<PAGE>
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 June 30, 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
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 July 29, 1994
<S> <C>
Class A Common Stock,
Par Value $1.00 per share 6,262,361
Class B Common Stock,
Par Value $1.00 per share 1,826,031
</TABLE>
<PAGE>
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 Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . $ 85,127 $ 81,848 $174,784 $162,352
Cost of goods sold . . . . . . . . . . . . . 36,605 37,237 76,014 71,558
GROSS PROFIT . . . . . . . . . . . . . . . . 48,522 44,611 98,770 90,794
Selling, general and administrative expense . 32,185 33,132 63,900 65,696
Product research and development expense . . 7,251 8,730 14,600 17,356
INCOME FROM OPERATIONS . . . . . . . . . . . 9,086 2,749 20,270 7,742
Interest expense . . . . . . . . . . . . . . (1,642) (2,181) (3,346) (4,334)
Investment income, net. . . . . . . . . . . . 203 239 525 3,602
Other, net . . . . . . . . . . . . . . . . . (2,959) (429) (4,920) (1,223)
INCOME BEFORE TAXES . . . . . . . . . . . . . 4,688 378 12,529 5,787
Provision for income taxes . . . . . . . . . 1,876 151 5,012 2,315
NET INCOME . . . . . . . . . . . . . . . . . $ 2,812 $ 227 $ 7,517 $ 3,472
======== ======== ======== ========
Earnings per share . . . . . . . . . . . . . $0.35 $0.03 $0.93 $0.44
======== ======== ======== ========
Weighted average common shares . . . . . . . 8,066 7,975 8,056 7,968
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
1
<PAGE>
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
<S> <C> <C>
ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . $ 4,839 $ 3,112
Accounts receivable . . . . . . . . . . . . . . . . . 81,542 75,768
Inventories . . . . . . . . . . . . . . . . . . . . . 72,805 72,114
Prepaid expenses, taxes and other current assets. . . 19,770 18,283
Total current assets . . . . . . . . . . . . . . . 178,956 169,277
Net property, plant and equipment . . . . . . . . . . 77,238 80,901
Marketable securities . . . . . . . . . . . . . . . . 4,707 4,111
Other assets . . . . . . . . . . . . . . . . . . . . 5,221 5,601
Total assets . . . . . . . . . . . . . . . . . . $ 266,122 $ 259,890
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable and current maturities of long-term debt $ 22,448 $ 30,769
Accounts payable . . . . . . . . . . . . . . . . . . 16,599 14,691
Accrued payroll and employee benefits . . . . . . . . 20,127 14,777
Sales, income and other taxes payable . . . . . . . . 10,278 6,369
Other current liabilities . . . . . . . . . . . . . . 23,896 20,758
Total current liabilities . . . . . . . . . . . . 93,348 87,364
Long-term debt, net of current maturities . . . . . . 37,800 47,834
Deferred tax liabilities . . . . . . . . . . . . . . 13,814 14,382
Total liabilities . . . . . . . . . . . . . . . . 144,962 149,580
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 - 6,242,256 at June 30 1994
and 6,188,581 at December 31, 1993 . . . . . . . 6,242 6,189
Class B common stock, $1.00 par value, 6,000,000 shares
authorized; outstanding - 1,830,006 at June 30, 1994
and 1,842,229 at December 31, 1993. . . . . . . . 1,830 1,842
Additional paid-in capital . . . . . . . . . . . . . . 18,498 18,179
Retained earnings . . . . . . . . . . . . . . . . . . 91,620 84,103
Currency translation . . . . . . . . . . . . . . . . 2,449 (3)
Net unrealized holding gain on available-for-sale securities 521 --
Total stockholders' equity . . . . . . . . . . . . 121,160 110,310
Total liabilities and stockholders' equity . . $ 266,122 $ 259,890
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
2
<PAGE>
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . . . . $174,909 $157,706
Cash paid to suppliers and employees . . . . . . . . . . . (140,791) (154,231)
Interest paid. . . . . . . . . . . . . . . . . . . . . . . (3,242) (4,034)
Income tax payments . . . . . . . . . . . . . . . . . . . (1,363) (2,178)
Miscellaneous payments . . . . . . . . . . . . . . . . . . (222) (107)
Net cash provided by (used in) operating activities. . . . 29,291 (2,844)
Cash flows from investing activities:
Capital expenditures, net. . . . . . . . . . . . . . . . . (3,729) (9,044)
Marketable securities investment activity, net . . . . . . 298 4,152
Foreign currency hedges, net . . . . . . . . . . . . . . . (2,090) (1,052)
Net cash used in investing activities. . . . . . . . . . . (5,521) (5,944)
Cash flows from financing activities:
Net borrowings under line-of-credit arrangements. . . . . (10,004) 6,415
Additions to long-term debt . . . . . . . . . . . . . . . 29,900 42,769
Payments on long-term debt. . . . . . . . . . . . . . . . (40,470) (40,573)
Proceeds from issuance of common stock. . . . . . . . . . 360 415
Net cash provided by (used in) financing activities . . . (20,214) 9,026
Effect of exchange rate changes on cash . . . . . . . . . . . . (1,829) 948
Net increase in cash and cash equivalents . . . . . . . . . . . 1,727 1,186
Cash and cash equivalents at beginning of period. . . . . . . . 3,112 2,686
Cash and cash equivalents at end of period. . . . . . . . . . . $ 4,839 $ 3,872
======== ========
Reconciliation of net income to net cash provided
by (used in) operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,517 $ 3,472
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . 8,339 7,920
Gains on disposition of marketable securities. . . . . . (356) (3,466)
Foreign currency hedges, net . . . . . . . . . . . . . . 2,744 144
Increase in accounts receivable. . . . . . . . . . . . . (1,442) (3,563)
(Increase) decrease in inventories . . . . . . . . . . . 1,889 (3,182)
Increase in other current assets . . . . . . . . . . . . (1,147) (978)
Increase (decrease) in accounts payable and other
current liabilities. . . . . . . . . . . . . . . . . . 8,108 (3,461)
Increase in income taxes payable . . . . . . . . . . . . 3,651 49
Other. . . . . . . . . . . . . . . . . . . . . . . . . . (12) 221
Net cash provided by (used in) operating activities . . . . . . $ 29,291 $ (2,844)
======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
3
<PAGE>
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 the
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>
June 30, December 31,
1994 1993
(in thousands)
<S> <C> <C>
Raw materials $ 23,435 $ 22,827
Work in process 18,725 18,607
Finished goods 30,645 30,680
$ 72,805 $ 72,114
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
The principal components of property, plant and equipment are as
follows:
<CAPTION>
June 30, December 31,
1994 1993
(in thousands)
<S> <C> <C>
Land and improvements $ 8,057 $ 8,057
Buildings and leasehold improvements 50,202 50,599
Equipment 88,933 84,410
147,192 143,066
Less accumulated depreciation 69,954 62,165
Net property, plant and equipment $ 77,238 $ 80,901
======== ========
</TABLE>
4
<PAGE>
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 June 30, 1994 was $1,572,000 and
$521,000, respectively.
5. LEGAL PROCEEDINGS
The Company is a defendant in an action in the U.S. District
Court in the District of New Jersey brought in March 1991,
by Pharmacia LKB Biotechnology, Inc., et. al. (Pharmacia)
alleging infringement of Pharmacia's U.S. patent. In June
1994, the Company was found liable for the willful
infringement of the patent. Damages are to be determined in
a separate trial scheduled for September 1994.
The Company has accrued an estimate of its liability for
this matter based on currently available information.
Although the amount of the award will not be known until a
judgment is entered, management believes this matter will be
resolved without material adverse effect on the future
results of operations or financial position of the Company.
The most unfavorable outcome, which management believes is
remote, would have a materially adverse effect on the
results of operations and the financial position of the
Company.
5
<PAGE>
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 Six Months Ended Year Ended
June 30, June 30, December 31,
1994 1993 1994 1993 1993
<S> <C> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0 100.0
Cost of goods sold 43.0 45.5 43.5 44.1 46.0
Gross profit 57.0 54.5 56.5 55.9 54.0
Selling, general and
administrative 37.8 40.5 36.6 40.4 39.3
Product research and
development 8.5 10.7 8.3 10.7 10.4
Restructuring costs - - - - 1.2
Income from operations 10.7 3.3 11.6 4.8 3.1
===== ===== ===== ===== =====
</TABLE>
Three Months Ended June 30, 1994 Compared to
Three Months Ended June 30, 1993
Corporate Results - Sales, Margins and Expenses
Bio-Rad's net sales in the second quarter of 1994 were $85.1
million up 4% from the $81.8 million reported in the second
quarter of 1993. Sales increased $2.4 million and $1.0 million
in Life Science and Analytical Instruments, respectively. 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 sluggish economies.
6
<PAGE>
Consolidated gross margins were 57.0% in the second quarter of 1994
up from 54.5% in the second quarter of 1993 and 54.0% reported for
the entire year of 1993. Gross margins were up in all segments.
The increase in gross margins is principally attributed to the
effects of selective headcount reductions and facility closings
during the second half of 1993 which addressed the under
utilization of production capacity experienced in 1993.
Both selling, general and administrative expense (SG&A) and product
research and development expense (R&D) declined from the second
quarter of 1993. Through improved expense control and a reduction
in work force, Life Science and Analytical Instruments reduced SG&A
and R&D costs both in absolute dollars and as a percentage of
sales. SG&A was virtually unchanged in Clinical Diagnostics.
Corporate Results - Non-Operating Items
Interest expense was $539,000 less in the second quarter of 1994
than the comparable period of 1993 principally as a result of lower
average borrowings. Average borrowings in the second quarter of
1994 were 35% less than average borrowings in the same period of
1993.
Net other income and expense in the second quarter of 1994 includes
reserves of $2.3 million for estimated damages from pending legal
action (see Note 5), hedging costs related to foreign exchange
exposures and non-operating legal costs. Net other income and
expense in the second quarter of 1993 was primarily hedging costs
related to foreign exchange exposures.
Six Months Ended June 30, 1994 Compared to
Six Months Ended June 30, 1993
Corporate Results - Sales, Margins and Expenses
Bio-Rad's net sales in the first half of 1994 were $174.8 million
compared to $162.4 million in the first half of 1993. Although
sales increased in all three segments of the Company's business,
Life Science accounted for $10.1 million of the $12.4 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 sluggish economies.
Consolidated gross margins were 56.5% in the first half of 1994 up
7
<PAGE>
from 55.9% in the first half of 1993 and 54.0% for the entire year
of 1993. Gross margins were up in Analytical Instruments and
Clinical Diagnostics but were down in Life Science. The reduction
in Life Science margins is related to the increase in sales of
instruments which generally have lower gross margins than
consumables. Gross profit for the Life Science segment increased
$5.6 million as the result of increased volume.
Both selling, general and administrative expenses (SG&A) and
product research and development expense (R&D) declined from the
first half 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 focused R&D efforts.
Corporate Results - Non-Operating Items
As a result of lower average borrowings, interest expense was $1.0
million less in the first half of 1994 than the comparable period
of 1993. Average borrowings in the first six months of 1994 were
29% less than average borrowings in the same period of 1993.
Investment income for the first half of 1994 was $0.5 million
compared to $3.6 million in the first half of 1993. Investment
income in the first half of 1993 included gains of $3.1 million
from sales of Escagenetics stock. The Company has sold
substantially all of the Escagenetics stock acquired upon
International Plant Research Institute's (IPRI) emergence from
bankruptcy. The Company retains 275,863 shares of Escagenetics,
substantially all of which are subject to option as outlined in the
IPRI reorganization plan.
Net other income and expense in the first half of 1994 includes
reserves for estimated damages from pending legal action (see
Note 5), hedging costs related to foreign exchange exposures and
non-operating legal costs. Non-operating items for the first half
of 1993 were primarily hedging costs related to foreign exchange
exposures.
The Company's effective tax rate was 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 June 30,
1994, the Company had available $4.8 million in cash and cash
equivalents and $55.0 million under its principal revolving credit
agreement. In addition, Bio-Rad held marketable securities with a
market value of $4.7 million, most of which could be readily
converted to cash.
8
<PAGE>
At June 30, 1994 consolidated net inventories increased 2.5% from
March 31, 1994 and 1.0% from December 31, 1993. Both Life Science
and Analytical Instruments have increased inventories while
Clinical Diagnostics has decreased inventories. Inventory control
remains central to management's efforts to moderate capital growth
requirements.
Net accounts receivable have increased $5.8 million since December
31, 1993 primarily as the result of foreign currencies
strengthening against the US dollar at June 30, 1994 compared to
December 31, 1993.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In June 1994, the Company was found liable for the willful
infringement of the Pharmacia patent (see Note 5).
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.
(b) Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended June 30,
1994.
9
<PAGE>
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: August 5, 1994 /s/ Thomas L. Braje
Thomas L. Braje, Vice President,
Chief Financial Officer
Date: August 5, 1994 /s/ James R. Stark
James R. Stark,
Corporate Controller
10
<PAGE>
EXHIBIT 11.1 - COMPUTATION OF EARNINGS PER SHARE
Bio-Rad Laboratories, Inc.
(In thousands, except per share data)
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Computation for Consolidated Statements of Income:
Net income $ 2,812 $ 227 $ 7,517 $ 3,472
======= ======= ======= =======
Weighted average common shares 8,066 7,975 8,056 7,968
======= ======= ======= =======
Earnings per share $0.35 $0.03 $0.93 $0.44
======= ======= ======= =======
Additional Primary Computation (1):
Weighted average common shares per above 8,066 7,975 8,056 7,968
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 43 -- 38 --
Weighted average common shares, as adjusted 8,109 7,975 8,094 7,968
======= ======= ====== =======
Primary earnings per share $0.35 $0.03 $0.93 $0.44
======= ======= ====== =======
Fully Diluted Computation (1):
Weighted average common shares per above 8,066 7,975 8,056 7,968
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 52 -- 45 --
Weighted average common shares, as adjusted 8,118 7,975 8,101 7,968
======= ======= ====== =======
Fully diluted earnings per share $0.35 $0.03 $0.93 $0.44
======= ======= ====== =======
</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%.
