FORM 10-Q
Securities and Exchange Commission
Washington, D. C. 20549
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended : November 30, 1996
OR
_ Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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
incorporation or organization) Identification No.)
3150 Gateway Drive P.O. Box 5625 Norcross, Georgia 30091-5625
(Address of principal executive offices) (Zip Code)
Registrant's telephone number : (770) 441-2051
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of January 10, 1997: Common Stock, $.10 Par Value - 8,076,984
IMMUCOR, INC.
Condensed Consolidated Balance Sheets
November 30, May 31,
ASSETS 1996 1996
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $19,283,189 $20,533,422
Accounts receivable, net 9,906,266 8,953,473
Inventories 5,967,891 5,932,923
Income tax receivable 39,517 37,119
Deferred income taxes 316,738 312,627
Other 1,056,166 707,623
Total current assets 36,569,767 36,477,187
Long-term investment 1,000,000 1,000,000
Property, plant and equipment, at 7,902,780 6,285,912
cost less accumulated depr (3,642,253) (3,029,388)
4,260,527 3,256,524
Other 754,627 646,994
Excess of cost over net tangible
assets acquired 5,762,100 5,826,153
$48,347,021 $47,206,858
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank loans $284,778 $283,335
Accounts payable 2,713,661 2,656,538
Income taxes payable 449,363 263,480
Accrued salaries and wages 606,591 594,853
Other accrued liabilities 150,619 154,607
Total current liabilities 4,205,012 3,952,813
Long-term debt 3,288,608 3,908,795
Deferred income taxes 113,725
Shareholders' equity:
Common stock, $.10 par value 805,508 805,438
Additional paid-in capital 21,490,154 21,485,849
Retained earnings 19,108,898 18,029,010
Cumulative translation adjustment (664,884) (975,047)
Total equity 40,739,676 39,345,250
$48,347,021 $47,206,858
See accompanying notes.
IMMUCOR, INC.
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended Six Months Ended
November 30, November 30, November 30, November 30,
1996 1995 1996 1995
Net sales $8,357,237 $7,282,304 $16,314,122 $14,758,231
Cost of sales 3,520,155 2,712,022 6,658,016 5,474,253
Gross profit 4,837,082 4,570,282 9,656,106 9,283,978
Research & development:
Instrument 32,776 106,917 51,512 240,655
General 125,366 119,964 259,498 243,732
Selling, general and
administrative 3,983,983 3,381,301 7,818,703 6,703,860
Total operating expenses 4,142,125 3,608,182 8,129,713 7,188,247
Income from operations 694,957 962,100 1,526,393 2,095,731
Other income 211,960 206,064 385,301 384,051
Interest expense (49,573) (75,329) (104,975) (169,328)
Other expense (13,609) (15,609) (250)
Total other 148,778 130,735 264,717 214,473
Income before income taxes 843,735 1,092,835 1,791,110 2,310,204
Provision for income taxes 361,015 342,642 711,222 764,244
Net income $482,720 $750,193 $1,079,888 $1,545,960
Net income per common
and common equivalent
share $0.06 $0.09 $0.13 $0.18
Weighted average number of common
and common equivalent shares
outstanding 8,619,956 8,705,134 8,623,157 8,588,802
See accompanying notes.
IMMUCOR, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
November 30, November 30,
1996 1995
OPERATING ACTIVITIES:
Net income $1,079,888 $1,545,960
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation 644,169 486,980
Amortization 164,444 130,002
Changes in assets and liabilities:
Accounts receivable (952,795) (273,211)
Inventories (34,968) (559,678)
Other assets (471,623) (254,490)
Accounts payable 57,123 329,230
Other current liabilities 307,358 (543,173)
Cash provided by operating activities 793,596 861,620
INVESTING ACTIVITIES:
Purchase of/deposits on property
and equipment (1,648,171) (893,774)
Other 8,939 8,178
Cash used in investing activities (1,639,232) (885,596)
FINANCING ACTIVITIES:
Proceeds from line of credit 1,443 5,871
Repayment of bank loans (669,077) (717,002)
Exercise of stock options 4,375 1,132,056
Cash provided by(used in) financing
activities (663,259) 420,925
Effect of exchange rate changes on cash 258,662 (34,940)
INCREASE(DECREASE) IN CASH
AND CASH EQUIVALENTS (1,250,233) 362,009
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 20,533,422 18,741,681
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $19,283,189 $19,103,690
See accompanying notes.
IMMUCOR, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six
month periods ended November 30, 1996 are not necessarily indicative of the
results that may be expected for the year ending May 31, 1997. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year
ended May 31, 1996. Revenues from product sales are recognized at the time
of shipment.
2. Inventories are stated at the lower of first-in, first-out cost or market:
As of November 30, 1996 As of May 31, 1996
Raw materials and supplies $1,895,988 $2,104,677
Work in process 351,505 741,723
Finished goods 3,720,398 3,086,523
3. Net income per common share:
Net income per common share is computed using the weighted average number
of common shares and dilutive common share equivalents outstanding during the
respective periods. There is no significant difference between primary and
fully diluted per share amounts.
IMMUCOR, INC.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Financial Condition and Liquidity:
As of November 30, 1996, the Company's cash position totaled $19,283,200.
For the six months ended November 30 1996, the Company generated cash from
operating activities of $793,600 and repaid $669,100 (1,000,000 DM) of bank
debt in Germany.
In December, the Company completed a facilities expansion at its U.S.
offices in Norcross, Georgia. The expansion provides an additional 10,000
square feet of manufacturing, laboratory and office space. The expansion
expenditures included leasehold improvements and furnishings totaling
approximately $1,000,000.
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.
Results of Operations:
Net sales
Net sales for the three months ended November 30, 1996 totaled $8,357,200,
an increase of 15% over last year's $7,282,300. Approximately one-half of
the increase in the three month period was generated in the U.S. and the
remainder was generated in Europe. For the six months ended November 30,
1996, net sales were $16,314,100 compared to $14,758,200 in the prior year.
The Company believes higher levels of marketing activity both in the U.S. and
in Europe have generated increased market share for the Company's products.
Gross profit
As a percent of sales, gross profit declined for the three month and six
month periods ended November 30, 1996, when compared to the same three and six
month periods in 1995. The decline in gross profit margin can be attributed
to the Company's efforts to emphasize longer term market share growth by
focusing efforts on large national accounts which demand lower product
pricing due to increased purchasing volume.
Operating expenses
When compared to the prior year three and six month periods, research and
development expense in the current year has declined. During the current year
six month period, two ABS2000 automated analyzers previously expensed as
research and development were sold to the Company's Canadian distributor, and
the sales proceeds were recorded as a reduction of current year research and
development expense. In addition, contract research expense has declined in
the current year period as the research phase of the Company's instrument
development programs has neared completion.
Selling, general and administrative expense for the three and six month
periods ended November 30, 1996, increased $602,700 and $1,114,800,
respectively, compared to the 1995 periods. The expense increase was
principally caused by the addition of sales and marketing personnel both in
the U.S. and in Europe, higher trade show expense, and other costs related
to launching the Company's instrument programs.
Interest expense
Interest expense declined $25,800 during the three months ended
November 30, 1996, and $64,400 for the six months ended November 30, 1996,
as compared to the same three and six month periods last year. The decline
in interest expense was primarily due to the Company reducing its outstanding
principal loan balance in Germany (see Financial Condition and Liquidity).
Provision for Income Taxes
As a percent of pretax income, the provision for income taxes increased
during the three and six month periods ended November 30, 1996, over the
prior year because of the need to provide for income taxes on increased
profits in Germany, which are taxed at higher rates than income in the
U.S.
Subsequent event
On December 11, 1996 (the "Closing Date"), pursuant to a Share Purchase
Agreement dated December 11, 1996 (the "Agreement"), Immucor, Inc. ("Immucor"),
through a newly formed Canadian subsidiary ("Immucor/Canada"), acquired all of
the issued and outstanding common stock of Dominion Biologicals Limited
("Dominion") from Nubio Technologies Corporation, Patrick Waddy and Blaine
MacNeil (collectively the "Sellers") for CDN$11,107,000.00 (the "Purchase
Price"). The Purchase Price was determined through arm's length negotiations.
CDN$5,366,000.00 of the Purchase Price was paid in cash on the Closing Date.
The remaining CDN$5,741,000.00 of the Purchase Price was paid in the form of
subordinated promissory notes of Immucor/Canada bearing interest at 6%
payable semiannually with principal due three (3) years after the Closing
Date. Immucor guaranteed the obligations of Immucor/Canada under the
subordinated promissory notes. The subordinated promissory notes and the
Immucor guaranties are subordinated to Immucor's and Immucor/Canada's
current bank financing. The transaction was funded by a loan from Wachovia
Bank of Georgia, N.A., a U.S. commercial bank, to Immucor/Canada.
The Agreement contained two (2) year noncompetition provisions for Messrs.
Waddy and MacNeil. In exchange for a cash payment of CDN$375,000.00, Samuel
Brushett, the sole shareholder of Nubio Technologies Corporation, is subject
to the noncompetition provisions of the Agreement for a period of five (5)
years after the Closing Date. On the Closing Date, Dominion entered into
two (2) year employment agreements with Messrs. Waddy and MacNeil.
In connection with the acquisition, the Sellers were each granted two (2) sets
of warrants to acquire Immucor stock exercisable one (1) year after the
issuance date, with one set expiring in five years and the other set expiring
in ten years. The exercise price for the five-year warrants is US$12.00, and
the aggregate number of shares covered by the five-year warrants is 478,417.
The exercise price for the ten-year warrants is US$11.98, and the aggregate
number of shares covered by the ten-year warrants is 150,000.
PART II - OTHER INFORMATION
Item 4. Submission of matters to a vote of security holders.
The annual meeting of shareholders of Immucor, Inc. was held on Thursday,
December 5, 1996. The shareholders elected the following eight directors to
constitute the Board of Directors and to serve until the next annual meeting
and thereafter until their successors have been elected and have been
qualified: Edward L. Gallup, Ralph A. Eatz, Richard J. Still, Daniel T.
McKeithan, Didier Lanson, Dr. Gioacchino De Chirico, Josef Wilms, and G.
Bruce Papesh.
Item 6. Exhibits and Reports on Form 8-K.
(a) The Company has filed the following exhibits with this report:
11.1 Statement re computation of per share earnings.
(b) The Company did not file any reports on Form 8-K during the six months
ended November 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IMMUCOR, INC.
(Registrant)
Date: January 15, 1997
/s/Edward L. Gallup_____________Edward L. Gallup, President
/s/Richard J. Still_______________ Richard J. Still, Senior Vice President -
Finance (Principal Accounting Officer)
IMMUCOR, INC.
EXHIBITS
Exhibit 11.1 Statement re computation of per share earnings.
Primary income per share calculations:
Three Months Ended Six Months Ended
Nov 30 Nov 30 Nov 30 Nov 30,
1996 1995 1996 1995
Net income $482,720 $750,193 $1,079,888 $1,545,960
Weighted average number of common
shares and common share
equivalents are as follows:
Weighted average common shares
outstanding 8,055,077 7,875,143 8,055,056 7,791,495
Shares issued from assumed
exercise of dilutive
options and warrants 564,879 829,991 568,101 797,307
Weighted average number of
shares outstanding
(as adjusted) 8,619,956 8,705,134 8,623,157 8,588,802
Net income per common
and common equivalent share $0.06 $0.09 $0.13 $0.18
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.
Fully diluted income per share calculations:
Three Months Ended Six Months Ended
Nov 30 Nov 30 Nov 30 Nov 30,
1996 1995 1996 1995
Net income $482,720 $750,193 $1,079,888 $1,545,960
Weighted average number of common
shares and common share
equivalents are as follows:
Weighted average common shares
outstanding 8,055,077 7,875,143 8,055,056 7,791,495
Shares issued from assumed
exercise of dilutive
options and warrants 564,879 829,991 584,396 968,156
Weighted average number of
shares outstanding
(as adjusted) 8,619,956 8,705,134 8,639,452 8,759,651
Net income per common
and common equivalent share $0.06 $0.09 $0.13 $0.18
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.
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