UNITED
STATES
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)
|
February
3, 2015
|
SPAN-AMERICA MEDICAL SYSTEMS, INC.
|
(Exact name of registrant as specified in its charter)
|
South
Carolina
|
0-11392
|
57-0525804
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
70
Commerce Center, Greenville, South Carolina
|
29615
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code
|
(864)
288-8877
|
N/A
|
(Former name or former address, if changed since last report.)
|
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On February 3, 2015, Span-America Medical Systems, Inc. ("SPAN") issued
a press release announcing financial information for its first quarter
fiscal 2015 ended January 3, 2015. The press release is attached as
Exhibit 99.1 to this Form 8-K and is furnished to, but not filed with,
the Commission.
Item 9.01 Financial Statements and Exhibits.
(d)
|
Exhibits.
|
|
|
|
|
|
Exhibit Number
|
Description of Exhibit
|
|
99.1
|
Press release issued February 3, 2015
|
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.
|
|
|
|
(Registrant)
|
|
|
|
|
Date:
|
February
3, 2015
|
|
|
|
|
By:
|
/s/ Richard C. Coggins
|
|
|
|
Richard
C. Coggins
|
|
|
|
Chief
Financial Officer
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EXHIBIT INDEX
Exhibit
|
Description
|
|
|
99.1
|
Press Release dated February 3, 2015
|
Exhibit 99.1
Span-America
Reports Improved First Quarter 2015 Results
GREENVILLE, S.C.--(BUSINESS WIRE)--February 3, 2015--Span-America
Medical Systems, Inc. (NASDAQ:SPAN) today reported improved results for
the first fiscal quarter ended January 3, 2015. Net income for the first
quarter of fiscal 2015 rose 46% to $970,000, or $0.32 per diluted share,
compared with $666,000, or $0.22 per diluted share, in the first quarter
of fiscal 2014. Net sales for the first quarter of fiscal 2015 were up
6% to $15.7 million compared with $14.9 million in the first quarter of
fiscal 2014.
“We are encouraged by the strong performance of our medical business
during the first quarter,” stated Jim Ferguson, president and chief
executive officer of Span-America. “We experienced broad-based demand
for our medical products that was reflected in higher sales, margins and
net income compared with the first quarter of last year.
“Our improved results benefited from several medium-sized,
large-corporate orders that combined sales of our therapeutic support
surfaces and M.C. Healthcare beds. In addition, sales to the Veterans
Administration increased significantly during the first quarter this
year compared with the same quarter last year, and we believe there are
opportunities for further growth in this part of the medical market.
“We are encouraged by the increased demand for our medical products and
customer quoting activity during the first quarter of fiscal 2015. This
was a noticeable shift from the sluggish demand and general customer
hesitancy that we experienced in the third and fourth quarters of fiscal
2014. We also signed a new purchase agreement with a major long-term
care provider in Canada, and we expect that agreement to contribute to
our future growth in fiscal 2015,” continued Ferguson.
First Quarter Results
Sales for the first quarter of fiscal 2015 rose 6% to $15.7 million
compared with $14.9 million in the first quarter of fiscal 2014. The
sales increase came from strong growth in the medical segment, partly
offset by a decrease in consumer sales within the custom products
segment. Sales in the medical segment increased by 21% to $12.8 million
on broad-based growth among our product lines. Sales in the custom
products segment were down by 32% to $2.9 million primarily due to the
loss of a large retail customer in the second quarter of fiscal 2014 as
previously reported. Fiscal year 2015 will be a 53-week year for
Span-America compared with 52 weeks in fiscal 2014. As a result, the
first quarter of fiscal 2015 included 14 weeks of business instead of
the usual 13 weeks in the prior year’s first quarter.
Earnings for the first quarter increased by 46% to $970,000, or $0.32
per diluted share, compared with $666,000, or $0.22 per diluted share,
in the first quarter last year. The earnings growth was due to the
significant increase in medical sales volume compared with the first
quarter of last year.
Medical Segment – Total medical sales increased 21% to
$12.8 million in the first quarter of fiscal 2015 compared with $10.6
million in the first quarter last year. The growth in medical sales was
broad-based, coming from all but one of our medical product lines. Sales
of therapeutic support surfaces, our largest medical product line,
increased 18% to $6.5 million. Demand for these products increased in
the first quarter of fiscal 2015, particularly compared with the soft
sales for support surfaces that we saw in the third and fourth quarters
of last fiscal year. Sales leaders for the growth in our therapeutic
support surfaces included our GeoMattress® all-foam products and our
PressureGuard® APM2® and Protocol™ products. Sales
of the new PressureGuard Protocol made a significant contribution to our
medical sales growth during the quarter, and we are encouraged by
customer demand for this new proprietary product.
Sales of M.C. Healthcare products increased by 43% to $3.4 million
compared with $2.4 million in the first quarter last year. M.C.
Healthcare’s strong sales growth came from our newest Encore™ bed and
healthy growth from several other M.C. Healthcare products. This was our
second best quarterly sales performance at M.C. Healthcare since we
acquired the business in December 2011.
Sales of Span-America’s other medical product lines increased during the
first quarter of fiscal 2015 and benefited from an extra sales week
compared with the same quarter last year. Sales of mattress overlays
increased by 19%, seating sales were up 9%, patient positioner sales
grew by 7% during the quarter, and sales of Selan® skin care products
increased by 4%. Sales increases in these product lines were offset
somewhat by lower sales of our Risk Manager® product line, where sales
decreased 20% compared with the first quarter of fiscal 2014.
Custom Products Segment – Total custom products sales
decreased by 32% in the first quarter to $2.9 million compared with $4.3
million in the first quarter last year. All of the custom products sales
decline was attributable to our consumer bedding product lines. Consumer
sales were down 44% to $1.9 million compared with $3.4 million in the
first quarter last year primarily due to the loss of a large retail
customer as previously reported. Our sales to this customer ended in
February 2014, and we resumed shipping products to them in late November
2014. Current sales levels to this customer are at a run rate of
approximately half of the sales levels that we had during fiscal 2014
before losing the business. If sales to this customer are excluded from
both first quarter periods, sales of consumer bedding products would
have decreased by 17% in the first quarter of fiscal 2015 compared with
the same quarter last year because of routine changes in sales programs
as retailers refreshed their product offerings.
Sales from our industrial product lines, included within the custom
products segment, rose 13% to $998,000 in the first quarter of fiscal
2015 compared with $881,000 in the same quarter last year. This marked
our sixth consecutive quarterly increase in industrial product line
sales, which have benefited from the strong manufacturing economy in our
region. Industrial sales growth in the first quarter came from a healthy
combination of new and existing customers primarily in the automotive
and packaging markets.
Earnings – Our strong earnings performance for the first
quarter was driven primarily from growth in the medical segment. Our
gross profit level increased 14% to $5.4 million compared with $4.8
million in the first quarter last year, and our gross margin percentage
rose to 34.7% compared with 32.2% in the same quarter last year. The
increases in gross profit dollars and gross margin percentage were the
result of the $2.2 million increase in medical sales during the quarter
and a more profitable sales mix in the first quarter this year compared
with the first quarter last year. Medical sales, which generally carry a
higher margin than custom products sales, rose to 82% of total sales
during the first quarter of this year compared with 71% in the
year-earlier quarter.
Selling and marketing expenses were up by 11% to $2.8 million due to
increases in expenses related to higher medical sales volume, including
shipping, commissions and samples expense. We also had higher marketing
expenses in the custom products segment related to the launch of our
geomattress.com website. R&D expenses declined 3% to $280,000 due to
normal quarter-to-quarter fluctuations in our product development costs.
Administrative expenses increased by 6% to $1.1 million due to increases
in property/casualty insurance, incentive compensation expenses and
lower income from officer life insurance policies.
Operating income increased by 34% to $1.3 million for the first quarter
this year compared with $1.0 million in the first quarter last year. Net
income for the first quarter rose 46% to $970,000, or $0.32 per diluted
share, compared with $666,000, or $0.22 per diluted share, in the first
quarter last year. The increases in operating income and net income were
due primarily to the increase in medical sales volume during the first
quarter.
Future Outlook
“We expect that our sales and earnings for fiscal year 2015 will be
higher than they were in fiscal 2014 due to anticipated increases in
medical sales volume during the remainder of the fiscal year and in
custom products sales volume primarily during the third and fourth
quarters of fiscal 2015,” continued Mr. Ferguson. “During the second
quarter of fiscal 2015, we expect sales and earnings to be similar to
the levels we achieved in the second quarter of fiscal 2014.
“We are pleased with the increased demand for our medical products
across our product lines. We remain optimistic about reporting improved
sales and earnings in fiscal 2015 based on increased demand from our
medical segment and the resumption of sales of consumer bedding products
to a large retail customer,” concluded Ferguson.
Conference Call
The company will conduct a conference call at 10:00 a.m. ET on
Wednesday, February 4, 2015, to review the Company’s financial and
operating results for the first quarter ended January 3, 2015. A live
broadcast of the conference call will be available online at www.spanamerica.com
under investor relations on the Company tab. The online replay will
follow immediately and continue for 30 days.
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®, PressureGuard®, Geo-Mattress®, Custom Care®, Span+Aids®,
Isch-Dish®, Risk Manager® and Selan® products. We also supply custom
foam and packaging products to the consumer and industrial markets.
Through our wholly-owned subsidiary Span Medical Products Canada Inc.,
we manufacture and market the M.C. Healthcare Products brands of
Encore™, Maxxum, Advantage and Rexx bed frames as well as related case
goods, tables and seating products for the long-term care market.
Span-America’s stock is traded on The NASDAQ Global Market under the
symbol “SPAN.” For more information, visit www.spanamerica.com
and www.mchealthcare.com.
Forward-Looking Statements
We have made forward-looking statements in this release regarding, among
other things, our expectations for future sales and earnings
performance. We wish to caution the reader that these statements are
only predictions. These forward-looking statements may be generally
identified by the use of forward-looking words and phrases such as
“will,” “intends,” “may,” “believes,” “anticipates,” “should” and
“expects,” and are based on the company’s current expectations or
beliefs concerning future events that involve risks and uncertainties.
Actual events or results may differ materially as a result of risks and
uncertainties facing the company, including: (a) the inability to
achieve anticipated sales growth in the medical and custom products
segments, (b) the possibility of disruptions in our consumer products
business related to the transfer of our exclusive distribution agreement
from Louisville Bedding Company to Hollander Home Fashions in May 2013
as a result of the sale of Louisville Bedding’s utility bedding retail
business to Hollander, (c) the possibility of a loss of a key customer
or distributor for our products, (d) risks related to international
operations and foreign exchange associated with our Canadian subsidiary,
(e) the possibility of having material uncollectible receivables from
one or more key customers or distributors, (f) the potential for
volatile pricing conditions in the market for polyurethane foam, (g) raw
material cost increases, (h) the possibility that some or all of our
medical products could be determined to be subject to the 2.3% medical
device excise tax imposed by the Affordable Care Act, (i) the potential
for lost sales due to competition from low-cost foreign imports, (j)
changes in relationships with large customers or key suppliers, (k) the
impact of competitive products and pricing, (l) government reimbursement
changes in the medical market, (m) FDA and Health Canada regulation of
medical device manufacturing and (n) other risks referenced from time to
time in our Securities and Exchange Commission filings. We disclaim any
obligation to update publicly any forward-looking statement, whether as
a result of new information, future events or otherwise. We are not
responsible for changes made to this document by wire services or
Internet services.
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SPAN-AMERICA MEDICAL SYSTEMS, INC.
|
Consolidated Statements of Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
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|
Jan. 3,
|
|
|
Dec. 28,
|
|
|
|
|
|
|
|
2015
|
|
|
2013
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
15,720,674
|
|
|
|
$
|
14,853,277
|
|
|
|
6
|
%
|
|
Cost of goods sold
|
|
|
|
10,271,694
|
|
|
|
|
10,065,482
|
|
|
|
2
|
%
|
|
Gross profit
|
|
|
|
5,448,980
|
|
|
|
|
4,787,795
|
|
|
|
14
|
%
|
|
|
|
|
|
34.7
|
%
|
|
|
|
32.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
|
2,760,234
|
|
|
|
|
2,487,050
|
|
|
|
11
|
%
|
|
Research and development expenses
|
|
|
|
279,678
|
|
|
|
|
288,770
|
|
|
|
-3
|
%
|
|
General and administrative expenses
|
|
|
|
1,065,004
|
|
|
|
|
1,006,964
|
|
|
|
6
|
%
|
|
|
|
|
|
4,104,916
|
|
|
|
|
3,782,784
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
1,344,064
|
|
|
|
|
1,005,011
|
|
|
|
34
|
%
|
|
|
|
|
|
8.5
|
%
|
|
|
|
6.8
|
%
|
|
|
|
|
Non-operating income (expense):
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(3,160
|
)
|
|
|
|
(3,194
|
)
|
|
|
1
|
%
|
|
Investment income and other
|
|
|
|
69,421
|
|
|
|
|
9,312
|
|
|
|
646
|
%
|
|
Net non-operating income (expense)
|
|
|
|
66,261
|
|
|
|
|
6,118
|
|
|
|
983
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
1,410,325
|
|
|
|
|
1,011,129
|
|
|
|
39
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
|
440,000
|
|
|
|
|
345,000
|
|
|
|
28
|
%
|
|
Net income
|
|
|
$
|
970,325
|
|
|
|
$
|
666,129
|
|
|
|
46
|
%
|
|
|
|
|
|
6.2
|
%
|
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.33
|
|
|
|
$
|
0.23
|
|
|
|
44
|
%
|
|
Diluted
|
|
|
|
0.32
|
|
|
|
|
0.22
|
|
|
|
45
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per common share (1)
|
|
|
$
|
1.15
|
|
|
|
$
|
0.14
|
|
|
|
721
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
2,962,007
|
|
|
|
|
2,927,416
|
|
|
|
1
|
%
|
|
Diluted
|
|
|
|
2,997,116
|
|
|
|
|
2,977,241
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental data:
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
$
|
211,294
|
|
|
|
$
|
179,794
|
|
|
|
18
|
%
|
|
Amortization expense
|
|
|
|
95,488
|
|
|
|
|
138,442
|
|
|
|
-31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Dividends per share for the quarter ended January 3, 2015, include
a special dividend of $1.00 per share declared on November 12,
2014 and paid on January 7, 2015 to shareholders of record on
December 17, 2014.
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|
|
|
|
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|
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SPAN-AMERICA MEDICAL SYSTEMS, INC.
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
Jan. 3,
|
|
|
Sept. 27,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
(Unaudited)
|
|
|
(Note)
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
7,244,458
|
|
|
|
$
|
6,865,931
|
|
Accounts receivable, net of allowances
|
|
|
|
7,048,683
|
|
|
|
|
5,851,822
|
|
Inventories
|
|
|
|
6,228,481
|
|
|
|
|
7,395,955
|
|
Deferred income taxes
|
|
|
|
272,198
|
|
|
|
|
271,828
|
|
Prepaid expenses
|
|
|
|
798,487
|
|
|
|
|
760,967
|
|
Total current assets
|
|
|
|
21,592,307
|
|
|
|
|
21,146,503
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
4,734,193
|
|
|
|
|
4,888,096
|
|
Goodwill
|
|
|
|
4,169,562
|
|
|
|
|
4,291,843
|
|
Intangibles, net
|
|
|
|
2,650,033
|
|
|
|
|
2,860,260
|
|
Other assets
|
|
|
|
2,793,166
|
|
|
|
|
2,660,132
|
|
|
|
|
$
|
35,939,261
|
|
|
|
$
|
35,846,834
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
2,146,388
|
|
|
|
$
|
2,477,198
|
|
Accrued and sundry liabilities
|
|
|
|
2,472,897
|
|
|
|
|
2,051,662
|
|
Accrued dividends
|
|
|
|
2,962,007
|
|
|
|
|
-
|
|
Total current liabilities
|
|
|
|
7,581,292
|
|
|
|
|
4,528,860
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
|
156,518
|
|
|
|
|
160,685
|
|
Deferred compensation
|
|
|
|
437,077
|
|
|
|
|
457,457
|
|
Total long-term liabilities
|
|
|
|
593,595
|
|
|
|
|
618,142
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
8,174,887
|
|
|
|
|
5,147,002
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
Common stock, no par value, 20,000,000 shares authorized; issued
and outstanding shares 2,962,007 (Jan. 3, 2015) and (Sept. 27,
2014)
|
|
|
|
3,064,658
|
|
|
|
|
3,064,658
|
|
Additional paid-in capital
|
|
|
|
913,493
|
|
|
|
|
906,834
|
|
Retained earnings
|
|
|
|
25,299,785
|
|
|
|
|
27,735,768
|
|
Accumulated other comprehensive loss
|
|
|
|
(1,513,562
|
)
|
|
|
|
(1,007,428
|
)
|
Total shareholders' equity
|
|
|
|
27,764,374
|
|
|
|
|
30,699,832
|
|
|
|
|
|
|
|
|
|
|
|
$
|
35,939,261
|
|
|
|
$
|
35,846,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: The Balance Sheet at September 27, 2014 has been derived
from the audited financial statements at that date.
|
CONTACT:
Span-America Medical Systems, Inc.
Jim Ferguson,
864-288-8877, ext. 6912
President and Chief Executive Officer
Span America (NASDAQ:SPAN)
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