As filed with the Securities and Exchange Commission
on August 13, 1996
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
JUNE 30, 1996
(for quarterly period ended)
1-12318
Commission File Number
BALLARD MEDICAL PRODUCTS
(Exact name of registrant as specified in its charter)
UTAH
(State or other jurisdiction of incorporation or
organization)
87-0340144
(I.R.S. Employer Identification Number)
12050 LONE PEAK PARKWAY, DRAPER, UTAH 84020
(Address and zip code of principal executive offices)
(801) 572-6800
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if
changed since last report)
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.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuer's classes of stock, as of the latest practicable
date:
27,466,074 - all common, August 12, 1996
BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
FORM 10-Q INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Unaudited Consolidated
Balance Sheets as of June 30, 1996
and September 30, 1995
Condensed Unaudited Consolidated
Statements of Operations for the
three and nine months ended June
30, 1996 and 1995
Condensed Unaudited Consolidated
Statements of Cash Flows for the
nine months ended June 30,
1996 and 1995
Notes to Condensed Unaudited
Consolidated Financial Statements
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations
Risk Factors
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote
of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
Index to Exhibits
DEFINITIONS
As used herein, the following terms have the meanings
indicated:
GENERAL DEFINITIONS
1. "Ballard" refers to Ballard Medical Products.
2. The "Company" and the "Registrant" refer to
Ballard and its subsidiaries.
3. "MIC" refers to Medical Innovations Corporation, a
wholly-owned subsidiary of Ballard.
4. "BREH" refers to Ballard Real Estate Holdings,
Inc., a wholly-owned subsidiary of Ballard.
5. "BI" refers to Ballard International, Inc., a
wholly-owned subsidiary of Ballard.
6. "Neuro" refers to Neuro Navigational Corporation,
a Delaware corporation.
GLOSSARY OF TECHNICAL AND MEDICAL TERMS
CATHETER is a flexible tube that is inserted into the body
to deliver or remove fluid, retrieve blood, or act as a
conduit to pass other devices.
CLOSED SUCTION CATHETER is a sleeved catheter used with
endotracheal tubes, on patients receiving mechanical
ventilation, enabling the airways to be suctioned while
maintaining mechanical ventilatory support.
ENTERAL FEEDING CATHETER is a catheter used for the delivery
of nutritional liquids into the gastrointestinal tract of
the patient.
GASTROENTEROLOGY ("GI") is the human digestive tract,
including, but not limited to, the esophagus, stomach,
duodenum, small intestine and colon.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS 6/30/96 9/30/95
<S> <C> <C>
CURRENT ASSETS:
Cash and cash
equivalents $20,547,161 $27,329,371
Investments available-
for-sale 25,476,775 18,357,304
Trade accounts
receivable - net 18,405,282 13,504,572
Other receivables 896,153 1,173,871
Inventories:
Raw materials 4,530,179 3,784,222
Work-in-progress 2,716,450 2,286,542
Finished goods 6,212,873 5,220,882
Deferred income taxes 734,481 593,313
Income tax receivable 2,095,898 2,103,570
Royalties receivable 651,885 447,282
Prepaid expenses 336,314 232,315
Total current assets 82,603,451 75,033,244
PROPERTY AND EQUIPMENT:
Land 3,944,701 1,849,511
Buildings 11,957,625 11,886,512
Molds 3,348,805 2,539,615
Machinery and equipment 8,833,419 8,077,753
Vehicles 595,958 535,547
Furniture and fixtures 1,816,819 1,408,169
Leasehold improvements 267,267 246,735
Construction-in-
progress 7,622,714 1,234,998
Total 38,387,308 27,778,840
Less accumulated
depreciation 7,279,161 5,832,822
Property and
equipment - net 31,108,147 21,946,018
INTANGIBLE ASSETS -
net 16,194,061 15,106,614
OTHER ASSETS 4,735,025 933,497
TOTAL $134,640,684 $113,019,373
</TABLE>
See Notes to Condensed Unaudited Consolidated Financial
Statements.
BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS (continued)
<TABLE>
<CAPTION>
LIABILITIES AND
STOCKHOLDERS' EQUITY 6/30/96 9/30/95
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $2,650,476 $1,114,607
Accrued liabilities:
Employee
compensation 1,895,095 2,301,755
Royalties 324,783 344,712
Other 1,249,942 448,236
Total current
liabilities 6,120,296 4,209,310
DEFERRED INCOME TAXES 223,757
Total liabilities 6,120,296 4,433,067
STOCKHOLDERS' EQUITY:
Common stock 2,731,072 2,656,129
Additional paid-in
capital 38,923,766 29,213,647
Retained earnings 87,057,922 76,859,258
Net unrealized loss
on investments
available-for-sale
(net of taxes) (192,372) (142,728)
Total
Stockholders'
equity 128,520,388 108,586,306
TOTAL $134,640,684 $113,019,373
</TABLE>
See Notes to Condensed Unaudited Consolidated Financial
Statements.
BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
<S> <C> <C> <C> <C>
NET SALES $26,198,564 $21,353,249 $74,457,407 $59,894,110
COST OF PRODUCTS
SOLD 8,913,954 7,069,845 25,237,388 19,910,709
GROSS MARGIN 17,284,610 14,283,404 49,220,019 39,983,401
OPERATING EXPENSES:
Selling, general,
and administrative 6,990,075 6,116,932 20,609,063 17,151,373
Research and
development 736,581 572,050 2,121,260 1,561,906
Royalties 357,300 357,660 1,121,901 1,036,140
Total operating
expenses 8,083,956 7,046,642 23,852,224 19,749,419
OPERATING INCOME 9,200,654 7,236,762 25,367,795 20,233,982
OTHER INCOME - net 1,286,197 975,941 3,910,644 2,845,701
INCOME BEFORE INCOME
TAX EXPENSE 10,486,851 8,212,703 29,278,439 23,079,683
INCOME TAX EXPENSE 3,969,834 2,943,537 10,800,344 8,264,037
NET INCOME 6,517,017 5,269,166 18,478,095 14,815,646
INCOME PER SHARE:
Common and common
equivalent shares $0.228 $0.191 $0.651 $0.539
Common shares
assuming full
dilution $0.228 $0.190 $0.643 $0.535
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING:
Common and common
equivalent shares 28,523,419 27,646,414 28,377,588 27,469,379
Common shares
assuming full
dilution 28,525,480 27,747,830 28,757,975 27,715,290
</TABLE>
See Notes to Condensed Unaudited Consolidated Financial
Statements.
BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
6/30/96 6/30/95
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES $19,095,972 $18,263,080
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures for
property and equipment (8,351,329) (1,317,939)
Capital expenditures for land (2,158,456)
Proceeds from sale of land 511,429
Investment in Neuro (2,670,454)
Interest bearing advances to
Neuro (2,130,700)
Repayment of advances to Neuro 1,295,640
Increase in deposits (13,460)
Net cash paid for acquisitions (1,216,382) (3,970,340)
Purchases of investments
available-for-sale (21,537,122) (16,279,778)
Purchases of intangible assets (1,667,324) (1,254,597)
Proceeds from sales of
investments available-for-sale 14,336,653 13,925,730
Net cash used in investing
activities (23,601,505) (8,896,924)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from exercise of
options 6,037,754 421,153
Cash dividends paid (2,153,010) (1,581,821)
Purchase of treasury stock (6,161,421)
Net cash used in financing
activities (2,276,677) (1,160,668)
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (6,782,210) 8,205,488
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 27,329,371 15,109,682
CASH AND CASH EQUIVALENTS,
END OF PERIOD $20,547,161 $23,315,170
</TABLE>
See notes to condensed unaudited consolidated financial
statements.
BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period
for taxes $9,509,060 $6,477,900
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
During the nine months ended June 30, 1996 and 1995, the
Company increased additional paid-in capital by $3,782,308
and $171,500, respectively, which represents the tax benefit
attributable to the compensation received by employees from
the exercise and disqualifying disposition of incentive
stock options.
During the nine months ended June 30, 1996 and 1995, the
Company included in equity $192,372 and $185,602,
respectively, net unrealized losses on investments
available-for-sale (net of taxes).
See Notes to Condensed Unaudited Consolidated Financial
Statements.
BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
1. In management's opinion, the accompanying condensed
unaudited consolidated financial statements contain all
adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial
condition of Ballard and its subsidiaries as of June
30, 1996 and September 30, 1995, the results of
operations for the three and nine months ended June 30,
1996 and 1995, and the cash flows for the nine months
ended June 30, 1996 and 1995.
2. The results of operations for the three and nine months
ended June 30, 1996 are not necessarily indicative of
the results to be expected for the full year ended
September 30, 1996.
3. On April 19, 1996, the Company acquired substantially
all of the assets of Endovations, Inc. ("Endovations"),
a wholly-owned subsidiary of Arrow Precision Products,
Inc., for a cash purchase price of $1,216,382.
Endovations is a manufacturer of various products used
in the hospital GI environment. The acquisition has
been accounted for using the purchase method of
accounting and, as such, Endovations' results of
operations have been included in the accompanying
consolidated financial statements from the date of
acquisition. The cost of this acquisition exceeded the
estimated fair value of the acquired net assets by
$400,000, which is being amortized over 10 years.
Pro forma financial information is not presented as the
effect on the Company's financial position and earnings
was not significant.
4. In October, 1995, the Financial Accounting Standards
Board issued SFAS 123 "Accounting for Stock-Based
Compensation" which became effective beginning January
1, 1996. SFAS 123 requires expanded disclosures of
stock-based compensation arrangements with employees
and encourages (but does not require) compensation cost
to be measured based on the fair value of the equity
instrument awarded. Companies are permitted, however,
to continue to apply APB Opinion 25, which recognizes
compensation cost based on the intrinsic value of the
equity instrument awarded. The Company will continue
to apply APB Opinion 25 in its financial statements and
will disclose in a footnote to its 1996 Annual Report
on Form 10-K the proforma effect on net income and
earnings per share, as if the Company had applied the
new standard.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's 1995 Annual Report to Shareholders
contains management's discussion and analysis of the
financial condition and results of operations at and for the
year ended September 30, 1995. The following discussion and
analysis describes material changes in the Company's
financial condition and position from September 30, 1995.
Trends of a material nature are discussed to the extent
known and considered relevant. The analysis of results of
operations compares the three and nine months ended June 30,
1996, respectively, with the corresponding periods of 1995.
This analysis should be considered in conjunction with the
condensed unaudited consolidated balance sheets, condensed
unaudited consolidated statements of operations, and
condensed unaudited consolidated statements of cash flows.
RESULTS OF OPERATIONS
OVERVIEW - The Company's net sales for the quarter and
the nine months ended June 30, 1996 were at record levels,
reflecting the Company's continuing ability to gain market
share through expansion of its existing business base and
its ability to efficiently develop and deliver to the market
new products and enhancements.
The Company's earnings for the third quarter and
through the nine months ending June 30, 1996 also continued
to grow over the corresponding 1995 periods. The growth in
overall profits and high after-tax margins reflects the
Company's ongoing cost control programs and its ability to
compete effectively in a dynamic, price competitive
environment.
SALES - Net sales for the three months ended June 30,
1996 increased 22.7% to $26,198,564, compared with
$21,353,249 for the corresponding period in fiscal year
1995. Net sales for the nine months ended June 30, 1996
increased 24.3% to $74,457,407, compared with $59,894,110
for the corresponding period in fiscal year 1995.
The growth in net sales is principally due to expanding
market penetration of all of Ballard's principal product
lines, as well as acceptance of the Company's new products.
The Company's MIC enteral feeding catheters and related
products continue to show especially strong sales with
growth of 60.0% for the nine months ending June 30, 1996
over the corresponding period in 1995. International sales
also showed strong growth of 38.7% over the corresponding
nine months of fiscal year 1995.
Throughout the year, pricing for several products was
reduced in order to meet competition and price reductions
demanded by hospitals and large buying groups. Effective
June 1, 1996, prices on several of the TRACH CARE and MIC
products and accessories increased from 3% to 5%. But
overall, substantially all of the increase in net sales for
the nine months ending June 30, 1996 is attributable
primarily to an increased volume of products sold.
All sales of the Company and related receipts were in
U.S. dollars. Export sales to unaffiliated customers from
the Company's domestic operations did not exceed 10% of the
Company's domestic consolidated net sales.
COST OF PRODUCTS SOLD - Cost of products sold for the
three months ended June 30, 1996 was $8,913,954, compared to
$7,069,845 for the corresponding three months in fiscal
1995. Cost of products sold for the nine months ended June
30, 1996 was $25,237,388, compared to $19,910,709 for the
corresponding period in fiscal year 1995. As a percentage
of net sales, cost of products sold for the three and nine
months ended June 30, 1996 was 34.0% and 33.9%,
respectively, compared with 33.1% and 33.2%, respectively,
for the corresponding periods in 1995.
Cost of products sold as a percentage of net sales has
increased slightly during the periods due principally to the
effect of higher material and labor costs as well as to the
impact on margins from increased product rebates and sales
discounts. Additional cost increases have resulted from new
product acquisitions and their relatively lower initial
margins. The Company will continue its efforts to control
manufacturing costs despite increases resulting from
inflationary and pricing pressures. The Company continues
to refine and automate its manufacturing processes, as well
as expand its injection molding capacity.
OPERATING EXPENSES - Operating expenses consist of
selling, general, and administrative expenses, research and
development expenses, and royalty expenses. Total operating
expenses for the three and nine months ended June 30, 1996
were $8,083,956 and $23,852,224, respectively, which
represent increases of 14.7% and 20.8%, respectively, over
the corresponding periods of fiscal year 1995. As a
percentage of net sales, operating expenses for the three
and nine months ended June 30, 1996 totaled 30.9% and 32.0%,
respectively, compared with 33.0% and 32.9%, respectively,
for the corresponding periods in fiscal year 1995.
The decrease in total operating expenses as a percent
of net sales is due primarily to selling, general, and
administrative expenses which, as a percent of net sales,
decreased from 28.6% for the three and nine months ended
June 30, 1995 to 26.7% and 27.7%, respectively, for the
three and nine months ended June 30, 1996. These decreases
reflect the Company's successful efforts in controlling its
variable selling expenses.
Research and development expenses and royalty expenses,
as a percentage of net sales, also remained relatively
consistent between the periods, approximating 2.8% and 1.5%,
respectively, for both the three and nine months ended June
30, 1996, compared with 2.6% and 1.7%, respectively, for the
corresponding periods in fiscal year 1995.
OTHER INCOME - Other income generally consists of
interest income from investments and royalty income from the
licensing of the TRACH CARE closed suction system. In
addition, during the nine months other income includes
$448,162 of net gain from the sale of approximately four
acres of land located to the south of the Company's
facility. For the three and nine months ended June 30,
1996, other income totaled $1,286,197 and $3,910,644,
respectively, compared to $975,941 and $2,845,701,
respectively, for the corresponding periods in fiscal year
1995. Besides the land sale, the increases primarily
reflect the higher interest income from the Company's
increased cash and investment balances. Royalty income
remains fairly consistent on a quarterly basis,
approximating $600,000 quarterly.
NET INCOME - Net income after taxes for the three and
nine months ended June 30, 1996 increased 23.7% and 24.7%,
respectively, to $6,517,017 and $18,478,095, compared to
$5,269,166 and $14,815,646, respectively, for the
corresponding periods in fiscal year 1995. The increase in
net income reflects the growth in net sales, including
strong contributions and market-share gains from the MIC
business, and reflects the Company's successful efforts in
controlling production and operating costs and maintaining
strong margins.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended June 30, 1996 the Company's
operating activities provided $19,095,972 in cash and cash
equivalents, compared with $18,263,080 in cash and cash
equivalents provided during the corresponding period in
fiscal year 1995. At June 30, 1996, working capital totaled
$76,483,155, compared with $70,823,934 at September 30,
1995, and the Company's current ratio was 13.5 to 1.0 at
June 30, 1996. The Company had $46,023,936 in cash, cash
equivalents, and investments available-for-sale at June 30,
1996, compared with $45,686,675 at September 30, 1995.
Significant uses of cash during the nine months ended
June 30, 1996 included the purchase of 350,000 shares of
treasury stock for $6,161,421, the purchase of a 19.5%
interest in Neuro Navigational for $2,000,000 and related
option for $500,000 (see December 31, 1995 Form 10-Q), the
payment of $2,153,010 in cash dividends, the purchase of
land in California for $2,158,456, the acquisition of
Endovations, Inc. for $1,216,382, and $5,469,896 in progress
payments toward the construction of the Company's new
manufacturing facility in Pocatello, Idaho.
In addition to its strong liquidity and overall
financial position, the Company does not have any long-term
debt nor does management intend to utilize debt to fund
future expansion. The Company maintains a $5,000,000
unsecured line of credit with its bank but has never drawn
on this line. Continued growth in cash, cash equivalents,
and investments provides the Company financial stability and
flexibility to fund current operations, an aggressive
acquisition program, future growth and expansion, and its
dividend payment policy.
No significant commitments for the purchase of
inventory or property or equipment existed as of June 30,
1996.
RISK FACTORS
The Company is an FDA regulated business operating in
the rapidly changing health care industry. From time to
time the Company may report, through its press releases
and/or SEC filings, certain matters that would be
characterized as forward-looking statements that are subject
to risks and uncertainties that could cause actual results
to differ materially from those projected. Certain of these
risks and uncertainties are beyond management's control.
Such risks and uncertainties may include, among other
things, the following items:
COMPETITION. The medical device industry is
characterized by rapidly evolving technology and increased
competition. There are a number of companies that currently
offer, or are in the process of developing, products that
compete with products offered by the Company. Some of these
competitors have substantially greater capital resources,
research and development staffs and experience in the
medical device industry, including with respect to
regulatory compliance in the development, manufacturing and
sale of medical products similar to those offered by the
Company. These competitors may succeed in developing
technologies and products that are more effective than those
currently used or produced by the Company or that would
render some products offered by the Company obsolete or
noncompetitive. Competition based on price is becoming an
increasingly important factor in customer purchasing
patterns as a result of cost containment pressures on, and
consolidation in, the health care industry. Such
competition has exerted, and is likely to continue to exert,
downward pressure on the prices the Company is able to
charge for its products. The Company may not be able to
offset such downward price pressure through corresponding
cost reductions. Any failure to offset such pressure could
have an adverse impact on the business, results of
operations or financial condition of the Company.
INTELLECTUAL PROPERTY RIGHTS. From time to time, the
Company has received, and in the future may receive, notices
of claims with respect to possible infringement of the
intellectual property rights of others or notices of
challenges to its intellectual property rights. In some
instances such notices have given rise to, or may in the
future give rise to, litigation. Any litigation involving
the intellectual property rights of the Company may be
resolved by means of a negotiated settlement or by
contesting the claim through the judicial process. There
can be no assurance that the business, results of operations
or the financial condition of the Company will not suffer an
adverse impact as a result of intellectual property claims
that may be commenced against the Company in the future.
The Company owns certain patents and proprietary information
acquired while developing its products or through
acquisitions, and the Company is the licensee of certain
other technology. As patents expire, more competing
products may be released into the marketplace by other
companies. The ability of the Company to continue to
compete effectively with other medical device companies may
be materially dependent upon the protection afforded by its
patents and the confidentiality of certain proprietary
information. There can be no assurance that patents will be
issued for products and product improvements recently
released into the marketplace or for products presently
being developed.
MANAGED CARE AND OTHER HEALTH CARE PROVIDER
ORGANIZATIONS. Managed care and other health care provider
organizations have grown substantially in terms of the
percentage of the population in the United States that
receives medical benefits through such organizations and in
terms of the influence and control that they are able to
exert over an increasingly large portion of the health care
industry. These organizations are continuing to consolidate
and grow, increasing the ability of these organizations to
influence the practices and pricing involved in the purchase
of medical devices, including the products sold by the
Company.
HEALTH CARE REFORM/PRICING PRESSURE. The health care
industry in the United States is experiencing a period of
extensive change. Health care reform proposals have been
formulated by the current administration and by members of
Congress. In addition, state legislatures periodically
consider various health care reform proposals. Federal,
state and local government representatives will, in all
likelihood, continue to review and assess alternative health
care delivery systems and payment methodologies, and ongoing
public debate of these issues can be expected. Cost
containment initiatives, market pressures and proposed
changes in applicable laws and regulations may have a
dramatic effect on pricing or potential demand for medical
devices, the relative costs associated with doing business
and the amount of reimbursement by both government and
third-party payors. In particular, the industry is
experiencing market-driven reforms from forces within the
industry that are exerting pressure on health care companies
to reduce health care costs. These market-driven reforms
are resulting in industry-wide consolidation that is
expected to increase the downward pressure on health care
product margins, as larger buyer and supplier groups exert
pricing pressure on providers of medical devices and other
health care products. Both short-term and long-term cost
containment pressures, as well as the possibility of
regulatory reform, may have an adverse impact on the
Company's results of operations.
GOVERNMENT REGULATION. There has been a trend in
recent years, both in the United States and outside the
United States, toward more stringent regulation of, and
enforcement of requirements applicable to, medical device
manufacturers. The continuing trend of more stringent
regulatory oversight in product clearance and enforcement
activities has caused medical device manufacturers to
experience longer approval cycles, more uncertainty, greater
risk and greater expense. At the present time, there are no
meaningful indications that this trend will be discontinued
in the near-term or the long-term either in the United
States or abroad. The Company expects to continue to incur
additional operating expenses associated with its ongoing
regulatory compliance program, but the amount of these
incremental costs cannot be completely predicted and will
depend upon a variety of factors, including future changes
in statutes and regulations governing medical device
manufacturers. There can be no assurance that such
compliance requirements and quality assurance programs will
not have an adverse impact on the business, results of
operations or financial condition of the Company or that the
Company will not experience problems associated with FDA
regulatory compliance.
NEW PRODUCT INTRODUCTIONS. As the existing products of
the Company become more mature and its existing markets more
saturated, the importance of developing or acquiring new
products will increase. The development of any such
products will entail considerable time and expense,
including research and development costs and the time and
expense required to obtain necessary regulatory approvals,
which could adversely affect the business, results of
operations or financial condition of the Company. There can
be no assurance that such development activities will yield
products that can be commercialized profitably, or that any
product acquisition can be consummated on commercially
reasonable terms or at all. Any failure to acquire or
develop new products to supplement more mature products
could have an adverse impact on the business, results of
operations or financial condition of the Company.
TECHNOLOGICAL CHANGE. The medical technology as
utilized by the Company has been subject to rapid advances.
While the Company feels that it currently possesses the
technology necessary to carry on its business, its
commercial success will depend on its ability to remain
current with respect to such technological advances and to
retain experienced technical personnel. Furthermore, there
can be no assurance that other technological advances will
not render the Company's technology and certain products
uneconomical or obsolete.
PRODUCT LIABILITY EXPOSURE. Because its products are
intended to be used in health care settings on patients who
are physiologically unstable and may also be seriously or
critically ill, the Company is exposed to potential product
liability claims. From time to time, patients using the
Company's products have suffered serious injury or death,
which has led to product liability claims against the
Company. The Company does not believe that any of these
claims, individually or in the aggregate, will have a
material adverse impact on its business, results of
operations or financial condition. However, the Company
may, in the future, be subject to product liability claims
that could have such an adverse impact.
The Company maintains product liability coverage in
amounts that it deems sufficient for its business. However,
there can be no assurance that such coverage will ultimately
prove to be adequate, or that such coverage will continue to
remain available on acceptable terms or at all.
ACQUISITIONS. In order to continue increasing sales
volume and profits, the Company relies heavily on a program
of acquiring business and new product lines from other
companies. There is always a significant risk that a given
acquisition by the Company will prove to be unsuccessful or
end up not contributing sufficiently to sales and profit
growth of the Company. There is also a risk that
undiscovered or contingent liabilities of an acquired
company could negatively impact the Company's financial
position or even the acquisition transaction itself. The
integration of any businesses that the Company might acquire
could require substantial management resources. There can
be no assurance that any such integration will be
accomplished without having a short or potentially long-term
adverse impact on the business, results of operations or
financial condition of the Company or that the benefits
expected from any such integration will be fully realized.
LACK OF DIVIDENDS. Prior to January, 1990, no
dividends had been paid by the Company on its shares of
Common Stock. The Company has paid dividends since January,
1990. However, there can be no assurance that dividends
will be paid on shares in the future, particularly since the
Company prefers to reserve its cash and liquid assets for
growth and possible business acquisitions.
UNCERTAINTY OF FINANCIAL RESULTS AND CAPITAL NEEDS.
There may be substantial fluctuations in the Company's
results of operations because of the timing and recording of
revenues and market acceptance of existing Company products.
The ability of the Company to expand its manufacturing and
marketing operations cannot be predicted with certainty. If
revenues do not continue to increase as rapidly as they have
in the past few years, or if manufacturing, marketing, or
research and development are not successful or require more
money than is anticipated, the Company may have to scale
back product marketing, development and production efforts
and attempt to obtain external financing. There can be no
assurance that the Company would be able to obtain timely
external financing in the amounts required or that such
financing, if available, would be on terms advantageous to
the Company.
SUPPLY OF RAW MATERIALS. Certain of the Company's
products are dependent upon raw materials for which there
are single or few sources. So far, the Company has not had
any serious problems obtaining needed raw materials.
However, there can be no assurance that the Company will be
able to continue to depend on existing sources of certain
materials.
IMPACT OF CURRENCY FLUCTUATIONS; IMPORTANCE OF FOREIGN
SALES. Because sales of products by the Company outside the
United States typically are denominated in local currencies
and such sales are growing at a rate that is generally
faster than domestic sales, the results of operations of the
Company are expected to continue to be affected by changes
in exchange rates between certain foreign currencies and the
United States Dollar. There can be no assurance that the
Company will not experience currency fluctuation effects in
future periods, which could have an adverse impact on its
business, results of operation or financial condition. The
operations and financial results of the Company also may be
significantly affected by other international factors,
including changes in governmental regulations or import and
export restrictions, and foreign economic and political
conditions generally.
POSSIBLE VOLATILITY OF STOCK PRICE. The market price
of the Company's stock is, and is expected to continue to
be, subject to significant fluctuations in response to
variations in quarterly operating results, trends in the
health care industry in general and the medical device
industry in particular, and certain other factors beyond the
control of the Company. In addition, broad market
fluctuations, as well as general economic or political
conditions and initiatives such as health care reform, may
adversely impact the market price of the Company's stock,
regardless of the Company's operating performance.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
GUARDIANSHIP OF CARMEN MARIE SMOOT
v. BALLARD MEDICAL PRODUCTS, ET AL.
No material developments have occurred in this
litigation since the filing of the Company's Form 10-Q for
the quarter ended March 31, 1996. The parties continue to
engage in the discovery process.
LINDA MADSEN V. BALLARD MEDICAL PRODUCTS
No material developments have occurred in this
litigation since the filing of the Company's Form 10-Q for
the quarter ended March 31, 1996.
OTHER LITIGATION
The Company is also a party to ordinary routine
litigation incidental to the Company's business.
ITEM 2. CHANGES IN SECURITIES
There are no changes in the rights of the holders of
common stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There are no senior securities of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Since the Company's January, 1996 Annual Meeting of
Shareholders, no matters have been submitted to a vote of
the shareholders.
ITEM 5. OTHER INFORMATION
SALE OF LAND
Effective August 1, 1996, the Company (through BREH) entered
into an Option Agreement, granting to Wasatch Pacific, Inc.,
a Utah corporation (the "Buyer"), an option to purchase
18.67 acres of BREH's land (and 18 shares of stock in East
Jordan Irrigation Co.) located south of the Company's
Draper, Utah facility, at a purchase price of $200,000 per
acre. The initial option payment (for a 30-day option
period) was $5,000. Under the Option Agreement, the Buyer
can maintain its option on said land through February 3,
1997, by paying to BREH $10,000 per month.
RELOCATION OF CALIFORNIA OPERATIONS
On or about August 8, 1996, the Company announced to its
employees the decision to move all of the Company's
California operations at MIC to Pocatello, Idaho. The move
will require the expansion of the Pocatello building. MIC
employees have been offered various bonus and incentive
packages to persuade them to remain with MIC through the
closing of the California plant. It is anticipated that
this move will take approximately 9-12 months to complete.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Statements concerning computation of income per
share are included in the financial information provided in
Item 1 of Part I and are incorporated by reference into this
Item 6 of Part II of this report.
(b) No reports on Form 8-K were filed during the
period covered by this Form 10-Q.
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.
BALLARD MEDICAL PRODUCTS
(Registrant)
Date: 8/13/96 Dale H. Ballard, President and
Principal Executive Officer
Date: 8/13/96 Kenneth R. Sorenson,
Treasurer and
Principal Financial Officer
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE NO.
10 Wasatch Pacific, Inc./Ballard
Real Estate Holdings, Inc.
Option Agreement
27 Financial Data Schedule
EXHIBIT 10
WASATCH PACIFIC, INC./BALLARD REAL ESTATE HOLDINGS, INC.
OPTION AGREEMENT
AGREEMENT made effective August 1, 1996, by and between
WASATCH PACIFIC, INC., a Utah corporation ("Buyer") and
BALLARD REAL ESTATE HOLDINGS, INC., a Utah corporation
("Seller").
THE PARTIES agree as follows:
1. GRANT OF OPTION. Seller hereby grants to Buyer an
option to purchase approximately 18.67 acres of property
located in Section 25, Township 3 South, Range 1 West, Salt
Lake Base and Meridian between 12300 South and Pilot Drive
and west of Lone Peak Parkway in Draper, Salt Lake County,
Utah (the "Property"), together with eighteen (18) shares of
water in East Jordan Irrigation Company (the "Water
Shares"). A sketch of the Property is set forth in Exhibit
A, attached to and made a part of this Agreement by
reference. A final legal description of the Property will
be prepared prior to closing, based upon a certified survey
to be obtained, at Buyer's cost. See Section 4 below.
2. OPTION CONSIDERATION/TERM. Contemporaneously with
the parties' execution of this Agreement, Buyer is paying to
Seller the sum of $5,000, as option consideration for an
option term of thirty (30) days, i.e., the option term will
expire at 5:00 p.m. September 2, 1996. However, the option
term may be extended, only for the respective additional
periods shown in column (b) of the table below, provided
Buyer pays and delivers to Seller the respective additional
option consideration sums (in cash or certified funds or
personal check) shown in column (a) before the expiration of
the respective termination dates indicated:
(a) (b)
If $10,000 is received Then the option term
by Seller from Buyer will be extended for an
before 5:00 p.m. additional thirty (30)
September 2, 1996, days to 5:00 p.m.
October 2, 1996.
If $10,000 is received Then the option term
by Seller from Buyer will be extended for an
before 5:00 p.m. additional thirty (30)
October 2, 1996, days to 5:00 p.m.
November 1, 1996.
If $10,000 is received Then the option term
by Seller from Buyer will be extended for an
before 5:00 p.m. additional thirty (30)
November 1, 1996, days to 5:00 p.m.
December 2, 1996.
If $10,000 is received Then the option term
by Seller from Buyer will be extended for an
before 5:00 p.m. additional thirty (30)
December 2, 1996, days to 5:00 p.m.
January 2, 1997.
If 10,000 is received Then the option term
by Seller from Buyer will be extended for an
before 5:00 p.m. additional thirty (30)
January 2, 1997, days to 5:00 p.m.
February 3, 1997.
Seller will not grant any extensions over and above
those shown above. The above payment schedule and dates
must be complied with strictly. If Seller does not receive
any given payment of additional option consideration (in
cash or certified funds or personal check) by the applicable
termination date shown above, then this Agreement and the
option granted herein shall terminate automatically and
completely as of the termination date granted for the most
recent payment of option consideration, shown in column (b),
without the requirement of any notice or opportunity to cure
being given to Buyer.
All of the option consideration paid or to be paid by
Buyer to Seller shall constitute NONREFUNDABLE consideration
for Seller's willingness to enter into this Agreement and
remove the Property and the Water Shares from the market
during the option term. These sums shall be retained by
Seller under any circumstances.
All sums payable to Seller under this Agreement shall
be paid in cash or certified funds or personal check and
shall be paid to the following:
Ballard Real Estate Holdings, Inc.
12050 Lone Peak Parkway
Draper, Utah 84020
Attention: Paul W. Hess, General Counsel
3. EXERCISE/CLOSING DATE.
(a) If Buyer decides to purchase the Property and
the Water Shares, Buyer must exercise its option hereunder
by delivering to Seller during the initial or any extended
option term (as shown in the table in Section 2 above) a
written notice advising Seller that Buyer is exercising its
option hereunder to purchase the Property and the Water
Shares (the "Exercise Notice"). Closing of the purchase and
sale of the Property and the Water Shares must then occur
within twenty (20) calendar days after Buyer gives the
Exercise Notice.
(b) If Seller does not receive the Exercise
Notice strictly when and as required herein, then this
Agreement and the option granted herein shall terminate
automatically and completely as of the termination date
granted for the most recent payment of option consideration,
shown in column (b) of Section 2 above, without the
requirement of any notice or opportunity to cure being given
to Buyer.
(c) If closing does not occur within the 20-day
period specified in paragraph (a) above, then this Agreement
and the option granted herein shall be automatically and
completely terminated as of the tenth day following Buyer's
giving of the Exercise Notice, without the requirement of
any notice or opportunity to cure being given to Buyer.
PROVIDED, HOWEVER, that if closing is delayed (i) by Seller;
or (ii) because of title problems with or encumbrances
against the Property through the fault of Seller arising
subsequent to the effective date of this Agreement, then
closing will be delayed until Seller cures such delay or
title problems.
4. PURCHASE PRICE/PAYMENT.
(a) The purchase price of the Property and the
Water Shares shall be determined by multiplying the total
number of acres included in the Property by $200,000 per
acre. In determining the acreage of the Property for
purposes of computation of the purchase price therefor there
shall be excluded any strips or other parts of the Property
that may be included within the boundary lines of any
dedicated street or highway, but there shall not be
excluded, and the purchase price of the Property shall not
be reduced by reason of, any strips or other parts of the
Property that may be included within and/or burdened by any
other streets, roadways, rights-of-way, easements, and/or
encroachment areas.
(b) The acreage of the Property (exclusive of the
strips or parts referred to above) shall be determined, to
at least two decimal places, via a boundary survey (from a
reputable engineering firm) to be arranged for and furnished
by Buyer to Seller within 45 days after the effective date
of this Agreement. Buyer shall cause the corners of the
Property to be staked on the ground in connection with such
boundary survey. The cost of such survey shall be borne by
Buyer. Buyer shall promptly provide a copy of the survey to
Seller.
(c) Based upon acreage of 18.67 acres, the
purchase price would be $3,734,000.
5. PAYMENT. The purchase price shall be paid as
follows:
(a) Buyer shall receive credit toward the
purchase price for all option consideration paid hereunder
by Buyer; and
(b) The balance of the purchase price shall be
paid in cash or certified funds at closing, as adjusted by
prorations, credits, and closing costs required by other
provisions of this Agreement to be taken into account.
6. TITLE REPORT. Within twenty (20) days after
Seller receives the survey under Section 4(b) above, Seller
will provide to Buyer a commitment for title insurance from
Metro National Title Company or another title company
acceptable to both parties (the "Title Company"), covering
the Property, naming Buyer as the proposed insured, and
contemplating the issuance of an owner's title policy in the
amount of the purchase price hereunder (the "Title Report").
7. CLOSING. Closing of the purchase and sale herein
shall occur at the offices of the Title Company. At
closing:
(a) Seller shall execute and deliver to Buyer a
Warranty Deed substantially in the form of the deed attached
hereto as Exhibit B and made a part of this Agreement by
reference (the "Warranty Deed").
(b) Buyer shall deliver to Seller cash or
certified funds in the amount and as specified in Section
5(b) above.
(c) Seller shall deliver possession of the
Property to Buyer.
(d) Seller shall provide to Buyer, at Seller's
cost, a standard owner's ALTA title insurance policy in the
amount of the purchase price, said policy to contain
standard exceptions and all exceptions shown in the Title
Report. Buyer may request and pay for extended coverage.
(e) The parties will execute and cause to be
recorded at the Salt Lake County Recorder's Office a
Declaration of Covenants, Conditions, and Restrictions (the
"CC&Rs") against the Property. The CC&Rs will provide,
among other things, the following use restriction:
No portion of the Property shall be used for any
purpose that is not permissible as regards such
portion under then-applicable zoning ordinances of
the governmental authority having jurisdiction.
In addition, no portion of the Property shall be
used for any of the following purposes, whether or
not permissible under applicable zoning
ordinances: (a) residential use; (b)
sandblasting; (c) animal kennels, stockyards, feed
yards, or slaughter of animals; (d) cemetery; (e)
correctional institution or prison; (f) amusement
enterprises; (g) milling or smelting of ore; (h)
manufacturing of cement, lime, gypsum, rock wool,
or plaster of paris; (i) garbage dumps or dead
animal reduction; or (j) refining of petroleum or
crank case oil.
(f) Seller shall endorse and deliver to Buyer
certificates for the Water Shares.
8. PROPERTY TAXES. General property taxes (at the
"Greenbelt" rate, i.e., based upon the Property's value for
agricultural use), for 1996 or 1997, whichever is the year
of closing, shall be prorated between the parties as of the
closing date. However, Buyer agrees to pay 50% of all
rollback taxes owed as a result of the change in use of the
Property to a use other than agricultural. Seller will pay
the other 50%.
9. CLOSING COSTS. Seller and Buyer shall each pay
one-half of the escrow closing fee. The parties shall
pay their own attorneys' fees and costs.
10. DEVELOPMENT PLANS. During the option term (a)
Seller will cooperate with any reasonable development plan
and application for rezoning Buyer wishes to submit to
Draper City, provided Seller approves of Buyer's proposed
development plan; and (b) Seller will also sign on any and
all preliminary or final plats as reasonably requested by
Buyer for applications with Draper City, provided such plats
are consistent with approvals given by Seller.
11. POSSESSION AND USE. Buyer shall not in any manner
whatsoever use, occupy, possess, excavate on, or conduct any
construction or development activities on the Property
unless and until the closing has occurred under this
Agreement. Buyer may, however, prior to the closing enter
upon or authorize others to enter upon the Property for the
limited purpose of performing soils tests, hazardous
substance and environmental tests, surveys, and associated
borings or activities as Buyer may deem necessary to
facilitate Buyer's intended use of the Property provided the
same shall not unreasonably interfere with Seller's use of
the Property for agricultural purposes. Buyer shall
indemnify and hold harmless Seller's from and against any
and all loss or liability that may result from any such
entry upon the Property.
12. "AS IS" SALE. Seller has made and is making no
representation, warranty, or agreement relative to the legal
or physical characteristics or condition of the Property,
relative to the buildings and structures located on the
Property, relative to the environmental condition of the
Property, relative to the adequacy or suitability of the
Property for development or for any particular use, relative
to the availability or adequacy of access or utility
services as regards the Property, regarding the status of
Seller's efforts relating to development or subdivision of
the Property or regarding the consequences or propriety of
those efforts. Buyer acknowledges that, except as may
otherwise be expressly provided in this Agreement, it is
purchasing and acquiring the Property, and any other assets,
rights, and interests covered by this Agreement "AS IS",
without any representation, warranty, or assurance of any
kind whatsoever, express or implied, by Seller or by any
agent, broker, employee, or other representative of Seller.
SELLER'S REPRESENTATIONS, WARRANTIES, AND ASSURANCES TO
BUYER IN CONNECTION WITH THE SUBJECT MATTER OF THIS
AGREEMENT ARE STRICTLY LIMITED TO THOSE SET FORTH HEREIN,
AND ANY AND ALL IMPLIED WARRANTIES AND ASSURANCES THAT MIGHT
OTHERWISE BENEFIT BUYER ARE HEREBY DISCLAIMED BY SELLER AND
WAIVED AND RELINQUISHED BY BUYER.
13. DEFAULT. Time is of the essence of this Agreement
and of each of the provisions hereof. In the event Buyer
fails to carry out any of the provisions of this Agreement
or to timely perform any of its obligations hereunder,
Seller shall have all of the following rights and remedies
and shall have the right at its option to pursue any of such
rights or remedies or any appropriate combination thereof:
(a) Seller may terminate all of Seller's obligations under
this Agreement and all of Buyer's rights respecting the
Property; and/or (b) Seller shall have such other rights or
remedies as are available under applicable law.
14. ENTIRE AGREEMENT. This Agreement contains the
entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all
previous written or oral negotiations, commitments, and
understandings. No letter, telegram or communication
passing between the parties hereto covering any matter
during the period of this Agreement, or thereafter, shall be
deemed a part of this Agreement; nor shall it have the
effect of modifying or adding to this Agreement unless it is
distinctly stated in such letter, telegram, or communication
that it is to constitute a part of this Agreement and is to
be attached as a rider to this Agreement and is signed by
the parties thereto.
15. EXECUTION BY COUNTERPART/SIGNATURES. This
Agreement may be executed separately or independently in any
number of counterparts, each and all of which together shall
be deemed to have been executed simultaneously and for all
purposes to be one Agreement. Facsimile signatures shall
constitute original, binding signatures.
16. HEADINGS. All headings in this Agreement are
inserted for convenience of reference and shall not affect
its meaning or interpretation.
17. EXHIBITS. All exhibits annexed to this Agreement
and the documents to be delivered at or prior to the closing
are expressly made a part of this Agreement as fully as
though completely set forth in it. All references to this
Agreement, either in the Agreement itself or in any of such
writings, shall be deemed to refer to and include this
Agreement and all such exhibits and writings.
18. FURTHER ACTION. The parties shall execute and
deliver all documents, provide all information and take or
forebear from all such action as may be necessary or
appropriate to achieve the intent and purposes of this
Agreement. In the case of either party's refusal or failure
to execute, acknowledge and deliver any document, instrument
or conveyance that may be necessary or proper to carry out
the provisions of this Agreement, the other party shall have
power and authority as an attorney-in-fact for the party so
refusing or failing, to execute, acknowledge, and deliver
such instrument or conveyance.
19. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Utah applicable to agreements made and entirely to be
performed within such jurisdiction except to the extent
federal law may be applicable. Any action under this
Agreement may be filed and maintained only in state or
federal courts located within Salt Lake County, State of
Utah, and all parties hereby submit to the jurisdiction of
such courts.
20. SEVERABILITY. If and to the extent that any court
of competent jurisdiction holds any provision or any part
hereof of this Agreement to be invalid or unenforceable,
such holding shall in no way affect the validity of the
remainder of this Agreement.
21. NOTICES. All notices, requests, consents,
demands, approvals, and other documents, instruments, and
communications which are required or permitted hereunder
shall be in writing and shall be deemed to have been duly
given either at the time of delivery if personally
delivered, or 5 business days after the time of the postmark
if mailed registered or certified mail, return receipt
requested, and addressed as follows:
If to Seller: Ballard Real Estate Holdings, Inc.
12050 Lone Peak Parkway
Draper, Utah 84020
Attention: Paul W. Hess, General Counsel
If to Buyer: Wasatch Pacific, Inc.
12433 South Fort Street
Draper, Utah 84020
Attention: Terry C. Diehl
with a copy to: Brent Small, General Counsel
12433 South Fort Street
Draper, Utah 84020
22. SURVIVAL. The covenants, terms, and conditions of
this Agreement shall survive the closing of the purchase and
sale contemplated herein.
23. AUTHORITY. Each person executing this Agreement
and the related closing documents for a party represents and
warrants that (a) he has authority to execute and perform
the same for and in behalf of said party; and (b) all
necessary action has been taken to approve the transactions
contemplated under this Agreement.
24. LITIGATION EXPENSES. If any action, suit or
proceeding is brought by a party hereto with respect to a
matter or matters covered by this Agreement, all costs and
expenses of the prevailing party incident to such
proceeding, including reasonable attorney's fees, shall be
paid by the other party.
25. BROKERS. Buyer represents and warrants that no
commission or finder's fee will be owed by Buyer as a result
of this purchase and sale and Buyer will indemnify and hold
Seller harmless from all claims which may be asserted by any
person or entity on account of any alleged sales or agency
agreement. Seller represents and warrants that no
commission or finder's fee will be owed by Seller as a
result of the purchase and sale transaction hereunder, and
Seller will indemnify and hold Buyer harmless from all
claims which may be asserted by any person or entity on
account of an alleged agreement with Seller.
26. ASSIGNMENT. Buyer may assign its rights under
this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the dates shown below, effective as of the date
and year first shown above.
BUYER:
WASATCH PACIFIC, INC.
Date: August 1, 1996 By: Terry C. Diehl, President
SELLER:
BALLARD REAL ESTATE HOLDINGS, INC.
Date: August 1, 1996 By: Dale H. Ballard, President
EXHIBIT A
(Map of area)
EXHIBIT B
(Attached to and forming part of Option Agreement)
RECORDED AT THE REQUEST OF: MAIL TAX NOTICE TO:
Paul W. Hess, Attorney at Law Wasatch Pacific, Inc.
12050 Lone Peak Parkway 12433 South Fort Street
Draper, Utah 84020 Draper, Utah 84020
WARRANTY DEED
BALLARD REAL ESTATE HOLDINGS, INC., a Utah corporation,
Grantor, of 12040 Lone Peak Parkway, Draper, Salt Lake
County, Utah, hereby conveys and warrants to WASATCH
PACIFIC, INC., a Utah corporation, Grantee, of 12433 South
Fort Street, Draper, Salt Lake County, Utah, for the sum of
ten dollars and other good and valuable consideration, the
following described real property located in Salt Lake
County, State of Utah:
[Legal Description]
Contains approximately 18.67 acres
TOGETHER with all buildings and improvements.
SUBJECT TO
1. All rollback taxes owed or accrued under the
Farmland Assessment Act. U.C.A. Section 59-2-501, et seq.;
plus general property taxes for [year of closing] and sub-
sequent years.
2. All easements, restrictions, reservations and
rights of way of record or enforceable in law or in equity
and all easements or rights of way for railroads, highways,
roads, ditches, canals, transmission lines, telephone lines,
water, water lines, waterways, gas, cable communication,
sewer, drainage, pipelines and all other utility easements
now existing over, under, or across said property.
3. Any reservation of rights by the United States or
Utah.
4. Charges, assessments, terms, conditions and
covenants for sewer districts, service areas, conservancy
districts, protection districts affecting said properties or
any assignments thereof.
5. Non-utility easements (including without
limitation irrigation ditches), restrictions, reservations
and rights-of-way of record or which are readily apparent
from an examination of the premises.
6. Any liens, encumbrances, or encroachments
resulting from work performed on the Property by or at the
request of Grantee.
7. Any dispute as to any property whose legal
description may overlap or be inconsistent with said
property.
8. Discrepancies, conflicts in boundary lines,
shortage in area, encroachments, or any other facts which a
correct survey would disclose, and which are not shown by
public records.
9. Any facts, rights, interests, or claims which are
not shown by the public records but which could be
ascertained by an inspection of said property or by making
inquiry of person or entities in possession thereof.
10. Charges and assessments by Draper City.
11. Charges and assessments of Draper Irrigation.
12. Charges and assessments of Salt Lake County
Sewerage Improvement District No. 1.
13. Notice of Adoption of Redevelopment Plan Entitled
"West Freeway Neighborhood Development Plan, as Amended,"
and dated April 16, 1990, recorded May 30, 1990, as Entry
No. 4922285, in Book 6224, at Page 1285 of Official Records.
14. The rights of parties in possession of the
property under unrecorded leases, rental or occupancy
agreements and any claims thereunder.
Together with all buildings, improvements, and
appurtenances.
Dated this [ ] day of [ ], 199[ ].
BALLARD REAL ESTATE HOLDINGS, INC.
Date: By: [Dale H. Ballard]
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me
this [ ] day of [ ], 199[ ], by Dale H. Ballard, as
President of Ballard Real Estate Holdings, Inc., Grantor.
Notary Public
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's third quarter 10-Q and is qualified in its entirety by reference to
such 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 20,547,161
<SECURITIES> 25,476,775
<RECEIVABLES> 19,130,282
<ALLOWANCES> 725,000
<INVENTORY> 13,459,502
<CURRENT-ASSETS> 82,603,451
<PP&E> 38,387,308
<DEPRECIATION> 7,279,161
<TOTAL-ASSETS> 134,640,684
<CURRENT-LIABILITIES> 6,120,296
<BONDS> 0
0
0
<COMMON> 2,731,072
<OTHER-SE> 125,789,316
<TOTAL-LIABILITY-AND-EQUITY> 134,640,684
<SALES> 74,457,407
<TOTAL-REVENUES> 74,457,407
<CGS> 25,237,388
<TOTAL-COSTS> 25,237,388
<OTHER-EXPENSES> 23,852,224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 29,278,439
<INCOME-TAX> 10,800,344
<INCOME-CONTINUING> 18,478,095
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,478,095
<EPS-PRIMARY> 0.651
<EPS-DILUTED> 0.643
</TABLE>
