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: December 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
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 February 12, 1996 there were 8,519,952 shares of Common Stock, par value
$.001 per share, outstanding.
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
Thirteen Weeks Ended December 30, 1995
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements.
<TABLE>
<S> <C>
Condensed Consolidated Statements of Operations - (Unaudited)
Thirteen Weeks Ended December 30, 1995 and December 31, 1994 4
Condensed Consolidated Balance Sheets -
December 30, 1995 (Unaudited) and September 30, 1995 5
Condensed Consolidated Statements of Cash Flows -
Thirteen Weeks Ended December 30, 1995 and December 31, 1994 (Unaudited) 6
Notes to Condensed Consolidated Financial Statements (Unaudited) 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 9-11
PART II. OTHER INFORMATION 11
</TABLE>
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
Thirteen Weeks Ended December 30, 1995
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Thirteen Weeks Ended
--------------------
December 30, December 31,
1995 1994
------------ ------------
NET SALES $18,148,000 $15,123,000
COST OF SALES 12,571,000 10,521,000
---------- ----------
GROSS PROFIT 5,577,000 4,602,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,806,000 2,204,000
---------- ----------
OPERATING INCOME 2,771,000 2,398,000
OTHER CREDITS (CHARGES):
Interest expense (330,000) (359,000)
Other (224,000) 118,000
---------- ----------
INCOME BEFORE INCOME TAX EXPENSE 2,217,000 2,157,000
INCOME TAX EXPENSE 887,000 919,000
---------- ----------
NET INCOME $1,330,000 $1,238,000
========== ==========
EARNINGS PER SHARE $ .16 $ .15
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 8,520,000 8,520,000
========== ==========
See notes to condensed consolidated financial statements.
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 30, September 30,
1995 1995
------------ -------------
(Unaudited) (See Note)
ASSETS
CURRENT ASSETS:
Cash $ 602,000 $ 503,000
Accounts receivable, net 9,487,000 9,050,000
Inventories 15,057,000 12,497,000
Deferred income taxes 885,000 977,000
Prepaid expenses and other 315,000 525,000
----------- -----------
TOTAL CURRENT ASSETS 26,346,000 23,552,000
PROPERTY, PLANT AND EQUIPMENT, net 24,647,000 23,714,000
GOODWILL, net 13,830,000 13,978,000
OTHER ASSETS 1,882,000 1,830,000
----------- -----------
$66,705,000 $63,074,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,083,000 $ 6,191,000
Accrued payroll and related taxes 623,000 366,000
Accrued expenses - other 1,135,000 939,000
Current portion of long-term debt 1,904,000 1,904,000
----------- -----------
TOTAL CURRENT LIABILITIES 9,745,000 9,400,000
LONG-TERM DEBT, less current maturities 14,397,000 12,550,000
OTHER LONG TERM LIABILITIES 312,000 312,000
DEFERRED INCOME TAXES 1,688,000 1,579,000
STOCKHOLDERS' EQUITY 40,563,000 39,233,000
----------- -----------
$66,705,000 $63,074,000
=========== ===========
Note: The balance sheet at September 30, 1995 has been condensed from the
audited financial statements at that date.
See notes to condensed consolidated financial statements.
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
---------------------------
December 30, December 31,
1995 1994
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,330,000 $ 1,238,000
Adjustments to reconcile net income to net cash
provided by operating activities 1,221,000 908,000
Increase (decrease), net of effect from acquisitions:
Accounts receivable 585,000 1,488,000
Inventories (1,433,000) (915,000)
Prepaid expenses and other 211,000 161,000
Accounts payable 176,000 (452,000)
Accrued payroll and related taxes 126,000 (59,000)
Accrued expenses - other (306,000) (554,000)
Federal and state taxes payable 397,000 579,000
--------- ---------
Net cash provided by operating activities 2,307,000 2,394,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (1,359,000) (1,260,000)
Acquisition, net of cash acquired (2,538,000) --
Deferred Costs (158,000) (119,000)
Other -- 90,000
--------- ---------
Net cash used in investing activities (4,055,000) (1,289,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 2,325,000 --
Debt repayments (478,000) (1,007,000)
--------- ---------
Net cash provided by (used in) financing activities 1,847,000 (1,007,000)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 99,000 98,000
CASH AND CASH EQUIVALENTS:
Beginning of period 503,000 376,000
--------- ---------
End of period $ 602,000 $ 474,000
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 316,000 $ 323,000
=========== ===========
Income taxes paid $ 304,000 $ 186,000
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
<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 December 30, 1995 and the
condensed consolidated statements of operations and cash flows for the thirteen
weeks ended December 30, 1995 and December 31, 1994 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 December 30,
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 September 30, 1995 Annual Report on Form 10-K. The results of
operations for the period ended December 30, 1995 are not necessarily indicative
of the operating results for the full year.
Note B - Acquisition
Effective October 23, 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 markets. The purchase
price consisted of $1,800,000 in cash, liabilities assumed of $363,000 and
related expenses of approximately $375,000.
Note C - Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
December 30, September 30,
1995 1995
------------ ------------
Raw materials $ 5,948,000 $ 5,278,000
Finished goods 7,514,000 6,088,000
Work-in-process 878,000 417,000
Machine parts and factory supplies 717,000 714,000
------------ ------------
$ 15,057,000 $ 12,497,000
============ ============
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note D - Long-Term Debt
On December 30, 1995, the Company's revolving credit facility was increased
$1,000,000 to $9,000,000. As of December 30, 1995, $7,400,000 was outstanding
under the Company's revolving credit facility and $1,300,000 of credit was
available based on management estimates. Additionally, as of November 30, 1995
the LIBOR interest rate option on the revolving credit facility and term loans
with State Street Bank was reduced to LIBOR plus 1.5% and LIBOR plus 2.25%,
respectively.
Note E - Special Committee
The Board of Directors of MEDIQ Incorporated ("MEDIQ"), a 47% owner of the
Company, has undertaken a process of exploring alternative ways to maximize
MEDIQ's shareholder value, which could include the disposition of its holdings
in the Company. In fiscal 1995, the Company formed a Special Committee of its
Board of Directors to explore strategic alternatives for the Company. The
Special Committee retained Wasserstein Parella & Co. as financial advisors to
seek opportunities for the Company to enhance shareholder value. The financial
statements for the current period reflect a charge of $161,000 before taxes
related to the activities of the Special Committee.
<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 December 30, 1995 and its results of operations for the thirteen week
period then ended, compared with the thirteen weeks ended December 31, 1994.
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 September 30, 1995 (pages 8-10) to which the reader is directed
for additional information.
Results of Operations
On October 23, 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.. This acquisition represents the Company's
introduction of its Oral Care product line.
The following table sets forth for the periods indicated the percentage
relationship that items in the Company's Condensed Consolidated Statements of
Operations bear to net sales.
Thirteen Weeks Ended
---------------------
Dec. 30, Dec. 31,
1995 1994
-------- --------
NET SALES 100% 100%
COST OF SALES 69 70
-- --
GROSS PROFIT 31 30
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 16 14
-- --
OPERATING INCOME 15 16
OTHER CREDITS (CHARGES) (3) (2)
-- --
INCOME BEFORE INCOME TAX EXPENSE 12 14
INCOME TAX EXPENSE 5 6
-- --
NET INCOME 7% 8%
== ==
First Quarter 1996 Compared to First Quarter 1995
Net sales for the first quarter of 1996 were $18,148,000, an increase of
$3,025,000, or 20%, over the prior year period sales of $15,123,000. The
increase in net sales was primarily attributable to sales of the new Adult
Nutritional products, which were introduced in March 1995, and Oral Care
products as well as strong sales of Feminine Hygiene and Cough/Cold products
resulting from increased volume.
Gross profit for the first quarter of 1996 increased to 31% of net sales,
as compared to 30% for the prior year period. The increase was primarily
attributable to increased operating leverage related to an increase in
cough/cold products volume and reductions in certain raw material costs.
<PAGE>
Selling, general and administrative expenses for the first quarter of 1996
were $2,806,000, an increase of $602,000, or 27%, over the prior year period
expenses of $2,204,000. As a percentage of net sales, selling, general and
administrative expenses increased to 16% in the current period as compared to
14% in the same period of 1995. These increases were primarily attributable to
commissions and freight expenses associated with increased sales and higher
costs associated with the Adult Nutritional category.
Interest expense for the first quarter of 1996 was $330,000, as compared to
$359,000 for the prior year period. This decrease was attributable to lower
interest rates on lower average debt balances for the period.
Other charges for the first quarter of 1996 were $224,000, primarily
consisting of costs associated with the Special Committee of the Board of
Directors and Wasserstein, Parella & Co., it's financial advisors. The prior
year quarter included $118,000 related to the gain on the sale of equipment.
The effective income tax rate for the first quarter of 1996 was 40%, as
compared to 43% in the prior year period. The decrease relates to the
implementation of tax planning strategies undertaken in 1995 to maximize state
tax benefits.
Liquidity and Capital Resources
As of December 30, 1995, the Company had working capital of $16,601,000,
including cash of $602,000. Net cash provided by operating activities was
$2,307,000 for the quarter ended December 30, 1995, as compared to $2,394,000 in
the prior year period.
Net cash used in investing activities for the first quarter of 1996
consisted primarily of the MiLor acquisition for $2,538,000 and capital
expenditures of $1,359,000. The Company anticipates capital expenditures of
approximately $4,500,000 during the remainder of 1996 for the purchase of
machinery and equipment for increased capacity.
Net cash provided by financing activities was $1,847,000 for the first
quarter of 1996, consisting of $2,325,000 of borrowings primarily attributable
to the Mi-Lor acquisition, partially offset by $478,000 of debt repayments on
the credit facility.
On December 30, 1995, the Company's revolving credit facility was increased
$1,000,000 to $9,000,000. As of December 30, 1995, $7,400,000 was outstanding
under the Company's revolving credit facility and $1,300,000 of credit was
available based on managements estimates. Additionally, as of November 30, 1995
the LIBOR interest rate option on the revolving credit facility and term loans
with State Street Bank was reduced to LIBOR plus 1.5% and LIBOR plus 2.25%,
respectively.
The Company believes that its existing working capital, anticipated funds
to be generated from future operations and the 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.
PART II. OTHER INFORMATION
ITEM VI. EXHIBITS & 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 filed in the quarter ended December 30,
1995
<PAGE>
NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES
Thirteen Weeks Ended December 30, 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)
February 13, 1996
- -----------------
(Date) /s/ Robert F. Burns
----------------------------
Robert F. Burns
Vice President and
Chief Financial Officer
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> DEC-30-1995
<CASH> 602
<SECURITIES> 0
<RECEIVABLES> 10,320
<ALLOWANCES> 833
<INVENTORY> 15,057
<CURRENT-ASSETS> 26,346
<PP&E> 35,152
<DEPRECIATION> 10,505
<TOTAL-ASSETS> 66,705
<CURRENT-LIABILITIES> 9,745
<BONDS> 14,397
<COMMON> 9
0
0
<OTHER-SE> 40,554
<TOTAL-LIABILITY-AND-EQUITY> 66,705
<SALES> 18,148
<TOTAL-REVENUES> 18,148
<CGS> 12,571
<TOTAL-COSTS> 12,571
<OTHER-EXPENSES> 2,806
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 330
<INCOME-PRETAX> 2,217
<INCOME-TAX> 887
<INCOME-CONTINUING> 1,330
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,330
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
