-----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, EitWRwNEBun/frJPgtvkeltxHf8z/9rpRNJXZLoIUbFnr9j+eWYQDVggPyguM5m6 v1bpYWk399Tabf2GHKMCsg== 0001047469-97-008991.txt : 19971230 0001047469-97-008991.hdr.sgml : 19971230 ACCESSION NUMBER: 0001047469-97-008991 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971129 FILED AS OF DATE: 19971229 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANGER BIOMECHANICS GROUP INC CENTRAL INDEX KEY: 0000725460 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 112239561 STATE OF INCORPORATION: NY FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12991 FILM NUMBER: 97745511 BUSINESS ADDRESS: STREET 1: 450 COMMACK ROAD CITY: DEER PARK STATE: NY ZIP: 11729 BUSINESS PHONE: 5166671200 MAIL ADDRESS: STREET 1: 450 COMMACK ROAD CITY: DEER PARK STATE: NY ZIP: 11729 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________ FORM 10-Q [ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 29, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-12991 THE LANGER BIOMECHANICS GROUP, INC. ------------------------------------ (Exact name of registrant as specified in its charter.) NEW YORK 11-2239561 ------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization.) Identification No.) 450 COMMACK ROAD, DEER PARK, NY 11729 ---------------------------------------------------- (Address of principal executive offices) (Zip Code) (516) 667-1200 -------------------------------------------------- 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 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 practical date. Common Stock, $.02 Par Value -- 2,585,281 shares as of December 23, 1997. INDEX THE LANGER BIOMECHANICS GROUP, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets -- November 29, 1997 and February 28, 1997 3 Consolidated Statements of Operations -- Three and Nine Months ended November 29, 1997 and November 23, 1996 4 Consolidated Statements of Cash Flows -- Nine Months ended November 29, 1997 and November 23, 1996 5 Notes to Consolidated Financial Statements 6 - 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 9 PART II. OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K 10 Signatures 11 2 PART I. FINANCIAL INFORMATION THE LANGER BIOMECHANICS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
NOV. 29, 1997 FEB. 28, 1997 ------------- ------------- (UNAUDITED) Assets Current Assets: Cash and cash equivalents........................ $1,294,371 $1,125,589 Accounts receivable, net of allowance for doubtful accounts of $27,000 and $21,000....... 1,342,956 1,431,567 Inventories, net (Note 2)........................ 1,006,463 922,346 Other current assets............................. 280,429 279,558 ---------- ---------- Total current assets............................... 3,924,219 3,759,060 Property and equipment, net........................ 722,366 507,195 Other assets....................................... 177,571 178,771 ---------- ---------- $4,824,156 $4,445,026 ---------- ---------- ---------- ---------- Liabilities and Stockholders' Equity Current Liabilities: Current maturities of notes payable.............. $ -- $ 301 Accounts payable................................. 340,337 341,078 Account liabilities: Accrued payroll and related payroll taxes...... 282,427 299,519 Other current liabilities...................... 878,028 677,669 Unearned revenue--current........................ 398,724 390,727 ---------- ---------- Total current liabilities.......................... 1,899,516 1,709,294 Accrued pension expense............................ 245,077 287,315 Unearned revenue--long term........................ 150,713 151,732 Deferred income taxes.............................. 5,567 5,376 ---------- ---------- Total liabilities.................................. 2,300,873 2,153,717 ---------- ---------- Stockholders' Equity: Common stock, $.02 par value. Authorized 10,000,000 shares; outstanding 2,585,281and $2,584,281 shares, respectively..................................... 51,706 51,686 Additional paid-in capital......................... 6,277,543 6,276,782 Accumulated deficit................................ (3,513,218) (3,740,402) Aggregate adjustment resulting from foreign currency translation..................... (44,500) (48,509) Minimum pension liability adjustment............... (248,248) (248,248) ---------- ---------- Total stockholders' equity......................... 2,523,283 2,291,309 ---------- ---------- $4,824,156 $4,445,026 ---------- ---------- ---------- ----------
See notes to consolidated financial statements. 3 THE LANGER BIOMECHANICS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED: NINE MONTHS ENDED: -------------------------- -------------------------- NOV. 29, NOV. 23, NOV. 29, NOV. 23, 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Net sales (Note 1)...................................... $2,586,395 $2,835,890 $7,652,193 $8,062,726 Cost of sales........................................... 1,551,096 1,614,459 4,650,279 4,642,127 ------------ ------------ ------------ ------------ Gross profit............................................ 1,035,299 1,221,431 3,001,914 3,420,599 Selling expense......................................... 366,891 522,317 1,149,135 1,419,856 General and administrative expense...................... 514,349 574,768 1,665,619 1,729,160 ------------ ------------ ------------ ------------ Income from operations.................................. 154,059 124,346 187,160 271,583 Other income, principally interest...................... 16,163 6,300 54,596 41,059 ------------ ------------ ------------ ------------ 170,222 130,646 241,756 312,642 Other expense, principally interest..................... 2,653 2,211 9,039 6,890 ------------ ------------ ------------ ------------ Income before income taxes.............................. 167,569 128,435 232,717 305,752 Provision for income taxes (Note 1)..................... 9,109 17,999 5,533 44,034 ------------ ------------ ------------ ------------ Net income.............................................. $ 158,460 $ 110,436 $ 227,184 $ 261,718 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Weighted average number of common and common equivqlent shares used in computation of net income per share: Primary............................................... 2,662,780 2,667,726 2,666,665 2,663,814 Fully Diluted......................................... 2,660,507 2,656,468 2,659,840 2,655,192 Net income per common and comon equivalent share: Primary............................................... $ 0.06 $ 0.04 $ 0.09 $ 0.10 Fully Diluted......................................... $ 0.06 $ 0.04 $ 0.09 $ 0.10
See notes to consolidated financial statements. 4 THE LANGER BIOMECHANICS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
NINE MONTHS ENDED: -------------------------- NOV. 29, NOV. 23, 1997 1996 ------------ ------------ Cash Flows from Operating Activities: Net income....................................................... $ 227,184 $ 261,718 Adjustments to reconcile net income to cash provided by (used in) operating activities: Depreciation and amortization.................................. 134,360 141,161 Deferred foreign tax provision................................. 0 28,389 Changes in operating assets and liabilities: Accounts receivable, net....................................... 88,611 (305,300) Inventories.................................................... (84,117) (17,957) Prepaid expenses and other assets.............................. 329 (34,850) Net pension liability.......................................... (42,238) 4,503 Accounts payable and accrued liabilities....................... 163,902 85,052 Unearned revenue............................................... 23,022 6,639 Disposal of fixed assets....................................... 0 5,300 ------------ ------------ Net cash provided by (used in) operating activities................ 511,053 174,655 ------------ ------------ Cash Flows from Investing Activities: Capital expenditures............................................... (342,751) (59,856) ------------ ------------ Net cash used in investing activities.............................. (342,751) (59,856) ------------ ------------ Cash Flows from Financing Activities: Common stock options exercised..................................... 781 2,344 Notes payable...................................................... (301) (2,519) ------------ ------------ Net cash (used in) provided by financing activities................ 480 (175) ------------ ------------ Net increase (decrease) in cash and cash equivalents............... 168,782 114,624 ------------ ------------ Cash and cash equivalents at beginning of year..................... 1,125,589 739,460 ------------ ------------ Cash and cash equivalents at end of period......................... $1,294,371 $ 854,084 ------------ ------------ ------------ ------------ Supplemental Disclosures of Cash Flow and Non-cash Flow Information: Cash paid for interest............................................. $ 9,039 $ 6,890 ------------ ------------ ------------ ------------
See notes to consolidated financial statements. 5 THE LANGER BIOMECHANICS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS A) Basis of Presentation The accompanying unaudited 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 Rule 10-01 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. For further information, refer to the consolidated financial statements and footnotes thereto for the fiscal year ended February 28, 1997 in the Company's 1997 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods ended November 29, 1997 are not necessarily indicative of the results that may be expected for the year ending February 28, 1998. B) Net Income per Share Net income per share includes the effect of common stock equivalents comprised of incentive stock options granted under the Company's qualified stock option plan and non-qualified stock options. C) Provision for Income Taxes The provision for income taxes, on domestic operations, for periods ended November 29, 1997 and November 23, 1996 were calculated at an effective annual tax rate of 4.5% and 9%, respectively, reflecting the utilization of available net operating loss carryforwards and also taking into account the "Alternative Minimum Tax". Provision for income taxes on foreign operations were estimated at 25%. 6 THE LANGER BIOMECHANICS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 2 INVENTORY The Company did not take a physical inventory as of November 29, 1997. Inventories and cost of sales for the interim period were based on the Company's perpetual inventory records.
November 29, 1997 February 28, 1997 ----------------- ----------------- (unaudited) Inventories consist of: Raw materials................................ $ 754,041 $ 706,184 Work-in-process.............................. 186,858 156,421 Finished goods............................... 119,902 119,353 ------------ ----------- Total Inventories....................... 1,060,801 981,958 Less: Allowance for obsolescence....... (54,338) (59,612) ------------ ----------- Net Inventories.............................. $ 1,006,463 $ 922,346 ------------ ----------- ------------ -----------
NOTE 3 STOCK OPTIONS The following summarizes stock option activity for the quarter ended November 29, 1997: Granted................................... 25,000 Exercise Price........................... $ 1.875 Exercised................................. 1,000 Exercise Price........................... $ .781 Options Cancelled/Expired/Terminated...... None NOTE 4 SEASONALITY Revenues derived from the Company's sale of orthotic devices, a substantial portion of the Company's operations, have historically been higher in the warmer months of the year. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three and nine months ended November 29, 1997 as compared with three and nine months ended November 23, 1996. Revenues Sales of $2,586,395 for the third quarter ended November 29, 1997 were 8.8% lower than the sales of $2,835,890 in the comparable prior-year quarter. Net sales of $7,652,193 for the nine months ended November 29, 1997 were 5.1% lower than prior-period's sales of $8,062,726. Decreased revenues resulted from decreased volume offset partially by an approximately 4% sales price increase for goods and services effective at various times in October and November of 1996. Gross Profit Gross profit for the current-year's third quarter was $1,035,299 (40.0% of sales) which represents a 15.2% decrease from the comparable prior-year quarter's gross profit of $1,221,431 (43.1% of sales). Gross profit for the recently concluded nine-month period of $3,001,914 (39.2% of sales) was 12.2% lower than the comparable prior nine-month period's gross profit of $3,420,599 (42.4% of sales). The year-to-date decrease was mostly due to decreased unit volume together with manufacturing problems occurring in the second quarter of this fiscal year in the Company's facility in the UK. Selling, General and Administrative Expenses Selling, general and administrative expenses for the recently ended quarter were $881,240 compared to $1,097,085 in the comparable prior-year period, a 19.7% decrease. Expenses for the nine months ended November 29, 1997, were $2,814,754 compared with $3,149,016 in the prior comparable period, accounting for a 10.6% decrease. Decreased expenses were due primarily to decreased selling expense in fiscal 1998 associated with reduced sales promotion efforts and decreased marketing staff, reflecting the Company's decision to contain costs in this area. Other Income - Net Other income consists primarily of income generated from investments and service income generated from the Company's accounts receivable offset partially by expenses of non-operating services. Net other income of $13,510 for the recently-concluded quarter was 230.4% more than the comparable prior-year quarter's other income of $4,089. Other income of $45,557 for the nine-month period was 33.3% more than the $34,169 achieved for the comparable prior nine-month period. 8 Provision for Income Taxes The Company has provided an effective tax rate of 4.5% (US operations) of pre-tax profits after utilizing available net operating loss carryforwards and taking into account the "Alternative Minimum Tax". Taxes for the UK operations were estimated at 25% of pre-tax profit. Net Income The Company earned $158,460 or $0.06 per share for the recently concluded quarter as compared to $110,436 or $0.04 per share generated in the prior-year's quarter. Nine month's net profit of $227,184 or $0.09 per share compares with $261,717 or $0.10 per share in the prior-year's comparable period. The effect on profit of the unit volume decrease was nearly offset by improved control of manufacturing costs, reduced marketing staff and sales promotion expenses, and the sales price increase for the nine month period ended November 29, 1997, versus prior-year's comparable period. Profits for the three month period ended November 29, 1997 increased versus prior-year's comparable period primarily due to improved manufacturing operations in the UK and reduced marketing expenses. Liquidity Working capital, as of November 29, 1997, was $2,024,703 versus $2,049,766 at February 28, 1997, a decrease of $25,063. Increases in cash from decreases in accounts receivable were more than offset by increases in current liabilities. The Company believes its capital position is adequate to meet anticipated cash needs for the next twelve months and beyond. As of July 31, 1997, the Company has renewed and increased a revolving credit line from $750,000 to $1,500,000 for an additional year (August 1, 1997 - July 31, 1998) at an interest rate of prime plus 0.5%, from NBD Bank. The Company has not drawn against the credit line during the nine month period ended November 29, 1997. 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports Form 8-K (a) Exhibits 11. Statement Re: Computation of Per Share Earnings 27. EDGAR financial data schedule (b) Reports on Form 8-K No Reports on Form 8-K were filed during the quarter ended November 29, 1997. 10 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. The Langer Biomechanics Group, Inc. ----------------------------------- (REGISTRANT) DATE: December 23, 1997 By: /s/ GARY L. GRAHN ------------------------ Gary L. Grahn President and Chief Executive Officer By: /s/ THOMAS F. BELLEAU --------------------------- Thomas F. Belleau Vice President - Finance and Chief Financial Officer (Principal Financial Officer) 11 EX-11 2 EXHIBIT 11 Exhibit 11 THE LANGER BIOMECHANICS GROUP, INC. AND SUBSIDIARIES COMPUTATION OF PER SHARE AMOUNTS EXHIBIT 11
THREE MONTHS NINE MONTHS -------------------------- -------------------------- NOV. 29, NOV. 23, NOV. 29, NOV. 23, 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Primary: Net income.............................................. $ 158,460 $ 110,436 $ 227,184 $ 261,718 ------------ ------------ ------------ ------------ Weighted average number of common shares................ 2,585,281 2,584,281 2,584,614 2,583,005 Assumed number of shares issued from common share equivalents........................................... 77,499 83,445 82,051 80,809 ------------ ------------ ------------ ------------ Weighted average number of common and common equivalent shares................................................ 2,662,780 2,667,726 2,666,665 2,663,814 ------------ ------------ ------------ ------------ Net income per share: Primary................................................. $ 0.06 $ 0.04 $ 0.09 $ 0.10 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Fully Diluted: Net income.............................................. $ 158,460 $ 110,436 $ 227,184 $ 261,718 ------------ ------------ ------------ ------------ Weighted average number of common shares................ 2,585,281 2,584,281 2,584,614 2,583,005 Assumed number of shares issued from common share equivalents........................................... 75,226 72,187 75,226 72,187 ------------ ------------ ------------ ------------ Weighted average number of common and common equivalent shares................................................ 2,660,507 2,656,468 2,659,840 2,655,192 ------------ ------------ ------------ ------------ Net income per share: Fully Diluted........................................... $ 0.06 $ 0.04 $ 0.09 $ 0.10 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
EX-27 3 FINANCIAL DATA SCHEDULE
5 9-MOS FEB-28-1997 NOV-29-1997 1,294,371 0 1,369,956 27,000 1,006,463 3,924,219 3,003,921 2,281,555 4,824,156 1,899,516 0 0 0 51,706 2,471,577 4,824,156 7,652,193 7,652,193 4,650,279 4,650,279 2,814,754 0 9,039 232,717 5,533 227,184 0 0 0 227,184 0.09 0.09
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