SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Period Ended March 31, 2001 Commission File Number 0-10763
Atrion Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 63-0821819
(State or Other Jurisdiction of I.R.S. Employer Identification No.)
Incorporation or Organization)
One Allentown Parkway, Allen, Texas 75002
(Address of Principal Executive Offices) (Zip Code)
(972) 390-9800
(Registrant's Telephone Number, Including Area Code)
Indicate by check whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of Shares Outstanding
Title of Each Class at May 2, 2001
Common stock, Par Value $0.10 per share 2,024,993
ATRION CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. Financial Information 2
Item 1. Financial Statements
Consolidated Statements of Income (Unaudited)
For the Three Months Ended
March 31, 2001 and 2000 3
Consolidated Balance Sheets
March 31, 2001 (Unaudited) and December 31, 2000 4-5
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended
March 31, 2001 and 2000 6
Notes to Consolidated Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II. Other Information 10
Item 6. Exhibits and Reports on
Form 8-K 10
SIGNATURES 11
1
PART I
FINANCIAL INFORMATION
2
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31
-------------------------------------
2001 2000
----------------- ----------------
(In thousands, except per share data)
Revenues $ 14,803 $ 12,985
Cost of goods sold 9,130 8,005
-------- --------
Gross profit 5,673 4,980
-------- --------
Operating expenses:
Selling expense 1,778 1,932
General and administrative 1,964 1,642
Research and development 518 542
-------- --------
4,260 4,116
-------- --------
Operating income 1,413 864
-------- --------
Other income:
Interest (expense) income, net (115) (138)
Other income 2 3
-------- --------
(113) (135)
-------- --------
Income before provision for income taxes 1,300 729
Provision for income taxes 395 197
-------- --------
Net income $ 905 $ 532
======== ========
Earnings per basic share $ 0.45 $ 0.25
======== ========
Weighted average basic shares outstanding 1,995 2,099
======== ========
Earnings per diluted share $ 0.42 $ 0.24
======== ========
Weighted average diluted shares outstanding 2,130 2,177
======== ========
The accompanying notes are an integral part of these consolidated statements.
3
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2001 2000
(Unaudited)
------------ ------------
Assets (In thousands)
- ------
Current assets:
Cash and cash equivalents $ 310 $ 159
Accounts receivable 9,174 7,175
Inventories 10,467 10,110
Prepaid expenses and other 836 752
------- -------
20,787 18,196
------- -------
Property, plant and equipment:
Original cost 37,910 37,295
Less accumulated depreciation and amortization 12,182 11,225
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25,728 26,070
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Deferred charges:
Patents 2,935 3,012
Goodwill 12,653 12,803
Other 3,517 3,609
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19,105 19,424
------- -------
$65,620 $63,690
======= =======
The accompanying notes to consolidated financial statements are an integral part
of these Balance Sheets.
4
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2001 2000
(Unaudited)
--------------------- --------------------
Liabilities and Stockholders' Equity (in thousands)
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 5,689 $ 4,518
Accrued income and other taxes 359 187
-------- --------
6,048 4,705
-------- --------
Long-term debt 7,061 7,400
-------- --------
Other noncurrent liabilities 7,591 7,571
-------- --------
Stockholders' equity:
Common shares, par value $0.10 per share; authorized
10,000,000 shares, issued 3,419,953 shares in
2001 and 2000 342 342
Paid-in capital 6,423 6,419
Retained earnings 52,811 51,906
Treasury shares,1,418,460 in 2001 and 1,427,660
in 2000, at cost (14,656) (14,653)
-------- --------
Total stockholders' equity 44,920 44,014
-------- --------
$ 65,620 $ 63,690
======== ========
The accompanying notes to consolidated financial statements are an integral part
of these Balance Sheets.
5
ATRION CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31
------------------- ----- -------------------
2001 2000
------------------- -------------------
(In thousands)
Cash flows from operating activities:
Net income $ 905 $ 532
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,184 1,042
Deferred income taxes 27 51
Other 85 (65)
------- -------
2,201 1,560
Change in current assets and liabilities:
Increase in accounts receivable (1,999) (871)
Increase in other current assets (441) (1,053)
Increase in accounts payable 1,424 1,048
(Decrease) increase in other current liabilities (81) 67
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1,104 751
------- -------
Cash flows from investing activities:
Property, plant and equipment additions (615) (895)
------- -------
(615) (895)
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Cash flows from financing activities:
(Decrease) increase in long-term indebtedness (339) 470
Issuance of common stock 99 23
Repurchase of common stock (98) --
------- -------
(338) 493
------- -------
Net change in cash and cash equivalents 151 349
Cash and cash equivalents at beginning of period 159 70
------- -------
Cash and cash equivalents at end of period $ 310 $ 419
======= =======
Cash paid for:
Interest (net of capitalization amounts) $ 138 $ 175
Income taxes (net of refunds) $ 192 $ 129
The accompanying notes are an integral part of these consolidated statements.
6
ATRION CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
In the opinion of management, all adjustments necessary for a fair
presentation of results of operations for the periods presented have been
included in the accompanying unaudited consolidated financial statements of
Atrion Corporation (the "Company"). Such adjustments consist of normal
recurring items. The accompanying financial statements have been prepared
in accordance with the instructions to Form 10-Q and include the
information and notes required by such instructions. Accordingly, the
consolidated financial statements and notes thereto should be read in
conjunction with the financial statements and notes included in the
Company's 2000 Annual Report on Form 10-K.
7
ATRION CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results for the three months ended March 31, 2001
The Company's consolidated net income for the quarter ended March 31, 2001 was
$905,000, or $.45 per basic and $.42 per diluted share, compared with $532,000,
or $.25 per basic and $.24 per diluted share, for the first quarter of 2000. The
earnings per basic share computations are based on weighted average basic shares
outstanding of 1,995,100 in 2001 and 2,099,274 in 2000. The earnings per diluted
share computations are based on weighted average diluted shares outstanding of
2,130,249 in 2001 and 2,176,735 in 2000.
Consolidated revenues of $14.8 million for the first quarter of 2001 were $1.8
million, or 14 percent, higher than revenues for the first quarter of 2000. The
increase in revenues in the first quarter of 2000 was a result of improved
revenues at all operations.
Gross profit of $5.7 million in the first quarter of 2001 was $693,000, or 14
percent, higher than in the comparable 2000 period. The previously mentioned
increase in revenues was the primary contributor to this increase.
The Company's first quarter 2001 operating expenses of $4.3 million were
$144,000 higher than the operating expenses for the first quarter of 2000. This
increase was the result of increased general and administrative (G&A) expenses
offset by reductions in selling expenses and research and development (R&D)
expenses in the current three-month period. G&A expenses for the first quarter
of 2001 were $322,000 higher than G&A expenses for the same period in 2000
primarily as a result increased spending on outside services, compensation and
benefit programs. Selling expenses for the first quarter of 2001 were $154,000
lower than selling expenses for the first quarter of 2000 due to a partial
reorganization of the sales team to optimize sales, resulting in reduced
compensation, travel and entertainment and advertising expenses. Operating
income of $1.4 million in the first quarter of 2001 was $549,000, or 64 percent,
higher than the operating income in the first quarter of 2000.
Net interest expense for the first quarter of 2001 was $115,000 compared to net
interest expense of $138,000 for the same period in the prior year. This
decrease is primarily attributable to the Company's reduction of its level of
borrowings.
Income tax expense for the first quarter of 2001 was $395,000 compared to income
tax expense of $197,000 for the same period in the prior year reflecting the
increased income level in the first quarter of 2001.
The first quarter of 2001 was the eighth consecutive quarter in which the
Company's earnings per share from continuing operations exceeded those of the
same period in the prior year. The Company anticipates that this trend will
continue for the remainder of 2001 and that diluted earnings per share from
continuing operations will exceed the 2000 level by approximately 25%.
8
Liquidity and Capital Resources
At March 31, 2001, the Company had cash and cash equivalents of $310,000
compared with $159,000 at December 31, 2000. The increase in cash and cash
equivalents from December 31, 2000 to March 31, 2001 was primarily attributable
to the Company's operating results. The Company had $7.1 million of long-term
debt borrowed under its $18.5 million revolving credit facility at March 31,
2001 compared with $7.4 million of long-term debt at December 31, 2000. This
decrease in long-term debt from December 31, 2000 to March 31, 2001 was
attributable the Company's use of cash flow from continuing operations to reduce
its borrowing level.
The Company believes that its existing cash and cash equivalents, cash flows
from operations, borrowings available under the Company's credit facility and
debt financing, which the Company believes would be available, will be
sufficient to fund the Company's cash requirements for at least the foreseeable
future.
Forward-Looking Statements
The statements in this Management's Discussion and Analysis that are
forward-looking are based upon current expectations, and actual results may
differ materially. Therefore, the inclusion of such forward-looking information
should not be regarded as a representation by the Company that the objectives or
plans of the Company would be achieved. Such statements include, but are not
limited to, the Company's expectations regarding the trend in earnings per share
from continuing operations for the remainder of 2001 and regarding diluted
earnings per share from continuing operations for the year 2001, as well as
future liquidity and capital resources. Words such as "anticipates," "believes,"
"expects," "estimated" and variations of such words and similar expressions are
intended to identify such forward-looking statements. Forward-looking statements
contained herein involve numerous risks and uncertainties, and there are a
number of factors that could cause actual results to differ materially
including, but not limited to, the following: changing economic, market and
business conditions, market acceptance of the Company's products, the effects of
governmental regulation, the impact of competition and new technologies,
slower-than-anticipated introduction of new products or implementation of
marketing strategies, changes in the prices or availability of raw materials,
changes in product mix, product recalls, the ability to attract and retain
qualified personnel and the loss of any significant customer. In addition,
assumptions relating to budgeting, marketing, product development and other
management decisions are subjective in many respects and thus susceptible to
interpretations and periodic review which may cause the Company to alter its
marketing, capital expenditures or other budgets, which in turn may affect the
Company's results of operations and financial condition.
9
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) No reports on Form 8-K have been filed during the quarter
ended March 31, 2001.
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.
Atrion Corporation
------------------
(Registrant)
Date: May 11, 2001 /s/ Emile A. Battat
-------------------------------
Emile A. Battat
Chairman, President and
Chief Executive Officer
Date: May 11, 2001 /s/ Jeffery Strickland
-------------------------------
Jeffery Strickland
Vice President and
Chief Financial Officer
11