x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
11-2644611
|
|
(State
or other jurisdiction of incorporation
or organization)
|
(I.R.S.
Employer Identification
No.)
|
|
734
Walt Whitman Road
Melville, New York
|
11747
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
accelerated filer o
|
Accelerated
filer x
|
|
Non-accelerated
filer o
(Do
not check if a smaller reporting company)
|
Smaller
reporting company o
|
BOVIE MEDICAL CORPORATION
|
||||
INDEX
TO FORM 10-Q
|
||||
FOR
THE QUARTER ENDED SEPTEMBER 30, 2009
|
||||
Page
|
||||
Part
I.
|
2
|
|||
Item
1.
|
||||
2
|
||||
4
|
||||
5
|
||||
6
|
||||
7
|
||||
Item
2.
|
15
|
|||
Item
3.
|
24
|
|||
Item
4.
|
25
|
|||
Part
II.
|
25
|
|||
Item
1.
|
25
|
|||
Item
1A.
|
26
|
|||
Item
2.
|
26
|
|||
Item
3.
|
26
|
|||
Item
4.
|
26
|
|||
Item
5.
|
26
|
|||
Item
6.
|
26
|
|||
27
|
BOVIE MEDICAL CORPORATION
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
SEPTEMBER
30, 2009 AND DECEMBER 31, 2008
|
||||||||
Assets
|
||||||||
(Unaudited)
|
||||||||
September
30,
2009
|
December
31,
2008
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 2,924,655 | $ | 2,564,443 | ||||
Trade
accounts receivable, net
|
2,244,959 | 2,991,715 | ||||||
Inventories
|
7,073,591 | 5,339,983 | ||||||
Prepaid
expenses
|
698,237 | 925,015 | ||||||
Deferred
income tax asset, net
|
285,255 | 216,885 | ||||||
Total
current assets
|
13,226,697 | 12,038,041 | ||||||
Property
and equipment, net
|
8,794,896 | 7,125,943 | ||||||
Other
assets:
|
||||||||
Brand
name/trademark, net
|
1,509,662 | 1,509,662 | ||||||
Purchased
technology, net
|
3,322,488 | 3,479,752 | ||||||
License
rights, net
|
168,330 | 215,673 | ||||||
Restricted
cash held in escrow
|
35,635 | 1,285,117 | ||||||
Deposits
and other assets
|
140,777 | 124,707 | ||||||
Total
other assets
|
5,176,892 | 6,614,911 | ||||||
Total
assets
|
$ | 27,198,485 | $ | 25,778,895 | ||||
The
accompanying notes are an integral part of the consolidated financial
statements.
|
BOVIE
MEDICAL CORPORATION
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
SEPTEMBER
30, 2009 AND DECEMBER 31, 2008
|
||||||||
(continued)
|
||||||||
Liabilities
and Stockholders’ Equity
|
||||||||
(Unaudited)
|
||||||||
September
30,
2009
|
December 31,
2008
|
|||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 761,110 | $ | 1,317,578 | ||||
Deferred
revenue
|
9,130 | 24,538 | ||||||
Accrued
payroll
|
166,933 | 61,168 | ||||||
Accrued
vacation
|
265,760 | 237,633 | ||||||
Current
portion of amounts due to Lican
|
50,000 | 50,000 | ||||||
Current
income taxes payable
|
– | 77,943 | ||||||
Current
portion of mortgage note payable to bank
|
133,000 | 125,000 | ||||||
Line
of credit
|
1,000,382 | - | ||||||
Accrued
litigation settlement
|
160,000 | - | ||||||
Accrued
and other liabilities
|
550,515 | 423,109 | ||||||
Total
current liabilities
|
3,096,830 | 2,316,969 | ||||||
Deferred
income taxes payable
|
584,500 | 530,863 | ||||||
Mortgage
note payable to bank, net of current portion
|
3,773,250 | 3,875,000 | ||||||
Due
to Lican, net of current portion
|
268,150 | 268,150 | ||||||
Total
liabilities
|
7,722,730 | 6,990,982 | ||||||
Commitments
and contingency (Note 11)
|
||||||||
Stockholders’
equity:
|
||||||||
Preferred
stock, par value $.001; 10,000,000 shares authorized; none issued and
outstanding
|
– | – | ||||||
Common
stock, par value $.001; 40,000,000 shares authorized, 16,948,133 and
16,795,269 issued and outstanding on September 30, 2009 and December 31,
2008, respectively
|
16,949 | 16,796 | ||||||
Additional
paid-in capital
|
23,023,478 | 22,841,545 | ||||||
Accumulated
other comprehensive loss
|
(150,844 | ) | (88,464 | ) | ||||
Deficit
|
(3,413,828 | ) | (3,981,964 | ) | ||||
Total
stockholders’ equity
|
19,475,755 | 18,787,913 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 27,198,485 | $ | 25,778,895 | ||||
The
accompanying notes are an integral part of the consolidated financial
statements.
|
BOVIE MEDICAL CORPORATION
|
||||||||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||||||||
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND
2008
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Sales
|
$ | 6,371,371 | $ | 7,295,793 | $ | 20,420,272 | $ | 20,958,672 | ||||||||
Cost
of sales
|
3,611,482 | 4,062,424 | 11,359,427 | 12,238,925 | ||||||||||||
Gross
profit
|
2,759,889 | 3,233,369 | 9,060,845 | 8,719,747 | ||||||||||||
Gain
on cancellation of agreement
|
– | – | – | 1,495,634 | ||||||||||||
Other
costs and expenses:
|
||||||||||||||||
Research
and development
|
495,818 | 488,063 | 1,497,332 | 1,430,207 | ||||||||||||
Professional
services
|
303,415 | 344,727 | 1,023,905 | 667,084 | ||||||||||||
Salaries
and related costs
|
759,114 | 726,761 | 2,303,807 | 2,253,066 | ||||||||||||
Selling,
general and administrative
|
1,312,033 | 1,061,135 | 3,531,874 | 3,221,433 | ||||||||||||
Total
other costs and expenses
|
2,870,380 | 2,620,686 | 8,356,918 | 7,571,790 | ||||||||||||
Income
(loss) from operations
|
(110,491 | ) | 612,683 | 703,927 | 2,643,591 | |||||||||||
Interest
(expense) income, net
|
(55,013 | ) | (15,244 | ) | 1,376 | 15,430 | ||||||||||
Income
(loss) before income taxes
|
(165,504 | ) | 597,439 | 705,303 | 2,659,021 | |||||||||||
Benefit
(provision) for income taxes
|
127,755 | (231,549 | ) | (137,167 | ) | (866,000 | ) | |||||||||
Net
(loss) income
|
$ | (37,749 | ) | $ | 365,890 | $ | 568,136 | $ | 1,793,021 | |||||||
Earnings
per share
|
||||||||||||||||
Basic
|
$ | – | $ | .02 | $ | .03 | $ | .11 | ||||||||
Diluted
|
$ | – | $ | .02 | $ | .03 | $ | .10 | ||||||||
Weighted
average number of shares outstanding
|
16,912,402 | 16,067,979 | 16,881,743 | 15,998,150 | ||||||||||||
Weighted
average number of shares outstanding adjusted for dilutive
securities
|
17,926,404 | 17,820,155 | 17,809,845 | 17,731,492 | ||||||||||||
The
accompanying notes are an integral part of the consolidated financial
statements.
|
Common
Stock
|
Additional Paid-in |
Accumulated Other |
Deficit
|
Total
|
||||||||||||||||||||
Shares
|
Par
Value
|
|||||||||||||||||||||||
January
1, 2008
|
15,457,088 | $ | 15,457 | $ | 22,435,161 | $ | – | $ | (5,813,752 | ) | $ | 16,636,866 | ||||||||||||
Options
exercised, net of stock swap
|
1,338,181 | 1,339 | 221,687 | – | – | 223,026 | ||||||||||||||||||
Stock
based compensation
|
– | – | 184,697 | – | – | 184,697 | ||||||||||||||||||
Income
for year
|
– | – | – | – | 1,831,788 | 1,831,788 | ||||||||||||||||||
Foreign
currency remeasurement
|
(88,464 | ) | – | (88,464 | ) | |||||||||||||||||||
Comprehensive
income
|
– | – | – | – | – | 1,743,324 | ||||||||||||||||||
December
31, 2008
|
16,795,269 | 16,796 | 22,841,545 | (88,464 | ) | (3,981,964 | ) | 18,787,913 | ||||||||||||||||
Options
exercised, net of stock swap
|
152,864 | 153 | 78,600 | – | – | 78,753 | ||||||||||||||||||
Stock
based compensation
|
– | – | 103,333 | – | – | 103,333 | ||||||||||||||||||
Income
for period
|
– | – | – | – | 568,136 | 568,136 | ||||||||||||||||||
Foreign
currency remeasurement
|
– | – | – | (62,380 | ) | – | (62,380 | ) | ||||||||||||||||
Comprehensive
income
|
– | – | – | – | – | 505,756 | ||||||||||||||||||
September
30, 2009
|
16,948,133 | $ | 16,949 | $ | 23,023,478 | $ | (150,844 | ) | $ | (3,413,828 | ) | $ | 19,475,755 |
2009
|
2008
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income
|
$ | 568,136 | $ | 1,420,664 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization of property and equipment:
|
562,402 | 398,163 | ||||||
Amortization
of intangible assets
|
204,606 | 77,467 | ||||||
Provision
for (recovery of) inventory obsolescence
|
6,498 | (4,711 | ) | |||||
Loss
on disposal of property and equipment
|
1,628 | 2,236 | ||||||
Stock
based compensation
|
103,333 | 44,594 | ||||||
Non-cash
reclassification
|
- | 10,324 | ||||||
Provision
for deferred taxes
|
(14,733 | ) | 610,035 | |||||
Gain
on cancellation of agreement
|
– | (1,495,634 | ) | |||||
Changes
in current assets and liabilities:
|
||||||||
Trade
receivables
|
746,757 | (78,754 | ) | |||||
Prepaid
expenses
|
226,778 | (412,290 | ) | |||||
Inventories
|
(1,740,104 | ) | (357,069 | ) | ||||
Deposits
and other assets
|
(16,069 | ) | (36,644 | ) | ||||
Accounts
payable
|
(556,468 | ) | 200,204 | |||||
Accrued
and other liabilities
|
127,788 | 297,284 | ||||||
Accrued
payroll
|
105,764 | 3,421 | ||||||
Accrued
vacation
|
28,128 | 44,064 | ||||||
Income
taxes payable
|
(77,943 | ) | – | |||||
Accrued
litigation settlement
|
160,000 | – | ||||||
Deferred
revenues
|
(15,408 | ) | (15,924 | ) | ||||
Net
cash provided by operating activities
|
421,093 | 707,430 | ||||||
Cash
flows from investing activities
|
||||||||
Purchases
of property and equipment
|
(2,232,983 | ) | (588,707 | ) | ||||
Proceeds
from sale of property and equipment
|
- | 10,573 | ||||||
Purchased
technology
|
- | (57,283 | ) | |||||
Net
cash used in investing activities
|
(2,232,983 | (635,417 | ) | |||||
Cash
flows from financing activities
|
||||||||
Proceeds
from escrow account
|
1,249,481 | – | ||||||
Net
increase in line of credit
|
1,000,000 | – | ||||||
Payments
on mortgage note payable
|
(93,750 | ) | – | |||||
Proceeds
from issuance of common shares
|
78,750 | 218,275 | ||||||
Net
cash provided by financing activities
|
2,234,481 | 218,275 | ||||||
Effect
of exchange rate changes on cash and cash equivalents
|
(62,379 | ) | (46,717 | ) | ||||
Net
change in cash equivalents
|
360,212 | 243,571 | ||||||
Cash
and cash equivalents, beginning of period
|
2,564,443 | 3,534,759 | ||||||
Cash
and cash equivalents, end of period
|
$ | 2,924,655 | $ | 3,778,330 | ||||
Cash
paid during the nine months ended September 30, 2009 and
2008:
|
||||||||
Interest
paid, net of amounts capitalized
|
$ | 71,136 | $ | 948 | ||||
Income
taxes
|
$ | 229,843 | $ | 37,128 |
(in
thousands)
|
Nine
months ended September 30, 2008
|
|||||||||||
As reported
|
Adjustment
|
As revised
|
||||||||||
Sales
|
$ | 20,959 | $ | - | $ | 20,959 | ||||||
Cost
of sales
|
12,239 | - | 12,239 | |||||||||
Gross
profit
|
8,720 | - | 8,720 | |||||||||
Gain
on cancellation of agreement
|
- | 1,496 | 1,496 | |||||||||
Other
costs and expenses
|
7,572 | - | 7,572 | |||||||||
Income
from operations
|
1,148 | 1,496 | 2,644 | |||||||||
Gain
on cancellation of agreement
|
1,496 | (1,496 | ) | - | ||||||||
Interest
income (expense)
|
15 | - | 15 | |||||||||
Income
before taxes
|
2,659 | - | 2,659 | |||||||||
Provision
for taxes
|
(866 | ) | - | (866 | ) | |||||||
Net
income
|
$ | 1,793 | $ | - | $ | 1,793 |
|
·
|
Number
of procedures ranging from 30 to 70% of the market (assumed growth rate
ranging from 2% to 7%)
|
|
·
|
Adoption
Rate ranging from 1% to 5%
|
|
·
|
Average
sales price of $800 based upon the current market price, which we were
generating revenue at, with an assumed 5% growth
rate
|
|
·
|
Capital
investment ranges from $500,000 to
$1,100,000
|
|
·
|
Discount
rate ranges from 10% to 30% (includes Risk Free rate, adjusted equity risk
premium, risk premium for size and risk premium for Company specific risk
factors)
|
|
·
|
SEER
device market opportunity projected revenues provided by Boston
Scientific.
|
September
30,
2009
|
December
31,
2008
|
|||||||
Raw
materials
|
$ | 4,192,556 | $ | 3,368,800 | ||||
Work
in process
|
2,177,572 | 1,621,032 | ||||||
Finished
goods
|
1,250,864 | 891,054 | ||||||
Gross
inventories
|
7,620,992 | 5,880,886 | ||||||
Less:
reserve for obsolescence
|
(547,401 | ) | (540,903 | ) | ||||
Net
inventories
|
$ | 7,073,591 | $ | 5,339,983 |
September
30,
2009
|
December
31,
2008
|
|||||||
Trade
name (life indefinite)
|
$ | 1,509,662 | $ | 1,509,662 | ||||
Purchased
technology (9-17 yr life)
|
$ | 3,940,617 | $ | 3,940,617 | ||||
Less:
accumulated amortization
|
(618,129 | ) | (460,865 | ) | ||||
Net
carrying amount
|
$ | 3,322,488 | $ | 3,479,752 | ||||
License
rights (5 yr life)
|
$ | 315,619 | $ | 315,619 | ||||
Less
accumulated amortization
|
(147,289 | ) | (99,946 | ) | ||||
Net
carrying amount
|
$ | 168,330 | $ | 215,673 |
September 30,
2009
Fair
Value Measurements
|
||||||||||||||||
Total
|
Level 1
|
Level
2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash
and equivalents – United States
|
$ | 2,793 | $ | 2,793 | $ | – | $ | – | ||||||||
Cash
and equivalents - Foreign currency
|
132 | 132 | – | – | ||||||||||||
Total
|
$ | 2,925 | $ | 2,925 | $ | – | $ | – |
December 31,
2008
Fair
Value Measurements
|
||||||||||||||||
Total
|
Level 1
|
Level
2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash
and equivalents – United States
|
$ | 2,497 | $ | 2,497 | $ | – | $ | – | ||||||||
Cash
and equivalents – Foreign currency
|
67 | 67 | – | – | ||||||||||||
Total
|
$ | 2,564 | $ | 2,564 | $ | – | $ | – |
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008 | |||||||||||||
Net
income
|
$ | (37,749 | ) | $ | 365,890 | $ | 568,136 | $ | 1,793,021 | |||||||
Basic
weighted average shares outstanding
|
16,912,402 | 16,067,979 | 16,881,743 | 15,998,150 | ||||||||||||
Effect
of potential dilutive securities
|
1,014,002 | 1,752,176 | 928,102 | 1,733,342 | ||||||||||||
Diluted
weighted average shares outstanding
|
$ | 17,926,404 | $ | 17,820,155 | $ | 17,809,845 | $ | 17,731,492 | ||||||||
Basic
EPS
|
$ | 0.00 | $ | 0.02 | $ | 0.03 | $ | 0.11 | ||||||||
Diluted
EPS
|
$ | 0.00 | $ | 0.02 | $ | 0.03 | $ | 0.10 |
Number
of
Options
|
Weighted
Average
Exercise
Price
|
|||||||
Outstanding
at December 31, 2008
|
1,867,150 | $ | 3.25 | |||||
Granted
|
5,500 | 6.60 | ||||||
Exercised
|
(177,250 | ) | 1.51 | |||||
Canceled
|
(10,000 | ) | 7.33 | |||||
Outstanding
at September 30, 2009
|
1,685,400 | $ | 3.42 |
Three
Months Ended September 30,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
(in
thousands)
|
USA
|
Canada
|
USA
|
Canada
|
||||||||||||
Sales,
net
|
$ | 6,306 | $ | 65 | $ | 7,071 | $ | 225 | ||||||||
Gross
profit
|
$ | 2,759 | $ | - | $ | 3,166 | $ | 67 | ||||||||
Operating
expenses
|
$ | (2,716 | ) | $ | (154 | ) | $ | (2,346 | ) | $ | (275 | ) | ||||
Net
income (loss)
|
$ | 116 | $ | (154 | ) | $ | 574 | $ | (208 | ) |
Nine
Months Ended September 30,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
(in
thousands)
|
USA
|
Canada
|
USA
|
Canada
|
||||||||||||
Sales,
net
|
$ | 20,014 | $ | 406 | $ | 20,551 | $ | 408 | ||||||||
Gross
profit
|
8,935 | 126 | 8,746 | (26 | ) | |||||||||||
Operating
expenses
|
(7,738 | ) | (619 | ) | (6,812 | ) | (760 | ) | ||||||||
Net
income (loss)
|
$ | 1,062 | $ | (494 | ) | $ | 2,579 | $ | (786 | ) |
|
·
|
general
economic and political conditions, such as political instability, credit
market uncertainty, the rate of economic growth or decline in our
principal geographic or product markets or fluctuations in exchange rates;
continued deterioration in or stabilization of the global
economy;
|
|
·
|
changes
in general economic and industry conditions in markets in which we
participate, such as:
|
|
§
|
continued
deterioration in or destabilization of the global
economy;
|
|
§
|
continued
deterioration in or destabilization of the North America housing
market;
|
|
§
|
the
strength of product demand and the markets we
serve;
|
|
§
|
the
intensity of competition, including that from foreign
competitors;
|
|
§
|
pricing
pressures;
|
|
§
|
the
financial condition of our
customers;
|
|
§
|
market
acceptance of new product introductions and
enhancements;
|
|
§
|
the
introduction of new products and enhancements by
competitors;
|
|
§
|
our
ability to maintain and expand relationships with large
customers;
|
|
§
|
our
ability to source raw material commodities from our suppliers without
interruption and at reasonable prices;
and
|
|
§
|
our
ability to source components from third parties, in particular from
foreign manufacturers, without interruption and at reasonable
prices;
|
|
·
|
our
ability to access capital markets and obtain anticipated financing under
favorable terms;
|
|
·
|
our
ability to identify, complete and integrate acquisitions successfully and
to realize expected synergies on our anticipated
timetable;
|
|
·
|
changes
in our business strategies, including acquisition, divestiture and
restructuring activities;
|
|
·
|
changes
in operating factors, such as continued improvement in manufacturing
activities, the achievement of related efficiencies and inventory risks
due to shifts in market demand;
|
|
·
|
our
ability to generate savings from our cost reduction
actions;
|
|
·
|
unanticipated
developments that could occur with respect to contingencies such as
litigation, intellectual property matters, product liability exposures and
environmental matters; and
|
|
·
|
our
ability to accurately evaluate the effects of contingent
liabilities.
|
Sales by Product Line |
Three
months ended September 30,
|
Percent change |
Nine
months ended September 30,
|
Percent change | ||||||||||||||||||||
(in thousands) |
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||||
Electrosurgical
|
$ | 4,217 | $ | 5,139 | (17.9 | %) | $ | 14,126 | $ | 14,480 | (2.4 | %) | ||||||||||||
Cauteries
|
1,575 | 1,532 | 2.8 | % | 4,623 | 4,673 | (1.1 | %) | ||||||||||||||||
Other
|
579 | 625 | (7.4 | %) | 1,671 | 1,806 | (7.5 | %) | ||||||||||||||||
Total
|
$ | 6,371 | $ | 7,296 | (12.7 | %) | $ | 20,420 | $ | 20,959 | (2.6 | %) |
Sales by Domestic and | Three months ended September 30, |
Percent
change
|
Nine
months ended September 30,
|
Percent
change
|
||||||||||||||||||||
International
(in thousands)
|
2009
|
2008
|
2009
|
2008 | ||||||||||||||||||||
Domestic
|
$ | 5,506 | $ | 6,348 | (13.3 | %) | $ | 17,121 | $ | 17,294 | (1.0 | %) | ||||||||||||
International
|
865 | 948 | (8.8 | %) | 3,299 | 3,665 | (10.0 | %) | ||||||||||||||||
Total
|
$ | 6,371 | $ | 7,296 | (12.7 | %) | $ | 20,420 | $ | 20,959 | (2.6 | %) |
|
·
|
sales
of generators were down $629,000 or 19.5% due to lower capital
expenditures by hospitals and doctor offices in the current
economy;
|
|
·
|
sales
of electrosurgical disposables were down $292,000 or 15.3% because
distributors elected to reduce their inventories in the current economy;
and
|
|
·
|
international
sales decreased by $83,000 or 8.7% due to periods of a stronger dollar
coupled with the global economic
slowdown.
|
|
·
|
international
sales decreased by $366,000 or 10.0% due to periods of a stronger dollar
coupled with the global economic
slowdown;
|
|
·
|
sales
of generators were down $1,190,000 or 12.1% due to lower capital
expenditures by hospitals and doctor offices in the current
economy;
|
|
·
|
cautery
sales were down $50,000 or 1.0%;
and
|
|
·
|
other
products were down $135,000 or 12.1%, mainly due to installment revenue
that ended in September 2008.
|
(in thousands) |
Three
months ended September 30,
|
Percent
of sales
|
Percent
change
|
Nine
months ended September 30,
|
Percent
of sales
|
Percent
change
|
||||||||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||
Cost
of sales
|
$ | 3,611 | $ | 4,062 | 56.7 | % | 55.7 | % | (11.1 | %) | $ | 11,359 | $ | 12,239 | 55.6 | % | 58.4 | % | (7.2 | %) | ||||||||||||||||||||
Gross
profit
|
$ | 2,760 | $ | 3,233 | 43.3 | % | 44.3 | % | (14.6 | %) | $ | 9,061 | $ | 8,720 | 44.4 | % | 41.6 | % | 3.9 | % |
|
·
|
a
$35,000 reduction in annual bonuses;
and
|
|
·
|
a
$40,000 reduction of our company match to our employees’ 401(k)
contributions.
|
|
·
|
a
$447,000 increase in capitalized manufacturing
overhead;
|
|
·
|
a
$105,000 reduction in annual
bonuses;
|
|
·
|
a
$120,000 reduction of our company match to our employees’ 401(k)
contributions; and
|
|
·
|
an
$835,000 increase in sales of electrosurgical disposables, mainly due to
the sale of ablators, which are higher margin
products.
|
(in thousands) |
Three
months ended September 30,
|
Percent
of sales
|
Percent change |
Nine
months ended September 30,
|
Percent
of sales
|
Percent change | ||||||||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||
Gain
on Cancellation of Agreement
|
$ | – | $ | – | – | – | – | $ | – | $ | 1,496 | – | 7.1 | % | – |
(in
thousands)
|
Three
months ended September 30,
|
Percent
of sales
|
Percent change |
Nine
months ended September 30,
|
Percent
of sales
|
Percent change | ||||||||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||
R
& D Expense
|
$ | 496 | $ | 488 | 7.8 | % | 6.7 | % | 1.6 | % | $ | 1,497 | $ | 1,430 | 7.3 | % | 6.8 | % | 4.7 | % |
|
·
|
a
$34,000 increase in staffing costs to support the J-Plasma product line;
and
|
|
·
|
a
$16,000 increase in validation costs related to our new Icon generators
(GS, GP, VS).
|
|
·
|
a
$119,000 increase in staffing costs to support the J-Plasma and sintered
steel product lines; and
|
|
·
|
a
$10,000 increase in validation costs related to our new Icon generators
(GS, GP, VS).
|
( in thousands) |
Three
months ended September 30,
|
Percent
of sales
|
Percent change |
Nine
months ended September 30,
|
Percent
of sales
|
Percent change | ||||||||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||
Professional
services
|
$ | 303 | $ | 345 | 4.8 | % | 4.7 | % | (12.0 | %) | $ | 1,024 | $ | 667 | 5.0 | % | 3.2 | % | 53.5 | % |
|
·
|
we
incurred $36,000 in consulting costs related to the Erbe lawsuit in 2008
that did not recur in 2009; and
|
|
·
|
our
legal fees for the Erbe lawsuit decreased by $28,000 in the third quarter
of 2009 because the parties began working towards a settlement of the
dispute.
|
|
·
|
accounting
fees increased by $65,000 due to tax related work and the timing of
auditing fees related to our employee 401(k) plan, which were incurred
earlier in 2009; and
|
|
·
|
legal
fees increased by $267,000 due to work related to the Erbe lawsuit and to
responding to the SEC’s periodic review of our Annual Report on Form 10-K
for the year ended December 31,
2008.
|
( in thousands) |
Three
months ended September 30,
|
Percent
of sales
|
Percent change |
Nine
months ended September 30,
|
Percent
of sales
|
Percent change | ||||||||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||
Salaries
& related cost
|
$ | 759 | $ | 727 | 11.9 | % | 10.0 | % | 4.5 | % | $ | 2,304 | $ | 2,253 | 11.3 | % | 10.8 | % | 2.3 | % |
|
·
|
a
$25,000 increase in staffing costs to support the domestic direct sales of
the SEER product line;
|
|
·
|
a
$6,000 increase in overall employee benefits and health insurance related
costs; and
|
|
·
|
an
$8,000 increase in the accrual for vacation pay related to higher-level
employees.
|
|
·
|
a
$12,000 reduction in annual
bonuses;
|
|
·
|
a
$14,000 reduction of our company match to our employees’ 401(k)
contributions; and
|
|
·
|
a
$6,000 reduction of a position in Bovie
Canada.
|
|
·
|
a
$56,000 increase in staffing costs to support the domestic direct sales of
the SEER product line;
|
|
·
|
a
$25,000 increase in overall employee benefits and health insurance related
costs; and
|
|
·
|
a
$14,000 increase in the accrual for vacation pay related to higher-level
employees.
|
|
·
|
a
$37,000 reduction in annual
bonuses;
|
|
·
|
a
$40,000 reduction of our company match to our employees’ 401(k)
contributions; and
|
|
·
|
a
$6,000 reduction of a position in Bovie
Canada.
|
(in
thousands)
|
Three
months ended September 30,
|
Percent
of sales
|
Percent change |
Nine
months ended September 30,
|
Percent
of sales
|
Percent change | ||||||||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||
SG
& A costs
|
$ | 1,312 | $ | 1,061 | 20.6 | % | 14.5 | % | 23.6 | % | $ | 3,532 | $ | 3,221 | 17.3 | % | 15.4 | % | 9.6 | % |
|
·
|
a
$160,000 accrual for the settlement of the Erbe
lawsuit;
|
|
·
|
a
$58,000 increase in property taxes related to our new facility in
Clearwater, Florida;
|
|
·
|
a
$33,000 increase in electricity costs related to the new larger
facility;
|
|
·
|
a
$25,000 increase in amortization expense related to new
products;
|
|
·
|
a
$22,000 increase in insurance expense due to the new larger facility as
well as insurance on our old building listed for
sale;
|
|
·
|
a
$14,000 increase in telephone expense due to an expansion of our
communication infrastructure and related costs;
and
|
|
·
|
a
$5,000 increase in depreciation expense attributable to Bovie Canada
during the 2009 period versus 2008.
|
|
·
|
a
$50,000 decrease in travel costs;
|
|
·
|
a
$36,000 decrease in advertising costs;
and
|
|
·
|
a
$40,000 decrease in administrative costs in Bovie
Canada.
|
|
·
|
a
$160,000 accrual for the settlement of the Erbe
lawsuit;
|
|
·
|
a
$94,000 increase in taxes related to our new facility in Clearwater
Florida;
|
|
·
|
an
$86,000 increase in electricity costs related to the new larger
facility;
|
|
·
|
an
$84,000 increase in amortization expense related to new
products;
|
|
·
|
a
$47,000 increase in telephone expense due to an expansion of our
communication infrastructure and related
costs;
|
|
·
|
a
$33,000 increase in insurance expense due to the new larger facility as
well as insurance on our old building listed for sale;
and
|
|
·
|
a
$30,000 increase in depreciation expense attributable to Bovie Canada
during the 2009 period versus 2008.
|
|
·
|
a
$118,000 decrease in travel costs;
|
|
·
|
an
$85,000 decrease in advertising costs;
and
|
|
·
|
a
$52,000 decrease in administrative costs in Bovie
Canada.
|
Three
months ended September 30,
|
Percent
of sales
|
Percent change |
Nine
months ended September 30,
|
Percent
of sales
|
Percent change | |||||||||||||||||||||||||||||||||||
(in thousands) |
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||||||||||||||||
Interest
income (expense)
|
$ | (55 | ) | $ | (15 | ) | (0.9 | %) | (0.2 | %) | (261 | %) | $ | 1 | $ | 15 | 0.0 | % | 0.1 | % | (91 | %) |
(in
thousands)
|
Three
months ended September 30,
|
Percent
of sales
|
Percent change |
Nine
months ended September 30,
|
Percent
of sales
|
Percent change | ||||||||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||
Income
before inc. taxes
|
$ | (166 | ) | $ | 597 | (2.6 | %) | 8.2 | % | (128 | %) | $ | 705 | $ | 2,659 | 3.5 | % | 12.7 | % | (73.5 | %) | |||||||||||||||||||
Benefit
(Provision) taxes
|
$ | 128 | $ | (232 | ) | 2.0 | % | (3.2 | %) | (155 | %) | $ | (137 | ) | $ | (866 | ) | (0.7 | %) | (4.1 | %) | (84.2 | %) | |||||||||||||||||
Effective
tax rate
|
– | 38.9 | % | 19.4 | % | 32.6 | % |
(in
thousands)
|
As
of September 30,
|
|||||||||||||||||||
2009
|
2010
|
2011
|
2012
|
2013
|
||||||||||||||||
Operating
leases
|
$ | 70 | $ | 278 | $ | 252 | $ | 246 | $ | 223 | ||||||||||
Employment
agreements
|
$ | 260 | $ | 865 | $ | 871 | $ | 881 | $ | 947 | ||||||||||
Purchase
order commitments
|
$ | 3,069 | $ | – | $ | – | $ | – | $ | – |
Certifications
of Andrew Makrides, President and Chief Executive Officer of Registrant,
pursuant to Rule 13a-14 adopted under the Securities Exchange Act of 1934,
as amended, and Section 302 of the Sarbanes-Oxley Act of
2002.
|
||
Certifications
of Gary D. Pickett, Chief Financial Officer of Registrant, pursuant to
Rule 13a-14 adopted under the Securities Exchange Act of 1934, as amended,
and Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification
of Andrew Makrides, President and Chief Executive Officer of Registrant,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002. This exhibit is not “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934 but is
instead furnished as provided by applicable rules of the Securities and
Exchange Commission.
|
||
Certification
of Gary D. Pickett, Chief Financial Officer of Registrant, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. This exhibit is not “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934 but is
instead furnished as provided by applicable rules of the Securities and
Exchange Commission.
|
Bovie
Medical Corporation
|
||
Dated: November
9, 2009
|
By:
|
/s/ Andrew Makrides
|
Andrew
Makrides
|
||
Chief
Executive Officer
|
||
Dated: November
9, 2009
|
By:
|
/s/ Gary D. Pickett
|
Gary
D. Pickett
|
||
Chief
Financial Officer
|