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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2005
 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 0-18053
 LASERSCOPE
  CALIFORNIA
(State or Other Jurisdiction
of Incorporation or Organization)
    
    77-0049527
(I.R.S. Employer Identification No.)
 
   þ o
 þ o




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TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements (unaudited)
    
    
    3Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Income
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Income
    
    
    12Results
of Operations
    
    
    14Liquidity and Capital Resources
    
    
    16Risk Factors
    
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    34PART II. OTHER INFORMATION
    
    
    35Item 4.
Submission of Matters to a Vote of Security Holders
    
    
    35Item 5. Other Information
    
    
    35Item 6. Exhibits
    
    
    36SIGNATURES
    
    
    37EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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PART I. FINANCIAL INFORMATION.
 
 Item 1. Financial Statements.
 Laserscope
 
 Condensed Consolidated Balance Sheets
(unaudited)
 June 30,
    
    
    December 31,(thousands)
    
    2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    28,011
    
    
    $
    15,954Accounts receivable, net
    
    
    21,359
    
    
    
    20,342Inventories, net
    
    
    24,979
    
    
    
    19,446Other current assets
    
    
    1,424
    
    
    
    1,471Total current assets
    
    
    75,773
    
    
    
    57,213Property and equipment, net
    
    
    4,627
    
    
    
    3,457Goodwill
    
    
    655
    
    
    
    655Other assets
    
    
    580
    
    
    
    264Total assets
    
    $
    81,635
    
    
    $
    61,589Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    7,123
    
    
    $
    2,389Accrued compensation
    
    
    3,832
    
    
    
    4,365Warranty
    
    
    2,813
    
    
    
    2,536Other accrued liabilities
    
    
    6,383
    
    
    
    5,761Deferred revenue
    
    
    4,916
    
    
    
    3,575Capital
leases, current portion
    
    
    20
    
    
    
    21Total current liabilities
    
    
    25,087
    
    
    
    18,647Long-term liabilities:Obligations under capital leases
    
    
    19
    
    
    
    31Total long-term liabilities
    
    
    19
    
    
    
    31Contingencies (see note 7)Shareholders equity:Common stock
    
    
    68,719
    
    
    
    65,009Accumulated deficit
    
    
    (11,943
    )
    
    
    (22,263
    )Accumulated
other comprehensive income (loss)
    
    
    (247
    )
    
    
    165Total shareholders equity
    
    
    56,529
    
    
    
    42,911Total liabilities and shareholders equity
    
    $
    81,635
    
    
    $
    61,589
  3




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Laserscope
 
 Condensed Consolidated Statements of Income
(Unaudited)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(thousands, except per share amounts)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net revenue
    
    $
    33,518
    
    
    $
    21,434
    
    
    $
    61,695
    
    
    $
    40,184Cost of sales
    
    
    13,152
    
    
    
    9,105
    
    
    
    23,729
    
    
    
    17,187Gross margin
    
    
    20,366
    
    
    
    12,329
    
    
    
    37,966
    
    
    
    22,997Operating expenses:Research and development
    
    
    1,805
    
    
    
    1,345
    
    
    
    3,323
    
    
    
    2,584Selling, general and administrative
    
    
    11,623
    
    
    
    8,255
    
    
    
    21,568
    
    
    
    15,070Total operating expenses
    
    
    13,428
    
    
    
    9,600
    
    
    
    24,891
    
    
    
    17,654Operating income
    
    
    6,938
    
    
    
    2,729
    
    
    
    13,075
    
    
    
    5,343Interest income and other, net
    
    
    249
    
    
    
    442
    
    
    
    328
    
    
    
    373Income before income taxes
    
    
    7,187
    
    
    
    3,171
    
    
    
    13,403
    
    
    
    5,716Provision for income taxes
    
    
    1,830
    
    
    
    183
    
    
    
    3,083
    
    
    
    514Net income
    
    $
    5,357
    
    
    $
    2,988
    
    
    $
    10,320
    
    
    $
    5,202Basic net income per share
    
    $
    0.24
    
    
    $
    0.14
    
    
    $
    0.47
    
    
    $
    0.25Diluted net income per share
    
    $
    0.23
    
    
    $
    0.13
    
    
    $
    0.45
    
    
    $
    0.23Shares used in basic per share calculations
    
    
    22,097
    
    
    
    20,920
    
    
    
    22,053
    
    
    
    20,631Shares used in diluted per share calculations
    
    
    23,072
    
    
    
    22,861
    
    
    
    23,028
    
    
    
    22,782
  4




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Laserscope
 
 Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Six Months EndedJune 30,(thousands)
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    10,320
    
    
    $
    5,202Adjustments to reconcile net income to
net cash provided by operating activities:Depreciation and amortization
    
    
    743
    
    
    
    489Provision for doubtful accounts
    
    
    106
    
    
    
    57Provision for excess and obsolete inventory
    
    
    77
    
    
    
    (90
    )Changes in assets and liabilities:Accounts receivable
    
    
    (1,421
    )
    
    
    (3,378
    )Inventories
    
    
    (5,813
    )
    
    
    (2,835
    )Prepayments and other current assets
    
    
    (126
    )
    
    
    24Accounts payable
    
    
    4,403
    
    
    
    (752
    )Accrued compensation
    
    
    (501
    )
    
    
    1,428Warranty
    
    
    277
    
    
    
    133Deferred revenue
    
    
    1,376
    
    
    
    1,110Other current liabilities
    
    
    1,067
    
    
    
    467Tax payable
    
    
    229
    
    
    
    412Net cash provided by operating activities
    
    
    10,737
    
    
    
    2,267Cash flows from investing activities:Acquisition of property and equipment
    
    
    (1,915
    )
    
    
    (1,523
    )Acquisition of intangibles and licenses
    
    
    (336
    )
    
    
    (70
    )Net cash used in investing activities
    
    
    (2,251
    )
    
    
    (1,593
    )Cash flows from financing activities:Payments on obligations under capital leases
    
    
    (10
    )
    
    
    30Proceeds from the sale of common stock under stock plans
    
    
    3,695
    
    
    
    2,573Proceeds from warrants exercised
    
    
    15
    
    
    
    Net cash provided by financing activities
    
    
    3,700
    
    
    
    2,603Effect of exchange rate changes on cash
    
    
    (129
    )
    
    
    11Net increase in cash and cash equivalents
    
    
    12,057
    
    
    
    3,288Cash and cash equivalents, beginning of period
    
    
    15,954
    
    
    
    7,158Cash and cash equivalents, end of period
    
    $
    28,011
    
    
    $
    10,446Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    14
    
    
    $
    7Income taxes
    
    $
    593
    
    
    $
    96
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Laserscope Notes to Unaudited Condensed Consolidated Financial Statements:
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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income as reported
    
    $
    5,357
    
    
    $
    2,988
    
    
    $
    10,320
    
    
    $
    5,202Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects
    
    
    (782
    )
    
    
    (658
    )
    
    
    (1,411
    )
    
    
    (1,024
    )Pro forma net income
    
    $
    4,575
    
    
    $
    2,330
    
    
    $
    8,909
    
    
    $
    4,178Net income per share:Basicas reported
    
    $
    0.24
    
    
    $
    0.14
    
    
    $
    0.47
    
    
    $
    0.25Basicpro forma
    
    $
    0.21
    
    
    $
    0.11
    
    
    $
    0.40
    
    
    $
    0.20Dilutedas reported
    
    $
    0.23
    
    
    $
    0.13
    
    
    $
    0.45
    
    
    $
    0.23Dilutedpro forma
    
    $
    0.20
    
    
    $
    0.10
    
    
    $
    0.39
    
    
    $
    0.18
   June 30,
    
    
    December 31,2005
    
    
    2004Sub-assemblies and purchased parts
    
    $
    12,166
    
    
    $
    9,120Work-in-process
    
    
    6,494
    
    
    
    6,330Finished goods
    
    
    6,319
    
    
    
    3,996$
    24,979
    
    
    $
    19,446
  Warranty
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Six months endedJune 30,Warranty Reserve (in thousands)
    
    2005
    
    
    2004Balance at beginning of period
    
    $
    2,536
    
    
    $
    1,947Add: Expense for products sold
    
    
    1,756
    
    
    
    1,309Expense to extend pre-existing warranties
    
    
    86
    
    
    
    12Less: Cost of warranty service provided
    
    
    (1,565
    )
    
    
    (1,188
    )Balance at end of period
    
    $
    2,813
    
    
    $
    2,080
 Service Contracts
  Six months endedJune 30,Deferred Service Contract Revenue (in thousands)
    
    2005
    
    
    2004Balance at beginning of period
    
    $
    2,936
    
    
    $
    1,433Add: Payments received
    
    
    2,878
    
    
    
    2,473Costs incurred under extended service contracts
    
    
    1,924
    
    
    
    1,227Less: Revenue recognized
    
    
    (2,775
    )
    
    
    (1,823
    )Settlements made under extended service
contracts during the period
    
    
    (1,924
    )
    
    
    (1,227
    )Balance at end of period
    
    $
    3,039
    
    
    $
    2,083
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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Numerator:Net income used in computing basic and
diluted net income per share
    
    $
    5,357
    
    
    $
    2,988
    
    
    $
    10,320
    
    
    $
    5,202Denominator:Weighted average number of common
shares outstanding used in computing
basic net income per share
    
    
    22,097
    
    
    
    20,920
    
    
    
    22,053
    
    
    
    20,631Add: Dilutive potential common shares used
in computing dilutive net income per share
    
    
    975
    
    
    
    1,941
    
    
    
    975
    
    
    
    2,151Total weighted average number of shares
used in computing diluted net income
per share
    
    
    23,072
    
    
    
    22,861
    
    
    
    23,028
    
    
    
    22,782
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Options to purchase common stock
    
    
    298
    
    
    
    30
    
    
    
    409
    
    
    
    30298
    
    
    
    30
    
    
    
    409
    
    
    
    30
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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income
    
    $
    5,357
    
    
    $
    2,988
    
    
    $
    10,320
    
    
    $
    5,202Translation adjustments
    
    
    (294
    )
    
    
    (65
    )
    
    
    (412
    )
    
    
    43Comprehensive income
    
    $
    5,063
    
    
    $
    2,923
    
    
    $
    9,908
    
    
    $
    5,245
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 INTRODUCTORY STATEMENT
  Overview.
    12




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Results of Operations.
   Three months ended
    
    
    
    
    
    Six months endedJune 30, 2005
    
    June 30, 2004
    
    %

    
    June 30, 2005
    
    June 30, 2004
    
    %Amount
    
    
    %(a)

    
    Amount
    
    
    %(a)
    
    Change
    
    Amount
    
    
    %(a)

    
    Amount
    
    
    %(a)

    
    ChangeRevenues from sales of:Lasers & Instrumentation
    
    $
    16,350
    
    
    
    49
    %
    
    
    13,299
    
    
    
    62
    %
    
    
    23
    %
    
    $
    30,152
    
    
    
    49
    %
    
    $
    24,963
    
    
    
    62
    %
    
    
    21
    %Disposable supplies
    
    
    14,991
    
    
    
    45
    %
    
    
    6,372
    
    
    
    30
    %
    
    
    135
    %
    
    
    27,429
    
    
    
    44
    %
    
    
    11,690
    
    
    
    29
    %
    
    
    135
    %Service
    
    
    2,177
    
    
    
    6
    %
    
    
    1,763
    
    
    
    8
    %
    
    
    23
    %
    
    
    4,114
    
    
    
    7
    %
    
    
    3,531
    
    
    
    9
    %
    
    
    17
    %Total net revenues
    
    $
    33,518
    
    
    
    100
    %
    
    
    21,434
    
    
    
    100
    %
    
    
    56
    %
    
    $
    61,695
    
    
    
    100
    %
    
    $
    40,184
    
    
    
    100
    %
    
    
    54
    %Gross margin
    
    
    20,366
    
    
    
    61
    %
    
    
    12,329
    
    
    
    58
    %
    
    
    65
    %
    
    
    37,966
    
    
    
    62
    %
    
    
    22,997
    
    
    
    57
    %
    
    
    65
    %Operating expenses:Research & development
    
    
    1,805
    
    
    
    5
    %
    
    
    1,345
    
    
    
    6
    %
    
    
    34
    %
    
    
    3,323
    
    
    
    5
    %
    
    
    2,584
    
    
    
    6
    %
    
    
    29
    %Selling, general & admin
    
    
    11,623
    
    
    
    35
    %
    
    
    8,255
    
    
    
    39
    %
    
    
    41
    %
    
    
    21,568
    
    
    
    35
    %
    
    
    15,070
    
    
    
    38
    %
    
    
    43
    %Net income
    
    $
    5,357
    
    
    
    16
    %
    
    $
    2,988
    
    
    
    14
    %
    
    
    79
    %
    
    $
    10,320
    
    
    
    17
    %
    
    $
    5,202
    
    
    
    13
    %
    
    
    98
    %
 
 (a)
    
    expressed as a percentage of total net revenues.  14




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Liquidity and Capital Resources.
  June 30,
    
    
    December 31,2005
    
    
    2004Cash and cash equivalents
    
    $
    28,011
    
    
    $
    15,954Total assets
    
    $
    81,635
    
    
    $
    61,589Total liabilities
    
    $
    25,106
    
    
    $
    18,678Working capital
    
    $
    50,686
    
    
    $
    38,566
  16




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
    
    our ability to effectively manage inventory and accounts receivable;
 
    
    our ability to anticipate and adapt to the changes in our industry such as new and alternative medical procedures;
 
    
    our level of profitability;
 
    
    our determination to acquire or invest in products and businesses complementary to ours; and
 
    
    the market price for our common stock as it affects the exercise of stock options and sale of common stock under stock
plans.
   Off-Balance Sheet Arrangements.
  17




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Contractual Obligations.
  Payments Due by Period (in thousands)Contractual
    
    
    
    
    
    Less Than
    
    
    
    
    
    
    
    
    
    More Than 5Obligations
    
    Total
    
    1 Year
    
    1-3 Years
    
    3-5 Years
    
    YearsOperating Leases
    
    $
    6,539
    
    
    $
    1,011
    
    
    $
    1,915
    
    
    $
    1,763
    
    
    $
    1,850Capital Leases
    
    $
    39
    
    
    $
    20
    
    
    $
    19
    
    
    
    
    
    
    
    Total
    
    $
    6,578
    
    
    $
    1,031
    
    
    $
    1,934
    
    
    $
    1,763
    
    
    $
    1,850
 18




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RISK FACTORS
  Demand for our products in the United States and internationally is highly dependent on the ability
of physicians, hospitals and other health care facilities to obtain satisfactory reimbursement
rates for our products and services performed with our products from private and governmental
third-party payers as well as direct payments from consumers. If satisfactory reimbursement rates
are not maintained demand for Laserscope products would decline and our business and financial
results and cash flows would suffer.
   The current Facility Fee reimbursement for PVP in the United States could be reduced,
eliminated or utilized by a competitor.
   19




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Physician Fee Schedule reimbursement for PVP in the
United States remains uncertain.
   20




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PVP physician reimbursement is typically lower, on a per-procedure basis, compared to other
BPH therapies.
  If we are not able to protect our intellectual property adequately, we will lose a critical
competitive advantage, which will reduce our revenues, profits and cash flows.
   21




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If we are unable to protect the integrity, safety and proper use of our ADDStat disposable
fiber optic delivery device with the GreenLight laser system, it could result in negative
patient outcomes and reduce our disposable fiber recurring revenue stream.
  22




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We participate in competitive markets with companies that have significantly greater
technical, research and development, manufacturing and marketing resources and/or who
produce standard, entrenched medical technologies.
  
    
    market acceptance of our products;
    
    product performance;
    
    price;
    
    customer support;
    
    the success and timing of new product development; and
    
    continued development of successful distribution channels.
   If we are unable to effectively manage our growth, our business may be harmed.
   23




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Our dependence on certain single-source suppliers and certain other third parties, could
adversely impact our ability to manufacture lasers.
  Problems associated with international business operations could affect our ability to sell
our products.
  
    
    changes in regulatory requirements;
    
    delays resulting from difficulty in obtaining export licenses for certain
technology;
    
    customs, tariffs and other barriers and restrictions; and
    
    the burdens of complying with a variety of foreign laws.
  
    
    differing economic conditions;
    
    changes in political climate;
    
    differing tax structures; and
    
    changes in diplomatic and trade relationships and war.
   24




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Our business has significant risks of product liability claims, which could drain our
resources and exceed our insurance coverage which is limited.
   Our products are subject to government regulation, and we cannot assure that all necessary
regulatory approvals, including approvals for new products or product improvements, will be
granted on a timely basis, if at all, and that we wont be subject to product recalls or
warnings and other regulatory actions and penalties that could materially affect our
operating results.
      25




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As we have limited working capital, we may need additional capital that may not be available
to us and, if raised, may dilute our stockholders ownership interest in us.
   26




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
    
    Our ability to manage effectively non-cash assets such as inventory and
accounts receivable;
    
    Our ability to anticipate and adapt to the changes in our industry such as
new and alternative medical procedures;
    
    Our level of profitability; and
    
    Our determination to acquire or invest in products and businesses
complementary to ours.
   We may have difficulty sustaining profitability and may experience additional losses in the
future.
  We may be unable to respond to the rapid technological changes that often affect the markets
in which we compete.
  27




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We may become a party to a patent infringement and other intellectual property related
actions or disputes, which could result in significant royalty or other payments or in
injunctions that can prevent the sale of our products.
    28




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Any acquisitions we make may not provide us the expected benefits and could disrupt our
business and harm our financial condition.
  We may be unable to attract and retain key personnel who are critical to the success of our
business
   Our quarterly operating results may fluctuate significantly and any failure to meet
financial expectations for any fiscal quarter may cause our stock price to decline.
  29




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If we are unable to continue our relationships with one or more of our U.S. distribution
partners on favorable contractual terms, our business may be harmed.
  If our products contain defects that harm our customers patients, it would damage our
reputation, subject us to potential legal liability and cause us to lose customers and
revenue.
  30




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
    
    loss of customers;
    
    increased costs of product, returns and warranty expenses;
    
    damage to our brand reputation;
    
    failure to attract new customers or achieve market acceptance;
    
    action by regulatory authorities;
    
    diversion of development and engineering resources; and
    
    legal actions by our customers
  Our financial results and stock price are affected by a number of factors which are beyond
our control.
  
    
    product mix;
    
    competitive pricing pressures;
    
    material costs;
    
    revenue and expenses related to new products and enhancements to existing
products;
    
    delays in customer purchases in anticipation of new products or product
enhancements by Laserscope or its competitors; and
    
    the risk of loss or interruption to our operations or increased costs due to
earthquakes, the availability of power and energy supplies and other
events beyond our control.
  
    
    quarterly fluctuations in our financial results;
    
    changes in analysts estimates of future results;
    
    changes in investors perceptions of our products;
    
    announcement of new or enhanced products by us or our competitors;
    
    announcements relating to acquisitions and strategic transactions by us
    
    or our competitors;
    
    general conditions in the medical equipment industry; and
    
    general conditions in the financial markets.
  31




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We are a party to legal proceedings arising in the ordinary course of business.
  We typically assume warranty obligations in connection with the sales of our products, which
could cause a significant drain on our resources if our products perform poorly.
  Natural catastrophic events, such as earthquakes, or terrorist attacks may reduce our
revenues and harm our business.
   32




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No Dividends.
  The exercise of outstanding options and warrants granted under Laserscopes stock option
plans and other options and warrants may result in dilution of our shareholders equity
interests.
  Other Risks.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Interest Rate Risk.
  33




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Foreign Currency Risk.
  
 Item 4. Controls and Procedures.
     34




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PART II. OTHER INFORMATION
 
 Item 4.
Submission of Matters to a Vote of Security Holders
 (a)
    
    The annual meeting of shareholders was held on June 10, 2005.(b)
    
    The first matter voted upon at the meeting was the election of directors and the results
of that vote were as follows:
 For
    
    
    Withheld
    
    
    AbstainedJames R. Baumgardt
    
    
    19,956,549
    
    
    
    571,039
    
    
    
    0Robert C. Pearson
    
    
    20,116,435
    
    
    
    411,153
    
    
    
    0Rodney Perkins, M.D.
    
    
    17,706,505
    
    
    
    2,821,083
    
    
    
    0Robert J. Pressley, Ph.D.
    
    
    17,728,007
    
    
    
    2,799,581
    
    
    
    0Eric M. Reuter
    
    
    17,895,647
    
    
    
    2,631,941
    
    
    
    0
 (c)
    
    The second matter voted upon at the meeting and the results of that vote were as follows
 For
    
    
    Withheld
    
    
    AbstainedTo approve an amendment to
    
    
    11,104,381
    
    
    
    1,353,815
    
    
    
    57,181the Companys 2004 Stock
Option Plan to increase the
number of shares for issuance
thereunder by 450,000 shares.
 (d)
    
    The third matter voted upon at the meeting and the results of that vote were as
follows:
 For
    
    
    Opposed
    
    
    AbstainedTo ratify the appointment
    
    
    20,426,241
    
    
    
    72,550
    
    
    
    28,797of PricewaterhouseCoopers LLP
as the Independent Registered
Accounting Firm for the Company
for the fiscal year endingDecember 31, 2005
 
 Item 5. Other Information
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Item 6. Exhibits
 (a)
    
    Exhibits filed herewith (numbered in accordance with Item 601 of Regulation S-K):
 ExhibitNumber
    
    Description31.1
    
    Certification of Principal Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Principal Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Principal Executive Officer pursuant to 18 U.S.C
Section 1350.32.2
    
    Certification of Principal Financial Officer pursuant to 18 U.S.C.
Section 1350.
 36




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SIGNATURES
  LASERSCOPE
Registrant/s/  Derek BertocciDerek BertocciVice President, Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)  37




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Description31.1
    
    Certification of Principal Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Principal Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Principal Executive Officer pursuant to 18 U.S.C
Section 1350.32.2
    
    Certification of Principal Financial Officer pursuant to 18 U.S.C.
Section 1350.