UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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 09178
DAIG CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-1245127
(State of Incorporation) (I.R.S. Employer
Identification No.)
14901 DeVeau Place
Minnetonka, Minnesota, 55345
(Address of principal executive offices)
Telephone Number: (612) 933-4700
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 .
As of July 11, 1995, there were a total of 15,236,144 shares of
common stock outstanding which is the only class of securities of
the Company.
<PAGE>
DAIG CORPORATION
INDEX
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets
Condensed Statements of Earnings
Condensed Statements of Cash Flows
Notes to Condensed Financial Statements
Item 2. Management's Discussion And Analysis of
Financial Condition And Results of Operations
PART II. OTHER INFORMATION
SIGNATURES
<PAGE>
<TABLE>
DAIG CORPORATION
CONDENSED BALANCE SHEETS
(unaudited)
<CAPTION>
June 30, September 30,
1995 1994
<S> <C> <C>
CURRENT ASSETS
Cash $17,221,935 $ 8,294,694
Short-term investments - 3,139,277
Accounts receivable 5,229,960 4,194,424
Prepaid expenses and other 453,391 176,674
Inventories
Raw material 1,349,305 1,356,146
Work in progress 442,693 382,049
Finished goods 1,604,713 1,523,860
3,396,711 3,262,055
Total current assets 26,301,997 19,067,124
Property, plant and equipment 11,843,072 10,930,139
Accumulated depreciation
and amortization (6,787,915) (5,963,063)
Net property, plant
and equipment 5,055,157 4,967,076
Other Assets - 265,288
Total Assets $31,357,154 $24,299,488
CURRENT LIABILITIES
Accounts payable $ 995,678 $ 778,063
Other current
liabilities 1,853,624 1,868,074
Total current
liabilities 2,849,302 2,646,137
Long-term capital lease
obligations - 76,508
SHAREHOLDERS' EQUITY
(Notes B and C)
Common stock 152,361 152,042
Other shareholders'
equity 28,355,491 21,424,801
28,507,852 21,576,843
Total Liabilities and
Shareholders' Equity $31,357,154 $24,299,488
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
DAIG CORPORATION
CONDENSED STATEMENTS OF EARNINGS
(unaudited)
<CAPTION>
Three Months Ended June 30,
1995 1994
<S> <C> <C>
NET SALES $10,223,194 $ 8,741,039
COST OF SALES 3,135,170 2,930,811
Gross Profit 7,088,024 5,810,228
OPERATING EXPENSES:
Selling, general and
administrative 2,689,348 2,108,450
Engineering and
development 993,186 541,614
Total operating
expenses 3,682,534 2,650,064
OPERATING PROFIT 3,405,490 3,160,164
INTEREST INCOME, INTEREST
EXPENSE, AND OTHER 250,449 119,000
EARNINGS BEFORE INCOME TAXES 3,655,939 3,279,164
PROVISION FOR INCOME TAXES 1,072,200 1,169,191
NET EARNINGS $ 2,583,739 $ 2,109,973
NET EARNINGS PER SHARE
(Note B) $ .17 $ .14
WEIGHTED NUMBER OF COMMON
SHARES OUTSTANDING DURING
THIS PERIOD (Note B) 15,236,144 15,212,936
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
DAIG CORPORATION
CONDENSED STATEMENTS OF EARNINGS
(unaudited)
<CAPTION>
October 1, October 1,
1994 through 1993 through
June 30, 1995 June 30, 1994
<S> <C> <C>
NET SALES $ 28,383,611 $ 23,843,012
COST OF SALES 9,103,031 8,282,804
Gross profit 19,280,580 15,560,208
OPERATING EXPENSES:
Selling, general and
administrative 7,513,400 6,089,977
Engineering and
development 2,228,373 1,796,727
Total operating
expenses 9,741,773 7,886,704
OPERATING PROFIT 9,538,807 7,673,504
INTEREST INCOME, INTEREST
EXPENSE, AND OTHER 567,150 203,804
Earnings before income taxes 10,105,957 7,877,308
PROVISION FOR INCOME TAXES 3,174,948 2,762,058
NET EARNINGS $ 6,931,009 $ 5,115,250
NET EARNINGS PER SHARE
(Note B) $ .46 $ .34
WEIGHTED NUMBER OF COMMON
SHARES OUTSTANDING DURING
THIS PERIOD (Note B) 15,218,485 15,218,436
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
DAIG CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
October 1, October 1,
1994 through 1993 through
June 30, 1995 June 30, 1994
<S> <C> <C>
Increase (decrease) in cash
Net cash provided by operating
activities $6,982,502 $ 5,456,823
Cash flows from financing activities:
Payments on capital lease
obligations and purchase and
retirement of common stock (169,162) (318,326)
Net cash used in financing
activities (169,162) (318,326)
Cash flows from investing activities:
Purchase of property, plant and
equipment (1,025,376) (2,533,984)
Purchase of short-term investment - (1,366,250)
Proceeds from sale of short-term
investments 3,139,277 1,289,961
Proceeds from equipment sale - 752,592
Net cash provided by (used in)
investing activities 2,113,901 (1,857,681)
Net increase in cash 8,927,241 3,280,816
CASH at beginning of period 8,294,694 3,841,643
CASH at end of period $17,221,935 $ 7,122,459
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
DAIG CORPORATION
Notes to Condensed Financial Statements
Note A - Basis of Presentation
The accompanying unaudited condensed financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and rule 10-01 of Regulation S-X.
They do not include all information and footnotes required by
generally accepted accounting principles for complete financial
statements. However, except as disclosed herein, there has been
no material change in the information disclosed in the notes to
financial statements included in the Annual Report on Form 10-K
of Daig Corporation (the "Company") for the year ended September
30,1994.
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
and nine months ended June 30, 1995 are not necessarily
indicative of the results that may be expected for the year
ending September 30, 1995.
Note B - Stock Splits
On December 22, 1993 and February 10, 1995, the Board of
Directors approved separate two-for-one splits of the common
shares to be distributed on January 19, 1994 and March 8, 1995 to
holders of record on January 7, 1994 and February 24, 1995,
respectively. All common shares and earnings per share data
included in the condensed financial statements have been adjusted
to reflect the relevant stock splits.
Note C - Reclassifications
Certain of the 1994 amounts have been reclassified to conform
with the financial statement presentation used in 1995.
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial
Condition And Results of Operations.
(1)(2) Liquidity and Capital Resources
Net working capital increased by approximately $7,032,000 or
43% during the first nine months of fiscal year 1995. The cash
and short-term investment components of working capital increased
by approximately $5,788,000 due to the overall rise in sales
volume. Accounts receivable gained approximately $1,036,000
without material change in aging.
The Company had no borrowings outstanding on June 30, 1995
under a $4,000,000 revolving line of credit. The line of credit
is available to supplement working capital needs.
The Company recognizes that additional capital may be
required in the future. Daig has collateral available to support
additional debt financing. It is also possible that additional
equity could be raised through private or public stock offerings
should the Company's capital or liquidity needs exceed its other
financing alternatives. The actual availability and relative
cost of additional capital through debt financing or stock
offerings have not been ascertained.
(3) Results Of Operations
Sales increased 17% and 19%, respectively in the three and
nine months ended June 30, 1995, compared to the same periods one
year ago. During the three and nine months ended June 30, 1995,
approximately sixty-seven and sixty-four percent of the Company's
sales gain, respectively, came from the domestic market while the
remaining gain reflected expansion of export sales. Daig's sales
success during the first three quarters of fiscal year 1995,
compared with the same periods one year ago, was the result
primarily of an increase in unit volume sales of existing product
lines due to the continued expansion of marketing and sales
activities of the Company. Sales results also reflect the impact
of ongoing additions to the Company's lines of electrophysiology
catheters and percutaneous catheter introducers.
Gross profit, as a percentage of sales, increased 2.8
percentage points to 69.3% and 2.6 percentage points to 67.9%,
respectively, for the three and nine months ended June 30, 1995,
versus the same periods in the prior year. This change is
attributed to (1) continued improvements in manufacturing
efficiency based on trade secret technology and economies of
scale and (2) greater use of existing manufacturing capacity.
Selling, general and administrative expenses as a percentage
of sales increased 2 percentage points to 26% in the quarter
ended June 30, 1995 as compared to 24% in the same period one
year ago and remained approximately 26% for the nine month
periods ended June 30, 1995 and 1994. Quarterly fluctuations in
this category reflect the timing of expenditures related to the
continued expansion of the Company's sales organization and
related marketing support. Engineering and development expenses
increased approximately $452,000 and $431,646, respectively,
during the three and nine months ended June 30, 1995, compared to
the same periods one year ago. These increases reflect the
Company's expanded clinical research and other product
development activities.
The Company's tax rate reflects the permanent tax savings
related to the federal and state tax credits generated by the
increase in research and development activities, expanded use of
the Company's foreign sales corporation and the recognition of
certain tax carryforwards.
Management cautions against drawing conclusions about
business trends on the basis of quarterly or other interim
results, and believes that operating results must be viewed over
a longer period.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports of Form 8-K
(a) Listings of exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on form 8-K:
None.
<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.
DAIG CORPORATION
Date July 13, 1995 By /S/ John J. Fleischhacker
Chairman and Chief Executive Officer
Date July 13, 1995 By /S/ Daniel J. Starks
President and Chief Operating Officer
Date July 13, 1995 By /S/ John C. Heinmiller
Vice President, Finance and Administration
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed Statements of Earnings and condensed Balance Sheets on pages 3-5 of
the Company's interim report for the period ended June 30, 1995, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 17,222
<SECURITIES> 0
<RECEIVABLES> 5,230
<ALLOWANCES> 0
<INVENTORY> 3,397
<CURRENT-ASSETS> 26,302
<PP&E> 11,843
<DEPRECIATION> 6,788
<TOTAL-ASSETS> 31,357
<CURRENT-LIABILITIES> 2,849
<BONDS> 0
<COMMON> 152
0
0
<OTHER-SE> 28,356
<TOTAL-LIABILITY-AND-EQUITY> 31,357
<SALES> 28,384
<TOTAL-REVENUES> 28,384
<CGS> 9,103
<TOTAL-COSTS> 9,103
<OTHER-EXPENSES> 2,228
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,106
<INCOME-TAX> 3,175
<INCOME-CONTINUING> 6,931
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,931
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
</TABLE>
