<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, 2000.
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 March 3, 2000: 4,403,964.
<PAGE>
PART I - FINANCIAL INFORMATION
CANTEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar Amounts in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
January 31, July 31,
2000 1999
----------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 438 $ 534
Accounts receivable, net 9,738 11,208
Inventories 11,062 8,971
Prepaid expenses and other current assets 841 851
-------- --------
Total current assets 22,079 21,564
Property and equipment, net 984 895
Intangible assets, net 1,598 1,666
Other assets 1,057 914
-------- --------
$ 25,718 $ 25,039
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,435 $ 6,099
Compensation payable 688 868
Other accrued expenses 835 1,321
Income taxes payable 173 546
-------- --------
Total current liabilities 7,131 8,834
Long-term debt 2,562 1,567
Deferred income taxes 97 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; January 31 - 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 (1,510) (2,588)
Accumulated other comprehensive income:
Cumulative foreign currency translation adjustment (1,725) (2,230)
Treasury Stock, at cost; January 31 -
143,256 shares; July 31 - 77,400 shares (705) (393)
-------- --------
Total stockholders' equity 15,928 14,545
-------- --------
$ 25,718 $ 25,039
======== ========
</TABLE>
See accompanying notes.
1
<PAGE>
CANTEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollar Amounts in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales:
Product sales $12,749 $11,046 $23,971 $20,776
Product service 1,312 1,295 2,631 2,431
------- ------- ------- -------
Total net sales 14,061 12,341 26,602 23,207
------- ------- ------- -------
Cost of sales:
Product sales 8,880 7,558 16,678 14,472
Product service 656 684 1,440 1,374
------- ------- ------- -------
Total cost of sales 9,536 8,242 18,118 15,846
------- ------- ------- -------
Gross profit 4,525 4,099 8,484 7,361
Expenses:
Shipping and warehouse 246 195 449 357
Selling 1,638 1,479 3,248 2,761
General and administrative 1,257 1,084 2,381 2,001
Research and development 219 240 361 427
Costs associated with
proposed acquisition - 74 - 74
------- ------- ------- -------
Total operating expenses 3,360 3,072 6,439 5,620
------- ------- ------- -------
Income from operations before
interest expense and income
taxes 1,165 1,027 2,045 1,741
Interest expense 75 91 131 169
------- ------- ------- -------
Income before income taxes 1,090 936 1,914 1,572
Income taxes 507 434 836 658
------- ------- ------- -------
Net income $ 583 $ 502 $ 1,078 $ 914
======= ======= ======= =======
Earnings per common share:
Basic $ 0.13 $ 0.11 $ 0.24 $ 0.21
======= ======= ======= =======
Diluted $ 0.13 $ 0.11 $ 0.24 $ 0.20
======= ======= ======= =======
</TABLE>
See accompanying notes.
2
<PAGE>
CANTEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
January 31,
2000 1999
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,078 $ 914
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 258 228
Deferred income taxes - 16
Changes in assets and liabilities:
Accounts receivable 1,864 (89)
Inventories (1,739) (363)
Prepaid expenses and other current assets 17 (29)
Accounts payable and accrued expenses (1,602) (1,091)
Income taxes payable (389) 49
------- -------
Net cash used in operating activities (513) (365)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (245) (195)
Other, net (139) (95)
------- -------
Net cash used in investing activities (384) (290)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under credit facilities 1,001 482
Proceeds from exercise of stock options 8 85
Purchases of Treasury Stock (208) -
------- -------
Net cash provided by financing activities 801 567
------- -------
Decrease in cash (96) (88)
Cash at beginning of period 534 493
------- -------
Cash at end of period $ 438 $ 405
======= =======
</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 the Annual Report of 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.
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 six months ended January 31, 2000 and 1999 are set forth in
the following table:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
2000 1999 2000 1999
---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Net income $ 583,000 $ 502,000 $1,078,000 $ 914,000
Other comprehensive income:
Foreign currency translation
adjustment 235,000 213,000 505,000 6,000
---------- ---------- ---------- ----------
Comprehensive income $ 818,000 $ 715,000 $1,583,000 $ 920,000
========== ========== ========== ==========
</TABLE>
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 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 Six Months Ended
January 31, January 31,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator for basic and diluted
earnings per common share:
Net income $ 583,000 $ 502,000 $1,078,000 $ 914,000
========== ========== ========== ==========
Denominator for basic and diluted
earnings per common share:
Denominator for basic earnings
per common share - weighted
average number of shares
outstanding 4,411,621 4,377,048 4,414,697 4,374,500
Dilutive effect of common stock
equivalents using the treasury
stock method and the average
market price for the period 57,126 216,696 61,615 240,857
---------- ---------- ---------- ----------
Denominator for diluted earnings
per common share - weighted
average number of shares
outstanding and common stock
equivalents 4,468,747 4,593,744 4,476,312 4,615,357
========== ========== ========== ==========
Basic earnings per common share $0.13 $0.11 $0.24 $0.21
========== ========== ========== ==========
Diluted earnings per common share $0.13 $0.11 $0.24 $0.20
========== ========== ========== ==========
</TABLE>
Note 4. COSTS ASSOCIATED WITH PROPOSED ACQUISITION
Non-recurring costs of $74,000 for the three and six month periods
ended January 31, 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 (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 January
31, 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 6.50% and 8.50%, respectively, at January 31, 2000. These
prime rates increased to 6.75% and 8.75%, respectively, on February 3, 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 6. 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 six months ended January 31, 2000 and 1999, respectively. For the
six months ended January 31, 2000 and 1999, 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 stronger Canadian dollar against the United States dollar during the three
and six months ended January 31, 2000 compared with the three and six months
ended January 31, 1999 (increase in value of approximately 5% and 4% for the
three and six months ended January 31, 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 Six Months Ended
January 31, January 31,
----------------------------- ------------------------------
2000 1999 2000 1999
----------------------------- ------------------------------
(Dollar amounts in thousands)
$ % $ % $ % $ %
------- ---- ------- ---- ------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Medical Products $ 4,769 33.9 $ 3,930 31.9 $ 8,025 30.2 $ 7,036 30.3
Infection Control
Products 2,440 17.4 2,446 19.8 4,774 17.9 4,960 21.4
Scientific Products 1,784 12.7 1,494 12.1 3,184 12.0 2,387 10.3
Product Service 1,312 9.3 1,295 10.5 2,631 9.9 2,431 10.5
Consumer Products 3,937 28.0 3,381 27.4 8,274 31.1 6,731 29.0
Elimination of inter-
company sales of
Infection Control
Products (181) (1.3) (205) (1.7) (286) (1.1) (338) (1.5)
-------- ------ -------- ------ -------- ------ -------- ------
$14,061 100.0 $12,341 100.0 $26,602 100.0 $23,207 100.0
======== ====== ======== ====== ======== ====== ======= =====
</TABLE>
Net sales increased by $1,720,000, or 13.9%, to $14,061,000 for the
three months ended January 31, 2000, from $12,341,000 for the three months ended
January 31, 1999. Net sales increased by $3,395,000, or 14.6%, to $26,602,000
for the six months ended January 31, 2000, from $23,207,000 for the six months
ended January 31, 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 six months ended January
31, 2000, compared with the three and six months ended January 31, 1999, by
approximately $565,000 and $968,000, 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 $426,000, or 10.4%, to $4,525,000 for the
three months ended January 31, 2000, from $4,099,000 for the three months ended
January 31, 1999. Gross profit increased by $1,123,000, or 15.3%, to $8,484,000
for the six months ended January 31, 2000, from $7,361,000 for the six months
ended January 31, 1999. The gross profit margins for the three and six months
ended January 31, 2000 were 32.2% and 31.9%, respectively, compared with 33.2%
and 31.7% for the three and six months ended January 31, 1999. The higher gross
profit margin for the six months ended January 31, 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; and
favorable sales mix associated with Product Service. These margin increases were
net of a reduction in gross profit margin attributable to competition in
Carsen's Scientific Products segment. Additionally, during the three months
ended January 31, 2000, sales mix associated with Infection Control Products
contributed to the reduction in gross profit percentage during this period
compared with last year.
Gross profit was positively impacted for the three and six months ended
January 31, 2000, compared with the three and six months ended January 31, 1999,
by approximately $163,000 and $276,000, 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 $51,000 to $246,000 for
the three months ended January 31, 2000, from $195,000 for the three months
ended January 31, 1999. For the six months ended January 31, 2000, shipping and
warehouse expenses increased by $92,000 to $449,000, from $357,000 for the six
months ended January 31, 1999. These increases were principally attributable to
variable freight costs associated with the increase in sales volume.
8
<PAGE>
Selling expenses as a percentage of net sales were 11.6% and 12.2% for
the three and six months ended January 31, 2000, compared with 12.0% and 11.9%
for the three and six months ended January 31, 1999. For the three months ended
January 31, 2000, the decrease in selling expenses as a percentage of net sales
was primarily attributable to the effect of the increased sales against the
fixed portion of selling expenses, as well as a reduction in advertising and
promotion expenses. For the six months ended January 31, 2000, the increase in
selling expenses as a percentage of net sales was principally attributable to an
increase in personnel to support the increase in sales volume, partially offset
by the effect of the increased sales against the fixed portion of selling
expenses and a reduction in advertising and promotion expenses.
General and administrative expenses increased by $173,000 to $1,257,000
for the three months ended January 31, 2000, from $1,084,000 for the three
months ended January 31, 1999. For the six months ended January 31, 2000,
general and administrative expenses increased by $380,000 to $2,381,000, from
$2,001,000 for the six months ended January 31, 1999. These increases were
primarily attributable to personnel costs, including incentive compensation, and
professional fees.
Costs associated with proposed acquisition of $74,000 for the three and
six month periods ended January 31, 1999 related to professional fees associated
with the termination of a proposed acquisition.
Research and development expenses decreased by $21,000 to $219,000 for
the three months ended January 31, 2000, from $240,000 for the three months
ended January 31, 1999. For the six months ended January 31, 2000, research and
development expenses decreased by $66,000 to $361,000, from $427,000 for the six
months ended January 31, 1999. These decreases were due primarily to a reduction
in outside laboratory testing.
Interest expense decreased to $75,000 for the three months ended
January 31, 2000, from $91,000 for the three months ended January 31, 1999. For
the six months ended January 31, 2000, interest expense decreased to $131,000
from $169,000 for the six months ended January 31, 1999. These decreases were
attributable to a decrease in average outstanding borrowings under the Company's
revolving credit facilities during the three and six months ended January 31,
2000, partially offset by an increase in average borrowing rates.
Income before income taxes increased by $342,000 to $1,914,000 for the
six months ended January 31, 2000, from $1,572,000 for the six months ended
January 31, 1999.
9
<PAGE>
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 six months ended January 31, 2000 and 1999, respectively. For the
six months ended January 31, 2000 and 1999, 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.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 2000, the Company's working capital was $14,948,000,
compared with $12,730,000 at July 31, 1999. This increase primarily reflects an
increase in inventories and decreases in accounts payable, compensation payable,
other accrued expenses and income taxes payable, partially offset by a decrease
in accounts receivable.
Net cash used in operating activities was $513,000 for the six months
ended January 31, 2000 and $365,000 for the six months ended January 31, 1999.
For the six months ended January 31, 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, partially offset by a decrease in
accounts receivable and net income, after adjusting for depreciation and
amortization. For the six months ended January 31, 1999, the net cash used in
operating activities was primarily due to a decrease in accounts payable and
accrued expenses, partially offset by net income, after adjusting for
depreciation and amortization.
Net cash used in investing activities was $384,000 for the six months
ended January 31, 2000 and $290,000 for the six months ended January 31, 1999,
which was principally for capital expenditures.
Net cash provided by financing activities was $801,000 for the six
months ended January 31, 2000 and $567,000 for the six months ended January 31,
1999, which was principally due to net increases in outstanding borrowings under
the Company's revolving credit facilities, partially offset for the six months
ended January 31, 2000 by purchases of Treasury Stock.
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 January
31, 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
10
<PAGE>
Carsen and MediVators revolving credit facilities were 6.50% and 8.50%,
respectively, at January 31, 2000. These prime rates increased to 6.75% and
8.75%, respectively, on February 3, 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.
For the six months ended January 31, 2000, compared with the six months
ended January 31, 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 March 3, 2000, Carsen had foreign
exchange forward contracts aggregating $9,211,000 (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 substantial portion of the Canadian subsidiary's projected purchases of
inventories through July 2000. The weighted average exchange rate of the forward
contracts open at March 3, 2000 was $1.4457 Canadian dollar per United States
dollar, or $.6917 United States dollar per Canadian dollar. The weighted average
range of the option contracts open at March 3, 2000 was $1.4601 to $1.3580
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 March 3, 2000 was $1.4564 Canadian dollar per United States dollar,
or $.6866 United States dollar per Canadian dollar.
For purposes of translating the balance sheet, at January 31, 2000
compared with July 31, 1999, the value of the Canadian dollar increased by 4%
relative to the value of the United States dollar. As a result, at January 31,
2000, the negative cumulative foreign currency translation adjustment was
reduced by $505,000 compared to July 31, 1999, thereby increasing stockholders'
equity.
11
<PAGE>
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 March 3, 2000, $2,705,000 was available under the credit
facilities.
The Company has assessed the ability of its computerized information
systems to process transactions relating to years 2000 and beyond. While certain
modifications were required, the Company completed all necessary year 2000
modifications by December 31, 1999 at a cost of approximately $50,000, the
majority of which were capital expenditures. There can be no assurance, however,
that the systems of other companies on which the Company relies, including major
suppliers and customers, are 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 requested a complete year 2000 assessment from all of its major
suppliers and customers, the majority of which indicated that they are, or would
be, year 2000 compliant. Presently, the Company has experienced no significant
year 2000 problems from either its own computerized information systems or those
of its major suppliers and customers.
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 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
12
<PAGE>
included in the Company's Annual Report on Form 10-K for the fiscal year ended
July 31, 1999. During the six months ended January 31, 2000 compared with the
six months ended January 31, 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.
13
<PAGE>
PART II - OTHER INFORMATION
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, 2000.
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 during the three
months ended January 31, 2000.
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: March 10, 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)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JANUARY 31, 2000 AND THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JANUARY 31, 2000 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
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0
0
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</TABLE>
