<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: July 1, 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
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____
As of August 4, 1995 there were 8,519,832 shares of Common Stock, par value
$.001 per share, outstanding.
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
Thirteen Weeks Ended July 1, 1995
PART I. FINANCIAL INFORMATION:
<TABLE>
<S> <C>
Item 1. Financial Statements.
Condensed Consolidated Statements of Operations -
Thirteen Weeks and Thirty-Nine Weeks ended July 1, 1995
and July 2, 1994 (Unaudited) 4
Condensed Consolidated Balance Sheets -
July 1, 1995 (Unaudited) and October 1, 1994 5
Condensed Consolidated Statements of Cash Flows -
Thirty-Nine Weeks ended July 1, 1995 and July 2, 1994 6
Notes to Condensed Consolidated Financial Statements (Unaudited) 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 9-10
PART II. OTHER INFORMATION
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
2
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
Thirteen Weeks Ended July 1, 1995
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
3
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------------- -------------------------
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $15,184,000 $15,399,000 $45,362,000 $40,577,000
Cost of sales 11,321,000 10,591,000 32,618,000 27,881,000
----------- ----------- ----------- -----------
Gross profit 3,863,000 4,808,000 12,744,000 12,696,000
Selling, general & administrative expenses 2,158,000 2,450,000 6,554,000 6,948,000
----------- ----------- ----------- -----------
Operating income 1,705,000 2,358,000 6,190,000 5,748,000
Other credits (charges):
Interest expense (364,000) (302,000) (1,105,000) (634,000)
Other 60,000 8,000 288,000 52,000
----------- ----------- ----------- -----------
Income before income tax expense 1,401,000 2,064,000 5,373,000 5,166,000
Income tax expense 544,000 879,000 2,167,000 2,209,000
----------- ----------- ----------- -----------
Net income $ 857,000 $ 1,185,000 $ 3,206,000 $ 2,957,000
=========== =========== =========== ===========
Earnings per share $ .10 $ .14 $ .38 $ .35
=========== =========== =========== ===========
Weighted average shares outstanding 8,520,000 8,506,000 8,520,000 8,467,000
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 1, October 1,
1995 1994
----------- -----------
(Unaudited) (See Note)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 147,000 $ 376,000
Accounts receivable, net 7,798,000 8,074,000
Inventories 12,634,000 11,238,000
Deferred income taxes 645,000 1,050,000
Prepaid expenses and other 253,000 729,000
----------- -----------
Total current assets 21,477,000 21,467,000
Property, plant and equipment, net 23,327,000 22,499,000
Goodwill, net 14,122,000 14,541,000
Other assets 1,916,000 1,943,000
----------- -----------
$60,842,000 $60,450,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,492,000 $ 4,865,000
Accrued payroll and related taxes 462,000 608,000
Accrued expenses - other 865,000 1,378,000
Current maturities of long-term debt 1,904,000 1,444,000
----------- -----------
Total current liabilities 6,723,000 8,295,000
Long-term debt, less current maturities 14,758,000 16,183,000
Deferred income taxes and other liabilities 1,398,000 1,215,000
Stockholders' equity 37,963,000 34,757,000
----------- -----------
$60,842,000 $60,450,000
=========== ===========
</TABLE>
Note: The balance sheet at October 1, 1994 has been condensed from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
5
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
--------------------------
July 1, July 2,
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,206,000 $ 2,957,000
Adjustments to reconcile net income to net cash
provided by operating activities 3,199,000 2,968,000
Increase (decrease), net of effect from acquisition:
Accounts receivable 350,000 73,000
Inventories (1,396,000) (3,464,000)
Prepaid expenses and other 444,000 612,000
Accounts payable (1,373,000) 309,000
Accrued payroll and related taxes (146,000) 145,000
Accrued expenses - other (424,000) 1,478,000
----------- -----------
Net cash provided by operating activities 3,860,000 5,078,000
Cash flows from investing activities:
Acquisition of Powers, net of cash acquired -- (13,423,000)
Purchases of property and equipment (2,818,000) (2,956,000)
Other (306,000) 193,000
----------- -----------
Net cash used in investing activities (3,124,000) (16,186,000)
Cash flows from financing activities:
Borrowings -- 19,165,000
Debt repayments (965,000) (8,795,000)
Proceeds from exercise of stock options -- 177,000
----------- -----------
Net cash provided by (used in) financing activities (965,000) 10,547,000
----------- -----------
Net decrease in cash (229,000) (561,000)
Cash:
Beginning of period 376,000 1,399,000
----------- -----------
End of period $ 147,000 $ 838,000
=========== ===========
Supplemental disclosure of cash flow information:
Income taxes paid $ 1,786,000 $ 916,000
=========== ===========
Interest paid $ 1,041,000 $ 510,000
=========== ===========
Supplemental disclosure of non-cash financing activities:
Plant and equipment financed with debt and capital leases $ -- $ 794,000
=========== ===========
Issuance of stock - non-cash compensation $ -- $ 318,000
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Condensed Consolidated Financial Statements
The condensed consolidated balance sheet as of July 1, 1995, the condensed
consolidated statements of operations for the thirteen and thirty-nine weeks
ended July 1, 1995 and July 2, 1994, and the condensed consolidated statements
of cash flows for the thirty-nine weeks then ended have been prepared by the
Company without audit. In the opinion of the Company, all adjustments
(consisting only of normal, recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at July 1, 1995,
and for all periods presented, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's October 1, 1994 Annual Report on Form 10-K. The results of
operations for the period ended July 1, 1995 are not necessarily indicative of
the operating results for the full year.
Note B - Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
<TABLE>
<CAPTION>
July 1, October 1,
1995 1994
----------- ------------
<S> <C> <C>
Raw materials $ 6,364,000 $ 4,799,000
Finished goods 5,292,000 5,600,000
Work-in-process 466,000 355,000
Machine parts and factory supplies 512,000 484,000
----------- -----------
$12,634,000 $11,238,000
=========== ===========
</TABLE>
Note C - Long-Term Debt
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 loan 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. At
July 1, 1995, $6,850,000 was outstanding under the revolving credit facility.
The amount of available credit fluctuates with the amount of eligible accounts
receivable and inventory. Based upon management's analysis, $909,000 of credit
was available at July 1, 1995. The term loans bear interest at prime plus .5%
and/or, at the Company's option, LIBOR plus 2.5%, and are payable in twenty
quarterly principal installments of $450,000. The mortgage bears interest at
prime plus .5% and/or, at the Company's option, LIBOR plus 2.5%, and is payable
in nineteen quarterly principal installments of $17,000, with a final payment
of approximately $680,000 in February 2000.
7
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note D - Special Committee
MEDIQ Incorporated ("MEDIQ"), a 47% owner of the Company, has formed a Special
Committee of its Board of Directors for the purposes 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 action, the Company
has 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.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion addresses the financial condition of the Company
as of July 1, 1995 and its results of operations for the thirteen and
thirty-nine week periods then ended, compared with the same periods last year.
This discussion should be read in conjunction with the Management's Discussion
and Analysis section included in the Company's Annual Report on Form 10-K for
the year ended October 1, 1994 (pages 8-10) to which the reader is directed for
additional information.
Results of Operations
The Company acquired all of the outstanding common stock of Certified
Corp., parent of Powers Pharmaceutical Corporation ("Powers"), in December 1993.
The results of operations of Powers are included in the Company's Condensed
Consolidated Statement of Operations from the date of acquisition.
The following table sets forth, for all periods indicated, the percentage
relationship that items in the Company's Condensed Consolidated Statements of
Operations bear to net sales.
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------- -----------------------
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
------ ------ ------- -------
<S> <C> <C> <C> <C>
Net sales 100% 100% 100% 100%
Cost of sales 75 69 72 69
--- --- --- ---
Gross profit 25 31 28 31
Selling, general and administrative expenses 14 16 14 17
--- --- --- ---
Operating income 11 15 14 14
Other credits (charges) (2) (2) (2) (1)
--- --- --- ---
Income before income tax expense 9 13 12 13
Income tax expense 4 6 5 6
--- --- --- ---
Net income 5% 7% 7% 7%
=== === === ===
</TABLE>
Thirteen Weeks Ended July 1, 1995 Compared with Thirteen Weeks
Ended July 2, 1994
Net sales for 1995 were $15,184,000, as compared to $15,399,000 for the
prior year quarter. The decrease in net sales was primarily attributable to
continued softness in Cough/Cold product sales resulting from the mild winter,
coupled with the time needed for retailers to sell down inventories. This
decrease was partially offset by increased sales in Feminine Hygiene and
Personal Care products as a result of increased volume with existing customers
and an expanded customer base.
Gross profit for 1995 was 25% of net sales, as compared to 31% for the
prior year quarter. The decrease in gross profit as a percentage of net sales
reflects the impact of competitive pressure relating to the Company's Feminine
Hygiene and Personal Care products, lower production levels for Cough/Cold
products and changes in product mix.
Selling, general and administrative expenses for 1995 were $2,158,000, or
14% of net sales, as compared to $2,450,000, or 16% of net sales for the prior
year quarter. The decrease was primarily attributable to non-recurring expenses
incurred in the prior year quarter.
Interest expense for 1995 was $364,000, as compared to $302,000 in the
prior year quarter. This increase was primarily attributable to increases in
interest rates.
9
<PAGE>
Thirty-Nine Weeks Ended July 1, 1995 Compared with Thirty-Nine Weeks
Ended July 2, 1994
Net sales for 1995 were $45,362,000, an increase of $4,785,000, or 12%,
over net sales of $40,577,000 in the prior year period. The increase in net
sales was primarily attributable to sales of Cough/Cold products resulting from
the acquisition of Powers in December 1993 in addition to increased volume in
all other product categories.
Gross profit for 1995 was 28% of net sales, as compared to 31% for the
prior year period. The decrease in gross profit as a percentage of net sales
reflects the impact of continued competitive pressure relating to the Company's
Feminine Hygiene and Personal Care products, lower production levels for
Cough/Cold products and changes in product mix.
Selling, general and administrative expenses for 1995 were $6,554,000 or
14% of net sales, as compared to $6,948,000, or 17% of net sales in the prior
year period. The decrease was primarily attributable to non-recurring expenses
incurred in the prior year period. As a percentage of net sales, selling,
general and administrative expenses decreased in the current period as a result
of moderately decreased costs allocated over increased sales volume.
Interest expense for 1995 was $1,105,000, as compared to $634,000 in the
prior year period. This increase was primarily attributable to debt incurred in
connection with the acquisition of Powers and increases in interest rates.
Liquidity and Capital Resources
The Company's working capital increased to $14,754,000, as compared to
working capital of $13,172,000 as of October 1, 1994. Net cash provided by
operating activities decreased to $3,860,000 for the thirty-nine weeks ended
July 1, 1995, as compared to $5,078,000 in the prior year period. This decrease
was primarily attributable to fluctuations in certain current liabilities and
prepaid income taxes, partially offset by improved operating results and lower
inventory purchases.
Net cash used in investing activities for 1995 consisted primarily of
capital expenditures of $2,818,000 for additional capacity. The Company
anticipates capital expenditures of approximately $1,000,000 during the
remainder of 1995, primarily for additional capacity.
Net cash used in financing activities for 1995 consisted of debt repayments
of $965,000.
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. At July 1, 1995, $6,850,000 was outstanding under this facility.
The amount of available credit fluctuates based upon the amount of eligible
accounts receivable and inventory. Based upon management's analysis, $909,000 of
credit was available at July 1, 1995. The term loans bear interest at prime plus
.5% and/or, at the Company's option, LIBOR plus 2.5%, and are payable in twenty
quarterly principal installments of $450,000. The mortgage bears interest at
prime plus .5% and/or, at the Company's option, LIBOR plus 2.5%, and is payable
in nineteen quarterly principal installments of $17,000, with a final payment
of approximately $680,000 in February 2000.
The Company believes that its existing working capital and anticipated
funds to be generated from future operations will be sufficient to meet the
Company's operating and capital needs. Depending upon future growth of the
business, additional financing may be required.
10
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
MEDIQ Incorporated ("MEDIQ"), a 47% owner of the Company, has formed a
Special Committee of its Board of Directors for the purposes 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 action,
the Company has 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.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27 -- Financial Data Schedule appears on page 13.
(b) Reports on Form 8-K
No reports on Form 8-K were filed in the quarter ended July 1,
1995.
11
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
Thirteen Weeks Ended July 1, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NutraMax Products, Inc.
-------------------------------
(Registrant)
August 14, 1995
---------------
(Date) /s/ Robert F. Burns
------------------------------
Robert F. Burns
Vice President and
Chief Financial Officer
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
Financial Data Schedule
(Unaudited)
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUL-01-1995
<CASH> 147
<SECURITIES> 0
<RECEIVABLES> 8,463
<ALLOWANCES> 665
<INVENTORY> 12,634
<CURRENT-ASSETS> 21,477
<PP&E> 33,061
<DEPRECIATION> 9,734
<TOTAL-ASSETS> 60,842
<CURRENT-LIABILITIES> 6,723
<BONDS> 14,758
<COMMON> 9
0
0
<OTHER-SE> 37,954
<TOTAL-LIABILITY-AND-EQUITY> 60,842
<SALES> 45,362
<TOTAL-REVENUES> 45,362
<CGS> 32,618
<TOTAL-COSTS> 6,554
<OTHER-EXPENSES> (288)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,105
<INCOME-PRETAX> 5,373
<INCOME-TAX> 2,167
<INCOME-CONTINUING> 3,206
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,206
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
