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 May 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 June 26, 1996 was 5,019,219.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MAY 31, 1996
INDEX
Page
Number
------
Part I Financial Information
Item 1. Financial Information
Consolidated Statements of Operations -
Six Months and Three Months Ended May 31, 1996
(Unaudited) and 1995 (Unaudited) 3
Consolidated Balance Sheets -
May 31, 1996 (Unaudited) and November 30, 1995 4-5
Consolidated Statements of Cash Flows
Six Months Ended May 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 11-13
Signature Page 14
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
---------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended May 31, Three Months Ended May 31,
--------------------------- ---------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 66,228,124 $ 52,957,943 $ 36,340,703 $ 28,089,303
COST OF GOODS SOLD 52,386,882 41,892,740 28,794,973 22,188,231
------------ ------------ ------------ ------------
GROSS PROFIT 13,841,242 11,065,203 7,545,730 5,901,072
OPERATING EXPENSES
Selling, shipping and warehouse 8,229,921 7,112,659 4,406,628 3,712,780
General and administrative 4,301,030 3,664,158 2,294,530 1,827,799
Interest and financing costs
(net of interest income of $ 42,157
in 1996, $ 81,420 in 1995) 553,100 670,298 238,997 358,427
------------ ------------ ------------ ------------
Total operating expenses 13,084,051 11,447,115 6,940,155 5,899,006
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 757,191 (381,912) 605,575 2,066
PROVISION (BENEFIT) FOR INCOME TAXES 303,000 (160,400) 239,300 900
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 454,191 $ (221,512) $ 366,275 $ 1,166
============ ============ ============ ============
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE $ .09 $ (.06) $ .07 $ --
============ ============ ============ ============
NUMBER OF SHARES USED IN
COMPUTING EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE 5,565,792 3,622,067 5,632,540 3,641,895
============ ============ ============ ============
DIVIDENDS PER COMMON SHARE None None None None
============ ============ ============ ============
</TABLE>
The notes to financial statements are made a part hereof.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
------------------------------------------------
ASSETS
May 31, 1996 November 30,
(UNAUDITED) 1995
----------- -----------
CURRENT ASSETS
Cash $ 1,291,725 $ 2,817,285
Accounts receivable, less allowance for
doubtful accounts, of $829,232 in May
1996 and $674,210 in November 1995 27,659,515 25,657,607
Inventory 13,715,793 12,318,756
Deferred income taxes 485,500 485,500
Prepaid expenses and other current assets 610,997 657,768
Loan receivable 444,248
Prepaid income taxes 234,078 471,710
----------- -----------
Total current assets 44,441,856 42,408,626
PROPERTY, PLANT AND EQUIPMENT - at cost
net of accumulated depreciation and
amortization of $3,001,741 at May 1996
and $3,616,134 at November 1995 3,872,886 3,477,807
INTANGIBLE ASSETS - net of accumulated
amortization of $ 918,881 at May 1996
and $1,061,323 at November 1995 7,942,339 4,990,073
OTHER ASSETS 167,213 259,206
----------- -----------
$56,424,294 $51,135,712
=========== ===========
The notes to financial statements are made a part hereof.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------------
LlABILITIES AND STOCKHOLDERS' EQUITY
May 31, 1996 November 30,
(UNAUDITED) 1995
------------ ------------
CURRENT LIABILITIES:
Current maturities of long term debt $ 452,442 $ 479,195
Accounts payable 15,471,509 10,297,403
Accrued expenses and sundry liabilities 1,655,123 1,666,762
------------ ------------
Total current liabilities 17,579,074 12,443,360
LONG-TERM DEBT, net of
current maturities 12,450,356 17,270,062
DEFERRED INCOME TAXES 39,211 358,138
------------ ------------
Total Liabilities 30,068,641 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 - 7,000,000 shares
Issued - 4,382,804 in May 1996
- 3,878,804 in November 1995 131,484 116,364
Capital in excess of par value 17,229,449 12,407,257
Retained earnings 8,995,884 8,541,695
Less: Cost of 1,167 shares of common
stock in treasury (1,164) (1,164)
------------ ------------
Total stockholder's equity 26,355,653 21,064,152
------------ ------------
$ 56,424,294 $ 51,135,712
============ ============
The notes to financial statements are made a part hereof.
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<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
-----------------------------------------------------
Six Months Ended May 31,
---------------------------
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 454,191 $ (221,512)
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Expenses not requiring the use of cash:
Depreciation and amortization 547,208 493,982
Provision for losses on
accounts receivable 60,012 32,192
Changes in assets and liabilities,
Due to seller (101,828)
Accounts receivable (775,882) 3,160,445
Inventory (1,425,617) 567,230
Prepaid expenses and other current
assets 2,788 (273,330)
Other assets (353,517) 199,680
Prepaid income taxes 301,531
Accounts payable 4,074,209 (3,822,708)
Accrued expenses and sundry
liabilities (176,181) (603,819)
----------- -----------
2,254,551 (348,156)
----------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 2,708,742 (569,668)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants 60,192 216,033
Exercise of employee stock options 151,525 158,355
Net repayments under
revolving loan agreements (3,500,000) (650,000)
Repayment of long-term debt (244,386) (291,587)
----------- -----------
NET CASH USED IN
FINANCING ACTIVITIES $(3,532,669) $ (567,199)
----------- -----------
The notes to financial statements are made a part hereof
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
-----------------------------------------------------
(CONTINUED)
Six Months Ended May 31,
--------------------------
1996 1995
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures $ (127,662) $ (113,838)
Payments for intangible assets (573,971) (523,009)
----------- -----------
NET CASH USED IN
INVESTING ACTIVITIES (701,633) (636,847)
----------- -----------
NET (DECREASE) IN CASH (1,525,560) (1,773,714)
CASH-beginning of period 2,817,285 3,333,345
----------- -----------
CASH-end of period $ 1,291,725 $ 1,559,631
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 595,257 $ 751,718
=========== ===========
Income taxes $ 65,524 $ 48,175
=========== ===========
BUSINESS ACQUIRED FOR ISSUANCE OF STOCK
which is not reflected in the above
statement $ 3,228,004
===========
The notes to financial statements are made part hereof.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO FORM 10-Q
MAY 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 SHARE
Earnings per common and common equivalent share for the six months and
three months ended May 31, 1996 was computed based upon the Modified
Treasury Stock Method. Loss per share for the six months and three months
ended May 31, 1995 was computed based upon the weighted average number of
common shares outstanding as using outstanding options and warrants would
have been anti-dilutive.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
MAY 31, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------
RESULTS OF OPERATIONS
For the six months ended May 31, 1996, net sales increased 25.1% as compared
with the prior year. For the three months ended May 31, 1996, net sales
increased 29.4% as compared with the prior year. The increase in net sales
resulted from our acquisition of Stone Medical Supply Corporation, increased
sales to Hospitals and our continuing effort to increase market penetration and
sales volume to our existing customer base and the addition of new customers.
For the three months and six months ended May 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 remained constant for the six
month period ended May 31, 1996 and decreased from 21.0% to 20.8% for the three
month period ended May 31, 1996 when compared to the prior period due to changes
in the product mix. Selling, shipping and warehouse and general and
administrative expenses expressed as a percent of net sales decreased 1.4% for
the six months ended May 31, 1996 and decreased 1% for the three months ended
May 31, 1996 when compared to the prior period.
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 six month period ended May 31, 1996 and decreased .7% for
the three month period ended may 31, 1996 when compared to the prior period as a
result of decreases in interest rates charged by financial institutions, the
reduction in collection days of accounts receivable and the decrease in
long-term debt.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
MAY 31, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended May 31, 1996 and 1995, the Company continued
to meet its cash needs via cash flow from operations and borrowings.
During the first six months of fiscal 1996 and fiscal 1995, the Company
had an average of approximately $12,700,000 and $9,700,000, respectively,
of unused credit lines available each month over its normal operating
requirements.
For the six months ended May 31, 1996, the Company generated cash from operating
activities. The increase in accounts payable over and above the increase in
accounts receivable and inventory contributed to the Company's generation of
cash. For the six months ended May 31, 1995, the Company used cash from
operating activities. The decrease in accounts payable and accrued expenses over
and above the decrease in accounts receivable and inventory contributed to the
Company's use of cash. During the six months ended May 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.
Management believes that its working capital of approximately $26,900,000
at May 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.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
FORM 10-Q
MAY 31, 1996
(UNAUDITED)
---------------------------------------
Item 4 - Submission of matters to a vote of Security Holders
On June 14, 1996, the Company held its annual meeting of shareholders. The
Company's shareholders re-elected Bruce J. Haber, Marvin S. Caligor, Renee
Steinberg and K. Deane Reade, Jr. as directors of the Company for a period
of one year and until their successors are elected. Mr. Haber received
3,612,337 votes in favor and 101,114 votes against and each of the other
three directors received 3,614,932 votes in favor and 98,519 votes against.
The Company's shareholders approved an increase in the authorized number of
shares of common stock from 7,000,000 shares to 20,000,000 shares, $.03 par
value by a vote of 2,656,069 in favor, 252,984 against, 22,277 abstentions
and 782,420 unvoted.
The Company's shareholders approved an increase in the number of shares
that are covered by the Company's 1992 Incentive and Non-Statutory Stock
Option Plan from 1,350,000 shares to 1,850,000 shares by a vote of 869,920
shares in favor, 244,772 against, 12,947 abstentions and 2,584,445 unvoted.
The Company's shareholders ratified, adopted and approved the 1996
Director's Retirement Plan by a vote of 2,714,435 in favor, 202,383
against, 23,247 abstentions and 773,353 unvoted.
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 Registrant
during the three months ended May 31, 1996.
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<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: July 8, 1996
------------ _____________________
Bruce J. Haber President
and Chief Executive
Officer
Date: July 8, 1996
------------ _____________________
Stuart F. Fleischer
Vice-President - Finance
and Chief Financial
Officer
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MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
FORM 10-Q
MAY 31, 1996
(UNAUDITED)
---------------------------------------
Exhibit 11
Computation of Earnings per Common and Common Equivalent Share
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
May 31, May 31,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Earnings
Income (loss) before cumulative
effect of accounting change $ 454,191 $ (221,512) $ 366,275 $ 1,166
Modified Treasury Stock Method
Incremental income 59,709 14,779
----------- ----------- ----------- -----------
Adjusted (loss) income before
cumulative effect of
accounting change $ 513,900 $ (221,512) $ 380,054 $ 1,166
=========== =========== =========== ===========
Shares
Weighted average number of
common shares outstanding 4,116,592 3,622,067 4,213,002 3,641,895
Additional shares assuming
conversion of stock options
and warrants utilizing the
modified treasury stock
method 1,449,190 1,419,538
----------- ----------- ----------- -----------
Number of common and common
equivalent shares 5,565,792 3,622,067 5,632,540 3,641,895
=========== =========== =========== ===========
Earnings (loss) per common
and common equivalent share $ .09 $ (.06) $ .07 $ .00
=========== =========== =========== ===========
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-START> Dec-01-1996
<PERIOD-END> May-31-1996
<CASH> 1,291,725
<SECURITIES> 0
<RECEIVABLES> 28,488,747
<ALLOWANCES> 829,232
<INVENTORY> 13,715,793
<CURRENT-ASSETS> 44,441,856
<PP&E> 6,874,627
<DEPRECIATION> 3,001,741
<TOTAL-ASSETS> 56,424,294
<CURRENT-LIABILITIES> 17,579,074
<BONDS> 12,450,356
131,484
0
<COMMON> 0
<OTHER-SE> 26,224,169
<TOTAL-LIABILITY-AND-EQUITY> 56,424,294
<SALES> 66,228,124
<TOTAL-REVENUES> 66,228,124
<CGS> 52,386,882
<TOTAL-COSTS> 52,386,882
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 48,000
<INTEREST-EXPENSE> 553,100
<INCOME-PRETAX> 757,191
<INCOME-TAX> 303,000
<INCOME-CONTINUING> 454,191
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 454,191
<EPS-PRIMARY> 0
<EPS-DILUTED> .09
</TABLE>
