FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
X THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended MAY 31, 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 0-14820
IMMUCOR, INC.
(Exact name of registrant as specified in its charter)
Georgia 22-2408354
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3130 GATEWAY DRIVE, 30091
P.O. BOX 5625 (Zip Code)
Norcross, Georgia
(Address of principal executive offices)
Registrant's telephone number, including area code, is (770) 441-2051
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.10 PAR VALUE
(Title of Class)
COMMON STOCK PURCHASE RIGHTS
(Title of Class)
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 by a check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
As of August 1, 1996, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $71,890,463.
As of August 1, 1996, there were 8,054,727 shares of common stock outstanding.
PART I
Item 1.-Business
Founded in 1982, Immucor, Inc., a Georgia corporation ("Immucor" or the
"Company"), develops, manufactures and sells a complete line of reagents
(over 60 products) and systems used primarily by hospitals and blood banks
in a number of tests performed to detect and identify certain properties of
the cell and serum components of human blood prior to blood transfusion.
The Company is also developing two automated blood bank instruments to
perform blood compatibility tests currently done manually by blood bank
technologists. One instrument is designed for patient testing in hospital
transfusion laboratories while the second instrument is designed for donor
testing in blood donor centers. Both instruments utilize the Company's
proprietary Capture(registered trademark) product technology.
Industry
Immucor is part of the immunohematology industry, which generally seeks to
prevent or cure certain diseases or conditions through the transfusion of
blood and blood components. The Food and Drug Administration (the "FDA")
treats human blood as a drug and as a biological product, and it treats the
transfusion of blood as the administration of a drug and of a biological
product. The FDA regulates all phases of the immunohematology industry,
including donor selection and the collection, classification, storage,
handling and transfusion of blood and blood components. The FDA requires
all facilities that manufacture products used for any of those purposes, and
the products themselves, to be registered or licensed by the FDA. See
"Regulation of Business."
The principal components of blood are plasma (the fluid portion) and cells.
Blood also contains antibodies and antigens. Antibodies are proteins that are
produced in response to the introduction of foreign substances (antigens).
Antigens are substances that stimulate the production of antibodies. Red
blood cells, which transport oxygen from the lungs to other parts of the
body, and return the carbon dioxide to the lungs, are categorized by four
blood groups (A, B, AB and O) and two blood types (Rh positive and Rh
negative), based on the presence or absence of certain antigens on the
surface of the cells. It is crucial that the health care provider correctly
identify the antibodies and antigens present in patient and donor blood.
For example, if a donor's red blood cells contain antigens that could react
with the corresponding antibody in the patient's plasma, the transfusion of
the red blood cells may result in the potentially life threatening
destruction of the red blood cells.
Because of the critical importance of matching patient and donor blood,
compatibility testing procedures are generally performed manually by highly
educated technologists in hospitals, blood banks and laboratories. At
present, with few exceptions, these tests are performed using procedures
which the Company believes can be significantly improved using its solid
phase testing system to automate the testing procedures. See "Products -
Solid Phase Technology", and "Products Under Development."
The Company believes that the worldwide market for traditional blood bank
reagents is approximately $250 million, and that this market is relatively
mature given current technology. However, because the industry is
labor-intensive, the introduction of labor-saving products may provide
additional growth in the market. The Company believes that its solid phase
blood testing system improves test results and reduces the time necessary
to perform certain test procedures, thereby offering a cost-effective
alternative for its customers. See "Products - Solid Phase Technology"
and "Products Under Development."
Products
Most of Immucor's current reagent products are used in tests performed prior
to blood transfusions to determine the blood group and type of patients' and
donors' blood, in the detection and identification of blood group antibodies,
in platelet antibody detection, in paternity testing and in prenatal care.
The FDA requires the accurate testing of blood and blood components prior to
transfusions using only FDA licensed reagents such as those manufactured and
sold by the Company.
Products. The following table sets forth the products sold by the Company,
most of which are manufactured by the Company.
Product Group Principal Use
ABO Blood Grouping Detect and identify ABO antigens on red blood cells
in order to classify a specimen's blood group as
either A, B, AB or O.
Rh Blood Typing Detect Rh antigens in order to classify a specimen
as either Rh positive or Rh negative, and to detect
other Rh-hr antigens.
Anti-human Globulin Used with other products for routine cross matching,
Serums (Coombs Serums) and antibody detection and identification; allows a
reaction to occur by bridging between antibodies
that by themselves could not cause a reaction.
Reagent Red Blood Cells Detect and identify antibodies in patient or donor
blood, confirm ABO blood grouping results and
validate the performance of anti-human serum in the
test system.
Rare Serums Detect the presence or absence of rare antigens.
Antibody Potentiators Increase the sensitivity of antigen-antibody tests.
Quality Control System Daily evaluation of the reactivity of routine blood
testing reagents.
Monoclonal (Hybridoma) Detect and identify ABO and other antigens on red
Antibody-based Reagents blood cells.
Rh (D) Immune Globulin Administered by injection once during and once after
pregnancy to an Rh negative woman who delivers an
Rh positive infant to prevent hemolytic disease of
the newborn.
Capture-P(registered Used for the detection of platelet antibodies.
trademark)
Capture-R(registered Used to detect and identify unexpected blood group
trademark) antibodies.
Capture-CMV(registered Used for the detection of antibodies to
trademark) cytomegalovirus.
The following table includes additional products not manufactured by the
Company but sold by the Company through Immucor GmbH and/or Immucor Italia:
Product Group Principal Use
HLA Serums Transplant typing and paternity testing.
DNA Probes Transplant typing, paternity testing, forensic
medicine, and genetic research.
Infectious Diseases Diagnosis of certain infectious diseases by the
methods of ELISA, Immunofluorescence and Latex
Slide Tests.
Clinical Chemistry Blood analysis and pathological testing.
Solid Phase Technology. In the Company's proprietary solid phase blood test
system, one of the reactants (either an antigen or an antibody) is applied or
bound to a solid support, such as a well in a microtitration plate. During
testing, the bound reactant captures other reactants in a fluid state and
binds those fluid reactants to the solid phase (the bound reactant). The
binding of the fluid reactants into the solid phase occurs rapidly and
results in clearly defined test reactions that are easier to interpret than
the subjective results sometimes obtained from existing agglutination
technology. Based on results obtained with Capture-P(registered trademark),
Capture-R(registered trademark), Capture-CMV(registered trademark), and the
Company's ongoing research, the Company believes that solid phase test
results can generally be obtained in substantially less time than by
existing techniques.
In contrast, under current agglutination blood testing techniques, serum is
mixed with red blood cells in a test tube and the technologist performs
several procedures and then examines the mixture to determine whether there
has been an agglutination reaction. A positive reaction will occur if the
cells are drawn together in clumps by the presence of corresponding
antibodies and antigens. The mixture remains in a fluid state and it is
sometimes difficult for the technologist to determine whether the positive
reaction has occurred.
Because of the critical importance of matching patient and donor blood,
testing procedures using agglutination techniques are usually performed
manually by highly educated technologists. Depending on the technical
proficiency of the person performing the test, the process can take from
30 minutes to one hour, and if the test results are ambiguous the entire
process may be repeated. Thus, a significant amount of expensive labor is
involved in such testing. Based on industry sources, the Company believes
that labor costs are the largest component of the total cost of operating
a hospital blood bank. The Company believes that its solid phase blood
testing system improves test results and reduces the time necessary to
perform certain blood testing procedures related to the transfusion of
blood and blood components.
Immucor has approved for sale three test systems using its solid phase
technology: a Platelet Antibody Detection System, Capture-P(registered
trademark); a Red Cell Antibody Detection System, Capture-R(registered
trademark); and an Infectious Disease Test, Capture-CMV(registered trademark)
(see below). In these three test systems, antigens are applied and bound to
the surface of a small well in a plastic microtitration plate, and patient
or donor serum or plasma is placed in the well. After the addition of special
proprietary indicator cells manufactured by Immucor, positive reactions
indicating the presence of blood group antibodies adhere to the well as a
thin layer and negative reactions do not adhere but settle to the bottom as
a small cell button.
Capture-P(registered trademark): Solid Phase Platelet Antibody Detection
System. A key component of plasma is platelets, small cell-like entities
that assist in the blood clotting process. A shortage of platelets in the
blood can significantly reduce the ability of a patient's body to control
bleeding. Certain multi-transfused patients, such as those on chemotherapy,
often develop antibodies to random donor platelets. Several techniques
have been designed by others to identify compatible platelets from random
donors. Such techniques are time consuming and technically difficult to
perform, or require expensive equipment, all of which limits their usefulness
as routine test procedures. The Company believes that its solid phase
platelet antibody detection test provides a simplified test with improved
reliability over existing techniques and thus will be suited for routine use
in transfusion services. The Company believes that the test provides a more
accurate method for matching donor and recipient platelets in order to reduce
the probability of an incompatible transfusion. Three products are currently
approved for sale in the Capture-P(registered trademark) system. The latest
product, Capture-P(registered trademark) Ready-Screen(registered trademark),
a solid phase assay for the detection of platelet IgG antibodies,
incorporates Immucor's proprietary dried platelet technology. Previous
platelet antibody detection tests required a source of freshly drawn platelet
samples. Capture-P(registered trademark) Ready-Screen(registered trademark)
is supplied with specially selected platelets dried onto the microtitration
plate wells ready for use.
Capture-R(registered trademark): Solid Phase Red Cell Antibody Detection and
Identification System. Unexpected blood group antibodies are found in
patients or donors who, through pregnancy, previous transfusion or injection,
have been exposed to foreign red blood cell antigens. Prior to blood
transfusions all patient and donor sera is tested for the presence of these
unexpected antibodies. In this solid phase method, reagent red blood cells
having known blood group antigens are immobilized onto microtitration plate
wells. Patient's or donor's serum is added to the wells. Following
incubation, the wells are washed to remove unbound immunoglobulins. Special
indicator red blood cells are added and the plates are centrifuged. Positive
reactions adhere as a thin layer while negative reactions do not adhere but
settle to the bottom as a small cell button. Three products are currently
approved for sale in the Capture-R(registered trademark) system. The two
latest products are Capture-R(registered trademark) Ready-Screen(registered
trademark), for the detection of unexpected IgG red cell antibodies, and
Capture-R(registered trademark) Ready-ID(registered trademark), for the
identification of unexpected IgG red cell antibodies. These two products
utilize Immucor's proprietary dried red cell technology. Test kits include
microtitration plates containing specially selected dried red cells supplied
ready for use. This feature further reduces the time necessary to perform
these tests with improved test results.
Capture-CMV(registered trademark): Solid Phase Test for Cytomegalovirus. CMV
is a herpes virus which can be transmitted by blood and cause severe problems
in the transfusion of newborn infants and organ transplant patients. The
test procedure combines patented cell drying technology with other patented
technology to produce a test system suitable for use in large volume blood
donor centers as well as testing the blood of individual patients.
Equipment. Immucor also distributes laboratory equipment designed to automate
certain blood test procedures and used in conjunction with the Company's
Capture(registered trademark) products. The Company markets, under its name,
cell washers, which are used to remove unwanted proteins, albumin and other
substances from a diagnostic test system and to bring the antibodies and
antigens in the system into close physical contact by centrifugation.
Products Under Development
Immucor continually seeks to improve its existing products and to develop new
ones in order to enhance its market share. Prior to their sale, any new
products will require licensing or premarket approval by the FDA. The
Company employs several persons whose specific duties are to continue to
improve existing products and develop new products for the Company's existing
and potential customers. The Company also has established relationships with
other individuals and institutions who provide similar services and the
Company expects that it will continue to do so. The Company intends to
continue its product development efforts primarily in the area of solid phase
technology and in several other areas that may also be useful in connection
with the development of additional solid phase products. For the fiscal
years ended May 31, 1996, 1995 and 1994, the Company spent $997,900,
$1,129,600, and $2,482,700, respectively, for research and development. The
significant decrease in spending during fiscal 1995 over the prior year was
due to the fact that the research phase of the Company's development project
for blood bank automation is nearing completion. See "Products Under
Development - Blood Bank Automation." The Company may in the future acquire
related technologies and product lines, or the companies that own them, to
improve the Company's ability to meet the needs of its customers.
Blood Bank Automation. The Company believes that the blood banking industry
today is labor-intensive, and that a market exists for further automation of
blood compatibility tests currently being performed manually by hospital and
donor center blood bank technologists.
Since 1992 the Company has worked with Bio-Tek Instruments, Inc., a privately
held Vermont corporation, to combine the reagent manufacturing expertise of
Immucor with the medical instrumentation expertise of Bio-Tek, to develop an
automated, "walk-away", blood bank analyzer. Bio-Tek has been responsible for
engineering, software development and manufacturing. The instrument uses
Immucor's proprietary Capture(registered trademark) reagent product
technology to perform blood bank patient testing. Known as the ABS2000,
Immucor plans to market the instrument worldwide. In March 1996, the Company
filed a 510(k) application with the US Food and Drug Administration for
market clearance. There is no assurance that the instrument will be approved
for sale by the FDA, or that it will gain market acceptance even if approved.
In June 1996 the Company received clearance to market the instrument in
Canada and has applied to other selected countries for export approval.
During fiscal 1996 the Company began joint development with DYNEX Technologies,
Inc. of a second automated medical instrument, known as the ABSHV, to provide
large blood donor centers and clinical reference laboratories automated batch
processing and positive sample identification of routine blood donor tests.
If development efforts prove successful, the Company will conduct clinical
trials prior to submission to FDA.
Through May 31, 1996 instrument research and development costs related to the
Bio-Tek and DYNEX instrument development contracts totaled $3.5 million, of
which $1.2 million was incurred during fiscal 1993, $1.8 million was incurred
during fiscal 1994, $0.2 million was incurred during fiscal 1995, and $0.3
million was incurred during fiscal 1996. In fiscal 1996, 1995, and 1994, the
Company incurred $0.2 million, $0.4 million, and $0.2 million, respectively,
in additional costs related to the projects. See "Management's Discussion
and Analysis of Financial Condition, Liquidity and Capital Resources." See
"Regulation of Business."
Additional Solid Phase Applications. The Company plans to continue to develop
and refine its patented, solid phase technology. Currently, the Company is
developing Capture(registered trademark)-S, a solid phase screening test for
the detection of IgG and IgM antibodies in the serum or plasma of blood
donors with syphilis, which is pending FDA review.
Monoclonal Antibodies. Monoclonal antibodies are derived by fusing an
antibody-producing cell with a tumor cell, resulting in a hybridoma cell that
manufactures the original antibody. The Company is actively engaged in the
development of additional monoclonal antibodies for a variety of uses,
including the detection of blood group and infectious disease antigens, and
for use in the solid phase test systems. The Company believes monoclonal
antibody reagents will continue to be in strong demand for two reasons.
First, they are highly specific, which means that their sensitivity allows
them to detect and identify antigens with greater efficiency than other
reagents. Second, product quality and consistency is maintained from
production lot to production lot. The Company has equipped a research
laboratory for developing monoclonal antibody-based reagents and has employed
several persons experienced in monoclonal antibody technology. Additionally,
the Company will pursue the development of such antibodies through contracts
with outside institutions.
Cell Drying Technology. Immucor has developed a proprietary method to
modify plastic or glass surfaces to immobilize platelets and red cells.
Additionally, the Company has developed a proprietary method to dry
platelets and red cells upon the modified surfaces. This technique is
currently utilized in several of the Company's Capture(registered trademark)
products.
Marketing and Distribution
Immucor's potential U.S. customers are approximately 6,000 blood banks,
hospitals and clinical laboratories. The Company maintains an active client
base of over 4,000 customers, and no one customer purchases annually in
excess of 5% of the Company's current sales volume. The Company believes
there is no seasonality to its sales activity and there is no material
backlog of orders.
The Company has sought to increase its market share through the use of its
experienced direct sales force and through the expansion of its product line
to offer customers a full range of products for their reagent needs. The
Company believes it can increase its market share by marketing products based
on its solid phase technology.
The Company markets and sells its products to its customers directly through
23 sales personnel employed by the Company in the U.S., 17 in Germany, 1 in
Portugal, and 10 direct employees with an additional 17 sales agents in Italy.
The Company has hired personnel whom the Company considers to be highly
experienced and respected for their knowledge of the blood bank diagnostic
business. The Company believes that it can more effectively market its
products through persons who specialize in blood testing reagents and related
equipment, as opposed to persons who generally sell a broader line of medical
supplies but without any expertise in blood testing products. Continuing
technical support and service is also provided to customers through the
Company's Consultation Laboratory, which assists the Company's customers in
identifying certain blood group antibodies which are rare or difficult to
detect. Each year Immucor sponsors workshops in the U.S. and Europe to which
customers are invited to hear the latest developments in the field.
The Company also markets its products internationally through distributors
located throughout the world. For the fiscal years ended May 31, 1996, 1995
and 1994, the Company had foreign net sales, including net domestic export
sales to unaffiliated customers, of approximately $18,168,000, $16,187,000,
and $16,356,000, respectively, and these sales accounted for approximately
58.7%, 56.0%, and 55.3% of the Company's total net sales for the respective
fiscal years. Most of the Company's foreign sales occurred in Germany and
in Italy where the Company maintains subsidiaries. (See Note 11 to the
Consolidated Financial Statements.)
Suppliers
The Company obtains raw materials from numerous outside suppliers. The
Company is not dependent on any single supplier other than the joint
manufacturers of the Company's monoclonal antibody-based products. The
Company believes that its business relationship with suppliers is excellent.
Certain of the Company's products are derived from blood having particular or
rare combinations of antibodies and antigens which are found in a limited
number of individuals. The Company to date has not experienced any major
difficulty in obtaining sufficient quantities of such blood for use in
manufacturing its products, but there can be no assurance that the Company
will always have available to it a sufficient supply of such blood.
Regulation of Business
The manufacture and sale of blood banking products is a highly regulated
business and is subject to continuing compliance with various federal and
state statutes, rules and regulations regarding, generally, licensing,
product testing, facilities compliance, product labeling, and consumer
disclosure. See "Industry" above. The Company operates under U.S.
Government Establishment License No. 886 granted by the FDA in December 1982.
An FDA license is issued for an indefinite period of time, subject to the
FDA's right to revoke the license. As part of its overview responsibility,
the FDA makes plant and facility inspections on an unannounced basis.
Further, a sample of each production lot of many of the Company's products
must be submitted to and approved by the FDA prior to its sale or
distribution.
In addition to its facilities license, the Company holds several product
licenses to manufacture blood grouping reagents. To obtain a product
license, the Company must submit the product manufacturing methods to the
FDA, perform a clinical trial of its product and demonstrate to the
satisfaction of the FDA that the product meets certain efficacy and safety
standards. The Company's automated blood bank instrument currently under
development will require clearance from the FDA. There can be no assurance
that any future product licenses will be obtained by the Company .
To sell its products in Germany, Immucor GmbH must license its products with
the Paul-Ehrlich-Institute prior to product introduction. In addition, an
import license for products purchased outside the European Economic Community
is required. To date, Immucor GmbH has been able to obtain licenses needed
to effectively promote its products in Germany and throughout Europe.
The Company has hired and retained several employees who are highly
experienced in FDA and other regulatory authority compliance, and the
Company believes that its manufacturing and on-going quality control
procedures conform to the required federal and state rules and regulations.
To date the Company has not experienced any difficulty in complying with the
various regulatory requirements imposed on it.
Patents, Trademarks and Royalties
Since 1986, the U.S. Patent Office has issued to Immucor six patents
pertaining to its solid phase technology.
Immucor's solid phase technology, including patent rights, was acquired from
five researchers at the Community Blood Center of Greater Kansas City
pursuant to an agreement entered into on March 11, 1983, and amended in 1985
and 1987. In 1987, one of the researchers joined the Company as Director of
Research and Development to continue to develop new products using the solid
phase technology. The agreement terminates on August 26, 2006, the date on
which the first patent issued on the technology expires. The Company has
agreed to pay the researchers royalties equal to 4% of the net sales from
products utilizing the solid phase technology. For the fiscal years ended
May 31, 1996, 1995 and 1994, the Company paid the researchers royalties of
approximately $328,400, $278,300, and $250,000 under this agreement.
Through its development activities involving its solid phase technology, the
Company has acquired expertise in such technology which it considers trade
secrets. While the Company will continue to seek patent protection for its
solid phase technology and new applications thereof, the Company believes
that its acquired expertise and know-how, including the above mentioned
trade secrets, will provide more important protection from competition.
The Company has registered the trademark "Immucor" and several product names,
such as "ImmuAdd", "Capture", "Capture-P", "MCP", "Capture-R", "Ready-Screen",
"Ready-ID" and "Capture-CMV".
Competition
There are other competitors with licenses to manufacture blood banking
reagents in the United States. The Company's principal U.S. competitors for
blood bank reagents are Ortho Diagnostic Systems, a division of Johnson &
Johnson, Inc. and Gamma Biologicals Inc. Additional European competitors for
blood bank products include Biotest, a German company; and Diamed, a Swiss
company. All of these companies have been established longer, some have
larger market shares than the Company, and some have substantially greater
financial and other resources than the Company. However, the Company
believes that it is properly positioned to compete favorably in the business
principally because of the quality and price of its products, the sale of
innovative products such as the Company's Capture(registered trademark)
products (see "Products"),the experience and expertise of its sales personnel
(see "Marketing and Distribution"), the stability and experience of its
management team (see Item 10 "Directors and Executive Officers of the
Registrant"), and the expertise of its technical and customer support staff.
Employees
At August 1, 1996, the Company had 131 full time employees in the U.S., of
whom 26 were in sales and marketing, 84 were in manufacturing, research, and
distribution, and 21 were in general and administration. The Company has
experienced a low turnover rate among its technical and sales staff, and
none of the Company's employees is represented by a union. The Company
considers its employee relations to be good.
At August 1, 1996, in Germany, Portugal and Italy, the Company had 57
full-time employees, of whom 28 were in sales and marketing and 29 were in
distribution and administration.
Item 2.-Properties.
The Company leases approximately 48,000 square feet in Norcross, Georgia, a
suburb of Atlanta, as its executive offices, laboratories and manufacturing
facilities. Rent charges for the fiscal year ended May 31, 1996, were
$310,800. The term of the lease is for a five-year period ending April 2001
with a right to renew for an additional five years. In Germany, the Company
leases 1,566 square meters near Frankfurt. Rent expense for the fiscal year
ended May 31, 1996, totaled $260,300. The term of the lease in Germany is
through April 2009. In Italy rent expense for the fiscal year ended May 31,
1996 totaled $59,200 for 465 square meters. The Company has two separate
lease agreements for the facility in Italy. The term of the first lease is
through September 1998 and the second lease is through April 2000. The
Company believes all of its facilities and lease terms are adequate and
suitable for the Company's current and anticipated business for the
foreseeable future.
Item 3.-Legal Proceedings.
The Company is not currently a party to any existing or pending legal
proceedings.
Item 4.-Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
Item 5.-Market for Registrant's Common Equity and Related Stockholder Matters.
Immucor's Common Stock trades on The Nasdaq Stock Market under the symbol
BLUD. The following table sets forth the quarterly high and low sale prices
of the Common Stock for the fiscal periods indicated. These prices represent
inter-dealer quotations without retail markups, markdowns or commissions
and may not represent actual transactions.
High Low
Fiscal Year Ended May 31, 1995
First Quarter . . . . . . . . . . . . . . . . . . $ 6 1/4 $ 4 3/4
Second Quarter . . . . . . . . . . . . . . . . . . 7 1/4 5
Third Quarter . . . . . . . . . . . . . . . . . . 6 1/4 5
Fourth Quarter . . . . . . . . . . . . . . . . . 10 3/4 5 1/2
Fiscal Year Ended May 31, 1996
First Quarter . . . . . . . . . . . . . . . . . . . $15 1/2 $ 8 1/2
Second Quarter . . . . . . . . . . . . . . . . . . 16 10 1/4
Third Quarter . . . . . . . . . . . . . . . . . . 16 9
Fourth Quarter . . . . . . . . . . . . . . . . . . 15 1/8 10 3/8
As of August 1, 1996, there were approximately 550 holders of record of the
Company's Common Stock. The last reported sales price of the Common Stock on
such date was $9 3/8.
Immucor has not declared any cash dividends with respect to its Common Stock.
The Company presently intends to continue to retain all earnings in connection
with its business.
Item 6.-Consolidated Selected Financial Data.
(All amounts are in thousands, except per share amounts)
Year Ended May 31,
1996 1995 1994 1993 1992(1)
Statement of
Operations Data:
Net sales $30,964 $28,892 $29,581 $30,070 $27,263
Cost of sales 12,005 10,865 12,394 11,674 11,354
Gross profit 18,959 18,027 17,187 18,396 15,909
Operating expenses:
Selling, general, &
administrative 14,367 12,575 12,179 13,302 10,991
Restructuring and
other non-recurring
charges 625
Research and development:
Instrument 493 644 2,005 1,245
General 505 486 478 466 481
Total operating
expenses 15,365 13,705 15,287 15,013 11,472
Income from
operations 3,594 4,322 1,900 3,383 4,437
Other:
Other income 877 677 507 556 803
Interest expense (294) (463) (579) (773) (631)
Other (1) (5) (110) (168) (40)
Total other 582 209 (182) (385) 132
Income before
income taxes 4,176 4,531 1,718 2,998 4,569
Income taxes 1,403 1,641 992 1,165 1,525
Net income $ 2,773 $ 2,890 $ 726 $ 1,833 $ 3,044
Income per common
and common
equivalent
share: $ .32 $ .37 $ .09 $ .25 $ .35
Weighted average
number of
common and common
equivalent shares
outstanding 8,797 7,856 7,798 8,070 8,864
Balance Sheet Data:
Working capital $32,524 $29,101 $21,219 $24,253 $24,203
Total assets 47,207 43,979 41,311 40,421 41,509
Long-term debt,
less current
portion 3,909 5,744 4,391 3,720
Retained earnings 18,029 15,256 12,367 11,641 9,809
Shareholders'
equity 39,345 34,067 31,026 30,389 31,372
(1) Includes results of Immucor Italia since October 1, 1991.
Item 7.-Management's Discussion and Analysis of Financial Condition
and Results of Operations.
(a) Liquidity and Capital Resources
Net cash provided by operating activities totaled $2,908,000, $2,740,000,
and $2,309,000 for the fiscal years 1996, 1995 and 1994 respectively. As of
May 31, 1996, the Company's cash balance totaled $20.5 million.
During fiscal 1996, the Company experienced an increase in accounts
receivable of $944,000 over the previous year due to increased sales in the
US and Europe and a slow-down in the collection process in Italy, due to the
funding program established by the Italian government for health care
providers. The Company expects shorter payment terms in the future as a
result of the Italian government's plan to reorganize the administration of
the Italian health sector. However, to date benefits have not been realized.
In April 1992, the Company invested $1.0 million in the common stock of
Bio-Tek Instruments, Inc. (Bio-Tek), a privately held Vermont company that
designs and manufactures medical instrumentation. Since 1992, the Company
has worked with Bio-Tek to complete the development of a fully automated
blood bank instrument. Through May 31, 1996, $3.4 million was spent under
this contract. During fiscal 1996 the Company began joint development with
DYNEX Technologies, Inc. of a second automated medical instrument, known as
the ABSHV, to provide large blood donor centers and clinical reference
laboratories automated batch processing and positive sample identification of
routine blood donor tests. If development efforts prove successful, the
Company will conduct clinical trials prior to submission to FDA. Through
May 31, 1996, the Company incurred $113,000 in development expense and is
committed to spend an additional $148,000 for instruments to be used in
clinical trials.
In March 1995, the Company refinanced its remaining Deutsche Mark debt with
the proceeds of a note payable, and entered into an interest rate swap
agreement, with a domestic bank (See Note 3 to the Consolidated Financial
Statements). At May 31, 1995, the note payable with a principal amount of
$5,744,238, and the interest rate swap agreement with a notional principal
of the same amount, were outstanding. During fiscal 1996, the Company repaid
$1,404,060 of this debt, and, at May 31, 1996, the principal amount of the
note payable and the notional principal of the interest rate swap agreement
was $3,908,795.
The Company's Italian subsidiary had approximately $0.3 million in borrowings
under an Italian lira line of credit as of May 31, 1996, with an additional
$1.0 million available, and the Company's German subsidiary had approximately
$0.3 million in unused Deutsche Mark lines of credit.
Although the Company has no material capital commitments, it has begun a
facilities expansion at its US facilities to provide an additional 10,000
square feet of manufacturing, laboratory and office space which should be
completed by December 1996. Management believes that the Company's current
cash balance, internally generated funds, and amounts available under the
lines of credit are sufficient to support operations for the foreseeable
future. Management also believes additional credit lines would be available
should the need arise.
(b) Results of Operations
Comparison of Fiscal Years Ended May 31, 1996 and May 31, 1995
Net sales increased $2,073,000, or 7% during fiscal 1996 over the prior year
primarily due to higher export sales from the Company's US facilities sold
through distributors and increased sales in the Company's German and Italian
subsidiaries. The sales growth is principally due to higher sales of the
Company's Capture(registered trademark) products.
While gross profit increased $933,000 with higher sales levels, as a percent
of sales revenue, gross profit margin declined slightly. This decline was
primarily due to higher manufacturing costs which could not be passed on to
customers in the form of higher prices given current competitive market
conditions.
Operating expenses increased $1,661,000 in fiscal 1996 over the previous
year. Selling, general and administrative expenses increased $1,793,000 over
the previous year, partially offset by a $151,000 decline in instrument
research and development charges. The increase was principally due to the
Company's decision to invest heavily in selling, marketing and advertising
strategies, which included increasing sales and marketing personnel both in
the US and in Europe, attending additional conventions and trade shows,
developing additional journal advertising programs and other marketing costs
related to the launch of the ABS2000. These higher levels of spending are
expected to continue as the Company attempts to position itself as the
industry leader in blood bank automation. The Company believes current
worldwide transfusion laboratory trends of cost containment, group purchasing
and centralization of laboratory testing will increase the demand for
automated solutions.
Other income for the year ended May 31, 1996 grew $200,000 over the prior
year principally due to higher amounts of cash invested during fiscal 1996
as compared to last year and foreign exchange losses in the prior year
period which did not recur in the current year.
As compared to last year, interest expense declined $168,000 in fiscal 1996,
primarily due to the Company's decision to reduce its outstanding principal
loan balance in Deutsche Marks (see Financial Condition and Liquidity).
The provision for income taxes in fiscal 1996, as a percent of pretax
profit, declined from 36.2% to 33.6%, when compared to last year. Although
the Company's operations in Europe generated a much higher contribution to
pretax income in the current year compared to a year ago, no income tax
expense was recorded in the current year, as European operations had
sufficient net operating loss carryforwards to offset the potential tax
liability.
Comparison of Fiscal Years Ended May 31, 1995 and May 31, 1994
Net sales for the fiscal year ended May 31, 1995, totaled $28,892,000, a
decrease of $689,000, or 2.3% over the previous year. The decrease was
caused by continuing pricing pressures on the Company's traditional blood
bank products and the Company's decision to discontinue the sale of blood
collection bags in Germany. In fiscal 1994, net sales included $1,581,000 of
blood collection bags with no blood bag sales recorded in fiscal 1995. The
decline was partially offset by increased sales of the Company's Capture
(registered trademark) product line.
As a percent of sales revenue, gross profit increased from 58.1% to 62.4% in
fiscal 1995. The increase in gross margin percentage is the result of the
Company's decision to discontinue the blood bag collection business and to
concentrate marketing efforts on the Company's own manufactured products which
have a more favorable gross margin, and favorable foreign currency exchange
values particularly in Germany.
Total operating expenses in fiscal 1995 decreased $1,583,000 compared to the
previous year. Research and development expense for the Company's blood bank
instrument project decreased $1,361,000 compared to fiscal 1994 as the
Company's development effort nears completion. The restructuring charge
recorded in fiscal 1994 to discontinue the Company's blood bag business and
reduce staffing levels did not recur in 1995.
Selling, general and administrative costs increased $396,000 compared to the
same period last year. In May 1995, the Company approved a management bonus,
of which $111,000 was included in operating expense, as the Company achieved
its targeted operating income goals for fiscal 1995.
Interest expense declined from $580,000 in fiscal 1994 to $463,000 in fiscal
1995. This decrease was primarily due to declining interest rates on borrowed
funds and a reduction in short-term borrowings in Europe.
Income tax expense increased $649,000 in fiscal 1995, when compared to the
prior year, principally due to higher levels of taxable income in the U.S.
and reduced research and development tax credits available to offset taxable
income.
(c) Impact of Recently issued Accounting Standards
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company will adopt Statement
121 in the first quarter of fiscal 1997 and, based on current circumstances,
does not believe the effect of adoption will be material.
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The company accounts for stock option grants in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly,
recognizes no compensation expense for the stock option grants.
(d) Effects of Inflation on Operations
Since the rate of inflation has slowed during the past few years, raw
material prices for the Company's products have not materially increased.
The Company believes that any increase in personnel-related expenses or
material costs would be experienced by others in the industry and can be
reflected in increased selling prices of the Company's products.
Item 8.-Financial Statements and Supplementary Data.
The following consolidated financial statements of the Company are
included under this item:
- -Independent Auditors' Reports
- -Consolidated Balance Sheets, May 31, 1996, and 1995
- -Consolidated Statements of Operations for the Years Ended May 31, 1996, 1995
and 1994
- -Consolidated Statements of Shareholders' Equity for the Years Ended May 31,
1996, 1995 and 1994.
- -Consolidated Statements of Cash Flows for the Years Ended May 31, 1996,
1995 and 1994
- -Notes to Consolidated Financial Statements
- -Consolidated Financial Statement Schedule
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
of Immucor, Inc.:
We have audited the accompanying consolidated balance sheet of Immucor, Inc.
as of May 31, 1996 and the related consolidated statements of operations,
shareholders' equity, and cash flows for the year then ended. Our audit also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Immucor, Inc. at May 31, 1996, and the consolidated results of its operations
and its cash flows for the year then ended in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Ernst & Young LLP
Atlanta, Georgia
July 18, 1996
REPORT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
of Immucor, Inc.:
We have audited the accompanying consolidated balance sheet of Immucor, Inc.
and its subsidiaries as of May 31, 1995, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of
the two years in the period ended May 31, 1995. Our audits also included
the financial statement schedule listed in the Index at Item 14. These
financial statements and financial statement schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
the financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Immucor, Inc. and its
subsidiaries as of May 31, 1995 and the results of their operations and their
cash flows for each of the two years in the period ended May 31, 1995 in
conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
Deloitte & Touche LLP
Atlanta, Georgia
July 21, 1995
IMMUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
May 31,
ASSETS 1996 1995
CURRENT ASSETS:
Cash $20,533,422 $18,741,681
Accounts receivable
(less an allowance for
doubtful accounts of
$350,545 in 1996 and
$233,197 in 1995) 8,953,473 8,009,967
Inventories 5,932,923 5,469,966
Income tax receivable 37,119 76,455
Deferred income taxes 312,627 250,387
Other assets 707,623 720,592
Total current assets 36,477,187 33,269,048
LONG-TERM INVESTMENT 1,000,000 1,000,000
PROPERTY AND EQUIP - Net 3,256,524 2,858,472
DEFERRED INCOME TAXES 40,128 23,551
OTHER ASSETS - Net 606,866 329,492
EXCESS OF COST OVER NET
TANGIBLE ASSETS ACQUIRED 5,826,153 6,498,679
$47,206,858 $43,979,242
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Borrowings under bank
line of credit
agreements $ 283,335 $ 241,639
Accounts payable 2,656,538 2,425,510
Income taxes payable 263,480 519,708
Accrued salaries and wages 594,853 683,032
Accrued restructuring costs 105,198
Other accrued liabilities 154,607 192,903
Total current liabilities 3,952,813 4,167,990
LONG-TERM DEBT 3,908,795 5,744,238
SHAREHOLDERS' EQUITY:
Common stock - authorized
30,000,000 shares in 1996
and 15,000,000 shares in
1995, $.10 par value;
issued and outstanding
8,054,380 in 1996 and
7,705,402 in 1995 805,438 770,540
Additional paid-in
capital 21,485,849 18,787,390
Retained earnings 18,029,010 15,256,375
Foreign currency
translation adjustment (975,047) (747,291)
Shareholders' equity, net 39,345,250 34,067,014
$47,206,858 $43,979,242
See notes to consolidated financial statements.
IMMUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended May 31,
1996 1995 1994
NET SALES $30,964,057 $28,891,538 $29,580,478
COST OF SALES 12,004,831 10,865,349 12,393,673
GROSS PROFIT 18,959,226 18,026,189 17,186,805
OPERATING EXPENSES:
Selling, general and
administrative 14,367,537 12,574,880 12,179,334
Restructuring and other
non-recurring charges 625,126
Research and development:
Instrument 493,010 643,839 2,004,842
General 504,902 485,799 477,812
15,365,449 13,704,518 15,287,114
INCOME FROM OPERATIONS 3,593,777 4,321,671 1,899,691
OTHER:
Other income 877,081 677,186 507,239
Interest expense (294,322) (462,803) (579,577)
Other (250) (5,392) (109,836)
582,509 208,991 (182,174)
INCOME BEFORE
INCOME TAXES 4,176,286 4,530,662 1,717,517
INCOME TAXES 1,403,651 1,640,875 991,855
NET INCOME $2,772,635 $ 2,889,787 $ 725,662
INCOME PER COMMON
AND COMMON EQUIVALENT
SHARE $ .32 $ .37 $ .09
See notes to consolidated financial statements.
IMMUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
Foreign
Additional Currency Total
Common Stock Paid-In Retained Translation Shareholders'
Shares Amount Capital Earnings Adjustment Equity
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MAY 31, 1993 7,568,749 $ 756,875 $18,548,782 $11,640,926 $(557,133) $30,389,450
Exercise of stock options 201,019 20,102 380,331 400,433
Purchase of treasury stock (77,959) (7,796) (426,720) (434,516)
Foreign currency translation
adjustment (296,717) (296,717)
Tax benefits related to
stock options 242,087 242,087
Net income 725,662 725,662
BALANCE, MAY 31, 1994 7,691,809 769,181 18,744,480 12,366,588 (853,850) 31,026,399
Exercise of stock options 13,593 1,359 23,820 25,179
Foreign currency translation
adjustment 106,559 106,559
Tax benefits related to stock
options 19,090 19,090
Net income 2,889,787 2,889,787
BALANCE, MAY 31, 1995 7,705,402 770,540 18,787,390 15,256,375 (747,291) 34,067,014
Exercise of stock options 349,887 34,989 2,276,993 2,311,982
Foreign currency translation
adjustment (227,756) (227,756)
Tax benefits related to stock
options 440,029 440,029
Other (909) (91) (18,563) (18,654)
Net income 2,772,635 2,772,635
BALANCE, MAY 31, 1996 8,054,380 $ 805,438 $ 21,485,849 $18,029,010 $ (975,047) $ 39,345,250
See notes to consolidated financial statements.
</TABLE>
IMMUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended May 31,
1996 1995 1994
OPERATING ACTIVITIES:
Net income $2,772,635 $2,889,787 $ 725,662
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 1,087,692 776,440 688,885
Amortization 328,314 299,024 293,632
Tax benefits related to stock options 440,029 19,090 242,087
Changes in assets and liabilities:
Accounts receivable (943,506) (1,028,898) (261,800)
Income tax receivable 39,336 61,489 49,931
Inventories (462,957) (311,846) 508,751
Other assets (96,352) (110,739) (97,601)
Accounts payable 231,028 (123,143) (335,224)
Other current liabilities (487,900) 269,062 494,805
Total adjustments 135,684 (149,521) 1,583,466
Net cash provided by operating
activities 2,908,319 2,740,266 2,309,128
INVESTING ACTIVITIES:
Purchases of/deposits on property
and equipment (1,890,488) (1,035,412) (553,941)
(Increase) decrease in other assets 36,729 (15,000) 4,388
Net cash used in investing
activities (1,853,759) (1,050,412) (549,553)
FINANCING ACTIVITIES:
Borrowings (repayments) under line
of credit agreements 41,696 (307,633) 79,601
Proceeds from notes payable 5,744,238 453,343
Repayment of notes payable (1,404,060) (6,921,758) (312,656)
Exercise of stock options 2,311,982 25,179 400,433
Purchase of treasury stock (434,516)
Other (18,654)
Net cash provided by (used in)
financing activities 930,964 (1,459,974) 186,205
EFFECT OF EXCHANGE RATE CHANGES ON
CASH (193,783) 208,549 (186,934)
NET INCREASE IN CASH 1,791,741 438,429 1,758,846
CASH, BEGINNING OF YEAR 18,741,681 18,303,252 16,544,406
CASH, END OF YEAR $20,533,422 $18,741,681 $18,303,252
CASH PAID DURING THE YEAR FOR:
Interest $ 387,799 $ 574,908 $ 632,257
Income taxes 1,362,320 1,528,127 721,046
See notes to consolidated financial statements.
IMMUCOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business - The Company's principal business activities are the
development, manufacturing, and marketing of immunological diagnostic medical
products which constitute one business segment.
Consolidation Policy - The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates - The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Reclassifications - Certain prior year balances have been reclassified to
conform with the 1996 presentation.
Concentration of Credit Risk - At May 31, 1996 and 1995, substantially all of
the Company's cash balances were on deposit with a high quality U.S. financial
institution. At various times during the year a significant portion of the
Company's cash balances are invested in U.S. Government securities and other
"AAA" rated securities with maturities which are typically 90 days or less.
Inventories - Inventories are stated at the lower of first-in, first-out cost
or market. Cost includes material, labor, and manufacturing overhead for
manufactured goods and material only for goods purchased for resale.
Long-Term Investment - The long-term investment, representing a 3.4% Common
Stock investment in Bio-Tek Instruments, Inc., acquired in April 1992, is
accounted for using the cost method of accounting (Note 10).
Property and Equipment - Property and equipment are stated at cost less
accumulated depreciation. Depreciation is computed using the straight-line
method over the estimated lives of the related assets.
Fair Value of Financial Instruments - The carrying amounts reported in the
consolidated balance sheets for cash, accounts receivable, long-term
investment, and accounts payable approximate fair values. The fair value of
the Company's long-term debt approximates the reported amount in the
accompanying 1996 consolidated balance sheet as its interest rate
approximates the May 31, 1996 market rate for similar debt instruments.
Excess of Cost Over Net Tangible Assets Acquired - Goodwill comprises the
cost of purchased businesses in excess of values assigned to net tangible
assets received, and is being amortized using the straight-line method
over 20 to 30 years. The Company periodically assesses the recoverability
of goodwill based on judgments as to the future profitability of its
operations. Accumulated amortization at May 31, 1996 and 1995 was $1,465,050
and $1,251,419, respectively.
Foreign Currency Translation - The financial statements of foreign subsidiaries
have been translated into U.S. dollars in accordance with FASB Statement No. 52,
Foreign Currency Translation. All balance sheet accounts have been
translated using the exchange rates in effect at the balance sheet dates.
Income statement amounts have been translated using the average exchange
rate for each year. The gains and losses resulting from the changes in
exchange rates from year to year have been reported separately as a
component of shareholders' equity.
The effect on the statements of income of transaction gains and losses is
insignificant for all years presented.
Revenue Recognition - Revenue from the sale of the Company's products is
recognized upon shipment.
Stock Based Compensation - The Company grants stock options for a fixed number
of shares to employees with an exercise price equal to the fair value of the
shares at the date of grant. The Company accounts for stock option grants in
accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees,
and, accordingly, recognizes no compensation expense for the stock option
grants.
In October 1995, the FASB issued Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation, which provides an
alternative to APB Opinion No. 25 in accounting for stock-based compensation
issued to employees. However, the Company plans to continue to account for
stock-based compensation in accordance with APB Opinion No. 25.
Income Taxes - Income taxes have been provided using the liability method in
accordance with FASB Statement No. 109, Accounting for Income Taxes.
Income Per Common and Common Equivalent Share - Income per common and common
equivalent share is computed using the weighted average number of common
shares and common share equivalents outstanding during the respective periods.
Common share and common share equivalents were 8,796,658 in 1996, 7,855,840
in 1995, and 7,798,448 in 1994. There is no significant difference between
primary and fully diluted per share amounts.
Impact of Recently Issued Accounting Standards - In March 1995, the FASB issued
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of, which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. Statement 121 also addresses
the accounting for long-lived assets that are expected to be disposed of. The
Company will adopt Statement 121 in the first quarter of 1997 and, based on
current circumstances, the effect of adoption will not be material.
2. BALANCE SHEET DETAIL
May 31,
1996 1995
Inventories:
Raw materials and supplies $2,104,677 $1,551,354
Work in process 741,723 819,296
Finished goods and goods purchased for resale 3,086,523 3,099,316
$5,932,923 $5,469,966
Property and Equipment:
Machinery and equipment $5,183,448 $4,163,325
Leasehold improvements 587,732 529,245
Furniture and fixtures 514,732 530,405
6,285,912 5,222,975
Less accumulated depreciation (3,029,388) (2,364,503)
Property and equipment - net $ 3,256,524 $ 2,858,472
3. BANK CREDIT AGREEMENTS, NOTES PAYABLE, AND LONG-TERM DEBT
The Company's Italian subsidiary has $1,316,000 in line of credit agreements
denominated in Lira with three Italian and one Spanish bank bearing interest
between 11.5% and 14.5%. Outstanding borrowings were $283,335 and $241,639
under these lines at May 31, 1996 and 1995, respectively, and were guaranteed
by the Company.
The Company's German subsidiary has a $342,020 line of credit agreement, as
amended, denominated in Deutsche Marks with a German bank bearing interest at
7.75%. There were no outstanding borrowings under this line at May 31, 1996
or 1995.
In March 1995, the Company refinanced its Deutsche Mark denominated debt
through the issuance of a note payable to a U.S. bank in Deutsche Marks which
matures September 1998 with interest of Libor plus .375%. At the same time,
the Company entered into an interest rate swap agreement with the bank,
maturing September 1998, which effectively converts the note payable's
floating rate to a fixed rate of 6.915% per annum provided the Company makes
periodic payments. If these payments are not made, future interest rates
could vary. At May 31, 1996 and 1995, the outstanding balance of the note
payable was $3,908,795 and $5,744,238, respectively, which corresponds to
the notional amount of the interest rate swap agreement. The fair value of
the interest rate swap agreement (which is nominal at May 31, 1996) is not
recognized in the financial statements.
The note payable requires the maintenance of certain income and other
financial ratios, and places certain limited restrictions on the Company's
ability to acquire other entities.
The note payable and interest rate swap agreement are guaranteed by the U.S.
parent company.
4. COMMON STOCK
At May 31, 1996, the following shares of Common Stock are reserved for future
issuance:
Common stock options - directors and employees 1,978,001
Common stock warrants - other 305,251
2,283,252
In connection with prior years' business acquisitions, the Company issued to
the sellers warrants to acquire, in whole or in part, 150,000 and 375,000
shares of the Company's Common Stock at $26.95 and $7.75 per share,
respectively. The 150,000 warrants become exercisable 20% per year
commencing August 1993, and expire in 2001. Through May 31, 1996, 219,749
of the 375,000 warrants had been exercised. The remaining 155,251 warrants
are currently exercisable and expire in 2008.
The Company has a Shareholders' Rights Plan under which one Common Stock
purchase right is presently attached to and trades with each outstanding
share of the Company's Common Stock. The rights become exercisable and
transferable apart from the Common Stock ten days after a person or group,
without the Company's consent, acquires beneficial ownership of, or the right
to obtain beneficial ownership of, 20% or more of the Company's Common Stock
or announces or commences a tender offer or exchange offer that could result
in at least 20% ownership. Once exercisable, each right entitles the holder
to purchase one share of the Company's Common Stock at an exercise price of
$16, subject to adjustment to prevent dilution. The rights have no voting
power and, until exercised, no dilutive effect on net income per common share.
The rights expire on April 20, 1999, and are redeemable at the discretion of
the Board of Directors at $.01. All reservations of shares of Common Stock
for purposes other than the rights plan shall take precedence and be superior
to any reservation of shares in connection with or under the rights plan.
If a person or a group acquires at least 20% ownership, except in an offer
approved by the Company under the rights plan, then each right not owned by
the acquirer or related parties will entitle its holder to purchase, at the
right's exercise price, Common Stock or Common Stock equivalents having a
market value immediately prior to the triggering of the right of twice that
exercise price. In addition, after an acquirer obtains at least 20%
ownership, if the Company is involved in certain mergers, business
combinations, or asset sales, each right not owned by the acquirer or related
persons will entitle its holder to purchase, at the right's exercise price,
shares of Common Stock of the other party to the transaction having a market
value immediately prior to the triggering of the right of twice that exercise
price.
In December 1995, the Company's shareholders elected to amend the Company's
Articles of Incorporation to increase the number of authorized shares of
Common Stock from 15,000,000 to 30,000,000. The Amendment was designed to
provide the Company with 15,000,000 additional shares of Common Stock which
would be available for future issuances pursuant to the Rights Plan, stock
splits, additional offerings, employee benefit programs, acquisitions and
for other proper corporate purposes.
5. STOCK OPTIONS
The Company is authorized to issue up to 1,978,001 shares of its Common Stock
under various employee and director stock option arrangements. These
arrangements include employee incentive plans and various voluntary salary
reduction plans. Options granted under these plans become exercisable at
various times and unless exercised expire at various dates through 2006.
Transactions involving these stock option arrangements are summarized as
follows:
Option
Price Per
Shares Share
Outstanding at May 31, 1993 1,272,420 $ .10 - $10.00
Granted 58,200 6.00 - 6.25
Exercised (201,019) .10 - 4.27
Canceled (7,172) 4.27 - 8.13
Expired (4,688) 1.07
Outstanding at May 31, 1994 1,117,741 .10 - 10.00
Granted 688,500 5.38 - 6.00
Exercised (13,594) .10 - 3.13
Canceled (17,381) 3.00 - 8.125
Outstanding at May 31, 1995 1,775,266 3.00 - 10.00
Granted 29,000 9.00 - 15.375
Exercised (144,200) 3.00 - 9.33
Canceled (27,719) 3.00 - 9.33
Outstanding at May 31, 1996 1,632,347 $3.00 - $15.375
At May 31, 1996 and 1995, options for 918,347 and 1,064,266 shares of Common
Stock, respectively, were exercisable, and 345,654 and 363,909 shares of
Common Stock, respectively, were available for future grants.
6. OPERATING LEASE COMMITMENTS
The Company leases domestic office and warehouse facilities under an operating
lease agreement expiring in 2001 with a right to renew for an additional five
years. The Company leases foreign office and warehouse facilities and
automobiles under operating lease agreements expiring at various dates
through 2009. Total rental expense, principally for office and warehouse
space, was $630,287 in 1996, $720,040 in 1995, and $566,463 in 1994.
In Germany, the office facility is leased from a related party. Rental
payments under this lease were $260,338, $355,136, and $209,368 for fiscal
1996, 1995, and 1994, respectively.
The following is a schedule of approximate future annual lease payments under
operating leases that have initial or remaining noncancelable lease terms in
excess of one year as of May 31, 1996:
Year Ending May 31:
1997 $ 641,863
1998 657,107
1999 632,933
2000 657,094
2001 599,725
Thereafter 2,048,745
The Company may, at its option, extend its office and warehouse facilities
lease terms through various dates.
7. RESTRUCTURING AND OTHER NON-RECURRING CHARGES
During the fourth quarter of fiscal 1994, the Company approved a plan to
discontinue its blood collection bag business and reduce staffing levels in
Europe which the Company completed in fiscal 1995. Restructuring charges
totaled approximately $625,000 during fiscal 1994 and consisted of $349,000
associated with the plan to discontinue the blood bag business and $276,000
associated with the staff reductions.
8. INCOME TAXES
Sources of income (loss) before income taxes are summarized below:
Year Ended May 31,
1996 1995 1994
Domestic Operations $4,014,011 $4,524,194 $3,264,848
Foreign Operations 162,275 6,468 (1,547,331)
Total $4,176,286 $4,530,662 $1,717,517
The provision for income taxes is summarized as follows:
Year Ended May 31,
1996 1995 1994
Current:
Federal $1,378,290 $1,536,798 $ 854,351
Foreign (8,585) 271 35,969
State 112,764 163,372 114,161
1,482,469 1,700,441 1,004,481
Deferred:
Federal (70,521) (53,295) 6,537
Foreign (511)
State (8,297) (6,271) (18,652)
(78,818) (59,566) (12,626)
Income taxes $1,403,651 $1,640,875 $ 991,855
Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating loss
carryforwards. Valuation allowances are established when necessary to reduce
deferred tax assets to the amounts expected to be realized. The tax effects
of significant items comprising the Company's net deferred tax asset at
May 31, 1996 and 1995 are as follows:
Year Ended May 31,
1996 1995
Deferred tax liabilities:
Amortization $(1,457,012) $(1,728,801)
Depreciation (25,414)
Deferred tax assets:
Depreciation 63,425
Reserves not currently
deductible 8,654 7,600
Foreign operating loss
carryforwards 2,293,091 2,565,876
Uniform capitalization 235,771 206,383
1,143,929 1,025,644
Valuation allowance (791,174) (751,706)
Net deferred tax asset $ 352,755 $ 273,938
The net increase in the deferred income tax valuation allowance during the year
ended May 31, 1996 was $39,468.
The Company's effective tax rate differs from the federal statutory rate as
follows:
Year Ended May 31,
1996 1995 1994
Federal statutory tax rate 34% 34% 34%
State income taxes, net of
federal tax benefit 2 2 2
Interest on state municipal
obligations (3) (2) (1)
Effect of foreign tax losses
and rates 29
Research and development tax
credits (1) (1) (6)
Other 2 3
34% 36% 58%
As a result of utilizing compensation cost deductions arising from the exercise
of nonqualified employee stock options for federal and state income tax
purposes, the Company realized income tax benefits of $384,887, $19,090,
and $242,087 in fiscal 1996, 1995, and 1994, respectively. Additionally, in
fiscal 1996 the Company recorded income tax benefits of $55,142 caused by
patent amortization expense deductions resulting from the exercise of stock
options previously issued in connection with the acquisition of certain
technology (Note 9). These income tax benefits are recognized in the
accompanying financial statements as additions to additional paid-in capital
rather than as reductions of the respective income tax provisions because
the related compensation deductions are not recognized as compensation for
financial reporting purposes.
At May 31, 1996, the Company's German subsidiary had net operating loss
carryforwards for income tax purposes of approximately $3,107,700 which do
not expire. The net operating loss carryforwards result primarily due to
differences in the timing of amortization deductions. At May 31, 1996, the
Company's Italian subsidiary had net operating loss carryforwards for income
tax purposes of approximately $1,710,640 which expire in 1999 and 2000.
9. TECHNOLOGY RIGHTS
In March 1983, the Company acquired rights to technology to be used in
developing diagnostic testing products. In connection with this acquisition,
the Company has agreed to pay to the inventors royalties equal to 4% of the
net sales from products utilizing the technology. Royalties under this
agreement amounted to approximately $328,400, $278,300, and $250,000 in
fiscal 1996, 1995, and 1994, respectively.
10. INSTRUMENT DEVELOPMENT AND MANUFACTURING AGREEMENTS
The Company has contracted with Bio-Tek Instruments, Inc. (Note 1) for the
development of a fully automated, "walk-away", blood bank analyzer. Known as
the ABS2000, the analyzer utilizes the Company's patented Capture(registered
trademark) products technology and will be marketed by the Company to hospital
transfusion laboratories for patient testing. Bio-Tek instrument development
costs for the fiscal years ended May 31, 1996, 1995 and 1994 were $167,188,
$200,142, and $1,765,698, respectively.
During fiscal 1996, the Company entered into a second development and
manufacturing agreement with DYNEX Technologies, Inc. Under the terms of
the agreement, DYNEX will design and manufacture a second analyzer known as
the ABSHV utilizing the Company's Capture(registered trademark) products
technology which will be marketed by the Company to blood donor centers for
donor testing. In fiscal 1996, the Company incurred $113,168 in development
expense, and is committed to spend an additional $148,000 for analyzers to be
used in clinical trials.
In fiscal 1996, 1995 and 1994, the Company incurred $212,654, $443,697 and
$239,144, respectively, in additional costs related to the projects.
11. DOMESTIC AND FOREIGN OPERATIONS
Information concerning the Company's domestic and foreign operations is
summarized below:
Year Ended May 31, 1996
United States Europe Eliminations Consolidated
Net Revenues:
Unaffiliated customers $15,953,635 $15,010,422 $30,964,057
Affiliates 3,432,611 89,820 $(3,522,431)
Total 19,386,246 15,100,242 (3,522,431) 30,964,057
Income from operations 2,777,277 814,871 1,629 3,593,777
Identifiable assets 31,700,867 18,451,729 (2,945,738) 47,206,858
Year Ended May 31, 1995
United States Europe Eliminations Consolidated
Net Revenues:
Unaffiliated customers $15,224,035 $13,667,503 $28,891,538
Affiliates 3,292,370 145,294 $(3,437,664)
Total 18,516,405 13,812,797 (3,437,664) 28,891,538
Income from operations 3,872,959 443,142 5,570 4,321,671
Identifiable assets 27,557,450 18,346,520 (1,924,728) 43,979,242
Year Ended May 31, 1994
United States Europe Eliminations Consolidated
Net Revenues:
Unaffiliated customers $15,823,791 $13,756,687 $29,580,478
Affiliates 2,970,566 149,445 $(3,120,011)
Total 18,794,357 13,906,132 (3,120,011) 29,580,478
Income (loss) from
operations 2,524,684 (605,966) (19,027) 1,899,691
Identifiable assets 26,972,583 15,197,590 (858,782) 41,311,391
Product sales to affiliates are valued at market prices.
During the years ended May 31, 1996, 1995, and 1994, the Company had net
domestic export sales to unaffiliated customers of approximately $3,158,000,
$2,519,000, and $2,600,000, respectively.
12. RETIREMENT PLAN
The Company maintains a 401(k) retirement plan covering its domestic employees
who meet certain age and length of service requirements, as defined. The
Company matches a portion of employee contributions to the plan. During the
years ended May 31, 1996, 1995, and 1994, the Company's matching contributions
to the plan were $92,700, $84,300, and $84,300. Vesting in the Company's
matching contributions is based on years of continuous service.
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share amounts)
Net Gross Operating Net Net Income
Sales Margin Income Income Per Share
FISCAL 1996
First Quarter $7,476 $4,714 $1,134 $796 $.09
Second Quarter 7,282 4,570 962 750 .09
Third Quarter 8,073 4,917 975 788 .09
Fourth Quarter 8,133 4,758 523 439 .05
$30,964 $18,959 $3,594 $2,773 $.32
FISCAL 1995
First Quarter $7,189 $4,296 $1,096 $669 $.09
Second Quarter 7,053 4,147 761 468 .06
Third Quarter 7,234 4,649 1,136 720 .09
Fourth Quarter 7,416 4,934 1,329 1,033 .13
$28,892 $18,026 $4,322 $2,890 $.37
IMMUCOR, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED MAY 31, 1994, 1995, AND 1996
Balance at Charged at Balance
Beginning Costs and Deductions at End
of Period Expense (Note 1) of Period
1994:
Allowance for
doubtful accounts $157,335 $35,668 $(14,909) $178,094
1995:
Allowance for
doubtful accounts $178,094 $61,092 $(5,989) $233,197
1996:
Allowance for
doubtful accounts $233,197 $118,682 $(1,334) $350,545
Note 1: "Deductions" represent accounts written off during the period less
recoveries of accounts previously written off.
Item 9.-Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
On May 7, 1996, the Company dismissed Deloitte & Touche LLP as its independent
accountant upon the recommendation of the Registrant's Audit Committee and the
approval of the Registrant's Board of Directors.
Deloitte & Touche's reports on the Company's consolidated balance sheet as of
May 31, 1995, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the two years in the period
ended May 31, 1995 did not contain any adverse opinion or any disclaimer of
opinion, and were not qualified or modified as to uncertainty, audit scope
or accounting principles.
During the two most recent fiscal years and the subsequent interim period
preceding Deloitte & Touche's dismissal, there were no disagreements between
the Company and Deloitte & Touche on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure
which, if not resolved to the satisfaction of Deloitte & Touche, would have
caused Deloitte & Touche to make a reference to the subject matter of such
disagreement in connection with its reports.
On May 14, 1996, the Company filed Form 8-K indicating that the firm of
Ernst & Young LLP had been engaged as its new independent accountant to audit
the Company's financial statements.
PART III
Item 10.-Directors and Executive Officers of the Registrant.
The following table sets forth certain information concerning the directors
and executive officers of the Company.
Name Age Position with Company
Edward L. Gallup 57 Chairman of the Board of Directors,
President and Chief Executive Officer
Ralph A. Eatz 52 Director and Senior Vice President -
Operations
Richard J. Still 47 Director, Senior Vice President - Finance,
Treasurer and Secretary
Daniel T. McKeithan 72 Director
Didier L. Lanson 46 Director
Dr. Gioacchino De Chirico 43 Director, President of Immucor Italia S.r.l.
Josef Wilms 59 Director, President of Immucor GmbH
G. Bruce Papesh 49 President, Dart, Papesh & Co.
All members of the Board of Directors hold office until the next annual
meeting of shareholders or until their successors are duly elected and have
qualified. All executive officers serve at the pleasure of the Board of
Directors.
Three of the Company's executive officers founded Immucor in 1982, and have
from 24 to 32 years experience in the blood banking diagnostic reagent
industry. In addition, such officers worked together for approximately six
years at Biological Corporation of America ("BCA"), now the blood banking
reagents division of Organon-Teknika, a Dutch health care products company.
Including the time they worked together as officers of BCA and Immucor,
Messrs. Gallup, Eatz and Still now have worked together as a management team
for over 21 years in the blood banking diagnostic reagent business.
Edward L. Gallup has been Chairman of the Board of Directors, President and
Chief Executive Officer of the Company since its founding. Mr. Gallup has
worked in the blood banking business for over 32 years.
Ralph A. Eatz, who has been working in the blood banking reagent field for
over 28 years, has been a director and Vice President - Operations of the
Company since its founding, and Senior Vice President - Operations since
December 1988.
Richard J. Still has been a director of the Company since August 1982, Vice
President - Finance (August 1982 to November 1988) and now Senior Vice
President - Finance (since December 1988), and Secretary and Treasurer since
February 1983. He has worked in the blood banking reagent business for over
24 years.
Daniel T. McKeithan has been a director of the Company since February 28,
1983. Since 1986, he has served as a consultant to health care companies.
From April 1979 until March 1986 he was employed by Blood Systems, Inc., a
supplier of blood and blood products, as a general manager and as Executive
Vice President of Operations. Mr. McKeithan also has 29 years experience in
pharmaceutical and diagnostic products with Johnson and Johnson, Inc.,
including Vice President - Manufacturing of the Ortho Diagnostic Systems
division.
Didier L. Lanson has been a director of the Company since October 24, 1989.
Since September 1992, he has served as Vice President, Europe, of SyStemix
International, subsidiary of SyStemix, Inc., a publicly traded biotechnology
company primarily engaged in the development of cellular processes and
cellular products. He was an Administrator and the President and CEO of
Diagnostics Transfusion ("DT"), a French corporation which manufactures and
distributes reagent products, and President and CEO of ESPACE VIE, a French
corporation which develops and markets pharmaceutical blood based products and
biotech products, from 1987 until December 1991.
Dr. Gioacchino De Chirico has been President of Immucor Italia S.r.l. since
February 1994. From 1989 until 1994, he was employed in the United States by
Ortho Diagnostic Systems, Inc., a Johnson and Johnson Company, as General
Manager, Immunocytometry, with worldwide responsibility. From 1979 until
1989, he was with Ortho Diagnostic Systems, Inc., in Italy, where he began as
a sales representative and held several management positions, including
Product Manager and European Marketing Manager for Immunology and Infectious
Disease products. Immucor Italia S.r.l. was acquired by the Company on
September 30, 1991.
Josef Wilms is the founder and has been President since 1984 of Immucor GmbH,
a German distributor of HLA products, DNA probes and the Company's blood bank
products. Immucor GmbH was acquired by the Company on September 28, 1990.
G. Bruce Papesh is the co-founder of Dart, Papesh & Co., a Lansing, Michigan
based company that provides investment consulting and other financial services.
He has served as President of Dart, Papesh & Co. Inc., since 1987. Mr. Papesh
has over 25 years of experience in investment services while serving in stock
broker, consulting and executive management positions. He provides investment
services to Dart Container Corporation and its affiliates. Mr. Papesh also
serves as a Director and as Secretary of Neogen Corporation, an agricultural,
biotechnology company.
The Company anticipates that it may add additional outside directors in the
future.
There are no family relationships among any of the directors or executive
officers of the Company.
Compliance with Section 16(a) of the Securities Exchange Act of 1934. Section
16(a) of the Securities Exchange Act of 1934 and regulations of the Securities
and Exchange Commission thereunder require the Company's executive officers and
directors and persons who own more than ten percent of the Company's Common
Stock, as well as certain affiliates of such persons, to file initial reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers. Executive
officers, directors and persons owning more than ten percent of the Company's
Common Stock are required by Securities and Exchange Commission regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it and written
representations that no other reports were required for those persons, the
Company believes that, during the fiscal year ended May 31, 1996, all filing
requirements applicable to its executive officers, directors, and owners of
more than ten percent of the Company's Common Stock were complied with.
Item 11.-Executive Compensation
The following table sets forth the compensation earned by the Company's Chief
Executive Officer and all of the Company's other executive officers for
services rendered in all capacities to the Company for the last three fiscal
years.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
Securities All Other
Name and Other Annual Underlying Compensa-
Principal Position Year Salary Bonus(1) Compensation(2)Options (3) tion (4)
Edward L. Gallup 1996 $176,587 $ - $31,633 - $4,945
Chairman of the 1995 $170,180 $10,000 $28,778 60,000 $4,906
Board, President 1994 $165,220 $ - $26,931 - $4,617
and Chief Executive
Officer
Ralph A. Eatz 1996 $170,913 $ - $26,738 - $4,975
Director and Senior 1995 $164,780 $10,000 $24,586 60,000 $4,911
Vice President - 1994 $159,820 $ - $23,215 - $4,619
Operations
Richard J. Still 1996 $170,981 $ - $23,058 - $5,038
Director, Senior 1995 $164,780 $10,000 $21,816 60,000 $4,808
Vice President - 1994 $153,700 $ - $20,684 - $4,498
Finance, Treasurer
and Secretary
Josef Wilms 1996 $202,131 $ - $17,663 - -
President, Immucor 1995 $192,714 $10,000 $18,709 60,000 -
GmbH and Director 1994 $166,180 $ - $20,526 - -
Dr. Gioacchino De 1996 $180,073 $ - $11,731 - -
Chirico (5) 1995 $163,336 $10,000 $11,350 60,000 -
President, Immucor
Italia, S.r.l.Director
(1) Represents for 1995 a bonus which was accrued for the year ended May 31,
1995, and was paid in August 1995.
(2) Includes the value of life insurance premiums and an allowance for
automobile expenditures for each of the above named executive officers as
follows: For 1996 - for Mr.Gallup, Eatz, Still, Wilms, and De Chirico, life
insurance premiums of $22,033, $17,138, $13,458, $2,059 and $2,131,
respectively, and an allowance for automobile expenditures for Mr. Gallup,
Eatz, and Still of $9,600 each, for Mr. Wilms $15,604, and for Dr. De Chirico
$9,600. For 1995 - for Mr. Gallup, Eatz, Still, Wilms, and De Chirico, life
insurance premiums of $19,178, $14,986, $12,216, $2,009, and $1,750,
respectively, and an allowance for automobile expenditures for Mr. Gallup,
Eatz and Still of $9,600 each, for Mr. Wilms $16,700, and for Dr. De Chirico
$9,600. For 1994 - for Mr. Gallup, Eatz, Still and Wilms, life insurance
premiums of $17,331, $13,615, $11,084, and $1,782, respectively, and an
allowance for automobile expenditures for Mr. Gallup, Eatz and Still of
$9,600 each, and for Mr. Wilms $18,744.
(3) Represents options granted under the 1995 Stock Option Plan to purchase
shares of the Company's Common Stock at an exercise price of $6.00. 50% of
the options are exercisable beginning January 2, 1997, and 25% per year
thereafter.
(4) Represents amounts the Company contributed to the 401(k) retirement plan
on behalf of the named executive officers.
(5) Dr. De Chirico became an executive officer and director of the Company on
December 1, 1994.
Stock Options.
Options Granted. No options were granted during the fiscal year ended
May 31, 1996.
Option Holdings
The table below summarizes options exercised during fiscal 1996 and presents
the value of unexercised options held as of the end of the fiscal year by
each of the Company's executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of
Securities Value of
Shares Underlying Unexercised
Acquired Unexercised In-the-Money
On Options at Options at
Exercise Value May 31, 1996 May 31, 1996(1)
(#) Realized E U E U
Edward L. Gallup 29,062 $295,307 89,250 60,000 $249,454 $367,500
Ralph A. Eatz 29,062 295,307 89,250 60,000 249,454 367,500
Richard J. Still 15,000 135,000 89,250 60,000 249,454 367,500
Dr. Gioacchino
De Chirico 15,000 125,375 - 75,000 - 459,375
Josef Wilms 175,000 1,081,092 233,000 60,000 878,360 367,500
E - Exercisable
U - Unexercisable
(1) Based on the difference between the exercise price and the closing price
for the Common Stock on May 31, 1996, of $12.125 as reported by NASDAQ.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee has responsibility for determining the types and
amounts of executive compensation, including setting the number of stock
options that can be granted to executive officers as a group. The Stock
Option Committee determines the number of shares to be granted to individual
executive officers. Ralph A. Eatz has been a director and Vice President -
Operations of the Company since its founding, and Senior Vice President -
Operations since December 1988 and participates in decisions on executive
compensation. Neither Mr. McKeithan nor Mr. Lanson are, nor have they ever
been, officers or employees of the Company. Edward L. Gallup, Ralph A. Eatz,
and Richard J. Still are the founders of the Company, have been directors and
executive officers of the Company since its inception, and each of them
participates in decisions on all stock options granted.
Compensation of Directors
Members of the Board of Directors, who are not also executive officers of the
Company, receive $500.00 per meeting and are reimbursed for all travel expenses
to and from meetings of the Board.
Employment Contracts, Termination of Employment and Change of Control
Arrangements
The Company has in effect employment agreements (the "Agreements") with three
of its executive officers: Edward L. Gallup, Ralph A. Eatz and Richard J. Still
(individually, "the Employee") entered into on January 1, 1986. Each of the
Agreements renews for a period of five years from each anniversary date unless
sooner terminated. If the Company terminates the employment of the Employee
"without cause", the Employee would receive his base annual salary for the
remainder of the five year period as renewed in a single lump sum payment
upon such termination. "Without cause" is defined in the Agreements to
include (i) the sale, exchange, or other disposition, in one transaction, or
in a series of related transactions, of at least 20% of the Company's
outstanding shares of capital stock (but not including a purchase and sale
of the Company's Common Stock by an underwriter in a public offering), (ii)
the sale of substantially all of the Company's assets to a purchaser or a
group of associated purchasers, whether in a single transaction or a series
of related transactions, (iii) under certain circumstances, the merger or
consolidation of the Company, or (iv) the occurrence of any change in control
of the Company within the meaning of the federal securities law. "Without
cause" also includes the relocation of the Employee without the Employee's
consent.
Immucor GmbH has in effect an employment agreement with Josef Wilms effective
for an indefinite period and subject to termination by either party at the end
of each calendar half year upon six months prior notice. A termination by
Immucor GmbH requires a decision by the Company as its sole shareholder. Mr.
Wilms has agreed to refrain from competition with Immucor GmbH for a period
of two years following the termination of the agreement, and Immucor GmbH
must pay Mr. Wilms monthly installments of 1/16 of his annual compensation
for such forbearance. Immucor GmbH has the right to release Mr. Wilms from
his noncompetition obligations, in which case Mr. Wilms would not be paid.
The Company has in effect employment agreements (the "Agreement") with Dr.
Gioacchino De Chirico entered into on December 31, 1993. The Agreement
renews for a period of five years from each anniversary date unless sooner
terminated based upon sales performance of Immucor Italia. The Company may
only terminate the employment agreement "for cause", as defined in the
agreement. If the Company terminates the employment of the Employee "without
cause", the Employee would receive his base annual salary for the remainder
of the five year period as renewed upon such termination. Dr. De Chirico
has agreed to refrain from competition with Immucor Italia, S.r.l. following
the termination of the agreement for a period of two years if he is terminated
without cause, and for a period of four years if he is terminated for cause or
if he voluntarily terminates the agreement.
Item 12.-Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth as of August 1, 1996, the number of shares of
Common Stock of Immucor beneficially owned by each director of the Company,
and by each person known to the Company to own more than 5% of the outstanding
shares of Common Stock, and by all of the executive officers and directors of
the Company as a group.
Name of Beneficial Owner
(and address for those Shares Percent
owning more than five percent) Owned(1) of Class(1)
Edward L. Gallup 201,857(2) 2.5%
Ralph A. Eatz 277,526(2) 3.4%
Richard J. Still 129,250(2) 1.6%
Josef Wilms 233,000(3) 2.8%
Dr. Gioacchino De Chirico 0 *
Didier L. Lanson 3,750(4) *
Daniel T. McKeithan 48,778(4) *
G. Bruce Papesh 500(5) *
Dart Financial Corporation
500 Hogsback Road
Mason, Michigan 48854 472,675 5.9%
All directors and executive officers
as a group (eight persons) 878,820 10.5%
* less than 1%.
(1) Except as otherwise noted herein, percentages are determined on the basis
of 8,054,727 shares of Common Stock issued and outstanding plus securities
deemed outstanding pursuant to Rule 13-3(d)(1) of the Securities Exchange
Act of 1934, as amended. As a result, the percentage of shares of Common
Stock is calculated assuming that the beneficial owner has exercised any
options held by such beneficial owner that are currently exercisable, or
exercisable within 60 days of August 1, 1996, and that no other options have
been exercised by anyone else. Unless otherwise indicated, the Company
believes the beneficial owner has sole voting and investment power over such
shares.
(2) Includes for each person an option to acquire 89,250 shares at an exercise
price of $9.33 (see 1990 Stock Option Plan).
(3) Includes warrants to purchase 143,750 shares of Common Stock at an exercise
price of $7.75, issued in connection with the acquisition of Immucor GmbH.
Also includes options to purchase 89,250 shares of Common Stock at an
exercise price of $9.33.
(4) Includes a currently exercisable option to acquire 3,750 shares at $5.40
per share.
(5) Includes 400 shares over which Mr. Papesh shares investment power in his
role as an investment advisor.
Item 13.-Certain Relationships and Related Transactions.
In Germany, the Company leases approximately 1,566 square meters of space
from Doris Wilms, the wife of Josef Wilms, a director of the Company and
President of Immucor GmbH. Rental payments for the 1996 fiscal year totaled
$260,338, and the lease term extends through April 2009. Subsequent to May
31, 1996, the Company loaned Josef Wilms $300,000 collateralized by his
warrants to purchase 155,251 shares of the Company's Common Stock.
PART IV
Item 14.-Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Documents filed as part of this report:
1. Consolidated Financial Statements
The Consolidated Financial Statements, Notes thereto, and Independent Auditors'
Reports thereon are included in Part II, Item 8 of this report.
2. Consolidated Financial Statement Schedule included in Part II, Item 8 of
this report
Schedule II - Valuation and Qualifying Accounts
Other financial statement schedules are omitted as they are not required or
not applicable or the required information is shown in the applicable
financial statements or notes thereto.
3. Exhibits
3.1 Articles of Incorporation (composite as of December 22, 1989) (incorporated
by reference to Exhibit 3.1 to Immucor, Inc.'s Quarterly Report on Form 10-Q
for the fiscal quarter ended November 30, 1989).
3.2 Bylaws (amended and restated as of August 28, 1991) (incorporated by
reference to Exhibit 19 to Immucor, Inc.'s Quarterly Report on Form 10-Q
for the fiscal quarter ended August 31, 1991).
4.1 Immucor, Inc. Shareholder Rights Plan, adopted April 7, 1989 (incorporated
by reference to Exhibit 4.1 to Immucor, Inc.'s Current Report on Form 8-K
dated April 7, 1989).
10.1 Standard Industrial Lease, dated July 21, 1982, between the Company and
Colony Center, Ltd. (incorporated by reference to Exhibit 10.2 to Immucor,
Inc.'s Annual Report on Form 10-K for the fiscal year ended May 31, 1985).
10.1-1 Lease Amendment dated June 28, 1989, between the Company and Colony
Center, Ltd. (incorporated by reference to Exhibit 10.1-1 to Immucor's Annual
Report on Form 10-K for the fiscal year ended May 31, 1989).
10.1-2 Lease Amendment dated November 8, 1991, between the Company and Colony
Center, Ltd. (incorporated by reference to Exhibit 10.1-1 to Immucor's Annual
Report on Form 10-K for the fiscal year ended May 31, 1992).
10.1-3 Lease Agreement, dated February 2, 1996, between the Company and
Connecticut General Life Insurance Company.
10.2 Agreement, dated March 11, 1983, between the Company and The Kansas City
Group, as amended through January 21, 1985 (incorporated by reference to
Exhibit 10.2 to Registration Statement No. 33-16275 on Form S-1).
10.3 Agreement dated August 27, 1987, between the Company and the Kansas City
Group amending Exhibit 10.2 (incorporated by reference to Exhibit 10.3 to
Immucor's Annual Report on Form 10-K for the fiscal year ended May 31, 1989).
10.4 United States Department of Health and Human Services Establishment
License dated December 28, 1982, for the manufacture of biological products
(incorporated by reference to Exhibit 10.12 to Registration Statement No.
33-966 on Form S-1).
10.5 United States Department of Health and Human Services Product License
dated December 28, 1982, for the manufacture and sale of reagent red blood
cells (incorporated by reference to Exhibit 10.13 to Registration Statement
No. 33-966 on Form S-1).
10.6 United States Department of Health and Human Services Product License
dated May 20, 1983, for the manufacture and sale of blood grouping sera
(incorporated by reference to Exhibit 10.14 to Registration Statement No.
33-966 on Form S-1).
10.7 United States Department of Health and Human Services Product License
date November 18, 1983, for the manufacture and sale of anti-human serum
(incorporated by reference to Exhibit 10.15 to Registration Statement No.
33-966 on Form S-1).
10.8* Employment Agreement, dated January 1, 1986, between the Company and
Edward L. Gallup (incorporated by reference to Exhibit 10.15 to Immucor,
Inc. Annual Report on Form 10-K for the fiscal year ended May 31, 1986).
10.8-1* Amendment to Employment Agreement dated April 7, 1989, between the
Company and Edward L. Gallup (incorporated by reference to Exhibit 10.12-1
to Immucor's Annual Report on Form 10-K for the fiscal year ended May 31,
1989).
10.9* Employment Agreement, dated January 1, 1986, between the Company and
Ralph A. Eatz (incorporated by reference to Exhibit 10.16 to Immucor, Inc.
Annual Report on Form 10-K for the fiscal year ended May 31, 1986).
10.9-1* Amendment to Employment Agreement dated April 7, 1989, between the
Company and Ralph A. Eatz (incorporated by reference to Exhibit 10.13-1 to
Immucor's Annual Report on Form 10-K for the fiscal year ended May 31, 1989).
10.10* Employment Agreement, dated January 1, 1986, between the Company and
Richard J. Still (incorporated by reference to Exhibit 10.17 to Immucor,
Inc. Annual Report on Form 10-K for the fiscal year ended May 31, 1986).
10.10-1* Amendment to Employment Agreement dated April 7, 1989, between the
Company and Richard J. Still (incorporated by reference to Exhibit 10.14-1
to Immucor's Annual Report on Form 10-K for the fiscal year ended May 31,
1989).
10.11* Employment Agreement dated September 12, 1990, between Immucor GmbH and
Josef Wilms (incorporated by reference to Exhibit 10.11 to Immucor, Inc. Annual
Report on Form 10-K for the fiscal year ended May 31, 1991).
10.12* Agreement dated December 31, 1993, between Immucor Italia, S.r.l. and
Dr. Gioacchino De Chirico (incorporated by reference to Exhibit 10.12 to
Immucor, Inc. Annual Report on Form 10-K for the fiscal year ended May 31,
1995).
10.13* Agreement dated December 31, 1993, between Immucor Italia, S.r.l. and
Dr. Gioacchino De Chirico (incorporated by reference to Exhibit 10.13 to
Immucor, Inc. Annual Report on Form 10-K for the fiscal year ended May 31,
1995).
10.14* 1995 Stock Option Plan, including form of Stock Option Agreement used
thereunder (incorporated by reference to Exhibit 10.14 to Immucor, Inc.
Annual Report on Form 10-K for the fiscal year ended May 31, 1995).
10.15* 1990 Stock Option Plan, including form of Stock Option Agreement used
thereunder (incorporated by reference to Exhibit 10.15 to Immucor, Inc.
Annual Report on Form 10-K for the fiscal year ended May 31, 1995).
10.16* Description of 1983 and 1984 Salary Reduction Plans (incorporated by
reference to Exhibit 10.9 to Immucor, Inc.'s Annual Report on Form 10-K for
the fiscal year ending May 31, 1985).
10.17* Description of 1983 Stock Option Plan (incorporated by reference to
Exhibit 10.10 to Immucor, Inc.'s Annual Report on Form 10-K for the fiscal
year ending May 31, 1985).
10.18* 1986 Incentive Stock Option Plan, amended July 29, 1987, including form
of Stock Option Agreement used thereunder (incorporated by reference to Exhibit
10.9 to Registration Statement No. 33-16275 on Form S-1).
11.1 Statement re computation of per share earnings.
21 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP.
*Denotes a management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
On May 14, 1996, the Company filed a Form 8-K dated May 7, 1996, relating to
Item 4, Changes in Registrant's Certifying Accountant.
(c) Exhibits
The exhibits required to be filed with this Annual Report on Form 10-K
pursuant to Item 601, of Regulation S-K are listed under "Exhibits" in Part
IV, Item 14(a)(3) of this Annual Report on Form 10-K, and are incorporated
herein by reference.
(d) Financial Statement Schedule
The Financial Statement Schedule required to be filed with this Annual Report
on Form 10-K is listed under "Financial Statement Schedule" in Part IV,
Item 14(a)(2) of this Annual Report on Form 10-K, and is incorporated
herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
IMMUCOR, INC.
By: /s/ EDWARD L. GALLUP
Edward L. Gallup, Chairman of the Board of Directors,
President and Chief Executive Officer
August 12, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ EDWARD L. GALLUP
Edward L. Gallup, Director, Chairman of the Board of
Directors, President and Chief Executive Officer (Principal
Executive Officer)
August 12, 1996
/s/ RICHARD J. STILL
Richard J. Still, Senior Vice President-Finance, Secretary,
Treasurer, and Director (Principal Financial and
Accounting Officer)
August 12, 1996
/s/RALPH A. EATZ
Ralph A. Eatz, Director
August 12, 1996
/s/DANIEL T. MCKEITHAN
Daniel T. McKeithan, Director
August 12, 1996
/s/G. BRUCE PAPESH
G. Bruce Papesh, Director
August 12, 1996
Didier L. Lanson, Director
Dr. Gioacchino De Chirico, Director
Josef Wilms, Director
EXHIBIT INDEX
Sequential
Number Description Page Number
3.1 Articles of Incorporation (composite as of December 22,
1989) (incorporated by reference to Exhibit 3.1 to Immucor,
Inc.'s Quarterly Report on Form 10-Q for the fiscal quarter
ended November 30, 1989).
3.2 Bylaws (amended and restated as of August 28, 1991)
(incorporated by reference to Exhibit 19 to Immucor, Inc.'s
Quarterly Report on Form 10-Q for the fiscal quarter ended
August 31, 1991).
4.1 Immucor, Inc. Shareholder Rights Plan, adopted April 7, 1989
(incorporated by reference to Exhibit 4.1 to Immucor, Inc.'s
Current Report on Form 8-K dated April 7, 1989).
10.1 Standard Industrial Lease, dated July 21, 1982, between the
Company and Colony Center, Ltd. (incorporated by reference
to Exhibit 10.2 to Immucor, Inc.'s Annual Report on Form 10-K
for the fiscal year ended May 31, 1985).
10.1-1 Lease Amendment dated June 28, 1989, between the Company and
Colony Center, Ltd. (incorporated by reference to Exhibit
10.1-1 to Immucor's Annual Report on Form 10-K for the fiscal
year ended May 31, 1989).
10.1-2 Lease Amendment dated November 8, 1991, between the Company
and Colony Center, Ltd. (incorporated by reference to Exhibit
10.1-1 to Immucor's Annual Report on Form 10-K for the fiscal
year ended May 31, 1992).
10.1-3 Lease Agreement, dated February 2, 1996, between the Company
and Connecticut General Life Insurance Company.
10.2 Agreement, dated March 11, 1983, between the Company and The
Kansas City Group, as amended through January 21, 1985
(incorporated by reference to Exhibit 10.2 to Registration
Statement No. 33-16275 on Form S-1).
10.3 Agreement dated August 27, 1987, between the Company and the
Kansas City Group amending Exhibit 10.2 (incorporated by
reference to Exhibit 10.3 to Immucor's Annual Report on
Form 10-K for the fiscal year ended May 31, 1989).
10.4 United States Department of Health and Human Services
Establishment License dated December 28, 1982, for the
manufacture of biological products (incorporated by
reference to Exhibit 10.12 to Registration Statement No.
33-966 on Form S-1).
10.5 United States Department of Health and Human Services Product
License dated December 28, 1982, for the manufacture and sale
of reagent red blood cells (incorporated by reference to
Exhibit 10.13 to Registration Statement No. 33-966 on Form S-1).
10.6 United States Department of Health and Human Services Product
License dated May 20, 1983, for the manufacture and sale of
blood grouping sera (incorporated by reference to Exhibit
10.14 to Registration Statement No. 33-966 on Form S-1).
10.7 United States Department of Health and Human Services Product
License date November 18, 1983, for the manufacture and sale
of anti-human serum (incorporated by reference to Exhibit
10.15 to Registration Statement No. 33-966 on Form S-1).
10.8* Employment Agreement, dated January 1, 1986, between the
Company and Edward L. Gallup (incorporated by reference
to Exhibit 10.15 to Immucor, Inc. Annual Report on Form 10-K
for the fiscal year ended May 31, 1986).
10.8-1*Amendment to Employment Agreement dated April 7, 1989, between
the Company and Edward L. Gallup (incorporated by reference
to Exhibit 10.12-1 to Immucor's Annual Report on Form 10-K
for the fiscal year ended May 31, 1989).
10.9* Employment Agreement, dated January 1, 1986, between the
Company and Ralph A. Eatz (incorporated by reference to
Exhibit 10.16 to Immucor, Inc. Annual Report on Form 10-K
for the fiscal year ended May 31, 1986).
10.9-1*Amendment to Employment Agreement dated April 7, 1989,
between the Company and Ralph A. Eatz (incorporated by
reference to Exhibit 10.13-1 to Immucor's Annual Report
on Form 10-K for the fiscal year ended May 31, 1989).
10.10* Employment Agreement, dated January 1, 1986, between the
Company and Richard J. Still (incorporated by reference
to Exhibit 10.17 to Immucor, Inc. Annual Report on Form
10-K for the fiscal year ended May 31, 1986).
10.10-1*Amendment to Employment Agreement dated April 7, 1989, between
the Company and Richard J. Still (incorporated by reference
to Exhibit 10.14-1 to Immucor's Annual Report on Form 10-K
for the fiscal year ended May 31, 1989).
10.11* Employment Agreement dated September 12, 1990, between Immucor
GmbH and Josef Wilms (incorporated by reference to Exhibit
10.11 to Immucor, Inc. Annual Report on Form 10-K for the
fiscal year ended May 31, 1991).
10.12* Agreement dated December 31, 1993, between Immucor Italia,
S.r.l. and Dr. Gioacchino De Chirico (incorporated by
reference to Exhibit 10.12 to Immucor, Inc. Annual Report
on Form 10-K for the fiscal year ended May 31, 1995).
10.13* Agreement dated December 31, 1993, between Immucor Italia,
S.r.l. and Dr. Gioacchino De Chirico (incorporated by
reference to Exhibit 10.13 to Immucor, Inc. Annual Report
on Form 10-K for the fiscal year ended May 31, 1995).
10.14* 1995 Stock Option Plan, including form of Stock Option
Agreement used thereunder (incorporated by reference to
Exhibit 10.14 to Immucor, Inc. Annual Report on Form 10-K
for the fiscal year ended May 31, 1995).
10.15* 1990 Stock Option Plan, including form of Stock Option
Agreement used thereunder (incorporated by reference to
Exhibit 10.15 to Immucor, Inc. Annual Report on Form 10-K
for the fiscal year ended May 31, 1995).
10.16* Description of 1983 and 1984 Salary Reduction Plans
(incorporated by reference to Exhibit 10.9 to Immucor,
Inc.'s Annual Report on Form 10-K for the fiscal year
ending May 31, 1985).
10.17* Description of 1983 Stock Option Plan (incorporated by
reference to Exhibit 10.10 to Immucor, Inc.'s Annual
Report on Form 10-K for the fiscal year ending May 31, 1985).
10.18* 1986 Incentive Stock Option Plan, amended July 29, 1987,
including form of Stock Option Agreement used thereunder
(incorporated by reference to Exhibit 10.9 to Registration
Statement No. 33-16275 on Form S-1).
11.1 Statement re computation of per share earnings.
21 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Deloitte & Touche LLP.
*Denotes a management contract or compensatory plan or arrangement.
EXHIBIT 10.1-3
LEASE AGREEMENT
PREMISES: 3130 Gateway Drive
Suite 600
Norcross, Georgia 30071
LESSOR: Connecticut General Life Insurance Company
on behalf of its Separate Account R
LESSEE: Immucor, Inc.
DATE: February 2, 1996
TABLE OF CONTENTS
1. Premises 1
2. Term 1
3. Rental 1
4. Security Deposit 2
5. Use 2
6. Lessor's Care 3
7. Lessee's Care 3
8. Inspections 3
9. Default and Remedies 3
10. Personalty of Lessee 4
11. Possession 5
12. Utilities 5
13. Assignment and Subletting 5
14. Destruction or Damage 5
15. Eminent Domain 6
16. Alterations and Improvements 6
17. Insurance 6
18. Exterior Signs 6
19. Attorney's Fees 7
20. Holding Over 7
21. Surrender of Premises 7
22. Notices 7
23. Parties 7
24. Parking Spaces and Driveways 7
25. Subordination 8
26. Governmental Orders 8
27. Improvements 8
28. Estoppel Certificates 8
29. Protective Covenants 9
30. Liability 9
31. Time is of the Essence 9
32. Lessor's Estate 9
33. Broker indemnification 9
34. Rules and Regulations 9
35. Special Stipulations 9
Exhibit "A" - Floor Plan
Exhibit "B" - Tenant Improvements (Intentionally Omitted)
Exhibit "C" - Rules & Regulations
Exhibit "D" - Signage Criteria
STANDARD LEASE AGREEMENT
THIS LEASE AGREEMENT, (the "Lessor") is made this 1st day of February, 1996,
by and between Connecticut General Life Insurance on behalf of its Separate
Account R ("Lessor"); and Immucor, Inc., a Georgia Corporation (the "Lessee").
W I T N E S S E T H:
1. PREMISES
Lessor does hereby rent and lease to the Lessee, and Lessee does hereby rent
and hire from Lessor, that certain space containing approximately 42,837
square feet of space, as shown on floor plan attached hereto as Exhibit A
and incorporated hereby by this reference (such space being hereinafter
referred to as the "Premises"). The Premises are located in Lessor's buildings
(hereinafter referred to as the "Buildings") known as 3130 Gateway Drive, Suite
600, Norcross, Georgia 30071 (37,931 square feet) and 3150 Gateway Drive, Suite
500, Norcross, Georgia 30071 (4,906 square feet). Effective January 1, 1997,
Lessor agrees to lease an additional 4,615 square feet in Suites 400 and 450
at 3150 Gateway Drive, Norcross, Georgia 30071 (See Exhibit "A") increasing
the total space leased to 47,452 square feet (See Special Stipulation #35).
2. TERM
The term of this Lease shall be for a period of Sixty (60) months, commencing
on May 1, 1996 (the "Commencement Date") and ending on April 30, 2001 (the
"Termination Date") at midnight unless sooner terminated as hereunder provided
or unless such commencement and termination dates are adjusted as herein
provided.
3. RENTAL
Lessee shall pay to Lessor at P.O. 102228, Atlanta Georgia 30368-0228, or at
such other place Lessor may designate in writing, a Base Rent of See Special
Stipulation #36, payable in equal monthly installments of See Special
Stipulation #36, to be paid without notice, demand, deduction, or offset on
the first day of each calendar month in advance. Rental payments not
received by Lessor within ten (10) calendar days after the due date thereof
shall be subject to a late charge payable by Lessee in an amount equal to
five percent (5%) of such past due rental.
(a) Commencing in the calendar year 1996 and continuing thereafter during each
year of the term of this Lease, in the event Lessor's per square foot cost of
real estate taxes, sanitary taxes, general and special assessments on the
Building and on the land on which the Building is located is above a tax
expense stop equal to $.18 per square foot, then Lessee shall pay to Lessor
as additional rent the amount of such per square foot overage. The term
"taxes" shall include every type of tax, charge or impost assessed against
the Building, or upon the land upon which the Building is located or upon
the operation of the Building together with any and all reasonable costs
protesting and reducing taxes and legal fees incident therewith, excepting
only income taxes imposed upon Lessor.
(b) Lessor shall notify Lessee in writing, on or reasonably after Lessor's
annual receipt of tax billings of the amount of any such increase over the
preceding calendar year in taxes pursuant to paragraph 3(a) above, and
Lessee shall pay the amount of such increase to Lessor as additional rent
within thirty (30) days after delivery of such notice to Premises or receipt
thereof by Lessee. Lessor shall, upon written request by Lessee, provide
copies of tax billings to Lessee.
(c) Lessee agrees to pay as additional rent, as hereinafter provided, its share
of reasonable expenses incurred by Lessor at its discretion, for the operation
and maintenance of the common areas, including, without limiting the generality
of the foregoing, cost incurred for building insurance, lighting, painting,
cleaning, traffic control, policing, inspection, landscaping and repairing and
replacing the common areas, or any part thereof together with a reasonable
allowance for Lessor's direct overhead for such services, and any and all
water consumed on the Premises which is not separately metered to the Lessee.
The share to be paid by the Lessee shall be that percentage of the cost of
operation and maintenance of the common areas which the gross rentable area
of the Premises bears to the gross rentable area of the buildings known as
Colony Center which percentage shall be equal to 42,837 / 220,553 = 19.42%.
Beginning January 1, 1997, Lessee's share shall increase to 21.52%
(47,452 / 220,553) denoting the expansion into suites 400 and 500 at 3150
Gateway Drive (See Special Stipulation #35). Such common area
maintenance expense shall be billed by the Lessor to the Lessee monthly based
upon the estimated annual cost of operation and maintenance of the common
areas during the term of this Lease and Lessee shall pay such common area
maintenance expense charges to Lessor as additional rent within thirty (30)
days after delivery of such billing to Premises of a receipt thereof by
Lessee. Lessor may, at its option, make monthly or other periodic charges
based upon the estimated annual cost of operation and maintenance of the
common areas. Within ninety days (90) after the end of each such calendar
year, or as soon thereafter as is reasonably practical, Lessor will furnish
to Lessee a statement of expenses relating to the common areas for such year,
such statement to be prepared in accordance with generally accepted accounting
principles and to include Lessee's proportionate share of the actual expenses
relating to common areas, computed as herein provided. If such statement
shows an amount owing to Lessor that is less than payments for such calendar
year previously made by Lessee, Lessee shall receive a credit against the
next monthly common area maintenance expense to be paid by Lessee. If such
statement shows an amount owed by Lessee, Lessee shall pay the deficiency to
Lessor within thirty (30) days after delivery of such statement. Lessee's
obligation to pay Lessee's proportionate share of common area maintenance
expenses and Lessor's obligation to make adjustments and settlements with
respect thereto shall survive any expiration or other termination of this
Lease.
4. SECURITY DEPOSIT
Intentionally Omitted.
5. USE
Lessee shall occupy and use the Premises and for General Office, R & D Lab,
Production and Warehouse and no other purpose or use. The Premises shall
not be used for illegal purposes; nor in violation of any regulation of any
governmental body; nor in any manner to create any nuisance or trespass; nor
in any manner to vitiate the insurance or increase the rate of insurance on
the Premises or the Building. Lessee agrees, at its own expense, to promptly
comply with any and all municipal, county, state and federal statutes,
regulations, and/or requirements applicable or in any way relating to its
specific use and occupancy of the Premises, including the use, storage,
handling, production or disposal of any "Hazardous Materials" (hereinafter
defined) on, from, under or about the Premises to the extent that such
Hazardous Materials are related to Lessee's specific use of the Premises.
In addition, Lessor reserves the right to amortize capital expenses for non
specific use compliance and pass such expenses through pro rata as common
area charges. Hazardous Material shall mean any flammable substances,
explosives, radioactive materials, hazardous materials, hazardous waste,
toxic substances, pollutants, oil or other petroleum products, or related
materials identified as such in any federal, state, or local statue,
ordinance or regulation. If Lessee's use should increase the rate of
insurance on the Premises or on the Building, then Lessee shall pay the
entire amount of such increase within thirty (30) days after notification of
same by Lessor.
6. LESSOR'S CARE
Lessor shall not be required to make any repairs or improvements to Premises
except reasonable repairs to the foundation, exterior walls or roof of the
Building as necessary for safety and tenantablity. Lessor shall present to
Lessee and permit Lessee to seek enforcement of any warranties provided to
Lessor in connection with any construction performed by Lessor within
Premises.
7. LESSEE'S CARE
Lessee shall repair, maintain, replace as necessary and keep in good, clean
and safe repair all portions of Premises and all equipment, fixtures and
systems therein which are not specifically set forth as the responsibility
of Lessor in Paragraph 6 of this Lease. Lessee's repairs and replacements
shall include, without limitation, all electrical, plumbing, heating and
air-conditioning systems, parts, components and fixtures; Lessee shall also
promptly repair or replace all partitions and all glass and plate glass within
Premises immediately when cracked or broken, and Lessee shall indemnify Lessor
and shall hold Lessor harmless against any damage or injury to Premises or
the Building or to any person or property caused or contributed to by any
act, omissions, or neglect of Lessee, any invitee, agent, affiliate, customer
or client of Lessee or anyone in Lessee's control or employ. Lessee shall at
once report in writing to Lessor any defective condition known to Lessee which
Lessor is required to repair, and failure to promptly report such defects shall
made Lessee liable to Lessor for any liability incurred by Lessor by reason of
Lessee's failure to notify Lessor of such defects. In no event shall Lessee
cause or allow any outside storage of trash, refuse, debris or anything else
on the Premises, whether in the area of the dumpster or otherwise. Lessee,
at Lessee's expense, shall keep in force a standard maintenance with a
reputable heating and air conditioning service organization, a copy of said
maintenance agreement to be provided to Lessee. Lessor will provide Lessee
with all warranties applicable to HVAC system.
8. INSPECTIONS
At reasonable hours and upon reasonable notice except in case of emergencies,
Lessor hereby reserves to itself and its agents the right to exhibit the
Premises to prospective purchasers to inspect the Premises to see that
Lessee is complying with all its obligations hereunder, to make repairs
required of Lessor or Lessee under the terms hereof, to make repairs or
modifications to any adjoining space, to maintain, use, repair, and replace
pipes, ducts, wires, meters and any other equipment, machinery, apparatus, and
fixtures located within or without the Premises which service the Building or
the Premises, to make alterations in and additions to the Building, and to
enter upon the Premises for the foregoing purposes. Lessor agrees that it
will not exhibit the Premises to prospective Lessees until 180 days before
the expiration of this Lease Agreement.
9. DEFAULT AND REMEDIES
In the event that: (A) any rental specified in this Lease is not paid within
ten (10) calendar days after the giving of written notice by Lessor to Lessee
that such rental is due and unpaid; (B) Premises are deserted or abandoned;
(C) Lessee fails to comply with any other term, provision, condition, or
covenant of this Lease or with any of the Rules and Regulations now or
hereafter reasonably established by Lessor for the government of the Building
and Lessee does not cure such failure within ten (10) calendar days after the
giving of written notice by Lessor to Lessee of such failure to comply; (D)
any petition is filed by or against Lessee in bankruptcy and not dismissed
within thirty (30) calendar days after the filing thereof or Lessee takes
advantage of any debtor relief proceeding under any present of future law
whereby the rental payable hereunder or any part thereof is or is proposed to
be reduced or deferred; (E) Lessee becomes insolvent or makes a transfer in
fraud of creditors; (F) Lessee makes an assignment for benefit of creditors;
(G) a receiver is appointed for all or a substantial part of the assets of
Lessee: (H) Lessee's Leasehold interest in Premises is levied upon under
execution; thereupon, in any such events, Lessor shall have the right, at
Lessor's election, to do any of the following, in addition and not in
limitation of any other remedy permitted by law or by this Lease:
(i) Lessor shall have the immediate right of re-entry and may remove all
property from the Premises to a warehouse or elsewhere at the cost of, and
for the account of, Lessee, all without being deemed guilty of trespass, or
becoming liable for any loss, damage or damages which may be occasioned
thereby unless such is due to Lessor's gross negligence or willful misconduct;
(ii) Lessor may enter the Premises and make such alterations and repairs as
may be necessary in order to relet the Premises;
(iii) Lessor, without terminating this Lease may, but shall not be obligated
to, relet the Premises or any part thereof for such term or terms (which may
be for a term extending beyond the Term of this Lease) at such rental or
rentals and upon such other terms and conditions as Lessor in its sole
discretion may deem advisable or acceptable. Upon each reletting all rentals
received by Lessor from such reletting all rentals received by Lessor from
such reletting shall be applied; first, to the payment of any indebtedness
other than rent due hereunder from Lessee to Lessor; second, to the payment
of any unpaid costs and expenses of such reletting, including brokerage fees
and attorney's fees, the costs of such alterations and repairs and lease
considerations and incentives; third to the payment of the Base Rental due
and unpaid hereunder; and fourth, the residue, if any shall be held by Lessor
and applied in payments of further Base Rental and other additional rent or
charges as the same may become due and payable hereunder. In no event shall
Lessee be entitled to any excess rental received by Lessor over and above
that which Lessee is obligated to pay hereunder, including Base Rental,
additional rent and all other charges. Notwithstanding any such reletting
without termination, Lessor may at any time thereafter terminate this Lease
for such previous breach;
(iv) Lessor may terminate this Lease, in which event Lessee shall immediately
surrender possession of the Premises, and Lessor may recover from Lessee all
damages it may incur by reason of such breach, including the cost of
recovering the Premises, reasonable attorneys' fees and costs, the value of
any "free rent" and rental concessions, and the unamortized cost of Lessee
improvements or allowances given to Lessee or made at Lessor's expense.
All sums due under this Lease shall bear interest at the lesser of a per annum
rate of eighteen percent (18%) or the maximum lawful rate, from due date
thereof until paid-in-full.
All rights and remedies of Lessor created or otherwise existing at law are
cumulative and the exercise of one or more rights or remedies shall not be
taken to exclude or waive the right to exercise any other.
10. PERSONALTY OF LESSEE
Lessee shall not remove any personal property, fixtures or equipment from
Premises at any time at which Lessee is in default under this Lease. Upon
any termination of this Lease at a time at which Lessee shall be liable in
any amount to Lessor under this Lease, Lessor shall have a lien upon the
personal property and effects of Lessee within Premises, and Lessor shall
have the right, at Lessors election, without notice to Lessee to sell at a
private, commercially reasonable sale of all or part of said property and
effects for such price as Lessor may deem best and to apply the proceeds of
such sale against any amounts due under this Lease from Lessee to Lessor,
including the expenses of such sale. If Lessee shall not remove all Lessee's
effects from Premises at any expiration or other termination of this Lease,
Lessor shall have the right, at Lessor's elections, to remove all or part of
said effects in any manner that Lessor shall choose and store the same without
liability to Lessee for loss thereof, and Lessee shall be liable to Lessor for
all expenses incurred in such removal and also for the cost of storage of said
effects. All personal property of Lessee or Lessee's employees, agents,
affiliates, or invitees, located in or brought upon Premises or any part of
the Building shall be at the risk of the Lessee only, and Lessor shall not
be liable to Lessee or any other part for any damages thereto or theft thereof
resulting from any cause.
11. POSSESSION
Lessee accepts all Premises in their present condition and as stated for the
uses intended by Lessee.
12. UTILITIES
Lessee shall pay all utility bills, including without limitation all gas,
electricity, fuel, light and heat bills for Premises, and Lessee shall pay
all charges for garbage collection service and for all other sanitary services
rendered to Premises or used by Lessee in therewith. If Lessee fails to pay
any of said utility bills or charges for garbage collection or other sanitary
services, Lessor shall have the right but not the obligation to pay the same,
and such payment may be added to the rental of Premises next due as additional
rental. Lessee shall strictly comply with all regulations, codes and
regulations of Gwinnett County or other applicable governmental authority
relative to the storage and collection of garbage and refuse. Lessee shall
also provide pest control service to Premises at Lessee's expense and keep
Premises free from pests.
13. ASSIGNMENT AND SUBLETTING
Lessee shall not, without the prior written consent of Lessor endorsed thereon
which consent shall not be unreasonably withheld, assign this Lease or any
interest thereunder, or sublet Premises or any portion thereof, or permit the
use of Premises by any party other than Lessee. In the event that during the
term of this Lease Lessee desires to assign or sublease and introduces Lessor
to a proposed replacement tenant for Lessee, which replacement tenant is of
financial strength at least equal to that of Lessee and has a use for Premises
and a number of employees reasonably consistent with that of Lessee's
operation, the Lessor shall consider such replacement tenant and notify
Lessee with reasonable promptness as to Lessor's choice, at Lessor's sole
discretion, of the following:
(1) That Lessor consents to an assignment or subleasing of Premises to such
replacement tenant provided that Lessee shall remain fully liable for all of
its obligations and liabilities under this Lease; or;
(2) That upon such replacement tenant's entering into a mutually-satisfactory
new Lease for the Premises with Lessor, then Lessee shall be released for all
further obligations and liabilities under this Lease (excepting only any
unpaid rentals or any unperformed covenants then past due under this Lease);
or;
(3) That Lessor declines to consent to such assignment or sublease due to
insufficient or unsatisfactory documentation furnished to Lessor to establish
Lessee's financial strength and proposed use of and operations upon Premises.
In no case may Lessee assign any options granted to Sublessees or Assignees
hereunder, all such options being deemed personal to Lessee and exercisable
by Lessee only.
14. DESTRUCTION OR DAMAGE
Should entire Premises or a substantial portion thereof be damaged by fire or
other casualty to such an extent that rebuilding or repairs cannot reasonably
be completed in Lessor's sole judgement, within one hundred eighty (180)
calendar days of the date of such Casualty, then either Lessor or Lessee
shall have the right with a period of thirty (30) calendar days following
such casualty to terminate this Lease by written notice to the other, in
which event all rental payable under this Lease shall be abated from the date
of such Casualty and this Lease shall end. However, if such damage or
destruction can be repaired or replaced within such one hundred eighty (180)
day period, Lessor shall make such repairs or replacements with reasonable
promptness and dispatch and, rental will abate in such proportion as the
Premises have been damaged and untenantable, and Lessor will restore the
Premises as speedily as practical, whereupon full rent will resume. In no
event will Lessee be entitled to terminate this Lease or be entitled to an
abatement of rent if the damage or destruction to the Premises, whether total
or partial, is a result of the negligence or willful misconduct of Lessee, its
agents, employees, contractors, invitees, and licensees.
15. EMINENT DOMAIN
If the whole or any substantial part of Premises shall be taken or condemned
(including without limitation a sale in lieu of condemnation) by any
competent authority for any public use or purpose, then, in that event, the
term of this Lease shall cease and terminate from the date on which
possession of the part so taken shall be acquired for such use or purpose;
the full amount of any resulting condemnation award shall be paid to Lessor
and rental shall be accounted for between Lessor and Lessee as of the date of
such taking. However, if only an insubstantial, in Lessor's reasonable
opinion, portion of Premises is so taken and Premises are not untenantable,
then Lessor shall repair any damage caused by such taking with reasonable
promptness and dispatch and shall allow Lessee an abatement or reduction in
rental hereunder for such time as such portion of Premises is untenantable,
and this Lease shall not be otherwise affected.
16. ALTERATIONS AND IMPROVEMENTS
Lessee shall make no structural alterations in, or additions to, the Premises
without first obtaining Lessor's written consent thereto, which consent shall
not be unreasonably withheld. No alterations shall lessen the value of
Premises or cause expenses to Lessor at the termination of the Lease. In no
event shall any work be done for Lessor's account or in any way which would
allow a lien to be placed against Premises; any such lien shall create a
default of Lessee under this Lease if not removed or lawfully bonded within
ten (10) calendar days following lessor's discovery thereof. All additions,
fixtures and improvements, whether temporary or permanent in character
(except only the movable office furniture of Lessee) made in or upon
Premises, either by Lessee or Lessor, shall be Lessor's property and shall
remain upon Premises at the termination of this Lease without compensation to
Lessee.
17. INSURANCE
Lessee shall obtain and maintain in force throughout the term of this Lease
general public liability insurance in the amount of not less than
$1,000,000.00 for any one injury (including death) to persons nor property
of not less than $1,000,000.00 for any one casualty and of not less than
$1,000,000.00 for property damage. Said policy shall name both Lessor and
Lessee as additional insured and shall contain a provision requiring the
insurer to give Lessor at least thirty (30) calendar days prior written
notice before any termination or expiration of said policy for any reason.
Prior to the commencement of this Lease and prior to the expiration of each
term of such policy, Lessee shall deliver to Lessor the original of such
policy or a proper certificate from the insurer.
Lessee hereby agrees to insure the contents of Premises including any
improvements or betterment to the extent Lessee deems satisfactory in
Lessee's sole discretion; and Lessor shall have no responsibility whatsoever
for any damage, theft, or other casualty to or involvement in such contents.
18. EXTERIOR SIGNS
Lessee shall place no signs upon the outside of the Premises unless consented
to in writing by Lessor. Any and all signs shall be maintained in compliance
with applicable governmental rules and regulations governing such signs, and
Lessee shall be responsible to Lessor for any damage caused by installation,
use, or maintenance of said signs. Lessee agrees upon removal of said signs
to repair all damage incident thereto. No advertisement, sign, or other
notice shall be inscribed, painted, or fixed on any part of the outside or
inside of the Premises without the prior written consent of Lessor, which
consent shall not be unreasonably withheld (see Exhibit "D" - Signage
Criteria).
19. ATTORNEY'S FEES
Lessee agrees to pay all attorney's fees and expenses incurred by the Lessor
in enforcing any of the obligations of the Lessee under this Lease, or in any
litigation or negotiation in which the Lessor shall, by virtue of this Lease
or Lessor's ownership of the Building, become involved through or on account
of this Lease.
20. HOLDING OVER
If Lessee holds over after the term hereof, with or without the express or
implied consent of Lessor, such tenancy shall be from month to month only,
and not a renewal hereof or an extension for any further term, and in such
case basic monthly rent shall be payable at the rate of two hundred percent
(200%) of the rent specified in Article 3 hereof for the last month of the
Lease term or any extensions thereof, and such month to month tenancy shall
be subject to every other term, covenant and agreement contained herein.
Nothing contained in this Article 20 shall be construed as consent by Lessor
to any holding over by Lessee and Lessor expressly reserves the right to
require Lessee to surrender possession of the Premises to Lessor as provided
in Article 21 hereof upon expiration of the term of this Lease or other
termination of this Lease.
21. SURRENDER OF PREMISES
At termination of this Lease, Lessee shall surrender Premises and keys thereof
to Lessor in at least as good as condition as at commencement of the term,
natural wear and tear only excepted.
22. NOTICES
All notices as provided herein shall be mailed via registered/return receipt
requested or certified mail to the following:
Lessee's Representative: Immucor, Inc.
3130 Gateway Drive
Suite 600
Norcross, Georgia 30071
Lessor's Representative: Peterson Properties
2849 Paces Ferry Road
Suite 700
Atlanta, GA 30339-3769
23. PARTIES
"Lessor" as used in this Lease shall include Lessor's assigns and successors
in title to Premises. "Lessee" shall include Lessee and, if this Lease shall
be validly assigned or sublet, shall include such assignee or sublessee, its
successors and permitted assigns. "Lessor" and "Lessee" shall include male
and female, singular and plural, corporation, partnership or individual, as
may fit the particular parties.
24. PARKING SPACES AND DRIVEWAYS
Lessee shall have the right of ingress and egress over the driveways located
on or in close proximity to Premises or the Building. If Premises occupy
less than all of the Building, all driveways and parking areas shall be used
by Lessee jointly with Lessor and Lessor's other tenants, their agents,
customers and invitees, and Lessee hereby agrees not to park on nor block
said driveways but in designated areas only.
25. SUBORDINATION
This Lease shall be subordinated to the right, title and interest of any
lender or other party holding a security interest in or lien upon Premises
under any and all security deed or mortgages presently encumbering Premises
or the Building and to any and all other security deeds or mortgages hereafter
encumbering Premises or the Building. Lessee shall, at any time hereafter,
on the demand of Lessor or the holder of such security deed or mortgage,
execute any instruments, which may reasonable be required by such secured
party for the purpose of evidencing Lessee's subordination of this Lease to
the lien or security interest of such secured party. In the event of the
termination of this Lease through foreclosure of any security deed or
mortgage to which this Lease is subordinated, Lessee shall, upon the demand
of the purchaser of Premises or the Building at foreclosure sale, attorn to
and enter into a new Lease with such purchaser for the unexpired term of
this Lease at the same rent and under the same provisions of this Lease.
26. GOVERNMENTAL ORDERS
Lessee, at Lessee's expense, shall comply with all laws and ordinances, and
all rules, order and regulation of all governmental authorities and of all
insurance bodies, at any time duly issued or in force, applicable to the
Premises or any part thereof or the Lessee's use thereof, except that Lessee
shall not hereby be under any obligation to comply with any law, ordinance,
rule, order or regulation requiring any structural alteration of or in
connection with the Premises, unless such alteration is required by reason
of a condition which has been created by, or at the instance of Lessee, or is
attributable to the use or manner of use to which Lessee puts the Premises,
or is required by reason of a breach of any of Lessee's covenants and
agreements hereunder. Where any structural alteration of or in connection
with the Premises is required by any such law, ordinance, rule order, or
regulations, and by reason of the express exception herein above contained,
Lessee is not under any obligation to make such alteration, then Lessor shall
have the option of making such alteration and paying the cost thereof or of
terminating this Lease and the term and estate hereby granted by giving to
Lessee not less than thirty (30) days prior written notice of such
termination; provided, however, that if within fifteen (15) days after the
giving by Lessor of its notice of termination as aforesaid, Lessee shall
give written notice to Lessor stating that Lessee elects to make such
alteration at the expense of Lessee, then such notice of termination shall
be ineffective provided that Lessee, at Lessee's expense, shall, concurrently
with the giving of such notice to Lessor, execute and deliver to Lessor
Lessee's written undertaking, with a surety and in form and substance
satisfactory to Lessor, obligating Lessee to promptly and duly make such
alteration in a manner satisfactory to Lessor and to save Lessor harmless
from any and all costs, expense, penalties and/or liabilities (including,
but not limited to, accountants' and attorneys' fees) in connection therewith
or by reason thereof; and Lessee covenants and agrees that, after so electing
to make any such alteration, Lessee will, at Lessee's expense, and incompliance
with all covenants, agreements, terms, provisions and condition of this Lease,
make such alteration, and Lessee, at Lessee's expense, will promptly and duly
perform all the condition of such undertaking and that all such conditions of
such undertaking shall be deemed to constitute provisions of this Lease to be
kept or performed on the part of Lessee with the same force and effect as if
the same had been set forth herein.
27. IMPROVEMENTS
Intentionally Omitted.
28. ESTOPPEL CERTIFICATES
From time to time during the term, or any renewal thereof, Lessee, on request
of Lessor given in writing not less than twenty (20) days prior to the desired
date of such certification, shall execute, acknowledge, and deliver to Lessor,
a statement in writing which certifies that: (a) this Lease is unmodified and
is in full force and effect (or if there shall have been modifications, that
this Lease is in full force and effect as so modified and stating such
modification); (b) the dates to which rental hereunder and all other charges
have been paid and whether any such payment represents payment in advance;
and (c) to the best knowledge of the individual executing the statement, after
due inquiry, no default of Lessor in the performance of any covenant,
agreement, or condition has occurred, and remains uncured or has been waived
or, if default has occurred, being the intention of Lessor that the statement
or statements to be delivered from time to time in accordance herewith may be
relied upon by any person to whom such statement may be delivered by Lessor.
29. PROTECTIVE COVENANTS
Intentionally Omitted.
30. LIABILITY
Anything in this Lease to the contrary notwithstanding, Lessee agrees that it
shall look solely to the estate and property of Lessor in the land and the
Building and any insurance proceeds thereof (subject to the prior rights of
any mortgagee or security deed holder) for the collection of any judgement or
other judicial process requiring a payment of money by Lessor in the event of
any default or breach by Lessor with respect to their terms, covenants and
conditions of this Lease to be observed and/or performed by Lessor and no
other assets of Lessor shall be subject to levy, execution or other procedures
for the satisfaction of Lessee's remedies. In the event Lessor transfers or
assigns this Lease, except as collateral security for a loan, upon such
transfer or assignment, Lessor shall thereupon be released of all further
liability and obligations hereunder.
31. TIME IS OF THE ESSENCE
Time is of the essence with respect to the performance of each of the covenants
and agreements of this Lease.
32. LESSOR'S ESTATE
This contract shall create the relationship of landlord and tenant between
Lessor and Lessee; no estate shall pass out of Lessor; Lessee has only a
usufruct, not subject to levy and sale.
33. BROKER INDEMNIFICATION
Lessee represents and warrants to Lessor that no broker, agent, commission
salesman, or other person has represented Lessee in the negotiations for and
procurement of this Lease and of the Premises and that no commissions, fees,
or compensation of any kind are due and payable in connection herewith to
any broker, agent, commission salesman, or other person. Lessee agrees to
indemnify Lessor against and hold Lessor harmless from any and all claims,
suits, or judgments (including without limitation, reasonable attorneys' fees
and court costs incurred in connection with any such claims, suits, or
judgements or in connection with the enforcement of this indemnity) for any
fees, commissions, or compensation of any kind which arise out of or are in
any way connected with any claimed agency relationship with Lessee.
34. RULES AND REGULATIONS
(See Exhibit "C"- Rules and Regulations)
35. SPECIAL STIPULATIONS
Insofar as the Special Stipulations attached hereto and incorporated herein
conflict with any of the foregoing provisions, said Special Stipulations
shall control.
IN WITNESS WHEREOF, the parties herein have hereunto set their hands and seals,
the day and year first above written.
LESSOR:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
on behalf of its Separate Account R
By: \s\Julia B. Bazenas
Julia B. Bazenas
Its: Managing Director
LESSEE:
IMMUCOR, INC.
By: \s\ Ralph A. Eatz
Its: Sr. Vice Pres.
Attest: \s\ Connie D. Vinson
Its: Executive Secretary
(Corporate Seal)
Date: 2/13/96
SPECIAL STIPULATIONS
35. PREMISES (See Exhibit "A" - Floor Plan)
Provided below is an outline of buildings, suite numbers and square foot
sizes of spaces which Lessee shall Lease during the Term of this Lease
Agreement:
1. Effective May 1, 1996 through December 31, 1996:
Building Suite Size
3130 Gateway Drive 600 37,931 square feet
3150 Gateway Drive 500 4,906 square feet
TOTAL 42,837 square feet
2. Effective January 1, 1997 through April 30, 2002:
3130 Gateway Drive 600 37,931 square feet
3150 Gateway Drive 500 4,906 square feet
3150 Gateway Drive 450 2,794 square feet
3150 Gateway Drive 400 1,821 square feet
TOTAL 47,452 square feet
Notwithstanding anything herein to the contrary, Lessor and Lessee agree that
Lessee shall be allowed to begin storing items in 3150 Gateway Drive, Suite
400 no later than July 1, 1996. No Base Rent shall be charged for suites 400
and 450 until January 1, 1997 provided, however, that Lessee will be
responsible for all other additional rent charges set forth herein including
all utility costs. Regarding Lessee's use of suites 400 and 450 during such
period, Lessee shall be liable for all obligations under this Lease other than
Base Rent charges.
36. RENTAL
For the term of this Lease, Lessee shall pay Lessor a Base Rent as follows:
a) From May 1, 1996 through December 31, 1996, the Base Rent shall be Two
Hundred Seventeen Thousand Nine Hundred Ninety-Four and 79/100 Dollars
($217,994.79) paid in eight (8) equal monthly installments of Twenty-Seven
Thousand Two Hundred Forty-Nine and 35/100 Dollars ($27,249.35).
b) From January 1, 1997 through April 30, 1997, the Base Rent shall be One
Hundred Twenty-Two Thousand One Hundred Fifty-Seven and 48/100 Dollars
($122,157.48), paid in four (4) equal monthly installments of Thirty
Thousand Five Hundred Thirty-Nine and 37/100 Dollars ($30,539.37).
c) From May 1, 1997 through December 31, 1997, the Base Rent shall be Two
Hundred Forty-Six Thousand Four Hundred Nine and 57/100 Dollars
($246,409.57), paid in eight (8) equal monthly installments of Thirty
Thousand Eight Hundred One and 20/100 ($30,801.20).
d) From January 1, 1998 through April 30, 1998, the Base Rent shall be One
Hundred Eight Thousand Thirty-Two and 39/100 Dollars ($108,032.39), paid in
four (4) equal monthly installments of Twenty-Seven Thousand Eight and 10/100
Dollars ($27,008.10).
e) From May 1, 1998 through April 30, 1999, the Base Rent shall be Three
Hundred Forty Thousand Two Hundred Thirty and 84/100 Dollars ($340,230.84),
paid in twelve (12) equal monthly installments of Twenty-Eight Thousand
Three Hundred Fifty-Two and 57/100 Dollars ($28,352.57).
f) From May 1, 1999 through April 30, 2000, the Base Rent shall be Three
Hundred Fifty-Seven Thousand Three Hundred Thirteen and 56/100 Dollars
($357,313.56), paid in twelve (12) equal monthly installments of Twenty-Nine
Thousand Seven Hundred Seventy-Six and 13/100 Dollars ($29,776.13).
g) From May 1, 2000 through April 30, 2001, the Base Rent shall be Three
Hundred Seventy-Four Thousand Eight Hundred Seventy and 80/100 Dollars
($374,870.80), paid in twelve (12) equal monthly installments of Thirty-One
Thousand, Two Hundred Thirty-Nine and 23/100 Dollars ($31,239.23).
37. ALTERATIONS OR REPAIRS
Notwithstanding anything contained in this Lease to the contrary, Lessee shall
not make any additions, alterations, replacements, improvements or other
modifications (collectively, "Alterations") to the leased premises without
the prior written consent of Lessor, which consent may be withheld in Lessor's
reasonable discretion, except for the installation of unattached, movable
trade fixtures which may be installed without drilling, cutting or otherwise
defacing the leased premises. Any approval by Lessor of or consent by Lessor
to any plans, specifications or other items to be submitted to and/or reviewed
by Lessor pursuant to this Lease shall be deemed to be strictly limited to an
acknowledgement of approval or consent by Lessor thereto and, whether or not
the work is performed by Lessor or by Lessee's contractor, such approval or
consent shall not constitute the assumption by Lessor of any responsibility
for the accuracy, sufficiency or feasibility of any plans, specifications or
other such items and shall not imply any acknowledgement, representation or
warranty by Lessor that the design is safe, feasible, structurally sound or
will comply with any legal or governmental requirements, and Lessee shall be
responsible for all of the same.
38. RENEWAL OPTION
Provided Lessee is not in default of this Lease Agreement, Lessee may, at its
option, extend the term hereof for a further term of five (5) years upon the
same terms and conditions contained herein, except that the rent to be paid
Lessor by Lessee for the extended term shall be the market rent for similar
space at the time such option is exercised, but in no event shall the annual
rent be decreased below the annual rent for the last year of this original
Lease Agreement.
To exercise such option, Lessee must give Lessor written notice at least 180
days prior to the expiration of the original term, such notice shall include
Lessee's election of the duration of the extended term as provided.
The establishment of market rent shall include term, rental rate, escalation
provisions, and expense recapture, as necessary to reflect the then
prevailing market conditions. The market rent for the extended term shall
be agreed upon in writing at least 180 days prior to the expiration of the
original term and if not so agreed upon between Lessor and Lessee, Lessee's
exercise of the option shall become void.
Upon written request from Lessee, Lessor shall provide Lessee with its
calculation of market rent at least two hundred and seventy (270) days prior
to the expiration of the original term.
39. EXPANSION
Right of First Offer
(a) Lessor and Lessee acknowledge that there is currently approximately 6,238
square feet of Rentable Floor Area adjacent to the Premises in the Building
(hereinafter the "First Offer Space"), as demarcated on Exhibit "A" to this
Lease as the "First Offer Space". The First Offer Space presently is leased
to and occupied by Broniec & Associates, Inc. pursuant to a lease agreement
having an expiration date of on or about June 30, 1999. Lessor acknowledges
that Lessee may wish to expand the Premises and lease the First Offer Space.
Lessee, however, acknowledges that Lessor must be in a position to lease the
First Offer Space to other tenants. In order to accommodate Lessee's desires
regarding the First Offer Space and Lessor's requirement for future leasing
of the First Offer Space, Lessor hereby grants to Lessee the right of first
offer (the "Right of First Offer") to lease the First Offer Space in
accordance with the terms and conditions contained herein. If at any time
on or before December 31, 1998 the First Offer Space becomes available for
lease and Lessor has received a bona fide offer from a third party prospective
tenant (the "Offering Party") to lease the First Offer Space, then Lessor
shall submit written notice thereof to Lessee. Upon receipt of the aforesaid
notice from Lessor, Lessee shall have the right, exercisable at any time
within five (5) days from the date of Lessee's receipt of such notice, to
lease said First Offer Space upon the same terms and conditions, including
the same Base Rental Rate as the third party offer. If Lessee elects to
exercise the Right of First Offer, it shall, prior to the end of said
five (5) day period, deliver written notice of such exercise to Lessor, and
the leasing of said First Offer Space exercised by Lessee shall commence on
the earlier to occur of (A) thirty (30) days after the expiration of such
5-day period or (B) the date of substantial completion of the tenant
improvements to the reasonable satisfaction of Lessee in the First Offer
Space, and shall be evidenced by a lease amendment agreement executed by
Lessee on Lessor's standard form, which shall be reasonably acceptable to
Lessee. If Lessee shall not exercise such Right of First Offer within said
five (5) day period or shall fail to deliver written notice of such exercise
as provided above, Lessor shall be free to lease the First Offer Space or
any part thereof to the Offering Party. If Lessor does not conclude a lease
agreement for all of the First Offer Space with the Offering Party, Lessee's
Right of First Offer shall survive with respect to any portion of the First
Offer Space not leased by the Offering Party and shall be eligible for
exercise by Lessee on the same terms and conditions described herein, upon
Lessor's receipt of a bona fide offer from another third party prospective
tenant to lease the First Offer Space. If Lessor does conclude a lease
agreement with the Offering Party for the First Offer Space, the Right of
First Offer shall expire and in no event shall Lessee have any further right
of first refusal or Right of First Offer under this Lease with respect to the
First Offer Space, or any portion thereof, except as otherwise expressly and
specifically provided in this Lease. Lessee shall not have the right to
assign its Right of First Offer to any sublessee of the Premises (or any
portion thereof) or assignee of this Lease, nor may any such sublessee or
assignee exercise such Right of First Offer.
(b) Notwithstanding any other term or provision of this Article or elsewhere
in this Lease, expressed or implied, it is understood and agreed by Lessee that
(i) one or more existing tenants of the Building (together with their
respective assignees, successors or assigns, hereinafter collectively
referred to as the "Existing Lessees") may have certain expansion options,
rights to lease and rights of first refusal or offer with respect to space
in the Building, including, without limitation, the First Offer Space,
(ii) the rights and interests in and to the First Offer Space and all
portions thereof granted by Lessor to Lessee in this Article are, in all
respects, subject and subordinate to all such options and rights of the
Existing Lessees and may be wholly or partially rendered void and of no
effect by such options and rights, (iii) Lessor shall not be liable for the
failure or inability of Lessee to exercise or benefit from any or all
rights granted in this Section with respect to said First Offer Space or
any portion thereof by reason of such superior rights and options of the
Existing Lessees, and (iv) Lessee shall not be entitled to any compensation,
consolation, consideration, replacement of such space, or any other remedy
from or against Lessor by reason of such failure or inability provided,
however, that in no event shall the Lessee's Right of First Offer be
subordinated to the rights of any subsequent tenant or prospective tenant or
any subsequently granted expansion options, rights to lease or rights of
first refusal or offer with respect to the First Offer Space.
(c) Notwithstanding the foregoing and any other provision of this Lease to
the contrary, such Right of First Offer (i) shall not be applicable after
December 31, 1998, and (ii) is conditioned upon this Lease being in full
force and effect and there being no default under this Lease. If Lessee
fails to exercise the foregoing Right of First Offer as provided in and in
strict accordance with the terms of this Article on or before December 31,
1998, or if the foregoing conditions in this subsection (c) are not entirely
satisfied at time of exercise, the Right of First Offer shall automatically
terminate and be of no further force or effect, or if exercised, shall be
null and void.
EXHIBIT "A"
FLOOR PLAN
EXHIBIT "C"
RULES AND REGULATIONS
1. The sidewalks, and public portions of the Building, such as entrances,
passages, courts, elevators, vestibules, stairways, corridors or halls, and
the streets, alleys or way surrounding or in the vicinity of the Building
shall not be obstructed, even temporarily, or encumbered by Lessee or
used for any purpose other than ingress and egress to and from the Premises
without approval of Lessor which shall not be unreasonably withheld.
2. All awnings or other projections shall be attached to the outside walls of
the Buildings. No exterior curtains, blinds, shades, louvered openings or
screens shall be attached to or hung in, or used in connection with, any
window or door of the Premises, without the prior written consent of
Lessor, unless installed by Lessor, this does not include interior treatments.
3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by Lessee on any part of the outside of the
Premises or Building, other than as provided below. Signs shall conform to
building standard signs, which shall be approved by Lessor. Signs shall, at
Lessee's expense, be inscribed, painted or affixed for each tenant by sign
makers approved by Lessor. In the event of the violation of the foregoing by
Lessee, Lessor may remove same without liability, and may charge the expense
incurred by such removal to Lessee.
4. The sashes, sash doors, skylights, windows, heating, ventilating and air
conditioning vents and doors that reflect or admit light and air into the
halls, passageways or other public places in the Building shall not be
covered or obstructed by Lessee, nor shall any bottles, parcels, or other
articles be placed on the window sills.
5. No show cases or other articles shall be put in front of or affixed to any
part of the exterior of the Building which shall not be unreasonably withheld..
6. The water and wash closets and other plumbing fixtures shall not be used
for any purpose other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by
Lessee.
7. Lessee shall not in any way deface any part of the Premises or the
Building.
8. Intentionally Deleted.
9. No space in the Building shall be used for heavy industrial manufacturing.
10. Intentionally Deleted.
11. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by Lessee, nor shall any changes be made in existing locks
or the mechanism thereof, without the prior written approval of Lessor and
unless and until a duplicate key is delivered to Lessor. Lessee shall, upon
the termination of its tenancy, restore to Lessor all keys of stores, offices
and toilet rooms, either furnished to, or otherwise procured by, Lessee, and
in the event of the loss of any keys so furnished, Lessee shall pay to Lessor
the cost thereof.
12. Lessee shall not occupy or permit any portion of the Premises to be
occupied without Lessor's expressed prior written consent, as an office for a
public stenographer or typist, or for the possession, storage, manufacture or
sale of liquor, narcotics, dope, tobacco in any form, or as a barber or
manicure shop, or as a public employment bureau or agency, or for a public
finance (personal loan) business.
13. Intentionally Deleted.
14. Lessor shall have the right to prohibit any advertising by Lessee which,
in Lessor's opinion, tends to impair the reputation of the Building or its
desirability as a building for offices, and upon written notice from Lessor,
Lessee shall refrain from or discontinue such advertising.
15. Canvassing, soliciting of other tenant's and peddling in the Building are
prohibited and Lessee shall cooperate to prevent the same.
16. There shall not be used in any space, or in the public halls of any
building, either by Lessee or by its jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber
tires and side guards.
17. Intentionally Deleted.
18. Lessee shall comply with the terms and conditions of all reasonable
restrictive covenants now or hereafter affecting title to the Premises
19. Lessee shall not permit in or on the Premises any auction, tag, sheriff
receiver's bankruptcy moving, relocation or "going out of business" sale.
Whenever the above rules conflict with any of the rights or obligations of
Lessee pursuant to the provisions of the Paragraphs of this Lease, the
provisions of the Paragraphs shall govern except to the extent in conflict
with the portion of the Lease entitled "Additional Special Stipulations".
EXHIBIT "D"
SIGN CRITERIA
COLONY CENTER
All Lessees at Colony Center will be allowed to put a tenant identification
sign for their premises as follows:
1. Front elevation sign shall consist of individual non-illuminated white
letters with a maximum height of 12".
2. Real and front door lettering to consist of vinyl die cut letters reading
tenant name and suite number with maximum height of 3". Only a flat white
color is acceptable unless approved by Lessor.
3. Lessee shall be responsible for all costs incurred for fabrication and
installation of tenant's sign.
4. Before installation of signage, Lessee must submit to Lessor a detailed
sketch and layout of proposed signage for Lessor's written approval.
IMMUCOR, INC. AND SUBSIDIARIES
EXHIBIT 11.1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Year Ended May 31,
1996 1995 1994
Income per common and common
equivalent share:
Net income $2,772,635 $2,889,787 $725,662
Weighted average number of
common shares and common share
equivalents are as follows:
Weighted average common shares
outstanding 7,867,354 7,695,252 7,669,650
Shares issued from assumed
exercise of options and
warrants 786,011 113,413 128,798
Weighted average number of
shares outstanding, as
adjusted 8,653,365 7,808,665 7,798,448
Income per common and common
equivalent share:
Net income $ .32 $ .37 $ .09
Note: Shares issued from assumed exercise of options and warrants include the
number of incremental shares which result from applying the "treasury stock
method" for options and warrants in 1996, 1995 and 1994, per APB 15,
paragraph 38.
Year Ended May 31,
1996 1995 1994
Fully diluted income per share:
Net income $2,772,635 $2,889,787 $725,662
The weighted average number
of common shares are
as follows:
Weighted average common shares
outstanding 7,867,354 7,695,252 7,669,650
Shares issued from assumed
exercise of options and
warrants 929,304 160,588 133,418
Weighted average number of
shares outstanding, as
adjusted 8,796,658 7,855,840 7,803,068
Fully diluted income per share:
Net income $ .32 $ .37 $ .09
Note: Shares issued from assumed exercise of options and warrants include
the number of incremental shares which result from applying the "treasury
stock method" for options and warrants in 1996, 1995 and 1994, per APB
15, paragraph 38.
EXHIBIT 21
Subsidiaries of Registrant
Subsidiary Jurisdiction of Organization
Immucor GmbH Federal Republic of Germany
Immucor Italia Srl Italy
Immucor Portugal, Lda. Portugal
Immucor, S.L. Spain
The Company owns 100% of the outstanding stock of each of the above.
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement Nos.
33-35863 and 33-42261 on Form S-3 and Registration Statement Nos. 33-4636,
33-24199, 33-36554, 33-41406, 33-49882, and 33-62097 on Form S-8, of our
report dated July 18, 1996, with respect to the consolidated financial
statements of Immucor, Inc. in this Annual Report (Form 10-K).
Ernst & Young LLP
Atlanta, Georgia
August 26, 1996
EXHIBIT 23.2
CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement Nos.
33-35863 and 33-42261 on Form S-3 and Registration Statements Nos. 33-4636,
33-24199, 33-36554, 33-41406, 33-49882, and 33-62097 on Form S-8, of
Immucor, Inc. of our report dated July 21, 1995 appearing in this Annual
Report on Form 10-K of Immucor, Inc. for the year ended May 31, 1996.
Deloitte & Touche LLP
Atlanta, Georgia
August 26, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> MAY-31-1996
<CASH> 20,533,422
<SECURITIES> 0
<RECEIVABLES> 9,304,018
<ALLOWANCES> 350,545
<INVENTORY> 5,932,923
<CURRENT-ASSETS> 36,477,187
<PP&E> 6,285,912
<DEPRECIATION> 3,029,388
<TOTAL-ASSETS> 47,206,858
<CURRENT-LIABILITIES> 3,952,813
<BONDS> 3,908,795
0
0
<COMMON> 805,438
<OTHER-SE> 38,539,812
<TOTAL-LIABILITY-AND-EQUITY> 47,206,858
<SALES> 30,964,057
<TOTAL-REVENUES> 30,964,057
<CGS> 12,004,831
<TOTAL-COSTS> 12,004,831
<OTHER-EXPENSES> 15,365,449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 294,322
<INCOME-PRETAX> 4,176,286
<INCOME-TAX> 1,403,651
<INCOME-CONTINUING> 2,772,635
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,772,635
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
