<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 March 31, 1996.
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 April 30, 1996
<S> <C>
Class A Common Stock,
Par Value $1.00 per share 6,436,820
Class B Common Stock,
Par Value $1.00 per share 1,752,348
</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
March 31,
1996 1995
<S> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . $108,272 $ 97,858
Cost of goods sold . . . . . . . . . . . . . 46,840 41,817
GROSS PROFIT . . . . . . . . . . . . . . . . 61,432 56,041
Selling, general and administrative expense . 37,838 34,956
Product research and development expense . . 9,592 8,376
INCOME FROM OPERATIONS . . . . . . . . . . . 14,002 12,709
Interest expense . . . . . . . . . . . . . . (840) (1,282)
Investment income, net . . . . . . . . . . . 300 208
Other, net . . . . . . . . . . . . . . . . . (847) (897)
INCOME BEFORE TAXES . . . . . . . . . . . . . 12,615 10,738
Provision for income taxes . . . . . . . . . 3,154 2,685
NET INCOME . . . . . . . . . . . . . . . . . $ 9,461 $ 8,053
======== ========
Per share data prior to second quarter stock split:
Earnings per share . . . . . . . . . . . . . $1.16 $0.99
======== ========
Weighted average common shares . . . . . . . 8,170 8,113
======== ========
</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>
March 31, December 31,
1996 1995
<S> <C> <C>
ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . $ 17,952 $ 14,774
Accounts receivable . . . . . . . . . . . . . . . . . 98,241 92,061
Inventories . . . . . . . . . . . . . . . . . . . . . 72,539 75,357
Prepaid expenses, taxes and other current assets. . . 20,627 19,400
Total current assets . . . . . . . . . . . . . . . 209,359 201,592
Net property, plant and equipment . . . . . . . . . . 71,832 72,966
Marketable securities . . . . . . . . . . . . . . . . 5,652 5,902
Other assets . . . . . . . . . . . . . . . . . . . . 4,688 4,638
Total assets . . . . . . . . . . . . . . . . . . $ 291,531 $ 285,098
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable and current maturities of long-term debt $ 10,056 $ 14,269
Accounts payable . . . . . . . . . . . . . . . . . . 19,448 19,946
Accrued payroll and employee benefits . . . . . . . . 23,283 23,908
Sales, income and other taxes payable . . . . . . . . 8,463 7,082
Other current liabilities . . . . . . . . . . . . . . 25,277 24,612
Total current liabilities . . . . . . . . . . . . 86,527 89,817
Long-term debt, net of current maturities . . . . . . 20,976 20,922
Deferred tax liabilities . . . . . . . . . . . . . . 17,760 17,300
Total liabilities . . . . . . . . . . . . . . . . 125,263 128,039
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 - 6,427,253 at March 31, 1996
and 6,395,522 at December 31, 1995 . . . . . . . 6,427 6,396
Class B common stock, $1.00 par value, 6,000,000 shares
authorized; outstanding - 1,752,348 at March 31, 1996
and 1,764,042 at December 31, 1995. . . . . . . . 1,752 1,764
Additional paid-in capital . . . . . . . . . . . . . . 20,368 19,966
Retained earnings . . . . . . . . . . . . . . . . . . 134,318 124,857
Currency translation . . . . . . . . . . . . . . . . 2,885 3,527
Net unrealized holding gain on marketable securities. 518 549
Total stockholders' equity . . . . . . . . . . . . 166,268 157,059
Total liabilities and stockholders' equity . . $ 291,531 $ 285,098
========= =========
</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>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . $100,279 $ 92,121
Cash paid to suppliers and employees . . . . . . . . (87,614) (81,696)
Interest paid. . . . . . . . . . . . . . . . . . . . (1,434) (1,232)
Income tax payments . . . . . . . . . . . . . . . . (2,932) (591)
Miscellaneous receipts (payments) . . . . . . . . . 105 (59)
Net cash provided by operating activities. . . . . . 8,404 8,543
Cash flows from investing activities:
Capital expenditures, net. . . . . . . . . . . . . . (2,555) (2,676)
Marketable securities investment activity, net . . . 339 (1)
Foreign currency hedges, net . . . . . . . . . . . . 382 (464)
Net cash used in investing activities. . . . . . . . (1,834) (3,141)
Cash flows from financing activities:
Net borrowings under line-of-credit arrangements. . (4,098) (213)
Additions to long-term debt . . . . . . . . . . . . - 17,967
Payments on long-term debt. . . . . . . . . . . . . (187) (19,084)
Proceeds from issuance of common stock. . . . . . . 421 282
Net cash used in financing activities . . . . . . . (3,864) (1,048)
Effect of exchange rate changes on cash . . . . . . . . . 472 (2,188)
Net increase in cash and cash equivalents . . . . . . . . 3,178 2,166
Cash and cash equivalents at beginning of period. . . . . 14,774 3,751
Cash and cash equivalents at end of period. . . . . . . . $ 17,952 $ 5,917
======== ========
Reconciliation of net income to net cash provided by operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . $ 9,461 $ 8,053
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization. . . . . . . . . . . 3,974 4,181
Foreign currency hedge transactions, net . . . . . (648) 1,921
Gains on dispositions of marketable securities . . (125) (143)
Increase in accounts receivable. . . . . . . . . . (7,132) (7,861)
(Increase) decrease in inventories . . . . . . . . 2,232 (4,465)
Increase in other current assets . . . . . . . . . (218) (373)
Increase in accounts payable and other
current liabilities. . . . . . . . . . . . . . . 820 5,385
Increase in income taxes payable . . . . . . . . . 476 2,088
Other. . . . . . . . . . . . . . . . . . . . . . . (436) (243)
Net cash provided by operating activities . . . . . . . . $ 8,404 $ 8,543
======== ========
</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, 1995 (the Company's
1995 Annual Report). Certain amounts in the financial statements
of the prior year have been reclassified to be consistent with
the 1996 presentation.
2. INVENTORIES
<TABLE>
The principal components of inventories are as follows:
<CAPTION>
March 31, December 31,
1996 1995
(in thousands)
<S> <C> <C>
Raw materials $ 27,899 $ 26,467
Work in process 18,190 17,189
Finished goods, net 26,450 31,701
$ 72,539 $ 75,357
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
The principal components of property, plant and equipment are as
follows:
<CAPTION>
March 31, December 31,
1996 1995
(in thousands)
<S> <C> <C>
Land and improvements $ 8,057 $ 8,057
Buildings and leasehold
improvements 51,834 51,786
Equipment 101,014 99,486
160,905 159,329
Less accumulated depreciation 89,073 86,363
Net property, plant and equipment $ 71,832 $ 72,966
======== ========
</TABLE>
4
<PAGE>
4. SUBSEQUENT EVENT - 3-FOR-2 STOCK SPLIT
On April 30, 1996 the Company announced that its Board of
Directors had approved a 3-for-2 stock split on both its
Class A and Class B common stock, to be effected in the form
of a 50% stock dividend payable May 31, 1996 to stockholders
of record on May 16, 1996.
Weighted average common shares and earnings per share will
be retroactively adjusted for this stock split. After
adjustment, earnings per share for the first quarter of 1996
and 1995 will be $0.77 and $0.66, respectively.
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,
1995.
<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,
1996 1995 1995
<S> <C> <C> <C>
Net sales 100.0 100.0 100.0
Cost of goods sold 43.3 42.7 43.4
Gross profit 56.7 57.3 56.6
Selling, general and
administrative 34.9 35.7 37.9
Product research and
development 8.9 8.6 8.7
Restructuring costs - - 0.4
Income from operations 12.9 13.0 9.6
===== ===== =====
</TABLE>
Three Months Ended March 31, 1996 Compared to
Three Months Ended March 31, 1995
Corporate Results - Sales, Margins and Expenses
Bio-Rad's net sales (sales) in the first quarter of 1996 reached
a record $108.3 million up 11% from the $97.9 million reported in
the first quarter of 1995. For the first quarter of 1996, the
effects of a stronger U.S. dollar reduced the increase in
consolidated sales compared to sales based on 1995 exchange rates
by approximately $0.5 million. Compared to the first quarter of
1995, sales increased 32% in Analytical Instruments, 8% in
Clinical Diagnostics and 6% in Life Science. Owing to strength
in the semiconductor market, Analytical Instruments semiconductor
test and manufacturing equipment sales have increased at double
digit rates when compared to the comparable quarter of the prior
year since the third quarter of 1994. In the first quarter of
1996 this segment also experienced comparable growth in the sales
of spectroscopy equipment. The improved trend in Clinical
Diagnostic sales is primarily attributable to increases in Europe
and the Pacific Rim.
6
<PAGE>
Consolidated gross margins were 56.7% for the first quarter of 1996
compared to 57.3% for the first quarter of 1995 and 56.6% reported
for the entire year of 1995. Gross margin decreased in the
Clinical Diagnostics segment, increased slightly in the Analytical
Instrument segment and remained the same in the Life Science
segment. The decline in margin in the Clinical Diagnostics segment
is primarily due to unfavorable manufacturing variances.
Selling, general and administrative expense (SG&A) decreased to
34.9% of sales in the first quarter of 1996 from 35.7% of sales in
the first quarter of 1995. While spending increased in absolute
dollars in all segments, Analytical Instruments and Clinical
Diagnostics succeeded in growing sales faster than SG&A for the
first quarter of 1996. Management continues to monitor SG&A
spending in an effort to improve overall profitability.
Product research and development expense (R&D) increased from the
first quarter of 1995, both in absolute dollars and as a percent of
sales. 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 $442,000 less in the first quarter of 1996
than the comparable period of 1995 principally as a result of lower
average borrowings. Average borrowings in the first three months
of 1996 were 33% less than average borrowings in the same period of
1995.
Net other income and expense in the first quarter of both 1996 and
1995 is primarily non-operating legal costs.
The Company's effective tax rate for the first quarter of 1996 and
all of 1995 was 25%. The tax rate reflects the utilization of
foreign loss carryforwards, foreign sales corporation benefits and
foreign tax credits.
Financial Condition
Net cash provided by operations was $8.4 million for the quarter
ended March 31, 1996 compared to $8.5 million for the comparable
quarter of 1995. Cash provided by operations and limited capital
expenditures allowed Bio-Rad to further reduce interest bearing
debt and continue to improve its debt to equity ratio.
At March 31, 1996, the Company had available $18.0 million in cash
and cash equivalents, $60.0 million under its principal revolving
credit agreement and marketable securities with a market value of
$5.7 million, most of which could be readily converted to cash.
During the first quarter of 1996, Bio-Rad did not utilize its
principal revolving credit facility. The majority of excess cash
has been invested in short-term instruments. Available funds and
cash flow from operations are adequate to meet the Company's
7
<PAGE>
objectives for operations, research and development and modest
external growth. Management believes Bio-Rad is well positioned to
make a substantial strategic acquisition should the opportunity
arise. While the Company regularly reviews such opportunities,
currently no material acquisitions have reached a stage beyond
preliminary exploratory discussions.
At March 31, 1996, consolidated accounts receivable were $6.2
million higher than at December 31, 1995. Approximately $3.2
million of the increase is attributed to increased sales in Japan
in the first quarter of 1996 when compared to the fourth quarter of
1995. The remainder is attributable to increased sales of larger
and more complex instruments, principally in the Pacific Rim where
payment terms are, on average, longer than in North America and
Europe.
At March 31, 1996 consolidated net inventories decreased by $2.8
million from December 31, 1995. The decline in inventory is the
result of management's continuous attention to lowering inventory
levels as a means to control capital requirements and improve the
return on assets employed. Management regularly plans for and
reviews the impact of obsolescence in current inventory caused by
the introduction of new products.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's annual meeting of stockholders on April 30, 1996,
the following individuals were reelected to the Board of Directors:
<TABLE>
<CAPTION>
Class of
Common Stock Votes Votes
Elected From For Witheld
<S> <C> <C> <C>
James J. Bennett Class B 1,649,121 224
Albert J. Hillman Class A 4,354,073 35,815
Philip L. Padou Class A 4,353,351 37,537
Alice N. Schwartz Class B 1,649,124 221
David Schwartz Class B 1,649,102 243
Norman Schwartz Class B 1,649,124 221
Burton A. Zabin Class B 1,649,124 221
</TABLE>
The following proposal was approved at the Company's annual
meeting:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstentions Non-Votes
<S> <C> <C> <C> <C>
Ratification of
Arthur Andersen LLP
as the Company's
independent auditors 2,087,141 855 437 --
</TABLE>
8
<PAGE>
The foregoing matters are described in detail in the Company's
definitive Proxy Statement dated March 29, 1996, filed with the
Securities and Exchange Commission and incorporated herein by
reference.
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 29, 1996 (definitive form filed
April 3, 1996 and incorporated by reference).
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended March 31,
1996.
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: May 13, 1996 /s/ Thomas L Braje
Thomas L. Braje, Vice President,
Chief Financial Officer
Date: May 13, 1996 /s/ James R. Stark
James R. Stark,
Corporate Controller
11
EXHIBIT 11.1 - COMPUTATION OF EARNINGS PER SHARE
Bio-Rad Laboratories, Inc.
(In thousands, except per share data)
<TABLE>
<CAPTION>
Retroactively
Adjusted for
3-For-2
As Reported Stock Split
Three Months Three Months
Ended March 31, Ended March 31,
1996 1995 1996 1995
Computation for Consolidated Statements of Income:
<S> <C> <C> <C> <C>
Net income $ 9,461 $ 8,053 $ 9,461 $ 8,053
======= ======= ======= =======
Weighted average common shares 8,170 8,113 12,255 12,170
======= ======= ======= =======
Earnings per share $1.16 $0.99 $0.77 $0.66
======= ======= ======= =======
Additional Primary Computation (1):
Weighted average common shares per above 8,170 8,113 12,255 12,170
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 143 105 215 158
Weighted average common shares, as adjusted 8,313 8,218 12,470 12,328
======= ======= ======= =======
Primary earnings per share $1.14 $0.98 $0.76 $0.65
======= ======= ======= =======
Fully Diluted Computation (1):
Weighted average common shares per above 8,170 8,113 12,255 12,170
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 150 114 225 171
Weighted average common shares, as adjusted 8,320 8,227 12,480 12,341
======= ======= ======= =======
Fully diluted earnings per share $1.14 $0.98 $0.76 $0.65
======= ======= ====== ======
</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
March 31, 1996 and is qualified in its entirety by reference
to such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 17,952
<SECURITIES> 0
<RECEIVABLES> 98,241
<ALLOWANCES> 0
<INVENTORY> 72,539
<CURRENT-ASSETS> 209,359
<PP&E> 160,905
<DEPRECIATION> 89,073
<TOTAL-ASSETS> 291,531
<CURRENT-LIABILITIES> 86,527
<BONDS> 20,976
<COMMON> 8,179
0
0
<OTHER-SE> 158,089
<TOTAL-LIABILITY-AND-EQUITY> 291,531
<SALES> 108,272
<TOTAL-REVENUES> 108,272
<CGS> 46,840
<TOTAL-COSTS> 46,840
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 840
<INCOME-PRETAX> 12,615
<INCOME-TAX> 3,154
<INCOME-CONTINUING> 9,461
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,461
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 0
</TABLE>
