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, 1997
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 July 3, 1997 was 5,209,801
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MAY 31, 1997
INDEX
Page
Number
Part I Financial Information
Item 1. Financial Information
Consolidated Statements of Operations -
Six Months and Three Months Ended May 31, 1997
(Unaudited) and 1996 (Unaudited) 3
Consolidated Balance Sheets -
May 31, 1997 (Unaudited) and November 30, 1996 4-5
Consolidated Statements of Cash Flows
Six Months Ended May 31, 1997 (Unaudited)
and 1996 (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
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
Six Months Ended May 31, Three Months Ended May 31,
------------------------ ---------------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET SALES $77,825,788 $66,228,124 $39,821,160 $36,340,703
COST OF GOODS SOLD 62,462,862 52,386,882 31,792,012 28,794,973
-------------------------- ------------------------
GROSS PROFIT 15,362,926 13,841,242 8,029,148 7,545,730
-------------------------- ------------------------
OPERATING EXPENSES
Selling, shipping and warehouse 9,162,736 8,229,921 4,661,284 4,406,628
General and administrative 4,682,507 4,301,030 2,326,757 2,294,530
Interest and financing costs
(net of interst income of $83,180
in 1997, $ 42,157 in 1996) 348,296 553,100 248,557 238,997
-------------------------- ----------------------
Total operating expenses 14,193,539 13,084,051 7,236,598 6,940,155
-------------------------- ----------------------
INCOME BEFORE INCOME TAXES 1,169,387 757,191 792,550 605,575
PROVISION FOR INCOME TAXES 491,100 303,000 332,800 239,300
-------------------------- ----------------------
NET INCOME $678,287 $454,191 $459,750 $366,275
========================== ======================
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $0.11 $0.09 $0.07 $0.07
========================== ======================
NUMBER OF SHARES USED IN
COMPUTING EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE 6,159,273 5,565,792 6,169,202 5,632,540
========================== ======================
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, 1997 November 30,
(UNAUDITED) 1966
------------ ------------
<TABLE>
CURRENT ASSETS
<S> <C> <C>
Cash $337,505 $1,513,750
Accounts receivable, less allowance for
doubtful accounts, of $688,744 in May
1997 and $686,179 in November 1996 31,978,406 31,280,932
Inventory 15,332,189 13,488,244
Deferred income taxes 781,500 781,500
Prepaid expenses and other current assets 420,524 875,451
Prepaid income taxes 329,918
---------- ----------
Total current assets 48,850,124 48,269,795
PROPERTY, PLANT AND EQUIPMENT - at cost
net of accumulated depreciation and
amortization of $3,985,700 at May 97
and $3,433,070 at November 1996 3,695,080 3,758,348
INTANGIBLE ASSETS - net of accumulated
amortization of $ 1,370,659 at May 1997
and $3,433,070 at November 1996 8,753,158 8,254,087
OTHER ASSETS 161,586 161,586
----------- ----------
$61,459,948 $60,443,816
=========== ===========
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
May 31, 1997 November 30,
(UNAUDITED) 1996
------------- ------------
CURRENT LIABILITIES:
Current maturities of
long term debt $407,755 $432,755
Accounts payable 17,573,713 17,182,644
Income taxes payable 91,690
Accrued expenses and
sundry liabilities 2,183,534 2,542,174
----------- -----------
Total current liabilities 20,256,692 20,157,573
LONG-TERM DEBT, net of
current maturities 8,754,966 8,714,567
DEFERRED INCOME TAXES 179,911 179,911
----------- -----------
Total Liabilities 29,191,569 29,052,051
----------- -----------
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 - 5,113,149 in May 1997
- 5,062,115 in November 1996 153,394 151,863
Capital in excess of par value 21,151,332 20,954,536
Retained earnings 10,964,817 10,286,530
Less: Cost of 1,167 shares of common
stock in treasury (1,164) (1,164)
----------- -----------
Total stockholders' equity 32,268,379 31,391,765
----------- -----------
$61,459,948 $60,443,816
=========== ===========
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)
Six Months Ended May 31,
------------------------
1997 1996
------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $678,287 $454,191
---------- -----------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Expenses not requiring the use of cash:
Depreciation and amortization 768,029 547,208
Provision for losses on
accounts receivable 2,565 60,012
Changes in assets and liabilities,
Accounts receivable (700,039) (775,882)
Inventory (1,843,945) (1,425,617)
Prepaid expenses and other current
assets 454,927 2,788
Other assets (353,517)
Prepaid income taxes 329,918 301,531
Accounts payable 391,069 4,074,209
Income taxes payable 91,690
Accrued expenses and sundry
liabilities (358,640) (176,181)
------------ -----------
(864,426) 2,254,551
------------ -----------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (186,139) 2,708,742
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants 60,192
Exercise of employee stock options 198,327 151,525
Net repayments under revolving
loan agreements (500,000) (3,500,000)
Repayment of long-term debt (416,150) (244,386)
Proceeds of long term debt 931,549
------------ ------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES $213,726 $(3,532,669)
------------ ------------
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 $(494,510) $(127,662)
Payments for intangible assets (709,322) (573,971)
------------ -----------
NET CASH USED IN INVESTING ACTIVITIES (1,203,832) (701,633)
------------ -----------
NET DECREASE IN CASH (1,176,245) (1,525,560)
CASH-beginning of period 1,513,750 2,817,285
------------ -----------
CASH-end of period $337,505 $1,291,725
============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $431,476 $595,257
============ ==========
Income taxes $69,491 $65,524
============ ==========
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, 1997
(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, 1996, 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 - PROPOSED MERGER WITH HENRY SCHEIN, INC.
On March 7, 1997, the Company entered into an agreement and plan of merger
whereby HSI Acquisition Corp., a wholly-owned subsidiary of Henry Schein,
Inc.("Schein"), will merge into the Company. The Company will be the surviving
corporation as a subsidiary of Schein. Schein is a marketer of healthcare
products and services to office-based healthcare practitioners including
dental practices and laboratories, physician practices and veterinary clinics
in the North American and European markets. As a result of the transaction,
outstanding shares of the Company's common stock will be exchanged at a rate
of .62 shares of Schein's common stock for each outstanding share of the
Company. Existing options and warrants will be exchanged for Schein's options
and warrants at the same rate. It is intended that the merger shall qualify as
a tax free reorganization for income tax purposes and accounted for as a
pooling of interests for financial reporting purposes.
The completion of the transaction is subject to approval by the Company's
shareholders and further, all dissenting shares shall not constitute more than
9% of the Company's outstanding common stock immediately prior to the
effective date of the merger.
For additional information on this plan of merger reference is made to the
Company's Form 10K for its year ended November 30, 1996.
NOTE D - EARNINGS PER 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.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
MAY 31, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
__________________________________________________
RESULTS OF OPERATIONS
_____________________
For the six months ended May 31, 1997, net sales increased 17.5% as
compared with the prior year. For the three months ended May 31, 1997, net
sales increased 9.6% as compared with the prior year. The increase in net
sales resulted from the Company's increased volume to hospitals, the
acquisition of Stone Medical Supply Corporation and our continuing effort to
increase market penetration and sales volume to our existing customer base and
the addition of new customers. For the six months and three months ended May
31, 1997 and 1996, 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 20.9% to 19.7%
for the six month period ended May 31, 1997 and decreased from 20.8% to 20.2%
for the three month period ended May 31, 1997 when compared to the prior
period due to increased sales to hospitals and changes in the product mix.
Selling, shipping and warehouse and general and administrative expenses
expressed as a percent of net sales decreased 1.1% for the six months ended
May 31, 1997 and decreased .9% for the three months ended May 31, 1997 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 .4% for the six month period ended May 31, 1997 and decreased
by less than .1% for the three month period ended May 31, 1997 when compared
to the prior period as a result of using the proceeds from last year's
conversion of outstanding warrants to decrease long-term debt and an increase
in interest income.
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<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
MAY 31, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
__________________________________________________
LIQUIDITY AND CAPITAL RESOURCES
_______________________________
During the six months ended May 31, 1997 and 1996, the Company continued
to meet its cash needs via cash flow from operations and borrowings.
During the first six months of fiscal 1997 and fiscal 1996, the Company
had an average of approximately $19,500,000 and $12,700,000, respectively,
of unused credit lines available each month over its normal operating
requirements.
For the six months ended May 31, 1997, the Company used cash from operating
activities. The increase in inventory and accounts receivable and a decrease
in accrued expenses over and above an increase in accounts payable and a
decrease in prepaid expenses contributed to the Company's use of cash. 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. During the six months ended May 31, 1997, the Company provided cash from
its financing activities as a result of the proceeds from the exercising of
employee stock options and the proceeds from a capitalized lease agreement
over and above net repayments of the bank loan under its long-term credit
agreement and other long-term debt. For the six months ended May 31, 1996, the
Company's financing activities used cash as a result of net repayments of the
bank loan under its long-term credit agreement and repayments of other long-
term debt. During the six months ended May 31, 1997 and 1996, the Company's
investing activities used cash to make capital expenditures and payments for
intangible assets.
Management believes that its working capital of approximately $28,600,000
at May 31, 1997 provides sufficient liquidity for its short and long-term
requirements and that the Company's long-term liquidity is not materially
affected 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 1997.
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<PAGE>
MICRO BIO-MEDICS, INC AND SUBSIDIARIES
NOTES TO FORM 10-Q
MAY 31, 1997
(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 three months ended May 31, 1997.
- 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: July 8, 1997 /s/ Bruce J. Haber
__________________ _________________________
Bruce J. Haber President
and Chief Executive
Officer
Date: July 8, 1997 /s/ Stuart F. Fleischer
__________________ ________________________
Stuart F. Fleischer
Vice-President - Finance
and Chief Financial
Officer
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</TABLE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
FORM 10-Q
MAY 31, 1997
(UNAUDITED)
_______________________________________
Exhibit 11
Computation of Earnings per Common and Common Equivalent Share
<TABLE>
Six Months Ended Three Months Ended
May 31, May 31,
------------------ --------------------
1997 1996 1997 1996
------------------ -------------------
Earnings
<S> <C> <C> <C> <C>
Net income $ 678,287 $ 454,191 $ 459,750 $ 366,275
Modified treasury stock method
Incremental income 59,709 14,779
-------- -------- -------- --------
Adjusted net income $ 678,287 $ 513,900 $ 459,750 $ 380,054
======== ======== ======== ========
Shares
Weighted average number of
common shares outstanding 5,084,296 4,116,592 5,103,526 4,213,002
Additional shares assuming
conversion of stock options
and warrants utilizing the
modified treasury stock
method 1,074,977 1,449,200 1,065,676 1,419,538
_________ _________ _________ _________
Number of common and common
equivalent shares 6,159,273 5,565,792 6,169,202 5,632,540
========= ========= ========= =========
Earnings per common
and common equivalent share $.11 $.09 $.07 $.07
===== ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> MAY-31-1997
<CASH> 337,505
<SECURITIES> 0
<RECEIVABLES> 32,667,150
<ALLOWANCES> 688,744
<INVENTORY> 15,332,189
<CURRENT-ASSETS> 48,850,124
<PP&E> 7,680,780
<DEPRECIATION> 3,985,700
<TOTAL-ASSETS> 61,459,948
<CURRENT-LIABILITIES> 20,256,692
<BONDS> 8,754,966
0
0
<COMMON> 153,394
<OTHER-SE> 32,114,985
<TOTAL-LIABILITY-AND-EQUITY> 61,459,948
<SALES> 77,825,788
<TOTAL-REVENUES> 77,825,788
<CGS> 62,462,862
<TOTAL-COSTS> 62,462,862
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 48,000
<INTEREST-EXPENSE> 348,296
<INCOME-PRETAX> 1,169,387
<INCOME-TAX> 491,000
<INCOME-CONTINUING> 678,287
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 678,287
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
