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 JUNE 30, 2005 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 \/ 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 AT
TITLE OF EACH CLASS AUGUST 2, 2005
- ----------------------------------------- ----------------------------------
COMMON STOCK, PAR VALUE $0.10 PER SHARE 1,825,407
ATRION CORPORATION AND SUBSIDIARIES
-----------------------------------
TABLE OF CONTENTS
-----------------
PART I. FINANCIAL INFORMATION 2
ITEM 1. Financial Statements
Consolidated Statements of Income (Unaudited)
For the Three and Six Months Ended
June 30, 2005 and 2004 3
Consolidated Balance Sheets
June 30, 2005 (Unaudited) and December 31, 2004 4
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended
June 30, 2005 and 2004 5
Notes to Consolidated Financial Statements (Unaudited) 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION 13
ITEM 4. Submission of Matters to a Vote of Security Holders 13
ITEM 6. Exhibits and Reports on
Form 8-K 13
SIGNATURES 14
1
PART I
FINANCIAL INFORMATION
2
ITEM 1. FINANCIAL STATEMENTS
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2005 2004 2005 2004
(in thousands, except per share amounts)
Revenues $ 18,102 $ 16,417 $ 36,747 $ 33,206
Cost of goods sold 10,896 10,351 21,920 21,185
-------- -------- -------- --------
Gross profit 7,206 6,066 14,827 12,021
-------- -------- -------- --------
Operating expenses:
Selling 1,448 1,404 2,853 2,833
General and administrative 2,002 2,019 4,220 4,100
Research and development 625 579 1,205 1,123
-------- -------- -------- --------
4,075 4,002 8,278 8,056
-------- -------- -------- --------
Operating income 3,131 2,064 6,549 3,965
-------- -------- -------- --------
Other income:
Interest income 9 11 25 22
Interest expense (21) (16) (42) (43)
Other income (expense), net -- 39 8 45
-------- -------- -------- --------
(12) 34 (9) 24
-------- -------- -------- --------
Income from continuing operations before provision for
income taxes 3,119 2,098 6,540 3,989
Provision for income taxes (1,012) (655) (2,138) (1,259)
-------- -------- -------- --------
Income from continuing operations 2,107 1,443 4,402 2,730
Gain on disposal of discontinued operations, net of income
taxes 165 165 165 165
-------- -------- -------- --------
Net income $ 2,272 $ 1,608 $ 4,567 $ 2,895
======== ======== ======== ========
Income per basic share:
Income from continuing operations $ 1.18 $ 0.84 $ 2.51 $ 1.60
Gain on disposal of discontinued operations 0.09 0.10 0.09 0.10
-------- -------- -------- --------
$ 1.27 $ 0.94 $ 2.60 $ 1.70
======== ======== ======== ========
Weighted average basic shares outstanding 1,789 1,710 1,756 1,706
======== ======== ======== ========
Income per diluted share:
Income from continuing operations $ 1.09 $ 0.78 $ 2.32 $ 1.48
Gain on disposal of discontinued operations 0.09 0.09 0.09 0.09
-------- -------- -------- --------
$ 1.18 $ 0.8 $ 2.41 $ 1.57
======== ======== ======== ========
Weighted average diluted shares outstanding 1,925 1,848 1,895 1,846
======== ======== ======== ========
The accompanying notes are an integral part of these statements.
3
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30,
2005 DECEMBER 31,
ASSETS (UNAUDITED) 2004
- ------ ---------- -----------
Current assets:
Cash and cash equivalents $ 365 $ 255
Accounts receivable 8,122 7,588
Inventories 17,455 14,013
Deposit on land purchase 3,750
Prepaid expenses 1,344 1,028
Other 1,039 1,039
-------- --------
28,325 27,673
-------- --------
Property, plant and equipment 57,802 50,402
Less accumulated depreciation and amortization 26,995 25,071
-------- --------
30,807 25,331
-------- --------
Other assets and deferred charges:
Patents 1,594 1,714
Goodwill 9,730 9,730
Other 3,722 2,960
-------- --------
15,046 14,404
-------- --------
$ 74,178 $ 67,408
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 7,149 $ 7,146
Accrued income and other taxes 406 1,321
-------- --------
7,555 8,467
-------- --------
Line of credit 3,293 2,936
Other non-current liabilities 5,667 5,402
Stockholders' equity:
Common shares, par value $0.10 per share; authorized
10,000 shares, issued 3,420 shares 342 342
Paid-in capital 12,181 10,013
Retained earnings 78,550 74,479
Treasury shares,1,600 at June 30, 2005 and 1,712
at December 31, 2004, at cost (33,410) (34,231)
-------- --------
Total stockholders' equity 57,663 50,603
-------- --------
$ 74,178 $ 67,408
======== ========
The accompanying notes are an integral part of these statements.
4
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
---------------------
2005 2004
------- --------
Cash flows from operating activities:
Net income $ 4,567 $ 2,895
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on disposal of discontinued operations (165) (165)
Depreciation and amortization 2,149 2,509
Deferred income taxes 273 (134)
Tax benefit related to stock plans 1,051 36
Other 11 1
------- -------
7,886 5,142
Change in operating assets and liabilities:
Accounts receivable (534) (1,481)
Inventories (3,442) (1,469)
Prepaid expenses (316) 661
Other non-current assets (762) 314
Accounts payable and current liabilities 3 969
Accrued income and other taxes (914) 789
Other non-current liabilities (9) 37
------- -------
Net cash provided by continuing operations 1,912 4,962
Net cash provided by discontinued operations 165 165
------- -------
2,077 5,127
------- -------
Cash flows from investing activities:
Property, plant and equipment additions (7,522) (2,058)
Deposit on land purchase 3,750
Property, plant and equipment sales 6 --
------- -------
(3,766) (2,058)
------- -------
Cash flows from financing activities:
Net change in line of credit 357 (2,586)
Issuance of common stock 1,938 321
Dividends (496) (411)
------- -------
1,799 (2,676)
------- -------
Net change in cash and cash equivalents 110 393
Cash and cash equivalents at beginning of period 255 298
------- -------
Cash and cash equivalents at end of period $ 365 $ 691
======= =======
Cash paid for:
Interest $ 43 $ 50
Income taxes $ 1,754 $ 0
The accompanying notes are an integral part of these statements.
5
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 2004 Annual Report on
Form 10-K.
(2) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined by using the first-in, first-out method. The following table
details the major components of inventories (in thousands):
JUNE 30, DECEMBER 31,
2005 2004
- -------------------------------------------------------------------------------
Raw materials $ 6,866 $ 5,665
Finished goods 5,996 4,595
Work in process 4,593 3,753
- -------------------------------------------------------------------------------
Total inventories $ 17,455 $ 14,013
- -------------------------------------------------------------------------------
(3) INCOME PER SHARE
The following is the computation for basic and diluted income per share
from continuing operations:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED
JUNE 30, JUNE 30,
2005 2004 2005 2004
---------- ----------- ----------- ----------
(in thousands, except per share amounts)
Income from continuing operations $ 2,107 $ 1,443 $ 4,402 $ 2,730
========== =========== =========== ==========
Weighted average basic shares outstanding
1,789 1,710 1,756 1,706
Add: Effect of dilutive securities
(options) 136 138 139 140
---------- ----------- ----------- ----------
Weighted average diluted shares
outstanding 1,925 1,848 1,895 1,846
========== =========== =========== ==========
EARNINGS PER SHARE FROM CONTINUING
OPERATIONS:
Basic $ 1.18 $ 0.84 $ 2.51 $ 1.60
========== =========== =========== ==========
Diluted $ 1.09 $ 0.78 $ 2.32 $ 1.48
========== =========== =========== ==========
There were no outstanding options to purchase shares of common stock
that were not included in the diluted income per share calculation
because their effect would be anti-dilutive for the three-month and
six-month periods ended June 30, 2005. There were options to purchase
52,000 shares of common stock that were not included in the diluted
income per share calculation because their effect would be anti-dilutive
for the three-month and six-month periods ended June 30, 2004.
6
ATRION CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(4) STOCK-BASED COMPENSATION
At June 30, 2005, the Company had two stock-based employee compensation
plans. The Company accounts for those plans under the recognition and
measurement provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related
interpretations. No stock-based employee compensation cost is reflected
in net income, as all options granted under those plans had an exercise
price equal to the market value of the underlying common stock on the
date of grant. The following table illustrates the effect on net income
and income per share if the Company had applied the fair value
recognition provisions of FASB SFAS No. 123, "Accounting for
Stock-Based Compensation," to stock-based employee compensation:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -----------------------------
2005 2004 2005 2004
------------ ------------ ---------- -----------
(in thousands, except per share amounts)
Net income, as reported $ 2,272 $ 1,608 $ 4,567 $ 2,895
Deduct: Total stock-based employee
compensation expense determined under
fair value-based methods for all awards,
net of tax effects 10 343 111 486
------------ ----------- ----------- -----------
Pro forma net income $ 2,262 $ 1,265 $ 4,456 $ 2,409
============ =========== =========== ===========
Income per share:
Basic - as reported $ 1.27 $ 0.94 $ 2.60 $ 1.70
============ =========== =========== ===========
Basic - pro forma $ 1.26 $ 0.74 $ 2.54 $ 1.41
============ =========== =========== ===========
Diluted - as reported $ 1.18 $ 0.87 $ 2.41 $ 1.57
============ =========== =========== ===========
Diluted - pro forma $ 1.18 $ 0.68 $ 2.35 $ 1.30
============ =========== =========== ===========
(5) PENSION BENEFITS
The components of net periodic pension cost are as follows for the
three and six months ended June 30, 2005 and June 30, 2004 (in
thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ----------------------------
2005 2004 2005 2004
---------- ----------- ---------- ----------
Service cost $ 67 $ 60 $ 134 $ 120
Interest cost 80 78 160 156
Expected return on assets (114) (106) (228) (212)
Prior service cost amortization (9) (9) (18) (18)
Actuarial loss 27 26 54 52
Transition amount amortization (11) (11) (22) (22)
---------- ----------- ---------- ----------
Net periodic pension cost $ 40 $ 38 $ 80 $ 76
========== =========== ========== ==========
7
ATRION CORPORATION AND SUBSIDIARIES
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company designs, develops, manufactures, sells and distributes
products and components, primarily for the medical and health care
industry. The Company markets components to other equipment
manufacturers for incorporation in their products and sells finished
devices to physicians, hospitals, clinics and other treatment centers.
The Company's medical products primarily range from ophthalmology and
cardiovascular products to fluid delivery devices. The Company's other
medical and non-medical products include obstetrics products,
instrumentation and disposables used in dialysis, contract
manufacturing and valves and inflation devices used in marine and
aviation safety products.
The Company's products are used in a wide variety of applications by
numerous customers. The Company encounters competition in all of its
markets and competes primarily on the basis of product quality, price,
engineering, customer service and delivery time.
For the three months ended June 30, 2005, the Company reported revenues
of $18.1 million, operating income of $3.1 million and net income of
$2.3 million, up 10 percent, 52 percent and 41 percent, respectively,
from the three months ended June 30, 2004. For the six months ended
June 30, 2005, the Company reported revenues of $36.7 million,
operating income of $6.5 million and net income of $4.6 million, up 11
percent, 65 percent and 58 percent, respectively, from the six months
ended June 30, 2004.
RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2005
Consolidated net income, including discontinued operations, totaled
$2.3 million, or $1.27 per basic and $1.18 per diluted share, in the
second quarter of 2005. This is compared with consolidated net income,
including discontinued operations, of $1.6 million, or $0.94 per basic
and $0.87 per diluted share, in the second quarter of 2004. The income
per basic share computations are based on weighted average basic shares
outstanding of 1,789,220 in the 2005 period and 1,709,775 in the 2004
period. The income per diluted share computations are based on weighted
average diluted shares outstanding of 1,925,320 in the 2005 period and
1,847,565 in the 2004 period.
Consolidated revenues of $18.1 million for the second quarter of 2005
were 10 percent higher than revenues of $16.4 million for the second
quarter of 2004. This increase in revenues is primarily attributable to
an approximate 13 percent increase, 12 percent increase, 11 percent
increase and 4 percent increase in the revenues from the Company's
fluid delivery products, cardiovascular products, other products and
ophthalmic products, respectively. These increases are generally
attributable to higher sales volumes.
Cost of goods sold of $10.9 million for the second quarter of 2005 was
5 percent higher than in the comparable 2004 period. An improved mix of
product sales toward products with lower costs coupled with favorable
manufacturing efficiencies brought on by increased volumes and
continued manufacturing cost improvement projects held the increase in
cost of goods sold to 5 percent.
8
Gross profit of $7.2 million in the second quarter of 2005 was $1.1
million, or 19 percent, higher than in the comparable 2004 period. The
Company's gross profit percentage in the second quarter of 2005 was
39.8 percent of revenues compared with 36.9 percent of revenues in the
second quarter of 2004. The increase in gross profit percentage in the
2005 period compared to the 2004 period is primarily related to a
favorable change in the mix of products sold and the previously
mentioned manufacturing efficiencies and cost improvement projects.
The Company's second quarter 2005 operating expenses of $4.1 million
were $73,000 higher than the operating expenses for the second quarter
of 2004, resulting from a $47,000 increase in research and development
(R&D) expenses, a $44,000 increase in selling expenses offset by a
$17,000 decrease in general and administrative (G&A) expenses. The
increase in R&D expenses for the second quarter of 2005 is primarily
related to outside services. The increase in selling expenses for the
second quarter of 2005 is primarily related to increases in travel and
entertainment expenses and increases in outside services. Operating
income in the second quarter of 2005 increased $1.1 million, or 52
percent, to $3.1 million. Operating income was 17.3 percent of revenues
in the second quarter of 2005 compared to 12.6 percent of revenues in
the second quarter of 2004. The improvement in operating income is
primarily attributable to the previously mentioned gross profit
improvement partially offset by the increase in operating expenses.
Interest expense for the second quarter of 2005 was $21,000 compared to
interest expense of $16,000 for the same period in the prior year. The
increase in the 2005 period from the 2004 period is primarily
attributable to the Company's higher average borrowing level in the
current-year period.
Income tax expense for the second quarter of 2005 was $1.0 million
compared to income tax expense of $655,000 for the same period in the
prior year. The effective tax rate for the second quarter of 2005 was
32.4 percent compared with 31.2 percent for the second quarter of 2004.
The Company recorded a gain on the disposal of discontinued operations
relating to the 1997 sale of its natural gas operations of $165,000
after tax, or $0.09 per basic and $0.09 per diluted share, for the
second quarter of 2005 and $165,000 after tax, or $0.10 per basic and
$0.09 per diluted share, for the second quarter of 2004, resulting from
the receipt of contingent deferred payments in each year.
RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2005
Consolidated net income, including discontinued operations, totaled
$4.6 million, or $2.60 per basic and $2.41 per diluted share, in the
first six months of 2005. This is compared with consolidated net
income, including discontinued operations, of $2.9 million, or $1.70
per basic and $1.57 per diluted share, in the first six months of 2004.
The income per basic share computations are based on weighted average
basic shares outstanding of 1,756,392 in the 2005 period and 1,706,464
in the 2004 period. The income per diluted share computations are based
on weighted average diluted shares outstanding of 1,895,008 in the 2005
period and 1,846,309 in the 2004 period.
9
Consolidated revenues of $36.7 million for the first six months of 2005
were 11 percent higher than revenues of $33.2 million for the first six
months of 2004. This increase in revenues is primarily attributable to
an approximate 18 percent increase, 15 percent increase and 11 percent
increase in the revenues from the Company's fluid delivery products,
cardiovascular products and other products, respectively. These
increases are generally attributable to higher sales volumes. These
increases were partially offset by an approximate 3 percent decrease in
the revenues from the Company's ophthalmic products.
Cost of goods sold of $21.9 million for the first six months of 2005
was 3 percent higher than in the comparable 2004 period. An improved
mix of product sales toward products with lower costs coupled with
favorable manufacturing efficiencies brought on by increased volumes
and continued manufacturing cost improvement projects held the increase
in cost of goods sold to 3 percent.
Gross profit of $14.8 million in the first six months of 2005 was $2.8
million, or 23 percent, higher than in the comparable 2004 period. The
Company's gross profit percentage in the first six months of 2005 was
40.3 percent of revenues compared with 36.2 percent of revenues in the
first six months of 2004. This increase in gross profit percentage is
primarily related to the favorable change in the mix of products sold
and the favorable impact of manufacturing efficiencies and cost
improvement projects.
The Company's operating expenses of $8.3 million for the first six
months of 2005 were $222,000 higher than the operating expenses for the
first six months of 2004. This resulted from a $120,000 increase in G&A
expenses, a $20,000 increase in selling expenses and an $82,000
increase in R&D expenses. The increase in G&A expenses for the first
six months of 2005 is primarily attributable to incentive compensation
costs. The increase in R&D expenses for the first six months of 2005 is
primarily related to outside services. Operating income in the first
six months of 2005 increased $2.6 million, or 65 percent, to $6.5
million. Operating income was 17.8 percent of revenues in the first six
months of 2005 compared to 11.9 percent of revenues in the first six
months of 2004. The improvement in operating income is primarily
attributable to the previously mentioned gross profit improvement
partially offset by the increase in operating expenses.
Income tax expense for the first six months of 2005 was $2.1 million
compared to income tax expense of $1.3 million for the same period in
the prior year. The effective tax rate for the first six months of 2005
was 32.7 percent compared with 31.5 percent for the first six months of
2004.
The Company recorded a gain on the disposal of discontinued operations
relating to the 1997 sale of its natural gas operations of $165,000
after tax, or $0.09 per basic and $0.09 per diluted share, for the
first six months of 2005 and $165,000 after tax, or $0.10 per basic and
$0.09 per diluted share, for the first six months of 2004, resulting
from the receipt of contingent deferred payments in each year.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2005, the Company had cash and cash equivalents of $365,000
compared with $255,000 at December 31, 2004. The Company had
outstanding borrowings of $3.3 million under its $25 million revolving
credit facility ("Credit Facility") at June 30, 2005 and $2.9 million
at December 31, 2004. The increase in the outstanding balance under the
Credit Facility in the first six months of 2005 is primarily
attributable to additions of property, plant and equipment offset by
cash provided by continuing operations. The Credit Facility, which
expires November 12, 2006, and may be extended under certain
circumstances, contains various restrictive covenants, none of which is
expected to impact the Company's liquidity or capital resources. At
June 30, 2005, the Company was in compliance with all financial
covenants.
10
As of June 30, 2005, the Company had working capital of $20.8 million,
including $365,000 in cash and cash equivalents. The $1.6 million
increase in working capital during the first six months of 2005 was
primarily related to increases in inventories and decreases in accrued
income and other taxes offset by a decrease in prepaid expenses. The
$3.4 million increase in inventories was primarily attributable to a
program to purchase critical raw materials in larger volumes to take
advantage of quantity discounts and to hedge against future price
increases. In addition, the Company began to increase its inventory of
finished goods to reflect increasing sales and to assure uninterrupted
deliveries to the Company's customers when the Florida facility is
relocated next year to a new plant in St. Petersburg, Florida. The
decrease in accrued income and other taxes is primarily related to
income tax payments made during 2005. The decrease in prepaid expenses
is primarily related to the completion of the purchase of ten acres of
land for which the Company had made a $3.75 million deposit.
In May 2005, the Company purchased for $3.75 million ten acres of land
to be used for the construction of a new facility for its
Halkey-Roberts operation. The Company anticipates spending an
additional $14.0 to $16.0 million for the construction of an expanded
new facility at this site. The Company expects to complete the
construction of this facility around mid-year 2006.
Cash flows from continuing operations generated $1.9 million for the
six months ended June 30, 2005 as compared to $5.0 million for the six
months ended June 30, 2004. The previously mentioned inventories
increase was the primary contributor to the decrease in cash flows from
operations. During the first six months of 2005, the Company expended
$3.8 million for the addition of property and equipment in addition to
the previously mentioned land purchase. The Company received net
proceeds of $1.9 million from the exercise of employee stock options
during the first six months of 2005. During the first six months of
2005 the Company paid dividends totaling $496,000 to its stockholders.
The Company believes that its existing cash and cash equivalents, cash
flows from operations, borrowings available under the Company's credit
facility, supplemented, if necessary, with equity or debt financing,
which the Company believes would be available, will be sufficient to
fund the Company's cash requirements for 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
or future events 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 will be achieved. Such statements include, but are not limited
to, the Company's expectations regarding deliveries to customers, the
cost and time of completion of the Company's new Florida facility, and
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 or future events to differ materially,
including, but not limited to, the following: changing economic, market
and business conditions; acts of war or terrorism; the effects of
governmental regulation; the impact of competition and new
technologies; slower-than-anticipated introduction of new products or
implementation of marketing strategies; implementation of new
manufacturing processes or implementation of new information systems;
the Company's ability to protect its intellectual property; changes in
the prices of raw materials; changes in product mix; intellectual
property and product liability claims and product recalls; the ability
to attract and retain qualified personnel and the loss of any
significant customers. 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.
11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For the quarter ended June 30, 2005, the Company did not experience any
material changes in market risk exposures that affect the quantitative
and qualitative disclosures presented in the Company's 2004 Annual
Report on Form 10K.
ITEM 4. CONTROLS AND PROCEDURES
With the participation of management, the Company's Chief Executive
Officer and its Chief Financial Officer evaluated the effectiveness of
the Company's disclosure controls and procedures as of June 30, 2005.
Based upon this evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material
information relating to the Company (including its consolidated
subsidiaries) required to be disclosed by the Company in the reports
that the Company files with the Securities and Exchange Commission.
There has been no change in the Company's internal controls over
financial reporting during the Company's most recent fiscal quarter
that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
12
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its 2005 Annual Meeting of Stockholders on May
19, 2005 at its offices in Allen, Texas. At such meeting, the
Company's stockholders ratified the appointment of Grant Thornton
LLP as independent accountants with 1,615,321 shares voted for
ratification, 5,391 voted against and 150 abstentions. The voting
with respect to the nominee for election as director was as
follows:
NOMINEE VOTES FOR VOTES WITHHELD
------- --------- --------------
Emile A. Battat 1,556,712 64,150
The terms of the following directors continued after
the meeting: John P. Stupp, Jr., Roger F. Stebbing,
Richard O. Jacobson and Hugh J. Morgan, Jr.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31.1 Sarbanes-Oxley Act Section 302 Certification of Chief Executive Officer
31.2 Sarbanes-Oxley Act Section 302 Certification of Chief Financial Officer
32.1 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To
Section 906 of The Sarbanes - Oxley Act Of 2002
32.2 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To
Section 906 of The Sarbanes - Oxley Act Of 2002
(b) Reports on Form 8-K
On April 29, 2005, the Company filed a report on Form 8-K
with the SEC regarding the public dissemination of a press
release announcing its financial results for the first
quarter ended March 31, 2005 (Item 12).
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.
ATRION CORPORATION
(Registrant)
Date: August 12, 2005 /S/ EMILE A. BATTAT
-----------------------------------
Emile A. Battat
Chairman, President and
Chief Executive Officer
Date: August 12, 2005 /S/ JEFFERY STRICKLAND
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Jeffery Strickland
Vice President and
Chief Financial Officer
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