SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____.
Commission File Number 0-18592
---------------------- -------
MERIT MEDICAL SYSTEMS, INC.
---------------------------
(Exact name of Registrant as specified in its charter)
Utah 87-0447695
------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Identification No.)
incorporation or organization)
1600 West Merit Park Way, South Jordan UT, 84095
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(Address of Principal Executive Offices)
(801) 253-1600
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 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
--- ---
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
Common Stock 7,767,458
---------------- -------------------------
TITLE OR CLASS Number of Shares Outstanding at
August 12, 2000
<PAGE>
<TABLE>
<CAPTION>
MERIT MEDICAL SYSTEMS, INC.
---------------------------
INDEX TO FORM 10-Q
------------------
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
<S> <C>
Consolidated Balance Sheets as of June 30, 2000
and December 31, 1999......................................................1
Consolidated Statements of Operations for the three and six months
ended June 30, 2000 and 1999...............................................3
Consolidated Statements of Cash Flows for the six months
ended June 30, 2000 and 1999...............................................4
Notes to Consolidated Financial Statements.................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................................7
Item 3. Quantitative and Qualitative Disclosure About Market Risk..................9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ......................10
Item 5. Other Information ........................................................10
Item 6. Exhibits and Reports on Form 8-K..........................................11
SIGNATURES........................................................................11
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1: Financial Statements
<TABLE>
<CAPTION>
MERIT MEDICAL SYSTEMS, INC.
---------------------------
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
-----------------------------------
June 30, December 31,
ASSETS 2000 1999
------ ------------- -------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 714,641 $ 668,711
Trade receivables - net 13,753,106 12,550,132
Employee and related
party receivables 525,573 502,803
Irish Development Agency grant receivable 102,362 93,059
Inventories 27,775,624 27,521,087
Prepaid expenses and other assets 1,133,644 564,213
Deferred income tax assets 1,029,147 1,052,745
Income tax refund receivable 210,112 210,112
------------- -------------
Total current assets 45,244,209 43,162,862
------------- -------------
PROPERTY AND EQUIPMENT:
Land 1,365,985 1,365,985
Building 1,500,000 1,500,000
Manufacturing equipment 19,862,053 17,617,798
Automobiles 131,426 133,316
Furniture and fixtures 9,250,212 8,883,297
Leasehold improvements 5,322,579 5,114,964
Construction-in-progress 2,018,656 1,669,725
-------------- --------------
Total 39,450,911 36,285,085
Less accumulated depreciation
and amortization (16,193,092) (14,277,666)
------------- -------------
Property and equipment - net 23,257,819 22,007,419
------------- --------------
OTHER ASSETS:
Intangible assets - net 2,492,525 2,319,581
Deposits 50,120 51,319
Cost in excess of the fair value of assets of acquired-net 5,196,502 4,819,288
------------- --------------
Total other assets 7,739,147 7,190,188
------------- --------------
TOTAL $ 76,241,175 $ 72,360,469
============= ============
</TABLE>
See Notes to Consolidated Financial Statements
1
<PAGE>
<TABLE>
<CAPTION>
MERIT MEDICAL SYSTEMS, INC.
---------------------------
CONSOLIDATED BALANCE SHEETS (Continued)
JUNE 30, 2000 AND DECEMBER 31, 1999
-----------------------------------
LIABILITIES AND STOCKHOLDERS' June 30, December 31,
EQUITY 2000 1999
------ ----------- ------------
(Unaudited)
CURRENT LIABILITIES:
<S> <C> <C>
Current portion of long-term debt $ 1,281,687 $ 1,001,917
Trade payables 4,450,030 4,749,432
Accrued expenses 3,603,808 3,092,280
Advances from employees 101,982 116,094
Income taxes payable 1,025 269,441
----------- ------------
Total current liabilities 9,438,532 9,229,164
DEFERRED INCOME TAX LIABILITIES 1,735,313 1,722,094
LONG-TERM DEBT 30,632,668 27,817,308
DEFERRED CREDITS 827,660 901,767
----------- ------------
Total Liabilities 42,634,173 39,670,333
----------- ------------
STOCKHOLDERS' EQUITY:
Preferred stock- 5,000,000 shares authorized as of
June 30, 2000 and December 31, 1999, no shares
issued
Common stock- no par value; 20,000,000 shares
authorized; 7,748,021 and
7,591,236 shares issued at June 30, 2000 and
December 31, 1999, respectively 19,512,909 18,428,572
Retained earnings 14,675,963 14,790,518
Accumulated other comprehensive loss (581,870) (528,954)
----------- ------------
Total stockholders' equity 33,607,002 32,690,136
----------- ------------
TOTAL $ 76,241,175 $ 72,360,469
=========== ============
</TABLE>
See Notes to Consolidated Financial Statements
2
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<TABLE>
<CAPTION>
MERIT MEDICAL SYSTEM, INC.
--------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 and 1999 (Unaudited)
------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
SALES $ 23,552,859 $ 18,979,739 $ 45,633,294 $ 36,681,462
COST OF SALES 15,936,620 11,629,974 30,383,005 22,639,595
------------- ------------- ------------ -------------
GROSS PROFIT 7,616,239 7,349,765 15,250,289 14,041,867
-------------- -------------- ------------ -------------
OPERATING EXPENSES:
Selling, general and administrative 5,688,793 4,980,256 12,027,332 9,799,919
Research and development 1,002,448 892,193 2,008,384 1,693,896
Severance costs 277,300 277,300
------------- ------------- ------------ -------------
TOTAL 6,968,541 5,872,449 14,313,016 11,493,815
-------------- -------------- ------------ -------------
INCOME FROM OPERATIONS 647,698 1,477,316 937,273 2,548,052
OTHER EXPENSE 583,517 228,954 1,100,921 459,500
------------- ------------- ------------ -------------
INCOME (LOSS) BEFORE INCOME TAX 64,181 1,248,362 (163,648) 2,088,552
EXPENSE
INCOME TAX EXPENSE (BENEFIT) 19,254 446,516 (49,093) 702,247
MINORITY INTEREST IN (INCOME)
LOSS OF SUBSIDIARY 0 (49,162) 0 (68,498)
------------- ------------- ------------ -------------
NET INCOME (LOSS) $ 44,927 $ 752,684 $ (114,555) $ 1,317,807
============== ============= ============ =============
EARNINGS (LOSS) PER COMMON SHARE -
Basic and diluted $ 0.01 $ 0.10 $ ( 0.01) $ 0.18
============== ============= =========== =============
AVERAGE COMMON SHARES -
Basic 7,747,976 7,530,307 7,685,444 7,520,754
============== ============= =========== =============
Diluted 7,785,161 7,531,131 7,839,400 7,522,229
============== ============= =========== =============
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
MERIT MEDICAL SYSTEMS, INC.
---------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (Unaudited)
---------------------------------------------------------------
June 30, June 30,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (114,555) $ 1,317,807
Adjustments to reconcile net income (loss) to net
cash provided by (used in) in operating activities:
Depreciation and amortization 2,171,968 1,606,643
Bad debt expense 449,793 11,975
Losses (gains) on sales and abandonment of
property and equipment (2,845) 1,267
Amortization of deferred credits (65,800) (76,643)
Deferred income taxes 36,817 99,217
Minority interest in income of subsidiary -- 68,498
Changes in operating assets and liabilities:
Trade receivables (1,652,767) (664,392)
Employee and related party receivables (22,770) 5,966
Other receivables -- (230,599)
Irish Development Agency grant receivable (17,610) 33,810
Inventories (193,327) (1,588,900)
Prepaid expenses and other assets (569,431) (243,675)
Deposits 1,199 6,796
Trade payables (299,402) 169,259
Accrued expenses 511,528 1,550,066
Advances from employees (14,112) 37,148
Income taxes payable (268,416) 264,770
----------- -----------
Total adjustments 64,825 1,051,206
----------- -----------
Net cash provided by (used in) operating activities (49,730) 2,369,013
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for:
Property and equipment (2,585,817) (2,188,879)
Intangible assets (273,041) (150,576)
Purchase of Electro Catheter assets
(Including cost in excess of fair market value of $482,628) (641,661) --
Other (22,688) --
Proceeds from sale of property and equipment 2,279 --
----------- -----------
Net cash used in investing activities (3,520,928) (2,339,455)
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
MERIT MEDICAL SYSTEMS, INC.
---------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (Unaudited)
---------------------------------------------------------------
June 30, June 30,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing under line of credit -- 1,197,626
Proceeds from issuance of common stock 1,084,337 125,642
Proceeds from long-term debt 3,255,263
Principal payments on:
Long-term debt (670,096) (768,447)
----------- -----------
Net cash provided by financing activities 3,669,504 554,821
----------- -----------
EFFECT OF EXCHANGE RATES ON CASH (52,916) (617,635)
----------- -----------
NET INCREASE (DECREASE) IN CASH 45,930 (33,256)
CASH AT BEGINNING OF PERIOD 668,711 851,910
----------- -----------
CASH AT END OF PERIOD $ 714,641 $ 818,654
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for interest (including
capitalized interest of $61,731 and $63,758 respectively) $ 1,050,752 $ 453,765
=========== ===========
Income taxes $ 182,506 $ 338,260
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
During the six months ended June 30, 2000 and 1999, the Company issued notes
payable totaling $509,963 and $85,230, respectively, for manufacturing equipment
and furniture and fixtures.
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
MERIT MEDICAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. Basis of Presentation. In the opinion of management, the accompanying
consolidated financial statements contain all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation of financial
position of the Company as of June 30, 2000 and December 31, 1999, and the
results of its operations and cash flows for the three and six months ended June
30, 2000 and 1999. The results of operations for the three and six months ended
June 30, 2000 and 1999 are not necessarily indicative of the results for a
full-year period.
2. Inventories. Inventories at June 30, 2000 and December 31, 1999 consisted of
the following:
June 30, December 31,
2000 1999
------------ -----------
Raw materials $ 7,888,690 $ 8,554,635
Work-in-process 3,361,279 3,270,163
Finished goods 18,157,763 16,816,578
Less reserve for obsolete inventory (1,632,108) (1,120,289)
------------ -----------
Total $ 27,775,624 $27,521,087
------------ -----------
3. Income Taxes. The Company has not fully allocated income tax expense between
current and deferred for the quarters and six months ended June 30, 2000 and
1999. The effective tax rates for the three and six months ended June 30, 2000
and 1999 were near or below the 35 % federal statutory rate. Improvements in the
effective tax rate below the 35 % federal statutory rate were largely the result
of the Company's operations in Ireland which are currently taxed at a lower rate
than the Company's overall effective tax rate.
4. Reporting Comprehensive Income - In June 1997, the Financial Accounting
Standards Board (FASB) issued SFAS No.130, "Reporting Comprehensive Income."
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. This statement requires that an
enterprise (a) classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional
paid-in-capital in the equity section of a statement of financial position.
Effective January 1, 1998, the Company adopted the provisions of SFAS No. 130.
Accordingly, the Company determined that the only transaction considered to be
an additional component of comprehensive income is the cumulative effect of
foreign currency translation adjustments. As of June 30, 2000 and December 31,
1999, the cumulative effect of such transactions reduced stockholders' equity by
$581,870 and $528,954, respectively. Comprehensive income (loss) for the three
and six months ended June 30, 2000 and 1999 has been computed as follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------- ----------------
June 30, June 30,
------- --------
2000 1999 2000 1999
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Net income (loss) $ 44,927 $ 752,684 $ (114,555) $ 1,317,807
Foreign currency translation (16,738) (211,454) (52,916) (617,635)
--------- ----------- --------- -----------
Comprehensive income (loss) $ 28,189 $ 541,230 $ (167,471) $ 700,172
========= =========== ========= ===========
</TABLE>
6
<PAGE>
MERIT MEDICAL SYSTEMS, INC.
--------------------------
5. Recently Issued Financial Accounting Standards. On July 7, 1999, the FASB
issued SFAS No. 137. "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133," an
amendment of FASB Statement No. 133 which establishes accounting and reporting
standards for derivative instruments and hedging activities and requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
supersedes SFAS No. 80, "Accounting for Future Contracts," SFAS No. 105,
"Disclosure of Information about Financial Instruments with Off-Balance-Sheet
Risk and Financial Instruments with Concentration of Credit Risk," and SFAS No.
119, "Disclosure about Derivative Financial Instruments and Fair Value of
Financial Instruments," and also amends certain aspects of other SFAS,
previously issued. SFAS No. 133, as amended by SFAS No. 137, is effective for
all quarterly and annual financial statements of fiscal year beginning after
June 15, 2000. Management does not believe this statement will have a
significant impact on the Company.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB
101 provides guidance on applying generally accepted accounting principles to
revenue recognition issued in financial statements. The Company is required to
adopt SAB 101 in the fourth quarter of fiscal 2000. Management is currently in
the process of evaluating the effect that SAB 101 may have.
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
-----------------------------------------------------------
Overview
In the quarter ended June 30, 2000, the Company experienced a significant growth
in revenues due in large part to the addition of the Angleton Catheter division.
Despite the increase in sales, the Company's profits were down from a year ago.
This minimal profit was attributable primarily to three developments discussed
below.
During the first half of 1999, shortly after the implementation of the Company's
new comprehensive Oracle software system, the planning, scheduling and
purchasing group, as well as other areas of the Company, experienced difficulty
in learning to effectively operate the system. One of the first concerns we
identified was an increase in back orders to our customers, and Merit, being a
customer- driven company, responded by building inventory at rates that were
higher than the rate of sales. By doing so we were able to work out of back
orders in most catalog numbers. We also increased our safety stock levels of
inventory in the expectation of higher quantities ordered by hospitals in
anticipation of possible Y2K problems.
The combination of these increased production demands created a build-up of
capacity in labor and overhead. As the end of 1999 approached, however, we
recognized that inventory levels were increasing at rates that exceeded the
sales rate and we needed to reduce production levels to match cash flow
expectations. The reduced production volumes created lower gross margins, and
lower bottom line results.
The Company has implemented a plan to address these problems. First, we have
reduced substantially the amount of discretionary spending such as travel,
advertising and trade shows. Second, we have reduced, through attrition and
other means, the number of employees and will continue to do so as the
circumstances warrant. We have also reduced a number of management salaries.
Expenses related to consultants and other programs have been reduced or
discontinued. In mid- May we realized a 23-person reduction in force which is
expected to save approximately $1 million per year, but caused an unusual charge
in the quarter of $277,300 for termination costs. The most important issue will
be to balance our overhead and production costs. Ongoing and new cost-reduction
programs have been and will continue to be implemented.
7
<PAGE>
MERIT MEDICAL SYSTEMS, INC.
--------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
-----------------------------------------------------------
In mid-April the Company also received notice that a large custom packer of
procedure trays for interventional cardiology and radiology procedures (Clinipad
Corporation) had been forced by the FDA into a significant recall for the
majority of their products. As result of this recall, Clinipad ceased its
operations and informed its vendors that there would be no assets left after the
secured lender satisfied its priority position. Therefore, the receivable the
Company had with Clinipad is expected to be uncollectible. This type of
subsequent event was determined to be applicable to the first quarter of 2000
and therefore an adjustment of $340,000 to write off the entire outstanding
balance of the Clinipad receivable was made in the first quarter.
Operations. The Company achieved significant increases in sales and experienced
a significant decline in income for the three and six months ended June 30, 2000
compared to the same periods in 1999. The following table sets forth certain
operational data as a percentage of sales for the three and six months ended
June 30, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------- ----------------
June 30, June 30,
--------- --------
2000 1999 2000 1999
-------- -------- ---- ----
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Gross Profit 32.3 38.7 33.4 38.3
Selling, general and administrative 24.2 26.2 26.4 26.7
Research and development 4.3 4.7 4.4 4.6
Income from Operations 2.7 7.8 2.1 6.9
Other Expense 2.5 1.2 2.4 1.3
Net Income (Loss) .2 4.0 (.3) 3.6
</TABLE>
Sales. Sales for the three months ended June 30, 2000 were $23,552,859, compared
to $18,979,739 for the same period last year, which represents an increase of 24
%. Sales growth for the three-month period was sustained mainly by sales of the
Company's catheter products, particularly with the acquisition of the Angleton,
catheter division in August of 1999. Merit's increased sales were also fueled by
growth in stand-alone products which grew by 27% and inflation devices which
grew at 6 %. For the six-month period ended June 30, 2000 total sales were
$45,633,294 compared with $36,681,462 for the same period in 1999, an increase
of 24 %. Growth in sales for the six-month period were attributable to growth in
the aforementioned catheter products as well as stand-alone products which grew
by 33 %, and inflation devices which grew at 6 %.
Gross Margin. Gross margin as a percentage of sales for the three months ended
June 30, 1999 was 32.3% compared to 38.7% for the same period in 1999. For the
six months ended June 30, 2000, gross margin was 33.4%, as compared to 38.3% for
the same period in 1999. The decrease in gross margin for the three and six
months ended June 30, 2000 was primarily the result of sales in these periods of
higher cost product, carrying the extra overhead and labor costs from the
December thru April of 2000 production periods.
Operating Expenses. Operating expenses decreased as a percentage of sales to
29.6% of sales for the three months ended June 30, 2000, compared to 30.9% for
the three months ended June 30, 1999. For the first six months of 2000 operating
expenses increased to 31.4% as compared to 31.3% for the same period in 1999.
Selling, general and administrative expenses as a percentage of sales decreased
to 24.2% and 26.4% for the three and six months ended June 30, 2000 and 1999,
respectively, compared to 26.2% and 26.7%,respectively, for the comarable
periods in 1999. The decrease in operating expenses for the three and six months
ended June 30, 1999, were due mainly to the implementation of our expense
reduction plan of reduced head count, salaries, discretionary spending etc.
Research and development costs declined to 4.3% of sales for the three months
ended June 30, 2000, compared to 4.7% for the same period in 1999. For the six
months ended June 30, 2000, research and development expenditures decreased to
4.4% of sales, down from 4.6% of sales for the six months ended June 30, 1999.
8
<PAGE>
MERIT MEDICAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
-----------------------------------------------------------
Operating Income. During the three months ended June 30, 2000, the Company
reported income from operations of $.6 million compared to $1.5 million for the
comparable period in 1999. Operating income for the first six months of 2000 was
$0.9 million, compared to $2.5 million in 1999. Net income for the three months
ended June 30, 2000 declined to $44,927, from $752,684, for the same three-month
period of 1999, and net income for the 6 months ended June 30, 2000, dropped to
a loss of $114,555 down from a net income of $1.3 million for the first half of
1999.
Liquidity and Capital Resources. At June 30, 2000, the Company's working capital
was 35.8 million, which represented a current ratio of 4.8 to 1. In March 2000,
the Company increased an available secured bank line of credit to $35 million.
At June 30, 2000, the outstanding balance under the line of credit was $29.16
million. Historically, the Company has incurred significant expenses in
connection with product development and introduction of new products.
Substantial capital has also been required to finance growth in inventories and
receivables. The Company's principal sources of funding for these and other
expenses has been the sale of equity and cash generated from operations, secured
loans on equipment and bank lines of credit. The Company believes that its
present sources of liquidity and capital are adequate for its current
operations.
Forward-Looking Statements. Statements contained in this release which are not
purely historical are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These encompass Merit's
beliefs, expectations, hopes or intentions regarding the future. All
forward-looking statements included in this release are made as of the date
hereof and are based on information available to Merit as of such date. Merit
assumes no obligation to update any forward-looking statement. It is important
to note that actual outcomes and Merit's actual results could differ materially
from those in such forward-looking statements. Factors that could cause actual
results to differ materially include risks and uncertainties related to future
market growth, delays in product introductions, product acceptance, product
recalls, delays in obtaining regulatory approvals, cost increases, price and
product competition, availability of labor and materials related to health care
reform initiatives, product obsolescence relating to changes in product
technology or other factors relating to the success of the Company's business.
ITEM 3:
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company principally hedges the following EURO currencies: Belgian Francs,
French Francs, German Marks, Dutch Gilders, and Irish Pounds. The Company enters
into forward foreign exchange contracts to protect the Company from the risk
that the eventual net dollar cash flows resulting from transactions with foreign
customers and suppliers may be adversely affected by changes in currency
exchange rates. Such contracts are not significant.
9
<PAGE>
PART II - OTHER INFORMATION
Item: 4 Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders (the "Annual
Meeting") on May 24, 2000 in South Jordan, Utah. The following items of business
were considered at the Annual Meeting:
A: Election of Directors
---------------------
Two persons were elected as members of the Board of Directors to
serve three-year terms. They are as follows:
Shares Shares
Voted For Withheld
Fred P. Lampropoulos 6,878,103 234,947
Kent W. Stanger 6,878,103 234,947
B. Approval to Amend the Merit Medical Systems, Inc. 1996 Employee
Stock Purchase Plan
----------------------------------------------------------------
A proposal to amend the Merit Medical Systems, Inc. 1996 Employee
Stock Purchase Plan was approved by the shareholders of the Company. The number
of shares voted for the amendment was 3,247,442. The number of shares voted
against the amendment was 267,577. The number of shares abstaining from voting
on was 26,730.
C. Selection of Auditors.
---------------------
A proposal to ratify the appointment of Deloitte & Touche LLP as
the independent auditor of the Company for fiscal 2000 was presented at the
Annual Meeting and such proposal was approved by the shareholders of the
Company. The number of shares voted for the proposal was 7,106,445. The number
of shares voted against such proposal was 955. The number of shares abstaining
from voting was 5,650.
Item 5. Other Information. Withheld
---------------------------
If a shareholder desiring to raise a proposal at the next annual
meeting of shareholders does not seek inclusion of the proposal in the Company's
proxy statement and fails to notify the Company at least 45 days prior to the
month and day of mailing of the prior year's proxy statement, management proxies
will be allowed to use their discretionary voting authority when the proposal is
raised at the annual meeting, without any discussion of the proposal in the
proxy statement.
10
<PAGE>
MERIT MEDICAL SYSTEMS, INC.
PART II - OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K - none
(b) Exhibits
--------------------------------------------------------------------------------
S - K No. Description Exhibit No.
27 Financial Data Schedule 2
--------------------------------------------------------------------------------
SIGNATURES
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.
MERIT MEDICAL SYSTEMS, INC.
REGISTRANT
Date: AUGUST 11, 2000 /s/ Fred P. Lampropoulos
--------------- ------------------------
FRED P. LAMPROPOULOS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Date: AUGUST 11, 2000 /s/ Kent W. Stanger
--------------- -------------------
KENT W. STANGER
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
11
