-----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, P2+KeO2YWLuRwQOYmAyByA2/dFI2fcqpg93c47qGtODFuvRaZGCb36YB9wGNwHiJ H9exkmM4Emn1WYrrfUQPfA== 0000927016-98-000674.txt : 20030406 0000927016-98-000674.hdr.sgml : 20030406 19980217173127 ACCESSION NUMBER: 0000927016-98-000674 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980103 FILED AS OF DATE: 19980217 DATE AS OF CHANGE: 19980218 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUTRAMAX PRODUCTS INC /DE/ CENTRAL INDEX KEY: 0000818467 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 061200464 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18671 FILM NUMBER: 98544008 BUSINESS ADDRESS: STREET 1: 9 BLACKBURN DRIVE CITY: GLOUCESTER STATE: MA ZIP: 01930 BUSINESS PHONE: 5082831800 MAIL ADDRESS: STREET 1: 9 BLACKBURN DRIVE CITY: GLOUCESTER STATE: MA ZIP: 01930 10-Q 1 FORM 10-Q 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 quarterly period ended: January 3, 1998 Commission File Number: 0-18671 NUTRAMAX PRODUCTS, INC. (Exact name of registrant as specified in its charter) Delaware 061200464 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9 Blackburn Drive, Gloucester, Massachusetts 01930 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (978) 283-1800 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 No X --- --- As of February 11, 1998 there were 6,298,516 shares of Common Stock, par value $.001 per share, outstanding. NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES Fourteen Weeks Ended January 3, 1998 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Operations - Fourteen Weeks ended January 3, 1998 and Thirteen Weeks Ended December 28, 1996 (Unaudited) 4 Condensed Consolidated Balance Sheets - January 3, 1998 (Unaudited) and September 27, 1997 5 Condensed Consolidated Statements of Cash Flows - Fourteen Weeks ended January 3, 1998 and and Thirteen Weeks Ended December 28, 1996 (Unaudited) 6 Notes to Condensed Consolidated Financial Statements (Unaudited) 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 9-11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 2 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES Fourteen Weeks Ended January 3, 1998 PART I. FINANCIAL INFORMATION Item 1. Financial Statements 3 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Fourteen Thirteen Weeks Ended Weeks Ended ----------------------------- January 3, December 28, 1998 1996 ------------ ------------- NET SALES $ 34,463,000 $ 22,035,000 COST OF SALES 25,874,000 15,984,000 ------------ ------------ GROSS PROFIT 8,589,000 6,051,000 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 4,906,000 3,074,000 ------------ ------------ OPERATING INCOME 3,683,000 2,977,000 OTHER INCOME (EXPENSE): Interest expense (2,343,000) (420,000) Interest Income 5,000 57,000 Other 2,000 (27,000) ------------ ------------ INCOME BEFORE INCOME TAX EXPENSE 1,348,000 2,587,000 INCOME TAX EXPENSE 538,000 1,047,000 ------------ ------------ NET INCOME $ 810,000 $ 1,540,000 ============ ============ EARNINGS PER SHARE: Basic $ .14 $ .18 ------------ ------------ Diluted $ .14 $ .18 ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 5,624,000 8,714,000 ------------ ------------ Diluted 5,938,000 8,766,000 ============ ============ See notes to condensed consolidated financial statements. 4 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS January 3, September 27, 1998 1997 ------------ ------------- (Unaudited) (See Note) ASSETS ------ CURRENT ASSETS: Cash $ 337,000 $ 243,000 Accounts receivable, net 19,033,000 19,618,000 Inventories 38,909,000 36,135,000 Deferred income taxes 823,000 823,000 Escrow receivable 1,125,000 2,876,000 Prepaid expenses and other 644,000 655,000 ------------ ------------ TOTAL CURRENT ASSETS 60,871,000 60,350,000 PROPERTY, PLANT AND EQUIPMENT, net 45,396,000 44,456,000 RESTRICTED CASH 520,000 316,000 GOODWILL, net 22,757,000 22,934,000 OTHER ASSETS 4,818,000 4,703,000 ------------ ------------ $134,362,000 $132,759,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 11,136,000 $ 13,427,000 Accrued payroll and related taxes 871,000 936,000 Accrued Interest 515,000 1,325,000 Accrued expenses - other 2,346,000 1,709,000 Current maturities of long-term debt 4,345,000 4,351,000 ------------ ------------ TOTAL CURRENT LIABILITIES 19,213,000 21,748,000 Long-Term Debt, less current maturities 88,891,000 85,542,000 Deferred Income Taxes and Other Liabilities 1,884,000 1,884,000 Other Long Term Liabilities 92,000 106,000 Commitments & Contingencies -- -- STOCKHOLDERS' EQUITY 24,282,000 23,479,000 ------------ ------------ $134,362,000 $132,759,000 ============ ============ Note: The balance sheet at September 27, 1997 has been condensed from the audited financial statements at that date. See notes to condensed consolidated financial statements. 5 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Thirteen Weeks Ended ------------------------------- January 3, December 28, 1998 1996 ------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 810,000 $ 1,540,000 Adjustments to reconcile net income to net cash provided by operating activities: Non cash items primarily depreciation and amortization 1,827,000 1,271,000 Increase (decrease), net of effect of acquisitions: Accounts receivable 473,000 472,000 Inventories (2,774,000) (1,863,000) Accounts payable, accrued expenses and other (3,055,000) 726,000 Federal and state taxes payable 529,000 301,000 ----------- ----------- Net cash (used in) provided by operating activities (2,190,000) 2,447,000 CASH FLOWS FROM INVESTING ACTIVITIES: Escrow received 1,751,000 -- Restricted Cash (204,000) 659,000 Purchases of property and equipment (1,976,000) (2,156,000) Deferred packaging costs (287,000) (240,000) Other (150,000) (34,000) ----------- ----------- Net cash used in investing activities (866,000) (1,771,000) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under Revolving Credit Facility and other Long Term Debt 4,034,000 (188,000) Proceeds from exercise of stock options -- 546,000 Debt Repayments (734,000) (477,000) Deferred Financing Costs (138,000) (775,000) Other (12,000) (49,000) ----------- ----------- Net cash provided by (used in) financing activities 3,150,000 (943,000) ----------- ----------- NET INCREASE (DECREASE) IN CASH 94,000 (267,000) CASH: Beginning of period 243,000 294,000 ----------- ----------- End of period $ 337,000 $ 27,000 ----------- ----------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Income taxes paid $ 99,000 $ 571,000 ----------- ----------- Interest paid $ 3,087,000 $ 379,000 =========== ===========
See notes to condensed consolidated financial statements. 6 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The condensed consolidated balance sheet of NutraMax Products, Inc. and Subsidiaries (the "Company") as of January 3, 1998, the condensed consolidated statements of operations for the thirteen weeks ended January 3, 1998 and December 28, 1996, and the condensed consolidated statements of cash flows for the thirteen weeks then ended have been prepared by the Company without audit. In the opinion of the Company, all adjustments (consisting only of normal, recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at January 3, 1998, and for all periods presented, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's September 27, 1997 Annual Report on Form 10-K. The results of operations for the period ended January 3, 1998 are not necessarily indicative of the operating results for the full year. Note B - Acquisition On September 11, 1997, the Company acquired certain assets and assumed certain liabilities related to the first aid business of American White Cross, Inc. and Weaver Manufacturing Corporation ("American White Cross" or "First Aid business"). As of fiscal year end 1997, the Company had recorded an escrow receivable of $1,125,000 that was purchased as part of the acquisition and an escrow receivable of $1,751,000 related to purchase price adjustments. The purchase price was finalized in December 1997 and the $1,751,000 was released from escrow and returned to the Company during the first quarter ended January 3, 1998. The Company is in the process of obtaining appraisals on certain assets acquired. The excess of purchase price over estimated fair value of assets acquired may be adjusted based on the results of such appraisals. Note C - Inventory Inventories are stated at the lower of cost (first-in, first-out method) or market. January 3, September 27, 1998 1997 ----------- ------------- Raw materials $19,091,000 $15,921,000 Finished goods 15,521,000 16,223,000 Work-in-process 2,119,000 1,953,000 Machine parts and factory supplies 2,178,000 2,038,000 ----------- ----------- $38,909,000 $36,135,000 =========== =========== 7 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note D - Debt The Company's Revolving Credit Facility of $25,000,000 had an outstanding balance of $20,342,000 on January 3, 1998. The interest rate was 8.946% based on LIBOR plus 2.5% and the prime rate. The Revolving Credit Facility expires on January 1, 2002. A summary of Debt outstanding as of January 3, 1998 is as follows: Revolving Credit Facility $ 20,342,000 Term Loans 50,335,000 Subordinated Debt 9,098,000 Industrial Development Bonds 6,900,000 MEDIQ Note 5,915,000 Mortgages 635,000 Capital Lease Obligation 11,000 ------------ $ 93,236,000 Less: Current maturities of long-term debt: 4,345,000 ------------ Long Term Debt $ 88,891,000 ============ Note E - Adoption of New Accounting Pronouncements Effective September 28, 1997, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per share which requires the disclosure of basic and dilutive earnings per share. The adoption of SFAS No. 128 did not have a dilutive effect on previously reported earnings per share. Note F - Income Taxes The provision for income tax expense for the fourteen weeks ended January 3, 1998 has been computed using an estimated effective tax rate for the year ended October 3, 1998. Note G - Dutch Auction Self Tender On October 29, 1997 the Company announced that it would purchase from its stockholders in a Dutch Auction self tender up to 450,000 shares of its common stock ("the Shares") at a purchase price not greater than $12.75 per share no less than $11.00 per share. The purpose of the offer was to provide added market liquidity for stock holders who wished to sell their shares as a result of the Company's fourth quarter performance. The offer expired on November 28, 1997. A total of 250,668 shares were purchased and retired by the Company at a price of $12.75 per share. The offer was financed by sales by the Company of Shares as follows: (i) to Cape Ann Investors, L.L.C. ("Cape Ann"), the Company's largest stockholder, pursuant to an agreement dated as of October 14, 1997, as amended on October 16, 1997 by and between the Company and Cape Ann (193,014 shares); (ii) to Bernard J. Korman 8 ("Mr. Korman"), the Company's Chairman of the Board, pursuant to an agreement dated as of October 14, 1997 buy and between the Company and Mr. Korman (50,134 shares); (iii) to Donald E. Lepone ("Mr. Lepone"), the Company's Chief Executive Officer, pursuant to an Agreement dated October 14, 1997 by and between the Company and Mr. Lepone (5,013 shares); and (iv) to Donald M. Gleklen ("Mr. Gleklen"), a member of the Board of Directors of the Company, pursuant to an Agreement dated as of October 16, 1997 by and between the Company and Mr. Gleklen (2,507 shares). The costs associated with the Dutch Auction Self Tender amounted to approximately $150,000. In connection with the Dutch Auction self tender, the Company received from its Senior and Subordinated lenders, a waiver to allow for the purchase of its common stock. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. General The following discussion addresses the financial condition of the Company as of January 3, 1998 and its results of operations for the fourteen weeks then ended, compared with the thirteen week period last year. On September 11, 1997, the Company acquired certain assets and assumed certain liabilities related to the first aid division of America White Cross, Inc. and Weaver Manufacturing Corp. ("The First Aid Business"). The acquisition was accounted for as a purchase and the results of operations of the First Aid business are included in the Company's Consolidated Operations for the fourteen weeks ended January 3, 1998. This discussion should be read in conjunction with the Management's Discussion and Analysis section included in the Company's Annual Report on Form 10-K for the year ended September 27, 1997 to which the reader is directed for additional information. Some of the information presented in this report constitutes forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors which could cause actual results to differ from expectations include the timing and amount of new product introductions by the Company, the timing of orders received from customers, the gain or loss of significant customers, changes in the mix of products sold, competition from brand name and other private label manufacturers, seasonal changes in the demand for the Company's products, increases in the cost of raw materials and changes in the retail market for health and beauty aids in general. For additional information concerning these and other important factors which may cause the Company's actual results to differ materially from expectations and underlying assumptions, please refer to the Company's Annual Report on Form 10-K for the year ended September 27, 1997 and other reports filed with the Securities and Exchange Commission. 9 Results of Operations The following table sets forth, for all periods indicated, the percentage relationship that items in the Company's Condensed Consolidated Statements of Operations bear to net sales. Thirteen Weeks Ended ---------------------------- January 3, December 28, 1998 1996 ---- ---- NET SALES 100% 100% COST OF SALES 75 72 ---- --- GROSS PROFIT 25 28 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 14 14 ---- --- OPERATING INCOME 11 14 OTHER CREDITS (CHARGES) (7) (2) ---- ---- INCOME BEFORE INCOME TAX EXPENSE 4 12 INCOME TAX EXPENSE 2 5 ---- --- NET INCOME 2% 7% ==== ==== First Quarter 1998 Compared to First Quarter 1997 Net sales for first quarter ended January 3, 1998 were $34,463,000, an increase of $12,428,000, or 56%, over first quarter 1997 net sales of $22,035,000 of the increase in net sales approximately $8,430,000 was primarily attributable to sales of First Aid products with added increases in the Cough/Cold category of approximately $2,403,000 with the balance of the increase in the Eye Care, Oral Care and Personal Care categories. Gross profit for first quarter 1998 was $8,589,000 or 25% of net sales, as compared to $6,051,000 or 28% of net sales for the prior year's quarter. The decrease in gross margin percent is attributable to inefficiencies related to Cough/Cold products production. These inefficiencies occurred during our fourth fiscal quarter of 1997 and relatd to the delay in the completion of the continuous cooking line which delayed production causing underabsorbed labor and overhead. Selling, general and administrative expenses for first quarter 1998 were $4,906,000, or 14% of net sales, as compared to $3,074,000 or 14% of net sales for the prior year's quarter. The $1,832,000 increase was primarily attributable to commission and freight increases associated with increased sales. Interest expense for the first quarter 1998 was $2,343,000 as compared to $420,000 in the prior year quarter. This increase is a result of the increased debt associated with the acquisition of the first aid business of American White Cross. Interest income for the quarter decreased due to the decreased balance of the restricted cash associated with the IDB financing. The effective income tax rate for the quarter was 40% which is comparable to the prior year quarter. 10 Liquidity and Capital Resources As of January 3, 1998 the Company had working capital of $41,658,000 as compared to working capital of $38,602,000 as of September 27, 1997. The increase in working capital was primarily attributable to increased inventories to support the increased sales and a decrease in accounts payable. Net cash used in operating activities was $2,190,000 for the fourteen weeks ended January 3, 1998, as compared to $2,447,000 provided by operating activities in the prior year thirteen week period. This decrease was primarily attributable to a reduction in accounts payable and increased inventories. Net cash used in investing activities was $866,000 for 1998, consisting primarily of funds used for expenditures of capital equipment offset by escrow proceeds received from the acquisition of the first aid business of American White Cross. The Company anticipates additional capital expenditures of approximately $7,500,000 for the remainder of fiscal 1998. The expenditures relate primarily to additional manufacturing capacity requirements and the purchase of its manufacturing facility in Gloucester, MA. These expenditures are expected to be financed through cash generated from operations and a mortgage note with respect to the building purchase. Net cash provided by financing activities was $3,150,000 for the fourteen weeks ended January 3, 1998, consisting of borrowings of $4,034,000 primarily resulting from the purchase of the first aid division of American White Cross offset by debt repayments of $734,000. The Companies Revolving Credit Facility of $25,000,000 had an outstanding balance of $20,342,000 on January 3, 1998. The interest rate was 8.946% based on LIBOR plus 2.5% and the prime rate. The Revolving Credit Facility expires on January 1, 2002. The Company believes that its existing working capital, anticipated funds to be generated from operations, funds available under the revolving credit facility and added financing resulting from the building purchase will be sufficient to meet the Company's operating and capital needs during fiscal 1998. However, depending upon future growth of the business, additional financing may be required. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 11 -Computation of Earnings Per Share appears on page 14. Exhibit 27 -Financial Data Schedule appears on page 15. (b) Reports on Form 8-K. No reports on Form 8-K were filed in the quarter ended January 3,1998. 11 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES Fourteen Weeks Ended January 3, 1998 SIGNATURE --------- 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. NutraMax Products, Inc. --------------------------- (Registrant) February 17, 1998 --------------------- (Date) /s/ Robert F. Burns --------------------------- Robert F. Burns Vice President and Chief Financial Officer 12 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES Fourteen Weeks Ended January 3, 1997 SIGNATURE --------- 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. NutraMax Products, Inc. --------------------------- (Registrant) February 17, 1998 ------------------- (Date) --------------------------- Robert F. Burns Vice President and Chief Financial Officer 13 EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES Computation Of Earnings Per Share (Unaudited)
Quarters Ended -------------------------------- Jan. 3, 1998 Dec. 28, 1997 ------------ ------------- Basic Earnings per share: Weighted average number of shares outstanding: Common 5,624,318 8,714,381 Shares deemed outstanding from the assumed exercise of stock options and ING warrant 222,206 50,312 ---------- ---------- Total 5,846,524 8,764,693 ---------- ---------- Net Income $ 810,000 $1,540,000 ---------- ---------- Basic Earnings per share $ 0.14 $ 0.18 ========== ========== Fully diluted earnings per share: Weighted average number of shares outstanding as above 5,846,524 8,764,693 Additional shares deemed outstanding from the assumed exercise of stock options and ING warrant 91,031 1,590 ---------- ---------- Total 5,937,555 8,766,283 ---------- ---------- Fully diluted earnings per share $ 0.14 $ 0.18 ========== ==========
EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS OCT-03-1998 JAN-03-1998 377 0 19,784 751 38,909 60,871 63,725 18,329 134,362 19,213 88,891 0 0 6 24,276 134,362 34,463 34,463 25,874 25,874 4,906 0 2,343 1,348 538 810 0 0 0 810 0.14 0.14
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