<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended August 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to________
Commission File Number: 0-12665
_______________________________
MICRO BIO-MEDICS, INC.
__________________________________________________________
(Exact name of Registrant as specified in its charter)
New York 13-2692560
___________________________________________________________________________
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
846 Pelham Parkway
______________________
Pelham Manor, New York 10803
______________________ ______
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (914) 738-8400
_______________
Not Applicable
_____________________________________________________________________
(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
____ ____
The number of shares of Registrant's Common Stock, par value $.03 per
share outstanding as of September 27, 1996 was 5,041,857.
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED AUGUST 31, 1996
INDEX
_____
Page
Number
_______
Part I Financial Information
Item 1. Financial Information
Consolidated Statements of Operations -
Nine Months and Three Months Ended August 31, 1996
(Unaudited) and 1995 (Unaudited) 3
Consolidated Balance Sheets -
August 31, 1996 (Unaudited) and November 30, 1995 4-5
Consolidated Statements of Cash Flows
Nine Months Ended August 31, 1996 (Unaudited)
and 1995 (Unaudited) 6-7
Notes to Consolidated Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
Part II 11
Signature Page 12
- 2 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
( UNAUDITED )
<TABLE>
<CAPTION>
Nine Months Ended August 31, Three Months Ended August 31,
---------------------------- -----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $110,320,649 $89,585,410 $44,092,525 $36,627,467
COST OF GOODS SOLD 87,285,148 70,558,869 34,898,266 28,666,129
------------ ------------ ------------ ------------
GROSS PROFIT 23,035,501 19,026,541 9,194,259 7,961,338
OPERATING EXPENSES
Selling, shipping and warehouse 12,798,137 10,926,236 4,568,216 3,813,577
General and administrative 6,739,710 5,754,148 2,438,680 2,089,990
Interest and financing costs
(net of interest income of $ 145,384
in 1996, $ 124,828 in 1995) 693,375 975,685 140,275 305,387
------------ ------------ ------------ ------------
Total operating expenses 20,231,222 17,656,069 7,147,171 6,208,954
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 2,804,279 1,370,472 2,047,088 1,752,384
PROVISION FOR INCOME TAXES 1,167,000 575,600 864,000 736,000
------------ ------------ ------------ ------------
NET INCOME $ 1,637,279 $ 794,872 $ 1,183,088 $ 1,016,384
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.30 $ 0.19 $ 0.20 $ 0.21
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
NUMBER OF SHARES USED IN
COMPUTING EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE 5,707,086 5,086,857 5,989,693 5,111,638
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
DIVIDENDS PER COMMON SHARE None None None None
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The notes to financial statements are made a part hereof.
-3-
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------------------
ASSETS
------
<TABLE>
<CAPTION>
August 31,
1996 November 30,
(UNAUDITED) 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivilents $4,892,263 $2,817,285
Accounts receivable, less allowance for
doubtful accounts, of $828,638 in August
1996 and $674,210 in November 1995 32,712,407 25,657,607
Inventory 13,114,518 12,318,756
Deferred income taxes 485,500 485,500
Prepaid expenses and other current assets 915,451 657,768
Loan receivable 106,737
Prepaid income taxes 471,710
----------- -----------
Total current assets 52,226,876 42,408,626
PROPERTY, PLANT AND EQUIPMENT - at cost
net of accumulated depreciation and
amortization of $3,195,841 at August 1996
and $3,616,134 at November 1995 3,926,127 3,477,807
INTANGIBLE ASSETS - net of accumulated
amortization of $ 963,781 at August 1996
and $1,061,323 at November 1995 8,352,513 4,990,073
OTHER ASSETS 165,206 259,206
----------- -----------
$64,670,722 $51,135,712
----------- -----------
----------- -----------
</TABLE>
The notes to financial statements are made a part hereof.
- 4 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------
<TABLE>
<CAPTION>
August 31,
1996 November 30,
(UNAUDITED) 1995
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of
long term debt 431,455 $479,195
Accounts payable 18,850,345 10,297,403
Income taxes payable 326,851
Accrued expenses and
sundry liabilities 2,358,966 1,666,762
----------- -----------
Total current liabilities 21,967,617 12,443,360
LONG-TERM DEBT, net of
current maturities 11,537,225 17,270,062
DEFERRED INCOME TAXES 70,211 358,138
----------- -----------
Total Liabilities 33,575,053 30,071,560
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock $ 1.00 par value
Authorized-1,000,000 shares
no shares issued - -
Common stock $.03 par value
Authorized - 20,000,000 shares
Issued - 5,038,949 in August 1996
- 3,878,804 in November 1995 151,168 116,364
Capital in excess of par value 20,766,693 12,407,257
Retained earnings 10,178,972 8,541,695
Less: Cost of 1,167 shares of common
stock in treasury (1,164) (1,164)
----------- -----------
Total stockholders' equity 31,095,669 21,064,152
----------- -----------
$64,670,722 $51,135,712
----------- -----------
----------- -----------
</TABLE>
The notes to financial statements are made a part hereof.
- 5 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
-----------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
August 31, 1996
--------------------------
1996 1995
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $1,637,279 $794,872
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Expenses not requiring the use of cash:
Depreciation and amortization 786,209 752,582
Provision for losses on
accounts receivable 59,418 72,000
Changes in assets and liabilities,
Due to seller (101,828)
Accounts receivable (5,828,180) (2,575,768)
Inventory (824,342) 1,859,305
Prepaid expenses and other current
assets (199,254) (27,264)
Other assets (12,737) 197,233
Income taxes 862,460
Accounts payable 7,453,043 290,904
Accrued expenses and sundry
liabilities 527,662 26,791
Deferred income taxes 31,000
----------- -----------
2,855,279 493,955
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 4,492,558 1,288,827
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants 3,776,880 280,815
Exercise of employee stock options 182,587 179,330
Net repayments under
revolving loan agreements (4,500,000) (2,150,000)
Repayment of long-term debt (609,078) (397,444)
Proceeds of long term debt 136,080
----------- -----------
NET CASH USED IN
FINANCING ACTIVITIES $(1,013,531) $(2,087,299)
----------- -----------
----------- -----------
The notes to financial statements are made a part hereof
- 6 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
-----------------------------------------------------
(CONTINUED)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures $ (856,454) $ (325,832)
Payments for intangible assets (547,595) (660,960)
----------- -----------
NET CASH USED IN
INVESTING ACTIVITIES (1,404,049) (986,792)
----------- -----------
NET ( DECREASE ) IN CASH 2,074,978 (1,785,264)
CASH-beginning of period 2,817,285 3,333,345
----------- -----------
CASH-end of period $4,892,263 $1,548,081
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 838,759 $ 1,100,513
----------- -----------
----------- -----------
Income taxes $ 329,023 $ 356,294
----------- -----------
----------- -----------
BUSINESS ACQUIRED FOR ISSUANCE OF STOCK
which is not reflected in the above
statement $3,228,004
-----------
-----------
</TABLE>
The notes to financial statements are made part hereof.
- 7 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO FORM 10-Q
AUGUST 31, 1996
(UNAUDITED)
---------------------------------------
NOTE A
The attached summarized financial information does not include all
disclosures required to be included in a complete set of financial
statements prepared in conformity with generally accepted accounting
principles. Such disclosures were included with the consolidated
financial statements of the Company at November 30, 1995, included
in its annual report on Form 10-K. Such statements should be read in
conjunction with the data herein.
NOTE B
The financial information reflects all normal recurring adjustments
which, in the opinion of management, are deemed necessary for a fair
presentation of the results for the interim periods. The results for
the interim periods are not necessarily indicative of the results to
be expected for the year.
NOTE C - ACQUISITION
Pursuant to an agreement for merger and reorganization dated November 2,
1995 among MBM, Diagnostic Leasing Corp. ("DLC"), Stone Medical Supply
Corporation ("Stone"), a distributor of physician and podiatry supplies and
equipment and Andrew D. Stone, Stone was merged into DLC as the surviving
corporation on January 18, 1996. The Company issued approximately 280,696
shares of its common stock in exchange for the outstanding shares of Stone.
Subsequent to the merger, DLC changed its name to Stone Medical Supply
Corporation.
NOTE D - EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings per common and common equivalent share are based on the weighted
average number of common shares and common equivalent shares outstanding
during the period. The modified treasury stock method was utilized to
calculate the dilutive effect of the options and warrants upon the earnings
per share data.
- 8 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
AUGUST 31, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
For the three months ended August 31, 1996 net sales increased 20.4% as compared
with the prior year. For the nine months ended August 31, 1996 net sales
increased 23.1%. Such rise in net sales resulted from our increased volume to
hospitals, the acquisition of Stone Medical Supply Corporation and our
continuing effort to gain market penetration and sales volume to our existing
customer base and the addition of new customers. During the three months and
nine months ended August 31, 1996 and 1995, the introduction of new products,
changing prices and inflation had no material impact on the Company's
operations.
GROSS PROFIT/OPERATING EXPENSES
- -------------------------------
Gross profit expressed as a percent of net sales decreased from 21.2% to
20.9% for the nine month period ended August 31, 1996 and decreased from
21.7% to 20.9% for the three month period ended August 31, 1996 due to
changes in the product mix and increased sales to hospitals. Selling,
shipping and warehouse and general and administrative expenses expressed
as a percent of net sales decreased .8% for the nine months ended August
31, 1996 and remained constant for the three months ended August 31, 1996.
INTEREST AND FINANCING COSTS (NET OF INTEREST INCOME)
- -----------------------------------------------------
Interest expense net of interest income expressed as a percent of net
sales decreased .5% for the nine months ended August 31, 1996 and
decreased .5% for the three months ended August 31, 1996, when compared
to the prior year as a result of using the proceeds from the conversion of
outstanding warrants to decrease long-term debt and decreases in the interest
rates charged by financial institutions.
- 9 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
AUGUST 31, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the nine months ended August 31, 1996 and 1995 the Company
continued to meet its cash needs via cash flow from operations and
borrowings. During the first nine months of fiscal 1996 and 1995,
the Company had an average of approximately $13,350,000 and $10,500,000,
respectively, of unused credit lines available each month over its normal
operating requirements.
For the nine months ended August 31, 1996, the Company generated cash
from operating activities. An increase in accounts payable and accrued expenses
over and above an increase in accounts receivable and inventory
contributed to the Company's generation of cash. For the nine months ended
August 31, 1995, the Company generated cash from operating activities. An
increase in accounts payable and a decrease in inventory over and above an
increase in accounts receivable and prepaid expenses and other current assets
contributed to the Company's generation of cash. During the nine months ended
August 31, 1996 and 1995, the Company's financing activities used cash as a
result of repayments of the bank loan under its long-term credit agreement
exceeding proceeds from the exercise of warrants. For the nine months ended
August 31, 1996 and 1995 the Company used cash in investing activities to make
capital expenditures.
Management believes that its working capital of approximately $30,300,000
at August 31, 1996 provides sufficient liquidity for its short and long-
term requirements and that the Company's long-term liquidity is not
materially effected by any restrictive covenants contained in the
Company's Revolving Credit Agreement. Further, Management believes that
the Company should not experience a problem in connection with the
maintenance of such covenants and that its $25,000,000 line of credit
provides the Company with the resources it reasonably expects to require
to meet its cash commitments through fiscal 1996.
- 10 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
FORM 10-Q
AUGUST 31, 1996
(UNAUDITED)
---------------------------------------
Item 6 - Exhibits and Reports on Form 8-K
---------------------------------
a. Exhibit 11 - Earnings per share
Exhibit 27 - Financial Data Schedule
b. No report on Form 8-K was required to be filed by the Company
during the quarter ended August 31, 1996.
- 11 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
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.
MICRO BIO-MEDICS, INC.
----------------------
Registrant
Date: September 30, 1996 /s/ Bruce J. Haber
------------------ ---------------------
Bruce J. Haber President
and Chief Executive
Officer
Date: September 30, 1996 /s/ Stuart F. Fleischer
------------------ ------------------------
Stuart F. Fleischer
Vice-President - Finance
and Chief Financial
Officer
- 12 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
FORM 10-Q
AUGUST 31, 1996
(UNAUDITED)
---------------------------------------
Exhibit 11
- ------------------------------
Computation of Earnings per Common and Common Equivalent Share
------------------------------------------------------------------
Nine Months Ended Three Months Ended
August 31, August 31,
----------------- ------------------
1996 1995 1996 1995
------ ------ ------ ------
Earnings
- --------
Net income $1,637,279 $ 794,872 $1,183,088 $1,016,384
Modified Treasury Stock Method
- ------------------------------
Incremental Income 59,709 166,760 - 42,063
--------- ---------- ---------- ---------
Adjusted income $1,696,988 $ 961,632 $1,183,088 $1,058,447
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
Shares
- ------
Weighted average number of
common shares outstanding 4,387,181 3,640,242 4,928,358 3,676,592
Additional shares assuming
conversion of stock options
and warrants utilizing the
modified treasury stock method 1,319,905 1,446,615 1,061,335 1,435,046
--------- --------- --------- ---------
Number of common and common
equivalent shares 5,707,086 5,086,857 5,989,693 5,111,638
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
Earnings per common and common
equivalent share $.30 $.19 $.20 $.21
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 4,892,263
<SECURITIES> 0
<RECEIVABLES> 33,541,045
<ALLOWANCES> 828,638
<INVENTORY> 13,114,518
<CURRENT-ASSETS> 52,226,876
<PP&E> 7,121,968
<DEPRECIATION> 3,195,841
<TOTAL-ASSETS> 64,670,722
<CURRENT-LIABILITIES> 21,967,617
<BONDS> 11,537,225
0
0
<COMMON> 151,168
<OTHER-SE> 30,944,501
<TOTAL-LIABILITY-AND-EQUITY> 64,670,722
<SALES> 110,320,649
<TOTAL-REVENUES> 110,320,649
<CGS> 87,285,148
<TOTAL-COSTS> 87,285,148
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 72,000
<INTEREST-EXPENSE> 693,375
<INCOME-PRETAX> 2,804,279
<INCOME-TAX> 1,167,000
<INCOME-CONTINUING> 1,637,279
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,637,279
<EPS-PRIMARY> 0
<EPS-DILUTED> .30
</TABLE>
