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UNITED STATES
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, 2004

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Transition Period From __________ to __________.
Commission File Number: 0-27120

Kensey Nash Corporation
(Exact name of registrant as specified in its charter)

Delaware
36-3316412
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
 
Marsh Creek Corporate Center, 55 East Uwchlan Avenue, Exton, Pennsylvania 19341
(Address of principal executive offices and zip code)

Registrant's telephone number, including area code: (610) 524-0188

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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act ). Yes x No o

As of January 31, 2005, there were 11,378,941 outstanding shares of Common Stock, par value $.001, of the registrant.
KENSEY NASH CORPORATION
QUARTER ENDED DECEMBER 31, 2004
 
INDEX
PART I - FINANCIAL INFORMATION
     PAGE  
Item 1. Financial Statements
        
         
                           Condensed Consolidated Balance Sheets
        
                             as of December 31, 2004 (Unaudited) and June 30, 2004
    
3
  
         
                           Condensed Consolidated Statements of Operations
        
                             for the three and six months ended December 31, 2004
        
                             and 2003 (Unaudited)
    
4
  
         
                           Condensed Consolidated Statements of Stockholders Equity for the
        
                            six months ended December 31, 2004 (Unaudited) and
        
                            for the year ended June 30, 2004
    
5
  
         
                           Condensed Consolidated Statements of Cash Flows
        
                             for the six months ended December 31, 2004 and 2003 (Unaudited)
    
6
  
         
                           Notes to Condensed Consolidated Financial Statements (Unaudited)
    
7
  
         
Item 2. Management's Discussion and Analysis of
        
                           Financial Condition and Results of Operations
    
17
  
         
Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
41
  
         
Item 4. Controls and Procedures
    
42
  
         
PART II - OTHER INFORMATION
        
         
         Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
43
  
         
         Item 4. Submission of Matters to a Vote of Security Holders
    
43
  
         
         Item 6. Exhibits
    
44
  
         
SIGNATURES
    
45
  
         
EXHIBITS
    
46
  

2

PART I - FINANCIAL INFORMATION
 
Item 1.  Financial Statements
KENSEY NASH CORPORATION
        
CONDENSED CONSOLIDATED BALANCE SHEETS
    
 
   
December 31,
      
ASSETS
  
2004
  
June 30,
  
CURRENT ASSETS:
  
(Unaudited)
  
2004
  
Cash and cash equivalents
  
$
7,709,399
  
$
14,615,633
  
Investments
    
44,979,673
   
46,480,854
 
Trade receivables, net of allowance for doubtful accounts of $33,918
    
       
and $13,590 at December 31, 2004 and June 30, 2004, respectively
   
6,831,822
   
6,005,702
 
Royalties receivable
    
4,646,403
   
4,432,692
 
Other receivables (including approximately $35,000 and $14,000 at
              
December 31, 2004 and June 30, 2004, respectively, due from employees)
   
728,782
   
511,186
 
Inventory
   
3,659,735
   
3,481,599
 
Deferred tax asset, current portion
    
1,247,620
   
2,607,669
 
Prepaid expenses and other
   
2,560,658
   
1,418,528
 
     
       
Total current assets
    
72,364,092
   
79,553,863
 
               
PROPERTY, PLANT AND EQUIPMENT, AT COST:
             
Land
    
3,263,869
   
-
 
Leasehold improvements
    
9,738,162
   
9,599,237
 
Machinery, furniture and equipment
    
20,884,732
   
18,598,090
 
Construction in progress - new facility
    
2,503,207
   
918,442
 
Construction in progress
    
1,879,612
   
1,142,349
 
Total property, plant and equipment
    
38,269,582
   
30,258,118
 
Accumulated depreciation
    
(15,968,764
)
  
(14,273,218
)
               
Net property, plant and equipment
    
22,300,818
   
15,984,900
 
               
OTHER ASSETS:
              
Deferred tax asset, non-current portion
    
-
   
2,825
 
Acquired patents and proprietary rights, net of accumulated amortization of
              
$2,033,923 and $1,685,743 at December 31, 2004 and June 30, 2004, respectively
   
4,662,443
   
2,410,623
 
Goodwill
    
3,284,303
   
3,284,303
 
               
Total other assets
    
7,946,746
   
5,697,751
 
               
TOTAL
  
$
102,611,656
  
$
101,236,514
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
CURRENT LIABILITIES:
              
Accounts payable
  
$
2,062,038
  
$
1,847,127
  
Accrued expenses (See Note 3)
    
2,421,481
   
4,636,239
 
Current portion of debt
    
-
   
219,147
 
Deferred revenue
    
17,159
   
109,773
 
               
Total current liabilities
    
4,500,678
   
6,812,286
 
               
DEFERRED TAX LIABILITY, NON-CURRENT
   
502,560
   
-
 
               
Total liabilities
    
5,003,238
   
6,812,286
 
               
COMMITMENTS AND CONTINGENCIES
              
               
STOCKHOLDERS' EQUITY:
              
Preferred stock, $.001 par value, 100,000 shares authorized,
              
no shares issued or outstanding at December 31, 2004 and June 30, 2004
    
-
   
-
 
Common stock, $.001 par value, 25,000,000 shares authorized,
              
11,367,207 and 11,511,806 shares issued and outstanding at
              
December 31, 2004 and June 30, 2004, respectively
    
11,367
   
11,512
 
Capital in excess of par value
    
74,863,640
   
78,497,472
 
Retained earnings
    
22,596,557
   
16,151,233
 
Accumulated other comprehensive income (loss)
    
136,854
   
(235,989
)