<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, 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 July 31, 1996
<S> <C>
Class A Common Stock,
Par Value $1.00 per share 9,676,689
Class B Common Stock,
Par Value $1.00 per share 2,618,163
</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,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . $ 99,981 $ 97,921 $208,253 $195,779
Cost of goods sold . . . . . . . . . . . . . 41,704 41,403 88,544 83,220
GROSS PROFIT . . . . . . . . . . . . . . . . 58,277 56,518 119,709 112,559
Selling, general and administrative expense . 38,655 38,918 76,493 73,874
Product research and development expense . . 9,620 8,513 19,212 16,889
INCOME FROM OPERATIONS . . . . . . . . . . . 10,002 9,087 24,004 21,796
Interest expense . . . . . . . . . . . . . . (743) (1,150) (1,583) (2,432)
Investment income, net . . . . . . . . . . . 1,000 278 1,300 486
Other, net . . . . . . . . . . . . . . . . . (245) 468 (1,092) (429)
INCOME BEFORE TAXES . . . . . . . . . . . . . 10,014 8,683 22,629 19,421
Provision for income taxes . . . . . . . . . 2,503 2,170 5,657 4,855
NET INCOME . . . . . . . . . . . . . . . . . $ 7,511 $ 6,513 $ 16,972 $ 14,566
======== ======== ======== ========
Earnings per share . . . . . . . . . . . . . $0.61 $0.54 $1.38 $1.20
======== ======== ======== ========
Weighted average common shares . . . . . . . 12,282 12,197 12,269 12,183
======== ======== ======== ========
</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,
1996 1995
<S> <C> <C>
ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . $ 26,429 $ 14,774
Accounts receivable . . . . . . . . . . . . . . . . . 89,085 92,061
Inventories . . . . . . . . . . . . . . . . . . . . . 72,596 75,357
Prepaid expenses, taxes and other current assets. . . 19,268 19,400
Total current assets . . . . . . . . . . . . . . . 207,378 201,592
Net property, plant and equipment . . . . . . . . . . 71,820 72,966
Marketable securities . . . . . . . . . . . . . . . . 6,441 5,902
Other assets . . . . . . . . . . . . . . . . . . . . 5,306 4,638
Total assets . . . . . . . . . . . . . . . . . . $ 290,945 $ 285,098
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable and current maturities of long-term debt $ 10,339 $ 14,269
Accounts payable . . . . . . . . . . . . . . . . . . 19,487 19,946
Accrued payroll and employee benefits . . . . . . . . 23,665 23,908
Sales, income and other taxes payable . . . . . . . . 5,490 7,082
Other current liabilities . . . . . . . . . . . . . . 23,076 24,612
Total current liabilities . . . . . . . . . . . . 82,057 89,817
Long-term debt, net of current maturities . . . . . . 16,955 20,922
Deferred tax liabilities . . . . . . . . . . . . . . 17,810 17,300
Total liabilities . . . . . . . . . . . . . . . . 116,822 128,039
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 - 9,658,915 at June 30, 1996
and 9,593,283 at December 31, 1995 . . . . . . . 9,659 9,593
Class B common stock, $1.00 par value, 6,000,000 shares
authorized; outstanding - 2,628,434 at June 30, 1996
and 2,646,063 at December 31, 1995. . . . . . . . 2,628 2,646
Additional paid-in capital . . . . . . . . . . . . . . 16,559 15,887
Retained earnings . . . . . . . . . . . . . . . . . . 141,829 124,857
Currency translation . . . . . . . . . . . . . . . . 2,700 3,527
Net unrealized holding gain on marketable securities. 748 549
Total stockholders' equity . . . . . . . . . . . . 174,123 157,059
Total liabilities and stockholders' equity . . $ 290,945 $ 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>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . . . . $208,862 $195,311
Cash paid to suppliers and employees . . . . . . . . . . . (175,453) (173,336)
Interest paid. . . . . . . . . . . . . . . . . . . . . . . (1,677) (2,398)
Income tax payments . . . . . . . . . . . . . . . . . . . (8,502) (1,683)
Miscellaneous receipts . . . . . . . . . . . . . . . . . . 83 191
Net cash provided by operating activities. . . . . . . . . 23,313 18,085
Cash flows from investing activities:
Capital expenditures, net. . . . . . . . . . . . . . . . . (6,289) (5,962)
Marketable securities investment activity, net . . . . . . 308 (158)
Foreign currency hedges, net . . . . . . . . . . . . . . . 1,114 (2,502)
Net cash used in investing activities. . . . . . . . . . . (4,867) (8,622)
Cash flows from financing activities:
Net borrowings under line-of-credit arrangements. . . . . (7,649) (2,893)
Additions to long-term debt . . . . . . . . . . . . . . . -- 38,904
Payments on long-term debt. . . . . . . . . . . . . . . . (433) (42,229)
Proceeds from issuance of common stock. . . . . . . . . . 720 550
Net cash used in financing activities . . . . . . . . . . (7,362) (5,668)
Effect of exchange rate changes on cash . . . . . . . . . . . . 571 (2,546)
Net increase in cash and cash equivalents . . . . . . . . . . . 11,655 1,249
Cash and cash equivalents at beginning of period. . . . . . . . 14,774 3,751
Cash and cash equivalents at end of period. . . . . . . . . . . $ 26,429 $ 5,000
======== ========
Reconciliation of net income to net cash provided
by operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,972 $ 14,566
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . 7,935 8,261
Gains on disposition of marketable securities. . . . . . (656) (391)
Foreign currency hedges, net . . . . . . . . . . . . . . (1,138) 2,601
(Increase) decrease in accounts receivable . . . . . . . 1,972 (3,106)
(Increase) decrease in inventories . . . . . . . . . . . 1,938 (9,285)
(Increase) decrease in other current assets. . . . . . . 643 (538)
Increase (decrease) in accounts payable and other
current liabilities. . . . . . . . . . . . . . . . . . (606) 4,039
Increase (decrease) in income taxes payable. . . . . . . (2,518) 3,138
Other. . . . . . . . . . . . . . . . . . . . . . . . . . (1,229) (1,200)
Net cash provided by operating activities . . . . . . . . . . . $ 23,313 $ 18,085
======== ========
</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>
June 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
Raw materials $ 27,776 $ 26,467
Work in process 17,521 17,189
Finished goods, net 27,299 31,701
$ 72,596 $ 75,357
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
The principal components of property, plant and equipment are as
follows:
<CAPTION>
June 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
Land and improvements $ 8,057 $ 8,057
Buildings and leasehold
improvements 51,949 51,786
Equipment 103,412 99,486
163,418 159,329
Less accumulated depreciation 91,598 86,363
Net property, plant and equipment $ 71,820 $ 72,966
======== ========
</TABLE>
4
<PAGE>
4. STOCK SPLIT
Retroactive adjustments for all periods presented have been
made, as appropriate, to common stock and per share amounts
to reflect the 3-for-2 stock split effected in the form of a
50% stock dividend paid May 31, 1996.
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 Six Months Ended Year Ended
June 30, June 30, December 31,
1996 1995 1996 1995 1995
<S> <C> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0 100.0
Cost of goods sold 41.7 42.3 42.5 42.5 43.4
Gross profit 58.3 57.7 57.5 57.5 56.6
Selling, general and
administrative 38.7 39.7 36.8 37.8 37.9
Product research and
development 9.6 8.7 9.2 8.6 8.7
Restructuring costs - - - - 0.4
Income from operations 10.0 9.3 11.5 11.1 9.6
===== ===== ===== ===== =====
</TABLE>
Three Months Ended June 30, 1996 Compared to
Three Months Ended June 30, 1995
Corporate Results - Sales, Margins and Expenses
Bio-Rad's net sales (sales) in the second quarter of 1996
increased 2% to $100.0 million from $97.9 million reported in the
second quarter of 1995. The effects of a strengthened U.S.
dollar, principally versus the Japanese yen, reduced the increase
in consolidated sales compared to sales based on 1995 exchange
rates by approximately $3.4 million or 4%. Compared to the
second quarter of 1995, sales increased 9% in Clinical
Diagnostics and decreased 2% in Analytical Instruments and 1% in
Life Science. Excluding the effects of the strengthened U.S.
dollar, sales increased 9% in Clinical Diagnostics, 6% in
Analytical Instruments and 3% in Life Science. During the second
quarter of 1996, the increased Clinical Diagnostics sales were
principally in the U.S., in part a result of increased investment
in sales personnel and support during 1995. In the Analytical
Instruments segment sales of spectroscopy equipment continued to
increase at double digit rates, a trend started in the fourth
quarter of 1995.
6
<PAGE>
Consolidated gross margin increased to 58.3% for the second
quarter of 1996 from 57.7% for the second quarter of 1995. The
increase is attributed to increased margins in the Analytical
Instruments segment resulting from product mix and better
overhead absorption in the spectroscopy equipment manufacturing
plant and to a greater proportion of total sales from the
Clinical Diagnostics segment where margins are generally higher
than the other segments of the Company's business.
The strengthened U.S. dollar caused international selling,
general and administrative expense (SG&A) to decline by
approximately $1.5 million for the second quarter of 1996 when
compared to international SG&A based on 1995 exchange rates.
This, coupled with the Company's continued monitoring of SG&A
expenses, reduced SG&A to $38.7 million in the second quarter of
1996 from $38.9 million in the second quarter of 1995. Cost
reductions in Clinical Diagnostics and Life Science allowed Bio-
Rad to succeed in growing SG&A slower than sales for the second
consecutive quarter.
Product research and development expense (R&D) increased from the
second quarter of 1996, both in absolute dollars and as a percent
of sales. R&D spending increased in Life Science and Analytical
Instruments but was down slightly in Clinical Diagnostics.
Corporate Results - Non-Operating Items
Interest expense was $407,000 less in the second quarter of 1996
than the comparable period of 1995 principally as a result of
lower average borrowings. Average borrowings in the second
quarter of 1996 were 37% less than average borrowings in the same
period of 1995.
Investment income in the second quarter of 1996 includes the
sales of equity securities for a gain of $531,000 and interest
income of $163,000. No significant items were included in other
income and expense for the second quarter of 1996 or the second
quarter of 1995.
The Company's effective tax rate for the second 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.
Six Months Ended June 30, 1996 Compare to
Six Months ended June 30, 1995
Corporate Results - Sales, Margins and Expenses
Bio-Rad's sales in the first half of 1996, at $208.3 million,
were 6% greater than sales in the first half of 1995. On a year-
to-date basis, the effects of a strengthened U.S. dollar
7
<PAGE>
decreased consolidated sales compared to sales based on 1995
exchange rates by approximately $4.0 million. Sales increased in
all segments of the Company's business. Excluding the effects of
the strengthened U.S. dollar, sales increased 20% in Analytical
Instruments, 8% in Clinical Diagnostics and 5% in Life Science.
The growth in Analytical Instruments is attributed to growth in
sales of spectroscopy equipment as well as semiconductor test and
manufacturing equipment. Led by a $2.8 million increase in U.S.
sales, Clinical Diagnostics is experiencing worldwide growth.
1996 year-to-date consolidated gross margins were unchanged from
the comparable period of 1995. Improved gross margins in the
Analytical Instruments segment offset minor decreases in the Life
Science and Clinical Diagnostics segments.
SG&A decreased to 36.8% of sales in the first half of 1996 from
37.8% in the first half of 1995. While spending increased in
absolute dollars in all segments, all segments of the Company
succeeded in growing sales faster than SG&A for the first half of
1996. Management continues to monitor SG&A spending in an effort
to improve overall profitability.
R&D increased from the first half 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. Spending increases
were most significant in the Analytical Instruments and Life
Science segments.
Corporate Results - Non-Operating Items
Interest expense was $849,000 less in the first half of 1996 than
the comparable period of 1995 principally as a result of lower
average borrowings. Average borrowings in the first half of 1996
were 35% less than average borrowings in the same period of 1995.
Investment income in the first half of 1996 includes the sales of
equity securities for a gain of $656,000 and interest income of
$318,000. Net other income and expense in the first half of both
1996 and 1995 is primarily non-operating legal costs.
The Company's effective tax rate for the first half 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 $23 million for the year-to-
date June 30, 1996 compared to $18 million for the comparable
period 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.
8
<PAGE>
At June 30, 1996, the Company had available $26 million in cash
and cash equivalents, $60 million under its principal revolving
credit agreement and marketable securities with a market value of
$6 million, most of which could be readily converted to cash.
During the first half 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 objectives for operations, research and
development and modest external growth. In early July 1996, the
Board of Directors authorized the Company to repurchase up to $4
million of common stock over an indefinite period of time.
Management believes shareholder value can be improved through the
selective repurchase of the Company's stock. 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 or exploratory discussions.
At June 30, 1996, consolidated accounts receivable were $3.0
million lower than at December 31, 1995. The decline in
receivables results from lower sales in the second quarter of
1996 when compared to the fourth quarter of 1995.
At June 30, 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 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,
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: August 8, 1996 /s/ Thomas L Braje
Thomas L. Braje, Vice President,
Chief Financial Officer
Date: August 8, 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>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Computation for Consolidated Statements of Income:
<S> <C> <C> <C> <C>
Net income $ 7,511 $ 6,513 $16,972 $14,566
======= ======= ======= =======
Weighted average common shares 12,282 12,197 12,269 12,183
======= ======= ======= =======
Earnings per share $0.61 $0.54 $1.38 $1.20
======= ======= ======= =======
Additional Primary Computation (1):
Weighted average common shares per above 12,282 12,197 12,269 12,183
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 271 191 265 188
Weighted average common shares, as adjusted 12,553 12,388 12,534 12,371
======= ======= ======= =======
Primary earnings per share $0.60 $0.53 $1.35 $1.18
======= ======= ======= =======
Fully Diluted Computation (1):
Weighted average common shares per above 12,282 12,197 12,269 12,183
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 283 224 285 225
Weighted average common shares, as adjusted 12,565 12,421 12,554 12,408
======= ======= ======= =======
Fully diluted earnings per share $0.60 $0.52 $1.35 $1.17
======= ======= ======= =======
</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, 1996 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-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 26,429
<SECURITIES> 0
<RECEIVABLES> 89,085
<ALLOWANCES> 0
<INVENTORY> 72,596
<CURRENT-ASSETS> 207,378
<PP&E> 163,418
<DEPRECIATION> 91,598
<TOTAL-ASSETS> 290,945
<CURRENT-LIABILITIES> 82,057
<BONDS> 16,955
<COMMON> 12,287
0
0
<OTHER-SE> 161,836
<TOTAL-LIABILITY-AND-EQUITY> 290,945
<SALES> 208,253
<TOTAL-REVENUES> 208,253
<CGS> 88,544
<TOTAL-COSTS> 88,544
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,583
<INCOME-PRETAX> 22,629
<INCOME-TAX> 5,657
<INCOME-CONTINUING> 16,972
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,972
<EPS-PRIMARY> 1.38
<EPS-DILUTED> 0
</TABLE>
