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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
DECEMBER 31, 1997 (DECEMBER 29, 1997)
QUEST MEDICAL, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
TEXAS 0-10521 75-1646002
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION)
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201 ALLENTOWN PARKWAY
ALLEN, TEXAS 75002
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(972) 390-9800
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ITEM 5. OTHER EVENTS.
On December 30, 1997, Quest Medical, Inc. announced that it has agreed
to sell its cardiovascular and intravenous fluid delivery products division to
Atrion Corporation (the "Sale"). The Press Release announcing the agreement is
filed herewith as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Press Release dated December 30, 1997, relating to the Sale.
2
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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.
Dated: December 31, 1997 QUEST MEDICAL, INC.
By: /s/ F. Robert Merrill III
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F. Robert Merrill III
Senior Vice President - Finance,
Secretary and Treasurer
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INDEX TO EXHIBITS
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Exhibit
Number Description
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<S> <C>
99.1 Press Release dated December 30, 1997 relating to the Sale.
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[QUEST MEDICAL, INC. LETTERHEAD]
FOR IMMEDIATE RELEASE
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For Further Information:
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
F. Robert Merrill Karl Plath Kate Rajeck
Sr. Vice President Finance General Inquiries Analyst Inquiries
972 390-9800 / Ext: 204 312 640-6738 415 986-1591
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QUEST MEDICAL ANNOUNCES SALE OF CARDIOVASCULAR DIVISION
DALLAS, DECEMBER 30, 1997 - QUEST MEDICAL, INC. (NASDAQ: QMED), a manufacturer
of proprietary products for the healthcare industry, announced today that it has
agreed to sell its cardiovascular and intravenous fluid products division,
including the Myocardial Protection System(R) product line, to Atrion
Corporation (NASDAQ: ATRI). The transaction is expected to close in January
1998. Quest will receive approximately $24.5 million in cash (subject to certain
purchase price adjustments) for the division. Quest has also granted Atrion a
nine-month option to purchase Quest's Allen, Texas manufacturing facility and
corporate headquarters for $6.5 million. Quest will lease space in the Allen
facility to Atrion during a transition period. Atrion has stated that it will
relocate its executive offices to the Allen facility. If Atrion purchases the
facility, Quest would relocate its Advanced Neuromodulation System ("ANS")
business to a new location in the North Dallas area. As part of the transaction,
approximately 130 Quest employees will accept employment with Atrion, including
certain executive officers. Other employees and executive officers (about 100 in
number) will stay with Quest.
The cardiovascular division generated approximately $14.7 million in
revenues in the year ended December 31, 1996 and $10.8 million in revenues in
the nine months ended September 30, 1997.
As announced in a press release dated December 15, 1997, Quest will
continue to operate its profitable and growing ANS business. Revenue for the ANS
division was $11.4 million for 1996 and $10.8 million for the first nine months
of 1997, and increased 46 percent in the third quarter over the comparable 1996
quarter and 30 percent for the nine months ended September 30 compared to the
prior year nine month period. ANS earnings before interest, taxes, depreciation
and amortization for the nine months of 1997 was $2,949,000 (excluding a second
quarter 1997 pretax write-off for ANS inventory of previous designs of
$479,000).
Quest will use approximately $9 million of the cash proceeds to pay off
debt and the expenses of the transaction. Following the transaction, Quest will
have approximately $15 million in cash and no debt other than its Allen facility
mortgage. If Atrion exercises the
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purchase option on the Allen facility, Quest would receive another $2.7 million
in net proceeds after paying off the mortgage. Quest's Board of Directors said
that it will consider using a portion of the transaction proceeds to implement a
stock repurchase program.
"We believe this transaction is a good one for Quest/ANS because it
allows us to focus our efforts on the ANS business and, with our strengthened
balance sheet, to capitalize on significant market opportunities in the
neuromodulation market, without the distractions of maintaining the
cardiovascular business. We intend to not only enhance our existing
radio-frequency (RF) product line with advanced RF technology, but also to
expand our product line to include an implantable pulse generator (IPG). IPG
products currently account for approximately 80% of the units sold in the spinal
cord stimulation market. We are also very interested in expanding the use of our
ANS products to address other neurological-related health problems, including
motor disorders, Parkinson's Disease and angina," commented F. Robert Merrill
III, the Company's acting CEO.
Quest Medical designs, develops, manufactures and markets a variety of
healthcare products used primarily in neuromodulation, cardiovascular surgery
and intravenous fluid delivery applications.
The following is a "safe harbor" statement under the Private Securities
Litigation Reform Act of 1995: Statements contained in this document that are
not based on historical facts are "forward-looking statements". Terms such as
"anticipate", "believe", "estimate", "expect", "predict" and similar expressions
are intended to identify forward-looking statements. Such statements are by
nature subject to uncertainties and risks, including but not limited to, whether
a stock repurchase program will be approved by the Board of Directors, and other
risks detailed from time to time in the Company's SEC public filings.
