SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
[x] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934.
For the Period ended June 30, 1999.
OR
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
Commission File Number: 0-13143
INNOVEX, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1223933
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
530 Eleventh Avenue South, Hopkins, Minnesota 55343-9904
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 938-4155
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
As of August 5, 1999, 14,812,904 shares of the registrant's common stock, $.04
par value per share, were outstanding.
Exhibit Index, page 12
<PAGE>
PART 1: ITEM 1 FINANCIAL INFORMATION
INNOVEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
ASSETS (Unaudited) (Audited)
- ------ ----------- ---------
<S> <C> <C>
Current assets:
Cash and equivalents $ 24,463,014 $ 17,021,264
Short-term investments 34,485,000 40,434,000
Accounts receivable, less allowance for
doubtful accounts of $211,000 and $213,000 12,110,390 10,521,518
Inventories 6,325,947 5,717,330
Income taxes receivable -- 938,447
Other current assets 2,838,597 4,686,504
------------ ------------
Total current assets 80,222,948 79,319,063
Property, plant and equipment, net of accumulated depreciation
of $18,479,000 and $15,817,000 36,830,426 28,501,443
Intangible and other assets, net of accumulated amortization of
$419,000 and $2,236,000 904,445 1,831,343
------------ ------------
$117,957,819 $109,651,849
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Current maturities of long-term debt $ 65,000 $ 83,000
Accounts payable 5,193,350 3,688,148
Accrued compensation 1,297,266 1,604,845
Income taxes payable 1,452,624 --
Other accrued liabilities 1,058,586 875,140
------------ ------------
Total current liabilities 9,066,826 6,251,133
Long-term debt, less current maturities 605,908 755,024
Deferred income taxes 227,632 227,632
Stockholders' equity:
Common stock, $.04 par value; 30,000,000 shares authorized,
14,812,504 and 14,779,604 shares issued and outstanding 592,500 591,184
Capital in excess of par value 16,027,847 15,732,350
Retained earnings 91,437,106 86,094,526
------------ ------------
Total stockholders' equity 108,057,453 102,418,060
------------ ------------
$117,957,819 $109,651,849
============ ============
</TABLE>
See accompanying notes.
Page 2 of 13
<PAGE>
INNOVEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30,
1999 1998
---- ----
Net sales $ 20,636,068 $ 20,298,838
Costs and expenses:
Cost of sales 14,313,843 14,900,713
Selling, general and administrative 2,003,330 1,608,180
Engineering 924,137 884,260
Net interest (income) expense (543,561) (495,283)
Net other (income) expense 1,811,648 (30,695)
------------ ------------
Income before taxes 2,126,671 3,431,663
Provision for income taxes 617,000 1,021,000
------------ ------------
Net income $ 1,509,671 $ 2,410,663
============ ============
Net income per share:
Basic $ 0.10 $ 0.16
============ ============
Diluted $ 0.10 $ 0.16
============ ============
Weighted average shares outstanding:
Basic 14,804,630 14,713,817
============ ============
Diluted 15,060,356 15,115,344
============ ============
Nine Months Ended June 30,
1999 1998
---- ----
Net sales $ 63,367,708 $ 78,412,668
Costs and expenses:
Cost of sales 43,183,819 51,056,349
Selling, general and administrative 6,538,951 5,598,987
Engineering 2,867,831 3,283,842
Net interest (income) expense (1,425,299) (1,298,550)
Net other (income) expense 2,280,867 (107,428)
------------ ------------
Income before taxes 9,921,539 19,879,468
Provision for income taxes 2,878,000 5,933,000
------------ ------------
Net income $ 7,043,539 $ 13,946,468
============ ============
Net income per share:
Basic $ 0.48 $ 0.95
============ ============
Diluted $ 0.47 $ 0.92
============ ============
Weighted average shares outstanding:
Basic 14,792,330 14,669,848
============ ============
Diluted 15,085,692 15,153,960
============ ============
See accompanying notes.
Page 3 of 13
<PAGE>
INNOVEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,043,539 $ 13,946,468
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,046,373 4,847,995
Other non-cash charges (credits) 750,516 155,470
Changes in operating assets and liabilities:
Accounts receivable (1,588,872) 10,918,625
Inventories (608,617) 1,080,843
Other current assets 1,847,906 (500,090)
Accounts payable 1,505,202 (1,678,701)
Other liabilities (124,133) (1,163,893)
Income taxes payable 2,391,071 20,973
------------ ------------
Net cash provided by (used in) operating activities 16,262,985 27,627,690
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,809,747) (10,754,386)
Proceeds from sale of assets 610,773 1,163,522
Purchase of held-to-maturity securities (28,120,000) (38,769,000)
Maturities of held-to-maturity securities 34,069,000 21,725,000
------------ ------------
Net cash provided by (used in) investing activities (7,249,974) (26,634,864)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (167,116) (196,592)
Proceeds from exercise of stock options 296,813 783,980
Dividends paid (1,700,958) (1,466,808)
------------ ------------
Net cash provided by (used in) financing activities (1,571,261) (879,420)
Increase (decrease) in cash and equivalents 7,441,750 113,406
Cash and equivalents at beginning of year 17,021,264 9,442,620
------------ ------------
Cash and equivalents at end of period $ 24,463,014 $ 9,556,026
============ ============
</TABLE>
SUPPLEMENTAL DISCLOSURES:
The Company considers all highly liquid investments with a maturity date of
three months or less when purchased to be "cash equivalents."
Cash paid for interest was $54,000 and $50,000 in 1999 and 1998, respectively.
Income tax payments were $1,875,000 and $5,913,000 in 1999 and 1998,
respectively.
See accompanying notes.
Page 4 of 13
<PAGE>
INNOVEX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions on Form 10-Q and do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. The unaudited condensed
consolidated financial statements include the accounts of Innovex, Inc. and its
subsidiaries (the "Company") after elimination of all significant intercompany
transactions and accounts. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of operating results have been made. Operating results for interim periods are
not necessarily indicative of results that may be expected for the year as a
whole. The Company utilizes a fiscal year that ends on the Saturday nearest to
September 30. For clarity of presentation, the Company has described all periods
as if they end at the end of the calendar quarter. For further information,
refer to the consolidated financial statements and footnotes included in the
registrant's annual report on Form 10-K for the year ended September 30, 1998.
NOTE 2 - EARNINGS PER SHARE
The Company's basic net income per share is computed by dividing net income by
the weighted average number of outstanding common shares. The Company's diluted
net income per share is computed by dividing net income by the weighted average
number of outstanding common shares and common share equivalents relating to
stock options when dilutive. Options to purchase 209,550 and 185,150 shares of
common stock with weighted average exercise prices of $24.83 and $26.32,
respectively, were outstanding during the three and nine month periods ending
June 30, 1999, but were excluded from the computation of common share
equivalents because they were not dilutive. Options to purchase 196,250 and
212,750 shares of common stock with weighted average exercise prices of $28.76
and $29.39, respectively, were outstanding during the three and nine month
periods ending June 30, 1998, but were excluded from the computation of common
share equivalents because they were not dilutive.
Page 5 of 13
<PAGE>
PART I: ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE COMPANY
On July 7, 1999, the Company commenced a tender offer to purchase all of the
issued and outstanding stock of ADFlex Solutions, Inc. ("ADFlex") at a purchase
price of $3.80 per share. The tender offer closed on August 3, 1999.
Approximately 76% of the outstanding shares of ADFlex were tendered in response
to the offer. On August 9, 1999, the Company consummated the purchase of the
tendered shares. The remaining approximately 24% of ADFlex issued and
outstanding stock not tendered in response to the tender offer will be acquired
by the Company through a merger transaction, which transaction will be completed
by the end of September, 1999. The total purchase price for all of the issued
and outstanding stock of ADFlex will be approximately $34,000,000. The Company
is in the process of obtaining credit facilities totaling in principal amount
$40,000,000, which credit facilities will upon consummation of the merger
transaction be utilized to refinance ADFlex's outstanding debt, pay down current
liabilities, and pay related transaction costs. ADFlex is a leading supplier of
flexible circuit based solutions to the computer, computer peripheral,
communications, and consumer electronics industries. Applications for these
flex-based interconnects include cellular phones, hard disk drives, other
storage systems, high end consumer products, notebook computers, pagers, and
personal communication systems.
Prior to July 28, 1998, Innovex, Inc. and its subsidiaries (the "Company")
operated through three divisions, Precision Products (Precision), Litchfield
Precision Components (LPC) and Iconovex. Each division had its own
administrative, engineering, manufacturing and marketing organizations. During
the quarter ending September 30, 1998, the Company combined the operations of
its two core operating divisions, Precision and LPC into one operating division,
Innovex Precision Components. The combination merged the rapidly growing LPC
flexible circuit fabrication and chemical etching operations with Precision's
high volume manufacturing expertise. The combination also allowed Innovex to
leverage Precision's disk drive industry market and trade knowledge to disk
drive industry flexible circuit applications.
Prior to the divisional combination, the largest division, Precision Products,
developed, engineered and manufactured specialty precision electromagnetic
products for original equipment manufacturers ("OEM's"). Lead wire assemblies
for the thin film disk drive market were the Division's primary product. Lead
wire assemblies are fine twisted magnet wires that connect the back end
electronics of a disk drive with the inductive or magneto resistive thin film
heads that read and write information on the disk.
The Litchfield Precision Components Division, prior to the divisional
combination, designed and manufactured highly complex flexible circuitry and
chemically machined components, primarily for the computer and medical
industries. The Company purchased Litchfield Precision Components, Inc. on May
16, 1996. This acquisition provided an entry into the large and rapidly growing
high-end flexible circuit market. LPC is one of a limited number of operations
in the world able to produce flexible circuits with line and spacing tolerances
of less than 2 mils for these applications.
The Iconovex Division was established in fiscal 1994 to market and further
develop a technologically advanced software product purchased in November 1993.
The core software utilizes syntactical analysis to recognize meanings and
relationships among words and phrases in order to prepare indexes and abstracts
of electronically stored information. In October 1997, Iconovex became the 51%
owner of a joint venture with Solutions Corporation of America. Operations of
both Iconovex and Smart Solution, which produced an immaterial portion of the
Company's revenue, have been discontinued and the Company is exploring
alternatives for the sale of the division.
On June 1, 1998 the Company sold the assets of its InnoMedica Division. This
division, which produced an immaterial portion of the Company's revenue,
provided contract development and
Page 6 of 13
<PAGE>
manufacturing services primarily to the medical device industry as well as
pacing/defibrillation leads and adapters for the implantable bradycardia and
tachacardia industry.
RESULTS OF OPERATIONS
NET SALES
- ---------
The Company's net sales from operations totaled $20,636,000 for the quarter, up
2% from $20,299,000 reported in fiscal 1998. Sales of $63,368,000 for the nine
months ended June 30, 1999 decreased 19% from the prior year period. The
decrease in net sales for the first nine months of fiscal 1999 was due to
continued disk drive industry softness. This softness appears to be due to an
over supply of disk drives and due to a reduction in the number of disk drives
kept in inventory by computer manufacturers that have adopted a build to order
business model. Also contributing to the sales decrease was a reduction in the
average number of heads per disk drive. This reduction is the result of an
increasing number of low cost disk drives being sold and as a result of the use
of magneto resistive (MR) and Giant Magneto Resistive (GMR) disk drive heads
which increase the storage capacity per disk drive platter and reduce the number
of heads required to provide the same disk drive capacity. The current quarter
was also impacted by the transition of the disk drive industry from traditional
lead wire interconnects to integrated interconnects including the Company's Head
Interconnect Flex (HIF).
During the fiscal 1999 third quarter, the Company experienced increases in
revenue from flexible circuits of 25% over the prior quarter and 167% over the
same quarter last year. Offsetting this increase was a material decline in the
shipments of wire interconnects during the quarter. This product transition
resulted in 80% of the fiscal 1999 third quarter revenue being generated from
the sale of flexible circuits as compared to 63% for the prior quarter and 25%
for the 1998 fiscal year.
Over 80% of the Company's total revenue continues to be from disk drive industry
interconnects. Through the acquisition of ADFlex, the Company prospectively will
reduce its dependence on the disk drive industry to less than 60% of total
revenue. An increasing portion of the Company's sales will be generated by the
sale of high-end flexible circuits. The market for high-end flexible circuits is
increasing due to new semiconductor packaging substrate applications and
increased use of flexible circuit products in the disk drive industry. These
products include the Company's Head Interconnect Flex (HIF), Flex Suspension
Assembly(FSA) and Bridge Flex. The magnitude of the increase in sales will
depend on the timing and acceptance of the Company's new FSA and semiconductor
packaging flexible circuit substrate products.
GROSS MARGINS
- -------------
The Company's gross profit as a percent of sales for the quarter increased to
31%, from the 27% reported for the fiscal 1998 third quarter. The gross profit
as a percent of sales for the first nine months decreased to 32%, from the 35%
reported for the same period last year. The third quarter gross margin improved
as compared to the prior year as a result of increased fixed cost leverage due
to higher flexible circuit unit volume. The gross margin percent for the
nine-month period decreased primarily due to lower shipments of lead wire
assemblies that reduced the leverage of the fixed overhead costs related to
their production. Gross margins for the remainder of fiscal 1999 will be volume
and product mix dependent.
OPERATING EXPENSES
- ------------------
Operating expenses were 14.2% of sales for the current quarter, as compared to
12.3% in the prior year's third quarter. Operating expenses for the first nine
months of fiscal 1999 were 14.8%, up from 11.3% for the prior year's first nine
months. The increase in operating expenses as a percent of sales for the current
year is primarily due to the decrease in revenue and an increase in marketing,
professional and legal expenses. Total operating expenses also increased due to
an increase in marketing, professional and legal expenses.
Page 7 of 13
<PAGE>
OPERATING PROFIT
- ----------------
Consolidated operating profit of $3,395,000 in the current quarter was up from
the $2,906,000 profit for the prior year third quarter. Consolidated operating
profit for the first nine months was $10,777,000 versus $18,473,000 for the same
period last year. The improvement for the quarter is the result of higher
flexible circuit sales increasing fixed cost leverage and a reduction in wire
production related fixed costs. The decrease in operating profit for the
nine-month period is primarily the result of the decreased sales volume.
NET INCOME
- ----------
Consolidated net income for the fiscal 1999 third quarter was $1,510,000 as
compared to $2,411,000 for the prior year. Basic and diluted net income per
share were $0.10 as compared to $0.16 for the prior year third quarter.
Consolidated net income for the first nine months of fiscal 1999 was $7,044,000
as compared to $13,946,000 for the prior year. Basic and diluted net income per
share were $0.48 and $0.47, respectively, as compared to $0.95 and $0.92 for the
same periods last year. Other expense for the quarter included charges of $1.7
million or $0.08 per diluted share related to the disposition of Iconovex,
Innovex's software division. Other expense for the nine-month period also
included $630,000 of charges related to the settlement of threatened litigation
by a former director of the Company. These charges reduced earnings per share by
$0.03 per diluted share.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash and short-term investments increased to $58.9 million at June 30, 1999 from
$57.5 million at September 30, 1998. This increase was primarily due to income
generated from operating activities more than offsetting capital expenditures.
Accounts receivable and inventory at June 30, 1999 increased by $1.6 million and
$0.6 million, respectively, from September 30, 1998 due to the increased level
of operating activity.
Working capital totaled $71.1 million and $73.1 million at June 30, 1999 and
September 30, 1998.
Since September 30, 1998, the Company has invested $13.8 million in capital
expenditures. These additions include FSA attachment equipment, computer system
enhancements and equipment to expand the high volume flexible circuit
manufacturing facility capacity. Capital expenditures of approximately $4
million are expected during the remainder of fiscal 1999 to increase the
Company's high volume flexible circuit manufacturing and FSA production
capacities and to begin construction of a facility to produce material for use
in flexible circuit manufacturing.
On August 9, 1999, the Company utilized $26 million to consummate the ADFlex
tender offer. An additional $8 million will be required to complete the merger
transaction prior to the end of September 1999. The Company is in the process of
obtaining credit facilities totaling in principal amount $40,000,000. These
credit facilities will, upon consummation of the ADFlex merger transaction, be
utilized to refinance ADFlex's outstanding debt, pay down current liabilities,
and pay related transaction costs. Management believes that internally generated
funds will provide the remaining sources of capital required to support
projected growth in fiscal 2000.
YEAR 2000 UPDATE
- ----------------
The Company is taking steps to ensure that it is not adversely affected by the
year 2000 equipment and software failures that may arise in software
applications and equipment with embedded logic where two-year digits are used to
define the applicable year. Our plan of action and current status follows:
YEAR 2000 STATE OF READINESS:
The Company's products do not contain embedded logic and, as such, they do not
pose any direct year 2000 problem. Innovex's internal operations utilize
computer hardware, software and some equipment with embedded logic and the
Company purchases raw materials from external sources. In order to prepare for
the year 2000, Innovex has formed an active year 2000 committee that is charged
with the
Page 8 of 13
<PAGE>
responsibility of securing year 2000 compliance to the fullest possible extent.
The process has been split into six major areas, information system hardware,
information system software, all other equipment with potential embedded logic,
critical vendors, critical customers and critical utilities and service
providers.
Information System Hardware:
The manufacturers of the Company's computer server and network hardware have
indicated that the equipment is year 2000 compliant. A plan to perform
comprehensive tests ensuring compliance has been developed and testing should be
complete by the end of September 1999. The Company's personal computers have
been tested to determine year 2000 compliance. Approximately 20 % of the
personal computers tested are currently not in compliance and will be replaced
or brought into compliance by the end of September 1999.
Information System Software:
The vendor for the Company's newly implemented primary manufacturing and
financial software has indicated that the software is year 2000 compliant. A
plan to perform comprehensive tests ensuring compliance of this software is
being developed and testing should be complete by the end of September 1999. As
the testing of personal computer hardware is being performed, the personal
computer operating systems and primary application software are being updated to
year 2000 compliant versions as specified by the software vendor. A listing of
all other personal computer resident application software has been prepared.
Vendors of software identified as not being year 2000 compliant are being
contacted to determine if any upgrades are required to bring the software into
year 2000 compliance. This process is scheduled for completion by the end of
September 1999.
Equipment With Potential Embedded Logic:
A list of all Company equipment with potential embedded logic was prepared. The
equipment was prioritized as Tier I - mission critical and Tier II - other
equipment. Information has been received from Tier I equipment manufacturers
indicating that over 90% of the Tier I equipment is year 2000 compliant. Year
2000 date remedies have been received from the manufacturers on much of the
remaining equipment. 95% of the Tier II equipment manufacturers have been
contacted and/or determined to be year 2000 compliant. The Company has a plan in
place to ensure compliance testing and remediation is completed by the end of
September 1999.
Critical Vendors:
A list of significant vendors was compiled. Letters were sent to these vendors
to determine the level of their year 2000 compliance. Approximately 90% have
replied and indicated that they are currently year 2000 compliant or will become
compliant during 1999. The Company is continuing its efforts to contact all
those vendors that have not yet responded to determine their level of compliance
by September 1999. Progress toward compliance of all vendors that are not yet
compliant will be monitored with alternative vendors identified if necessary.
Critical Customers:
A list of customers considered significant to the Company was compiled. Letters
were sent to these customers to determine the level of their year 2000
compliance. Approximately 65% have responded indicating full year 2000
compliance or have targeted their compliance by calendar third quarter 1999.
Many of the Company's customers are proceeding with their own Y2K compliance
plans as indicated by their request for information from the Company as a
supplier to them. Progress toward compliance of all customers that have not yet
indicated compliance will be monitored.
Utilities and Service Providers:
A list of utilities and service providers considered critical to the Company's
ongoing success has been compiled. These companies are being contacted to
determine their level of Y2K compliance. Most of these companies are in
regulated industries with stringent Y2K compliance requirements. The Company
does not anticipate that any significant problems will be identified in these
areas.
Page 9 of 13
<PAGE>
COSTS TO ADDRESS YEAR 2000 ISSUES:
The Company does not anticipate that the costs related to becoming year 2000
compliant will be material. Costs incurred to date are less than $50,000 and
future costs of consultants and equipment and software replacements and upgrades
are expected to be approximately $100,000. Costs of implementing the new
manufacturing and financial software are not considered related to the year 2000
issue.
RISKS OF THE COMPANY'S YEAR 2000 ISSUES AND CONTINGENCY PLANS:
Based on the progress of the Company's Year 2000 initiative, management believes
the potential of a significant year 2000 issue to be unlikely. The Company's
products do not contain embedded logic. The Company has recently implemented
year 2000 compliant primary manufacturing and financial software throughout its
operation. Dual sources for material are utilized or have been identified and
most manufacturing equipment was recently purchased and/or does not utilize date
sensitive embedded logic.
There can be no assurance that all non-complying equipment and software will be
identified and upgraded on a timely basis. In addition, there can be no
assurance that the Company's customers and suppliers will not be adversely
affected by their own Year 2000 issues, which may adversely affect the Company.
FORWARD LOOKING STATEMENTS
- --------------------------
Statements included in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, in letters to shareholders, elsewhere in
the Company's Form 10-Q and in future filings by the Company with the SEC,
except for historical information contained herein and therein, are "forward
looking statements" that involve risks and uncertainties, including the impact
of the ADFlex acquisition, timely availability and acceptance of new products,
the impact of competitive products and pricing, interruptions in the Company's
operations or those of its suppliers or major customers as such may be caused by
problems arising from the year 2000 and a general downturn in the Company's
principal market. The Company disclaims any obligation subsequently to revise
any forward-looking statements to reflect subsequent events or circumstances or
the occurrence of unanticipated events.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes in the Company's market risk during the
nine-month period ended June 30, 1999.
Page 10 of 13
<PAGE>
PART II - OTHER INFORMATION
Responses to Items 1 through 4 are omitted since these items are either
inapplicable or the response thereto would be negative.
ITEM 5. OTHER INFORMATION
On July 7, 1999, the Company commenced a tender offer to purchase all of the
issued and outstanding stock of ADFlex Solutions, Inc. ("ADFlex") at a purchase
price of $3.80 per share. The tender offer closed on August 3, 1999.
Approximately 76% of the outstanding shares of ADFlex were tendered in response
to the offer. On August 9, 1999, the Company consummated the purchase of the
tendered shares. The remaining approximately 24% of ADFlex issued and
outstanding stock not tendered in response to the tender offer will be acquired
by the Company through a merger transaction, which transaction will be completed
by the end of September 1999. The total purchase price for all of the issued and
outstanding stock of ADFlex will be approximately $34,000,000. The Company is in
the process of obtaining credit facilities totaling in principal amount
$40,000,000, which credit facilities will upon consummation of the merger
transaction be utilized to refinance ADFlex's outstanding debt, pay down current
liabilities, and pay related transaction costs.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
27 Financial Data Schedule
b) Reports on Form 8-K
None.
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.
INNOVEX, INC.
Registrant
Date: August 13, 1999
By \s\ Thomas W. Haley
Thomas W. Haley
Chief Executive Officer
By \s\ Douglas W. Keller
Douglas W. Keller
Vice President, Finance
Page 11 of 13
<PAGE>
INDEX TO EXHIBITS
Exhibits Page
27 Financial Data Schedule 13
Page 12 of 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS INCLUDED IN THE 10-Q FOR THE QUARTER ENDED JUNE
30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 24,463
<SECURITIES> 34,485
<RECEIVABLES> 12,321
<ALLOWANCES> 211
<INVENTORY> 6,326
<CURRENT-ASSETS> 80,223
<PP&E> 55,309
<DEPRECIATION> 18,479
<TOTAL-ASSETS> 117,958
<CURRENT-LIABILITIES> 9,067
<BONDS> 606
0
0
<COMMON> 593
<OTHER-SE> 107,464
<TOTAL-LIABILITY-AND-EQUITY> 117,958
<SALES> 63,368
<TOTAL-REVENUES> 63,368
<CGS> 43,184
<TOTAL-COSTS> 43,184
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 9,922
<INCOME-TAX> 2,878
<INCOME-CONTINUING> 7,044
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,044
<EPS-BASIC> 0.48
<EPS-DILUTED> 0.47
</TABLE>
