-----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, NLnOdHSjJ6hAWTGS/47uU6vExhbmZrhcJIlii0hSchWppMS3g9YYcQjchP0RtCZV +p4hgac6h+k2J6aHmeoaeA== 0000701288-96-000011.txt : 19960517 0000701288-96-000011.hdr.sgml : 19960517 ACCESSION NUMBER: 0000701288-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALATENN RESOURCES INC CENTRAL INDEX KEY: 0000701288 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 630821819 STATE OF INCORPORATION: AL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10763 FILM NUMBER: 96565725 BUSINESS ADDRESS: STREET 1: POST OFFICE 918 CITY: FLORENCE STATE: AL ZIP: 35631 BUSINESS PHONE: 2053833631 MAIL ADDRESS: STREET 1: P O BOX 918 CITY: FLORENCE STATE: AL ZIP: 35631 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended March 31, 1996 Commission File Number 0-10763 ATRION Corporation (Exact Name of Registrant as Specified in its Charter) Alabama 63-0821819 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) Post Office Box 918, Florence, Alabama 35631 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (205) 383-3631 AlaTenn Resources, Inc. (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports requiredto 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 _____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, Par Value $0.10 per share - Outstanding at March 31, 1996 2,120,084 shares PART I - FINANCIAL INFORMATION ATRION CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) [CAPTION] Three Months Ended March 31, 1996 1995 (In thousands, except per share data) [S] [C] [C] OPERATING REVENUES: Industrial sales $ 25,496 $ 8,886 Resale sales 6,746 3,706 Transportation 3,500 3,293 Off-system sales and other 2,506 3,376 Medical and health care products 3,074 3,213 TOTAL OPERATING REVENUES 41,322 22,474 COST OF GOODS SOLD 35,405 17,620 GROSS MARGIN 5,917 4,854 OTHER OPERATING EXPENSES: Operations 2,451 2,099 Maintenance 33 60 Depreciation and amortization 314 300 Other taxes 96 94 2,894 2,553 OPERATING INCOME 3,023 2,301 OTHER INCOME: Interest and investment income 100 111 Other income 190 46 290 157 INTEREST EXPENSE 26 58 INCOME BEFORE TAXES 3,287 2,400 INCOME TAXES 1,188 869 NET INCOME $ 2,099 $ 1,531 EARNINGS PER SHARE $ 0.99 $ 0.72 DIVIDENDS PER SHARE $ 0.30 $ 0.30 AVERAGE SHARES OUTSTANDING 2,119,925 2,115,484 The accompanying notes to consolidated financial statements are an integral part of these statements. ATRION CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS [CAPTION] March 31, December 31 1996 1995 (In thousands) [S] [C] [C] CURRENT ASSETS: Cash and temporary cash investments $ 5,455 $ 2,811 Accounts receivable, including $974,000 in 1996 and $1,860,000 in 1995 of take-or-pay settlement costs 15,762 13,890 Materials and supplies 513 689 Inventories 766 717 Prepaid expenses and other 555 288 23,051 18,395 PROPERTY, PLANT AND EQUIPMENT: Original cost 36,266 35,447 Less - accumulated depreciation and amortization 15,835 15,725 20,431 19,722 DEFERRED CHARGES: Patents 5,395 5,505 Goodwill 2,624 2,652 Other 2,403 2,232 10,422 10,389 $ 53,904 $ 48,506 The accompanying notes to consolidated financial statements are an interegral part of these statements. ATRION CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) [CAPTION] SHAREHOLDERS' EQUITY AND LIABILITIES March 31, December 31 1996 1995 (In thousands) [S] [C] [C] CURRENT LIABILITIES: Current maturities of long-term debt $ 203 $ 203 Accounts payable 15,762 12,646 Accrued income and other taxes 1,407 537 17,372 13,386 LONG-TERM DEBT, LESS CURRENT MATURITIES 1,508 1,609 OTHER LIABILITIES AND DEFERRED CREDITS: Accumulated deferred income taxes 1,631 1,559 Unamortized investment tax credits 235 243 Other 1,725 1,739 3,591 3,541 COMMON SHAREHOLDERS' EQUITY Common shares, par value $0.10 per share; authorized 10,000,000 shares, issued 2,280,000 shares 228 228 Paid-in capital 6,078 6,078 Retained earnings 26,988 25,525 Treasury shares, at cost (1,861) (1,861) Total shareholders' equity 31,433 29,970 $ 53,904 $ 48,506 The accompanying notes to consolidated financial statements are an integral part of these statements. ATRION CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) [CAPTION] Three Months Ended March 31, 1996 1995 (In thousands) [S] [C] [C] CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,099 $ 1,531 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 520 503 Deferred income taxes 73 24 Take-or-pay recoveries (net of expenditures) 895 728 Other (268) (129) 3,319 2,657 Change in current assets and liabilities: (Increase) in accounts receivable (2,729) (955) (Increase) in other current assets (139) (32) Increase in accounts payable 3,117 1,152 Increase in other current liabilities 869 484 4,437 3,306 CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions (1,055) (68) (1,055) (68) CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in long-term indebtedness (102) (971) Cash dividends paid (636) (635) (738) (1,606) Net increase in cash and temporary cash investments 2,644 1,632 Cash & temp. cash investments, beg. of period 2,811 439 Cash and temporary cash investments, end of period $ 5,455 $ 2,071 Cash paid for: Interest (net of capitalized amounts) $ 28 $ 19 Income taxes (net of refunds) 369 358 The accompanying notes to consolidated financial statements are an integral part of these statements. ATRION CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation In the opinion of management, all adjustments necessary for a fair presentation of results of operations for the periods presented have been included in the accompanying unaudited consolidated financial statements of ATRION Corporation (the Company). Such adjustments consist of normal recurring items. The accompanying financial statements have been prepared in accordance with the instructions to Form 10-Q and include only the information and notes required by such instructions. Accordingly, the consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes included in the Company's 1995 Annual Report on Form 10-K. Because of the seasonal nature of certain of the Company's operations, among other factors, the results of operations for the periods presented are not necessarily indicative of the results which will be achieved for an entire year. 2. Change of Corporate Name On May 6, 1996, the Articles of Incorporation of AlaTenn Resources, Inc. were amended, changing its name to ATRION Corporation.) All references to the Company subsequent to May 6, 1996 will utilize the new name of ATRION Corporation. ATRION CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results For The Three Months Ended March 31, 1996 The Company's consolidated net income for the quarter ended March 31, 1996 was $2,099,000 or $.99 per share, compared with $1,531,000 or $.72 per share, for the first quarter of 1995. The earnings per share computations are based on shares outstanding of 2,120,084 in 1996 and 2,115,484 in 1995. Consolidated revenues of $41.3 million for the first quarter of 1996 were 84% higher than revenues of $22.5 million for the first quarter of 1995. The increase in revenues in the first quarter of 1996, compared to the same period in the prior year, occurred primarily at the Company's natural gas marketing subsidiary. This increase between periods resulted primarily from significant volume and price increases related to colder weather. Sales volumes by this unit increased by 27% above volumes for the first quarter of 1995. Due to increased demands for natural gas which were due to the colder weather, natural gas prices increased by 92% compared to the prior year period. Gross margin of $5.9 million in the first quarter of 1996 was $1.1 million or 22% higher than that in the comparable period in 1995. The increase in gross margin, primarily in the pipeline and energy segment, was the result of colder weather as well as increased transportation revenues due to a major industrial customer increasing its natural gas usage because of equipment failures which reduced its ability to use alternate fuels. The cost of goods sold of $35.4 million for the first quarter of 1996, a 100% increase from the same period in 1995, was consistent with the changes in revenues in the pipeline and energy segment related to volume and price referred to above. The Company's operations and maintenance expenses of $2.5 million for the first quarter of 1996 were $.3 million higher than in the first quarter of 1995. This increase was primarily attributable to start-up costs of the Company's medical marketing unit, which was formed to market and distribute a newly developed line of products, called LacriCATH , to be used in a patented ophthalmic surgical procedure for treating excessive tearing of the eye. Depreciation and amortization expense of $.3 million for the first quarter of 1996 was comparable to that for the same period in the prior year. Interest and other income of $290,000 in the first quarter of 1996 increased $133,000 compared to the first quarter of 1995. The increase was attributable to income from the sale of substantially all of the assets of a small natural gas distribution subsidiary which was partially offset by lower interest income on the take-or-pay receivable at the Company's interstate pipeline subsidiary. Interest expense of $26,000 in the first quarter of 1996 was $32,000 lower than in the comparable prior year period due to the reduction of debt related to the 1994 acquisition of the business of Ryder International Corporation and the payoff of the interstate pipeline subsidiary's take-or-pay obligation. Income taxes in the first quarter of 1996 were $319,000 greater than in the comparable period in the prior year due to the increase in income in the current period. Liquidity and Capital Resources At March 31, 1996, the Company had no borrowings under its $20.0 million revolving loan facilities with a regional bank and had long-term debt, including current maturities, of $1.7 million which was related to the 1994 acquisition of its principal medical and health care products unit. The Company's total debt as a percent of total capitalization at March 31, 1996 was 5%. At March 31, 1996, the Company had cash and temporary cash investments of $5.5 million compared with $2.8 million at December 31, 1995. This increase was attributable to an increase in cash flows from operations and collections of receivables of take-or-pay costs by its interstate pipeline subsidiary from its customers which more than offset capital expenditures primarily related to the construction of a gaseous oxygen pipeline (see Other Matters) and the payment of dividends. The Company believes that existing cash and temporary cash investments, cash flows from operations, cash recoveries of take-or-pay costs by the Company's interstate pipeline subsidiary from its customers, borrowings available under the Company's revolving loan agreement and other equity or debt financing, which the Company believes would be available will be sufficient to fund operations, potential projects and budgeted capital expenditures over the next two years. Regulatory Matters As has been previously reported, two of the Company's interstate pipeline municipal customers, the cities of Decatur and Huntsville, Alabama, which together accounted for approximately 3% of ATRION's revenues and 14% of its gross margin for the first three months of 1996 entered into a 20 year contract with Southern Natural Gas Company (Southern), a wholly owned subsidiary of Sonat, Inc., for substantially all of their natural gas transportation requirements beginning in late 1997. Southern has filed an application with the Federal Energy Regulatory Commission (FERC) to build a 110-mile pipeline from Tuscaloosa, Alabama to North Alabama to provide such service. The Company's interstate pipeline unit currently has firm transportation contracts with both cities, which expire with Decatur on November 1, 1997 for approximately 93% of that municipality's contract volume and on November 1, 2000 for the balance, and which expire with Huntsville on April 1, 1998 for approximately 86% of that municipality's contract volume and on November 1, 2000 for the balance. For further information regarding the proposed bypass see Item 1 in Part II entitled "Legal Proceedings". The Company, through one of its subsidiaries, completed construction of and put into operation at the end of the first quarter, a 22-mile high pressure steel pipeline to transport gaseous oxygen, under a long-term contract with a large industrial gas supplier, to one of the Company's existing natural gas customers. PART II - OTHER INFORMATION Item 1. Legal Proceedings. On February 9, 1996, the Company filed a lawsuit in the Circuit Court of Jefferson County, Alabama against Southern and Huntsville. The Company is asserting that the contract between Southern and Huntsville for natural gas transportation service violates Alabama's competitive bid law and is requesting that the contract be declared void. The Company is also opposing Southern's application at the FERC to build its 110-mile pipeline.. There were no other material pending legal proceedings to which the Company or any of its subsidiaries was a party, or of which any of their property was the subject, as of March 31, 1996. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 27 Financial Data Schedules (Filed electronically only) (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended March 31, 1996. 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. ATRION Corporation (Registrant) Date: May 15, 1996 s/s Jerry A. Howard Jerry A.Howard Chairman, President & Chief Executive Officer Date: May 15, 1996 s/s George G. Petty George G.Petty Vice President-Finance & Chief Financial Officer EX-27 2
5 3-MOS DEC-31-1996 MAR-31-1996 5,455 0 15,762 0 1,279 23,051 36,266 15,835 53,904 17,372 1,711 0 0 228 31,205 53,904 41,322 41,322 35,405 35,405 2,894 0 26 3,287 1,188 2,099 0 0 0 2,099 .99 .99
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