-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MJHjVi58FLzhzSoWWICO7NCUW6eIAtLsgQPU5KAEYcBiL21uSzVwAza54ldciyhs aPL5C1mj+uZL7yjhmRBWHw== 0000310252-96-000008.txt : 19960613 0000310252-96-000008.hdr.sgml : 19960613 ACCESSION NUMBER: 0000310252-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960430 FILED AS OF DATE: 19960612 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GELMAN SCIENCES INC CENTRAL INDEX KEY: 0000310252 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY APPARATUS & FURNITURE [3821] IRS NUMBER: 381614806 STATE OF INCORPORATION: MI FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07828 FILM NUMBER: 96580007 BUSINESS ADDRESS: STREET 1: 600 SOUTH WAGNER RD CITY: ANN ARBOR STATE: MI ZIP: 48103-9019 BUSINESS PHONE: 3136650651 MAIL ADDRESS: STREET 1: 600 S WAGNER RD STREET 2: 600 S WAGNER RD CITY: ANN ARBOR STATE: MI ZIP: 48103-9019 FORMER COMPANY: FORMER CONFORMED NAME: GELMAN INSTRUMENT CO DATE OF NAME CHANGE: 19600201 10-Q 1 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 1996 --------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from __________ to ___________ Commission file number I7828 ------------------------------------------------------ GELMAN SCIENCES INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) MICHIGAN 38-1614806 - ---------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 600 South Wagner Road, Ann Arbor, Michigan 48103-9019 -------------------------------------------------------- (Address of principal executive offices) (Zip Code) (313) 665-0651 ----------------------------------------------------- (Registrant's telephone number, including area code) 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 and 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 issuer's classes of common stock, as of the latest practicable date. At June 4, 1996, there were 7,946,340 shares of the Company's $.10 par value common stock outstanding. 2 GELMAN SCIENCES INC. INDEX Page PART I. Financial Information Number Item 1. Financial Statements Condensed Consolidated Balance Sheets April 30, 1996 (Unaudited) and July 31, 1995. . . . . . . . . . . . . . . . . . . . . . . 3 Condensed Consolidated Statements of Income (Unaudited) for the three and nine months ended April 30, 1996 and 1995. . . . . . . . . . . . . . . . . . 4 Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended April 30, 1996 and 1995. . . . . . . . . . . . . . . . . . 5 Condensed Notes to Unaudited Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . . . . 7 PART II. Other Information Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 10 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 11 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3 GELMAN SCIENCES INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
April 30, July 31, 1996 1995 ------------- ------------- ASSETS (Unaudited) Current Assets: Cash and cash equivalents $ 7,010 $ 3,010 Accounts receivable, less allowances 26,476 23,985 Inventories: Finished products 6,993 6,320 Work in process 1,439 1,572 Raw material and purchased parts 4,976 7,052 ------------- ------------- 13,408 14,944 Other current assets 4,897 4,988 ------------- ------------- Total Current Assets 51,791 46,927 Property, Plant and Equipment 73,535 69,842 Less Allowances for Depreciation (39,952) (37,258) ------------- ------------- 33,583 32,584 Intangibles and Other Assets 2,581 2,270 ------------- ------------- Total Assets $ 87,955 $ 81,781 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes payable $ 2,171 $ 1,368 Accounts payable 4,344 3,813 Accrued expenses 7,226 9,312 Current maturities of long-term debt 497 524 ------------- ------------- Total Current Liabilities 14,238 15,017 Long-Term Debt, Exclusive of Current Maturities 5,056 5,493 Other Long-Term Liabilities 2,476 2,498 Stockholders' Equity: Preferred stock, par value $1.00 per share Common stock, par value $.10 per share 794 779 Additional capital 36,535 35,145 Retained earnings 30,125 23,714 Translation adjustments (969) (565) Less loan to Employee Stock Ownership Plan (300) (300) ------------- ------------- Total Stockholders' Equity 66,185 58,773 ------------- ------------- Total Liabilities and Stockholders' Equity $ 87,955 $ 81,781 ============= ============
See Notes To Unaudited Consolidated Financial Statements. 4 GELMAN SCIENCES INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In Thousands, except per share data)
Three Months Ended Nine Months Ended April 30, April 30, ------------------------- ----------------------- 1996 1995 1996 1995 ----------- ---------- ---------- --------- Net Sales $ 29,502 $ 26,893 $ 83,961 $ 75,078 Cost and Expenses: Cost of products sold 14,143 12,825 40,957 36,408 Selling and administrative 10,494 9,528 29,200 26,848 Research and development 1,643 1,366 4,598 3,990 Other income - net (229) (241) (273) (363) ----------- ---------- ---------- --------- Operating Earnings 3,451 3,415 9,479 8,195 Interest Expense 142 311 447 1,193 ----------- ---------- ---------- --------- Earnings Before Income Taxes 3,309 3,104 9,032 7,002 Provision For Income Taxes 676 1,133 2,621 2,544 ----------- ---------- ---------- --------- Net Earnings $ 2,633 $ 1,971 $ 6,411 $ 4,458 =========== ========== ========== ========= Primary Earnings Per Share $ .32 $ .26 $ .78 $ .64 =========== ========== ========== ========= Weighted Average Common and Common Equivalent Shares Outstanding 8,323 7,587 8,238 6,927 =========== ========== ========== =========
See Notes To Unaudited Consolidated Financial Statements. 5 GELMAN SCIENCES INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Nine Months Ended April 30, ----------- ---------- 1996 1995 ----------- ---------- Operating Activities Net earnings $ 6,411 $ 4,458 Loss on disposal of assets - 54 Depreciation and amortization 3,315 3,288 (Increase) decrease in inventories 1,238 (1,228) Increase in accounts receivable (2,833) (3,867) (Increase) decrease in other current assets 28 (948) Increase (decrease) in current liabilities (219) 927 Decrease in liabilities for environmental activities (326) (515) Other 271 92 ----------- ---------- Net Cash Provided by Operating Activities 7,885 2,261 Financing Activities Net proceeds from issuance of common stock - 19,424 Long-term debt borrowings 685 22,353 Principal payments on long-term debt (1,109) (38,480) Tax benefit from exercised stock options 557 394 Proceeds from exercised stock options 792 682 ----------- ---------- Net Cash Provided by Financing Activities 925 4,373 Investment Activities Capital expenditures (4,308) (5,536) Proceeds from sale of assets 2 25 Increase in intangibles and other assets (360) (143) ----------- ---------- Net Cash Used in Investment Activities (4,666) (5,654) Effects of Exchange Rate Changes on Cash (144) (231) ----------- ---------- Net change in cash and cash equivalents during the period 4,000 749 Cash and cash equivalents at beginning of period 3,010 1,525 ----------- ---------- Cash and cash equivalents at end of period $ 7,010 $ 2,274 =========== ==========
See Notes To Unaudited Consolidated Financial Statements. 6 GELMAN SCIENCES INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS General In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (which are of a normal recurring nature) necessary to present fairly the financial position of Gelman Sciences Inc. and subsidiaries as of April 30, 1996, and the results of their operations and cash flows for the three and nine months ended April 30, 1996 and 1995. These financial statements should be read in conjunction with the financial statements and notes set forth in the Company's Annual Report and Form 10-K for the year ended July 31, 1995. The results of operations for the three and nine months ended April 30, 1996 and 1995 are not necessarily indicative of the results that might occur for the full year. Pollution Related Matters The Company has settled several lawsuits related to groundwater contamination and has begun remediation activities. The remediation plan requires the Company to treat the groundwater to the extent necessary to reduce contaminants to a defined level. Total costs to the Company of pollution-related activities will be dependent upon the efficacy and duration of the remediation plan and obtaining a cost-free repository for treated groundwater. The ultimate costs incurred by the Company for the remediation activities could exceed the amount provided of $415,000 at April 30, 1996. However, the Company believes that these additional costs, if any, will not have a material adverse effect on the Company's operations because the cash outflows would be spread over many future years. Income Taxes During the quarter, the Company undertook an examination of research and development expense for the current and prior years for the purpose of reflecting an accurate research and development tax credit consistent with actual business activities. The result of the study has been reflected in income tax expense for the third quarter, resulting in a 5% reduction in the overall 34% effective tax rate for the nine months ended April 30, 1996. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Comparison of Nine months ended April 30, 1996 and 1995 Net sales for the nine months ended April 30, 1996 increased by $8.9 million or 12% to $84.0 million as compared to net sales of $75.1 million for the nine months ended April 30, 1995. The increase was primarily the result of strong European sales led by a 44% increase in sales of medical device products. Overall, sales to customers in Europe increased 25% due mainly to increases in sales of medical device products used in intravenous therapy. Sales growth in the Asia/Pacific region declined slightly due to lower sales of laboratory products in the Japanese market combined with a negative sales impact, in the third quarter relating to currency fluctuations in the yen. Sales to customers in the Americas increased 9% over the same period of the prior fiscal year. Overall growth in the Americas was slowed as sales of laboratory products increased 2% compared to the same period of fiscal 1995. This was due primarily to distributor inventory reductions during the Company's second fiscal quarter. The inventory reductions resulted from the consolidation of distributors through which the Company sells its laboratory products. Worldwide sales in the laboratory market increased 4%. As described above, the slow growth in the sale of laboratory products was the result of distributor inventory reduction programs in the Americas during the Company's second fiscal quarter. Sales of process filtration products improved 17% over the prior fiscal year, sales of medical devices improved 22% and sales of microporous membrane improved 15%. Gross profit increased $4.3 million or 11% to $43.0 million in the nine months ended April 30, 1996, as compared to $38.7 million in the nine months ended April 30, 1995. As a percentage of net sales, gross profit declined slightly from 51.5% to 51.2%. The decline in gross margin reflects a change in product mix compared to the first nine months of last fiscal year. The combination of strong growth in the sales of medical device products, which carry lower margins, and the slow growth for laboratory products, which carry higher margins, has resulted in the overall margin decline. 8 Selling and administrative expenses increased by $2.4 million or 9% to $29.2 million in the nine months ended April 30, 1996, compared to $26.8 million in the nine months ended April 30, 1995. As a percentage of sales, selling and administrative expenses declined from 35.8% to 34.8% reflecting lower levels of certain accruals relating to management incentive programs during the first half of the year. Interest expense declined $746,000 due to the repayment of outstanding indebtedness in the third quarter of fiscal 1995 with the proceeds from the public offering of the Company's common stock. The effective tax rate for the nine months ended April 30, 1996 was 29% compared to 36% for the same period in fiscal 1995. As more fully described in Notes To Unaudited Consolidated Financial Statements, the change in the effective tax rate to 29% reflects a 5% reduction from the overall 34% effective rate for this fiscal year. That reduction is the result of a research and development expense examination undertaken during the third quarter for the purpose of reflecting an accurate research and development tax credit consistent with actual business activities. Net earnings increased $1.9 million or 44% to $6.4 million or $.78 per share for the nine months ended April 30, 1996, compared to $4.5 million or $.64 per share for the nine months ended April 30, 1995. The increase in the weighted average shares from 6,927,000 to 8,238,000 reflects the effect of the secondary public offering in the third quarter of last fiscal year. As a percentage of sales, net earnings increased to 7.6% from 5.9%. Comparison of Three Months ended April 30, 1996 and 1995 Net sales for the third quarter ended April 30, 1996 increased 10% to $29.5 million as compared to net sales of $26.9 million for the quarter ended April 30, 1995. The increase was due to strong European sales of medical devices and process products. Foreign currency fluctuations negatively impacted overall sales by 1% during the quarter as compared to the same quarter of last fiscal year. Overall, sales to customers in Europe increased 23% as laboratory, process products and medical devices each showed strong growth. Sales to customers in Asia/Pacific declined 9%. The stronger dollar compared to the yen plus lower sales levels of laboratory products were the main reasons for the decline. Sales to customers in the Americas increased 9% over the same period of the prior fiscal year. Laboratory products increased 6% as sales began to recover from the distributor inventory reduction programs which took place during the Company's second fiscal quarter when sales to distributors decreased 6%. 9 Worldwide sales for laboratory products increased 7% as compared to the third quarter of last fiscal year. Medical device sales increased 12%, process filtration sales increased 14% and sales of microporous membrane increased 10% in each case as compared to the third quarter of the prior fiscal year. Gross margins for the third quarter of fiscal 1996 and 1995 were 52.1% and 52.3%, respectively. This represents an improvement over the first half of this fiscal year as product mix has become more favorable. However, the margin was below the third quarter of last fiscal year as the overall mix of products sold remains slightly unfavorable. Interest expense decreased $169,000 due to the repayment of outstanding indebtedness late in the third quarter of fiscal 1995. The effective tax rate for the third quarter was 20% compared to 36.5% for the same period in fiscal 1995. This reflects the research and development tax credit recorded during the quarter as more fully described in Notes To Unaudited Consolidated Financial Statements. Net earnings for the third quarter ended April 30, 1996 increased 34% to $2.6 million or $.32 per share, as compared with $2.0 million or $.26 per share for the third quarter ended April 30, 1995. Liquidity and Capital Resources The Company generated cash from operations of $7.9 million for the nine months ended April 30, 1996 compared to $2.3 million for the same period last fiscal year. The Company used $4.3 million to fund capital expenditures and increased its cash reserves by $4.0 million. Working capital at April 30, 1996 was $37.5 million compared to $31.9 million at July 31,1995. The increased working capital was due mainly to the additional cash reserves. At April 30, 1996, the Company's unused portion of its line of credit under the revolving credit agreement was $15.0 million. 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company, in the normal course of business, is involved in incidental, routine litigation, which, in the opinion of management, will not have a material impact on the financial condition of the Company. 11 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits (4) Instruments Defining the Rights of Security Holders (1) Pursuant to 17 CFR 229.601(b)(4)(iii), instruments with respect to long-term debt issues have been omitted where the amount of securities authorized under each instrument does not exceed 10% of the total consolidated assets of the Company. The Company hereby agrees to furnish a copy of each such instrument to the Commission upon its request. (11) Statement re computation of per share earnings for the three and nine months ended April 30, 1996 and 1995. (27) Financial Data Schedules (b) Reports on Form 8-K No reports on Form 8-K were filed during the fiscal quarter ended April 30, 1996. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant had duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GELMAN SCIENCES INC. ------------------------------- (Registrant) Date: June 12, 1996 /s/ Kim A. Davis --------------------------------- Kim A. Davis, President and Chief Operating Officer Date: June 12, 1996 /s/ George Uveges -------------------------------------- George Uveges, Chief Financial Officer and Vice President of Administration EX-11 2 Exhibit 11 Computation of Earnings Per Common Share Primary and Fully Diluted
Three Months Ended Nine Months Ended April 30 April 30 -------------------------- --------------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Net income for computing primary and fully diluted earnings per common share $ 2,633,000 $ 1,971,000 $ 6,411,000 $ 4,458,000 Primary shares Weighted average number of common shares outstanding 7,932,010 7,211,448 7,866,882 6,519,800 Additions from assumed exercise of stock options and warrants 390,838 375,919 370,955 407,171 ---------- ---------- ---------- ---------- Weighted average of common and common equivalent shares 8,322,848 7,587,367 8,237,837 6,926,971 ========== ========== ========== ========== Fully diluted shares Weighted average number of common shares outstanding 7,932,010 7,211,448 7,866,882 6,519,800 Additions from assumed exercise of stock options and warrants 407,226 418,442 407,226 421,345 ---------- ---------- ---------- ---------- Weighted average of common and common equivalent shares 8,339,236 7,629,890 8,274,108 6,941,145 ========== ========== ========== ========== Net income per common share Primary $0.32 $0.26 $0.78 $0.64 ========== ========== ========== ========== Fully diluted $0.32 $0.26 $0.78 $0.64 ========== ========== ========== ==========
Primary additions from assumed exercise of stock options and warrants are net of assumed purchase of common shares at the average market price during the period. Fully diluted earnings per share was determined in the same manner except that the greater of period end or period average stock price was used. EX-27 3
5 This schedule contains summary financial information extracted from (a) Gelman Sciences Inc. Statement of Income and Consolidated Statement of Cash Flows for the nine months ended April 30, 1996 an the Consolidated Balance Sheet as of April 30, 1996 and is qualified in its entirety by reference to such (b) Form 10-Q for the third quarter ended April 30, 1996. 0000310252 GELMAN SCIENCES INC. 1,000 US DOLLARS 9-MOS JUL-31-1996 APR-30-1996 1 7,010 0 27,864 1,388 13,408 51,791 73,535 39,952 87,955 14,238 7,532 794 0 0 65,391 87,955 83,961 83,961 40,957 40,957 33,361 164 447 9,032 2,621 6,411 0 0 0 6,411 0.78 0.78
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