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 JUNE 30, 2001
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.
---------------------------
(Exact name of Registrant as specified in its charter)
Utah 87-0447695
---- ----------
(State or other jurisdiction of (I.R.S. Identification No.)
incorporation or organization)
1600 West Merit Park Way, South Jordan UT, 84095
------------------------------------------------
(Address of Principal Executive Offices)
(801) 253-1600
--------------
(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 8,202,174
------------ ---------
TITLE OR CLASS Number of Shares Outstanding at
August 13, 2001
MERIT MEDICAL SYSTEMS, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2001
and December 31, 2000......................................................1
Consolidated Statements of Operations for the three and six months
ended June 30, 2001 and 2000...............................................3
Consolidated Statements of Cash Flows for the six months
ended June 30, 2001 and 2000...............................................4
Notes to Consolidated Financial Statements.................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................................7
Item 3. Quantitative and Qualitative Disclosure About Market Risk.................10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ......................10
Item 5. Other Information ........................................................10
Item 6. Exhibits and Reports on Form 8-K..........................................11
SIGNATURES..........................................................................11
PART I - FINANCIAL INFORMATION
ITEM 1: Financial Statements
MERIT MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2001 AND DECEMBER 31, 2000
----------------------------------------------------------------------------------------------------
June 30, December 31,
ASSETS 2001 2000
------ ---------------------------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 358,743 $ 412,384
Trade receivables - net 14,328,653 13,235,858
Employee and related
party receivables 426,249 440,654
Irish Development Agency grant receivable 177,477
Inventories 22,304,636 25,273,428
Prepaid expenses and other assets 689,822 663,101
Deferred income tax assets 1,183,944 1,183,944
Income tax refund receivable 236,643 588,640
--------------- ---------------
Total current assets 39,528,690 41,975,486
------------- -------------
PROPERTY AND EQUIPMENT:
Land 1,258,013 1,260,985
Building 1,500,000 1,500,000
Manufacturing equipment 21,247,530 19,696,550
Automobiles 91,332 131,036
Furniture and fixtures 9,660,975 9,576,084
Leasehold improvements 5,541,410 5,420,194
Construction-in-progress 2,144,254 2,120,671
-------------- --------------
Total 41,443,514 39,705,520
Less accumulated depreciation
and amortization (19,804,456) (17,860,490)
------------- -------------
Property and equipment - net 21,639,058 21,845,030
------------- --------------
OTHER ASSETS:
Intangible assets - net 2,571,559 2,522,384
Deposits 38,988 41,273
Cost in excess of the fair value of assets acquired-net 4,913,527 5,062,458
------------- --------------
Total other assets 7,524,074 7,626,115
------------- --------------
TOTAL ASSETS $ 68,691,822 $ 71,446,631
============= ============
Continued on Page 2
See Notes to Consolidated Financial Statements
1
MERIT MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS (Continued)
JUNE 30, 2001 AND DECEMBER 31, 2000
---------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' June 30, December 31,
EQUITY 2001 2000
------ --------------- ------------
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt $ 789,151 $ 1,091,725
Trade payables 4,798,606 4,835,517
Accrued expenses 4,878,572 3,471,039
Advances from employees 110,521 96,778
Income taxes payable 1,074,703 33,420
------------- ------------
Total current liabilities 11,651,553 9,528,479
DEFERRED INCOME TAX LIABILITIES 2,262,657 2,177,833
LONG-TERM DEBT 14,755,086 24,011,778
DEFERRED CREDITS 882,865 955,839
------------- ------------
Total Liabilities 29,552,161 36,673,929
------------- ------------
STOCKHOLDERS' EQUITY:
Preferred stock- 5,000,000 shares authorized as of
June 30, 2001 and December 31, 2000, no shares
issued
Common stock- no par value; 20,000,000
shares authorized; 8,047,265 and
7,788,208 shares issued at June 30, 2001
and December 31, 2000,
respectively 21,158,016 19,779,765
Retained earnings 18,662,293 15,617,075
Accumulated other comprehensive loss (680,648) (624,138)
------------- -------------
Total stockholders' equity 39,139,661 34,772,702
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS $ 68,691,822 $ 71,446,631
------------- -============
See Notes to Consolidated Financial Statements
2
MERIT MEDICAL SYSTEM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 and 2000 (Unaudited)
- -----------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
------------ ------------ ------------ ------------
NET SALES $ 26,264,015 $ 23,552,859 $ 53,052,388 $ 45,633,294
COST OF SALES 16,837,858 15,936,620 34,406,857 30,383,055
------------ ------------ ------------ ------------
GROSS PROFIT 9,426,157 7,616,239 18,645,531 15,250,289
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Selling, general and administrative 6,158,130 5,688,793 12,164,203 12,027,332
Research and development 1,090,791 1,002,448 2,220,863 2,008,384
Severance costs -- 277,300 -- 277,300
------------ ------------ ------------ ------------
TOTAL OPERATING EXPENSES 7,248,921 6,968,541 14,385,066 14,313,016
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 2,177,236 647,698 4,260,465 937,273
OTHER ( INCOME) EXPENSE - NET (467,492) 583,517 (31,425) 1,100,921
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 2,644,728 64,181 4,291,890 (163,648)
INCOME TAX EXPENSE (BENEFIT) 785,935 19,254 1,246,672 (49,093)
NET INCOME (LOSS) $ 1,858,793 $ 44,927 $ 3,045,218 $ (114,555)
============ ============ ============ ============
EARNINGS (LOSS) PER COMMON SHARE -
Basic $ 0.24 $ 0.01 $ 0.39 $ (0.01)
============ ============ ============ ============
Diluted $ 0.23 $ 0.01 $ 0.38 $ (0.01)
============ ============ ============ ============
AVERAGE COMMON SHARES -
Basic 7,895,260 7,747,976 7,845,595 7,685,444
============ ============ ============ ============
Diluted 8,243,247 7,785,161 8,069,004 7,839,400
============ ============ ============ ============
See Notes to Consolidated Financial Statements
3
MERIT MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (Unaudited)
- -------------------------------------------------------------------------------------------------
June 30, June 30,
2001 2000
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 3,045,218 $ (114,555)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) in operating activities:
Depreciation and amortization 2,248,160 2,171,968
Bad debt expense 124,558 449,793
(Gains) on sales and abandonment of
property, equipment and land (786,279) (2,845)
Amortization of deferred credits (68,912) (65,800)
Deferred income taxes 84,824 36,817
Changes in operating assets and liabilities:
Trade receivables (1,217,353) (1,652,767)
Employee and related party receivables 14,405 (22,770)
Other receivables
Irish Development Agency grant receivable 173,415 (17,610)
Inventories 2,968,792 (193,327)
Prepaid expenses and other assets (26,721) (569,431)
Deposits 2,285 1,199
Trade payables (36,911) (299,402)
Accrued expenses 1,407,533 511,528
Advances from employees 13,743 (14,112)
Income taxes payable 1,393,280 (268,416)
----------- -----------
Total adjustments 6,294,819 64,825
----------- -----------
Net cash provided by (used in) operating activities 9,340,037 (49,730)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for:
Property and equipment (1,693,544) (2,585,817)
Intangible assets (129,743) (273,041)
Purchase of Electro Catheter assets
(Including cost in excess of fair market value of $482,628) -- (641,661)
Other -- (22,688)
Proceeds from sale of property, equipment and land 938,303 2,279
----------- -----------
Net cash used in investing activities (884,984) (3,520,928)
----------- -----------
See Notes to Consolidated Financial Statements
4
MERIT MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (Unaudited)
- ----------------------------------------------------------------------------------------------
June 30, June 30,
2001 2000
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock $ 1,378,251 $ 1,084,337
Proceeds from long-term debt -- 3,255,263
Principal payments on long-term debt (9,830,435) (670,096)
----------- -----------
Net cash provided by (used in) financing activities (8,452,184) 3,669,504
----------- -----------
EFFECT OF EXCHANGE RATES ON CASH (56,510) (52,916)
----------- -----------
NET (DECREASE) INCREASE IN CASH (53,641) 45,930
CASH AT BEGINNING OF PERIOD 412,384 668,711
----------- -----------
CASH AT END OF PERIOD $ 358,743 $ 714,641
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for interest (including
capitalized interest of $44,738 and $61,731 respectively) $ 804,396 $1 ,050,752
=========== ===========
Income taxes $ 120,565 $ 182,506
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
During the six months ended June 30, 2001 and 2000, the Company issued notes
payable totaling $271,169 and $509,963 respectively, for manufacturing equipment
and furniture and fixtures.
See Notes to Consolidated Financial Statements
5
MERIT MEDICAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 financial
position of the Company as of June 30, 2001 and December 31, 2000, and the
results of its operations and cash flows for the three and six months ended June
30, 2001 and 2000. The results of operations for the three and six months ended
June 30, 2001 and 2000 are not necessarily indicative of the results for a
full-year period.
2. Inventories. Inventories at June 30, 2001 and December 31, 2000 consisted of
the following:
June 30, December 31,
2001 2000
------------ ------------
Raw materials $ 8,789,695 $ 8,325,314
Work-in-process 4,080,770 3,678,807
Finished goods 12,132,728 15,255,622
Less reserve for obsolete inventory (2,698,557) (1,986,315)
------------ ------------
Total $ 22,304,636 $ 25,273,428
------------ ------------
3. Income Taxes. The Company has not fully allocated income tax expense between
current and deferred for the quarters and six months ended June 30, 2001 and
2000. The effective tax rates for the three and six months ended June 30, 2001
and 2000 were below the 35 % federal statutory rate. Improvements in the
effective tax rate below the 35 % federal statutory rate were largely the result
of the Company's operations in Ireland which are currently taxed at a lower rate
than the Company's overall effective tax rate, and increased research tax
credits.
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 display 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) display 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.
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 June 30, 2001 and December 31, 2000, the
cumulative effect of such transactions reduced stockholders' equity by $680,648
and $624,138, respectively. Comprehensive income (loss) for the three and six
months ended June 30, 2001 and 2000 has been computed as follows:
Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Net income (loss) $ 1,858,793 $ 44,927 $ 3,045,218 $ (114,555)
Foreign currency translation (13,619) (16,738) (56,510) (52,916)
----------- ----------- ----------- -----------
Comprehensive income (loss) $ 1,845,174 $ 28,189 $ 2,988,708 $ (167,471)
=========== =========== =========== ===========
6
MERIT MEDICAL SYSTEMS, INC
5. Recently Issued Financial Accounting Standards. Statement of Financial
Accounting Standards No.133, Accounting for Derivative Instruments and Hedging
Activities, as amended, requires that all derivative instruments be recognized
as either assets or liabilities at fair market value. The Company adopted this
statement beginning January 1, 2001. The effect on the Company's financial
statements of adopting this statement was not significant.
On June 29, 2001, Statement of Financial Accounting Standards (SFAS) No. l41,
"Business Combinations" was approved by the Financial Accounting Standards Board
(FASB). SFAS No. 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001. Goodwill and certain
intangible assets will remain on the balance sheet and not be amortized. On an
annual basis, and when there is reason to suspect that their values have been
diminished or impaired, these assets must be tested for impairment, and
write-downs may be necessary. The Company is required to implement SFAS No. 141
on July 1, 2001 and it has not determined the impact, if any, that this
statement will have on its consolidated financial position or results of
operations.
On June 29, 2001, SFAS No. 142, "Goodwill and Other Intangible Assets" was
approved by the FASB. SFAS No.142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Amortization of goodwill,
including goodwill recorded in past business combinations, will cease upon
adoption of this statement. The Company is required to implement SFAS No. 142 on
January 1, 2002 and it has not determined the impact, if any, that this
statement will have on its consolidated financial position or results of
operations.
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Overview
Merit Medical Systems, Inc. is happy to report its best quarter and six months
in history, with record revenues and earnings. Company sales increased over 16%
for the second quarter 2001 compared to the second quarter of 2000, across most
product lines, particularly kits and stand-alone products. The Company is
pleased to report a continued positive momentum in manufacturing efficiencies
and the resulting drop in costs per unit, particularly in our Salt Lake
operations. This increase in both sales volume and manufacturing efficiencies
has resulted in very favorable labor and overhead utilization as compared to
first few months of 2000. Management believes that this trend toward lower costs
per unit and higher gross margins will continue into the third and probably
fourth quarters as the Company sells inventories produced in the last four or
five months.
The Company also continues to leverage its operating expenses and is
experiencing greater efficiencies in the sales, general and administrative areas
of the Company. Merit is pleased to announce a significant reduction, of over $6
million since January, 2000 of its inventory, along with the associated benefits
of lower inventory carrying costs. The Company's cash flow from operations
continues to strengthen to record levels (over $9.3 million in cash flow from
operations for the first six months of 2001), resulting in a decline of the
Company's line of credit balance from $30.4 million at August 24, 2000 to $10.4
million as of August 8, 2001. Therefore, the Company has paid back the bank $20
million in less than twelve months. This lower debt, combined with falling
interest rates, have resulted in a significant decrease in interest expense.
Management is pleased to report that the fundamental financial performance of
the Company has dramatically improved over the last year in almost every area.
Sales are up, productivity has increased, gross margins are improving, operating
expenses are dropping as a percentage of sales and interest costs are down,
resulting in much improved cash flow, net income, earnings per share.
7
MERIT MEDICAL SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
- --------------------------------------------------------------------------------
Operations. The Company enjoyed it's best quarter, and six months in history,
experiencing record revenues and earnings. The following table sets forth
certain operational data as a percentage of sales for the three and six months
ended June 30, 2001 and 2000:
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
-------- -------- ---- ----
Sales 100.0 % 100.0% 100.0% 100.0%
Gross Profit 35.9 32.3 35.1 33.4
Selling, general and administrative 23.4 24.2 22.9 26.4
Research and development 4.2 4.3 4.2 4.4
Income from Operations 8.3 2.7 8.0 2.1
Other Expense (1.8) 2.5 (.1) 2.4
Net Income (Loss) 7.1 .2 5.7 (.3)
Sales. Sales for the three months ended June 30, 2001 were a record $26.3
million, compared to $23.6 million for the same period last year, which was the
strongest quarter of 2000, representing an increase of 12 %. Merit's increased
sales were fueled by growth in stand-alone products which grew by 19%, custom
kits up 19% and inflation devices which grew at 13 %. For the six-month period
ended June 30, 2001 total sales were a record $53.1 million compared with $45.6
million for the same period in 2000, an increase of 16 %. Growth in sales for
the six-month period were attributable to growth in Custom kits by 25% as well
as stand-alone products which grew by 21 %, and inflation devices which grew at
14 %. Catheter sales declined in the quarter and six months ended June 30, 2001
compared to the same periods of 2000 by 21% and 7% respectively. This
comparative decline was mainly due to a sizable increase in catheter sales in
the 2nd quarter of last year because of a catheter recall by the company's
largest competitor.
Gross Margin. Gross margin as a percentage of sales for the three months ended
June 30, 2001 was 35.9% compared to 32.3% for the same period in 2000. For the
six months ended June 30, 2001, gross margin was 35.1%, as compared to 33.4% for
the same period in 2000. The increase in gross margin for the three and six
months ended June 30, 2001 was primarily the result of lower costs per unit for
both labor and overhead than a year ago. The Company is benefiting from an
almost 20% reduction in head count and inventory, while growing the top line by
over 17% in 2000 and over 16% so far in 2001. This positive momentum for gross
margins will continue into the 3rd quarter as Merit sells this lower cost
product manufactured in March through June of 2001.
Operating Expenses. Operating expenses decreased as a percentage of sales to
27.6% of sales for the three months ended June 30, 2001, compared to 29.6% for
the three months ended June 30, 2000. For the first six months of 2001 operating
expenses decreased to 27.1% as compared to 31.4% for the same period in 2000.
Selling, general and administrative expenses decreased as a percentage of sales
to 23.4% and 24.2% for the three and six months ended June 30, 2001,
respectively, compared to 22.9% and 26.4%,respectively, for the comparable
periods in 2000. The decrease as a percentage of sales in operating expenses for
the three and six months ended June 30, 2001, were due mainly to becoming more
efficient by holding the line on expenses, combined with a significant increase
in sales. Research and development costs increased slightly but declined to 4.2%
of sales for the three months ended June 30, 2001, compared to 4.3% for the same
period in 2000. For the six months ended June 30, 2001, research and development
expenditures decreased to 4.2% of sales, down from 4.4% of sales for the six
months ended June 30, 2000.
8
MERIT MEDICAL SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
- --------------------------------------------------------------------------------
Operating Income. During the three months ended June 30, 2001, the Company
reported income from operations of $2.2 million compared to $.6 million for the
comparable period in 2000. Operating income for the first six months of 2001 was
$4.3 million, compared to $.9 million in 2000. Net income for the three months
ended June 30, 2001 increased to a record $1.9 million, from $44,927, for the
same three-month period of 2000, and net income for the 6 months ended June 30,
2001, grew to a record $3.0 million, compared to a net loss of $114,555 for the
first half of 2000.
Liquidity and Capital Resources. At June 30, 2001, the Company's working capital
was $27.9 million, which represented a current ratio of 3.4 to 1. At June 30,
2001, the outstanding balance under the line of credit was $13.9 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. The
Company's principal sources of funding for these and other expenses has been the
cash generated from operations, secured loans on equipment and bank lines of
credit and the sale of equity. The Company believes that its present sources of
liquidity and capital are adequate for its current operations.
Forward-Looking Statements. This Report includes "Forward-Looking Statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange of 1934, as amended. All statements other
than statements of historical fact are "Forward-Looking Statements" for purpose
of these provisions, including any projections of earnings, revenues or other
financial items, any statements of the plans and objectives of management for
future operations, any statements concerning proposed new products or services,
any statements regarding future economic conditions or performance, and any
statements of assumptions underlying any of the foregoing. All Forward-Looking
Statements included in this document 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. In some cases,
Forward-Looking Statements can be identified by the use of terminology such as
"may," "will," "expects," "plans," "anticipates," "intends," "believes,"
"estimates," "potential," or "continue," or the negative thereof or other
comparable terminology. Although the Company believes that the expectations
reflected in the Forward-Looking Statements contained herein are reasonable,
there can be no assurance that such expectations or any of the Forward- Looking
Statements will prove to be correct, and actual results could differ materially
from those projected or assumed in the Forward-Looking Statements. Future
financial condition and results of operations, as well as any Forward-Looking
Statements are subject to inherent risks and uncertainties, including market
acceptance of the Company's products, timing and acceptance of product
introductions, potential product recalls, delays in obtaining regulatory
approvals, cost increases, fluctuations in and obsolescence of inventory, price
and product competition, availability of labor and materials, development of new
products and techniques that render the Company's products obsolete, foreign
currency fluctuation, changes in health care markets related to health care
reform initiatives and other factors referred to in the Company's press releases
and reports filed with the Securities and Exchange Commission. All subsequent
Forward- Looking Statements attributable to the Company or person acting on its
behalf are expressly qualified in their entirety by these cautionary statements.
9
MERIT MEDICAL SYSTEMS, INC
- --------------------------
ITEM 3:
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company principally hedges the following EURO currencies: Belgian Francs,
French Francs, German Marks, Dutch Gilders, and Irish Pounds. The Company enters
into forward foreign exchange contracts to protect the Company from the risk
that the eventual net dollar cash flows resulting from transactions with foreign
customers and suppliers may be adversely affected by changes in currency
exchange rates. Such contracts are not significant to financial results of the
Company.
PART II - OTHER INFORMATION
Item: 4 Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders (the "Annual
Meeting") on May 23, 2001 in South Jordan, Utah. The following items of business
were considered at the Annual Meeting:
A: Election of Directors
Two persons were elected as members of the Board of Directors to
serve three-year terms. They are as follows:
Shares Withhold
Voted For
--------- -------------
James J. Ellis 6,448,788 126,422
Michael E. Stillabower, M.D. 6,448,140 127,070
B. To Approve the Adoption of the Medical Services Non-Qualified
Employee Stock Purchase Plan
A proposal to adopt the Merit Medical Service Non-qualified
Employee Stock Purchase Plan was approved by the shareholders of the Company.
The number of shares voted for the plan was 6,329,157. The number of shares
voted against the plan was 216,098. The number of shares abstaining from voting
on was 29,955.
C. Selection of Auditors.
A proposal to ratify the appointment of Deloitte & Touche LLP as
the independent auditor of the Company for fiscal 2001 was presented at the
Annual Meeting and such proposal was approved by the shareholders of the
Company. The number of shares voted for the proposal was 6,462,942. The number
of shares voted against such proposal was 4,035 The number of shares abstaining
from voting was 108,233.
10
MERIT MEDICAL SYSTEMS, INC.
- ---------------------------
PART II - OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K - none
(b) Exhibits - None
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: AUGUST 13, 2001 By: /s/ Fred P.Lampropoulos
--------------- ---------------------------
FRED P. LAMPROPOULOS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Date: AUGUST 13, 2001 By: /s/ Kent W. Stanger
--------------- -----------------------
KENT W. STANGER
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
11
