-----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, A1sJXsvR690yjNcUYTqN/fINoirmmWViY63w44F2rM/LHDp/okd/idWSBIllvAAx UIR8aPCgyDWusulaU7UD3A== 0000891554-01-506203.txt : 20020410 0000891554-01-506203.hdr.sgml : 20020410 ACCESSION NUMBER: 0000891554-01-506203 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATRION CORP CENTRAL INDEX KEY: 0000701288 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 630821819 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10763 FILM NUMBER: 1782924 BUSINESS ADDRESS: STREET 1: ONE ALLENTOWN PARKWAY CITY: ALLEN STATE: TX ZIP: 75002 BUSINESS PHONE: 9723909800 MAIL ADDRESS: STREET 1: POST OFFICE 3869 CITY: MUSCLE SHOALS STATE: AL ZIP: 356623869 FORMER COMPANY: FORMER CONFORMED NAME: ALATENN RESOURCES INC DATE OF NAME CHANGE: 19920703 10-Q 1 d27333_10q.txt QUARTERLY REPORT 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 September 30, 2001 Commission File Number 0-10763 Atrion Corporation (Exact Name of Registrant as Specified in its Charter) Delaware 63-0821819 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) One Allentown Parkway, Allen, Texas 75002 (Address of Principal Executive Offices) (Zip Code) (972) 390-9800 (Registrant's Telephone Number, Including Area Code) Indicate by check 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 ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of Shares Outstanding at Title of Each Class November 9, 2001 - --------------------------------------- ------------------------------- Common stock, Par Value $0.10 per share 2,079,050 ATRION CORPORATION AND SUBSIDIARIES TABLE OF CONTENTS PART I. Financial Information 2 Item 1. Financial Statements Consolidated Statements of Income (Unaudited) For the Three Months and Nine Months Ended September 30, 2001 and 2000 3 Consolidated Balance Sheets September 30, 2001 (Unaudited) and December 31, 2000 4-5 Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2001 and 2000 6 Notes to Consolidated Financial Statements (Unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 PART I FINANCIAL INFORMATION 2 ATRION CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended September 30 September 30 ------------------------------------- ------------------------------------- 2001 2000 2001 2000 (In thousands, except per share data) (In thousands, except per share data) -------- -------- -------- -------- Revenues $ 15,418 $ 12,459 $ 44,998 $ 38,487 Cost of goods sold 9,577 7,695 27,864 23,603 -------- -------- -------- -------- Gross profit 5,841 4,764 17,134 14,884 -------- -------- -------- -------- Operating expenses: Selling expense 1,543 1,649 5,027 5,482 General and administrative 2,082 1,546 5,970 4,885 Research and development 483 513 1,479 1,553 -------- -------- -------- -------- 4,108 3,708 12,476 11,920 -------- -------- -------- -------- Operating income 1,733 1,056 4,658 2,964 -------- -------- -------- -------- Other income (expense): Interest expense, net (25) (173) (217) (496) Other income (expense) 4 2 437 (10) -------- -------- -------- -------- (21) (171) 220 (506) -------- -------- -------- -------- Income from continuing operations before provision for income taxes 1,712 885 4,878 2,458 Provision for income taxes 535 187 1,529 589 -------- -------- -------- -------- Income from continuing operations 1,177 698 3,349 1,869 Gain on disposal of discontinued operations, net of income taxes 5,326 30 5,492 129 -------- -------- -------- -------- Net income $ 6,503 $ 728 $ 8,841 $ 1,998 ======== ======== ======== ======== Earnings per basic share: Continuing operations $ 0.57 $ 0.34 $ 1.66 $ 0.91 Gain on disposal of discontinued operations 2.60 0.02 2.72 0.06 -------- -------- -------- -------- $ 3.17 $ 0.36 $ 4.38 $ 0.97 ======== ======== ======== ======== Weighted average basic shares outstanding 2,048 2,033 2,022 2,059 ======== ======== ======== ======== Earnings per diluted share: Continuing operations $ 0.51 $ 0.33 $ 1.50 $ 0.87 Gain on disposal of discontinued operations 2.33 0.01 2.46 0.06 -------- -------- -------- -------- $ 2.84 $ 0.34 $ 3.96 $ 0.93 ======== ======== ======== ======== Weighted average diluted shares outstanding 2,290 2,128 2,234 2,144 ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated statements. 3 ATRION CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, December 31, 2001 2000 Assets (unaudited) - ------ ----------- ----------- (In thousands) Current assets: Cash and cash equivalents $ 346 $ 159 Accounts receivable, net 9,124 7,175 Inventories 10,404 10,110 Prepaid expenses and other 633 752 ------- ------- 20,507 18,196 ------- ------- Property, plant and equipment: Original cost 38,773 37,295 Less accumulated depreciation and amortization 13,576 11,225 ------- ------- 25,197 26,070 ------- ------- Deferred charges: Patents, net 2,784 3,012 Goodwill, net 12,367 12,803 Other 3,373 3,609 ------- ------- 18,524 19,424 ------- ------- $64,228 $63,690 ======= ======= The accompanying notes are an integral part of these Consolidated Balance Sheets. 4 ATRION CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, December 31, 2001 2000 Liabilities and Stockholders' Equity (unaudited) - ------------------------------------ ------------ ------------ (In thousands) Current liabilities: Accounts payable and accrued liabilities $ 5,055 $ 4,518 Accrued income and other taxes 817 187 -------- -------- 5,872 4,705 -------- -------- Long-term debt 2,387 7,400 -------- -------- Other noncurrent liabilities 2,825 7,571 -------- -------- Stockholders' equity: Common shares, par value $0.10 per share; authorized 10,000,000 shares, issued 3,419,953 shares in 2001 and 2000 342 342 Paid-in capital 6,501 6,419 Retained earnings 60,747 51,906 Treasury shares,1,363,353 in 2001 and 1,427,660 in 2000, at cost (14,446) (14,653) -------- -------- Total stockholders' equity 53,144 44,014 -------- -------- $ 64,228 $ 63,690 ======== ========
The accompanying notes are an integral part of these Consolidated Balance Sheets. 5 ATRION CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30 ------------------------------- 2001 2000 -------------- -------------- (In thousands) Cash flows from operating activities: Net income $ 8,841 $ 1,998 Adjustments to reconcile net income to net cash provided by operating activities: Gain on disposal of discontinued operations (5,492) (129) Depreciation and amortization 3,429 3,128 Deferred income taxes 203 (396) Other 69 154 ------- ------- 7,050 4,755 Change in current assets and liabilities: (Increase) in accounts receivable (1,949) (458) (Increase) in other current assets (175) (1,312) Increase in accounts payable 277 488 Increase in other current liabilities 1,006 722 ------- ------- Net cash provided by continuing operations 6,209 4,195 Net cash provided by discontinued operations 165 129 ------- ------- 6,374 4,324 ------- ------- Cash flows from investing activities: Property, plant and equipment additions (2,068) (1,915) Property, plant and equipment sales 176 199 Patent sale 428 -- ------- ------- (1,464) (1,716) ------- ------- Cash flows from financing activities: Decrease in long-term indebtedness (5,013) (1,617) Issuance of common stock 459 23 Repurchase of common stock (169) (999) ------- ------- (4,723) (2,593) ------- ------- Net change in cash and cash equivalents 187 15 Cash and cash equivalents at beginning of period 159 70 ------- ------- Cash and cash equivalents at end of period $ 346 $ 85 ======= ======= Cash paid for: Interest $ 314 $ 566 Income taxes (net of refunds) $ 895 $ (382)
The accompanying notes are an integral part of these consolidated statements. 6 ATRION CORPORATION AND SUBSIDIARIES 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 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 2000 Annual Report on Form 10-K. (2) New Accounting Pronouncements In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations" (effective July 1, 2001) and SFAS No. 142, "Goodwill and Other Intangible Assets" (effective for the Company on January 1, 2002). SFAS No. 141 prohibits pooling-of-interests accounting for acquisitions. SFAS No. 142 establishes accounting and reporting standards for intangible assets acquired at acquisition. SFAS No. 142 specifies that goodwill will be evaluated for impairment and that amortization of goodwill will cease. Additionally, upon adoption of SFAS No. 142, the Company will be required to complete an initial assessment of goodwill impairment by June 30, 2002 with any impairment loss being recognized as the cumulative effect of a change in accounting principle, restating first quarter 2002 results, if necessary. As of September 30, 2001, the Company had goodwill of $12,367,000 and anticipates that goodwill amortization expense for 2001 will be approximately $600,000, or $400,000 after tax. Any impairment of goodwill could have a material impact on the Company's financial position or results of operations. The Company has not determined the impact of initial adoption of SFAS No. 142 on the Company's financial position or results of operations. 7 ATRION CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results for the three months ended September 30, 2001 The Company's consolidated income from continuing operations for the quarter ended September 30, 2001 was $1,177,000, or $.57 per basic and $.51 per diluted share, compared with $698,000, or $.34 per basic and $.33 per diluted share, for the third quarter of 2000. The earnings per basic share computations are based on weighted average basic shares outstanding of 2,047,535 in 2001 and 2,033,093 in 2000. The earnings per diluted share computations are based on weighted average diluted shares outstanding of 2,289,880 in 2001 and 2,127,883 in 2000. Consolidated revenues of $15.4 million for the third quarter of 2001 were $3.0 million, or 24 percent, higher than revenues for the third quarter of 2000. This improvement is primarily attributable to increased demand for the Company's products, particularly when measured against the third quarter of 2000 which was the Company's weakest quarterly period that year. The Company expects revenue growth in the next several quarters to revert to more normal levels reflecting conditions in our industry. Gross profit of $5.8 million in the third quarter of 2001 was $1.1 million, or 23 percent, higher than in the comparable 2000 period. This increase in gross profit is primarily attributable to the previously mentioned revenue increase in the third quarter of 2001 over the third quarter of 2000. The Company's third quarter 2001 operating expenses of $4.1 million were $400,000 higher than the operating expenses for the third quarter of 2000. This increase was primarily the result of higher general and administrative (G&A) expenses partially offset by reductions in selling expenses in the current year period. G&A expenses for the third quarter of 2001 were $536,000 higher than G&A expenses for the same period in 2000 primarily as a result of increased spending on outside services, compensation and benefit programs. Selling expenses for the third quarter of 2001 were $106,000 lower than selling expenses for the third quarter of 2000 due to a partial reorganization of the sales team after September 30, 2000. Operating income of $1.7 million in the third quarter of 2001 was $677,000, or 64 percent, higher than operating income in the third quarter of 2000. Net interest expense of $25,000 for the three months ended September 30, 2001 was $148,000 lower than net interest expense for the comparable 2000 period. This reduction was primarily related to the Company's reduction of its level of borrowings and lower interest rates in 2001. Income tax expense for the third quarter of 2001 was $535,000 compared to income tax expense of $187,000 for the same period in the prior year. The increase in pretax income in the third quarter of 2001 was the primary contributor to the increase in income tax expense in that period. The Company recorded a non-cash gain from discontinued operations of $5,326,000 after tax, or $2.60 per basic and $2.33 per diluted share, for the third quarter of 2001 compared with a gain of $30,000 after tax, or $.02 per basic and $.01 per diluted share, for the third quarter of 2000. The third quarter 2001 gain resulted from the reversal of a reserve 8 established when the Company disposed of its natural gas operations in 1997. The reversal followed the resolution of an outstanding contingency related to the sale of those assets. The third quarter of 2001 was the tenth consecutive quarter in which the Company's earnings per share from continuing operations exceeded those of the same period in the prior year. The Company anticipates that diluted earnings per share from continuing operations for 2001 will exceed the 2000 level by more than 50%. Results for the nine months ended September 30, 2001 The Company's consolidated income from continuing operations for the nine months ended September 30, 2001 was $3.3 million, or $1.66 per basic and $1.50 per diluted share, compared with $1.9 million, or $.91 per basic and $.87 per diluted share, for the same period of 2000. The earnings per basic share computations are based on weighted average basic shares outstanding of 2,021,908 in 2001 and 2,058,622 in 2000. The earnings per diluted share computations are based on weighted average diluted shares outstanding of 2,233,723 in 2001 and 2,143,606 in 2000. Consolidated revenues of $45.0 million for the first nine months of 2001 were $6.5 million, or 17 percent, higher than revenues for the same period of 2000. The increase in revenues for the nine-months ended September 30, 2001 was a result of improved revenues at all operations. Gross profit of $17.1 million for the nine-months ended September 30, 2001 was $2.3 million, or 15 percent, higher than in the comparable 2000 period. The previously mentioned increase in revenues was the primary contributor to this increase. The Company's operating expenses of $12.5 million for the first nine months of 2001 were $556,000 higher than the operating expenses for the same period of 2000. This increase was the result of increased G&A expenses partially offset by reductions in selling and other expenses in the current year period. G&A expenses for the first nine months of 2001 were $1.1 million higher than G&A expenses for the same period in 2000 primarily as a result of increased spending on outside services, compensation and benefit programs. Selling expenses for the nine-months ended September 30, 2001 were $455,000 lower than selling expenses for the comparable period of 2000 due to a partial reorganization of the sales team after September 30, 2000. Operating income of $4.7 million in the first nine months of 2001 was $1.7 million, or 57 percent, higher than the operating income in the comparable period of 2000. Net interest expense of $217,000 for the nine months ended September 30, 2001 was $279,000 lower than net interest expense for the comparable 2000 period. This reduction was primarily related to the Company's reduction of its level of borrowings and lower interest rates in 2001. Other income for the nine-month period ended September 30, 2001 was $437,000 compared to other expense of $10,000 for the same period in the prior year. This increase is primarily attributable to a one-time gain of $428,000 resulting from the sale of a patent that was recorded in the second quarter of 2001. 9 Income tax expense for the nine-month period ended September 30, 2001 was $1.5 million compared to income tax expense of $589,000 for the same period in the prior year. The increase in pretax income in the nine-month period ended September 30, 2001 was the primary contributor to the increase in income tax expense in that period. The Company recorded a gain from discontinued operations relating to the sale of its natural gas operations of $5.5 million after tax, or $2.72 per basic and $2.46 per diluted share, for the nine months ended September 30, 2001 compared with a gain of $129,000 after tax, or $.06 per basic and diluted share, for the nine months ended September 30, 2000. The reversal in 2001 of a reserve established when the Company disposed of its natural gas operations in 1997, as reported above, is the primary contributor to the 2001 gain. Liquidity and Capital Resources At September 30, 2001, the Company had cash and cash equivalents of $346,000 compared with $159,000 at December 31, 2000. The Company had $2.4 million of long-tem debt under its $18.5 million revolving credit facility at September 30, 2001 compared with $7.4 million of long-term debt at December 31, 2000. This decrease in long-term debt from December 31, 2000 to September 30, 2001 resulted from the Company's use of cash flow from continuing operations to reduce its borrowing level. The term of the revolving credit facility was extended two years during the third quarter of 2002 and expires on November 11, 2004. As previously discussed, the Company recorded a non-cash gain from discontinued operations during the third quarter of 2001. The gain had no affect on the Company's cash position or the balance of its outstanding indebtedness and, as a result, it will not have any impact on earnings from continuing operations in future periods. The Company believes that its existing cash and cash equivalents, cash flows from operations, borrowings available under the Company's credit facility and debt financing, which the Company believes would be available, will be sufficient to fund the Company's cash requirements for at least the foreseeable future. Forward-Looking Statements The statements in this Management's Discussion and Analysis that are forward-looking are based upon current expectations, and actual results may differ materially. Therefore, the inclusion of such forward-looking information should not be regarded as a representation by the Company that the objectives or plans of the Company would be achieved. Such statements include, but are not limited to, the Company's expectations regarding revenue in the next several quarters, regarding diluted earnings per share from continuing operations for the year 2001, as well as future liquidity and capital resources. 10 Words such as "anticipates," "believes," "expects," "estimated" and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements contained herein involve numerous risks and uncertainties, and there are a number of factors that could cause actual results to differ materially including, but not limited to, the following: changing economic, market and business conditions, the uncertainties resulting from the events of September 11, 2001, acts of war or terrorism, market acceptance of the Company's products, the effects of governmental regulation, the impact of competition and new technologies, slower-than-anticipated introduction of new products or implementation of marketing strategies, changes in the prices or availability of raw materials, changes in product mix, product recalls, the ability to attract and retain qualified personnel and the loss of any significant customer. In addition, assumptions relating to budgeting, marketing, product development and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic review which may cause the Company to alter its marketing, capital expenditures or other budgets, which in turn may affect the Company's results of operations and financial condition. 11 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None 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 None (b) No reports on Form 8-K have been filed during the quarter ended September 30, 2001. 12 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: November 13, 2001 /s/ Emile A. Battat --------------------------- Emile A. Battat Chairman, President and Chief Executive Officer Date: November 13, 2001 /s/ Jeffery Strickland --------------------------- Jeffery Strickland Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----