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FIDELITY MEDICAL RESTATES PRIOR FINANCIAL RESULTS AND REPORTS SECOND AND THIRD FISCAL QUARTERS

 FIDELITY MEDICAL RESTATES PRIOR FINANCIAL
 RESULTS AND REPORTS SECOND AND THIRD FISCAL QUARTERS
 FLORHAM PARK, N.J., Aug. 14 /PRNewswire/ -- Three months after the launch of a special investigation by a committee of outside directors, Fidelity Medical, Inc. (NASDAQ: FMSIE) announced today that it has restated its financial results for the three years ended Sept. 30, 1991, as well as for the first quarter of the current fiscal year. The company has concluded that there were irregularities in its revenue recognition practices and that its financial statements contained some transactions which were inappropriately recorded.
 The special investigation commenced immediately after Efraim Landa, the company's former chairman and chief executive officer, advised the board of directors on May 7, 1992, that he had overstated preliminary results for the period ended March 31 in a press release dated April 23. Landa tendered his resignation on May 7. The adjustments in past financial statements result from the committee's review with the assistance of Deloitte & Touche, which was retained for the investigation by the company's counsel. The company today is filing amendments to its prior filings with the Securities and Exchange Commission with respect to the periods involved.
 The adjustments primarily involve correction of timing errors where sale transactions were recognized prematurely, and elimination of invalid sales where transactions were recognized inappropriately and, in many cases, reversed by the company in a later period. Appropriate actions have been and will be taken by the company to prevent recurrence of revenue recognition problems.
 As a result of the adjustments, aggregate revenues for the three and one-quarter fiscal years ended Dec. 31, 1991, are reduced by $2,215,500, or 13.8 percent of the amount previously reported. For the same period, the company's aggregate net loss is increased by $1,867,901, an adjustment of 53.7 percent.
 As of June 30, 1992, the company held cash equivalents of approximately $12.7 million, and had no long-term debt. The company is, however, involved in pending stockholder litigation, a formal investigation by the Securities and Exchange Commission and a review by the U.S. attorney for the district of New Jersey.
 Recent Results
 For the three months ended March 31, 1992, revenues were $1,469,209, a 4 percent increase over restated results for last year's second quarter. Net income before extraordinary item for the period was $2,267 (less than $0.01 per share), compared to a restated net loss of $155,723 ($0.05 per share) for the second quarter of fiscal 1991. An extraordinary charge of $443,720 was recorded for the repayment of debt with stock, resulting in a net loss of $441,003 ($0.08 per share) for the second quarter. Due to weak sales in the first quarter, six-month revenues decreased to $1,905,691, a 20 percent decrease from restated revenues for the first half of fiscal 1991. Net loss for the six-month period was $1,167,498 ($0.24 per share) before the extraordinary item and $1,610,768 ($0.33 per share) after such item, as compared to a restated loss of $720,691 ($0.22 per share) for the first six months of fiscal 1991.
 For the three months ended June 30, 1992, revenues were $1,205,891, a 27 percent decrease from restated revenues for the third quarter of 1991. Gross margin for the third quarter decreased primarily due to a reserve for obsolete inventory. Operating expenses for the quarter more than doubled over the prior-year period due the non-recurring costs related to the special investigation, pending litigation and the restatement; the expansion of sales and marketing activities; and increased research and development spending. Net loss for the period was $1,436,747 ($0.25 per share), as compared to a restated net income of $247,265 ($0.05 per share) for last year's third quarter.
 For the nine months ended June 30, 1992, revenues of $3,111,582 represent a 23 percent decrease from the prior-year period. Net loss before and after extraordinary item was $2,604,245 ($0.50 per share) and $3,047,515 ($0.59 per share), respectively, compared to a net loss of $473,426 ($0.14 per share) for the nine months ended June 30, 1991.
 Dr. Werner J. Haas, who joined the company as president and chief executive officer on July 22, commented, "The disappointing results for the fiscal year to date appear to be due to a transition in our direct sales force, a gap in sales management which recently has been filled, a general weakness in the hospital capital equipment sector and the difficulties normally associated with introduction of new technology."
 Haas said he has already initiated actions to improve sales, and is currently directing the preparation of a strategic profit plan which will address the company's efforts in marketing, sales, and new product development. He added, "The company already has in place several ingredients for success in the medical electronics field -- a strong research and development organization, a line of innovative products, and a technically capable sales force. I expect that these strengths will position the company for long-term success."
 As previously announced, Haas joined Fidelity Medical from Siemens A.G., where he was a corporate vice president and formerly chairman and chief executive of Siemens Medical Instrumentation in the Unite States.
 Fidelity Medical's products include systems for real-time digital image display of certain X-ray procedures; condensed image storage using laser disk technology which replaces cumbersome and more expensive film archives; and other innovative microprocessor-based cardio-diagnostic devices.
 FIDELITY MEDICAL, INC.
 Restated Results of Operations
 Fiscal year ended Sept. 30, 1991
 Periods ended 1st quarter 2nd quarter 6 months 3rd quarter
 12/31/90 3/31/91 3/31/91 6/30/91
 Net revenues,
 as reported $1,656,703 $1,854,461 $3,511,164 $1,786,219
 Adjustments (685,875) (441,450) (1,127,325) (124,875)
 Net revenues,
 adjusted 970,828 1,413,011 2,383,839 1,561,344
 Net income (loss),
 reported 51,361 251,854 303,215 271,084
 Adjustments (616,329) (407,577) (1,023,906) (23,819)
 Net income (loss),
 adjusted (564,968) (155,723) (720,691) 247,265
 Net income (loss)
 per common share,
 as reported $0.02 $0.07 $0.10 $0.06
 Net income (loss)
 per common share,
 as adjusted (0.18) (0.05) (0.22) 0.05
 Weighted average
 number of common
 shares, as reported
 (A) 3,167,606 3,439,323 3,150,895 4,822,410
 Weighted average
 number of common
 shares, as adjusted
 (A)(B) 3,167,606 3,439,323 3,302,036 --(C)
 9 months 4th quarter Total Fiscal year
 6/30/91 9/30/91 (Audited) ending 9/30/92
 1st quarter
 12/31/91
 Net revenues,
 as reported $5,297,383 $1,164,242 $6,461,625 $1,082,782
 Adjustments (1,252,200) 32,325 (1,219,875) (646,300)
 Net revenues,
 adjusted 4,045,183 1,196,567 5,241,750 436,482
 Net income (loss),
 reported 574,299 3,896 578,195 (685,059)
 Adjustments (1,047,725) 55,181 (992,544) (484,706)
 Net income (loss),
 adjusted (473,426) 59,077 (414,349) (1,169,765)
 Net income (loss)
 per common share,
 as reported $0.13 -- $0.12 $(0.16)
 Net income (loss)
 per common share,
 as adjusted (0.14) 0.01 (0.12) (0.28)
 Weighted average
 number of common
 shares, as reported
 (A) 4,516,565 4,882,412 4,964,096 4,251,341
 Weighted average
 number of common
 shares, as adjusted
 (A)(B) 3,367,774 --(C) 3,399,728 --(C)
 (A) -- As adjusted for a 1:4 reverse stock split effected on Sept. 27, 1991.
 (B) -- Weighted number of common shares includes dilutive securities (such as options and warrants) in periods of net income but not in periods of net loss.
 (C) -- No adjustment required.
 Fiscal year ended Sept. 30, 1989
 1st quarter 2nd quarter 6 months 3rd quarter
 12/31/88 3/31/89 3/31/89 6/30/89
 Net revenues,
 as reported $799,864 $656,790 $1,456,654 $1,020,900
 Adjustments (85,000) (79,810) (164,810) (15,845)
 Net revenues,
 adjusted 714,864 575,980 1,291,844 1,005,055
 Net income (loss),
 reported (310,896) (697,009) (1,007,905) (333,153)
 Adjustments (72,645) (69,393) (142,038) (16,465)
 Net income (loss),
 adjusted (383,541) (766,402) (1,149,943) (349,618)
 Net income (loss)
 per common share,
 as reported $(0.11) $(0.23) $(0.33) $(0.11)
 Net income (loss)
 per common share,
 as adjusted (0.13) (0.25) (0.38) (0.11)
 Weighted average number
 of common shares,
 as reported(A) 2,927,242 3,095,367 3,009,977 3,122,805
 9 months 4th quarter 1989 Total
 6/30/89 9/30/89 (audited)
 Net revenues,
 as reported $2,477,554 $1,503,644 $3,981,198
 Adjustments (180,655) (342,685) (523,340)
 Net revenues, adjusted 2,296,899 1,160,959 3,457,858
 Net income (loss),
 reported (1,341,058) (72,329) (1,413,387)
 Adjustments (158,503) (319,270) (477,773)
 Net income (loss),
 adjusted (1,499,561) (391,599) (1,891,160)
 Net income (loss)
 per common share,
 as reported $(0.44) $(0.02) $(0.46)
 Net income (loss)
 per common share,
 as adjusted (0.49) (0.13) (0.62)
 Weighted average number
 of common shares,
 as reported(A) 3,047,245 3,123,555 3,067,139
 Fiscal year ended Sept. 30, 1990
 1st quarter 2nd quarter 6 months 3rd quarter
 12/31/89 3/31/90 3/31/90 6/30/90
 Net revenues,
 as reported $1,062,230 $1,671,028 $2,733,258 $1,276,564
 Adjustments (360,450) (226,140) (134,310) (186,124)
 Net revenues,
 adjusted 701,780 1,897,168 2,598,948 1,090,440
 Net income (loss),
 reported (556,632) (140,235) (696,867) (225,741)
 Adjustments (304,454) 190,100 (114,354) (175,292)
 Net income (loss),
 adjusted (851,086) 49,865 (811,221) (401,033)
 Net income (loss)
 per common share,
 as reported $(0.18) $(0.04) $(0.22) $(0.07)
 Net income (loss)
 per common share,
 as adjusted (0.27) 0.02 (0.26) (0.31)
 Weighted average number
 common shares, as
 reported(A) 3,139,439 3,150,895 3,145,155 3,151,536
 9 months 4th quarter Total
 6/30/90 9/30/90 (Audited)
 Net revenues, as reported $4,009,822 $487,648 $4,497,470
 Adjustments (320,434) 494,449 174,015
 Net revenues, adjusted 3,689,388 982,097 4,671,485
 Net income (loss),
 reported (923,843) (1,036,667) (1,959,275)
 Adjustments (289,646) 376,768 87,122
 Net income (loss), adjusted (1,213,489) (659,899) (1,872,153)
 Net income (loss)
 per common share,
 as reported (0.29) (0.33) (0.62)
 Net income (loss) per
 common share, as adjusted (0.39) (0.21) (0.60)
 Weighted average number
 of common shares,
 as reported(A) 3,147,383 3,151,833 3,148,441
 Results of Operations
 (restated)
 Three months Six months
 Periods ended March 31 1991 1992 1991 1992
 Net revenues $1,413,011 $1,469,209 $2,383,839 $1,905,691
 Gross profit 902,811 1,072,089 1,441,204 1,308,414
 Operating inc. (loss) (68,602) (86,369) (560,178)(1,033,833)
 Net inc. (loss) before
 extraordinary item (155,723) 2,267 (720,691)(1,157,498)
 Extraordinary loss on
 repayment of debt
 with stock -- (443,270) -- (443,270)
 Net (loss) (155,723) (441,003) (720,691)(1,610,768)
 Net (loss) per common share:
 Before extraordinary
 item $(0.05) -- $(0.22) $(0.24)
 Extraordinary item -- (0.08) -- (0.09)
 Net (loss) per common
 share (0.05) (0.08) (0.22) (0.33)
 Weighted avg. number of
 common shares 3,439,323 5,601,230 3,302,036 4,913,016
 Three months Nine months
 Periods ended June 30 1991 1992 1991 1992
 Net revenues $1,661,344 $1,205,891 $4,045,183 $3,111,582
 Gross profit 1,164,654 418,069 2,605,868 1,726,483
 Operating inc. (loss) 309,192 (1,539,986) (250,986)(2,573,819)
 Net inc. (loss) before
 extraordinary item 247,265 (1,436,747) (473,426)(2,604,245)
 Extraordinary loss on
 repayment of debt
 with stock -- -- -- (443,270)
 Net (loss) 247,265 (1,436,747) (473,426)(3,047,515)
 Net (loss) per common share:
 Before extraordinary
 item $(0.05) $(0.25) $(0.14) $(0.50)
 Extraordinary item -- -- -- (0.09)
 Net (loss) per common
 share 0.05 (0.25) (0.14) (0.59)
 Weighted avg. number of
 shares 4,882,410 5,857,866 3,367,774 5,190,046
 Balance Sheet Data
 As of June 30, 1992
 Cash $12,746,406
 Total current assets 16,247,000
 Total assets 16,708,555
 Total current
 liabilities 1,499,856
 Total liabilities 1,505,947
 Stockholders' equity 15,202,608
 (A) -- Adjusted for a 1:4 reverse stock split effected on Sept. 27, 1991.
 -0- 8/14/92
 /CONTACT: Mark Hoffman of Fidelity Medical, 201-377-0400, or Pete Earle of Omega Group, 212-661-8722, for Fidelity Medical/
 (FMSIE) CO: Fidelity Medical, Inc. ST: New Jersey IN: MTC SU: ERN


CK-OR -- NY027 -- 0029 08/14/92 13:01 EDT
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