-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, HtEw566nJXtDEbPyNU/aLS3YhPosLPFI8lzU3gaWaax+w1kI+Wkq45rSKwb7F0/X eTKA1QTkLS+mcrXE7YQEKg== 0000950132-95-000174.txt : 19950620 0000950132-95-000174.hdr.sgml : 19950620 ACCESSION NUMBER: 0000950132-95-000174 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESPIRONICS INC CENTRAL INDEX KEY: 0000780434 STANDARD INDUSTRIAL CLASSIFICATION: 3842 IRS NUMBER: 251304989 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16723 FILM NUMBER: 95538855 BUSINESS ADDRESS: STREET 1: 1001 MURRY RIDGE DR CITY: MURRYSVILLE STATE: PA ZIP: 15668 BUSINESS PHONE: 4127330200 MAIL ADDRESS: STREET 1: 1001 MURRY RIDGE DRIVE CITY: MURRYSVILLE STATE: PA ZIP: 15668 10-Q 1 QUARTERLY REPORT 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) X Quarterly Report pursuant to section 13 or 15(d) of the Securities - Exchange Act of 1934 for the quarterly period ended March 31, 1995 or -------------- Transition Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to ----------- ------------- Commission File No. 000-16723 RESPIRONICS, INC. (Exact name of registrant as specified in its charter) Delaware 25-1304989 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 1001 Murry Ridge Dr. Murrysville, Pennsylvania 15668 (Address of principal executive offices) (Zip Code) (Registrant's Telephone Number, including area code) 412-733-0200 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 and (2) has been subject to such filing requirements for at least the past 90 days. Yes X No . --- --- As of April 30, 1995, there were 16,724,969 shares of Common Stock of the registrant outstanding. INDEX RESPIRONICS, INC. PART I - FINANCIAL INFORMATION - - ------------------------------ Item 1. Financial Statements (Unaudited). Consolidated balance sheets -- March 31, 1995 and June 30, 1994. Consolidated statements of operations -- Three months ended March 31, 1995 and 1994 and nine months ended March 31, 1995 and 1994. Consolidated statements of cash flows-- Nine months ended March 31, 1995 and 1994. Notes to consolidated financial statements -- March 31, 1995. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition PART II - OTHER INFORMATION - - --------------------------- Item 1. Legal Proceedings. Item 2. Changes in Securities. Item 3. Defaults Upon Senior Securities. Item 4. Submission of Matters to a Vote of Security Holders. Item 5. Other Information. Item 6. Exhibits and Reports on Form 8-K. SIGNATURES - - ---------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements CONSOLIDATED BALANCE SHEETS (UNAUDITED) RESPIRONICS, INC. AND SUBSIDIARIES
March 31 June 30 1995 1994 ----------------------- ASSETS CURRENT ASSETS Cash and short-term investments $16,638,370 $12,384,054 Trade accounts receivable, less allowance for doubtful accounts of $700,000 and $525,000 18,532,611 15,011,285 Refundable income taxes -0- 1,787,265 Inventories 11,691,787 7,833,755 Prepaid expenses and other 1,188,874 1,168,167 Deferred income tax benefits 2,021,776 2,021,776 ----------- ----------- TOTAL CURRENT ASSETS 50,073,418 40,206,302 PROPERTY, PLANT AND EQUIPMENT Land 2,459,323 2,417,334 Building 8,512,638 7,713,405 Machinery and equipment 13,131,192 10,849,230 Furniture and office equipment 10,265,746 7,915,022 Leasehold improvements 519,744 519,744 ----------- ----------- 34,888,643 29,414,735 Less allowances for depreciation and amortization 14,797,793 11,929,911 ----------- ----------- 20,090,850 17,484,824 Funds held in trust for construction of new facility 701,554 680,372 OTHER ASSETS 640,074 545,722 ----------- -----------
$71,505,896 $58,917,220 =========== =========== See notes to consolidated financial statements.
March 31 June 30 1995 1994 ------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $3,367,677 $3,086,776 Accrued compensation and related expenses 3,991,568 3,055,420 Accrued expenses 2,986,940 1,968,977 Income taxes 1,044,706 658,364 Current portion of long-term obligations 475,303 404,866 ----------- ---------- TOTAL CURRENT LIABILITIES 11,866,194 9,174,403 LONG-TERM OBLIGATIONS 5,605,936 4,854,440 MINORITY INTEREST 668,853 664,268 COMMITMENTS SHAREHOLDERS' EQUITY Common Stock, $.01 par value; authorized 40,000,000 shares; issued and outstanding 16,557,054 shares at March 31, 1995 and 16,344,690 shares at June 30, 1994 165,570 163,446 Additional capital 17,741,463 16,790,919 Retained earnings 35,457,880 27,269,744 ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 53,364,913 44,224,109 ----------- ----------- $71,505,896 $58,917,220 =========== ===========
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) RESPIRONICS, INC. AND SUBSIDIARIES
Three months ended March 31 Nine months ended March 31 1995 1994 1995 1994 ----------------------------- ---------------------------- Net sales $ 25,599,736 $ 19,307,611 $ 71,137,348 $ 56,132,166 Cost of goods sold 11,113,853 8,603,122 30,773,215 25,338,721 ------------- ------------ ------------- ------------ 14,485,883 10,704,489 40,364,133 30,793,445 General & administrative expenses 3,829,945 2,288,156 10,641,765 7,259,800 Sales, marketing & commission expense 4,353,971 3,767,358 12,652,646 10,697,944 Research & development expense 1,735,308 1,227,629 4,795,636 3,199,223 Non-recurring charges -0- -0- -0- 1,966,085 Interest expense 49,183 39,567 145,126 130,786 Other income (358,299) (139,453) (868,082) (432,179) ------------- ------------ ------------- ----------- 9,610,108 7,183,257 27,367,091 22,821,659 ------------- ------------ ------------- ----------- INCOME BEFORE INCOME TAXES 4,875,775 3,521,232 12,997,042 7,971,786 Income taxes 1,804,034 1,276,937 4,808,906 2,790,125 ------------- ------------ ------------- ----------- NET INCOME $3,071,741 $2,244,295 $ 8,188,136 $5,181,661 ============= ============ ============== =========== Earnings per share $ 0.17 $ 0.13 $ 0.47 $ 0.30 ============= ============ ============== =========== Weighted Average Number of Shares Used in Computing Earnings Per Share 17,687,053 17,330,390 17,459,702 17,285,838 ============= ============ ============== ===========
See notes to consolidated financial statements CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) RESPIRONICS, INC. AND SUBSIDIARIES
Nine months ended March 31 1995 1994 ------------------------ OPERATING ACTIVITIES Net income $ 8,188,136 $ 5,181,661 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,867,882 2,544,256 Provision for losses on accounts receivable 175,000 75,000 Provision for losses on write-off of equipment -0- 224,504 Changes in operating assets and liabilities: Increase in accounts receivable (3,696,326) (2,056,074) Decrease in refundable income taxes 1,787,265 -0- Increase in inventories and prepaid expenses (3,878,739) (231,662) Increase in other assets (94,352) (20,609) Increase (decrease) in accounts payable 280,901 (1,703,236) Increase (decrease) in accrued compensation and related expenses 936,148 (1,473,485) Increase in accrued expenses 1,017,963 309,413 Increase (decrease) in accrued income taxes 386,342 (256,764) ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 7,970,220 2,593,004 INVESTING ACTIVITIES Purchase of property, plant and equipment (5,473,908) (7,101,673) Increase in funds held in trust for construction of new facility (21,182) -0- ----------- ----------- NET CASH USED BY INVESTING ACTIVITIES (5,495,090) (7,101,673) FINANCING ACTIVITIES Proceeds from long-term obligations 1,132,761 41,974 Reduction in long-term obligations (310,828) (322,765) Issuance of common stock 952,668 162,638 Increase in minority interest 4,585 647,138 ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 1,779,186 528,985 ----------- ----------- INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS 4,254,316 (3,979,684) Cash and short-term investments at beginning of period 12,384,054 14,635,546 ----------- ----------- CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $16,638,370 $10,655,862 =========== ===========
See notes to consolidated financial statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) RESPIRONICS, INC. AND SUBSIDIARIES MARCH 31, 1995 NOTE 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 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, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended March 31, 1995 are not necessarily indicative of the results that may be expected for the year ended June 30, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 1994. NOTE B -- INVENTORIES The composition of inventory is as follows:
March 31 June 30 1995 1994 ----------------------- Raw materials $6,631,683 $5,268,039 Work-in-process 1,106,724 818,400 Finished goods 3,953,379 1,747,316 ----------- ---------- $11,691,786 $7,833,755 =========== ==========
NOTE C -- NON-RECURRING CHARGES In November 1993, the Company discontinued the production and sale of its BagEasy line of disposable manual resuscitators and recalled all remaining BagEasy products in distribution channels and customer inventories. Accordingly, during the nine months ended March 31, 1994 the Company recorded non-recurring charges of $1,966,000 which included provisions for write-offs of inventory and fixed assets, the satisfaction of purchase order and compensation commitments, and costs associated with the recall. NOTE D -- STOCK SPLIT On February 16, 1995, the Company's Board of Directors declared a 100% stock distribution in the form of a two-for-one stock split of the Company's common stock. On March 17, 1995, one additional share of common stock was distributed for each share held of record on March 3, 1995. All outstanding stock options were amended to provide for issuance of two shares of common stock for every one share issuable prior to the split. An amount equal to the par value of the shares issued was transferred from the additional capital account to the common stock account. All references to number of shares, except shares authorized, and to per share information in the consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis. NOTE E -- SUBSEQUENT EVENT On April 6, 1995, the Company acquired Vitalog Monitoring, Inc., a California company that designs, manufactures and markets sleep monitoring and diagnostic equipment. This combination will be treated for financial reporting purposes as a purchase. Consideration was $681,000 in cash and $1,276,000 in shares of the Company's common stock in exchange for the outstanding stock of Vitalog, related patents, and non-competition agreements. Item 2. Management's Discussion and Analysis of Result of Operations and Financial Condition RESULTS OF OPERATIONS Net sales for the quarter ended March 31, 1995 were $25,600,000 representing a 33% increase over the $19,308,000 recorded for the quarter ended March 31, 1994. Sales for the nine months ended March 31, 1995 were $71,137,000, an increase of 27% over the $56,132,000 recorded in the year earlier period. The increases in net sales were primarily attributable to increases in total unit sales for the Company's obstructive sleep apnea and ventilatory support products and reflect sales growth across all of the Company's market bases for these product groups. The nine month sales increase was accomplished in spite of a decrease in sales of the Company's resuscitation products resulting from the Company's November 1993 decision to discontinue production and shipment of its BagEasy manual resuscitator, which accounted for 3% of net sales for the nine month period ended March 31, 1994. In March of 1995 the Company introduced a redesigned version of the BagEasy product. In addition, sales of the Company's face masks used as accessories for its obstructive sleep apnea and ventilatory support units increased significantly in both unit and dollar terms in both the quarter to quarter and nine month comparisons. The Company's gross profit was 57% of net sales for the quarter and nine months ended March 31, 1995 as compared to 55% for the quarter and nine months ended March 31, 1994. This improvement was due to the Company's ability to limit the growth of manufacturing and manufacturing support costs to rates less than the rate of sales increases achieved, a shift in sales mix toward the Company's higher margin products, and, for the nine month comparison, the fact that during the nine months ended March 31, 1994, gross profit was reduced because of a temporary diversion of engineering resources away from research and development activities and to manufacturing support in response to recommendations resulting from an FDA inspection. General and administrative expenses were $3,830,000 (15% of net sales) for the quarter ended March 31, 1995 as compared to $2,288,000 (12% of net sales) for the quarter ended March 31, 1994. General and administrative expenses were $10,642,000 (15% of net sales) for the nine months ended March 31, 1995 as compared to $7,260,000 (13% of net sales) for the year earlier period. These increases were due primarily to provisions for profit sharing bonus being made in the quarter and nine months ended March 31, 1995 based on results achieved. There were no profit sharing bonuses for fiscal year 1994. Higher expenses were also incurred due to staffing increases, increased legal fees, and increased provisions for uncollectible accounts receivable. Sales, marketing and commission expenses were $4,354,000 (17% of net sales) for the quarter ended March 31, 1995 as compared to $3,767,000 (20% of net sales) for the quarter ended March 31, 1994. Sales, marketing and commission expenses were $12,653,000 (18% of net sales) for the nine months ended March 31, 1995 as compared to $10,698,000 (19% of net sales) for the year earlier period. These increases in absolute dollars were primarily due to higher commission expenses paid to independent sales representatives resulting from a shift in sales mix towards the products handled by these representatives and, to a lesser extent, product literature expenses incurred in anticipation of product launches, higher trade show and training expenses, and increased salary expenses principally for new employees in sales and marketing management. Research and development expenses were $1,735,000 (7% of net sales) for the quarter ended March 31, 1995 as compared to $1,227,000 (6% of net sales) for the quarter ended March 31, 1994. Research and development expenses were $4,796,000 (7% of net sales) for the nine months ended March 31, 1995 as compared to $3,199,000 (6% of net sales) for the year earlier period. The increases in spending reflect the Company's commitment to investment in future product development and product enhancements in all of the Company's major product groups and also reflect extensive new product development efforts currently underway in anticipation of new product introductions in each of these groups during calendar year 1995 and in some cases with initial distribution in international markets until regulatory approval in the United States is obtained. In addition, research and development expenditures were lower than normal during the nine months ended March 31, 1994 as engineering resources were temporarily diverted away from research and development activities and devoted to improving manufacturing and engineering systems. Non-recurring charges were $1,966,000 (5% of net sales) for the nine months ended March 31, 1994. These charges represent costs incurred by the Company in connection with its November 1993 decision to discontinue the production and sale of its BagEasy line of disposable manual resuscitators and recall all remaining BagEasy products in distribution channels and customer inventory and include provisions for write-offs of inventory and fixed assets, the satisfaction of purchase order and compensation commitments, and costs associated with the recall. The Company's effective income tax rate was 37% for the quarter ended March 31, 1995 as compared to 36% for the quarter ended March 31, 1994 and 37% for the nine months ended March 31, 1995 as compared to 35% for the nine months ended March 31, 1994. The increases for the quarter to quarter and nine month comparisons were due to increases in the proportion of the Company's taxable income attributable to its United States operation. The United States operation pays income taxes at a higher rate (approximately 40% before available income tax credits) than do the Hong Kong and Peoples Republic of China operations. The increase in the proportion of taxable income attributable to the United States operation was caused in part by the non-recurring charges recorded in the nine months ended March 31, 1994 and described above, the majority of which were incurred by the United States operation. As a result of the factors described above, the Company's net income was $3,072,000 (12% of net sales) for the quarter ended March 31, 1995 as compared to $2,244,000 (12% of net sales) for the quarter ended March 31, 1994 and $8,118,000 (12% of net sales) for the nine months ended March 31, 1995 as compared to $5,182,000 (9% of net sales) for the nine months ended March 31, 1994. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The Company had working capital of $38,207,000 at March 31, 1995 and $31,032,000 at June 30, 1994. Net cash provided by operating activities was $7,970,000 for the nine months ended March 31, 1995 as compared to $2,593,000 for the nine months ended March 31, 1994. The increase in cash provided by operations was due primarily to an increase in net income, a decrease in refundable income taxes, and increases in accounts payable, accrued compensation and related expenses, accrued expenses and accrued income taxes during the current nine month period as compared to decreases or smaller increases in those accounts during the prior year's nine month period. Net cash used by investing activities was $5,495,000 for the nine months ended March 31, 1995 as compared to $7,102,000 for the nine months ended March 31, 1994. All of the cash used by investing activities for both periods represented capital expenditures. These capital expenditures included the purchase of production equipment, office equipment, and computers, and, for the nine months ended March 31, 1994, also included costs related to the 46,000 square foot expansion of the Company's headquarters facility which was completed in November 1993. Funding for a portion of the capital expenditures in the current nine month period came from the proceeds of a $1,133,000 loan received in February 1995 from the Pennsylvania Industrial Development Authority relating to the Company's previously completed building expansion project. The remainder of the funding for capital expenditures in the current nine month period and all of the funding for the prior year's nine month period were provided by positive cash flows from operating activities and from accumulated cash and short-term investment balances. The Company believes that positive cash flow from operating activities, the availability of the full amount of funds under its $1.25 million line of credit, and its accumulated cash and short-term investments will be sufficient to meet its current and presently anticipated future needs for the next 12 months for operating activities, investing activities, and financing activities (primarily consisting of payments on long-term debt ). PART 2 OTHER INFORMATION Item 1: Legal Proceedings - - --------------------------- On May 8, 1995 the United States District Court for the Southern District of California approved the Company's motion to transfer the previously disclosed patent infringement suit filed by ResCare Limited against the Company from that court to the United States District Court for the Western District of Pennsylvania. ResCare Limited had opposed the Company's motion. Pursuant to a previous stipulation of the parties, they have agreed jointly to move for the consolidation of the transferred suit with the declaratory judgement action previously filed by the Company in the United States District Court for the Western District of Pennsylvania. For additional information regarding this litigation, see the Company's Report on Form 10-Q for the quarter ended December 31, 1994. Item 2: Change in Securities - - ------- -------------------- (a) None (b) None Item 3: Defaults Upon Senior Securities - - ------- ------------------------------- (a) None (b) 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) Reports on Form 8-K None 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. RESPIRONICS, INC. Date: May 12, 1995 /s/ Daniel J. Bevevino ----------------------------- ------------------------------------ Daniel J. Bevevino Controller, and Chief Financial and Accounting Officer Signing on behalf of the registrant and as Chief Financial and Accounting Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS 9-MOS JUN-30-1995 JUN-30-1994 JUL-01-1994 JUL-01-1993 MAR-31-1995 MAR-31-1994 16,638,370 12,384,054 0 0 19,232,611 15,536,285 700,000 525,000 11,691,787 7,833,755 50,073,418 40,206,302 34,888,643 29,414,735 14,797,793 11,929,911 71,505,896 58,917,220 11,866,194 9,174,403 0 0 165,570 163,446 0 0 0 0 53,199,343 44,060,663 71,505,896 58,917,220 71,137,348 56,132,166 71,137,348 56,132,166 30,773,215 25,338,721 30,773,215 25,338,721 27,221,965 22,690,873 0 0 145,126 130,786 12,997,042 7,971,786 4,808,906 2,790,125 8,188,136 5,181,661 0 0 0 0 0 0 8,188,136 5,181,661 .469 .300 .465 .300
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