<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 1, 1998
[ ] 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)
5 Technology Drive, 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: 8,023,483 shares issued and outstanding as of
November 30, 1998
Page 1 of 19
Index to Exhibits at Page 18
<PAGE> 2
NOVAMETRIX MEDICAL SYSTEMS INC.
INDEX
PAGE
I. INTRODUCTION 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Condensed Consolidated Statements of Income -
Three months ended November 1, 1998 and November 2, 1997 4
Six months ended November 1, 1998 and November 2, 1997 5
Condensed Consolidated Balance Sheets -
November 1, 1998 and May 3, 1998 6
Condensed Consolidated Statements of Cash Flows -
Six months ended November 1, 1998 and November 2, 1997 8
Notes to Condensed Consolidated Financial Statements -
November 1, 1998 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 12
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 15
ITEM 5. OTHER INFORMATION 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 16
SIGNATURES 17
Page 2 of 19
<PAGE> 3
I. INTRODUCTION
On July 1, 1999, Novametrix Medical Systems Inc. ("the Company") announced
that it had restated its quarterly results for the first three quarters of
fiscal 1999. The restatement was due principally to modifications to the
accounting treatment for sales financing arrangements which the Company entered
into with customers during the first three quarters of fiscal 1999 and the
reversal of certain dealer sales where products were ultimately returned to the
Company due to cancellation of dealer orders by end users.
Financial statement information and related disclosures included in this
amended filing reflect, where appropriate, changes as a result of the
restatements.
All other information is presented as of the original filing date and has
not been updated in this amended filing.
Page 3 of 19
<PAGE> 4
PART I - FINANCIAL INFORMATION
NOVAMETRIX MEDICAL SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
RESTATED
THREE MONTHS ENDED THREE MONTHS ENDED
NOVEMBER 1, 1998 NOVEMBER 2, 1997
------------------ ------------------
<S> <C> <C>
Net sales $8,134,062 $7,505,960
Costs and expenses:
Cost of products sold 3,316,664 3,278,430
Research and product development 1,066,771 851,156
Selling, general and administrative 2,751,801 2,495,182
Interest 19,688 20,025
Other expense 13,066 23,379
---------- ----------
7,167,990 6,668,172
---------- ----------
INCOME BEFORE INCOME TAXES 966,072 837,788
Income tax provision 270,500 211,000
---------- ----------
NET INCOME $ 695,572 $ 626,788
========== ==========
Per common share amounts:
Basic $ 0.08 $ 0.08
========== ==========
Diluted $ 0.08 $ 0.07
========== ==========
Weighted average common shares outstanding:
Basic 8,409,010 7,914,648
Diluted 8,640,168 9,300,893
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
Page 4 of 19
<PAGE> 5
NOVAMETRIX MEDICAL SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
RESTATED
SIX MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 1, 1998 NOVEMBER 2, 1997
---------------- ----------------
<S> <C> <C>
Net sales $15,161,947 $14,872,421
Costs and expenses:
Cost of products sold 6,064,538 6,392,882
Research and product development 1,978,917 1,711,313
Selling, general and administrative 5,548,191 5,034,156
Interest 25,077 104,332
Other expense 23,467 32,092
----------- -----------
13,640,190 13,274,775
----------- -----------
INCOME BEFORE INCOME TAXES 1,521,757 1,597,646
Income tax provision 426,100 447,000
----------- -----------
NET INCOME $ 1,095,657 $ 1,150,646
=========== ===========
Per common share amounts:
Basic $ 0.13 $ 0.15
=========== ===========
Diluted $ 0.12 $ 0.13
=========== ===========
Weighted average common shares outstanding:
Basic 8,629,336 7,581,194
Diluted 8,982,119 9,152,412
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
Page 5 of 19
<PAGE> 6
NOVAMETRIX MEDICAL SYSTEMS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
RESTATED
ASSETS NOVEMBER 1, 1998 MAY 3, 1998
------ ---------------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 181,324 $ 1,783,596
Accounts and notes receivable, less
allowance for losses of $250,000 8,968,360 9,712,814
Net investment in sales-type lease 200,814
Inventories:
Finished products 3,657,590 3,067,625
Work in process 1,494,469 1,777,028
Materials 3,593,272 3,028,281
------------ ------------
8,745,331 7,872,934
Deferred income taxes, net 2,414,000 2,414,000
Prepaid expenses 857,015 697,880
------------ ------------
TOTAL CURRENT ASSETS 21,366,844 22,481,224
Net investment in sales-type lease 726,273
Equipment 9,464,702 8,627,726
Accumulated depreciation (6,382,262) (6,031,517)
------------ ------------
3,082,440 2,596,209
License, technology, patents and other 7,901,132 7,521,371
Accumulated amortization (3,747,362) (3,566,574)
------------ ------------
4,153,770 3,954,797
Deferred income taxes, net 1,608,566 1,969,666
------------ ------------
$ 30,937,893 $ 31,001,896
============ ============
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
Page 6 of 19
<PAGE> 7
NOVAMETRIX MEDICAL SYSTEMS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - (CONTINUED)
<TABLE>
<CAPTION>
RESTATED
LIABILITIES AND SHAREHOLDERS' EQUITY NOVEMBER 1, 1998 MAY 3, 1998
- ------------------------------------ ---------------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 1,626,141 $ 1,883,234
Accrued expenses 1,660,979 1,961,441
Note payable to bank under revolving credit agreement 3,474,000
Current portion of capital lease obligation 35,323 33,901
------------ ------------
TOTAL CURRENT LIABILITIES 6,796,443 3,878,576
Capital lease obligation, less current portion 72,856 90,881
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value, authorized
20,000,000 shares, issued 9,204,738 at
November 1, 1998 and 9,174,355 at
May 3, 1998, including Treasury shares 92,047 91,744
Additional paid-in capital 34,836,027 34,754,643
Retained-earnings deficit (4,231,253) (5,326,910)
Treasury stock - 1,181,255 shares at November 1, (6,628,227) (2,487,038)
1998 and 338,452 shares at May 3, 1998
------------ ------------
24,068,594 27,032,439
------------ ------------
$ 30,937,893 $ 31,001,896
============ ============
</TABLE>
See notes to condensed consolidated financial statements (unaudited) .
Page 7 of 19
<PAGE> 8
NOVAMETRIX MEDICAL SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
RESTATED
SIX MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 1, 1998 NOVEMBER 2, 1997
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,095,657 $ 1,150,646
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 350,929 283,755
Amortization 241,304 270,625
Deferred income taxes 361,100 417,000
Net investment in sales-type lease (927,087)
Changes in operating assets and liabilities:
Accounts and notes receivable 744,454 1,619,474
Inventories (872,397) (584,432)
Prepaid expenses (159,135) (67,208)
Accounts payable (257,093) (586,718)
Accrued expenses (300,462) (871,838)
NET CASH PROVIDED BY OPERATING ----------- -----------
ACTIVITIES 277,270 1,631,304
INVESTING ACTIVITIES
Purchases of equipment (837,160) (362,381)
Purchases of licenses, technology, patents and other (440,277) (225,631)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (1,277,437) (588,012)
FINANCING ACTIVITIES
Proceeds from note payable 3,474,000
Principal payments on borrowings (16,603) (3,621,158)
Dividends on Preferred Stock (15,000)
Net proceeds from sales of Common Stock 81,687 2,659,524
Purchase of Treasury Stock (4,141,189)
NET CASH USED BY FINANCING ----------- -----------
ACTIVITIES (602,105) (976,634)
(DECREASE) INCREASE IN CASH ----------- -----------
AND CASH EQUIVALENTS (1,602,272) 66,658
Cash and cash equivalents at beginning of period 1,783,596 236,808
----------- -----------
Cash and cash equivalents at end of period $ 181,324 $ 303,466
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
Page 8 of 19
<PAGE> 9
NOVAMETRIX MEDICAL SYSTEMS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 1, 1998
NOTE 1 -- BASIS OF PRESENTATION: The accompanying unaudited 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 (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three months and
six months ended November 1, 1998 are not necessarily indicative of the results
that may be expected for the year ending May 2, 1999. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended May 3, 1998.
On July 1, 1999, the Company announced that it had restated its quarterly
earnings for the first three quarters of fiscal 1999 to adjust recognition of
revenue and related costs and expenses in those periods. The restatement was due
principally to modifications to the accounting treatment for sales financing
arrangements which the Company entered into with customers during the first
three quarters of fiscal 1999 and the reversal of certain dealer sales where
products were ultimately returned to the Company due to cancellation of dealer
orders by end users. The restatement resulted in a decrease in revenues from
approximately $8,408,000, as previously reported, to approximately $8,134,000
for the three months ended November 1, 1998. Net income decreased from
approximately $743,000 or $0.09 per diluted share, as previously reported, to
approximately $696,000 or $0.08 per diluted share for the same period. For the
six months ended November 1, 1998, revenues decreased from approximately
$16,080,000, as previously reported, to approximately $15,162,000. Net income
for the same period decreased from approximately $1,356,000 or $0.15 per
diluted share, as previously reported, to approximately $1,096,000 or $0.12
per diluted share.
NOTE 2 -- PER SHARE AMOUNTS: In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 128,
"Earnings Per Share". This Statement replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. The calculation of diluted earnings per share excludes
anti-dilutive options and warrants whose exercise price exceeds the average
market price. All earnings per share amounts for all periods presented have been
restated to conform to the Statement No. 128 requirements.
The following table sets forth the calculation of basic and diluted
earnings per share for the three months and six months ended November 1, 1998
and November 2, 1997:
Page 9 of 19
<PAGE> 10
NOVAMETRIX MEDICAL SYSTEMS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
11-01-98 11-02-97 11-01-98 11-02-97
<S> <C> <C> <C> <C>
NUMERATOR
Net Income $ 695,572 $ 626,788 $1,095,657 $1,150,646
Preferred Stock dividends 7,500 15,000
---------- ---------- ---------- ----------
Numerator for basic earnings per share 695,572 619,288 1,095,657 1,135,646
Effect of dilutive securities:
Preferred Stock dividends 7,500 15,000
---------- ---------- ---------- ----------
Numerator for diluted earnings per share $ 695,572 $ 626,788 $1,095,657 $1,150,646
========== ========== ========== ==========
DENOMINATOR
Denominator for basic earnings per share:
Weighted average shares outstanding 8,409,010 7,914,648 8,629,336 7,581,194
Effect of dilutive securities:
Employee stock options and warrants 231,158 1,122,509 352,783 1,213,782
Convertible Preferred Stock 263,736 357,436
---------- ---------- ---------- ----------
Dilutive potential common shares 231,158 1,386,245 352,783 1,571,218
---------- ---------- ---------- ----------
Denominator for diluted earnings per share 8,640,168 9,300,893 8,982,119 9,152,412
========== ========== ========== ==========
Basic earnings per share $ 0.08 $ 0.08 $ 0.13 $ 0.15
========== ========== ========== ==========
Diluted earnings per share $ 0.08 $ 0.07 $ 0.12 $ 0.13
========== ========== ========== ==========
</TABLE>
NOTE 3 - NET INVESTMENT IN SALES-TYPE LEASE: During the first quarter of fiscal
1999, the Company entered into a sales-type lease with one of its customers
which will result in payments over a multi-year period. The lease is for a term
of five years and provides for the transfer of title to the lessee at the end of
the lease term. The Company's net investment in this lease as of November 1,
1998 consists of:
<TABLE>
<S> <C>
Minimum lease payments receivable $ 1,162,620
Less unearned income (235,533)
-----------
Net investment in sales-type lease $ 927,087
===========
</TABLE>
Page 10 of 19
<PAGE> 11
NOTE 4 -- DEBT: During October 1998, the Company replaced its existing revolving
credit facility with a new revolving credit agreement. The agreement provides
for borrowing to a maximum of $5,000,000, expires August 31, 2000, and bears
interest at the London Interbank Offered Rate ("LIBOR") plus .98% (totaling
6.60% at November 30, 1998). Subsequent to the end of the second quarter of
fiscal 1999, the Company entered into a five-year $3,000,000 term loan with its
lender, the proceeds of which were used to reduce borrowings under the revolving
credit facility. The term loan is payable in monthly installments of $50,000
plus interest at LIBOR plus 1.40% (totaling 7.02% at November 30, 1998). The
Company has entered into an interest rate swap agreement with its lender which
effectively exchanges the variable rate on the long-term debt for a fixed rate
of 6.77% and expires coincident with the scheduled maturity date of the term
loan in 2003. The Company is required under both loan agreements to maintain
certain financial ratios, minimum working capital and net worth, has pledged its
assets as collateral, and is limited, among other things, on the purchases of
its capital stock and new borrowings.
NOTE 5 - CAPITAL STOCK: As of November 1, 1998, the Company purchased 842,803
shares of its common stock at a cost of $4,141,188 under the previously approved
repurchase plans. There are 349,995 remaining shares authorized for purchase
under the repurchase program.
Page 11 of 19
<PAGE> 12
NOVAMETRIX MEDICAL SYSTEMS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
On July 1, 1999, the Company announced it had restated its quarterly
earnings for the first three quarters of fiscal 1999 to adjust recognition of
revenue and related costs and expenses in those periods. The restatement was
due principally to modifications to the accounting treatment for sales
financing arrangements which the Company entered into with customers during the
first three quarters of fiscal 1999 and the reversal of certain dealer sales
where products were ultimately returned to the Company due to cancellation of
dealer orders by end users. The restatement resulted in a decrease in revenues
from approximately $8,408,000, as previously reported, to approximately
$8,134,000 for the three months ended November 1, 1998 and from approximately
$16,080,000, as previously reported, to approximately $15,162,000 for the
first six months of fiscal 1999. Net income for the three months ended November
1, 1998 decreased from approximately $743,000 or $0.09 per diluted share, as
previously reported, to approximately $696,000 or $0.08 per diluted share for
the same period as compared to net income of approximately $627,000 or $0.07
per diluted share for the second quarter of the prior fiscal year ended
November 2, 1997. Net income for the first six months of fiscal 1999 decreased
from approximately $1,356,000 or $0.15 per diluted share, as previously
reported, to approximately $1,096,000 or $0.12 per diluted share as compared to
net income of approximately $1,151,000 or $0.13 per diluted share for the first
six months of fiscal 1998.
Net sales for the second quarter of fiscal 1999 increased 8% to
approximately $8,134,000 compared to net sales of approximately $7,506,000 for
the second quarter of fiscal 1998. Net sales for the first six months of fiscal
1999 increased 2% to approximately $15,162,000 compared to net sales of
approximately $14,872,000 for the corresponding period of the prior fiscal year.
The increase for both periods was led by strong growth in domestic sales, which
was substantially offset by decreases in international shipments and sales to
original equipment manufacturers (OEM) compared to the corresponding periods of
the prior fiscal year. Sales in the second half of fiscal 1999 are expected to
continue to be led by domestic, through a strengthened sales organization.
Cost of products sold as a percentage of net sales improved to 41% for the
second quarter of fiscal 1999 as compared to 44% for the second quarter of
fiscal 1998. Cost of products sold was 40% of net sales for the first six months
of fiscal 1999 compared to 43% for the first six months of fiscal 1998. The
improvement in cost of products sold for both periods was primarily related to
increased domestic sales as a percentage of total sales and product mix. The
Company continues to pursue product cost reductions.
Research and product development ("R&D") expenses increased by
approximately $216,000 or 25% and $268,000 or 16%, respectively, for the three
months and six months ended November 1, 1998 as compared to the corresponding
periods of the prior fiscal year. The increase for both periods was primarily
due to higher levels of salaries and related fringe benefits from increased
personnel, and increases in expenditures for outside professional services.
Page 12 of 19
<PAGE> 13
Selling, general and administrative ("S,G&A") expenses increased
approximately $257,000 or 10% for the second quarter of fiscal 1999 as compared
to the second quarter of fiscal 1998. Increased selling expenses, primarily
dealer and employee sales commissions on the increased domestic sales volume,
and increased outside professional services were primarily responsible for the
overall increase in S,G&A expenses. S,G&A expenses increased approximately
$514,000 or 10% for the first six months of fiscal 1999 as compared to the first
six months of the prior fiscal year reflecting the Company's expanded domestic
sales efforts. Increased selling expenses including dealer and employee
commissions and outside professional services, and increased G&A expenses
including salaries and related expenditures and outside professional services,
were partially offset by reduced service overhead costs.
Interest expense was approximately $20,000 for both the three months ended
November 1, 1998 and the three months ended November 2, 1997. The Company's
borrowing during the second quarter of fiscal 1999 was primarily associated with
the common stock repurchase program. Interest expense decreased by approximately
$79,000 to approximately $25,000 for the six months ended November 1, 1998 as
compared to the six months ended November 2, 1997 as a result of lower average
debt levels.
Income tax expense for the first six months of both fiscal 1999 and 1998
was based upon the estimated effective tax rate of 28%. Income tax expense of
$211,000 for the second quarter of the prior fiscal year was recorded at an
effective rate of 25% bringing the year-to-date effective tax rate to 28%. Due
to net operating loss carryforwards for federal income tax purposes, the Company
expects income taxes payable, calculated on an alternative minimum tax basis, to
be minimal for fiscal 1999.
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 CAPITAL RESOURCES
The Company had working capital of approximately $14,570,000 at November 1,
1998 compared to approximately $18,603,000 at May 3, 1998. The decrease in
working capital of approximately $4,033,000 was primarily attributable to an
increase in bank debt resulting from the Company's repurchase of its common
stock. As a result, the Company's current ratio decreased to 3.1 to 1 at
November 1, 1998 compared to 5.8 to 1 at May 3, 1998.
Cash provided from operations was approximately $277,000 for the six months
ended November 1, 1998 compared to approximately $1,631,000 for the
corresponding period of the prior fiscal year. The reduction of approximately
$1,354,000 was primarily caused by a long-term sales financing arrangement
entered into with a customer, an increase in inventory and decreases in accounts
payable and accrued expenses which were partially offset by a decrease in
accounts receivable.
During the first six months of fiscal 1999, the Company invested
approximately $837,000 in capital expenditures as compared to approximately
$362,000 for the first six months of fiscal 1998. The Company expects that
capital expenditures will continue to exceed its normal requirements for the
balance of fiscal 1999 primarily due to costs pertaining to tooling and
production equipment associated with the Company's new products.
Page 13 of 19
<PAGE> 14
Approximately $602,000 of funds were used for financing activities during
the first six months of fiscal 1999. The Company used approximately $4,141,000
of funds to repurchase 842,803 shares of its Common Stock which was financed by
approximately $3,474,000 of funds from borrowings and the balance by funds from
operations. There are 349,995 remaining shares authorized for purchase under the
repurchase plan.
During October 1998, the Company replaced its existing revolving credit
facility with a new $5,000,000 revolving credit agreement. Following the end of
the second quarter, the Company entered into a $3,000,000 term loan with its
lender, the proceeds of which will be used to reduce borrowings under the
Company's revolving credit agreement. The Company expects cash from operations
and funds available under the Company's revolving credit agreement to adequately
support its planned operating requirements for the balance of fiscal 1999. In
addition, management believes that additional funds, if needed, could be
obtained on commercially reasonable terms.
YEAR 2000 COMPLIANCE
The Company has addressed the Year 2000 compliance issue with regard to the
potential impact on its business, results of operations and financial condition.
The Company has determined that its products and business operating systems are
Year 2000 compliant and does not believe that it will be significantly impacted
by the inability of third parties used by the Company to provide products and
services. While the Company cannot be certain that all third parties will meet
the Year 2000 requirements, the estimated cost or disruption of services is not
expected to be material to the Company's financial position or results of
operations.
FORWARD LOOKING INFORMATION
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, global economic
changes, an unanticipated slowdown in the healthcare industry, unanticipated
technological developments which affect the competitiveness of the Company's
products, or an unanticipated loss or delay of business. The Company does not
intend to update publicly any of the forward looking statements contained
herein.
Page 14 of 19
<PAGE> 15
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 September 1, 1998 at the Ramada Plaza Hotel in Meriden,
Connecticut.
(b) Not applicable because:
(i) Proxies for the Meeting were solicited pursuant to Regulation 14
under the Securities Exchange Act of 1934,
(ii) There was no solicitation in opposition to management's nominees
as listed in the Company's Proxy Statement dated July 29, 1998,
and
(iii) Such nominees were elected.
(c) Matters voted upon at the Meeting were as follows:
Votes Votes Withheld/
For Against Abstain
----- ------- ---------
(i) Election of two Class C
directors of the Company for
the next three years:
Thomas M. Haythe 6,796,467 664,648
William J. Lacourciere 6,792,917 668,198
(ii) Ratification of the Board of 7,346,874 82,183 32,058
Directors' selection of Ernst
& Young LLP to serve as the
Company's independent
auditors for the fiscal year
ended May 2, 1999.
ITEM 5. Other Information.
(a) On September 1, 1998, at a meeting of the Board of Directors of the
Company held subsequent to the Annual Meeting of Stockholders, John P.
Mahoney, M.D., a director of the Company whose term expired on
September 1, 1998, was elected by the Board of Directors to serve as a
Class B director. Dr. Mahoney's term will expire at the 2000 Annual
Meeting.
Page 15 of 19
<PAGE> 16
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 November 1, 1998.
Page 16 of 19
<PAGE> 17
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: July 14, 1999 /s/ WILLIAM J. LACOURCIERE
-------------------------------------
William J. Lacourciere
Chairman of the Board,
President and Chief Executive Officer
Dated: July 14, 1999 /s/ JEFFERY A. BAIRD
-------------------------------------
Jeffery A. Baird
Chief Financial Officer and
Principal Accounting Officer
Page 17 of 19
<PAGE> 18
INDEX TO EXHIBITS
PAGE
27 Financial Data Schedule 19
Page 18 of 19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED NOVAMETRIX MEDICAL SYSTEMS INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME FOR THE SIX MONTHS ENDED NOVEMBER 1, 1998 AND THE CONDENSED CONSOLIDATED
BALANCE SHEETS AT NOVEMBER 1, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-02-1999
<PERIOD-END> NOV-01-1998
<CASH> 181,324
<SECURITIES> 0
<RECEIVABLES> 9,218,360
<ALLOWANCES> (250,000)
<INVENTORY> 8,745,331
<CURRENT-ASSETS> 21,366,844
<PP&E> 9,464,702
<DEPRECIATION> (6,382,262)
<TOTAL-ASSETS> 30,937,893
<CURRENT-LIABILITIES> 6,796,443
<BONDS> 72,856
0
0
<COMMON> 92,047
<OTHER-SE> 23,976,547
<TOTAL-LIABILITY-AND-EQUITY> 30,937,893
<SALES> 15,161,947
<TOTAL-REVENUES> 15,161,947
<CGS> 6,064,538
<TOTAL-COSTS> 6,064,538
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,077
<INCOME-PRETAX> 1,521,757
<INCOME-TAX> 426,100
<INCOME-CONTINUING> 1,095,657
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,095,657
<EPS-BASIC> .13
<EPS-DILUTED> .12
</TABLE>
