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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act 1934
Date of Report (Date of earliest event reported) July 29, 1999
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Respironics, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-16723 25-1304989
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State or other jurisdiction Commission IRS Employer
of incorporation File Number identification
Employees
1501 Ardmore Boulevard, Pittsburgh PA 15221-4401
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(Address of principal executive officers) (Zip)
Registrant's telephone number, including area code (412) 731-2100
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(Former name and former address, if changed since last report)
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Item 1. Changes in Control of Registrant
None
Item 2. Acquisition or Disposition of Assets.
None
Item 3. Bankruptcy or Receivership.
None
Item 4. Changes in Registrant's Certifying Accountant.
None
Item 5. Other Events.
In connection with a restructuring of its business, the Company
issued press releases on July 29, 1999 (announcing quarterly
earnings and outlining the details of the restructuring) and
August 19, 1999 (announcing the appointment of a new Chief
Executive Officer). These press releases are included as
exhibits to this filing.
Item 6. Resignation of Registrant's Directors.
None
Item 7. Financial Statements and Exhibits.
Exhibit 99.1: Press Release dated July 29, 1999
Exhibit 99.2: Press Release dated August 19, 1999
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Respironics, Inc.
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(Registrant)
August 23, 1999 /s/James C. Woll
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(Date) (Signature)
James C. Woll
Vice President -
Corporate Controller
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Exhibit 99.1: Press Release dated July 29, 1999
Respironics Reports Fourth Quarter and Annual 1999 Results And Details of
Previously Announced Restructuring
PITTSBURGH, July 29 /PRNewswire/ -- Respironics, Inc. (Nasdaq: RESP - news)
today reported sales and net earnings for the fourth fiscal quarter and year
ended June 30, 1999. Additionally, Respironics provided details of its
restructuring plan previously announced on July 6, 1999. The restructuring is
designed to enhance the company's focus on its customers and core businesses,
improve the overall speed and responsiveness of the company, strengthen the
company's innovative culture and improve profitability through reduced operating
costs.
Fourth Quarter Results
Net sales for the fourth quarter totaled $90.1 million compared with $85.2
million recorded in the fourth quarter a year ago, an increase of 6 percent.
Excluding charges described below for both periods, net income was $5.6 million
for the fourth quarter compared to $5.6 million a year ago. Diluted earnings per
share, excluding charges in both periods, were $0.18 for the fourth quarter, an
increase of 6 percent over last year's fourth quarter earnings of $0.17.
For the year ended June 30, 1999, net sales were $357.6 million compared with
$351.6 million last year. Excluding charges in both periods, net income for the
current year was $27.5 million versus last year's $27.2 million. Diluted
earnings per share, excluding charges in both periods, were $0.86 for the
current year compared with last year's $0.82.
Results for the quarter and year ended June 30, 1999 shown above exclude the
impact of restructuring charges of $2.4 million, or $0.04 per share, and a
previously announced special addition to the Company's allowance for
uncollectible receivables of $5.0 million, or $0.10 per share. Prior year
results shown above exclude the impact of charges related to the Company's
merger with Healthdyne Technologies, Inc., which totaled $3.2 million, or $0.06
per share, for the quarter ended June 30, 1998, and $40.7 million, or $0.87 per
share, for the year ended June 30, 1998. Prior year results also exclude the
impact of costs related to an unsolicited offer by another company to acquire
Healthdyne, which totaled $650,000, or $0.01 per share, for the year ended June
30, 1998.
Restructuring
The company also made known the details of a previously announced restructuring
plan. The company will be structured as four major divisions: homecare;
hospital; asthma/allergy; and international, with a related management
realignment corresponding to the new structure. Additionally, the company will
be closing and downsizing a number of facilities and positioning itself for more
intensive focus on research and development. Specifically, the company will
close its Westminster, Colo., manufacturing facility and its customer
satisfaction centers in the United States, while refocusing its Marietta, Ga.,
manufacturing facilities. The company will open a centralized distribution and
repair center in Youngwood, Pa., within the next sixty days. As a result of this
restructuring, the company will record a pre tax charge of approximately $25.0
million. As noted above, $2.4 million of the restructuring charges are included
in the results for the June 1999 quarter, with the remainder to be recorded over
the next several quarters.
Dennis S. Meteny, president and chief executive officer, announced that his
operating management team will be led by Craig B. Reynolds, who will be assuming
the role of executive vice president and chief operating officer. Mr. Meteny's
other four direct reports will consist of Daniel J. Bevevino as chief financial
officer, Richard A. Gruber in corporate quality assurance, Dorita A. Pishko as
corporate secretary, and Robert D. Crouch as senior vice president of new
ventures and corporate services. Mr. Crouch will now be responsible for new
ventures and corporate services, including legal, human resources, information
technology and government relations.
Mr. Reynolds will be responsible for the day to day operations of all
businesses. He will have four key officers in charge of the operating divisions;
John L. Miclot for homecare; Paul L. Woodring for hospital;
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Susan A. Lloyd for asthma/allergy; and Geoffrey C. Waters for international.
The company also announced that its sales force is now organized and aligned
with the four divisions. The home care sales force, numbering over 100, allows
for significant coverage of the principal home care markets including
obstructive sleep apnea, noninvasive ventilation and oxygen. The company has
formed a hospital sales force from the combination of its previous ventilation
sales specialists and a number of clinical sales people who previously managed
the company's customer satisfaction centers. The hospital sales force will
number over twenty-five and will work closely with Respironics' strategic
hospital distribution partners. The asthma/allergy and international sales
forces have been recently strengthened with the addition of key personnel.
The company has also announced plans to close its Westminster, Colo.,
manufacturing and product design center. The PLV ventilator currently
manufactured in Westminster will be transferred to the company's Murrysville,
Pa., facility. The Marietta, Ga., facility will remain open but will be reduced
in size and will focus on oxygen and monitoring only. All sleep and noninvasive
ventilator product lines will be transferred from Marietta to Murrysville. The
company expects to implement its Demand Flow Technology (DFT) manufacturing
system in Marietta within the calendar year. The company also will close its 19
customer satisfaction centers and transition product service activities to the
new Youngwood, Pa., facility and a newly formed field service organization.
Innovation in the new product development area will continue to be an area of
strategic importance to Respironics. The company will have 118 design engineers
working in various areas of new product development. Engineers will remain
focused on new products and product line extensions in their respective
divisions. Mr. Meteny will increase his involvement with new ventures and the
application of Respironics' technologies to new markets. Mr. McGinnis, the
company's founder and current chairman of the board of directors, will advise
Mr. Meteny with regard to technology issues related to new business.
Overall, general and administrative headcount reductions and those associated
with the changes outlined above amount to approximately ten percent of the
worldwide workforce. The facility changes will reduce overall square footage by
approximately 100,000 square feet; this reduction represents a decrease of over
20 percent of the company's current facility space.
Comments From Management
Dennis S. Meteny, president and chief executive officer, commented on the
restructuring: "In my opinion, focus, speed, innovation and profitability were
the essential elements of Respironics in its early stages when the company's
reputation was built. Our associates recognize the need to increase the
company's performance level and are aware of the tremendous opportunities and
potential both in our current markets and in new markets. We must focus on the
basics of our business and continue to invest in new product research and
development in order to maintain our market leadership. I believe we will emerge
from this challenge stronger than ever and more determined to excel for our
shareholders."
Mr. Meteny added: "We are making significant changes with the expressed intent
of improving focus on our customers while concentrating efforts on new product
development activities. Craig Reynolds' new role will provide us with a single
focal point for operations decision making. John Miclot taking responsibility
for our largest division also provides us with an experienced business leader
who will focus on the considerable opportunities in home care. The new
organization structure, with a reduced number of direct reports for me, will
allow me to focus more directly on the future opportunities and strategic
initiatives of the company. My role in product development will be to create the
appropriate culture that will allow innovation to thrive. I will work with our
management team on projects that go beyond next generation products and into new
areas of opportunity for Respironics."
In closing, Mr. Meteny summarized his thoughts on Respironics' people, his role
as CEO and his vision for the future: "I sincerely regret that the actions we
are taking today will impact some of our people negatively. I do believe that we
have cushioned any effects to these individuals to the best of our ability, and
I know that these actions were necessary for the viability of the company. I
know as well, because I have seen them perform, that Respironics' people are
achievers; they are self-starters. They have various backgrounds from all over
the world and are unified by their strong work ethic, their desire to succeed
and their dedication to serve our customers and patients. Our associates thrive
on challenge and expect
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their job to be a positive experience. My role as the CEO is to ensure that our
culture encourages these self-starters to excel for their own personal benefit
and for the good of the entire team. It is also my role to ensure that our
associates have the opportunity to make an impact and be heard. Respironics has
a unique opportunity to positively affect the lives of millions of people
through innovative products and services, allowing our associates to feel good
about themselves through their accomplishments in the healthcare field. They
understand this opportunity and look forward to Respironics becoming the best
medical device company, and the best place to work, in the world."
Respironics is a leading designer, manufacturer and marketer of technologically
advanced medical devices for use in the home, hospital and alternative clinical
care settings. The company employs almost 1,800 individuals worldwide and has
manufacturing facilities in several domestic and international locations. In
addition to therapy products for obstructive sleep apnea and portable
ventilation, the company's major product lines include monitoring devices for
newborns, sleep diagnostics and a variety of products for the treatment of
respiratory disorders, including asthma management devices.
This press release contains forward-looking statements, including statements
relating to developments in the healthcare industry, third-party reimbursement
policies and practices, future sales of the company's products, new product
development, anticipated cost savings and regulatory requirements, which are
subject to change. Actual results may differ materially from those described in
any forward-looking statements. Additional information on potential factors that
could affect the company's financial results are included in the reports filed
with the SEC, including the reports on Form 10-K, 10-Q and 8-K.
RESPIRONICS, INC. AND SUBSIDIARIES
Condensed Statement of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Year Ended
06/30/99 6/30/98 6/30/99 6/30/98
Sales $90,080 $85,227 $357,571 $351,576
Gross profits 41,787 40,583 171,084 170,926
Restructuring charges 2,415 0 2,415 0
Special addition to
allowance for
uncollectible
receivables 5,000 0 5,000 0
Merger related costs 0 3,248 0 40,751
Costs associated with
an unsolicited offer to
acquire Healthdyne
Technologies 0 0 0 650
Income before income
taxes 1,907 6,150 38,456 3,864
Net Income (loss) 1,132 3,618 23,061 (1,825)
Basic earnings (loss)
per share 0.04 0.11 0.73 (0.06)
Diluted earnings (loss)
per share 0.04 0.11 0.72 (0.06)
Diluted earnings per
share, excluding the
impact of restructuring
charges, the special
addition to allowance
for uncollectible
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receivables, merger
related costs and
costs associated
with the unsolicited
offer to acquire
Healthdyne
Technologies $0.18 $0.17 $0.86 $0.82
Basic shares
outstanding 30,485 32,591 31,521 32,098
Diluted shares
outstanding 30,819 33,220 31,956 33,122
Product Sales Summary
(Unaudited)
(Dollars in thousands)
Three Months Ended Year Ended
06/30/99 6/30/98 6/30/99 6/30/98
Sleep Products $46,220 $44,172 $179,555 $167,725
Respiratory Products 37,004 33,035 146,417 150,328
Asthma, Allergy and
OEM Products 6,856 8,020 31,599 33,523
Total $90,080 $85,227 $357,571 $351,576
Condensed Balance Sheet
(Unaudited)
(Dollars in thousands)
June 30, 1999 June 30, 1998
Cash $23,651 $14,875
Trade Accounts Receivable 99,253 90,985
Inventory 61,212 58,898
Other Current Assets 27,519 29,926
Total Current Assets $211,635 $194,684
Property, Plant and Equipment (net) 62,083 49,742
Other Assets, including Goodwill 77,243 83,676
Total Assets $350,961 $328,102
Current Liabilities $56,300 $57,134
Long Term Obligations and Other 100,140 70,128
Shareholders' Equity 194,521 200,840
Total Liabilities and
Shareholders' Equity $350,961 $328,102
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Exhibit 99.2: Press Release Dated August 19, 1999
Respironics Names James W. Liken Chief Executive Officer, To Succeed
Dennis S. Meteny
PITTSBURGH, Aug. 19 /PRNewswire/ -- Respironics, Inc. (Nasdaq: RESP), a
Pittsburgh-based designer and manufacturer of advanced medical devices, today
named James W. Liken President and Chief Executive Officer to succeed Dennis S.
Meteny.
"Our company initiated a restructuring program in order to position the company
to be increasingly responsive to the changing health care environment and our
customers," said Gerald E. McGinnis, the company's founder and chairman. "Jim
Liken's appointment is an important step in completing the restructuring. We
believe his experience in the marketing, distribution and sales side of the
medical product business and his entrepreneurial spirit will generate the
greatest benefits for our customers, employees and shareholders."
McGinnis called Meteny a "builder" who, during his five-year tenure as chief
executive officer, created a company with the broadest and most complete product
line in the industry while increasing Respironics' revenue five-fold. In doing
so, "Dennis built a manufacturing capability and management team second to
none," McGinnis said.
Liken, 49, is a member of the Respironics board and has advised the company on a
number of marketing and sales strategies as a consultant. "The board knows Jim
very well and Jim knows Respironics," McGinnis said. "Under Jim, we will refocus
our attention on our customers and customer service as never before. "
In 1990, Jim Liken started Liken Home Medical and led his company to become one
of the largest providers of home oxygen, respiratory and medical equipment and
respiratory medications in Western Pennsylvania, eastern Ohio and West Virginia.
In July of 1998 he sold that business to Lincare, Inc. of Clearwater, Fla., and
since then has been a private investor and consultant.
Liken has demonstrated leadership on the national level as a member of the Board
of Directors of the National Association for Medical Equipment Services since
1984. He served as Chairman of that Association from 1987 to 1989 and again from
1997 to 1998. He has served as a consultant to the Japanese Government on home
health care issues. He served as President of the Pennsylvania Association of
Medical Suppliers from 1981 to 1983. Liken is a member of the Business Advisory
Council of the Federal Reserve Bank of Cleveland.
"In my role as a Respironics Director and consultant, I gained familiarity with
the management group and the organization. I look forward to working with the
strong Respironics team," added Liken.
Consistent with the previously announced organization structure, the operating
management team will be led by Craig B. Reynolds as executive vice president and
chief operating officer. Mr. Liken's other direct reports will consist of Daniel
J. Bevevino as chief financial officer, Richard A. Gruber in corporate quality
assurance, Dorita A. Pishko as corporate secretary, and Robert D. Crouch as
senior vice president of new ventures and corporate services.
Mr. Reynolds will be responsible for the day to day operations of all
businesses. Reporting to Craig will be four key officers in charge of the
operating divisions; John L. Miclot for homecare; Paul L. Woodring for hospital;
Susan A. Lloyd for asthma/allergy; and Geoffrey C. Waters for international.
"Jim's successful business career has been focused on marketing, selling and
distributing products and services through home health care organizations to end
users who range from hospitals to individuals," said McGinnis, noting that
almost 70 percent of Respironics' sales are channeled through Home Healthcare
Equipment
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providers in the United States. "Jim understands our customers' needs and we
intend to use his experience to help them to further build their businesses,"
McGinnis said.
Respironics is a leading designer, manufacturer and marketer of technologically
advanced medical devices for use in the home, hospital and alternative clinical
care settings. The company employs almost 1,800 individuals worldwide and has
manufacturing facilities in several domestic and international locations. In
addition to therapy products for obstructive sleep apnea and portable
ventilation, the company's major product lines include monitoring devices for
newborns, sleep diagnostics and a variety of products for the treatment of
respiratory disorders, including asthma management devices.
This press release contains forward-looking statements, including statements
relating to developments in the healthcare industry, third-party reimbursement
policies and practices, future sales of the company's products, new product
development, anticipated cost savings and regulatory requirements, which are
subject to change. Actual results may differ materially from those described in
any forward-looking statements. Additional information on potential factors that
could affect the company's financial results are included in the reports filed
with the SEC, including the reports on Form 10-K, 10-Q and 8-K.
