<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 Exchange Act of 1934
For the quarterly period ended April 30, 2000.
or
|_| 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: 0-6132
CANTEL MEDICAL CORP.
--------------------
(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
CANTEL INDUSTRIES, INC.
(Former name)
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 2, 2000:
4,403,964.
<PAGE>
PART I - FINANCIAL INFORMATION
CANTEL MEDICAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar Amounts in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
April 30, July 31,
2000 1999
<S> <C> <C>
ASSETS
Current assets:
Cash $ 473 $ 534
Accounts receivable, net 11,147 11,208
Inventories 11,046 8,971
Prepaid expenses and other current assets 740 851
-------- --------
Total current assets 23,406 21,564
Property and equipment, net 954 895
Intangible assets, net 1,559 1,666
Other assets 942 914
-------- --------
$26,861 $25,039
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,791 $ 6,099
Compensation payable 735 868
Other accrued expenses 841 1,321
Income taxes payable 466 546
-------- --------
Total current liabilities 7,833 8,834
Long-term debt 2,751 1,567
Deferred income taxes 95 93
Stockholders' equity:
Preferred Stock, par value $1.00 per share;
authorized 1,000,000 shares; none issued - -
Common Stock, $.10 par value; authorized 12,000,000
shares; April 30 - 4,547,220 shares issued and
4,403,964 shares outstanding; July 31 - 4,517,945
shares issued and 4,440,545 shares outstanding 455 452
Additional capital 19,413 19,304
Accumulated deficit (934) (2,588)
Accumulated other comprehensive income:
Cumulative foreign currency translation adjustment (2,047) (2,230)
Treasury Stock, at cost; April 30 -
143,256 shares; July 31 - 77,400 shares (705) (393)
-------- --------
Total stockholders' equity 16,182 14,545
-------- --------
$26,861 $25,039
</TABLE>
See accompanying notes.
1
<PAGE>
CANTEL MEDICAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollar Amounts in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales:
Product sales $12,326 $10,139 $36,297 $30,915
Product service 1,470 1,410 4,101 3,841
------- ------- ------- -------
Total net sales 13,796 11,549 40,398 34,756
------- ------- ------- -------
Cost of sales:
Product sales 8,235 6,764 24,913 21,236
Product service 825 850 2,265 2,224
------- ------- ------- -------
Total cost of sales 9,060 7,614 27,178 23,460
------- ------- ------- -------
Gross profit 4,736 3,935 13,220 11,296
Expenses:
Shipping and warehouse 189 187 638 544
Selling 1,766 1,628 5,014 4,389
General and administrative 1,385 1,172 3,766 3,247
Research and development 193 163 554 590
------- ------- ------- -------
Total operating expenses 3,533 3,150 9,972 8,770
------- ------- ------- -------
Income from operations before
interest expense and income
taxes 1,203 785 3,248 2,526
Interest expense 63 66 194 235
------- ------- ------- -------
Income before income taxes 1,140 719 3,054 2,291
Income taxes 564 398 1,400 1,056
------- ------- ------- -------
Net income $ 576 $ 321 $ 1,654 $ 1,235
======= ======= ======= =======
Earnings per common share:
Basic $ 0.13 $ 0.07 $ 0.37 $ 0.28
======= ======= ======= =======
Diluted $ 0.13 $ 0.07 $ 0.37 $ 0.27
======= ======= ======= =======
</TABLE>
See accompanying notes.
2
<PAGE>
CANTEL MEDICAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,654 $1,235
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Depreciation and amortization 398 341
Deferred income taxes - 23
Changes in assets and liabilities:
Accounts receivable 245 208
Inventories (1,962) (563)
Prepaid expenses and other current assets 114 110
Accounts payable and accrued expenses (1,052) (402)
Income taxes payable (91) 3
-------- --------
Net cash (used in) provided by operating activities (694) 955
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (332) (280)
Other, net (25) (82)
-------- --------
Net cash used in investing activities (357) (362)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under credit facilities 1,190 (819)
Proceeds from exercise of stock options 8 85
Purchases of Treasury Stock (208) -
-------- --------
Net cash provided by (used in) financing activities 990 (734)
-------- --------
Decrease in cash (61) (141)
Cash at beginning of period 534 493
-------- --------
Cash at end of period $ 473 $ 352
======== ========
</TABLE>
See accompanying notes.
3
<PAGE>
CANTEL MEDICAL CORP.
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
Medical Corp., formerly Cantel Industries, Inc., (the "Company" or "Cantel") on
Form 10-K for the fiscal year ended July 31, 1999, 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, 1999 was derived from
the audited consolidated balance sheet of the Company at that date.
Certain items in the April 30, 1999 financial statements have been
reclassified from statements previously presented to conform to the presentation
of the April 30, 2000 financial statements.
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, 2000 and 1999 are set forth in the
following table:
4
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
2000 1999 2000 1999
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net income $576,000 $ 321,000 $1,654,000 $1,235,000
Other comprehensive income (loss):
Foreign currency translation
adjustment (322,000) 427,000 183,000 433,000
--------- --------- ---------- ----------
Comprehensive income $254,000 $ 748,000 $1,837,000 $1,668,000
========= ========= ========== ==========
</TABLE>
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 common stock equivalents 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:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator for basic and diluted
earnings per common share:
Net income $ 576,000 $ 321,000 $1,654,000 $1,235,000
========== ========== ========== ==========
Denominator for basic and diluted
earnings per common share:
Denominator for basic earnings
per common share - weighted
average number of shares
outstanding 4,403,964 4,381,571 4,411,171 4,376,805
Dilutive effect of common stock
equivalents using the treasury
stock method and the average
market price for the period 70,635 191,904 62,600 224,202
---------- ---------- ---------- ----------
Denominator for diluted earnings
per common share - weighted
average number of shares
outstanding and common
stock equivalents 4,474,599 4,573,475 4,473,771 4,601,007
========== ========== ========== ==========
Basic earnings per common share $0.13 $0.07 $0.37 $0.28
========== ========== ========== ==========
Diluted earnings per common share $0.13 $0.07 $0.37 $0.27
========== ========== ========== ==========
</TABLE>
5
<PAGE>
Note 4. FINANCING ARRANGEMENTS
The Company has two credit facilities, a $5,000,000 (United States
dollars) revolving credit facility for Carsen expiring on December 31, 2002 and
a $1,500,000 revolving credit facility for MediVators expiring on August 1,
2001. 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. At April 30,
2000, such rate was .25% above the lender's prime rate. Borrowings under the
MediVators revolving credit facility bear interest at the lender's prime rate
plus 1%. The prime rates associated with the Carsen and MediVators revolving
credit facilities were 7.00% and 9.00%, respectively, at April 30, 2000. These
prime rates increased to 7.50% and 9.50%, respectively, on May 17, 2000. 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 5. INCOME TAXES
Income taxes consist primarily of taxes imposed on the Company's Canadian
operations. The effective tax rate on Canadian operations was 44.2% and 47.3%
for the nine months ended April 30, 2000 and 1999, respectively. For the nine
months ended April 30, 2000, the consolidated effective tax rate is higher than
the Canadian effective tax rate due to the fact that losses generated by the
United States operations could not be used to offset income generated by the
Canadian operations. For the nine months ended April 30, 1999, the consolidated
effective tax rate was 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 stronger Canadian dollar against the United States dollar during the three
and nine months ended April 30, 2000 compared with the three and nine months
ended April 30, 1999 (increase in value of approximately 3% and 4% for the three
and nine months ended April 30, 2000, 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, 1999.
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,
------------------------------- -------------------------------
2000 1999 2000 1999
------------------------------- -------------------------------
(Dollar amounts in thousands)
$ % $ % $ % $ %
-------- ------ -------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Medical Products $ 4,692 34.0 $ 4,184 36.2 $12,717 31.5 $11,220 32.3
Infection Control
Products 2,569 18.6 2,098 18.2 7,343 18.2 7,058 20.3
Scientific Products 2,217 16.1 1,692 14.6 5,401 13.4 4,079 11.7
Product Service 1,470 10.7 1,410 12.2 4,101 10.1 3,841 11.1
Consumer Products 3,147 22.8 2,317 20.1 11,421 28.3 9,048 26.0
Elimination of inter-
company sales of
Infection Control
Products (299) (2.2) (152) (1.3) (585) (1.5) (490) (1.4)
-------- ------ -------- ------ -------- ------ -------- ------
$13,796 100.0 $11,549 100.0 $40,398 100.0 $34,756 100.0
======== ====== ======== ====== ======== ====== ======== ======
</TABLE>
Net sales increased by $2,247,000, or 19.5%, to $13,796,000 for the three
months ended April 30, 2000, from $11,549,000 for the three months ended April
30, 1999. Net sales increased by $5,642,000, or 16.2%, to $40,398,000 for the
nine months ended April 30, 2000, from $34,756,000 for the nine months ended
April 30, 1999. These increases were principally attributable to increased sales
of Medical Products, Scientific Products and Consumer Products. Net sales were
positively impacted for the three and nine months ended April 30, 2000, compared
with the three and nine months ended April 30, 1999, by approximately $363,000
and $1,331,000, respectively, due to the translation of Carsen's net sales using
a stronger Canadian dollar against the United States dollar.
7
<PAGE>
The increased sales of Medical Products was due primarily to an increase
in demand for surgical endoscopy products. The increased sales of Scientific
Products was primarily attributable to an increase in demand for microscopes and
related imaging equipment. The increased sales of Consumer Products was due
primarily to stronger demand from national accounts for both 35 mm.
and digital cameras.
Gross profit increased by $801,000, or 20.4%, to $4,736,000 for the three
months ended April 30, 2000, from $3,935,000 for the three months ended April
30, 1999. Gross profit increased by $1,924,000, or 17.0%, to $13,220,000 for the
nine months ended April 30, 2000, from $11,296,000 for the nine months ended
April 30, 1999. The gross profit margins for the three and nine months ended
April 30, 2000 were 34.3% and 32.7%, respectively, compared with 34.1% and 32.5%
for the three and nine months ended April 30, 1999. The higher gross profit
margin for the three and nine months ended April 30, 2000 was primarily
attributable to the positive impact of a stronger 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; selling price increases, a decrease in the cost of
inventories purchased from Carsen's principal supplier and a reduction in cash
discounts and volume rebates, all associated with Consumer Products; favorable
sales mix associated with Product Service; and sales mix and manufacturing
efficiencies associated with Infection Control Products. These margin increases
were net of a reduction in gross profit margin attributable to competition in
Carsen's Scientific Products segment.
Gross profit was positively impacted for the three and nine months ended
April 30, 2000, compared with the three and nine months ended April 30, 1999, by
approximately $113,000 and $387,000, respectively, due to the translation of
Carsen's gross profit using a stronger Canadian dollar against the United States
dollar.
Shipping and warehouse expenses increased by $2,000 to $189,000 for the
three months ended April 30, 2000, from $187,000 for the three months ended
April 30, 1999. For the nine months ended April 30, 2000, shipping and warehouse
expenses increased by $94,000 to $638,000, from $544,000 for the nine months
ended April 30, 1999. These increases were primarily attributable to variable
freight costs associated with the increase in sales volume.
Selling expenses as a percentage of net sales were 12.8% and 12.4% for the
three and nine months ended April 30, 2000, compared with 14.1% and 12.6% for
the three and nine months ended April 30, 1999. For the three and nine months
ended April 30, 2000, the decrease in selling expenses as a percentage of net
sales was primarily attributable to the effect of the increased sales against
8
<PAGE>
the fixed portion of selling expenses as well as a reduction in advertising and
promotion expenses, partially offset by an increase in personnel to support the
increase in sales volume.
General and administrative expenses increased by $213,000 to $1,385,000
for the three months ended April 30, 2000, from $1,172,000 for the three months
ended April 30, 1999. For the nine months ended April 30, 2000, general and
administrative expenses increased by $519,000 to $3,766,000, from $3,247,000 for
the nine months ended April 30, 1999. These increases were primarily
attributable to personnel costs, including incentive compensation, and
professional fees, including investor relations and executive recruiting.
Research and development expenses increased by $30,000 to $193,000 for the
three months ended April 30, 2000, from $163,000 for the three months ended
April 30, 1999. For the nine months ended April 30, 2000, research and
development expenses decreased by $36,000 to $554,000, from $590,000 for the
nine months ended April 30, 1999. For the three months ended April 30, 2000, the
increase in research and development expenses was primarily attributable to an
increase in personnel and continuing engineering on existing products. For the
nine months ended April 30, 2000, the decrease in research and development
expenses was due to the reduction of outside laboratory testing on certain
projects, including a new liquid chemical germicide.
Interest expense decreased to $63,000 for the three months ended April 30,
2000, from $66,000 for the three months ended April 30, 1999. For the nine
months ended April 30, 2000, interest expense decreased to $194,000, from
$235,000 for the nine months ended April 30, 1999. These decreases were
attributable to a decrease in average outstanding borrowings under the Company's
revolving credit facilities during the three and nine months ended April 30,
2000, partially offset by an increase in average borrowing rates.
Income before income taxes increased by $763,000 to $3,054,000 for the
nine months ended April 30, 2000, from $2,291,000 for the nine months ended
April 30, 1999.
Income taxes consist primarily of taxes imposed on the Company's Canadian
operations. The effective tax rate on Canadian operations was 44.2% and 47.3%
for the nine months ended April 30, 2000 and 1999, respectively. For the nine
months ended April 30, 2000, the consolidated effective tax rate is higher than
the Canadian effective tax rate due to the fact that losses generated by the
United States operations could not be used to offset income generated by the
Canadian operations. For the nine months ended April 30, 1999, the consolidated
effective tax rate was lower than the Canadian effective tax rate due to the
fact that income generated by the United States operations is substantially
offset
9
<PAGE>
by tax benefits resulting from the utilization of net operating loss
carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 2000, the Company's working capital was $15,573,000, compared
with $12,730,000 at July 31, 1999. This increase primarily reflects an increase
in inventories and decreases in accounts payable and other accrued expenses.
Net cash used in operating activities was $694,000 for the nine months
ended April 30, 2000 compared with net cash provided by operating activities of
$955,000 for the nine months ended April 30, 1999. For the nine months ended
April 30, 2000, the net cash used in operating activities was primarily due to
an increase in inventories and a decrease in accounts payable and accrued
expenses, offset by net income, after adjusting for depreciation and
amortization. For the nine months ended April 30, 1999, the net cash provided by
operating activities 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.
Net cash used in investing activities was $357,000 for the nine months
ended April 30, 2000 and $362,000 for the nine months ended April 30, 1999,
which was principally for capital expenditures.
Net cash provided by financing activities was $990,000 for the nine months
ended April 30, 2000 compared with net cash used in financing activities of
$734,000 for the nine months ended April 30, 1999. These changes were
principally due to fluctuations in outstanding borrowings under the Company's
revolving credit facilities.
The Company has two credit facilities, a $5,000,000 (United States
dollars) revolving credit facility for Carsen expiring on December 31, 2002 and
a $1,500,000 revolving credit facility for MediVators expiring on August 1,
2001. 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. At April 30,
2000, such rate was .25% above the lenders' prime rate. Borrowings under the
MediVators revolving credit facility bear interest at the lender's prime rate
plus 1%. The prime rates associated with the Carsen and MediVators revolving
credit facilities were 7.00% and 9.00%, respectively, at April 30, 2000. These
prime rates increased to 7.50% and 9.50%, respectively, on May 17, 2000. 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
10
<PAGE>
subsidiary; and is guaranteed by Cantel.
For the nine months ended April 30, 2000, compared with the nine months
ended April 30, 1999, the average value of the Canadian dollar increased 4%
relative to the value of the United States dollar. Changes in the value of the
Canadian dollar against the United States dollar affects 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 currency fluctuations also result in a corresponding 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 (United States 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 2, 2000, Carsen had foreign exchange
forward contracts aggregating $7,953,000 (United States dollars), and foreign
exchange option contracts aggregating $2,000,000 (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 portion
of the Canadian subsidiary's projected purchases of inventories through October
2000. The weighted average exchange rate of the forward contracts open at June
2, 2000 was $1.4447 Canadian dollar per United States dollar, or $.6922 United
States dollar per Canadian dollar. The weighted average range of the option
contracts open at June 2, 2000 was $1.4600 to $1.3579 Canadian dollar per United
States dollar, or $.6849 to $.7364 United States dollar per Canadian dollar. The
exchange rate published by the Wall Street Journal on June 2, 2000 was $1.4912
Canadian dollar per United States dollar, or $.6706 United States dollar per
Canadian dollar.
For purposes of translating the balance sheet, at April 30, 2000 compared
with July 31, 1999, the value of the Canadian dollar increased by 2% relative to
the value of the United States dollar. As a result, at April 30, 2000, the
negative cumulative foreign currency translation adjustment was reduced by
$183,000 compared to July 31, 1999, 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 2, 2000, $4,985,000 was available under the credit
facilities.
Inflation has not significantly impacted the Company's operations.
11
<PAGE>
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 their 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.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES
ABOUT MARKET RISK.
Foreign currency market risk: Carsen pays for a substantial portion of its
products in United States dollars, and Carsen's business could be materially and
adversely affected by the imposition of trade barriers, fluctuations in the
rates of exchange, tariff increases and import and export restrictions between
the United States and Canada. Additionally, Carsen's financial statements are
translated using the accounting policies described in Note 2 to the Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K for
the fiscal year ended July 31, 1999. During the nine months ended April 30, 2000
compared with the nine months ended April 30, 1999, fluctuations in the exchange
rates between the United States and Canada had a positive impact upon the
Company's results of operations and stockholders' equity, as described in
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Interest rate market risk: The Company has two credit facilities for which
the interest rate on outstanding borrowings is variable. Therefore, interest
expense is affected by the general level of interest rates in the United States
and Canada.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On March 28, 2000 the Company held its Annual Meeting of Stockholders. At
the meeting, James P. Reilly and Robert L. Barbanell were re-elected directors
of the Company, to hold office until the Annual Meeting of Stockholders to be
held after the fiscal year ending July 31, 2002. 4,238,204 votes were cast for
and 11,267 votes were against in the election of James P. Reilly and 4,238,076
votes were cast for and 11,395 votes were against in the election of Robert L.
Barbanell.
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 400,000 to 700,000. 2,104,759 votes were cast for, 145,400 votes were
against, and 6,004 votes abstained in the approval of the amendment to the 1997
Employee Stock Option Plan.
Stockholders also approved an amendment to the Certificate of
Incorporation of the Company to change the name of the Company from Cantel
Industries, Inc. to Cantel Medical Corp. 4,244,739 votes were cast for, 4,454
votes were against, and 278 votes abstained in the approval of the amendment to
the Certificate of Incorporation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27, Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K was filed on April 7, 2000 indicating
that the Company's name was changed from Cantel Industries, Inc. to Cantel
Medical Corp.
There were no other reports on Form 8-K filed for the three
months ended April 30, 2000.
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 MEDICAL CORP.
Date: June 13, 2000 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
