<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended NOVEMBER 30, 1995
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: 0-12395
ALCIDE CORPORATION
DELAWARE 22-2445061
- ------------------------------ ------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
8561 154TH AVENUE NORTH EAST, REDMOND WA 98052
- ---------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code . . . . . . (206) 882-2555
----------------
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
---------- ----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of November 30, 1995: 2,787,838.
----------
<PAGE>
ALCIDE CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . .PAGE
Unaudited Condensed Balance Sheets - November 30, 1995 and May 31, 1995 . 3
Unaudited Condensed Statements of Operations -
For the three months and six months ended November 30, 1995
and November 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Unaudited Condensed Statements of Cash Flows - For the six months ended
November 30, 1995 and November 30, 1994 . . . . . . . . . . . . . . . . . 5
Notes to the Unaudited Condensed Financial Statements . . . . . . . . . . 6
Statements of Changes in Shareholders' Equity . . . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . .10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . .11
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
<PAGE>
ALCIDE CORPORATION UNAUDITED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
NOVEMBER 30, 1995 MAY 31, 1995
----------------- ------------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 2,554,928 $ 2,770,157
Short term investments 1,006,861 983,889
Accounts receivable - trade 3,212,702 2,583,905
Inventory 1,092,154 562,197
Prepaid expenses and other current assets 85,376 161,710
----------------- ------------
Total Current Assets 7,952,021 7,061,858
----------------- ------------
Equipment and leasehold improvements:
Office equipment 80,864 80,864
Laboratory and manufacturing equipment 99,774 99,774
Leasehold improvements 56,152 56,152
Less: Accumulated depreciation and amortization (60,810) (37,128)
----------------- ------------
Total equipment and leasehold improvements, net 175,980 199,662
----------------- ------------
Deferred income tax asset 2,958,002 3,524,409
----------------- ------------
Other assets 1,122,701 1,125,063
----------------- ------------
TOTAL ASSETS $12,208,704 $ 11,910,992
----------------- ------------
----------------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 210,702 $ 379,198
Accrued expenses and taxes payable 953,682 807,217
----------------- ------------
TOTAL LIABILITIES 1,164,384 1,186,415
----------------- ------------
COMMITMENTS AND CONTINGENCIES:
Redeemable Class B Preferred Stock -noncumulative convertible $.01 par value:
authorized 1,664,581 shares;
issued and outstanding:
May 31, 1995 - 99,437
November 30, 1995 - 95,002 249,380 261,022
----------------- ------------
Shareholders' equity:
Class "A" Preferred Stock - no par value authorized 1,000 shares; issued and
outstanding 1,000 shares 135,307 135,307
Common Stock $.01 par value; authorized 100,000,000 shares;
issued and outstanding:
May 31, 1995 - 2,787,838
November 30, 1995 - 2,787,838 27,878 27,878
Treasury stock at cost (2,213,845) (1,441,132)
Additional paid-in capital 18,164,399 18,164,399
Accumulated Deficit (5,318,799) (6,422,897)
----------------- ------------
Total Shareholders' Equity 10,794,940 10,463,555
----------------- ------------
TOTAL LIABILITIES, AND SHAREHOLDERS' EQUITY $12,208,704 $ 11,910,992
----------------- ------------
----------------- ------------
</TABLE>
See notes to Unaudited Condensed Financial Statements.
<PAGE>
ALCIDE CORPORATION UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED ENDED
NOVEMBER 30 NOVEMBER 30
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES $2,980,208 $2,033,647 $5,588,954 $3,432,578
---------- ---------- ---------- ----------
Expenditures
Cost of goods sold 964,773 677,022 1,866,074 1,122,165
Research and Development Expense 407,281 186,989 675,729 356,749
Depreciation and amortization 11,841 6,524 23,682 11,938
Consulting expense to the related parties 15,000 15,000 30,000 30,000
Royalty expense 222,934 112,986 427,669 217,567
Other selling, general and administrative expense 511,567 504,283 1,024,364 892,614
---------- ---------- ---------- ----------
Total Expenditures 2,133,396 1,502,804 4,047,518 2,631,033
---------- ---------- ---------- ----------
Operating income 846,812 530,843 1,541,436 801,545
Royalty and other income 5,719 25,287 11,041 41,239
Interest income 64,783 65,927 135,646 117,700
Interest expense -- (1,263) -- (2,112)
---------- ---------- ---------- ----------
Total Non-Operating Income 70,502 89,951 146,687 156,827
Income before provision for income tax 917,314 620,794 1,688,123 958,372
Provision for income taxes 317,356 225,996 584,026 355,081
---------- ---------- ---------- ----------
Net income $ 599,958 $ 394,798 $1,104,097 $ 603,291
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per share $ .21 $ .15 $ .39 $ .23
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average Common Shares outstanding and Common Share equivalents 2,849,035 2,686,115 2,852,388 2,670,881
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See Notes to Unaudited Condensed Financial Statements.
<PAGE>
ALCIDE CORPORATION UNAUDITED C0NDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
NOVEMBER 30,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,104,098 $ 603,291
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 23,682 11,938
Deferred income tax benefit 566,407 341,294
----------- -----------
1,694,187 956,523
----------- -----------
Decrease (increase) in assets:
Inventory (529,957) (209,940)
Accounts receivable - trade (628,797) (93,754)
Prepaid expenses and other assets and security deposits 76,333 (67,514)
Increase (decrease) in liabilities:
Accounts payable (168,496) 47,584
Accrued expenses and taxes payable 146,465 (360,699)
----------- -----------
Total adjustments (1,104,452) (684,323)
----------- -----------
Net cash generated by (used in) operating activities 589,735 272,200
----------- -----------
INVESTING ACTIVITIES:
Acquisition of U.S. Treasury Note -- (1,000,000)
Acquisition of fixed and other assets (20,609) (115,928)
----------- -----------
Net cash used in investing activities (20,609) (1,115,928)
----------- -----------
FINANCING ACTIVITIES:
Redemption of Class B Preferred Stock (11,642) 4,488
Purchase of Alcide Common Stock (772,713) (360,700)
----------- -----------
Net cash used in financing activities (784,355) (356,212)
----------- -----------
Net increase (decrease) in cash and cash equivalents (215,229) (1,199,940)
Cash and cash equivalents at beginning of period 2,770,157 3,385,932
----------- -----------
Cash and cash equivalents at end of period $ 2,554,928 $ 2,185,992
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest -- 2,112
Cash paid for income taxes 36,500 2,407
</TABLE>
See notes to Unaudited Condensed Financial Statements.
<PAGE>
ALCIDE CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited financial statements of
Alcide Corporation (the "Company") for the six-month periods ended November 30,
1995 and 1994 have been prepared in accordance with the instructions to Form 10-
Q. Certain information and disclosures normally included in notes to financial
statements have been condensed or omitted according to the rules and regulations
of the Securities and Exchange Commission, although the Company believes that
the disclosures are adequate to make the information presented not misleading.
The accompanying unaudited condensed financial statements should be read in
conjunction with the financial statements contained in the Company's Annual
Report on Form 10-K for the year ended May 31, 1995. In the opinion of
management, the accompanying unaudited condensed financial statements contain
all adjustments (consisting of only normal recurring accruals) considered
necessary for a fair presentation. The results of operations for the three-
month periods are not necessarily indicative of the results to be expected for
the full year.
2. INVENTORIES
Inventory consisted of the following:
<TABLE>
<CAPTION>
NOVEMBER 30, 1995 MAY 31, 1995
<S> <C> <C>
Finished products $143,992 $75,861
Raw materials $948,161 $486,336
-------- --------
Total $1,092,153 $562,197
---------- --------
---------- --------
</TABLE>
3. TAXES
In the first quarter of 1994 the Company adopted SFAS 109, "Accounting for
Income Taxes," the effects of which have been applied retroactively. SFAS 109
requires the Company to compute deferred income taxes based on the difference
between the financial statement and tax basis of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected
to reverse.
The income tax provision for the three-month period ended November 30, 1995
consists of:
<TABLE>
<CAPTION>
TAXES PAYABLE DURING REDUCTION OF DEFERRED TOTAL TAX PROVISION
FISCAL YEAR TAX ASSET
<S> <C> <C> <C>
Federal Income Taxes $17,619 $566,407 $584,026
------- -------- --------
</TABLE>
4. Orders for Future Delivery
At November 30, 1995 and 1994 the Company had orders for future delivery of
$2,735,992 and $2,419,571 respectively, of which $2,167,237 is from one
distributor at November 30, 1995. The $2,735,992 orders are scheduled for
shipment during the period December, 1995 through March, 1996.
<PAGE>
5. MARKETABLE SECURITIES
On November 2, 1995 the Company redeemed the $1,000,000 U.S. Treasury Bills
which it had purchased on May 4, 1995 for $970,500.
Also on November 2, 1995 the Company invested $996,610 to purchase U.S. Treasury
Bills having a redemption value of $1,050,000 at October 17, 1996 maturity,
yielding 5.51%.
6. SERIES 2 REDEEMABLE PREFERRED STOCK
On September 30, 1995 the Company redeemed 4,435 shares of Series 2 stock for
$11,642 in cash out of a sinking fund equal to 0.7% of the Company's FY 1995 net
income as required by the terms of the stock issue.
<PAGE>
ALCIDE CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS "A" PREFERRED STOCK COMMON STOCK ADDITIONAL PAID COMMON TREASURY STOCK ACCUMULATED TOTAL
IN CAPITAL DEFICIT SHAREHOLDERS'
EQUITY
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE
MAY 31, 1995 1,000 $135,307 2,787,838 $27,878 $18,164,399 (153,380) ($1,441,132) ($6,422,897) $10,463,555
----- -------- --------- ------- ----------- --------- ------------ ------------ -----------
----- -------- --------- ------- ----------- --------- ------------ ------------ -----------
PURCHASE
TREASURY STOCK (4,000) (70,400) (70,400)
NET INCOME 504,139 504,139
----- -------- --------- ------- ----------- --------- ------------ ------------ -----------
BALANCE
AUGUST31, 1995 1,000 $135,307 2,787,838 $27,878 $18,164,399 (157,380) ($1,511,532) ($5,918,758) $10,897,294
----- -------- --------- ------- ----------- --------- ------------ ------------ -----------
----- -------- --------- ------- ----------- --------- ------------ ------------ -----------
PURCHASE
TREASURY
STOCK (34,957) (702,313) (702,313)
NET INCOME 599,958 599,958
----- -------- --------- ------- ----------- --------- ------------ ------------ -----------
BALANCE
NOVEMBER 30,
1995 1,000 $135,307 2,787,838 $27,878 $18,164,399 (192,337) ($2,213,845) ($5,318,800) $10,794,939
----- -------- --------- ------- ----------- --------- ------------ ------------ -----------
----- -------- --------- ------- ----------- --------- ------------ ------------ -----------
</TABLE>
<PAGE>
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net sales for the first six months of fiscal 1996 were $5,588,954, an increase
of 63% over the corresponding period in fiscal 1995. Sales to ABS Global, which
represents Alcide in North and South America and in several other key markets,
totaled $3,643,311 for the six month period, a 71% increase compared to the
first six months last year. Sales to ABS Global represented 65% of total Alcide
sales for the first six months of fiscal 1996. Sales to international
distributors were $1,633,435, a 55% increase over the same period last year.
Sales prospects for the immediate future are positive. The Company enters its
third fiscal quarter with orders for future delivery of $2,735,992. The backlog
relates primarily to the animal health product line with firm orders specifying
delivery between December 1, 1995 and March 31, 1996.
Cost of goods as a percentage of net sales increased slightly to 33.4% of sales
for the first half of fiscal 1996 vs. 32.7% of net sales for the first six
months of fiscal 1995. The increase results primarily from the introduction of
UDDERgold Plus which carries a slightly lower percentage margin than UDDERgold,
the product it has replaced.
Operating expenses other than cost of goods decreased significantly to 37.2% of
net sales for the first half of fiscal 1996 vs. 44% of net sales for the first
half of fiscal 1995.
Research and development expenses increased to $675,729 this year vs. $356,749
for the first six months last year. The increase was caused primarily by an
increase in the number of research personnel ($56,562); user fees paid to the
Food and Drug Administration to support the New Drug Application for the
Company's presurgical skin antiseptic ($81,000); and outside laboratory testing
charges primarily associated with vendor qualification and raw materials
specifications development to support international registration of the
Company's products ($142,952).
Royalty expenses increased proportionate to the net sales increase. Of the
$427,669 FY 96 first half expense, $305,421 has been utilized to increase the
$352,800 reserve established in FY 95 for the purpose of defending the Company's
position in the event there is a legal dispute with royalty rights holders.
Other selling, general and administrative expenses were $1,024,364, an increase
of $131,750 vs. first half of FY 95. The increase is due to a $94,414 increase
in advertising/marketing expenses consistent with the sales volume increase and
to normal inflationary increases.
LIQUIDITY
The Company's cash, cash equivalents, short term investments and U.S. Treasury
Instruments totaled $4,684,490 on November 30, 1995, an amount $194,619 lower
than at the end of the fiscal year ended May 31, 1995. The Company's net income
for the six month period on a cash flow basis was $1,694,187. This was offset
by an $1,104,452 increase in working capital and a $772,713 investment in the
acquisition of Treasury Stock. The working capital increase was caused by a
$559,957 increase in inventory, $350,000 of which was for mandelic acid to
support the Company's growing UDDERgold plus business. Accounts receivable
increased $628,797 caused by a 30 day extension of selling terms to ABS Global.
ABS Global and all other major Alcide distributors are meeting their payment
obligations to Alcide within agreed to credit terms.
The Company's cash position remained strong relative to its anticipated needs.
Cash generated from operations is expected to be greater than operating cash
needs during the remainder of the present fiscal year.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Shareholders voted on two proposals described in the Company's proxy statement
dated October 24, 1995.
1. Votes for election of Directors of the Corporation for the ensuing
year were as follows:
FOR WITHHELD
AUTHORITY
Thomas L. Kempner 2,222,715 6,768
Kenneth N. May 2,214,183 15,300
Joseph A. Sasenick 2,224,518 4,965
William G. Spears 2,224,651 4,832
Aaron Stern 2,136,851 92,632
2. Votes for the ratification of the Board's selection of Arthur Andersen
LLP as independent auditors of the Company for the fiscal year ending
May 31, 1996, were as follows:
FOR AGAINST ABSTAIN
2,221,730 5,102 2,571
<PAGE>
PART II.
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT 11
(a) Computation of Earnings Per Common Share
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average number of
Common Shares outstanding 2,612,979 2,634,505 2,616,332 2,639,726
Assuming exercise of options
reduced by the number of shares
which could have been purchased
with the proceeds from exercise
of such options 236,056 51,610 236,056 31,155
--------- --------- --------- ---------
Weighted average Common Shares
outstanding and Common Share
equivalents 2,849,035 2,686,115 2,852,388 2,670,881
--------- --------- --------- ---------
--------- --------- --------- ---------
Net Income per share $.21 $.15 $.39 $.23
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
REPORTS ON FORM 8-K
None.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
ALCIDE CORPORATION
The Registrant
Date: December 28, 1995 By s/
------------------------------------
John P. Richards
Executive Vice President
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> OCT-30-1995
<CASH> 2554928
<SECURITIES> 0
<RECEIVABLES> 3212702
<ALLOWANCES> 0
<INVENTORY> 1092154
<CURRENT-ASSETS> 85376
<PP&E> 236790
<DEPRECIATION> (60810)
<TOTAL-ASSETS> 12208704
<CURRENT-LIABILITIES> 1164384
<BONDS> 0
<COMMON> 27878
249380
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12208704
<SALES> 2980208
<TOTAL-REVENUES> 3050710
<CGS> 964773
<TOTAL-COSTS> 1168623
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 917314
<INCOME-TAX> 317356
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 599956
<EPS-PRIMARY> 0
<EPS-DILUTED> .21
</TABLE>
