<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to 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 quarterly period
ended 6/30/95
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 0-4538
LUMEX, INC.
(Exact name of registrant as specified in its charter)
New York 11-1731581
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
81 Spence Street, Bay Shore, New York 11706
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (516) 273-2200
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
On June 30, 1995, the registrant had outstanding 4,313,161 shares of
Common Stock, par value $.10 per share, which is the registrant's only
class of common stock.
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LUMEX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net Sales $31,551 $31,525 $65,164 $60,822
Costs and Expenses:
Cost of sales 19,437 19,166 40,017 36,992
Selling and administrative 12,518 10,062 24,094 19,572
Product development 1,674 1,154 3,127 2,211
Interest 402 265 654 460
Other income (principally
interest income) (539) (522) ( 965) (1,029)
33,492 30,125 66,927 58,206
(Loss) income before income tax
(benefit) provision (1,941) 1,400 (1,763) 2,616
Income tax (benefit) provision (679) 420 (617) 785
NET (LOSS) INCOME $(1,262) $ 980 $(1,146) $ 1,831
NET (LOSS) INCOME PER SHARE
OF COMMON STOCK $(.29) $ .23 $(.26) $ .43
</TABLE>
See notes to consolidated condensed financial statements.
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LUMEX, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(unaudited)
June 30, December 31,
1995 1994
(Dollars in thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 929 $ 9,746
Investments 5,000 4,768
Accounts receivable 24,702 28,854
Inventories 20,209 14,962
Lease receivables 2,830 1,801
Other current assets 3,643 3,566
Total Current Assets 57,313 63,697
Property, plant and equipment 23,113 20,067
Lease receivables 10,565 7,234
Intangible assets 6,071 2,577
Other assets 555 593
$97,617 $94,168
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 5,500 $ -0-
Accounts payable 15,832 11,379
Other current liabilities 11,875 15,160
Total Current Liabilities 33,207 26,539
Deferred income taxes 2,221 2,221
Long-term debt 10,466 12,771
Stockholders' Equity
Common stock, par value $.10 per share,
authorized 15,000,000 shares, issued
4,379,209 in 1995 and 4,361,812 in 1994 438 436
Capital surplus 16,383 16,167
Retained earnings 35,701 37,004
Unrealized losses on investments, net (54) (225)
Treasury stock at cost (66,048 shares in 1995
and 1994) (745) (745)
Total Stockholder's Equity 51,723 52,637
$97,617 $94,168
</TABLE>
See notes to consolidated condensed financial statements.
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LUMEX, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(unaudited)
Six Months Ended
June 30,
1995 1994
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income $(1,146) $ 1,831
Adjustments to reconcile net (loss) income to
net cash used in operating activities:
Depreciation and amortization 2,448 1,684
Net changes in operating assets
and liabilities (8,740) (9,607)
NET CASH USED IN OPERATING ACTIVITIES (7,438) (6,092)
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (4,895) (1,727)
Proceeds from sales and maturities
of investments - 6,312
Purchases of investments - (2,505)
Purchases of intangible assets (3,919) -
Repayment of note receivable - 2,160
Other (110) (376)
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (8,924) 3,864
FINANCING ACTIVITIES:
Proceeds from short-term borrowings 5,500 5,000
Proceeds from sale of leases 4,491 -
Principal payments of long-term debt (2,305) (1,805)
Common shares reacquired (2) (57)
Exercise of stock options 18 265
Other (157) (71)
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,545 3,332
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (8,817) 1,104
CASH AND CASH EQUIVALENTS -- January 1st 9,746 260
CASH AND CASH EQUIVALENTS -- June 30th $ 929 $ 1,364
</TABLE>
See notes to consolidated condensed financial statements.
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LUMEX, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited)
(dollars in thousands)
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the instructions to Form 10-Q
and, therefore, do not include all information and footnotes necessary
for a fair presentation of financial position, results of operations
and changes in cash flows in conformity with generally accepted
accounting principles. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The Company has reclassified the
presentation of certain prior year information to conform to the
current year presentation format.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto
included in the Company's latest Annual Report or Form 10-K for the
year ended December 31, 1994.
NOTE 2--INVENTORIES
Inventories are valued at the lower of cost or market principally on
the Last-in, First-out (LIFO) method. The estimated replacement cost
of LIFO inventories exceeds stated LIFO cost by $4,548, and $4,498 at
June 30, 1995 and December 31, 1994 respectively.
Inventories were as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Finished goods $ 8,263 $ 6,024
Work in process 6,169 3,664
Raw materials 5,777 5,274
$20,209 $14,962
</TABLE>
Because the inventory determination under the LIFO method can only be
made at the end of each fiscal year based on the inventory levels and
costs at that point, interim LIFO determinations are based on
management's estimates of expected year-end inventory levels and costs.
Since future estimates of inventory levels and prices are subject to
many forces beyond the control of management, interim financial results
are subject to final year-end LIFO inventory amounts.
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LUMEX, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited)
(dollars in thousands)
NOTE 3-ACQUISITION
In June 1995, the Company acquired through its newly formed subsidiary,
Lumex Bed Systems, Inc., all of the assets of the former Sci-O-Tech
Inc., a manufacturer of beds for the nursing home and home
healthcare markets, for cash in the amount of $1,146. The
acquisition cost, accounted for under the Purchase Method, represents
the fair value of the assets received which consisted principally of
receivables, inventories and property and equipment.
NOTE 4-NET (LOSS) INCOME PER SHARE OF COMMON STOCK
Net (loss) income per share of common stock is computed by dividing net
(loss) income by the weighted average number of common shares and
common share equivalents (dilutive stock options) outstanding during
each year as appears below:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Three months ended June 30 4,348,212 4,308,299
Six months ended June 30 4,353,240 4,300,101
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
items from the Consolidated Statements of Operations both as a
percentage of sales and as a percentage increase (decrease) from the
comparable three and six months ended of the prior year:
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
% %
% of Sales Inc % of Sales Inc
1995 1994 (Dec) 1995 1994 (Dec)
<S> <C> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% .1% 100.0% 100.0% 7.1%
Costs and Expenses:
Cost of sales 61.6 60.8 1.4 61.4 60.8 8.2
Selling and
administrative 39.7 31.9 24.4 37.0 32.2 23.1
Product development 5.3 3.7 45.1 4.8 3.6 41.4
Interest expense 1.3 .8 51.7 1.0 .8 42.2
Other (income) (1.7) (1.6) 3.3 (1.5) (1.7) (6.2)
(Loss) income before
income tax (benefit)
provision (6.2) 4.4 (238.6) (2.7) 4.3 (167.4)
</TABLE>
Net sales for the second quarter 1995 were $31,551,000, slightly higher
than net sales for the second quarter 1994 of $31,525,000. For the six
months ended June 30, 1995, net sales were $65,164,000, a 7.1% increase
over sales of $60,822,000 in the same period a year earlier.
Lumex division sales rose 10.6% in the second quarter 1995, as compared
to the second quarter 1994 on the continued strong growth in shipments
of its Akrotech 4000 low air loss therapy systems. Shipments of both
the mobility aids and bath safety product lines were also well ahead of
the shipments for the same period a year earlier and more than offset
lower shipments of the division's seating products.
Cybex division 1995 second quarter sales were 9% lower than the prior
year period as sales orders for current products were impacted by the
early 1995 introduction of a new extremity testing and rehabilitation
system and an innovative new line of strength training equipment, both
of which began shipping in the third quarter.
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Gross margins were lower, at 38.4% in the second quarter 1995,
resulting from increases in material costs and a changing product mix.
Selling and administrative costs increased 24.4% in the second quarter
due to an expanded sales and marketing organization at Lumex for low
air loss therapy products and at Cybex for sales growth anticipated
from its major new product introductions and expansion of efforts in
international markets.
Administrative costs were higher in the 1995 quarter due to the
amortization of the rights and licenses acquired in earlier in the year
related to the low air loss therapy and FASTEX product lines as well as
approximately $700,000 of expenses related to severance and recruitment
for senior executive management changes.
Product development expenses rose 45.1% in the second quarter 1995, the
result of efforts to accelerate the introduction of major new products
in Cybex's rehabilitation and strength training product lines and
increased spending at Lumex for Therapeutic Support Systems product
development efforts.
Interest expense rose, principally resulting from increased use of the
Company's short-term bank lines of credit and higher interest rates.
The income tax benefit was reflected at 35% representing the expected
annual effective tax rate for the year.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to maintain a strong financial condition
with working capital in excess of $24.1 million including cash and
investments of $5.9 million and a current ratio of 1.7 to 1.
Net cash used in operating activities was $2 million in the second
quarter 1995 with the largest uses of cash resulting from the continued
growth of lease receivables under the Company's captive lease program
and increased inventory levels due to new product introductions and
lower sales volume at the Cybex division.
Cash used in investing activities was in excess of $3.4 million during
the second quarter 1995 largely the result of increased capital
spending which totaled nearly $3.0 million.
Cash provided by financing activities in the second quarter 1995 was
$5.5 million resulting from the sale of $4.5 million of leases and
additional short-term borrowings of $2.5 million, less principal
payments on long-term debt of $1.4 million.
The Company has a healthy capital structure with a long-term debt to
equity ratio of .20 to 1 at June 30, 1995 and $20 million in short-term
bank lines of credit of which $5.5 million was utilized at the end of
the second quarter. Management expects the Company's manufacturing
operations will continue to use cash during the remainder of 1995 as it
funds several major new products and increases its capital spending to
take advantage of newer manufacturing technologies and redesign of its
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facilities to increase capacity and lower costs. The Company believes
its conservative capital structure affords it ample borrowing capacity
to meet these additional cash requirements. The Company's finance
subsidiary is expected to continue to meet its cash requirements by
utilizing its warehousing lines of credit and through periodic sales of
its lease portfolio.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of the
Company was held on June 5, 1995.
(c) Voting for the election of directors of the
Company:
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
John C. Spratt 4,249,763 23,575
Carol G. Nelson 4,245,994 27,344
</TABLE>
2,573,386 shares were voted in favor of the
proposal to approve the Lumex, Inc. 1995
Omnibus Incentive Plan, with 152,648 shares
voted against and 49,314 abstentions.
2,340,096 shares were voted in favor of the
proposal to approve the Lumex, Inc. 1995 Stock
Retainer Plan for Nonemployee Directors, with
387,094 shares voted against and 48,158
abstentions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10(xiii)- Lumex, Inc. 1995 Omnibus Incentive
Plan (incorporated by reference to
Exhibit A to the Company's Proxy
Statement for the Annual Meeting of
Shareholders held on June 5, 1995,
as filed with the Commission on
May 1, 1995).
10(xiv) - Lumex, Inc. 1995 Stock Retainer Plan
for Nonemployee Directors
(incorporated by reference to
Exhibit B to the Company's Proxy
Statement for the Annual Meeting of
Shareholders held on June 5, 1995,
as filed with the Commission on
May 1, 1995).
27 - Financial Data Schedule (filed
herewith)
(b) There were no reports on Form 8-K filed
during the quarter ended June 30, 1995.
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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.
LUMEX, INC.
Date: August 11, 1995 By /s/ Robert McNally
Robert McNally
Senior Vice President and
Chief Financial Officer
Date: August 11, 1995 By /s/ Robert S. Zuccaro
Robert S. Zuccaro
Vice President and Treasurer
<PAGE>
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Exhibit Index
Exhibit No.
10(xiii)- Lumex, Inc. 1995 Omnibus Incentive Plan
(incorporated by reference to Exhibit A to
the Company's Proxy Statement for the
Annual Meeting of Shareholders held on
June 5, 1995, as filed with the Commission
on May 1, 1995).
10(xiv) - Lumex, Inc. 1995 Stock Retainer Plan for
Nonemployee Directors (incorporated by
reference to Exhibit B to the Company's Proxy
Statement for the Annual Meeting of Shareholders
held on June 5, 1995, as filed with the
Commission on May 1, 1995).
27 - Financial Data Schedule (filed herewith)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial
information extracted from the financial
statements contained in the body of the
accompanying Form 10-Q and is qualified
in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 929
<SECURITIES> 5,000
<RECEIVABLES> 25,276
<ALLOWANCES> 574
<INVENTORY> 20,209
<CURRENT-ASSETS> 57,313
<PP&E> 47,499
<DEPRECIATION> 24,386
<TOTAL-ASSETS> 97,617
<CURRENT-LIABILITIES> 33,207
<BONDS> 10,466
<COMMON> 438
0
0
<OTHER-SE> 51,285
<TOTAL-LIABILITY-AND-EQUITY> 97,617
<SALES> 65,164
<TOTAL-REVENUES> 65,164
<CGS> 40,017
<TOTAL-COSTS> 67,238
<OTHER-EXPENSES> (965)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 654
<INCOME-PRETAX> (1,763)
<INCOME-TAX> (617)
<INCOME-CONTINUING> (1,146)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,146)
<EPS-PRIMARY> (.26)
<EPS-DILUTED> (.26)
</TABLE>
