TRINITY BIOTECH PLC — Regulatory Filings 2000

Nov 2, 2000

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 6-K REPORT OF FOREIGN ISSUER Pursuant to Rule 13a-16 or 15d-16 of The Securities Exchange Act of 1934 For the month of August, 2000 ------------ TRINITY BIOTECH PLC ------------------- (Translation of registrant's name into English) IDA BUSINESS PARK, BRAY, CO. WICKLOW, IRELAND (Address of Principal Executive Offices) Management's Discussion and Analysis of Financial Condition and Results of Operations General Trinity Biotech plc ("Trinity" or the "Company") develops, manufactures and markets diagnostic test kits used for the clinical laboratory, point-of-care ("POC"), and self-testing ("OTC") segments of the diagnostic market. The Company's rapid tests provide fast and accurate results designed for home (OTC) and doctor's office (POC) use. In addition, the Company manufactures and markets a range of diagnostic test kits used in clinical laboratories to detect infectious diseases and autoimmune disorders. The Company markets over 90 different diagnostic tests in 65 countries. Trinity was incorporated in Ireland in January 1992. The Company was organised to acquire, develop and market technologies for rapid in vitro blood and saliva diagnostics for HIV and other infectious diseases. In October 1992, Trinity completed an initial public offering in the United States in which it raised net proceeds of more than US$4.9 million. In October 1993, Trinity took a controlling interest in Disease Detection International Inc ("DDI") and in October 1994 merged, Trinity's wholly owned subsidiary into DDI so that DDI became a wholly owned subsidiary of Trinity. DDI was the surviving entity in the merger and was subsequently renamed Trinity Biotech Inc ("TBI"). In December 1994, Trinity acquired the remaining 50% of FHC Corporation ("FHC"), which its subsidiary TBI did not own. In 1995, Trinity raised net proceeds of $7 million because of a private placement of the Company's shares. In February 1997, Trinity acquired all the outstanding share capital of Clark Laboratories Inc., ("Clark"), based in Jamestown, New York. In June 1997, Trinity acquired Centocor UK Holdings Limited ("Centocor"), a company based in Guildford in the U.K. Centocor was a 100% subsidiary of Centocor, Inc., a U.S. biotechnology company. In July 1998, Trinity purchased the Microzyme product line for hormones and drugs of abuse tests from Diatech Inc, a Boston based diagnostics company. In September 1998, Trinity purchased the Macra Lp(a) laboratory test for monitoring Lipoprotein (Lp(a)) from Strategic Diagnostics Inc, Newark, Delaware based diagnostics company. In addition, in September 1998, Trinity purchased the infectious disease diagnostics business of Cambridge Diagnostics Ireland Ltd. ("Cambridge"), a Subsidiary of Selfcare, Inc. of Waltham, Massachusetts. Also, in September 1998, Trinity acquired the Syva Microtrak business ("Microtrak") from Dade Behring Inc. of Chicago, Illinois. Also, in September 1998, Trinity disposed of its interest in its pregnancy sales contract with Warner Lambert to Applied Biotech Inc., a subsidiary of Sybron International Corporation. In February, 2000 Trinity acquired all the outstanding share capital of MarDx Diagnostics Inc. ("MarDx"), based in Carlsbad, California. The group financial statements include the attributable results of TBI and of its subsidiary FHC, the results of Clark, Trinity Biotech UK Ltd. (formerly Centocor UK Ltd.) and the results for the Microzyme, Macra Lp(a), Cambridge and Microtrak product lines for the three months ended March 31, 2000. They also include the results from MarDx, acquired in February 2000 for the month ended March 31, 2000. The following discussion should be read in conjunction with the unaudited condensed interim Financial Statements and notes thereto. The financial statements have been prepared in accordance with Irish generally accepted accounting principals, which conform in all material respects to US GAAP except as indicated in the notes to the condensed Financial Statements. Results of Operations Nine Months Ended March 31, 2000 Compared to Nine Months Ended March 31, 1999 - ----------------------------------------------------------------------------- Trinity's consolidated revenues for the nine month period ended March 31, 2000 were $6,850,000, an increase of $500,000 compared to consolidated revenues of $6,350,000 for the nine months ended March 31, 1999. This increase reflects additional sales of the Company's rapid and laboratory based diagnostic test kits plus the inclusion of the revenues of MarDx for the month of March. Management expects that revenues of all Trinity's product lines will continue to increase due to further regulatory approvals, increased sales from our existing distribution network and expansion of the distribution network. In addition, the recent acquisition of MarDx will add further to the Company's overall revenues. Trinity also had interest and other income of $32,000 for the three month period ended March 31, 2000 compared to $17,000 the same period the year before. The gross margin from product sales for the three month period ended March 31, 2000 was 49% compared to 39% for the three month period ended arch 31, 1999. This increase is due to the increase in sales of the Company's higher margin tests and efficiencies gained in production as a result of the higher output in the quarter. Administrative expenses for the three month period ended March 31, 2000 amounted to $862,000 compared to $726,000 for the three month period ended March 31, 1999. The reason for the increase is an increased spending on the Company's marketing budget along with the addition of additional administration personnel. Research and development expenditure increased to $728,000 from $519,000 during the period. The increase is due partly from increased resources invested in research and also to the fact that the Company had additional expenses relating to an FDA submission for its UniGold HIV test. The net profit for the three month period ended March 31, 2000 was $1,401,000 compared to a net profit of $902,000 for the same period last year. In addition, management expects that anticipated increases in revenues, control of overheads and additional contribution from the four recently acquired product lines, will result in further improvements for 2000. However, there can be no assurance that Trinity can increase the level of sales or reduce the level of overheads necessary to sustain profitability. 2 Liquidity and Capital Resources As of March 31, 2000, Trinity's consolidated cash and cash equivalents were $4,183,000. This compares to cash and cash equivalents of $3,064,000 at December 31, 1999. This increase has been caused primarily from operations and the issue of Ordinary Shares of $1,473,000 and $3,534,000, respectively, offset by the repayment of $1,481,000 of the Company's bank borrowings, the payment of $667,000 of deferred consideration and the investment in MarDx of $1,481,000. The combination of these factors has resulted in net cash inflows of $1,119,000 during the three month period. The Company does not anticipate capital expenditures in excess of $1,000,000 over the next twelve months. Much of this expenditure will relate to additional expansion of the Company's manufacturing facilities and the purchase of new equipment required to automate the production of the Company';s rapid and laboratory based tests. In order to fund future expansion, Trinity may require additional financing and expects to rely on cash generated from operations, the exercise of warrants and stock options and the issuance of stock in either private or public offerings. There can be no assurance that financing from the preceding sources will be available at attractive terms or at all. The Company believes success in raising additional capital or obtaining profitability will be dependent on the viability of its products and their success in the marketplace. Impact of Inflation Although Trinity's operations are influenced by general economic trends, Trinity does not believe that inflation has a material effect on its operations for the periods presented. Impact of Currency Fluctuation Trinity's revenue and expenses are affected by fluctuations in currency exchange rates especially the exchange rate between the US Dollar and the Irish Pound. Trinity's revenues are primarily denominated in US Dollars, its expenses are incurred principally in Irish Pounds and US Dollars. The revenues and costs incurred by US subsidiaries are denominated in US Dollars. 3 Trinity Biotech plc Unaudited Consolidated Balance Sheet as at:

Note: The balance sheet at December 31, 1998 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to condensed consolidated financial statements. 4 Trinity Biotech plc Unaudited Consolidated Statement of Operations

5 Trinity Biotech plc Unaudited Consolidated Statement of Cash Flows

6 TRINITY BIOTECH PLC NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PREPARATION AND ACCOUNTING POLICIES The unaudited results for the three months to March 31, 1999 and March 31, 2000 been prepared in accordance with Irish generally accepted accounting principals. The accounting policies and the basis of preparation of these unaudited results is consistent with those used in the Group's Annual Financial Statements. The information included in the interim consolidated financial statements is unaudited but reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The results for the three months to March 31, 2000 are not necessarily indicative of the results for the full fiscal year. 2. ANALYSIS OF REVENUE AND OPERATING INCOME a) The distribution of revenue by geographical area was as follows: Three months ended March 31 March 31 2000 1999 US$ US$ U.S.A. 4,251,955 3,914,154 Central and South America 140,293 121,741 Asia 327,232 241,856 Europe 1,310,074 1,270,211 Africa 801,203 781,487 Ireland 19,142 20,880 --------- --------- 6,849,899 6,350,329 --------- --------- b) The distribution of operating income by geographical area was as follows: Three months ended March 31 March 31 2000 1999 US$ US$ Ireland 704,855 499,609 United States 803,800 560,418 ------- ------- Total operating income 1,508,655 1,060,027 ------- ------- 7 3. INVENTORIES Three months ended March 31 March 31 2000 1999 US$ US$ Raw materials 4,024,148 3,845,665 Work in progress 4,304,116 4,119,856 Finished goods 1,873,635 1,545,021 ------- ------- 10,201,899 9,510,541 ------- ------- The replacement cost of inventory is not materially different from that stated. 4. ACQUISITION OF MARDX DIAGNOSTICS INC. On February 29, 2000 Trinity finalised the acquisition of MarDx Diagnostics Inc. ("MarDx") of Carlsbad, California. The purchase consideration for the acquisition was US $4,000,000, US $1,800,000 was paid in cash, US $1,500,000 was paid by the issue of Class 'A' Ordinary Shares of Trinity and the remaining US $700,000 was paid in the form of a loan note to be paid in August 2000. The fair value of the assets acquired by Trinity was US $183,507 resulting in goodwill of US $3,866,493. MarDx is a manufacturing and distribution company and as such has no in process research and development. 8 TRINITY BIOTECH PLC NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. DIFFERENCES BETWEEN IRISH AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the Republic of Ireland ("Irish GAAP"), which differ in certain significant respects from accounting principles generally accepted in the United States ("US GAAP"). These differences relate principally to the following items and the necessary adjustments are shown in the table set out below; (1) Goodwill: In prior years Irish GAAP goodwill would be either written off immediately on completion of the acquisition against shareholders' equity, or capitalised in the balance sheet and amortised through the income statement on a systematic basis over its useful economic life. From 1998, goodwill must be capitalised and amortised over the period of its expected useful life; however, historic goodwill continues to remain an offset against shareholders' equity. Under US GAAP, accounting for goodwill as an offset against shareholders' equity is not permitted. Rather, goodwill must be amortised over the period of its expected useful life, subject to a maximum write off period of 40 years, through the income statement. For goodwill arising prior to 1998, a useful life of 10 years has been adopted for the purposes of the reconciliation. The carrying value of goodwill arising on the acquisition of subsidiaries is reviewed on each balance sheet date on the basis of estimated future profits. If the review indicates a shortfall in the estimated future profits then the goodwill is written down by the amount of the shortfall. Management believes no adjustment to the carrying value is required in the current period. (2) Share Capital Not Paid: Under Irish GAAP, unpaid share capital is classified as a receivable under current assets. Under US GAAP, share capital receivable should be reported as a reduction to Shareholders' Equity. (3) Statement of Comprehensive Income: The Company prepares a "Statement of Recognised Gains and Losses" which is essentially the same as the "Statement of Comprehensive Income" required under US GAAP. (4) Deferred Set-Up Costs: Under Irish GAAP, certain costs arising on the integration of acquired businesses or product lines may be capitalised and amortised over set periods. Under US GAAP, these costs must be expensed in the period in which they occur. (5) Pre-Paid Offering Expenses: Under Irish GAAP, share issue expenses arising as a result of fundraising activities, where no funds have yet been raised, may be included in prepayments and written off to share premium on the finalisation of the fundraising. Under US GAAP, if the fundraising has suspended for a period of more than 90 days the costs must be expensed to the profit and loss account. (6) Sale and Leaseback: UnderIrish GAAP, the Company's sale and leaseback transaction was treated as a disposal of assets with the gain on the disposal of US $1,014,080 being credited to the profit and loss in year ended December 31, 1999. Under US GAAP, this amount would be deferred and released to the profit and loss account over the period of the lease (20 years). 9 (7) Minority Interests: Under Irish GAAP, Minority Interests are included as a portion of Shareholders' Equity. Under US GAAP, Minority Interests are excluded from Shareholders' Equity. 10 TRINITY BIOTECH PLC NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Continued) 6. DIFFERENCES BETWEEN IRISH AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

11 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 authorised. TRINITY BIOTECH PLC /s/Maurice Hickey ----------------- Maurice Hickey Chief Financial Officer August 31, 2000 --------------- (Date) 12