SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
For the month of August, 2000
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TRINITY BIOTECH PLC
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(Translation of registrant's name into English)
IDA BUSINESS PARK,
BRAY,
CO. WICKLOW, IRELAND
(Address of Principal Executive Offices)
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
General
Trinity Biotech plc ("Trinity" or the "Company") develops, manufactures and
markets diagnostic test kits used for the clinical laboratory, point-of-care
("POC"), and self-testing ("OTC") segments of the diagnostic market. The
Company's rapid tests provide fast and accurate results designed for home (OTC)
and doctor's office (POC) use. In addition, the Company manufactures and markets
a range of diagnostic test kits used in clinical laboratories to detect
infectious diseases and autoimmune disorders. The Company markets over 90
different diagnostic tests in 65 countries.
Trinity was incorporated in Ireland in January 1992. The Company was organised
to acquire, develop and market technologies for rapid in vitro blood and saliva
diagnostics for HIV and other infectious diseases. In October 1992, Trinity
completed an initial public offering in the United States in which it raised net
proceeds of more than US$4.9 million. In October 1993, Trinity took a
controlling interest in Disease Detection International Inc ("DDI") and in
October 1994 merged, Trinity's wholly owned subsidiary into DDI so that DDI
became a wholly owned subsidiary of Trinity. DDI was the surviving entity in the
merger and was subsequently renamed Trinity Biotech Inc ("TBI"). In December
1994, Trinity acquired the remaining 50% of FHC Corporation ("FHC"), which its
subsidiary TBI did not own. In 1995, Trinity raised net proceeds of $7 million
because of a private placement of the Company's shares. In February 1997,
Trinity acquired all the outstanding share capital of Clark Laboratories Inc.,
("Clark"), based in Jamestown, New York. In June 1997, Trinity acquired Centocor
UK Holdings Limited ("Centocor"), a company based in Guildford in the U.K.
Centocor was a 100% subsidiary of Centocor, Inc., a U.S. biotechnology company.
In July 1998, Trinity purchased the Microzyme product line for hormones and
drugs of abuse tests from Diatech Inc, a Boston based diagnostics company. In
September 1998, Trinity purchased the Macra Lp(a) laboratory test for monitoring
Lipoprotein (Lp(a)) from Strategic Diagnostics Inc, Newark, Delaware based
diagnostics company. In addition, in September 1998, Trinity purchased the
infectious disease diagnostics business of Cambridge Diagnostics Ireland Ltd.
("Cambridge"), a Subsidiary of Selfcare, Inc. of Waltham, Massachusetts. Also,
in September 1998, Trinity acquired the Syva Microtrak business ("Microtrak")
from Dade Behring Inc. of Chicago, Illinois. Also, in September 1998, Trinity
disposed of its interest in its pregnancy sales contract with Warner Lambert to
Applied Biotech Inc., a subsidiary of Sybron International Corporation. In
February, 2000 Trinity acquired all the outstanding share capital of MarDx
Diagnostics Inc. ("MarDx"), based in Carlsbad, California. The group financial
statements include the attributable results of TBI and of its subsidiary FHC,
the results of Clark, Trinity Biotech UK Ltd. (formerly Centocor UK Ltd.) and
the results for the Microzyme, Macra Lp(a), Cambridge and Microtrak product
lines for the three months ended March 31, 2000. They also include the results
from MarDx, acquired in February 2000 for the month ended March 31, 2000.
The following discussion should be read in conjunction with the unaudited
condensed interim Financial Statements and notes thereto. The financial
statements have been prepared in accordance with Irish generally accepted
accounting principals, which conform in all material respects to US GAAP except
as indicated in the notes to the condensed Financial Statements.
<PAGE>
Results of Operations
Nine Months Ended March 31, 2000 Compared to Nine Months Ended March 31, 1999
-----------------------------------------------------------------------------
Trinity's consolidated revenues for the nine month period ended March 31, 2000
were $6,850,000, an increase of $500,000 compared to consolidated revenues of
$6,350,000 for the nine months ended March 31, 1999. This increase reflects
additional sales of the Company's rapid and laboratory based diagnostic test
kits plus the inclusion of the revenues of MarDx for the month of March.
Management expects that revenues of all Trinity's product lines will continue to
increase due to further regulatory approvals, increased sales from our existing
distribution network and expansion of the distribution network. In addition, the
recent acquisition of MarDx will add further to the Company's overall revenues.
Trinity also had interest and other income of $32,000 for the three month period
ended March 31, 2000 compared to $17,000 the same period the year before.
The gross margin from product sales for the three month period ended March 31,
2000 was 49% compared to 39% for the three month period ended arch 31, 1999.
This increase is due to the increase in sales of the Company's higher margin
tests and efficiencies gained in production as a result of the higher output in
the quarter.
Administrative expenses for the three month period ended March 31, 2000 amounted
to $862,000 compared to $726,000 for the three month period ended March 31,
1999. The reason for the increase is an increased spending on the Company's
marketing budget along with the addition of additional administration personnel.
Research and development expenditure increased to $728,000 from $519,000 during
the period. The increase is due partly from increased resources invested in
research and also to the fact that the Company had additional expenses relating
to an FDA submission for its UniGold HIV test.
The net profit for the three month period ended March 31, 2000 was $1,401,000
compared to a net profit of $902,000 for the same period last year. In addition,
management expects that anticipated increases in revenues, control of overheads
and additional contribution from the four recently acquired product lines, will
result in further improvements for 2000. However, there can be no assurance that
Trinity can increase the level of sales or reduce the level of overheads
necessary to sustain profitability.
2
<PAGE>
Liquidity and Capital Resources
As of March 31, 2000, Trinity's consolidated cash and cash equivalents were
$4,183,000. This compares to cash and cash equivalents of $3,064,000 at December
31, 1999. This increase has been caused primarily from operations and the issue
of Ordinary Shares of $1,473,000 and $3,534,000, respectively, offset by the
repayment of $1,481,000 of the Company's bank borrowings, the payment of
$667,000 of deferred consideration and the investment in MarDx of $1,481,000.
The combination of these factors has resulted in net cash inflows of $1,119,000
during the three month period.
The Company does not anticipate capital expenditures in excess of $1,000,000
over the next twelve months. Much of this expenditure will relate to additional
expansion of the Company's manufacturing facilities and the purchase of new
equipment required to automate the production of the Company';s rapid and
laboratory based tests.
In order to fund future expansion, Trinity may require additional financing and
expects to rely on cash generated from operations, the exercise of warrants and
stock options and the issuance of stock in either private or public offerings.
There can be no assurance that financing from the preceding sources will be
available at attractive terms or at all. The Company believes success in raising
additional capital or obtaining profitability will be dependent on the viability
of its products and their success in the marketplace.
Impact of Inflation
Although Trinity's operations are influenced by general economic trends, Trinity
does not believe that inflation has a material effect on its operations for the
periods presented.
Impact of Currency Fluctuation
Trinity's revenue and expenses are affected by fluctuations in currency exchange
rates especially the exchange rate between the US Dollar and the Irish Pound.
Trinity's revenues are primarily denominated in US Dollars, its expenses are
incurred principally in Irish Pounds and US Dollars. The revenues and costs
incurred by US subsidiaries are denominated in US Dollars.
3
<PAGE>
Trinity Biotech plc
Unaudited Consolidated Balance Sheet as at:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
US$ US$
Restated See Note 6 Restated - See Note 6
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents 4,183,124 3,064,443
Accounts receivable and prepayments 7,715,245 7,212,419
Inventories 10,201,899 9,510,542
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Total Current Assets 22,100,268 19,787,404
Property, plant & equipment, net 4,677,377 4,695,668
Intangible assets, net 24,486,754 20,559,223
---------- ----------
TOTAL ASSETS 51,264,399 45,042,295
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
Accounts payable & accrued expenses 13,282,348 14,234,246
Long term liabilities 8,660,884 8,086,232
SHAREHOLDERS' EQUITY
Called up share capital
Class 'A' ordinary shares 497,177 447,974
Class 'B' ordinary shares 12,255 12,255
Share premium account 52,991,873 47,863,861
Currency adjustment (4,637,188) (4,637,484)
Retained deficit (19,302,956) (20,732,540)
Minority Interest (239,994) (239,249)
----------- -----------
Total Shareholders' Equity 29,321,167 22,721,817
---------- ----------
Total Liabilities and Shareholders' Equity 51,264,399 45,042,295
========== ==========
</TABLE>
Note: The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements.
4
<PAGE>
Trinity Biotech plc
Unaudited Consolidated Statement of Operations
<TABLE>
<CAPTION>
Three months ended March 31
2000 1999
US$ US$
(Unaudited) (Unaudited)
<S> <C> <C>
Revenues 6,849,899 6,350,329
--------- ---------
Costs and Expenses
Cost of goods sold (3,526,114) (3,844,922)
Selling, general and administrative (862,442 (726,490)
Research and development (727,688) (518,690)
Goodwill amortisation (225,000) (200,200)
-------- --------
Operating profit 1,508,655 1,060,027
Interest and other income 32,496 17,160
Interest expense (139,752) (175,070)
-------- --------
Net profit per ordinary share 1,401,399 920,117
Net profit per ordinary share 0.045 0.0322
Weighted average number of ordinary shares
outstanding 31,302,057 27,987,106
STATEMENT OF RECOGNISED GAINS
AND LOSSES
Net Profit 1,401,399 902,117
Currency adjustment 296 (110,296)
--------- --------
Comprehensive income for the period 1,401,695 791,821
--------- -------
</TABLE>
5
<PAGE>
Trinity Biotech plc
Unaudited Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Nine months ended March 31
2000 1999
US$ US$
(Unaudited) (Unaudited)
<S> <C> <C>
Net cash flow from operating activities 1,473,251 348,148
Investing activities
Interest receivable 28,355 15,215
Payment of deferred consideration (666,811) (760,835)
Purchase of subsidiary undertaking (1,480,980) -
Purchase of fixed assets (50,012) (210,294)
Purchase of intangible assets - (12,637)
---------- --------
(2,169,448) (968,551)
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Financing activities
Interest payable (221,3220) (161,217)
Issue of ordinary shares 3,533,647 7,756
Capital element of loan repayments (1,497,354) (625,891)
Loans received - 1,062,215
--------- ---------
1,814,971 282,863
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Increase (decrease) in cash and cash equivalents 1,118,774 (337,540)
Balance at beginning of period 3,064,443 1,301,658
--------- ---------
Balance at end of period 4,183,217 964,118
--------- -------
</TABLE>
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<PAGE>
TRINITY BIOTECH PLC
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The unaudited results for the three months to March 31, 1999 and March 31,
2000 been prepared in accordance with Irish generally accepted accounting
principals. The accounting policies and the basis of preparation of these
unaudited results is consistent with those used in the Group's Annual
Financial Statements.
The information included in the interim consolidated financial statements
is unaudited but reflects all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair statement of the results for the interim periods presented. The
results for the three months to March 31, 2000 are not necessarily
indicative of the results for the full fiscal year.
2. ANALYSIS OF REVENUE AND OPERATING INCOME
a) The distribution of revenue by geographical area was as follows:
Three months ended
March 31 March 31
2000 1999
US$ US$
U.S.A. 4,251,955 3,914,154
Central and South America 140,293 121,741
Asia 327,232 241,856
Europe 1,310,074 1,270,211
Africa 801,203 781,487
Ireland 19,142 20,880
--------- ---------
6,849,899 6,350,329
--------- ---------
b) The distribution of operating income by geographical area was as follows:
Three months ended
March 31 March 31
2000 1999
US$ US$
Ireland 704,855 499,609
United States 803,800 560,418
------- -------
Total operating income 1,508,655 1,060,027
------- -------
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<PAGE>
3. INVENTORIES Three months ended March 31 March 31 2000 1999 US$ US$
Raw materials 4,024,148 3,845,665
Work in progress 4,304,116 4,119,856
Finished goods 1,873,635 1,545,021
------- -------
10,201,899 9,510,541
------- -------
The replacement cost of inventory is not materially different from that
stated.
4. ACQUISITION OF MARDX DIAGNOSTICS INC.
On February 29, 2000 Trinity finalised the acquisition of MarDx Diagnostics
Inc. ("MarDx") of Carlsbad, California.
The purchase consideration for the acquisition was US $4,000,000, US
$1,800,000 was paid in cash, US $1,500,000 was paid by the issue of Class
'A' Ordinary Shares of Trinity and the remaining US $700,000 was paid in
the form of a loan note to be paid in August 2000.
The fair value of the assets acquired by Trinity was US $183,507 resulting
in goodwill of US $3,866,493. MarDx is a manufacturing and distribution
company and as such has no in process research and development.
8
<PAGE>
TRINITY BIOTECH PLC
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. DIFFERENCES BETWEEN IRISH AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The Consolidated Financial Statements are prepared in accordance with
accounting principles generally accepted in the Republic of Ireland ("Irish
GAAP"), which differ in certain significant respects from accounting
principles generally accepted in the United States ("US GAAP"). These
differences relate principally to the following items and the necessary
adjustments are shown in the table set out below;
(1) Goodwill:
In prior years Irish GAAP goodwill would be either written off immediately
on completion of the acquisition against shareholders' equity, or
capitalised in the balance sheet and amortised through the income statement
on a systematic basis over its useful economic life. From 1998, goodwill
must be capitalised and amortised over the period of its expected useful
life; however, historic goodwill continues to remain an offset against
shareholders' equity. Under US GAAP, accounting for goodwill as an offset
against shareholders' equity is not permitted. Rather, goodwill must be
amortised over the period of its expected useful life, subject to a maximum
write off period of 40 years, through the income statement. For goodwill
arising prior to 1998, a useful life of 10 years has been adopted for the
purposes of the reconciliation. The carrying value of goodwill arising on
the acquisition of subsidiaries is reviewed on each balance sheet date on
the basis of estimated future profits. If the review indicates a shortfall
in the estimated future profits then the goodwill is written down by the
amount of the shortfall. Management believes no adjustment to the carrying
value is required in the current period.
(2) Share Capital Not Paid:
Under Irish GAAP, unpaid share capital is classified as a receivable under
current assets. Under US GAAP, share capital receivable should be reported
as a reduction to Shareholders' Equity.
(3) Statement of Comprehensive Income:
The Company prepares a "Statement of Recognised Gains and Losses" which is
essentially the same as the "Statement of Comprehensive Income" required
under US GAAP.
(4) Deferred Set-Up Costs:
Under Irish GAAP, certain costs arising on the integration of acquired
businesses or product lines may be capitalised and amortised over set
periods. Under US GAAP, these costs must be expensed in the period in which
they occur.
(5) Pre-Paid Offering Expenses:
Under Irish GAAP, share issue expenses arising as a result of fundraising
activities, where no funds have yet been raised, may be included in
prepayments and written off to share premium on the finalisation of the
fundraising. Under US GAAP, if the fundraising has suspended for a period
of more than 90 days the costs must be expensed to the profit and loss
account.
(6) Sale and Leaseback:
UnderIrish GAAP, the Company's sale and leaseback transaction was treated
as a disposal of assets with the gain on the disposal of US $1,014,080
being credited to the profit and loss in year ended December 31, 1999.
Under US GAAP, this amount would be deferred and released to the profit and
loss account over the period of the lease (20 years).
9
<PAGE>
(7) Minority Interests:
Under Irish GAAP, Minority Interests are included as a portion of
Shareholders' Equity. Under US GAAP, Minority Interests are excluded from
Shareholders' Equity.
10
<PAGE>
TRINITY BIOTECH PLC
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. DIFFERENCES BETWEEN IRISH AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(Continued)
<TABLE>
<S> <C> <C>
ESTIMATED CUMULATIVE EFFECT ON 31 March 31 December
SHAREHOLDERS' EQUITY 2000 1999
US$ US$
Total shareholders' equity before
Minority Interests under Irish GAAP 29,561,161 22,954,066
[The 2000 amount is after minority interest.]
US GAAP adjustments:
Goodwill 22,399,000 12,943,417
Share capital not paid (348,279) (419,061)
Adjustment for amortisation of contingent
consideration - 26,850
Adjustment for deferred set-up costs (491,334) (536,000)
Adjustment for pre-paid offering expenses - (226,007)
Adjustment for sale and leaseback (1,003,939) (1,014,080)
---------- ----------
Shareholders' equity under US GAAP 40,116,609 33,729,185
---------- ----------
EFFECT ON NET PROFIT 31 March 31 March
2000 1999
US$ US$
Profit on ordinary activities after taxation
under Irish GAAP 1,401,399 902,117
US GAAP adjustments:
Goodwill amortisation (544,417) (543,876)
Adjustment for sale and leaseback 10,141 -
Adjustment for deferred et-up costs (44,666) -
------- --------
Profit under US GAAP 822,457 358,241
------- --------
Profit per ordinary share 0.026 0.013
Weighted average number of shares 31,302,057 27,987,106
STATEMENT OF COMPREHENSIVE INCOME
Estimated income under US GAAP 822,457 358,241
Currency adjustment 296 (110,296)
--------- --------
Comprehensive income for the period 822,753 247,945
</TABLE>
11
<PAGE>
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 authorised.
TRINITY BIOTECH PLC
/s/Maurice Hickey
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Maurice Hickey
Chief Financial Officer
August 31, 2000
---------------
(Date)
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