SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999.
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 0-18592
MERIT MEDICAL SYSTEMS, INC.
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(Exact name of Registrant as specified in its charter)
UTAH 87-0447695
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(State or other jurisdiction of (I.R.S. Identification No.)
incorporation or organization)
1600 West Merit Parkway, South Jordan UT, 84095
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(Address of Principal Executive Offices)
(801) 253-1600
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 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 Registrant's
classes of common stock, as of the latest practicable date.
COMMON STOCK 7,572,425
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TITLE OR CLASS Number of Shares Outstanding at
November 12, 1999
MERIT MEDICAL SYSTEMS, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1999
and December 31, 1998...................................................... 1
Consolidated Statements of Operations for the three and nine months
ended September 30, 1999 and 1998.......................................... 3
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1999 and 1998.......................................... 4
Notes to Consolidated Financial Statements................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................. 7
Item 3. Market Risk Disclosure..................................................... 9
PART II. OTHER INFORMATION
Item 4. Exhibits and Reports on Form 8-K........................................... 10
SIGNATURES............................................................................. 10
PART I - FINANCIAL INFORMATION
ITEM 1: Financial Statements
MERIT MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
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September December 31,
ASSET 1999 1998
- ----- ------------ ------------
(Unaudited)
CURRENT ASSETS:
Cash $ 731,436 $ 851,910
Trade receivables - net 12,290,665 10,436,485
Employee and related party receivables 467,484 472,994
Irish Development Agency grant receivable 94,945 198,445
Inventories 24,553,726 17,785,743
Prepaid expenses and other assets 625,083 636,124
Deferred income tax assets 739,595 739,595
------------ ------------
Total current assets 39,502,934 31,121,296
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PROPERTY AND EQUIPMENT:
Land 1,365,985 1,065,985
Building 1,500,000
Automobiles 136,436 89,469
Manufacturing equipment 17,105,849 13,669,599
Furniture and fixtures 8,751,644 7,963,835
Leasehold improvements 5,003,745 5,035,288
Construction-in-progress 2,031,670 1,182,669
------------ ------------
Total 35,895,329 29,006,845
Less accumulated depreciation
and amortization (14,110,964) (12,043,130)
------------ ------------
Property and equipment - net 21,784,365 16,963,715
------------ ------------
OTHER ASSETS:
Intangible assets - net 2,322,946 2,333,456
Cost in excess of the fair value of assets acquired - net 4,983,554 150,673
Prepaid royalty - net 21,428
Deposits 44,804 74,218
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Total other assets 7,351,304 2,579,775
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TOTAL $ 68,638,603 $ 50,664,786
============ ============
CONTINUED ON PAGE 2
See Notes to Consolidated Financial Statements
1
MERIT MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS (Continued)
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
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LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1999 1998
------------ -------------
(Unaudited)
CURRENT LIABILITIES:
Line of credit $ $ 7,634,607
Current portion of long-term debt 1,036,354 1,808,970
Trade payables 5,524,626 3,573,333
Accrued expenses 3,576,249 2,055,849
Advances from employees 97,116 74,090
Income taxes payable 622,712 194,722
------------ -------------
Total current liabilities 10,857,057 15,341,571
DEFERRED INCOME TAX LIABILITIES 1,362,620 1,275,651
LONG-TERM DEBT 24,228,151 3,388,835
DEFERRED CREDITS 997,052 1,023,861
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Total liabilities 37,444,880 21,029,918
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MINORITY INTEREST IN SUBSIDIARY 548,500
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STOCKHOLDERS' EQUITY:
Preferred stock -5,000,000 shares authorized as of September 30,
1999, and December 31, 1998, no shares issued
Common stock - no par value; 20,000,000 and 10,000,000 shares
authorized, respectively, 7,554,371 and 7,508,914 shares issued
at September 30, 1999 and December 31, 1998, respectively 18,084,309 17,793,094
Retained earnings 13,811,503 11,564,928
Foreign currency translation adjustment (702,089) (271,654)
------------ -------------
Total stockholders' equity 31,193,723 29,086,368
------------ -------------
TOTAL $ 68,638,603 $ 50,664,786
============ =============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
MERIT MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 and 1998 (Unaudited)
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Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
SALES $19,920,419 $16,703,033 $56,601,881 $51,143,218
COST OF SALES 12,156,979 10,270,250 34,796,574 31,734,533
----------- ----------- ----------- -----------
GROSS MARGIN 7,763,440 6,432,783 21,805,307 19,408,685
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Selling, general and administrative 5,071,648 4,160,108 14,871,567 12,899,025
Research and development 986,010 729,583 2,679,906 2,476,337
----------- ----------- ----------- -----------
TOTAL 6,057,658 4,889,691 17,551,473 15,375,362
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 1,705,782 1,543,092 4,253,834 4,033,323
OTHER EXPENSE 301,114 236,417 760,614 631,393
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAX EXPENSE 1,404,668 1,306,675 3,493,220 3,401,930
INCOME TAX EXPENSE 463,321 542,743 1,165,567 1,550,163
MINORITY INTEREST IN INCOME
OF SUBSIDIARY 12,579 41,096 81,077 114,717
----------- ----------- ----------- -----------
NET INCOME $ 928,768 $ 722,836 $ 2,246,576 $ 1,737,050
=========== =========== =========== ===========
EARNINGS PER COMMON SHARE -
Basic $ .12 $ .10 $ .30 $ .23
=========== =========== =========== ===========
Diluted $ .12 $ .10 $ .29 $ .23
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES -
Basic 7,535,735 7,434,624 7,531,319 7,410,866
=========== =========== =========== ===========
Diluted 7,709,815 7,521,075 7,590,329 7,496,200
=========== =========== =========== ===========
See Notes to Consolidated Financial Statements
3
MERIT MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED September 30, 1999 and 1998 (Unaudited)
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September 30, September 30,
1999 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,246,576 $ 1,737,050
------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,575,323 2,121,645
Bad debt expense 110,977 75,689
Losses (gains) on sales and abandonment of
property and equipment 764 43,475
Amortization of deferred credit (106,701) (67,423)
Deferred income taxes 86,969 147,159
Minority interest in income of subsidiary 81,077 114,717
Changes in operating assets and liabilities net of
effects from acquisitions:
Trade receivables (1,965,157) 310,553
Employee and related party receivables 5,510 (224,805)
Irish Development Agency grant receivable 183,392 340,299
Inventories (4,312,626) (2,555,138)
Prepaid expenses 11,041 (63,555)
Deposits and other 29,414 (21,878)
Trade payables 1,951,293 22,422
Accrued expenses 1,520,400 142,536
Advances from employees 23,026 (25,389)
Income taxes 427,990 68,613
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Total adjustments 622,692 428,920
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Net cash provided by operating activities 2,869,268 2,165,970
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for:
Property and equipment (3,795,562) (3,042,791)
Cash payments in connection with assets
purchased from Mallinckrodt (8,122,777)
Cash payment in connection with purchase of minority
Sentir shareholders' shares (3,477,904)
Intangible assets (188,692) (477,702)
Proceeds from the sale of property and equipment 503 539,202
------------ ------------
Net cash used in investing activities (15,584,432) (2,981,291)
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CONTINUED ON PAGE 5
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
MERIT MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (Unaudited)
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September 30, September 30,
1999 1998
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Line of credit 1,729,070
Issuance of common stock 291,215 283,443
Issuance of long-term debt 22,058,311
Principal payments on:
Long-term debt (1,689,794) (1,581,681)
Deferred credit
Line of credit (7,634,607) (52,101)
------------ ------------
Net cash provided by financing activities 13,025,125 378,731
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NET INCREASE (DECREASE) IN CASH 309,961 (436,590)
EFFECT OF EXCHANGE RATES ON CASH (430,435) 280,716
CASH AT BEGINNING OF PERIOD 851,910 976,692
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CASH AT END OF PERIOD $ 731,436 $ 820,818
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (including capitalized interest
of $110,702 and $102,958, respectively) $ 730,539 $ 606,999
============ ============
Income taxes $ 650,608 $ 1,334,391
============ ============
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
During the nine months ended September 30, 1999 and 1998 the Company issued
notes payable totaling $301,817 and $770,848, respectively, for manufacturing
equipment, furniture and fixtures, land and building.
During the nine months ended September 30, 1999, the Company acquired
substantially all of the operating assets of the Mallinckrodt Catheter
Division located in Angleton, Texas for cash. In connection with this
acquisition, the Company recorded the following as of the acquisition date:
Assets Acquired $6,098,675
Cost in excess of fair market value 2,024,102
----------
Total purchase price $8,122,777
==========
During the nine months ended September 30, 1999 the Company purchased all 28%
of the minority shares of Sentir Semiconductor not previously owned by the
Company for $3,477,904. In connection with this acquisition, the Company
recorded $2,848,327 in goodwill.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
MERIT MEDICAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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1. BASIS OF PRESENTATION. In the opinion of management, the accompanying
consolidated financial statements contain all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation of the financial
position of the Company as of September 30, 1999 and December 31, 1998, and
the results of its operations and cash flows for the three and nine months
ended September 30, 1999 and 1998, and its cash flows for the nine months
September 30, 1999 and 1998. The results of operations for the three and nine
months ended September 30, 1999 and 1998 are not necessarily indicative of
the results for a full year period.
2. INVENTORIES. Inventories at September 30, 1999 and December 31, 1998
consisted of the following:
September 30, December 31,
1999 1998
-------------- -------------
Raw materials $10,856,575 $ 8,981,007
Work-in-process 4,203,502 1,954,696
Finished goods 11,198,371 7,458,133
Less reserve for obsolete inventory (1,704,722) (608,093)
-------------- -------------
Total $24,553,726 $ 17,785,743
============== =============
3. INCOME TAXES. The Company has not fully allocated income tax expense
between current and deferred for the quarters ended September 30, 1999 and
1998. The effective tax rate for the three and nine months ended September
30, 1998 is higher than the federal statutory tax rate largely due to losses
incurred by the Company's Irish subsidiary for which a tax benefit was
recorded at a rate of 10% vs. a 35% federal statutory tax rate. The effective
tax rate improved during the three and nine months ended September 30, 1999,
as the Company's operations in Ireland became profitable and their lower tax
rate improved the Company's overall effective tax rate.
4. REPORTING COMPREHENSIVE INCOME - In June 1997, the Financial Accounting
Standards Board (FASB) issued SFAS No.130, "Reporting Comprehensive Income."
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income and its components (revenues, expenses, gains and
losses) in a full set of general-purpose financial statements. This statement
requires that an enterprise (a) classify items of other comprehensive income
by their nature in a financial statement and (b) present the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in-capital in the equity section of a statement of financial
position.
Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130. Accordingly, the Company determined that the only transaction considered
to be an additional component of comprehensive income is the cumulative
effect of foreign currency translation adjustments. As of September 30, 1999
and December 31, 1998, the cumulative effect of such transactions reduced
stockholders' equity by $702,089 and $271,654, respectively. Comprehensive
income for the three and nine months ended September 30, 1999 and 1998 is
computed as follows:
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Net Income $ 928,768 $ 722,836 $2,246,576 $ 1,737,050
Foreign currency translation 187,200 396,545 (430,435) 280,716
----------- ----------- ----------- -----------
Comprehensive income $ 1,115,968 $ 1,119,381 $1,816,141 $ 2,017,766
=========== =========== =========== ===========
6
MERIT MEDICAL SYSTEMS, INC.
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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OVERVIEW
During the third quarter of 1999, the Company completed a significant
acquisition consistent with its continuing strategy of growth into primary
use, higher-margin products. On August 20, 1999, the Company acquired the
operating assets of the Angleton, Texas division of Mallinckrodt, Inc. for
approximately $8.1 million. The acquisition included a line of diagnostic,
guiding and specialty catheters, as well as diagnostic guide wires, sheaths,
specialty needles and other accessories. All of these products complement
Merit's existing products and are sold to the same customers through the
existing sales force. This acquisition also added important technology and
know-how which the Company believes will accelerate the development of
several new lines of catheter products to be sold into interventional
radiology markets.
The Company also increased its available capital by increasing its existing
bank line of credit to $28 million, up from $10.5 million, on terms that are
deemed favorable to the Company. This new six-year facility with Zions Bank
was instrumental in the financing of the Angleton acquisition. These
transactions, along with new products which have been or will be introduced
in the near future, have positioned the Company for what management believes
will be increased growth and profitability.
OPERATIONS. The Company achieved record levels of sales and earnings for the
three and nine months ended September 30, 1999 compared to the same periods
in 1998. The following table sets forth certain operational data as a
percentage of sales for the three and nine months ended September 30, 1999
and 1998.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
---- ---- ---- ----
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Gross Margin 39.0 38.5 38.5 37.9
Selling, General and Administrative 25.5 24.9 26.3 25.2
Research & Development 4.9 4.4 4.7 4.8
Income From Operations 8.6 9.2 7.5 7.9
Other Expense 1.5 1.4 1.3 1.2
Net Income 4.7 4.3 4.0 3.4
SALES. Sales for the third quarter of 1999 ended September 30 were
$19,920,419 compared to $16,703,033 for the same period last year, which
represents a gain of 19 percent. The Company's catheter sales were up 393%,
which included five weeks of sales from the recently required Angleton
catheter line; Sentir's business grew by 140%; inflation device sales
increased by 19 percent, custom kit business grew by 8 percent during the
three-month period compared to the quarter ended September 30, 1998; while
sales of other devices including syringes, manifolds and needles grew by 17
percent. Growth in all segments reflects continued market share gains and
acceptance of the Company's products, as well as hospital procedural growth.
For the nine-month period ended September 30, 1999 total sales were
$56,601,881 compared with $51,143,218 for the same period in 1998, a gain of
11 percent. These gains were led by sales of the Company's catheters which
were up 243%; Sentir's business grew by 45%; inflation devices, which rose 17
percent; tubing, which grew by 16 percent; and custom kits,(other than
inflation and manifold kits) which grew by 17 percent.
7
MERIT MEDICAL SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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GROSS MARGIN. Gross margin as a percentage of sales for the third quarter of
1999 was 39.0% compared to 38.5% for the same period of 1998. For the nine
months ended September 30, 1999 gross margin was 38.5% compared to 37.9% for
the first nine months of 1998. The increase in gross margin for the three and
nine months ended September 30, 1999 was primarily due to favorable changes
in product mix, price strategies and economies of scale associated with
increased sales.
OPERATING EXPENSES. Operating expenses were 30.4% of sales for the three
months ended September 30,1999 compared to 29.3% for the third quarter of
1998. For the first nine months of 1999 operating expenses increased to 31.0%
compared to 30.1% for the same period in 1998. Selling, general and
administrative expenses as a percentage of sales were 25.5% and 26.3% for the
three and nine months ended September 30, 1999 compared to 25.2% and 24.9%
for the same periods in 1998. The increase was primarily due to additions to
the MIS department to address the implementation of the Company's Oracle
integrated business information system and Y2K compliance issues, as well as
strengthening its OEM sales and new business development departments.
OPERATING INCOME. During the quarter ended September 30, 1999, the Company
reported record income from operations of $1.7 million compared to $1.5
million for the comparable period in 1998. Operating income for the first
nine months of 1999 was also a record $4.3 million vs. $4.0 million for the
same period in 1998. The increase in net earnings for the three and nine
months ended September 30, 1999 was attributable to an increase in sales with
improved gross margins and a reduction in the effective tax rate offset in
part by the increase in operating expenses.
LIQUIDITY AND CAPITAL RESOURCES. At September 30, 1999, the Company's working
capital increased significantly to $28.6 million which represented a current
ratio of 3.6 to 1 up from $15.8 million and a current ratio of 2.0 to 1 at
December 31, 1998. During the nine months ended September 30, 1999 the
principal sources of funds were $2.9 million generated from operations, $20.3
million in net long-term debt and $.3 million from the issuance of common
stock. During the same period the Company invested $8.1 million in plant,
equipment, inventory and intangibles for the acquisition of the Mallinckrodt
Angleton Catheter Division; $3.5 million in the purchase of the 28% of the
minority shares of Sentir Semiconductor not previously owned by the Company;
$4.0 million in equipment, and $7.6 million in payments on the line of
credit. These factors resulted in an increase of $.3 million in cash for the
nine months ended September 30, 1999.
On August 11, 1999, the Company renewed an available secured bank line of
credit to $28 million for a term of six years. The line of credit bears
interest at or below the bank's prime rate, or can be fixed at between 140
and 160 points over LIBOR and contains various conditions and restrictions.
At September 30, 1999, the outstanding balance under the line of credit was
$24.2 million. Historically, the Company has incurred significant expenses in
connection with product development and introduction of new products.
Substantial capital has also been required to finance growth in inventories
and receivables, particularly with the recent acquisitions and the
introduction of new product lines. The Company's principal source of funding
for these and other expenses has been the sale of equity and cash generated
from operations, secured loans on equipment and bank lines of credit. The
Company believes that its present sources of liquidity and capital are
adequate for its current operations.
YEAR 2000. In 1996 the Company began the conversion of the principal computer
software systems to a new integrated system to support future growth and
improve productivity. The Company has completed a review of its business
information systems with regard to Year 2000 compliance and is either
replacing or correcting those computer systems that have been found to have
date-related deficiencies. A new Oracle integrated business information
system for the order administration, financial and manufacturing processes
was implemented and completed in November 1998. Through September 30, 1999
the Company had incurred approximately $3.8 million in costs to improve the
Company's information technology systems and for Year 2000 readiness efforts.
Of this amount, a substantial portion represents the costs of implementing
and transitioning to new computer hardware and software for the Company's
Oracle enterprise-wide business systems. Substantially all of these costs
have been capitalized. The Company anticipates incurring an additional
$500,000 in connection with the Year 2000 readiness efforts. The Company
expects to have all Year 2000 readiness efforts completed by December 31,
1999. The Company believes its non-IT systems and products have been assessed
and found to be Year 2000 compliant. The Company relies on third-party
providers for materials and services such as telecommunications, utilities,
financial services and other key services. Interruption of those materials or
services due to Year 2000 issues could affect the Company's operations. The
Company has completed the process of contacting its major suppliers and has
determined that all major
8
MERIT MEDICAL SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
suppliers are in the process of ensuring Year 2000 compliance. However, since
the Company is dependent on key third parties, there can be no guarantee that
the Company's efforts will prevent a material adverse impact on its financial
position, results of operations or liquidity in future periods in the event
that a significant number of suppliers and /or customers experience business
disruptions as a result of their lack of Year 2000 readiness. The Company is
in the process of implementing the Oracle system in its Irish facility with a
planned completion date for November of 1999. Both the Company's cost
estimates and completion time frames could be influenced by the Company's
ability to successfully identify all Year 2000 issues, the nature and amount
of corrective action required, the availability and cost of trained personnel
in this area and the Year 2000 success that key third parties and customers
attain. While these and other unforeseen factors could have a material
adverse impact on the Company's financial position, results of operations or
liquidity in future periods, management believes that it has implemented an
effective Year 2000 compliance program that will minimize the possible
negative consequences to the Company. The foregoing discussion of the
Company's Year 2000 readiness includes forward-looking statements, including
estimates of the time frames and costs for addressing the known Year 2000
issues confronting the Company, and is based upon management's current
estimates, which were derived using numerous assumptions. There can be no
assurance that these estimates will be achieved, and actual events and
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability of personnel with required remediation skills, the ability of
the Company to identify and correct or replace all relevant computer code and
the success of the third parties with whom the Company does business in
addressing their Year 2000 issues.
FORWARD-LOOKING STATEMENTS. Statements contained in this document which are
not purely historical are forward- looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These encompass Merit's
beliefs, expectations, hopes or intentions regarding the future. All
forward-looking statements included in this release are made as of the date
hereof and are based on information available to Merit as of such date. Merit
assumes no obligation to update any forward-looking statement. It is
important to note that actual outcomes and Merit's actual results could
differ materially from those in such forward-looking statements. Factors that
could cause actual results to differ materially include risks and
uncertainties related to future market growth such as product acceptance,
product recalls, competition and the overall regulatory environment.
ITEM 3: Quantitative and Qualitative Disclosure About Market Risk.
MARKET RISK DISCLOSURES. The Company does not engage in significant
derivative financial instruments. The Company does experience risk associated
with foreign currency fluctuations, and interest rate risk associated with
its variable rate debt; however, such risks have not been material to the
Company and, accordingly, the Company has not deemed it necessary to enter
into agreements to hedge such risks. The Company may enter into such
agreements in the event that such risks become material in the future.
9
MERIT MEDICAL SYSTEMS, INC.
- ---------------------------
PART II - OTHER INFORMATION
ITEM 4: EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K- August 20, 1999 Acquisition of Angleton,
Texas division of Mallinckrod, Inc.
(b) Exhibits 1.
- --------------------------------------------------------------------------------
S - K No. Description Exhibit No.
- --------------------------------------------------------------------------------
10 Zions Bank Agreement 1
- --------------------------------------------------------------------------------
27 Financial Data Schedule 2
- --------------------------------------------------------------------------------
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.
MERIT MEDICAL SYSTEMS, INC.
- ------------------------------------------
REGISTRANT
Date: NOVEMBER 12, 1999
----------------------- -------------------------------------------
FRED P. LAMPROPOULOS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Date: NOVEMBER 12, 1999
----------------------- -------------------------------------------
KENT W. STANGER
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
10