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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q/A
AMENDMENT No.1

|ý                                            | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|-------------------------------------------- | ----------------------------------------------------------------------------------------
|For The Quarterly Period Ended June 30, 2002
|or                                          
|o                                            | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period from
 to          

Commission file number 0-19386

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FISCHER IMAGING CORPORATION(Exact name of Registrant as specified in its charter)

|DELAWARE(State of incorporation)                                                  |  | 36-2756787(I.R.S. Employer Identification No.)
|--------------------------------------------------------------------------------- |  | ----------------------------------------------
|12300 North Grant Street
Denver, Colorado(Address of principal executive offices) |  | 80241(Zip Code)                               

Registrant's
telephone number, including area code:(303) 452-6800

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Indicate
by check mark whether the Registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (ii) has been subject to such filing requirements for the past
90 days. Yes o    No ý

The
number of shares of Registrant's Common Stock outstanding as of August 30, 2002 was 9,274,826.

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EXPLANATORY NOTE

This filing amends the 10-Q for the period ended June 30, 2002 for the following purposes: (a) the re-classification of a
$32.2 million favorable patent infringement lawsuit settlement (for further discussion of the classification of this settlement, please see Note 4 to unaudited financial statements);
(b) to note that this report on Form 10-Q has been duly reviewed in accordance with SAS-71 review procedures; and (c) to reflect an increase in the
allowance for doubtful accounts.

FISCHER IMAGING CORPORATION
TABLE OF CONTENTS



|         |  |                                                                                       |  |                                                                                                                  
|-------- |  | ------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------
|PART I.  |  | FINANCIAL INFORMATION                                                                
|Item 1.  |  | Condensed Consolidated Financial Statements                                          
|         |  |                                                                                       |  | Condensed Consolidated Balance Sheets (unaudited)June 30, 2002 and December 31, 2001                            
|         |  |                                                                                       |  | Condensed Consolidated Statements of Income (unaudited)Three and six months ended June 30, 2002 and July 1, 2001
|         |  |                                                                                       |  | Condensed Consolidated Statements of Cash Flows (unaudited)Six months ended June 30, 2002 and July 1, 2001      
|         |  |                                                                                       |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                 
|Item 2.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                           
|Item 4.  |  | Controls and Procedures                                                              
|PART II. |  | OTHER INFORMATION                                                                    
|Item 1.  |  | Legal Proceedings                                                                    
|Item 2.  |  | Changes in Securities and Use of Proceeds                                            
|Item 3.  |  | Defaults Upon Senior Securities                                                      
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                  
|Item 5.  |  | Other Information                                                                    
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                     





Part 1Financial Information

Item 1. Financial Statements

FISCHER IMAGING CORPORATION  CONDENSED CONSOLIDATED BALANCE SHEETS  (Amounts in thousands except share data)  (Unaudited)

|                                         |                                                                                                                                                                          | June 30, 2002               |                   | December 31, 2001                              |       
|---------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------- | ----------------- | ---------------------------------------------- | ------
|ASSETS                                   |                                                                                                                                                                         
|Current assets:                          |                                                                                                                                                                          |                             |                   |                                                |       
|                                         | Cash and cash equivalents                                                                                                                                                |                             | $                 | 18,195                                         |       
|                                         | Trade accounts receivable, net of allowance for doubtful accounts of $1,175 and $1,278 at June 30, 2002 and December 31, 2001, respectively                              |                             |                   | 16,194                                         |       
|                                         | Inventories, net                                                                                                                                                         |                             |                   | 13,182                                         |       
|                                         | Patent settlement receivable                                                                                                                                             |                             |                   | 900                                            |       
|                                         | Prepaid expenses and other current assets                                                                                                                                |                             |                   | 564                                            |       
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|                                         |                                                                                                                                                                          | Total current assets        |                   |                                                | 49,035
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|Non-current patent settlement receivable |                                                                                                                                                                          |                             | 6,300             |                                                |       
|Property and equipment:                  |                                                                                                                                                                          |                             |                   |                                                |       
|                                         | Manufacturing equipment                                                                                                                                                  |                             |                   | 8,451                                          |       
|                                         | Office equipment and leasehold improvements                                                                                                                              |                             |                   | 6,771                                          |       
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|                                         | Total property and equipment                                                                                                                                             |                             |                   | 15,222                                         |       
|                                         | Less: accumulated depreciation and amortization                                                                                                                          |                             |                   | 12,940                                         |       
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|                                         |                                                                                                                                                                          | Property and equipment, net |                   |                                                | 2,282 
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|Intangible assets, net                   |                                                                                                                                                                          |                             | 1,171             |                                                |       
|Deferred costs and other assets          |                                                                                                                                                                          |                             | 1,193             |                                                |       
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|                                         |                                                                                                                                                                          | Total assets                |                   | $                                              | 59,981
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|LIABILITIES AND STOCKHOLDERS' INVESTMENT |                                                                                                                                                                         
|Current liabilities:                     |                                                                                                                                                                          |                             |                   |                                                |       
|                                         | Trade accounts payable                                                                                                                                                   |                             | $                 | 1,786                                          |       
|                                         | Accrued salaries and wages                                                                                                                                               |                             |                   | 1,859                                          |       
|                                         | Customer deposits                                                                                                                                                        |                             |                   | 23                                             |       
|                                         | Accrued warranty and installation costs                                                                                                                                  |                             |                   | 1,357                                          |       
|                                         | Deferred service revenue                                                                                                                                                 |                             |                   | 369                                            |       
|                                         | Deferred royalty revenue                                                                                                                                                 |                             |                   | 900                                            |       
|                                         | Other current liabilities                                                                                                                                                |                             |                   | 3,073                                          |       
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|                                         |                                                                                                                                                                          | Total current liabilities   |                   |                                                | 9,367 
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|Long-term debt                           |                                                                                                                                                                          |                             | 915               |                                                |       
|Non-current deferred royalty revenue     |                                                                                                                                                                          |                             | 6,300             |                                                |       
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|                                         |                                                                                                                                                                          |                             | Total liabilities |                                                |       
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|Stockholders' investment:                |                                                                                                                                                                          |                             |                   |                                                |       
|                                         | Common Stock, $.01 par value, 25,000,000 shares authorized, 9,255,553 and 9,176,646 shares issued and outstanding at June 30, 2002 and December 31, 2001, respectively   |                             |                   | 92                                             |       
|                                         | Preferred Stock, 5,000,000 shares authorized: Series C Junior Participating Preferred Stock, $.01 par value, 500,000 shares authorized, no shares issued and outstanding |                             |                   |                                               |       
|                                         | Series D convertible Preferred Stock, $.01 par value, 506,667 shares authorized, no shares issued and outstanding                                                        |                             |                   |                                               |       
|                                         | Additional paid-in capital                                                                                                                                               |                             |                   | 49,009                                         |       
|                                         | Accumulated deficit                                                                                                                                                      |                             |                   | (5,498                                         | )     
|                                         | Accumulated other comprehensive loss (foreign currency translation adjustments)                                                                                          |                             |                   | (204                                           | )     
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|                                         |                                                                                                                                                                          |                             |                   | Total stockholders' investment                 |       
|                                         |                                                                                                                                                                          |                             |                   |                                                |       
|                                         |                                                                                                                                                                          |                             |                   | Total liabilities and stockholders' investment |       
|                                         |                                                                                                                                                                          |                             |                   |                                                |       

The accompanying notes are an integral part of these condensed consolidated financial statements.





FISCHER IMAGING CORPORATION  CONDENSED CONSOLIDATED STATEMENTS OF INCOME  (Amounts in thousands except per share data)  (Unaudited)

|                                                                |                                        | Three Months Ended       |         | Six Months Ended |       
|--------------------------------------------------------------- | -------------------------------------- | ------------------------ | ------- | ---------------- | ------
|
|Revenues:                                                       |                                        |                          |         |                  |       
|                                                                | Products and services                  |                          | $       | 8,793            |       
|Cost of sales:                                                  |                                        |                          |         |                  |       
|                                                                | Products and services                  |                          |         | 8,621            |       
|                                                                | Inventory write-down and other charges |                          |         | 7,226            |       
|                                                                |                                        |                          |         |                  |       
|                                                                |                                        | Total cost of sales      |         |                  | 15,847
|                                                                |                                        |                          |         |                  |       
|Gross (loss) profit                                             |                                        |                          | (7,054  | )                |       
|Operating expenses:                                             |                                        |                          |         |                  |       
|                                                                | Research and development               |                          |         | 813              |       
|                                                                | Selling, marketing and service         |                          |         | 3,807            |       
|                                                                | General and administrative             |                          |         | 2,476            |       
|                                                                |                                        |                          |         |                  |       
|                                                                |                                        | Total operating expenses |         |                  | 7,096 
|                                                                |                                        |                          |         |                  |       
|(Loss) income from operations                                   |                                        |                          | (14,150 | )                |       
|                                                                | Interest expense                       |                          |         | (37              | )     
|                                                                | Interest income                        |                          |         | 17               |       
|                                                                | Patent settlement                      |                          |         | 24,700           |       
|                                                                | Other expense, net                     |                          |         | (50              | )     
|                                                                |                                        |                          |         |                  |       
|Income before income taxes                                      |                                        |                          | 10,480  |                  |       
|                                                                |                                        |                          |         |                  |       
|                                                                | Provision for income taxes             |                          |         |                 |       
|Net income                                                      |                                        | $                        | 10,480  |                  | $     
|                                                                |                                        |                          |         |                  |       
|Net income per share:                                           |                                        |                          |         |                  |       
|                                                                | Basic                                  |                          | $       | 1.13             |       
|                                                                |                                        |                          |         |                  |       
|                                                                | Diluted                                |                          | $       | 1.05             |       
|                                                                |                                        |                          |         |                  |       
|Weighted average shares used to calculate net income per share: |                                        |                          |         |                  |       
|                                                                | Basic                                  |                          |         | 9,239            |       
|                                                                |                                        |                          |         |                  |       
|                                                                | Diluted                                |                          |         | 10,013           |       
|                                                                |                                        |                          |         |                  |       

The
accompanying notes are an integral part of these condensed consolidated financial statements.





FISCHER IMAGING CORPORATION  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (Amounts in thousands)  (Unaudited)

|                                               |                                           | Six Months Ended |       
|---------------------------------------------- | ----------------------------------------- | ---------------- | ------
|
|Cash flows from operating activities:          |                                           |                  |       
|                                               | Net cash provided by operating activities |                  | $     
|Cash flows from investing activities:          |                                           |                  |       
|                                               | Capital expenditures                      |                  |       
|                                               |                                           |                  |       
|                                               | Net cash used in investing activities     |                  |       
|Cash flows from financing activities:          |                                           |                  |       
|                                               | Proceeds from exercise of stock options   |                  |       
|                                               | Repayments of long-term debt              |                  |       
|                                               |                                           |                  |       
|                                               | Net cash provided by financing activities |                  |       
|Effect of exchange rate changes on cash        |                                           |                  | (4    
|                                               |                                           |                  |       
|Net increase in cash and cash equivalents      |                                           |                  | 16,962
|Cash and cash equivalents, beginning of period |                                           |                  | 1,233 
|                                               |                                           |                  |       
|Cash and cash equivalents, end of period       |                                           | $                | 18,195
|                                               |                                           |                  |       

The
accompanying notes are an integral part of these condensed consolidated financial statements.





FISCHER IMAGING CORPORATION        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  FOR THE SIX MONTHS ENDED JUNE 30, 2002        (UNAUDITED)

(1)    GENERAL

In management's opinion, the accompanying unaudited condensed consolidated balance sheets and statements of income and cash flows contain all adjustments
necessary to present fairly the financial position of the Fischer Imaging Corporation (the "Company"), at June 30, 2002, its results of operations for the three and six months ended
June 30, 2002 and July 1, 2001 and its cash flows for the six months ended June 30, 2002 and July 1, 2001. Results of operations and cash flows for the interim periods may
not be indicative of the results of operations and cash flows for the full fiscal year.

These
unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, as a result, do not include all
the information and note disclosures required by generally accepted accounting principles. The financial statements should be read in conjunction with the audited financial statements and notes
thereto contained in the Company's latest annual report on Form 10-K for the year ended December 31, 2001.

Typically,
and for the year ending December 31, 2002, the Company closes its first three fiscal quarters as of the Sunday closest to the end of March, June and September,
respectively.

During
the second quarter of 2002, the Board of Directors approved a plan to review the Company's business and its organizational structure. This resulted in the establishment of the new
Radiology, Electrophysiology & Surgery ("RES") Division, with its own sales, marketing and engineering structure, and staffed with experienced Company employees. Management believes the
divisionalization of the
business relating to its non-core products into the newly formed RES Division will facilitate increased focus on the RES product lines.

The
Company's core business is the design, manufacture and marketing of specialty digital and other mammography systems for the diagnosis and treatment of disease.

(2)    INVENTORIES

Inventories, which include costs of materials, direct labor, and manufacturing overhead, are priced at the lower of cost (using primarily the
first-in, first-out, or FIFO, method of valuation) or market. Write-downs for excess and obsolete inventories are charged to expense in the period when conditions giving rise
to the write-downs are first recognized.

During
the second quarter, the Company conducted a review of its products and strategies pertaining to its business and in particular with respect to its newly formed RES Division. As a
result of this analysis, the Company has identified significant amounts of obsolete inventories related to product strategy changes, primarily in the RES product lines. Additionally, during the second
quarter, the Company consolidated and reviewed its warehousing operations, inventory stores locations, production lines, field inventory and work order inventory counts. As a consequence of this
review, a total inventory shrinkage charge of $4.7 million relating to the review of field inventory and work order inventory was estimated and has been recorded in cost of
salesproducts and services. A total charge of $6.1 million relating to obsolete inventory primarily in the non-core business products that represents the RES product
lines was estimated and recorded in cost of salesinventory write-down and other charges.

The
Company will be taking a complete physical inventory at the end of third quarter and is not expected to result in any further significant adjustments to inventory balances.

Inventories
consisted of the following components (in thousands):

June 30, 2002

December 31, 2001Raw materials and component parts

$
6,945

$
8,323Work in process & finished goods


6,237


11,360Inventories, net

$
13,182

$
19,683


(3)    NOTES PAYABLE AND LONG-TERM DEBT

Notes payable and long-term debt consisted of the following (in thousands):

June 30, 2002

December 31, 2001Capitalized lease obligations

$
18

$
76Loan on CSV of life insurance


915


883933


959Lesscurrent maturities


(18
)

(34
)Long-term debt

$
915

$
925


The
Company paid interest of $37,000 and $50,000 for the quarters ended June 30, 2002 and July 1, 2001, respectively.

See
"Management's Discussion and AnalysisLiquidity and Capital Resources" for further discussion of the Company's line of credit.

(4)    PATENT LITIGATION SETTLEMENT

During the second quarter, the Company settled a patent infringement lawsuit that it had filed against ThermoElectron and Hologic, Inc. Under the
$32.2 million settlement, the Company received $25 million in cash and $7.2 million in a long-term receivable from ThermoElectron to be received in equal annual
installments over the remaining eight-year life of the patents for continued sales of the breast-biopsy imaging system now being sold by Hologic, Inc. The Company recognized a one
time net other income item of $24.7 million in quarter two, net of certain settlement costs. The $7.2 million receivable, due to various contingencies, will be recognized as cash is
received over the remaining receivable payment period, which will result in $900,000 being recognized each year during quarter two for the remaining 8 year patent life.

(5)    NET INCOME PER SHARE

Basic net income per share is computed by dividing the net income by the weighted average number of shares of common stock outstanding. Diluted net income per
share is determined by dividing the net income by the sum of: (1) the weighted average number of common shares outstanding; and (2) if dilutive, the effect of outstanding stock options determined utilizing the treasury stock method.

A
reconciliation between the number of securities used to calculate basic and diluted net income per share is as follows (in thousands):

Three Months Ended

Six Months EndedJune 30, 2002

July 1 2001

June 30, 2002

July 1 2001Weighted average of common shares outstanding:Basic

9,239

8,635

9,213

8,633Effect of stock options (treasury method)

774

768

811

602Diluted

10,013

9,403

10,024

9,235


As
of June 30, 2002 and July 1, 2001, there were, respectively, 1,580,882 and 1,652,275 outstanding options to purchase shares of common stock under the Company's current
stock option plans.

The
anti-dilutive options for the three months ended June 30, 2002 and July 1, 2001 were 806,203 and 884,132, respectively. The anti-dilutive
options for the six months ended June 30, 2002 and July 1, 2001 were 769,821 and 1,050,832, respectively. The anti-dilutive options were excluded from the computation of
diluted earnings per share for the quarters ended June 30, 2002 and July 1, 2001 because the exercise price exceeded the average market price of the stock.

(6)    COMPREHENSIVE INCOME

Comprehensive income is defined as the change in equity of an enterprise other than the change resulting from investments by or distributions to its owners. For
the Company, comprehensive income includes only net earnings and foreign currency translation adjustments, as follows (in thousands):

Three Months Ended

Six Months EndedJune 30, 2002

July 1 2001

June 30, 2002

July 1 2001Net income

$
10,480

$
751

$
10,891

$
958Foreign currency translation adjustments


(4
)

(144
)

(2
)

(388
)Comprehensive income

$
10,476

$
607

$
10,889

$
570


(7)    NEW OPERATING DIVISION

In establishing the new RES Division, the Company recognized a $1.1 million charge during the second quarter to provide system enhancements for
non-core systems already sold in order to meet certain customer and safety requirements. This charge and the $6.1 million inventory write-down during the second quarter
have been included in the consolidated statement of operations in cost of salesinventory write-down and other charges. Additionally in the second quarter, the Company charged
a $0.2 million write-down of impaired goodwill related to a now-discontinued sales subsidiary of non-core products, which is included in general and
administrative expenses.

(8)    OPERATING AND GEOGRAPHIC SEGMENT INFORMATION

The Company operates in a single industry segment: the design, manufacture, and marketing of x-ray imaging systems. The Company's manufacturing and
most distribution activities are in the United States, including export sales to Europe, primarily, and elsewhere. The Company also has marketing operations in Europe. The following is a summary of
the Company's operations by segment.

(in thousands)

|                                 |                             | Domestic                               |  | Export |        | Total |   | Europe |   | Inter-company
Sales |        | Total |     
|-------------------------------- | --------------------------- | -------------------------------------- |  | ------ | ------ | ----- | - | ------ | - | ------------------- | ------ | ----- | ----
|Three Months Ended June 30, 2002 |                             |                                        |  |        |        |       |   |        |   |                     |        |       |     
|                                 | Revenues:                   |                                        |  |        |        |       |   |        |   |                     |        |       |     
|                                 |                             | Products                               |  | $      | 4,095  |       | $ | 930    |   | $                   | 5,025  |       | $   
|                                 |                             | Services                               |  |        | 3,460  |       |   |       |   |                     | 3,460  |       |     
|                                 |                             |                                        |  |        |        |       |   |        |   |                     |        |       |     
|                                 |                             | Total revenues                         |  |        | 7,555  |       |   | 930    |   |                     | 8,485  |       |     
|                                 | Cost of sales:              |                                        |  |        |        |       |   |        |   |                     |        |       |     
|                                 |                             | Products                               |  |        | 7,802  |       |   | 583    |   |                     | 8,385  |       |     
|                                 |                             | Services                               |  |        | 133    |       |   |       |   |                     | 133    |       |     
|                                 |                             | Inventory write-down and other charges |  |        | 7,226  |       |   |       |   |                     | 7,226  |       |     
|                                 |                             |                                        |  |        |        |       |   |        |   |                     |        |       |     
|                                 |                             | Total cost of sales                    |  | $      | 15,161 |       | $ | 583    |   |                     | 15,744 |       |     
|                                 |                             |                                        |  |        |        |       |   |        |   |                     |        |       |     
|                                 | Gross profit                |                                        |  |        |        |       |   |        |   | (7,259              | )      |       | 205 
|                                 | Operating expenses          |                                        |  |        |        |       |   |        |   | 6,718               |        |       | 378 
|                                 |                             |                                        |  |        |        |       |   |        |   |                     |        |       |     
|                                 | Loss from operations        |                                        |  |        |        |       |   |        |   | (13,977             | )      |       | (173
|                                 | Interest expense            |                                        |  |        |        |       |   |        |   | (37                 | )      |       |    
|                                 | Interest income             |                                        |  |        |        |       |   |        |   | 17                  |        |       |    
|                                 | Other income (expense), net |                                        |  |        |        |       |   |        |   | 24,658              |        |       | (8  
|                                 |                             |                                        |  |        |        |       |   |        |   |                     |        |       |     
|                                 | Net income (loss)           |                                        |  |        |        |       |   |        | $ | 10,661              |        | ($    | 181 
|                                 |                             |                                        |  |        |        |       |   |        |   |                     |        |       |     

|                                |                | Domestic                    |  | Export |        | Total |   | Europe |  | Inter-company
Sales |        | Total |  
|------------------------------- | -------------- | --------------------------- |  | ------ | ------ | ----- | - | ------ |  | ------------------- | ------ | ----- | -
|Three Months Ended July 1, 2001 |                |                             |  |        |        |       |   |        |  |                     |        |       |  
|                                | Revenues:      |                             |  |        |        |       |   |        |  |                     |        |       |  
|                                |                | Products                    |  | $      | 7,542  |       | $ | 1,422  |  | $                   | 8,964  |       | $
|                                |                | Services                    |  |        | 3,541  |       |   |       |  |                     | 3,541  |       |  
|                                |                |                             |  |        |        |       |   |        |  |                     |        |       |  
|                                |                | Total revenues              |  |        | 11,083 |       |   | 1,422  |  |                     | 12,505 |       |  
|                                | Cost of sales: |                             |  |        |        |       |   |        |  |                     |        |       |  
|                                |                | Products                    |  |        | 4,096  |       |   | 846    |  |                     | 4,942  |       |  
|                                |                | Services                    |  |        | 536    |       |   |       |  |                     | 536    |       |  
|                                |                |                             |  |        |        |       |   |        |  |                     |        |       |  
|                                |                | Allocated                   |  |        | 4,632  |       |   | 846    |  |                     | 5,478  |       |  
|                                |                | Unallocated                 |  |        | 809    |       |   |       |  |                     | 809    |       |  
|                                |                |                             |  |        |        |       |   |        |  |                     |        |       |  
|                                |                | Total cost of sales         |  | $      | 5,441  |       | $ | 846    |  |                     | 6,287  |       |  
|                                |                |                             |  |        |        |       |   |        |  |                     |        |       |  
|                                |                | Gross profit                |  |        |        |       |   |        |  |                     | 6,218  |       |  
|                                |                | Operating expenses          |  |        |        |       |   |        |  |                     | 5,418  |       |  
|                                |                |                             |  |        |        |       |   |        |  |                     |        |       |  
|                                |                | Income from operations      |  |        |        |       |   |        |  |                     | 800    |       |  
|                                |                | Interest expense            |  |        |        |       |   |        |  |                     | (50    | )     |  
|                                |                | Interest income             |  |        |        |       |   |        |  |                     | 25     |       |  
|                                |                | Other (expense) income, net |  |        |        |       |   |        |  |                     | (56    | )     |  
|                                |                |                             |  |        |        |       |   |        |  |                     |        |       |  
|                                |                | Net income                  |  |        |        |       |   |        |  | $                   | 719    |       | $
|                                |                |                             |  |        |        |       |   |        |  |                     |        |       |  

Inter-Company
sales from the United States and Europe are recorded on the basis of transfer pricing established by the Company.



(in thousands)

|                               |                             | Domestic                               |  | Export |        | Total |   | Europe |   | Inter-Company
Sales |        | Total |    
|------------------------------ | --------------------------- | -------------------------------------- |  | ------ | ------ | ----- | - | ------ | - | ------------------- | ------ | ----- | ---
|Six Months Ended June 30, 2002 |                             |                                        |  |        |        |       |   |        |   |                     |        |       |    
|                               | Revenues:                   |                                        |  |        |        |       |   |        |   |                     |        |       |    
|                               |                             | Products                               |  | $      | 10,079 |       | $ | 2,031  |   | $                   | 12,110 |       | $  
|                               |                             | Services                               |  |        | 7,102  |       |   |       |   |                     | 7,102  |       |    
|                               |                             |                                        |  |        |        |       |   |        |   |                     |        |       |    
|                               |                             | Total revenues                         |  |        | 17,181 |       |   | 2,031  |   |                     | 19,212 |       |    
|                               | Cost of sales:              |                                        |  |        |        |       |   |        |   |                     |        |       |    
|                               |                             | Products                               |  |        | 11,955 |       |   | 1,279  |   |                     | 13,234 |       |    
|                               |                             | Services                               |  |        | 688    |       |   |       |   |                     | 688    |       |    
|                               |                             | Inventory write-down and other charges |  |        | 7,226  |       |   |       |   |                     | 7,226  |       |    
|                               |                             |                                        |  |        |        |       |   |        |   |                     |        |       |    
|                               |                             | Total cost of sales                    |  | $      | 19,869 |       | $ | 1,279  |   |                     | 21,148 |       |    
|                               |                             |                                        |  |        |        |       |   |        |   |                     |        |       |    
|                               | Gross profit                |                                        |  |        |        |       |   |        |   | (1,936              | )      |       | 575
|                               | Operating expenses          |                                        |  |        |        |       |   |        |   | 11,692              |        |       | 611
|                               |                             |                                        |  |        |        |       |   |        |   |                     |        |       |    
|                               | Loss from operations        |                                        |  |        |        |       |   |        |   | (13,628             | )      |       | (36
|                               | Interest expense            |                                        |  |        |        |       |   |        |   | (68                 | )      |       |   
|                               | Interest income             |                                        |  |        |        |       |   |        |   | 18                  |        |       |   
|                               | Other income (expense), net |                                        |  |        |        |       |   |        |   | 24,623              |        |       | (18
|                               |                             |                                        |  |        |        |       |   |        |   |                     |        |       |    
|                               | Net income (loss)           |                                        |  |        |        |       |   |        | $ | 10,945              |        | ($    | 54 
|                               |                             |                                        |  |        |        |       |   |        |   |                     |        |       |    

|                              |                             | Domestic            |  | Export |        | Total |   | Europe |   | Inter-Company
Sales |        | Total |    
|----------------------------- | --------------------------- | ------------------- |  | ------ | ------ | ----- | - | ------ | - | ------------------- | ------ | ----- | ---
|Six Months Ended July 1, 2001 |                             |                     |  |        |        |       |   |        |   |                     |        |       |    
|                              | Revenues:                   |                     |  |        |        |       |   |        |   |                     |        |       |    
|                              |                             | Products            |  | $      | 14,570 |       | $ | 2,323  |   | $                   | 16,893 |       | $  
|                              |                             | Services            |  |        | 6,401  |       |   |       |   |                     | 6,401  |       |    
|                              |                             |                     |  |        |        |       |   |        |   |                     |        |       |    
|                              |                             | Total revenues      |  |        | 20,971 |       |   | 2,323  |   |                     | 23,294 |       |    
|                              | Cost of sales:              |                     |  |        |        |       |   |        |   |                     |        |       |    
|                              |                             | Products            |  |        | 8,117  |       |   | 1,348  |   |                     | 9,465  |       |    
|                              |                             | Services            |  |        | 871    |       |   |       |   |                     | 871    |       |    
|                              |                             |                     |  |        |        |       |   |        |   |                     |        |       |    
|                              |                             | Allocated           |  |        | 8,988  |       |   | 1,348  |   |                     | 10,336 |       |    
|                              |                             | Unallocated         |  |        | 1,448  |       |   |       |   |                     | 1,448  |       |    
|                              |                             |                     |  |        |        |       |   |        |   |                     |        |       |    
|                              |                             | Total cost of sales |  | $      | 10,436 |       | $ | 1,348  |   |                     | 11,784 |       |    
|                              |                             |                     |  |        |        |       |   |        |   |                     |        |       |    
|                              | Gross profit                |                     |  |        |        |       |   |        |   | 11,510              |        |       | 490
|                              | Operating expenses          |                     |  |        |        |       |   |        |   | 10,339              |        |       | 438
|                              |                             |                     |  |        |        |       |   |        |   |                     |        |       |    
|                              | Income from operations      |                     |  |        |        |       |   |        |   | 1,171               |        |       | 52 
|                              | Interest expense            |                     |  |        |        |       |   |        |   | (104                | )      |       |   
|                              | Interest income             |                     |  |        |        |       |   |        |   | 47                  |        |       |   
|                              | Other (expense) income, net |                     |  |        |        |       |   |        |   | (203                | )      |       | (5 
|                              |                             |                     |  |        |        |       |   |        |   |                     |        |       |    
|                              | Net income                  |                     |  |        |        |       |   |        | $ | 911                 |        | $     | 47 
|                              |                             |                     |  |        |        |       |   |        |   |                     |        |       |    

Inter-Company
sales from the United States and Europe are recorded on the basis of transfer pricing established by the Company.



(in thousands)

|                   |                      | June 30, 2002
|------------------ | -------------------- | -------------
|
|Other information: |                      |              
|                   | Identifiable assets  |              
|                   | Capital expenditures |              
|                   | Depreciation         |              
|                   | Amortization         |              

|                   |                      | July 1, 2001
|------------------ | -------------------- | ------------
|
|Other information: |                      |             
|                   | Identifiable assets  |             
|                   | Capital expenditures |             
|                   | Depreciation         |             
|                   | Amortization         |             

(9)    COMMITMENTS & CONTINGENCIES

The Company is a defendant in various lawsuits incident to the operation of its business. We believe there are no pending legal proceedings that would have a
material adverse effect on the consolidated financial position or results of operations of the Company.

Vendor Financing Program

The Company has agreed to provide a guarantee to one customer on the lease with a third-party of one SenoScan system. If the customer should default on its lease
obligation for a period of more than 60 days, the Company has agreed to assume the liability remaining on the lease. In such a case, the Company may be exposed to a maximum liability of the
total amount of the lease payments of approximately $524,000 if it is not able to resell or relocate the SenoScan system.

(10)    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 142.

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets," which replaced Accounting Principle Board Opinion No. 17, "Intangible Assets". SFAS No. 142 changes the accounting for goodwill from an amortization method to
an impairment-only method. Amortization of goodwill, including goodwill recorded in past business combinations, will cease upon adoption of SFAS No. 142. After December 31,
2001, goodwill can only be written down upon impairment as a result of annual tests for fair value, or tests taken when certain triggering events occur. The Company adopted SFAS No. 142 on
January 1, 2002 and it did not have a material effect on the consolidated financial statements for the three and six months ended July 1, 2002. Goodwill amortization expense recorded in the three months ended July 1, 2001 was $50,303.

Statement of Financial Accounting Standards No. 143.

In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." The statement requires companies to recognize the fair
value of an asset retirement liability in the financial statements and capitalize that cost as part of the cost of the related long-lived asset. The asset retirement liability should then
be allocated to expense by using a systematic and rational method. The statement is effective for fiscal years beginning after June 15, 2002. Adoption of this statement is not expected to have
a significant impact on the Company's consolidated financial statements.

Statement of Financial Accounting Standards No. 144.

In August 2001, the FASB issued SFAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The provisions of
this statement are generally to be applied prospectively. The adoption of SFAS No. 144 did not have a material impact on the Company's consolidated financial statements.

Statement of Financial Accounting Standards No. 146.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which addresses financial accounting
and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). Generally, SFAS No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized as incurred, whereas EITF Issue No. 94-3 required such a liability to be recognized at the time that an entity committed to an exit play. The
Company is currently evaluating the provisions of the new rule, which is effective for exit or disposal activities that are initiated after December 31, 2002.

Special Note Regarding Forward-looking Statements

This Form 10-Q contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from any future results or
performance expressed or implied by the forward-looking
statements. Statements that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements because they contain the
words "believes," "expects," "anticipates," "plans," "estimates," and similar words and expressions. These forward-looking statements include statements about:



These
forward-looking statements are only predictions and involve risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking
statements. In addition, these forward-looking statements represent our estimates and assumptions only as of the date of this report, and we expressly disclaim any duty to update these estimates and
assumptions. Factors that could cause the actual results we achieve to differ materially from those discussed in the forward-looking statements are included in the risk factors of the
Form 10-K as well as elsewhere in this report.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of the results of operations and financial condition in conjunction with our consolidated
financial statements and notes thereto appearing in the Company's Form 10-K for the year ended December 31, 2001.

Critical Accounting Policies and Estimates

The Company's discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to bad debts, inventories, long-lived assets, income taxes, and contingencies and litigation.
The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or
conditions.

The
Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

The
Company designs, manufactures and markets specialty digital and other mammography systems for the diagnosis and treatment of disease. During the second quarter of 2002, the Board of
Directors
approved the establishment of the new RES Division, with its own sales, marketing and engineering structure, and staffed with experienced Fischer employees. Management believes the divisionalization
of the business relating to its non-core products into the newly formed RES Division will facilitate increased focus on the RES product lines.

The
Company recognizes revenue from the sales of systems and parts at the time the product is shipped. The Company recognizes revenue from services when they are performed, and from
pre-paid service contracts and extended warranty contracts in the periods for which the contracts are in effect. The Company bills for service contracts and extended warranties in advance,
and records a liability for the amount of the deferred revenue until such time as the contract expires. In the course of business, the Company ships replacement parts to customers, and records related
revenue at the time of shipment. Certain replaced parts may be returned for partial credit, and the Company makes estimates to reduce current revenue to account for the future effect of those returns.
Should such parts not be returned by customers, additional revenue may be recognized in future periods.

The
Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon
assumptions about future demand and market conditions. In the second quarter of 2002, there was a substantial write-down of inventory associated with a review of its products and
strategies in its business and in particular with respect to the non-core product lines that represent the new RES Division.

The
Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the
Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Alternatively, if customer remittances are better than
expected, allowances may be reduced.

Contractual Obligations

At June 30, 2002, the Company's commitments under contractual obligations were as follows:

Payments Due by Period  (in thousands)

|                                               |  | Total |       | Less than
1 Year |   | 2-3 Years |  | 4-5 Years |       | After
5 Years
|---------------------------------------------- |  | ----- | ----- | ---------------- | - | --------- |  | --------- | ----- | -------------
|Capital lease obligations                      |  | $     | 18    |                  | $ | 18        |  | $         |      |              
|Loan on cash surrender value of life insurance |  |       | 915   |                  |   |          |  |           |      |              
|Guaranteecustomer financing                   |  |       | 524   |                  |   | 524       |  |           |      |              
|Operating leases                               |  |       | 8,083 |                  |   | 822       |  |           | 1,622 |              
|                                               |  |       |       |                  |   |           |  |           |       |              
|Total contractual cash obligations             |  | $     | 9,540 |                  | $ | 1,364     |  | $         | 1,622 |              
|                                               |  |       |       |                  |   |           |  |           |       |              



Results of Operations

Risk of Operating Losses

We design, manufacture and market specialty and general purpose medical imaging systems for the diagnosis and treatment of disease. Our newer products are
directed towards medical specialties, such
as mammography screening and diagnosing and treating breast cancer, in which image-guided, minimally invasive therapies are replacing open surgical procedures.

We
have experienced losses from operations for this quarter and for three of the past five fiscal years. Significant factors giving rise to losses include: costs associated with
excessive manufacturing capacity and intense competition for our markets. We have taken steps to reduce costs and improve sales, including:



Regaining
profitability will depend on many factors, including:



We
expect continued fluctuations in quarterly and annual revenues, operating results and net income, depending on such factors as:



These
factors can occur unexpectedly and, because many of our costs are fixed, we may not be able to sufficiently reduce our costs in periods when revenues are less than anticipated and
may, as a result, suffer unexpected losses. Please refer to the disclosure contained in our Form 10-K for the year ended December 31, 2001 for additional factors which may
unexpectedly reduce our revenues.

Risks Associated with Market Acceptance of SenoScan

The market for SenoScan is unproven. We have had only limited sales of our SenoScan system since its introduction, and our sales plan contemplates increasing the
manufacture of SenoScan systems slowly and gradually.

Thus,
it will take some time before we can ascertain whether SenoScan has been accepted by clinicians. There is a significant installed base of conventional X-ray imaging
products in hospitals and radiology practices. The use of SenoScan in many cases would require these potential customers to either modify or replace their existing X-ray imaging equipment. Moreover, we believe
that a major factor in the market's acceptance of digital imaging technology is the trend toward transition by the healthcare industry from conventional film archiving systems to storage of
X-ray images electronically. Because the benefits of our direct-to-digital technology may not by fully realized by customers until they install an electronic
storage platform, a large potential market for these products may not develop until electronic storage is more widely used. Because of the early stage of the markets for these products, it
is likely that our evaluation of the potential markets for these products will vary with time. A significant market for SenoScan and digital imaging products may not develop.

Three and six months ended June 30, 2002 compared to the three and six months ended July 1, 2001

The following table sets forth the percentage of revenues represented by certain data included in the Company's statements of operations for the periods
indicated:

|                               |                                        | Three Months Ended |      | Six Months Ended |     
|------------------------------ | -------------------------------------- | ------------------ | ---- | ---------------- | ----
|
|Revenues                       |                                        | 100.0              | %    | 100.0            | %   
|Cost of sales:                 |                                        |                    |      |                  |     
|                               | Products and services                  |                    | 98.0 | %                | 49.8
|                               | Inventory write-down and other charges |                    | 82.2 | %                |    
|Research and development       |                                        | 9.2                | %    | 7.3              | %   
|Selling, marketing and service |                                        | 43.3               | %    | 24.4             | %   
|General and administrative     |                                        | 28.2               | %    | 12.1             | %   
|(Loss) income from operations  |                                        | (160.1             | )%   | 6.4              | %   
|Other income (expense)         |                                        | 280.1              | %    | (0.5             | )%  
|Net income                     |                                        | 119.2              | %    | 5.9              | %   

Revenues.Second quarter 2002 revenues were $8,793,000, a 31.4% decrease from second quarter 2001 revenues of $12,824,000.
The decrease reflects primarily a decrease in non-mammography product line sales of 68%. During the quarter, significant management energy was directed at restructuring the field sales
organization, establishing a senior sales management structure, as well as other activities designed to increase future sales.

For
the six months ended June 30, 2002, revenues were $19,902,000, or about 17.3% lower than revenues of $24,070,000 for the six months ended July 1, 2001. The decrease was
primarily in non-mammography product line sales with mammography product lines remaining relatively flat.

Cost of salesproducts and services.For the second quarter of 2002, cost of salesproducts and
services expressed as a percentage of revenue was 98.0%, as compared to 49.8% for the second quarter of 2001. For the six months ended June 30, 2002, cost of salesproducts and
services as a percentage of revenue was 70.5%, as compared to 50.1% for the six months ending July 1, 2001. The significant increase for the quarter and the six months ending June 30,
2002 was due primarily to the impact of a $4.7 million inventory shrinkage charge in quarter two associated with the write-off of field service inventories, work-orders,
and labor and overhead associated with build-to-order systems.

Cost of salesinventory write down and other charges.For the three and six months ended June 30, 2002,
cost of salesinventory write-down and other charges were 82.2% and 36.3% of revenues, respectively. At the end of the second quarter, the Company conducted a review of its
products and strategies pertaining to its business and in particular with respect to its newly formed RES Division. As a result of this analysis, the company has identified and written off significant
amounts of obsolete inventories related to product strategy changes primarily in the RES product lines during quarter of of $6.1 million. Also during quarter two, the Company recorded an additional
warranty charge of $1.2 million related to specific warranty costs expected to be incurred related to the discontinued products in the RES division.

Research and development expenses.Research and development expenses for the second quarters of 2002 and 2001 were $813,000
and $937,000, respectively, and 9.2% and 7.3%, respectively, of revenues. For the six months ended June 30, 2002 and July 1, 2001, research and development expenses were $2,052,000 and
$1,909,000, respectively, and 10.3% and 7.9%, respectively, of revenues. Overall, research and development expenses are up year over year due to the hiring of additional research and development
personnel. Second quarter research and development expenses were lower due to transfers of build-to-order systems to inventory during the second quarter.

Selling, marketing and service expenses.Selling, marketing and service expenses for the second quarters of 2002 and 2001
were $3,807,000 and $3,125,000, respectively, 43.3% and 24.4%, respectively, of revenues. For the six months ended June 30, 2002 and July 1, 2001, selling, marketing and service expenses
were $6,300,000 and $6,019,000, respectively, or 31.7% and 25.0% of revenues, respectively. The Company has increased its sales and marketing headcount, as well as increased its marketing costs
associated with its core mammography product lines.

General and administrative expenses.General and administrative expenses for the second quarters of 2002 and 2001 were
$2,476,000 and $1,551,000, respectively, and 28.2% and 12.1%, respectively, of revenues. For the six months ended June 30, 2002 and July 1, 2001, general and administrative expenses were
$3,951,000 and $2,849,000, respectively, and 19.9% and 11.8%, respectively, of revenues. The increase in general and administrative expenses was due primarily to additional legal expenses accrued for
pending lawsuits of $300,000 and a write-down of impaired goodwill of $222,000.

Interest expense / interest income.Interest expense for the three months ended June 30, 2002 and July 1, 2001
was $37,000 and $50,000, respectively. Interest income for the second quarters of 2002 and 2001 was $17,000 and $25,000, respectively. Interest expense for the six months ended June 30, 2002
and July 1, 2001 was $68,000 and $104,000, respectively. Interest income for the six months ended June 30, 2002 and July 1, 2001 was $18,000 and $47,000, respectively. The
decreases in interest expense in the three and six months ended June 30, 2002, as compared to the three and six months ended July 1, 2001, respectively were due primarily to lower levels
of borrowings under the Company's working capital line of credit due to having excess cash balances from the settlement of the patent litigation.

Patent settlement.During the second quarter, the Company settled a patent infringement lawsuit that it had filed against
ThermoElectron and Hologic, Inc. Under the $32.2 million settlement, the Company received $25 million in cash and $7.2 million in a long-term receivable from
ThermoElectron to be received in equal annual installments over the remaining eight-year life of the patents for continued sales of the breast-biopsy imaging system now being sold by
Hologic. The Company recognized a one-time other income item of $24.7 million in quarter two, net of certain settlement costs. The $7.2 million receivable, due to various
contingencies, will be recognized as cash is received over the
receivable payment period, which will result in $900,000 being recognized each year during quarter two for the remaining 8 year patent life.

Net income/loss.The Company's net income for the second quarter of 2002 was $10,480,000 as compared to net income for the
second quarter of 2001 of $751,000. The changes in net income are due to the factors mentioned above. The Company's net income for the six months ended June 30, 2002 and July 1, 2001 was
$10,891,000 and $958,000, respectively. The changes in net income are due to the factors mentioned above.

Earnings Per Share.Diluted earning per share for the second quarter increased to $1.05 in 2002 from $0.08 in 2001 as a
result of higher net income in the second quarter of 2002 compared to second quarter 2001. On a year to date basis, diluted earnings per share increased to $1.09 in 2002 from $0.10 in 2001. The
significant increases in earnings per share are due to the factors mentioned above.

Income Taxes

The Company estimates that it will owe no taxes for the year ended December 31, 2002. Accordingly, no income tax benefit or provision has been recorded for
the six month period ended June 30, 2002. This was determined based upon the anticipated 2002 results of operations includable in the domestic tax return and net operating loss carry-forward of
$12.7 million at December 31, 2001. As of December 31, 2001, the Company had valuation allowances of approximately $8.5 million, reducing net deferred tax assets to $0. The
realizability of net deferred tax assets is dependent on the Company's ability to generate future taxable income.

No
income tax provisions have been recognized for foreign tax jurisdictions and no income tax benefits have been recognized for subsidiary losses outside the domestic return.

Liquidity and Capital Resources

Net cash provided by operating activities for the six months ended June 30, 2002 was $17.5 million compared with $2.5 million provided by
operations in the comparable six month period of 2001. The increase in cash was due primarily to $24.7 million received as part of a favorable patent infringement lawsuit settlement in June,
2002.

Net
cash used in investing activities was $762,000 for the six months ended June 30, 2002, versus cash used of $538,000 for the comparable six month period in 2001. The Company
will commit approximately $500,000 in the third quarter for a new manufacturing software package, with $250,000 being incurred during that quarter and the remainder being incurred over the following
three quarters. The increase in capital expenditures from $538,000 in 2001 to $762,000 in 2002 is due to leasehold improvements.

Net
cash provided by financing activities for the six months ended June 30, 2002 was $202,000 which resulted principally from the exercise of stock options. For the comparable
period in 2001, cash of $69,000 was provided from the exercise of stock options.

As
of June 30, 2002, the Company had $18.2 million in cash and cash equivalents, working capital of $39.7 million, and an $8.0 million bank revolving line of
credit facility, which is subject to restrictions as to availability based on eligible receivables and inventory, as defined, with availability of $5 million at June 30, 2002. In June,
2002, the Company received $25 million in cash from the settlement of the patent infringement lawsuit that the Company had filed against ThermoElectron. As of June 30, 2002, the Company
had no outstanding borrowing against the line of credit. On August 20, 2002, the Company cancelled the line of credit in order to avoid additional bank charges associated with the line of
credit.

The
Company believes its current cash and cash equivalent balances and cash generated from operations will be sufficient to satisfy its liquidity needs through 2003. The Company may need
to obtain additional debt or equity financing in the future to fund its long-term growth needs.

Item 3. Quantitative and Qualitative Disclosures About Market Risk:

Market risk represents the risk of loss that may impact the financial position, results of operations or cash flow due to adverse changes
in financial and commodity market prices and rates. The Company is exposed to market risk in the areas of changes in United States interest rates and changes in foreign currency rates as measured
against the United States dollar. These exposures directly relate to the Company's normal operating and funding activities. Historically and as of June 30, 2002, the Company has not used
derivative instruments or engaged in hedging activities. There have been no significant changes in the Company's market risk from December 31, 2001.

Item 4. Disclosures Relating to Internal Controls: Not applicable.





PART II. OTHER INFORMATION

Item 1. Legal Proceedings:On June 10, 2002, the Company settled a patent infringement lawsuit that the Company filed against ThermoElectron and
Hologic, Inc. involving patents relating to the Company's Mammotest stereotactic breast biopsy system.

Under
the $32.2 million settlement, the Company received $25 million in cash and $7.2 million in a long-term receivable from ThermoElectron to be
received in equal annual installments over the remaining eight-year life of the patents. The Company agreed to dismiss the lawsuit, as well as dismissing litigation filed against
Hologic, Inc. in the U.S. District Court of Boston, as well as in courts in France and Germany.

Item 2. Changes in Securities and Use of Proceeds:Not applicable.

Item 3. Defaults Upon Senior Securities:Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders:The annual shareholder meeting was held June 5, 2002 at 3:00 pm. There was one
proposal presented to the stockholders for consideration: the
election of directors. David G. Bragg, M.D. and Gerald D. Knudson were re-elected for a three-year term ending in 2005. No other business came before the stockholders for vote.

The
vote results were as follows:

David G. Bragg, M.D.

For:

4,060,275

Withheld:

77,946Gerald D. Knudson

For:

3,589,387

Withheld:

548,834


Directors
whose terms expire in 2003 are Morgan W. Nields and Teresa W. Ayers. The term of Kathryn A. Paul expires in 2004.

Item 5. Other Information:Not applicable.

Item 6. Exhibits and Reports on Form 8-K:



The following is a list of exhibits filed as part of this Report on Form 10-Q. Where so indicated by footnote, exhibits which were previously
filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated parenthetically except in those situation where the exhibit number was the same as set forth below.

|Exhibit
Number |  | Description of Exhibit                                                                                                                                                                                                                                                                            
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            |  | Certificate of Incorporation of the Company(1)                                                                                                                                                                                                                                                    
|3.2            |  | Bylaws of the Company(1)                                                                                                                                                                                                                                                                          
|4.1            |  | Amended and Restated Rights Agreement, dated as of November 3, 1994, between the Company and American Securities Transfer, Inc. which includes the Certificate of Designation for the Series C Junior
Participating Preferred Stock as Exhibit A and the form of Right Certificate as Exhibit B(4)
|4.2            |  | Certificate of Designation for the Series D Convertible Preferred Stock(4)                                                                                                                                                                                                                        
|10.1           |  | Agreement, dated October 5, 1990, between the Company and Dornier Medizintechnik GmbH(1)                                                                                                                                                                                                          
|10.2           |  | Nonemployee Director Stock Option Plan, as amended(5)                                                                                                                                                                                                                                             
|10.3           |  | Retention Bonus Plan(3)                                                                                                                                                                                                                                                                           
|10.4           |  | Lease Agreement, dated July 31, 1992, between the Company and JN Properties(2)                                                                                                                                                                                                                    
|10.5           |  | Agreement dated October 10, 1997, between the Company and Ethicon Endo-Surgery, Inc. with Addendum dated January 28, 1998(5)                                                                                                                                                                      
|10.6           |  | Form of Indemnification Agreement, dated as of September 6, 2002, between the Company and each of Kathryn A. Paul, Teresa W. Ayers, Gerald D. Knudson, Morgan W. Nields and David G. Bragg,
 M.D.(6)                                                                                              
|99.1           |  | Certification pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                          
|99.2           |  | Certification pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                          

---

The
Company filed a report on Form 8-K on June 25, 2002 announcing the settlement of patent infringement litigation that the Company filed against
ThermoElectron and Hologic, Inc.





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002 to be signed on its behalf by the undersigned thereunto duly authorized.

|                        |  | FISCHER IMAGING CORPORATION                                  
|----------------------- |  | -------------------------------------------------------------
|Date: November 13, 2002 |  | /s/GERALD D. KNUDSONGerald D. Knudson Chief Executive Officer
|Date: November 13, 2002 |  | /s/STEPHEN G. BURKEStephen G. Burke Chief Financial Officer  



CERTIFICATION  of the Chief Executive Officer

I, Gerald D. Knudson, Chief Executive Officer of Fischer Imaging Corporation (the "Company"), hereby certify that:

Date:
November 13, 2002

| |  | /s/ Gerald D. Knudson                    
| |  | -----------------------------------------
| |  | Gerald D. Knudson Chief Executive Officer



CERTIFICATION  of the Chief Financial Officer

I, Stephen G. Burke, Chief Financial Officer of Fischer Imaging Corporation (the "Company"), hereby certify that:

Date:
November 13, 2002

| |  | /s/ Stephen G. Burke                    
| |  | ----------------------------------------
| |  | Stephen G. Burke Chief Financial Officer