Colorado MEDtech, Inc. Announces Second-Quarter Results and Provides Pro Forma Information to Reflect the Sale of Its Colorado Operations.Business Editors/Health & Medical Writers BOULDER Boulder, city, United States Boulder, city (1990 pop. 83,312), seat of Boulder co., N central Colo.; inc. 1871. A Rocky Mountain resort and a suburb of Denver, it is the seat of the Univ. of Colorado (1876). , Colo.--(BUSINESS WIRE)--Feb. 10, 2003 Colorado Colorado, state, United States Colorado (kŏlərăd`ə, –răd`ō, –rä`dō), state, W central United States, one of the Rocky Mt. states. MEDtech, Inc. (Nasdaq:CMED CMED Coordinated Medical Emergency Direction CMED Central Massachusetts Emergency Dispatch ) today announced results for its second quarter ended December December: see month. 31, 2002. The Company filed information with the SEC today reflecting the sale of the Colorado operations, some of which is included below. For the quarter ended December 31, 2002, the Company had net income of $519,000 and earnings per share, on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, of 4 cents. In the second quarter of the prior year, the Company had a net loss of $818,000 and a loss per share, on a diluted basis, of 6 cents. Sales in the second quarter were $14,544,000 compared to $17,688,000 for the same period in the prior year. For the six months ended December 31, 2002, the Company had net income of $180,000 and earnings per share, on a diluted basis, of 1 cent. In the same period of the prior year, the Company had a net loss of $1,964,000 and a loss per share, on a diluted basis, of 15 cents. Sales in the six months ended December 31, 2002, were $28,677,000 compared to $34,708,000 for the same period in the prior year. On January January: see month. 24, 2003, the Company and HEI HEI Higher Education Institution (UK) HEI Health Effects Institute HEI Hautes Études Internationales HEI House Ear Institute HEI Healthy Eating Index HEI Hautes Etudes d'Ingénieur HEI High-Explosive Incendiary , Inc. entered into a purchase agreement whereby the Company sold certain of the assets and liabilities of the Colorado Operations to HEI. The assets and liabilities sold consisted primarily of cash, inventories, property and equipment, warranty An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party. Warranties are used in a variety of commercial situations. In many instances a business may voluntarily make a warranty. obligations and customer deposits, and had a recorded net book value of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $9.8 million. The Company sold the net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. to HEI in exchange for 1,000,000 shares of HEI common stock, valued at approximately $2.6 million (based on the closing price of the stock on the NASDAQ market) and a $2.6 million subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. (the "Note"). The Note has an interest rate of 10% (increasing to 12% on July July: see month. 24, 2003, and to 14% on January 24, 2004) and matures September September: see month. 30, 2004. The Company also transferred the rights and obligations of the operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. and expansion of the facilities located in Boulder, Colorado The City of Boulder (, Mountain Time Zone) is a home rule municipality located in Boulder County, Colorado, United States. Boulder is the 11th most populous city in the State of Colorado, as well as the most populous city and the county , which had a 10-year lease commitment and future minimum lease payments Rental payments over the lease term including the amount of any bargain purchase option, premium and any guaranteed residual value and excluding any rental relating to costs to be met by the lessor and any contingent rentals. of approximately $10.4 million for the current lease and $6.9 million for the expansion, a total obligation of approximately $17.3 million. As result of this transaction, in January 2003 the Company recorded a loss of approximately $6.4 million, and an after tax loss of approximately $4.2 million. The Company filed a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. on February February: see month. 10, 2003, containing pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma information on the impact of this transaction. The Company has included the pro forma information as part of this press release to show how the transaction might have affected historical financial statements if the transaction had been consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. at an earlier date. The pro forma balance sheet is as of December 31, 2002, and is prepared as if the transaction with HEI, Inc. had occurred on December 31, 2002. The pro forma income statement is for the six months ended December 31, 2002, and is prepared as if the transaction with HEI, Inc. had occurred on June June: see month. 30, 2001. Both of these pro forma statements Pro forma statement A financial statement showing the forecast or projected operating results and balance sheet, as in pro forma income statements, balance sheets, and statements of cash flows. are included in the Form 8-K filed February 10, 2003. These pro forma financial statements Pro forma financial statements A firm's financial statements as adjusted to reflect a projected or planned transaction. "What-if" analysis. were prepared under the guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. provided by the Securities and Exchange Commission for pro forma financial statements. These pro forma statements are not intended to present what the actual financial condition or results of operations would have been had the Company previously disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of these assets and liabilities nor are they necessarily indicative indicative: see mood. of results of operations to be achieved in future periods. "We are very pleased to have completed the sale of the Colorado operations," said Stephen Stephen, 1097?–1154, king of England (1135–54). The son of Stephen, count of Blois and Chartres, and Adela, daughter of William I of England, he was brought up by his uncle, Henry I of England, who presented him with estates in England and France and K. Onody, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "The business that remains is our CIVCO Medical Instruments subsidiary. During the six months ended December 31, 2002, CIVCO has reported revenues of $13.7 million and operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $3.0 million. We look forward to CIVCO's continued growth prospects and we expect it to report operating profits. We are continuing the process of seeking buyers for the entire company or CIVCO." Colorado MEDtech, Inc., through its CIVCO Medical Instruments Co., Inc. subsidiary, is a full service developer and manufacturer of medical devices and equipment for the ultrasound ultrasound or sonography, in medicine, technique that uses sound waves to study and treat hard-to-reach body areas. In scanning with ultrasound, high-frequency sound waves are transmitted to the area of interest and the returning echoes recorded and minimally invasive invasive /in·va·sive/ (-siv) 1. having the quality of invasiveness. 2. involving puncture of the skin or insertion of an instrument or foreign material into the body; said of diagnostic techniques. OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and and end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. markets. Conference Call Colorado MEDtech will hold a conference call at 8:00 a.m. MST See micro systems technology. (10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy ) on Tuesday Tuesday: see week. , February 11, 2003, to discuss its second-quarter results. Interested parties may listen to the call by calling 800/218-9073. A replay of the call will be available until February 25, 2003, at 800/405-2236, passcode 524377#. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The statements in this news release that are not historical facts, including those regarding strategic alternatives, are forward-looking statements that represent management's beliefs and assumptions based on currently available information. Forward-looking statements can be identified by the use of words such as "believes," "intends," "estimates," "may," "will," "should," "anticipated," "expected" or comparable terminology The terminology used in the computer and telecommunications field adds tremendous confusion not only for the lay person, but for the technicians themselves. What many do not realize is that terms are made up by anybody and everybody in a nonchalant, casual manner without any regard or or by discussions of strategy. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot assure that these expectations will prove to be correct. Such statements involve risks and uncertainties including, but not limited to, the risk that the value of the HEI stock and subordinated debenture subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before may, in the future, be lower than the price at which the Company acquired them, the risk that such changes in fair value will result in significant charges to our income statement, the risk that the Company may be unable to successfully complete the sale of the Company or its CIVCO Medical Instruments subsidiary, the risk that the Company's existing level of orders may not be indicative of the level or trend of future orders, the risk that the Company may not successfully complete the work encompassed by current or future orders, the risk that unforeseen technical or production difficulties may adversely impact project timing and financial performance, the risk of an adverse result in pending or potential litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , the risks associated with regulation by the Federal Food and Drug Administration including compliance with the Quality System Regulation, the risk that acquired companies cannot be successfully integrated with the Company's existing operations and the risk that a downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in general economic conditions or customer budgets may adversely affect research and development and capital expenditure budgets of potential customers upon which the Company is dependent. Should one or more of these risks materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. (or the consequences of such a development worsen wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. worsen Verb to make or become worse worsening adjn ), or should the underlying assumptions prove incorrect Incorrect means to not be correct and may also refer to:
COLORADO MEDTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31, 2002 June 30, 2002
----------------- -------------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 9,296,248 $ 6,366,303
Short-term investments 594,626 993,319
Accounts receivable, net 5,703,213 9,644,164
Unbilled receivables 385,361 169,438
Inventories 5,048,322 5,781,665
Income taxes receivable 3,279,972 3,589,907
Deferred income taxes 1,557,803 1,557,803
Prepaid expenses and other 594,365 824,563
---------- ----------
Total current assets 26,459,910 28,927,162
NON-CURRENT ASSETS:
Property and equipment, net 6,098,673 5,700,043
Goodwill and other intangibles,
net 6,172,417 5,876,785
Land held for sale 500,000 500,000
Deferred income taxes 1,227,143 1,227,143
Other assets 315,273 302,726
---------- ----------
Total non-current assets 14,313,506 13,606,697
TOTAL ASSETS $40,773,416 $42,533,859
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 3,052,705 $ 4,878,784
Accrued product service costs 386,149 376,907
Accrued salaries and wages 1,704,501 1,989,815
Other accrued expenses 1,749,787 1,435,222
Customer deposits and deferred
revenue 1,342,326 1,733,746
Capital lease obligation 11,380 33,503
---------- ----------
Total liabilities 8,246,848 10,447,977
SHAREHOLDERS' EQUITY:
Preferred stock, no par value;
5,000,000 shares authorized;
none issued
Common Stock, no par value,
25,000,000 shares authorized;
13,256,959 and 13,168,783
issued and outstanding at
December 31, 2002 and June 30,
2002, respectively 16,882,820 16,718,092
Accumulated other
comprehensive loss (1,691) (7,432)
Notes receivable -- related
parties (609,799) (699,799)
Retained earnings 16,255,238 16,075,021
---------- ----------
Total shareholders' equity 32,526,568 32,085,882
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $40,773,416 $42,533,859
========== ==========
COLORADO MEDTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2002 AND 2001
(UNAUDITED)
Three Months Ended Six Months Ended
December 31, December 31,
------------------ ----------------
2002 2001 2002 2001
---- ---- ---- ----
NET REVENUE:
Outsourcing Services $ 3,624,533 $ 6,946,866 $ 7,222,298 $13,281,834
Medical Products 10,919,241 10,741,452 21,454,803 21,425,827
---------- ---------- ---------- ----------
Total net revenue 14,543,774 17,688,318 28,677,101 34,707,661
---------- ---------- ---------- ----------
COST OF PRODUCTS AND SERVICES:
Outsourcing Services 3,777,828 6,731,234 7,819,632 12,286,236
Medical Products 6,420,143 6,065,237 12,868,910 12,698,489
---------- ---------- ---------- ----------
Total cost of products
and services 10,197,971 12,796,471 20,688,542 24,984,725
---------- ---------- ---------- ----------
GROSS PROFIT 4,345,803 4,891,847 7,988,559 9,722,936
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Research and
development 447,123 1,035,347 947,320 1,867,606
Marketing and selling 835,106 966,069 1,891,805 1,954,039
Operating, general and
administrative 2,008,035 3,775,319 4,426,982 8,140,816
Other operating
expenses 224,383 470,530 494,189 1,067,510
---------- ---------- ---------- ----------
Total operating
expenses 3,514,647 6,247,265 7,760,296 13,029,971
---------- ---------- ---------- ----------
INCOME (LOSS) FROM
OPERATIONS 831,156 (1,355,418) 228,263 (3,307,035)
OTHER INCOME, net 5,420 35,104 70,954 135,868
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE
INCOME TAXES 836,576 (1,320,314) 299,217 (3,171,167)
INCOME TAX EXPENSE
(BENEFIT) 318,000 (502,000) 119,000 (1,207,000)
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 518,576 $ (818,314)$ 180,217 $(1,964,167)
========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE
Basic and diluted $ .04 $ (.06) $ .01 $ (.15)
==== ===== ==== =====
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic and diluted 13,169,741 12,963,968 13,169,262 12,967,347
========== ========== ========== ==========
The following unaudited pro forma statements represent the December 31, 2002, balance sheet adjusted to reflect the sale of the assets and liabilities of the Colorado operations to HEI as if such sale had taken place on December 31, 2002:
Consolidated Pro Forma Pro Forma
ASSETS December 31, 2002 Adjustments December 31, 2002
----------------- ----------- -----------------
CURRENT ASSETS:
Cash and cash
equivalents $ 9,296,000 $(5,315,000) a $ 3,981,000
Short-term
investments 595,000 - 595,000
Accounts receivable,
net 5,703,000 - 5,703,000
Unbilled receivables 385,000 (340,000) a 45,000
Inventories 5,048,000 (2,688,000) a 2,360,000
Income taxes receivable 3,280,000 3,760,000 d,k 7,040,000
Deferred income taxes 1,558,000 (1,152,000) k 406,000
Prepaid expenses and
other 595,000 (328,000) a 267,000
---------- ---------- ----------
Total current assets 26,460,000 (6,063,000) 20,397,000
---------- ---------- ----------
NON-CURRENT ASSETS:
Property and equipment,
net 6,099,000 (1,822,000) a 4,277,000
Goodwill and
intangibles, net 6,172,000 - 6,172,000
Investment in HEI
stock - 2,483,000 b,c 2,483,000
Promissory note, HEI - 2,600,000 b 2,600,000
Land held for sale 500,000 - 500,000
Deferred income taxes 1,227,000 (522,000) k 705,000
Other assets 315,000 (80,000) a 235,000
---------- ---------- ----------
Total non-current
assets 14,313,000 2,659,000 16,972,000
---------- ---------- ----------
TOTAL ASSETS $40,773,000 $(3,404,000) $37,369,000
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,053,000 $ 1,025,000 e,f $ 4,078,000
Accrued product
service cost 386,000 (376,000) a 10,000
Accrued salaries and
wages 1,705,000 800,000 h,i 2,505,000
Other accrued expenses 1,750,000 (290,000) g 1,460,000
Customer deposits and
deferred revenue 1,342,000 (515,000) a 827,000
Capital lease obligation 11,000 - 11,000
---------- ---------- ----------
Total liabilities 8,247,000 644,000 8,891,000
---------- ---------- ----------
SHAREHOLDERS' EQUITY
Common stock 16,883,000 - 16,883,000
Accumulated other
comprehensive loss (2,000) - (2,000)
Notes receivable --
related parties (610,000) - (610,000)
Retained earnings 16,255,000 (4,048,000) j 12,207,000
---------- ---------- ----------
Total shareholders'
equity 32,526,000 (4,048,000) 28,478,000
---------- ---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY $40,773,000 $(3,404,000) $37,369,000
========== ========== ==========
Pro forma adjustments to reflect the sale of the Colorado operations
to HEI:
a. assets and liabilities sold to HEI under the purchase agreement
b. subordinated promissory note ($2.6 million) and common stock
($2.6 million) received by the Company as consideration for the
Colorado operations
c. payment to landlord of $117,000 paid in the form of HEI common
stock
d. taxes receivable resulting from the loss on the sale of the
Colorado operations, carried back against taxable gains earned in the
last five years of approximately $2,086,000
e. investment banking, legal and accounting fees incurred and
accrued as part of the transaction of approximately $950,000
f. Colorado MEDtech's portion of the sales and use taxes on the
transaction of approximately $75,000
g. relief of accrued future rent obligation for the Colorado
operations' leased facility
h. Colorado MEDtech holdback for employees leased to HEI for one
week $300,000
i. severance accrued for additional personnel reductions $500,000
j. loss on HEI transaction, assuming the transaction occurred on
December 31, 2002
k. deferred tax assets that will become income tax receivables as
a result of the sale of Colorado operations
The following unaudited pro forma statement of operations for the six months ended December 31, 2002, represents the results as if the sale to HEI occurred on June 30, 2001:
Pro Forma
Six Months Ended Pro Forma Six Months Ended
December 31, 2002 Adjustments December 31, 2002
----------------- ----------- -----------------
NET REVENUE
Outsourcing services $ 7,222,000 $(7,222,000) l $ -
Medical products 21,455,000 (7,773,000) l 13,682,000
---------- ---------- ----------
Total net revenue 28,677,000 (14,995,000) 13,682,000
---------- ---------- ----------
COST OF PRODUCTS AND SERVICES
Outsourcing services 7,820,000 (7,820,000) l -
Medical products 12,869,000 (6,035,000) l 6,834,000
---------- --------- ----------
Total cost of
products and
services 20,689,000 (13,855,000) 6,834,000
---------- ---------- ----------
GROSS PROFIT 7,988,000 (1,140,000) 6,848,000
---------- ---------- ----------
OPERATING EXPENSES
Research and
development 947,000 (624,000) l 323,000
Marketing and selling 1,892,000 (1,171,000) l 721,000
Operating, general and
administrative 4,427,000 (1,661,000) l 2,766,000
Other operating expense 494,000 (494,000) l -
---------- ---------- ----------
Total operating
expenses 7,760,000 (3,950,000) 3,810,000
---------- ---------- ----------
NET INCOME (LOSS)
FROM OPERATIONS 228,000 2,810,000 3,038,000
OTHER INCOME (EXPENSE)
Other income, net 71,000 (50,000) m,n 21,000
Unrealized holding gains
(losses) in HEI Stock - (1,228,000) o (1,228,000)
Interest income on
subordinated note
from HEI - 182,000 p 182,000
---------- ---------- ----------
Total other income
(expense) 71,000 (1,096,000) (1,025,000)
---------- ---------- ----------
INCOME (LOSS) BEFORE
TAXES 299,000 1,714,000 2,013,000
INCOME TAX EXPENSE
(BENEFIT) 119,000 651,000 770,000
---------- ---------- ----------
NET INCOME (LOSS) $ 180,000 $ 1,063,000 $ 1,243,000
========== ========== ==========
NET INCOME (LOSS) PER SHARE
Basic and diluted $ .01 $ .08 $ .09
==== ==== ====
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic and diluted 13,169,262 13,169,262 13,169,262
========== ========== ==========
Pro forma adjustments to reflect the sale of the Colorado Operations
to HEI:
l. elimination of operating results of the Colorado operations
m. removal of interest income on the $5,600,00 of cash sold to HEI
at an average rate of 1.5% per annum
n. removal of interest income on officer loans for officers who
left Colorado MEDtech as a direct result of the sale of the Colorado
operations
o. change in HEI stock price from $7.70 per share at June 30, 2002
to $3.20 per share at December 31, 2002, based upon the purchase of
$2,6 million of stock at June 30, 2001
p. interest income on subordinated promissory note from HEI, Inc.
at approximately $182,000
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion