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 April 30, 1999.
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 07013-3346
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code
(973) 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 June 4, 1999:
4,378,130.
<PAGE>
PART I - FINANCIAL INFORMATION
CANTEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar Amounts in Thousands, Except Per Share Data)
(Unaudited)
April 30, July 31,
1999 1998
--------- --------
Assets
Current assets:
Cash $ 352 $ 493
Accounts receivable, net 8,469 8,446
Inventories 10,079 9,207
Insurance claim receivable -- 563
Prepaid expenses and other current assets 921 465
-------- --------
Total current assets 19,821 19,174
Property and equipment, net 923 841
Intangible assets, net 1,717 1,823
Other assets 733 640
-------- --------
$ 23,194 $ 22,478
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 4,255 $ 4,148
Compensation payable 463 989
Other accrued expenses 1,109 893
Income taxes payable 174 164
-------- --------
Total current liabilities 6,001 6,194
Long-term debt 2,164 3,004
Deferred income taxes 80 54
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 April 30 -
4,378,130 shares; July 31 - 4,367,201 shares 438 437
Additional capital 19,073 19,019
Accumulated deficit (2,722) (3,957)
Accumulated other comprehensive income:
Cumulative foreign currency translation adjustment (1,840) (2,273)
-------- --------
Total stockholders' equity 14,949 13,226
-------- --------
$ 23,194 $ 22,478
======== ========
See accompanying notes.
1
<PAGE>
CANTEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollar Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
April 30, April 30,
1999 1998 1999 1998
------- ------- ------- -------
Net sales:
Product sales $10,139 $ 9,133 $30,915 $25,747
Product service 1,410 1,035 3,841 2,827
------- ------- ------- -------
Total net sales 11,549 10,168 34,756 28,574
------- ------- ------- -------
Cost of sales:
Product sales 6,764 5,951 21,236 17,259
Product service 850 646 2,224 1,627
------- ------- ------- -------
Total cost of sales 7,614 6,597 23,460 18,886
------- ------- ------- -------
Gross profit 3,935 3,571 11,296 9,688
Expenses:
Shipping and warehouse 187 173 544 484
Selling 1,628 1,286 4,389 3,393
General and administrative 1,172 978 3,173 2,816
Research and development 163 244 590 621
Non-recurring costs -- -- 74 --
------- ------- ------- -------
Total operating expenses 3,150 2,681 8,770 7,314
------- ------- ------- -------
Income from operations before
interest expense and income
taxes 785 890 2,526 2,374
Interest expense 66 45 235 127
------- ------- ------- -------
Income before income taxes 719 845 2,291 2,247
Income taxes 398 361 1,056 982
------- ------- ------- -------
Net income $ 321 $ 484 $ 1,235 $ 1,265
======= ======= ======= =======
Earnings per common share:
Basic $ .07 $ .11 $ .28 $ .30
======= ======= ======= =======
Diluted $ .07 $ .11 $ .27 $ .29
======= ======= ======= =======
See accompanying notes.
2
<PAGE>
CANTEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
(Unaudited)
Nine Months Ended
April 30,
1999 1998
------- -------
Cash flows from operating activities
Net income $ 1,235 $ 1,265
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 341 218
Deferred income taxes 23 (19)
Changes in assets and liabilities:
Accounts receivable 208 (1,053)
Inventories (563) 24
Prepaid expenses and other current assets 110 (727)
Accounts payable and accrued expenses (402) (450)
Income taxes payable 3 (400)
------- -------
Net cash provided by (used in) operating activities 955 (1,142)
------- -------
Cash flows from investing activities
Capital expenditures (280) (308)
Acquisition of Chris Lutz Medical net assets -- (315)
Other, net (82) 27
------- -------
Net cash used in investing activities (362) (596)
------- -------
Cash flows from financing activities
Net (repayments) borrowings under credit facilities (819) 1,534
Proceeds from exercise of stock options 85 36
------- -------
Net cash (used in) provided by financing activities (734) 1,570
------- -------
Decrease in cash (141) (168)
Cash at beginning of period 493 656
------- -------
Cash at end of period $ 352 $ 488
======= =======
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 the Annual Report of Cantel
Industries, Inc. (the "Company" or "Cantel") on Form 10-K for the fiscal year
ended July 31, 1998, and Management's Discussion and Analysis of Financial
Condition and Results of Operations included elsewhere herein. Cantel has two
wholly-owned subsidiaries, Carsen Group Inc. ("Carsen"), its Canadian
subsidiary, and MediVators, Inc. ("MediVators"), its United States subsidiary.
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, 1998 was derived from
the audited consolidated balance sheet of the Company at that date.
Note 2. Comprehensive Income
The Company has adopted Statement of Financial Accounting Standards No.
130, Reporting Comprehensive Income, which establishes standards for the
reporting and disclosure of comprehensive income and its components in the
financial statements. The adoption of this Statement had no impact on the
Company's net income or stockholders' equity. The Company's comprehensive income
for the three and nine months ended April 30, 1999 and 1998 are set forth in the
following table:
Three Months Ended Nine Months Ended
April 30, April 30,
1999 1998 1999 1998
--------- --------- ---------- ----------
Net income $ 321,000 $ 484,000 $1,235,000 $1,265,000
Other comprehensive income (loss):
Foreign currency translation
adjustment 427,000 151,000 433,000 (359,000)
--------- --------- ---------- ----------
Comprehensive income $ 748,000 $ 635,000 $1,668,000 $ 906,000
========= ========= ========== ==========
4
<PAGE>
Note 3. Earnings Per Common Share
Basic earnings per common share are computed based upon the weighted
average number of common shares outstanding during the period.
Diluted earnings per common share are computed based upon the weighted
average number of common shares outstanding during the period plus the dilutive
effect of options and warrants using the treasury stock method and the average
market price for the period.
The following weighted average shares were used for the computation of
basic and diluted earnings per common share:
Three Months Ended Nine Months Ended
April 30, April 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
Numerator for basic and
diluted earnings per
common share:
Net income $ 321,000 $ 484,000 $1,235,000 $1,265,000
========== ========== ========== ==========
Denominator for basic
and diluted earnings
per common share:
Denominator for basic
earnings per common
share - weighted
average number of
shares outstanding 4,381,571 4,262,213 4,376,805 4,197,583
Dilutive effect of
options and warrants
using the treasury
stock method and the
average market price
for the period 191,904 243,412 224,202 228,622
---------- ---------- ---------- ----------
Denominator for diluted
earnings per common
share - weighted
average number of
shares and common stock
equivalents 4,573,475 4,505,625 4,601,007 4,426,205
========== ========== ========== ==========
Basic earnings per
common share $ .07 $ .11 $ .28 $ .30
========== ========== ========== ==========
Diluted earnings per
common share $ .07 $ .11 $ .27 $ .29
========== ========== ========== ==========
Note 4. Non-recurring Costs
Non-recurring costs of $74,000 for the nine month period ended April 30,
1999 related to professional fees associated with the termination of a proposed
acquisition.
5
<PAGE>
Note 5. Financing Arrangements
The Company has two credit facilities, a $5,000,000 revolving credit
facility for Carsen expiring on December 31, 2002 and a $1,500,000 revolving
credit facility for MediVators expiring on August 1, 2000. Borrowings under the
Carsen revolving credit facility are in Canadian dollars and bear interest at
rates ranging from lender's prime rate to .75% above the prime rate, depending
upon Carsen's debt to equity ratio. Borrowings under the MediVators revolving
credit facility bear interest at the lender's prime rate plus 1%. Each of the
credit facilities provides for restrictions on available borrowings based
primarily upon percentages of eligible accounts receivable and inventories;
requires the subsidiary to meet certain financial covenants; is secured by
substantially all assets of the subsidiary; and is guaranteed by Cantel.
Note 6. Income Taxes
Income taxes consist primarily of taxes imposed on the Company's Canadian
operations. The effective tax rate on Canadian operations was 47.3% and 45.3%
for the nine months ended April 30, 1999 and 1998, respectively. For the nine
months ended April 30, 1999 and 1998, the consolidated effective tax rate is
lower than the Canadian effective tax rate due to the fact that income generated
by the United States operations is substantially offset by tax benefits
resulting from the utilization of net operating loss carryforwards.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Results of Operations
The results of operations reflect the results of Carsen and MediVators.
Reference is made hereafter to the impact on the Company's results of operations
of a weaker Canadian dollar against the United States dollar during the three
and nine months ended April 30, 1999 compared with the three and nine months
ended April 30, 1998 (decrease in value of approximately 5% and 7% for the three
and nine months ended April 30, 1999, respectively, based upon average exchange
rates). 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, 1998.
The following table gives information as to the net sales and the
percentage to the total net sales accounted for by each operating segment of the
Company.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
----------------------------------- ------------------------------------
1999 1998 1999 1998
----------------------------------- ------------------------------------
(Dollar amounts in thousands)
$ % $ % $ % $ %
-------- ----- -------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Medical Products $ 4,184 36.2 $ 3,744 36.8 $ 11,220 32.3 $ 9,293 32.5
Infection Control
Products 2,098 18.2 2,029 19.9 7,058 20.3 5,639 19.8
Scientific Products 1,692 14.6 1,275 12.5 4,079 11.7 4,235 14.8
Product Service 1,410 12.2 1,035 10.2 3,841 11.1 2,827 9.9
Consumer Products 2,317 20.1 2,222 21.9 9,048 26.0 6,890 24.1
Elimination of inter-
company sales of
Infection Control
Products (152) (1.3) (137) (1.3) (490) (1.4) (310) (1.1)
-------- ----- -------- ----- -------- ----- -------- -----
$ 11,549 100.0 $ 10,168 100.0 $ 34,756 100.0 $ 28,574 100.0
======== ===== ======== ===== ======== ===== ======== =====
</TABLE>
Net sales increased by $1,381,000, or 13.6%, to $11,549,000 for the three
months ended April 30, 1999, from $10,168,000 for the three months ended April
30, 1998. Net sales increased by $6,182,000, or 21.6%, to $34,756,000 for the
nine months ended April 30, 1999, from $28,574,000 for the nine months ended
April 30, 1998. For the three months ended April 30, 1999, these increases were
principally attributable to increased sales of Medical Products, Scientific
Products and Product Service. For the nine months ended April 30, 1999, these
increases were principally attributable to increased sales of Medical Products,
Infection Control Products, Product Service and Consumer Products. Net sales
were adversely impacted for the three and nine months ended April 30, 1999,
compared with the three and nine months ended April 30, 1998, by approximately
$493,000 and $2,117,000, respectively, due to
7
<PAGE>
the translation of Carsen's net sales using a weaker Canadian dollar against the
United States dollar.
For the three and nine month periods ended April 30, 1999, the increased
sales of Medical Products in Canada was principally due to an increase in
demand, and to a lesser extent selling price increases, and the increased sales
of Product Service was attributable to an expansion of the Company's service
business at each of Carsen and MediVators. For the three months ended April 30,
1999, the increased sales of Scientific Products was attributable to an increase
in demand for microscopes. For the nine months ended April 30, 1999, the
increased sales of Infection Control Products was attributable to an increase in
demand for infection control products in the United States; continued expansion
and improvement of the international distribution of MediVators' infection
control products; and selling price increases, and the increased sales of
Consumer Products was due to stronger demand for certain 35 mm. camera models,
as well as the strong demand for an expanded line of digital cameras.
Gross profit increased by $364,000, or 10.2%, to $3,935,000 for the three
months ended April 30, 1999, from $3,571,000 for the three months ended April
30, 1998. Gross profit increased by $1,608,000, or 16.6%, to $11,296,000 for the
nine months ended April 30, 1999, from $9,688,000 for the nine months ended
April 30, 1998. The gross profit margins for the three and nine months ended
April 30, 1999 were 34.1% and 32.5%, respectively, compared with 35.1% and 33.9%
for the three and nine months ended April 30, 1998. The lower gross profit
margins for the three and nine months ended April 30, 1999 were primarily
attributable to the adverse impact of a weaker Canadian dollar relative to the
United States dollar, since the Company's Canadian subsidiary purchases
substantially all of its products in United States dollars and sells its
products in Canadian dollars; increased sales of consumer products, which
generally have lower gross profit margins; more competitive sales of medical
products; and an increase in cash discounts and volume rebates associated with
consumer products. These margin decreases were net of improvements in gross
margin attributable to favorable sales mix, selling price increases and volume
related manufacturing efficiencies associated with infection control products.
Gross profit was adversely impacted for the three and nine months ended
April 30, 1999, compared with the three and nine months ended April 30, 1998, by
approximately $154,000 and $603,000, respectively, due to the translation of
Carsen's gross profit using a weaker Canadian dollar against the United States
dollar.
Shipping and warehouse expenses increased by $14,000 to $187,000 for the
three months ended April 30, 1999, from $173,000 for the three months ended
April 30, 1998. For the nine months ended April 30, 1999, shipping and warehouse
expenses increased by $60,000 to $544,000, from $484,000 for the nine months
ended April
8
<PAGE>
30, 1998. These increases were attributable to variable freight costs associated
with the increase in sales volume.
Selling expenses as a percentage of net sales increased to 14.1% and 12.6%
for the three and nine months ended April 30, 1999, from 12.6% and 11.9% for the
three and nine months ended April 30, 1998. These increases were principally
attributable to an increase in advertising and sales promotion costs associated
with infection control products and consumer products and higher personnel
costs, partially offset by the effect of the increased sales against the fixed
portion of selling expenses.
General and administrative expenses increased by $194,000 to $1,172,000
for the three months ended April 30, 1999, from $978,000 for the three months
ended April 30, 1998. For the nine months ended April 30, 1999, general and
administrative expenses increased by $357,000 to $3,173,000, from $2,816,000 for
the nine months ended April 30, 1998. These increases were primarily
attributable to professional fees, amortization of intangible assets related to
the acquisition of Lutz Medical in March 1998, and internal regulatory
department costs, including costs of ISO certification.
Non-recurring costs of $74,000 for the nine months ended April 30, 1999
related to professional fees associated with the termination of a proposed
acquisition.
Research and development expenses decreased by $81,000 to $163,000 for the
three months ended April 30, 1999, from $244,000 for the three months ended
April 30, 1998. For the nine months ended April 30, 1999, research and
development expenses decreased by $31,000 to $590,000, from $621,000 for the
nine months ended April 30, 1998. These decreases were due to a reduction in
personnel costs and third party laboratory testing.
Interest expense increased to $66,000 for the three months ended April 30,
1999, from $45,000 for the three months ended April 30, 1998. For the nine
months ended April 30, 1999, interest expense increased to $235,000, from
$127,000 for the nine months ended April 30, 1998. These increases were
primarily attributable to an increase in average borrowings under the Company's
revolving credit facilities during the three and nine month periods ended April
30, 1999.
Income before income taxes increased by $44,000 to $2,291,000 for the nine
months ended April 30, 1999, from $2,247,000 for the nine months ended April 30,
1998.
Income taxes consist primarily of taxes imposed on the Company's Canadian
operations. The effective tax rate on Canadian operations was 47.3% and 45.3%
for the nine months ended April 30, 1999 and 1998, respectively. For the nine
months ended April 30, 1999 and 1998, the consolidated effective tax rate is
lower than
9
<PAGE>
the Canadian effective tax rate due to the fact that income generated by the
United States operations is substantially offset by tax benefits resulting from
the utilization of net operating loss carryforwards.
Liquidity and Capital Resources
At April 30, 1999, the Company's working capital was $13,820,000, compared
with $12,980,000 at July 31, 1998. This increase primarily reflects increases in
inventories and prepaid expenses and other current assets, and a decrease in
compensation payable, partially offset by a decrease in the insurance claim
receivable.
Net cash provided by operating activities was $955,000 for the nine months
ended April 30, 1999 compared with net cash used in operating activities of
$1,142,000 for the nine months ended April 30, 1998. The net cash provided by
operating activities for the nine months ended April 30, 1999 was primarily due
to net income, after adjusting for depreciation and amortization, partially
offset by an increase in inventories and a decrease in accounts payable and
accrued expenses. The net cash used in operating activities for the nine months
ended April 30, 1998 was primarily due to increases in accounts receivable and
prepaid expenses and other current assets, and decreases in accounts payable and
accrued expenses and income taxes payable, partially offset by net income, after
adjusting for depreciation and amortization.
Net cash used in investing activities was $362,000 for the nine months
ended April 30, 1999 and $596,000 for the nine months ended April 30, 1998,
which was principally attributable to capital expenditures and, for the fiscal
1998 period, the acquisition of the Lutz Medical net assets.
Net cash used in financing activities was $734,000 for the nine months
ended April 30, 1999 compared with net cash provided by financing activities of
$1,570,000 for the nine months ended April 30, 1998. These changes were
principally due to the fluctuations in outstanding borrowings under the
Company's revolving credit facilities.
The Company has two credit facilities, a $5,000,000 revolving credit
facility for Carsen expiring on December 31, 2002 and a $1,500,000 revolving
credit facility for MediVators expiring on August 1, 2000. Borrowings under the
Carsen revolving credit facility are in Canadian dollars and bear interest at
rates ranging from lender's prime rate to .75% above the prime rate, depending
upon Carsen's debt to equity ratio. Borrowings under the MediVators revolving
credit facility bear interest at the lender's prime rate plus 1%. Each of the
credit facilities provides for restrictions on available borrowings based
primarily upon percentages of eligible accounts receivable and inventories;
10
<PAGE>
requires the subsidiary to meet certain financial covenants; is secured by
substantially all assets of the subsidiary; and is guaranteed by Cantel.
For the nine months ended April 30, 1999, compared with the nine months
ended April 30, 1998, the average value of the Canadian dollar declined 7%
relative to the value of the United States dollar. A further decrease in the
value of the Canadian dollar against the United States dollar would adversely
affect the Company's results of operations 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
would 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 Carsen credit facility the Company's Canadian subsidiary has a
$15,000,000 (U.S. dollars) foreign exchange hedging facility which is available
to be used to minimize future adverse currency fluctuations as they relate to
purchases of inventories. At June 4, 1999, Carsen had foreign exchange forward
contracts aggregating $10,000,000 (United States dollars), and foreign exchange
option contracts aggregating $4,000,000 (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 represent a
substantial portion of the Canadian subsidiary's projected purchases of
inventories for the period from May 1999 to January 2000. The weighted average
exchange rate of the forward contracts open at June 4, 1999 was $1.4852 Canadian
dollar per United States dollar, or $.6733 United States dollar per Canadian
dollar. The weighted average range of the option contracts open at June 4, 1999
was $1.4863 to $1.4316 Canadian dollar per United States dollar, or $.6728 to
$.6985 United States dollar per Canadian dollar. The exchange rate published by
the Wall Street Journal on June 4, 1999 was $1.4740 Canadian dollar per United
States dollar, or $.6784 United States dollar per Canadian dollar.
For purposes of translating the balance sheet, at April 30, 1999 compared
with July 31, 1998, the value of the Canadian dollar increased by 4% relative to
the value of the United States dollar. As a result, at April 30, 1999, the
negative cumulative foreign currency translation adjustment was reduced by
$433,000 compared to July 31, 1998, thereby increasing stockholders' equity.
The Company believes that its anticipated cash flow from operations and
the funds available under the credit facilities will be sufficient to satisfy
the Company's cash operating requirements for its existing operations for the
foreseeable future. At June 4, 1999, $4,796,000 was available under the credit
facilities.
11
<PAGE>
The Company has assessed the ability of its computerized information
systems to process transactions relating to year 2000 and beyond. While certain
modifications are required, the Company expects to achieve necessary
modifications on a timely basis at a cost of approximately $50,000, the majority
of which will be capital expenditures. These modifications are expected to be
substantially completed by September 30, 1999. There can be no assurance,
however, that the systems of other companies on which the Company relies,
including major suppliers and customers, will be timely converted, or that a
failure to successfully convert by another company, or a conversion that is
incompatible with the Company's systems, would not have an adverse impact on the
Company's operations. Management has requested a complete year 2000 assessment
from all of its major suppliers and customers, the majority of which have
indicated that they are, or will be, year 2000 compliant.
Inflation has not significantly impacted the Company's operations.
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements. All forward-looking statements
involve risks and uncertainties, including, without limitation, acceptance and
demand of new products, the impact of competitive products and pricing, the
Company's ability to successfully integrate and operate acquired and merged
businesses and the risks associated with such businesses, the ability of the
Company's vendors and distributors to complete the necessary actions to achieve
a year 2000 conversion for its computer systems and applications, and the risks
detailed in the Company's filings and reports with the Securities and Exchange
Commission. Such statements are only predictions, and actual events or results
may differ materially from those projected.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On April 27, 1999 the Company held its Annual Meeting of Stockholders. At
the meeting, Charles M. Diker, Alan J. Hirschfield and Bruce Slovin were
re-elected directors of the Company, to hold office until the Annual Meeting of
Shareholders to be held after the fiscal year ending July 31, 2001. 3,907,805
votes were cast for and 11,590 votes were withheld in the election of each of
these directors.
In addition, the stockholders approved the appointment of the firm Ernst &
Young LLP to audit the financial statements of the Company for the fiscal year
ending July 31, 1999. 3,902,265 votes were cast for, 5,800 votes were against,
and 11,330 votes abstained in the appointment of Ernst & Young LLP.
Stockholders also approved and adopted the 1998 Directors' Stock Option
Plan, under which options may be granted to directors for an aggregate of
200,000 shares of the Company's Common Stock. 2,199,354 votes were cast for,
30,902 votes were against, and 14,082 votes abstained in the approval of the
1998 Directors' Stock Option Plan.
Stockholders also approved an amendment to the 1997 Employee Stock Option
Plan, to increase the number of shares reserved for issuance and available for
grant from 200,000 to 400,000. 2,205,598 votes were cast for, 23,658 votes were
against, and 15,082 votes abstained in the approval of the amendment to the 1997
Employee Stock Option Plan.
Stockholders also approved and ratified three stock options, each to
purchase 50,000 shares of the Company's Common Stock, granted to the Company's
Chairman of the Board during the period October 1996 through October 1998.
2,200,329 votes were cast for, 33,939 votes were against, and 10,070 votes
abstained in the approval of these stock options.
Stockholders also approved an amendment to the Certificate of
Incorporation of the Company to increase the authorized number of shares of
Common Stock from 7,500,000 to 12,000,000 shares. 3,860,312 votes were cast for,
47,087 votes were against, and 11,996 votes abstained in the approval of the
amendment to the Certificate of Incorporation.
13
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
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 April 30, 1999.
14
<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: June 11, 1999 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)
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT APRIL 30, 1999 AND THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED APRIL 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> APR-30-1999
<CASH> 352,000
<SECURITIES> 0
<RECEIVABLES> 8,469,000
<ALLOWANCES> 0
<INVENTORY> 10,079,000
<CURRENT-ASSETS> 19,821,000
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<DEPRECIATION> 1,995,000
<TOTAL-ASSETS> 23,194,000
<CURRENT-LIABILITIES> 6,001,000
<BONDS> 2,164,000
0
0
<COMMON> 438,000
<OTHER-SE> 14,511,000
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<SALES> 30,915,000
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<CGS> 21,236,000
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<INTEREST-EXPENSE> 235,000
<INCOME-PRETAX> 2,291,000
<INCOME-TAX> 1,056,000
<INCOME-CONTINUING> 1,235,000
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<EXTRAORDINARY> 0
<CHANGES> 0
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<EPS-BASIC> 0.28
<EPS-DILUTED> 0.27
</TABLE>
