<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
/ X / Quarterly Report pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the quarterly period ended January 31, 1996.
or
/ / Transition Report pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the transition period from _____ to _____.
Commission file number: 0-6132
CANTEL INDUSTRIES, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 22-1760285
- ------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1135 Broad Street, Clifton, New Jersey 07013
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code
(201) 470-8700
--------------
Indicate by check mark whether registrant (1) 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 (2) has been subject to the filing
requirements for the past 90 days. Yes X No
----- -----
Number of shares of Common Stock outstanding as of February 29, 1996: 2,770,693
<PAGE>
PART I - FINANCIAL INFORMATION
CANTEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (NOTE 1)
(Dollar Amounts in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
January 31, July 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 236 $ 520
Accounts receivable, net 4,692 7,961
Inventories 7,377 7,232
Prepaid expenses and other current assets 658 303
------- -------
Total current assets 12,963 16,016
Property and equipment, at cost:
Furniture and equipment 838 1,135
Leasehold improvements 474 634
------- -------
1,312 1,769
Less accumulated depreciation and amortization 875 1,289
------- -------
437 480
Other assets 941 903
------- -------
$14,341 $17,399
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,109 $ 3,147
Compensation payable 697 849
Other accrued expenses 425 493
Income taxes payable - 364
------- -------
Total current liabilities 3,231 4,853
Long-term debt 4,441 6,087
Deferred income taxes 98 91
Stockholders' equity:
Preferred Stock, par value $1.00 per share;
authorized 1,000,000 shares; none issued - -
Common Stock, $.10 par value; authorized 7,500,000
shares; issued and outstanding January 31 -
2,770,693 shares; July 31 - 2,768,193 shares 277 277
Additional capital 8,546 8,539
Accumulated deficit (933) (1,187)
Cumulative foreign currency translation adjustment (1,319) (1,261)
------- -------
Total stockholders' equity 6,571 6,368
------- -------
$14,341 $17,399
------- -------
------- -------
</TABLE>
See accompanying notes.
1
<PAGE>
CANTEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (NOTE 1)
(Dollar Amounts in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 5,767 $ 7,558 $10,317 $12,779
Product service 1,009 880 1,888 1,972
------- ------- ------- -------
Total net revenues 6,776 8,438 12,205 14,751
------- ------- ------- -------
Cost of sales:
Product sales 3,864 5,148 7,043 8,824
Product service 661 577 1,237 1,262
------- ------- ------- -------
Total cost of sales 4,525 5,725 8,280 10,086
------- ------- ------- -------
Gross profit 2,251 2,713 3,925 4,665
Expenses:
Shipping and warehouse 186 200 379 390
Selling 1,034 1,177 1,967 2,092
General and administrative 556 601 1,204 1,188
------- ------- ------- -------
Total operating expenses 1,776 1,978 3,550 3,670
------- ------- ------- -------
Income from operations before
interest expense and income
taxes 475 735 375 995
Interest expense 107 118 120 213
------- ------- ------- -------
Income before income taxes 368 617 255 782
Income taxes 201 313 1 417
------- ------- ------- -------
Net income $ 167 $ 304 $ 254 $ 365
------- ------- ------- -------
------- ------- ------- -------
Earnings per common share (Note 3):
Primary $ 0.05 $ 0.10 $ 0.08 $ 0.12
------- ------- ------- -------
------- ------- ------- -------
Fully diluted $ 0.05 $ 0.10 $ 0.08 $ 0.12
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See accompanying notes.
2
<PAGE>
CANTEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 1)
(Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
January 31,
1996 1995
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 254 $ 365
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 75 73
Imputed interest 4 12
Deferred income taxes 7 -
Changes in assets and liabilities:
Accounts receivable 3,269 (542)
Inventories (145) (300)
Prepaid expenses and other current assets (355) 98
Accounts payable and accrued expenses (1,199) 323
Income taxes payable (364) (786)
------- -------
Net cash provided by (used in) operating activities 1,546 (757)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Net additions to property and equipment (9) (62)
Other, net (119) (99)
------- -------
Net cash used in investing activities (128) (161)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 8,539 8,110
Repayment of long-term debt (10,185) (7,463)
Proceeds from exercise of stock options 7 42
Deferred compensation payments (63) (64)
------- -------
Net cash (used in) provided by financing activities (1,702) 625
------- -------
Decrease in cash (284) (293)
Cash at beginning of period 520 521
------- -------
Cash at end of period $ 236 $ 228
------ ------
------ ------
</TABLE>
See accompanying notes.
3
<PAGE>
CANTEL INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and the requirements of Form 10-Q and Rule 10.01 of
Regulation S-X. Accordingly, they do not include certain information and note
disclosures required by generally accepted accounting principles for annual
financial reporting and should be read in conjunction with the consolidated
financial statements and notes thereto included in Cantel Industries, Inc.'s
("Company") Annual Report on Form 10-K for the fiscal year ended July 31, 1995,
and Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere herein.
The unaudited interim financial statements reflect all adjustments which
management considers necessary for a fair presentation of the results of
operations for these periods. The results of operations for the interim periods
are not necessarily indicative of the results for the full year.
The condensed consolidated balance sheet at July 31, 1995 was derived from
the audited consolidated balance sheet at that date.
Note 2. INCOME TAXES
Income taxes primarily consist of foreign income taxes provided on the
Company's Canadian operations. For the six months ended January 31, 1996,
income taxes include taxes on income at an effective rate of 43.9%, as well as a
recovery of prior years' federal and provincial income taxes and withholding
taxes. The effective tax rate on Canadian operations was 44.5% for the six
months ended January 31, 1995.
The recovery of prior years' federal and provincial income taxes and
withholding taxes related to a notice of reassessment received by the Company's
Canadian subsidiary during fiscal 1994, which notice was based upon the
disallowance as a deduction for income tax purposes and treatment as a taxable
dividend, of all of the payments made to Cantel by the Canadian subsidiary
during the taxable years 1990 to 1992 with respect to a purchasing fee charged
by Cantel for negotiating certain distribution agreements on behalf of the
Canadian subsidiary. In prior years, the Company recorded the full amount of
the reassessment, which aggregated approximately $413,000, in its provision for
income taxes, and the related interest, of approximately $154,000, as interest
expense. During
4
<PAGE>
the three months ended October 31, 1994, the full amount of the reassessment,
including interest, was paid under protest. During the three months ended
October 31, 1995, the Company negotiated a settlement with Revenue Canada which
resulted in the recovery of federal and provincial income taxes and withholding
taxes of approximately $182,000 and interest of approximately $103,000. Of
these amounts, approximately $218,000 has been received to date.
Note 3. EARNINGS PER COMMON SHARE
Primary earnings per common share are computed based upon the weighted
average number of common shares outstanding during the period plus common stock
equivalents where dilutive.
Fully diluted earnings per common share are computed on the assumption that
the weighted average number of common shares outstanding during the period was
further increased by the exercise of those stock options and warrants for which
the period-end market price of the Common Stock exceeded the average market
price.
The following average shares were used for the computation of primary and
fully diluted earnings per share (see Exhibit 11 for computation of Earnings per
Share):
<TABLE>
<CAPTION>
For the For the
three months ended six months ended
January 31, January 31,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary 3,301,898 3,075,351 3,282,541 3,117,987
--------- --------- --------- ---------
--------- --------- --------- ---------
Fully diluted 3,307,255 3,083,099 3,303,463 3,117,987
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Note 4. FINANCING ARRANGEMENTS
The revolving credit facility entered into during fiscal 1994, as amended,
is comprised of a $7,500,000 revolving credit facility to the Company's Canadian
subsidiary. The maximum borrowing availability under this facility decreases
annually over a three year period commencing January 1, 1996 and must be paid in
full no later than December 31, 1998. Pursuant to the terms of the facility,
the maximum borrowing availability decreased to $6,500,000 effective January 1,
1996. The Company has submitted a request to the bank that the borrowing
availability remain at $7,500,000 for the duration of the agreement; presently,
the Company is waiting for approval from the bank regarding this request. The
Company is permitted to borrow an amount up to
5
<PAGE>
(i) 75%-85% of certain eligible accounts receivable, depending on the customer,
and (ii) 50% of qualifying inventory, depending on the type of goods in
inventory; however, any trade letters of credit issued under this facility will
reduce the maximum available borrowings by 50% of the amount of such trade
letters of credit, while any standby letters of credit, including the $500,000
letter of credit issued to Olympus America Inc. during November 1993, reduces
the maximum available borrowings by the full amount of such standby letters of
credit. The Company has the right to borrow funds under this facility in either
United States dollars or Canadian dollars, a portion of which may be in the form
of bankers acceptances. The borrowings outstanding at January 31, 1996 and July
31, 1995 are in Canadian dollars. United States dollar borrowings bear interest
at .5% above the lender's United States base rate, and Canadian dollar
borrowings bear interest at .75% above the lender's Canadian prime rate. A
commitment fee on the unused portion of this facility is payable in arrears at a
rate of .25% per annum, with interest on borrowings payable monthly. Borrowings
under this facility are guaranteed by Cantel and secured by substantially all
assets of the Company's Canadian subsidiary and require the subsidiary to meet
certain financial covenants, including a minimum working capital ratio, a
minimum interest coverage ratio, a maximum debt to tangible net worth ratio, and
an annual limitation on capital expenditures.
Note 5. PROPOSED ACQUISITION OF MEDIVATORS, INC.
On November 14, 1995, the Company entered into an Agreement and Plan of
Merger which provides for the Company's acquisition of MediVators, Inc.
("MediVators") through a merger transaction. Upon consummation of the proposed
merger, MediVators will be a wholly-owned subsidiary of the Company and the
stockholders of MediVators will own approximately a 26.5% equity interest in
Cantel (without giving effect to outstanding options and warrants to acquire
stock of Cantel or MediVators). The transaction will be treated as a pooling of
interests for accounting purposes.
MediVators is a public company which designs, manufactures and markets
infection control equipment and supplies used for disinfecting flexible
endoscopes and medical waste disposal equipment. MediVators is currently a
supplier of endoscope disinfection equipment to the Company.
The merger was approved by the Company's stockholders and MediVators'
stockholders on March 12, 1996, and is expected to be consummated within ten
days following the stockholders' approval.
In connection with the proposed merger, the Company has filed a
Registration Statement on Form S-4 with the Securities and Exchange Commission,
which was declared effective on February 8,
6
<PAGE>
1996, which covers the issuance of the Company's common shares to the
stockholders of MediVators in exchange for shares of MediVators common stock.
The issuance of shares of the Company's stock in the merger will be made only by
means of the prospectus included in the Registration Statement.
Historical financial information for MediVators is as follows:
<TABLE>
<CAPTION>
Nine Months
Fiscal Year Ended December 31, Ended
------------------------------------ September 30,
1994 1993 1992 1995
---- ---- ---- -------------
<S> <C> <C> <C> <C>
Total assets $4,313,000 $3,430,000 $4,393,000 $2,644,000
Total
stockholders'
equity $3,558,000 $2,936,000 $3,976,000 $2,094,000
Net sales $3,310,000 $2,888,000 $2,014,000 $2,334,000
Net loss from
continuing
operations $ (736,000) $(1,570,000) $(1,059,000) $(1,567,000)
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF CONTINUING OPERATIONS
The results of continuing operations described hereafter reflect, for the
most part, those results of the Company's wholly-owned Canadian subsidiary,
Carsen Group Inc. There was no significant impact upon the Company's results of
operations for the six months ended January 31, 1996, as compared to the six
months ended January 31, 1995, as a result of translating Canadian dollars into
United States dollars. In order to further analyze the results of operations,
certain comparisons will be presented in Canadian dollars as well as United
States dollars. The ensuing discussion should also be read in conjunction with
the Company's Annual Report on Form 10-K for the fiscal year ended July 31,
1995.
Net revenues in Canadian dollars decreased by $2,497,000, or 21.3%, to
$9,204,000 for the three months ended January 31, 1996, from $11,701,000 for the
three months ended January 31, 1995; however, when translated into United States
dollars, the net revenues decreased by $1,662,000, or 19.7%, to $6,776,000 for
the three months ended January 31, 1996, from $8,438,000 for the three months
ended January 31, 1995. Net revenues in Canadian dollars decreased by
$3,764,000, or 18.6%, to $16,509,000 for the six months ended January 31, 1996
from $20,273,000 for the six months ended January 31, 1995; however, when
translated into United States dollars, the net revenues decreased by $2,546,000,
or 17.3%, to $12,205,000 for the six months ended January 31, 1996, from
$14,751,000 for the six months ended January 31, 1995. These decreases were
principally attributable to the decreased sales of the Consumer Products
Division and the Medical Instruments Division, offset in part by increased sales
in the Industrial Technology Division, the Product Service Division for the
three months ended January 31, 1996 and the Precision Instruments Division for
the six months ended January 31, 1996. The decreased sales of the Consumer
Products Division resulted from lower demand for product, primarily attributable
to the loss of national account business. The Company is restructuring this
division's sales functions and marketing strategies in order to address current
market conditions. The decreased sales of the Medical Instruments Division
resulted from lower demand for product. This division has been adversely
impacted by certain cost control measures proposed or recently implemented by
various provincial governments which may decrease or delay funding to hospitals
and thereby decrease or delay hospital spending. The increased sales of the
Industrial Technology Division and Precision Instruments Division resulted from
increased demand for new products such as the Olympus B-Max microscope, the
restructuring of the sales functions and the implementation of new marketing
strategies in these divisions, and increases in selling prices of certain
products. The increased
8
<PAGE>
sales of the Product Service Division for the three months ended January 31,
1996 resulted primarily from specific actions taken to accelerate the acceptance
of quotes.
Gross profit in Canadian dollars decreased by $695,000, or 18.5%, to
$3,057,000 for the three months ended January 31, 1996, from $3,752,000 for the
three months ended January 31, 1995; however, when translated into United States
dollars, the gross profit decreased by $462,000, or 17.0%, to $2,251,000 for the
three months ended January 31, 1996, from $2,713,000 for the three months ended
January 31, 1995. Gross profit in Canadian dollars decreased by $1,101,000, or
17.2%, to $5,307,000 for the six months ended January 31, 1996, from $6,408,000
for the six months ended January 31, 1995; however, when translated into United
States dollars, the gross profit decreased by $740,000, or 15.9%, to $3,925,000
for the six months ended January 31, 1996 from $4,665,000 for the six months
ended January 31, 1995. The gross profit margins for the three and six month
periods ended January 31, 1996 were 33.2% and 32.2%, respectively, as compared
with 32.2% and 31.6% for the three and six month periods ended January 31, 1995.
The higher gross profit margins are principally attributable to sales mix in all
divisions, and the decreased sales of the Consumer Products Division which
generally have lower profit margins. These margin increases were partially
offset by price increases received from a major supplier, and for the six months
ended January 31, 1996, the reduction in small labor intensive repairs in the
Product Service Division, which repairs generally carry higher margins.
Shipping and warehouse expenses as a percentage of net revenues increased
to 2.7% and 3.1% for the three and six months ended January 31, 1996, from 2.4%
and 2.6% for the three and six months ended January 31, 1995, respectively.
These percentage increases were principally attributable to the decrease in
revenues, since most of the expenses in this category are of a fixed nature.
Selling expenses as a percentage of net revenues were 15.3% and 16.1% for
the three and six months ended January 31, 1996, as compared with 13.9% and
14.2% for the three and six months ended January 31, 1995. These percentage
increases were principally attributable to the decrease in revenues, even though
the fixed portion of selling expenses has decreased when compared to the prior
year periods.
General and administrative expenses decreased by $45,000 to $556,000 for
the three months ended January 31, 1996 from $601,000 for the three months ended
January 31, 1995, primarily attributable to a reduction in personnel costs. For
the six months ended January 31, 1996, general and administrative expenses
increased by $16,000 to $1,204,000 from $1,188,000 for the six months ended
January 31, 1995.
9
<PAGE>
Interest expense decreased to $120,000 for the six months ended January 31,
1996, as compared with $213,000 for the six months ended January 31, 1995. This
decrease is due to a recovery of interest of approximately $103,000 related to
the tax reassessments described in Note 2 to the Condensed Consolidated
Financial Statements, partially offset by an increase in interest expense
attributable primarily to an increase in average borrowings under the Canadian
revolver.
Income from continuing operations before income taxes decreased by $527,000
to $255,000 for the six months ended January 31, 1996 from $782,000 for the six
months ended January 31, 1995.
Income taxes represent taxes imposed on the Company's Canadian operations
for the six months ended January 31, 1996, as well as a recovery of taxes
related to the tax reassessment described in Note 2 to the Condensed
Consolidated Financial Statements, and taxes imposed on the Canadian operations
for the six months ended January 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 1996, the Company's working capital was $9,732,000, as
compared with $11,163,000 at July 31, 1995. This decrease primarily reflects a
decrease in accounts receivable, partially offset by increases in inventories
and other current assets, including income taxes receivable and prepaid income
taxes of approximately $216,000, and a decrease in current liabilities. Long-
term debt decreased from $6,087,000 at July 31, 1995 to $4,441,000 at January
31, 1996.
Net cash provided by operating activities was $1,546,000 for the six months
ended January 31, 1996, as compared with net cash used in operating activities
of $757,000 for the six months ended January 31, 1995. This change was
primarily due to a decrease in accounts receivable, partially offset by
increases in inventories and other current assets, including income taxes
receivable and prepaid income taxes, and decreases in current liabilities. Net
cash used in investing activities was $128,000 for the six months ended January
31, 1996, as compared with net cash used in investing activities of $161,000 for
the six months ended January 31, 1995. Net cash used in financing activities
was $1,702,000 for the six months ended January 31, 1996, as compared with net
cash provided by financing activities of $625,000 for the six months ended
January 31, 1995. This change principally reflects borrowings and repayments
under the revolving credit facility.
The revolving credit facility entered into during fiscal 1994, as amended,
is comprised of a $7,500,000 revolving credit facility to the Company's Canadian
subsidiary. The maximum borrowing availability under this facility decreases
annually over a three year period commencing January 1, 1996 and must be paid in
full no
10
<PAGE>
later than December 31, 1998. Pursuant to the terms of the facility, the
maximum borrowing availability decreased to $6,500,000 effective January 1,
1996. The Company has submitted a request to the bank that the borrowing
availability remain at $7,500,000 for the duration of the agreement; presently,
the Company is waiting for approval from the bank regarding this request. The
Company is permitted to borrow an amount up to (i) 75%-85% of certain eligible
accounts receivable, depending on the customer, and (ii) 50% of qualifying
inventory, depending on the type of goods in inventory; however, any trade
letters of credit issued under this facility will reduce the maximum available
borrowings by 50% of the amount of such trade letters of credit, while any
standby letters of credit, including the $500,000 letter of credit issued to
Olympus America Inc. during November 1993, reduces the maximum available
borrowings by the full amount of such standby letters of credit. The Company
has the right to borrow funds under this facility in either United States
dollars or Canadian dollars, a portion of which may be in the form of bankers
acceptances. The borrowings outstanding at January 31, 1996 and July 31, 1995
are in Canadian dollars. United States dollar borrowings bear interest at .5%
above the lender's United States base rate, and Canadian dollar borrowings bear
interest at .75% above the lender's Canadian prime rate. A commitment fee on
the unused portion of this facility is payable in arrears at a rate of .25% per
annum, with interest on borrowings payable monthly. Borrowings under this
facility are guaranteed by Cantel and secured by substantially all assets of the
Company's Canadian subsidiary and require the subsidiary to meet certain
financial covenants, including a minimum working capital ratio, a minimum
interest coverage ratio, a maximum debt to tangible net worth ratio, and an
annual limitation on capital expenditures.
A decrease in the value of the Canadian dollar against the United States
dollar could adversely affect the Company because the Company's Canadian
subsidiary purchases substantially all of its products in United States dollars
and sells its products in Canadian dollars. Such adverse currency fluctuations
could also result in a corresponding adverse change in the United States dollar
value of the Company's assets that are denominated in Canadian dollars. Under
the credit facility, as amended, the Company's Canadian subsidiary has a foreign
exchange hedging arrangement of up to $15,000,000 (U.S. dollars) which could be
used to minimize future adverse currency fluctuations as they relate to
purchases of inventories.
The Company's Canadian subsidiary has forward exchange contracts at January
31, 1996 aggregating $3,000,000 (United States dollars) to hedge against
possible declines in the value of the Canadian dollar which would otherwise
result in higher inventory costs. Such contracts represented the Canadian
subsidiary's projected purchases of inventories through February 29, 1996.
11
<PAGE>
The average exchange rate of the contracts open at January 31, 1996 was
$1.3409 Canadian dollar per United States dollar, or $.7458 United States dollar
per Canadian dollar. The exchange rate published by the Wall Street Journal on
March 7, 1996, was $1.3723 Canadian dollar per United States dollar, or $.7287
United States dollar per Canadian dollar.
The Company believes that its anticipated cash flow from operations and the
funds available under the credit facility will be sufficient to satisfy the
Company's cash operating requirements for its existing operations for the
foreseeable future. At March 7, 1996, $1,774,000 was available under the credit
facility.
Inflation has not significantly impacted the Company's operations.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In late November 1995, the Company was one of 102 named defendants in
the lawsuit titled "Caldwell Trucking PRP Group v. ADT Automotive, Inc.
including Cantel Industries Inc." (Civ. No. 95-1690 (WGB)) brought by nine
companies which settled a Comprehensive Environmental Response Compensation and
Liability Act claim by the United States Government and the State of New Jersey
for contribution to the remediation costs of an alleged hazardous waste site in
New Jersey. The Company's time to formally respond to the complaint, which was
filed in the United States District Court, District of New Jersey, is April 1,
1996. The complaint, which relates to alleged septic and/or industrial waste
disposed of prior to 1984, seeks total past and future remediation costs from
the 102 named defendants and prior settling companies, estimated at
approximately $30 million, but does not allege any specific offense against the
Company at this time. Management of the Company believes that Cantel was not
engaged in the production, transportation or dumping of industrial waste at any
time. Although the Company can make no estimate of what its share, if any, of
this total potential exposure could be, based on its current knowledge and
available information, management believes that the claim will not have a
material adverse affect on the Company or its liquidity, financial condition or
operating results. Furthermore, the Company believes that it has defenses to
the suit and that it may have insurance covering such claims in whole or in
part, and intends to vigorously defend itself in this litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There was no submission of matters to a vote during the three months
ended January 31, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11, Computation of Earnings Per Share
Exhibit 27, Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months
ended January 31, 1996.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CANTEL INDUSTRIES, INC.
Date: March 13, 1996 By: /s/ James P. Reilly
-------------------------------
James P. Reilly, President
and Chief Executive Officer
(Principal Executive Officer
and Principal Financial Officer)
By: /s/ Craig A. Sheldon
-------------------------------
Craig A. Sheldon, Vice
President and Controller
(Chief Accounting Officer)
14
<PAGE>
EXHIBIT 11
CANTEL INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
1996 1995 1996 1995
--------- -------- --------- ---------
PRIMARY
<S> <C> <C> <C> <C>
Weighted average number of
shares outstanding 2,768,804 2,740,544 2,768,499 2,737,836
Dilutive effect of options and
warrants using the treasury
stock method and average
market price for the period 533,094 334,807 514,042 380,151
--------- --------- --------- ---------
Weighted average number of
shares and common stock
equivalents 3,301,898 3,075,351 3,282,541 3,117,987
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income $ 167,000 $ 304,000 $ 254,000 $ 365,000
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income per common share $0.05 $0.10 $0.08 $0.12
----- ------ ----- -----
----- ------ ----- -----
</TABLE>
15
<PAGE>
EXHIBIT 11
CANTEL INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
1996 1995 1996 1995
--------- -------- --------- ---------
FULLY DILUTED
<S> <C> <C> <C> <C>
Weighted average number of
shares outstanding 2,768,804 2,740,544 2,768,499 2,737,836
Dilutive effect of options and
warrants using the treasury
stock method and the higher
of the period and or average
market price for the period 538,451 342,555 534,964 380,151
--------- --------- --------- ---------
Weighted average number of
shares and common stock
equivalents 3,307,255 3,083,099 3,303,463 3,117,987
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income $ 167,000 $ 304,000 $ 254,000 $ 365,000
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income per common share $0.05 $0.10 $0.08 $0.12
----- ------ ----- -----
----- ------ ----- -----
</TABLE>
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JANUARY 31, 1996 AND THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JANUARY 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JAN-31-1996
<CASH> 236000
<SECURITIES> 0
<RECEIVABLES> 4692000
<ALLOWANCES> 0
<INVENTORY> 7377000
<CURRENT-ASSETS> 12963000
<PP&E> 1312000
<DEPRECIATION> 875000
<TOTAL-ASSETS> 14341000
<CURRENT-LIABILITIES> 3231000
<BONDS> 4441000
277000
0
<COMMON> 0
<OTHER-SE> 6294000
<TOTAL-LIABILITY-AND-EQUITY> 14341000
<SALES> 12205000
<TOTAL-REVENUES> 12205000
<CGS> 8280000
<TOTAL-COSTS> 8280000
<OTHER-EXPENSES> 3550000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 120000
<INCOME-PRETAX> 255000
<INCOME-TAX> 1000
<INCOME-CONTINUING> 254000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 254000
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
