SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-QSBQuarterly Report
Pursuant to Section 13 or 15(d) of |
For the Quarterly Period Ended: February 28, 2002 |
Commission File Number 1-11038 |
NORTHERN TECHNOLOGIES
INTERNATIONAL CORPORATION |
Delaware (State of Incorporation) |
41-0857886 (I.R.S. Employer Identification Number) |
6680 N. Highway 49,
Lino Lakes, MN 55014 (651) 784-1250
Indicate by check mark
whether the Registrant (1) has filed all reports required to be filed by Section
13 or YES [X] NO [_] Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. |
Class Common Stock, $.02 par value |
Outstanding as of March 31, 2002 3,669,051 |
"This document consists of 14 pages." |
PART I FINANCIAL INFORMATIONITEM 1 FINANCIAL STATEMENTS NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (Unaudited) |
February 28, 2002 |
August 31, 2001 | ||||
---|---|---|---|---|---|
ASSETS | |||||
CURRENT ASSETS: | |||||
Cash and cash equivalents | $ 3,152,570 | $ 3,238,283 | |||
Receivables: | |||||
Trade excluding international corporate joint ventures, less allowance | |||||
for doubtful account of $15,000 and $30,000, respectively | 764,373 | 864,319 | |||
Trade international corporate joint ventures | 218,653 | 193,509 | |||
Technical and other services international corporate joint ventures | 567,823 | 629,816 | |||
Income taxes | 104,256 | 86,533 | |||
Inventories | 846,412 | 913,911 | |||
Prepaid expenses and other | 186,438 | 90,886 | |||
Advance to related parties | 200,000 | | |||
Deferred income taxes | 80,000 | 80,000 | |||
Total current assets | 6,120,525 | 6,097,257 | |||
PROPERTY AND EQUIPMENT, net | 1,067,137 | 1,067,138 | |||
OTHER ASSETS: | |||||
Investments in international corporate joint ventures | 4,040,833 | 3,923,883 | |||
Investment in European holding company | 30,812 | 209,748 | |||
Deferred income taxes | 380,000 | 380,000 | |||
Other | 991,213 | 729,838 | |||
5,442,858 | 5,243,469 | ||||
$ 12,630,520 | $ 12,407,864 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY | |||||
CURRENT LIABILITIES: | |||||
Accounts payable | $ 238,017 | $ 240,109 | |||
Accrued liabilities: | |||||
Payroll and related benefits | 49,503 | 80,811 | |||
Other | 233,159 | 196,862 | |||
Total current liabilities | 520,679 | 517,782 | |||
DEFERRED GROSS PROFIT | 25,000 | 25,000 | |||
COMMITMENTS AND CONTINGENCIES | |||||
STOCKHOLDERS EQUITY: | |||||
Preferred stock, no par value, authorized 10,000 shares, none issued | |||||
Common stock, $.02 par value per share; authorized 10,000,000 | |||||
shares; issued and outstanding 3,669,051 and 3,689,551, respectively | 73,381 | 73,791 | |||
Additional paid-in capital | 4,277,682 | 4,318,682 | |||
Retained earnings | 8,649,474 | 8,199,866 | |||
Accumulated other comprehensive loss (see Note 7) | (915,696 | ) | (727,257 | ) | |
Total stockholders equity | 12,084,841 | 11,865,082 | |||
$ 12,630,520 | $ 12,407,864 | ||||
See notes to consolidated financial statements. 2 |
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
Three Months Ended |
Six Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
February 28, 2002 |
February 28, 2001 |
February 28, 2002 |
February 28, 2001 | ||||||
SALES ORIGINATING IN NORTH AMERICA | $ 1,564,085 | $ 2,090,355 | $ 3,606,323 | $ 4,596,062 | |||||
COST OF GOODS SOLD | 798,411 | 1,061,498 | 1,720,182 | 2,355,303 | |||||
GROSS PROFIT | 765,674 | 1,028,857 | 1,886,141 | 2,240,759 | |||||
OPERATING EXPENSES: | |||||||||
Selling | 392,179 | 335,816 | 661,455 | 770,462 | |||||
General and administrative | 485,117 | 625,607 | 952,018 | 1,137,953 | |||||
Research, engineering, and technical support | 183,544 | 130,820 | 373,640 | 287,668 | |||||
1,060,840 | 1,092,243 | 1,987,113 | 2,196,083 | ||||||
OPERATING (LOSS) INCOME | (295,166 | ) | (63,386 | ) | (100,972 | ) | 44,676 | ||
INTERNATIONAL CORPORATE JOINT | |||||||||
VENTURES AND EUROPEAN | |||||||||
HOLDING COMPANY: | |||||||||
Equity in income of international corporate | |||||||||
joint ventures and European holding | |||||||||
company | 184,176 | 145,846 | 369,227 | 238,600 | |||||
Fees for technical support and other services | |||||||||
provided to international corporate joint | |||||||||
ventures | 533,490 | 633,470 | 1,102,850 | 1,235,075 | |||||
Expenses incurred in support of international | |||||||||
corporate joint ventures | (496,597 | ) | (271,595 | ) | (792,455 | ) | (457,883 | ) | |
Expenses incurred in support of international | |||||||||
corporate joint ventures conference | | (236,073 | ) | | (236,073 | ) | |||
221,069 | 271,648 | 679,622 | 779,719 | ||||||
INTEREST INCOME | 6,830 | 34,858 | 11,645 | 73,251 | |||||
(LOSS) INCOME BEFORE INCOME TAX | |||||||||
BENEFIT (EXPENSE) | (67,267 | ) | 243,120 | 590,295 | 897,646 | ||||
INCOME TAX BENEFIT (EXPENSE) | 90,000 | (100,000 | ) | (80,000 | ) | (300,000 | ) | ||
NET INCOME | $ 22,733 | $ 143,120 | $ 510,295 | $ 597,646 | |||||
NET INCOME PER COMMON SHARE: | |||||||||
Basic | $ .01 | $ .04 | $ .14 | $ .16 | |||||
Diluted | $ .01 | $ .04 | $ .14 | $ .16 | |||||
WEIGHTED AVERAGE COMMON SHARES | |||||||||
ASSUMED OUTSTANDING: | |||||||||
Basic | 3,669,273 | 3,787,831 | 3,670,076 | 3,792,026 | |||||
Diluted | 3,669,273 | 3,788,434 | 3,670,076 | 3,796,269 | |||||
See notes to consolidated financial statements. 3 |
NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND
CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) |
Six Months Ended | |||||
---|---|---|---|---|---|
February 28, 2002 |
February 28, 2001 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net income | $ 510,295 | $ 597,646 | |||
Adjustments to reconcile net income to net cash provided | |||||
by operating activities: | |||||
Depreciation | 104,326 | 120,481 | |||
Equity income of international corporate joint ventures | |||||
and European holding company | (369,227 | ) | (66,143 | ) | |
Dividends received from international corporate joint ventures | 78,838 | 239,902 | |||
Change in current assets and liabilities: | |||||
Receivables: | |||||
Trade | 99,946 | 75,822 | |||
International corporate joint ventures | (25,144 | ) | 62,518 | ||
Technical fee | 61,993 | (24,508 | ) | ||
Income tax receivable | (17,723 | ) | (114,933 | ) | |
Inventories | 67,499 | (51,386 | ) | ||
Prepaid expenses and other | (298,709 | ) | (226,471 | ) | |
Accounts payable | (2,092 | ) | 6,788 | ||
Income tax payable | | (313,806 | ) | ||
Accrued liabilities | 4,989 | (123,313 | ) | ||
Total adjustments | (295,304 | ) | (415,049 | ) | |
Net cash provided by operating activities | 214,991 | 182,597 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Investments in international corporate joint ventures | (15,000 | ) | (142,267 | ) | |
Additions to property | (104,325 | ) | (124,212 | ) | |
Partial return of original investment in European holding company | 178,936 | | |||
Increase in other assets | (258,218 | ) | (50,000 | ) | |
Net cash used in investing activities | (198,607 | ) | (316,479 | ) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Proceeds from exercise of stock options | | 19,999 | |||
Repurchase of common stock | (102,097 | ) | (358,053 | ) | |
Dividends paid | | (644,972 | ) | ||
Net cash used in financing activities | (102,097 | ) | (983,026 | ) | |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (85,713 | ) | (1,116,908 | ) | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 3,238,283 | 3,840,057 | |||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 3,152,570 | $ 2,723,149 | |||
See notes to consolidated financial statements. 4 |
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
1. | INTERIM FINANCIAL INFORMATION |
In the opinion of management, the accompanying unaudited consolidated financial statements contain all necessary adjustments, which are of a normal recurring nature, to present fairly the financial position of Northern Technologies International Corporation and Subsidiaries as of February 28, 2002 and February 28, 2001, the results of operations for the three and six months ended February 28, 2002 and February 28, 2001, and the cash flows for the six months ended February 28, 2002 and February 28, 2001, in conformity with generally accepted accounting principles. |
These financial statements should be read in conjunction with the financial statements and related notes as of and for the year ended August 31, 2001 contained in the Companys filing on Form 10-KSB dated November 9, 2001 and with Managements Discussion and Analysis of Financial Condition and Results of Operations appearing on pages 8 through 12 of this quarterly report. |
2. | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets (the Statements). The Company does not currently have any goodwill or intangible assets relating to business acquisitions. Therefore, the adoption of the Statements does not impact the Companys financial statements. |
In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company expects to adopt SFAS No. 143 in fiscal year 2003. The Company has not yet determined the impact of SFAS No. 143 on its financial position and results of operations. |
In September 2001, the FASB also issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets. SFAS No. 144 replaces SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposal Of. The FASB issued SFAS No. 144 to establish a single accounting model, based on the framework established in SFAS No. 121, as SFAS No. 121 did not address the accounting for a segment of a business accounted for as a discontinued operation under Accounting Principle Board Opinion No. 30, Reporting the Results of OperationsReporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequent Occurring Events and Transactions. SFAS No. 144 also resolves significant implementation issues related to SFAS No. 121. The provisions of SFAS No. 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, are to be applied prospectively. The Company expects to adopt SFAS No. 144 in fiscal year 2003. The Company has not yet determined the impact of SFAS No. 144 on its financial position and results of operations. |
5 |
3. | INVENTORIES |
Inventories consist of the following: |
February 28, 2002 |
August 31, 2001 | ||||||
---|---|---|---|---|---|---|---|
Production materials | $307,141 | $396,793 | |||||
Work in process | 26,737 | 27,071 | |||||
Finished goods | 512,534 | 490,047 | |||||
$846,412 | $913,911 | ||||||
4. | PROPERTY AND EQUIPMENT |
Property and equipment consist of the following: |
February 28, 2002 |
August 31, 2001 | ||||||
---|---|---|---|---|---|---|---|
Land | $ 246,097 | $ 246,097 | |||||
Buildings and improvements | 1,176,214 | 1,165,542 | |||||
Machinery and equipment | 814,703 | 1,180,823 | |||||
2,237,014 | 2,592,462 | ||||||
Less accumulated depreciation | 1,169,877 | 1,525,324 | |||||
$1,067,137 | $1,067,138 | ||||||
5. | INVETSTMENTS IN INTERNATIONAL CORPORATE JOINT VENTURES |
During the six months ended February 28, 2002, the Company invested an additional $15,000 in an existing international corporate joint venture. |
6. | STOCKHOLDERS EQUITY |
During the six months ended February 28, 2002, the Company purchased and retired 20,500 shares of common stock for $102,097. |
7. | COMPREHENSIVE (LOSS) INCOME |
The Companys total comprehensive (loss) income was as follows: |
Three Months Ended |
Six Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
February 28, 2002 |
February 28, 2001 |
February 28, 2002 |
February 28, 2001 | ||||||||
Net income | $ 22,733 | $143,120 | $ 510,295 | $ 597,646 | |||||||
Other comprehensive (loss) income - | |||||||||||
foreign currency translation adjustment | (91,284 | ) | 45,180 | (188,439 | ) | (73,538 | ) | ||||
Total comprehensive (loss) income | $(68,551 | ) | $188,300 | $ 321,856 | $ 524,108 | ||||||
6 |
8. | EXPENSES INCURRED IN SUPPORT OF INTERNATIONAL CORPORATE JOINT VENTURES CONFERENCE |
During the three and six months ended February 28, 2001, the Company incurred expenses totaling $236,073 relating to the Joint Venture Conference held in Chennai, India. The additional expense had an impact on per share earnings of $0.04 per share. This conference is held approximately every three years as a means to discuss new products and technologies being offered and to evaluate current and future market and material science strategies for all Joint Ventures. |
9. | NET INCOME PER SHARE |
Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per share assumes the exercise of stock options using the treasury stock method, if dilutive. |
7 |
ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Critical Accounting Policies The consolidated financial statements include accounts of the Company and all wholly owned subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related footnotes. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company does not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Revenue Recognition Revenues are recognized when the Company receives a valid bill of lading from the shipping agent when the shipping terms are FOB Destination. At this time, ownership and risk of loss is transferred to the customer. Revenues are recognized when the Company ships an order when the shipping terms are FOB Shipping Point. At this time, title and risk of loss is transferred to the customer. There are no provisions for returns recorded as all products are quality tested and most are made to order. Allowance for Doubtful Accounts Accounts receivable are reduced by an allowance for amounts that may become uncollectable in the future. The majority of the Companys receivables are due from manufacturing facilities located in the United States. The estimated allowance for doubtful accounts is based upon the age of the outstanding receivables and the payment history and credit worthiness of each customer. Management on a quarterly basis evaluates adequacy of the reserve for doubtful accounts. Inventories Inventories are valued at the lower of cost or market. On a quarterly basis, management assesses the inventory quantities on hand to estimated future usage and sales and, if necessary, writes down the value of inventory deemed obsolete or excess to market. International Corporate Joint Ventures International Corporate Joint Ventures are recorded on the equity basis of accounting. The Company records income from the International Corporate Joint Ventures relating to fees for technical support and other services provided by the Company to the International Corporate Joint Ventures. Management reviews the historical and planned future operations of each joint venture on a quarterly basis to determine if the Companys investment in the Joint Venture is recoverable. 8 |
RESULTS OF OPERATIONS GeneralThe Company conducts all foreign transactions based on the U.S. dollar, except for its investments in foreign joint ventures. The exchange rate differential relating to investments in foreign joint ventures is accounted for under the requirements of SFAS No. 52. Sales Originating in North AmericaSales decreased by $526,270 or 25.2% during the second quarter of 2002 from those of the second quarter of 2001. Net sales decreased by $989,739 or 21.5% during the six months ended February 28, 2002 compared to the six months ended February 28, 2001. These changes in sales are due to a decrease in demand for materials science based industrial packaging products. The decrease was due to the slow down in the industrial sector we serve. Cost of SalesCost of goods sold as a percentage of net sales was 51.0% and 50.8% for the second quarter of 2002 and 2001, respectively. The cost of goods sold percentage of net sales was 47.7% and 51.2% for the six months ended February 28, 2002 and February 28, 2001. Variations are due primarily to the mix of product sales and changes in the price of resin. Operating ExpensesAs a percentage of net sales, total operating expenses were 67.8% in the second quarter of fiscal 2002 and 52.3% in the second quarter of fiscal 2001. Operating expenses were 55.1% and 47.8% of net sales for the six months ended February 28, 2002 and for the six months ended February 28, 2001. Operating expense classification percentages of net sales were as follows: |
Three Months Ended |
Three Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
February 28, 2002 |
February 28, 2001 |
February 28, 2002 |
February 28, 2001 | ||||||
Selling expense | 25 | % | 16 | % | 18 | % | 17 | % | |
General and administrative | 31 | 30 | 27 | 25 | |||||
Research, engineering, and | |||||||||
technical support | 12 | 6 | 10 | 6 |
Selling expense increased during the second quarter of fiscal 2002 as compared to the same period in fiscal 2001. This is primarily due to the increase in salaries associated with adding additional employees to the existing sales staff and related commission and travel expenses. Selling expense for the six months ended February 28, 2002 decreased over the same period in fiscal 2001 due to a reduction in spending in the first quarter of fiscal 2002 related to trade show attendance and related travel expenses. Selling expense for the three and six months ended February 28, 2002 as a percentage of net sales increased over the same periods in fiscal 2001 due to selling expense not decreasing proportionately with the decrease in sales levels. General and administrative expenses decreased during the three and six months ended February 28, 2002 as compared to the same periods in fiscal 2001 due primarily to decreases in consulting expense and expenses related to the operation of Northern Instruments Corporation (a 100% owned Subsidiary). General and administrative expenses as a percentage of net sales increased slightly for the three and six months ended February 28, 2002, as compared to the same periods in fiscal 2001 due to the decrease in sales during fiscal 2002. 9 |
Research, engineering, and technical support expenses increased during the three and six months ended February 28, 2002 as compared to the same periods in fiscal 2001. This is primarily due to an increase in travel and consulting services for product development and product support. Such expenses as a percentage of sales were significantly increased for the three months and six months ended February 28, 2002 as compared to the same period in fiscal 2001 due to research, engineering, and technical support expense not decreasing proportionately with the decrease in sales levels. International Corporate Joint Ventures and European Holding Company Net earnings from international corporate joint ventures and European holding company were $221,069 and $679,622 for the three and six months ended February 28, 2002, respectively, compared to $271,648 and $779,719 for the three and the six months ended February 28, 2001. This net decrease is due to decreased sales volume at certain of the Companys joint ventures and an increase in expenses incurred in support of international corporate joint ventures. Income Taxes Income tax benefit (expense) for the three and six months ended February 28, 2002 and February 28, 2001 was calculated based on managements estimate of the Companys annual effective income tax rate. The Companys annual effective income tax rate for fiscal 2002 was lower than the statutory rate primarily due to the Companys equity in income of international corporate joint ventures and European holding company being recognized based on after-tax earnings of these entities. To the extent joint ventures undistributed earnings are distributed to the Company, it does not result in any material additional income tax liability after the application of foreign tax credits. LIQUIDITY AND CAPITAL RESOURCES At November 30, 2001, the Companys working capital was $5,599,846, including $3,152,570 in cash and cash equivalents, compared to working capital of $5,579,475 including $3,238,283 in cash and cash equivalents as of August 31, 2001. Net cash provided from operations has been sufficient to meet liquidity requirements, capital expenditures, research and development cost, and expansion of operations of the Companys international joint ventures. Cash flows provided by operations for the six months ended February 28, 2002 and 2001 was $214,991 and $182,597, respectively. The net cash provided by operations for the six months ended February 28, 2002 resulted principally from net income, receivables, dividends and depreciation, offset by equity income of international corporate joint ventures and European holding company and increases in prepaid expenses and other. The net cash provided by operations for the six months ended February 28, 2001 was principally from net income, depreciation, dividends received from international corporate joint ventures and a decrease in accounts receivable. This was offset by income tax payments, an increase prepaid expenses and other decreases in current liabilities. Net cash used in investing activities for the six months ended February 28, 2002 was $198,607, which resulted from an increase in other assets and additions to property and equipment partially offset by a partial return of the Companys original investment in European holding company. Net cash used in investing activities for the six months ended February 28, 2001 was $316,479, which resulted from investments in international corporate joint ventures, additions to property and increases in other assets. Net cash used in financing activities for the six months ended February 28, 2002 was $102,097, which resulted from the repurchase of common stock. Net cash used in financing activities for the six months ended February 28, 2001 was $983,026, which resulted from the repurchase of common stock of $358,053 and dividends paid of $644,972 offset by proceeds from the exercise of stock options of $19,999. 10 |
The Company expects to meet future liquidity requirements with its existing cash and cash equivalents and from cash flows of future operating earnings and distributions of earnings and technical assistance fees from the international corporate joint venture investments. The Company has no long-term debt and no material capital lease commitments at February 28, 2002; however, the Companys subsidiary has entered into a 15-year lease agreement for 16,826 square feet of office, manufacturing, laboratory, and warehouse space requiring monthly payments of $16,434, which can be adjusted annually according to the annual consumer price index through November 2014. The Company has no postretirement benefit plan and does not anticipate establishing any postretirement benefit program. Euro Currency Issue On January 1, 1999, twelve of the fifteen member countries of the European Union established fixed conversion rates between their respective existing currencies and the Euro and elected to adopt the Euro as their common legal currency on that date (the Euro Conversion). Following the Euro Conversion, however, the previously existing currencies of the participating countries will remain legal tender in the participating countries through January 2002. During the transition period, public and private parties have been paying for goods and services using both the Euro and the previously existing currencies. The participating countries were issued new Euro-denominated bills and coins for use in cash transactions. No later than July 1, 2002, the participating countries will withdraw all bills and coins denominated in the previously existing currencies making Euro Conversion complete. The Euro Conversion has not impacted on the overall business operations of the Company or its international corporate joint ventures. Recently Issued Accounting Pronouncements In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets (the Statements). The Company does not currently have any goodwill or intangible assets relating to business acquisitions. Therefore, the adoption of the statement does not impact the Companys financial statements. In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company expects to adopt SFAS No. 143 in fiscal year 2003. The Company has not yet determined the impact of SFAS No. 143 on its financial position and results of operations. In September 2001, the FASB also issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets. SFAS No. 144 replaces SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposal Of. The FASB issued SFAS No. 144 to establish a single accounting model, based on the framework established in SFAS No. 121, as SFAS No. 121 did not address the accounting for a segment of a business accounted for as a discontinued operation under Accounting Principle Board Opinion No. 30, Reporting the Results of Operations--Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequent Occurring Events and Transactions. SFAS No. 144 also resolves significant implementation issues related to SFAS No. 121. The provisions of SFAS No. 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, are to be applied prospectively. The Company expects to adopt SFAS No. 144 in fiscal year 2003. The Company has not yet determined the impact of SFAS No. 144 on its financial position and results of operations. 11 |
PART II OTHER INFORMATION ITEM 1 LEGAL PROCEEDINGS None ITEM 2 CHANGES IN SECURITIES None ITEM 3 DEFAULTS UPON SENIOR SECURITIES None ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Stockholders of the Company (Annual Meeting) was held on February 15, 2002. The following matters were voted on and approved by the Companys stockholders at the Annual Meeting. There were 3,689,551 shares of common stock entitled to vote at the meeting and a total of 3,310,126 shares or 89.72% were represented at the meeting. The tabulation of votes with respect to each of the following matters voted on at the Annual Meeting is set forth as follows: |
1. | ELECTION OF DIRECTORS: |
For | Withheld | ||||||
---|---|---|---|---|---|---|---|
Ursula-Kiel-Dixon | 3,286,748 | 23,378 | |||||
Prof. Aradhna Krishna | 3,286,363 | 23,763 | |||||
Dr. Donald A. Kubik | 3,272,863 | 37,263 | |||||
Richard G. Lareau | 3,287,048 | 23,078 | |||||
Philip M. Lynch | 3,272,691 | 37,435 | |||||
Haruhiko Rikuta | 3,287,048 | 23,078 | |||||
Mark J. Stone | 3,287,148 | 22,978 | |||||
Stephan C. Taylor | 3,286,748 | 23,378 | |||||
Dr. Milan R. Vukcevich | 3,287,148 | 22,978 | |||||
Dr. Mehmet A. Gencer | 3,286,191 | 23,935 |
2. | APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS |
The appointment of Deloitte & Touche LLP as independent auditors of the Company for the fiscal year ending August 31, 2002 was ratified. Total votes cast: |
For | 3,299,096 | ||||
Against | 3,642 | ||||
Abstain | 7,387 |
ITEM 5 OTHER INFORMATION None ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K None 12 |
SIGNATURESPursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. |
NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION |
April 12, 2002 |
/s/ Matthew Wolsfeld Matthew Wolsfeld Chief Financial Officer |