<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: September 30, 1995 Commission File
Number: 0-18671
NUTRAMAX PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 061200464
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
9 Blackburn Drive, Gloucester, Massachusetts 01930
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 283-1800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
par value
$.001 per share
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
-- --
The aggregate market value of the registrant's voting stock held by
nonaffiliates (based upon the closing price of $9.50) on December 1, 1995 was
approximately $36,700,000. As of December 1, 1995, there were 8,519,952 shares
of Common Stock, par value $.001 per share, outstanding.
Indicate by 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
---
Documents Incorporated by Reference
Portions of the Proxy Statement for the Annual Meeting of Stockholders to be
held in 1996 are incorporated by reference into Part III. The Index to Exhibits
begins on page 25.
<PAGE>
PART I
ITEM 1. BUSINESS
General
NutraMax Products, Inc. (the "Company") is a private label health and
personal care products company. The Company's strategy is to offer a line of
quality products equivalent to national brands at lower cost to consumers while
providing greater profit potential to retailers than the national brands.
National brands dominate health and personal care product categories. However,
in recent years private label products have captured increased market share by
appealing to value conscious consumers seeking lower cost products of comparable
quality. The Company received the 1993 Retail Excellence Award as the Private
Label Company of the Year, with the selection based on a survey conducted by a
major trade journal.
The Company was incorporated on April 20, 1987 under the laws of the
State of Delaware.
Products
Feminine Needs -- The Company manufactures disposable douches for sale under
its value brands Sweet*n FreshR and Sweet LoveR and on a private label basis. As
a result of the growth of the Company's other product lines, sales of douche
products in fiscal 1995 were 24% of net sales, as compared to 25% in 1994 and
56% in 1993. The Company also markets private label feminine yeast infection
medication products containing the active ingredient clotrimazole.
Cough/Cold Products -- In December 1993, the Company acquired the leading
manufacturer and distributor of private label cough drops and throat lozenges,
which also manufactures cough drops on a contract basis for national branded
companies. The acquisition enabled the Company to offer an extensive line of
solid dosage cough/cold products, including cough drops, throat lozenges,
sugar-free products, vitamin C drops and liquid center items. Sales of
cough/cold products represented 34% and 33% of net sales in fiscal 1995 and
1994, respectively.
Baby Care -- The Company manufactures disposable baby bottle liners on a
private label basis and under its value brand Fresh*n EasyR. The Company
manufactures pediatric electrolyte oral maintenance solution, a product which is
used to replace minerals lost by children who suffer from diarrhea and vomiting,
for sale under its value brand NutraMax Baby Care Pediatric Electrolyte and on a
private label basis. During fiscal years 1995, 1994 and 1993, sales of baby care
products represented 19%, 21% and 28% of net sales, respectively.
Ophthalmics -- In June 1993, the Company acquired a manufacturer of private
label over-the-counter and prescription ophthalmic products for retail and
industrial customers, enabling the Company to offer a broad line of eye care
products, including over-the-counter contact lens solutions, artificial tears
and eye drops, as well as generic prescription eye care products. Sales of
ophthalmic products represented 10% and 11% of net sales in fiscal 1995 and
1994, respectively.
Adult Nutrition Products -- In March 1995, the Company introduced a new line
of adult high calorie liquid nutrition products which are sold under its value
brand NutraMax Plus High Calorie Liquid Nutrition and on a private label basis.
This product is the Company's entry into the growing adult nutrition category.
The products are manufactured by a third party and marketed by the Company
through its distribution channels.
Personal Care -- The Company manufactures ready-to-use disposable enemas for
sale under its value brand Pure & Gentle, on a private label basis and for the
institutional market.
2
<PAGE>
Other Products -- The Company's other products consist principally of a
patented line of sterile, prefilled, disposable dilution bottles used in
laboratory testing of water, waste water, foods, drug products, pharmaceuticals
and cosmetics.
New Product Strategy
The Company's growth strategy includes the acquisition and development of new
products, and the extension or modification of existing product lines to
correspond with national branded products and product variations. The Company
expects to add new product lines through internal development, acquisition and
joint venture or partnership agreements. The Company contemplates that product
line expansion will enable the Company to capitalize on its established
distribution channels and manufacturing and marketing expertise. New products
will most likely focus on consumer packaged goods, including health and personal
care products. The Company has recently expanded its product lines to include
the following:
Oral Care -- In October 1995, the Company acquired the assets and assumed
certain liabilities of Mi-Lor Corporation, Professional Brushes, Inc. and Codent
Dental Products, Inc., companies engaged in the manufacturing and marketing of
toothbrushes, dental floss and related products for the store brand market. The
acquisition is the Company's entry into the private label oral care segment.
These products are manufactured in an 88,000 square foot manufacturing facility
located in Florence, Massachusetts which was acquired by the Company as part of
the transaction. Oral care products are being marketed by the Company through
its existing distribution channels.
Marketing and Distribution
The Company utilizes national brand marketing methods to meet the specific
needs of its customers. Such marketing methods include designing contemporary
packaging to improve point-of-purchase impact and increase consumer appeal. The
Company also uses price, display, packaging, bonus and multi-pack promotions to
increase sales and retailer support. Sales are made through the Company's sales
representatives and independent brokers.
Customers
For fiscal years 1995 and 1994, American Home Products, Inc. accounted for
14% and 17% of net sales, respectively. For fiscal year 1993, no individual
customer represented in excess of 10% of the Company's net sales. While the
Company is continually expanding its distribution and customer base, the loss of
one or more of its largest customers, if not replaced with other comparable
business, could have a material adverse effect on the Company's results of
operations.
Competition
The markets in which the Company competes are dominated by nationally
advertised brand name products marketed by established consumer packaged goods
companies, most of which have greater marketing, financial and human resources
than the Company. The Company also competes with several other private label
manufacturers and marketers. Competition for consumer health and personal care
products is based primarily on product reliability, price, customer service, and
the ability to provide tamper resistant/evident packaging. Growth in sales of
private label products is also dependent on increasing the amount of shelf space
available at retail stores in order to maximize brand awareness and consumer
trial. The Company experiences aggressive price competition from time to time
from branded and other private label competitors. There can be no assurance
that such price competition will not have a material adverse effect on the
Company's results of operations.
3
<PAGE>
Governmental Regulation and Health Issues
The Company is registered with the Food & Drug Administration ("FDA") as a
manufacturer for certain of its products. The primary forms of governmental
regulation are the current "good manufacturing practices" and "good laboratory
practices" guidelines administered by the FDA, which set forth the protocols to
be followed in the manufacture, storage, packaging and distribution of medical
products for human use. Certain of the Company's ophthalmic products are subject
to additional FDA regulations relating to pre-market approval of products. The
Company's operations are also subject to periodic inspections by the FDA.
Promotional claims made with respect to health and personal care products are
also subject to regulation by the FDA, and by the Federal Trade Commission.
The use of health and personal care products may result in allergic or other
adverse reactions in users. Since 1952, a number of studies have been published
in medical journals concerning the relationship of douching to the incidence of
pelvic inflammatory disease. These studies provide no conclusive results on the
issue of whether douching causes this disease. A 1990 study showed an
association between douching and the disease and concluded that further studies
were needed. A 1993 study stated that the results of the study lend support to
the hypothesis that douching can predispose a woman to pelvic inflammatory
disease. Although the Company believes its douche products are safe when used in
accordance with instructions accompanying the product package, negative
publicity resulting from such studies and any future studies may affect sales of
douche products. In such event there could be a material adverse impact on the
Company's results of operations.
Employees
The Company has approximately 580 full-time employees engaged in quality
control, marketing and sales, general corporate and administrative positions and
manufacturing operations. The Company believes that relations with its employees
are satisfactory.
ITEM 2. PROPERTIES
The Company currently operates the following facilities (which are owned
unless otherwise indicated):
<TABLE>
<CAPTION>
Approximate
Location Type of Facility Square Feet
- -------- ---------------- -----------
<S> <C> <C>
Gloucester, Massachusetts (1) Corporate and Administrative Offices, 111,000
Manufacturing Facilities
Fairton, New Jersey Manufacturing 48,000
Brockton, Massachusetts Manufacturing 66,000
Florence, Massachusetts (2) Manufacturing 88,000
</TABLE>
- -----------------
(1) Consists of four facilities, of which three are leased.
(2) Acquired in October 1995.
The Company believes that its present facilities will be adequate for all of
its reasonably foreseeable manufacturing, warehousing and distribution
requirements, or that alternative facilities can be obtained at a reasonable
cost.
4
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company, like other companies in the store brand industry, has been the
subject of claims and litigation brought by national brand name companies based
on packaging alleged to be similar to competing brand name products. The Company
is also subject to certain claims and informal complaints relating to its
products which are incidental and routine to its business and for which the
Company maintains insurance coverage. The Company knows of no litigation, either
pending or threatened, which is likely to have a material adverse effect on the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 1995.
5
<PAGE>
PART II
ITEM 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
Market Information
The following table sets forth, for the periods indicated, the high and low
prices for the common stock as reported by The Nasdaq Stock Market. The
Company's common stock is traded on The Nasdaq Stock Market's National Market
System under the symbol "NMPC".
<TABLE>
<CAPTION>
Fiscal 1995: High Low
----------- ---- ----
<S> <C> <C>
First Quarter $10.375 $ 8.750
Second Quarter 9.750 7.750
Third Quarter 9.375 5.750
Fourth Quarter 10.000 7.750
Fiscal 1994:
------------
First Quarter $16.125 $10.500
Second Quarter 12.750 10.750
Third Quarter 11.625 7.875
Fourth Quarter 10.750 8.250
</TABLE>
Common Stock Holders
The Company believes there are approximately 2,500 holders of common stock,
including shares held in street name by brokers.
Dividends
The Company has never declared or paid any cash dividends. The declaration of
dividends by the Company in the future will at all times be subject to the sole
discretion of the Company's Board of Directors, and will depend upon operating
results, capital requirements and financial position. See notes to the
consolidated financial statements included elsewhere herein.
6
<PAGE>
ITEM 6. Selected Consolidated Financial Data
The selected consolidated financial data presented below has been derived
from the audited financial statements of the Company. This data is qualified in
its entirety by reference to, and should be read in conjunction with,
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Company's Consolidated Financial Statements included
elsewhere herein.
<TABLE>
<CAPTION>
Year Ended
-------------------------------------------------------------
Sept. 30, Oct. 1, Oct. 2, Sept. 30, Sept. 30,
1995 1994(1) 1993(2) 1992 1991
--------- ------- ------ -------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
- ----------------------
Net sales $ 63,111 $ 55,958 $ 31,144 $ 25,151 $ 20,115
Cost of sales 45,916 38,752 19,598 13,908 11,330
-------- -------- -------- -------- -------
Gross profit 17,195 17,206 11,546 11,243 8,785
Selling, general and administrative expenses 8,694 9,281 5,928 5,715 4,639
-------- -------- -------- -------- -------
Operating income 8,501 7,925 5,618 5,528 4,146
Other credits (charges):
Interest expense (1,427) (928) -- -- (650)
Other 316 95 251 338 244
-------- -------- -------- -------- -------
Income before income tax expense 7,390 7,092 5,869 5,866 3,740
Income tax expense 2,916 2,832 2,350 2,397 1,605
-------- -------- -------- -------- -------
Net income $ 4,474 $ 4,260 $ 3,519 $ 3,469 $ 2,135
======== ======== ======== ======== =======
Earnings per share $ .53 $ .50 $ .43 $ .43 $ .35
======== ======== ======== ======== =======
Weighted average shares
outstanding (3) 8,520 8,480 8,235 8,090 6,143
======== ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
Sept. 30, Oct. 1, Oct. 2, Sept. 30, Sept. 30,
1995 1994(1) 1993(2) 1992 1991
---------- ------- ------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
- -------------------
Working capital $ 14,152 $ 13,172 $ 9,703 $ 10,235 $ 8,559
Total assets 63,074 60,450 33,207 25,925 22,416
Long-term debt, less current maturities 12,550 16,183 -- -- --
Stockholders' equity 39,233 34,757 29,953 22,549 19,026
</TABLE>
- ------------------
(1) In December 1993, the Company acquired a manufacturer and distributor of
private label cough/cold products for $13,500,000 which was financed with
proceeds from a revolving credit facility.
(2) In June 1993, the Company acquired a manufacturer of private label
over-the-counter and prescription ophthalmic products, for approximately
202,000 shares of the Company's common stock with a market value of
$2,846,000.
(3) In August 1991, the Company completed a public stock offering consisting of
2,150,000 shares of common stock.
7
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the Consolidated
Financial Statements and notes thereto, contained elsewhere herein.
Results of Operations
The Consolidated Statements of Operations include the results of operations
of acquired companies from the dates acquired: Optopics Laboratories Corporation
("Optopics") (June 1993) and Powers Pharmaceutical Corporation ("Powers")
(December 1993). The following table sets forth, for all periods indicated, the
percentage relationship that items in the Consolidated Statements of Operations
bear to net sales.
<TABLE>
<CAPTION>
Year Ended
--------------------------------------
Sept. 30, Oct. 1, Oct. 2,
1995 1994 1993
-------- ------ ------
<S> <C> <C> <C>
Net sales 100% 100% 100%
Cost of sales 73 69 63
--- --- ---
Gross profit 27 31 37
Selling, general and administrative expenses 14 17 19
--- --- ---
Operating income 13 14 18
Other credits (charges) (1) (1) 1
--- --- ---
Income before income tax expense 12 13 19
Income tax expense 5 5 8
--- --- ---
Net income 7% 8% 11%
=== === ===
</TABLE>
Fiscal Year 1995 Compared to Fiscal Year 1994
Net sales for 1995 were $63,111,000, an increase of $7,153,000, or 13%, over
1994 net sales of $55,958,000. The increase in net sales was primarily
attributable to sales of Cough/Cold products resulting from the acquisition of
Powers in December 1993 and the introduction of the Adult Nutrition product line
in March 1995, in addition to increased volume in other product categories.
Gross profit for 1995 was $17,195,000, or 27% of net sales, as compared to
$17,206,000, or 31% in 1994. The decrease in the gross margin reflects the
impact of lower production levels for Cough/Cold products, competitive pressure
on the Company's Feminine Needs and Personal Care products and changes in
product mix. In addition, the Company experienced higher raw material costs in
1995, which are not expected to continue through 1996.
Selling, general and administrative expenses for 1995 were $8,694,000 or
14% of net sales, as compared to $9,281,000, or 17% of net sales in 1994. The
decrease in selling, general and administrative expenses was primarily
attributable to a decrease in bad debt expense and professional fees partially
offset by commissions and freight expenses associated with the increase in
sales. The decrease, as a percentage of net sales, resulted from decreased costs
allocated over higher net sales.
Interest expense for 1995 was $1,427,000, as compared to $928,000 in the
prior year. This increase was primarily attributable to debt incurred in
connection with the acquisition of Powers and increases in interest rates.
8
<PAGE>
Fiscal Year 1994 Compared to Fiscal Year 1993
Net sales for 1994 were $55,958,000, an increase of $24,814,000, or 80%,
over 1993 net sales of $31,144,000. The increase in net sales was primarily
attributable to sales of cough/cold products which represented 33% of net sales
in 1994. The increase in net sales was also attributable to increased unit sales
of ophthalmics and baby care products, partially offset by a decrease in sales
of certain feminine needs products. Sales of certain feminine needs products
decreased as a result of lower average sale prices in response to continued
competitive pressure, while unit sales for the year stabilized. The timing,
frequency and nature of promotional activities in this category by brand
manufacturers and other private label companies have had the effect of
decreasing sale prices.
Gross profit for 1994 increased to $17,206,000, or 31% of net sales, as
compared to $11,546,000, or 37% in 1993. The decrease in the gross margin
reflected changes in product mix and the impact of competitive pricing pressure
relating to certain of the Company's feminine needs products. The Company also
incurred an increase in manufacturing overhead expenses in connection with
anticipated higher sales of ophthalmics products.
Selling, general and administrative expenses for 1994 were $9,281,000, or
17% of net sales, as compared to $5,928,000, or 19% of net sales in 1993. Fiscal
1994 included ten months of Powers' operations which accounted for a significant
portion of the increase in selling, general and administrative expenses. As a
percentage of net sales, selling, general and administrative expenses decreased
as a result of the allocation of these costs over substantially higher net
sales.
Interest expense of $928,000 for 1994 was attributable to debt incurred in
connection with the acquisition of Powers. Other income for 1994 was $95,000, as
compared to $251,000 in 1993. The decrease was primarily attributable to lower
interest income as a result of the use of investments to fund, in part,
acquisitions.
Seasonality
During the last four months of the calendar year, retailers focus their
merchandising efforts on and devote more shelf space to seasonal and holiday
merchandise. As a result, sales of certain of the Company's products tend to be
weaker in the Company's first quarter (ending in December), and normally
strengthen in the second quarter as retailers replenish their shelves with
health and personal care products. Sales of pediatric electrolyte and cough/cold
products may help mitigate weaker sales in the Company's first quarter, as the
Company's customers purchase such products to stock inventories in anticipation
of the winter months. Consequently, the results of any one quarter may not
necessarily be indicative of results of future quarters.
Liquidity and Capital Resources
As of September 30, 1995, the Company's working capital increased to
$14,152,000, as compared to $13,172,000 on October 1, 1994. Net cash provided by
operating activities increased to $7,605,000 in 1995 from $5,400,000 in the
prior year. This increase was primarily attributable to improved operating
results and changes in working capital. The change in working capital was
primarily attributable to increased collections of accounts receivable and
stabilization of inventory levels partially offset by increased payments for
income taxes.
Net cash used in investing activities was $4,306,000 in 1995 and consisted
primarily of capital expenditures for additional capacity. The Company
anticipates capital expenditures of approximately $5,800,000 in fiscal 1996 for
additional manufacturing capacity at the Company's existing facilities and the
facility acquired in October 1995. See "Recent Developments".
9
<PAGE>
Net cash used in financing activities for 1995 consisted primarily of debt
repayments of $3,174,000.
In December 1994, the Company converted its $20,000,000 credit facility
into an $8,000,000 revolving credit facility, two term loans aggregating
$9,000,000 and a mortgage of $1,000,000, all of which are secured by
substantially all of the Company's assets. The revolving credit facility bears
interest at prime and/or, at the Company's option, LIBOR plus 2%, and expires in
January 1997. The average amount outstanding under this facility during the year
amounted to $6,452,000, and the weighted average interest rate computed on the
monthly outstanding balance was 8.14%. At September 30, 1995, $5,118,000 was
outstanding under this facility. The amount of available credit fluctuates based
upon the amount of eligible accounts receivable and inventory. As of September
30, 1995, $2,800,000 of credit was available. The term loans bear interest at
prime plus .5% and/or, at the Company's option, LIBOR plus 2.5%, and are payable
in quarterly principal installments of $450,000 through November 1999. The
mortgage bears interest at prime plus .5% and/or, at the Company's option, LIBOR
plus 2.5%, and is payable in quarterly principal installments of $17,000, with a
final payment of approximately $680,000 in November 1999. The interest rates on
the term loans and the mortgage ranged from 8.25% to 9% during 1995.
The Company believes that its existing working capital, anticipated funds
to be generated from future operations and funds available under the revolving
credit facility will be sufficient to meet all of the Company's operating and
capital needs for the foreseeable future. However, depending upon future growth
of the business, additional financing may be required.
Recent Developments
In October 1995, the Company acquired substantially all of the assets and
assumed certain liabilities of Mi-Lor Corporation, Professional Brushes, Inc.
and Codent Dental Products, Inc., which manufacture and market toothbrushes,
dental floss and related products for the store brand market. The purchase price
consisted of $1,800,000 in cash, obtained under the Company's revolving credit
facility, liabilities assumed of $225,000 and related expenses of approximately
$375,000.
Other Information
The Board of Directors of MEDIQ Incorporated ("MEDIQ"), a 47% owner of the
Company, is currently in the process of exploring alternative ways to maximize
MEDIQ's shareholder value, which could include the disposition of its holdings
in the Company. In connection with MEDIQ's activities, the Company formed a
Special Committee of its Board of Directors to explore strategic alternatives
for the Company. The Committee has retained Wasserstein Perella & Co. as
financial advisors to seek opportunities for the Company to enhance shareholder
value. However there can be no assurances that a transaction will occur.
10
<PAGE>
Item 8. Financial Statements And Supplemental Data
<TABLE>
<S> <C>
Independent Auditors' Report 12
Consolidated Statements of Operations - Three Years Ended September 30, 1995 13
Consolidated Balance Sheets - September 30, 1995 and October 1, 1994 14
Consolidated Statements of Stockholders' Equity - Three Years Ended September 30, 1995 15
Consolidated Statements of Cash Flows - Three Years Ended September 30, 1995 16
Notes to Consolidated Financial Statements 17-24
</TABLE>
11
<PAGE>
Independent Auditors' Report
Board of Directors and Stockholders
NutraMax Products, Inc.
Gloucester, Massachusetts
We have audited the accompanying consolidated balance sheets of NutraMax
Products, Inc. and subsidiaries as of September 30, 1995 and October 1, 1994,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three fiscal years in the period ended September 30,
1995. Our audits also included the financial statement schedule listed in the
Index at Item 14. These financial statements and the financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on the financial statements and the financial statement
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 audit 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, such consolidated financial statements present fairly, in all
material respects, the financial position of NutraMax Products, Inc. and
subsidiaries as of September 30, 1995 and October 1, 1994, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended September 30, 1995 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
November 3, 1995
12
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
-----------------------------------------------
Sept. 30, Oct. 1, Oct. 2,
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Net Sales $63,111,000 $55,958,000 $31,144,000
Cost of Sales 45,916,000 38,752,000 19,598,000
----------- ----------- -----------
Gross Profit 17,195,000 17,206,000 11,546,000
Selling, General and Administrative Expenses 8,694,000 9,281,000 5,928,000
----------- ----------- -----------
Operating Income 8,501,000 7,925,000 5,618,000
Other Credits (charges):
Interest expense (1,427,000) (928,000) --
Interest income 13,000 60,000 235,000
Other 303,000 35,000 16,000
----------- ----------- -----------
Income Before Income Tax Expense 7,390,000 7,092,000 5,869,000
Income Tax Expense 2,916,000 2,832,000 2,350,000
----------- ----------- -----------
Net Income $ 4,474,000 $ 4,260,000 $ 3,519,000
=========== =========== ===========
Earnings Per Share $ .53 $ .50 $ .43
=========== =========== ===========
Weighted Average Shares Outstanding 8,520,000 8,480,000 8,235,000
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
13
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, October 1,
1995 1994
----------- -----------
<S> <C> <C>
Current Assets:
Cash $ 503,000 $ 376,000
Accounts receivable, less allowance for doubtful accounts
of $601,000 in 1995 and $738,000 in 1994 9,050,000 8,074,000
Inventories 12,497,000 11,238,000
Deferred income taxes 977,000 1,050,000
Prepaid expenses and other 525,000 729,000
----------- -----------
Total Current Assets 23,552,000 21,467,000
Property, Plant and Equipment, net 23,714,000 22,499,000
Goodwill, net of accumulated amortization of $2,609,000
in 1995 and $2,046,000 in 1994 13,978,000 14,541,000
Other Assets 1,830,000 1,943,000
----------- -----------
$63,074,000 $60,450,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 6,191,000 $ 4,865,000
Accrued payroll and related taxes 366,000 608,000
Accrued expenses - other 939,000 1,378,000
Current maturities of long-term debt 1,904,000 1,444,000
----------- -----------
Total Current Liabilities 9,400,000 8,295,000
Long-Term Debt, less current maturities 12,550,000 16,183,000
Other Long Term Liabilities 312,000 312,000
Deferred Income Taxes 1,579,000 903,000
Stockholders' Equity:
Common stock - $.001 par value:
Authorized - 20,000,000 shares
Issued and outstanding: 8,520,000 shares in 1995
and 1994 9,000 9,000
Additional paid-in capital 22,567,000 22,565,000
Retained earnings 16,657,000 12,183,000
----------- -----------
Total Stockholders' Equity 39,233,000 34,757,000
----------- -----------
$63,074,000 $60,450,000
=========== ===========
</TABLE>
See notes to consolidated financial statements.
14
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
------------------------
Shares Additional Retained
Issued Amount Paid-In Capital Earnings Total
---------- --------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at October 1, 1992 8,094,000 $ 8,000 $18,137,000 $ 4,404,000 $22,549,000
Issuance of stock -
management compensation 53,000 -- 212,000 -- 212,000
Exercise of stock options and warrants 90,000 -- 827,000 -- 827,000
Issuance of stock -
acquisition of Optopics 202,000 -- 2,846,000 -- 2,846,000
Net income -- -- -- 3,519,000 3,519,000
--------- --------- ----------- ----------- -----------
Balance at October 2, 1993 8,439,000 8,000 22,022,000 7,923,000 29,953,000
Issuance of stock -
management compensation 53,000 -- 318,000 -- 318,000
Exercise of stock options 28,000 1,000 225,000 -- 226,000
Net income -- -- -- 4,260,000 4,260,000
--------- --------- ----------- ----------- -----------
Balance at October 1, 1994 8,520,000 9,000 22,565,000 12,183,000 34,757,000
Exercise of stock options (1) -- -- 2,000 -- 2,000
Net income -- -- -- 4,474,000 4,474,000
--------- --------- ----------- ----------- -----------
Balance at September 30, 1995 8,520,000 $ 9,000 $22,567,000 $16,657,000 $39,233,000
========= ========= =========== =========== ===========
</TABLE>
- ------------------
(1) 180 stock options were exercised in 1995.
See notes to consolidated financial statements.
15
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
------------------------------------------------
Sept. 30, Oct. 1, Oct. 2,
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 4,474,000 $ 4,260,000 $ 3,519,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,857,000 3,527,000 1,948,000
Deferred taxes 732,000 419,000 545,000
Other (227,000) 286,000 82,000
Increase (decrease), net of effect of acquisitions:
Accounts receivable (838,000) (1,471,000) (1,851,000)
Inventories (1,259,000) (4,647,000) (2,112,000)
Prepaid expenses and other 379,000 (94,000) (251,000)
Accounts payable 1,326,000 1,433,000 (226,000)
Accrued payroll and related taxes (242,000) (71,000) 16,000
Accrued expenses - other (386,000) 721,000 (352,000)
Income taxes (211,000) 1,037,000 (752,000)
----------- ---------- ----------
Net cash provided by operating activities 7,605,000 5,400,000 566,000
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired -- (13,541,000) (245,000)
Purchases of property, plant and equipment (3,937,000) (3,929,000 (3,420,000)
Maturities of short-term investments -- -- 4,940,000
Deferred costs (527,000) (532,000) (620,000)
Other 158,000 74,000 (270,000)
----------- ---------- ----------
Net cash provided by (used in) investing activities (4,306,000) (17,928,000) 385,000
Cash Flows from Financing Activities:
Borrowings -- 19,166,000 --
Proceeds from exercise of stock options
and warrants 2,000 177,000 613,000
Debt repayments (3,174,000) (7,838,000) (3,167,000)
----------- ---------- ----------
Net cash provided by (used in) financing activities (3,172,000) 11,505,000 (2,554,000)
----------- ---------- ----------
Net Increase (Decrease) in Cash 127,000 (1,023,000) (1,603,000)
Cash:
Beginning of year 376,000 1,399,000 3,002,000
----------- ---------- ----------
End of year $ 503,000 $ 376,000 $ 1,399,000
=========== =========== ===========
Supplemental Disclosures of Cash Flow Information:
Income taxes paid $ 2,384,000 $ 1,534,000 $ 2,458,000
=========== =========== ===========
Interest paid $ 1,297,000 $ 831,000 $ --
=========== =========== ===========
Supplemental Disclosure of Non-Cash Financing
and Investing Activities:
Issuance of stock - acquisition of Optopics $ -- $ -- $2,846,000
=========== =========== ===========
Issuance of stock - non-cash compensation $ -- $ 318,000 $ 212,000
=========== =========== ===========
Plant and equipment financed with long-term
debt and capital lease obligations $ -- $ 794,000 $ --
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
16
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Summary of Significant Accounting Policies
Principles of Consolidation -- The consolidated financial statements
include the accounts of NutraMax Products, Inc. and its subsidiaries (the
"Company"). In consolidation, all significant intercompany transactions and
balances have been eliminated.
Inventories -- Inventories are stated at the lower of cost (first-in,
first-out method) or market.
Property, Plant and Equipment -- Property, plant and equipment are stated
at cost. The Company's policy of providing for depreciation and amortization is
as follows:
Buildings 20 years on a straight-line basis
Liquid packaging machines 32,000 to 48,000 machine hours
which approximate a five to eight
and one-half year life
Machinery, equipment, molds 5 to 10 years on a straight-line
and furniture and fixtures basis
Leasehold improvements The terms of the related lease
on a straight-line basis
Vehicles 3 to 5 years on a straight-line
basis
Goodwill -- The purchase price in excess of net assets acquired is
amortized on a straight-line basis over periods from thirty to forty years. The
Company evaluates the carrying value of goodwill based upon current and
anticipated net income and undiscounted cash flows, and recognizes an impairment
when it is probable that such estimated future net income and/or cash flows will
be less than the carrying value of goodwill. Measurement of the amount of
impairment, if any, is based upon the difference between carrying value and fair
value.
Other Assets -- Other assets include intangible assets which are amortized
on a straight-line basis over the estimated periods of related benefit, ranging
from three to fifteen years. Accumulated amortization was $213,000 and $187,000
as of September 30, 1995 and October 1, 1994, respectively. Other assets also
include external costs deferred in connection with tools, dies and the design of
packaging materials for the Company's products which are amortized on a
straight-line basis over four years.
Income Taxes -- Effective October 3, 1993, the Company adopted on a
prospective basis the provisions of Statement of Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes", which supersedes SFAS No. 96. The effect
of adopting SFAS No. 109 was not significant.
Earnings Per Share -- Earnings per share computations are based upon the
weighted average number of common shares outstanding. Stock options have been
excluded from the calculation of weighted average shares outstanding since the
dilutive effect is less than 3%.
Reclassification of Accounts -- Certain reclassifications have been made to
conform prior years' balances to the current year presentation.
17
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note B - Acquisitions
Powers Pharmaceutical Corporation -- In December 1993, the Company acquired
all of the outstanding common stock of Certified Corporation, parent of Powers
Pharmaceutical Corporation ("Powers"), for $13,500,000 in cash and related
expenses of $236,000. Powers, based in Brockton, Massachusetts, is the nation's
leading manufacturer and distributor of private label cough drops and throat
lozenges, and also manufactures cough drops on a contract basis. The transaction
was accounted for by the purchase method of accounting. The excess of the
purchase price over the fair values of the net assets acquired of $6,206,000 is
amortized over thirty years.
Optopics Laboratories Corporation -- In June 1993, the Company acquired all
of the assets and assumed all of the liabilities of Optopics Laboratories
Corporation ("Optopics") for approximately 202,000 shares of the Company's
common stock, with a market value of $2,846,000, and related transaction costs
of $245,000. Additionally, the Company acquired Optopics' manufacturing facility
for $800,000 in cash, which was previously leased from the former stockholders
of Optopics. Optopics is a manufacturer of private label over-the-counter and
prescription ophthalmics products. The acquisition was accounted for by the
purchase method of accounting. The excess of the purchase price over the
estimated fair value of the net assets acquired of $4,325,000 is amortized over
thirty years.
Note C - Inventories
<TABLE>
<CAPTION>
Sept. 30, Oct. 1,
1995 1994
----------- -----------
<S> <C> <C>
Raw materials $ 5,278,000 $ 4,799,000
Finished goods 6,088,000 5,600,000
Work in process 417,000 355,000
Machinery parts and factory supplies 714,000 484,000
----------- -----------
$12,497,000 $11,238,000
=========== ===========
</TABLE>
Note D - Property, Plant and Equipment
<TABLE>
<CAPTION>
Sept. 30, Oct. 1,
1995 1994
----------- -----------
<S> <C> <C>
Machinery and equipment $21,211,000 $18,684,000
Land, buildings and improvements 8,131,000 7,392,000
Molds 2,611,000 2,268,000
Furniture and fixtures 1,496,000 1,253,000
Vehicles 25,000 41,000
----------- -----------
33,474,000 29,638,000
Less: Accumulated depreciation and amortization 9,760,000 7,139,000
----------- -----------
$23,714,000 $22,499,000
=========== ===========
</TABLE>
Depreciation and amortization expense for property, plant and equipment for
1995, 1994 and 1993 was $2,725,000, $2,390,000 and $1,177,000, respectively.
18
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note E - Long-Term Debt
<TABLE>
<CAPTION>
Sept. 30, Oct. 1,
1995 1994
----------- -----------
<S> <C> <C>
Revolving credit facility $ 5,118,000 $ 7,850,000
Term loans 7,650,000 9,000,000
Mortgages 1,654,000 733,000
Capital lease obligation 32,000 44,000
----------- -----------
14,454,000 17,627,000
Less: Current maturities of long-term debt 1,904,000 1,444,000
----------- -----------
$12,550,000 $16,183,000
=========== ===========
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Fiscal Year
-----------
<S> <C>
1996 $ 1,904,000
1997 7,668,000
1998 1,876,000
1999 1,871,000
2000 1,135,000
-----------
$14,454,000
===========
</TABLE>
The revolving credit facility bears interest at prime (8.75% at September
30, 1995) and/or, at the Company's option, LIBOR plus 2% (7.875% at September
30, 1995), and expires in January 1997. The average amount outstanding under
this facility during the year amounted to $6,452,000, and the weighted average
interest rate computed on the monthly outstanding balance was 8.14%. The amount
of available credit fluctuates based upon eligible accounts receivable and
inventory. As of September 30, 1995, $2,800,000 of credit was available. The
term loans bear interest at prime plus .5% (9.25% at September 30, 1995) and/or,
at the Company's option, LIBOR plus 2.5% (8.375% at September 30, 1995), and are
payable in quarterly principal installments of $450,000 through November 1999.
The mortgage bears interest at prime plus .5% and/or, at the Company's option,
LIBOR plus 2.5%, and is payable in quarterly principal installments of $17,000,
with a final payment of approximately $680,000 in November 1999. The interest
rates on the term loans and the mortgage ranged from 8.25% to 9% during 1995 and
were 8.375% at September 30, 1995.
The Company has an additional mortgage which bears interest at 7% and is
payable in monthly installments of $7,000 including interest, with a final
payment of approximately $670,000 due in February 1997.
The revolving credit facility and term loans, which are collateralized by
substantially all of the Company's assets, require the maintenance of certain
balance sheet and operating ratios and impose certain dividend limitations. The
most restrictive of these provisions limits the payment of cash dividends to
approximately $8,900,000 as of September 30, 1995.
19
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note F - Commitments and Contingencies
Leases -- The Company leases certain of its administrative, manufacturing,
distribution and warehouse facilities under operating leases. The Company also
leases certain equipment under operating and capital leases. Future minimum
payments under noncancelable operating and capital leases are as follows:
<TABLE>
<CAPTION>
Operating Capital
Fiscal Year Leases Leases
----------- -------- --------
<S> <C> <C> <C>
1996 $387,000 $ 11,000
1997 93,000 11,000
1998 1,000 11,000
1999 -- 2,000
-------- --------
Total minimum lease payments $481,000 35,000
========
Amount representing interest 3,000
--------
Present value of minimum lease payments $ 32,000
========
</TABLE>
Rental expense for operating leases was $387,000, $413,000 and $456,000 for
1995, 1994 and 1993, respectively.
Litigation -- The Company has pending certain legal actions and claims
incurred in the normal course of business and is actively pursuing the defense
thereof. In the opinion of management, the ultimate disposition of these matters
will not have a material adverse effect on the Company's financial statements.
Note G - Income Taxes
Income tax expense consisted of the following:
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------
Sept. 30, Oct. 1, Oct. 2,
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal $1,769,000 $2,014,000 $1,368,000
State 415,000 399,000 437,000
---------- ---------- ----------
2,184,000 2,413,000 1,805,000
Deferred:
Federal 696,000 395,000 511,000
State 36,000 24,000 34,000
---------- ---------- ----------
732,000 419,000 545,000
---------- ---------- ----------
$2,916,000 $2,832,000 $2,350,000
========== ========== ==========
</TABLE>
20
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note G - Income Taxes (Continued)
The difference between the Company's income tax and the statutory federal
tax is reconciled below:
<TABLE>
<CAPTION>
Year Ended
----------------------------------------
Sept. 30, Oct. 1, Oct. 2,
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Statutory federal tax $2,513,000 $2,411,000 $1,996,000
Nondeductible goodwill amortization 189,000 179,000 87,000
State tax, net of federal benefit 298,000 279,000 311,000
Other (84,000) (37,000) (44,000)
---------- ---------- ----------
Income tax expense $2,916,000 $2,832,000 $2,350,000
========== ========== ==========
</TABLE>
As of September 30, 1995, the Company had Federal net operating loss
carryforwards of $2,418,000 which are available to offset future taxable income.
The Company also has investment tax credit carryforwards of $208,000.
Utilization of the operating loss carryforwards, which expire in fiscal years
1997 to 2007, is limited to $1,049,000 annually.
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
Sept. 30, Oct. 1,
1995 1994
---------- ----------
<S> <C> <C>
Assets:
Net operating loss carryforwards $ 822,000 $1,311,000
Allowance for bad debts 236,000 291,000
Inventory 234,000 302,000
Investment tax credits 208,000 156,000
Other 331,000 309,000
---------- ----------
1,831,000 2,369,000
Valuation allowance -- (58,000)
---------- ----------
Deferred tax assets 1,831,000 2,311,000
---------- ----------
Liabilities:
Depreciation and amortization 2,387,000 1,965,000
Other 46,000 199,000
---------- ----------
Deferred tax liabilities 2,433,000 2,164,000
---------- ----------
Net deferred tax liability (asset) $ 602,000 $ (147,000)
========== ==========
</TABLE>
Under the provisions of SFAS No. 96, the deferred tax provision for fiscal
year 1993 of $545,000 resulted principally from utilization of acquired net
operating loss carryforwards of $436,000 and depreciation of $189,000, partially
offset by the allowance for doubtful accounts of $58,000.
21
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note H - Selected Quarterly Financial Data (Unaudited)
Selected quarterly financial data for fiscal years 1995 and 1994 is as
follows:
<TABLE>
<CAPTION>
First Second Third Fourth
1995 Quarter Quarter Quarter Quarter
- ---- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $15,123,000 $15,055,000 $15,184,000 $17,749,000
Gross profit 4,602,000 4,279,000 3,863,000 4,451,000
Net income 1,238,000 1,111,000 857,000 1,268,000
Earnings per share .15 .13 .10 .15
Weighted average shares outstanding 8,520,000 8,520,000 8,520,000 8,520,000
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
1994 (1) Quarter Quarter Quarter Quarter
- ---- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $10,201,000 $14,977,000 $15,399,000 $15,381,000
Gross profit 3,260,000 4,628,000 4,808,000 4,510,000
Net income 662,000 1,110,000 1,185,000 1,303,000
Earnings per share .08 .13 .14 .15
Weighted average shares outstanding 8,440,000 8,455,000 8,506,000 8,520,000
</TABLE>
- -----------
(1) Includes the results of operations of Powers from the date of acquisition.
Note I - Related Party Transactions
Services Agreement -- The Company obtains certain legal, accounting, tax,
insurance and human resource services from MEDIQ Incorporated ("MEDIQ"), the
owner of approximately 47% of the outstanding common stock. Costs for such
services were $100,000 for each of the three years ended September 30, 1995. The
Company believes that MEDIQ's charges for such services are on terms no less
favorable to the Company than those that could be obtained from unaffiliated
third parties for comparable services.
Insurance -- The Company obtains certain insurance coverages through
programs administered by MEDIQ. Insurance expense under these programs was
$409,000, $464,000 and $213,000 for fiscal years 1995, 1994 and 1993,
respectively.
Pledge of Stock -- A portion of the shares of the Company's stock owned by
MEDIQ is subject to exchange for outstanding MEDIQ debentures and a portion
secures certain MEDIQ indebtedness.
22
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note J - Stock Options
The Company maintains a Stock Option Plan which includes an Incentive Stock
Option Program and a Non-Qualified Stock Option Program. Incentive stock options
may be granted to key employees, including the Company's officers, at the
discretion of the Stock Option Plan Committee, until termination of the Plan.
Non-qualified stock options may be granted to employees, non-employee
directors, advisors and independent consultants at the discretion of the
Committee. No options may be granted under the programs for a term in excess of
five years from the date of grant. As of September 30, 1995, 401,000 stock
options were exercisable under such plans. The stock option prices listed below
represent the quoted market value of the common stock at dates of grant.
A summary of stock option activity for the three years ended September 30,
1995 follows:
<TABLE>
<CAPTION>
Number Option Price
of Shares Per Share
--------- ------------
<S> <C> <C>
October 1, 1992 345,000 $4.00-$8.50
Granted 88,000 $12.25
Exercised (70,000) $5.00-$8.50
-------
October 2, 1993 363,000 $4.00-$12.25
Granted 524,000 $9.63-$12.00
Exercised (27,000) $4.00-$12.00
Terminated (15,000) $6.00-$12.25
-------
October 1, 1994 845,000 $6.00-$12.25
Granted 60,000 $9.38-$9.69
Exercised --(1) $6.00
-------
September 30, 1995 905,000 $6.00-$12.25
=======
</TABLE>
- ----------------
(1) 180 stock options were exercised in 1995.
Note K - Major Customers
American Home Products, Inc. accounted for 14% and 17% of net sales in 1995
and 1994, respectively. No individual customer represented in excess of 10% of
the Company's net sales for 1993.
Note L - Special Committee
The Board of Directors of MEDIQ Incorporated ("MEDIQ"), a 47% owner of the
Company, is currently in the process of exploring alternative ways to maximize
MEDIQ's shareholder value, which could include the disposition of its holdings
in the Company. In connection with MEDIQ's activities, the Company formed a
Special Committee of its Board of Directors to explore strategic alternatives
for the Company. The Committee has retained Wasserstein Perella & Co. as
financial advisors to seek opportunities for the Company to enhance shareholder
value.
23
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note M - Subsequent Event
In October 1995, the Company acquired substantially all of the assets and
assumed certain liabilities of Mi-Lor Corporation, Professional Brushes, Inc.
and Codent Dental Products, Inc., which manufacture and market toothbrushes,
dental floss and related products for the store brand market. The purchase price
consisted of $1,800,000 in cash, liabilities assumed of $225,000 and related
expenses of approximately $375,000.
24
<PAGE>
PART III
The information required to be included herein has been incorporated herein by
reference to the Registrant's proxy statement relating to the annual meeting of
its stockholders scheduled to be held in 1996.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) (1) The response to this portion of Item 14 is submitted as a separate
section of this report commencing on page 11.
(a) (2) Financial Statement Schedules
Schedule II Valuation and Qualifying Accounts and Reserves
Other schedules are omitted because of the absence of conditions under which
they are required.
(a) (3) and (c) Exhibits (numbered in accordance with Item 601 of
Regulation S-K).
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Method of
Number Description Filing
- ------- ----------- ---------
<S> <C> <C>
3(a) Restated and Amended Certificate of
Incorporation (1)
3(b) Amendment, filed June 12, 1991, to the
Company's Certificate of Incorporation (1)
3(c) Amendment, filed March 5, 1992 to the
Company's Certificate of Incorporation (2)
3(d) By-Laws (1)
10(a) Employment Agreement between the Company
and Donald E. Lepone, dated November 28, 1993 (3)
10(b) Employment Agreement between the Company
and Richard Zakin, dated January 1, 1994 (3)
10(c) Employment Agreement between the Company
and Gary A. LeDuc, dated January 1, 1994 (4)
10(h) 1988 Stock Option Plan (adopted
April 28, 1988) (5)
10(i) Amendment No. 1 to the 1988 Stock Option Plan (2)
10(j) Amendment No. 2 to the 1988 Stock Option Plan (2)
10(k) Amendment No. 3 to the 1988 Stock Option Plan (2)
10(l) Amendment No. 4 to the 1988 Stock Option Plan (3)
10(m) Letter, dated March 29, 1994, from the Company
to Donald E. Lepone, reflecting the terms of
a stock option grant (4)
10(n) Tax Allocation/Sharing Agreement between
the Company and MEDIQ Incorporated, dated
July 25, 1990 (1)
10(o) Lease Agreement, dated January 1, 1987,
between The Aid-Pack Limited Partnership
and Aid-Pack, Inc. (6)
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Exhibit Method of
Number Description Filing
- ------- ----------- ---------
<S> <C> <C>
10(p) Lease Extension Agreement, dated May 1, 1991,
between The Aid-Pack Limited Partnership
and the Company (6)
10(q) Registration Rights Agreement, dated July 1, 1991
between MEDIQ Incorporated and the Company (7)
10(r) Amendment to Registration Rights Agreement, dated July 1, 1991
among MEDIQ, MEDIQ Investment Services, Inc. and the Company (8)
10(s) Services Agreement, dated August 22, 1991
between MEDIQ Incorporated and the Company (7)
10(t) Revolving Credit and Security Agreement between the Company
and State Street Bank and Trust Company (8)
10(u) Revolving Credit and Security Agreement between the Company
and State Street Bank and Trust Company (8)
21 Subsidiaries of the Company (4)
23 Consent of Deloitte & Touche LLP, Independent Certified
Public Accountants (4)
27 Financial Data Schedule (4)
</TABLE>
(1) Filed as an Exhibit to the Company's Registration Statement on Form S-1 on
July 5, 1991, and incorporated herein by reference.
(2) Filed as an Exhibit to the Company's Annual Report on Form 10-K for
fiscal year 1992, and incorporated herein by reference.
(3) Filed as an Exhibit to the Company's Annual Report on Form 10-K for
fiscal year 1994, and incorporated herein by reference.
(4) Filed herewith.
(5) Filed as an Exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1990, and incorporated herein by
reference.
(6) Filed as an Exhibit to Amendment No. 1 to the Company's Registration
Statement on Form S-1 on August 15, 1991, and incorporated herein by
reference.
(7) Filed as an Exhibit to the Company's Annual Report on Form 10-K for fiscal
year 1991, and incorporated herein by reference.
(8) Filed as an Exhibit to the Company's Annual Report on Form 10-K for
fiscal 1993, and incorporated herein by reference.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the fourth
quarter of fiscal 1995.
26
<PAGE>
SIGNATURES
Pursuant to requirements of Section 13 of 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.
Dated: December 8, 1995 NUTRAMAX PRODUCTS, INC.
By: /s/ Donald E. Lepone
-------------------------------
Donald E. Lepone, President
and Chief Executive Officer
By: /s/ Robert F. Burns
-------------------------------
Robert F. Burns, Vice
President, Treasurer and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons, which include at least a
majority of the Board of Directors on behalf of the Registrant and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- -----
<S> <C> <C>
/s/ Bernard J. Korman Chairman of the Board December 8, 1995
- ---------------------
Bernard J. Korman
/s/ Donald E. Lepone President, Chief December 8, 1995
- -------------------- Executive Officer and
Donald E. Lepone Director
/s/ Donald M. Gleklen Director December 8, 1995
- ---------------------
Donald M. Gleklen
/s/ Frederick W. McCarthy Director December 8, 1995
- -------------------------
Frederick W. McCarthy
/s/ Dennis M. Newnham Director December 8, 1995
- ---------------------
Dennis M. Newnham
/s/ Michael F. Sandler Director December 8, 1995
- ----------------------
Michael F. Sandler
</TABLE>
27
<PAGE>
NUTRAMAX PRODUCTS, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FISCAL YEARS 1995, 1994 AND 1993
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C - Additions COL. D COL. E
- ---------------------------------------------------------------------------------------------------------------------
(1) (2)
Description Balance at Charged to Charged to Deductions Balance
Beginning Costs and Other at End
of Period Expenses Accounts of Period
- ---------------------------------------------------------------------------------------------------------------------
Year ended September 30, 1995:
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts $738,000 $149,000 $ -- $(286,000) $601,000
======== ======== ======== ========= ========
Year ended October 1, 1994:
Allowance for doubtful accounts $375,000 $337,000 $ 73,000 $ (47,000) $738,000
======== ======== ======== ========= ========
Year ended October 2, 1993:
Allowance for doubtful accounts $275,000 $ 83,000 $ 17,000 $ -- $375,000
======== ======== ======== ========= ========
</TABLE>
(1) Includes allowance from acquisition of Optopics in 1993 and Powers in 1994.
(2) Represents accounts directly written-off net of recoveries.
EXHIBIT 10(C)
EMPLOYMENT AGREEMENT
BETWEEN
NUTRAMAX PRODUCTS, INC.
EMPLOYER
AND
EMPLOYEE
DATED: January 1, 1994
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated and effective as if this first day of January, 1994,
by and between Nutramax Products, Inc., a corporation organized and existing
under the laws of the State of Delaware (hereinafter 'Employer'), and Gary A.
LeDuc (hereinafter 'Employee'), an individual residing at 69 Old Na????? Farm
Road, Gloucester, PA, 01900.
WHEREAS, Employee desires to retain Employee as Vice President, Materials
Management for Employer; and
WHEREAS, Employee desires to accept such engagement, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, agree as follows:
1. Terms and Duties
(a) Employer hereby employs Employee as Vice President, Materials
Management of Employer, and to render such services as are appurtenant thereto,
for an initial term beginning on the 1st day of January, 1994 (the 'Commencement
Date') and ending on the 31st day of December, 1996, and thereafter until either
party shall have given to the other written notice of its intent to terminate
not less than thirty (30) days prior to the termination date set forth in the
notice. Employee shall perform such executive duties of a responsible nature as
shall be in all material respects in conformance with the directions and
policies established and promulgated by Employer and consistent with his
position.
(b) In addition to its right to terminate this Employment Agreement for
cause under the provisions of subparagraph 5(c) hereinafter, Employer shall have
the further right, at any time without notice:
(i) To terminate Employee's position as Vice President, Materials
Management of Employer (but not terminate this Employment Agreement) if in
the sole determination of Employer's Board of Directors, Employee's
continuation in either such position may be contrary to the best interests
of Employer; or
(ii) To terminate this Employment Agreement at any time without cause
and without notice, upon payment to Employee of a sum equal to the
compensation then due him for the balance of the initial term hereof, at
the annual rate of compensation to which Employee is entitled to hereunder
as of the date of such termination.
(c) Employee shall report to the President of Employer and shall devote
his best efforts and full business time to the performance of his duties and to
advance Employer's interests.
(d) Employee shall not, without the prior written consent of Employer,
during the term of this Agreement, be engaged in any other business activity
whether or not such business activity is pursued for gain, profit, or other
pecuniary advantage; but this shall not be construed as preventing Employee from
investing his assets in such form or manner as will not require the performance
of services by Employee in the operation of the affairs of the enterprises or
companies in which said investments are made. Employee may participate in
appropriate community activities not inconsistent with his duties and position
as an Executive of Employer. In all cases, Employee's activities in this regard
shall comply with policies of general application as to participation on Boards
of Directors of non-profit and for-profit corporations, as such policies are
established by Employer from time to time.
2. Compensation.
(a) As compensation for Employee's services hereunder, Employer shall pay
to Employee a salary (the 'Base Compensation'), which shall initially be at the
rate of Ninety thousand ($90,000) dollars per year, from the commencement of the
term hereof until the next following December 31. During each subsequent year
ending December 31, Employee's salary shall be at the annual rate set
1
<PAGE>
forth in the annual Business Plan of Employer for such year. All salary provided
for hereunder shall be payable in biweekly or such other installments as shall
be consistent with Employer's payroll procedures. Employer shall deduct and
withhold all necessary social security and withholding taxes and any other
similar sums required by law or authorized by Employee.
(b) Employee shall be entitled to receive such fringe benefits as are set
forth in the applicable policy manual of Employer; provided, however, that
Employer may at any time and from time to time add to, reduce, eliminate or
otherwise modify those fringe benefits as long as Employee is provided with
those fringe benefits which are applicable to all similarly situated senior
electives of Employer. In addition, Employee shall participate in an Executive
incentive Compensation Plan, as the same is described on Exhibit 2(b) attached
hereto and made part hereof (the 'Incentive Plan'), at the 'C' level; provided,
however, the Board may at any time and from time to time modify or replace the
Incentive Plan, and in the event that the said Incentive Plan shall be succeeded
by another such plan, Employee shall participate therein at a similar level as
shall be set forth in such successor plan. The annual objectives of Employee in
connection with his participation in the Incentive Plan shall be mutually agreed
upon each year by Employee an the President of Employer.
(c) anything contained herein to the contrary notwithstanding, no further
Base Compensation, bonus or incentive compensation (as described in subparagraph
2(b) hereof) shall be payable hereunder, including salary and fringe benefits,
upon and in the event of the termination of this Employment Agreement prior to
the expiration of its term by Employee for any reason, or by Employer for any of
the reasons set forth in subparagraph 5.
(d) Notwithstanding anything to the contrary contained herein, the
provisions of this paragraph 2 supersede in all respects the provision of
paragraphs 2 and 6 of that certain Employment Agreement between Employer and
Employer and Employee dated July 25, 1990, as amended except to the extent that
paragraph 6 of said prior agreement refers to payments, distribution and acts
occurring on or after January 1, 1994 (the 'Surviving Provisions') in which case
the Surviving Provision in said agreement shall remain in force and effect.
3. Expenses.
Employee is authorized to incur reasonable expenses for conducting and
promoting the business of Employer, including expenses for travel and similar
items, subject to time. Employer will reimburse Employee for such expenses, on a
monthly or other regular basis, upon the presentation by Employee of an itemized
account of such expenditures, consistent with procedures established by
Employer, together with such receipts or other evidence as shall be required for
tax or accounting purposes.
4. Disclosure of Information/Restrictive Covenant.
(a) Employee recognizes and acknowledges that (i) all plans, system,
methods, designs, procedures, books and records known to Employee, relating to
the operations, personnel and practices of Employer, and of any subsidiary or
affiliate of Employer (whether instituted or commenced prior or subsequent to
the date hereof and whether or not initially instituted or commenced by
Employer, or by any now or then present or former subsidiary or affiliate
thereof), (ii) all other records, documents and information concerning
Employer's or such subsidiary's or affiliate's business activities, practices
and procedures, and any name or style under which Employer or any such
subsidiary or affiliate shall be operated during the term hereof, or shall have
been operated prior hereto, and (iii) any logo or other descriptive or
illustrative form thereof, utilized by Employer, or such subsidiary or
affiliate, as they may exist from time to time, constitute and will constitute
valuable, special and unique assets of Employer's and any such subsidiary's or
affiliate's business and that Employee may have access to confidential
information and/or trade secrets related to Employer's business. Except as
required in the course of his employment hereunder, Employee therefore covenants
and agrees that he will not ever, at any time without the prior consent of
Employer, as the case may be, directly or indirectly disclose to any third party
or use for his own benefit any part of such confidential information, to the
extent such information has theretofore remained confidential (except for
unauthorized disclosures by Employee) and except as otherwise ordered by a court
of competent jurisdiction, or use or permit to be used any
2
<PAGE>
such name, style, logo or form, to or by any person, firm, corporation,
association, or other entity for any reason or purpose whatsoever.
(b) Presently Employer's business is national in scope, and the parties
hereto understand and agree that it is the intention of both to maintain
Employer's business activities, operations, markets and marketing activities and
of corporations and entities controlled by or related to or affiliated with
Employer, throughout the United States, and further that Employer's business
will continue in the future to be national in scope. Therefore, the parties
expressly agree that during the term of this Employment Agreement and any
renewal or extension thereof, and in addition, for a period of two (2) years
following the termination of this Agreement (or any renewal or extension
period), Employee will not, throughout the United States, (i) own directly or
indirectly, manage, operate, control, be employed by, participate in, or be
connected in any manner with the ownership, management, operation or control or,
any business which shall deal with or provide services, or engage in activities,
at any time hereafter engaged in by Employer, or by any subsidiary or affiliate
of Employer, or by any subsidiary or affiliate of Employer, nor (ii) following
the termination of this Agreement (or any renewal or extension period), solicit
or attempt to solicit customers of Employers or any subsidiary or affiliate of
Employer, or other persons or entities with or through whom Employer and/or any
subsidiary or affiliate or either has done business, for the purpose of
providing such services or engaging in such activities or in any other way
interfere with or detract from the business and opportunities of Employer or any
subsidiary or affiliate of Employer, including by way of example and without
limiting the generality of the foregoing, by inducing an employee to leave
Employer's employ or that of any subsidiary or affiliate of Employer, or by
inducing a consultant or other independent contractor to sever that person's
relationship with Employer or with any subsidiary or affiliate of Employer.
(c) Employee acknowledges that the restrictions contained in this
paragraph are reasonable and necessary in view of the nature of Employer's
businesses, in order to protect the legitimate interests of Employer, and that
any violation thereof would result in irreparable injury to Employer. Therefore,
Employee agrees that, in the event of a breach or threatened breach by Employee
of the provision of subparagraphs 4(a) or 4(b), Employer shall be entitled to
obtain from any court of competent jurisdiction, preliminary and permanent
injunctive relief restraining Employee from any violation of the foregoing.
(d) Nothing herein shall be construed as prohibiting Employer from
pursuing any other remedies available to Employer for such breach or threatened
breach, including recovery of damages from Employee, and an equitable accounting
of all earnings, profits and other benefits arising from such violation.
(e) Employee and Employee acknowledge their intention that Employer shall
have the broadest possible protection of the value to Employer's business in the
trade area set forth above consistent with public policy, and it will not
violate the intent of parties if any court should determine that, consistent
with established precedent of the forum state, the public policy of such state
requires a more limited restriction in geographical area or duration of
Employee's covenant not to compete, contained in an appropriate decree.
5. Termination.
This Agreement may be terminated by Employer under any of the following
circumstances:
(a) Upon the death of Employee; or
(b) Upon the inability of Employee to perform all of his duties hereunder
by reason of illness, physical, mental or emotional disability or other
incapacity, which inability shall continue for more than three (3) months or six
(6) months in the aggregate during any period of twelve (12) consecutive months;
or
(c) For cause, defined as the failure of Employee (other than for the
reasons described in subparagraph 5(b) above) to perform or to observe and
comply with any of the material terms or provisions of this Employment
Agreement; Employer's good faith determination that Employee is not
3
<PAGE>
adequately performing his duties hereunder; misconduct or action on the part of
Employee that is damaging or detrimental to Employer; conviction of a crime
involving a felony; fraud, embezzlement or the like; habitual insobriety;
habitual use of a controlled substance; or misappropriation of Employer's funds.
6. Insurance.
Employer shall have the right to purchase such policies of insurance on the
life of Employee as may be determined by Employer in its sole discretion, and as
may be available, at the sole cost and expense of Employer, and naming Employer
as owner and beneficiary, and Employee shall cooperate in the placement thereof.
7. Notice.
(a) Each notice, demand, request, consent, report, approval or
communication ('Notice') which is or may be required to be given by any party to
any other party in connection with this Agreement and the transactions
contemplated hereby, shall be in writing, and given by telecopy, personal
delivery, receipted delivery device, or by certified mail, return receipt
requested, prepaid and properly addressed to the party to be served as shown in
subparagraph 7(b) below.
(b) Notices shall be effective on the date sent via telecopy, the date
delivered personally or by receipted delivery service, or three (3) days after
the date mailed:
If to Employer: NutraMax Products, Inc.
One MEDIQ Plaza
Pennsauken, NJ 08110
Attn: Donald E. Lepone
If to Employee: At his residence address most
recently filed with Employer.
In each case, with Alan S.Einhorn, Esq.
copies to: Corporate Counsel
MEDIQ Incorporated
One MEDIQ Plaza
Pennsauken, NJ 08110
(c) Each party may designate by Notice to the others in writing, given in
the foregoing manner, a new address to which any Notice may thereafter be so
given, served or sent.
8. Waiver of Breach.
The waiver by either party of a breach of any provision of this Agreement
by the other shall not operate or be construed as a waiver of any subsequent
breach.
9. Assignment.
The rights and obligations of Employer under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of Employer,
but the rights and obligations of Employee are personal and may not be assigned
or delegated without Employer's prior written consent.
10. Entire Agreement.
This Agreement contains the entire agreement of the parties with respect to
the subject matter hereof. It may not be changed orally, but only by an
agreement in writing executed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
11. Law Applicable.
This Agreement and all covenants contained herein, shall be governed in all
respects, whether as to validity, construction, capacity, performance or
otherwise, by the laws of the Commonwealth of Massachusetts in which it has a
situs. Each of the covenants contained in paragraph 4 of this Agreement shall be
construed as a separate covenant in each of the separate cities and counties of
the United States in which Employer presently is engaged in business. To the
extent that any such covenant shall be unenforceable in any one or more of such
cities or counties, such declaration shall not affect this covenant with respect
to any other city or county, as each of said covenants shall be construed to be
severable and independent. In the event any provision of this Agreement shall be
held invalid by a court with jurisdiction over the parties to this Agreement,
such provision shall be deleted from the Agreement, which shall then be
construed to give effect to the remaining provisions thereof.
4
<PAGE>
12. Paragraph Headings.
The paragraph headings contained in this Agreement are for convenience only
and in no manner shall be construed as part of this Agreement.
13. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
Employer:
NutraMax Products, Inc.
By: _/s/___________________________
Donald E. Lepone, President
Employee:
_/s/__________________________(SEAL)
Gary A. LeDuc
5
<PAGE>
<PAGE>
MARCH 29, 1994
Mr. Donald E. Lepone
861 O'Connell Place
Oradell, NJ 07649
NOTICE OF GRANT OF NONQUALIFIED STOCK OPTION TO EMPLOYEE
Dear Mr. Lepone:
I am pleased to notify you that on March 1, 1994, the Stock Option
Committee of NutraMax Products, Inc. (Company') granted to you a nonqualified
stock option (the 'Option') pursuant to the Company's Stock Option Plan (the
'Plan') to purchase up to 500,000 shares of the Common Stock of the Company at
the price per share set forth below, beginning (subject to the vesting and
approval requirements set forth below) on March 1, 1994, and from time to time
thereafter, until March 1, 1999, when the Option shall expire. Any portion of
the Option which is exercisable in any one year period and is not exercised in
that year shall accumulate and remain exercisable until the expiration date
stated above.
The Option is subject to:
Vesting -- The Option vests and is exercisable as follows:
<TABLE>
<CAPTION>
EXERCISE
NUMBER OF PRICE CONDITION
SHARES VESTING DATE PER SHARE TO VESTING
----------- ----------------------- ------------- ------------------------------------------------
<S> <C> <C> <C> <C>
Group 1: 100,000 Fiscal Year End $ 11.00 None
('FYE') 1994 (1)
Group 2: 100,000 FYE 1995(1) $ 11.00 Market Price must be at least $12.65 per share
Group 3: 100,000 FYE 1996(1) $ 11.00 Market Price must be at least $14.55 per share
Group 4: 100,000 FYE 1997(1) $ 11.00 Market Price must be at least $16.73 per share
Group 5: 100,000 FYE 1998(1) $ 11.00 Market Price must be at least $19.24 per share
</TABLE>
- ------------------
(1) Or the most recently completed trading day.
provided, however, that any group of options which do not vest on the applicable
Vesting Date as a result of the applicable Condition to Vesting not being
satisfied shall not terminate, and shall instead become a part of the next group
to be vested at and upon the terms and conditions applicable to such next group.
All options which have not vested on or before the 1998 fiscal year end shall
terminate and never vest or become exercisable. For purposes of determining
satisfaction with the Conditions to Vesting, 'Market Price' shall mean the
closing bid price per share of the Common Stock on the NASDAQ Stock Market (or
other principal securities exchange on which the Common Stock is then included)
as of a date within sixty (60) days prior to the applicable Vesting Date.
Shareholder Approval -- Since the total number of options granted hereunder
is in excess of those provided for under the Plan, the Board of Directors has
authorized additional shares to be eligible for option grants. The Shareholders
of the Company must approve the additional shares, and will be asked to do so in
the future. The option granted hereunder, to the extent it exceeds the number of
shares available under the Plan on the date of grant, will not be exercisable
unless and until shareholder approval is received.
1
<PAGE>
Change of Control -- In the event of a Change of Control (as that term is
defined in the Plan) of the Company, any group of options which has not vested
as of the effective date of such Change of Control shall vest and become
exercisable if and to the extent that the value of the consideration received,
if any, by the shareholders of the Company from such Change of Control is equal
to or greater than the applicable Conditions for Vesting. For example, if a
Change of Control occurs on January 1, 1995 and the value of the consideration
is $15.00 per share, then the options in Group 2 and Group 3 will vest and
become exercisable upon the effective date of such Change of Control.
Your attention is directed to the terms and conditions of the Plan, which
govern the Option. You have previously received a copy of the Plan. Although you
should review the Plan in its entirety, the following points should be
emphasized:
-- Except as specifically provided otherwise therein, during your lifetime
the Option may only be exercised by you, and may not be transferred by you,
except in the case of your death, in which case the Option may be exercised by
your executor, administrator or heirs within three months after your death;
-- If your employment terminates because of disability, the Option may be
exercised by you within one year after such termination;
-- If your employment terminates as a result of your retirement, the Option
may be exercised by you within three months after such termination,
-- In the case of the termination of your employment with the Company or
any Subsidiary for cause, the Option is immediately terminated; and
-- If your employment with the Company is terminated for any other reason,
the Option may be exercised by you within 30 days after the date of termination
of employment.
Further, your attention is directed to Exhibit A attached hereto, which
sets forth additional holding period rules required for publicly-traded
corporations under the Securities Exchange Act of 1934.
While the option has been granted pursuant to the Plan, it has been
designated as a non-qualified option, and therefor does not qualify under the
requirements or Section 422 of the Internal Revenue Code of 1986, as amended.
The Company makes no representation to you with respect to the tax consequences
of this Option, and suggests that if desired, you seek advice with respect
thereto from your tax counsel.
The exercise of this Option shall be subject to the condition that if at
any time the Company shall determine in its discretion that the satisfaction of
withholding tax or other withholding liabilities, or that the listing,
registration or qualification of any shares otherwise deliverable upon such
exercise, upon any securities exchange or under any state or federal law, or
that the consent or approval of any regulatory body, is necessary or desirable
as a condition of, or in connection with, the exercise or the delivery or
purchase of shares pursuant to this Option, then in any such event, the exercise
shall not be effective unless such withholding, listing, registration,
qualification, consent or approval shall have been effective or obtained, free
of any conditions not acceptable to the Company.
You may exercise the Option by furnishing a letter to the Secretary of the
Company stating your intention to exercise all or part of the then vested
portion of the Option, and setting forth the number of shares covered by the
exercise, your social security number, current residence address, and the
name(s) in which the share certificate is to be issued. To be effective, the
letter must be accompanied by payment in full for the shares then being
purchased.
The Plan reflects the desire of the Company's Board of Directors and
management to encourage key employees to become stockholders and to identify
themselves as such with the progress of the Company, and you are encouraged to
take full advantage of your rights under the Plan. In accepting the Option,
however, you do acknowledge that nothing in the granting of the Option in any
way affects the right of the Company to terminate your employment or alter your
employment responsibilities, duties or authority at any time; that the Company
has no obligation to register the shares of stock subject to
2
<PAGE>
the Option under the Securities Act of 1933, as amended, or under any other
applicable securities laws, and you agree to take such reasonable steps as the
Company may request to assure that the Option complies with all such laws; and
that as an employee of the Company, you are intimately knowledgeable of the
business and operations of the Company and are relying solely on such knowledge
in accepting the Option and in any exercise thereof.
If you wish to accept the grant of the Option, and agree to be legally
bound by all of the terms and conditions of the Plan and this letter, please
sign the enclosed copy of this letter and return it to the undersigned. If you
have any questions with respect to the Plan or your rights under it, please
contact me.
Sincerely,
NUTRAMAX PRODUCTS, INC.
By: _/s/___________________________
Steven J. Feder
Assistant Secretary
I hereby accept the stock option
granted in the above letter and,
intending to be legally bound,
agree to all of the terms and
conditions of such letter and
the Plan.
_/s/____________________________
Optionee
________________________________
Date
3
<PAGE>
EXHIBIT A
All grants of Options shall be subject to the following provisions required
under Rule 16b-3 of the Securities Exchange Act of 1934 (the 'Exchange Act'),
and the terms used herein shall be interpreted in a manner consistent with Rule
16a-3 and related rules as in effect from time to time:
1. Any equity security, as defined by the Exchange Act, offered pursuant to
the Plan to an optionee who is at the time subject to Section 16 of the Exchange
Act, may not be sold for at least six months after grant of the option pursuant
to which the equity security is acquired except in case of death or disability,
and any optionee who acquires a derivative security pursuant to the Plan and who
is at the time subject to Section 16 of the Exchange Act, must wait six months
from the date of the acquisition of the derivative security before selling the
underlying security, unless such sale or exercise is permissible under the
provisions of Rule 16b-3;
2. Option grants which constitute derivative securities shall not be
transferable by an optionee except by will or the laws of decent and
distribution, and shall be exercisable during the optionee's lifetime only by
such optionee or his guardian or legal representative; provided, however, that
the Committee may determine that these restrictions on transferability shall not
apply to options granted to any optionee who, at the time of the initial grant
and the transfer, is not subject to Section 16 of the Exchange Act. However, the
provisions of Section 422 of the Code shall continue to apply to any grant of an
option, whether or not Section 16 of the Exchange Act applies; and
3. Other provisions of the Plan and any Notice of Grant of Stock Option
notwithstanding, if any decision regarding an option or the exercise of any
right by an optionee, at any time such optionee is subject to Section 16 of the
Exchange Act, is required to be made or approved by the Committee, in order that
the Plan will continue to meet the requirements of Rule 16b-3, or in order that
a transaction by such optionee will be exempt under Rule 16b-3, then the
Committee shall retain full and exclusive power and authority to make such
decision or to approve or disapprove any such decision by the optionee.
4
<PAGE>
EXHIBIT 21
Set forth below is a list of NutraMax Products, Inc.'s subsidiaries, as of
December 1, 1995, with their respective states of incorporation. All of such
subsidiaries were wholly-owned by the Company as of such date.
<TABLE>
<CAPTION>
STATE OF
NAME INCORPORATION
- ------------------------------------------------- -------------
<S> <C>
Optopics Laboratories Corporation DE
Fairton Realty Holdings, Inc. DE
Powers Pharmaceutical Corporation(1) DE
Certified Corp. DE
Oral Care, Inc. DE
Florence Realty, Inc. MA
</TABLE>
- ------------------
(1) Subsidiary of Certified Corp.
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-46553 of NutraMax Products, Inc. on Form S-3, Registration Statement No.
33-61724-01 of NutraMax Products, Inc. on Form S-3 and Registration Statement
No. 33-47175 of NutraMax Products, Inc. on Form S-8 of our report dated November
3, 1995, appearing in this Annual Report on Form 10-K of NutraMax Products, Inc.
for the year ended September 30, 1995.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 18, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 503
<SECURITIES> 0
<RECEIVABLES> 9,651
<ALLOWANCES> 601
<INVENTORY> 12,497
<CURRENT-ASSETS> 23,552
<PP&E> 33,474
<DEPRECIATION> 9,760
<TOTAL-ASSETS> 63,074
<CURRENT-LIABILITIES> 9,400
<BONDS> 14,454
<COMMON> 9
0
0
<OTHER-SE> 39,224
<TOTAL-LIABILITY-AND-EQUITY> 63,074
<SALES> 63,111
<TOTAL-REVENUES> 63,111
<CGS> 45,916
<TOTAL-COSTS> 45,916
<OTHER-EXPENSES> 8,694
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,427
<INCOME-PRETAX> 7,390
<INCOME-TAX> 2,916
<INCOME-CONTINUING> 4,474
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,474
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
</TABLE>
