EXHIBIT 19
LETTER TO OUR STOCKHOLDERS
Puritan-Bennett Corporation reported earnings of $3,724,000 or $.30 per share
on revenues of $80,408,000 and orders of $80,113,000 for the first quarter ended
April 30, 1994.
Orders and revenues were up 13% and 7%, respectively, from last year's first
quarter orders of $71,040,000 and revenues of $75,391,000. The revenue and
earnings growth were achieved essentially without depleting the substantial
backlog growth that resulted from the record orders we received during last
year's fourth quarter.
While still very early, we are cautiously optimistic that the second quarter
will show further improvement. During much of the first quarter, the cash flow
of a number of our U.S. home care provider customers was adversely affected by
slower Medicare claims processing associated with consolidating the number of
third-party payors and the implementation of new electronic claims processing
systems. In response, home care providers were reluctant and, in some cases,
unable to maintain their normal equipment inventory levels, even though we
believe their underlying demand for equipment remained strong. In April steps
were taken to accelerate payments to home care providers during this period of
transition. Concurrently, we experienced a substantial increase over February
and March levels in home care orders from U.S. customers. Even with this
temporary impediment, our worldwide home care business experienced order and
revenue growth of 13% and 10%, respectively, compared to the first quarter of
last year.
As expected, U.S. demand for the 7200/(R)/ Series ventilator has stabilized
generally around last year's levels and international demand has continued
growing. The level of interest in our CliniVision/(R)/ respiratory care
management information system continues to be high.
Our aviation business is experiencing growth in orders and revenues, up 45%
and 12%, respectively, from first quarter levels last year. This increase is due
in large part, although not entirely, to our new ACCTV/(TM)/ operation.
/s/ Burton A. Dole, Jr.
----------------------------
Burton A. Dole Jr.
Chairman, President and
May 16, 1994 Chief Executive Officer
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)
Dollars in thousands, except per share data
THREE MONTHS ENDED
APRIL 30
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1994 1993
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Net Sales $ 80,408 $ 75,391
Cost of Goods Sold 46,617 42,173
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Gross Profit 33,791 33,218
Selling and Administrative Expense 23,918 23,438
Research and Development Expense 4,815 6,549
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Operating Profit 5,058 3,231
Other Expense, net 404 853
----------- -----------
Income Before Income Taxes 4,654 2,378
Provision for Income Taxes 930 529
----------- -----------
Net Income Before Cumulative Effect 3,724 1,849
Cumulative Effect of a Change in Accounting
for Income Taxes - 2,755
----------- -----------
Net Income (Loss) $ 3,724 $ (906)
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Weighted Average Number of Shares Outstanding 12,432,109 11,932,615
Net Income Before Cumulative Effect Per Share $ .30 $ .15
Cumulative Effect of Change in Accounting for
Income Taxes Per Share - (.23)
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Net Income (Loss) Per Share $ .30 $ (.08)
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Dividends Declared Per Share $ .03 $ .03
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CONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED)
Dollars in thousands
April 30 January 31
ASSETS 1994 1994
---------------------
Current Assets:
Cash and cash equivalents $ 646 $ 713
Trade notes and accounts receivable, net 69,572 70,137
Inventories:
Finished goods 15,899 16,163
Work in process 4,738 4,437
Raw materials and supplies 32,633 30,894
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53,270 51,494
Less excess of FIFO cost over LIFO cost (4,181) (4,024)
-------- --------
49,089 47,470
Prepaid expenses and other 3,149 5,567
Deferred income tax benefits 10,760 10,760
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Total current assets 133,216 134,647
Plant and Equipment 165,239 158,961
Less accumulated depreciation and amortization 70,364 70,068
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94,875 88,893
Other Assets, net 32,020 33,054
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Total Assets $260,111 $256,594
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 28,544 $ 27,791
Trade accounts payable 13,382 13,937
Employee compensation, payroll taxes and withholdings 7,279 8,015
Accrued self-insurance expenses 1,168 1,299
Other accrued expenses 16,270 21,140
Dividends payable 374 359
Income taxes payable 5,149 3,678
Current maturities of long-term debt 6,660 6,546
-------- --------
Total current liabilities 78,826 82,765
Long-Term Debt, less current maturities 43,358 38,656
Deferred Compensation and Pensions 16,413 17,444
Deferred Income Taxes 55 55
Deferred Revenue 10,098 9,962
Stockholders' Equity:
Common stock, par value $1.00 per share -
Authorized 30,000,000 shares; issued and
outstanding, 12,468,493 shares in April
and 12,427,653 shares in January 12,468 12,428
Additional paid-in capital 35,960 34,794
Retained earnings 64,610 61,736
Deferred stock awards (1,627) (602)
Treasury stock (50) (644)
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Total Stockholders' Equity 111,361 107,712
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Total Liabilities and Stockholders' Equity $260,111 $256,594
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CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (UNAUDITED)
Dollars in thousands
THREE MONTHS ENDED
APRIL 30
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CASH FLOWS FROM OPERATING ACTIVITIES 1994 1993
==================
Net income (loss) $ 3,724 $ (906)
Adjustments to reconcile net income to net cash and
cash equivalents provided by operating activities:
Depreciation and amortization 3,567 3,529
Cumulative effect of change in accounting principles - 2,755
Restructuring charges (3,307) -
Deferred compensation and pensions (1,031) 486
Provision for losses on accounts receivable 43 49
Asset dispositions, net (462) (34)
Shares issued to employee benefit plans 710 985
Change in operating assets and liabilities:
Trade notes and accounts receivable 522 4,037
Inventories (1,619) (3,576)
Prepaid expenses 1,937 33
Other assets 704 281
Trade accounts payable and accrued expenses (985) (805)
Federal and state income taxes payable/receivable 1,471 1,119
Deferred revenue 136 454
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Net Cash and Cash Equivalents Provided by
Operating Activities 5,410 8,407
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of capital assets 2,073 422
Capital expenditures (5,868) (3,819)
Purchases of intangible assets (32) (69)
Acquisitions, net of cash acquired (2,000) (6,624)
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Net Cash and Cash Equivalents Used in
Investing Activities (5,827) (10,090)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of notes payable 753 2,589
Payments on long-term debt (46) -
Dividends paid to stockholders (372) (357)
Stock options exercised 15 46
Stock repurchased - (189)
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Net Cash and Cash Equivalents Provided by
Financing Activities 350 2,089
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Net Increase (Decrease) in Cash and Cash Equivalents (67) 406
Cash and Cash Equivalents at the Beginning of the Year 713 403
------- --------
Cash and Cash Equivalents at the End of the Period $ 646 $ 809
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INCOMING ORDERS, NET SALES ($ MILLIONS) AND
NET INCOME (LOSS) PER SHARE
FY 1994 FY 1995
------------------------------------- -------
Apr. 30 July 31 Oct. 31 Jan. 31 Apr. 30
------- ------- ------- ------- -------
MEDICAL -- Orders $65.4 $75.6 $69.9 $ 85.0 $71.9
Net Sales 69.4 71.9 69.6 75.0 73.7
AERO -- Orders 5.6 7.0 5.1 10.4 8.2
Net Sales 6.0 6.0 5.7 5.7 6.7
TOTAL -- Orders $71.0 $82.6 $75.0 $ 95.4 $80.1
Net Sales 75.4 77.9 75.3 80.7 80.4
BACKLOG INCREASE (DECREASE) $(4.4) $ 4.7 $(0.3) $ 14.7 $(0.3)
===============================================================================================
NET INCOME (LOSS) BEFORE CUMULATIVE
EFFECT PER SHARE $ .15 $(.41) $ .06 $(2.46) $ .30
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES PER SHARE (.23) - - (.01) -
----- ----- ----- ------ -----
NET INCOME (LOSS) PER SHARE $(.08) $(.41) $ .06 $(2.47) $ .30
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