-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kc3C9/QzxUTb0L4ve4W+SzvYLYc6guMypnTDnda6FgWQtU0Q6U+xw4OmvEaQUl/7 gY1sAJayA7sappT1xKPzkQ== /in/edgar/work/20000814/0000926236-00-000104/0000926236-00-000104.txt : 20000921 0000926236-00-000104.hdr.sgml : 20000921 ACCESSION NUMBER: 0000926236-00-000104 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARRINGTON LABORATORIES INC /TX/ CENTRAL INDEX KEY: 0000718007 STANDARD INDUSTRIAL CLASSIFICATION: [2834 ] IRS NUMBER: 751435663 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10862 FILM NUMBER: 698130 BUSINESS ADDRESS: STREET 1: 2001 WALNUT HILL LANE CITY: IRVING STATE: TX ZIP: 75038 BUSINESS PHONE: 972-518-1300 MAIL ADDRESS: STREET 1: PO BOX 168128 CITY: IRVING STATE: TX ZIP: 75016-8128 FORMER COMPANY: FORMER CONFORMED NAME: AVACARE INC DATE OF NAME CHANGE: 19860521 10-Q 1 0001.txt QUARTERLY PERIOD ENDED JUN 30, 2000 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ( x ) For the quarterly period ended June 30, 2000 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 0-11997 CARRINGTON LABORATORIES, INC. (Exact name of registrant as specified in its charter) Texas 75-1435663 ------------------------------ -------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 2001 Walnut Hill Lane, Irving, Texas 75038 ----------------------------------------------------- (Address of principal executive offices and Zip Code) 972-518-1300 ---------------------------------------------------- (Registrant's telephone number, including area code) ---------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark 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 [ X ] No [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. 9,614,087 shares of Common Stock, $.01 par value, were outstanding at August 10, 2000. INDEX Page ---- Part I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets at June 30, 2000 (unaudited) and December 31, 1999 3 Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2000 and 1999 (unaudited) 4-5 Condensed Consolidated Statements of Cash Flows for the six months ended June 30,2000 and 1999 (unaudited) 6 Notes to Condensed Consolidated Financial Statements (unaudite 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-13 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Part II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets (Dollar amounts in 000's) December 31, June 30, 1999 2000 (unaudited) ------- ------- Assets Cash and cash equivalents $ 2,453 $ 2,410 Accounts receivable, net 3,690 2,846 Inventories 5,184 5,103 Prepaid expenses 573 901 ------- ------- Total current assets 11,900 11,260 Property, plant and equipment, net 10,985 10,715 Other assets 608 421 ------- ------- Total assets $23,493 $22,396 ======= ======= Liabilities and Shareholders' Investment Notes payable $ 200 $ 200 Accounts payable 1,871 1,034 Accrued liabilities 1,918 2,525 ------- ------- Total current liabilities 3,989 3,759 Shareholders' investment: Common stock 94 96 Capital in excess of par 51,910 52,249 Deficit (32,500) (33,708) ------- ------- Total shareholders' investment 19,504 18,637 ------- ------- Total liabilities and shareholders' investment $23,493 $22,396 ======= ======= The accompanying notes are an integral part of these statements.
Condensed Consolidated Statements of Operations (unaudited) (Dollar amounts and shares in 000's, except per share amounts) Three Months Ended June 30, 1999 2000 ------- ------- Net sales $ 6,750 $ 5,463 Costs and expenses: Cost of sales 3,370 2,614 Selling, general and administrative 2,592 2,648 Research and development 661 692 Research and development, Aliminase[TM] clinical trial 551 - Charge related to Oregon Freeze Dry, Inc. - 223 Other Income - (8) Interest, net (30) (27) ------- ------- Loss before income taxes (394) (679) Provision for income taxes - - ------- ------- Net loss $ (394) $ (679) ======= ======= Net loss per share - basic and diluted $ (0.04) $ (0.07) ======= ======= The accompanying notes are an integral part of these statements.
Condensed Consolidated Statements of Operations (unaudited) (Dollar amounts and shares in 000's, except per share amounts) Six Months Ended June 30, 1999 2000 ------- ------- Net sales $13,648 $12,588 Costs and expenses: Cost of sales 6,981 6,244 Selling, general and administrative 5,143 5,271 Research and development 1,313 1,506 Research and development, Aliminase[TM] clinical trial 1,670 623 Charge related to Oregon Freeze Dry, Inc. - 223 Other income - (25) Interest, net (60) (46) ------- ------- Loss before income taxes (1,399) (1,208) Provision for income taxes - - ------- ------- Net loss $(1,399) $ (1,208) ======= ======= Net loss per share basic and diluted $ (0.15) $ (0.13) ======= ======= The accompanying notes are an integral part of these statements.
Condensed Consolidated Statements of Cash Flows (unaudited) (Dollar amounts in 000's) Six Months Ended June 30, 1999 2000 ------- ------- Cash flows from operating activities Net loss $(1,399) $(1,208) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation and amortization 513 534 Provision for inventory obsolescence 173 90 Changes in assets and liabilities: Receivables, net (244) 843 Inventories 197 139 Prepaid expenses (354) (327) Other assets 24 187 Accounts payable and accrued liabilities 401 (370) ------- ------- Net cash used in operating activities (689) (112) Cash flows from investing activities: Purchases of property, plant and equipment (421) (263) ------- ------- Net cash used by investing activities (421) (263) Cash flows from financing activities: Issuances of common stock 80 341 Debt payments (1) (9) ------- ------- Net cash provided by financing activities 79 332 Net decrease in cash and cash equivalents (1,031) (43) Cash and cash equivalents, beginning of period 3,931 2,453 ------- ------- Cash and cash equivalents, end of period $ 2,900 $ 2,410 ======= ======= Supplemental disclosure of cash flow information Cash paid during the period for interest $ - $ 9 Cash paid during the period for federal, state and local income taxes 44 - The accompanying notes are an integral part of these statements.
Notes to Condensed Consolidated Financial Statements (unaudited) (1) Condensed Consolidated Financial Statements: The condensed consolidated balance sheet as of June 30, 2000, the condensed consolidated statements of operations and cash flows for the six month periods ended June 30, 1999 and 2000 and the condensed consolidated statements of cash flows for the six month periods ended June 30, 1999 and 2000 have been prepared by the Company without audit. In the opinion of management, all adjustments (which include all normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows at June 30, 2000 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report to shareholders or Form 10-K for the year ended December 31, 1999. (2) Net Loss Per Share: Basic net loss per share was computed by dividing net loss by the weighted average number of common shares outstanding. The weighted average numbers of common shares outstanding for the quarters ended June 30, 1999 and 2000 were 9,358,000 and 9,585,000, respectively. The weighted average numbers of common shares outstanding for the six month periods ended June 30, 1999 and 2000 were 9,354,000 and 9,541,000, respectively. In calculating the diluted net loss per share for the three and six month periods ended June 30, 2000, no effect was given to options and warrants because the effect would be antidilutive. Total dilutive securities were insignificant in the three and six month periods ended June 30, 1999 and had no impact on diluted net loss per share. (3) Reportable Segments: The Company operates in two reportable segments: human and veterinary products sold through its Medical Services Division, and bulk raw materials, consumer beverages and nutritional and skin care products sold through its consumer products subsidiary, Caraloe, Inc. The Company evaluates performance and allocates resources based on profit or loss from operations before income taxes. Corporate Loss Before Income Taxes set forth in the following table includes research and development expenses which were related to the development of pharmaceutical products not associated with the reporting segments. Assets which are used in more than one segment are reported in the segment where the predominant use occurs. The Company's production facility in Costa Rica, which provides bulk ingredients for all segments, and total cash for the Company are included in the Corporate Assets figure. Reportable Segments (in thousands) ------------------------------------------------------------------------------ Quarter Ended Medical Caraloe, June 30, 1999 Services Inc. Corporate Total ------------------------------------------------------------------------------ Sales to unaffiliated customers $ 3,746 $ 3,004 $ - $ 6,750 Income (loss) before income taxes (22) 676 (1,048) (394) Identifiable assets 14,134 1,289 7,908 23,331 Capital expenditures 40 - 225 265 Depreciation and amortization 167 - 89 256 ------------------------------------------------------------------------------ Quarter Ended June 30, 2000 ------------------------------------------------------------------------------ Sales to unaffiliated customers $ 2,995 $ 2,468 $ - $ 5,463 Income (loss) before income taxes (777) 686 (588) (679) Identifiable assets 12,314 1,686 8,512 22,512 Capital expenditures 38 - 73 111 Depreciation and amortization 145 - 117 262 ------------------------------------------------------------------------------ Six Months Ended June 30, 1999 ------------------------------------------------------------------------------ Sales to unaffiliated customers $ 7,635 $ 6,013 $ - $13,648 Income (loss) before income taxes (93) 1,289 (2,595) (1,399) Capital expenditures 137 - 284 421 Depreciation and amortization 343 - 170 513 ------------------------------------------------------------------------------ Six Months Ended June 30, 2000 ------------------------------------------------------------------------------ Sales to unaffiliated customers $ 6,696 $ 5,892 $ - $12,588 Income (loss) before income taxes (858) 1,460 (1,810) (1,208) Capital expenditures 38 - 225 263 Depreciation and amortization 303 - 231 534
(4) Income Taxes: The tax effects of temporary differences have given rise to deferred tax assets. At December 31, 1999 and June 30, 2000, the Company provided a valuation allowance against the entire deferred tax asset due to the uncertainty as to the realization of the asset. At December 31, 1999, the Company had net operating loss carryforwards of approximately $41,400,000 for federal income tax purposes, which expire beginning in 2000, and research and development tax credit carryforwards of approximately $748,000, which expire beginning in 2000, all of which are available to offset federal income taxes due in future periods. The entire benefit from the second quarter 2000 loss was offset by an increase in the valuation allowance. (5) Commitments and Contingencies: In February 1995, the Company entered into a commitment to purchase $2.5 million of freeze-dried products from its principal supplier over a 66-month period ending in August 2000. The commitment, which also provides for monthly minimum purchases, is required to be supported to the extent of 60% of the remaining commitment by a letter of credit from a bank or a pledged certificate of deposit. Through June 30, 2000, the Company has purchased $776,000 of products pursuant to this commitment and made prepayments of $770,000 toward future deliveries under the commitment. In the fourth quarter of 1999, the Company determined that it was unlikely to sell the quantities of products it was obligated to pay for under the minimum purchase requirements of the agreement, and thus the Company established a reserve of $1,042,000 for estimated losses under this contract. Of this amount, $698,000 is recorded in accrued liabilities and $344,000 offsets the aforementioned prepayments. At June 30, 2000, the Company increased the reserve by $223,000. The Company is currently negotiating with the supplier regarding purchase arrangements beyond the term of the current agreement. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Background The Company is a research-based biopharmaceutical, medical device, raw materials and nutraceutical company engaged in the development, manufacturing and marketing of naturally-derived complex carbohydrates and other natural product therapeutics for the treatment of major illnesses, the dressing and management of wounds and nutritional supplements. The Company is comprised of two business segments. See Note (3) to the condensed consolidated financial statements for financial information about these business segments. The Company sells, using a network of distributors, prescription and nonprescription human and veterinary products through its Medical Services Division and consumer and bulk raw material products through its consumer products subsidiary, Caraloe, Inc. The Company's research and product portfolio are based primarily on complex carbohydrates isolated from the Aloe vera L. plant. Liquidity and Capital Resources At December 31, 1999 and June 30, 2000, the Company held cash and cash equivalents of $2,453,000 and $2,410,000, respectively. The Company has invested in inventory to support sales of bulk products to Mannatech, Inc. Receivables from this customer totaled $666,000 as of June 30, 2000. As of July 17, 2000, all of this balance had been collected. As of June 30, 2000, the Company had no material capital commitments. In February 1995, the Company entered into a supply agreement with its supplier of freeze-dried products. The agreement required that the Company establish a letter of credit equal to 60% of the minimum purchase commitment of $2,500,000, but allowed for the amount of the letter of credit to be reduced by 60% of the payments made under the agreement. In July 2000, the letter of credit was reduced under this provision of the agreement to $600,000. The supplier currently produces the CarraSorb[TM] M Freeze Dried Gel and the Carrington[TM] (Aphthous Ulcer) Patch for the Company. The supply agreement also requires the Company to make minimum monthly purchases of $30,000. In February 1998, the supply agreement was amended to allow for unmet monthly minimum purchase amounts to be met by prepayments, to be applied to future purchases under the agreement, which allows the Company to keep inventory at levels appropriate for sales demand. The Company is continuing its effort to develop the markets for its freeze-dried products. Due to the unique technology of these products, this effort has taken longer than was initially expected. See Note (5) to the condensed consolidated financial statements. As of June 30, 2000, the Company had paid this supplier a total of $1,546,000 for products purchased and prepayments made under the agreement. The Company is in full compliance with the agreement and, as of June 30, 2000, had the available resources to meet all future minimum purchase requirements. In the fourth quarter of 1999, the Company determined that it was unlikely to sell the quantities of products it was obligated to pay for under the minimum purchase requirements of the agreement, and thus the Company established a reserve of $1,042,000 for estimated losses under this contract. Of this amount, $698,000 is recorded in accrued liabilities and $344,000 offsets the aforementioned prepayments. In the quarter ended June 30, 2000, the Company increased the reserve by $223,000 due to unsuccessful efforts to develop a freeze-dried concentrated gel product. The Company is currently negotiating with the supplier regarding purchase arrangements beyond the term of the current agreement. In November 1997, the Company entered into an agreement with Comerica Bank- Texas for a $3,000,000 line of credit, secured by accounts receivable and inventory. This credit facility is used to secure the letter of credit described above and used for operating needs, as required. As of June 30, 2000, there was $200,000 outstanding under this credit facility. As a result of sharp increases in sales of raw materials produced at the Company's processing facility in Costa Rica, the Company's demand for Aloe vera L. leaves has exceeded and continues to exceed both the current and the normal production capacity of its farm. It has therefore been necessary for the Company to purchase Aloe vera L. leaves from other sources at costs that are significantly higher than the cost of leaves produced on its own farm. In March 1998, the Company, with four other investors, formed Aloe and Herbs International, Inc., a Panamanian corporation ("Aloe & Herbs"), with the sole intent of acquiring a 5,000-acre tract of land in Costa Rica to be used for the production of Aloe vera L. leaves to be sold to the Company at competitive, local market rates. This would allow the Company to save approximately 50% on the per-kilogram cost of leaves as compared to the cost of importing leaves from other Central and South American countries. Aloe & Herbs subsequently formed a wholly-owned subsidiary, Rancho Aloe (C.R.), S.A., a Costa Rican corporation ("Rancho Aloe"), which acquired the land in March 1998. The Company loaned $487,000 to Aloe & Herbs during 1998. The Company reserved all of its loans to Aloe & Herbs at December 31, 1998, due to uncertainty regarding Aloe & Herbs' ability to meet significant mortgage obligations in 1999 and 2000. In April 2000, Aloe & Herbs refinanced its mortgage, removing the financial uncertainty. Therefore, the Company will recognize as other income all principal payments collected from Aloe & Herbs relating to this debt. As of June 30, 2000, the Company has collected $9,400 from Aloe & Herbs as payment on the debt. The Company believes that its available cash resources and expected cash flows from operations will provide the funds necessary to finance its current operations. However, the Company does not expect that its current cash resources will be sufficient to finance the major clinical studies and costs of filing new drug applications necessary to develop its products to their full commercial potential. Additional funds, therefore, may have to be raised through equity offerings, borrowings, licensing arrangements or other means, and there is no assurance that the Company will be able to obtain such funds on satisfactory terms when they are needed. Regulation The Company is subject to regulation by numerous governmental authorities in the United States and other countries. Certain of the Company's proposed products will require governmental approval prior to commercial use. The approval process applicable to prescription pharmaceutical products usually takes several years and typically requires substantial expenditures. The Company and any licensees may encounter significant delays or excessive costs in their respective efforts to secure necessary approvals. Future United States or foreign legislative or administrative acts could also prevent or delay regulatory approval of the Company's or any licensees' products. Failure to obtain requisite governmental approvals or failure to obtain approvals of the scope requested could delay or preclude the Company or any licensees from marketing their products, or could limit the commercial use of the products, and thereby have a material adverse effect on the Company's liquidity and financial condition. Impact of Inflation The Company does not believe that inflation has had a material impact on its results of operations. Second Quarter of 2000 Compared With Second Quarter of 1999 Net sales were $5,463,000 in the second quarter of 2000, a decrease of $1,287,000, or 19%, compared with $6,750,000 in the second quarter of 1999. Net sales for Caraloe, Inc., the Company's consumer products subsidiary, decreased from $3,004,000 to $2,468,000. Caraloe sales to Mannatech, Inc., which are primarily Manapol[R] powder, decreased from $2,761,000 in the second quarter of 1999 to $1,997,000 in the second quarter of 2000. Sales of the Company's wound and skin care products decreased 20%, due to product mix and intense downward pricing pressure, to $2,995,000 in the second quarter of 2000 as compared to $3,746,000 in the second quarter of 1999. Domestic sales of wound care products were $2,780,000 in 2000 compared to $3,549,000 in 1999. Cost of sales decreased from $3,370,000 to $2,614,000 or 22%. As a percentage of sales, cost of sales decreased from 50% in the second quarter of 1999 to 48% in the second quarter of 2000. This was due to operating efficiencies achieved in the Company's Costa Rica operations as well as its Irving location. Selling, general and administrative expenses increased from $2,592,000 in the second quarter of 1999 to $2,648,000 in 2000. Research and development expenses decreased to $692,000 from $1,212,000, or 43%, due to the cessation of the clinical trial of Aliminase[TM] in the first quarter of 2000. Excluding Aliminase[TM] costs, research and development expenses in the second quarter of 1999 were $661,000. All costs related to the conclusion of the Aliminise[TM] trial were included in the quarter ended March 31, 2000. Other income of $8,000 in the second quarter 2000 was primarily from royalty income. Net interest income was $27,000 in the second quarter of 2000 as compared to $30,000 in the second quarter of 1999. The reduced investment income was primarily due to lower cash balances invested. Net loss for the second quarter of 2000 was $679,000, compared with net loss of $394,000 during the second quarter of 1999. Assuming dilution, the net loss for the second quarter of 2000 was $.07 per share, compared to net loss of $.04 per share for the same quarter of 1999. First Six Months of 2000 Compared With First Six Months of 1999 Net sales were $12,588,000 in the first six months of 2000, compared with $13,648,000 in the first six months of 1999. This decrease of $1,060,000, or 8%, resulted from a decrease of $121,000 in sales of Caraloe, Inc., the Company's consumer products subsidiary, and a decrease in wound care sales of $939,000. Caraloe's sales decreased from $6,013,000 to $5,892,000, or 2%. Caraloe's sales to Mannatech, Inc., which were primarily Manapol[R] powder, decreased from $5,487,000 in 1999 to $5,077,000 in 2000. Net wound care sales decreased from $7,635,000 in 1999 to $6,696,000 in 2000, or 12%. Decreased wound care sales were primarily due to downward pricing pressures from an increasingly competitive marketplace. Cost of sales decreased from $6,981,000 in 1999 to $6,244,000 in 2000, or 11%. As a percentage of sales, cost of sales decreased from 51% in the first six months of 1999 to 50% in the first six months of 2000. This was due to increased efficiencies in the Company's manufacturing operations. Selling, general and administrative expenses increased to $5,271,000 in 2000 from $5,143,000 in 1999. This increase was due primarily to costs associated with the initiation of two large sales contracts. Research and development expenses decreased to $2,129,000 in 2000 from 2,983,000 in 1999, or 29%. This decrease was primarily due to the cessation of the clinical trial of Aliminase[TM] in the first quarter of 2000. Expenses from the clinical trial totaled $623,000 the first half of 2000 versus $1,670,000 in the first half of 1999. Net interest income of $60,000 was realized in the first six months of 1999, versus net interest income of $46,000 in the first six months of 2000. The reduced investment income was primarily due to lower cash balances invested. Net loss for the first six months of 2000 was $1,208,000, compared with a net loss of $1,399,000 for the first six months of 1999. Assuming dilution, the net loss for the first six months of 2000 was $0.13 per share, compared to a net loss of $0.15 per share for the same period in 1999. Forward Looking Statements All statements other than statements of historical fact contained in this report, including but not limited to statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" (and similar statements contained in the Notes to Consolidated Financial Statements) concerning the Company's financial position, liquidity, capital resources and results of operations, its prospects for the future and other matters, are forward-looking statements. Forward-looking statements in this report generally include or are accompanied by words such as "anticipate", "believe", "estimate", "expect", "intend" or words of similar import. Such forward-looking statements include, but are not limited to, statements regarding the Company's plan or ability to negotiate an extension of the agreement with its supplier of freeze-dried products, to fulfill its obligations under that agreement, to reduce its cost of Aloe vera L. leaves significantly by purchasing such leaves from Rancho Aloe, to obtain financing when it is needed and to fund its operations from revenue and other available cash resources. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements include but are not limited to the possibilities that the Company may be unable to obtain the funds needed to carry out large scale clinical trials and other research and development projects, that the results of the Company's clinical trials may not be sufficiently positive to warrant continued development and marketing of the products tested, that new products may not receive required approvals by the appropriate government agencies or may not meet with adequate customer acceptance, that the Company may not be able to obtain financing when needed, that the Company may not be able to obtain appropriate licensing agreements for products that it wishes to market or products that it needs assistance in developing, that the Company's efforts to improve its sales and reduce its costs may not be sufficient to enable it to fund its operating costs from revenues and available cash resources, that one or more of the customers that the Company expects to purchase significant quantities of products from the Company or Caraloe may fail to do so, that competitive pressures may require the Company to lower the prices of or increase the discounts on its products, that the Company's sales of products it is contractually obligated to purchase from suppliers may not be sufficient to enable and justify its fulfillment of those contractual purchase obligations, that the Company may not succeed in negotiating an extension of its agreement with its supplier of freeze-dried products, that other parties who owe the Company substantial amounts of money may be unable to pay what they owe the Company, and that the Company may be unable to produce or obtain or may have to pay excessive prices for the raw materials or products it needs. All forward-looking statements in this report are expressly qualified in their entirety by the cautionary statements in the two immediately preceding paragraphs. Item 3. Quantitative and Qualitative Disclosures About Market Risk. The Company's exposure to market risk from changes in foreign currency exchange rates and the supply and prices of Aloe vera L. leaves has not changed materially from its exposure at December 31, 1999, as described in the Company's Form 10-K Annual Report for the year then ended. Part II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the 2000 Annual meeting of Shareholders held on May 18, 2000, the persons named below were re-elected to serve as directors of the Company for terms expiring at the 2003 annual meeting by the votes shown opposite their respective names: Nominee Shares Voted For Shares Abstaining ------- ---------------- ----------------- George DeMott 8,375,722 136,295 Robert A. Fildes, Ph.D. 8,376,061 135,956 Carlton E. Turner, Ph.D., D.Sc. 8,372,693 139,324 The other directors whose terms of office continued after the meeting are R. Dale Bowerman, whose term expires at the 2002 annual meeting, and Thomas J. Marquez and Selvi Vescovi, whose terms expire at the 2001 annual meeting. One directorship remained vacant following the meeting and may be filled by action of the Board at a future date if a suitable candidate is found. The appointment of Ernst & Young LLP as independent public accountants for the Company for the fiscal year ending December 31, 2000 was approved by the holders of 8,466,877 shares, with the holders of 31,065 shares voting against approval and the holders of 14,075 shares abstaining. Item 6. Exhibits and Reports on Form 8-K a. Exhibits: 27.1 Financial Data Schedule b. Reports on Form 8-K: The Registrant did not file any reports on Form 8-K during the quarter ended June 30, 2000. 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. CARRINGTON LABORATORIES, INC. (Registrant) Date: August 14, 2000 By: /s/ Carlton E. Turner --------------------- Carlton E. Turner, President and C.E.O. (principal executive officer) Date: August 14, 2000 By: /s/ Robert W. Schnitzius ------------------------ Robert W. Schnitzius, Chief Financial Officer (principal financial and accounting officer) INDEX TO EXHIBITS Item No. Description ---- ----------- 27.1 Financial Data Schedule EX-27.1 2 0002.txt
5 This schedule contains summary financial information extracted from (1) Statements of Balance Sheets, (2) Statements of Operations and (3) Statements of Cash Flows, and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-2000 JUN-30-2000 2,410 0 3,225 379 5,103 11,260 21,220 10,508 22,396 3,759 0 0 0 96 18,541 22,396 12,588 12,659 6,244 13,644 223 0 0 (1,208) 0 (1,208) 0 0 0 (1,208) (0.13) (0.13)
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