RETRACTABLE TECHNOLOGIES INC
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
RVP$0.57-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001558370-24-012200
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001558370-24-015682
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 50 previous paragraphs and 56 current paragraphs.
19 unchanged; 23 reworded; 12 added; 5 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
On September 13, 2024, the Office of the U.S. Trade Representative (“USTR”) revealed final adjustments to increase tariffs on certain goods imported from China under Section 301 of the Trade Act of 1974. Among those products included were syringes and needles, at a rate of 100%. As previously noted, for the first nine months of 2024, 90% of the products the Company obtained were purchased from our manufacturers in China, most of which are impacted by the tariffs. The adjusted tariffs were effective on September 27, 2024. Tariffs are expected to have a material impact to our results of operations and financial position. To date, the Company has incurred $568 thousand in tariff expenses and due to existing orders from our Chinese manufacturers, we expect to incur a total of approximately $1.5 million in tariff expenses through February 2025. We are working to lessen the financial impact of the tariffs, including shifting a larger portion of manufacturing of 1mL, 3mL, and EasyPoint® needles to our domestic manufacturing facility, but while these actions would decrease tariff expenses, they would lead to an increase in compensation expense as we must hire additional manufacturing personnel. Certain products must be purchased from third party suppliers as we do not currently have the machinery to manufacture our entire product line in our U.S. facility. When equipment was added to our U.S. facility pursuant to the TIA, it was strictly for product lines typically used in the administration of vaccines, as required by the TIA. We have sued the USTR and other defendants involved in the issuance of the recent tariff adjustment as described in Note 8 to the financial statements seeking an injunction and, ultimately, a decision that the tariffs be set aside, as well as certain costs, fees, and other relief. Some of our requests for injunctions were denied as described in Note 8 to the financial statements and therefore we are currently subject to the tariffs during the pendency of the case. Tariffs at the
Current report
100% level without sufficient time to increase our domestic production would considerably increase our costs and may cause irreparable harm.
Current report
Cost of manufactured product increased 81.6% principally due to a rise in the volume of units sold, higher period costs associated with increased sales, and additional period costs related to increased domestic production activities.** **Royalty expense increased 11.4% primarily due to the increase in gross sales and royalties received from sublicenses.
Current report
The gross profit margin decreased from 41.8% to (0.1%) for the three months ended September 30, 2024. This decline was primarily driven by a decrease in the average selling price, a drop in international sales, and rising production costs. Despite the increase in unit sales, these factors contributed to the overall reduction in gross profit.
Current report
Operating expenses were essentially flat, with a slight decrease of 2.6% compared to the three months ended September 30, 2023.
Current report
Tariffs are expected to materially increase our costs in future periods.
Current report
Comparison of Nine Months Ended September 30, 2024 and September 30, 2023
Current report
Domestic sales accounted for 88.8% and 75.5% of the revenues for the nine months ended September 30, 2024 and 2023, respectively. Domestic unit sales increased 10.7% while domestic revenues decreased 3.8% primarily due to the mix of products sold. This decline in revenues was largely driven by a decrease in the average selling price, mainly resulting from increased sales of our EasyPoint® needles, which typically have a lower average selling price. Domestic
Current report
Cost of manufactured product remained largely consistent, with a slight increase of 4.4%. This change was primarily driven by a decrease in the volume of units sold, partially offset by higher period costs associated with increased domestic production activities.
Current report
Tariffs are expected to materially increase our costs in future periods.
Current report
The imposition of 100% tariffs on our imported syringe and needle products will have a material effect on our operating results and liquidity. There have been no such tariffs incurred during the periods represented in this report but such tariffs were enacted effective September 27, 2024. To date, the Company has incurred $568 thousand in tariff expenses, and due to existing orders from our Chinese manufacturers, we expect to incur a total of approximately $1.5 million in tariff expenses through February 2025. Additional capital improvements and increases to our manufacturing workforce will also increase expenses in the near-term as a result of the tariffs and our expected increase in domestic manufacturing.
Current report
We expect to spend approximately $1 million over the next few months using existing cash reserves to convert a portion of our domestic equipment to align to our plan to produce more units at our U.S. facility. While additional equipment expenditures may be necessary in the future, this near-term equipment conversion is expected to be completed by the second quarter of 2025.
Removed paragraphs (5)
Previous report
On May 14, 2024, President Biden directed the Office of the U.S. Trade Representative (“USTR”) to increase tariffs on certain goods imported from China under Section 301 of the Trade Act of 1974. Among those products included were syringes and needles, at a rate of 50%. As noted in this report, for the first six months of 2024, 91% of our products were purchased from our manufacturers in China, most of which would be impacted by the contemplated tariffs. On July 30, 2024, the USTR announced that, in response to more than 1,100 public comments received regarding the modifications, it would continue reviewing the comments and expects its final determination will be issued in August, and that the modifications slated for 2024 will take effect approximately two weeks after its final determination. In the event that the tariffs affecting syringes and needles are enacted, the resulting increase in costs could have a material impact to our results of operations and financial position. We are working to evaluate options to lessen the financial impact of the tariffs, including shifting a larger portion of manufacturing of 1mL, 3mL, and EasyPoint® needles to our domestic manufacturing facility. While this shift to increase our domestic production of those products will not require additional capital outlays for equipment, we will most likely incur an increase in our headcount and associated employee costs for production staff. The impact to our overall production staff costs will be dependent on our product mix and timing of implementation, but is expected to increase our overall wage expense.
Previous report
Cost of manufactured product decreased 15.7% principally due to lower unit sales.** **Royalty expense decreased 8.8% due to the associated decrease in gross sales.
Previous report
Comparison of Six Months Ended June 30, 2024 and June 30, 2023
Previous report
Cost of manufactured product decreased 23.8% principally due to lower unit sales.** **Royalty expense decreased 12.5% due to the associated decrease in gross sales.
Previous report
If new tariffs become effective and we determine to increase domestic production, we expect to spend approximately $1 million over the next six to eight months to improve and add to our domestic equipment in order to begin producing products we cannot currently produce at our U.S. facility.
Reworded paragraphs (23)
Previous wording
We have been manufacturing and marketing our products since 1997. Syringes comprised 86.4% of our sales in the first six months of 2024. EasyPoint®products accounted for 7.3% and other products, including our IV safety catheter and blood collection products, were 6.4% of our sales in the first six months of 2024.
Current wording
We have been manufacturing and marketing our products since 1997. Syringes comprised 70.7% of our sales in the first nine months of 2024. EasyPoint®products accounted for 24.4% and other products, including our IV safety catheter and blood collection products, were 4.8% of our sales in the first nine months of 2024.
Previous wording
Over the past several years, we have experienced certain cost increases in raw materials, but those costs primarily affect our domestic manufacturing because the finished goods we purchased from China (being 91% of our products) are subject to a long-term fixed price contract. Other factors that could affect our unit costs include increases in tariffs, supplier
Current wording
Over the past several years, we have experienced certain cost increases in raw materials, but those costs primarily affect our domestic manufacturing because the finished goods we purchased from China (being 90% of our products) have been subject to a long-term fixed price contract. Other factors that could affect our unit costs include tariffs, supplier cost increases, and changing production volumes. Increases in costs may not be recoverable through price increases of our products.
Previous wording
As detailed in Note 4 to the financial statements, we held $35.1 million in debt and equity securities as of June 30, 2024, which represented 21.8% of our total assets.
Current wording
As detailed in Note 4 to the financial statements, we held $32.8 million in debt and equity securities as of September 30, 2024, which represented 20.8% of our total assets.
Previous wording
Historically, unit sales have increased during the flu season. From approximately 2020-2022, the effect of flu season sales was less impactful due to the dramatic increase in sales attributable to COVID-19 vaccinations. Seasonal trends may now be following pre-pandemic patterns.
Current wording
Historically, unit sales have increased during the flu season. From approximately 2020-2022, the effect of flu season sales was less impactful due to the dramatic increase in sales attributable to COVID-19 vaccinations. Seasonal trends for syringe sales may now be following pre-pandemic patterns. Additionally, we believe there may be more demand for EasyPoint® products during flu season.
Previous wording
Product purchases from our Chinese manufacturers have enabled us to increase manufacturing capacity with little capital outlay and have provided a competitive manufacturing cost. In the second quarter of 2024, our Chinese manufacturers produced approximately 92% of our products. In the event that we become unable to purchase products from our Chinese manufacturers, we may need to find an alternate manufacturer for the blood collection set, IV catheter, Patient Safe® syringe, 0.5mL insulin syringe, 0.5mL autodisable syringe, and 2mL, 5mL, and 10mL syringes, and we would increase domestic production for the 1mL and 3mL syringes and EasyPoint®needles.** **
Current wording
In the third quarter of 2024, our Chinese manufacturers produced approximately 87.3% of our products.
Previous wording
A material portion of our net losses for the 2024 periods presented in this report is comprised of the approximately $8.3 million change in valuation allowance on the deferred tax asset which is included as a provision for income taxes on the Condensed Statements of Operations and additionally is reflected as a removal of that asset from the Condensed Balance Sheets. In short, the devaluation of the deferred tax asset is related to our determination that, based on current information, it is more likely than not that we wouldn’t be in a position to use loss carryforwards against future taxable net income based on a variety of factors and accounting guidelines. The expected implementation of tariffs on imported syringes from China was one of the factors considered in this determination.
Current wording
A material portion of our net losses for the nine months ended September 30, 2024 is comprised of the approximately $8.4 million change in valuation allowance which occurred in the second quarter of 2024 on the deferred tax asset which is included as a provision for income taxes on the Condensed Statements of Operations. The devaluation of the deferred tax asset was related to our determination that, based on current information, it was more likely than not that we wouldn’t be in a position to use loss carryforwards against future taxable net income based on a variety of factors and accounting guidelines. The announced implementation of tariffs on imported syringes from China was one of the factors considered in this determination.
Previous wording
In 1995, we entered into a license agreement with Thomas J. Shaw for the exclusive right to manufacture, market, and distribute products utilizing his patented automated retraction technology and other patented technology. This technology is the subject of various patents and patent applications owned by Mr. Shaw. The license agreement generally provides for quarterly payments of a 5% royalty fee on gross sales of products subject to the license and he receives fifty percent (50%) of the royalties paid to us by certain sublicensees of the technology subject to the license.
Current wording
In 1995, we entered into a license agreement with Thomas J. Shaw for the exclusive right to manufacture, market, and distribute products utilizing his patented automated retraction technology and other patented technology. This technology is the subject of various patents and patent applications owned by Mr. Shaw. The license agreement generally
Previous wording
Included in net sales for the second quarter of 2024 is $90 thousand in licensing fees recorded under a sublicensing agreement with one of our Chinese manufacturers. Under the terms of our licensing agreement with Mr. Shaw, he is
Current wording
Included in net sales for the third quarter of 2024 is $38 thousand in licensing fees recorded under a sublicensing agreement with one of our Chinese manufacturers. Under the terms of our licensing agreement with Mr. Shaw, he is entitled to receive 50% of this amount, which is recorded as royalty expense to shareholder in total cost of sales for the year.
Previous wording
Domestic sales accounted for 83.2% and 91.6% of the revenues for the three months ended June 30, 2024 and 2023, respectively. Domestic revenues decreased 31.3% principally due to lower demand. Domestic unit sales decreased 22.1%. Domestic unit sales were 79.3% of total unit sales for the three months ended June 30, 2024. International revenues increased approximately 51.5% or $345 thousand. The increase in international revenues is primarily due to the timing of international shipments. Overall unit sales decreased 13.6%. There is uncertainty as to the timing of future international orders.
Current wording
Domestic sales accounted for 93.1% and 90.9% of the revenues for the three months ended September 30, 2024 and 2023, respectively. Domestic revenues were essentially flat while domestic unit sales increased 29.6%. Domestic unit sales were 92.4% of total unit sales for the three months ended September 30, 2024. The increase in unit sales not contributing to domestic revenues was primarily driven by a decrease in the average selling price, largely due to higher sales of our EasyPoint® needles, which typically have a lower average selling price. International revenues decreased approximately 23.8%. The decrease in international revenues is primarily due to the timing of international shipments. Overall unit sales increased 22%. There is uncertainty as to the timing of future international orders.
Previous wording
The loss from operations was $5.8 million compared to a loss of $5.0 million for the same period last year. The increased loss was due to lower gross profit for the current period, offset by a slight reduction in overall operating expenses.
Current wording
The loss from operations was $5.1 million compared to a loss of $936 thousand for the same period last year. The increased loss was due to lower gross profit for the current period.
Previous wording
The unrealized loss on debt and equity securities was $1.8 million due to the decreased market values of those securities.
Current wording
The unrealized gain on debt and equity securities was $1.5 million due to the increased market values of those securities.
Previous wording
The provision for income taxes was $8.3 million for the second quarter of 2024 as compared to a benefit for income taxes of $932 thousand in the second quarter of 2023. The increase in income tax expense is primarily related to the valuation allowance against the Deferred tax asset.
Current wording
The benefit for income taxes was $31 thousand for the third quarter of 2024 as compared to a benefit for income taxes of $1.2 million in the third quarter of 2023. This change is primarily due to the increase in valuation allowance on our deferred tax asset in the second quarter of 2024.
Previous wording
Domestic sales accounted for 85.5% and 67.1% of the revenues for the six months ended June 30, 2024 and 2023, respectively. Domestic revenues decreased 8.4% principally due to lower demand. Domestic unit sales decreased 4.6%. Domestic unit sales were 82.8% of total unit sales for the six months ended June 30, 2024. International revenues decreased approximately 68.4% predominately due to fewer international vaccination-related sales. Overall unit sales decreased 35.8%. There is uncertainty as to the timing of future international orders.
Current wording
unit sales were 87.6% of total unit sales for the nine months ended September 30, 2024. International revenues decreased approximately 62.6% predominately due to fewer international vaccination-related sales. Overall unit sales decreased 16.1%. There is uncertainty as to the timing of future international orders.
Previous wording
Operating expenses decreased 7.2% from the prior year. This is substantially due to a reduction of property tax expense as a result of newly enacted property tax exemption legislation relating to medical device property.
Current wording
Operating expenses decreased 5.7% from the prior year. This is substantially due to a reduction of property tax expense as a result of newly enacted property tax exemption legislation relating to medical device property. The decrease was partially offset by an increase in sales and marketing expenses.
Previous wording
The loss from operations was $8.7 million compared to a loss of $7.8 million for the same period last year. The increased loss was due to lower gross profit for the current period, offset by a slight reduction in overall operating expenses.
Current wording
The loss from operations was $13.9 million compared to a loss of $8.7 million for the same period last year. The increased loss was due to lower gross profit for the current period.
Previous wording
The provision for income taxes was $8.4 million for the first six months of 2024 as compared to a benefit for income taxes of $701 thousand in the first six months of 2023. The year-to-date income tax provision is primarily related to the second quarter of 2024 as a result of fully reserving the Company’s Deferred tax asset.
Current wording
The provision for income taxes was $8.4 million for the first nine months of 2024 as compared to a benefit for income taxes of $1.9 million in the first nine months of 2023. The year-to-date income tax provision is primarily related to fully reserving our deferred tax asset in the second quarter of 2024.
Previous wording
Cash and investments comprise 26.1% of total assets. Cash flow used by operations was $4.7 million for the six months ended June 30, 2024 due to a number of factors. We recognized approximately $3.0 million in other income from the TIA during the first six months of 2024, offset by increase of $8.4 million in valuation allowance related to deferred tax assets which is material to the adjustments to total cash flow from operations. Changes in working capital also impacted cash flows from operating activities. Accounts receivable decreased by $5.6 million, inventories increased by $4.4 million, and accounts payable decreased by $1.7 million.
Current wording
Cash and investments comprise 23.3% of total assets. Cash flow used by operations was $10.5 million for the nine months ended September 30, 2024 due to a number of factors. We recognized approximately $4.4 million in other income from the TIA during the first nine months of 2024, offset by an increase of $8.4 million in valuation allowance related to deferred tax assets which is material to the adjustments to total cash flow from operations. Changes in working capital also impacted cash flows from operating activities. Accounts receivable decreased by $1.6 million, inventories increased by $3.7 million, and accounts payable decreased by $1.5 million.
Previous wording
Cash flow used by investing activities was $825 thousand for the six months ended June 30, 2024 due to the purchase of assets and securities.
Current wording
Cash flow from investing activities was $2.1 million for the nine months ended September 30, 2024 due to the purchase of assets and net sale of securities.
Previous wording
Cash flow used by financing activities was $264 thousand for the six months ended June 30, 2024 due to repayments of long-term debt and payment of preferred stock dividends.
Current wording
Cash flow used by financing activities was $398 thousand for the nine months ended September 30, 2024 due to repayments of long-term debt and payment of preferred stock dividends.
Previous wording
We have historically funded operations primarily from the proceeds from revenues, private placements, litigation settlements, and loans. We may fund operations going forward from revenues, cash reserves, and investments available for sale if the need to access those funds arises.
Current wording
We have historically funded operations primarily from the proceeds from revenues, private placements, litigation settlements, and loans. We may fund operations going forward from revenues, cash reserves, and investments in trading securities should the need to access those funds arise.
Previous wording
The mix of domestic and international sales affects the average sales price of our products. Generally, the higher the ratio of domestic sales to international sales, the higher the average sales price will be. Some international sales of our products are shipped directly from China to the customer. The number of units produced by us versus manufactured in China can have a significant effect on the carrying costs of Inventory as well as Cost of sales. Generally, an overall increase in units sold can positively affect our margins. The cost of raw materials used in manufacturing, transportation costs, and the impact of tariffs can also significantly affect our margins. We will continue to evaluate the appropriate mix of products manufactured domestically and those manufactured in China to achieve economic benefits as well as to maintain our domestic manufacturing capability.
Current wording
The mix of domestic and international sales, along with product mix, affects the average sales price of our products. Generally, the higher the ratio of domestic sales to international sales, the higher the average sales price will be. Additionally, product mix plays a role, with syringe sales typically having higher average selling prices and gross profit margins than our other product lines. Some international sales of our products are shipped directly from China to the customer. The number of units produced by us versus manufactured in China can have a significant effect on the carrying costs of Inventory as well as Cost of sales. Generally, an overall increase in units sold can positively affect our margins. The cost of raw materials used in manufacturing, transportation costs, and the impact of tariffs can also significantly affect our margins. We will continue to evaluate the appropriate mix of products manufactured domestically and those manufactured in China to achieve economic benefits as well as to maintain our domestic manufacturing capability.
Previous wording
We believe we will have adequate means to meet our short-term needs to fund operations for at least 12 months from the date of issuance of the financial statements.** Besides cash reserves and expected income from operations, we also have access to our investments which may be liquidated in the event that we need to access the funds for operations. Expected short-term uses of cash include payroll and benefits, royalty expense, inventory purchases, contractual obligations, payment of income taxes, quarterly preferred stock dividends, and other operational priorities. Our liabilities are our bank debt as set forth as Long-term debt on our Condensed Balance Sheets and other liabilities detailed herein in Note 6 **to the financial statements. We believe we will have adequate means to meet our currently foreseeable long-term liquidity needs. In the event that our long-term cash requirements exceed our current reserves and our ability to generate cash from operations, management would reduce our operational cash requirements.
Current wording
We believe we will have adequate means to meet our short-term needs to fund operations for at least 12 months from the date of issuance of the financial statements.** Besides cash reserves and expected income from operations, we also have access to our investments which may be liquidated in the event that we need to access the funds for operations. Expected short-term uses of cash include payroll and benefits, royalty expense, inventory purchases, tariffs, contractual obligations, payment of income taxes, quarterly preferred stock dividends, and other operational priorities. Our liabilities are our bank debt as set forth as Long-term debt on our Condensed Balance Sheets and other liabilities detailed herein in Note 6 **to the financial statements. We believe we will have adequate means to meet our currently foreseeable long-term liquidity needs although the new tariffs and our costs related to an increase in domestic manufacturing will increase our expenses materially. For the next 1-3 years, we believe our liquidity will decline materially but expect that we may be able to satisfy our long-term cash requirements using a combination of cash and liquidation of our equity investments. If cash needs cannot be met using existing cash and investments, management would reduce operational costs.
Previous wording
We are responsible for developing estimates for amounts reported as assets and liabilities, and revenues and expenses in conformity with U.S. generally accepted accounting principles (“GAAP”). Those estimates require that we develop assumptions of future events based on past experience and expectations of economic factors. Among the more critical estimates management makes is the estimate for customer rebates. The amount reported as a contractual allowance for rebates involves examination of past historical trends related to our sales to distributors and the related credits issued once our distributors have satisfied their contractual obligations. The estimate includes consideration of historical redemption rates, discount rates, a combination of estimated distributor inventories based on tracking information provided by the distributors or if known, inventory turnover rates. The establishment of a liability for future claims of rebates against sales in the current period requires that we have an understanding of the relevant sales with respect to product categories, sales distribution channels, and the likelihood of contractual obligations being satisfied. We examine the results of estimates against actual results historically and use the determination to further develop our basis for assumptions in future periods, as well as the accuracy of past estimates. Based on distributors purchasing and claiming rebates practices, we do not expect significant changes to the current inputs and assumption used in the estimate calculations. While we believe that we have sufficient historical data, and a firm basis for establishing reserves for contractual obligations, there is an inherent risk that our estimates and the underlying assumptions may not reflect actual future results. In the event that these estimates and/or assumptions are incorrect, adjustments to our reserves may have a material impact on future results. As of June 30, 2024, we estimate that the total potential future credits to be issued as a result of prior purchases which have not yet been claimed is $1.3 million.
Current wording
We are responsible for developing estimates for amounts reported as assets and liabilities, and revenues and expenses in conformity with U.S. generally accepted accounting principles (“GAAP”). Those estimates require that we develop assumptions of future events based on past experience and expectations of economic factors. Among the more critical estimates management makes is the estimate for customer rebates. The amount reported as a contractual allowance for rebates involves examination of past historical trends related to our sales to distributors and the related credits issued once our distributors have satisfied their contractual obligations. The estimate includes consideration of historical redemption rates, discount rates, a combination of estimated distributor inventories based on tracking information provided by the distributors or if known, inventory turnover rates. The establishment of a liability for future claims of rebates against sales in the current period requires that we have an understanding of the relevant sales with respect to product categories, sales distribution channels, and the likelihood of contractual obligations being satisfied. We examine the results of estimates against actual results historically and use the determination to further develop our basis for assumptions in future periods, as well as the accuracy of past estimates. Based on distributors purchasing and claiming rebates practices, we do not expect significant changes to the current inputs and assumption used in the estimate calculations. While we believe that we have sufficient historical data, and a firm basis for establishing reserves for contractual obligations, there is an inherent risk that our estimates and the underlying assumptions may not reflect actual future results. In the event that these estimates and/or assumptions are incorrect, adjustments to our reserves may have a material impact on future results. As of September 30, 2024, we estimate that the total potential future credits to be issued as a result of prior purchases which have not yet been claimed is $1.8 million.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
provides for quarterly payments of a 5% royalty fee on gross sales of products subject to the license and he receives fifty percent (50%) of the royalties paid to us by certain sublicensees of the technology subject to the license.
Current report — wording carried from elsewhere
The unrealized gain on debt and equity securities was $1.4 million due to the increased market values of those securities.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
cost increases, and changing production volumes. Increases in costs may not be recoverable through price increases of our products.
Previous report — wording carried elsewhere
entitled to receive 50% of this amount, which is recorded as royalty expense to shareholder in total cost of sales for the year.
Previous report — wording carried elsewhere
Operating expenses decreased 1.2% from the prior year due to a reduction of property tax expense as a result of newly enacted property tax exemption legislation relating to medical device property, offset by an increase in our allowance for anticipated credit losses.