<PAGE>
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
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Commission File Number 0-1561
REUTER MANUFACTURING, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0780999
------------------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
410 - 11th Avenue South, Hopkins, Minnesota 55343
- --------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
612/935-6921
- --------------------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during past 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 July 15, 1997 there were outstanding 4,813,385 shares of the registrant's
common stock, par value $.18-3/4 per share.
1
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PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
REUTER MANUFACTURING, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales $5,713,985 $3,359,688 $10,731,410 $6,079,600
Cost of sales 3,876,188 2,579,411 7,357,439 4,868,709
---------- ---------- ----------- ----------
GROSS PROFIT 1,837,797 780,277 3,373,971 1,210,891
Selling, general and administrative expenses 916,550 644,814 1,660,995 1,157,078
---------- ---------- ----------- ----------
OPERATING INCOME 921,247 135,463 1,712,976 53,813
---------- ---------- ----------- ----------
Other income (expenses):
Interest income 6,549 2,250 14,186 11,774
Interest expense (91,141) (100,991) (221,229) (202,834)
Other, net (3,691) 20,015 (10,181) 8,011
---------- ---------- ----------- ----------
TOTAL OTHER EXPENSE, NET (88,283) (78,726) (217,224) (183,049)
---------- ---------- ----------- ----------
INCOME (LOSS) FROM OPERATIONS BEFORE
PROVISION FOR INCOME TAXES AND EXTRAORDINARY
ITEM - GAIN ON DEBT RESTRUCTURING 832,964 56,737 1,495,752 (129,236)
Provision for income taxes (17,492) (31,411)
---------- ---------- ----------- ----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 815,472 56,737 1,464,341 (129,236)
Extraordinary items - gains on debt
restructuring (note 2) 3,431,052 7,249,018 3,431,052 7,249,018
---------- ---------- ----------- ----------
NET INCOME $4,246,524 $7,305,755 $ 4,895,393 $7,119,782
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
REUTER MANUFACTURING, INC.
STATEMENTS OF OPERATIONS
(CONTINUED)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income (loss) per common and common
equivalent share data:
Primary:
INCOME (LOSS) PER SHARE BEFORE
EXTRAORDINARY ITEMS $ 0.17 $ 0.02 $ 0.36 ($0.04)
Extraordinary items (note 2) 0.72 2.27 0.84 2.27
---------- ---------- ---------- ----------
NET INCOME PER SHARE $ 0.89 $ 2.29 $ 1.20 $ 2.23
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Fully diluted:
INCOME (LOSS) PER SHARE BEFORE
EXTRAORDINARY ITEMS $ 0.17 $ 0.01 $ 0.36 ($0.04)
Extraordinary items (note 2) 0.72 1.83 0.84 2.03
---------- ---------- ---------- ----------
NET INCOME PER SHARE $ 0.89 $ 1.84 $ 1.20 $ 1.99
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number of shares outstanding:
Primary 4,741,586 3,191,520 4,089,004 3,191,520
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Fully Diluted 4,747,103 3,960,016 4,099,717 3,575,768
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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REUTER MANUFACTURING, INC.
BALANCE SHEETS
June 30,
1997 December 31,
(Unaudited) 1996
----------- ------------
ASSETS
CURRENT ASSETS:
Cash $ 796,009 $ 74,980
Investments, restricted 250,000 250,000
Accounts receivable, net of allowances of
$30,000 and $25,000 at June 30, 1997 and
December 31, 1996, respectively 2,215,218 1,839,367
Inventories 1,989,303 1,766,040
Other current assets 21,023 29,137
------------ -----------
TOTAL CURRENT ASSETS 5,271,553 3,959,524
Property, plant and equipment, net 4,571,297 4,176,741
Intangible assets, net 373,413 397,731
------------ -----------
TOTAL ASSETS $ 10,216,263 $ 8,533,996
------------ -----------
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Current maturities of long-term debt $ 923,819 $ 4,312,071
Current borrowings under asset-based line of
credit 2,104,867 2,900,097
Accounts payable, trade 956,441 763,495
Accrued expenses 977,460 792,183
------------ -----------
TOTAL CURRENT LIABILITIES 4,962,587 8,767,846
Long-term debt, less current maturities 4,013,355 7,689,725
Other long-term liabilities 116,169 143,998
Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock, par value $.01 per share;
authorized 2,500,000 shares; none issued
Common stock, par value $.1875 per share;
authorized 9,000,000 shares; issued and
outstanding: 4,812,385 shares at June 30,
1997 and 3,208,020 shares at December 31,
1996, respectively 902,322 601,504
Additional paid-in capital 17,709,096 13,713,582
Accumulated deficit (17,487,266) (22,382,659)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 1,124,152 (8,067,573)
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY) $ 10,216,263 $ 8,533,996
------------ -----------
------------ -----------
The accompanying notes are an integral part of the financial statements.
4
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REUTER MANUFACTURING, INC.
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash
For the six months ended June 30,
- --------------------------------------------------------------------------------
1997 1996
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,895,393 $7,119,782
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary items - gains on debt restructuring (3,431,052) (7,249,018)
Depreciation 397,652 343,597
Amortization of intangible assets 24,318 24,317
Gain on sales of assets (2,415)
Provision for uncollectible accounts receivable 5,000 2,000
Provision for writedown of inventories 155,000 56,500
Changes in operating assets and liabilities:
Accounts receivable (380,851) (326,517)
Inventories (378,263) (475,770)
Other assets 8,114 44,152
Accounts payable 192,946 334,086
Accrued expenses 185,277 171,401
Accrued retirement (27,829) (24,696)
- --------------------------------------------------------------------------------
Net cash provided by operating activities 1,643,290 19,834
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 13,500
Additions to property, plant and equipment (354,997) (37,784)
- --------------------------------------------------------------------------------
Net cash used in investing activities (341,497) (37,784)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (4,526,244) (216,874)
Proceeds from asset-based line of credit 10,133,104 5,911,835
Repayment of asset-based line of credit (10,358,974) (5,760,949)
Net proceeds from Private Placement of
common stock 4,151,780
Proceeds from exercise of stock options 19,570
- --------------------------------------------------------------------------------
Net cash used in financing activities (580,764) (65,988)
- --------------------------------------------------------------------------------
Net increase (decrease) in cash 721,029 (83,938)
Cash, beginning of year 74,980 101,048
- --------------------------------------------------------------------------------
Cash, end of period $ 796,009 $ 17,110
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Cash paid for interest $ 222,570 $ 202,887
Noncash investing and financing activities:
Purchase of equipment in exchange for
notes payable 448,296
Settlement of debt obligation in exchange
for common stock 124,982
The accompanying notes are an integral part of the financial statements.
5
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Reuter Manufacturing, Inc.
Notes to Financial Statements
(Unaudited)
1. FINANCIAL STATEMENTS:
The unaudited financial statements of Reuter Manufacturing, Inc. (the
Company) for the three and six-month periods ended June 30, 1997 and 1996,
reflect, in the opinion of management, all adjustments (which include only
normal recurring adjustments, except as described in Note 2) necessary to
fairly state the financial position at June 30, 1997, and the results of
operations and cash flows for the reported periods. The results of
operations for any interim period are not necessarily indicative of results
expected for the full year. These unaudited interim financial statements
should be read in conjunction with the consolidated financial statements
and notes thereto included in the Company's 1996 Annual Report on Form
10-KSB.
RECLASSIFICATIONS:
Certain reclassifications have been made to the period ended June 30, 1996
statements of operations for the three and six-month periods ended June 30,
1996 to conform to the comparable 1997 presentations. These
reclassifications had no impact on the previously reported operating income
or net income.
NEWLY ISSUED ACCOUNTING STANDARDS:
In March 1997, the Financial Accounting Standards Board issued Statement
No. 128 "Earnings per Share," which the Company will adopt effective for
its 1997 year end reporting. The Company will be required to report basic
net income per share based on weighted average common shares outstanding,
without considering common equivalent shares, and diluted net income per
share based on weighted average common and common equivalent shares
outstanding. Diluted net income per share would be equivalent to the
Company's current reporting of primary net income (loss) per common and
common equivalent share.
2. PRIVATE PLACEMENT OF COMPANY STOCK AND SUBSEQUENT DEBT RESTRUCTURING:
On April 18, 1997, the Company completed its Private Placement of 1,517,333
shares of the Company's common stock at $3.00 per share, raising gross
proceeds of $4,552,000. Proceeds of $3,750,000 from the private placement
were used to retire two debt instruments with Sanwa Business Credit
Corporation ("Sanwa"), including the Junior Subordinated Promissory
(Junior) Note and the Income Sharing Agreements described in Note 6 to the
consolidated financial statements included in the Company's 1996 Annual
Report on Form 10-KSB. The balance of the proceeds were used to pay
expenses of the private placement while the remaining proceeds were applied
to general Company operating requirements.
6
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The retired debt instruments represented the remaining obligations
associated with discontinued waste processing operations. The two debt
instruments, including associated future interest at 8%, had an aggregate
carrying value of $6,922,288 at April 18, 1997. The Company owed Sanwa
approximately $252,500 under the two debt instruments for the first quarter
of 1997, which was also paid from gross proceeds of the Private Placement
during the second quarter of 1997. In connection with the retirement of
the Sanwa debt, the warrant previously issued to Sanwa for 3,178,780 shares
of Common Stock and the Trading Standstill Agreements with certain
directors of the Company were terminated. As a result of the transactions
described above, the Company recognized an extraordinary item - gain on
debt restructuring of approximately $3.4 million in the second quarter
ended June 30, 1997. The Senior Subordinated Secured Promissory (Senior)
Note with Sanwa and associated future interest at 8% (carrying value of
$3,097,916 at June 30, 1997) continues as an obligation of the Company. In
addition, the Company obtained waivers for its previous covenant violations
with Sanwa and its asset-based lender. As a result of these waivers, the
Company has reclassified the noncurrent portion of its obligations to Sanwa
and its asset-based lender which were previously in default, to long-term
debt on the balance sheet as of June 30, 1997. In connection with the
Private Placement, the Company also granted the underwriter, a five year
warrant for 50,000 shares of the Company's common stock with an exercise
price of $3.60 per share.
3. SIGNIFICANT CUSTOMERS:
Sales to the Company's two largest medical product customers were
$4,540,555 or 79.5% of net sales for the second quarter of 1997, compared
to sales of $2,453,468 or 73.0% of net sales for the same period in 1996.
Sales to the Company's two largest medical product customers were
$8,424,041 or 78.5% of net sales and $4,228,130 or 69.5% of net sales for
the six-months ended June 30, 1997 and 1996, respectively. Accounts
receivable concentrations associated with the Company's two largest medical
product customers discussed above, represented 71.7% and 6.4%, of June 30,
1997 accounts receivable, respectively. Inventory concentrations, for
production in process to customer specification associated with the
Company's two largest customers at June 30, 1997, were $872,318 and
$129,262, respectively.
4. DIRECTORS STOCK OPTION PLAN:
On May 20, 1997, the Board of Directors approved a new director stock
option plan to grant nonstatutory stock options to non-employee directors
of the Company. Under the plan, a maximum of 125,000 shares of the
Company's common stock is available for grant to new and current
non-employee directors of the Company. The plan provides that new
non-employee directors of the Company be granted 10,000 shares that vest
equally over three years, upon election as a director. Current
non-employee directors are automatically granted options for 2,000 shares
on June 30 of each year and vest over a one year period. All options
are
7
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granted at prices equal to or exceeding the fair market value of the
Company's common stock on the date of grant. The options generally expire
ten years from the date of grant.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company is principally engaged in the business of contract
manufacturing of precision machined products and assemblies. The Company
manufactures, among other items, close tolerance bearing-related assemblies for
the medical device industry. In addition, the Company also began manufacturing
and selling tradename products (oil centrifuges and rotary vane actuators) in
1995. As discussed in Note 2 to the June 30, 1997, financial statements
included in this Form 10-QSB, on April 18, 1997, the Company retired the Junior
Subordinated Promissory Note and Income Sharing Agreement with Sanwa for
$3,750,000, with proceeds from the Private Placement of 1,517,333 shares of
common stock of the Company at $3.00 per share. The retirement of these
obligations resulted in an extraordinary gain of approximately $3.4 million.
RESULTS OF OPERATIONS
The Company's net sales from operations for the second quarter of 1997
increased by approximately 70.1% or $2,354,297 from the same period in 1996.
The Company's net sales for the six-months ended June 30, 1997 were $10,731,410
compared to $6,079,600 for the same period in 1996, an increase of 76.5%. The
improvement in net sales for the three and six-month periods ended June 30, 1997
was due primarily to increased sales of medical products. Sales from the
medical, industrial, and tradename product lines were $4,797,674, $786,254 and
$130,057 respectively, for the second quarter of 1997, as compared to
$2,569,376, $659,594 and $130,718 respectively, for the same period in 1996.
Sales from the medical, industrial, and tradename product lines for the
six-month period ended June 30, 1997 were $9,020,103, $1,447,812 and $263,495
respectively, as compared to $4,551,205, $1,307,369 and $221,026 respectively,
for the same period in 1996. Sales to the Company's two major medical product
customers were $4,540,555 for the second quarter of 1997, compared to $2,453,468
for the same period in 1996. While these major customers accounted for 79.5% of
net sales for the second quarter of 1997 and 73.0% of net sales for the same
period in 1996, one of the customers accounted for 74.8% and 69.3% of net sales
in the second quarter of 1997 and 1996, respectively. Sales to the Company's two
largest medical product customers were $8,424,041 or 78.5% of net sales and
$4,228,130 or 69.5% of net sales for the six-month periods ended June 30, 1997,
and 1996, respectively.
Gross profit was 32.2% in the second quarter of 1997, compared to 23.2%
for the same period in 1996. Gross profit was 31.4% and 19.9% for the six-month
periods ended June 30, 1997 and 1996, respectively. The improvement in gross
profit for the three and six-month periods ended June 30, 1997, was due
primarily to a substantial increase in sales of higher margin
9
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medical products over the same periods in 1996. In addition, the Company
achieved operational efficiencies as a result of the increase in sales volume.
Selling, general and administrative expenses were $916,550 or 16.0% of net
sales for the second quarter of 1997, compared to $644,814 or 19.2% of net sales
for the same period in 1996. Selling, general and administrative expenses were
$1,660,995 or 15.5% of net sales for the six-month period ended June 30, 1997,
compared to $1,157,078 or 19.0% of net sales for the same period in 1996. The
dollar increase in these expenses were $271,736 and $503,917 for the three and
six-month periods ended June 30, 1997, respectively, from the same periods in
1996. Selling expenses increased approximately $43,000 and $111,000 for the
respective three and six-month periods ended June 30, 1997, from the same
periods in 1996, principally to enhance the marketing of the Company's rotary
vane actuators and oil centrifuges. In addition, the sales staff has increased
over the comparable periods in 1996 to support continued diversification of the
Company's customer base and to strengthen current customer relations.
Administrative expenses increased approximately $229,000 and $393,000 for the
three and six-month periods ended June 30, 1997, from the same periods in 1996,
principally resulting from increases in benefit plan accruals resulting from the
Company's increased profitability. Also contributing to the increase were
general pay increases and staffing additions to handle the increased growth,
increases in computer supplies and services to enhance the Company's computer
systems, and general increases in administrative expenses to support increased
sales volume.
In the second quarter of 1997, the Company had operating income of
$921,247, compared to operating income of $135,463 in the same period of 1996.
The Company had operating income of $1,712,976 for the six-month period ended
June 30, 1997, compared to operating income of $53,813 for the same period in
1996. The higher operating income in the three and six-month periods ended June
30, 1997 was due to the increase in higher margin medical product sales as
discussed above, along with increased operational efficiencies as a result of
the increased sales volume, coupled with a decrease (as a percentage of sales)
in selling, general and administrative expenses.
The increase of $9,557 in total other expense, net for the second quarter
of 1997, resulted primarily from a decrease in rental income of approximately
$18,000 from the same quarter of 1996, coupled with a net decrease in interest
expense of $9,900, which included a reversal of approximately $18,000 in accrued
default interest related to the retirement of certain Sanwa debt. Other
expense, net, increased $34,175 for the six-months ended June 30, 1997 from the
same period in 1996. Interest expense increased approximately $18,000 due to
increased utilization of the Company's asset-based short-term financing
arrangement coupled with higher interest rates on borrowings. The balance of
the increase in other expenses is due to a decrease in rental income that was
partially offset by an increase in other miscellaneous expenses for the
six-months ended June 30, 1997, from the same period in 1996.
The Company was profitable during the three and six-months ended June 30,
1997, but generally does not pay regular income taxes because of the utilization
of its net operating loss
10
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carryforwards. The Company is, however, subject to alternative minimum tax
under the Internal Revenue Code of 1986, as amended, because only 90% of the
net operating loss carryforward is allowed as a deduction before arriving at
the alternative minimum taxable income. Therefore, 10% of the Company's
taxable income is subject to the flat alternative minimum tax rate of 21%.
The Company recorded a provision for income taxes of $17,492 and $31,411
during the three and six-month periods ended June 30, 1997, respectively.
The Company's alternative minimum taxable income was negligible during the
same periods of 1996, and accordingly, recorded no provision for income taxes.
The effect of inflation on the Company's results has not been significant.
NET INCOME (LOSS) Net income for the second quarter of 1997 was
$4,246,524, or $.89 per share (primary and fully diluted basis), compared to net
income of $7,305,755 or $2.29 per share ($1.84 per share on a fully diluted
basis), for the same period of 1996. Net income for the six-month period ended
June 30, 1997 was $4,895,393 or $1.20 per share (primary and fully diluted
basis), compared to net income of $7,119,782 or $2.23 per share ($1.99 per share
on a fully diluted basis), for the same period of 1996. The decrease in the net
income for the three and six-month periods ended June 30, 1997, from the net
income for the same periods in 1996 was due primarily to the recognition of an
extraordinary item - gain on debt restructuring of $3,431,052 or $.72 per share
(primary and fully diluted basis) for the three months ended June 30, 1997, and
$.84 per share (primary and fully diluted basis) for the six-months ended June
30, 1997, compared to the recognition of an extraordinary items - gains on
debt restructuring of $7,249,018 or $2.27 per share for the three and
six-month periods ended June 30, 1996 and $1.83 and $2.03 per share (fully
diluted basis) for the three and six-month periods ended June 30, 1996,
respectively. The decrease in net income was partially offset by improved
income from operations for the three and six-month periods ended June 30,
1997.
LIQUIDITY AND CAPITAL RESOURCES The Company had working capital of
$308,966 at June 30, 1997, compared to a working capital deficit of $4,808,322
at December 31, 1996. The current ratio at June 30, 1997 was 1.06 compared to
.45 at December 31, 1996. The improvement in the working capital and current
ratio is due primarily to cash generated from operations, the debt restructuring
transactions with Sanwa, and the reclassification of certain debt to long-term
that was previously classified as a current liability.
As of July 15, 1997, the Company had borrowed approximately $2,623,959 and
had additional availability of approximately $100,000 under its asset-based
line of credit financing arrangement.
The Company generated positive cash flow from operations of $1,643,290
for the six-months ended June 30, 1997, compared to cash flow from operations
of $19,834 for the same period of 1996, due to the increase in net income.
The Company's ability to meet its continuing
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cash flow requirements in the future is dependent on maintaining adequate sales
and margins from its manufacturing operations.
Net cash used in investing activities was $341,497 for the six-months
ended June 30, 1997, compared to cash used in investing activities of $37,784
for the same period in 1996. The increase was due primarily to increased
capital expenditures during 1997.
Net cash used in financing activities was $580,764 for the six-months
ended June 30, 1997, compared to cash used in financing activities of $65,988
for the same period in 1996. The change is primarily due to payments made to
Sanwa of $501,408 under the Restructuring Agreements. In addition, the Company
retired the Junior Subordinated Promissory Note and Income Sharing Agreements
with Sanwa for the sum of $3,750,000 with funds raised through a Private
Placement of the Company's common stock which is discussed in Note 2 of this
Form 10-QSB. The Company was also able to obtain sufficient funds under its
asset-based financing arrangement to meet its operating needs.
Management anticipates making capital expenditures to support
diversification and growth of the manufacturing operations. Near term capital
commitments for new manufacturing equipment total approximately $150,000. The
Company intends to raise capital for these requirements through bank financing
and from cash provided by operations, although there can be no assurance that
the Company will be able to obtain financing, or obtain financing on terms that
are satisfactory to the Company.
In summary, the Company has returned to profitability, showing a profit for
the last 5 consecutive quarters. On April 18, 1997, the Company completed a
Private Placement of 1,517,333 shares of the Company's common stock for gross
proceeds of $4,552,000. Proceeds of $3,750,000 were used to retire the Junior
Note and Income Sharing Agreement with Sanwa. The balance of the proceeds after
expenses of the Private Placement, were applied to general Company funds. The
Company has also obtained waivers for its previous covenant violations with
Sanwa and its asset-based lender. As a result of these waivers, the Company has
reclassified the noncurrent portion of the obligations, which were previously in
default, to long-term on the balance sheet as of June 30, 1997.
Forward looking statements in this Form 10-QSB, including references to
anticipated sales volume and higher medical product margins, involve risks and
uncertainties, with establishing new customers, and developing products to the
specifications of the Company's customers. In addition, the Company has a high
concentration of business with two major customers. Actual future results could
differ materially from those reflected in the forward looking statements.
12
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports
a) Exhibits.
Item No. Item Method of Filing
-------- ---- ----------------
11.1 Statement Regarding Computation
of Per Share Earnings Filed herewith electronically
27.1 Financial Data Schedule Filed herewith electronically
(b) Reports on Form 8-K.
There were no reports on Form 8-K which were filed during the
second quarter of 1997.
13
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REUTER MANUFACTURING, INC.
(Registrant)
Date: July 25, 1997 By: /s/ James W. Taylor
---------------------- ---------------------------------
James W. Taylor
President, Chief Executive Officer
and Chief Financial Officer
(principal executive and financial
officer)
Date: July 25, 1997 By: /s/ William H. Johnson
---------------------- ---------------------------------
William H. Johnson
Vice President, Controller and
Secretary (principal accounting
officer)
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REUTER MANUFACTURING, INC.
EXHIBIT TO QUARTERLY
REPORT ON FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED June 30, 1997
Item No. Item Method of Filing
---------- ---- ----------------
11.1 Statement Regarding Computation
of Per Share Earnings Filed herewith electronically
27.1 Financial Data Schedule Filed herewith electronically
15
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REUTER MANUFACTURING, INC.
DETAIL COMPUTATION OF NET INCOME (LOSS) PER SHARE
------------- -------------
Three Months Three Months
Ended Ended
June 30, 1997 June 30, 1996
------------- -------------
Income (loss) before extraordinary item $ 815,472 $ 56,737
Extraordinary item - gain on debt
restructuring (Note 2) 3,431,052 7,249,018
---------- ----------
Net income $4,246,524 $7,305,755
---------- ----------
---------- ----------
Net income (loss) per common and common
equivalent share:
Primary:
Income (loss) before extraordinary item $ .17 $ .02
Extraordinary item - gain on debt
restructuring (Note 2) .72 2.27
---------- ----------
Net income (loss) per common and common equivalent
share $ .89 $ 2.29
---------- ----------
---------- ----------
Fully diluted:
Income (loss) before extraordinary item $ .17 $ .01
Extraordinary item - gain on debt
restructuring (Note 2) .72 1.83
---------- ----------
Net income (loss) per common and common equivalent
share $ .89 $ 1.84
---------- ----------
---------- ----------
Primary:
Weighted average number of common shares
outstanding during the year 4,473,785 3,191,520
Add common equivalent shares relating to
outstanding options to purchase common stock
using the treasury stock method 227,691
Add dilutive impact of the exercise of a stock
purchase warrant which was granted to John G.
Kinnard Company 40,110
---------- ----------
Weighted average number of common and common
equivalent shares outstanding 4,741,586 3,191,520
---------- ----------
---------- ----------
Fully Diluted:
Weighted average number of common shares
outstanding during the year 4,473,785 3,191,520
Add common equivalent shares relating to
outstanding options to purchase common stock
using the treasury stock method 233,208
Add dilutive impact of the exercise of the
contingent stock purchase warrant which was
granted to Sanwa Business Credit Corporation
on June 8, 1996 768,496
Add dilutive impact of the exercise of a stock
purchase warrant which was granted to John G.
Kinnard Company 40,110
---------- ----------
Weighted average number of common and common
equivalent shares outstanding 4,747,103 3,960,016
---------- ----------
---------- ----------
<PAGE>
REUTER MANUFACTURING, INC.
DETAIL COMPUTATION OF NET INCOME (LOSS) PER SHARE
(CONTINUED)
------------- -------------
Six Months Six Months
Ended Ended
June 30, 1997 June 30, 1996
------------- -------------
Income (loss) before extraordinary item $1,464,341 $ (129,236)
Extraordinary item - gain on debt
restructuring (Note 2) 3,431,052 7,249,018
---------- ----------
Net income $4,895,393 $7,119,782
---------- ----------
---------- ----------
Net income (loss) per common and common
equivalent share:
Primary:
Income (loss) before extraordinary item $ .36 $ (.04)
Extraordinary item - gain on debt
restructuring (Note 2) .84 2.27
---------- ----------
Net income (loss) per common and common
equivalent share $ 1.20 $ 2.23
---------- ----------
---------- ----------
Fully diluted:
Income (loss) before extraordinary item $ .36 $ (.04)
Extraordinary item - gain on debt
restructuring (Note 2) .84 2.03
---------- ----------
Net income (loss) per common and common
equivalent share $ 1.20 $ 1.99
---------- ----------
---------- ----------
Primary:
Weighted average number of common shares
outstanding during the year 3,846,344 3,191,520
Add common equivalent shares relating to
outstanding options to purchase common stock
using the treasury stock method 222,495
Add dilutive impact of the exercise of a stock
purchase warrant which was granted to John G.
Kinnard Company 20,165
---------- ----------
Weighted average number of common and common
equivalent shares outstanding 4,089,004 3,191,520
---------- ----------
---------- ----------
Fully Diluted:
Weighted average number of common shares
outstanding during the year 3,846,344 3,191,520
Add common equivalent shares relating to
outstanding options to purchase common stock
using the treasury stock method 233,208
Add dilutive impact of the exercise of the
contingent stock purchase warrant which was
granted to Sanwa Business Credit Corporation
on June 8, 1996 384,248
Add dilutive impact of the exercise of a stock
purchase warrant which was granted to John G.
Kinnard Company 20,165
---------- ----------
Weighted average number of common and common
equivalent shares outstanding 4,099,717 3,575,768
---------- ----------
---------- ----------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 796,009
<SECURITIES> 0
<RECEIVABLES> 2,215,218
<ALLOWANCES> 0
<INVENTORY> 1,989,303
<CURRENT-ASSETS> 5,271,553
<PP&E> 12,461,990
<DEPRECIATION> 7,890,693
<TOTAL-ASSETS> 10,216,263
<CURRENT-LIABILITIES> 4,962,587
<BONDS> 0
0
0
<COMMON> 902,322
<OTHER-SE> 17,709,096
<TOTAL-LIABILITY-AND-EQUITY> 10,216,263
<SALES> 10,731,410
<TOTAL-REVENUES> 10,731,410
<CGS> 7,357,439
<TOTAL-COSTS> 9,018,434
<OTHER-EXPENSES> 217,224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 221,229
<INCOME-PRETAX> 1,495,752
<INCOME-TAX> 31,411
<INCOME-CONTINUING> 1,464,341
<DISCONTINUED> 0
<EXTRAORDINARY> 3,431,052<F1>
<CHANGES> 0
<NET-INCOME> 4,895,393
<EPS-PRIMARY> 1.20
<EPS-DILUTED> 1.20
<FN>
<F1>EXTRAORDINARY ITEM - GAIN ON DEBT RESTRUCTURING
</FN>
</TABLE>
