SOURCE: Viking Systems, Inc.

Viking Systems, Inc.

August 14, 2012 07:15 ET

Viking Systems Reports Second Quarter 2012 Results

WESTBOROUGH, MA--(Marketwire - Aug 14, 2012) - Viking Systems, Inc. (OTCBB: VKNG), a leading worldwide developer, manufacturer and marketer of 3D and 2D visualization solutions for complex minimally invasive surgery today announced results for the quarter ended June 30, 2012.

Summary Financial Results for the Quarter

  • Sales were $2.2 million for the second quarter of 2012, a decrease of 11% compared with the $2.5 million of sales reported for second quarter of 2011.

  • Second quarter sales included revenue from sales of ten of Viking's 3DHD Vision Systems, including eight systems for clinical use outside the USA and two distributor demonstration systems.

  • Gross profit for the quarter was $433,000 or 20% of sales, an increase of 13% compared with gross profit of $385,000 or 15% of sales reported for second quarter of 2011.

  • The net loss for the quarter was $890,000 or $0.01 per share, compared with a net loss of $860,000 or $0.01 per share in the second quarter of 2011.

CONMED Corporation to Acquire Viking Systems, Inc
Additionally, in a joint announcement earlier today CONMED Corporation and Viking Systems announced that the companies have entered into a definitive agreement providing for CONMED to acquire Viking for $0.27 per share in cash. The purchase price represents a 42% premium over the closing price of Viking's common stock on August 13, 2012. Under the terms of the transaction, a wholly-owned subsidiary of CONMED will promptly commence a tender offer to purchase all of Viking's outstanding shares of common stock for $0.27 per share in cash. Following successful completion of the tender offer, CONMED will acquire all remaining shares not tendered into the offer through a second-step merger at the same price as in the tender offer.

The proposed transaction has been approved by the boards of directors of both companies. In addition, certain Viking stockholders have entered into Tender and Voting Agreements under which they have agreed, among other things, to tender into the tender offer all shares of Viking's common stock that they beneficially own. As of August 13, 2012, these stockholders own an aggregate of approximately 43% of Viking's issued and outstanding shares.

About Viking Systems, Inc.
Viking Systems, Inc. is a leading worldwide developer, manufacturer and marketer of 3D and 2D visualization solutions for complex minimally invasive surgery. It actively markets and sells the only stand alone, FDA cleared, cost-effective 3D system for use in minimally invasive laparoscopic surgery. Viking partners with medical device companies and healthcare facilities to provide surgeons with proprietary visualization systems enabling minimally invasive surgical procedures, which reduce patient trauma and recovery time. Viking, through its OEM products business, also designs and manufactures surgical vision systems and components for several leading medical instrument companies worldwide. For more information, please visit our website at www.vikingsystems.com.

Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements are estimates reflecting the best judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors as described in our annual report on Form 10-K under the heading "Risk Factors" as updated from time to time by our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission. Statements concerning forecasts, revenue growth, profitability, production and shipment of units, future financial results, and statements using words such as "estimate", "project", "plan", "intend", "expect", "anticipate", "believe" and similar expressions are intended to identify forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as required by law.

Important Information about the Tender Offer
The tender offer described in the press release disseminated by CONMED Corporation and us on August 14, 2012 has not yet commenced. This communication relates to a press release regarding our earnings release for the quarter ended June 30, 2012. This communication is neither an offer to purchase nor a solicitation of an offer to sell any securities. At the time the offer is commenced, CONMED will file a Tender Offer Statement on Schedule TO containing an Offer to Purchase, a related Letter of Transmittal and other documents relating to the tender offer, and thereafter we will file a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the offer.

In connection with the proposed transaction and required stockholder approval, we will file a proxy statement with the SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT VIKING AND THE TRANSACTION. Investors and Security holders may obtain free copies of these documents (when they are available) and other documents filed with the SEC at the SEC's web site at www.sec.gov. In addition, the documents we filed with the SEC may be obtained free of charge by contacting Viking Systems, Inc., 134 Flanders Road, Westborough, MA, 01581, Attention: Corporate Secretary. Our filings with the SEC are also available on our website at: http://www.vikingsystems.com/.

 
 
Sales of OEM and Branded Products were as follows:
 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2012     2011     Change     2012     2011     Change  
Branded products   $ 652,865     $ 1,023,877     $ (371,012)     $ 2,132,300     $ 2,427,622     $ (295,322 )
OEM products and service     1,514,203       1,485,202       29,001       3,550,647       3,204,051       346,596  
Total sales   $ 2,167,068     $ 2,509,079     $ (342,011)     $ 5,682,947     $ 5,631,673     $ 51,274  
                                                 
                                                 
3DHD Clinical Systems     8       8       -       25       15       10  
3DHD Demonstration Systems     2       8       (6 )     6       18       (12 )
Total 3DHD Systems     10       16       (6 )     31       33       (2)  
                                                 
3Di Systems (predecessor product)     -       -       -       -       4       (4 )
Total 3D systems     10       16       (6 )     31       37       (6 )
                                                 
                                                 
 
 
Condensed Statements of Operations - Unaudited
 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
                         
Sales, net   $ 2,167,068     $ 2,509,079     $ 5,682,947     $ 5,631,673  
Cost of sales     1,733,915       2,124,489       4,290,738       4,595,325  
                                 
    Gross profit     433,153       384,590       1,392,209       1,036,348  
                                 
Operating expenses:                                
  Selling and marketing     524,763       455,120       1,130,790       933,483  
  Research and development     349,484       362,670       661,385       618,633  
  General and administrative     449,031       427,272       891,602       861,137  
    Total operating expenses     1,323,278       1,245,062       2,683,777       2,413,253  
  Operating loss     (890,125 )     (860,472 )     (1,291,568 )     (1,376,905 )
                                 
Total other income     81       344       147       70,522  
Net loss   $ (890,044 )   $ (860,128 )   $ (1,291,421 )   $ (1,306,383 )
                                 
Net loss per share - basic and diluted   $ (0.01 )     (0.01 )   $ (0.02 )   $ (0.02 )
                                 
Weighted average shares - basic and diluted     72,554,620       66,920,426       72,554,620       62,948,738  
                                 
                                 

Operating Loss Before Non-Cash Charges

Management assesses operational performance and improvement by measuring and reporting our operating loss before noncash charges. Management believes this non-GAAP metric is useful in understanding our ability to generate cash, before consideration of working capital or capital expenditure needs.

A reconciliation of net loss in accordance with U.S. generally accepted accounting principles, or GAAP, to the non-GAAP measure of operating loss before non-cash charges is as follows:

             
             
    Three Months Ended
 June 30,
    Six Months Ended
June 30,
 
    2012     2011     2012     2011  
Net loss, as reported   $ (890,044 )   $ (860,128 )   $ (1,291,421 )   $ (1,306,383 )
Adjustments: Total other (income)/expense     (81 )     (344 )     (147 )     (70,522 )
Operating loss, as reported     (890,125 )     (860,472 )     (1,291,568 )     (1,376,905 )
Non-cash stock option expense     70,093       103,628       144,042       199,925  
Depreciation and amortization     138,028       91,058       268,826       169,633  
Operating loss before non-cash charges   $ (682,004 )   $ (665,786 )   $ (878,700 )   $ (1,007,347 )
                                 
                                 
 
 
Condensed Balance Sheets
 
    June 30,   December 31,
    2012   2011
Assets   (unaudited)    
Current assets:        
Cash and cash equivalents   $ 514,475   $ 1,261,864
Accounts receivable, net     1,270,146     1,184,064
Inventories     2,278,714     2,308,564
Prepaid expenses and other current assets     142,797     58,704
Total current assets     4,206,132     4,813,196
             
Property and equipment, net     513,625     627,128
Total assets   $ 4,719,757   $ 5,440,324
             
Liabilities and Stockholders' Equity            
Current liabilities:            
Accounts payable   $ 1,516,178   $ 1,131,694
Accrued expenses     853,183     654,908
Deferred revenue     154,711     310,658
Total current liabilities     2,524,072     2,097,260
             
Noncurrent liabilities     579,444     579,444
Total stockholders' equity     1,616,241     2,763,620
Total liabilities and stockholders' equity   $ 4,719,757   $ 5,440,324

Contact Information

  • Contact:
    Viking Systems, Inc.
    Robert Mathews
    EVP & CFO
    508-366-3668 Ext. 8392