SECURITIES AND EXCHANGE COMMISSION
Washington, DC
Form 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
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Exchange Act of 1934
For the quarterly period ended June 30, 2000
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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: 0-28748
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CLOSURE MEDICAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 56-1959623
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(State or other (I.R.S. Employer
jurisdiction Identification No.)
of incorporation or
organization)
5250 Greens Dairy Road, Raleigh, North Carolina 27616
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(Address of principal executive offices) (Zip Code)
(919) 876-7800
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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 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.
Class Outstanding at August 7, 2000
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Common Stock, par value $0.01 per share 13,410,374
CLOSURE MEDICAL CORPORATION
INDEX
Page Number
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PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of June 30, 2000 (unaudited) and
December 31, 1999....................................................... 3
Statements of Operations (unaudited) for the three
months ended June 30, 2000 and 1999 and for the six
months ended June 30, 2000 and 1999..................................... 4
Statements of Cash Flows (unaudited) for the six
months ended June 30, 2000 and 1999..................................... 5
Notes to Condensed Financial Statements (unaudited)...................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................... 8
Item 3. Quantitative and Qualitative Disclosure about Market Risk........... 12
PART II: OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders................. 13
Item 6. Exhibits and Reports on Form 8-K.................................... 13
2
PART I- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CLOSURE MEDICAL CORPORATION
BALANCE SHEETS
(In thousands, except per share data)
JUNE 30, DECEMBER 31,
2000 1999
---- ----
ASSETS (Unaudited)
Cash and cash equivalents $ 204 $ 508
Short-term investments 8,095 9,299
Restricted investments 1,561 1,515
Accounts receivable, net 1,189 732
Inventories 693 591
Prepaid expenses 214 326
-------- --------
Total current assets 11,956 12,971
Restricted investments 1,298 1,292
Furniture, fixtures and equipment, net 7,058 7,351
Intangible assets, net 1,096 897
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Total assets $ 21,408 $ 22,511
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 1,251 $ 1,110
Accrued expenses 1,062 794
Deferred revenue 206 443
Capital lease obligations 300 279
Current portion of long-term debt 600 600
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Total current liabilities 3,419 3,226
Deferred revenue 505 505
Capital lease obligations less current portion 499 655
Long-term debt less current portion 1,187 1,500
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Total liabilities 5,610 5,886
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Commitments and Contingencies -- --
Preferred Stock, $.01 par value. Authorized 2,000 shares; none
issued or outstanding -- --
Common Stock, $.01 par value. Authorized 35,000 shares;
issued and outstanding 13,396 and 13,347 shares, respectively 134 133
Additional paid-in capital 47,302 46,940
Accumulated deficit (31,638) (30,375)
Deferred compensation on stock options -- (73)
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Total stockholders' equity 15,798 16,625
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Total liabilities and stockholders' equity $ 21,408 $ 22,511
======== ========
The accompanying notes are an integral part of these financial statements.
3
CLOSURE MEDICAL CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
---- ---- ---- ----
Product sales $ 3,072 $ 4,277 $ 5,738 $ 8,094
Cost of products sold 981 1,520 1,797 2,697
-------- -------- ------- -------
Gross profit 2,091 2,757 3,941 5,397
-------- -------- ------- -------
Research, development and regulatory affairs expenses 1,600 1,588 3,067 3,450
General and administrative expenses 1,257 1,270 2,381 2,758
-------- -------- ------- -------
Total operating expenses 2,857 2,858 5,448 6,208
-------- -------- ------- -------
Income (loss) from operations (766) (101) (1,507) (811)
Interest expense (62) (94) (120) (185)
Investment and interest income 184 210 364 446
-------- -------- ------- -------
Net income (loss) $ (644) $ 15 $(1,263) $ (550)
======== ======== ======= =======
Shares used in computation of net income (loss)
per common share:
Basic 13,380 13,315 13,367 13,309
======== ======== ======= =======
Diluted 13,380 13,884 13,367 13,309
======== ======== ======= =======
Net income (loss) per common share:
Basic $ (0.05) $ 0.00 $ (0.09) $ (0.04)
======== ======== ======= =======
Diluted $ (0.05) $ 0.00 $ (0.09) $ (0.04)
======== ======== ======= =======
The accompanying notes are an integral part of these financial statements.
4
CLOSURE MEDICAL CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,263) $ (550)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization expense 458 458
Amortization of deferred compensation on stock options 73 152
Net loss on disposals of fixed assets 12 3
Change in accounts receivable (457) (1,555)
Change in inventories (102) 296
Change in prepaid expenses 112 (145)
Change in accounts payable and accrued expenses 409 (734)
Change in deferred revenue (237) (373)
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Net cash provided (used) by operating activities (995) (2,448)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of furniture, fixtures and equipment (170) (1,117)
Investment in intangible assets (206) (181)
Purchases of investments (2,750) (3,696)
Proceeds from the sale of investments 3,902 6,625
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Net cash provided (used) by investing activities 776 1,631
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (313) (250)
Net proceeds from exercise of stock options 363 370
Payments under capital lease obligations (135) (120)
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Net cash provided (used) by financing activities (85) --
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Increase (decrease) in cash and cash equivalents (304) (817)
Cash and cash equivalents at beginning of period 508 824
-------- -------
Cash and cash equivalents at end of period $ 204 $ 7
======== =======
The accompanying notes are an integral part of these financial statements.
5
Closure Medical Corporation
Condensed Notes to Financial Statements
(Unaudited)
1. Organization and Operations
Closure Medical Corporation ("Closure" or the "Company") develops, manufactures
and commercializes medical tissue adhesive products based on its proprietary
cyanoacrylate technology for use in wound closure in humans and animals.
On September 30, 1996, the Company sold 2,550,000 shares of Common Stock in its
initial public offering ("IPO"). On April 2, 1997, the Company completed a
follow-on public offering selling 1,025,000 shares of Common Stock. The net
proceeds from the IPO and follow-on public offering of approximately $17.9
million and $12.0 million, respectively, have been and will continue to be used
primarily for capital expenditures related to office space and manufacturing
facilities, laboratories, research and development, including clinical trials,
working capital and general corporate purposes.
2. Significant Accounting Policies
The significant accounting policies followed by the Company for interim
financial reporting are consistent with the accounting policies followed for
annual financial reporting. These unaudited financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X, and in management's
opinion, all adjustments of a normal recurring nature necessary for a fair
presentation have been included. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 1999
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1999.
The results of operations for the three and six month periods ended June 30,
2000 are not necessarily indicative of the results to be expected for the full
year ending December 31, 2000.
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), was issued in June 1998. SFAS
133, as amended by SFAS 137, is effective for financial statements for fiscal
years beginning after June 15, 2000. The Company will adopt SFAS 133 on or
before the effective date. It is not anticipated that this standard will have a
material impact on the results of operations or financial position of the
Company.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements,"("SAB 101"),
which provides guidance on the recognition, presentation, and disclosures of
revenue in financial statements filed with the SEC. SAB 101, as amended by SAB
101A and SAB 101B, outlines the basic criteria that must be met to recognize
revenue and provides guidance for disclosures related to revenue recognition
policies. SAB 101B delays the implementation date of SAB 101 until no later
than the fourth fiscal quarter of fiscal years beginning after December 15,
1999. SAB 101 is not expected to have a significant impact on the Company's
revenue recognition policies.
3. Taxes
No federal or state income tax provision has been provided for income tax
purposes, as the Company does not expect to have a tax liability for the year
ending December 31, 2000. Additionally, the deferred tax asset that might be
recorded as a result of net operating losses under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," has been offset by
a related valuation allowance because realization of the asset is not likely.
Accordingly, no benefit has been recorded.
6
Closure Medical Corporation
Condensed Notes to Financial Statements
(Unaudited)
4. Inventories
Inventories included the following (in thousands):
June 30, December 31,
2000 1999
---- ----
Packaging $ 220 $ 148
Raw materials 85 45
Work-in-process 365 283
Finished goods 23 115
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$ 693 $ 591
===== =====
5. Net Income (Loss) Per Share
Basic net income (loss) per common share is computed using the weighted average
number of shares of common stock outstanding during the period.
Diluted net income (loss) per common share is computed using the weighted
average number of shares of common and common equivalent shares outstanding
during the period. Common equivalent shares consist of stock options using the
treasury stock method and are excluded from the computation if their effect is
antidilutive.
7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION ACT OF 1995
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto included in Part I--Item 1 of this Form
10-Q and the audited financial statements and notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
year ended December 31, 1999 contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1999.
This report and the documents incorporated by reference herein contain "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. When used in this report and the documents incorporated herein by
reference, the words "anticipate," "believe," "estimate," and similar
expressions are generally intended to identify forward-looking statements.
These forward-looking statements include, among others, the statements in
Management's Discussion and Analysis about the following:
. the Company's expectations with respect to increases in operating expenses;
. expectations with respect to increases in research and development and
general and administrative expenses in order to develop new products,
manufacture commercial quantities of products and fund additional clinical
trials;
. expectations with respect to the development, manufacturing and approval of
new products;
. expectations with respect to incurring additional capital expenditures to
expand its manufacturing capabilities;
. expectations with respect to generating revenue or becoming profitable on a
sustained basis;
. the Company's ability to enter into additional marketing agreements and the
ability of its existing marketing partners to successfully commercialize
products incorporating the Company's technologies;
. the sufficiency of the Company's existing cash and cash equivalents and
investments to finance its capital requirements for 12 months;
. expected losses in 2000 and subsequent years; and
. expectations with respect to future capital requirements.
There are important factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements including,
but not limited to, the following:
. a decline in the level of demand for the Company's products;
. developments by competitors;
. the Company's inability to obtain regulatory clearances;
. general economic conditions and specifically, conditions in the health care
industry;
. the Company's ability to protect its proprietary products, know-how and
manufacturing processes;
8
. the Company's inability to obtain adequate supply of raw materials;
. the failure to enter into definitive marketing agreements;
. unanticipated cash requirements to support current operations or research and
development; and
. the Company's ability to attract and retain key personnel.
These and other risks and uncertainties affecting the Company are discussed in
greater detail in this report and in other filings by the Company with the
Securities and Exchange Commission.
Overview
Since its inception in May 1990, the Company has been developing, manufacturing
and commercializing medical tissue adhesive products for use in wound closure in
humans and animals. The Company's products are based on its proprietary
cyanoacrylate technology, and a substantial portion of the Company's historical
expenses have consisted of research and development and clinical trial expenses.
Through September 25, 1996, the effective date of the Company's initial public
offering, the Company had funded its operations with cash borrowed from
Sharpoint Development Corporation ("Sharpoint"), sales of Octyldent(R) and
Nexaband(R) products, and license and product development revenues from
marketing partners. On September 30, 1996, the Company completed its initial
public offering, issuing 2,550,000 shares of Common Stock and generating net
proceeds of approximately $17.9 million. On April 2, 1997, the Company completed
a follow-on public offering, issuing 1,025,000 shares of Common Stock and
generating net proceeds of approximately $12.0 million. The Company has also
funded its operations through sales of DERMABOND(R) Topical Skin Adhesive
("DERMABOND(R) adhesive") after the product received its CE Mark and U.S. Food
and Drug Administration ("FDA") approval in August 1997 and August 1998,
respectively.
The Company has been unprofitable since its inception and has incurred net
losses in each year, including a net loss of approximately $2.5 million for the
year ended December 31, 1999. The Company anticipates that its recurring
operating expenses will increase for the next several years, as it expects its
research and development and general and administrative expenses to increase in
order to develop new products, manufacture commercial quantities of products and
fund additional clinical trials. The Company also expects to incur additional
capital expenditures to expand its manufacturing capabilities. The Company
expects to incur a loss in 2000 and may incur losses in subsequent years,
although the amount of future net losses and time required by the Company to
reach profitability are highly uncertain. The Company's ability to generate
significant revenue and become profitable will depend on its success in
commercializing DERMABOND(R) adhesive, expanding its manufacturing capabilities,
developing new products, entering into additional marketing agreements and on
the ability of its marketing partners to successfully commercialize products
incorporating the Company's technologies. The Company may never generate
significant revenue or become profitable on a sustained basis, if at all.
On August 28, 1998, the Company was granted approval from the FDA of its
premarket approval application to market DERMABOND(R) adhesive in the United
States. DERMABOND(R) adhesive, which is used to replace sutures, staples and
adhesive strips for closing certain topical incisions and lacerations, is the
first such product to be approved by the FDA for the U.S. market. In March
1996, Closure licensed exclusive worldwide marketing and distribution rights for
DERMABOND(R) adhesive to Ethicon, Inc. ("Ethicon"), a subsidiary of Johnson &
Johnson. In August 1997, Closure received CE Mark approval allowing the Company
to ship DERMABOND(R) adhesive to Ethicon to support its launch in European Union
countries. DERMABOND(R) adhesive is currently marketed by Ethicon in the U.S.
and approximately 34 countries outside the U.S., including Japan.
9
On July 27, 1999, the Company was awarded its first United States Patent
relevant to DERMABOND(R) adhesive. The invention covered in this patent
capitalizes on the ability of the Company's adhesive technology to be
manipulated in a manner that enhances product performance by controlling the
setting time and extending the shelf-life of the material. The award of the
patent increases royalty revenue on sales of DERMABOND(R) adhesive in the
United States under the supply and distribution agreement with Ethicon.
On September 2, 1999, the Company received clearance from the FDA to market
SOOTHE-N-SEAL(TM) canker sore relief in the United States. SOOTHE-N-SEAL(TM)
adhesive, which is used to provide relief of pain associated with oral ulcers,
is the first such product to be approved by the FDA for the over-the-counter
United States consumer market. The Company is currently in discussions for a
marketing distribution agreement for SOOTHE-N-SEAL(TM) adhesive.
The Company has developed LIQUIDERM(TM) liquid adhesive bandage for the
treatment of minor cuts and abrasions. The results of the preclinical studies,
performed in July and August 1999, for the liquid adhesive bandage indicated
that the product compared favorably to air-dried wounds and wounds covered with
commercial adhesive bandages. As a result of this preclinical study, the Company
conducted a definitive multi-center, 162-patient study which was completed in
June 2000. In the multi-center study, LIQUIDERM(TM) liquid adhesive bandage was
found to: (i) stay on wounds better and longer than traditional adhesive
bandages, (ii) seal wounds from dirt and germs, (iii) minimize pain better than
adhesive bandages, (iv) stop bleeding of minor cuts and abrasions, and (v)
require only one application per treatment. The Company will seek marketing
clearance for LIQUIDERM(TM) adhesive through submission of a 510(k) premarket
notification which was filed August 1, 2000 with the FDA. The Company is
currently in discussions for a marketing distribution agreement for
LIQUIDERM(TM) adhesive.
Results of Operations
Product sales were $3.1 million for the three months ended June 30, 2000,
compared to $4.3 million for the three months ended June 30, 1999. For the six
months ended June 30, 2000, product sales were $5.7 million compared to $8.1
million for the same period of 1999. The decrease in 2000 product sales was
primarily a result of reduced sales of DERMABOND(R) adhesive.
Cost of products sold was $981,000 for the three months ended June 30, 2000
compared to $1.5 million for the same period of 1999. This decrease is primarily
related to a reduction in DERMABOND(R) adhesive units sold from the 1999 period
as well as reduced manufacturing expenses during 2000. Cost of products sold as
a percentage of product sales decreased to 32% for the three months ended June
30, 2000 compared to 36% during the same period of 1999. For the six months
ended June 30, 2000, cost of products sold was $1.8 million compared to $2.7
million for the same period of 1999. Cost of products sold as a percentage of
product sales decreased to 31% in the six months ended June 30, 2000, compared
to 33% during the same period of 1999. Although DERMABOND(R) adhesive unit
sales decreased during the three and six month periods ended June 30, 2000,
compared to the same periods in 1999, a consistent gross margin percentage for
the 2000 period was achieved primarily as a result of the significant reductions
in manufacturing expenses and an increase in product yields.
Operating expenses were $2.9 million for the three months ended June 30, 2000
and June 30, 1999. For the six months ended June 30, 2000 and June 30, 1999,
operating expenses were $5.4 million and $6.2 million, respectively. The
decrease was primarily attributable to decreased outside professional services
for research and development, the reduction of personnel and the reduction of
general and administrative expenses. Although the Company experienced decreased
expenses related to research and development, it expects these expenses will
increase in the future as the Company expands its pipeline and related
development efforts and clinical trials for potential new products.
Interest expense was $62,000 for the three months ended June 30, 2000, compared
to $94,000 for the three months ended June 30, 1999. For the six months ended
June 30, 2000 and June 30, 1999, interest expense
10
was $120,000 and $185,000, respectively. This decrease was primarily the result
of the continued reduction of the Company's term loan balance and capital lease
obligations through monthly principal payments.
Investment and interest income was $184,000 for the three months ended June 30,
2000, compared to $210,000 for the same period of 1999. For the six months
ended June 30, 2000 and June 30, 1999, investment and interest income was
$364,000 and $446,000, respectively. This decrease was primarily attributed to
interest earned from lower average cash and investment balances.
Liquidity and Capital Resources
The Company has financed its operations to date primarily through the sale of
equity securities, borrowings from Sharpoint and other lenders, license and
product development revenues and product sales. Through June 30, 2000, the
Company has raised approximately $30.0 million from equity financings. During
1997 and 1998, the Company entered into and received approximately $4.5 million
from a new lease line and term loan. In May 1999, the term loan principal
balance of $2.5 million was refinanced under similar terms of the original
agreement for an additional 24 months. In May 2000, the Company renewed for a
period of one year its $3.0 million line of credit for working capital purposes.
As of June 30, 2000, there were no borrowings against the line of credit.
At June 30, 2000, net working capital was approximately $8.5 million versus net
working capital of $9.7 million available at December 31, 1999. This decrease
was primarily attributable to cash used to fund the Company's operations. At
June 30, 2000, the Company's primary working capital consisted of $11.2 million
of cash and cash equivalents and investments compared to $12.6 million at
December 31, 1999. The Company had $2.6 million in debt and capital lease
obligations at June 30, 2000, reflecting a $448,000 decrease over the December
31, 1999 debt and capital lease obligations. These decreases represent monthly
principal payments on these obligations.
Net cash provided by investing activities was $776,000 for the six months ended
June 30, 2000 compared to $1.6 million for the same period in 1999. During the
six months ended June 30, 2000 and June 30,1999, cash was provided by the sale
of investments offset by purchases of investments and other assets.
Net cash used by financing activities was $85,000 for the six months ended June
30, 2000. The Company's primary financing activities during the six months
ended June 30, 2000 were the repayments of its term loan and capital lease
obligations offset by employee stock option exercises. The Company's primary
financing activity during the six months ended June 30, 1999 were the proceeds
from employee stock option exercises, offset by repayments of its term loan and
capital lease obligations.
The Company believes that existing cash and cash equivalents and investments,
which totaled approximately $11.2 million at June 30, 2000, will be sufficient
to finance its capital requirements for 12 months. In May 2000, the Company
renewed for a period of one year its $3.0 million line of credit for working
capital purposes. The Company expects to incur a loss in 2000 and may incur
losses in subsequent years, although the amount of future net losses and time
required by the Company to reach profitability are highly uncertain. The
Company anticipates that its recurring operating expenses will increase for the
next several years, as it expects its research and development and general and
administrative expenses to increase in order to develop new products,
manufacture commercial quantities of products and fund additional clinical
trials. The Company also expects to incur additional capital expenditures to
expand its manufacturing capabilities.
The Company's future capital requirements, however, will depend on numerous
factors, including (i) the Company's ability to manufacture and successfully
commercialize its lead product, DERMABOND(R) adhesive, (ii) the progress of its
research and product development programs for future nonabsorbable and
absorbable products, including clinical studies, (iii) the effectiveness of
product commercialization activities and marketing agreements for the Company's
future products, including additional scale-up of manufacturing capability in
anticipation of product commercialization and development and progress of sales
and marketing efforts, (iv) the ability of the Company to maintain existing
marketing agreements,
11
including its agreement with Ethicon for DERMABOND(R) adhesive, and establish
and maintain new marketing agreements, (v) the costs involved in preparing,
filing, prosecuting, defending and enforcing intellectual property rights and
complying with regulatory requirements, (vi) the effect of competing
technological and market developments, (vii) timely receipt of regulatory
clearances and approvals and (viii) general economic conditions. The Company may
be required to seek additional capital to finance its operations in the future.
If the Company's currently available funds and internally generated cash flow
are not sufficient to satisfy its financing needs, the Company will be required
to seek additional funding through bank borrowings and additional public or
private sales of its securities, including equity securities, or through other
arrangements with marketing partners. Other than the Company's equipment
financing line of credit, term loan, and working capital line of credit, the
Company has no credit facility or other committed sources of capital. There can
be no assurance that additional funds, if required, will be available to the
Company on favorable terms, if at all.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Interest Rate Sensitivity
The Company is subject to interest rate risk on its investment portfolio which
consists primarily of high quality short-term money market funds, commercial
paper and corporate bonds with an average maturity of less than one year. The
Company mitigates default risk by investing in what it believes are safe and
high credit quality securities and by monitoring the credit rating of investment
issuers. The portfolio includes only marketable securities with active secondary
or resale markets to ensure portfolio liquidity and there are limitations
regarding average and individual duration of investments. These available-for-
sale securities are subject to interest rate risk and will decrease in value if
market interest rates increase. At June 30, 2000, the Company's total portfolio
consisted of approximately $11.2 million of investments, the majority of which
had average maturities within one year. Additionally, the Company generally has
the ability to hold fixed income investments to maturity. Therefore, the Company
does not expect its results of operations or cash flows to be materially
affected due to a sudden change in interest rates.
Foreign Currency Exchange Risk
The Company's international sales and related royalties of DERMABOND(R) adhesive
are based on sales in foreign currencies, but payable in U.S. dollars, and thus
may be adversely affected by fluctuations in currency exchange rates.
Additionally, fluctuations in currency exchange rates may adversely affect
demand for the Company's products by increasing the price of the Company's
products in the currency of the countries in which the products are sold.
12
PART II- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Stockholders of the Company (the "Meeting") was held on
June 13, 2000. At the Meeting, the following nominees were re-elected as
directors for the Company to serve until the Annual Meeting of Stockholders of
the Company in 2003 and until their successors shall have been elected and
qualified and received the votes set forth after their names below:
Name of Nominee For Withheld
- --------------- --- --------
Dennis C. Carey 12,386,749 323,399
F. William Schmidt 12,386,749 323,399
The terms of office of the following directors continued after the Meeting:
Ronald A. Ahrens, Richard W. Miller, Rolf D. Schmidt, Randy H. Thurman and
Robert V. Toni.
Also at the Meeting, the stockholders of the Company approved and adopted an
amendment to the Company's Amended and Restated 1996 Equity Compensation Plan
(the "Plan") to increase the number of shares authorized for issuance under the
Plan and to provide for flexibility in the granting of options to non-employee
directors. The results of the voting on such matters were as follows:
For Against Abstentions or Broker Non-Votes
--- ------- -------------------------------
9,585,735 783,452 28,736
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
13
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.
CLOSURE MEDICAL CORPORATION
Date: August 14, 2000 By: \s\ Robert V. Toni
------------------------------------------
Robert V. Toni
President and Chief Executive Officer
Date: August 14, 2000 By: \s\ Benny Ward
------------------------------------------
Benny Ward
Vice President and Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
27 Financial Data Schedule.