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, 1998
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 July 31, 1998, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $74,545,537.
As of July 31, 1998, there were 8,075,349 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
and systems used primarily by hospitals, clinical laboratories 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.
Since 1992 the Company has worked with the medical instrument manufacturer
Bio-Tek Instruments, Inc., a wholly owned subsidiary of Lionheart
Technologies, Inc., to develop an automated, "walk-away", blood bank
analyzer, using Immucor's proprietary Capturer technology called the
ABS2000. In March 1996, the Company filed a 510(k) application with the
U.S. Food and Drug Administration (the "FDA") for market clearance. On
July 6, 1998, the Company announced that the FDA cleared the ABS2000 for
marketing in the U.S. The instrument is designed for patient testing in
hospital transfusion laboratories and is the first fully automated blood
bank system that performs blood compatibility tests currently done manually
by blood bank technologists. The Company has already begun to implement
its plan to introduce the ABS2000 to the U.S. market in fiscal 1999.
In March 1998, Immucor signed an exclusive distribution agreement with
IBG Systems Limited headquartered in England whereby Immucor assumes the
sale, marketing and service of all current and future IBG products in North
America. IBG presently has the only semi-automated microtitration plate
reader available for sale in the U.S. that uses Immucor's proprietary solid
phase Capturer assay (registered trademark). With this agreement Immucor
also obtained the North American distribution rights for blood bank
applications of the ROSYS Plato system manufactured by ROSYS Anthos Ag of
Switzerland. The system provides medium sized donor centers and large
hospital transfusion laboratories automated liquid and sample handling for
processing of microtitration plates and also uses Immucor's proprietary
solid phase Capture (registered trademark) assays. The Company plans to
introduce the system to the U.S. market in fiscal 1999.
In 1998, the Company began marketing an automated medical instrument,
previously referred to as the ABSHV, utilizing DYNEX Technologies, Inc.'s
510(k) clearance for its product called the DIAS PLUS. The instrument
provides large blood donor centers and clinical reference laboratories
automated batch processing and positive sample identification of routine
blood donor tests, and uses the Company's solid phase Capture (registered
trademark) assays.
In January 1997, Immucor signed an exclusive distribution agreement with
Biometric Imaging, Inc. to market their novel, proprietary cellular analysis
system known as the IMAGN (registered trademark) 2000. This system provides
rapid, precise and easy-to-perform cell test procedures to monitor disease
progression and the efficacy of therapy for patients undergoing transfusion
therapy and for HIV+ patient monitoring. In January 1998 the Company
returned the distribution rights for the HIV+ patient monitoring market in
order to allow the sales force to focus on Immucor's core market, blood bank
and transfusion therapy. In June 1998, not having met contractual minimum
purchase requirements, Immucor became the co-exclusive distributor together
with Biometric Imaging, Inc. for the transfusion therapy market.
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. In the U.S., 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 Blood Bank Automation.
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 and automation 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 Blood Bank Automation.
Product
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.
The following table sets forth the products sold by the Company, most of
which are manufactured by or exclusively for 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
Serums (Coombs Serums) crossmatching, 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
Antibody-based Reagents antigens on red blood cells.
Capture-P (registered Used for the detection of platelet
trademark) antibodies.
Capture-R (registered Used to detect and identify unexpected
trademark) blood group antibodies.
Capture-CMV (registered Used for the detection of antibodies to
trademark) cytomegalovirus.
Capture (registered trademark)-S Used for the detection of antilipid
antibodies for syphilis screening.
ABS2000 Fully automated blood bank system used
for patient ABO/Rh grouping, antibody
screening, donor ABO/Rh confirmation
testing and patient crossmatch.
The following table includes additional products not manufactured by the
Company but sold by the Company:
Product Group Principal Use
Rh (D) Immune Globulin Administered by injection once during and
(Human) once after pregnancy to an Rh negative
woman who delivers an Rh positive infant
to prevent hemolytic disease of the
newborn.
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, Immuno-
fluorescence and Latex Slide Tests.
Clinical Chemistry Blood analysis and pathological testing.
Immunofluorescent Monoclonal Used in clinical research to identify
Antibodies rare cell surface antigens.
Automated Microtitration Plate Instruments providing laboratories auto-
Processors and Liquid Handlers mated batch processing and positive
sample identification of routine blood
donor tests.
Microtitration Plate Reader Instrument that reads and interprets
test results of Immucor's proprietary
Capture (registered trademark) products.
Microvolume Fluorimetry Automated cell enumeration and
characterization for patients undergoing
transfusion therapy.
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), Capture (registered trademark)-S 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 four 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 two Infectious Disease Tests, Capture-CMV (registered
trademark) and Capture (registered trademark)-S (see below). In these four
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
tradmark) 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.
Capture (registered trademark)-S: Solid Phase Test for Syphilis Screening.
Syphilis is a venereal disease which can be transmitted by blood and cause
severe problems in transfusion patients. The test procedure combines
patented cell drying technology with other patented technology to produce a
test for the detection of IgG and IgM antibodies in the serum or plasma of
blood donors with syphilis. The test is suitable for use in large volume
blood donor centers.
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. Based on the results of
independent workflow studies, the Company believes that its Blood Bank
Automation products significantly reduce the amount of blood bank
technologist time required to perform routine blood compatibility tests.
ABS2000: Fully Automated Blood Bank System. On July 6, 1998, the Company
announced it received FDA clearance to market the ABS2000 in the U.S. The
automated, "walk-away", blood bank analyzer uses Immucor's proprietary
Capture (registered trademark) reagent product technology to perform blood
bank patient testing and is manufactured exclusively for Immucor by Bio-Tek
Instruments, Inc., a wholly owned subsidiary of Lionheart Technologies, Inc.
The Company has also received clearance to market the instrument in
Australia, Belgium, Canada, Denmark, Ireland, Italy, Norway, Portugal,
Spain, Sweden and the United Kingdom and has applied to other selected
countries for export approval. Although there is no assurance the
instrument will gain market acceptance, the Company has already begun to
implement its marketing plan for domestic sale of the product during fiscal
1999.
DIAS PLUS: High Volume Microplate Processor. The instrument provides large
blood donor centers and clinical reference laboratories automated batch
processing and positive sample identification of routine blood donor tests,
and uses the Company's Capture-R (registered trademark), Capture-CMV
(registered trademark) and Capture(registerd trademark)-S products.
ROSYS Plato: Microplate Liquid Handler and Sample Processor. The system
provides medium sized donor centers and large hospital transfusion
laboratories automated liquid and sample handling for processing of
microtitration plates and also uses Immucor's proprietary solid phase
Capture (registered trademark) assays.
Multireader Plus: Microplate Reader. Semi-automated spectraphotometric
microtitration plate reader that reads and interprets test results of
Immucor's proprietary Capture (registered trademark) products. Together
with the ROSYS Plato or the DIAS PLUS, the Multireader Plus completes a
semi-automated blood bank system ideally suited for blood donor centers and
large hospital transfusion laboratories.
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.
Microvolume Fluorimetry. Microvolume fluorimetry is a laser-based imaging
system which detects fluorescently-tagged cells held in stasis in a defined
volume, enabling an automated cellular assay delivery system.
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, 1998, 1997 and 1996, the
Company spent $970,900, $907,100, and $997,900, respectively, for research
and development. 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 wholly
owned subsidiary of Lionheart Technologies, Inc., 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 develop-
ment and manufacturing. The Company announced clearance to market the
product in the U.S. from the FDA on July 6, 1998 and continues to upgrade
and develop the system to perform other proprietary test applications.
In 1997, the Company decided to market a second automated medical
instrument, previously referred to as the ABSHV, utilizing DYNEX
Technologies, Inc.'s 510(k) clearance for its product called the DIAS PLUS.
The instrument provides large blood donor centers and clinical reference
laboratories automated batch processing and positive sample identification
of routine blood donor tests, and uses the Company's Capture-R (registered
trademark), Capture-CMV (registered trademark) and Capture (registered
trademark) -S products.
For the six year period ending May 31, 1998 the Company has invested
$5 million in instrument research and development principally under
research contracts with Bio-Tek and DYNEX.
Additional Solid Phase Applications. The Company plans to continue to
develop and refine its patented, solid phase technology. Currently, the
Company is developing a screening test for the detection of weak D antigens
on donor red cells.
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. Monoclonal
antibodies are highly specific, which means that their sensitivity allows
them to detect and identify antigens with greater efficiency than other
reagents. Product quality and consistency is maintained from production
lot to production lot. The Company continues to pursue the development of
such antibodies principally through its Canadian subsidiary, Dominion
Biologicals Limited.
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 worldwide, 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
61 sales personnel employed by the Company in the U.S., Germany, Portugal,
Italy, Spain and Canada. In addition, the Company utilizes 16 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 develop-
ments in the field.
The Company also markets its products internationally through distributors
located throughout the world. For the fiscal years ended May 31, 1998, 1997
and 1996, the Company had foreign net sales, including net domestic export
sales to unaffiliated customers, of approximately $24,101,000, $22,130,000
and $18,168,000, respectively, and these sales accounted for approximately
61%, 62% and 59% of the Company's total net sales for the respective fiscal
years. See Note 13 to the Consolidated Financial Statements. Most of the
Company's foreign sales occurred in Germany and in Italy where the Company
maintains subsidiaries. See Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of Operations concerning the impact of
recent changes in the management of the Company's German subsidiary.
Suppliers
The Company obtains raw materials from numerous outside suppliers. The
Company is not dependent on any single supplier other than certain
instrumentation manufacturers (see Note 12) and the joint manufacturers of
some 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). The Company operates under U.S. Government
Establishment License No. 886 granted by the FDA in December 1982 and under
U.S. Government Establishment License No. 1151 granted by the FDA in
May 1992 to Dominion Biologicals Limited. 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. 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 through-
out Europe.
Both in the U.S. and Canada, 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.
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, 1998, 1997
and 1996, the Company paid the researchers royalties of approximately
$389,900, $368,800, and $328,400 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 "ABS2000", "ImmuAdd", "Capture", "Capture-P", "MCP",
"Capture-R", "Ready-Screen", "Ready-ID" and "Capture-CMV".
Dominion Biologicals Limited has registered the trademark "NOVACLONE".
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-Clinical Diagnostics, a Johnson & Johnson
company, 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), continuing research efforts in the area of blood
bank automation (see Products Under Development), the experience and
expertise of its sales personnel (see Marketing and Distribution) and the
expertise of its technical and customer support staff.
Employees
At July 31, 1998, the Company had 138 full time employees in the U.S., of
whom 35 were in sales and marketing, 88 were in manufacturing, research and
distribution, and 15 were in 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 July 31, 1998 in Germany, Portugal, Italy, Spain and Canada, the Company
had 94 full-time employees, of whom 43 were in sales and marketing, 29 were
in distribution and administration and 22 were in manufacturing.
Item 2.-Properties.
The Company leases approximately 54,000 square feet in Norcross, Georgia,
a suburb of Atlanta, as its executive offices, laboratories and manu-
facturing facilities. Rent charges for the fiscal year ended May 31, 1998
were $415,600. The term of the lease is for a five-year period ending
April 2003 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, 1998, totaled $184,500. The term of the lease
in Germany is through April 2009. In Italy rent expense for the fiscal year
ended May 31, 1998 totaled $90,300 for 805 square meters. The Company has
five separate lease agreements for the facility in Italy. The term of the
first lease is through September 1998, the second lease is through
April 2000, the third lease is through October 2000, the fourth lease is
through September 2002 and the fifth lease is through October 2003. In
Canada, the FDA approved facility is owned by the Company. 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 National Market System of 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
Period June 1 through July 31, 1998 . . . . . . $ 11.118 $ 8.125
Fiscal Year Ended May 31, 1998
First Quarter . . . . . . . . . . . . . . . . . . $ 10.875 $ 7.125
Second Quarter . . . . . . . . . . . . . . . . . . 12.000 7.750
Third Quarter . . . . . . . . . . . . . . .. . . .. 10.625 7.500
Fourth Quarter . . . . . . . . . . . . . . . . . 10.000 7.063
Fiscal Year Ended May 31, 1997
First Quarter . . . . . . . . . . . . . . . . . $ 14.000 $ 7.500
Second Quarter . . . . . . . . . . . . . . . . . 12.750 9.500
Third Quarter . . . . . . . . . . . . . . . . . 11.500 8.750
Fourth Quarter . . . . . . . . . . . . . . . . .. 10.500 6.125
As of July 31, 1998, there were 486 holders of record of the Company's
Common Stock. The last reported sales price of the Common Stock on such date
was $9.688.
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,
1998 1997(1) 1996 1995 1994
Statement of Income Data:
Net sales $39,790 $35,653 $30,964 $28,892 $29,581
Cost of sales 18,167 15,055 12,005 10,865 12,394
Gross profit 21,623 20,598 18,959 18,027 17,187
Operating expenses:
Selling, general, & admin. 16,873 16,714 14,367 12,575 12,179
Restructuring & other non-recurring
charges - - - - 625
Research and development:
Instrument 303 342 493 644 2,005
General 668 565 505 486 478
Total operating expenses 17,844 17,621 15,365 13,705 15,287
Income from operations 3,779 2,977 3,594 4,322 1,900
Other:
Interest income 789 848 868 805 545
Interest expense (616) (486) (388) (534) (618)
Other (73) (197) 102 (62) (109)
Total other 100 165 582 209 (182)
Income before income taxes 3,879 3,142 4,176 4,531 1,718
Income taxes 1,810 1,302 1,403 1,641 992
Net income $ 2,069 $ 1,840 $ 2,773 $ 2,890 $ 726
Earnings per share:
Basic $ .26 $ .23 $ .35 $ .38 $ .09
Diluted $ .25 $ .22 $ .32 $ .37 $ .09
Weighted average shares outstanding:
Basic 8,095 8,066 7,867 7,695 7,670
Diluted 8,443 8,535 8,653 7,809 7,814
Balance Sheet Data:
Working capital $32,948 $31,868 $32,524 $29,101 $21,219
Total assets 57,544 57,726 47,207 43,979 41,311
Long-term debt, less current
portion 8,912 10,666 3,909 5,744 -
Retained earnings 21,938 19,869 18,029 15,256 12,367
Shareholders' equity 42,433 41,221 39,345 34,067 31,026
(1) Includes results of Dominion Biologicals Limited since December 11, 1996.
Item 7.-Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Any statements contained herein that are not historical fact are forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995, and involve risks and uncertainties. All forward-looking
statements included in this document are based on information available to
the Company on the date hereof, and the Company assumes no obligation to
update any such forward-looking statements. Further risks are detailed in
the Company's filings with the Securities and Exchange Commission, including
those set forth in this Form 10-K and Quarterly Reports on Form 10-Q.
(a) Liquidity and Capital Resources
Net cash provided by operating activities totaled $3,783,000, $510,000, and
$2,908,000 for the fiscal years 1998, 1997 and 1996, respectively. As of
May 31, 1998, the Company's cash and cash equivalents balance totaled
$15.8 million.
During fiscal 1998, the Company experienced an increase in
trade accounts receivable of $1,148,000 over the previous year principally
due to higher sales levels in the U.S. and Europe. Other accounts
receivable decreased $914,000 primarily as a result of a former director
repaying loans payable to the Company. See Note 5 to the Consolidated
Financial Statements and Item 13 - Certain Relationships and Related
Transactions.
During fiscal 1998, the Company authorized a program to repurchase up to
10% of its common stock in the open market. Through May 31, the Company
repurchased approximately 103,000 shares of its common stock for $877,000
under the program.
In connection with the acquisition of Dominion Biologicals Limited in
December 1996, the Company borrowed $4,228,200 (CDN$5,741,000) under a
long-term revolving line of credit facility with a U.S. bank maturing
December 2001. At the same time, the Company entered into an interest rate
swap agreement with a notional amount of $2,577,700 (CDN$3,500,000) also
maturing December 2001. This transaction effectively converts the
revolver's floating rate to a fixed rate on the principal balance of
$2,577,700 (CDN$3,500,000). The interest rate on the remaining principal
of $1,167,000 (CDN$1,700,000) is adjusted every 90 days. The balance of the
acquisition of Dominion was financed from the issuance to Dominion's former
shareholders of subordinated promissory notes totaling $4,228,200
(CDN$5,741,000) due December 1999 and from the issuance of warrants
(see Notes 3 and 4 to the Consolidated Financial Statements). During fiscal
1998 the Company repaid $385,000 (CDN$541,000) under the long-term revolving
line of credit facility leaving a remaining principal balance at May 31,
1998 of $3,569,000 (CDN$5,200,000).
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 U.S. bank (see Note 4 to the Consolidated Financial
Statements). The note, which initially matured September 1998, has been
extended to September 2000. At May 31, 1998, the note payable with a
principal amount of $1,402,682, and the interest rate swap agreement with a
notional principal of the same amount were outstanding. During fiscal 1998
and 1997, the Company repaid $835,490 and $1,290,200, respectively.
The Company's Italian subsidiary had approximately $268,000 in borrowings
under an Italian lira line of credit as of May 31, 1998, with an additional
$1.4 million available.
During fiscal 1998 the Company signed an amendment to its lease for the
expansion of the facilities in the U.S. which provides an additional 6,000
square feet of laboratory, training facilities and office space. The
Company anticipates spending approximately $300,000 in fiscal 1999 to
complete the expansion. In addition, the Company plans to spend
approximately $400,000 to renovate the manufacturing facilities and
approximately $500,000 for the purchase and implementation of a new
enterprise software system.
Management believes that the Company's current cash and cash equivalents
balance, internally generated funds, and amounts available under the lines
of credit should be more than sufficient to support operations to support
planned product introduction and continued improvement and development of
products during the next 12 months. Management also believes additional
credit lines would be available should the need arise for capital
improvements, acquisitions or other corporate purposes.
(b) Results of Operations
Comparison of Years Ended May 31, 1998 and May 31, 1997
Net sales increased from $35,653,000 in fiscal 1997 to $39,790,000 in fiscal
1998. Net sales from the operations of Dominion Biologicals Limited acquired
December 1996 accounted for $2,503,000 of the sales increase (See Liquidity
and Capital Resources). The remaining sales increase was caused by higher
sales in the U.S. of the Company's blood bank automation products and
reagent products used with automation. The Company's European operations
increased sales in local currencies by 3%; however, unfavorable exchange
rates caused a 2% decline when translated into U.S. dollars.
As a percent of sales revenue, gross profit margin declined from 58% to 54%.
This decline was primarily due 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,
combined with higher manufacturing costs which could not be passed on to
customers in the form of higher prices given current competitive market
conditions. Other contributing factors included unfavorable foreign
exchange rates in Europe and U.S. sales of the DIAS PLUS and IMAGN (registered
trademark) 2000 which are sold at lower margins than the Company's
proprietary products.
Selling, general and administrative expenses increased $159,000 over the
previous year. Dominion Biologicals Limited acquired in December 1996
accounted for $612,000 of increased selling, general and administrative
costs. This increase was offset by savings in Europe which are partially
attributable to the effect of unfavorable exchange rates. In the U.S.,
increases in selling, general and administrative expenses over the prior
year of $259,000 were caused primarily by costs related to the Company's
instrument programs.
Interest expense increased from $486,000 in fiscal 1997 to $616,000 in
fiscal 1998 as a result of the financing of the acquisition of Dominion
Biologicals Limited. The increase was partially offset by the Company
reducing its outstanding principal loan balance in Germany. See Liquidity
and Capital Resources.
The decrease in other expense of $124,000 as compared to last year was
caused by reduced foreign currency transaction losses recorded in Europe.
As a percent of pretax income, the provision for income taxes increased in
fiscal 1998 from 41% to 47%, principally due to the earnings of Dominion
Biologicals Limited being subject to a higher income tax rate in Canada
than the U.S. tax rate. In addition, the provision increased because of the
need to provide for income taxes on increased profits in Germany, which are
also taxed at higher rates than income in the U.S.
Comparison of Years Ended May 31, 1997 and May 31, 1996
Net sales increased from $30,964,000 in fiscal 1996 to $35,653,000 in fiscal
1997. Fiscal 1997 results include $2,085,000 in net sales from the
operations of Dominion Biologicals Limited acquired December 1996 (see
Liquidity and Capital Resources). The remaining sales increase was caused
by higher sales in both the U.S. and in the Company's European operations
as a result of increased marketing activity.
As a percent of sales revenue, gross profit margin declined from 61% to 58%.
This decline was primarily due 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,
combined with higher manufacturing costs which could not be passed on to
customers in the form of higher prices given competitive market conditions.
Selling, general and administrative expenses increased $2,346,900 over
fiscal 1996. The acquisition of Dominion Biologicals Limited in
December 1996 contributed $512,000 of selling, general and administrative
costs. Other increases in selling, general and administrative expenses in
fiscal 1997 compared to fiscal 1996 were caused primarily by the addition of
sales and marketing personnel both in the U.S. and in Europe, higher trade
show, marketing, advertising, and distribution costs, and other costs
related to the Company's instrument programs, including the launch of the
IMAGN (registered trademark) 2000.
Interest expense increased from $388,000 in fiscal 1996 to $486,000 in
fiscal 1997 as a result of the financing of the acquisition of Dominion
Biologicals Limited. The increase was partially offset by the Company
reducing its outstanding principal loan balance in Germany. See Liquidity
and Capital Resources.
The increase in other expense of $299,000 over the previous year was caused
by currency transaction losses recorded in Europe. An increase in the value
of the U.S. dollar during the year required the recognition of a loss in the
value of the U.S. dollar liabilities converted from local European currency.
As a percent of pretax income, the provision for income taxes increased in
fiscal 1997 from 34% to 41%, principally due to the earnings of Dominion
Biologicals Limited being subject to a higher income tax rate in Canada
than the U.S. tax rate. In addition, the provision increased because of
the need to provide for income taxes on increased profits in Germany, which
are also taxed at higher rates than income in the U.S.
(c) Impact of Year 2000
The Company is aware of the issues that many companies will face as the year
2000 approaches. In order to become year 2000 compliant, the Company has
set up a project team to address the issue and has taken the following steps:
Impact Assessment - Instances where electronics are used in the Company and
the associated potential risks have been identified. The Company believes
that non-information technology systems and its products are not significant-
ly impacted. However, internal business information software is affected
and will require program changes in order to become year 2000 compliant.
Third Party Impact Assessment - The Company has begun to verify the
readiness of its significant suppliers and customers through the
distribution of a questionnaire. Although this process is not complete,
based on information available, the Company has no reason to believe that
any year 2000 problems encountered by customers and suppliers will have a
significant effect on the Company's operations. The Company estimates that
this assessment will be completed by February 1999.
Project Plan - Based on the impact assessment, the need to make software
program changes to the Company's internal business information software had
been identified. In Europe, minor software program changes to existing
systems are being made at a nominal cost making them year 2000 compliant
before the summer of 1999. In North America, since the Company had already
planned to implement a new enterprise wide internal business information
software system by September 1999, the need to make software changes to the
existing system are for the most part not required. The Company is current-
ly identifying which software package to implement and ensuring that the
system is year 2000 compliant. The software should be identified by
September 1998, installed by December 1998, tested and modified by
August 1999 and be operating by September 1999. The Company will set
milestone completion dates during the implementation period of the new
software and be monitoring progress closely.
Contingency Plan - The risk the Company faces is a delay in the
implementation of the new internal business information software. The
Company is uncertain what the costs associated with a delay would be or the
related impact on operations, liquidity and financial condition. Because of
this, the Company has in place a contingency plan which would be put into
effect should implementation milestones not be met. If by July 1999, it is
determined that an August testing and modification milestone cannot be
completed, the Company will begin to make program modifications to the exist-
ing internal business software. The Company estimates that all
modifications and testing can be completed within two months at a cost of
less than $20,000 which will be expensed as incurred. Expenses to date
are nominal.
The Company believes that it is diligently addressing the year 2000 issue
and expects that through its actions year 2000 problems are not reasonably
likely to have a material adverse effect on the Company's operations. There
can be no assurance, however, that such problems will not arise.
(d) Impact of Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement No. 128, Earning per Share, which requires the Company to change
the method previously used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options is excluded. The Company
adopted Statement 128 in the third quarter of fiscal 1998, and the effect of
adoption was not material.
In February 1997, the FASB issued Statement No. 129, Disclosure of
Information about Capital Structure, which establishes standards for
disclosing information about an entity's capital structure. The Company
adopted Statement 129 for the year ending May 31, 1998 with no impact on
the consolidated financial statements.
In June 1997, the FASB issued Statement No. 130, Reporting Comprehensive
Income. Statement 130 establishes new standards for the reporting and
display of comprehensive income and its components in a full set of general
purpose financial statements. These new standards require that all items
recognized as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. Statement 130 is effective for fiscal years beginning after
December 15, 1997. The adoption of Statement 130 will not have a
significant impact on the Company's consolidated financial statements.
In June 1997, the FASB issued Statement No. 131, Disclosures About Segments
of an Enterprise and Related Information. Statement 131 changes the way
public companies report segment information in annual financial statements
and also requires those companies to report selected segment information in
interim financial reports. The Company has adopted Statement 131 and the
effect of adoption had no impact on the Company's consolidated financial
statements.
In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. Statement 133 establishes accounting
and reporting standards for derivative instruments and for hedging
activities. Statement 133 is effective for fiscal quarters of fiscal years
beginning after June 15, 1999. The adoption of Statement 133 will not have
a significant impact on the Company's consolidated financial statements.
(e) 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 also be experienced by others in the industry.
Item 8.-Financial Statements and Supplementary Data.
The following consolidated financial statements of the Company are included
under this item:
-Report of Independent Auditors
-Consolidated Balance Sheets, May 31, 1998 and 1997
-Consolidated Statements of Income for the Years Ended May 31, 1998, 1997
and 1996
-Consolidated Statements of Shareholders' Equity for the Years Ended
May 31, 1998, 1997 and 1996
-Consolidated Statements of Cash Flows for the Years Ended May 31, 1998,
1997 and 1996
-Notes to Consolidated Financial Statements
-Consolidated Financial Statement Schedule
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
of Immucor, Inc.:
We have audited the accompanying consolidated balance sheets of Immucor, Inc.
as of May 31, 1998 and 1997 and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the three years in
the period ended May 31, 1998. Our audits 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Immucor, Inc. at May 31, 1998 and 1997, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended May 31, 1998, 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 13, 1998, except for the last two sentences of
the fourth paragraph of Note 5 as to which the
date is July 31, 1998
IMMUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
May 31,
ASSETS 1998 1997
CURRENT ASSETS:
Cash and cash equivalents $15,816,217 $15,718,234
Accounts receivable, trade (less allowance for
doubtful accounts of $502,372
in 1998 and $395,076 in 1997) 12,214,270 11,066,519
Accounts receivable, other 695,430 1,609,000
Inventories 8,462,850 7,662,764
Income tax receivable 95,166 38,066
Deferred income taxes 370,029 358,470
Other assets 447,661 677,017
Total current assets 38,101,623 37,130,070
LONG-TERM INVESTMENT - At cost 1,000,000 1,000,000
PROPERTY AND EQUIPMENT - Net 6,018,792 5,333,310
DEFERRED INCOME TAXES - 23,176
OTHER ASSETS - Net 801,779 1,401,164
EXCESS OF COST OVER NET TANGIBLE
ASSETS ACQUIRED 11,622,082 12,837,926
$57,544,276 $57,725,646
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Borrowings under bank line of
credit agreements $ 359,325 $ 487,161
Accounts payable 3,069,973 3,136,117
Income taxes payable 359,598 391,616
Accrued salaries and wages 862,550 695,716
Other accrued liabilities 501,739 551,419
Total current liabilities 5,153,185 5,262,029
LONG-TERM DEBT 8,911,727 10,665,658
DEFERRED INCOME TAXES 1,046,814 577,091
SHAREHOLDERS' EQUITY:
Common stock - authorized 30,000,000 shares,
$.10 par value; issued and outstanding
8,078,811 in 1998 and 8,078,737 in 1997 807,881 807,873
Additional paid-in capital 22,079,468 22,502,930
Retained earnings 21,937,697 19,868,924
Foreign currency translation adjustment (2,392,496) (1,958,859)
Total shareholders' equity 42,432,550 41,220,868
$57,544,276 $57,725,646
See notes to consolidated financial statements.
IMMUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended May 31,
1998 1997 1996
NET SALES $39,790,434 $35,653,617 $30,964,057
COST OF SALES 18,167,840 15,055,254 12,004,831
GROSS PROFIT 21,622,594 20,598,363 18,959,226
OPERATING EXPENSES:
Selling, general and administrative 16,872,996 16,714,390 14,367,537
Research and development:
Instrument 302,851 342,040 493,010
General 668,073 565,101 504,902
17,843,920 17,621,531 15,365,449
INCOME FROM OPERATIONS 3,778,674 2,976,832 3,593,777
OTHER:
Interest income 788,870 847,916 868,149
Interest expense (615,705) (485,799) (387,795)
Other (72,650) (196,745) 102,155
100,515 165,372 582,509
INCOME BEFORE INCOME TAXES 3,879,189 3,142,204 4,176,286
INCOME TAXES 1,810,416 1,302,290 1,403,651
NET INCOME $ 2,068,773 $ 1,839,914 $ 2,772,635
INCOME PER SHARE
Basic $ .26 $ .23 $ .35
Diluted $ .25 $ .22 $ .32
See notes to consolidated financial statements.
IMMUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Foreign
Additional Currency Total
Common Stock Paid-In Retained Translation Shareholders'
Shares Amount Capital Earnings Adjustment Equity
BALANCE, JUNE 1, 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
Exercise of stock options
24,357 2,435 114,217 116,652
Foreign currency translation adjustment
(983,812) (983,812)
Issuance of warrants
800,000 800,000
Tax benefits related to stock options
102,864 102,864
Net income
1,839,914 1,839,914
BALANCE, MAY 31, 1997
8,078,737 807,873 22,502,930 19,868,924 (1,958,859) 41,220,868
Exercise of stock options
119,774 11,978 602,419 614,397
Foreign currency translation adjustment
(433,637) (433,637)
Tax benefits related to stock options
177,551 177,551
Exchange of stock for cancellation of non-compete agreement
(16,500) (1,650) (336,369) (338,019)
Stock repurchase
(103,200) (10,320) (867,063) (877,383)
Net income
2,068,773 2,068,773
BALANCE, MAY 31, 1998
8,078,811 $807,881 $22,079,468 $21,937,697 $(2,392,496) $42,432,550
See notes to consolidated financial statements.
IMMUCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended May 31,
1998 1997 1996
OPERATING ACTIVITIES:
Net income $2,068,773 $1,839,914 $2,772,635
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization of
property and equipment 1,392,534 1,198,699 1,087,692
Amortization of other assets and
excess of cost over net tangible
assets acquired 588,555 449,982 328,314
Deferred tax provision 481,340 276,002 (78,818)
Changes in assets and liabilities:
Accounts receivable, trade (1,147,751) (1,347,699) (943,506)
Accounts receivable, other 913,570 (1,609,000) -
Income taxes 88,433 442,315 174,290
Inventories (800,086) (1,241,278) (462,957)
Other current assets 146,934 31,559 (17,533)
Accounts payable (66,145) 343,539 231,028
Other current liabilities 117,154 126,101 (182,826)
Total adjustments 1,714,538 (1,329,780) 135,684
Cash provided by operating activities 3,783,311 510,134 2,908,319
INVESTING ACTIVITIES:
Purchases of / deposits on property
and equipment (1,506,005) (2,930,330) (1,890,488)
Cash paid for acquisition,
net of cash acquired - (4,366,734) -
(Increase) decrease in other assets (35,014) (481,715) 36,729
Cash used in investing activities $(1,541,019) $(7,778,779) $(1,853,759)
FINANCING ACTIVITIES:
Borrowings (repayments) under line
of credit agreements $ (86,363) $ (57,367) $ 41,696
Proceeds from issuance of long
term debt - 4,228,163 -
Repayment of notes payable (1,246,185) (1,300,293) (1,404,060)
Exercise of stock options 614,397 116,652 2,311,982
Stock repurchases (877,383) - -
Other - - (18,654)
Cash provided by (used in) financing
activities (1,595,534) 2,987,155 930,964
EFFECT OF EXCHANGE RATE CHANGES ON CASH (548,775) (533,698) (193,783)
INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS 97,983 (4,815,188) 1,791,741
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 15,718,234 20,533,422 18,741,681
CASH AND CASH EQUIVALENTS
AT END OF YEAR $15,816,217 $15,718,234 $20,533,422
Noncash investing and financing activities:
Exchange of stock for cancellation
of non-compete agreement $ 338,019 $ - $ -
Transfer of equipment deposit to
property and equipment 562,361 - -
Fair value of assets acquired - 2,234,241 -
Cost in excess of assets acquired - 8,119,926 -
Liabilities assumed - (959,270) -
Notes and warrants issued for
assets acquired - (5,028,163) -
Net cash paid for acquisition $ - $ 4,366,734 $ -
CASH PAID DURING THE YEAR FOR:
Interest $ 662,185 $ 325,686 $ 387,799
Income taxes 1,143,802 596,492 1,362,320
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. The Company operates
facilities in North America and Europe.
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 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 1997 and 1998 presentation.
Concentration of Credit Risk - At May 31, 1998 approximately $2,467,000 of
the Company's cash balance was on deposit with high quality U.S. financial
institutions and $11,478,000 was invested in "AAA" rated municipal bonds
and money market funds. At May 31, 1997 approximately $13,051,000 of the
Company's cash balance was on deposit with a high quality U.S. financial
institution and $2,050,000 of the Company's cash balance was invested in a
"AAA" rated security which matured at various dates.
The Company obtains raw materials from numerous outside suppliers. The
Company is not dependent on any single supplier other than certain
instrumentation manufacturers (see Note 12) and the joint manufacturers of
some 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.
The Company generally does not require collateral from its customers.
Cash and Cash Equivalents - The Company considers all highly liquid
investments with an original maturity of three months or less when purchased
to be cash and cash equivalents.
Management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such designation at each balance sheet
date. Available for sale securities are carried at fair value, with
unrealized gains and losses reported in a separate component of stock-
holders' equity. Realized gains and losses are included in investment
income and are determined on a first-in, first-out basis.
At May 31, 1998 and 1997, the Company held $11,478,000 and $2,050,000 in
municipal bonds, overnight Eurodollar investments and money market funds.
All investments were classified as available for sale as of May 31, 1998.
Fair market value is equivalent to cost at May 31, 1998. All investments
held by the Company have original maturities of less than 90 days and are
classified as cash and cash equivalents as of May 31, 1998.
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 Lionheart Technologies, Inc., acquired in April 1992, is
accounted for using the cost method of accounting (see Note 12). Bio-Tek
Instruments, Inc., is a wholly owned subsidiary of Lionheart Technologies,
Inc.
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 ranging from three to
ten years.
Fair Value of Financial Instruments - The carrying amounts reported in the
consolidated balance sheets for cash and cash equivalents, accounts
receivable, long-term investment and accounts payable approximate their
fair values. The fair values of the Company's long-term debt approximate
the reported amounts in the accompanying consolidated balance sheets as
their interest rates approximate the May 31, 1998 and 1997 market rates 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, 1998 and 1997 was $2,214,000 and
$1,754,000, respectively.
The Company evaluates long-lived assets for impairment when events and
circumstances indicate that the assets might be impaired and records an
impairment loss if the undiscounted cash flows estimated to be generated by
those assets are less than the carrying amount of those assets. The impair-
ment loss recognized is equal to the difference between the discounted cash
flows and the carrying amount of the assets. The Company believes that the
carrying value of recorded intangibles is not impaired.
Foreign Currency Translation - The financial statements of foreign subsid-
iaries 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 rates 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 of foreign currency
transaction gains and losses has been recorded in the accompanying
statements of income.
Revenue Recognition - Revenue from the sale of the Company's reagents is
recognized upon shipment, and revenue from the sale of the Company's medical
instruments is recognized upon the customers' acceptance of such instru-
ments.
Stock Based Compensation - In October 1995, the FASB issued Statement No.
123, Accounting for Stock-Based Compensation, which provides an alternative
to APB Opinion No. 25, Accounting for Stock Issued to Employees. The
Company accounts for stock-based compensation in accordance with APB Opinion
No. 25 and discloses pro forma information regarding net income and earnings
per share as required by Statement 123. 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 such grants.
Earnings per Share - In 1997, the FASB issued Statement No. 128, Earnings
per Share, changing the calculation and presentation of earnings per share.
All earnings per share amounts for all periods have been presented, and where
appropriate, restated to conform to the Statement 128 requirements.
Impact of Recently Issued Accounting Standards - In February 1997, the FASB
issued Statement No. 129, Disclosure of Information about Capital Structure,
which establishes standards for disclosing information about an entity's
capital structure. The Company adopted Statement 129 for the fiscal year
ending May 31, 1998, which had no significant impact on the consolidated
financial statements.
In June 1997, the FASB issued Statement No. 130, Reporting Comprehensive
Income, which establishes new standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The Company will adopt Statement 130 for the fiscal
year ending May 31, 1999. This statement is not expected to have a
significant impact on the consolidated financial statements.
In June 1997, the FASB issued Statement No. 131, Disclosures About Segments
of an Enterprise and Related Information. Statement 131 changes the way
public companies report segment information in annual financial statements
and also requires those companies to report selected segment information in
interim financial reports. The Company adopted Statement 131 for the fiscal
year ended May 31, 1998 and the effect of adoption had no significant impact
on the consolidated financial statements.
In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. Statement 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities.
Statement 133 is effective for fiscal quarters of fiscal years beginning
after June 15, 1999. The adoption of Statement 133 is not expected to
have a significant impact on the Company's consolidated financial statements.
2. BALANCE SHEET DETAIL
May 31,
1998 1997
Inventories:
Raw materials and supplies $ 2,668,444 $ 2,278,107
Work in process 762,475 669,112
Finished goods and goods
purchased for resale 5,031,931 4,715,545
$ 8,462,850 $ 7,662,764
Property and Equipment:
Machinery and equipment $ 8,665,693 $ 7,263,108
Leasehold improvements 926,894 864,772
Furniture and fixtures 913,179 857,849
10,505,766 8,985,729
Less accumulated depreciation (4,486,974) (3,652,419)
Property and equipment - net $ 6,018,792 $ 5,333,310
3. PURCHASE OF DOMINION BIOLOGICALS LIMITED
On December 11, 1996, the Company acquired all of the issued and outstanding
common stock of Dominion Biologicals Limited for $9,256,326
(CDN$12,568,240), plus acquisition costs of $138,571. The acquisition was
principally financed from the proceeds of a bank loan of $4,228,163
(CDN$5,741,000) and by the issuance of: (a) subordinated promissory notes
totaling $4,228,163 (CDN$5,741,000), due three years from the closing date;
and (b) five and ten year warrants to purchase 478,417 and 150,000 shares of
the Company's common stock at $12.00 and $11.98 per share, respectively.
The Company assigned a value of $800,000 to the warrants. The Company
accounted for this transaction as a purchase business combination. The
results of the operations of Dominion Biologicals Limited since December 11,
1996 are included in the 1997 Consolidated Statements of Income.
The purchase price allocation is as follows:
Current assets $1,383,356
Property and equipment - net 850,885
Intangible asset - goodwill 8,119,926
Less: Liabilities assumed (959,270)
$9,394,897
The pro forma unaudited results of operations for the years ended May 31,
1997 and 1996, assuming consummation of the purchase as of June 1, 1995,
including financing from the proceeds of a bank loan and issuing
subordinated promissory notes and warrants to purchase common stock, are
as follows:
Year Ended
May 31, 1997 May 31, 1996
Net sales $37,458,262 $34,604,574
Net income 1,810,411 2,664,386
Net income per common share:
Primary .21 .31
Fully diluted .21 .30
4. BANK CREDIT AGREEMENTS, NOTES PAYABLE AND LONG-TERM DEBT
The Company's Italian subsidiary has $1,696,000 in line of credit agreements
denominated in Lira with three Italian and one Spanish bank bearing interest
between 8.5% and 14.5%. Outstanding borrowings were $268,000 and $298,000
under these lines at May 31, 1998 and 1997, respectively, and were
guaranteed by the Company. At May 31, 1998, the Company had $1,428,000
available under these line of credit agreements.
At May 31, 1997 the Company's German subsidiary had a $380,274 line of
credit agreement, as amended, denominated in Deutsche Marks with a German
bank bearing interest at 7.75%. Outstanding borrowings under this line of
credit were $72,046 at May 31, 1997 and there were no outstanding borrowings
at May 31, 1998 as the line of credit was extinguished during fiscal 1998.
In connection with the acquisition of Dominion Biologicals Limited in
December 1996, the Company entered into a $4,566,200 (CDN$6,200,000) long-
term revolving line of credit facility with a U.S. bank maturing December
2001 and bearing interest at LIBOR plus .4375%. The Company borrowed
$4,228,200 (CDN$5,741,000) under this line of credit facility. The Company
simultaneously entered into an interest rate swap agreement with a notional
amount of $2,577,700 (CDN$3,500,000), also maturing December 2001. This
transaction effectively converts the revolver's floating rate to a fixed
rate of 6.6375% on the principal balance of $2,577,700 (CDN$3,500,000). The
interest rate on the remaining principal balance of $1,167,000
(CDN$1,700,000) is LIBOR plus .4375%, which was 4.875% at May 31, 1998, and
is adjusted every 90 days. At May 31, 1998, the outstanding balance of the
line of credit facility was $3,569,000 (CDN$5,200,000). The fair value of
the interest rate swap agreement (which is nominal at May 31, 1998) is not
recognized in the financial statements. The Company also issued
subordinated promissory notes to the former shareholders of Dominion
totaling $4,228,200 (CDN$5,741,000), bearing interest at 6% payable semi-
annually with principal due in December 1999.
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 initially matured September 1998 and has been extended to September
2000 with interest of LIBOR plus .375%. At the same time, the Company
entered into an interest rate swap agreement with the bank, initially
maturing September 1998 and extended to September 2000, which effectively
converts the note payable's floating rate to a fixed rate of 6.915% per
annum up to September 1998 and a rate to be determined for the remaining
period provided the Company makes periodic payments. If these payments are
not made, future interest rates could vary. At May 31, 1998 and 1997, the
outstanding balance of the note payable was $1,402,700 and $2,348,400,
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, 1998) is not recognized in the financial statements.
The notes payable require the maintenance of certain income and other
financial ratios, and place certain limited restrictions on the Company's
ability to acquire other entities.
The notes payable and interest rate swap agreements with the U.S. bank are
guaranteed by the Company.
5. ACCOUNTS RECEIVABLE, OTHER
In fiscal 1997, Mr. Josef Wilms, the former president of the Company's
German subsidiary, Immucor GmbH, borrowed, prior to his resignation,
$300,000 from the Company at 6% interest, secured by his warrants to
purchase 143,750 shares of the Company's Common Stock. At May 31, 1998
the amount outstanding under the loan was $167,000, and as of July 14, 1998
the loan including accrued interest was fully paid.
In July 1997, management of the Company discovered that Mr. Wilms had caused
Immucor GmbH to make unauthorized loans to him since 1994. The amounts
advanced were documented in the records of Immucor GmbH, including interest
rates ranging from 7.75% to 9.5%, and were generally paid down by the end of
each accounting period, but were not disclosed to the Company's management.
The largest aggregate amounts outstanding under the Immucor GmbH loans were
$29,600 in fiscal 1994, $290,000 in fiscal 1995, $669,000 in fiscal 1996 and
$1,311,000 in fiscal 1997. At May 31, 1997, the outstanding amount under
the Immucor GmbH loan was approximately $1,300,000, and at May 31, 1998 the
aggregate amounts receivable were approximately $528,000.
Mr. Wilms and his family have granted liens on certain property owned by
them in Germany and Portugal to collateralize the loans from the Company
and Immucor GmbH, and Mr. Wilms has agreed to grant liens on additional
property owned by him and located in the United States.
Mr. Wilms had agreed to pay all amounts borrowed from the Company and
Immucor GmbH, plus interest at 8.25%, plus the Company's expenses in
securing the loans, by October 31, 1997. Although the loans had not been
repaid by October 31, 1997, the Company agreed to extend the date for
payment of these loans to December 31, 1997 based upon the Company's
belief that Mr. Wilms had been working diligently to liquidate the
collateral to obtain the funds. At December 31, 1997, as Mr. Wilms had not
fully repaid these amounts, the Company began to arrange the sale of some
or all of the collateral to the extent necessary to recover the unpaid
balance of the loan. Since December 31, 1997 and up to May 31, 1998 the
Company had arranged the sale of collateral reducing the debt to
approximately $695,000 and subsequent to May 31, 1998 the Company
sold other collateral and gained legal title to a U.S. residential rental
property previously held by Mr. Wilms. The aggregate amount payable to the
Company by Mr. Wilms as of July 31, 1998 was approximately $123,000.
The Company believes it has adequate collateral to extinguish the remaining
debt and, with Mr. Wilm's assistance, is arranging for the liquidation of
this collateral.
Mr. Wilms has had no continuing employment or consulting relationships with
Immucor, Inc. or Immucor GmbH since December 31, 1997.
6. COMMON STOCK
At May 31, 1998, the following shares of Common Stock are reserved for
future issuance:
Common stock options - directors and employees 1,953,643
Common stock warrants - other 933,668
2,887,311
In connection with the acquisition of Dominion Biologicals Limited, the
Company issued to the sellers five and ten year warrants to acquire, in
whole or in part, 478,417 and 150,000 shares of Immucor stock at $12.00 and
$11.98 per share, respectively. These warrants are exercisable one year
after the issuance date, with the five-year warrants expiring in 2001 and
the ten-year warrants expiring in 2006. Immucor has agreed to register the
resale of the shares covered by both sets of warrants upon the sellers'
request after the exercise date or in connection with another registered
public offering by the Company.
In connection with other 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 became exercisable at the rate
of 20% per year commencing August 1993, and expire in 2001. At May 31,
1998, 219,749 of the 375,000 warrants had been exercised and as of July 31,
1998 363,499 had been exercised. The remaining 11,501 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 each. 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% owner-
ship, 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.
7. STOCK OPTIONS
The Company has various stock option plans which authorize the Company's
Compensation Committee to grant employees, officers and directors options to
purchase shares of the Company's Common Stock. Exercise prices of stock
options are determined by the Compensation Committee and have generally been
the fair market value at the date of the grant.
The Company's 1995 Non-Incentive Stock Option Plan authorizes the grant of
options to employees, officers and directors for up to 1,000,000 shares of
the Company's common stock. All options have 10 year terms and vest and
become fully exercisable 50% at the end of 2 years, 25% at the end of 3
years, and 25% at the end of 4 years of continued employment.
The Company has elected to follow Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, (APB 25) and related
Interpretations in accounting for its employee stock options because the
alternative fair value accounting provided for under FASB Statement No. 123,
Accounting for Stock-Based Compensation, requires use of option valuation
models that were not developed for use in valuing employee stock options.
Under APB 25, because the exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date of
grant, no compensation is recognized.
Pro forma information regarding net income and earnings per share is
required by Statement 123, which also requires that the information be
determined as if the Company has accounted for its employee stock options
granted subsequent to June 1, 1995 under the fair value method of that
Statement. The fair value for these options was estimated at the date of
grant using a Black-Scholes option pricing model with the following weighted
average assumptions: a risk-free interest rate of 6.22%, 6.36% and 6.27% in
fiscal 1998, 1997 and 1996 respectively, no dividend yields; a volatility
factor of the expected market price of the Company's common stock of .458
for 1998 and .473 for 1997 and 1996 based on quarterly closing prices since
1986; and an expected life of each option of 8 years.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting periods. The
Company's pro forma information follows:
1998 1997 1996
Net income as reported $2,068,773 $1,839,914 $2,772,635
Pro forma net income $1,646,037 $1,738,227 $2,749,562
Earnings per share as reported:
Basic $ .26 $ .23 $ .35
Diluted $ .25 $ .22 $ .32
Pro forma earnings per share:
Basic $ .20 $ .22 $ .35
Diluted $ .19 $ .20 $ .32
Because Statement 123 is applicable only to options granted subsequent to
May 31, 1995, its pro forma effect will not be fully reflected until 1999.
The Company is authorized to issue up to 1,953,643 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 2008. Transactions involving these stock option arrangements are
summarized as follow:
Weighted
Range Average
of Exercise Exercise
Shares Prices Price
Outstanding at May 31, 1995 1,775,266 $3.00 -$10.00 $ 7.11
Granted 29,000 9.00 - 15.375 10.60
Exercised (144,200) 3.00 - 9.33 4.98
Canceled (27,719) 3.00 - 9.33 7.63
Outstanding at May 31, 1996 1,632,347 3.00 - 15.375 7.38
Granted 36,500 9.375 - 10.50 9.92
Exercised (24,357) 4.59 - 6.25 4.79
Canceled -
Outstanding at May 31, 1997 1,644,490 3.00 - 15.375 7.53
Granted 343,500 8.00 - 12.00 8.20
Exercised (119,774) 3.00 - 6.00 5.13
Canceled (77,250) 6.00 - 12.00 7.10
Outstanding at May 31, 1998 1,790,966 3.13 - 15.375 7.84
At May 31, 1998 and 1997, options for 1,293,535 and 1,238,240 shares of
Common Stock, respectively, were exercisable, and 162,677 and 309,153
shares of Common Stock, respectively, were available for future grants.
The following table as of May 31, 1998 sets forth by group of exercise
price ranges, the number of shares, weighted average exercise prices and
weighted average remaining contractual lives of options outstanding, and
the number and weighted average exercise prices of options currently
exercisable.
Options Outstanding Options Exercisable
Weighted
Weighted Average Number
Range of Number Average Contractual of Weighted
Exercise of Exercise Life Shares Average
Prices Shares Price (Years) Price Exercise
$ 3.13 - $ 5.50 133,229 $5.29 2.16 129,479 $5.28
6.00 - 9.88 1,607,737 7.96 5.38 1,143,556 8.11
10.00 - 15.38 50,000 10.88 7.31 20,500 11.02
3.13 - 15.38 1,790,966 7.84 5.20 1,293,535 7.87
8. EARNINGS PER SHARE
In 1997, the FASB issued Statement No. 128 which replaced the calculation of
primary and fully diluted earnings per share with basic and diluted earnings
per share. Unlike primary earnings per share, basic earnings per share ex-
cludes dilutive effects of options, warrants and convertible securities.
Diluted earnings per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for all periods
have been presented, and where appropriate, restated to conform to the
Statement 128 requirements. The following table sets forth the computation
of basic and diluted earnings per share.
Year Ended May 31,
1998 1997 1996
Numerator for basic and diluted
earnings per share:
Income available to common
shareholders $2,068,773 $1,839,914 $2,772,635
Denominator:
For basic earnings per share -
weighted average basis 8,095,254 8,066,137 7,867,354
Effect of dilutive stock options
and warrants 347,847 468,947 786,011
Denominator for diluted earnings
per share-adjusted weighted-
average shares 8,443,101 8,535,084 8,653,365
Basic earnings per share $0.26 $0.23 $0.35
Diluted earnings per share $0.25 $0.22 $0.32
9. OPERATING LEASE COMMITMENTS
The Company leases domestic office and warehouse facilities under an
operating lease agreement expiring in 2003 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 $690,400 in fiscal 1998, $672,600 in fiscal 1997
and $630,300 in fiscal 1996.
In Germany, the office facility is leased from a company owned by Mr. Josef
Wilms' family (see Note 5). Rental payments under this lease were $184,500,
$209,100 and $260,300 for fiscal 1998, 1997 and 1996, respectively.
The following is a schedule of approximate future annual lease payments
under all operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of May 31, 1998:
Year Ending May 31:
1999 $ 686,614
2000 699,954
2001 687,735
2002 702,158
2003 660,545
Thereafter 1,237,308
$4,674,314
The Company may, at its option, extend its office and warehouse facilities
lease terms through various dates.
10. INCOME TAXES
Sources of income before income taxes are summarized below:
Year Ended May 31,
1998 1997 1996
Domestic Operations $1,962,591 $2,122,795 $4,014,011
Foreign Operations 1,916,598 1,019,409 162,275
Total $3,879,189 $3,142,204 $4,176,286
The provision for income taxes is summarized as follows:
Year Ended May 31,
1998 1997 1996
Current:
Federal $652,941 $648,258 $1,378,290
Foreign 645,914 327,647 (8,585)
State 30,221 50,383 112,764
1,329,076 1,026,288 1,482,469
Deferred:
Federal 10,394 (25,849) (70,521)
Foreign 469,723 304,892 -
State 1,223 (3,041) (8,297)
481,340 276,002 (78,818)
Income taxes $1,810,416 $1,302,290 $1,403,651
Deferred income taxes reflect the net tax effects of: (a) temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and 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.
Based on an assessment of all available evidence including, but not limited
to, the Italian subsidiary's operating history and lack of profitability,
the Company is uncertain as to the realizability of the Italian subsidiary's
net operating loss carryforwards and, as a result, a 100% deferred tax
valuation allowance has been recorded against these assets. The tax effects
of significant items comprising the Company's net deferred tax liability at
May 31, 1998 and 1997 are as follows:
Year Ended May 31,
1998 1997
Deferred tax liabilities:
Amortization $(1,439,110) $(1,568,309)
Depreciation (228,949) (199,377)
Deferred tax assets:
Reserves not currently deductible 75,767 69,166
Foreign operating loss carryforwards 1,358,556 1,967,222
Uniform capitalization 302,939 282,608
69,203 551,310
Valuation allowance (745,988) (746,755)
Net deferred tax liability $ (676,785) $ (195,445)
The Company's effective tax rate differs from the federal statutory rate as
follows:
Year Ended May 31,
1998 1997 1996
Federal statutory tax rate 34% 34% 34%
State income taxes, net of federal tax benefit 1 1 2
Interest on state municipal obligations (2) (3) (3)
Foreign Sales Corporation commissions (5) (5) -
Higher effective income tax rates of other
countries 10 6 -
Excess of cost over tangible assets acquired - net 3 2 -
Research and development tax credits (1) (1) (1)
Other 7 7 2
47% 41% 34%
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 $122,409,
$47,722, and $384,887 in fiscal 1998, 1997 and 1996, respectively.
Additionally, the Company recorded income tax benefits of $55,142 in fiscal
1998, 1997 and 1996, caused by patent amortization expense deductions
resulting from a 1993 exercise of stock options previously issued in
connection with the acquisition of certain technology (Note 11). 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 expense for financial reporting purposes.
At May 31, 1998, the Company's German subsidiary had net operating loss
carryforwards for income tax purposes of approximately $1,152,967 which do
not expire. The net operating loss carryforwards result primarily due to
differences in the timing of amortization deductions. At May 31, 1998, the
Company's Italian subsidiary had net operating loss carryforwards for
income tax purposes of approximately $1,620,818 which expire in 2000 and
2001.
11. 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 $389,900, $368,800 and
$328,400 in fiscal 1998, 1997 and 1996, respectively.
12. INSTRUMENT DEVELOPMENT AND MANUFACTURING AGREEMENTS
The Company has contracted with Bio-Tek Instruments, Inc. (see 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 is being marketed in Europe
and will be marketed in the United States in fiscal 1999 to hospital trans-
fusion laboratories for patient testing. Under the terms of the 15 year
agreement, the Company reimburses Bio-Tek Instruments, Inc. for its develop-
ment costs and the Company is granted worldwide marketing rights to sell
the instrument for use in the human clinical diagnostic market for testing
of human blood or blood components with centrifugation. Bio-Tek Instruments,
Inc. may sell the product in other markets paying the Company up to a 4%
royalty of the selling price. In order to maintain the exclusive worldwide
marketing rights the Company must purchase 250 instruments over a 6 year
period beginning with the delivery of the first production instrument which
occurred in fiscal 1997. If the Company purchases less than 250 instruments
over a 6 year period it has the right to continue to purchasing the
instruments on a non-exclusive basis. On July 6, 1998, the ABS2000 was
cleared by the FDA for marketing in the United States.
During fiscal 1996, the Company entered into a second development and manu-
facturing agreement with DYNEX Technologies, Inc ("DYNEX"). Under the terms
of the agreement, DYNEX will design and manufacture a second analyzer known
as the ABSHV utilizing the Company's Capture products technology which will
be marketed by the Company to blood donor centers for donor testing. In ex-
change for reimbursing DYNEX for its development costs and pursuing FDA
510(k) approval, the Company is granted exclusive distribution rights to
sell the instrument to blood banks and centralized and hospital transfusion
laboratories. In order to maintain exclusive distribution rights the
Company must purchase 240 instruments over a 3 year period beginning on the
date FDA 510(k) clearance is granted. The 510(k) application has yet to
be submitted. If the Company does not purchase the minimum amount of
instruments within the time period specified the Company has the right to
continue purchasing the instruments on a non-exclusive basis. Based upon
the Company's current projections, it does not appear that these minimums
will be met.
In fiscal 1998, 1997 and 1996, the Company incurred $302,850, $342,040 and
$493,010, respectively, in instrument research and development costs
principally under these contracts.
13. DOMESTIC AND FOREIGN OPERATIONS
Information concerning the Company's domestic and foreign operations is
summarized below (in 000s):
Year Ended May 31, 1998
U.S. Germany Italy Canada Other Elimi- Consol-
nations idated
Net sales:
Unaffiliated
customers $19,207 $9,493 $5,834 $4,439 $817 - $39,790
Affiliates 3,716 285 - 149 - $(4,150) -
Total 22,923 9,778 5,834 4,588 817 (4,150) 39,790
Income from
operations 808 1,134 438 1,290 88 21 3,779
Identifiable
assets 31,851 8,085 9,916 9,593 1,514 (3,415) 57,544
Net assets 45,060 4,282 (1,101) 1,404 758 (7,970) 42,433
Year Ended May 31, 1997
U.S. Germany Italy Canada Other Elimi- Consol-
nations dated
Net sales:
Unaffiliated
customers $17,184 $10,103 $5,750 $2,013 $604 - $35,654
Affiliates 3,731 324 - 72 - $(4,127) -
Total 20,915 10,427 5,750 2,085 604 (4,127) 35,654
Income from
operations 860 1,234 377 589 (77) (6) 2,977
Identifiable
assets 31,581 9,258 9,271 10,319 1,024 (3,727) 57,726
Net assets 44,227 4,073 (981) 1,156 137 (7,391) 41,221
Year Ended May 31, 1996
U.S. Germany Italy Canada Other Elimi- Consol-
nations idated
Net sales:
Unaffiliated
customers $15,954 $9,847 $4,794 - $369 - $30,964
Affiliates 3,432 218 - - - $(3,650) -
Total 19,386 10,065 4,794 - 369 (3,650) 30,964
Income from
operations 2,777 1,162 (43) - (304) 2 3,594
Identifiable
assets 31,701 10,360 8,909 - 636 (4,399) 47,207
Net assets 42,552 4,027 (769) - (1,211) (5,254) 39,345
During the years ended May 31, 1998, 1997 and 1996, the Company's U.S.
operation made net export sales to unaffiliated customers of approximately
$3,518,000, $3,660,000 and $3,158,000, respectively. The Company's German
operation made net export sales to unaffiliated customers of $1,191,000,
$1,189,000 and $829,000 for the years ended May 31, 1998, 1997, and 1996,
respectively. The Company's Canadian operation made export net sales to
unaffiliated customers of $3,137,000 and $1,418,000 for the years ending
May 31, 1998 and 1997, respectively.
Product sales to affiliates are valued at market prices.
14. 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, 1998, 1997 and 1996, the Company's
matching contributions to the plan were $88,000, $101,000 and $93,000,
respectively. Vesting in the Company's matching contributions is based on
years of continuous service.
15. QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share amounts)
Basic Diluted
Net Gross Operating Net Earnings Earnings
Sales Margin Income Income Per Share Per Share
FISCAL 1998
First Quarter $9,273 $5,426 $1,004 $558 $.07 $.07
Second Quarter 10,192 5,431 971 546 .07 .06
Third Quarter 10,155 5,363 916 465 .06 .06
Fourth Quarter 10,170 5,403 888 500 .06 .06
$39,790 $21,623 $3,779 $2,069 $.26 $.25
FISCAL 1997
First Quarter $7,957 $4,819 $831 $597 $.07 $.07
Second Quarter 8,357 4,837 695 483 .06 .06
Third Quarter 9,640 5,706 884 344 .04 .04
Fourth Quarter 9,700 5,236 566 416 .05 .05
$35,654 $20,598 $2,976 $1,840 $.23 $.22
IMMUCOR, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED MAY 31, 1998, 1997 AND 1996
Balance at Charged to Balance
Beginning Costs and Deduction at End
of Period Expense (Note 1) of Period
1998:
Allowance for doubtful
accounts $395,076 $114,334 $(7,038) $502,372
1997:
Allowance for doubtful
accounts $350,545 $75,521 $(30,990) $395,076
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.
None.
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 59 Chairman of the Board of Directors,
President and Chief Executive Officer
Ralph A. Eatz 54 Director and Senior Vice President -
Operations
Dr. Gioacchino De Chirico 45 Director, Director of European
Operations and President of Immucor
Italia S.r.l
Steven C. Ramsey 49 Vice President - Chief Financial
Officer and Secretary
Daniel T. McKeithan 74 Director
Didier L. Lanson 48 Director
G. Bruce Papesh 51 Director
Dennis M. Smith, Jr., MD 46 Director
Joseph E. Rosen 54 Director
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 or until their earlier death, resignation, or removal. All
executive officers serve at the pleasure of the Board of Directors.
Messrs. Gallup and Eatz founded Immucor in 1982, and have 34 and 30 years
experience in the blood banking diagnostic reagent industry. In addition,
they worked together for approximately six years at Biological Corporation
of America ("BCA"), now the blood banking reagents division of Biopool, Inc.
Including the time they worked together as officers of BCA and Immucor, they
now have worked together as a management team for over 23 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 34 years.
Ralph A. Eatz, who has been working in the blood banking reagent field for
over 30 years, has been a director and Vice President - Operations of the
Company since its founding, and Senior Vice President - Operations since
December 1988.
Dr. Gioacchino De Chirico has been Director of European Operations since
May 1998 and 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, Immuno-
cytometry, 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.
Steven C. Ramsey accepted the position of Vice President and Chief Financial
Officer on March 30, 1998. Mr. Ramsey has for the previous six years worked
for International Murex Technologies Corporation, the last three as Chief
Financial Officer. He has more the 25 years of financial management
experience.
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 30
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, a publicly traded biotechnology company recently acquired by
Novartis Biotech Holding Company. He is currently Vice President Global
Operations and International Affairs of SyStemix Inc. and General Manager of
SyStemix International, a subsidiary of SyStemix Inc., located in France.
SyStemix Inc. is primarily engaged in the development of cellular and gene
therapy products. He was a Director and the President and CEO of
Diagnostics Transfusion ("DT"), a French corporation which develops, manu-
factures 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.
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 28 years of experience in investment services while
serving in stock broker, consulting and executive management positions. Mr.
Papesh also serves as a Director and as Secretary of Neogen Corporation, an
agricultural biotechnology company.
Dennis M. Smith, Jr., MD is the Chairman of the Section of Pathology and the
Director of Laboratories at Columbia Memorial Hospital in Jacksonville,
Florida. In addition to these duties, Dr. Smith is a member of the Board
of Directors of Medical Equity Partners, Jacksonville, Florida, Vice
President of Laboratory Physicians, St. Petersburg, Florida and Managing
Director, Florida Region of AmeriPath, Inc. Dr. Smith is a past president
of the American Association of Blood Banks and is currently Chairman of the
Board of Trustees of the National Blood Foundation. He has over 19 years of
experience in the medical field.
Joseph E. Rosen has been with Sera-Tec Biologicals since its inception in
1969 and has served as President for the past fifteen years. Mr. Rosen is
currently serving as Chairman of the Board of the American Blood Resources
Association, the plasma industry trade group, and has been a member of the
Board of Directors of several public and private health care companies. He
has over 25 years of experience in the blood banking industry.
There are no family relationships among any of the directors or executive
officers of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance. 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. 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, 1998, 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
Name and Other Securities All Other
Principal Annual Comp- Underlying Compensa-
Position Year Salary ensation (1) Options (2) tion (3)
Edward L. Gallup 1998 $190,253 $35,619 - $4,752
Chairman of the 1997 183,993 33,415 - 4,812
Board, President 1996 176,587 31,633 - 4,945
and Chief Executive Officer
Ralph A. Eatz 1998 185,091 29,628 - 4,726
Director and 1997 178,593 28,108 - 4,782
Senior Vice 1996 170,913 26,738 - 4,975
President - of Operations
Dr. Gioacchino 1998 150,575 12,752 - -
De Chirico 1997 177,188 13,021 - -
President, Immucor 1996 180,073 11,731 - -
Italia, S.r.l. and Director of
European Operations
Steven C. Ramsey(4) 1998 14,385 - 30,000 -
Vice President - Chief Financial
Officer and Secretary
Richard J. Still(5) 1998 137,928 15,764 - 3,241
Former Director, 1997 178,593 24,639 - 4,778
Senior Vice Pres- 1996 170,981 23,058 - 5,038
ident - Finance, Treasurer
and Secretary
Josef Wilms (6) 1998 29,156 2,408 - 75,461
Former President, 1997 193,548 16,093 - -
Immucor, GmbH 1996 202,131 17,663 - -
(1) Includes the value of life insurance premiums and an allowance for
automobile expenditures for each of the above named executive officers as
follows: For 1998 - for Mr. Gallup, Eatz, Still, Wilms, and De Chirico,
life insurance premiums of $26,019, $20,028 $9,364, $317 and $3,152,
respectively, and an allowance for automobile expenditures for Mr. Gallup,
Eatz and Dr. De Chirico of $9,600 each, for Mr. Still $6,400 and for Mr.
Wilms $2,091. For 1997 - for Mr. Gallup, Eatz, Still, Wilms, and
De Chirico, life insurance premiums of $23,815, $18,508, $15,039, $1,898,
and $3,421, respectively, and an allowance for automobile expenditures for
Mr. Gallup, Eatz, Still and Dr. De Chirico of $9,600 each and for Mr. Wilms
$14,195. 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, Still and Dr. De Chirico of $9,600 each, and for Mr. Wilms $15,604.
(2) Represents options granted under the 1995 Stock Option Plan to purchase
shares of the Company's Common Stock at an exercise price of $8.38. 50% of
the options are exercisable beginning April 20, 2000, and 25% per year
thereafter.
(3) Represents amounts the Company contributed to the 401(k) retirement plan
on behalf of the named executive officers and for Mr. Wilms' consulting
fees for August 1 through December 31, 1997.
(4) Mr. Ramsey assumed the position of Vice President and Chief Financial
Officer in April 1998.
(5) Mr. Still resigned as Director, Senior Vice President-Finance, Treasurer
and Secretary in January 1998.
(6) Mr. Wilms resigned as President of Immucor GmbH in July 1997 and was
retained as a consultant until December 31, 1997.
Stock Options
Options Granted. During the fiscal year ended May 31, 1998, stock options
were granted to Mr. Ramsey under the 1995 Stock Option Plan. No other
options have been granted during the fiscal years ended May 31,1998, 1997
and 1996 to the executive officers listed in the Summary Compensation Table.
The table below sets forth information regarding the options granted during
the fiscal year ended May 31, 1998, to Mr. Ramsey.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of % of Total Potential Realizable Value at
Securities Options Assumed Annual Rates of
Underlying Granted to Exercise or Stock Price Appreciation
Option s Employees Base Price Expiration For Option Term
Name Granted (#) in Fiscal Yr ($/share) Date 5% 10%
Steven C.
Ramsey (1) 30,000 9.6% $8.38 4/16/08 $158,100 $400,800
(1) 50% of the options are exercisable beginning April 20, 2000, and 25% per
year thereafter.
Option Holdings
The table below presents information concerning option exercises during the
past fiscal year and the value of unexercised options held as of the end of
the fiscal year by each of the individuals listed in the Summary Compensation
Table.
FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired On Value May 31, 1998 May 31, 1998 (1)
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Edward L.
Gallup - - 134,250 15,000 $118,125 $39,375
Ralph A.
Eatz - - 134,250 15,000 118,125 39,375
Dr. Gioacchino
De Chirico - - 60,000 15,000 157,500 39,375
Steven C.
Ramsey - - - 30,000 - 7,350
Richard J.
Still 31,800 $96,300 102,450 - 34,650 -
Josef Wilms (2)
43,600 158,670 234,400 - 129,456
(1) Based on the difference between the exercise price and the closing
price for the Common Stock on May 31, 1998, of $8.625 as reported by NASDAQ.
(2) 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.
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. Messrs. Eatz,
McKeithan, Papesh and Lanson are members of the Compensation Committee. The
Stock Option Committee determines the number of shares to be granted to
individual executive officers. Messrs. Gallup and Eatz are members of the
Stock Option Committee. 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, Mr. Papesh nor Mr. Lanson
are, nor have they ever been, officers or employees of the Company. Edward
L. Gallup and Ralph A. Eatz 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 per meeting and are reimbursed for all travel
expenses to and from meetings of the Board. In addition, the Company
provides each of the non-employee directors a grant of an option to purchase
shares of the Company's common stock upon their election as a director at
the stock's then current fair market value, and at the direction of the
Board, they may receive additional options. The amount of shares subject
to the option is determined at the time of the grant. Messrs. McKeithan
and Lanson hold 13,750 options each and Messrs. Papesh, Smith and Rosen
hold 10,000 options each to purchase shares of the Company's common stock.
Employment Contracts, Termination of Employment and Change of Control
Arrangements
The Company has in effect employment agreements (the "Agreements") with two
of its executive officers: Edward L. Gallup and Ralph A. Eatz
(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 had in effect an employment agreement with Josef Wilms, prior
to his resignation, 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 required a decision by
the Company as its sole shareholder. Under the terms of the employment
agreement, Mr. Wilms agreed to refrain from competition with Immucor GmbH
for a period of two years following the termination of the agreement, and
Immucor GmbH agreed to pay Mr. Wilms monthly installments of 1/16 of his
annual compensation for such forbearance. Immucor GmbH had the right to
release Mr. Wilms from his noncompetition obligations, in which case Mr.
Wilms would not have been paid. A new agreement signed in fiscal 1998
supercedes the above and releases Immucor from any further obligations
under the Employment Agreement and requires Mr. Wilms to refrain from
competition with Immucor Inc. until December 31, 1999. Currently, Mr.
Wilms is no longer an employee or consultant to the Company. See Item 13 -
Certain Relationships and Related Transactions.
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.
The Company has in effect an employment agreement (the "Agreement") with
Mr. Steven C. Ramsey entered into on April 7, 1998. The Agreement renews
for a period of eighteen months from each anniversary date unless sooner
terminated. If the Company terminates employment "without cause",
the Employee would continue to receive his base compensation in installments
payable every two weeks for a period of eighteen months. "Without cause" is
defined in the Agreement 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, (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.
Mr. Ramsey has agreed to refrain from competition with Immucor for a period
of three years after his employment has terminated and for any additional
period that he is compensated by the Company.
Item 12.-Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth as of July 31, 1998, 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 244,357 (2) 3.0%
Ralph A. Eatz 322,526 (2) 3.9%
Dr. Gioacchino De Chirico 60,000 (3) *
Steven C. Ramsey 1,500 *
Didier L. Lanson 11,250 (4) *
Daniel T. McKeithan 56,278 (4) *
G. Bruce Papesh 500 (5) *
Dennis M. Smith 35,312 *
Joseph E. Rosen - -
Wellington Management Co. LLP 522,000 (6) 6.4%
75 State Street
Boston, MA 02109
All directors and executive officers
as a group (nine persons) 731,723 8.8%
* less than 1%.
(1) Except as otherwise noted herein, percentages are determined on the
basis of 8,075,349 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 July 31, 1998, 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 Messrs. Gallup and Eatz an option to acquire 89,250 shares
at an exercise price of $9.33 and an option to acquire 45,000 shares at an
exercise price of $6.00.
(3) Includes a currently exercisable option to acquire 15,000 shares of
Common Stock at an exercise price of $6.00 and an option to acquire 45,000
shares of Common Stock at an exercise price of $6.00.
(4) Includes a currently exercisable option to acquire 3,750 shares at $5.40
per share and a currently exercisable option to acquire 7,500 shares at
$6.00 per share.
(5) Includes 400 shares over which Mr. Papesh shares investment power in his
role as an investment advisor.
(6) Wellington Management Co. LLP ("WMC") reported in a Schedule 13G dated
January 14, 1998, that WMC in its capacity as an investment adviser may be
deemed to beneficially own 522,000 shares or 6.4% of the Company, which are
held of record by clients of WMC. WMC indicated that it had the shared
power to vote or direct the vote of 335,000 shares and shared power to
dispose or to direct the disposition of 522,000 shares and that it had no
sole power to vote or dispose of the shares.
Item 13.-Certain Relationships and Related Transactions.
The Company's German subsidiary, Immucor Mediziniche Diagnostik GmbH
("Immucor GmbH"), leases approximately 1,566 square meters of space from a
corporation of which Josef Wilms' son is a majority stakeholder. Josef
Wilms was formerly the President of Immucor GmbH and a director of the
Company. Rental payments for the 1998 fiscal year totaled $184,500, and
the lease term extends through April 2009.
In fiscal 1997, Mr. Josef Wilms, the former president of the Company's
German subsidiary, Immucor GmbH, borrowed, prior to his resignation,
$300,000 from the Company at 6% interest, secured by his warrants to
purchase 143,750 shares of the Company's Common Stock. At May 31, 1998 the
amount outstanding under the loan was $167,000, and at July 14, 1998 the
loan including accrued interest was fully paid.
In July 1997, management of the Company discovered that Mr. Wilms had caused
Immucor GmbH to make unauthorized loans to him since 1994. The amounts
advanced were documented in the records of Immucor GmbH, including interest
rates ranging from 7.75% to 9.5%, and were generally paid down by the end of
each accounting period, but were not disclosed to the Company's management.
The largest aggregate amounts outstanding under the Immucor GmbH loans were
$29,600 in fiscal 1994, $290,000 in fiscal 1995, $669,000 in fiscal 1996 and
$1,311,000 in fiscal 1997. At May 31, 1997, the outstanding amount under
the Immucor GmbH loan was approximately $1,300,000, and at May 31, 1998 the
aggregate amounts receivable were approximately $528,000.
Mr. Wilms and his family granted liens on certain property owned by them to
collateralize the loans from the Company. Since May 31, 1998 the Company
arranged the sale of some of the collateral bringing the aggregate amount
payable to the Company by Mr. Wilms as of July 31, 1998 to approximately
$123,000.
The Company believes it has adequate collateral to extinguish the remaining
debt and, with Mr. Wilm's assistance, is arranging for the liquidation of
this collateral.
In July 1997, Mr. Wilms resigned as a director of the Company and as an
employee of Immucor GmbH, but remained a Managing Director of Immucor GmbH,
with limited authority, through December 31, 1997. Mr. Wilms remained as a
consultant to the Company through December 31, 1997 on European sales and
marketing matters. For these consulting services Mr. Wilms was paid
approximately $75,000.
Mr. Wilms has had no continuing employment or consulting relationship with
Immucor, Inc. or Immucor GmbH since December 31, 1997.
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 Report of
Independent Auditors 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.
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. (incorporated by reference to
Exhibit 10.1-3 to Immucor's Annual Report on Form 10-K for the fiscal year
ended May 31, 1996).
10.1-4 Lease Amendment, dated March 8, 1998, 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).
10.19* Agreement dated April 7, 1998, between the Company and Steven C. Ramsey.
10.20* Agreement dated July 26, 1997 between the Company and Josef Wilms.
21 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP.
27 Financial Data Schedule
*Denotes a management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
The Company did not file a Current Report on Form 8-K during the quarter
ended May 31, 1998.
(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 17, 1998
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 17, 1998
/s/ STEVEN C. RAMSEY
Steven C. Ramsey, Vice President - Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
August 17, 1998
/s/RALPH A. EATZ
Ralph A. Eatz, Director, Vice President - Operations
August 17, 1998
/s/DANIEL T. MCKEITHAN
Daniel T. McKeithan, Director
August 17, 1998
/s/G. BRUCE PAPESH
G. Bruce Papesh, Director
August 17, 1998
Didier L. Lanson, Director
August 17, 1998
Dr. Gioacchino De Chirico, Director, Director of European Operations and
President of Immucor Italia S.r.l.
August 17, 1998
Dennis M. Smith, Jr., MD, Director
August 17, 1998
/s/Joseph E. Rosen
Joseph E. Rosen, Director
August 17, 1998
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. (incorporated by reference to
Exhibit 10.1-3 to Immucor's Annual Report on Form 10-K for the fiscal year
ended May 31, 1996).
10.1-4 Lease Amendment, dated March 8, 1998, 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).
10.19* Agreement dated April 7, 1998, between the Company and Steven C.
Ramsey.
10.20* Agreement date July 26, 1997, between the Company and Josef Wilms.
21 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP
27 Financial Data Schedule
*Denotes a management contract or compensatory plan or arrangement.
EXHIBIT 10.1-4
FIRST AMENDMENT TO LEASE
STATE OF GEORGIA
COUNTY OF GWINNETT
THIS, FIRST Amendment to Lease, made and entered into this 8th day of
March, 1998 by and between CROCKER REALTY, L.P., successor to Connecticut
General Life Insurance Company on behalf of its Separate Account R,
hereafter referred to as "Lessor" and Immucor , Inc. hereafter referred to
as "Lessee";
WITNESSETH
WHEREAS, Lessor and Lessee entered into a Lease Agreement dated
February 2, 1996 for the Premises located at Suite 600 at 3130 Gateway Drive,
and Suite 400, 450, and 500 at 3150 Gateway Drive, Norcross, Georgia 30071
containing 47,452 square feet (hereinafter referred to as "Lease");
NOW THEREFORE, in consideration of the Premises, the sum of ten and no/100
dollars ($10.00) in hand paid by Lessee to Lessor, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. EXTENSION
In further reference to Section 2 of the Lease, the Lease shall be extended
for twenty four (24) months from May 1, 2001 to April 30, 2003.
2. PREMISES
As of March 1, 1998, the Premises shall be expanded to include 6,238
rentable square feet in Suite 600 at 3150 Gateway Drive. The new size of
the Premises shall be 53,690 rentable square feet.
3. BASE RENT
In further reference to Section 3 and Special Stipulation 36 of the
original Lease, as of March 1, 1998 Base Rent shall be paid by Lessee to
Lessor for the entire Premises (53,690 rsf) per the following schedule:
Base Rent Schedule
Months PRSF Monthly Annum
3/01/98 to 4/30/98 6.83 $30,558.56 $366,702.70
5/01/98 to 4/30/99 7.17 $32,079.78 $384,957.30
5/01/99 to 4/30/2000 7.46 $33,362.97 $400,355.59
5/01/2000 to 4/30/2001 7.76 $34,697.48 $416,369.82
5/01/2001 to 4/30/2002 8.07 $36,085.38 $433,024.61
5/01/2002 to 4/30/2003 8.39 $37,528.80 $450,345.59
The Base Rent payments are due without deduction, notice or set off, in
advance on the first day of each month throughout the term of this Lease.
The aforesaid payments of rent are to be made to Lessor at:
Crocker Realty, L.P.
c/o Crocker Realty Management, Inc.
433 Plaza Real
Suite 335
Boca Raton, Florida 33432
or any other place which Lessor, from time to time might designate.
FIRST AMENDMENT TO LEASE
IMMUCOR, INC.
PAGE TWO
4. CONDITION OF PREMISES
Lessee accepts the Premises in "as is "condition.
5. IMPROVEMENT ALLOWANCE
Lessor shall provide an Allowance of Sixty Two Thousand Three Hundred Eighty
Dollars ($62,380.00) to renovate the Premises according to the Provisions of
Exhibit A.
6. LIENS
As stated in Section 16 of the Lease, in no event shall any work be done
which would allow a lien to be placed against the Premises, any such lien
shall create a default of Lessee under this Lease if not removed or lawfully
bonded with ten (10) calendar days following Lessor's discovery thereof.
7. DELETION OF SECTIONS 38 AND 39
Section 38, Renewal Option, and Section 39, Right of First Offer, are hereby
deleted from this Lease and shall be of no further force or effect.
Except as amended hereby, The lease shall remain in full force and effect
and same is hereby ratified and confirmed.
IN WITNESS WHEREOF, the parties hereto have set their hand and seal this
day and year first above written.
LESSOR:
Signed, Sealed and delivered in the CROCKER REALTY, L.P. a Delaware
presence of: limited partnership
BY: CRT-GP, LLC, a Delaware
limited liability company,
its sole general partner
BY: Crocker Operating Partnership,
L.P., a Delaware Limited
partnership, its sol member
BY: Crocker Realty Trust, Inc., a
Witness:__________________________ Maryland corporation, its sole
generl partner
Witness:_________________________ BY:_______________________
Name: Christopher L. Becker
Title: Vice President
[CORPORATE SEAL]
LESSEE:
IMMUCOR, INC.
Witness:_________________________ BY:____________________________________
TITLE: ________________________________
Witness: ________________________ [SEAL]
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 7th day of April, 1998, by and
between Immucor, Inc., a Georgia corporation with its executive offices at
3130 Gateway Drive, Norcross, Georgia 30071 (herein referred to as
("Employer"), and Steven C. Ramsey, residing at 5710 Chestatee Landing,
Gainesville, Georgia 30506 (herein referred to as "Employee").
WITNESSETH
WHEREAS, the parties hereto desire to enter into an agreement for Employer's
employment of Employee on the terms and conditions hereinafter states.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereby agree as follows:
1. Relationship Established
Employer hereby employs Employee as Vice President and Chief Financial
Officer of Employer to perform the services and duties normally and
customarily associated with Employee's position, such duties as specified
in the Employer's bylaws, and such other duties as may from time to time
be specified by the Employer's Board of Directors. Employee will be
retained in this position during the term of his employment under this
Employment Agreement, and hereby agrees to perform such services and
duties in this capacity.
2. Extent of Services
Employee shall devote substantially all his business time, attention skill
and efforts to the performance of his duties hereunder, and shall use his
best efforts to promote the success of the Employer's business.
3. Term of Employment
Employee's employment hereunder shall commence on April 20, 1998
(hereinafter called the "Effective Date," and shall continue for a period
of eighteen (18) months, unless sooner terminated by the first to occur of
the following:
(a) The death or complete disability of Employee. "Complete disability",
as used herein, shall mean the inability of Employee, due to illness,
accident or any other physical or mental incapacity, to perform the
services provided for hereunder for an aggregate of 12 months during the
term hereof.
(b) The discharge of Employee by Employer for Cause. Employee's discharge
shall be "with cause" if due to any of the following:
(i) Employee's dishonesty,
(ii) An act of defalcation committed by Employee,
(iii) Employee's continuing inability or refusal to perform reasonable duties
assigned to him hereunder (unless such refusal occurs following the
occurrence of an event described in paragraph 7 hereof) or
(iv) Employee's moral turpitude.
Disability because of illness or accident or any other physical or mental
disability shall not constitute a basis for discharge for Cause.
(c) The discharge of Employee by Employer without Cause (which shall be
deemed to have occurred if Employee's employment hereunder terminates under
paragraph 7 hereof).
(d) At Employee's request and with the express prior written consent of
Employer.
(e) At Employee's election upon 120 days notice (or such lesser notice as
Employer may accept), without the express prior written consent of Employer.
(f) At the end of the term of the Agreement, or any extension thereof, if
the either the Employer or Employee gives 60 days notice to the other of
non-renewal of the Agreement.
If not sooner terminated under the provisions of paragraphs 3(a) through
3(f) above, the term of Employee's employment hereunder shall automatically
renew for an additional periods of eighteen (18) months.
4. Compensation
(a) Subject to the provisions of subparagraph (e) of this paragraph 4,
Employer will pay to Employee as base compensation for the services to be
performed by him hereunder the base compensation specified on Schedule A
attached hereto. Schedule A may be amended from time to time upon the
parties' revision and reexecution thereof, whereupon the amended Schedule A
shall be attached hereto; provided, however, the amended Schedule A shall
be effective upon such reexecution, whether or not it is attached hereto.
(b) The Employee may be entitled to additional bonus compensation as may be
determined by the Board of Directors of Employer from time to time, any such
determination to be final, binding, conclusive on Employee and all other
persons.
(c) The Employee shall be granted options to acquire 30,000 shares of the
common stock of Employer, at an exercise price of the market price on the
date of execution of the Employment Agreement pursuant to Employer's 1995
Stock Option Plan (the "Plan"). Such options shall vest, if at all, in
accordance with following schedule, and shall otherwise be subject to the
terms and conditions of a stock option agreement and the Plan, as the Board
of Directors of Employer determines:
# of Shares Vesting Date
15,000 April 20, 2000
7,500 April 20, 2001
7,500 April 20, 2002
(d) In the event Employee's employment shall terminate under paragraph 3(c)
hereof, the Employee shall be paid an amount equal to one and a half times
the annual base compensation payable to Employee under Schedule A in
accordance with the payment schedule set forth on Schedule A, to be paid
over the 18 month period following termination; provided, however, that if
at any time during such 18-month period Employee fails to perform fully
paragraph 8 hereof, Employee shall immediately forfeit and refund to
Employer any portion of such compensation payable to Employee hereunder for
that portion of the period beginning upon the failure to perform fully
paragraph 8 and ending upon the end of the eighteen month period.
(e) In the event Employee's employment shall terminate under Section 3(a),
3(b), 3(d), 3(e) or 3(f) hereof, all of Employer's obligations to Employee
hereunder will cease automatically and Employee shall only be entitled to
compensation accrued through the date of termination.
5. Expenses
Employee shall be entitled to receive reimbursement for, or payment directly
by the Employer of, all reasonable expenses incurred by Employee at the
request of the Employer in the performance of his duties under this
Agreement, provided that Employee accounts therefor in writing and that
such expenses are ordinary and necessary business expenses of the Employer
within the meaning of Section 162 of the Internal Revenue Code of 1986 as
amended.
6. Insurance and Other Fringe Benefits
Upon completion of 90 days employment hereunder, Employer will provide
Employee with (a) life insurance, health insurance, dental insurance
long-term disability insurance, paid vacations and other fringe benefits in
the form and in dollar amounts substantially equivalent to the benefits
provided to the Employer's other officers, and (b) $2,500 annually for
additional life insurance premiums. Employee shall be eligible to
participate in Employer's 401(k) Plan beginning on the first day of the
quarter following completion of one (1) year of employment hereunder
(April 1, 1998 begins a new quarter). In addition, for the 90-day period
before Employee begins receiving insurance and benefits hereunder, Employer
shall pay Employee's COBRA costs in the amount agreed upon before Employee's
employment begins hereunder.
7. Termination of Employment Upon Sale or Change of Control of Employer's
Business
Notwithstanding anything to the contrary contained in this Agreement, either
Employer or Employee may terminate Employee's employment hereunder if any of
the following events occur:
(a) Sale of Employer's Assets. The sale of all or substantially all of
Employer's assets to a single purchaser or group of associated purchasers,
whether in a single transaction or a series of related transactions.
(b) Sale of Employer's Shares. The sale, exchange, or other disposition, in
one transaction, or in a series of related transactions, of twenty percent
(20%) or more of Employer's outstanding shares of capital stock.
(c) Merger or Consolidation. The merger or consolidation of Employer in a
transaction or series of transactions in which Employer's shareholders
receive or retain less than fifty percent (50%) of the outstanding voting
shares of the new or surviving corporation.
(d) Other Changes in Control. The occurrence of any change in control of
the Employer within the meaning of federal securities law.
A termination under this paragraph 7 shall be deemed to be a termination
under paragraph 3 (c) hereof for all purposes hereunder.
8. Prohibited Practices
During the term of Employee's employment hereunder, for a period of three
years after such employment is terminated for any reason, and for any
additional period that Employer compensates Employee under paragraph 4(b),
in consideration of the compensation being paid to Employee hereunder,
Employee will not, except with prior written consent of Employer, or except
in direct performance of Employee's duties hereunder:
(a) furnish anyone with the name of, or any list or lists of customers of
Employer or utilize such lists of information himself.
(b) furnish, use, or divulge to anyone any information acquired by him from
Employer relating to Employer's methods of doing business, price structures,
systems of operation, "know-how", designs, forms or any other confidential
information.
(c) contract directly or indirectly any customer of Employer whose name was
divulged to him by Employer.
(d) hire for any other Employer any employee of Employer or directly or
indirectly cause any such employee to leave his or her employment in order
to work for another.
(e) serve as principal, partner, officer or director of any business
competitive with the business of Employer.
(f) serve as an employee, consultant or contractor of any business
competitive with the business of Employer, unless such service involves
activities that are substantially unlike and unrelated to any of the
activities conducted by Employee during the term of his employment with
Employer.
9. Waiver of Provisions
Failure of either party to insist, in one or more instances, on performance
by the other in strict accordance with the terms and conditions of this
Agreement shall not be deemed a waiver or relinquishment of any right
granted hereunder or of the future performance of any such term or condition
or of any other term of condition of this Agreement, unless such waiver's
contained in a writing signed by the party against whom the waiver or
relinquishment is sought to be enforced.
10. Notices
Any notice or other communication to a party required or permitted hereunder
shall be in a writing and shall be deemed sufficiently given when received
by the party (regardless of the method of delivery), or if sent by
registered or certified mail, postage and fees prepaid, addressed to the
party as follows, on the third business day after mailing:
(a) If to Employer: 3130 Gateway Drive
Norcross, GA 30071
(b) If to Employee: 5710 Chestatee Landing
Gainesville , GA 30506
or in each case to such other address as the party may time to time
designate in writing to the other party.
10. Governing Law
This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Georgia.
11. Modification and Amendment
This Agreement contains the sole and entire agreement between the parties
and supersedes all prior discussions and agreements between the parties with
respect to the matters addressed herein, and any such prior agreement shall,
from and after the date hereof, be null and void. This Agreement and the
attached Schedules shall not be modified or amended except by an instrument
in writing signed by the parties hereto.
12. Parties Benefited
This Agreement shall insure to the benefit of, and be binding upon,
Employee, his heirs, executors and administrators, and Employer, its
subsidiaries, affiliates, and successors.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first mentioned above.
IMMUCOR, INC. EMPLOYEE
By: By:
Edward L. Gallup, President Steven C. Ramsey
SCHEDULE A
EMPLOYMENT AGREEMENT DATED _________________, 1998 BY AND BETWEEN
IMMUCOR, INC. AND STEVEN C. RAMSEY
Base compensation: $170,000.00 a year payable in 26 installments every two
weeks.
Immucor, Inc. Employee
By: By:
Edward L. Gallup, President Steven C. Ramsey
Date: Date:
(This Schedule A supersedes and replaces any Schedule A previously executed
by the parties hereto.)
EXHIBIT 10.20
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement"), is made and entered into as of
26 July 1997, by and between IMMUCOR, INC., whose address is 3130 Gateway
Drive, Norcross, Georgia 30091, USA, and JOSEF WILMS, whose address is
Sallfeldener Straae 38, 63322 R"dermark, Germany (hereinafter "Consultant").
Section 1
SCOPE OF SERVICES
1.1 Engagement. Immucor, Inc. hereby engages Consultant to provided
consulting services to Immucor, Inc. under terms of this Agreement, and
Consultant hereby accepts such engagement.
1.2 Services. Consultant will provide consulting services requested by
Edward L. Gallup, President of Immucor, Inc., related to the domestic and
international sales and marketing of products by Immucor, Inc. and its
German subsidiary, Immucor Medizinische Diagnostik GmbH (hereinafter
"Immucor GmbH"). These activities shall be performed under the direct
supervision of Mr. Gallup. In addition, Consultant shall keep
Michael Lichtner, Managing Director of Immucor GmbH, closely informed of
all of Consultant's activities related to Immucor GmbH. If the services
requested cannot be completed during the Term of this Agreement, Consultant
agrees to cooperate with Immucor, Inc. to permit an orderly turnover and
transition of unfinished business, which will be conducted in a manner that
reflects favorably on Immucor, Inc. and its business.
1.3 Limitation of Authority. Consultant will continue externally as a
Managing Director (Geschaftsfuhrer) of Immucor GmbH and will serve
internally as a Deputy Managing Director (Stellvertretender Geschaftsfuhrer)
for the Term of this Agreement. Other than the consulting services
described in Section 1.1, which will be performed by Consultant in
accordance with the terms of this Agreement, all activities of Consultant
related to the business of Immucor, Inc. or Immucor GmbH must be approved
in writing by another Managing Director of Immucor GmbH.
1.4 Conduct of Services. All work shall be performed in a professional
manner in accordance with applicable professional requirements and ethical
considerations.
1.5 Time of Work. Consultant shall have the right to determine his own
work schedule in coordination with Mr. Gallup.
1.6 Place of Work. Consultant will perform his work under this Agreement
at Immucor, Inc.'s place of business, Immucor GmbH's place of business, or
elsewhere as mutually agreed by Consultant and Mr. Gallup.
Section 2
TERM AND TERMINATION
2.1 Term. The term of Consultant's engagement under this Agreement shall
commence on the date set forth above and shall continue until the close of
business on 31 October 1997 (the "Term"). If Consultant's debts to Immucor,
Inc. and Immucor GmbH are paid in full by this date, the Term will be
automatically extended until 31 December 1997.
2.2 Termination. Consultant's engagement under this Agreement will
terminate at the end of the Term, as it may be extended. In addition,
Consultant's engagement under this Agreement may be terminated by
Immucor, Inc. upon written notice to Consultant for proper cause. For
this purpose, proper cause would include, without limitation, a material
failure or serious delay in Consultant's efforts, dishonesty, or similar
major problems. Upon any such termination, all obligations of Immucor, Inc.
to Mr. Wilms shall cease.
Section 3
FEES AND EXPENSES
3.1 Fees. Consultant will be paid fees of DM [27.000] per month for the
term of this Agreement, such fees to be paid on completion of each month's
services; provided, however, Consultant and Immucor, Inc. agree that
Immucor, Inc. will retain DM 10.000 of that amount each month and apply it
to Consultant's debts to Immucor, Inc.
3.2 Expenses. Immucor, Inc. shall reimburse Consultant for expenses
approved by Immucor, Inc. that arise in the exercise of his duties in the
regular course of his engagement under this Agreement, including travel and
hospitality expenses. Before the 15th day of every calendar month
Consultant shall give an account of the expenses for the month before,
enclosing adequate receipts or records, or otherwise in accordance with tax
laws and rules.
3.3 Car. For the term of Consultant's engagement hereunder Immucor, Inc.
will make a BMW 850 available to Consultant to use for purposes of
fulfilling his obligations under this Agreement. He may also use the car
for private purposes up to a maximum of 10.000 kilometers per annum, pro
rated for the term of Consultant's engagement hereunder.
3.4 No Immucor GmbH Obligations. The parties agree that before 26 July 1997
Consultant was an employee of Immucor GmbH under an Employment Agreement
dated 12 September 1990; that Consultant resigned from that position on
25 July 1997 and the Employment Agreement was canceled on that date; and
that Immucor GmbH has no further obligations to Consultant under the
Employment Agreement or for any other reason.
Section 4
RESPONSIBILITIES OF CONSULTANT FOR TAXES AND OTHER MATTERS
As an independent contractor, Consultant shall pay and report all income
taxes and social security obligations applicable to Consultant under this
Agreement.
Section 5
CONFIDENTIALITY; RIGHTS IN WORK PRODUCT
5.1 Confidentiality. Except as required to perform his duties for
Immucor, Inc. under this Agreement, Consultant shall not use or disclose
any confidential information of Immucor, Inc., Immucor GmbH or any related
company, whether of a technical or commercial nature. This restriction
shall apply during and after the Term of this Agreement. In case of any
material violation of the obligations of this section, Consultant shall pay
a fine of DM 50.000 to Immucor, Inc. Immucor, Inc. retains the right, in
addition, to recover any damages.
5.2 Work Product. All intellectual property (inventions, discoveries,
trade secrets, trademarks and the like) conceived or developed by Consultant
and related to Immucor, Inc.'s business (including but not limited to the
business of Immucor GmbH) shall be the sole property of Immucor, Inc. To
the fullest extent permitted by applicable law, all such intellectual
property shall be considered works made for hire, and Immucor, Inc. shall
be entitled to original ownership of them. Consultant hereby assigns, and
agrees to assign, to Immucor, Inc. all of his rights in such intellectual
property; and Consultant agrees to assist Immucor, Inc. in every reasonable
way to obtain, perfect, and enforce Immucor, Inc.'s rights in such
intellectual property.
Section 6
RESTRICTIONS
6.1 Restraint of Competition. During the Term of this Agreement and for
a period of two years after the termination of Consultant's engagement under
this Agreement, Consultant shall not, directly or indirectly: engage in
competition with Immucor, Inc., Immucor GmbH or any related company;
participate directly or indirectly in a competitor; or support the
activities of a competitor. This section shall be interpreted broadly to
cover every business relation between Consultant and a competitor falling
within the normal business scope of Immucor, Inc., Immucor GmbH and related
companies, whether or not the relation results in the strengthening of the
competitive position of a competitor. These restrictions include a
prohibition on soliciting any customers of Immucor, Inc., Immucor GmbH or
any related company, except as necessary to provide consulting services
under this Agreement. In case of any material violation of the obligations
of this section, Consultant shall pay a fine of DM 50.000 to Immucor, Inc.
Immucor, Inc. retains the right, in addition, to recover any damages.
6.2 No Recruitment of Personnel. Consultant agrees not to recruit, or to
provide assistance to others in recruiting, any personnel of Immucor, Inc.,
Immucor GmbH or any related company during the Term of this Agreement and
for a period of one (1) year after termination of Consultant's engagement
under this Agreement for any reason.
Section 7
MISCELLANEOUS
7.1 Governing Law. This Agreement and the rights of the parties hereunder
shall be construed under and governed by the laws of Germany.
7.2 Independent Contractors. The parties are and shall be independent
contractors to one another. Nothing in this Agreement shall be interpreted
as creating or establishing an agency, partnership, joint venture or the
relationship of employee and employer between Consultant and Immucor, Inc.,
Immucor GmbH or any related company.
7.3 Notices. All notices required or permitted hereunder shall be in
writing addressed to the respective parties as set forth herein, unless
another address shall have been designated, and shall be delivered by hand
or by registered or certified mail, postage prepaid.
7.4 Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto and supersedes all prior representations, proposals,
discussions, and communications, whether oral or in writing. This Agreement
may be modified only in writing and shall be enforceable in accordance with
its terms when signed by the party sought to be bound.
7.5 Translations. If any conflict in the interpretation of this Agreement
arises between the English language version of this Agreement and any
translation thereof, the English language version of this Agreement shall
control.
The parties have executed and delivered this Agreement as of the date and
year first written above.
IMMUCOR, INC.
By: /s/Edward L. Gallup
Edward L. Gallup
President
/s/Josef Wilms
JOSEF WILMS
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
Dominion Biologicals Limited Canada
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 13, 1998, except for the last two
sentences of the fourth paragraph of Note 5 as to which the date is
July 31, 1998 with respect to the consolidated financial statements of
Immucor, Inc. in this Annual Report (Form 10-K).
Ernst & Young LLP
Atlanta, Georgia
August 11, 1998
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