-----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, HyDWq+y1atfhp6OIUTJR8bbixyaMNFD36kRpRca53SE0GrAdjat9QuU3/IHB1NWu zDYZRFg8SeFMktGxlPuUDA== 0000891092-03-001699.txt : 20030724 0000891092-03-001699.hdr.sgml : 20030724 20030724142219 ACCESSION NUMBER: 0000891092-03-001699 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030724 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030724 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPAN AMERICA MEDICAL SYSTEMS INC CENTRAL INDEX KEY: 0000718924 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 570525804 STATE OF INCORPORATION: SC FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11392 FILM NUMBER: 03800681 BUSINESS ADDRESS: STREET 1: 70 COMMERCE DR STREET 2: P O BOX 5231 CITY: GREENVILLE STATE: SC ZIP: 29615 BUSINESS PHONE: 8642888877 MAIL ADDRESS: STREET 1: 70 COMMERCE DR STREET 2: PO BOX 5231 CITY: GREENVILLE STATE: SC ZIP: 29606 8-K 1 e15286_8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (Date of earliest event reported): July 24, 2003 SPAN-AMERICA MEDICAL SYSTEMS, INC. ---------------------------------- (Exact name of registrant as specified in its charter) Commission File Number 0-11392 South Carolina 57-0525804 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 70 Commerce Center Greenville, South Carolina 29615 -------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number (including area code): (864) 288-8877 Not Applicable -------------- (Former name or former address, if changed since last report) Item 7. Financial Statements and Exhibits. (c) Exhibits. Exhibit Number Exhibit -------------- ------- 99.1 Press Release dated July 24, 2003 Item 9. Regulation FD Disclosure/Results of Operations and Financial Condition. On July 24, 2003, Span-America Medical Systems, Inc. ("SPAN") issued a press release announcing financial information for its fiscal third quarter ended June 28, 2003. The press release is attached as Exhibit 99.1 to this Form 8-K and is furnished to, but not filed with, the Commission. This information is provided under Item 12 of Form 8-K. 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 hereunto duly authorized. SPAN-AMERICA MEDICAL SYSTEMS, INC. /s/ Richard C. Coggins ------------------------------------ Richard C. Coggins Chief Financial Officer Dated: July 24, 2003 INDEX TO EXHIBITS Exhibit Number Exhibit - -------------- ------- 99.1 Press Release dated July 24, 2003 * * This exhibit is furnished to, but not filed with, the Commission by inclusion herein. EX-99.1 3 e15286ex99-1.txt PRESS RELEASE Exhibit 99.1 Span-America Reports Higher Sales and Net Income For Third Quarter of Fiscal 2003 Declares Quarterly Dividend GREENVILLE, S.C., July 24 /PRNewswire-FirstCall/ -- Span-America Medical Systems, Inc. (Nasdaq: SPAN) today reported higher sales and net income for the third quarter of fiscal 2003 ended June 28, 2003. The Board also declared a regular quarterly dividend of $0.035 per share to be paid on September 3, 2003, to shareholders of record on August 15, 2003. "Net sales in the third quarter rose 27% to $10.6 million and net income was up 9% to $392,000, or $0.15 per diluted share, compared with the third quarter of fiscal 2002," stated Jim Ferguson, president and chief executive officer of Span-America Medical Systems. "Our improved results were due to higher sales in the custom products segment, particularly consumer mattress pads, and increased medical mattress sales." Third Quarter Results Net sales for the quarter increased 27% to $10.6 million compared with $8.3 million in third quarter of last year. Medical sales increased 8% during the third quarter to $5.5 million compared with $5.1 million in the third quarter last year. The majority of growth in medical sales was from Span-America's proprietary lines of therapeutic replacement mattresses. Medical mattress sales were up 31% in the quarter, led by the Company's newest powered mattresses, the PressureGuard(R) APM2(R) and the PressureGuard Easy Air(R). "We are pleased with the continued growth in our powered medical mattresses business, particularly considering the current weakness in the long term care market," stated Mr. Ferguson. "We believe the clinical value of powered mattresses is proven and we continue to invest in research and development of new features and products for this market. This is one of the fastest growing parts of our medical business and accounted for approximately 25% of medical sales in the latest quarter." In other medical product lines, sales of patient positioners increased 4% during the third quarter. Sales of the Company's Selan(R) line of skin care products grew by 11% during the quarter as a result of the June introduction of the new Selan Herbal(TM) barrier cream. Sales of medical mattress overlays declined 8% during the quarter, continuing a long-term trend of customers switching from overlays to replacement mattresses. Seating sales were down 46% in the third quarter compared with the third quarter of fiscal 2002. Last year's third quarter seating sales included a large one-time sale to a long term care customer. Excluding the special order from last year, seating sales in the third quarter this year would have declined 9% compared with the prior year. Sales in the custom products segment rose 57% to $5.1 million in the third quarter compared with $3.3 million in third quarter of last year. Consumer sales rose 68% and industrial sales were up 11% compared with the third quarter of the prior year. Consumer sales benefited from Span-America's marketing partnership with Louisville Bedding Company with increased shipments of Geo-tech(TM) foam mattress pads sold to Wal-Mart. Industrial sales growth came from increased orders from new and existing customers. Gross profit rose 15% to $2.9 million compared with $2.5 million in the third quarter last year. The increase in gross profit level was caused by higher sales volume and improved manufacturing efficiencies. Gross margin declined to 27.4% from 30.3% last year due to higher raw material costs and a less profitable product mix. Span-America has received three price increases on foam raw materials during the past year and has been only partially successful at passing these higher costs along to customers. Higher consumer sales also reduced margins since they carry lower margins than those associated with the Company's medical business. Operating profit increased 14% in the third quarter to $442,000 compared with $388,000 in the same period last year. Operating profit was offset somewhat in the latest quarter by higher marketing and development costs for the Secure I.V. safety catheter product line and increased administrative expenses related to a proposed tender offer by Jerry Zucker. Third quarter costs related to Secure I.V. totaled $131,000 and tender offer related expenses were approximately $85,000. "We are encouraged about potential marketing opportunities for Secure I.V. and are pleased with our progress in preparing the product for market," continued Mr. Ferguson. "We look forward to having the product available for sale later this year." Net income for the third quarter rose 9% to $392,000, or $0.15 per diluted share, compared with $359,000, or $0.14 per diluted share, in the third quarter last year. Most of the earnings increase came from higher sales volume during the quarter. Year-to-Date - Nine Months Results For the first three quarters of fiscal 2003, sales rose 29% to $29.3 million compared with $22.8 million for the same period last year. The year-to-date sales increase was due to higher volumes of consumer foam mattress pads, medical therapeutic replacement mattresses, and industrial foam products. Net income for the year-to-date declined 19% to $951,000, or $0.36 per diluted share, compared with $1.2 million, or $0.45 per diluted share, last year. The year-to-date earnings decline was due primarily to higher foam raw material costs and expenses related to the development and introduction of the Secure I.V. product line. Outlook for Fourth Quarter - Fiscal 2003 "We expect our fourth quarter sales to be similar to the fourth quarter of last year based on current trends," continued Mr. Ferguson. "Medical sales are expected to be somewhat soft due to weakness in the long term care portion of the medical market. We believe fourth quarter sales in the custom products segment will be flat to down slightly mainly due to the comparison with our excellent sales performance in the fourth quarter last year. We expect earnings for the remainder of the fiscal year to be lower than fourth quarter of last year because of higher foam costs, expenses related to Secure I.V. development and introduction, and anticipated ongoing expenses related to the proposed tender offer. "Our progress in growing sales and earnings was recently highlighted by FSB: Fortune Small Business magazine by our inclusion in their listing of the top 100 fastest growing publicly traded companies. Span-America ranked number 63 on the list that was included in the magazine's July/August 2003 issue. We remain focused on building shareholder value through our product development programs and expanded marketing partnerships," concluded Mr. Ferguson. About Span-America Medical Systems, Inc. Span-America manufactures and markets a comprehensive selection of pressure management products for the medical market, including Geo-Matt(R), PressureGuard(R), Geo-Mattress(R), Span+Aids(R), Isch-Dish(R), and Selan(R) products. The Company also supplies custom foam and packaging products to the consumer and industrial markets. Span-America's stock is traded on The Nasdaq Stock Market's National Market under the symbol SPAN. Forward-Looking Statements The Company has made forward-looking statements in this release, regarding management's expectations for future sales and earnings performance. Management wishes to caution the reader that these statements are only predictions. Actual events or results may differ materially as a result of risks and uncertainties facing the Company including: (a) the loss of a major distributor of the Company's medical or custom products, (b) inability to achieve anticipated sales volumes of medical or custom products, (c) raw material cost increases, (d) changes in relationships with large customers, (e) the inability to achieve sales and cost targets for the Secure I.V. product line, (f) the impact of competitive products and pricing, (g) government reimbursement changes in the medical market, (h) FDA regulation of medical device manufacturing, and other risks referenced in the Company's Securities and Exchange Commission filings. The Company disclaims any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Span-America Medical Systems, Inc. is not responsible for changes made to this document by wire services or Internet services. SPAN-AMERICA MEDICAL SYSTEMS, INC. Statements of Income (Unaudited) 3 Months Ended June 28, June 29, 2003 2002 % Chg Net sales $10,608,800 $8,343,500 27% Cost of goods sold 7,702,300 5,814,500 32% Gross profit 2,906,500 2,529,000 15% 27.4% 30.3% Selling and marketing expenses 1,674,900 1,479,100 13% Research and development expenses 144,100 80,000 80% General and administrative expenses 645,300 582,100 11% 2,464,300 2,141,200 15% Operating income 442,200 387,800 14% 4.2% 4.6% Investment income 20,500 26,000 -21% Royalty income 138,900 135,000 3% Other 800 600 33% Total non-operating income 160,200 161,600 -1% Income before income taxes 602,400 549,400 10% Income taxes 210,000 190,000 11% Net income $392,400 $359,400 9% 3.7% 4.3% Net income per share of common stock: Basic $0.15 $0.14 8% Diluted 0.15 0.14 7% Dividends per common share $0.035 $0.030 17% Weighted average shares outstanding Basic 2,549,802 2,530,793 1% Diluted 2,674,306 2,629,517 2% Supplemental Data Depreciation expense 122,500 110,500 11% Amortization expense 20,200 10,200 98% 9 Months Ended June 28, June 29, 2003 2002 % Chg Net sales $29,339,500 $22,792,300 29% Cost of goods sold 21,293,200 15,494,400 37% Gross profit 8,046,300 7,297,900 10% 27.4% 32.0% Selling and marketing expenses 4,774,300 4,229,600 13% Research and development expenses 428,500 222,100 93% General and administrative expenses 1,908,700 1,673,200 14% 7,111,500 6,124,900 16% Operating income 934,800 1,173,000 -20% 3.2% 5.1% Investment income 69,000 76,600 -10% Royalty income 457,400 471,200 -3% Other 2,200 88,200 -98% Total non-operating income 528,600 636,000 -17% Income before income taxes 1,463,400 1,809,000 -19% Income taxes 512,000 633,000 -19% Net income $951,400 $1,176,000 -19% 3.2% 5.2% Net income per share of common stock: Basic $0.37 $0.47 -20% Diluted 0.36 0.45 -21% Dividends per common share $0.105 $0.090 17% Weighted average shares outstanding Basic 2,542,840 2,524,236 1% Diluted 2,650,514 2,593,253 2% Supplemental Data Depreciation expense 350,100 299,400 17% Amortization expense 55,800 60,700 -8% SPAN-AMERICA MEDICAL SYSTEMS, INC. Balance Sheets June 28, September 28, 2003 2002 (Unaudited) (Note) Assets Current assets: Cash and cash equivalents $1,325,600 $1,095,300 Securities available for sale 4,850,600 5,853,700 Accounts receivable, net of allowances 5,615,600 4,926,900 Inventories 2,888,400 1,958,400 Prepaid expenses and deferred income taxes 473,800 496,200 Total current assets 15,154,000 14,330,500 Property and equipment, net 4,621,300 3,631,900 Cost in excess of fair value of net assets acquired, net of accumulated amortization 1,924,100 1,924,100 Other assets 2,171,200 2,019,400 $23,870,600 $21,905,900 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $3,013,100 $1,703,000 Accrued and sundry liabilities 1,484,000 1,570,000 Total current liabilities 4,497,100 3,273,000 Deferred income taxes 282,000 282,000 Deferred compensation 936,500 957,300 Shareholders' equity Common stock, no par value, 20,000,000 shares authorized; issued and outstanding shares 2,550,154 (2003) and 2,538,870 (2002) 273,400 196,300 Additional paid-in capital 8,500 8,500 Retained earnings 17,873,100 17,188,800 Total shareholders' equity 18,155,000 17,393,600 $23,870,600 $21,905,900 Note: The Balance Sheet at September 28, 2002 has been derived from the audited financial statements at that date. SOURCE Span-America Medical Systems, Inc. -0- 07/24/2003 /CONTACT: James D. Ferguson, President and Chief Executive Officer of Span-America Medical Systems, Inc., +1-864-288-8877, ext., 212/ (SPAN) CO: Span-America Medical Systems, Inc. ST: South Carolina IN: BIO HEA MTC SU: ERN -----END PRIVACY-ENHANCED MESSAGE-----