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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period Ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
------------------ --------------
Commission File No. 0-9407
REHABILICARE INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0985318
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1811 OLD HIGHWAY 8
NEW BRIGHTON, MINNESOTA 55112
(Address of principal executive offices)
(651) 631-0590
(Registrant's telephone number, including area code)
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of February 9, 2001 was:
COMMON STOCK, $.10 PAR VALUE 10,788,902 SHARES
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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
The following Quarterly Report on Form 10-Q contains various "forward looking
statements" within the meaning of federal securities laws. These forward looking
statements represent management's expectations or beliefs concerning future
events, including statements regarding anticipated product introductions;
changes in markets, customers and customer order rates; changes in third party
reimbursement rates; expenditures for research and development; growth in
revenue; taxation levels; and the effects of pricing decisions. When used in
this 10-Q, the words "anticipate," "believe," "expect," "estimate" and similar
expressions are generally intended to identify forward-looking statements. These
and other forward looking statements made by the Company must be evaluated in
the context of a number of factors that may affect the Company's financial
condition and results of operations, including, but not limited to, the
following:
- The Company acquired two businesses during the year ended June 30, 1999 and
a third in July 1999. Although integration of those businesses has been
substantially completed without significant problems, complete integration
may not be concluded as smoothly as anticipated and the Company may
discover issues with respect to acquired businesses of which it was
unaware.
- Like many medical device companies, the Company has a large balance of
uncollected receivables. If it cannot collect an amount of receivables that
is consistent with historical collection rates, it might be required to
charge off a portion of uncollected receivables, significantly impacting
earnings.
- The Company has incurred a significant amount of indebtedness to finance
acquired businesses. The interest expense on such indebtedness reduces
earnings and could cause the Company to be short of cash if its operations
do not meet expectations.
- In the United States, the Company's products and services are frequently
reimbursed by private and public insurers that impose limits on
reimbursement and strict rules on applications for reimbursement. Changes
in the rates, eligibility or requirements for reimbursement, or failure to
comply with reimbursement requirements, could cause a reduction in earnings
or fines or both.
- The Company maintains significant amounts of inventory on consignment at
clinics for distribution to patients. It may not be able to completely
control losses of this inventory and if inventory losses are not consistent
with historical experience, the Company might be required to write off a
portion of the carrying value of inventory.
- The clinical effectiveness of the Company's electrotherapy products has
periodically been challenged. Publicity about the effectiveness of
electrotherapy for pain relief or other clinical applications could
negatively impact sales and earnings.
- The Company formed a subsidiary in the United Kingdom in fiscal 1999 and
acquired a Swiss company in the first quarter of fiscal 2000. These
European operations may be more difficult to supervise, and may be subject
to different economic influences than United States operations, and may
subject the Company to significant exposure from currency fluctuations.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Included herein is the following unaudited condensed financial
information:
Consolidated Balance Sheets as of December 31, 2000 and June 30,
2000
Consolidated Statements of Operations for the three months and six
months ended December 31, 2000 and 1999
Consolidated Statements of Cash Flows for the six months ended
December 31, 2000 and 1999
Notes to Consolidated Financial Statements
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REHABILICARE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, June 30,
2000 2000
------------------ ----------------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 1,510,881 $ 2,227,352
Receivables, less reserve for uncollectible accounts of $6,901,609 18,990,756 19,268,252
and $6,575,715
Inventories -
Raw materials 1,784,501 1,283,791
Work in process 45,962 334,900
Finished goods 6,264,970 6,817,964
Deferred tax assets 3,351,294 3,351,294
Prepaid expenses 1,885,131 1,404,968
------------------ ----------------
Total current assets 33,833,495 34,688,521
------------------ ----------------
PROPERTY, PLANT AND EQUIPMENT: 13,508,132 12,932,485
Less accumulated depreciation (8,072,224) (7,336,310)
------------------ ----------------
Net property, plant and equipment 5,435,908 5,596,175
------------------ ----------------
Intangible assets, net 11,804,164 12,152,185
Deferred tax assets 218,669 223,923
Other assets 442,882 47,158
------------------ ----------------
$ 51,735,118 $ 52,707,962
================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,162,277 $ 2,170,468
Note payable 400,000 1,200,000
Accounts payable 2,921,345 3,108,514
Medicare lawsuit payable 1,588,510 1,677,021
Accrued liabilities -
Payroll 397,061 327,856
Commissions 283,041 350,893
Income taxes 1,023,962 1,672,636
Other 2,688,377 2,684,301
------------------ -----------------
Total current liabilities 11,464,573 13,191,689
LONG-TERM LIABILITIES:
Long term-debt 11,785,850 13,662,792
Deferred tax liabilities 766,256 583,927
------------------ -----------------
Total liabilities 24,016,679 27,438,408
------------------ -----------------
STOCKHOLDERS' EQUITY
Common stock, $.10 par value: 25,000,000 shares authorized; 1,076,449 1,055,871
issued and outstanding 10,764,487 and 10,558,710 shares,
respectively
Preferred stock, no par value; 5,000,000 shares authorized; none
issued and outstanding ---- ----
Additional paid-in capital 21,367,816 20,873,737
Less note receivable from officer/stockholder (210,417) (210,417)
Accumulated other non-owner changes in equity (164,754) (154,719)
Retained earnings 5,649,345 3,705,082
------------------ ----------------
Total stockholders' equity 27,718,439 25,269,554
------------------ ----------------
$ 51,735,118 $ 52,707,962
================== ================
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REHABILICARE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
December 31 December 31
-------------------------------------- ---------------------------------------
2000 1999 2000 1999
----------------- ----------------- ----------------- ------------------
Net sales and rental revenue $15,028,717 $14,778,144 $ 30,096,364 $ 28,654,356
Cost of sales and rentals 4,646,357 4,107,485 9,396,197 8,706,291
----------- ----------- ------------ ------------
Gross profit 10,382,360 10,670,659 20,700,167 19,948,065
Operating expenses:
Selling, general and administrative 8,047,110 7,677,079 15,764,117 15,004,223
Research and development 481,563 353,071 839,906 606,879
----------- ----------- ------------ ------------
8,528,673 8,030,150 16,604,023 15,611,102
----------- ----------- ------------ ------------
Income from operations 1,853,687 2,640,509 4,096,144 4,336,963
Other income (expense):
Interest expense (333,821) (404,281) (712,720) (749,862)
Other income (expense) 16,219 (84,331) 28,839 (87,455)
Minority interest --- 11,931 --- 17,798
Gain on sale of building --- --- --- 1,075,680
----------- ----------- ------------ ------------
Income before income taxes 1,536,085 2,163,828 3,412,263 4,593,124
Provision for income taxes 714,000 932,000 1,468,000 1,927,000
----------- ----------- ------------ ------------
Net income $ 822,085 $ 1,231,828 $ 1,944,263 $ 2,666,124
=========== =========== ============ ============
Net income per common and
common equivalent share
Basic $ 0.08 $ 0.12 $ 0.18 $ 0.25
=========== =========== ============ ============
Diluted $ 0.08 $ 0.12 $ 0.18 $ 0.25
=========== =========== ============ ============
Weighted average number of shares
outstanding
Basic
10,764,487 10,546,701 10,743,862 10,538,617
=========== =========== ============ ============
Diluted 10,778,078 10,705,843 10,762,378 10,698,821
=========== =========== ============ ============
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REHABILICARE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
December 31
--------------------------------------------------
2000 1999
---------------------- --------------------
OPERATING ACTIVITIES:
Net income $ 1,944,263 $ 2,666,124
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Gain on sale of building --- (1,075,680)
Depreciation and amortization 1,283,935 940,925
Change in long-term portion of deferred taxes 187,583 92,389
Minority interest --- (17,798)
Change in current assets and liabilities, excluding effects of
business combinations
Receivables 277,495 (230,833)
Inventories 341,222 1,784,709
Prepaid expenses (789,613) (461,222)
Accounts payable (187,169) 88,050
Accrued liabilities (771,045) (1,313,203)
--------------- ---------------
Net cash provided by operating activities 2,286,671 2,473,461
--------------- ---------------
INVESTING ACTIVITIES:
Purchases of property and equipment (235,929) (983,394)
Cash paid in asset acquisition, net of cash received --- (12,598,117)
Proceeds from sale of building --- 1,726,930
Change in other assets, net (625,992) ---
--------------- ---------------
Net cash used in investing activities (861,921) (11,854,581)
--------------- ---------------
FINANCING ACTIVITIES:
Proceeds from new financing --- 15,339,364
Principal payments on long-term obligations (1,885,157) (2,874,804)
Proceeds from (payments on) line of credit, net (800,000) (450,000)
Payment of finance obligation --- (1,261,733)
Proceeds from issuance of restricted stock grants and
exercise of stock options 455,000 37,059
Proceeds from issuance of employer stock purchase 59,657 43,097
--------------- ---------------
Net cash provided by (used in) financing activities (2,170,500) 10,832,983
--------------- ---------------
Effect of exchange on cash and cash equivalents 29,279 (25,791)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents (716,471) 1,426,072
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,227,352 561,207
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,510,881 $ 1,987,279
=============== ================
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 712,708 $ 715,247
=============== ================
Income taxes paid $ 1,653,728 $ 1,382,418
=============== ================
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REHABILICARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
1. ACCOUNTING POLICIES
The amounts set forth in the preceding financial statements are unaudited as of
and for the periods ended December 31, 2000 and 1999 but, in the opinion of
management, reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair statement of the results for the periods
presented. Such results are not necessarily indicative of results for the full
year. The significant accounting policies and certain financial information
which are normally included in financial statements prepared in accordance with
generally accepted accounting principles, but which are not required for interim
reporting purposes, have been omitted. The accompanying financial statements of
the Company should be read in conjunction with the audited consolidated
financial statements for the year ended June 30, 2000, included in the Company's
Annual Report on Form 10-K.
Certain previously reported amounts have been reclassified to conform to
classifications adopted in fiscal year 2001. These reclassifications had no
effect on net income, cash flows or shareholders' equity.
2. BUSINESS COMBINATIONS
On July 16, 1999, the Company acquired substantially all the assets of Compex
SA, a Swiss-based medical products company for cash of approximately $11.0
million. The acquisition was financed principally with debt and provided for
additional contingent consideration of up to $2 million based on the performance
of Compex through December 31, 2000. In connection with the acquisition, the
purchase consideration and transaction costs were allocated as follows:
Net assets acquired $ 1,612,085
Goodwill 9,060,772
Developed technology 1,400,000
Existing workforce 1,400,000
Debt structuring costs 346,970
------------------
$ 13,819,827
==================
Included in goodwill is a contingent payment of $1,777,185 made during fiscal
2000 to the former Compex shareholders. The final contingent payment of $222,815
was accrued at December 31, 2000 and will be paid in March 2001. That amount is
also included in goodwill and will be amortized beginning in January 2001.
3. NOTE PAYABLE AND LONG TERM DEBT
In conjunction with its acquisition of Compex SA, the Company entered into a new
$20,000,000 credit facility which provides for both term and revolving
borrowings at varying rates based either on the bank's prime rate or LIBOR. The
initial term loan of $15,000,000 was used to fund the acquisition and repay the
balance of a note and a revolving loan provided under a credit facility with
another bank.
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Borrowings under the credit facility are secured by substantially all assets of
the Company other than those pledged as collateral on existing lease or mortgage
obligations. The interest rate on the term loan was 8.99% at December 31, 2000.
There were borrowings of $400,000 under the revolving line of credit as of
December 31, 2000, and had a weighted average interest rate of 9.5%.
The Company was in compliance with all financial covenants in its credit
agreement as of December 31, 2000 and for the period then ended.
4. SEGMENT INFORMATION
Rehabilicare and its consolidated subsidiaries operate their business in one
reportable segment, the manufacture and distribution of electromedical pain
management and rehabilitation products. The Company's chief operating decision
makers use consolidated results to make operating and strategic decisions. Net
revenue from the United States and foreign sources (primarily Europe) are as
follows:
For the Six Months Ended December 31
-------------------------------------------------------------
2000 1999
------------------------------- --------------------------
United States revenue $ 21,692,082 $ 21,023,638
Foreign revenue 8,404,282 7,630,718
--------------- ---------------
$ 30,096,364 $ 28,654,356
================ ===============
Net revenue by product line was as follows:
For the Six Months Ended
December 31
-----------------------------------------------
2000 1999
------------------- --------------------
Rehabilitation products $ 6,139,659 $ 5,893,597
Pain management 6,990,371 7,117,778
Consumer Products 5,997,539 5,334,690
Accessories and supplies 10,968,795 10,308,291
-------------- --------------
$ 30,096,364 $ 28,654,356
============== ==============
During the first six months of fiscal 2001, one customer accounted for
approximately 15% of total consolidated revenue. This customer represented
approximately 4% of total accounts receivable at December 31, 2000.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company designs, manufactures and distributes electrotherapy products used
for pain management, rehabilitation and training. Its products are used in
clinical, home health care, sports medicine and occupational medicine
applications. It also distributes other medical products used in related
applications. The Company operates in one business segment, distributing its
products through sales to medical product dealers and distributors, sport shops
and, in the United States, through direct rental or sale to patients.
The direct rental or sale approach involves placing electrotherapy units with
physicians, physical therapists and other health care providers who then refer
those units to patients after determining an appropriate treatment regimen.
Units are left on consignment with the health care providers for such referral.
The Company then bills the patient or the patient's insurance carrier directly
after being notified that a unit has been prescribed and provided to the
patient. The Company takes responsibility for subsequent patient follow-up,
including extension of the rental period, sale of the unit, if appropriate, and
sale of additional supplies required for continued use of the electrotherapy
units. This distribution approach requires the Company to maintain significant
investments in inventories and receivables.
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RESULTS OF OPERATIONS
The following table sets forth information from the statements of operations as
a percentage of revenue for the periods indicated:
Three Months Ended Six Months Ended
December 31 December 31
---------------------------- -------------------------
2000 1999 2000 1999
----------- -------- -------- ---------
Net sales and rental revenue 100.0% 100.0% 100.0% 100.0%
Cost of sales and rentals (30.9) (27.8) (31.2) (30.4)
Gross profit 69.1 72.2 68.8 69.6
Operating expenses -
Selling, general and administrative (53.6) (51.9) (52.4) (52.4)
Research and development (3.2) (2.4) (2.8) (2.1)
----- ----- ----- -----
Total operating expenses (56.8) (54.3) (55.2) (54.5)
----- ----- ----- -----
Income from operations 12.3 17.9 13.6 15.1
Other income (expense), net (2.0) (3.3) (2.2) (2.8)
Gain on sale of building --- --- --- 3.8
Income tax provision (4.8) (6.0) (4.9) (6.6)
----- ----- ----- -----
Net income 5.5 8.6 6.5 9.5
===== ===== ===== =====
Revenue was $15,029,000 for the second quarter of fiscal 2001, a 2% increase
from $14,778,000 for the second quarter of fiscal 2000. Revenue for the six
months ended December 31, 2000 increased 5% to $30,096,000 from $28,654,000 in
the first six months of fiscal 1999. The increase was primarily attributable to
United States operations where revenue increased 6% in the second quarter and
11% for the first six months of fiscal 2001 over the same period in fiscal 2000.
The Company continues its recovery from the impact of a whistleblower lawsuit
disclosed in the third quarter of fiscal 2000, which adversely impacted earnings
growth during the last half of fiscal 2000. Compex accounted for $3,822,000 of
revenue in the second quarter and $7,856,000 for the first six months of fiscal
2001, compared to $4,043,000 in the second quarter and $7,019,000 for the first
six months of fiscal 2000. Revenue from Compex was lower than expected in the
second quarter of fiscal 2001 due mainly to poor weather in Europe during
November and December that impacted consumer retail sales.
Gross profit was $10,383,000 or 69.1% of revenue in the second quarter and
$20,701,000 or 68.8% of revenue for the first six months of fiscal 2001 compared
with $10,671,000 or 72.2% of revenue in the second quarter and $19,948,000 or
69.6% of revenue for the first six months of fiscal 2000. Cost of sales in the
first quarter of fiscal 2000 included a one-time charge of $645,000 related to
the step-up in basis of inventory recorded in connection with the Compex
acquisition. Without that charge, gross profit would have been 71.5% of revenue
for the six months. The current year reduction in gross profit resulted
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primarily from increased focus on sales of Compex sport products through retail
store outlets, rather than direct to consumers, in order to expand market
penetration.
Selling, general and administrative expenses increased 5% to $8,048,000 in the
second quarter of fiscal 2001 from $7,677,000 in fiscal 2000. As a percent of
revenue, those expenses increased from 52% to 54%. For the six months ended
December 31, 2000, those expenses increased 5% to $15,765,000 from $15,004,000
in fiscal 2000, but stayed the same as a percentage of revenue at 52%. That
increase is primarily attributable to an increase in the provision for
uncollectible accounts receivable to reflect actual collection experience.
Research and development expense increased 36% to $482,000 in the second quarter
of fiscal 2001, compared with $353,000 in fiscal 2000. For the six months ended
December 31, 2000, these costs increased 38% to $840,000 compared to $607,000 in
fiscal 2000. Those increases reflect expanded new product development
activities.
Interest expense decreased slightly from $750,000 in the first six months of
fiscal 2000 to $713,000 in the current period. The decrease resulted from
slightly lower interest rates and lower outstanding borrowings under the
Company's revolving line of credit.
Operating results for the first six months of fiscal 2000 include a gain on the
sale of the former Staodyn building in Longmont, Colorado in the amount of
$1,076,000. The Company exercised its option to purchase that building in the
first quarter of fiscal 1999 and closed the purchase and the subsequent sale on
July 7, 1999.
The provision for income taxes was increased from 40% of income before taxes in
the first quarter of fiscal 2001 to 43% for the six months ended December 31,
2000, compared with 41% and 42%, respectively, in the prior year. The Company
now operates in various countries in Europe as well as the United States. Some
countries have higher tax rates than the United States as well as different
rules on the deductibility of certain expenses and the availability of certain
credits for taxes paid to other jurisdictions. In addition, the Company has
relocated certain operations and negotiated new agreements with certain European
taxing authorities. The Company believes that 43% is a reasonable estimate of
the effective rate for fiscal 2001 based on most recent estimates of expected
sources of revenue and expenses for the entire year.
As a result of all the above changes, net income decreased from $1,232,000 in
the second quarter of fiscal 2000 to $822,000 in the second quarter of fiscal
2001. For the six months ended December 31, 2000 net income decreased to
$1,944,000 from $2,666,000 during the same period in fiscal 2000. Diluted
earnings per share decreased from $.12 to $.08 for the second quarter and $.25
to $.18 for the six month period. Before the one time gain related to the
building sale and the one time charge related to the Compex inventory step-up,
net income was $2,462,000 of $.23 per share for the first six months of fiscal
2000.
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LIQUIDITY AND CAPITAL RESOURCES
During the six months ended December 31, 2000, the Company's operations provided
cash of $2,287,000, mainly from net income and a reduction in inventory and
accounts receivable of $341,000 and $277,000, respectively. These amounts were
offset by an increase in prepaid expenses of $790,000 and decreases of $187,000
in accounts payable and $771,000 in accrued liabilities.
The Company used $862,000 in investing activities in the first six months of
fiscal 2001 for net purchases of property and equipment and a net increase in
clinical and rental equipment.
The Company's financing activities used $2,171,000 of cash during the first six
months of fiscal 2001, mainly for the repayment of debt on the $20,000,000
credit facility used to finance the Compex acquisition. The Company initially
borrowed $15,000,000 under the credit facility to finance the Compex purchase
and to repay an outstanding note. At December 31, 2000, $11,697,000 is
outstanding under the facility.
Managing receivables represents one of the biggest business challenges to the
Company. The process of determining what products will be reimbursed by third
party payors and the amounts to be paid for those products is very complex and
the reimbursement environment is constantly changing. That risk is spread across
many payors throughout the United States. The determination of an appropriate
reserve for uncollectible accounts at the end of each reporting period includes
various factors including historical trends and relationships and experience
with insurance companies or other third party payors. As discussed in the Form
10-Q for the third quarter ended March 31, 2000, the Medicare whistleblower suit
disclosed in early February 2000 adversely affected morale and productivity in
the Company's patient support operations. Careful evaluation of that situation
and the nature of remaining receivables at June 30, 2000 led management to
conclude that an additional $1,000.000 should be provided for uncollectible
accounts. The Company believes that the reserve at December 31, 2000 is adequate
to cover future losses on its receivables based on collection history and
trends. The provision for uncollectible accounts recorded in the income
statement may continue to fluctuate significantly from quarter to quarter as
such trends change. The reserve was 26.7% of receivables at December 31, 2000
compared to 25.4% at June 30, 2000. The Company believes that the ratio will be
favorably impacted in the future as a result of including receivables from
Compex SA and Rehabilicare (UK) Ltd. which are more traditional trade
receivables and not dependent on third party payors.
At December 31, 2000 the Company was committed to pay $1,588,000 settlement of
the Medicare whistleblower suit and this amount was remitted in full to the
United States Government on January 29, 2001. The Company has no material
commitment for capital expenditures. The Company believes that available cash
and borrowings under its credit line will be adequate to fund cash requirements
operations for the current fiscal year.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in the interest rates
on certain of its outstanding debt. The outstanding loan balance under
the $20 million credit facility bears interest at a variable rate based
on the bank's prime rate or LIBOR. Based on the average outstanding bank
debt for the period ended December 31, 2000, a 100 basis point change in
interest rates would not change interest expense by a material amount.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 11, 2000, the Company announced that it had reached an
agreement with the United States Government to settle allegations of
improper Medicare billing that were asserted in a lawsuit filed by a
former employee. The Company agreed to pay $1,588,510 to settle the
lawsuit and that amount was remitted to the United States Government on
January 29, 2001. The Company has denied allegations that it engaged in
fraudulent Medicare billing practices.
Under the terms of the settlement, the Company also entered into a
Corporate Integrity Agreement ("CIA"). The CIA has a duration of five
years and provides for an independent audit of claims submitted to
federal health care programs to ensure, among other things, proper
filing of future Medicare claims. The Company previously hired a
corporate compliance officer and implemented a corporate compliance
program to ensure that the Company is in compliance with all applicable
laws and regulations.
The Company has also, from time to time, been a party to other claims,
legal actions and complaints arising in the ordinary course of business.
Management does not believe that the resolution of such matters has had
or will have a material impact on the Company's results of operations or
financial position.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of Rehabilicare was held on December
12, 2000. Shareholders holding 8,310,777 shares, or approximately 77.2%
of outstanding shares, were represented at the meeting by proxy or in
person. The only matter submitted at the meeting for vote by the
shareholders was as follows:
a. Election of Directors
The following nominees were elected to serve as members of
the Board of Directors until the annual meeting of
shareholders in 2001 or until such time as a successor may be
elected:
IN FAVOR WITHHELD
-------- --------
Frederick H. Ayers 8,241,847 68,930
W. Bayne Gibson 8,173,310 137,467
Richard E. Jahnke 8,244,547 66,230
David B. Kaysen 8,249,203 61,574
John H.P. Maley 8,249,904 60,873
Robert C. Wingrove 8,247,680 63,097
ITEM 5. OTHER INFORMATION - None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None filed during the quarter ended December 31, 2000
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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.
REHABILICARE INC.
February 14, 2001 /s/ David B. Kaysen
---------------------------------- --------------------------------
Date David B. Kaysen
President and Chief Executive
Officer
February 14, 2001 /s/ W. Glen Winchell
---------------------------------- --------------------------------
Date W. Glen Winchell
Vice President of Finance
(Principal Financial and
Accounting Officer)
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