<PAGE>
UNITED STATES
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, 1997.
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, 1997
<S> <C>
Class A Common Stock,
Par Value $1.00 per share 9,790,734
Class B Common Stock,
Par Value $1.00 per share 2,614,803
</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)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . $105,854 $108,272
Cost of goods sold . . . . . . . . . . . . . 43,713 46,840
GROSS PROFIT . . . . . . . . . . . . . . . . 62,141 61,432
Selling, general and administrative expense . 40,718 37,838
Product research and development expense . . 10,808 9,592
INCOME FROM OPERATIONS . . . . . . . . . . . 10,615 14,002
Interest expense . . . . . . . . . . . . . . (285) (840)
Investment income, net . . . . . . . . . . . 448 300
Other, net . . . . . . . . . . . . . . . . . (370) (847)
INCOME BEFORE TAXES . . . . . . . . . . . . . 10,408 12,615
Provision for income taxes . . . . . . . . . 2,914 3,154
NET INCOME . . . . . . . . . . . . . . . . . $ 7,494 $ 9,461
======== ========
Earnings per share . . . . . . . . . . . . . $0.61 $0.77
======== ========
Weighted average common shares . . . . . . . 12,276 12,255
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE>
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . $ 10,667 $ 9,390
Accounts receivable . . . . . . . . . . . . . . . . . 97,116 97,795
Inventories . . . . . . . . . . . . . . . . . . . . . 73,140 69,738
Prepaid expenses, taxes and other current assets . . . 23,324 21,612
Total current assets . . . . . . . . . . . . . . . 204,247 198,535
Net property, plant and equipment . . . . . . . . . . 72,024 71,862
Marketable securities . . . . . . . . . . . . . . . . 8,817 7,432
Other assets . . . . . . . . . . . . . . . . . . . . . 6,745 7,096
Total assets . . . . . . . . . . . . . . . . . . $291,833 $284,925
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable and current maturities of long-term debt $ 11,918 $ 5,542
Accounts payable . . . . . . . . . . . . . . . . . . . 19,893 21,262
Accrued payroll and employee benefits . . . . . . . . 23,120 23,717
Sales, income and other taxes payable . . . . . . . . 4,766 3,988
Other current liabilities . . . . . . . . . . . . . . 23,987 24,630
Total current liabilities . . . . . . . . . . . . . 83,684 79,139
Long-term debt, net of current maturities . . . . . . 4,572 6,721
Deferred tax liabilities . . . . . . . . . . . . . . . 15,919 15,557
Total liabilities . . . . . . . . . . . . . . . . . 104,175 101,417
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 - 9,788,961 at March 31, 1997
and 9,740,922 at December 31, 1996 . . . . . . . . . 9,789 9,741
Class B common stock, $1.00 par value, 6,000,000 shares
authorized; outstanding - 2,614,803 at March 31, 1997
and 2,579,803 at December 31, 1996 . . . . . . . . . 2,615 2,580
Additional paid-in capital . . . . . . . . . . . . . . 18,107 17,067
Class A treasury stock, 79,116 shares at March 31, 1997
and 31,216 shares at December 31, 1996 at cost . . . (2,178) (839)
Class B treasury stock, 30,000 shares at March 31, 1997
and December 31, 1996 at cost . . . . . . . . . . . (800) (800)
Retained earnings . . . . . . . . . . . . . . . . . . 158,497 151,003
Currency translation . . . . . . . . . . . . . . . . . 502 3,570
Net unrealized holding gain on marketable securities . 1,126 1,186
Total stockholders' equity . . . . . . . . . . . . 187,658 183,508
Total liabilities and stockholders' equity . . . $291,833 $284,925
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . . $ 99,499 $100,279
Cash paid to suppliers and employees . . . . . . . . . (99,019) (87,614)
Interest paid. . . . . . . . . . . . . . . . . . . . . (282) (1,434)
Income tax payments . . . . . . . . . . . . . . . . . (982) (2,932)
Miscellaneous receipts . . . . . . . . . . . . . . . . 82 105
Net cash provided by (used in) operating activities. . (702) 8,404
Cash flows from investing activities:
Capital expenditures, net. . . . . . . . . . . . . . . (4,842) (2,555)
Marketable securities investment activity, net . . . . (1,132) 339
Foreign currency hedges, net . . . . . . . . . . . . . 1,894 382
Net cash used in investing activities. . . . . . . . . (4,080) (1,834)
Cash flows from financing activities:
Net borrowings under line-of-credit arrangements. . . 6,695 (4,098)
Long-term borrowings. . . . . . . . . . . . . . . . . 6,425 -
Payments on long-term debt. . . . . . . . . . . . . . (8,589) (187)
Proceeds from issuance of common stock. . . . . . . . 1,123 421
Purchase of treasury stock. . . . . . . . . . . . . . (1,339) -
Net cash provided by (used in) financing activities . 4,315 (3,864)
Effect of exchange rate changes on cash . . . . . . . . . . 1,744 472
Net increase in cash and cash equivalents . . . . . . . . . 1,277 3,178
Cash and cash equivalents at beginning of period. . . . . . 9,390 14,774
Cash and cash equivalents at end of period. . . . . . . . . $ 10,667 $ 17,952
======== ========
Reconciliation of net income to net cash provided by operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 7,494 $ 9,461
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . 4,217 3,974
Foreign currency hedge transactions, net . . . . . . (2,261) (648)
Gains on dispositions of marketable securities . . . (313) (125)
Increase in accounts receivable. . . . . . . . . . . (3,808) (7,132)
(Increase) decrease in inventories . . . . . . . . . (5,125) 2,232
Increase in other current assets . . . . . . . . . . (1,941) (218)
Increase (decrease) in accounts payable and
other current liabilities . . . . . . . . . . . . (915) 820
Increase in income taxes payable . . . . . . . . . . 1,917 476
Other. . . . . . . . . . . . . . . . . . . . . . . . 33 (436)
Net cash provided by (used in) operating activities . . . . $ (702) $ 8,404
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
BIO-RAD LABORATORIES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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, 1996 (the Company's
1996 Annual Report). Certain amounts in the financial statements
of the prior year have been reclassified to be consistent with
the 1997 presentation.
2. INVENTORIES
<TABLE>
The principal components of inventories are as follows:
<CAPTION>
March 31, December 31,
1997 1996
(in thousands)
<S> <C> <C>
Raw materials $ 28,299 $ 26,920
Work in process 21,412 19,866
Finished goods 23,429 22,952
$ 73,140 $ 69,738
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
The principal components of property, plant and equipment are as
follows:
<CAPTION>
March 31, December 31,
1997 1996
(in thousands)
<S> <C> <C>
Land and improvements $ 8,057 $ 8,057
Buildings and leasehold
improvements 52,098 52,050
Equipment 109,031 107,847
169,186 167,954
Less accumulated depreciation 97,162 96,092
Net property, plant and equipment $ 72,024 $ 71,862
======== ========
</TABLE>
4
<PAGE>
4. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
SFAS No. 128, "Earnings per Share", effective for financial
statements issued for periods ending after December 15, 1997.
Under SFAS 128, Bio-Rad will be required to disclose basic
earning per share and diluted earnings per share. Earnings per
share as currently reported by Bio-Rad are equal to basic
earnings per share as defined in SFAS 128. Historically, Bio-Rad
has not been subject to the provisions of the Accounting
Principles Board Opinion No. 15 because common stock equivalents
as defined within that statement resulted in dilution of less
than 3%.
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,
1996.
<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,
1997 1996 1996
<S> <C> <C> <C>
Net sales 100.0 100.0 100.0
Cost of goods sold 41.3 43.3 43.5
Gross profit 58.7 56.7 56.5
Selling, general and
administrative 38.5 34.9 37.1
Product research and
development 10.2 8.9 9.5
Restructuring costs - - 0.6
Income from operations 10.0 12.9 9.3
===== ===== =====
</TABLE>
Three Months Ended March 31, 1997 Compared to
Three Months Ended March 31, 1996
Corporate Results - Sales, Margins and Expenses
Net sales (sales) in the first quarter of 1997 were $105.9
million compared to $108.3 million in the first quarter of 1996.
For the first quarter of 1997, the effect of a strengthened U.S.
dollar reduced international sales by approximately $4.0 million
when compared to sales based upon 1996 exchange rates. Sales
increased 7% in Life Science, but were down 3% in Clinical
Diagnostics and 22% in Analytical Instruments. Sales growth in
the Life Science segment is attributed to new product
introductions in the latter part of 1996 and early 1997; the
impact of foreign exchange reduced this growth by approximately
4%. Excluding the impact of the strengthened U.S. dollar, sales
were flat in Clinical Diagnostics. Approximately 10% of the
decline in Analytical Instruments sales is attributable to Japan.
During the first quarter of 1996, Analytical Instruments
6
<PAGE>
benefited from the government injecting money into the Japanese
economy for capital expenditures; this was not repeated in 1997.
Customer delivery schedules and a slowdown in deliveries to the
semiconductor market accounts for another 6% of the decline in
Analytical Instruments sales; and currency fluctuations account
for approximately 3% of the decline.
Consolidated gross margins were 58.7% for the first quarter of
1997 compared to 56.7% for the first quarter of 1996. Gross
margins improved in all three of the Company's segments. The
improvement in gross margin is primarily due to the change in
product mix. Sales in the first quarter of 1996 included more
instrument sales which generally have lower margins than sales of
consumable products and there were fewer returns in the Life
Science segment after implementing a program to increase product
quality.
Selling, general and administrative expense (SG&A) increased to
38.5% of sales in the first quarter of 1997 from 34.9% of sales
in the comparable period of 1996. SG&A spending increased in all
segments reflecting planned spending increases in anticipation of
sales growth. The majority of the increased spending was for
personnel and advertising.
Product research and development expense (R&D) increased from the
first quarter of 1996, both in absolute dollars and as a percent
of sales. As part of the Company's continuing commitment to
long-term growth, Bio-Rad continues to expand R&D. Compared to
the first quarter of 1996, spending increased in both the Life
Science and Analytical Instruments segments. R&D spending was
down approximately $0.5 million in Clinical Diagnostics.
Corporate Results - Non-Operating Items
Interest expense was $555,000 less in the first quarter of 1997
than the comparable period of 1996 principally as a result of
lower average borrowings. The early extinguishment of $20
million of subordinated notes in December 1996 has reduced the
Company's debt level to that of pre-1980.
Investment income in both years includes gains on sales of
marketable securities and interest income from short-term
investments.
Net other income and expense in the first quarter of 1997
includes net exchange losses and goodwill amortization. Bio-Rad
regularly enters into forward foreign exchange contracts as a
hedge against foreign currency denominated intercompany
receivables and payables. Net other income and expense in the
first quarter of 1996 was primarily non-operating legal costs.
As expected, the Company's effective tax rate increased from 25%
7
<PAGE>
to 28% for the first quarter of 1997. The tax rate for both
years reflects the utilization of loss carryforwards, foreign
sales corporation benefits and foreign tax credits. However, the
benefits realized in 1997 will not be at the same level as 1996.
Financial Condition
At March 31, 1997, the Company had available $10.7 million in
cash and cash equivalents, $57.0 million under its principal
revolving credit agreement and marketable securities with a
market value of $8.8 million, most of which could be readily
converted to cash. Financing activities, principally borrowings
under short-term lines of credit, provided the Company with the
cash flow necessary to support investing activities and the
modest shortfall in operating activities.
During the first quarter of 1997, the Company continued to
repurchase common stock, an action began in July 1996 when the
Board of Directors authorized the spending of up to $4 million.
To date, the Company has repurchased $3.2 million of common
stock, which will be used to satisfy the Company's obligations
under the employee stock purchase and stock option plans. Bio-
Rad remains well positioned to make a substantial strategic
acquisition should the opportunity arise. While the Company
regularly reviews such opportunities, currently no acquisitions
have reached a stage beyond preliminary exploratory discussions.
At March 31, 1997, consolidated accounts receivable decreased by
$0.7 million from December 31, 1996. Excluding the effects of
the strengthened U.S. dollar, accounts receivable increased by
$3.8 million. The increase is a result of local operations
opportunistically using credit in the sales process, increased
equipment sales which require extensive acceptance procedures and
in some areas, a slow down in the payment process. Management
has noted the overall increase and has taken selective steps
where advantageous to accelerate customer payments.
At March 31, 1997, consolidated net inventories were $3.4 million
higher than at December 31, 1996. The increase in inventory
occurred in all three segments of the Company's business in
anticipation of planned sales that were not realized. Management
continues to monitor inventory levels and regularly 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 29,
1997, the following individuals were reelected to the Board of
Directors:
8
<PAGE>
<TABLE>
<CAPTION>
Class of
Common Stock Votes Votes
Elected From For Withheld
<S> <C> <C> <C>
James J. Bennett Class B 2,188,037 1,794
Albert J. Hillman Class A 8,734,042 140,417
Philip L. Padou Class A 8,734,042 140,417
Alice N. Schwartz Class B 2,188,037 1,794
David Schwartz Class B 2,188,037 1,794
Norman Schwartz Class B 2,188,037 1,794
Burton A. Zabin Class B 2,188,037 1,794
</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 3,074,410 1,703 1,164 --
</TABLE>
The foregoing matters are described in detail in the Company's
definitive Proxy Statement dated April 1, 1997, 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 April 1, 1997 (definitive form
filed April 2, 1997 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,
1997.
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, 1997 /s/ Thomas C. Chesterman
Thomas C. Chesterman, Vice President,
Chief Financial Officer
Date: May 13, 1997 /s/ James R. Stark
James R. Stark,
Corporate Controller
10
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,
1997 1996
Computation for Consolidated Statements of Income:
<S> <C> <C>
Net income $ 7,494 $ 9,461
======= =======
Weighted average common shares 12,276 12,255
======= =======
Earnings per share $0.61 $0.77
======= =======
Additional Primary Computation (1):
Weighted average common shares per above 12,276 12,255
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 163 215
Weighted average common shares, as adjusted 12,439 12,470
======= =======
Primary earnings per share $0.60 $0.76
======= =======
Fully Diluted Computation (1):
Weighted average common shares per above 12,276 12,255
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 206 225
Weighted average common shares, as adjusted 12,482 12,480
======= =======
Fully diluted earnings per share $0.60 $0.76
======= ======
</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, 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,667
<SECURITIES> 0
<RECEIVABLES> 97,116
<ALLOWANCES> 0
<INVENTORY> 73,140
<CURRENT-ASSETS> 204,247
<PP&E> 169,186
<DEPRECIATION> 97,162
<TOTAL-ASSETS> 291,833
<CURRENT-LIABILITIES> 83,684
<BONDS> 4,572
<COMMON> 12,404
0
0
<OTHER-SE> 175,254
<TOTAL-LIABILITY-AND-EQUITY> 291,833
<SALES> 105,854
<TOTAL-REVENUES> 105,854
<CGS> 43,713
<TOTAL-COSTS> 43,713
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 285
<INCOME-PRETAX> 10,408
<INCOME-TAX> 2,914
<INCOME-CONTINUING> 7,494
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,494
<EPS-PRIMARY> 0.61
<EPS-DILUTED> 0
</TABLE>
