income from operations 1,041 605
Interest income 250 215
--------- --------
Income before income taxes 1,291 820
Provision for income taxes 503 98
--------- --------
Net income $ 788 $ 722
========= ========
Net income per share $ 0.12 $ 0.11
========= ========
Shares used to compute net income per share 6,743 6,826
========= ========
The accompanying notes are an integral part of these financial
statements.
Lumisys Incorporated
Consolidated Statements of Cash Flow
(Unaudited)
(In thousands)
Three months ended
------------------
March 31, March 31,
1997 1996
------- -------
Cash flows from operating activities:
Net income $ 788 $ 722
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 43 47
Deferred income taxes --- (210)
Interest on notes receivable from stockholders --- (3)
Changes in assets and liabilities:
Accounts receivable (181) (271)
Inventories 252 (433)
Other assets 115 46
Accounts payable (78) 113
Accrued expenses 516 228
------- -------
Net cash provided by operating activities 1,455 239
------- -------
Cash flows from investing activities:
Proceeds from sale of short-term investments --- 3,934
Purchases of property and equipment (11) (58)
------- -------
Net cash provided (used) in investing activities (11) 3,876
------- -------
Cash flows from financing activities:
Proceeds from sale of common stock, net 30 (79)
Payment on notes receivable from stockholders --- 98
------- -------
Net cash provided by financing activities 30 19
------- -------
Net increase in cash and cash equivalents 1,474 4,134
Cash and cash equivalents at beginning of
period 18,438 11,426
------- -------
Cash and cash equivalents at end of period $19,912 $15,560
======= =======
Supplemental disclosure of cash flow information:
Cash paid (refunded) for income taxes $ (14)$ 89
The accompanying notes are an integral part of these financial
statements.
Lumisys Incorporated
Notes to Consolidated Financial Statements
Note 1 - Basis of Presentation
The consolidated financial statements of Lumisys Incorporated
(the "Company") presented herein have been prepared pursuant to
the rules of the Securities and Exchange Commission for quarterly
reports on Form 10-Q and do not include all of the information
and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with
the consolidated financial statements and notes thereto for the
year ended December 31, 1996, included in the Company's Annual
Report on Form 10-K as filed with the Securities and Exchange
Commission.
The consolidated balance sheet as of March 31, 1997, and the
consolidated statements of income and of cash flows for the three
months ended March 31, 1997 and 1996 are unaudited but, in the
opinion of management, include all adjustments (consisting of
normal, recurring adjustments) necessary for a fair presentation
of the results for these interim periods.
The results of operations for the three months ended March 31,
1997, are not necessarily indicative of the results to be
expected for the entire fiscal year ending December 31, 1997.
Note 2 - Composition of Certain Financial Statement Amounts
March 31, December 31,
1997 1996
------- -------
(In thousands)
Inventories:
Raw materials $ 2,275 $ 2,607
Work-in-process 758 422
Finished goods 765 959
------- -------
3,798 3,988
Less: inventory reserves (997) (935)
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$ 2,801 $ 3,053
======= =======
Accrued expenses:
Payroll and related benefits $ 633 $ 670
Warranty 461 471
Income taxes payable 721 204
Other 305 259
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$ 2,120 $ 1,604
======= =======
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
Lumisys develops, manufactures and markets a broad product line
of laser-based very high resolution medical film digitizers, CCD-
based film scanners and video digitizer products necessary for
converting analog medical images into diagnostic quality digital
formats.
Except for the historical information contained herein, the
following discussion contains forward-looking statements that
involve risks and uncertainties. The Company's actual results
could differ materially from those discussed here. Factors that
could cause or contribute to such differences include, but are
not limited to, those discussed in this section, as well as those
discussed in the Company's 1996 Annual Report on Form 10-K.
Results of Operations
Total sales for the first quarter of 1997 increased 13.9% to $5.8
million from $5.1 million for the first quarter of 1996. This
increase was primarily due to sales of new products introduced in
1996.
Gross profit for the first quarter of 1997 increased 18.6% to
$3.2 million from $2.7 million for the corresponding period of
1996. Gross margin increased to 55.3% in the first quarter of
1997 from 53.1% in the first quarter of 1996 primarily due to
increased volume and continued product cost control.
Sales and marketing expenses increased 31.7% in the first quarter
of 1997 to $636,000 from $483,000 in the first quarter of 1996.
The increase was primarily due to the increase in the Company's
sales and marketing personnel. As a percentage of sales, these
expenses increased to 10.9% in the first quarter of 1997 from
9.5% in the first quarter of 1996.
Research and development expenses increased 3.4% in the first
quarter of 1997 to $1,033,000 from $999,000 in the same quarter
of 1996. As a percentage of sales, research and development
expenses decreased to 17.8% in the first quarter of 1997 from
19.5% in the same quarter of 1996.
General and administrative expenses decreased 18.8% in the first
quarter of 1997 to $510,000 from $628,000 in the first quarter of
1996. The decrease is due in part to the reorganization of
Imagraph which resulted in a decrease in administrative personnel
and lower acquisition related charges in 1997 as compared to
1996. As a percentage of sales, general and administrative
expenses decreased to 8.8% in the first quarter of 1997 from
12.3% in the first quarter of 1996.
The Company recognized a provision for income taxes in the first
quarter of 1997 of $503,000 compared with a net provision of
$98,000 in the corresponding period of 1996. The net provision
for taxes in the first quarter of 1996 was reduced by the
recognition of $210,000 of deferred tax assets, based on the
Company's assessment that it was more likely than not that this
portion of the deferred tax assets would be realized. The
Company has provided a partial valuation allowance against the
balance of the deferred tax assets remaining as of March 31,
1997. The Company expects to continue to be subject to an
effective tax rate of approximately 39% for the remainder of
1997.
Liquidity and Capital Resources
The Company has financed its activities primarily from net cash
provided by operations, which contributed $1.5 million in the
first quarter of 1997 and $239,000 in the same period of 1996.
At March 31, 1997, the Company's working capital was $25.0
million. The Company had cash and cash equivalents of
approximately $19.9 million at March 31, 1997, compared with
$18.4 million cash and cash equivalents at December 31, 1996.
The increase is primarily due to net income for the period and an
increase in accrued income taxes.
The Company does not currently have any significant capital
commitments and believes that existing sources of liquidity and
funds expected to be generated from operations will provide
adequate cash to fund the Company's anticipated working capital
and other cash needs for the foreseeable future.
Part 2 - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits furnished:
Exhibit
Number Description of Document
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27 Financial Data Schedule
(b) Reports on Form 8-K: none.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
LUMISYS INCORPORATED
Dated: May 13, 1997 By: /s/ Stephen J. Weiss
------------ --------------------
Stephen J. Weiss
President, Chief
Executive Officer
May 13, 1997 /s/ Craig L. Klosterman
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Craig L. Klosterman
Chief Operating and
Chief Financial Officer