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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 March 31, 1994.
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 number 1-7928
BIO-RAD LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
A Delaware Corporation 94-1381833
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1000 Alfred Nobel Drive, Hercules, California 94547
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 724-7000
Former name, former address and former fiscal year, if changed since
last year - NO CHANGE
Indicate by check 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 month (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 the latest practicable date--
<TABLE>
<CAPTION>
Shares Outstanding
Title of each Class at April 30, 1994
<S> <C>
Class A Common Stock,
Par Value $1.00 per share 6,235,733
Class B Common Stock,
Par Value $1.00 per share 1,836,529
</TABLE>
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1994 1993
<S> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . $ 89,657 $ 80,504
Cost of goods sold . . . . . . . . . . . . . 39,409 34,321
GROSS PROFIT . . . . . . . . . . . . . . . . 50,248 46,183
Selling, general and administrative expense . 31,715 32,564
Product research and development expense . . 7,349 8,626
INCOME FROM OPERATIONS . . . . . . . . . . . 11,184 4,993
Interest expense . . . . . . . . . . . . . . (1,704) (2,153)
Investment income, net . . . . . . . . . . . 322 3,363
Other, net . . . . . . . . . . . . . . . . . (1,961) (794)
INCOME BEFORE TAXES . . . . . . . . . . . . . 7,841 5,409
Provision for income taxes . . . . . . . . . 3,136 2,164
NET INCOME . . . . . . . . . . . . . . . . . $ 4,705 $ 3,245
======== ========
Earnings per share . . . . . . . . . . . . . $0.58 $0.41
======== ========
Weighted average common shares . . . . . . . 8,045 7,960
======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
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BIO-RAD LABORATORIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
<S> <C> <C>
ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . $ 5,662 $ 3,112
Accounts receivable . . . . . . . . . . . . . . . . . 81,857 75,768
Inventories . . . . . . . . . . . . . . . . . . . . . 70,997 72,114
Prepaid expenses, taxes and other current assets. . . 19,280 18,283
Total current assets . . . . . . . . . . . . . . . 177,796 169,277
Net property, plant and equipment . . . . . . . . . . 78,338 80,901
Marketable securities . . . . . . . . . . . . . . . . 4,998 4,111
Other assets . . . . . . . . . . . . . . . . . . . . 5,199 5,601
Total assets . . . . . . . . . . . . . . . . . . $ 266,331 $ 259,890
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable and current maturities of long-term debt $ 25,622 $ 30,769
Accounts payable . . . . . . . . . . . . . . . . . . 14,046 14,691
Sales, income and other taxes payable . . . . . . . . 10,993 6,369
Other current liabilities . . . . . . . . . . . . . . 39,242 35,535
Total current liabilities . . . . . . . . . . . . 89,903 87,364
Long-term debt, net of current maturities . . . . . . 44,796 47,834
Deferred tax liabilities. . . . . . . . . . . . . . . 14,082 14,382
Total liabilities . . . . . . . . . . . . . . . . 148,781 149,580
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value, 2,300,000 shares
authorized; none outstanding . . . . . . . . . . . -- --
Class A common stock, $1.00 par value, 15,000,000 shares
authorized; outstanding - 6,216,164 at March 31, 1994
and 6,188,581 at December 31, 1993 . . . . . . . 6,216 6,189
Class B common stock, $1.00 par value, 6,000,000 shares
authorized; outstanding - 1,836,529 at March 31, 1994
and 1,842,229 at December 31, 1993. . . . . . . . 1,837 1,842
Additional paid-in capital . . . . . . . . . . . . . . 18,343 18,179
Retained earnings . . . . . . . . . . . . . . . . . . 88,808 84,103
Currency translation . . . . . . . . . . . . . . . . 1,233 (3)
Net unrealized holding gain on available-for-sale securities 1,113 --
Total stockholders' equity . . . . . . . . . . . . 117,550 110,310
Total liabilities and stockholders' equity . . $ 266,331 $ 259,890
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
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BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . $ 87,023 $ 77,573
Cash paid to suppliers and employees . . . . . . . . (70,857) (76,610)
Interest paid. . . . . . . . . . . . . . . . . . . . (2,056) (2,461)
Income tax receipts (payments) . . . . . . . . . . . 1,052 (781)
Miscellaneous receipts (payments) . . . . . . . . . (156) 142
Net cash provided by (used in) operating activities. 15,006 (2,137)
Cash flows from investing activities:
Capital expenditures, net. . . . . . . . . . . . . . (1,716) (4,253)
Marketable securities investment activity, net . . . 511 4,061
Foreign currency hedges, net . . . . . . . . . . . . (769) 1,110
Net cash provided by (used in) investing activities. (1,974) 918
Cash flows from financing activities:
Net borrowings under line-of-credit arrangements. . (6,105) 1,117
Additions to long-term debt . . . . . . . . . . . . 13,800 20,088
Payments on long-term debt. . . . . . . . . . . . . (17,068) (19,586)
Proceeds from issuance of common stock. . . . . . . 186 206
Net cash provided by (used in) financing activities (9,187) 1,825
Effect of exchange rate changes on cash . . . . . . . . . (1,295) 531
Net increase in cash and cash equivalents . . . . . . . . 2,550 1,137
Cash and cash equivalents at beginning of period. . . . . 3,112 2,686
Cash and cash equivalents at end of period. . . . . . . . $ 5,662 $ 3,823
======== ========
Reconciliation of net income to net cash provided
by operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . $ 4,705 $ 3,245
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . 4,320 3,520
Foreign currency hedges, net . . . . . . . . . . . 1,524 89
Gains on dispositions of marketable securities . . (273) (3,328)
Increase in accounts receivable . . . . . . . . . (3,380) (2,506)
(Increase) decrease in inventories . . . . . . . . 2,690 (3,373)
Increase in other current assets . . . . . . . . . (858) (1,406)
Increase (decrease) in accounts payable and other
current liabilities. . . . . . . . . . . . . . . 2,032 (26)
Increase in income taxes payable . . . . . . . . . 4,188 645
Other. . . . . . . . . . . . . . . . . . . . . . . 58 1,003
Net cash provided by (used in) operating activities . . . $ 15,006 $ (2,137)
======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
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BIO-RAD LABORATORIES, INC.
Notes to Condensed Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements of Bio-Rad Laboratories, Inc. ("Bio-Rad" or the
"Company"), reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of the
interim periods presented. All such adjustments are of a normal
recurring nature. The condensed consolidated financial
statements should be read in conjunction with the notes to
consolidated financial statements contained in the Company's
Annual Report for the year ended December 31, 1993 (the Company's
1993 Annual Report). Certain amounts in the financial statements
of the prior year have been reclassified to be consistent with
the 1994 presentation.
2. INVENTORIES
<TABLE>
The principal components of inventories are as follows:
<CAPTION>
March 31, December 31,
1994 1993
(in thousands)
<S> <C> <C>
Raw materials $ 21,948 $ 22,827
Work in process 19,354 18,607
Finished goods, net 29,695 30,680
$ 70,997 $ 72,114
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
The principal components of property, plant and equipment are as
follows:
<CAPTION>
March 31, December 31,
1994 1993
(in thousands)
<S> <C> <C>
Land and improvements $ 8,057 $ 8,057
Buildings and leasehold
improvements 49,756 50,599
Equipment 86,692 84,410
144,505 143,066
Less accumulated depreciation 66,167 62,165
Net property, plant and equipment $ 78,338 $ 80,901
======== ========
</TABLE>
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4. MARKETABLE SECURITIES
Bio-Rad adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", effective January 1, 1994. The
Company's portfolio of marketable securities is classified
as available-for-sale securities and net unrealized holding
gains or losses are recorded as a separate component of
stockholders' equity. The net unrealized holding gain at
January 1, 1994 and March 31, 1994 was $1,572,000 and
$1,113,000, respectively.
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ITEM 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.
This discussion should be read in conjunction with the information
contained both in this report and in the Company's Consolidated
Financial Statements for the year ended December 31, 1993.
<TABLE>
The following table shows operating income and expense items as a
percentage of net sales:
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
1994 1993 1993
<S> <C> <C> <C>
Net sales 100.0 100.0 100.0
Cost of goods sold 44.0 42.6 46.0
Gross profit 56.0 57.4 54.0
Selling, general and
administrative 35.3 40.5 39.3
Product research and
development 8.2 10.7 10.4
Restructuring costs - - 1.2
Income from operations 12.5 6.2 3.1
===== ===== =====
</TABLE>
Three Months Ended March 31, 1994 Compared to
Three Months Ended March 31, 1993
Corporate Results - Sales, Margins and Expenses
Bio-Rad's net sales in the first quarter of 1994 reached a record
$89.7 million up 11% from the $80.5 million reported in the first
quarter of 1993. Although sales increased in all three segments
of the Company's business, Life Science accounted for $7.8
million of the $9.2 million increase in sales. The increase in Life
Science sales is attributed to increased instrument sales as
products introduced in the past eighteen to twenty-four months are
making an impact. (The confocal microscope product line has
been reclassified to Life Science from Analytical Instruments.
All prior period information has been restated for comparability.)
Although instrument sales have increased, the Company's growth
rates in certain business segments continue to be impeded by
uncertainties in the international health care markets and
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sluggish economies.
Consolidated gross margins declined to 56.0% in the first quarter
of 1994 from 57.4% in the first quarter of 1993 although they were
higher than the 54.0% reported for the entire year of 1993. The
decline in gross margins is principally attributed to a decline in
Life Science margins related to the increase in sales of
instruments which generally have lower gross margins than
consumables. Gross margins were down slightly in Clinical
Diagnostics and increased in Analytical Instruments.
Both selling, general and administrative expense (SG&A) and product
research and development expense (R&D) declined from the first
quarter of 1993. Through improved expense control and an
approximate 10% reduction in work force, all segments of the
Company reduced SG&A and R&D costs both in absolute dollars and as
a percentage of sales. Bio-Rad continues to be committed to long-
term growth through R&D.
Corporate Results - Non-Operating Items
Net interest expense was $449,000 less in the first quarter of 1994
than the comparable period of 1993 principally as a result of lower
average borrowings. Average borrowings in the first three months
of 1994 were 21% less than average borrowings in the same period of
1993.
Investment income for the first quarter of 1994 was $0.3 million
compared to $3.4 million in the first quarter of 1993. Investment
income in the first quarter of 1993 included a $3.1 million gain
from sales of Escagenetics stock. The Company has sold
substantially all of the Escagenetics stock acquired upon
International Plant Research Institute's emergence from bankruptcy.
Net other income and expense in the first quarter of 1994 includes
non-operating legal costs and hedging costs related to foreign
exchange exposures. Net other income and expense in the first
quarter of 1993 was primarily hedging costs related to foreign
exchange exposures and fixed asset dispositions.
The Company's effective tax rate was constant at 40% for both 1994
and 1993.
Financial Condition
The Company's ongoing and principal capital requirement is for
working capital to fund its growth in operations. At March 31,
1994, the Company had available $5.7 million in cash and cash
equivalents and $48.0 million under its principal revolving credit
agreement. In addition, Bio-Rad held marketable securities with a
market value of $5.0 million, most of which could be readily
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converted to cash.
At March 31, 1994 consolidated net inventories decreased for the
fourth consecutive quarter. Inventory levels peaked at $86.0
million at March 31, 1993 and have now been reduced 17%. Inventory
control remains central to management's efforts to moderate capital
growth requirements.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the annual meeting of the stockholders of Bio-Rad Laboratories,
Inc. on April 26, 1994 the stockholders re-elected the Board of
Directors and ratified proposals to amend the 1988 Employee Stock
Purchase Plan (Purchase Plan) and to approve the 1994 Stock Option
Plan (Option Plan). These proposals are described in subparts II
and III of the Proxy Statement dated March 25, 1994, filed with the
Securities and Exchange Commission and incorporated herein by this
reference. The votes cast were as follows:
<TABLE>
<CAPTION>
Purchase Plan Option Plan
<S> <C> <C>
For 1,894,159 1,868,701
Against 30,567 56,115
Abstentions 7,466 7,376
Broker non-votes 171,959 171,959
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following documents are filed as part of this report:
Exhibit No.
11.1 Computation of Earnings Per Share.
22.1 Proxy Statement dated March 25, 1994 (definitive form
filed March 29, 1994 and incorporated by reference).
(b) Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended March 31,
1994.
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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 thereto duly authorized.
BIO-RAD LABORATORIES, INC.
(Registrant)
Date: May 11, 1994 /s/ Thomas L. Braje
Thomas L. Braje, Vice President,
Chief Financial Officer
Date: May 11, 1994 /s/ James R. Stark
James R. Stark,
Corporate Controller
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</TABLE>
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EXHIBIT 11.1 - COMPUTATION OF EARNINGS PER SHARE
Bio-Rad Laboratories, Inc.
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1994 1993
<S> <C> <C>
Computation for Consolidated Statements of Income:
Net income $ 4,705 $ 3,245
======= =======
Weighted average common shares 8,045 7,960
======= =======
Earnings per share $0.58 $0.41
======= =======
Additional Primary Computation (1):
Weighted average common shares per above 8,045 7,960
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 6 0
Weighted average common shares, as adjusted 8,051 7,960
======= =======
Primary earnings per share $0.58 $0.41
======= =======
Fully Diluted Computation (1):
Weighted average common shares per above 8,045 7,960
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 8 0
Weighted average common shares, as adjusted 8,053 7,960
======= =======
Fully diluted earnings per share $0.58 $0.41
======= =======
</TABLE>
[FN]
(1) This calculation is submitted in accordance with Regulation
S-K item 601(b)(11) although not required by footnote 2 to
paragraph 14 of APB Opinion No. 15 because it results in
dilution of less than 3%.
