<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 February 29, 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 of (I.R.S. Employer Identification No.)
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
---------------
- --------------------------------------------------------------------
(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 April 3, 1996 was 4,176,473.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED FEBRUARY 29, 1996
INDEX
-----
Page
Number
------
Part I Financial Information
Item 1. Financial Information
Consolidated Statements of Operations -
Three Months Ended February 29, 1996 (Unaudited)
and 1995 (Unaudited) 3
Consolidated Balance Sheets -
February 29, 1996 (Unaudited) and November 30, 1995 4-5
Consolidated Statements of Cash Flows
Three Months Ended February 29, 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
Exhibits 13-14
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
( UNAUDITED )
--------------------------------------------
Three Months Ended
--------------------------
February 29, February 28,
1996 1995
----------- -----------
NET SALES $29,887,421 $24,868,640
COST OF GOODS SOLD 23,591,909 19,704,509
-------------------------
GROSS PROFIT 6,295,512 5,164,131
-------------------------
OPERATING EXPENSES
Selling, shipping and warehouse 3,823,293 3,399,879
General and administrative 2,006,500 1,836,359
Interest and financing costs
(net of interest income of $ 35,728
in 1996, $ 55,067 in 1995) 314,103 311,871
-------------------------
Total operating expenses 6,143,896 5,548,109
-------------------------
INCOME (LOSS) BEFORE INCOME TAXES 151,616 (383,978)
PROVISION (BENEFIT) FOR INCOME TAXES 63,700 (161,300)
-------------------------
NET INCOME ( LOSS ) $87,916 ($222,678)
-------------------------
-------------------------
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE $ .02 $ (.06)
NUMBER OF SHARES USED IN
COMPUTING EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE 5,499,024 3,602,240
-------------------------
-------------------------
DIVIDENDS PER COMMON SHARE None None
-------------------------
-------------------------
The notes to financial statements are made a part hereof.
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MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------------------
ASSETS
--------
<TABLE>
<CAPTION>
February 28,
1995 November 30,
(UNAUDITED) 1995
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash $1,841,803 $2,817,285
Accounts receivable, less allowance for
doubtful accounts, of $774,921 in February
1996 and $674,210 in November 1995 27,443,389 25,657,607
Inventory 11,979,529 12,318,756
Deferred income taxes 485,500 485,500
Prepaid expenses and other current assets 745,512 657,768
Loan receivable 342,227
Prepaid income taxes 473,455 471,710
------------ ------------
Total current assets 43,311,415 42,408,626
PROPERTY, PLANT AND EQUIPMENT - at cost
net of accumulated depreciation and
amortization of $4,065,799 at February 1996
and $3,616,134 at November 1995 3,938,629 3,477,807
INTANGIBLE ASSETS - net of accumulated
amortization of $1,149,933 at February 1996
and $1,061,323 at November 1995 7,706,814 4,990,073
LOAN RECEIVABLE 80,000
OTHER ASSETS 165,205 259,206
------------ ------------
$55,202,063 $51,135,712
============ ============
</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
---------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
<TABLE>
<CAPTION>
February 29,
1996 November 30,
(UNAUDITED) 1995
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of
long term debt $490,017 $479,195
Accounts payable 12,617,907 10,297,403
Accrued expenses and
sundry liabilities 1,614,985 1,666,762
----------- -----------
Total current liabilities 14,722,909 12,443,360
LONG-TERM DEBT, net of
current maturities 15,998,722 17,270,062
DEFERRED INCOME TAXES 39,211 358,138
----------- -----------
Total Liabilities 30,760,842 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 - 4,170,759 in February 1996
- 3,878,804 in November 1995 125,122 116,364
Capital in excess of par value 15,687,652 12,407,257
Retained earnings 8,629,611 8,541,695
Less: Cost of 1,167 shares of common
stock in treasury ( 1,164) ( 1,164)
------------- ------------
Total stockholders' equity 24,441,221 21,064,152
------------- ------------
$55,202,063 $51,135,712
============= ============
</TABLE>
The notes to financial statements are made a part hereof.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
---------------------------------------
Three Months Ended
February 29, February 28,
------------ ------------
1996 1995
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ( Loss ) $87,916 ($222,678)
------------ -----------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Expenses not requiring the use of cash:
Depreciation and amortization 282,711 235,383
Provision for losses on
accounts receivable 5,701 17,350
Exercise of employee stock options
Changes in assets and liabilities,
net of effect of asset acquisitions
Due to seller (122,590)
Accounts receivable (505,445) 3,347,196
Inventory 310,648 146,165
Prepaid expenses and other current
assets (29,315) (441,232)
Other assets (328,226) 209,621
Prepaid income taxes 62,154
Accounts payable 1,219,346 (3,532,974)
Accrued expenses and sundry
liabilities (216,319) (376,281)
------------ ------------
801,255 (517,362)
------------ ------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 889,171 (740,040)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants 41,022 32,460
Exercise of employee stock options 20,125 107,132
Net borrowings (repayments) under
revolving loan agreements (1,500,000) (400,000)
Repayment of long-term debt (158,446) (124,260)
------------ ------------
NET CASH BY (USED IN)
FINANCING ACTIVITIES (1,597,299) (384,668)
------------ ------------
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)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (267,354) (145,820)
------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES (267,354) (145,820)
------------ ------------
NET ( DECREASE ) IN CASH (975,482) (1,270,528)
CASH-beginning of period 2,817,285 3,333,345
------------ ------------
CASH-end of period $1,841,803 $2,062,817
------------ ------------
------------ ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $349,831 $366,938
------------ ------------
------------ ------------
Income taxes $1,500 $48,060
------------ ------------
------------ ------------
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
FEBRUARY 29, 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 with 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 three month
period ended February 29, 1996 was computed based upon the Modified
Treasury Stock Method. Loss per share for the three month period ended
February 28, 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
FEBRUARY 29, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
For the three months ended February 29, 1996 net sales increased 20.2% from the
prior year. The increase in net sales resulted from our continuing effort to
increase market penetration and sales volume to our existing customer base, the
addition of new customers and the acquisition of Stone Medical Supply
Corporation. For the three months ended February 29, 1996, the introduction of
new products, changing prices and inflation had no material impact on the
Company's operations.
OPERATING EXPENSES
- ------------------
Gross Profit expressed as a percent of net sales increased from 20.8% to 21.1%
for the three month period ended February 29, 1996 due to changes in the product
mix. Selling, shipping and warehouse and general and administrative expenses
expressed as a percent of net sales decreased 1.6% for the three months ended
February 29, 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 .2% for the three months ended February 29, 1996 when compared to the
prior period as a result of decreases in the interest rates charged by financial
institutions.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
FEBRUARY 29, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the three months ended February 29, 1996 the Company continued to meet
its cash needs via cash flow from operations and borrowings. During
the three months ended February 29, 1996 and 1995 the Company had an average of
approximately $12,300,000 and $10,300,000, respectively, of unused credit lines
available each month over its normal operating requirements.
For the three months ended February 29, 1996, the Company provided cash from
operating activities. The increase in accounts payable and accounts receivable
over and above a decrease in inventory contributed to the Company's cash. For
the three months ended February 28, 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 three months ended February 29, 1996 and
February 28, 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 $28,600,000 at
February 29, 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 meet its cash commitments through fiscal 1996.
- 10 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO FORM 10-Q
FEBRUARY 29, 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 Registrant
during the quarter ended February 29, 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: April 8, 1996
------------------ ---------------------
Bruce J. Haber President
and Chief Executive
Officer
Date: April 8, 1996
------------------ ---------------------
Stuart F. Fleischer
Vice-President - Finance
and Chief Financial
Officer
- 12 -
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
FORM 10-Q
FEBRUARY 29, 1996
(UNAUDITED)
----------------------------------------
Exhibit 11
- -------------
Computation of Earnings per Common and Common Equivalent Share
----------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
February 29,
--------------------
1996 1995
---- ----
Earnings
- -----------
<S> <C> <C>
Net income (loss) $ 87,916 ($ 222,678)
Modified Treasury Stock Method
- ---------------------------------
Incremental income 44,930
----------- ----------
Adjusted income before cumulative effect
of accounting change $ 132,846 ($ 222,678)
----------- -----------
----------- -----------
Shares
- ------
Weighted average number of
common shares outstanding 4,020,182 3,602,240
Additional shares assuming conversion of:
Stock options and warrants utilizing the
modified treasury stock method 1,478,842
---------- ----------
Number of common and common
equivalent shares 5,499,024 3,602,240
--------- ----------
--------- ----------
(Loss) Earnings per common and common
equivalent share $.02 ($.06)
--------- ----------
--------- ----------
</TABLE>
-13-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 1,841,803
<SECURITIES> 0
<RECEIVABLES> 28,218,310
<ALLOWANCES> 774,921
<INVENTORY> 11,979,529
<CURRENT-ASSETS> 43,311,415
<PP&E> 8,004,428
<DEPRECIATION> 4,065,799
<TOTAL-ASSETS> 55,202,063
<CURRENT-LIABILITIES> 14,722,909
<BONDS> 15,998,722
125,122
0
<COMMON> 0
<OTHER-SE> 24,316,099
<TOTAL-LIABILITY-AND-EQUITY> 55,202,063
<SALES> 29,887,421
<TOTAL-REVENUES> 29,887,421
<CGS> 23,591,909
<TOTAL-COSTS> 23,591,909
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 24,000
<INTEREST-EXPENSE> 314,103
<INCOME-PRETAX> 151,616
<INCOME-TAX> 63,700
<INCOME-CONTINUING> 87,916
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,916
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
