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
For the period ended March 31, 1996 Commission File Number 0-10763
ATRION Corporation
(Exact Name of Registrant as Specified in its Charter)
Alabama 63-0821819
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Post Office Box 918, Florence, Alabama 35631
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (205) 383-3631
AlaTenn Resources, Inc.
(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 requiredto 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 _____
Indicate the number of shares outstanding of each of the
issuer's classes of
common stock, as of the latest practicable date.
Common Stock, Par Value $0.10 per share -
Outstanding at March 31, 1996 2,120,084 shares
PART I - FINANCIAL INFORMATION
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
[CAPTION]
Three Months Ended
March 31,
1996 1995
(In thousands, except
per share data)
[S] [C] [C]
OPERATING REVENUES:
Industrial sales $ 25,496 $ 8,886
Resale sales 6,746 3,706
Transportation 3,500 3,293
Off-system sales and other 2,506 3,376
Medical and health care products 3,074 3,213
TOTAL OPERATING REVENUES 41,322 22,474
COST OF GOODS SOLD 35,405 17,620
GROSS MARGIN 5,917 4,854
OTHER OPERATING EXPENSES:
Operations 2,451 2,099
Maintenance 33 60
Depreciation and amortization 314 300
Other taxes 96 94
2,894 2,553
OPERATING INCOME 3,023 2,301
OTHER INCOME:
Interest and investment income 100 111
Other income 190 46
290 157
INTEREST EXPENSE 26 58
INCOME BEFORE TAXES 3,287 2,400
INCOME TAXES 1,188 869
NET INCOME $ 2,099 $ 1,531
EARNINGS PER SHARE $ 0.99 $ 0.72
DIVIDENDS PER SHARE $ 0.30 $ 0.30
AVERAGE SHARES OUTSTANDING 2,119,925 2,115,484
The accompanying notes to consolidated financial statements are an integral
part of these statements.
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
[CAPTION]
March 31, December 31
1996 1995
(In thousands)
[S] [C] [C]
CURRENT ASSETS:
Cash and temporary cash investments $ 5,455 $ 2,811
Accounts receivable, including $974,000
in 1996 and $1,860,000
in 1995 of take-or-pay settlement costs 15,762 13,890
Materials and supplies 513 689
Inventories 766 717
Prepaid expenses and other 555 288
23,051 18,395
PROPERTY, PLANT AND EQUIPMENT:
Original cost 36,266 35,447
Less - accumulated depreciation and amortization 15,835 15,725
20,431 19,722
DEFERRED CHARGES:
Patents 5,395 5,505
Goodwill 2,624 2,652
Other 2,403 2,232
10,422 10,389
$ 53,904 $ 48,506
The accompanying notes to consolidated financial statements are an
interegral part of these statements.
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
[CAPTION]
SHAREHOLDERS' EQUITY AND LIABILITIES
March 31, December 31
1996 1995
(In thousands)
[S] [C] [C]
CURRENT LIABILITIES:
Current maturities of long-term debt $ 203 $ 203
Accounts payable 15,762 12,646
Accrued income and other taxes 1,407 537
17,372 13,386
LONG-TERM DEBT, LESS CURRENT MATURITIES 1,508 1,609
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes 1,631 1,559
Unamortized investment tax credits 235 243
Other 1,725 1,739
3,591 3,541
COMMON SHAREHOLDERS' EQUITY
Common shares, par value $0.10 per share; authorized
10,000,000 shares, issued 2,280,000 shares 228 228
Paid-in capital 6,078 6,078
Retained earnings 26,988 25,525
Treasury shares, at cost (1,861) (1,861)
Total shareholders' equity 31,433 29,970
$ 53,904 $ 48,506
The accompanying notes to consolidated financial statements are an integral
part of these statements.
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
[CAPTION]
Three Months Ended
March 31,
1996 1995
(In thousands)
[S] [C] [C]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,099 $ 1,531
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 520 503
Deferred income taxes 73 24
Take-or-pay recoveries (net of expenditures) 895 728
Other (268) (129)
3,319 2,657
Change in current assets and liabilities:
(Increase) in accounts receivable (2,729) (955)
(Increase) in other current assets (139) (32)
Increase in accounts payable 3,117 1,152
Increase in other current liabilities 869 484
4,437 3,306
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (1,055) (68)
(1,055) (68)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in long-term indebtedness (102) (971)
Cash dividends paid (636) (635)
(738) (1,606)
Net increase in cash and temporary cash investments 2,644 1,632
Cash & temp. cash investments, beg. of period 2,811 439
Cash and temporary cash investments, end of period $ 5,455 $ 2,071
Cash paid for:
Interest (net of capitalized amounts) $ 28 $ 19
Income taxes (net of refunds) 369 358
The accompanying notes to consolidated financial statements are an integral
part of these statements.
ATRION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
In the opinion of management, all adjustments
necessary for a fair presentation of results of
operations for the periods presented have been
included in the accompanying unaudited
consolidated financial statements of ATRION
Corporation (the Company). Such adjustments
consist of normal recurring items. The
accompanying financial statements have been
prepared in accordance with the instructions to
Form 10-Q and include only the information and
notes required by such instructions.
Accordingly, the consolidated financial
statements and notes thereto should be read in
conjunction with the financial statements and
notes included in the Company's 1995 Annual
Report on Form 10-K.
Because of the seasonal nature of certain of the
Company's operations, among other factors, the
results of operations for the periods presented
are not necessarily indicative of the results
which will be achieved for an entire year.
2. Change of Corporate Name
On May 6, 1996, the Articles of Incorporation of
AlaTenn Resources, Inc. were amended, changing
its name to ATRION Corporation.) All references
to the Company subsequent to May 6, 1996 will
utilize the new name of ATRION Corporation.
ATRION CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results For The Three Months Ended March 31, 1996
The Company's consolidated net income for the
quarter ended March 31, 1996 was $2,099,000 or
$.99 per share, compared with $1,531,000 or $.72
per share, for the first quarter of 1995. The
earnings per share computations are based on
shares outstanding of 2,120,084 in 1996 and
2,115,484 in 1995.
Consolidated revenues of $41.3 million for the
first quarter of 1996 were 84% higher than
revenues of $22.5 million for the first quarter
of 1995. The increase in revenues in the first
quarter of 1996, compared to the same period in
the prior year, occurred primarily at the
Company's natural gas marketing subsidiary. This
increase between periods resulted primarily from
significant volume and price increases related to
colder weather. Sales volumes by this unit
increased by 27% above volumes for the first
quarter of 1995. Due to increased demands for
natural gas which were due to the colder weather,
natural gas prices increased by 92% compared to
the prior year period.
Gross margin of $5.9 million in the first
quarter of 1996 was $1.1 million or 22% higher
than that in the comparable period in 1995. The
increase in gross margin, primarily in the
pipeline and energy segment, was the result of
colder weather as well as increased
transportation revenues due to a major industrial
customer increasing its natural gas usage because
of equipment failures which reduced its ability
to use alternate fuels.
The cost of goods sold of $35.4 million for the
first quarter of 1996, a 100% increase from the
same period in 1995, was consistent with the
changes in revenues in the pipeline and energy
segment related to volume and price referred to
above.
The Company's operations and maintenance expenses
of $2.5 million for the first quarter of 1996
were $.3 million higher than in the first quarter
of 1995. This increase was primarily attributable
to start-up costs of the Company's medical
marketing unit, which was formed to market and
distribute a newly developed line of products,
called LacriCATH , to be used in a patented
ophthalmic surgical procedure for treating
excessive tearing of the eye.
Depreciation and amortization expense of $.3
million for the first quarter of 1996 was
comparable to that for the same period in the
prior year.
Interest and other income of $290,000 in the
first quarter of 1996 increased $133,000 compared
to the first quarter of 1995. The increase was
attributable to income from the sale of
substantially all of the assets of a small
natural gas distribution subsidiary which was
partially offset by lower interest income on the
take-or-pay receivable at the Company's
interstate pipeline subsidiary.
Interest expense of $26,000 in the first quarter
of 1996 was $32,000 lower than in the comparable
prior year period due to the reduction of debt
related to the 1994 acquisition of the business
of Ryder International Corporation and the
payoff of the interstate pipeline subsidiary's
take-or-pay obligation.
Income taxes in the first quarter of 1996 were
$319,000 greater than in the comparable period in
the prior year due to the increase in income in
the current period.
Liquidity and Capital Resources
At March 31, 1996, the Company had no borrowings
under its $20.0 million revolving loan facilities
with a regional bank and had long-term debt,
including current maturities, of $1.7 million
which was related to the 1994 acquisition of its
principal medical and health care products unit.
The Company's total debt as a percent of total
capitalization at March 31, 1996 was 5%.
At March 31, 1996, the Company had cash and
temporary cash investments of $5.5 million
compared with $2.8 million at December 31, 1995.
This increase was attributable to an increase in
cash flows from operations and collections of
receivables of take-or-pay costs by its
interstate pipeline subsidiary from its customers
which more than offset capital expenditures
primarily related to the construction of a
gaseous oxygen pipeline (see Other Matters) and
the payment of dividends.
The Company believes that existing cash and
temporary cash investments, cash flows from
operations, cash recoveries of take-or-pay costs
by the Company's interstate pipeline subsidiary
from its customers, borrowings available under
the Company's revolving loan agreement and other
equity or debt financing, which the Company
believes would be available will be sufficient to
fund operations, potential projects and budgeted
capital expenditures over the next two years.
<PAGE>
Regulatory Matters
As has been previously reported, two of the
Company's interstate pipeline municipal
customers, the cities of Decatur and Huntsville,
Alabama, which together accounted for
approximately 3% of ATRION's revenues and 14% of
its gross margin for the first three months of
1996 entered into a 20 year contract with
Southern Natural Gas Company (Southern), a wholly
owned subsidiary of Sonat, Inc., for
substantially all of their natural gas
transportation requirements beginning in late
1997. Southern has filed an application with the
Federal Energy Regulatory Commission (FERC) to
build a 110-mile pipeline from Tuscaloosa,
Alabama to North Alabama to provide such service.
The Company's interstate pipeline unit currently
has firm transportation contracts with both
cities, which expire with Decatur on November 1,
1997 for approximately 93% of that municipality's
contract volume and on November 1, 2000 for the
balance, and which expire with Huntsville on
April 1, 1998 for approximately 86% of that
municipality's contract volume and on November 1,
2000 for the balance. For further information
regarding the proposed bypass see Item 1 in Part
II entitled "Legal Proceedings".
The Company, through one of its subsidiaries,
completed construction of and put into operation
at the end of the first quarter, a 22-mile high
pressure steel pipeline to transport gaseous
oxygen, under a long-term contract with a large
industrial gas supplier, to one of the Company's
existing natural gas customers.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On February 9, 1996, the Company filed a lawsuit
in the Circuit Court of Jefferson County, Alabama
against Southern and Huntsville. The Company is
asserting that the contract between Southern and
Huntsville for natural gas transportation service
violates Alabama's competitive bid law and is
requesting that the contract be declared void.
The Company is also opposing Southern's
application at the FERC to build its 110-mile
pipeline..
There were no other material pending legal
proceedings to which the Company or any of its
subsidiaries was a party, or of which any of
their property was the subject, as of March 31,
1996.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of
Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 27 Financial Data Schedules (Filed
electronically only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter ended March 31, 1996.
<PAGE>
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.
ATRION Corporation
(Registrant)
Date: May 15, 1996 s/s Jerry A. Howard
Jerry A.Howard
Chairman, President
& Chief Executive Officer
Date: May 15, 1996 s/s George G. Petty
George G.Petty
Vice President-Finance
& Chief Financial Officer
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