US Surgical Corp Case Doc

Topics: Asset, Balance sheet, Auditor's report Pages: 13 (4843 words) Published: April 25, 2015
CASE 1.10
United States SUrgical Corporation
1980 an ‘1981 ftnicia1
sheets and iicbme statements fOr the j
1 Thas and subsequent quOtatiOnS unless indicated othrwise, were taken from Secunties and Exchange AccountiAg and AuthdrzEifocerhe,# Release No 1O9A, August 1986. 122
H
 
SECTION ONE COMPREHENSIVE CASES
IIBIT 1
TED STATES :GICAL
PORAT1ON’S
‘9—1981
kNCIAL
TEMENTS
Current Assets:
Cash
Receivables (net)
Inventories:
Finished Goods
Work in Process
Raw Materials
Other Current Assets
Total Current Assets
Property. Plant, and Equipment:
• Buildings
Molds and Dies
ALlowance For Depredation
Other Assets
Total Assets
1981
$ 426
36,670
29,216
5,105
20,948
55,269
7,914
10,279
2,502
3 2,416
32,082
40,227
107,227
(14,953)
2,274
14,786
$207,339
(000s omitted)
December 31, 1980
$ 1,243
30,475
9,860
2,667
18,806
31,333
1,567
64,618
2,371
18,511
15,963
23,762
60,607
(9,96.4)
50,643
3,42 -
$119,103
1979
$ 596
22557
5,685
1,153
7,365
14,203
1,820
39,116
1,027
13,019
8,777
12,362
35,185
(6,340)
28,845
2,499
$70,520
Current Liabilities:
Accounts PayabLe
Notes Payable
Income Taxes Payable
Current Portion of Long- Term Debt’
Accrued Epenses
Total Current Liabilities
Long-Term Debt
Deferred Income Taxes
U.S. Surgical Corporation ConsoLidated Balance Sheets 1979—1981 tand
Machinery and Equipment
‘Stockholders’ Equity:
Common Stock
Additional Paid-in Capital
Retaifled Earnings
Translation Allowance
Deferred Compensation—from Issuance of Restricted Stock
Total Stockholders’ Equity Total Liabilities and
Stockholders’ Equity
q
$207,339
$119,103

$ 12,278
S
6,951
$ 6,271


1,596

1,685

724

666
401
5,673
18,675

5,130
14,432
5,145
13,413
80,642

47,569
33,497
7,466

2,956
1,384
1,081

930
379
72,594
32,665
(1,086)
(4,698)
100,556

34,932
20,881
— (2,597)
54,146
10,736
13,189
— (2,078)
22,226
$70,520

 
CASE 1.10 UNITED STATES SURGICAL CORPORATION
EXHIBIT 1—
US. Su,gftal Corporation . continued
Consolidated Income Statements 1979—1981 (000s omitted) ... UNrrED STATES December 31, Suiicj.
1981 . 1980 1979 CORPORATION’S
- 1979—1981
Net SaLes - $111 800 886 214 $60876
Costs and Expenses STATEMENTS
Cost of Produtts Sold .; i 47,983 32,300 25,659
Selling, General, and
Administrative* 45,0i5 - :: 37,740 23,935
Interest , ,, 5,898 ,, 4063 3,403
i? 98.896 ‘“ 74,103 527
- .f-t? - zI’t’. - — S.’’’ -. -
Income Before Income Taxes 12 904 12 111 7 8
.IncomeTaxs : .
FederaL and Foreign :.: . . . 795 •. 3A06 -. 2,279
State and l.ocal 325 -• ______
— 1,120 4,226 2,750
Net Income $11 784 S 5129
Net Income per common share -
and common share equivalent -. $113 - ‘,L’ $89
_$,‘ F
Average number of common shares
and éômmon share equivalents ‘.‘- - ‘‘ .. -. . .
outstanding . :--: 10,403,392 8,816,986 . 7,555,710
*lrIcItjdj in the amounts for this ilne iWrn are the following researth and devloprnent-expenes 81—$1 337 198G—$3 020 1979—42.289 . ,
To settle the SEC charges, USSC officials signed an agreement with the federal agency that forced the company to reduce its previously reported earnings by $26 mul ion. Additionally senior executives of USSC, including Hirsch, agreed to return to the company large bonuses they had been paid during 1980 and 1981. Following the signi ng of th agreement with the SEC, Hirsch reported that the Criticism of his company and his management decisions was undeserved. Hirsch implied that cost considerat ions motivated him to accept the SEC sanctions: “It was our Opinion that the settlem ent [with the SECJ was preferable to long, costly and time-consuming litigation:’2 USSC’s Abusive Accounting Practices

The enforcement release that disclosed the key findings of the SEC’S...
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