-----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, AJKwS/zZiQGZCNTyCz4mg+LdLn1aUV10YzV/a34ZZ4QyNM5tywyAP4Qa2YZD1vPa mEN5VB0nlZQKzW05U1nskA== 0000912057-95-009687.txt : 19951119 0000912057-95-009687.hdr.sgml : 19951119 ACCESSION NUMBER: 0000912057-95-009687 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMPI INC CENTRAL INDEX KEY: 0000317032 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 411310335 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09387 FILM NUMBER: 95589772 BUSINESS ADDRESS: STREET 1: 1275 GREY FOX RD CITY: ST PAUL STATE: MN ZIP: 55112-6989 BUSINESS PHONE: 6126366600 MAIL ADDRESS: STREET 2: 1275 GREY FOX ROAD CITY: ST PAUL STATE: MN ZIP: 55112-6989 10-Q 1 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended September 30, 1995 ---------------------------------------- Commission File Number 0-9387 ----------------------------- Empi, Inc. ---------------------- (Exact name of registrant as specified in its charter) Minnesota 41-1310335 ------------------------------- ------------------------------ (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 5255 East River Road Minneapolis, Minnesota 55421 ------------------------------- ------------------------------ (Address of principal (Zip code) executive offices) Registrant's telephone number, including area code (612) 586-7300 --------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / 8,600,946 shares of Common Stock were outstanding as of November 1, 1995. This document contains 12 pages. The Exhibit Index is on page 4. 1 PART I - - FINANCIAL INFORMATION Item 1. CONSOLIDATED FINANCIAL STATEMENTS The response to Part I, Item 1 is submitted as a separate section of this report. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS Empi, Inc.'s (the "Company") total sales for the 1995 third quarter equaled $17.3 million compared to $14.5 million for the third quarter of 1994, an increase of 19.3 percent. Total sales for the first nine months of 1995 equaled $50.1 million, an 11.6 percent increase over the same period sales of $44.9 million for 1994. Sales from the Company's core rehabilitation products of TENS (Trancutaneous Electrical Nerve Stimulation) devices, NMES (Neuromuscular Electrical Stimulation) devices, and related accessory products were up 9.2 percent and 3.1 percent from 1994's third quarter and first nine months, respectively. Sales from the Company's non-core products of Innova PFS-Registered Trademark- (Pelvic Floor Stimulator), Dupel-Registered Trademark- non-invasive drug delivery system, Advanced Dynamic ROM-TM- and Ultraflex-Registered Trademark- dynamic orthosis, sEMG (surface Electromyography Biofeedback), Pronex-TM- pneumatic device to manage cervical pain, and other miscellaneous products were up 46.6 percent and 36.0 percent from 1994's third quarter and first nine months, respectively. International sales were 4.9 percent of total sales for the third quarter of 1995 and 6.1 percent of total sales for the first nine months of 1995, and compares to 5.9 percent and 6.3 percent of total sales for the same periods in 1994. Gross profit for the third quarter of 1995 was 73.1 percent of sales compared to 73.3 percent of sales for the third quarter of 1994. The gross profit for the first nine months of 1995 was 73.3 percent of sales versus 75.0 percent of sales for the same period in 1994. The lower gross profit percentages for the first nine months of 1995 were due primarily, to higher manufacturing costs (mix and inflation), and higher distribution costs due to the increase in volume of product shipped. The Company anticipates gross profit, as a percent of sales, to continue at the current level for the remainder of 1995. Selling, general and administrative expenses for the third quarter of 1995 and 1994 were $8.5 million, respectively. Stated as a percent of sales, SG&A expenses for the third quarter were 49.1 percent and 58.6 percent for 1995 and 1994, respectively. Selling, general and administrative costs for the first nine months of 1995 were $25.2 million and 50.3 percent of sales compared to SG&A costs for the first nine months in 1994 of $24.9 million and 55.5 percent of sales. There continues to be offsetting factors reflected in the results for the third quarter and the first nine months of 1995, when compared to the same periods in 1994. The major factors are higher payroll and incentive compensation expenses, which are offset by lower costs due to the closing of two office locations and lower provisions for bad debts. Research and development costs were $.8 million and $2.6 million for the third quarter and first nine months of 1995, respectively. That compares to R & D spending for the same periods in 1994 of $.9 million and $2.5 million. The Company's research and development spending in 1995 has been spread evenly within the TENS/NMES, Orthosis, and Iontophoresis product groups, with slightly higher spending on Incontinence and other new product research and development, and lower spending on the sEMG product group. 2 FORM 10-Q - - PART 1 - ITEM 2 (Continued) Interest income for the third quarter and the first nine months of 1995 was $211 thousand and $550 thousand, respectively. Interest income for the same periods in 1994 was $84 thousand and $195 thousand. The increase in interest income is attributable to the Company's improved cash position, which has allowed the Company to increase its long and short term investments in interest-bearing securities. Interest expense was $27 thousand and $87 thousand for the third quarter and first nine months of 1995, respectively. Interest expense for the same periods in 1994 was $40 thousand and $125 thousand. The majority of interest expense for both years is due to an interest-bearing note issued to finance the Company's acquisition of Nortech in 1992. Also in the third quarter of 1995, the Company had a one time gain of $42 thousand on the sale of its Urofitness Center to Continence Clinics, Inc. (CCI) of Minneapolis, Minnesota. Net income for the third quarter of 1995 was $2.1 million compared to $.8 million for the third quarter in 1994. Net income for the first nine months of 1995 and 1994 was $5.8 million and $3.7 million, respectively. The 54 percent improvement in net income for the first nine months of 1995 has been driven mainly by the following three factors; higher sales, stronger spending controls, and higher interest income. LIQUIDITY AND CAPITAL REQUIREMENTS The Company ended the third quarter of 1995 with a very sound and strong financial position. Working capital at quarter end stood at $39.7 million compared to $34.3 million at year end 1994, an increase of $5.4 million. The Company's cash position (including short and long terms investments) increased from $12.1 million at December 31, 1994 to $19.3 million at September 30, 1995. The Company has a $7.0 million line of credit, which it currently has not borrowed against. The Company believes its cash, cash equivalents and short term investments, together with cash flows from operations and the line of credit, will be sufficient to meet the Company's anticipated working capital and capital outlay requirements. 3 PART II - - OTHER INFORMATION Item 5. OTHER INFORMATION On September 8, 1995, the Company filed an action in the United States District Court for the District of Minnesota Third Division against Iomed, Inc. for trademark infringement, unfair competition and deceptive trade practices, requesting damages in an amount yet to be determined. On October 16, 1995, Iomed, Inc. filed an answer denying all of the Company's claims and in addition filed counterclaims alleging various deceptive and unlawful trade practices, breach of contract and other claims and seeks various preliminary injunctions, orders and damages to be determined at trial. The Company has denied all of Iomed, Inc.'s counterclaims and believes such counterclaims are without merit and will have no material effect on the Company's financial statements. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Description Page No. ----------- ----------- -------- (11) Statement re: computation of 12 per share earnings (27) Financial Data Schedule (filed only in electronic format) (b) No report on Form 8-K has been filed during the quarter ended September 30, 1995. 4 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 thereto duly authorized. Empi, Inc. November 3, 1995 By /s/ Joseph E. Laptewicz -------------------------------------------- Joseph E. Laptewicz President and Chief Executive Officer (Principal Executive Officer) November 3, 1995 By /s/ Timothy E. Briggs -------------------------------------------- Timothy E. Briggs Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 5 QUARTERLY REPORT ON FORM 10-Q PART I - ITEM 1 LIST OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 EMPI, INC. MINNEAPOLIS, MINNESOTA 6 FORM 10-Q - - PART I - ITEM 1 EMPI, INC. LIST OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following condensed consolidated financial statements of Empi, Inc. are included in Part I - Item 1. Condensed Consolidated Balance Sheets - - September 30, 1995 and December 31, 1994, Condensed Consolidated Statements of Operations - - Three and Nine months ended September 30, 1995 and 1994, Condensed Consolidated Statements of Cash Flows - - Nine months ended September 30, 1995 and 1994. Notes to Condensed Consolidated Financial Statements. 7 FORM 10-Q - - PART I - ITEM 1 EMPI, INC. CONDENSED CONSOLIDATED BALANCE SHEETS IN THOUSANDS)
September 30 December 31 1995 1994 ------------ ----------- (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $10,550 $ 5,652 Short-term investments 5,778 5,309 Accounts and notes receivable, less allowances 15,567 16,825 Inventories - Note B 8,412 7,487 Deferred income taxes 4,649 4,277 Other 619 702 ------- ------- TOTAL CURRENT ASSETS 45,575 40,252 PROPERTY, PLANT AND EQUIPMENT - NET 4,989 5,330 OTHER ASSETS 4,907 6,025 LONG-TERM INVESTMENTS 3,000 1,101 ------- ------- $58,471 $52,708 ------- ------- ------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,955 $ 2,941 Employee compensation 2,030 981 Commissions payable 776 559 Current portion of long-term debt 600 603 Income taxes 203 584 Other 282 240 ------- ------- TOTAL CURRENT LIABILITIES 5,846 5,908 LONG-TERM DEBT, LESS CURRENT PORTION 1,800 1,800 SHAREHOLDERS' EQUITY: Common Stock 24,108 24,033 Retained earnings 26,717 20,967 ------- ------- TOTAL SHAREHOLDERS' EQUITY 50,825 45,000 ------- ------- $58,471 $52,708 ------- ------- ------- -------
See notes to condensed consolidated financial statements. 8 FORM 10-Q - - PART I - ITEM 1 EMPI, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 ----------- ---------- ---------- ---------- (unaudited) (unaudited) (unaudited) (unaudited) Net sales $17,273 $14,468 $50,071 $44,874 Cost of goods sold 4,639 3,862 13,354 11,227 ------- ------- ------- ------- GROSS PROFIT 12,634 10,606 36,717 33,647 Operating Expenses: Selling, general and administrative 8,536 8,508 25,202 24,938 Research and development 832 899 2,569 2,529 ------- ------- ------- ------- 9,368 9,407 27,771 27,467 ------- ------- ------- ------- INCOME FROM OPERATIONS 3,266 1,199 8,946 6,180 Other income/(expense), net 217 63 515 68 ------- ------- ------- ------- INCOME BEFORE INCOME TAXES 3,483 1,262 9,461 6,248 Income tax expense 1,359 506 3,690 2,500 ------- ------- ------- ------- NET INCOME $ 2,124 $ 756 $ 5,771 $ 3,748 ------- ------- ------- ------- ------- ------- ------- ------- NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ .24 $ .09 $ .66 $ .44 ------- ------- ------- ------- ------- ------- ------- ------- Weighted average common and common equivalent shares outstanding during the period 8,859 8,603 8,771 8,604 ------- ------- ------- ------- ------- ------- ------- -------
See notes to condensed consolidated financial statements. 9 FORM 10-Q A - - PART I - ITEM 1 EMPI, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
Nine Months Ended, September 30 1995 1994 ---------- ---------- (unaudited) (unaudited) OPERATING ACTIVITIES Net income $ 5,771 $ 3,748 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,587 2,384 Provision for deferred income taxes (372) (546) Gain on sale of long-term investments (70) -- Loss on sale of equipment 52 5 Provision for loss on accounts receivable 1,956 2,460 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (698) 1,327 Increase in inventories (925) (1,181) Increase (decrease) in other assets/liabilities 97 (392) Increase (decrease) in accounts payable and accrued expenses 281 (1,101) Decrease in income taxes payable (381) (874) ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 8,298 5,830 INVESTING ACTIVITIES Sale of short-term investments 1,800 1,500 Additions to other assets (28) (418) Acquisition of Nortech -- (1,115) Purchase of equipment and improvements (1,196) (1,489) Proceeds from sale of equipment 50 1 Purchase of short-term investments (2,269) (2,006) Sale of long-term investments 1,080 -- Purchase of long-term investments (2,909) (1,021) ------- ------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (3,472) (4,548) FINANCING ACTIVITIES Payments on long-term debt (3) (9) Proceeds from exercise of Common Stock options 75 91 ------- ------- NET CASH PROVIDED BY FINANCING ACTIVITIES 72 82 ------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS 4,898 1,364 Cash and cash equivalents at beginning of year 5,652 6,231 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $10,550 $ 7,595 ------- ------- ------- -------
See notes to condensed consolidated financial statements. 10 FORM 10-Q - - PART I - ITEM 1 EMPI, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE A - ACCOUNTING POLICIES The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management of the Company, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the results have been included. Operating results for the three months and nine months ended September 30, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in Empi, Inc. and Subsidiaries' annual report on Form 10-K for the year ended December 31, 1994. NOTE B - INVENTORIES (IN THOUSANDS)
September 30 December 31 1995 1994 ----------- ----------- (unaudited) Finished goods $5,840 $5,254 Work in process 755 794 Raw materials 1,817 1,439 ------ ------ $8,412 $7,487 ------ ------ ------ ------
EXHIBITS Exhibit No. Description Page No. ----------- ----------- -------- (11) Statement re: computation of 12 per share earnings (27) Filed Data Schedule -- (filed only in electronic format) 11 EX-11 2 EXHIBIT 11 EXHIBIT 11 - - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended, Nine Months Ended, September 30 September 30 1995 1994 1995 1994 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) PRIMARY EARNINGS PER SHARE: Average shares outstanding 8,598 8,548 8,589 8,532 Net effect of dilutive stock options and warrants - based on the treasury stock method using average market price 261 55 182 72 ------ ------ ------ ------ 8,859 8,603 8,771 8,604 ------ ------ ------ ------ ------ ------ ------ ------ Net income $2,124 $ 756 $5,771 $3,748 ------ ------ ------ ------ ------ ------ ------ ------ Net income per share $ .24 $ .09 $ .66 $ .44 ------ ------ ------ ------ ------ ------ ------ ------ FULLY-DILUTED EARNINGS PER SHARE: Average shares outstanding 8,598 8,548 8,589 8,532 Net effect of dilutive stock options and warrants - based on the treasury stock method using closing market price 315 53 377 66 ------ ------ ------ ------ 8,913 8,601 8,966 8,598 ------ ------ ------ ------ ------ ------ ------ ------ Net income $2,124 $ 756 $5,771 $3,748 ------ ------ ------ ------ ------ ------ ------ ------ Net income per share $ .24 $ .09 $ .64 $ .44 ------ ------ ------ ------ ------ ------ ------ ------
12 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THIRD QUARTER 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 10,550 5,778 21,389 5,822 8,412 45,575 11,869 6,880 58,471 5,846 1,800 24,108 0 0 26,717 58,471 50,071 50,071 13,354 13,354 27,771 1,956 87 9,461 3,690 5,771 0 0 0 5,771 .66 .66
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