ATL consolidates Interspec division,posts $20 million loss in 1994

March 1, 1995

Success of HDI 3000 jump starts 1995 sales Chalk up 1994 as the quintessential good news/bad news year atAdvanced Technology Laboratories. The ultrasound scanner vendorrecorded mediocre sales growth and a net loss of $20 million for1994,

Success of HDI 3000 jump starts 1995 sales

Chalk up 1994 as the quintessential good news/bad news year atAdvanced Technology Laboratories. The ultrasound scanner vendorrecorded mediocre sales growth and a net loss of $20 million for1994, primarily due to extraordinary charges. ATL also announcedthe closure of the Ambler, PA, facility it inherited with theacquisition of Interspec last year. The vendor's new HDI 3000scanner is off to a roaring start, however, and should help improvethe company's 1995 financial picture.

ATL sold more than 100 new HDI 3000 scanners in the last weeksof 1994, according to president and COO David M. Perozek. Thepositive reception boosted ATL's fourth-quarter results and fulfilledthe company's expectations after it launched the new $200,000platform at last year's Radiological Society of North Americashow (SCAN 10/26/94).

ATL's acquisition of cardiac ultrasound scanner vendor Interspecis also producing results, according to Perozek. The combinationof Interspec's moderately priced echocardiology products and ATL'ssales and distribution strengths in Asian and Latin American marketshelped boost dollar sales volumes of the Apogee lines by over200% in the fourth quarter of 1994, compared to the same perioda year before, he said.

ATL used the announcement of its 1994 financial results todisclose plans for consolidation of ATL and Interspec. Interspec'smanufacturing operations and R&D laboratory will be movedfrom Pennsylvania to the parent company's Bothell, WA, headquartersin the second half of this year. About 80 employees, representingapproximately 4% of ATL's total work force, will be laid off,according to Perozek. The downsizing will save about $8 millionannually.

The company took a one-time charge of $1.6 million relatedto the plant closure in the fourth quarter of 1994. An additional$5 million charge will accrue this year, according to the company.

The changes coincide with a general management restructuring.ATL established a new worldwide sales and marketing division toconsolidate sales-related activities. Castor F. Diaz, formerlysenior vice president of ATL Europe, will be transferred to Bothellto lead the new operation. He was promoted to senior vice presidentof worldwide sales and marketing.

Consolidation does not affect the management of ATL's U.S.cardiology sales force, Perozek said. Sales operations supervisedby William Doherty will be moved to a site near Ambler, PA. Hewill report to Diaz.

New duties were being defined in mid-February for Interspecfounder and former chief executive Edward Ray, according to Perozek.He continued to serve as a board member and executive committeemember, reporting to Fill.

Perozek also announced that a possible end is in sight forits long and costly patent dispute with SRI International of MenloPark, CA. Damages against ATL are expected to be assessed in March,Perozek said.

The action comes after the U.S. Court of Appeals for the FederalDistrict rejected ATL's appeal of a 1992 summary judgment againstthe manufacturer issued by a U.S. District Court (SCAN 2/1/95and 2/24/93). ATL will not appeal the case to the U.S. SupremeCourt, Perozek said. The patent covers the use of an electronicprocessing filter that varies its performance according to thedepth of echoes returning to the transducer, he said. ATL assesseditself $5 million in the fourth quarter of 1994 for ongoing chargesaccrued in the case.

Charges associated with the lawsuit, the restructuring andthe acquisition of Interspec in May 1994 conspired against ATL'sbottom line last year. The company reported a net loss of $20.2million for 1994 (end-December), compared to a loss in 1993 of$3.3 million. Revenues for the year were $366.2 million, up 1.6%compared to $360.5 million in 1993.

Despite an early surge of 1995 sales, Perozek does not counton recovery this year. Falling industry sales for three straightyears doesn't encourage optimism, according to Perozek.

"We haven't set our expectations so high as to believethat sales will spring back," he said.