<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended April 30, 1995
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 0-3717
PURITAN-BENNETT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 44-0399150
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9401 Indian Creek Parkway
Building #40, Suite 300
P.O. Box 25905
Overland Park, Kansas 66225
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code 913-661-0444
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 and 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
As of June 8, 1995, there were 12,822,379 shares of the Company's $1.00 par
value common stock outstanding.
<PAGE>
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements incorporated by
reference to the Puritan-Bennett Corporation First Quarter Report, 1996, have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended April 30,
1995, are not necessarily indicative of the results that may be expected for the
year ended January 31, 1996. 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 January 31, 1995. The Company cannot
predict the actual amounts of revenue and expense that it will recognize for the
year ended January 31, 1996, or for any other future period. Nor can there be
any assurance as to the levels of profitability, if any, that will be
experienced in the year ended January 31, 1996, or in any other future period.
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements.
Company or group of companies for which report is filed:
PURITAN-BENNETT CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited) - Three months
ended April 30, 1995 and 1994 (incorporated herein by reference to the
Puritan-Bennett Corporation First Quarter Report, 1996).
Condensed Consolidated Balance Sheets (Unaudited) - April 30, 1995 and January
31, 1995 (incorporated herein by reference to the Puritan-Bennett
Corporation First Quarter Report, 1996).
Condensed Consolidated Statements of Cash Flows (Unaudited) - Three months ended
April 30, 1995 and 1994 (incorporated herein by reference to the Puritan-
Bennett Corporation First Quarter Report, 1996).
3
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS - APRIL 30, 1995 COMPARED TO APRIL 30, 1994
All tables reflect dollars in millions.
NET SALES
Net sales for the three months ended April 30, 1995 (FY 1996) increased 5%
compared to the three months ended April 30, 1994 (FY 1995). Sales for Q1 1996
grew over 8% from Q1 1995 levels after adjusting for the late FY 1995
discontinuation of certain products and distribution agreements and after taking
into account unusual non-recurring sales in Q1 1995. The following table
reflects sales for the Company's primary business lines:
<TABLE>
<CAPTION>
Percent
Q1 96 Q1 95 Change
----------------------------------
<S> <C> <C> <C>
Puritan $54.1 $50.3 7.6%
Bennett 30.4 30.1 1.0%
----- -----
Total Net Sales $84.5 $80.4 5.1%
===== =====
</TABLE>
The Puritan line includes nearly all of the Company's home care product lines
as well as the complementary medical gas and gas-related equipment and
spirometry product lines. Aero Systems is also included because it shares one of
the Company's larger manufacturing facilities with the Puritan Group and is
relatively small. Puritan's Q1 1996 revenues and orders were up 8% and 4%,
respectively, from Q1 1995.
Two major clinical areas, home oxygen therapy and the diagnosis and treatment
of adult sleep disorders, contributed to the Puritan growth. With respect to the
first major clinical area, the Company believes that the home oxygen therapy
market will continue growing worldwide. With respect to the second major
clinical area of its home care product lines, the Company expects the emerging
field of diagnosing and treating adult sleep disorders to continue growing also.
Recently published research indicates that millions of adults in the United
States suffer chronically from debilitating but treatable breathing disorders
during sleep. The Company believes the prevalence of such disorders is also
widespread in most developed nations. These disorders are only beginning to be
recognized and understood by the medical community and the general population.
Consequently, only a small fraction of people suffering from sleep disorders
have been diagnosed and are being treated today. Therefore, while the market for
such sleep products has grown rapidly in recent years, the Company believes that
most of the market growth lies ahead. With the late January 1994 acquisition of
SEFAM S.A. (Nancy, France), the Company believes it has the second largest share
of the therapeutic portion of the worldwide sleep market.
The aviation portion of Puritan's revenue is up 22% from Q1 1995 while orders
have remained relatively unchanged. The overall increase in the Company's
aviation business is due in part to a growing interest in the offerings of
Airborne Closed Circuit Television (ACCTV(TM)), the Airbus A330/A340 program
and the Sweep-On 2000(R) inflatable harness crew masks.
The Bennett line includes the Company's worldwide critical care ventilator
business, as well as the CliniVision(R) product line in the United States. The
small holter monitoring and international portable ventilator product lines are
also included. Bennett's revenues for Q1 1996 were flat compared to Q1 1995.
This is a result of the Company's decision to discontinue some older products.
The Company believes it remains the worldwide leader in critical care
ventilation. International demand, however, has continued to grow; nearly half
of the revenues from these products now come from international markets. The
level of interest in CliniVision continues to expand as hospitals increasingly
focus on this system as a valuable solution to their cost-containment challenge
and as the Company continues to enhance the CliniVision system.
4
<PAGE>
INTERNATIONAL SALES AND PROFITABILITY
The following tables reflect sales and operating profits from the Company's
United States and foreign geographic segments:
<TABLE>
<CAPTION>
Net Sales Percent Operating Profit Percent
Q1 96 Q1 95 Change Q1 96 Q1 95 Change
------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Operations $65.1 $61.2 6.4% $4.0 $1.5 --
Foreign Operations 19.4 19.2 1.0% 4.9 3.5 40.0%
----- ----- ---- ----
Total $84.5 $80.4 5.1% $8.9 $5.0 78.0%
===== ===== ==== ====
</TABLE>
Operating profit for the Company, as a whole, increased significantly due to
the FY 1995 restructuring and other cost-cutting initiatives.
The following table reflects sales by customer location:
<TABLE>
<CAPTION>
Net Sales Percent of Sales
Q1 96 Q1 95 Q1 96 Q1 95
----------------------------------
<S> <C> <C> <C> <C>
Customers Within the U.S. $55.6 $51.4 65.8% 63.9%
Customers Outside the U.S. 28.9 29.0 34.2% 36.1%
----- ----- ------ ------
Total Net Sales $84.5 $80.4 100.0% 100.0%
===== ===== ====== ======
</TABLE>
GROSS PROFIT
The gross profit percentage for Q1 1996 improved from Q1 1995. This
improvement is the result of restructuring actions taken late in FY 1995.
<TABLE>
<CAPTION>
Percent
Q1 96 Q1 95 Change
------------------------
<S> <C> <C> <C>
Gross Profit $36.1 $33.8 6.8%
Gross Profit Percentage 42.7% 42.0% --
</TABLE>
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses for Q1 1996 decreased approximately 6%
from Q1 1995. This decrease is a result of restructuring and other cost-cutting
actions taken in late FY 1995.
<TABLE>
<CAPTION>
Percent
Q1 96 Q1 95 Change
------------------------
<S> <C> <C> <C>
Selling and Administrative Expenses $22.5 $23.9 (5.9)%
</TABLE>
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses for Q1 1996 decreased 2% from Q1 1995. The
decrease is not significant. Research and development continues across all
product lines at levels the Company considers appropriate to provide long-term
growth.
<TABLE>
<CAPTION>
Percent
Q1 96 Q1 95 Change
------------------------
<S> <C> <C> <C>
Research and Development Expenses $ 4.7 $ 4.8 (2.1)%
</TABLE>
5
<PAGE>
COST-CUTTING INITIATIVES INCLUDING RESTRUCTURING
As part of the Company's plan to enhance shareholder value, the Company
implemented a strategic cost-cutting initiative in FY 1995 that is expected to
lower overhead and other expenses while preserving growth potential. This plan
included a restructuring for which charges of $2.7 million were recorded in FY
1995. The $2.7 million represents severance payments and other costs of
implementing a near 6% reduction in workforce. In addition to the restructuring,
the Company sold its airplane and reduced the matching contribution rate
regarding its 401(k) plan. Operational changes resulting in significant freight
savings, the scheduled phasing in of a new proportional solenoid valve for the
7200/R/ Series ventilator and the scheduled transfer of the spirometry product
line to the Company's facility in Mexico from its facility in Ireland are also
included in the Company's cost-cutting initiatives. The Company also recorded
charges totaling $.7 million that represent non-restructuring actions associated
with the cost-cutting initiative. These actions primarily include facility
consolidations and a loss on the sale of the Company's airplane. The accrued
liability associated with this initiative was approximately $.9 million at April
30, 1995. The Company expects to pay this amount out over Q2 and Q3 of FY 1996.
As of April 30, 1995, approximately $1.2 million relative to the FY 1994
restructuring remained in accrued liabilities representing costs necessary to
complete the restructuring plan in an orderly and effective manner. This amount
is expected to be disbursed primarily over Q2 and Q3 of FY 1996.
OTHER EXPENSE (INCOME)
Other expense in Q1 1996 increased from Q1 1995. Interest expense increased
by $.4 million due to higher levels of debt in Q1 1996 as well as an overall
increase in the Company's average interest rate. The Company recorded final
charges of $.2 million for obligations associated with a FY 1995 unsolicited
offer to acquire the Company. This charge was to adjust the final calculation of
the investment banking fee. The Company recorded a gain on the sale of certain
assets in the amount of approximately $.7 million in Q1 1995 versus a loss of
approximately $.1 million in Q1 1996. This was offset in Q1 1996 by the effect
of currency gains. The Company recorded currency gains of $.5 million in Q1 1996
versus a loss of $.1 million in Q1 1995. These transactions were included in
Other Expense (Income), net.
<TABLE>
<CAPTION>
Percent
Q1 96 Q1 95 Change
--------------------------
<S> <C> <C> <C>
Interest Income $ -- -- --
Interest Expense 1.6 1.2 33.3%
Costs Associated With an Unsolicited Offer
To Acquire the Company .2 -- --
Other Expense (Income), net (.4) (.8) (50.0)%
---- ----
Total Other Expense (Income) $1.4 $ .4 --
==== ====
</TABLE>
PROVISION FOR INCOME TAXES
The FY 1996 effective tax rate is 15% versus a U.S. statutory rate of 34%.
This lower rate is due primarily to the interaction of the tax valuation
allowance discussed below and the proportion of earnings generated domestically
versus internationally, which are taxed at foreign statutory rates averaging 12%
in FY 1996. The FY 1995 effective tax benefit rate of 20% was due to non-
deductible amortization combined with losses for which there was no current
benefit.
The Company has net deferred tax assets of $31.2 million partially offset by
a valuation allowance of $21.1 million. The realization of the deferred tax
benefit depends on the Company's ability to generate sufficient U.S. taxable
income (approximately $20 million) in the future. Approximately 65% of the
Company's total temporary differences are expected to reverse in the next two
years. As a result of the restructuring actions taken during FY 1994 and FY
1995, the Company believes it is well positioned to take advantage of this tax
benefit in the future.
If the Company achieves sufficient profitability to use all of the deferred
tax benefit, the valuation allowance will be reduced through a credit to
expense. If the Company is unable to generate taxable income in the future,
increases in the valuation allowance relative to the deferred tax benefit
currently existing will be required through a charge to expense.
6
<PAGE>
FINANCIAL CONDITION
WORKING CAPITAL
The ratio of current assets to current liabilities was 2.2 as of April 30,
1995, up from 2.0 as of January 31, 1995. Working capital increased to $82.2
million from $73.6 million. The primary reasons for the increase included a $1.9
million increase in accounts receivable and a $4.6 million increase in inventory
combined with a $3.4 million decrease in accounts payable. Inventory increased
as a result of the Company's production requirements.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated an increase of $2.7 million in net income in Q1 1996
over Q1 1995. This additional net income was offset by an increase in accounts
receivable of $1.9 million, which is a reflection of higher sales. Inventory
balances also increased approximately $4.6 million due to a planned effort to
raise levels of inventory to meet expected demand. In addition, a $1.9 million
payout from the deferred compensation plan occurred in Q1 1995 for which there
was no comparable event in Q1 1996.
Net cash and cash equivalents used in investing activities decreased when
compared to Q1 1995. This decrease was primarily due to the Q1 1995 final
acquisition payment of $2 million for Hoyer Medizintechnik. The remaining
decrease was the result of a decrease in capital expenditures offset by the sale
of certain fixed assets during Q1 1995. Fiscal year 1996 capital expenditures
are expected to increase relative to prior year levels as the Company continues
to improve and replace existing facilities and other fixed assets as
appropriate.
Net cash and cash equivalents provided by financing activities have increased
when compared to Q1 1995. This is a result of an increase in the number of
employee stock options exercised.
Long-term debt, excluding current maturities, represents 30.5% of long-term
debt plus stockholders' equity at April 30, 1995, and 31.7% at January 31, 1995.
At April 30, 1995, the Company had $35 million of unsecured bank lines-of-credit
available, $18.7 million of which was used.
U.S. HEALTH CARE SYSTEM CHANGES
The U.S. health care system is undergoing significant changes in response to
market forces. The principal change involves increasing utilization of various
forms of managed care. Managed care trends are, in turn, causing hospitals to
consolidate, restructure, and otherwise slow their rate of spending growth. The
Company believes it is seeing the effects of such spending curtailment in its
hospital capital equipment products-principally the 7200 Series ventilatory
system. The Company has not seen any significant adverse effects of managed care
trends on its home care products business and home care may, in fact, be
benefiting from such trends due to its inherent cost-effectiveness relative to
institutional care. However, the Congress, with its Republican majority, is
likely to further emphasize deficit reduction and there can be no assurance that
home care will not be adversely affected by deficit reduction-driven legislative
changes to the Medicare and Medicaid programs.
SUPPLEMENTAL INFORMATION
In order to help stockholders better understand the Company's business, the
Company is providing supplemental information that sets forth its revenues and
earnings before interest, taxes and other unusual charges (EBITOC) in its two
primary business lines - Puritan and Bennett. The information excludes charges
related to an unsolicited offer to acquire the Company and the write down of
certain non-operations related assets, but otherwise includes fully allocated
corporate office expenses.
PURITAN - Puritan includes the home care product lines and certain
complementary products such as medical gases and gas-related equipment and
spirometry. Aero Systems is also included because it shares one of the larger
manufacturing facilities with the Puritan Group and is relatively small.
<TABLE>
<CAPTION>
Q1 96 Q1 95 Q1 94
-----------------------
<S> <C> <C> <C>
Revenue $54.1 $50.3 $45.2
EBITOC $ 5.8 $ 5.3 $ 7.0
% of Revenue 10.7% 10.5% 15.5%
</TABLE>
7
<PAGE>
Puritan now accounts for about two-thirds of the Company's total revenues.
The average annual growth for the five years ended April 30, 1995, was 14%.
Within Puritan, home care product revenues have grown at rates considerably
above the overall Puritan average.
Puritan's EBITOC has been higher in the recent past and, with the recently
implemented cost-cutting initiative, is expected to improve in FY 1996. Fiscal
year 1995 was a year in which the Company placed a very high priority upon
strengthening the operating systems and procedures of Puritan's research and
manufacturing operations, most of which have grown very rapidly in recent years.
This effort increases the Company's ability to continue growing in the future
while maintaining control over the quality of its products during such growth.
At the same time, however, this investment was not without initial higher costs
and lost revenues, both of which compressed EBITOC as a percent of revenue. Part
of this price involved disruptions as the Company installed new operating
systems and procedures and moved into two larger facilities and expanded in a
third. Such disruptions also prevented the Company from keeping pace with
growing customer demand and caused some temporary loss of revenues. As of April
30, 1995, these investment measures resulted in rapid product delivery in all of
the Company's home care product lines.
BENNETT - Bennett includes the Company's critical care ventilator business,
as well as the rapidly growing CliniVision product line in the U.S., and the
small holter monitoring and international portable ventilator product lines.
<TABLE>
<CAPTION>
Q1 96 Q1 95 Q1 94
----------------------
<S> <C> <C> <C>
Revenue $30.4 $30.1 $29.6
EBITOC $ 3.4 $ .5 $(5.2)
% of Revenue 11.2% 1.7% --
</TABLE>
Since FY 1993, Bennett has faced difficult market conditions, particularly in
the U.S. hospital market, resulting in the discontinuation of certain older
products and accessories and the Company's withdrawal from the U.S. portable
ventilator market. In addition, Bennett has also undertaken major initiatives at
significant costs to strengthen the operating systems and procedures of its
research and manufacturing operations.
Bennett's EBITOC as a percent of revenues improved dramatically in Q1 1996
over Q1 1995. Profitability is expected to improve in FY 1996 as a result of
recent cost-cutting actions and revenue growth is expected as a result of a
number of new products and product enhancements recently introduced
internationally and cleared for introduction in the United States.
TOTAL COMPANY - The Company is encouraged by the continued growth of Puritan
and believes both Puritan and Bennett are well positioned to begin returning to
and sustaining higher levels of revenue growth and profitability. Key elements
to increasing profitability are additional new products under development
coupled with maintaining the Company's strong direct sales and service
distribution channels in North America and Europe, which are capable of handling
more volume. The Company expects it may take somewhat longer for Bennett
profitability as a percentage of revenues to reach desired levels.
<TABLE>
<CAPTION>
Q1 96 Q1 95 Q1 94
----------------------
<S> <C> <C> <C>
Revenue $84.5 $80.4 $74.8
EBITOC $ 9.2 $ 5.8 $ 1.8
% of Revenue 10.9% 7.2% 2.4%
</TABLE>
8
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information.
On May 21, 1995, Nellcor Incorporated, a Delaware corporation ("Nellcor"),
Puritan-Bennett Corporation, a Delaware corporation ("Puritan-Bennett"), and
Puma Merger Corporation, a Delaware corporation and wholly-owned subsidiary of
Nellcor ("Sub"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") providing for a merger of Sub with and into Puritan-Bennett. Under
the terms of the Merger Agreement, Puritan-Bennett stockholders will receive
0.88 shares of Nellcor common stock for each outstanding share of Puritan-
Bennett common stock held by them. The merger is intended to qualify as a tax-
free reorganization and a pooling-of-interests for accounting and financial
reporting purposes, and is subject to certain conditions, including the approval
of the respective stockholders of Nellcor and Puritan-Bennett.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits
Exhibits required by Item 601 of Regulation S-K are listed in the
Exhibit Index which is incorporated herein by reference.
b. Reports on Form 8-K
A Current Report on Form 8-K dated May 23, 1995, with respect to
Item 5 relating to the joint press release of Nellcor Incorporated
and Puritan-Bennett Corporation dated May 22, 1995, with respect to
the proposed merger, was filed with the Securities and Exchange
Commission ("SEC") by the Company.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
PURITAN-BENNETT CORPORATION
Registrant
June 9, 1995 /s/ Lee A. Robbins
------------------
Lee A. Robbins, Vice President,
Controller-Chief Financial Officer
(Principal Financial Officer,
Chief Accounting Officer and
duly authorized Officer to execute
on behalf of registrant)
10
<PAGE>
EXHIBIT INDEX
Exhibits filed with Securities and Exchange Commission:
(Number and description of exhibit)
(11) Statement re: Computation of Per Share Earnings.
(19) Puritan-Bennett Corporation First Quarter
Report, 1996.
(27) Financial Data Schedule.
11
<PAGE>
<TABLE>
<CAPTION>
Statement Regarding Computation
Of Per Share Earnings
Quarter Ending
April 30
--------------------------
1995 1994
----------- -----------
<S> <C> <C>
Primary
Weighted average shares outstanding at end of period 12,618,451 12,432,109
Assuming exercise of options reduced by the number of
shares which could have been purchased with the
proceeds from exercise 66,147 56,340
----------- -----------
Shares outstanding for computation of per share earnings 12,684,598 12,488,449
=========== ===========
Net income $ 6,377,000 $ 3,724,000
=========== ===========
Primary earnings per share $0.50 $0.30
=========== ===========
Fully Diluted
Weighted average shares outstanding at end of period 12,618,451 12,432,109
Assuming exercise of options reduced by the number of
shares which could have been purchased with the
proceeds from exercise 129,266 66,766
----------- -----------
Shares outstanding for computation of per share earnings 12,747,717 12,498,875
=========== ===========
Net income $ 6,377,000 $ 3,724,000
=========== ===========
Fully diluted earnings per share $0.50 $0.30
=========== ===========
Reported Earnings Per Share
Based on weighted average shares at the end of the period $0.51 $0.30
=========== ===========
</TABLE>
The company does not meet the 3% dilution test contained in Accounting
Principles Board Opinion #15, therefore disclosure of diluted earnings per share
on the face of the income statements is not required.
12
<PAGE>
FY 1996 FIRST QUARTER REPORT
LETTER TO OUR STOCKHOLDERS
We are providing you this First Quarter Report in a new format in a
continuing effort to deliver timely information at less expense. We hope you
will be pleased with our efforts.
The Company reported record earnings of $6,377,000 or $.51 per share (up 70%)
on revenues of $84,493,000 (up 5%) for the first quarter ending April 30, 1995.
A final charge of $.2 million for obligations associated with Thermo Electron
Corp.'s unsolicited tender offer should bring this matter to a close
financially. Without this charge, earnings per share for the quarter would have
been $.52, up 73% over the same period last year.
The Company is pleased with the results, which demonstrates that the
previously announced cost reduction program is very much on track. Profitability
was well balanced as earnings before interest and taxes were in the 10% to 11%
of revenues range for both the Puritan and Bennett lines.
During May, the Company launched an important new liquid oxygen system
product and related marketing program that are part of a larger strategy to help
providers of home oxygen therapy reduce their total costs significantly by
substituting the Company's equipment for their direct labor, distribution, and
oxygen costs. This strategy is discussed at some length in the Company's FY 1995
Annual Report and is expected to benefit both the Company's liquid oxygen system
and oxygen concentrator businesses.
In addition, the Company has a large number of sleep disorder products
scheduled for U.S. and international market introduction beginning this month
and continuing throughout the remainder of the year. With a productive R&D
program in place and a busy new product introduction schedule both this year and
next, the Company looks for faster revenue growth ahead.
/s/ Burton A. Dole Jr.
Burton A. Dole Jr.
Chairman, President and
May 12, 1995 Chief Executive Officer
INCOMING ORDERS, NET SALES ($ MILLIONS) AND NET INCOME (LOSS) PER SHARE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FY 1995 FY 1996
----------------------------------- -------
Apr.30 July 31 Oct. 31 Jan.31 Apr. 30
------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
PURITAN - Orders $52.1 $55.7 $53.6 $54.4 $54.2
Net Sales 50.3 52.9 56.2 55.4 54.1
BENNETT - Orders 28.0 26.5 29.4 37.7 27.3
Net Sales 30.1 31.1 27.2 32.8 30.4
TOTAL - Orders $80.1 $82.2 $83.0 $92.1 $81.5
Net Sales 80.4 84.0 83.4 88.2 84.5
BACKLOG INCREASE
(DECREASE) $(0.3) $(1.8) $(0.4) $ 3.9 $(3.0)
NET INCOME (LOSS) PER SHARE $ .30 $ .34 $(.05) $ .08 $ .51
- --------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
PURITAN-BENNETT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)
Dollars in thousands, except per share data
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30
1995 1994
-------------------------
<S> <C> <C>
Net Sales $ 84,493 $ 80,408
Cost of Goods Sold 48,424 46,617
----------- -----------
Gross Profit 36,069 33,791
Selling and Administrative Expense 22,508 23,918
Research and Development Expense 4,669 4,815
----------- -----------
Operating Profit 8,892 5,058
Interest Expense 1,616 1,216
Costs Associated with an Unsolicited Offer
to Acquire the Company 200 --
Other Expense (Income), net (427) (812)
----------- -----------
Income Before Income Taxes 7,503 4,654
Provision for Income Taxes 1,126 930
----------- -----------
Net Income 6,377 3,724
=========== ===========
Weighted-Average Shares Outstanding 12,618,451 12,432,109
Net Income Per Common Share $ .51 $ .30
=========== ===========
Dividends Declared Per Share $ .03 $ .03
=========== ===========
</TABLE>
14
<PAGE>
PURITAN-BENNETT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED)
Dollars in thousands, except per share data
<TABLE>
<CAPTION>
APRIL 30 January 31
1995 1995
--------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,162 $ 2,802
Trade notes and accounts receivable, net 75,907 73,346
Inventories:
Finished goods 21,906 18,714
Work in process 5,887 5,746
Raw materials and supplies 38,771 37,369
-------- --------
66,564 61,829
Less excess FIFO cost over LIFO cost (4,450) 4,288
-------- --------
62,114 57,541
Prepaid expenses and other 4,141 4,416
Deferred income tax benefits 6,610 6,628
-------- --------
Total current assets 149,934 144,733
Plant and Equipment 171,814 171,140
Less accumulated depreciation and amortization 80,511 78,780
-------- --------
91,303 92,360
Other Assets, net 36,415 36,042
-------- --------
Total Assets $277,652 $273,135
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 18,700 $ 18,004
Trade accounts payable 13,198 16,619
Employee compensation, payroll taxes and withholdings 7,452 8,575
Accrued self-insurance expenses 1,239 950
Other accrued expenses 13,625 14,589
Dividends payable 379 377
Income taxes payable 3,654 2,520
Current maturities of long-term debt 9,533 9,527
-------- --------
Total current liabilities 67,780 71,161
Long-Term Debt, less current maturities 54,573 54,492
Deferred Compensation and Pensions 20,352 19,303
Deferred Revenue 10,775 10,895
Stockholders' Equity:
Common stock, par value $1.00 per share--authorized
30,000,000 shares; issued and outstanding, 12,634,401
shares in April and 12,581,412 shares in January 12,634 12,581
Additional paid-in capital 38,469 37,629
Retained earnings 74,319 68,322
Deferred stock awards (1,250) (1,248)
-------- --------
Total Stockholders' Equity 124,172 117,284
-------- --------
Total Liabilities and Stockholders' Equity $277,652 $273,135
======== ========
</TABLE>
15
<PAGE>
PURITAN-BENNETT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (UNAUDITED)
Dollars in thousands
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30
1995 1994
------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6,376 $ 3,724
Adjustments to reconcile net income to net cash and cash
equivalents provided by operating activities:
Depreciation and amortization 3,873 3,567
Deferred income tax benefit 18 --
Restructuring charges -- (3,307)
Deferred compensation and pensions 1,047 (1,033)
Provision for losses on accounts receivable 38 43
Gain on disposition of assets (220) (462)
Shares issued to employee benefit plans 439 710
Foreign currency transaction (gain)/loss (519) 77
Change in operating assets and liabilities:
Trade notes and accounts receivable (1,905) 497
Inventories (4,573) (1,619)
Prepaid expenses 288 1,937
Other assets (244) 691
Trade accounts payable and accrued expenses (5,482) (1,001)
Federal and state income taxes payable/receivable 1,134 1,471
Deferred revenue (122) 136
------- -------
Net Cash and Cash Equivalents Provided by Operating Activities 148 5,431
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of capital assets 796 2,073
Capital expenditures (3,278) (5,868)
Purchases of intangible assets (102) (32)
Acquisitions, net of cash acquired -- (2,000)
------- -------
Net Cash and Cash Equivalents Used in Investing Activities (2,584) (5,827)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of notes payable 700 753
Payments on long-term debt (70) (46)
Dividends paid to stockholders (377) (372)
Stock options exercised 345 15
------- -------
Net Cash and Cash Equivalents Provided by Financing Activities 598 350
Effect of Exchange Rate Changes on Cash and Cash Equivalents 198 (21)
------- -------
Net Increase (Decrease) in Cash and Cash Equivalents (1,640) (67)
Cash and Cash Equivalents at the Beginning of the Year 2,802 713
------- -------
Cash and Cash Equivalents at the End of the Period $ 1,162 $ 646
======= =======
</TABLE>
9401 INDIAN CREEK PARKWAY
OVERLAND PARK, KS 66210
TELEPHONE: 913-661-0444
FAX: 913-661-0234
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<CASH> 496
<SECURITIES> 666
<RECEIVABLES> 77,246
<ALLOWANCES> 1,339
<INVENTORY> 62,114
<CURRENT-ASSETS> 149,934
<PP&E> 171,814
<DEPRECIATION> 80,511
<TOTAL-ASSETS> 277,652
<CURRENT-LIABILITIES> 67,780
<BONDS> 54,573
<COMMON> 12,634
0
0
<OTHER-SE> 111,538
<TOTAL-LIABILITY-AND-EQUITY> 277,652
<SALES> 84,493
<TOTAL-REVENUES> 84,493
<CGS> 48,424
<TOTAL-COSTS> 75,601
<OTHER-EXPENSES> (427)
<LOSS-PROVISION> 200
<INTEREST-EXPENSE> 1,616
<INCOME-PRETAX> 7,503
<INCOME-TAX> 1,126
<INCOME-CONTINUING> 6,377
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,377
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.51
</TABLE>
