SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED JUNE 30, 2004 COMMISSION FILE NUMBER 0-10763
ATRION CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 63-0821819
-------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
ONE ALLENTOWN PARKWAY, ALLEN, TEXAS 75002
(Address of Principal Executive Offices) (Zip Code)
(972) 390-9800
(Registrant's Telephone Number, Including Area Code)
Indicate by check 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 [check mark] NO
------------ -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
NUMBER OF SHARES OUTSTANDING AT
TITLE OF EACH CLASS AUGUST 2, 2004
- --------------------------------------- ----------------------------------
COMMON STOCK, PAR VALUE $0.10 PER SHARE 1,717,507
17
ATRION CORPORATION AND SUBSIDIARIES
-----------------------------------
TABLE OF CONTENTS
-----------------
PART I. FINANCIAL INFORMATION 2
ITEM 1. Financial Statements
Consolidated Statements of Income (Unaudited)
For the Three and Six Months Ended
June 30, 2004 and 2003 3
Consolidated Balance Sheets
June 30, 2004 (Unaudited) and December 31, 2003 4
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended
June 30, 2004 and 2003 5
Notes to Consolidated Financial Statements (Unaudited) 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION 13
ITEM 4. Submission of Matters to a Vote of Security Holders 13
ITEM 6. Exhibits and Reports on
Form 8-K 13
SIGNATURES 14
1
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2004 2003 2004 2003
-------- -------- ---------- --------
(in thousands, except per share amounts)
Revenues $ 16,417 $ 16,175 $ 33,206 $ 31,896
Cost of goods sold 10,351 10,598 21,185 20,723
-------- -------- -------- --------
Gross profit 6,066 5,577 12,021 11,173
-------- -------- -------- --------
Operating expenses:
Selling 1,404 1,390 2,833 2,799
General and administrative 2,019 1,951 4,100 3,885
Research and development 579 531 1,123 1,060
-------- -------- -------- --------
4,002 3,872 8,056 7,744
-------- -------- -------- --------
Operating income 2,064 1,705 3,965 3,429
-------- -------- -------- --------
Other income:
Interest income 11 20 22 39
Interest expense (16) (54) (43) (114)
Other income (expense), net 39 (14) 45 (5)
-------- -------- -------- --------
34 (48) 24 (80)
-------- -------- -------- --------
Income from continuing operations before provision for
income taxes 2,098 1,657 3,989 3,349
Provision for income taxes 655 509 1,259 1,051
-------- -------- -------- --------
Income from continuing operations 1,443 1,148 2,730 2,298
Gain on disposal of discontinued operations, net of income
taxes 165 165 165 165
-------- -------- -------- --------
Net income $ 1,608 $ 1,313 $ 2,895 $ 2,463
======== ======== ======== ========
Income per basic share:
Income from continuing operations $ 0.84 $ 0.67 $ 1.60 $ 1.33
Gain on disposal of discontinued operations 0.10 0.10 0.10 0.10
-------- -------- -------- --------
$ 0.94 $ 0.77 $ 1.70 $ 1.43
======== ======== ======== ========
Weighted average basic shares outstanding 1,710 1,702 1,706 1,733
======== ======== ======== ========
Income per diluted share:
Income from continuing operations $ 0.78 $ 0.63 $ 1.48 $ 1.25
Gain on disposal of discontinued operations 0.09 0.09 0.09 0.09
-------- -------- -------- --------
$ 0.87 $ 0.72 $ 1.57 $ 1.34
======== ======== ======== ========
Weighted average diluted shares outstanding 1,848 1,812 1,846 1,841
======== ======== ======== ========
The accompanying notes are an integral part of these statements.
3
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30,
2004 DECEMBER 31,
ASSETS (UNAUDITED) 2003
- ------- -------- --------
Current assets:
Cash and cash equivalents $ 691 $ 298
Accounts receivable 7,707 6,226
Inventories 12,784 11,314
Prepaid expenses 1,233 1,894
Other 760 760
-------- --------
23,175 20,492
-------- --------
Property, plant and equipment 47,522 45,767
Less accumulated depreciation and amortization 23,522 21,578
-------- --------
24,000 24,189
-------- --------
Other assets and deferred charges:
Patents 1,836 2,099
Goodwill 9,730 9,730
Other 3,226 3,540
-------- --------
14,792 15,369
-------- --------
$ 61,967 $ 60,050
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 7,007 $ 6,038
Accrued income and other taxes 1,440 651
-------- --------
8,447 6,689
-------- --------
Line of credit 1,701 4,287
Other non-current liabilities 4,373 4,470
Stockholders' equity:
Common shares, par value $0.10 per share; authorized
10,000 shares, issued 3,420 shares 342 342
Paid-in capital 9,915 9,673
Retained earnings 71,385 68,900
Treasury shares,1,705 at June 30, 2004 and 1,742
at December 31, 2003, at cost (34,196) (34,311)
-------- --------
Total stockholders' equity 47,446 44,604
-------- --------
$ 61,967 $ 60,050
======== ========
The accompanying notes are an integral part of these statements.
4
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
-------------------
2004 2003
------ ---------
(In thousands)
Cash flows from operating activities:
Net income $ 2,895 $ 2,463
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on disposal of discontinued operations (165) (165)
Depreciation and amortization 2,509 2,218
Deferred income taxes (134) 94
Tax benefit related to stock plans 36 170
Other 1 25
------ --------
5,142 4,805
Change in operating assets and liabilities:
Accounts receivable (1,481) (1,361)
Inventories (1,469) (1,254)
Prepaid expenses 661 397
Other non-current assets 314 77
Accounts payable and current liabilities 969 1,365
Accrued income and other taxes 789 200
Other non-current liabilities 37 234
------ --------
Net cash provided by continuing operations 4,962 4,463
Net cash provided by discontinued operations 165 165
------ --------
5,127 4,628
------ --------
Cash flows from investing activities:
Property, plant and equipment additions (2,058) (1,819)
Property, plant and equipment sales -- 14
------ --------
(2,058) (1,805)
------ --------
Cash flows from financing activities:
Net change in line of credit (2,586) (651)
Purchase of treasury stock -- (4,069)
Issuance of common stock 321 2,100
Dividends (411) --
------ --------
(2,676) (2,620)
------ --------
Net change in cash and cash equivalents 393 203
Cash and cash equivalents at beginning of period 298 353
------ --------
Cash and cash equivalents at end of period $ 691 $ 556
======= =======
Cash paid for:
Interest $ 50 $ 119
Income taxes $ 0 $ 542
The accompanying notes are an integral part of these statements.
5
ATRION CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
In the opinion of management, all adjustments necessary for a fair
presentation of results of operations for the periods presented have
been included in the accompanying unaudited consolidated financial
statements of Atrion Corporation (the "Company"). Such adjustments
consist of normal recurring items. The accompanying financial
statements have been prepared in accordance with the instructions to
Form 10-Q and include the information and notes required by such
instructions. Accordingly, the consolidated financial statements and
notes thereto should be read in conjunction with the financial
statements and notes included in the Company's 2003 Annual Report on
Form 10-K.
(2) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined by using the first-in, first-out method. The following table
details the major components of inventories (in thousands):
JUNE 30, DECEMBER 31,
2004 2003
- --------------------------------------------------------------------------------
Raw materials $ 6,824 $ 5,641
Finished goods 4,522 4,044
Work in process 1,438 1,626
- --------------------------------------------------------------------------------
Total inventories $ 12,784 $ 11,314
- --------------------------------------------------------------------------------
(3) INCOME PER SHARE
The following is the computation for basic and diluted income per
share from continuing operations:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2004 2003 2004 2003
-------------------------- --------------------------
(in thousands, except per share amounts)
Income from continuing operations $ 1,443 $ 1,148 $ 2,730 $ 2,298
========================= =========================
Weighted average basic shares outstanding 1,710 1,702 1,706 1,733
Add: Effect of dilutive securities
(options) 138 110 140 108
------------------------- -------------------------
Weighted average diluted shares
outstanding 1,848 1,812 1,846 1,841
========================= =========================
EARNINGS PER SHARE FROM CONTINUING
OPERATIONS:
Basic $ 0.84 $ 0.67 $ 1.60 $ 1.33
========================= =========================
Diluted $ 0.78 $ 0.63 $ 1.48 $ 1.25
========================= =========================
Outstanding options that were not included in the diluted income per
share calculation because their effect would be anti-dilutive totaled
52,000 and 39,500 for the three-month periods ended June 30, 2004 and
June 30, 2003, respectively,and 52,000 and 25,250 for the six-month
periods ended June 30, 2004 and June 30, 2003, respectively.
6
ATRION CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(4) STOCK-BASED COMPENSATION
At June 30, 2004, the Company had three stock-based employee
compensation plans. The Company accounts for those plans under the
recognition and measurement provisions of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. No stock-based employee compensation cost is reflected
in net income, as all options granted under those plans had an exercise
price equal to the market value of the underlying common stock on the
date of grant. The following table illustrates the effect on net income
and income per share if the Company had applied the fair value
recognition provisions of FASB SFAS No. 123, "Accounting for
Stock-Based Compensation," to stock-based employee compensation:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -----------------------------
2004 2003 2004 2003
----------- ----------- ----------- ---------
(in thousands, except per share amounts)
Net income, as reported $ 1,608 $ 1,313 $ 2,895 $ 2,463
Deduct: Total stock-based employee
compensation expense determined under
fair value-based methods for all awards,
net of tax effects 343 106 486 212
----------- ----------- ----------- ---------
Pro forma net income $ 1,265 $ 1,207 $ 2,409 $ 2,251
=========== =========== =========== =========
Income per share:
Basic - as reported $ 0.94 $ 0.77 $ 1.70 $ 1.43
=========== =========== =========== =========
Basic - pro forma $ 0.74 $ 0.71 $ 1.41 $ 1.30
=========== =========== =========== =========
Diluted - as reported $ 0.87 $ 0.72 $ 1.57 $ 1.34
=========== =========== =========== =========
Diluted - pro forma $ 0.68 $ 0.67 $ 1.30 $ 1.22
=========== =========== =========== =========
(5) PENSION BENEFITS
The components of net periodic pension cost are as follows for the
three and six months ended June 30, 2004 and June 30, 2003 (in
thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2004 2003 2004 2003
----- ---- ---- ----
Service cost $ 60 $ 53 $ 120 $ 106
Interest cost 78 74 156 148
Expected return on assets (106) (87) (212) (174)
Prior service cost amortization (9) (9) (18) (18)
Actuarial loss 26 32 52 64
Transition amount amortization (11) (11) (22) (22)
----- ---- ----- -----
Net periodic pension cost $ 38 $ 52 $ 76 $ 104
===== ==== ===== =====
7
ATRION CORPORATION AND SUBSIDIARIES
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company designs, develops, manufactures, markets, sells and
distributes products and components, primarily for the medical and
health care industry. The Company markets components to other equipment
manufacturers for incorporation in their products and sells finished
devices to physicians, hospitals, clinics and other treatment centers.
The Company's products and services primarily range from ophthalmology
and cardiovascular products to fluid delivery devices, contract
manufacturing and kitting services.
The Company's products are used in a wide variety of applications by
numerous customers. The Company encounters competition in all of its
markets and competes primarily on the basis of product quality, price,
engineering, customer service and delivery time.
For the three months ended June 30, 2004, the Company reported revenues
of $16.4 million, operating income of $2.1 million and net income of
$1.6 million, up 1 percent, 21 percent and 22 percent, respectively,
from the three months ended June 30, 2003. For the six months ended
June 30, 2004, the Company reported revenues of $33.2 million,
operating income of $4.0 million and net income of $2.9 million, up 4
percent, 16 percent and 18 percent, respectively, from the six months
ended June 30, 2003.
RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2004
The Company's income from continuing operations for the three months
ended June 30, 2003 was $1.4 million, or $0.84 per basic and $0.78 per
diluted share, compared with income from continuing operations for the
three months ended June 30, 2003 of $1.1 million, or $0.67 per basic
and $0.63 per diluted share. Consolidated net income, including
discontinued operations, totaled $1.6 million, or $0.94 per basic and
$0.87 per diluted share, in the second quarter of 2004. This is
compared with consolidated net income, including discontinued
operations, of $1.3 million, or $0.77 per basic and $0.72 per diluted
share, in the second quarter of 2003. The income per basic share
computations are based on weighted average basic shares outstanding of
1,709,775 in the 2004 period and 1,701,627 in the 2003 period. The
income per diluted share computations are based on weighted average
diluted shares outstanding of 1,847,565 in the 2004 period and
1,811,949 in the 2003 period.
Consolidated revenues of $16.4 million for the second quarter of 2004
were higher than revenues of $16.2 million for the second quarter of
2003. This 1 percent increase in revenues for the second quarter of
2004 over the second quarter of 2003 is primarily attributable to
increases in the revenues from the Company's fluid delivery products,
cardiovascular products and other products. These increases are
generally attributable to higher sales volumes. These increases were
largely offset by a decrease in the revenues from the Company's
ophthalmic products following the fulfillment of a customer's
requirements in late 2003. Revenue comparisons for the remainder of the
year will be similarly affected by the completion of that order. Cost
of goods sold of $10.4 million for the second quarter of 2004 was 2
percent lower than in the comparable 2003 period primarily as a result
of a change in product mix.
Gross profit of $6.1 million in the second quarter of 2004 was
$489,000, or 9 percent, higher than in the comparable 2003 period. The
Company's gross profit percentage in the second quarter of 2004 was
36.9 percent of revenues compared with 34.5 percent of revenues in the
second quarter of 2003. This increase in gross profit percentage is
primarily related to a change in product mix. The previously mentioned
reduced ophthalmic revenues generated a lower gross profit percentage
as compared with the gross profit percentage generated by the higher
revenues from the Company's fluid delivery products, cardiovascular
products and other products.
The Company's second quarter 2004 operating expenses of $4.0 million
were $130,000 higher than the operating expenses for the second quarter
of 2003, resulting from a $68,000 increase in general and
administrative (G&A) expenses, a $15,000 increase in selling expenses
and a $47,000 increase in research and development (R&D) expenses. The
increase in G&A expenses for the second quarter of 2004 is primarily
attributable to increases in outside services and compensation. The
increase in R&D expenses for the second quarter of 2004 is primarily
attributable to increases in outside services. Operating income in the
second quarter of 2004 increased $359,000, or 21 percent, to $2.1
million from $1.7 million in the second quarter of 2003. Operating
income margin was 12.6 percent of revenues in the second quarter of
2004 compared to 10.5 percent of revenues in the second quarter of
2003. The improvement in operating income is primarily attributable to
the previously mentioned gross profit improvement partially offset by
the increase in operating expenses.
Interest expense for the second quarter of 2004 was $16,000 compared to
interest expense of $54,000 for the same period in the prior year. The
decrease in the 2004 period from the 2003 period is primarily
attributable to the Company's lower average borrowing level in the
current-year period.
Income tax expense for the second quarter of 2004 was $655,000 compared
to income tax expense of $509,000 for the same period in the prior
year. The effective tax rate for the second quarter of 2004 was 31.2
percent compared with 30.7 percent for the second quarter of 2003.
The Company recorded a gain on the disposal of discontinued operations
relating to the 1997 sale of its natural gas operations of $165,000
after tax, or $0.10 per basic and $0.09 per diluted share, for the
second quarter of 2004 and $165,000 after tax, or $0.10 per basic and
$0.09 per diluted share, for the second quarter of 2003, resulting from
the receipt of contingent deferred payments in each year.
RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2004
The Company's income from continuing operations for the six months
ended June 30, 2003 was $2.7 million, or $1.60 per basic and $1.48 per
diluted share, compared with income from continuing operations for the
six months ended June 30, 2003 of $2.3 million, or $1.33 per basic and
$1.25 per diluted share. Consolidated net income, including
discontinued operations, totaled $2.9 million, or $1.70 per basic and
$1.57 per diluted share, in the first six months of 2004. This is
compared with consolidated net income, including discontinued
operations, of $2.5 million, or $1.43 per basic and $1.34 per diluted
share, in the first six months of 2003. The income per basic share
computations are based on weighted average basic shares outstanding of
1,706,464 in the 2004 period and 1,733,127 in the 2003 period. The
income per diluted share computations are based on weighted average
diluted shares outstanding of 1,846,309 in the 2004 period and
1,841,258 in the 2003 period.
9
Consolidated revenues of $33.2 million for the first six months of 2004
were higher than revenues of $31.9 million for the first six months of
2003. This 4 percent increase in revenues for the first six months of
2004 over the first six months of 2003 is primarily attributable to an
increase in the revenues from the Company's fluid delivery products,
cardiovascular products and other products. These increases are
generally attributable to higher sales volumes. These increases were
partially offset by a decrease in the revenues from the Company's
ophthalmic products following the fulfillment of a customer's
requirements in late 2003. Cost of goods sold of $21.2 million for the
first six months of 2004 was 2 percent higher than in the comparable
2003 period. The increase in cost of goods sold is primarily the result
of higher sales volumes.
Gross profit of $12.0 million in the first six months of 2004 was
$848,000, or 8 percent, higher than in the comparable 2003 period. The
Company's gross profit percentage in the first six months of 2004 was
36.2 percent of revenues compared with 35.0 percent of revenues in the
first six months of 2003. This increase in gross profit percentage is
primarily related to a change in product mix. The previously mentioned
reduced ophthalmic revenues generated a lower gross profit percentage
as compared with the gross profit percentage generated by the higher
revenues from the Company's fluid delivery products, cardiovascular
products and other products.
The Company's operating expenses of $8.1 million for the first six
months of 2004 were $312,000 higher than the operating expenses for the
first six months of 2003. This resulted from a $215,000 increase in G&A
expenses, a $34,000 increase in selling expenses and a $63,000 increase
in R&D expenses. The increase in G&A expenses for the first six months
of 2004 is primarily attributable to a write-off of $124,000 for the
impairment of a patent related to a discontinued product and increased
outside services and compensation. Operating income in the first six
months of 2004 increased $536,000, or 16 percent, to $4.0 million from
$3.4 million in the first six months of 2003. Operating income margin
was 11.9 percent of revenues in the first six months of 2004 compared
to 10.8 percent of revenues in the first six months of 2003. The
improvement in operating income is primarily attributable to the
previously mentioned gross profit improvement partially offset by the
increase in operating expenses.
Interest expense for the first six months of 2004 was $43,000 compared
to interest expense of $114,000 for the same period in the prior year.
The decrease in the 2004 period from the 2003 period is primarily
attributable to the Company's lower average borrowing level in the
current-year period.
Income tax expense for the first six months of 2004 was $1.3 million
compared to income tax expense of $1.1 million for the same period in
the prior year. The effective tax rate for the first six months of 2004
was 31.6 percent compared with 31.4 percent for the first six months of
2003.
The Company recorded a gain on the disposal of discontinued operations
relating to the 1997 sale of its natural gas operations of $165,000
after tax, or $0.10 per basic and $0.09 per diluted share, for the
first six months of 2004 and $165,000 after tax, or $0.10 per basic and
$0.09 per diluted share, for the first six months of 2003, resulting
from the receipt of contingent deferred payments in each year.
10
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2004, the Company had cash and cash equivalents of $691,000
compared with $298,000 at December 31, 2003. The Company had
outstanding borrowings of $1.7 million under its $25 million revolving
credit facility ("Credit Facility") at June 30, 2004 and $4.3 million
at December 31, 2003. The decrease in the outstanding balance under the
Credit Facility in the first six months of 2004 is primarily
attributable to cash provided by continuing operations. The Credit
Facility, which expires November 12, 2006, and may be extended under
certain circumstances, contains various restrictive covenants, none of
which is expected to impact the Company's liquidity or capital
resources. At June 30, 2004, the Company was in compliance with all
financial covenants.
As of June 30, 2004, the Company had working capital of $14.7 million,
including $691,000 in cash and cash equivalents. The $925,000 increase
in working capital during the first six months of 2004 was primarily
related to increases in accounts receivable and inventories offset by
increases in current liabilities. The increase in accounts receivable
during the first six months of 2004 is directly related to the increase
in revenues for the second quarter of 2004 as compared to the fourth
quarter of 2003. The increase in inventories is primarily attributable
to planned increases related to new product introductions. The increase
in current liabilities is primarily related to standard accruals made
in the normal course of operations and accruals for income and other
taxes. Cash flows from continuing operations generated $5.0 million for
the six months ended June 30, 2004 as compared to $4.5 million for the
six months ended June 30, 2003. Earnings from continuing operations
were the primary contributor to this increase. During the first six
months of 2004, the Company expended $2.1 million for the addition of
property and equipment. The Company received net proceeds of $321,000
from the exercise of employee stock options during the first six months
of 2004. During the first six months of 2004 the Company paid dividends
totaling $411,000 to its stockholders.
The Company believes that its existing cash and cash equivalents, cash
flows from operations, borrowings available under the Company's credit
facility, supplemented, if necessary, with equity or debt financing,
which the Company believes would be available, will be sufficient to
fund the Company's cash requirements for the foreseeable future.
FORWARD-LOOKING STATEMENTS
The statements in this Management's Discussion and Analysis that are
forward-looking are based upon current expectations, and actual results
may differ materially. Therefore, the inclusion of such forward-looking
information should not be regarded as a representation by the Company
that the objectives or plans of the Company would be achieved. Such
statements include, but are not limited to, the Company's expectations
regarding future liquidity and capital resources. Words such as
"anticipates," "believes," "expects," "estimated" and variations of
such words and similar expressions are intended to identify such
forward-looking statements. These statements involve risks and
uncertainties. The following are some of the factors that could cause
actual results to differ materially from those expressed in or
underlying the Company's forward-looking statements: changing economic,
market and business conditions; market acceptance of the Company's
products; the effects of governmental regulation; acts of war or
terrorism; competition and new technologies; slower-than-anticipated
introduction of new products or implementation of marketing strategies;
changes in the prices or availability of raw materials; changes in
product mix; product liability claims and product recalls; the ability
to attract and retain qualified personnel and the loss of any
significant customer. In addition, assumptions relating to budgeting,
marketing, product development and other management decisions are
subjective in many respects and thus susceptible to interpretations and
periodic review which may cause the Company to alter its marketing,
capital expenditures or other budgets, which in turn may affect the
Company's results of operations and financial condition.
11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For the quarter ended June 30, 2004, the Company did not experience any
material changes in market risk exposures that affect the quantitative
and qualitative disclosures presented in the Company's 2003 Annual
Report on Form 10K.
ITEM 4. CONTROLS AND PROCEDURES
With the participation of management, the Company's Chief Executive
Officer and its Chief Financial Officer evaluated the effectiveness of
the Company's disclosure controls and procedures as of June 30, 2004.
Based upon this evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material
information relating to the Company (including its consolidated
subsidiaries) required to be disclosed by the Company in the reports
that the Company files with the Securities and Exchange Commission.
There has been no change in the Company's internal controls over
financial reporting during the Company's most recent fiscal quarter
that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
12
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its 2004 Annual Meeting of Stockholders on May
27, 2004 at its offices in Allen, Texas. At such meeting, the
Company's stockholders ratified the appointment of Grant Thornton
LLP as independent accountants with 1,511,009 shares voted for
ratification, 8,886 voted against and 150 abstentions. The voting
with respect to the nominees for election as directors was as
follows:
NOMINEE VOTES FOR VOTES WITHHELD
- ----------------- ---------- --------------
Roger F. Stebbing 1,499,749 20,276
John P. Stupp, Jr. 1,499,749 20,276
The terms of the following directors continued after the meeting:
Emile A. Battat, John H. P. Maley, Richard O. Jacobson and Hugh J.
Morgan, Jr.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31.1 Sarbanes-Oxley Act Section 302 Certification of Chief
Executive Officer
31.2 Sarbanes-Oxley Act Section 302 Certification of Chief
Financial Officer
32.1 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted
Pursuant To Section 906 of The Sarbanes - Oxley Act Of 2002
32.2 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted
Pursuant To Section 906 of The Sarbanes - Oxley Act Of 2002
(b) Reports on Form 8-K
On April 29, 2005, the Company filed a report on Form 8-K
with the SEC regarding the public dissemination of a press
release announcing its financial results for the first
quarter ended March 31, 2004 (Item 12).
13
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.
ATRION CORPORATION
(Registrant)
Date: August 12, 2004 /s/ Emile A. Battat
--------------------------
Emile A. Battat
Chairman, President and
Chief Executive Officer
Date: August 12, 2004 /s/ Jeffery Strickland
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Jeffery Strickland
Vice President and
Chief Financial Officer
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