FORM 10-Q
Securities and Exchange Commission
Washington, D. C. 20549
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: November 30, 1997
OR
_ Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File Number: 0-14820
IMMUCOR, INC.
(Exact name of registrant as specified in its charter)
Georgia 22-2408354
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3130 Gateway Drive P.O. Box 5625 Norcross, Georgia 30091-5625
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (770) 441-2051
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of January 9, 1998: Common Stock, $.10 Par Value - 8,110,671
IMMUCOR, INC.
Condensed Consolidated Balance Sheets
November 30, May 31,
ASSETS 1997 1997
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $14,834,517 $15,718,234
Accounts receivable, net 11,719,401 11,066,519
Accounts receivable, other 1,739,922 1,609,000
Inventories 8,743,173 7,662,764
Income tax receivable 36,870 38,066
Deferred income taxes 357,741 358,470
Other assets 808,642 677,017
Total current assets 38,240,266 37,130,070
Long-term investment 1,000,000 1,000,000
Property and equipment, at cost 10,219,064 8,985,729
less accumulated depreciation (4,236,031) (3,652,419)
5,983,033 5,333,310
Deferred income taxes 23,176 23,176
Other assets, net 696,961 1,401,164
Excess of cost over net tangible
assets acquired, net 11,985,169 12,837,926
$57,928,605 $57,725,646
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Borrowings - bank line of credit $385,175 $487,161
Accounts payable 3,266,301 3,136,117
Income taxes payable 409,064 391,616
Accrued salaries and wages 610,576 695,716
Other accrued liabilities 644,765 551,419
Total current liabilities 5,315,881 5,262,029
Long-term debt 9,978,564 10,665,658
Deferred income taxes 843,482 577,091
Shareholders' equity:
Common stock, $.10 par value 809,417 807,873
Additional paid-in capital 22,259,178 22,502,930
Retained earnings 20,972,986 19,868,924
Foreign currency translation adj. (2,250,903) (1,958,859)
Total shareholders' equity 41,790,678 41,220,868
$57,928,605 $57,725,646
See accompanying notes.
IMMUCOR, INC.
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended Six Months Ended
November 30, November 30, November 30, November 30,
1997 1996 1997 1996
Net sales $10,192,109 $8,357,237 $19,465,588 $16,314,122
Cost of sales 4,761,634 3,520,155 8,609,015 6,658,016
Gross profit 5,430,475 4,837,082 10,856,573 9,656,106
Research and development:
Instrument 56,179 32,776 156,467 51,512
General 151,900 125,366 312,911 259,498
Selling, general & admin. 4,251,331 3,983,983 8,412,310 7,818,703
Total operating expenses 4,459,410 4,142,125 8,881,688 8,129,713
Income from operations 971,065 694,957 1,974,885 1,526,393
Interest income 195,123 203,346 398,496 423,062
Interest expense (152,486) (69,602) (319,101) (145,385)
Other 3,703 15,034 (9,972) (12,960)
Total other 46,340 148,778 69,423 264,717
Income before inc. taxes 1,017,405 843,735 2,044,308 1,791,110
Income taxes 470,998 361,015 940,246 711,222
Net income $546,407 $482,720 $1,104,062 $1,079,888
Net income per common
and common equivalent share $0.06 $0.06 $0.13 $0.13
Weighted average number of common
and common equivalent shares
outstanding 8,568,731 8,619,956 8,484,729 8,623,157
See accompanying notes.
IMMUCOR, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
November 30, November 30,
1997 1996
OPERATING ACTIVITIES:
Net income $1,104,062 $1,079,888
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 703,755 644,169
Amortization 302,726 164,444
Changes in assets and liabilities:
Accounts receivable (652,882) (952,795)
Accounts receivable, other (130,922) -
Income tax receivable 1,196 (2,398)
Inventories (1,080,409) (34,968)
Other current assets (154,385) (469,225)
Accounts payable 130,184 57,123
Income taxes payable 17,448 -
Other current liabilities 274,597 307,358
Cash provided by operating activities 515,370 793,596
INVESTING ACTIVITIES:
Purchase of property and equipment (779,258) (1,648,171)
Decrease in other assets 29,771 8,939
Cash used in investing activities (749,487) (1,639,232)
FINANCING ACTIVITIES:
Borrowings / (repayment) line of credit (101,986) 1,443
Repayment of notes payable (357,419) (669,077)
Exercise of stock options 95,811 4,375
Cash used in financing activities (363,594) (663,259)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (286,006) 258,662
DECREASE IN CASH
AND CASH EQUIVALENTS (883,717) (1,250,233)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 15,718,234 20,533,422
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $14,834,517 $19,283,189
See accompanying notes.
IMMUCOR, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the six month period ended November 30, 1997 are not necessarily indicative
of the results that may be expected for the year ending May 31, 1998. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended May 31, 1997.
2. Inventories are stated at the lower of first-in, first-out cost or
market:
As of November 30, 1997 As of May 31, 1997
Raw materials
and supplies $2,553,267 $2,278,107
Work in process 426,969 669,112
Finished goods 5,762,937 4,715,545
3. Net income per common share:
Net income per common share is computed using the weighted average
number of common shares and dilutive common share equivalents outstanding
during the respective periods. There is no significant difference between
primary and fully diluted per share amounts.
IMMUCOR, INC.
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
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 its Annual Report
on Form 10-K for the fiscal year ended May 31, 1997.
Financial Condition and Liquidity:
As of November 30, 1997, the Company's cash position totaled
$14,834,500. During the six months ended November 30, 1997, the Company
generated cash from operating activities of $515,400, repaid $284,500
(500,000DM) of bank debt in Germany, repaid $72,900 (100,000 CAD) of bank
debt in Canada, and purchased property, plant and equipment of $779,300.
Management believes that the Company's current cash balance, internally
generated funds, and amounts available under the lines of credit are
sufficient to support operations for the foreseeable future. Management
also believes additional credit lines would be available should the need
arise.
Results of Operations:
Net sales
Net sales for the three months ended November 30, 1997 totaled $10,192,100,
an increase of 22% over last year's $8,357,200. Current year three month
results include $1,049,800 in net sales from the operations of Dominion
Biologicals Limited acquired in December 1996. Domestic sales increased
$898,300, most of which is attributed to instrumentation product sales. In
addition, sales of the Company's European subsidiaries, recorded in their
functional currencies, increased 10% over last year's total. However, due to
unfavorable rates of foreign exchange in Europe, when translated into U.S.
dollars, European sales declined.
For the six months ended November 30, 1997, net sales were $19,465,600,
including $2,148,600 in net sales from the operations of Dominion
Biologicals Limited, compared to $16,314,100 in the prior year. As stated
above, European sales in functional currency increased, but, unfavorable
rates of foreign exchange held back sales growth in U.S. dollars.
Gross profit
As a percent of sales, gross profit declined for the three and six
month periods ended November 30, 1997, when compared to the same periods in
1996. In the U.S., the decline in gross profit margin in the current quarter
was partially caused by instrumentation product sales of the IMAGN 2000 and
the DIAS PLUS of approximately $750,000 which were sold at lower gross
profit margins than the Company's reagent products. In addition, the
Company's decision to participate in national account contracts in order to
have a strong domestic presence prior to the release of the ABS2000
contributed to declining gross profit margin.
In the Company's European operations, the reduction in gross profit margin
was principally caused by unfavorable rates of foreign exchange in Europe
which increased the cost of goods purchased in U.S. dollars and sold in
local currencies.
Operating expenses
As compared to the prior year's three and six month periods, research and
development costs increased $49,900 and $158,400, respectively. In the
prior year period, two ABS2000 automated analyzers previously expensed as
contract research and development were sold to the Company's Canadian
distributor, and the sale ($70,000) was recorded as a reduction of research
and development costs. No comparable offset of contract research and
development occurred in the current year. The remainder of the increase is
due to the inclusion of Dominion Biologicals Limited's operating results in
the current year.
Selling, general and administrative expenses for the three and six month
periods ended November 30, 1997 increased $267,300 and $593,600,
respectively, over the same periods last year. The acquisition of Dominion
Biologicals Limited contributed $254,700 and $520,000 in selling, general and
administrative expenses for the current year three and six month periods.
In Europe, selling, general and administrative expense levels as recorded
in functional currencies did not increase. However, due to unfavorable rates
of foreign exchange, when translated into U.S. dollars, spending in Europe
declined. This decline was offset by an increase in selling, general and
administrative expenses in the U.S. for the current year three and six month
periods. This increase was due to staff additions in sales and marketing,
higher shipping charges resulting from increased sales levels and additional
shareholder-related costs.
Interest expense
When compared to the prior year's three and six month periods, interest
expense grew $82,900 and $173,700, respectively. This increase is the
result of the acquisition of Dominion Biologicals Limited which was financed
with the proceeds of a bank loan and the issuance of subordinated promissory
notes.
Income taxes
As a percent of pretax income, income tax expense increased during the
three and six month periods ended November 30, 1997, 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.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The Company has filed the following exhibits with this report:
11.1 Statement re: computation of per share earnings.
27 Financial data schedule.
(b) The Company did not file any reports on Form 8-K during the six months
ended November 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IMMUCOR, INC.
(Registrant)
Date: January 13, 1998
\s\Edward L. Gallup Edward L. Gallup, President
\s\Richard J. Still Richard J. Still, Senior Vice President
- Finance (Principal Accounting Officer)
IMMUCOR, INC.
EXHIBITS
Exhibit 11.1 Statement re: computation of per share earnings.
Primary income per share calculations:
Three Month Six Months Ended
November 30 November 30 November 30 November 30,
1997 1996 1997 1996
Net income $546,407 $482,720 $1,104,062 $1,079,888
Weighted average number of common
shares and common share
equivalents are as follows:
Weighted average common shares
outstanding
8,098,797 8,055,077 8,089,561 8,055,056
Shares issued from assumed exercise of
dilutive options and warrant
469,934 564,879 395,168 568,101
Weighted average number of shares
outstanding (as adjusted)
8,568,731 8,619,956 8,484,729 8,623,157
Net income per common
and common equivalent share
$0.06 $0.06 $0.13 $0.13
Note: shares issued from assumed exercise of options and warrants include the
numberof incremental shares which result from applying the "treasury stock
method" for options and warrants.
IMMUCOR, INC.
EXHIBITS
Exhibit 11.1 Statement re: computation of per share earnings.
(continued)
Fully diluted income per share calculations:
Three Month Six Months Ended
November 30 November 30 November 30 November 30,
1997 1996 1997 1996
Net income $546,407 $482,720 1,104,062 1,079,088
Weighted average number of common
shares and common share
equivalents are as follows:
Weighted average common shares
outstanding
8,098,797 8,055,077 8,089,651 8,055,056
Shares issued from assumed exercise of
dilutive options and warrant
469,934 564,879 395,168 584,396
Weighted average number of shares
outstanding (as adjusted)
8,568,731 8,619,956 8,484,819 8,639,452
Net income per common
and common equivalent share
$0.06 $0.06 $0.13 $0.13
Note: shares issued from assumed exercise of options and warrants include the
number of incremental shares which result from applying the "treasury stock
method" for options and warrants.
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