|
|
|
|
|
|
|
|
|
|
|
|
|
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly period ended JUNE 30, 1996 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 0-11278
-------
MINNTECH CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1229121
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14605 - 28TH AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55447
(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 553-3300
----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at July 31, 1996
- -------------------------- -------------------------------
Common Stock, $0.05 par value 6,653,214 shares
<PAGE>
Minntech Corporation
Quarterly Report on Form 10-Q
June 30, 1996
Index
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Earnings 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MINNTECH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands except per share amounts)
Three Months Ended
June 30
----------------------------
1996 1995
------- -------
Net sales $16,685 $15,444
OPERATING COSTS AND EXPENSES
Cost of sales 9,383 9,153
Research and development 834 754
Selling, general and administrative 4,092 3,579
Amortization of intangible assets 212 140
------- -------
Total operating costs and expenses 14,521 13,626
------- -------
EARNINGS FROM OPERATIONS 2,164 1,818
Other income (expense), net (73) 45
------- -------
EARNINGS BEFORE INCOME TAXES AND
MINORITY INTEREST 2,091 1,863
Provision for income taxes 871 670
Minority interest (70) -
------- -------
NET EARNINGS $ 1,290 $ 1,193
------- -------
------- -------
NET EARNINGS PER SHARE $ .19 $.18
------- -------
------- -------
Weighted average common and common
equivalent shares 6,962 6,683
------- -------
------- -------
Page 3
<PAGE>
MINNTECH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS June 30, March 31,
1996 1996
-------- --------
CURRENT ASSETS
Cash and cash equivalents $ 1,234 $ 4,064
Marketable securities 1,130 1,154
Accounts receivable, net 11,666 11,262
Inventories
Finished goods 6,078 4,768
Materials and work-in-process 8,577 6,667
Prepaid expenses 741 1,197
-------- --------
TOTAL CURRENT ASSETS 29,426 29,112
PROPERTY AND EQUIPMENT, AT COST
Land, buildings and improvements 9,326 9,326
Machinery and equipment 22,487 21,024
-------- --------
31,813 30,350
Less accumulated depreciation (13,791) (13,027)
-------- --------
18,022 17,323
OTHER ASSETS
Patent costs, net 776 802
Goodwill, net 1,660 1,770
Other 1,237 1,040
-------- --------
$ 51,121 $ 50,047
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,852 $ 5,189
Accrued expenses 1,402 1,795
Income taxes payable 458 -
-------- --------
TOTAL CURRENT LIABILITIES 6,712 6,984
DEFERRED INCOME TAXES 1,412 1,412
DEFERRED COMPENSATION 158 130
MINORITY INTEREST 240 310
STOCKHOLDERS' EQUITY
Preferred stock, no par value - -
Common stock, $.05 par value 333 332
Additional paid-in capital 11,850 11,647
Retained earnings 30,416 29,232
-------- --------
42,599 41,211
-------- --------
$ 51,121 $ 50,047
-------- --------
-------- --------
Page 4
<PAGE>
MINNTECH CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
June 30
--------------------------
1996 1995
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $1,290 $1,193
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities
Depreciation and amortization 974 775
Provision for losses on accounts receivable 38 15
Tax benefit from stock option exercises - 40
Foreign currency exchange (gain) loss 96 31
Deferred income taxes - 30
Minority interest (70) -
Other 24 (80)
Changes in assets and liabilities:
Accounts receivable (516) 177
Inventories (3,286) (962)
Prepaid expenses 50 90
Accounts payable and accrued expenses (712) 484
Income taxes payable 827 469
---------- ---------
Total adjustments (2,575) 1,069
---------- ---------
NET CASH PROVIDED BY (USED IN)OPERATING ACTIVITIES (1,285) 2,262
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (1,667) (1,295)
Patent application costs (70) (90)
Acquisition of product line - (733)
---------- ---------
NET CASH USED IN INVESTING ACTIVITIES (1,737) (2,118)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options 204 401
---------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 204 401
---------- ---------
Effects of exchange rate changes on foreign currency
cash balances (12) (15)
---------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,830) 530
Cash and cash equivalents at beginning of period 4,064 3,325
---------- ---------
Cash and cash equivalents at end of period $1,234 $3,855
---------- ---------
---------- ---------
</TABLE>
Page 5
<PAGE>
MINNTECH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - FINANCIAL INFORMATION
The unaudited interim condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission; accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
These interim condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes in the
Company's Annual Report on Form 10-K for the year ended March 31, 1996 as filed
with the Securities and Exchange Commission.
In the opinion of management, the condensed consolidated financial statements
reflect all adjustments necessary for a fair presentation of the interim
periods.
NOTE B - NET EARNINGS PER SHARE
The calculations of net earnings per common and common equivalent shares are
presented in the following table. All amounts are in thousands except per share
amounts.
Three Months Ended
June 30
-----------------------
1996 1995
------- -------
Net earnings $ 1,290 $ 1,193
------- -------
------- -------
Weighted average common shares
outstanding 6,652 6,411
Weighted average common equivalent
shares for stock options 310 272
------- -------
Weighted average common and common
equivalent shares 6,962 6,683
------- -------
------- -------
Net earnings per share $ .19 $ .18
------- -------
------- -------
Page 6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales for the first quarter ended June 30, 1996 increased by $1,241,000, or 8%,
from sales in the first quarter of the prior year due to increased sales of
Renatrons-Registered Trademark-, reprocessing supplies, dialyzers and water
treatment products.
Net sales by product group are summarized on the following table:
(in thousands) Three Months Ended June 30
------------------------
1996 1995
-------- --------
Dialysis supplies and devices $ 4,770 $ 4,960
Reprocessing products 5,794 4,559
Cardiosurgery products 5,457 5,563
Water purification products 664 362
-------- --------
$16,685 $15,444
-------- --------
-------- --------
Gross profit for the quarter ended June 30, 1996 was $7,302,000, or 43.8% of net
sales, compared to $6,291,000, or 40.7% of net sales, for the first quarter last
year. Increased gross margin was due primarily to improved efficiencies in
manufacturing.
Research and development expenses for the quarter ended June 30, 1996 totaled
$834,000, or 5.0% of sales, compared to $754,000, or 4.9% of sales, in the first
quarter one year ago. The Company expects total research and development
expenses for the fiscal year ending March 31, 1997 to be approximately 6% of
sales.
Selling, general and administrative expenses for the quarter ended June 30,
1996 were $4,092,000, or 24.5% of sales, compared to $3,579,000, or 23.2% of
sales, in the first quarter one year ago. Selling, general and
administrative expenses have increased due to expansion of sales, expenses
associated with the year-end audit and implementation of an MIS system, and
expanded marketing efforts in Europe and Japan.
The Company's effective income tax rate was 41.7% in the quarter ended June 30,
1996 compared to a rate of 36.0% in the first quarter of the prior year. The
increased effective tax rate was due to foreign subsidiary operating losses
which were not deductible as of June 30, 1996.
The Company reported net earnings of $1,290,000, or 7.7% of sales, for the
quarter ended June 30, 1996 compared to earnings of $1,193,000, or 7.7% of
sales, in the first quarter one year ago.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had $2,364,000 of cash, cash equivalents and
marketable securities, a decrease of $2,854,000 from the balance at March 31,
1996. Working capital at June 30, 1996 was $22,714,000 compared to $22,128,000
at March 31, 1996. The decrease in cash in the first quarter was due to a
build-up of finished goods and increased raw material inventories to meet
ramped up production. The Company's current ratio at June 30, 1996 was 4.4 to
1 compared to 4.2 to 1 at March 31, 1996.
Page 7
<PAGE>
The Company acquired $1,667,000 of capital equipment during the quarter ended
June 30, 1996 and expects to invest approximately $3,500,000 in capital
equipment for the full fiscal year.
The Company believes that it may require borrowing to meet working capital
needs in fiscal year 1997. Cash expended to ramp up production may exceed
cash flow from operations in the second quarter.
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 1996.
Page 8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MINNTECH CORPORATION
DATE: AUGUST , 1996 /s/ Thomas J. McGoldrick
------------------ ---------------------------
Thomas J. McGoldrick
Executive Vice President
(Duly authorized officer)
(Principal financial officer)
Page 9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF EARNINGS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,234
<SECURITIES> 1,130
<RECEIVABLES> 11,666
<ALLOWANCES> 0
<INVENTORY> 14,655
<CURRENT-ASSETS> 29,426
<PP&E> 31,813
<DEPRECIATION> 13,791
<TOTAL-ASSETS> 51,121
<CURRENT-LIABILITIES> 6,712
<BONDS> 0
0
0
<COMMON> 12,183
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 51,121
<SALES> 16,685
<TOTAL-REVENUES> 16,685
<CGS> 9,383
<TOTAL-COSTS> 14,521
<OTHER-EXPENSES> 73
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,091
<INCOME-TAX> 871
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,290
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
|
|