<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
(Mark One)
X
- ----- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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 0-12488
Isomedix Inc.
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-1986189
- ---------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
11 Apollo Drive, Whippany, New Jersey 07981
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201) 887-4700
- -----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- -----------------------------------------------------------------------------
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 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of March 31, 1995: 6,995,968 shares of common stock
$.01 par value.
<PAGE> 2
ISOMEDIX INC. AND SUBSIDIARIES
TABLE OF CONTENTS
MARCH 31, 1995
<TABLE>
<CAPTION>
Page
Number
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS 3-4
March 31, 1995 and
December 31, 1994
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended
March 31, 1995 and 1994 5
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY 6-7
For the Three Months Ended
March 31, 1995
CONSOLIDATED STATEMENTS OF CASH FLOWS 8
For the Three Months Ended
March 31, 1995 and 1994
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-13
PART II. OTHER INFORMATION 14-16
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ISOMEDIX INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 7,215,356 $ 5,961,473
Investments 12,528,300 11,891,561
Accounts Receivable, Less
Allowance for Doubtful Accounts
of $350,000 at March 31, 1995
and at December 31, 1994 9,058,636 8,493,608
Prepaid Expenses and Other Current Assets 1,459,398 1,614,108
------------ ------------
Total Current Assets 30,261,690 27,960,750
------------ ------------
PROPERTY, PLANT AND EQUIPMENT
At Cost 55,893,718 55,207,156
Less, Accumulated Depreciation 15,967,803 15,359,400
------------ ------------
39,925,915 39,847,756
------------ ------------
RADIOISOTOPE
At Cost 63,669,596 62,790,850
Less, Accumulated Depreciation 33,285,476 32,203,450
------------ ------------
30,384,120 30,587,400
------------ ------------
INVESTMENTS 4,987,153 5,526,960
EXCESS OF COSTS OVER NET ASSETS ACQUIRED 736,305 753,482
OTHER ASSETS 1,297,704 1,523,357
------------ ------------
Total Assets $107,592,887 $106,199,705
============ ============
</TABLE>
See accompanying notes to the consolidated financial statements.
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<PAGE> 4
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
LIABILITIES (Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current Portion of Long-Term Debt $ 700,000 $ 925,000
Accounts Payable 1,750,930 1,663,756
Accrued Expenses 282,845 825,455
Contract Deposits 114,094 47,572
Income Taxes Payable 1,083,909 264,923
------------ ------------
Total Current Liabilities 3,931,778 3,726,706
LONG-TERM DEBT 9,000,000 9,100,000
DEFERRED INCOME TAXES 7,725,775 7,633,452
------------ ------------
Total Liabilities 20,657,553 20,460,158
------------ ------------
STOCKHOLDERS' EQUITY
PREFERRED STOCK
$1.00 par value
Authorized - 15,000,000 shares
Issued and Outstanding - none
COMMON STOCK
$.01 par value
Authorized - 15,000,000 shares
Issued:
March 31, 1995 - 7,159,968 shares
December 31, 1994 - 7,152,592 shares
Outstanding:
March 31, 1995 - 6,995,968
December 31, 1994 - 7,042,592 71,600 71,526
ADDITIONAL PAID-IN CAPITAL 37,592,891 37,505,506
RETAINED EARNINGS 51,732,346 49,868,144
------------ ------------
89,396,837 87,445,176
------------ ------------
Less, Common Stock Held in the Treasury
at cost:
March 31, 1995 - 164,000 Shares
December 31, 1994 - 110,000 Shares (2,461,503) (1,705,629)
------------ ------------
Total Stockholders' Equity 86,935,334 85,739,547
------------ ------------
Total Liabilities and
Stockholders' Equity $107,592,887 $106,199,705
============ ============
</TABLE>
See accompanying notes to the consolidated financial statements.
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<PAGE> 5
ISOMEDIX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1995 % 1994 %
----------- ----- ------------ -----
<S> <C> <C> <C> <C>
SALES $11,455,026 100.0 $11,239,784 100.0
COST OF SALES 5,535,678 48.3 5,316,663 47.3
----------- ----- ----------- -----
GROSS PROFIT 5,919,348 51.7 5,923,121 52.7
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 2,844,968 24.8 2,719,602 24.2
----------- ----- ----------- -----
OPERATING INCOME 3,074,380 26.9 3,203,519 28.5
OTHER INCOME (EXPENSE)
Investment Income 167,876 1.5 126,245 1.1
Interest Expense (135,252) (1.2) ( 115,259) (1.0)
----------- ----- ----------- -----
INCOME BEFORE PROVISION
FOR INCOME TAXES 3,107,004 27.2 3,214,505 28.6
PROVISION FOR INCOME
TAXES 1,242,802 10.8 1,285,800 11.4
----------- ----- ----------- -----
NET INCOME $ 1,864,202 16.4 $ 1,928,705 17.2
=========== ===== =========== =====
EARNINGS PER SHARE $ .26 $ .26
=========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
-5-
<PAGE> 6
ISOMEDIX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
<S> <C>
BALANCE - December 31, 1994 $85,739,547
Exercise of Stock Options 28,875
Acquisition of Treasury Stock (755,874)
Sales of Common Stock Under Employee
Stock Purchase Plan 58,584
Net Income 1,864,202
-----------
BALANCE - March 31, 1995 $86,935,334
===========
</TABLE>
See accompanying notes to the consolidated financial statements.
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<PAGE> 7
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
- ---------------------- ADDITIONAL -------------------------
NUMBER PAID-IN RETAINED NUMBER
OF SHARES AMOUNT CAPITAL EARNINGS OF SHARES AMOUNT
<S> <C> <C> <C> <C> <C>
7,152,592 $71,526 $37,505,506 $49,868,144 (110,000) ($1,705,629)
3,000 30 28,845
(54,000) (755,874)
4,376 44 58,540
1,864,202
- --------- ------- ----------- ----------- -------- -----------
7,159,968 $71,600 $37,592,891 $51,732,346 (164,000) ($2,461,503)
========= ======= =========== =========== ======== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
-7-
<PAGE> 8
ISOMEDIX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
March 31, March 31,
1995 1994
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 1,864,202 $ 1,928,705
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 1,703,635 1,747,930
Amortization 171,320 174,092
Gain on sale of asset (3,100)
Changes in assets and liabilities:
Increase in accounts receivable (565,028) (413,583)
Decrease in prepaid expenses and
other current assets 154,710 391,609
Decrease in accounts payable
and accrued expenses (455,436) (575,243)
Increase (decrease) in contract deposits 66,522 (158,629)
Increase in income taxes payable 818,986 321,837
Increase in deferred income taxes 92,323 179,390
----------- ------------
Net cash used in operating activities 3,848,134 3,596,108
----------- ------------
Cash flows from investing activities:
Purchases of investments (3,572,865) (1,577,353)
Proceeds from sale of investments 3,475,933 850,000
Proceeds from sale of assets 3,100
Increase in equipment deposits 219,921
Additions to property, plant and
equipment (699,766) (606,816)
Additions to radioisotope (698,306) (2,168,466)
Deferred pre-operating costs incurred (21,816)
Other 5,983 21,967
----------- ------------
Net cash used in investing activities (1,507,737) (3,260,747)
----------- ------------
Cash flows from financing activities:
Payment of long-term debt (325,000) (275,000)
Purchase of treasury stock (755,874)
Costs of New York Stock Exchange listing (93,099)
Proceeds from stock options exercised and
employee stock purchases 87,459 163,124
----------- ------------
Net cash used in financing activities (1,086,514) (111,876)
----------- ------------
Net increase in cash and cash equivalents 1,253,883 223,485
Cash and cash equivalents at beginning of
year 5,961,473 2,949,572
----------- ------------
Cash and cash equivalents at end of period $ 7,215,356 $ 3,173,057
----------- ------------
Supplemental cash flow information:
----------- ------------
Cash paid for interest (net of amounts
capitalized) $ 105,521 $ 85,301
----------- ------------
Cash paid for income taxes $ 349,619 $ 279,078
----------- ------------
Supplemental non-cash investing activities:
----------- ------------
Additions to radioisotope $ 180,440
----------- ------------
</TABLE>
See accompanying notes to the consolidated financial statements.
-8-
<PAGE> 9
ISOMEDIX INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The interim consolidated financial statements reflect all adjustments,
consisting only of normal recurring accruals, which are, in the opinion of the
Company's management, necessary for a fair statement of results for the periods
presented. Operating revenues and net income for any interim period are not
necessarily indicative of results for a full year.
2. Earnings per share have been computed based upon the weighted average
number of shares of common stock outstanding during each period. For the three
months ended March 31, 1995 and 1994, the number of shares used in computing
earnings per share was 7,265,923 and 7,366,151, respectively.
3. As of March 31, 1995, the Company had total investments classified as
held-to-maturity of $17,515,453 with a market value of $17,281,871. The market
value is calculated using information provided by outside quotation services.
The Company's investments consist of debt instruments from various governmental
agencies with maturity dates ranging from April, 1995 to September, 2026.
For the three months ended March 31, 1995, the gross unrealized
holding losses were $233,582. Management has concluded that the decline in
fair value is temporary and, therefore, no adjustment to the cost basis of the
investments has been recorded.
-9-
<PAGE> 10
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Consolidated sales increased approximately 1.9% to $11,455,026 in 1995 from
$11,239,784 in 1994. This increase was due to a 2.3% increase in sales of
sterilization services to $10,415,093 in 1995 from $10,177,178 in 1994, due to
higher volumes of products processed for new and existing customers. This
increase was partially offset by increased competitive factors including
pricing pressures which, as previously reported, are expected to continue
during 1995. Sales of validation services by the Company's Skyland subsidiary
decreased slightly to $1,039,933 in 1995 from $1,062,606 in 1994.
Gross profit decreased to 51.7% of sales in 1995 from 52.7% in 1994. This
decrease is attributable to the competitive factors described above. This
decrease was partially offset by the growth in consolidated sales.
Selling, general and administrative expenses, as a percentage of sales, were
24.8% in 1995 compared to 24.2% in 1994. This increase was attributable to an
overall increase in administrative expenses.
Consolidated operating income decreased 4.0% to $3,074,380 in 1995 from
$3,203,519 in 1994, and as a percentage of sales, to 26.9% in 1995 compared to
28.5% in 1994. Operating income from sterilization services (before corporate
overhead) decreased to 34.2% of that segment's sales in 1995 from 37.7% in
1994. These decreases resulted from the factors described above. Operating
income from validation services (before corporate overhead) decreased to 13.1%
of that segment's sales in 1995 from 21.3% in 1994, primarily as a result from
the decrease in sales.
-10-
<PAGE> 11
Interest expense increased to $135,252 in 1995 from $115,259 in 1994 as a
result of higher interest rates, as partially offset by the payments of current
maturities on long-term debt.
Net income decreased to $1,864,202 in 1995 from $1,928,705 in 1994. This
decrease in net income was attributable to the reasons described above. As a
percentage of sales, net income was 16.4% in 1995 compared to 17.2% in 1994.
-11-
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1995, the Company's working capital was $26,329,912 as compared
to $24,234,044 at December 31, 1994. The increase in working capital was
principally attributable to cash provided by operating activities, derived from
net income for the period as adjusted for non-cash expense items, such as
depreciation and amortization. This increase was partially offset by cash used
in investing and financing activities primarily relating to capital
expenditures used to purchase radioisotope and to equip the Company's existing
sterilization facilities, and purchases of treasury stock.
The Company has utilized industrial development revenue bonds to finance a
substantial portion of the costs of constructing and equipping (including the
initial purchase of radioisotope) some of its sterilization facilities. The
obligations of the Company under the terms of the industrial development
revenue bonds are collateralized by the property, plant, equipment and
radioisotope purchased with the proceeds of such bonds and the agreements
relating to such bonds contain various restrictive covenants. More recently,
funds generated from operations and sales of common stock have served as
sources of funds used to finance the construction and equipping of facilities.
The Company believes that funds from operating activities will be sufficient to
purchase radioisotope and to equip, on a year to year basis, the Company's
existing sterilization facilities.
-12-
<PAGE> 13
The Company may utilize existing credit facilities, which the Company expects
to be able to renew annually, to also fund the working capital needs of the
Company, as required. Expansion plans are expected to be funded from the
Company's investments, which will mature in amounts necessary to cover the
foreseeable expansion program of the Company. The Company's capital
expenditures for 1995 are anticipated to be approximately $12 to $15 million.
INFLATION
Inflation is not expected to have a significant impact on the Company's income,
particularly as the United States economy is presently experiencing a period of
low inflation. Based upon its experience since inception, the Company does not
expect that future increases in the cost of radioisotope or other materials
will be significant to its operations.
-13-
<PAGE> 14
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
None to report.
Item 2 Changes in Securities
None to report.
Item 3 Defaults Upon Senior Securities
None to report.
Item 4 Submission of Matters to a Vote of Security Holders
None to report.
Item 5 Other Information
None to report.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits:
XI(a) Statement Re: Computation of Earnings Per
Share For the Three Months Ended March 31,
1995 and 1994. (Unaudited)
27 Financial Data Schedule
(b) Reports on Form 8-K:
During the three months ended March 31,
1995, the registrant filed no reports
on Form 8-K.
-14-
<PAGE> 15
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.
ISOMEDIX INC.
(Registrant)
Date: May 11, 1995 /s/ John Masefield
----------------------------
John Masefield
Chairman
Date: May 11, 1995 /s/ Thomas J. DeAngelo
----------------------------
Thomas J. DeAngelo
Vice President -
Finance and Administration
-15-
<PAGE> 16
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
Ex-11.XI(a) Statement Re: Computation of Earnings Per
Share For the Three Months Ended March 31,
1995 and 1994. (Unaudited)
Ex-27 Financial Data Schedule
<PAGE> 1
EXHIBIT XI (A)
ISOMEDIX INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE FOR THE
THREE MONTHS ENDED MARCH 31, 1995 AND 1994.
(Unaudited)
Net income and common shares used in the calculation of earnings per share for
the three months ended March 31, 1995 and 1994, were computed as follows:
<TABLE>
<CAPTION>
March 31, March 31,
1995 1994
----------- -----------
<S> <C> <C>
Net Income $ 1,864,202 $ 1,928,705
=========== ===========
Weighted average number
of common shares
outstanding during the
period: 7,030,750 7,122,276
Add: Shares issuable upon
assumed exercise or con-
version of stock options
and warrants 235,173 243,875
----------- -----------
Common Shares 7,265,923 7,366,151
=========== ===========
Earnings per common share $ .26 $ .26
=========== ===========
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q
FOR THE QUARTER ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10Q FOR THE QUARTER ENDED MARCH 31, 1995.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 7,215,356
<SECURITIES> 17,515,453
<RECEIVABLES> 9,058,636
<ALLOWANCES> 350,000
<INVENTORY> 0
<CURRENT-ASSETS> 30,261,690
<PP&E> 119,563,314
<DEPRECIATION> 49,253,279
<TOTAL-ASSETS> 107,592,887
<CURRENT-LIABILITIES> 3,931,778
<BONDS> 0
<COMMON> 71,600
0
0
<OTHER-SE> 86,935,334
<TOTAL-LIABILITY-AND-EQUITY> 107,592,887
<SALES> 11,455,026
<TOTAL-REVENUES> 11,455,026
<CGS> 5,535,678
<TOTAL-COSTS> 5,919,348
<OTHER-EXPENSES> 2,844,968
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,624
<INCOME-PRETAX> 3,107,004
<INCOME-TAX> 1,242,802
<INCOME-CONTINUING> 1,864,202
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,864,202
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
