-----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, F7Y+dVScEtDhfxx9bUsWBQoqZ7+IX9bVKs6E/TLIV1QJD0JGxAfIg1tNjOVq4dVh dnZFpeYIX4ekyYBVQnMcbQ== 0000950135-97-004343.txt : 19971110 0000950135-97-004343.hdr.sgml : 19971110 ACCESSION NUMBER: 0000950135-97-004343 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971107 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL DENTEX CORP /MA/ CENTRAL INDEX KEY: 0000913616 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HEALTH SERVICES [8000] IRS NUMBER: 042762050 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23092 FILM NUMBER: 97709717 BUSINESS ADDRESS: STREET 1: 111 SPEEN ST CITY: FRAMINGHAM STATE: MA ZIP: 01701 BUSINESS PHONE: 5088204800 10-Q 1 NATIONAL DENTEX CORPORATION 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 1997 COMMISSION FILE NUMBER: 0-23092 NATIONAL DENTEX CORPORATION MASSACHUSETTS 04-2762050 - ------------------------ --------------------------- (STATE OF INCORPORATION) (I.R.S. IDENTIFICATION NO.) 111 SPEEN STREET, FRAMINGHAM, MA 01701 - ---------------------------------------- ---------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (508)-820-4800 ------------------------------- (REGISTRANT'S TELEPHONE NUMBER) 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 ----- ----- NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF NOVEMBER 4, 1997: 3,459,707. --------- ================================================================================ 2 NATIONAL DENTEX CORPORATION FORM 10-Q QUARTER ENDED SEPTEMBER 30, 1997 TABLE OF CONTENTS PAGE PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS: CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1996 AND 3 SEPTEMBER 30, 1997 (UNAUDITED) CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS AND 4 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1997 (UNAUDITED) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE NINE 5 MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS 6 ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1997 (UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 8 RESULTS OF OPERATIONS PART II. OTHER INFORMATION 11 SIGNATURES 12 3 NATIONAL DENTEX CORPORATION CONSOLIDATED BALANCE SHEETS
December 31, September 30, 1996 1997 ------------ ------------- (Unaudited) ASSETS ------ CURRENT ASSETS: Cash and equivalents............................................. $ 4,959,038 $ 3,739,837 Accounts receivable: Trade, less allowance of $204,000 in 1996 and $165,000 in 1997.............................................. 6,149,448 7,037,848 Other.......................................................... 198,481 208,445 Inventories...................................................... 2,929,898 3,126,026 Prepaid expenses................................................. 668,606 780,838 Deferred tax asset............................................... 402,703 408,862 ----------- ----------- Total current assets............................................ 15,308,174 15,301,856 ----------- ----------- PROPERTY AND EQUIPMENT: Land and buildings............................................... 3,773,720 3,590,720 Leasehold and building improvements.............................. 2,380,010 2,882,205 Laboratory equipment............................................. 5,734,432 6,125,831 Furniture and fixtures........................................... 1,592,657 1,798,375 Capital leases................................................... 342,819 342,819 ----------- ----------- 13,823,638 14,739,950 Less - Accumulated depreciation and amortization................................................. 7,352,321 7,763,373 ----------- ----------- Net property and equipment....................................... 6,471,317 6,976,577 ----------- ----------- OTHER ASSETS, net: Goodwill......................................................... 5,346,757 8,399,666 Other............................................................ 3,107,873 4,257,409 ----------- ----------- 8,454,630 12,657,075 ----------- ----------- $30,234,121 $34,935,508 ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Current portion of long-term obligations......................... $ 204,213 $ 3,646 Accounts payable................................................. 973,080 1,135,291 Accrued liabilities: Payroll and employee benefits.................................. 2,604,909 3,153,331 Deferred purchase price........................................ 1,244,629 1,765,928 Other.......................................................... 422,693 148,471 ----------- ----------- Total current liabilities...................................... 5,449,524 6,206,667 ----------- ----------- LONG TERM LIABILITIES: Deferred tax liability........................................... 304,819 244,588 Deferred purchase price.......................................... 443,300 872,967 ----------- ----------- Total long-term liabilities.................................... 748,119 1,117,555 ----------- ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS EQUITY: Preferred stock, $.01 par value Authorized - 500,000 shares None issued and outstanding.................................... --- --- Common stock, $.01 par value Authorized - 8,000,000 shares Issued and outstanding - 3,440,738 shares at December 31, 1996, and 3,459,291 shares at September 30, 1997............................................. 34,407 34,593 Paid-in capital.................................................. 13,683,615 13,950,612 Retained earnings................................................ 10,318,456 13,626,081 ----------- ----------- Total stockholders' equity..................................... 24,036,478 27,611,286 ----------- ----------- $30,234,121 $34,935,508 ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements. 3 4 NATIONAL DENTEX CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three months ended Nine months ended -------------------------------- -------------------------------- September 30, September 30, September 30, September 30, 1996 1997 1996 1997 ------------- ------------- ------------- ------------- Net sales.................................... $12,987,428 $15,117,547 $39,041,261 $44,365,018 Cost of goods sold........................... 7,561,389 8,784,726 22,160,984 25,177,843 ----------- ----------- ----------- ----------- Gross profit.............................. 5,426,039 6,332,821 16,880,277 19,187,175 Total operating expenses..................... 4,124,172 4,707,234 12,378,139 13,827,682 ----------- ----------- ----------- ----------- Operating income.......................... 1,301,867 1,625,587 4,502,138 5,359,493 Other income ................................ 27,691 17,742 112,889 77,590 Interest income.............................. 31,805 21,941 90,559 57,312 ----------- ----------- ----------- ----------- Income before provision for income taxes.. 1,361,363 1,665,270 4,705,586 5,494,395 Provision for income taxes................... 525,311 662,777 1,863,000 2,186,770 ----------- ----------- ----------- ----------- Net income ............................... $ 836,052 $ 1,002,493 $ 2,842,586 $ 3,307,625 =========== =========== =========== =========== Net income per share $ .24 $ .28 $ .81 $ .94 =========== =========== =========== =========== Weighted average shares outstanding 3,510,464 3,524,872 3,510,282 3,510,948 =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 4 5 NATIONAL DENTEX CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
Preferred Stock Common Stock -------------------- -------------------- Number of $.01 Par Number of $.01 Par Paid-in Retained Shares Value Shares Value Capital Earnings Total -------- -------- --------- -------- ----------- ----------- ----------- BALANCE, December 31, 1996..................... --- $ --- 3,440,738 $ 34,407 $13,683,615 $10,318,456 $24,036,478 Issuance of 2,757 shares of common stock under the employee stock option plan......... --- --- 2,757 28 27,536 --- 27,564 Issuance of 12,386 shares of common stock under the employee stock purchase plan ..... --- --- 12,386 124 181,525 --- 181,649 Issuance of 2,000 shares of common stock as compensation................................ --- --- 2,000 20 33,980 --- 34,000 Issuance of 1,410 shares of common stock as director's fees............................. --- --- 1,410 14 23,956 --- 23,970 --- --- --- --- --- 3,307,625 3,307,625 ---- ------ --------- -------- ----------- ----------- ----------- Net income..................................... BALANCE, September 30, 1997.................... --- $ --- 3,459,291 $ 34,593 $13,950,612 $13,626,081 $27,611,286 ==== ===== ========= ======== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 5 6 NATIONAL DENTEX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine months ended September 30, ----------------------------------------- 1996 1997 ------------ ------------ Cash flows from operating activities: Net income...................................................... $ 2,842,586 $ 3,307,625 Adjustments to reconcile net income to net cash provided by operating activities, net of effects of acquisitions: Depreciation and amortization............................... 999,420 1,266,938 Increase in accounts receivable............................. (24,198) (376,874) Increase in inventories..................................... (310,996) (140,971) Increase in prepaid expenses ............................... (71,023) (108,702) (Increase) decrease in deferred tax asset .................. (65,667) 3,841 (Increase) decrease in other assets......................... 145,892 (166,577) Increase (decrease) in accounts payable and accrued liabilities........................................ (796,234) 149,772 Decrease in deferred tax liability.......................... (18,107) (60,231) ------------ ------------ Net cash provided by operating activities................... 2,701,673 3,874,821 ------------ ------------ Cash flows from investing activities: Payment for acquisitions, net of cash acquired............ (839,017) (3,691,799) Payment of deferred purchase price............................ (978,629) (604,329) Additions to property and equipment, net...................... (650,989) (864,509) ------------ ------------ Net cash used in investing activities....................... (2,468,635) (5,160,637) ------------ ------------ Cash flows from financing activities: Net payments of current and long-term obligations............. (95,918) (200,568) Proceeds from issuance of common stock........................ 366,214 267,183 ------------ ------------ Net cash provided by financing activities................... 270,296 66,615 ------------ ------------ Net decrease in cash............................................ 503,334 (1,219,201) Cash at beginning of period..................................... 4,193,394 4,959,038 ------------ ------------ Cash at end of period........................................... $ 4,696,728 $ 3,739,837 ------------ ------------ Supplemental disclosures of cash flow information: Interest paid................................................. $ 18,741 $ 8,599 ------------ ------------ Income taxes paid............................................. $ 2,143,128 $ 2,518,566 ------------ ------------
The accompanying notes are an integral part of these consolidated financial statements. 6 7 NATIONAL DENTEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (1) INTERIM FINANCIAL STATEMENTS The accompanying unaudited financial statements include all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for fair presentation of the results of operations for the periods presented. Interim results are not necessarily indicative of the results to be expected for a full year. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with generally accepted accounting principles, have been condensed or omitted as allowed by Form 10-Q. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 1996 as filed with the Securities and Exchange Commission on Form 10-K. (2) EARNINGS PER SHARE Net earnings per share ("EPS") amounts have been computed using the weighted average number of common and common equivalent shares outstanding during each year. In March 1997, the Financial Accounting Standards Board (FASB) released SFAS 128, "Earnings Per Share", which will become effective December 31, 1997. As a result, the Company's reported earnings per share for 1996 and 1997 will be restated in the Company's annual report on Form 10-K for the year ending December 31, 1997. The pro forma effect of this accounting change on previously reported earnings per share is as follows:
For the three months ended For the nine months ended Year Ended -------------------------- ------------------------- ----------- September 30 September 30 December 31 Per Share Amounts 1997 1996 1997 1996 1996 ---- ---- ---- ---- ---- Primary EPS as reported $.28 $.24 $.94 $.81 $1.06 Effect of SFAS No. 128 .01 .01 .02 .02 .03 ---- ---- ---- ---- ----- Basic EPS as restated $.29 $.25 $.96 $.83 $1.09 ==== ==== ==== ==== ===== Fully Diluted EPS as reported $.28 $.24 $.94 $.81 $1.06 Effect of SFAS No. 128 --- --- --- --- --- ---- ---- ---- ---- ----- Diluted EPS as restated $.28 $.24 $.94 $.81 $1.06 ==== ==== ==== ==== =====
(3) ACQUISITIONS In July, 1997 the Company acquired all of the capital stock of T.L.C. Dental Laboratories, Inc. in Orlando, Florida. The acquisition, which has been reflected in the accompanying consolidated balance sheet as of September 30, 1997 has been accounted for as a purchase in accordance with Accounting Principle Board Opinion No. 16. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ================================================================================ LIQUIDITY AND CAPITAL RESOURCES Working capital decreased from $9,859,000 at December 31, 1996 to $9,095,000 at September 30, 1997. Cash and equivalents decreased $1,219,000 from $4,959,000 at December 31, 1996. Operating activities provided $3,875,000 in cash flow for the nine months ended September 30,1997. Cash outflows related to dental laboratory acquisitions totaled $4,296,000 for the same period. The Company maintains a financing agreement (the "Agreement") with State Street Bank and Trust Company (the "Bank"). The Agreement, as amended and extended on June 27, 1997, includes revolving lines of credit of $4,000,000 and $8,000,000. The interest rate on both revolving lines of credit is the prime rate minus 0.5% or the LIBOR rate plus 1.5%, at the Company's option. The first revolving line of credit matures on June 1, 2001 and the second revolving line of credit matures on June 1, 2000. A commitment fee of one eighth of 1% is payable on the unused amount of both revolving lines of credit. At September 30, 1997, the full principal amount was available to the Company under both revolving lines of credit. Management believes that existing working capital and financing will be sufficient to meet contemplated operating and capital requirements, including costs associated with anticipated acquisitions, if any, in the foreseeable future. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that could affect capital expenditures, the Company's requirements for capital, the costs associated with anticipated acquisitions and the Company's results of operations include general economic conditions, the availability of laboratories for purchase by the Company, the ability of the Company to acquire and successfully operate additional dental laboratories, governmental regulation of health care, other factors affecting patient visits to the Company's clients, and other risks indicated in filings with the Securities and Exchange Commission. 8 9 RESULTS OF OPERATIONS The following table sets forth for the periods indicated the percentage of net sales represented by certain items in the Company's Consolidated Financial Statements:
Nine months ended ------------------------------------ September 30, September 30, 1996 1997 ------------- ------------- Net sales 100.0% 100.0% Cost of goods sold 56.8 56.8 ----- ----- Gross profit 43.2 43.2 Total operating expenses 31.7 31.2 ----- ----- Operating income 11.5 12.1 Other income 0.3 0.2 Interest income 0.2 0.1 ----- ----- Income before provision for income taxes 12.1 12.4 Provision for income taxes 4.8 4.9 ----- ----- Net income 7.3% 7.5% ----- -----
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 1996 Net Sales Net sales increased $5,324,000 or 13.6% in the nine months ended September 30, 1997 over the corresponding period of the prior year. Approximately $3,505,000 of this increase was attributable to business at dental laboratories owned less than one year, with the remaining increase representing unit growth at dental laboratories owned during both the nine months ended September 30, 1997 and the comparable nine months ended September 30, 1996. Cost of Goods Sold Cost of goods sold, which consists principally of labor and related benefits, cost of materials, and laboratory overhead, increased by $3,017,000. As a percentage of sales, cost of goods sold was 56.8% in both the nine months ended September 30, 1997 and the comparable nine months ended September 30, 1996. Increases in materials costs continued to be offset by improvements in labor productivity and decreases in laboratory overhead expenses. 9 10 Total Operating Expenses Total operating expenses, which consist of (i) selling expenses, the cost of the Company's pick-up and delivery services and administrative expenses at the dental laboratory level, and (ii) costs of operation by the Company's corporate headquarters and field support services, increased by $1,450,000 or 11.7% during the nine months ended September 30, 1997 over the corresponding period in 1996. Operating expenses decreased as a percentage of net sales from 31.7% to 31.2% during the nine months ended September 30, 1997 over the corresponding period in 1996. Decreases as a percentage of sales in administrative, selling and corporate field support services were partially offset by increased delivery expenses, increased incentive compensation and amortization of intangible assets acquired in acquisitions subsequent to September 30, 1996. Operating Income Operating income increased by $857,000 or 19.0% for the nine months ended September 30, 1997 over the corresponding period in 1996. The increase was the result of higher sales volume and reductions in operating expenses as a percentage of net sales. Interest Income Interest income decreased by $33,000 or 36.7% in the nine months ended September 30, 1997 over the corresponding period in 1996. The decrease was primarily due to decreased investment principal. Provision for Income Taxes The Company's provision for income taxes for the nine months ended September 30, 1997 increased to $2,187,000 from $1,863,000 in the corresponding period in 1996. The effective tax rate increased slightly from 39.6% to 39.8%. Net Income As a result of the factors discussed above, net income for the nine months ended September 30, 1997 increased by $465,000 or 16.4% over the corresponding period in 1996. Net income per share increased from $0.81 per share to $0.94 per share. 10 11 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings: The Company is a party to various legal proceedings incident to its normal course of business, none of which management believes will have a material adverse effect on the Company's results of operations or financial position. Item 2. Changes in Securities: Not applicable. ITEM 3. Defaults upon Senior Securities: Not applicable. ITEM 4. Submission of Matters to a Vote of Security Holders: Not Applicable ITEM 5. Other Information: Not Applicable ITEM 6. Exhibits and Reports on form 8-K: a. Exhibits: (11) Statement Regarding Computation of Per Share Earnings (27) Financial Data Schedule b. Reports on Form 8-K: None 11 12 SIGNATURES Pursuant to the requirements of Section 13 and 15(d) 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. NATIONAL DENTEX CORPORATION --------------------------- Registrant November 6, 1997 By: /s/ William M. Mullahy ------------------------------------- William M. Mullahy, President Chief Executive Officer and Director (Principal Executive Officer) November 6, 1997 By: /s/ David L. Brown ------------------------------------- David L. Brown, Vice President, Chief Financial Officer, Treasurer and Assistant Clerk (Principal Financial Officer) 12 EX-11 2 COMPUTATION OF NET INCOME PER SHARE 1 EXHIBIT 11 NATIONAL DENTEX CORPORATION COMPUTATION OF NET INCOME PER SHARE
Three months ended Nine months ended ------------------------------- ------------------------------ September 30, September 30, September 30, September 30, 1996 1997 1996 1997 ------------- ------------- ------------- ------------- COMPUTATION OF PRIMARY NET INCOME PER SHARE: Net Income applicable to common stock $ 836,052 $1,002,493 $2,842,586 $3,307,625 ---------------------------- --------------------------- Shares: Weighted average common shares outstanding 3,439,904 3,459,072 3,405,721 3,452,638 Add: Shares issuable from assumed exercise of options and warrants (as determined by the application of the treasury stock method) 70,560 65,800 104,561 58,310 ---------------------------- --------------------------- Weighted average common shares outstanding as adjusted 3,510,464 3,524,872 3,510,282 3,510,948 ---------------------------- --------------------------- Primary net income per share $ 0.24 $ 0.28 $ 0.81 $ 0.94 ============================ =========================== COMPUTATION OF FULLY DILUTED NET INCOME PER SHARE: Net Income per primary computation above $ 836,052 $1,002,493 $2,842,586 $3,307,625 ---------------------------- --------------------------- Shares: Weighted average common shares outstanding 3,439,904 3,459,072 3,405,721 3,452,638 Add: Shares issuable from assumed exercise of options and warrants (as determined by the application of the treasury stock method) 70,560 75,165 104,561 75,860 ---------------------------- --------------------------- Weighted average common shares outstanding as adjusted 3,510,464 3,534,237 3,510,282 3,528,498 ---------------------------- --------------------------- Fully diluted net income per share $ 0.24 $ 0.28 $ 0.81 $ 0.94 ============================ ===========================
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEETS AT SEPTEMBER 30, 1997 (UNAUDITED) AND THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 3,739,837 0 7,246,293 165,346 3,126,026 15,301,856 14,739,950 7,763,373 34,935,508 6,206,667 0 0 0 34,593 27,576,693 34,935,508 44,365,018 44,365,018 25,177,843 13,827,682 0 0 (57,312) 5,494,395 2,186,770 0 0 0 0 3,307,625 .94 .94
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