SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): October 22, 2003
Commission File Number: 1-18592
Merit Medical Systems, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Utah 87-0447695
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1600 W. Merit Parkway
South Jordan, Utah 84095-2415
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(801) 253-1600
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N/A
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(Former name, former address, and formal fiscal year,
if changed since last report)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(c) Exhibits
99.1 Press release issued October 22, 2003
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ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
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On October 22, 2003, Merit Medical Systems, Inc. ("Merit") issued a press
release announcing its financial results for the third quarter of 2003. The full
text of Merit's press release, and the related income statement and balance
sheet, are attached hereto as Exhibit 99.1.
Also, on the routine quarterly earnings conference call held at 3:00 p.m. MDT on
October 22, 2003, Fred P. Lampropoulos, Chairman and CEO, Merit Medical,
expressed his belief that the Company's gross margins for the fourth quarter of
2003 will be more in line with those of the Company's analysts. In addition,
Kent W. Stanger, the Company's Chief Financial Officer, also expressed his
belief that the Company's gross margins for fourth quarter 2003 will be
somewhere in the range of 44%, but we could see as high as 46%.
Notwithstanding these comments, the Company does not intend to adopt the
practice of commenting on the expectations of analysts.
The information being furnished under this item 12 shall not be deemed "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or incorporated by reference in any filing under the
Securities Act of 1933, as amended, or the Exchange Act, except as shall be
expressly set forth by specific reference in such a filing.
Forward Looking Statements
Statements in this Current Report on Form 8-K, including exhibits, that are not
purely historical facts, including statements regarding Merit's beliefs,
expectations, intentions or strategies for the future, may be "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995. All
forward-looking statements involve a number of risks and uncertainties that
could cause actual results to differ materially from the plans, intentions and
expectations reflected in or suggested by the forward-looking statements. Such
risks and uncertainties include, among others, market acceptance of Merit's
products, 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 could render Merit's products
obsolete, product liability claims, infringing technology, inability to protect
Merit's proprietary technology, foreign currency fluctuations and changes in
health care markets related to health care reform initiatives. Additional
information with respect to the factors and events that could cause differences
between forward-looking statements and future rsults is contained in Merit's
filings with the Securities and Exchange Commission, including Merit's Annual
Report on Form 10-K for the year ended December 31, 2002. Merit undertakes no
obligation to update any forward-looking statement to reflect events or
circumstances that may arise after the date of this filing.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 23, 2003 MERIT MEDICAL SYSTEMS, INC.
By /s/ Kent W. Stanger
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Kent W. Stanger
(Chief Financial Officer
Principal Financial and Accounting Officer)
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Exhibit 99.1
MERIT MEDICAL REPORTS RECORD EARNINGS FOR THE THIRD QUARTER
ENDED SEPTEMBER 30, 2003
SOUTH JORDAN, UTAH--Merit Medical Systems, Inc. (NASDAQ:NMS: MMSI) a
leading manufacturer and marketer of proprietary disposable products used
primarily in cardiology and radiology procedures, reported revenues for the
third quarter ended September 30, 2003 of $34.5 million, compared with $29.3
million for the same period in 2002, a gain of 18 percent. Net income for the
third quarter of 2003 was a record $4.7 million, or $0.23 per share, compared
with $3.1 million, or $0.16 per share, in last year's third quarter, a gain of
49 percent.
Revenues for the nine-month period ended September 30, 2003 were a
record $100.8 million, compared with $86.8 million for the comparable nine-month
period in 2002, a gain of 16 percent. Net income for the nine-month period of
2003 was a record $12.6 million, or $0.63 per share, compared with $8.2 million,
or $0.42 per share in the same period of 2002, a gain of 55 percent.
Gains in revenues for the third quarter of 2003 compared with the third
quarter of 2002 resulted from across-the-board growth in sales of Merit's
medical devices, as follows: custom kit sales grew 21 percent; stand-alone
device sales rose 21 percent; inflation device sales increased 15 percent; and
catheter sales rose 8 percent.
For the nine-month period ended September 30, 2003 compared with the
same period in 2002, stand-alone device sales grew 20 percent; inflation device
sales grew 16 percent; custom kit sales rose 16 percent; and catheter sales
increased 6 percent.
Fred P. Lampropoulos, Chairman and CEO of Merit, said, "We continued to
experience robust product sales in the third quarter. I am particularly pleased
with the results, as the third quarter historically has been a seasonally slower
one for Merit in terms of sales.
"As with the second quarter, sales of Merit's products are continuing
to benefit from group purchasing contracts and OEM product sales. In addition,
strong individual product sales such as our inflation devices, fluid management
manifolds, guide wires and needles made contributions to top-line growth during
the third quarter.
"Our gross profit was 46.3 percent of sales for the third quarter
compared with 42.8 percent in the third quarter of 2002. Two percentage points
of the margin gain was due to higher positive labor and overhead variances
primarily associated with higher production and sales and, to a lesser degree,
to expanding inventory levels to alleviate a depletion caused by the second
quarter surge in sales, " Mr. Lampropoulos continued.
Selling, general and administrative expenses for the third quarter of
2003 were 22.5 percent of sales, compared with 23.7 percent of sales in the
previous year's third quarter. Research and development expenses during the
third quarter of 2003 were 3.3 percent of sales, consistent with the third
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quarter of 2002. Income from operations was a record 20.5 percent of sales for
the third quarter of 2003, versus 15.8 percent for the same quarter last year.
For the nine-month period ended September 30, 2003, selling, general
and administrative expenses were 22.4 percent of sales, compared with 23.8
percent for the first nine months in 2002. Research and development expenses
were 3.4 percent of sales for the first nine months of 2003, versus 3.3 percent
for the same period of 2002.
Merit's effective tax rate for both the third quarter and nine-month
periods of 2003 were 35.5 percent and 35.8 percent, respectively, compared with
32.6 percent and 32.8 percent for the comparable periods of 2002. The tax-rate
increase was a direct result of increased sales and income, placing Merit in a
higher tax bracket, which also diluted the positive effect from relatively fixed
tax benefits.
Merit's cash position rose to $26.3 million as of September 30, 2003,
compared with $9.7 million as of December 31, 2002. Inventories rose to $20
million as of September 30, 2003, compared with $18.7 million at the end of
2002. The Company noted that inventory turns are still rising, to 3.6 times for
the nine months ended September 30, 2003, compared with 3.4 times as of December
31, 2002.
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INCOME STATEMENT
3 Mos. Ended 9/30 9 Mos. Ended 9/30
2003 2002 2003 2002
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($ In Thousands Except Per Share Data)
Sales $ 34,506 $ 29,341 $ 100,825 $ 86,802
Cost of Sales 18,529 16,784 56,396 51,061
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Gross Profit 15,977 12,557 44,429 35,741
OPERATING EXPENSES:
Selling, General and Administrative 7,766 6,966 22,607
20,655
Research and Development 1,127 967 3,422 2,875
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TOTAL OPERATING EXPENSES 8,893 7,933 26,029 23,530
OPERATING INCOME 7,084 4,624 18,400 12,211
Other (Income) Expense - Net (125) (10) (269)
76
Litigation Settlement Income 0 0 (475) 0
Gain on Sale of Land 0 0 (508) 0
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TOTAL OTHER (INCOME)
EXPENSE - NET (125) (10) (1,252) 76
PRETAX INCOME 7,209 4,634 19,652 12,135
INCOME TAX EXPENSE 2,557 1,509 7,043 3,981
NET INCOME 4,652 3,125 12,609 8,154
EARNINGS PER SHARE:
Basic $ 0.24 $ 0.17 $ 0.67 $ 0.45
Diluted $ 0.23 $ 0.16 $ 0.63 $ 0.42
AVERAGE COMMON SHARES:
Basic 19,137,692 18,272,080 18,939,243 18,069,404
Diluted 20,429,190 19,753,535 20,128,926 19,544,367
BALANCE SHEET
09/30/03 12/31/02
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($ In Thousands)
ASSETS
Cash $26,323 $ 9,684
Trade Receivables (Net) 16,882 15,248
Inventories 20,019 18,699
Other Current Assets 1,772 2,537
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Total Current Assets $64,996 $46,168
Property and Equipment (Net) 28,236 25,412
Other Assets 6,621 6,725
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TOTAL ASSETS $99,853 $78,305
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LIABILITIES AND STOCKHOLDERS' EQUITY
Total Current Liabilities $16,404 $11,586
Other Liabilities 3,160 3,304
Long-Term Debt 0 17
Stockholders' Equity 80,289 63,398
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $99,853 $78,305
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CONFERENCE CALL
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Merit Medical Systems, Inc. invites all interested parties to join its
officers in their quarterly earnings conference call to be held today, October
22, 2003, at 5:00 p.m. Eastern Daylight Time (4:00 p.m. Central, 3:00 p.m.
Mountain, and 2:00 p.m. Pacific). The telephone numbers are: Domestic -
800-218-4007; International - 303-262-2130.
ABOUT MERIT
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Founded in 1987, Merit Medical Systems is a publicly-traded company
engaged in the development, manufacture and distribution of proprietary
disposable medical products used in interventional and diagnostic procedures,
primarily in cardiology and radiology. Merit serves client hospitals worldwide
with a domestic and international sales force totaling approximately 74
individuals. Merit employs approximately 1,200 individuals worldwide, with
manufacturing facilities in South Jordan and Salt Lake City, Utah; Santa Clara,
California; Angleton, Texas; and Galway, Ireland. For more information about
Merit, visit www.merit.com.
SAFE HARBOR STATEMENT
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Portions of this release contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. All
statements other than statements of historical fact are "forward-looking
statements" for purposes of these provisions, including any projections of
earnings, revenues, expenses or other financial items, any statement 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 statement of assumptions underlying
any of the foregoing. All forward-looking statements included in this release
are made as of the date hereof and are based on information available to Merit
as of such date. Merit assumes no obligation to update any forward-looking
statement. 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 Merit 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 may
differ materially from those projected or assumed in the forward-looking
statements. Future financial conditions and results of operations, as well as
any forward-looking statements, are subject to inherent risks and uncertainties,
including, but not limited to, market acceptance of Merit's products; product
introductions; potential product recalls or product liability claims; delays in
obtaining regulatory approvals; cost increases; fluctuations in and obsolescence
of inventory; price and product competition; availability of labor, materials,
and transportation; development of new products and/or technologies that could
render Merit's products obsolete; infringing technology; inability to protect
Merit's proprietary technology; foreign currency fluctuations; changes in health
care markets related to health care reform initiatives; limited product
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reimbursement; large portions of revenues derived from a few products and
procedures; inability to successfully manage growth; market price volatility
Merit's common stock; dependencies on key personnel; and other factors referred
to in Merit's press releases and filings with the Securities and Exchange
Commission, including Merit's Annual Report on Form 10-K for the year ended
December 31, 2002. Financial statements are subject to change and are not
intended to be relied upon as predictions of future operating results. All
subsequent forward-looking statements attributable to Merit or persons acting on
its behalf are expressly qualified in their entirety by these cautionary
statements.
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