FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 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 Number: 0-12395
ALCIDE CORPORATION
------------------
DELAWARE 22-2445061
- ------------------------------------------------------------ -----------------------
State or other jurisdiction of incorporation or organization (I.R.S. Employer Identification No.)
8561 154TH AVENUE NORTH EAST, REDMOND WA 98052
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (206) 882-2555
------------------
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 August 31, 1995: 2,787,838.
---------
ALCIDE CORPORATION
INDEX
-----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . .PAGE
----
Unaudited Condensed Balance Sheets - August 31, 1995 and May 31, 1995 . . 3
Unaudited Condensed Statements of Operations - For the three months ended
August 31, 1995 and August 31, 1994 . . . . . . . . . . . . . . . . . . . 4
Unaudited Condensed Statements of Cash Flows - For the three months ended
August 31, 1995 and August 31, 1994 . . . . . . . . . . . . . . . . . . . 5
Notes to the Unaudited Condensed Financial Statements . . . . . . . . . . 6
Statements of Changes in Shareholders' Equity . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . 8
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . 8
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8 - K . . . . . . . . . . . . . . . . . 9
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
- ---------
2
ALCIDE CORPORATION UNAUDITED CONDENSED BALANCE SHEETS
August 31, 1995 May 31, 1995
--------------- ------------
ASSETS:
Current assets:
Cash and cash equivalents $2,632,916 $2,770,157
Short term investments 997,422 983,889
Accounts receivable - trade 3,237,732 2,583,905
Inventory 854,721 562,197
Prepaid expenses and other current assets 102,996 161,710
----------- -----------
Total Current Assets 7,825,787 7,061,858
----------- -----------
Equipment and leasehold improvements:
Office equipment 80,864 80,864
Laboratory and manufacturing equipment 99,774 99,774
Leasehold improvements 56,152 56,152
Less: Accumulated depreciation and amortization (48,969) (37,128)
----------- -----------
Total equipment and leasehold improvements, net 187,821 199,662
----------- -----------
Deferred income tax asset 3,266,989 3,524,409
----------- -----------
Other assets 1,123,883 1,125,063
----------- -----------
TOTAL ASSETS $12,404,480 $11,910,992
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $391,363 $379,198
Accrued expenses and taxes payable 854,801 807,217
----------- -----------
Total Liabilities 1,246,164 1,186,415
----------- -----------
COMMITMENTS AND CONTINGENCIES:
Redeemable Class B Preferred Stock - noncumulative convertible
$.01 par value: authorized 1,664,581 shares;
issued and outstanding:
May 31, 1995 - 99,437
August 31, 1995 - 99,437 261,022 261,022
----------- ------------
Shareholders' equity:
Class "A" Preferred Stock - no par value authorized 1,000 shares;
issued and outstanding 1,000 shares 135,307 135,307
Common Stock $.01 par value; authorized 100,000,000 shares;
issued and outstanding:
May 31, 1995 - 2,787,838
August 31, 1995 - 2,787,838 27,878 27,878
Treasury stock at cost (1,511,532) 1,441,132)
Additional paid-in capital 18,164,399 18,164,399
Accumulated Deficit (5,918,758) (6,422,897)
----------- -----------
Total Shareholders' Equity 10,897,294 10,463,555
----------- -----------
TOTAL LIABILITIES, AND SHAREHOLDERS' EQUITY $12,404,480 $11,910,992
----------- -----------
----------- -----------
See notes to Unaudited Condensed Financial Statements.
3
ALCIDE CORPORATION UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended August 31,
-------------------------------------
1995 1994
---- ----
NET SALES $2,608,746 $1,398,931
- ---------
EXPENDITURES
Cost of goods sold 901,301 445,143
Research and Development Expense 268,448 169,760
Depreciation and amortization 11,841 5,414
Consulting expense to the related parties 15,000 15,000
Royalty expense 204,735 104,581
Other selling, general and administrative expense 512,797 388,311
---------- ----------
1,914,122 1,128,229
---------- ----------
Operating income 694,624 270,702
Royalty and other income 5,322 15,952
Interest and dividend income 70,863 51,773
Interest expense --- (849)
---------- ----------
Income before provision for income tax 770,809 337,578
Provision for income taxes 266,670 129,085
---------- ----------
Net income $504,139 $208,493
---------- ----------
---------- ----------
Net income per share $.18 $.07
---------- ----------
---------- ----------
Weighted average Common Shares outstanding and
Common Share equivalents 2,855,740 2,786,174
---------- ----------
---------- ----------
See Notes to Unaudited Condensed Financial Statements.
4
ALCIDE CORPORATION UNAUDITED C0NDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended August 31,
-------------------------------------
1995 1994
---- ----
OPERATING ACTIVITIES:
Net income $504,139 $208,493
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 11,841 5,414
Deferred income tax benefit 257,420 125,544
---------- ----------
773,400 339,451
---------- ----------
Decrease (increase) in assets:
Inventory (292,524) 3,348
Accounts receivable - trade (653,827) 182,829
Prepaid expenses and other assets and security deposits 58,713 19,157
Increase (decrease) in liabilities:
Accounts payable 12,165 (142,332)
Accrued expenses and taxes payable 47,584 (353,673)
---------- ----------
Total adjustments (827,889) (290,671)
---------- ----------
Net cash generated by (used in) operating activities (54,489) 48,780
---------- ----------
INVESTING ACTIVITIES:
Acquisition of fixed and other assets (12,352) (19,371)
---------- ----------
Net cash used in investing activities (12,352) (19,371)
---------- ----------
FINANCING ACTIVITIES:
Purchase of Alcide Common Stock (70,400) (201,078)
---------- ----------
Net cash used in financing activities (70,400) (201,078)
---------- ----------
Net increase (decrease) in cash and cash equivalents (137,241) (171,669)
Cash and cash equivalents at beginning of period 2,770,157 3,385,932
Cash and cash equivalents at end of period $2,632,916 $3,214,263
---------- ----------
---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest --- $849
Cash paid for income taxes $2,500 $2,407
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Accretion of Series 1 Stock redemption value --- $167
See notes to Unaudited Condensed Financial Statements.
5
ALCIDE CORPORATION
- ------------------
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
- -------------------------------------------------
1. Basis of Presentation
In the opinion of management, the accompanying unaudited financial statements of
Alcide Corporation (the "Company") for the three-month periods ended August 31,
1995 and 1994 have been prepared in accordance with the instructions to Form 10-
Q. Certain information and disclosures normally included in notes to financial
statements have been condensed or omitted according to the rules and regulations
of the Securities and Exchange Commission, although the Company believes that
the disclosures are adequate to make the information presented not misleading.
The accompanying unaudited condensed financial statements should be read in
conjunction with the financial statements contained in the Company's Annual
Report on Form 10 - K for the year ended May 31, 1995. In the opinion of
management, the accompanying unaudited condensed financial statements contain
all adjustments (consisting of only normal recurring accruals) considered
necessary for a fair presentation. The results of operations for the three-
month periods are not necessarily indicative of the results to be expected for
the full year.
2. Inventories
Inventory consisted of the following:
AUGUST 31, 1995 MAY 31, 1995
Finished products $97,667 $75,861
Raw materials $757,054 $486,336
--------- ---------
Total $854,721 $562,197
--------- ----------
--------- ----------
3. Taxes
In the first quarter of 1994 the Company adopted SFAS 109, "Accounting for
Income Taxes," the effects of which have been applied retroactively. SFAS 109
requires the Company to compute deferred income taxes based on the difference
between the financial statement and tax basis of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected
to reverse.
The income tax provision for the three-month period ended August 31, 1995
consists of:
TAXES PAYABLE DURING REDUCTION OF DEFERRED TOTAL TAX PROVISION
FISCAL YEAR TAX ASSET
Federal Income Taxes $9,250 $257,420 $266,670
------ -------- --------
4. Backlog Orders
At August 31, 1995 and 1994 the Company had orders for future delivery of
$2,759,726 and $1,669,848, respectively, of which $1,650,619 is from one
distributor at August 31, 1995. The $2,759,726 backlog is scheduled for
shipment during the period October through December 1995.
6
ALCIDE CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Class "A" Preferred Stock Common Stock Additional Paid
in Capital
- -------------------------------------------------------------------------------------------------
Shares Amount Shares Amount
Balance May 31, 1995 1,000 $135,307 2,787,838 $27,878 $18,164,399
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
Purchase Treasury Stock
Net Income
--------- --------- --------- --------- -----------
Balance August 31, 1995 1,000 $135,307 2,787,838 $27,878 $18,164,399
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
Common Treasury Stock Accumulated Total
Deficit Shareholders'
Equity
- --------------------------------------------------------------------------------------------------
Shares Amount
Balance May 31, 1995 (153,380) ($1,441,132) ($6,422,897) $10,463,555
--------- ------------ ------------ ------------
--------- ------------ ------------ ------------
Purchase Treasury Stock (4,000) (70,400) (70,400)
Net Income 504,139 504,139
--------- ----------- ----------- -----------
Balance August 31, 1995 (157,380) ($1,511,532) ($5,918,758) $10,897,294
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
7
PART I
-------
ALCIDE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------
First quarter fiscal year 1996 sales of $2,608,746 were 86% higher than first
quarter sales one year ago. The sales growth reflects sales increases by each
of the Company's major distributors. Sales to ABS Global, which represents
Alcide in North and South America, increased 83% as compared to the first
quarter last year. This increase reflects market share growth in the United
States, along with the introduction of UDDERgold Plus in U.S. markets, the
introduction of 4XLA into Canadian markets, and expansion in several key Latin
American countries. Sales to distributors in Europe increased 109% as compared
to the first quarter last year. Each of the Company's international
distributors has increased its share of market.
Sales prospects for the immediate future are positive. The Company enters its
second fiscal quarter with orders for future delivery of $2,759,726. The
backlog relates primarily to the animal health product line with firm orders
specifying delivery between October 1, 1995 and December 31, 1995.
Cost of goods as a percentage of net sales increased to 34.5% for the quarter
from 31.8% during the first quarter last year. The increase results primarily
from the introduction of UDDERgold Plus, which carries a slightly lower
percentage margin than UDDERgold, the product it has replaced.
Operating expenses other than cost of goods have decreased to 38.8% of sales
during the quarter ended August 31, 1995, from 48.8% of sales during the
equivalent quarter last year.
LIQUIDITY
- ---------
The Company's cash, cash equivalents, short term investments and U.S. Treasury
Instruments totalled $4,754,221 on August 31, 1995, an amount $124,888 lower
than at the end of fiscal year ended May 31, 1995. The Company's net income for
the quarter on a cash flow basis was $773,400. This was offset by an $827,889
increase in working capital. The working capital increase was caused primarily
by a $292,524 increase in inventories consistent with the increased pace of the
Company's business, and a $653,827 increase in accounts receivable caused
primarily by a 30 day extension of selling terms to ABS Global. ABS Global and
all other major Alcide distributors are meeting their payment obligations to
Alcide within agreed to credit terms.
The Company's cash position remained strong relative to its anticipated needs.
Cash generated from operations is expected to be greater than operating cash
needs during the remainder of the present fiscal year.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
8
PART II.
--------
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
EXHIBIT 11
- ----------
(a) Computation of Earnings Per Common Share
Three Months Ended August 31,
1995 1994
---- ----
Weighted average number of Common Shares outstanding 2,632,458 2,754,682
Assuming conversion of Preferred Stock --- 20,793
Assuming exercise of options reduced by the number of shares
which could have been purchased with the proceeds from exercise
of such options 223,282 10,699
--------- ---------
Weighted average Common Shares outstanding and Common
Share equivalents 2,855,740 2,786,174
--------- ---------
--------- ---------
Net Income per share $.18 $.07
--------- ---------
--------- ---------
REPORTS ON FORM 8 - K
None.
9
SIGNATURE
---------
Pursuant to the requirements of Section 13 or 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.
ALCIDE CORPORATION
The Registrant
Date: September 28, 1995 By s/
---------------------------
John P. Richards
Vice President
Chief Financial Officer
10