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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [fee required] for the fiscal year ended June 30, 1995.
[ ] Transition Report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [no fee required] for the transition period from _______
to ______.
Commission file number 0-16061
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Criticare Systems, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 39-1501563
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
20925 Crossroads Circle, Waukesha, Wisconsin 53186
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 414-798-8282
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
NA NA
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Securities registered pursuant to Section 12(g) of the Act:
Voting Common Stock, $.04 Par Value
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(Title of class)
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
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [ X ]
The aggregate market value of the voting common stock held by
nonaffiliates of the Registrant as of August 31, 1995 was $12,585,409.
On August 31, 1995, there were outstanding 6,712,218 shares of the
Registrant's $.04 par value common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the
fiscal year ended June 30, 1995 are incorporated by reference into Part II of
this report.
Portions of the Proxy Statement for the Annual Meeting of the
Stockholders of the Registrant to be held November 10, 1995 are incorporated by
reference into Part III of this report.
PART I
Item 1. BUSINESS.
Criticare designs, manufactures and markets vital signs and gas
monitoring instruments and related noninvasive sensors used to monitor patients
in many healthcare settings. Since a patient's oxygen, anesthetic gas and
carbon dioxide levels can change dramatically within minutes, causing severe
side effects or death, continuous monitoring of these parameters is increasing.
The Company's monitoring equipment improves patient safety by delivering
accurate, comprehensive and instantaneous patient information to the clinician.
The Company's products also allow hospitals to contain costs primarily by
substituting cost-effective reusable pulse oximetry sensors for disposable
sensors, controlling the use of costly anesthetics and increasing personnel
productivity.
To meet the needs of end-users in a wide variety of patient settings,
the Company has developed a broad line of patient monitors which combine one or
more of its patented or other proprietary technologies, for monitoring oxygen
saturation, carbon dioxide and anesthetic agents, with standard monitoring
technologies that provide electrocardiogram ("ECG"), invasive and noninvasive
blood pressures, temperature, heart rate and respiration rate. In addition,
the Company's VitalView telemetry system allows one nurse to monitor up to
eight
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patients simultaneously from a convenient central location. This allows
hospitals to move out of the intensive care unit ("ICU") those patients that
require continuous monitoring, but do not need all of an ICU's extensive and
costly personnel and equipment resources.
The Company was incorporated under the laws of the State of Delaware
in October 1984.
Products
Criticare markets a broad range of vital signs and gas monitoring
products designed to address the needs of a variety of end-users in different
patient settings. Criticare's monitors display information graphically and
numerically. All Criticare monitors incorporate adjustable visual and audible
alarms to provide reliable patient-specific warnings of critical conditions,
and most of the Company's monitors record up to 60 hours of trend data.
Criticare monitors are available with printer capability to provide permanent
records of patient data.
Model 503, 503S, 504, 504P, 504US, 504USP and 5040 (PONI) Pulse
Oximeters . Criticare's complete line of pulse oximeters meet the needs of
virtually all clinical environments: adult, pediatric and neonatal intensive
care units, operating rooms, emergency rooms, nursing homes, physicians'
offices and ambulances. The line is designed to provide accuracy and
convenience at a competitive cost to the end-user.
Model 507S, 507SD, 507N, 507O and 507E Patient Monitors. The 507
series is comprised of small, compact, portable, full-featured vital signs
monitors configured to meet specific clinical needs. The 507S and 507SD are
well-suited to dental and physician offices. The 507N and 507O are ideal for
patient floor monitoring of noninvasive blood pressure and pulse oximetry. The
507E combines ECG, oxygen saturation and noninvasive blood pressure for a
complete vital signs monitor for physician office and hospital applications.
Combined with the VitalView central station, the 507E is an effective low-cost
monitoring system for the emergency room or the recovery room.
Model 602-3B, 602-6B, 602-11 and 602-13 Gas Monitors . The 602 series
provides monitoring of carbon dioxide, pulse oximetry and anesthetic agents
using Criticare's proprietary infrared technology. The 602 IQ series of
operating room monitors provides automatic identification and quantification of
all five approved anesthetic agents simultaneously.
Model 820 Maestro(TM) I Telemetry Monitors. The Maestro I Telemetry
system addresses the rapidly expanding telemetry market with a reliable,
inexpensive ECG telemetry system. The U.S. market for telemetry in 1996 is
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expected to reach $400 million. The Maestro I system provides a waterproof ECG
transmitter capable of five ECG lead configurations at a price approximately
30% lower than Criticare's material competitors. The ability to link
Criticare's 507E and Scholar monitors to this versatile central station is
expected to expand the market into numerous hospital departments.
Model 1100 Anesthesia Monitor . The Model 1100 monitor provides
patient monitoring for a wide variety of cardio-pulmonary parameters in an
integrated system. The Model 1100 is able to monitor two ECG waveforms,
non-invasive blood pressure, three types of invasive blood pressure,
respiration rate, heart rate, temperature, oxygen saturation, inspired/expired
oxygen, carbon dioxide and the range of anesthetic gases, including recently
developed anesthetic agents such as desflurane and sevoflurane. The Model 1100
uses the Company's proprietary disposable respiratory secretion filter system
and is designed to accommodate low-flow anesthesia situations.
Pulse Oximetry Sensors. Criticare has designed proprietary,
noninvasive sensors that can be used on any patient, from a premature infant to
a full-grown adult. Criticare's line of reusable pulse oximetry sensors offers
users significant cost savings compared to disposables. Criticare's reusable
sensors generally last longer than the one-year warranty period and are easily
and inexpensively cleaned between uses. Criticare's reusable sensors include a
finger sensor for routine applications and a multisite sensor for increased
placement flexibility. The multisite sensor is fully immersible, allowing for
sterilization between patients. The Company recently introduced the "Shell"
sensor, the first reusable sensor with a removable hard cover. The cover can
be inexpensively replaced if it becomes damaged, saving hundreds of dollars
over buying a new sensor. The Shell sensor is also the first reusable sensor
on the market that can be fully dismantled and immersed for improved cleaning
and sterilization between patients if required. The Company also sells a range
of disposable sensors designed for single use in cases where the facility would
prefer to use a patient charge disposable product.
Water Chek/Chek-Mate Filter System. The Company's patented,
disposable Water Chek system separates a patient's respiratory secretions from
a breath sample before it enters the gas monitor(s) for analysis. The
Company's proprietary, disposable Chek-Mate filter enhances the removal of
moisture from the sample, while preventing cross-contamination. This system
allows the monitor to operate effectively regardless of humidity or patient
condition. The self-sealing feature also protects the healthcare provider from
potential contamination.
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Products Under Development
Fetal Oxygen Monitor. The Company is in the active stage of
developing a fetal oxygen monitor designed to monitor the blood oxygen
saturation of a fetus during labor and delivery. The Company's potential
introduction of this product will depend to a large extent on the need for
clinical testing, engineering requirements and, in particular, the FDA approval
process. Although there were over 4 million births in the United States in
1990, it is likely that a fetal oxygen monitor would, at least initially, be
used only during deliveries where some unusual circumstances or danger were
perceived by the physician. No assurance can be given that such product will
be successfully developed and marketed by the Company or, if developed and
marketed, will be clinically or commercially accepted.
Scholar(TM). The Scholar series specifically addresses the needs of
small hospitals with broad clinical needs (the monitoring of ECG, blood oxygen
saturation, noninvasive blood pressure, temperature and invasive blood
pressure) but whose budgets are small. Scholar offers all of the primary
features a hospital needs with the capability of adding more features if
desired.
Vital Signs(TM) . The hand-held Vital Signs monitor measures heart
rate, oxygen saturation, noninvasive blood pressure and temperature using a
hand-held monitor weighing less than two pounds. These features make the Vital
Signs monitor well-suited for use on nursing floors and in physicians' offices,
ambulances and home healthcare organizations.
VitalView(TM). The VitalView central station makes it possible for one
nurse or technician to monitor numerous patients simultaneously. The VitalView
can receive, display and store data from a wide variety of Criticare monitors
such as the Scholar, 507E and MPT.
MPT(TM) . The Company believes the MPT (Multiple Parameter Telemetry)
is the first device of its kind. In today's healthcare environment, hospitals
need to move patients from expensive critical care departments as quickly as
possible to less expensive general nursing floors. MPT, because of its complete
monitoring capability and its lower cost, allows the patient to be ambulatory
while still being monitored for all vital signs. Home health applications where
the patient is monitored from the hospital while he or she is at home, reduces
hospital lengths of stay even more.
Marketing and Sales
Domestic Sales. In fiscal 1989, the Company reduced its reliance on
third party distributors to sell its products to domestic hospitals and began
the transition
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to a direct sales effort. The Company had determined that marketing its more
advanced and expensive multiparameter monitors, such as the Model 1100 vital
signs monitor and the Model 602 POET gas monitors, required a well-trained,
more focused and dedicated sales force. The Company believes its change to a
direct sales force has allowed it to exercise better control over the pricing
of its products and maintain a better understanding of the needs of the
domestic hospital market. The Company is focusing its direct sales efforts on
hospitals with over 100 beds, where the Company believes its products most
effectively address cost containment issues. Such hospitals comprise over half
of the United States' 7,500 hospitals.
As of August 31, 1995, the Company's direct sales force included nine
sales people, three regional managers and one executive manager. The Company
has augmented its direct sales effort by the appointment of nine key regional
specialty dealers employing approximately 30 sales people to improve specific
market penetration while adhering to prudent cost of sale guidelines. This
strategy will be continued until specific market share targets are achieved and
demand increases for the new products.
The Company's alternate care division markets the Company's products,
primarily the Model 503, Model 504, Model 507 and POET TE monitors, to domestic
alternate care providers such as free-standing surgery centers, oral and
plastic surgery suites, other out-patient clinics, home care services, extended
care facilities and medical transport vehicles. As of August 31, 1995, the
Company served this market through 60 independent dealers and distributors
employing approximately 650 sales people. The Company also sells monitors to
third party rental and leasing companies. The Company does not lease products
directly.
International Sales. One of the Company's principal marketing
strategies has been to target international markets, particularly Western
Europe, Latin America and the Pacific Rim countries. During fiscal 1995,
Criticare sold its products principally to hospitals in over 75 countries
through over 60 independent dealers. The Company's wholly owned subsidiary,
Criticare International GmbH Marketing Services ("Criticare International"),
coordinates international sales and distribution. Criticare believes demand
for the Company's products in international markets is primarily driven by cost
containment concerns, and increased interest in using quality patient
monitoring for improved patient management.
In fiscal 1995, 49.1% of Criticare's net sales, or $14.1 million, was
attributable to international sales, of which approximately 42.0% was from
sales in Western Europe, 28.5% was from sales to Pacific Rim countries and
29.5% was from sales to Canada and South America. In fiscal 1994, 46.5% of
Criticare's net sales, or $14.0 million, was attributable to international
sales. In fiscal 1993,
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49.8% or $14.6 million, of Criticare's net sales was attributable to exports.
There are no material identifiable assets of the Company located in foreign
markets. The Company sells its products in United States dollars and is not
subject to significant currency risks; however, an increase in the value of the
United States dollar relative to foreign currencies could make the Company's
products less price competitive in those markets.
Clinical Support. At August 31, 1995, Criticare employed two clinical
support specialists to provide customer training and education, primarily to
domestic hospitals. The clinical support staff also assists in the periodic
training and education of the direct sales force. In addition, the direct
sales force maintains contact with end-users and provides additional training
and updates. Clinical support in foreign markets is provided by Criticare
International sales coordinators.
Warranty and Service. Criticare believes that customer service is a
key element of its marketing program. Criticare's monitors are warranted
against defects for one year and its reusable sensors for six months. If a
problem develops with a Criticare product while under warranty, the Company
typically provides a replacement unit until the product can be repaired at the
Company's facility. At August 31, 1995, the Company had a customer service
staff of 14 people at its Waukesha, Wisconsin facility. The Company also
maintains product repair facilities in Bad Homburg, Germany and Kuala Lumpur,
Malaysia for its international customers. The Company offers extended
warranties and service contracts on all of its monitors.
Manufacturing
The Company continually strives to implement manufacturing
efficiencies while maintaining product quality and reliability. The Company's
oximeters and sensors are assembled from off-the-shelf components and other
parts produced to the Company's specifications, such as printed circuit board
assemblies, custom transformers and sensor cable/connector subassemblies.
However, Criticare produces certain important components in-house. All
electronic components are subjected to a 24-hour high-temperature burn-in to
eliminate early component failure. Some subassembly is performed by
subcontractors, but final assembly and quality control are performed at
Criticare's facility. Criticare maintains test and inspection procedures to
minimize errors and enhance the operating reliability of its products. Final
test procedures on fully assembled units include an operational test and a
continuous 72-hour burn-in procedure.
Certain of Criticare's products incorporate components currently
purchased from single sources. While the Company believes these components are
available from alternate sources on reasonable terms, an interruption in the
delivery of these
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or other components could have an adverse effect on the Company. In order to
reduce the risk of supply interruption, the Company maintains inventories of
certain components.
The ISO 9000 series of quality management and assurance standards was
developed by the International Organization for Standardization (ISO) and
published in 1987. In 1993 the EC (European Community) was formed with the
signing of the Maastricht Treaty by 12 European countries. One of the many
standards adopted by this group is the ISO 9000 international quality assurance
and quality management series under the designation EN2 9000. Based on this
action by the EC and specific requirements from European customers, the Company
believes ISO 9000 registration will be required to compete in EC and other
international markets as an indication of compliance with international quality
management and assurance standards. In July 1994 the Food and Drug
Administration (FDA) announced its intention of harmonizing the ISO 9000
standards with its Medical Device Good Manufacturing Practices (GMP). The
Company has achieved certification under ISO's standards 9001 and 9002. See
"Regulation."
Research, Development and Engineering
Criticare has focused its research, development and engineering
expenditures on products designed to meet identified market demands. The
Company seeks to apply its expertise in gas monitoring and related sensor
technology to develop new products and adapt existing products for new markets.
At August 31, 1995, the Company had an in-house research, development and
engineering staff of 22 people. The Company's research, development and
engineering expenditures were $1.9 million in fiscal 1995, $2.4 million in
fiscal 1994 and $2.6 million in fiscal 1993.
Competition
The markets for the Company's products are highly competitive. Many
of Criticare's competitors, including its principal competitors described
below, have greater financial resources, more established brand identities and
reputations, longer histories in the medical equipment industry and larger and
more experienced sales forces than Criticare. In these respects, such
competitors have a competitive advantage over the Company. The Company
competes primarily on the basis of product features, the quality and value of
its products (i.e., their relative price compared to performance features
provided) and the effectiveness of its sales and marketing efforts. The
Company believes that its principal competitive advantages are provided by its
focus on cost containment and its patented and other proprietary technology and
software for noninvasive, continuous monitoring of oxygen, specific anesthetic
gases, carbon dioxide and
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blood pressure, its cost-efficient manufacturing, the efficiency and speed of
its research and development efforts and its established international
presence.
The principal competing manufacturers of pulse oximeters are Nellcor
Puritan Bennett and Ohmeda, a division of The BOC Group, Inc.. The Company
estimates that Nellcor has captured a majority, and that Ohmeda and the Company
have each captured significant portions of the worldwide pulse oximeter market.
In addition, there are approximately 30 other companies which compete in the
market for pulse oximeters. The Company also indirectly competes with
manufacturers of numerous other medical equipment products for limited customer
funds.
The Company believes that the worldwide anesthetic agent and carbon
dioxide monitor markets are comparatively fragmented, with no dominant
competitor. The Company's principal competitors in the domestic gas monitor
market include Datex Medical Instrumentation, Inc., a United States subsidiary
of Instrumentarium OY, a Finnish company, Ohmeda and Datascope Corp. The
market for vital signs monitors includes competitors such as Hewlett-Packard
Company, Siemens A.G., Datex and SpaceLabs, Inc., a subsidiary of Westmark
International Incorporated.
The Company believes that its principal competitors in Western Europe
include Datex and Ohmeda and that the Company has a significant share of this
market. In the Pacific Rim countries, the Company believes that Ohmeda is the
leading competitor and that Datex and the Company also have significant market
shares.
Regulation
As a manufacturer of medical diagnostic equipment, the Company is
regulated by the FDA and similar foreign governmental agencies. In producing
its products, the Company must comply with a variety of regulations, including
the good manufacturing practices regulations of the FDA. In addition, it is
subject to periodic inspections by this agency. If the FDA believes that its
legal requirements have not been fulfilled, it has extensive enforcement
powers, including the ability to ban or recall products from the market and to
prohibit the operation of manufacturing facilities. The Company believes its
products comply with applicable FDA regulations in all material respects. In
addition, the Company received ISO 9002 certification on April 29, 1993 and ISO
9001 certification on July 8, 1994.
Under the Federal Food, Drug and Cosmetic Act, as amended, all medical
devices are classified as Class I, Class II or Class III, depending upon the
level of regulatory control to which they will be subject. Class III devices,
which are the
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most highly controlled devices, are subject to premarket approval by the FDA
prior to commercial distribution in the United States.
The Company's current products have not been subject to the FDA's
comprehensive premarket approval requirements, but are generally subject to
premarket notification requirements. If a new device is substantially
equivalent to a device that did not require premarket approval, premarket
review is satisfied through a procedure known as a "510(k) submission," under
which the applicant provides product information supporting its claim of
substantial equivalence. The FDA may also require that it be provided with
clinical trial results showing the device's safety and efficacy.
The Company believes that, with the possible exception of the fetal
oxygen monitor, the products it is currently developing generally will be
eligible for the 510(k) submission procedure and, therefore, will not be
subject to lengthy premarket approval procedures. However, these products are
still being developed and there can be no assurance that the FDA will determine
that the products may be marketed without premarket approval.
Criticare seeks, where appropriate, to comply with the safety
standards of Underwriters' Laboratories and the Canadian Standards Association
and the standards of the European Community. To date, the Company has not
experienced significant regulatory expense or delay in the foreign markets in
which it sells its products. Industry and professional groups such as the
American Society of Anesthesiologists, to the extent they have the power to
mandate certain practices or procedures as part of their profession's standard
of care, are also a source of indirect regulation of the Company's business.
Patents and Trademarks
The Company believes one of its principal competitive advantages is
provided by its patented and other proprietary technology including its sensor
technology, infrared specific anesthetic gas monitoring technology, UltraSync
signal processing software and disposable respiratory secretion filter system.
None of the Company's U.S. patents expire before 2004. Criticare also has been
granted three foreign patents and has three foreign patent applications pending
on its respiratory secretion filter system. There is no assurance that any
patents held or secured by the Company will provide any protection or
commercial or competitive benefit to the Company. There is also no assurance
that the Company's products will not infringe upon patents held by others. The
Company is the owner of a United States trademark registrations for "POET,"
"Scholar," "Vital View" and "MPT."
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The Company also relies upon trade secret protection for certain of
its proprietary technology. Although the Company requires its employees having
access to its proprietary information to sign confidentiality agreements, no
assurance can be given that such agreements can be effectively enforced or that
others will not independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to or disclose the
Company's trade secrets.
Employees
At August 31, 1995, Criticare had 112 employees in the United States,
including 29 in manufacturing and operations, 11 in quality control, 38 in
marketing and sales, 12 in administration and 22 in research, development and
engineering. At August 31, 1995, Criticare International had 23 employees.
Many of the Company's technical employees are highly skilled. The
Company believes that its continued success depends in part on its ability to
continue to attract qualified management, marketing and technical personnel.
None of the Company's employees are subject to a collective bargaining
agreement. The Company believes that its relations with its employees are
good.
Backlog
Criticare's backlog on June 30, 1995 and 1994 was approximately
$899,000 and $865,000, respectively. The backlog at these dates consisted
primarily of products for which the sales order specified a delayed delivery
date. Criticare generally delivers its products out of inventory when
specified by the customer. The Company does not believe that its backlog at
any date is indicative of its future sales.
Item 2. PROPERTIES.
In November 1992, the Company purchased a new 60,000 square foot
facility for approximately $4.5 million. The Company's mortgage calls for
monthly installments of principal and interest of approximately $35,000 and a
final "balloon" payment of approximately $2.7 million in December 2003. The
Company believes this facility will be adequate for the foreseeable future.
Item 3. LEGAL PROCEEDINGS.
From time to time the Company receives notices from competitors of
potential patent infringement. Based on the advice of its patent counsel and
other considerations, the Company does not currently believe that any of such
claims which it has received, either individually or in the aggregate, will
have a material
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adverse effect on the Company's results of operations or financial condition.
However, there can be no assurance that the Company will not be sued for patent
infringement or that if sued, the outcome of such suits will not have an
adverse effect on the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended June 30, 1995.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Incorporated herein by reference to the Company's 1995 Annual Report
to Stockholders, page 23.
Item 6. SELECTED FINANCIAL DATA.
Incorporated herein by reference to the Company's 1995 Annual Report
to Stockholders, page 2.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Incorporated herein by reference to the Company's 1995 Annual Report
to Stockholders, pages 7 through 9.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Consolidated Balance Sheets for the Company at June 30, 1995 and 1994
and Consolidated Statements of Income, Stockholders' Equity and Cash Flows for
the years ended June 30, 1995, 1994 and 1993, and notes thereto, are
incorporated herein by reference to the Company's 1995 Annual Report to
Stockholders, pages 10 through 22.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
The Company has not changed accountants during the 24 months prior to
June 30, 1995. During that period, there were no disagreements with the
accountants regarding accounting and financial disclosure.
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PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding the executive officers and directors of the
Company is incorporated herein by reference to the discussions under "Nominee
for Election as Director," "Other Directors," "Compliance with Section 16(a) of
the Securities Exchange Act of 1934" and "Executive Officers" in the Company's
Proxy Statement for the 1995 Annual Meeting of Stockholders (the "Criticare
Proxy Statement").
Item 11. EXECUTIVE COMPENSATION.
Incorporated herein by reference to the discussion under "Executive
Compensation" in the Criticare Proxy Statement.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated herein by reference to the discussion under "Security
Ownership" in the Criticare Proxy Statement.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated herein by reference to the discussion under "Certain
Transactions" in the Criticare Proxy Statement.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements. The following consolidated financial
statements of the Company, included in the annual report of the Company to its
Stockholders for the fiscal year ended June 30, 1995, are incorporated by
reference in Item 8.
Consolidated Balance Sheets - as of June 30, 1995 and 1994.
Consolidated Statements of Income - for the years ended June
30, 1995, 1994 and 1993.
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Consolidated Statements of Stockholders' Equity - for the
years ended June 30, 1995, 1994 and 1993.
Consolidated Statements of Cash Flows - for the years ended
June 30, 1995, 1994 and 1993.
Notes to consolidated financial statements.
2. Financial Statement Schedules:
Independent Auditors' Report.
Financial Statement Schedule for the years ending June 30,
1995, 1994 and 1993:
Schedule
Number Description Page
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VIII Valuation and Qualifying Accounts 20
and Reserves
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions, are inapplicable or the required
information is shown in the financial statements or notes thereto, and
therefore have been omitted.
3. Exhibits:
3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to the Registration Statement filed on Form S-1,
Registration No. 33-13050).
3.2 By-Laws of the Company (incorporated by reference to
the Registration Statement filed on Form S-1, Registration No. 33-13050).
4.1 Specimen Common Stock certificate (incorporated by
reference to the Registration Statement filed on Form S-1, Registration No.
33-13050).
10.1 Employment Agreement of Gerhard J. Von der Ruhr
(incorporated by reference to the Registration Statement filed on Form S-1 by
the Company, Registration No. 33-13050).
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10.2 Employment Agreement of N.C. Joseph Lai (incorporated
by reference to the Registration Statement filed on Form S-1, Registration No.
33-13050).
10.3 Blatz House Offices Limited Partnership Agreement
(incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1987).
10.4 Option Agreement dated March 12, 1991 between the
Company and American Healthcare Systems (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended June 30, 1991).
10.5 1992 Employee Stock Option Plan (incorporated by
reference to the Company's Registration Statement on Form S-8, Registration No.
33-60644).
10.6 1992 Nonemployee Stock Option Plan (incorporated by
reference to the Company's Registration Statement on Form S-8, Registration No.
33-60214).
10.7 1987 Employee Stock Option Plan (incorporated by
reference to the Company's Registration Statement on Form S-8, Registration No.
33-33497).
10.8 1987 Nonemployee Stock Option Plan (incorporated by
reference to the Company's Registration Statement on Form S-8, Registration No.
33-40038).
10.9 Form of Executive Office and Director Indemnity
Agreement (incorporated by reference to the Company's Registration Statement on
Form S-1, Registration No. 33-13050).
10.10 Employment Agreement of Richard J. Osowski
(incorporated by reference to the Company's Annual Report on Form 10-K for the
year ended June 30, 1994).
10.11 Revised Option Agreement between the Company and AmHS
Purchasing Partners, L.P. dated as of July 1, 1993 (incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended June 30, 1994).
11.1 Statement regarding computation of per share earnings.
13.1 Annual Report to Stockholders for the Year Ended June
30, 1995.
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21.1 Subsidiaries.
23.1 Independent Auditors' Consent.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K for the three months
ended June 30, 1995.
(c) Exhibits.
The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) Financial Statement Schedules.
The response to this portion of Item 14 is submitted as a separate
section of this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CRITICARE SYSTEMS, INC.
By /s/ Richard J. Osowski
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Richard J. Osowski,
Senior Vice President-Finance
Date: September 28, 1995
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Gerhard J. Von der Ruhr and Richard J. Osowski, and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this Report
on Form 10-K and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each them full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Gerhard J. Von der Ruhr Chairman of the Board, President and September 28, 1995
- --------------------------- Director
Gerhard J. Von der Ruhr
/s/ N.C. Joseph Lai Vice Chairman of the Board, September 28, 1995
- ------------------------------- Vice President and Director
N.C. Joseph Lai
/s/ Richard J. Osowski Senior Vice President-Finance (Principal September 28, 1995
- ----------------------------- Financial and Accounting Officer)
Richard J. Osowski
/s/ Karsten Houm Director September 28, 1995
- ------------------------------
Karsten Houm
/s/ Milton Datsopoulos Director September 28, 1995
- ------------------------------
Milton Datsopoulos
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DELOITTE & TOUCHE LLP
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-4496
Telephone (414)271-3000
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Criticare Systems, Inc.:
We have audited the consolidated financial statements of Criticare Systems,
Inc. and subsidiaries as of June 30, 1995 and 1994, and for each of the three
years in the period ended June 30, 1995, and have issued our report thereon
dated August 1, 1995; such financial statements and report are included in your
1995 Annual Report to Stockholders and are incorporated herein by reference.
Our audits also included the consolidated financial statement schedule of
Criticare Systems, Inc. listed in Item 14. This consolidated financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such consolidated financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
/s/ Deloitte & Touche LLP
Milwaukee, Wisconsin
August 1, 1995
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SCHEDULE VIII
CRITICARE SYSTEMS, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Balance at Charged to Balance at
Beginning Costs and End of
Description of Period Expenses Deductions Period
----------- --------- -------- ---------- ------
YEAR ENDED JUNE 30, 1993:
Allowance for doubtful accounts $241,000 $32,063 $42,063 $231,000
Reserve for sales returns and allowances
$162,000 $519,393 $573,393 $108,000
YEAR ENDED JUNE 30, 1994:
Allowance for doubtful accounts $231,000 $45,706 $1,706 $275,000
Reserve for sales returns and allowances $108,000 $724,687 $628,687 $204,000
YEAR ENDED JUNE 30, 1995:
Allowance for doubtful accounts $275,000 $36,878 $41,878 $270,000
Reserve for sales returns and allowances $204,000 $1,172,464 $1,007,464 $369,000
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EXHIBIT INDEX
Sequential
Exhibit Page
Number Number
------ ------
3.1 Restated Certificate of (1)
Incorporation of the Company
3.2 By-Laws of the Company (1)
4.1 Specimen Common Stock (1)
certificate
10.1 Employment Agreement of (1)
Gerhard J. Von der Ruhr
10.2 Employment Agreement of (1)
N.C. Joseph Lai
10.3 Blatz House Offices Limited (1)
Partnership
10.4 Option Agreement dated March 12, (1)
1991 between the Company and
American Healthcare Systems
10.5 1992 Employee Stock Option Plan (1)
10.6 1992 Nonemployee Stock Option Plan (1)
10.7 1987 Employee Stock Option Plan (1)
10.8 1987 Nonemployee Stock Option Plan (1)
10.9 Form of Executive Officer and (1)
Director Indemnity Agreement
10.10 Employment Agreement of Richard J. Osowski (1)
10.11 Revised Option Agreement between the (1)
Company and AmHS Purchasing Partners,
L.P. dated as of July 1, 1993(1)
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11.1 Statement regarding computation
of per share earnings
13.1 Annual Report to Stockholders
for the year ended June 30, 1995
21.1 Subsidiaries
23.1 Independent Auditors' Consent
(1) Exhibit incorporated by reference as indicated in Part IV.
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