<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 June 30, 1997
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 Identification No.)
incorporation of organization)
11 Apollo Drive, Whippany, New Jersey 07981
(Address of principal executive offices) (Zip Code)
(973) 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 June 30, 1997: 6,459,098 shares of common stock,
$.01 par value.
<PAGE> 2
ISOMEDIX INC. AND SUBSIDIARIES
TABLE OF CONTENTS
JUNE 30, 1997
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and
December 31, 1996 3-4
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended
June 30, 1997 and 1996 5
For the Six Months Ended
June 30, 1997 and 1996 6
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
For the Six Months Ended
June 30, 1997 7-8
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30, 1997 and 1996 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12-17
PART II. OTHER INFORMATION 18-22
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ISOMEDIX INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 12,324,886 $ 22,097,466
Accounts receivable, Less
Allowance for doubtful accounts of
$425,000 at June 30, 1997 and
$390,000 at December 31, 1996 7,150,631 6,360,174
Assets of discontinued operations 2,476,416
Prepaid expenses and other current assets 948,748 553,538
------------- -------------
Total current assets 20,424,265 31,487,594
------------- -------------
Property, plant and equipment, at cost 78,153,044 72,125,613
Less, Accumulated depreciation and
amortization (19,970,148) (18,730,202)
------------- -------------
58,182,896 53,395,411
------------- -------------
Radioisotope, at cost 76,964,767 70,712,938
Less, Accumulated Depreciation (43,014,738) (41,099,527)
------------- -------------
33,950,029 29,613,411
------------- -------------
Other assets 1,146,158 1,123,916
------------- -------------
Total assets $ 113,703,348 $ 115,620,332
============= =============
</TABLE>
See accompanying notes to the consolidated financial statements.
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<PAGE> 4
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES
Current portion of long-term debt $ 600,000 $ 600,000
Accounts payable and accrued expenses 3,003,817 1,961,282
Liabilities of discontinued operations 387,668 1,295,251
Income taxes payable 725,901 405,704
------------- -------------
Total Current Liabilities 4,717,386 4,262,237
LONG-TERM DEBT 7,900,000 8,000,000
DEFERRED INCOME TAXES 8,192,991 8,997,668
------------- -------------
Total Liabilities 20,810,377 21,259,905
------------- -------------
STOCKHOLDERS' EQUITY
PREFERRED STOCK
$1.00 par value
Authorized - 1,000,000 shares
Issued and Outstanding - none
COMMON STOCK
$.01 par value
Authorized - 15,000,000 shares
Issued:
June 30, 1997 - 7,169,868 shares
December 31, 1996 - 7,169,868 shares
Outstanding:
June 30, 1997 - 6,459,098 shares
December 31, 1996 - 6,837,993 shares 71,699 71,699
ADDITIONAL PAID-IN CAPITAL 37,609,355 37,667,729
CUMULATIVE FOREIGN TRANSLATION ADJUSTMENTS (348,603)
RETAINED EARNINGS 65,722,786 61,485,309
------------- -------------
103,055,237 99,224,737
LESS, COMMON STOCK HELD IN THE TREASURY,
AT COST
June 30, 1997 - 710,770 shares
December 31, 1996 - 331,875 shares (10,162,266) (4,864,310)
------------- -------------
Total Stockholders' Equity 92,892,971 94,360,427
------------- -------------
Total Liabilities and Stockholders' Equity $ 113,703,348 $ 115,620,332
============= =============
</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 JUNE 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
June 30, June 30,
1997 % 1996 %
---- - ---- -
<S> <C> <C> <C> <C>
SALES $ 13,598,253 100.0 $ 11,562,127 100.0
COST OF SALES 6,208,751 45.7 5,528,551 47.8
------------ ------- ------------ -------
GROSS PROFIT 7,389,502 54.3 6,033,576 52.2
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 3,513,344 25.8 2,982,239 25.8
------------ ------- ------------ -------
OPERATING INCOME 3,876,158 28.5 3,051,337 26.4
OTHER INCOME (EXPENSE)
Investment Income 106,182 0.8 222,743 1.9
Interest Expense (153,858) (1.1) (116,808) (1.0)
------------ ------- ------------ -------
INCOME BEFORE PROVISION
FOR INCOME TAXES 3,828,482 28.2 3,157,272 27.3
PROVISION FOR INCOME TAXES 1,531,524 11.3 1,264,473 10.9
------------ ------- ------------ -------
INCOME FROM CONTINUING
OPERATIONS 2,296,958 16.9 1,892,799 16.4
------------ ------- ------------ -------
DISCONTINUED OPERATIONS 200,150 1.5 (118,084) (1.0)
------------ ------- ------------ -------
NET INCOME $ 2,497,108 18.4 $ 1,774,715 15.4
============ ======= ============ =======
EARNINGS PER SHARE:
INCOME FROM CONTINUING OPERATIONS
DISCONTINUED OPERATIONS $ 0.35 $ 0.26
$ 0.03 $ (0.01)
------------ ----------
NET INCOME
$ 0.38 $ 0.25
============ ==========
</TABLE>
See accompanying notes to the consolidated financial statements.
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<PAGE> 6
ISOMEDIX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
June 30, June 30,
1997 % 1996 %
---- - ---- -
<S> <C> <C> <C> <C>
SALES $25,588,093 100.0 $22,354,859 100.0
COST OF SALES 12,149,514 47.5 11,090,519 49.6
---------- ---- ---------- ----
GROSS PROFIT 13,438,579 52.5 11,264,340 50.4
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 6,731,666 26.3 5,790,447 25.9
---------- ---- ---------- ----
OPERATING INCOME 6,706,913 26.2 5,473,893 24.5
OTHER INCOME (EXPENSE)
Investment Income 283,230 1.1 414,653 1.9
Interest Expense (261,046) (1.0) (235,955) (1.1)
----------- ---- ---------- ----
INCOME BEFORE PROVISION
FOR INCOME TAXES 6,729,097 26.3 5,652,591 25.3
PROVISION FOR INCOME TAXES 2,691,770 10.5 2,264,412 10.1
---------- ---- ---------- ----
INCOME FROM CONTINUING
OPERATIONS
4,037,327 15.8 3,388,179 15.2
---------- ---- ---------- ----
DISCONTINUED OPERATIONS 200,150 .8 (128,963) (.6)
---------- -- ---------- ---
NET INCOME $ 4,237,477 16.6 $ 3,259,216 14.6
========== ==== ========== ====
EARNINGS PER SHARE:
INCOME FROM CONTINUING
OPERATIONS
DISCONTINUED OPERATIONS $ 0.60 $ 0.47
$ 0.03 $ (0.02)
----------- -----------
NET INCOME
$ 0.63 $ 0.45
=========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
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<PAGE> 7
ISOMEDIX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
<S> <C>
BALANCE - December 31, 1996 $94,360,427
Acquisition of Treasury Stock (5,781,645)
Exercise of Stock Options 339,525
Tax Benefit from Exercise of Stock Options 22,025
Sales of Common Stock Under Employee
Stock Purchase Plan 63,765
Translation Adjustments (348,603)
Net Income 4,237,477
BALANCE - June 30, 1997 $92,892,971
===========
</TABLE>
See accompanying notes to the consolidated financial statements.
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<PAGE> 8
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CUMULATIVE TREASURY STOCK
- ----------------------------------- --------------------------------
NUMBER PAID-IN TRANSLATION RETAINED NUMBER
OF SHARES AMOUNT CAPITAL ADJUSTMENT EARNINGS OF SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
7,169,868 $71,699 $37,667,729 $61,485,309 (331,875) ($ 4,864,310)
(412,600) (5,781,645)
(72,257) 28,800 411,782
22,025
(8,142) 4,905 71,907
($348,603)
4,237,477
- --------- ------- ----------- --------- ----------- -------- ------------
7,169,868 $71,699 $37,609,355 ($348,603) $65,722,786 (710,770) ($10,162,266)
========= ====== ========== ======== ========== ======= ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
-8-
<PAGE> 9
ISOMEDIX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 4,237,477 $ 3,259,216
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,750,577 3,479,985
Amortization 12,978 112,927
Provision for doubtful accounts (136,293) 125,000
Gain on sale of Skyland assets (150,000)
Changes in assets and liabilities:
Decrease (increase)in accounts receivable 1,081,390 (659,931)
Increase in prepaid expenses and other
assets (395,210) (137,314)
(Decrease) increase in accounts payable
and accrued expenses
(281,007) 330,371
Decrease in contract deposits (38,390)
Increase (decrease) in income taxes
payable 842,503 (73,988)
(Decrease) increase in deferred income
taxes (885,847) 193,759
- --------------------------------------------- ------------ ------------
Net cash provided by operating activities 8,076,568 6,591,635
- --------------------------------------------- ------------ ------------
Cash flows from investing activities:
Purchases of held to maturity securities (31,748,331)
Proceeds from maturity of held to maturity
securities
31,446,777
Proceeds from sale of Skyland assets 150,000
Additions to property, plant and equipment (3,411,163) (1,626,968)
Additions to radioisotope (4,346,676) (2,374,566)
Acquisition of Puerto Rico (4,600,000)
Increase in equipment deposits (138,947) (900,000)
Other 39,695 (19,664)
- --------------------------------------------- ------------ ------------
Net cash used in investing activities (12,307,091) (5,222,752)
- --------------------------------------------- ------------ ------------
Cash flows from financing activities:
Payment of long-term debt (100,000) (100,000)
Purchases of treasury stock (5,781,645) (2,145,003)
Proceeds of stock options exercised and
employee stock purchases 425,315 219,340
- --------------------------------------------- ------------ ------------
Net cash used in financing activities (5,456,330) (2,025,663)
- --------------------------------------------- ------------ ------------
Effect of exchange rate changes on cash (85,727)
------------ ------------
Net decrease in cash and cash equivalents (9,772,580) (656,780)
Cash and cash equivalents at beginning of
period 22,097,466 4,860,088
- --------------------------------------------- ------------ ------------
Cash and cash equivalents at end of period $ 12,324,886 $ 4,203,308
- --------------------------------------------- ------------ ------------
Supplemental cash flow information:
Cash paid for interest (net of amounts
capitalized) $ 205,006 $ 179,914
- --------------------------------------------- ------------ ------------
Cash paid for income taxes $ 2,370,455 $ 499,702
- --------------------------------------------- ------------ ------------
Supplemental non-cash investing activities
Additions to radioisotope in satisfaction
of lease receivable 24,835
------------ ------------
Accruals for capital expenditures $ 431,114 $
------------ ============
</TABLE>
See accompanying notes to the consolidated financial statements.
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<PAGE> 10
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 June 30, 1997 and 1996, the numbers of shares used in computing earnings
per share were 6,653,493 and 7,172,600, respectively. For the six months ended
June 30, 1997 and 1996, the numbers of shares used in computing earnings per
share were 6,676,640 and 7,182,112, respectively.
3. The Company has reclassified certain prior period amounts to conform with the
1997 presentation.
4. In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"),
which is effective for financial statements for annual periods ending after
December 15, 1997. SFAS 128 establishes standards for the computation,
presentation and disclosure requirements for earnings per share. Management is
currently evaluating the impact of SFAS 128 on the financial statements.
5. In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards Number 129 "Disclosure of Information About
Capital Structure" ("SFAS 129") that established
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<PAGE> 11
standards for disclosing information about an entity's capital structure. The
statement is effective for periods ending after December 15, 1997. The Company
will adopt SFAS 129 in the fourth quarter of 1997.
6. In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards Number 130 "Reporting Comprehensive Income"
("SFAS 130") that establishes standards for reporting and display of an
alternative income measurement in a full set of general-purpose financial
statements. This statement is effective for fiscal years beginning after
December 15, 1997. The Company will adopt SFAS 130 in fiscal year 1998.
7. In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards Number 131 "Disclosures About Segments of an
Enterprise and Related Information" ("SFAS 131") that establishes standards for
the reporting of information about operating segments in annual financial
statements. The Company is currently evaluating the new pronouncement for its
impact on the Company's financial statements. This statement is effective for
periods beginning after December 15, 1997.
The Company will adopt SFAS 131 in fiscal year 1998.
8. Subsequent Events
SPARTANBURG, SOUTH CAROLINA FIRE
On July 29, 1997, there was a fire at the Company's Spartanburg, South Carolina
facility. The fire started and was contained in a small area of warehouse
portion of the facility and was not related to any of the processing equipment
or sterilization practices at the facility. The Company anticipates that there
will be losses and expenses relating to the damage caused by the fire, though,
the Company believes that the losses and expenses will not have a material
adverse effect on the Company's results of operations, financial or cash flows.
MERGER ANNOUNCEMENT
On August 12, 1997, the Company announced that it has entered into an Agreement
and Plan of Merger (the "Merger Agreement") with STERIS Corporation ("STERIS")
and its wholly owned subsidiary, Steris Acquisition Corp. ("the Purchaser"),
which provides for the acquisition of Isomedix by STERIS. Under the terms of the
Merger Agreement, the Purchaser will commence a cash tender offer to acquire all
of the outstanding shares of Isomedix common stock at a price of $20.50 per
share, net to the selling stockholder. Closing of the tender offer is subject
to satisfaction of customary closing conditions, including the Purchaser's
acquisition in the tender offer of a majority of the outstanding shares of
Isomedix common stock. The tender offer is not conditioned upon financing.
The Company and STERIS expect to complete the transaction before the end of
September 1997.
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<PAGE> 12
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
Sales increased approximately 17.6% to $13,598,253 in 1997 from $11,562,127 in
1996, as a result of an overall increase in business across the Isomedix network
of facilities. The Vega Alta, Puerto Rico facility, acquired in March 1997, was
also a factor in the sales increase. This increase was partially offset by
competitive factors previously reported.
Gross profit increased to 54.3% of sales in 1997 from 52.2% in 1996. This
increase is attributable the increase in sales.
Selling, general and administrative expenses, as a percentage of sales, were
25.8% in both 1997 and 1996. However, selling, general and administrative
expenses increased 17.8% to $3,513,344 in 1997 from $2,982,239 in 1996. This
increase was primarily due to expenses related to the new Libertyville, Illinois
facility and the Vega Alta, Puerto Rico facility.
Operating income increased 27.0% to $3,876,158 in 1997 from $3,051,337 in 1996.
This increase is primarily a result of increased sales as discussed above. As a
percentage of sales, operating income increased to 28.5% in 1997 compared to
26.4% in 1996.
Investment income decreased to 52.3% to $106,182 in 1997 from $222,743 in 1996,
primarily as a result of a decrease in invested capital, compared to a year ago,
due to the purchase of Company common stock, radioisotope and property, plant
and equipment.
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<PAGE> 13
Income from continuing operations increased 21.4% to $2,296,958 in 1997 from
$1,892,799 in 1996. This increase is attributable to the reasons described
above.
Income from discontinued operations was $200,150 in the 1997 period compared to
a loss of $118,084 in the 1996 period. This was primarily due to the sale of
certain fixed assets of the discontinued Skyland operation during June 1997.
Net income increased 40.7% to $2,497,108 from $1,774,715 in 1996. This increase
is attributable to the reasons described above. As a percentage of sales, net
income was 18.4% in 1997 compared to 15.4% in 1996.
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<PAGE> 14
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Sales increased approximately 14.5% to $25,588,093 in 1997 from $22,354,859 in
1996. The 1996 period included $420,960 in progress billing towards an
irradiator sold to the United States Department of Agriculture. Excluding the
effect of the progress billing, sales increased 16.7% to $25,588,093 in 1997
from $21,933,899 in 1996, as a result of an overall increase in business across
the Isomedix network of facilities. The Vega Alta, Puerto Rico facility,
acquired in March 1997, was also a factor in the sales increase. This increase
was partially offset by competitive factors previously reported.
Gross profit increased to 52.5% of sales in 1997 from 50.4% in 1996. This
increase is attributable to the increase in sales.
Selling, general and administrative expenses, as a percentage of sales, were
26.3% in 1997 compared to 25.9% in 1996. This increase was primarily due to
severance payments of approximately $300,000 in the 1997 period. Before taking
this charge into account, selling, general and administrative expenses, as a
percentage of sales, were 25.1% in 1997.
Operating income increased 28.0% to $7,006,913 in 1997 from $5,473,893 in 1996,
before taking into account the charge in the 1997 period for severance payments
of approximately $300,000. Reflecting this charge, operating income increased
22.5% to $6,706,913 in 1997 from $5,473,893 in 1996. This increase is primarily
a result of increased sales as discussed above. As a percentage of sales,
operating income increased to 26.2% in 1997 compared to 24.5% in 1996.
-14-
<PAGE> 15
Investment income decreased 31.7% to $283,230 in 1997 from $414,653 in 1996,
primarily as a result of a decrease in invested capital, compared to a year ago,
due to the purchases of Company common stock, radioisotope and property, plant
and equipment.
Income from continuing operations increased 19.2% to $4,037,327 in 1997 from
$3,388,179 in 1996. This increase is attributable to the reasons described
above.
Income from discontinued operations was $200,150 in the 1997 period compared to
a loss of $128,963 in the 1996 period. This was primarily due to the sale of
certain fixed assets of the discontinued Skyland operation during June 1997.
Net income increased 30.0% to $4,237,477 from $3,259,216 in 1996. This increase
is attributable to the reasons described above. As a percentage of sales, net
income was 16.6% in 1997 compared to 14.6% in 1996.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997, the Company experienced a decrease in
its liquidity, attributable to purchases of Company common stock, the purchase
of a gamma radiation facility in Puerto Rico, capital expenditures for the
purchase of equipment and radioisotope for the Company's existing sterilization
facilities and the construction of a new sterilization facility in Libertyville,
Illinois. This decrease was
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<PAGE> 16
partially offset by cash provided by operating activities, derived from net
income for the period as adjusted for non-cash expense items such as
depreciation and amortization.
The Company currently utilizes excess cash flows from operations to fund capital
expenditures and facility expansion. In prior years, the Company has utilized
industrial development revenue bonds and sales of common stock to finance a
substantial portion of the costs of constructing and equipping (including the
initial purchase of radioisotope) some of its sterilization facilities.
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.
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.
The Company may also utilize existing credit facilities, which the Company
expects to be able to renew annually, to fund the working capital needs of the
Company, as required. Expansion plans are expected to be funded from the
Company's investments. The Company's capital expenditures for 1997 are
anticipated to be approximately $17 to $20 million, including the constructing
and equipping of the Company's new sterilization facility in Libertyville,
Illinois, which is expected to become operational in the second half of 1997 and
the purchase of a gamma radiation facility in Puerto Rico, which was completed
on March 19, 1997.
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<PAGE> 17
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.
NEW ACCOUNTING PRONOUNCEMENTS
1. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"), which is effective for financial statements for annual periods ending
after December 15, 1997. SFAS 128 establishes standards for the computation,
presentation and disclosure requirements for earnings per share. Management is
currently evaluating the impact of SFAS 128 on the financial statements.
2. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards Number 129 "Disclosure of
Information About Capital Structure" ("SFAS 129") that established standards
for disclosing information about an entity's capital structure. The statement
is effective for periods ending after December 15, 1997. The Company will adopt
SFAS 129 in the fourth quarter of 1997.
3. In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards Number 130 "Reporting Comprehensive Income"
("SFAS 130") that establishes standards for reporting and display of an
alternative income measurement in a full set of general-purpose financial
statements. This statement is effective for fiscal years beginning after
December 15, 1997. The Company will adopt SFAS 130 in fiscal year 1998.
4. In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards Number 131 "Disclosures About Segments of an
Enterprise and Related Information" ("SFAS 131") that establishes standards for
the reporting of information about operating segments in annual financial
statements. The Company is currently evaluating the new pronouncement for its
impact on the Company's financial statements. This statement is effective for
periods beginning after December 15, 1997. The Company will adopt SFAS 131 in
fiscal year 1998.
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<PAGE> 18
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 Submissions of Matters to a Vote of Security Holders
a) Registrant held its Annual Meeting of Stockholders on May 20,
1997.
Holders of at least 5,242,543 shares of the Common Stock of the
Company were present in person or represented by proxy, being
approximately 81.6% of the 6,425,393 shares of Common Stock of the
Company outstanding at the close of business on March 27, 1997,
the Record Date of the Meeting.
The following matters were acted on by the stockholders at the
Meeting:
1) The following persons were elected to the Board of Directors, as
follows:
<TABLE>
<CAPTION>
Votes Votes Votes
For Against Abstaining
<S> <C> <C> <C>
H. Stuart Campbell 5,200,851 41,692
Michael C. Nahl 5,185,424 47,314
</TABLE>
The following persons continue as directors after the Meeting:
Thomas J. DeAngelo, Thomas M. Haythe, David M. Lank and John
Masefield.
2) A proposal for the ratification of the selection of Coopers &
Lybrand L.L.P. to serve as the auditors for the fiscal year ending
December 31, 1997 was approved, as follows: 5,217,416 shares voted
in favor, 15,317 shares voted against and 9,810 shares abstained.
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<PAGE> 19
PART II. OTHER INFORMATION
Item 5 Other Information
On August 12, 1997, the Company announced that it has entered into an
Agreement and Plan of Merger (the "Merger Agreement") with STERIS
Corporation ("STERIS") and its wholly-owned subsidiary, Steris
Acquisition Corp. (the "Purchaser"), which provides for the
acquisition of Isomedix by STERIS. Under the terms of the Merger
Agreement, the Purchaser will commence a cash tender offer to acquire
all of the outstanding shares of Isomedix common stock at a price of
$20.50 per share, net to the selling stockholder. Closing of the
tender offer is subject to satisfaction of customary closing
conditions, including the Purchaser's acquisition in the tender offer
of a majority of the outstanding shares of Isomedix common stock. The
tender offer is not conditioned upon financing. The Company and STERIS
expect to complete the transaction before the end of September 1997.
Item 6 Exhibits and Reports on Form 10-Q
(a) Exhibits:
XI(a) Statement Re: Computation of Earnings Per Share For the Three
Months Ended June 30, 1997 and 1996. (Unaudited)
XI(b) Statement Re: Computation of Earnings Per Share for the Six
Months Ended June 30, 1997 and 1996. (Unaudited)
27 Financial Data Schedule
(b) Reports on Form 8-K:
During the three months ended June 30, 1997, the registrant filed no
reports on Form 8-K.
-19-
<PAGE> 20
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: August 14, 1997 /s/ John Masefield
----------------------------
John Masefield
President and
Chief Executive Officer
Date: August 14, 1997 /s/ Thomas J. DeAngelo
----------------------------
Thomas J. DeAngelo
Vice President
Finance and Administration
and Chief Financial Officer
-22-
<PAGE> 21
EXHIBIT INDEX
XI(a) Statement Re: Computation of Earnings Per Share For the Three
Months Ended June 30, 1997 and 1996. (Unaudited)
XI(b) Statement Re: Computation of Earnings Per Share for the Six
Months Ended June 30, 1997 and 1996. (Unaudited)
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 JUNE 30, 1997 AND 1996
(Unaudited)
Net income and common shares used in the calculation of earnings per share for
the three months ended June 30, 1997 and 1996, were computed as follows:
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
---- ----
<S> <C> <C>
Income from continuing operations $2,296,958 $ 1,892,799
Discontinued operations 200,150 (118,084)
---------- -----------
Net Income $2,497,108 $ 1,774,715
========== ===========
Weighted average number
of common shares
outstanding during the
period: 6,438,676 6,969,955
Add: Shares issuable upon
assumed exercise or con-
version of stock options
and warrants 214,817 202,645
---------- -----------
Common Shares 6,653,493 7,172,600
========== ===========
Primary earnings (loss) per
common share: (1)
Continuing operations $ .35 $ .26
Discontinued operations $ .03 $ (.01)
---------- -----------
Net income $ .38 $ .25
========== ===========
</TABLE>
(1) Fully diluted earnings per common share is equivalent to primary earnings
per common share.
-20-
<PAGE> 1
EXHIBIT XI(b)
ISOMEDIX INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE FOR THE
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
Net income and common shares used in the calculation of earnings per share for
the six months ended June 30, 1997 and 1996, were computed as follows:
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
---- ----
<S> <C> <C>
Income from continuing operations $4,037,327 $ 3,388,179
Discontinued operations 200,150 (128,963)
---------- -----------
Net Income $4,237,477 $ 3,259,216
========== ===========
Weighted average number of
common shares outstanding
during the period: 6,513,458 6,981,350
Add: Shares issuable upon
assumed exercise or con-
version of stock options
and warrants 163,182 200,762
---------- -----------
Common Shares 6,676,640 7,182,112
========== ===========
Primary earnings (loss) per
common share
Continuing operations $ .60 $ .47
Discontinued operations $ .03 $ (.02)
---------- -----------
Net income $ .63 $ .45
========== ===========
</TABLE>
(1) Fully diluted earnings per common share is equivalent to primary earnings
per common share.
-21-
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 12,324,885
<SECURITIES> 0
<RECEIVABLES> 7,575,631
<ALLOWANCES> 425,000
<INVENTORY> 0
<CURRENT-ASSETS> 20,424,285
<PP&E> 155,117,811
<DEPRECIATION> 62,984,888
<TOTAL-ASSETS> 113,703,348
<CURRENT-LIABILITIES> 4,717,388
<BONDS> 7,900,000
0
0
<COMMON> 71,689
<OTHER-SE> 92,821,272
<TOTAL-LIABILITY-AND-EQUITY> 113,703,348
<SALES> 25,588,093
<TOTAL-REVENUES> 25,588,093
<CGS> 12,149,514
<TOTAL-COSTS> 12,149,514
<OTHER-EXPENSES> 6,731,666
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 281,046
<INCOME-PRETAX> 6,729,097
<INCOME-TAX> 2,691,770
<INCOME-CONTINUING> 4,037,327
<DISCONTINUED> 200,150
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,237,477
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0.83
</TABLE>
