<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, 1995.
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 31, 1995
<S> <C>
Class A Common Stock,
Par Value $1.00 per share 6,377,547
Class B Common Stock,
Par Value $1.00 per share 1,766,942
</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,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . $ 97,921 $ 85,127 $195,779 $174,784
Cost of goods sold . . . . . . . . . . . . . 41,403 36,605 83,220 76,014
GROSS PROFIT . . . . . . . . . . . . . . . . 56,518 48,522 112,559 98,770
Selling, general and administrative expense . 38,918 32,185 73,874 63,900
Product research and development expense . . 8,513 7,251 16,889 14,600
INCOME FROM OPERATIONS . . . . . . . . . . . 9,087 9,086 21,796 20,270
Interest expense . . . . . . . . . . . . . . (1,150) (1,642) (2,432) (3,346)
Investment income, net. . . . . . . . . . . . 278 203 486 525
Other, net . . . . . . . . . . . . . . . . . 468 (2,959) (429) (4,920)
INCOME BEFORE TAXES . . . . . . . . . . . . . 8,683 4,688 19,421 12,529
Provision for income taxes . . . . . . . . . 2,170 1,876 4,855 5,012
NET INCOME . . . . . . . . . . . . . . . . . $ 6,513 $ 2,812 $ 14,566 $ 7,517
======== ======== ======== ========
Earnings per share . . . . . . . . . . . . . $0.80 $0.35 $1.79 $0.93
======== ======== ======== ========
Weighted average common shares . . . . . . . 8,131 8,066 8,122 8,056
======== ======== ======== ========
</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,
1995 1994
<S> <C> <C>
ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . $ 5,000 $ 3,751
Accounts receivable . . . . . . . . . . . . . . . . . 88,335 81,714
Inventories . . . . . . . . . . . . . . . . . . . . . 85,401 73,339
Prepaid expenses, taxes and other current assets. . . 20,337 19,526
Total current assets . . . . . . . . . . . . . . . 199,073 178,330
Net property, plant and equipment . . . . . . . . . . 74,754 75,625
Marketable securities . . . . . . . . . . . . . . . . 5,757 4,743
Other assets . . . . . . . . . . . . . . . . . . . . 6,167 4,952
Total assets . . . . . . . . . . . . . . . . . . $ 285,751 $ 263,650
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable and current maturities of long-term debt $ 20,092 $ 21,593
Accounts payable . . . . . . . . . . . . . . . . . . 20,682 21,116
Accrued payroll and employee benefits . . . . . . . . 23,775 21,191
Sales, income and other taxes payable . . . . . . . . 9,629 6,377
Other current liabilities . . . . . . . . . . . . . . 23,987 19,601
Total current liabilities . . . . . . . . . . . . 98,165 89,878
Long-term debt, net of current maturities . . . . . . 23,593 26,287
Deferred tax liabilities . . . . . . . . . . . . . . 16,881 17,667
Total liabilities . . . . . . . . . . . . . . . . 138,639 133,832
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 - 6,362,118 at June 30, 1995
and 6,311,128 at December 31, 1994 . . . . . . . 6,362 6,311
Class B common stock, $1.00 par value, 6,000,000 shares
authorized; outstanding - 1,773,525 at June 30, 1995
and 1,794,999 at December 31, 1994. . . . . . . . 1,774 1,795
Additional paid-in capital . . . . . . . . . . . . . . 19,447 18,927
Retained earnings . . . . . . . . . . . . . . . . . . 114,267 99,701
Currency translation . . . . . . . . . . . . . . . . 4,305 2,566
Net unrealized holding gain on available-for-sale securities 957 518
Total stockholders' equity . . . . . . . . . . . . 147,112 129,818
Total liabilities and stockholders' equity . . $ 285,751 $ 263,650
========= =========
</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,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . . . . $195,311 $174,909
Cash paid to suppliers and employees . . . . . . . . . . . (173,336) (140,791)
Interest paid. . . . . . . . . . . . . . . . . . . . . . . (2,398) (3,242)
Income tax payments . . . . . . . . . . . . . . . . . . . (1,683) (1,363)
Miscellaneous receipts (payments). . . . . . . . . . . . . 191 (222)
Net cash provided by operating activities. . . . . . . . . 18,085 29,291
Cash flows from investing activities:
Capital expenditures, net. . . . . . . . . . . . . . . . . (5,962) (3,729)
Marketable securities investment activity, net . . . . . . (158) 298
Foreign currency hedges, net . . . . . . . . . . . . . . . (2,502) (2,090)
Net cash used in investing activities. . . . . . . . . . . (8,622) (5,521)
Cash flows from financing activities:
Net borrowings under line-of-credit arrangements. . . . . (2,893) (10,004)
Additions to long-term debt . . . . . . . . . . . . . . . 38,904 29,900
Payments on long-term debt. . . . . . . . . . . . . . . . (42,229) (40,470)
Proceeds from issuance of common stock. . . . . . . . . . 550 360
Net cash used in financing activities . . . . . . . . . . (5,668) (20,214)
Effect of exchange rate changes on cash . . . . . . . . . . . . (2,546) (1,829)
Net increase in cash and cash equivalents . . . . . . . . . . . 1,249 1,727
Cash and cash equivalents at beginning of period. . . . . . . . 3,751 3,112
Cash and cash equivalents at end of period. . . . . . . . . . . $ 5,000 $ 4,839
======== ========
Reconciliation of net income to net cash provided
by operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,566 $ 7,517
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . 8,261 8,339
Gains on disposition of marketable securities. . . . . . (391) (356)
Foreign currency hedges, net . . . . . . . . . . . . . . 2,601 2,744
Increase in accounts receivable. . . . . . . . . . . . . (3,106) (1,442)
(Increase) decrease in inventories . . . . . . . . . . . (9,285) 1,889
Increase in other current assets . . . . . . . . . . . . (538) (1,147)
Increase in accounts payable and other
current liabilities. . . . . . . . . . . . . . . . . . 4,039 8,108
Increase in income taxes payable . . . . . . . . . . . . 3,138 3,651
Other. . . . . . . . . . . . . . . . . . . . . . . . . . (1,200) (12)
Net cash provided by operating activities . . . . . . . . . . . $ 18,085 $ 29,291
======== ========
</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
consolidated financial statements contained in the Company's
Annual Report for the year ended December 31, 1994 (the Company's
1994 Annual Report). Certain amounts in the financial statements
of the prior year have been reclassified to be consistent with
the 1995 presentation.
2. INVENTORIES
<TABLE>
The principal components of inventories are as follows:
<CAPTION>
June 30, December 31,
1995 1994
(in thousands)
<S> <C> <C>
Raw materials $ 27,329 $ 23,713
Work in process 19,763 19,813
Finished goods 38,309 29,813
$ 85,401 $ 73,339
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
The principal components of property, plant and equipment are as
follows:
<CAPTION>
June 30, December 31,
1995 1994
(in thousands)
<S> <C> <C>
Land and improvements $ 8,057 $ 8,057
Buildings and leasehold
improvements 51,283 50,757
Equipment 97,480 91,600
156,820 150,414
Less accumulated depreciation 82,066 74,789
Net property, plant and equipment $ 74,754 $ 75,625
======== ========
</TABLE>
4
<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, 1994.
<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,
1995 1994 1995 1994 1994
<S> <C> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0 100.0
Cost of goods sold 42.3 43.0 42.5 43.5 43.9
Gross profit 57.7 57.0 57.5 56.5 56.1
Selling, general and
administrative 39.7 37.8 37.8 36.6 37.3
Product research and
development 8.7 8.5 8.6 8.3 8.5
Income from operations 9.3 10.7 11.1 11.6 10.3
===== ===== ===== ===== =====
</TABLE>
Three Months Ended June 30, 1995 Compared to
Three Months Ended June 30, 1994
Corporate Results - Sales, Margins and Expenses
Bio-Rad's net sales (sales) in the second quarter of 1995
increased 15% to $97.9 million from $85.1 million reported in the
second quarter of 1994. Compared to the second quarter of 1994,
sales increased 35% in Analytical Instruments, 17% in Life
Science and 5% in Clinical Diagnostics. The effects of a
weakened U.S. dollar account for approximately $5.5 million of
the increase in consolidated sales compared to sales based on
1994 exchange rates. Excluding the affects of the weakened U.S.
dollar, sales increased 25% in Analytical Instruments, 9% in Life
Science and 1% in Clinical Diagnostics. The increase in
Analytical Instruments sales is attributable to the continued
strength of the semiconductor instrument market. Life Science
growth is occurring in Bio-Rad's traditional laboratory products
and genetic systems. The diagnostic market remains very
competitive in response to concerns regarding healthcare
spending.
5
<PAGE>
Consolidated gross margins increased to 57.7% for the second
quarter of 1995 from 57.0% for the second quarter of 1994. Gross
margins increased in Life Science and Clinical Diagnostics but were
down in Analytical Instruments. The increase in gross margins is
attributable to the aforementioned weakened dollar increasing the
gross margin of foreign sales and increased sales volume. Although
gross margins declined in Analytical Instruments, gross profit
dollars increased as a result of more volume.
Selling, general and administrative expense (SG&A) and product
research and development expense (R&D) increased from the second
quarter of 1994, both in absolute dollars and as a percent of
sales. SG&A was 39.7% of sales compared to 37.8% of sales for the
second quarter of 1994. The 1.9% increase as a percent of sales
represents approximately $1.9 million, the majority of which was
spent for personnel and advertising to support future growth. SG&A
in the Life Science and Clinical Diagnostics segments increased at
a rate greater than the increase in sales while SG&A in the
Analytical Instruments segment decreased as a percent of sales.
Analytical Instruments is characterized by long lead times in
completing sales and SG&A can fluctuate more significantly than in
Life Science and Clinical Diagnostics. As planned, R&D was
expanded and spending increased in all segments as part of Bio-
Rad's continuing commitment to long-term growth.
Corporate Results - Non-Operating Items
Interest expense was $492,000 less in the second quarter of 1995
than the comparable period of 1994. This principally reflects a
29% reduction in average borrowings in the second quarter of 1995
compared to the second quarter of 1994.
No significant items were included in net other income and expense
for the second quarter of 1995. Net other income and expense in
the second quarter of 1994 included reserves of $2.3 million for
estimated damages in a legal action, hedging costs related to
foreign exchange exposures and legal costs.
The Company's effective tax rate in the second quarter of 1995 was
25% compared to 40% for the second quarter of 1994 and 35% for the
year 1994. The lower effective tax rate is the result of changes
in the location of taxable income and fewer non-deductible expenses
and reserves. The tax rate reflects the utilization of foreign
loss carryforwards, foreign sales corporation benefits and foreign
tax credits. These benefits are expected to continue into 1996.
6
<PAGE>
Six Months Ended June 30, 1995 Compared to
Six Months ended June 30, 1994
Corporate Results - Sales, Margins and Expenses
Bio-Rad's sales in the first half of 1995, at $195.8 million, were
12% greater than sales in the first half of 1994. On a year-to-
date basis, the effects of a weakened U.S. dollar account for
approximately $9.7 million of the $21.0 million increase in
consolidated sales compared to sales based on 1994 exchange rates.
Sales increased in all segments of the Company's business.
Excluding the affects of the weakened U.S. dollar, sales increased
21% in Analytical Instruments, 6% in Life Science and 2% in
Clinical Diagnostics. Analytical Instruments is benefiting from
ongoing demand in the semiconductor instrument market. Life
Science is experiencing growth in both laboratory products and
genetic systems. The diagnostic market remains extremely
competitive in response to ever increasing healthcare cost pressure
in developed countries.
Consolidated gross margins were 57.5% in the first half of 1995 up
from 56.5% in the first half of 1994 and 56.1% for the entire year
of 1994. The increase in gross margin occurred in all segments of
the Company's business and is principally attributable to the
aforementioned weakened dollar increasing the gross margin of
foreign sales. While the Company sells its products worldwide,
they are primarily manufactured in the United States.
Both SG&A and R&D increased from the first half of 1994.
Approximately $3.5 million of the growth in SG&A is attributed to
the weakened U.S. dollar. Life Science and Clinical Diagnostics
have increased SG&A at a rate greater than the increase in sales
while Analytical Instruments has increased SG&A at a rate less than
the increase in sales. R&D spending is continuing as planned to
support Bio-Rad's commitment to long-term growth.
Corporate Results - Non-Operating Items
As a result of lower average borrowings, interest expense was
$914,000 less in the first half of 1995 than the comparable period
of 1994. Average borrowings in the first six months of 1995 were
33% less than average borrowings in the same period of 1994.
Net other income and expense in the first half of 1995 is primarily
legal costs. Net other income and expense in the first half of
1994 included reserves for estimated damages in a legal action,
hedging costs related to foreign exchange exposures and legal
costs.
7
<PAGE>
The Company's effective tax rate in the first half of 1995 was 25%
compared to 40% for the first half of 1994 and 35% for the year
1994. The lower effective tax rate is the result of changes in the
location of taxable income and fewer non-deductible expenses and
reserves. The tax rate reflects the utilization of foreign loss
carryforwards, foreign sales corporation benefits and foreign tax
credits. These benefits are expected to continue into 1996.
Financial Condition
At June 30, 1995, the Company had available $5.0 million in cash
and cash equivalents and $57.6 million under its principal
revolving credit agreement. In addition, Bio-Rad held marketable
securities with a market value of $5.8 million, most of which could
be readily converted to cash. In July, Bio-Rad completed the
acquisition of an infrared spectrometer product line which will
complement instrumentation in the spectroscopy division. This
acquisition is expected to augment growth in the Analytical
Instruments segment, but will not have a material affect on the
financial position of the Company. The Company may consider
additional acquisition opportunities to enhance growth. Future
cash flows would be affected if any significant acquisition was
consummated. Available funds and cash flows from operations are
adequate to meet the Company's objectives for operations, research
and development, internal and external growth.
Net cash provided by operations was $18.1 million for the six
months ended June 30, 1995 compared to $29.3 million for the
comparable period of 1994. Increases in accounts receivable and
inventories as described below account for the majority of the
difference. For the eighth consecutive quarter, cash provided by
operations and limited capital expenditures have allowed Bio-Rad to
improve its debt to equity ratio.
At June 30, 1995, consolidated accounts receivable were $6.6
million higher than at December 31, 1994. Approximately $0.8
million of the increase is attributed to increased sales in the
second quarter of 1995 when compared to the fourth quarter of 1994.
Approximately $3.5 million of the increase is attributed to the
weakened U.S. dollar. Additionally, the reorganization of the
Italian healthcare reimbursement system has temporarily slowed
payments until the administrative transition is complete. The
collection of accounts receivable is also slowed by increases in
the sales of instruments and inherently takes longer due to the
complexities of the acceptance process.
At June 30, 1995 consolidated net inventories increased by $12.1
million from December 31, 1994. Approximately $2.7 million of the
increase is attributed to the weakened U.S. dollar. The remainder
is principally due to increases in Life Science instrumentation
8
<PAGE>
production to lower back order levels and increases in Clinical
Diagnostics for new products. Inventory control remains critical
to management's efforts to moderate capital growth requirements.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
As reported in the Company's 1994 Annual Report in 1994, the
Company was named as a potentially responsible party under the
Comprehensive Environmental Response Compensation and Liability Act
of 1980, as amended, at one site in Louisiana. On March 23, 1995,
the Company was notified that the Environmental Protection Agency
does not intend to pursue the Company as a potentially responsible
party in connection with this site.
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.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended June 30,
1995.
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 8, 1995 /s/ Thomas L. Braje
Thomas L. Braje, Vice President,
Chief Financial Officer
Date: August 8, 1995 /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,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Computation for Consolidated Statements of Income:
Net income $ 6,513 $ 2,812 $14,566 $ 7,517
======= ======= ======= =======
Weighted average common shares 8,131 8,066 8,122 8,056
======= ======= ======= =======
Earnings per share $0.80 $0.35 $1.79 $0.93
======= ======= ======= =======
Additional Primary Computation (1):
Weighted average common shares per above 8,131 8,066 8,122 8,056
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 127 43 125 38
Weighted average common shares, as adjusted 8,258 8,109 8,247 8,094
======= ======= ======= =======
Primary earnings per share $0.79 $0.35 $1.77 $0.93
======= ======= ======= =======
Fully Diluted Computation (1):
Weighted average common shares per above 8,131 8,066 8,122 8,056
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 149 52 150 45
Weighted average common shares, as adjusted 8,280 8,118 8,272 8,101
======= ======= ======= =======
Fully diluted earnings per share $0.79 $0.35 $1.76 $0.93
======= ======= ======= =======
</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%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted
from Bio-Rad Laboratories, Inc. Form 10-Q for the quarter ended
June 30, 1995 and is qualified in its entirety by reference
to such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 5,000
<SECURITIES> 0
<RECEIVABLES> 88,335
<ALLOWANCES> 0
<INVENTORY> 85,401
<CURRENT-ASSETS> 199,073
<PP&E> 156,820
<DEPRECIATION> 82,066
<TOTAL-ASSETS> 285,751
<CURRENT-LIABILITIES> 98,165
<BONDS> 23,593
<COMMON> 8,136
0
0
<OTHER-SE> 138,976
<TOTAL-LIABILITY-AND-EQUITY> 285,751
<SALES> 195,779
<TOTAL-REVENUES> 195,779
<CGS> 83,220
<TOTAL-COSTS> 83,220
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,432
<INCOME-PRETAX> 19,421
<INCOME-TAX> 4,855
<INCOME-CONTINUING> 14,566
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,566
<EPS-PRIMARY> 1.79
<EPS-DILUTED> 0
</TABLE>
