<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 26, 1997
[ ] 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 20-8969
NOVAMETRIX MEDICAL SYSTEMS INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0977422
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
56 Carpenter Lane, Wallingford, CT 06492
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (203) 265-7701
__________________________________________________________________________
(Former name, former address and former fiscal year
if changed since last report)
Indicate by check mark whether the 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 such filing
requirements for the past 90 days.
YES __X__ NO _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $0.01 par value: 7,186,087 shares issued and outstanding as of
February 28, 1997
Page 1 of 18
Index to Exhibits at Page 16
<PAGE> 2
NOVAMETRIX MEDICAL SYSTEMS INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Statements of Operations (Unaudited) -
Quarters ended January 26, 1997 and January 28, 1996 3
Nine month periods ended January 26, 1997 and January 28, 1996 4
Condensed Consolidated Balance Sheets (Unaudited) -
January 26, 1997 and April 28, 1996 5
Condensed Consolidated Statements of Cash Flows (Unaudited) -
Nine month periods ended January 26, 1997 and January 28, 1996 7
Notes to Condensed Consolidated Financial Statements
(Unaudited) - January 26, 1997 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 15
Page 2 of 18
<PAGE> 3
PART I - FINANCIAL INFORMATION
NOVAMETRIX MEDICAL SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
JANUARY 26, 1997 JANUARY 28, 1996
---------------- ----------------
<S> <C> <C>
Net sales $ 7,255,157 $6,245,318
Costs and expenses:
Cost of products sold 3,212,517 2,774,054
Research and product development 814,182 654,316
Selling, general and administrative 2,342,447 2,223,644
Interest 64,896 70,039
Non-recurring expense 2,149,910
Other expense 1,065 18,098
----------- ----------
8,585,017 5,740,151
----------- ----------
(LOSS) INCOME BEFORE INCOME TAXES (1,329,860) 505,167
Income tax (benefit) provision (50,000) 8,000
----------- ----------
NET (LOSS) INCOME $(1,279,860) $ 497,167
=========== ==========
Per common share amounts:
Primary $ (0.16) $ .06
=========== ==========
Fully Diluted $ (0.16) $ .06
=========== ==========
Weighted average common shares outstanding:
Primary 8,244,627 8,074,887
Fully Diluted 8,247,536 8,391,233
</TABLE>
See accompanying notes.
Page 3 of 18
<PAGE> 4
NOVAMETRIX MEDICAL SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
JANUARY 26, 1997 JANUARY 28, 1996
---------------- ----------------
<S> <C> <C>
Net sales $ 20,268,504 $18,474,183
Costs and expenses:
Cost of products sold 8,791,361 8,032,244
Research and product development 2,456,138 1,998,090
Selling, general and administrative 6,883,759 6,800,143
Interest 163,955 219,571
Non-recurring expense 2,149,910
Other expense 9,209 57,837
------------ -----------
20,454,332 17,107,885
------------ -----------
(LOSS) INCOME BEFORE INCOME TAXES (185,828) 1,366,298
Income tax (benefit) provision (250,000) 24,000
------------ -----------
NET INCOME $ 64,172 $ 1,342,298
============ ===========
Per common share amounts:
Primary $ .01 $ .17
============ ===========
Fully Diluted .01 $ .16
============ ===========
Weighted average common shares outstanding:
Primary 8,145,708 8,020,296
Fully Diluted 8,382,537 8,369,020
</TABLE>
See accompanying notes.
Page 4 of 18
<PAGE> 5
NOVAMETRIX MEDICAL SYSTEMS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
ASSETS JANUARY 26, 1997 APRIL 28, 1996
------ ---------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 167,437 $ 283,003
Accounts receivable, less
allowance for losses of $250,000 7,886,701 5,934,528
Inventories:
Finished products 1,786,430 1,357,610
Work in process 1,554,667 1,136,200
Materials 3,116,338 3,181,670
------------ ------------
6,457,435 5,675,480
Deferred income taxes, net 415,000 300,540
Prepaid expenses 328,199 131,843
------------ ------------
TOTAL CURRENT ASSETS 15,254,772 12,325,394
Equipment 7,394,995 6,243,454
Accumulated depreciation (deduction) (5,229,586) (5,019,466)
------------ ------------
2,165,409 1,223,988
License, technology, patents and other 7,804,648 7,732,059
Accumulated amortization (deduction) (3,559,308) (3,177,539)
------------ ------------
4,245,340 4,554,520
Deferred income taxes, net 885,000 719,460
------------ ------------
$ 22,550,521 $ 18,823,362
============ ============
</TABLE>
See accompanying notes
Page 5 of 18
<PAGE> 6
NOVAMETRIX MEDICAL SYSTEMS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - (CONTINUED)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY JANUARY 26, 1997 APRIL 28, 1996
- ------------------------------------ ---------------- --------------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 1,577,486 $ 1,225,000
Accounts payable 1,934,342 1,243,490
Accrued expenses 2,493,681 1,492,990
------------ ------------
TOTAL CURRENT LIABILITIES 6,005,509 3,961,480
Long-term debt, less current portion 2,322,972 1,333,333
Redeemable Preferred Stock, $1 par value,
40,000 shares at redemption and liquidation value 1,000,000 1,000,000
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value, authorized
20,000,000 shares, issued 7,515,873
at January 26, 1997 and 6,985,964 at April 28, 1996,
including 338,452 Treasury shares 75,159 69,860
Additional paid-in capital 28,701,314 28,054,794
Retained-earnings deficit (13,067,395) (13,109,067)
Treasury stock (2,487,038) (2,487,038)
------------ ------------
13,222,040 12,528,549
------------ ------------
$ 22,550,521 $ 18,823,362
============ ============
</TABLE>
See accompanying notes.
Page 6 of 18
<PAGE> 7
NOVAMETRIX MEDICAL SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
JANUARY 26, 1997 JANUARY 28, 1996
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 64,172 $ 1,342,298
Adjustments to reconcile net income
to net cash (used) provided by operating activities
Depreciation 320,555 306,828
Amortization 393,894 382,053
Deferred income taxes (280,000)
Changes in operating assets and liabilities
Increase in accounts receivable (1,952,173) (650,198)
Increase in inventories (781,955) (740,700)
Increase in prepaid expenses (196,356) (10,381)
Increase in accounts payable 690,852 129,490
Increase (decrease) in accrued expenses 1,000,691 (390,522)
----------- -----------
NET CASH (USED) PROVIDED BY OPERATING
ACTIVITIES (740,320) 368,868
INVESTING ACTIVITIES
Purchases of equipment (936,589) (328,418)
Purchases of license, technology, patents and other (84,714) (136,598)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (1,021,303) (465,016)
FINANCING ACTIVITIES
Proceeds from borrowings 1,420,000 300,000
Principal payments on borrowings (403,262) (375,000)
Dividends on Preferred Stock (22,500) (56,250)
Net proceeds from sales of Common Stock 651,819 232,316
----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 1,646,057 101,066
----------- -----------
(DECREASE) INCREASE IN CASH AND (115,566) 4,918
CASH EQUIVALENTS
Cash and cash equivalents at beginning of period 283,003 272,033
----------- -----------
Cash and cash equivalents at end of period $ 167,437 $ 276,951
=========== ===========
NON-CASH INVESTING ACTIVITIES:
Capital lease obligations $ 325,387
</TABLE>
See accompanying notes.
Page 7 of 18
<PAGE> 8
NOVAMETRIX MEDICAL SYSTEMS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JANUARY 26, 1997
NOTE 1 -- BASIS OF PRESENTATION: The condensed consolidated financial statements
of Novametrix Medical Systems Inc. (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. Operating results for the quarter
and nine months ended January 26, 1997 are not necessarily indicative of the
results that may be expected for the year ending April 27, 1997. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-KSB for the year
ended April 28, 1996.
NOTE 2 -- PER SHARE AMOUNTS: Common stock equivalents consist of the Company's
Preferred Stock, stock options, warrants and shares subscribed under the
Company's Employee Stock Purchase Plan. The computation of dilutive common stock
equivalents is based on the if-converted method for the Preferred Stock and on
the treasury stock method for the other common stock equivalents using the
average market price for the primary earnings per share computations and the
higher of average or period-end market price for the fully diluted earnings per
share computations.
NOTE 3 -- CONTINGENCIES: The Company is a party to various legal proceedings
generally incidental to its business. Management believes that none of such
legal proceedings will have a material adverse effect on the Company's
consolidated financial position, results of operations or liquidity.
NOTE 4 -- INCOME TAXES: SFAS No. 109 requires the reduction of a deferred tax
asset by a valuation allowance if, based upon the weight of available evidence,
it is more likely than not that a portion or all of the deferred tax asset will
not be realized. The Company reduced its valuation allowance by $280,000 during
the first nine months of fiscal 1997 due to the Company's continued improvement
in operating earnings and increased probability of future taxable income. Based
upon the weight of available evidence, in the opinion of the Company's
management, the Company will more likely than not generate sufficient future
taxable income to fully utilize the net deferred tax asset recorded on the
balance sheet at January 26, 1997.
Page 8 of 18
<PAGE> 9
NOVAMETRIX MEDICAL SYSTEMS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
NOTE 5 -- DEBT: Long-term debt consists of:
<TABLE>
<CAPTION>
JANUARY 26, 1997 APRIL 28, 1996
---------------- --------------
<S> <C> <C>
Term loan to bank $1,208,333 $1,583,333
Note payable to bank under
revolving credit agreement 2,395,000 975,000
Capital lease obligations 297,125
---------- ----------
3,900,458 2,558,333
Less current portion 1,577,486 1,225,000
---------- ----------
Long-term debt, less current portion $2,322,972 $1,333,333
========== ==========
</TABLE>
Effective October 25, 1996, the Company amended its revolving credit facility
with its bank to extend the maturity of the agreement to August 31, 1998 and to
increase the maximum available borrowings under the agreement from $2,500,000 to
$3,500,000. The new agreement also includes a reduction in the interest rate
from LIBOR (London Interbank Offered Rate) plus 2 1/2% to LIBOR plus 2% (7.4375%
at January 26, 1997). All other terms of the agreement remain unchanged.
During fiscal 1997, the Company entered into several lease agreements for the
purchase of certain computer hardware and software. Based upon the terms of the
agreements, the Company has recorded the transactions as capital leases.
NOTE 6 -- OTHER EVENTS: As a result of the Annual Meeting of Stockholders held
November 25, 1996 at which the Company's stockholders voted against the proposed
merger with Andros Holdings Inc., and a subsequent meeting of the Board of
Directors held January 21, 1997 at which further discussion of the merger was
tabled, $2,149,910 of merger and proxy related contest costs were expensed for
the quarter ended January 26, 1997.
Page 9 of 18
<PAGE> 10
NOVAMETRIX MEDICAL SYSTEMS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Operating results for both the quarter and first nine months of fiscal 1997
ended January 26, 1997 (before a non-recurring charge of approximately
$2,150,000 associated with the Company's attempted merger and related proxy
contest) were significantly improved compared to the corresponding periods of
the prior fiscal year ended January 28, 1996. Net income for the third quarter
of fiscal 1997 without regard to the non-recurring charges would have been
approximately $870,000 or $0.11 per share compared to approximately $497,000 or
$0.06 per share for the third quarter of fiscal 1996. Net income for the third
quarter of fiscal 1997 also included a deferred tax benefit of $50,000 or $0.01
per share. Net income for the first nine months of fiscal 1997 without regard to
the non-recurring charge would have improved to approximately $2,214,000 or
$0.27 per share compared to approximately $1,342,000 or $0.17 per share ($0.16
fully diluted) for the first nine months of fiscal 1996. Net income for the nine
months ended January 26, 1997 also included a deferred tax benefit of $280,000
or $0.03 per share. Net (loss) income as reported (including the non-recurring
charges) for the third quarter and first nine months of fiscal 1997 was
approximately $(1,280,000) or $(0.16) per share and approximately $64,000 or
$0.01 per share, respectively.
Revenues for the third quarter of fiscal 1997 increased 16% to
approximately $7,255,000 compared to approximately $6,245,000 for the third
quarter of fiscal 1996. The increase in revenues was primarily led by an
increase in sales to original equipment manufacturers (OEMs). Revenues for the
first nine months of fiscal 1997 increased 10% to approximately $20,269,000
compared to $18,474,000 reported for the first nine months of fiscal 1996.
Higher levels of OEM sales were again primarily responsible for the increase.
Cost of products sold as a percentage of net sales was approximately 44%
and 43%, respectively, for the third quarter and the first nine months of fiscal
1997. For both periods reported, cost of products sold as a percentage of net
sales remained unchanged from the corresponding periods of fiscal 1996. The
favorable impact from the Company's continued focus on quality and product cost
improvements was offset by product mix for both periods reported.
Research and product development ("R&D") expenses increased by
approximately $160,000 or 24% for the third quarter of fiscal 1997 compared to
the third quarter of fiscal 1996. R&D expenses increased by approximately
$458,000 or 23% for the first nine months of fiscal 1997 compared to the first
nine months of fiscal 1996. The increase for both periods was primarily due to
higher levels of salaries and related fringe benefits, outside professional
services, and development materials. In connection with the Company's
anticipated fourth quarter launch of three recently introduced products, R&D
spending is expected to continue to approximate 11% to 12% of revenues for the
balance of fiscal 1997.
Selling, general and administrative ("S,G&A") expenses increased
approximately $119,000 or 5% to approximately $2,342,000 for the third quarter
of fiscal 1997 compared to approximately $2,224,000 for the third quarter of
fiscal 1996. Increased sales and marketing expenses, including salaries and
related fringe benefits, commissions, and travel and entertainment, were
partially offset by reduced service
Page 10 of 18
<PAGE> 11
expenditures including salaries and related fringe benefits and travel and
entertainment costs. For the first nine months of fiscal 1997, S,G&A expenses
increased approximately $84,000 or 1% to approximately $6,884,000 compared to
the first nine months of fiscal 1996. Increased sales and marketing expenses,
including salaries and related fringe benefits, commissions, and promotional
costs, and increased G&A expenses, including salaries and related fringe
benefits and legal expenses were partially offset by reductions in service
expenditures, including salaries and related fringe benefits, materials and
travel and entertainment expenses.
Interest expense decreased by approximately $5,000 or 7% for the quarter
ended January 26, 1997 as compared to the quarter ended January 28, 1996. Lower
term debt levels were largely offset by increased borrowings against the
Company's revolving credit agreement. For the first nine months of fiscal 1997,
interest expense decreased by approximately $56,000 or 25% compared to the first
nine months of the prior fiscal year. The improvement resulted primarily from
reduced bank debt levels as a result of scheduled principal payments which was
slightly offset by higher borrowing costs resulting from an increase in the
revolving credit facility balance at January 26, 1997.
Non-recurring expense of approximately $2,150,000 resulted from the
Company's attempted merger with Andros Holdings Inc., proxy costs, and the
related proxy contest. As a result of the Company's Annual Meeting of
Stockholders held on November 25,1996 at which the stockholders voted against
the issuance of stock for the proposed merger, and the tabling of further
consideration by the Board of Directors, management has expensed the costs
associated with the proposed merger and related proxy contest.
Income taxes for the third quarter and nine months ended January 26, 1997
include $50,000 and $280,000, respectively, of deferred income tax benefits as a
result of the Company's continued improvement in earnings from operations
(excluding the $2,150,000 of non-recurring expense) and increased probability of
future taxable income. For the nine months ended January 26, 1997, the income
taxes include $30,000 of current income tax expense calculated on an alternative
minimum tax basis due to the Company's net operating loss carryforwards.
Management continues to evaluate whether further reductions in the valuation
allowance are warranted based on future operating performance and other relevant
factors.
The Company's backlog of firm orders aggregated approximately $4,830,000 as
of January 26, 1997 compared to approximately $4,292,000 as of April 28, 1996.
Except for orders pursuant to long-term OEM agreements, the Company
traditionally ships its products on a current basis. As such, the Company does
not consider its backlog levels to be a meaningful indicator of future sales.
LIQUIDITY AND SOURCES OF CAPITAL
The Company had working capital of approximately $9,249,000 at January 26,
1997 compared to approximately $8,364,000 at April 28, 1996. The increase in
working capital of approximately $885,000 was primarily generated by increases
in accounts receivable of approximately $1,952,000 and inventory of
approximately $782,000. The increase in accounts receivable was primarily caused
by delays in payments from international customers and to a lesser degree, the
overall expansion in sales for the three months ended January 26, 1997 as
compared to the last quarter of fiscal 1996. The growth in inventory was
primarily related to additional purchases needed to support higher planned
future sales, and new products production planned for the fourth quarter of
fiscal 1997. These increases were partially offset by
Page 11 of 18
<PAGE> 12
increases in accounts payable and accrued expenses of approximately $1,692,000
and an increase in the current portion of the Company's revolving credit
facility of $275,000. These increases were caused by higher inventory and
capital equipment purchases, and costs pertaining to the proposed merger and
proxy contest. As a result, the Company's current ratio decreased to 2.5 to 1 at
January 26, 1997 from 3.1 to 1 at April 28, 1996.
Effective October 25, 1996, the Company's revolving credit facility with
its bank was amended to increase its available borrowing capacity to $3,500,000
from $2,500,000. In addition, the rate of interest charged on borrowed funds was
reduced by 1/2% to LIBOR (London Interbank Offered Rate) plus 2% (7.4375% at
January 26, 1997). As of January 26, 1997, approximately $1,105,000 was
available for working capital needs under the revolving credit facility.
Further, the Company has additional funds that could be available under
prescribed conditions from the net proceeds of approximately $5,600,000
associated with the potential exercise of Class A and Class B Warrants issued
under the Company's June 1994 offering and which are redeemable by the Company
under specified conditions.
Approximately $740,000 of cash was used by operations for the nine months
ended January 26, 1997 compared to approximately $369,000 of cash provided for
the nine months ended January 28, 1996. A reduction in net income excluding
depreciation, amortization, and deferred income taxes of approximately
$1,533,000 (primarily caused by the $2,150,000 of proposed merger and proxy
related costs) was a primary contributor to the change. Other factors
contributing to the $740,000 of cash used by operations include an increase in
accounts receivable of approximately $1,952,000 offset by an increase in
accounts payable and accrued expenses of $1,692,000.
Approximately $937,000 of capital equipment was purchased during the nine
months ended January 26, 1997 compared to approximately $328,000 for the nine
months ended January 28, 1996. Leasehold improvements pertaining to the
Company's new facilities occupied as of August 1996, production equipment
purchases including tooling, molds and test fixtures required for the Company's
new products, and engineering equipment purchases were primarily responsible for
the increase. Proceeds of approximately $652,000 from the exercise of stock
options and warrants during the first nine months of fiscal 1997 reduced the
borrowing required for these expenditures.
The Company expects cash from operations to adequately fund its planned
operating requirements for the balance of fiscal 1997 and that additional funds,
if needed, could be obtained from the unused portion of the Company's revolving
credit facility, the exercise of the warrants associated with the June 1994
offering, or from other available sources on commercially reasonable terms.
This Quarterly Report contains forward-looking statements about the
Company's projected operating results. The Company's ability to achieve its
projected results is dependent upon a variety of factors, many of which are
outside of management's control, including without limitation, an unanticipated
slowdown in the healthcare industry, unanticipated technological developments
which affect the competitiveness of the Company's products, or an unanticipated
loss of business. The Company does not intend to update publicly any of the
forward-looking statements contained herein.
Page 12 of 18
<PAGE> 13
PART II- OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders (the "Meeting") of the Company was
held on November 25, 1996 in New York, New York.
(b) The following directors were elected as Class A directors at the
Meeting:
Paul A. Cote
Vartan Ghugasian
The following persons continued in office as directors after the
Meeting:
Thomas M. Haythe (Class C)
William J. Lacourciere (Class C)
Photios T. Paulson (Class B)
Steven J. Shulman (Class B)
(c) Matters voted upon at the Meeting were as follows:
(i) Approve the issuance of shares of the Company's Common Stock
contemplated by the Merger Agreement with Andros Holdings Inc.
<TABLE>
<CAPTION>
Votes For Votes Against Withheld/Abstain
--------- ------------- ----------------
<S> <C> <C>
2,685,998 3,570,049 9,756
</TABLE>
(ii) Approve the Company's 1996 Long Term Incentive Plan:
<TABLE>
<CAPTION>
Votes For Votes Against Withheld/Abstain
--------- ------------- ----------------
<S> <C> <C>
2,584,292 3,633,259 48,252
</TABLE>
(iii) Elect two Class A directors:
<TABLE>
<CAPTION>
Votes For
---------
<S> <C>
Paul A. Cote 3,509,206
Vartan Ghugasian 3,506,444
Michael J. Needham 2,714,893
Joseph A. Vincent 2,713,893
</TABLE>
Page 13 of 18
<PAGE> 14
(iv) Ratify the Board of Directors selection of Ernst & Young LLP
to serve as the Company's independent auditors for the 1997
fiscal year.
<TABLE>
<CAPTION>
Votes For Votes Against Withheld/Abstain
--------- ------------- ----------------
<S> <C> <C>
5,568,945 341,158 304,890
</TABLE>
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: The exhibits required to be filed as part of the
Quarterly Report on Form 10-Q are listed in the attached Index
to Exhibits.
(b) Reports on Form 8-K: There were no reports filed on Form 8-K
filed during the quarter ended January 26, 1997.
Page 14 of 18
<PAGE> 15
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.
NOVAMETRIX MEDICAL SYSTEMS INC.
Dated: March 11, 1997 /s/ WILLIAM J. LACOURCIERE
-------------- ---------------------------
William J. Lacourciere
Chairman of the Board,
President and
Chief Executive Officer
Dated: March 11, 1997 /s/ JOSEPH A. VINCENT
-------------- ---------------------------
Joseph A. Vincent, CMA
Vice President Finance,
Chief Financial Officer and
Principal Accounting Officer
Page 15 of 18
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
PAGE
<S> <C>
11 Statement Re: Computation of Per Share Earnings 17
27 Financial Data Schedule 18
</TABLE>
Page 16 of 18
<PAGE> 1
EXHIBIT 11
NOVAMETRIX MEDICAL SYSTEMS INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
01-26-97 01-28-96 01-26-97 01-28-96
-------- -------- -------- --------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Weighted average number of shares of 7,168,117 6,278,856 6,929,115 6,002,675
Common Stock outstanding
Net effect of dilutive common stock
equivalents (1) 1,076,510 1,796,031 1,216,593 2,017,621
----------- ---------- ---------- ----------
Total weighted average number of shares
of Common Stock and dilutive common
stock equivalents outstanding 8,244,627 8,074,887 8,145,708 8,020,296
=========== ========== ========== ==========
FULLY DILUTED EARNINGS PER SHARE:
Weighted average number of shares of 7,168,117 6,278,856 6,929,115 6,002,675
Common Stock outstanding
Net effect of dilutive common stock
equivalents (1) 1,079,419 2,112,377 1,453,422 2,366,345
----------- ---------- ---------- ----------
Total weighted average number of shares
of Common Stock and dilutive common
stock equivalents outstanding 8,247,536 8,391,233 8,382,537 8,369,020
=========== ========== ========== ==========
Net (loss) income $(1,279,860) $ 497,167 $ 64,172 $1,342,298
PER COMMON SHARE AMOUNTS:
Primary $ (0.16) $ .06 $ .01 $ .17
=========== ========== ========== ==========
Fully Diluted $ (0.16) $ .06 $ .01 $ .16
=========== ========== ========== ==========
</TABLE>
(1) Common stock equivalents consist of the Company's Preferred Stock, stock
options, warrants and shares subscribed under the Company's Employee Stock
Purchase Plan. The computation of dilutive common stock equivalents is based on
the if-converted method for the Preferred Stock and on the treasury stock method
for the other common stock equivalents using the average market price for the
primary earnings per share computations and the higher of average or period-end
market price for the fully diluted earnings per share computations.
Page 17 of 18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED NOVAMETRIX MEDICAL SYSTEMS INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS FOR THE NINE MONTHS ENDED JANUARY 26, 1997 AND TO THE CONDENSED
CONSOLIDATED BALANCE SHEETS AT JANUARY 26, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-27-1997
<PERIOD-END> JAN-26-1997
<CASH> 167,437
<SECURITIES> 0
<RECEIVABLES> 8,136,701
<ALLOWANCES> (250,000)
<INVENTORY> 6,457,435
<CURRENT-ASSETS> 15,254,772
<PP&E> 7,394,995
<DEPRECIATION> (5,229,586)
<TOTAL-ASSETS> 22,550,521
<CURRENT-LIABILITIES> 6,005,509
<BONDS> 2,322,972
0
1,000,000
<COMMON> 75,159
<OTHER-SE> 13,146,881
<TOTAL-LIABILITY-AND-EQUITY> 22,550,521
<SALES> 20,268,504
<TOTAL-REVENUES> 20,268,504
<CGS> 8,791,361
<TOTAL-COSTS> 18,131,258
<OTHER-EXPENSES> 2,159,119
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 163,955
<INCOME-PRETAX> (185,828)
<INCOME-TAX> (250,000)
<INCOME-CONTINUING> 64,172
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,172
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
