<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 June 30, 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 July 31, 1997
<S> <C>
Class A Common Stock,
Par Value $1.00 per share 9,803,908
Class B Common Stock,
Par Value $1.00 per share 2,604,595
</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 Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . $105,752 $ 99,981 $211,606 $208,253
Cost of goods sold . . . . . . . . . . . . . 47,031 41,704 90,744 88,544
GROSS PROFIT . . . . . . . . . . . . . . . . 58,721 58,277 120,862 119,709
Selling, general and administrative expense . 40,549 38,655 81,267 76,493
Product research and development expense . . 11,205 9,620 22,013 19,212
INCOME FROM OPERATIONS . . . . . . . . . . . 6,967 10,002 17,582 24,004
Interest expense . . . . . . . . . . . . . . (275) (743) (560) (1,583)
Investment income, net . . . . . . . . . . . 450 1,000 898 1,300
Other, net . . . . . . . . . . . . . . . . . (337) (245) (707) (1,092)
INCOME BEFORE TAXES . . . . . . . . . . . . . 6,805 10,014 17,213 22,629
Provision for income taxes . . . . . . . . . 1,906 2,503 4,820 5,657
-------- -------- -------- --------
NET INCOME . . . . . . . . . . . . . . . . . $ 4,899 $ 7,511 $ 12,393 $ 16,972
======== ======== ======== ========
Earnings per share . . . . . . . . . . . . . $0.40 $0.61 $1.01 $1.38
======== ======== ======== ========
Weighted average common shares . . . . . . . 12,293 12,282 12,285 12,269
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
1
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BIO-RAD LABORATORIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . $ 5,483 $ 9,390
Accounts receivable . . . . . . . . . . . . . . . . . . . 96,776 97,795
Inventories . . . . . . . . . . . . . . . . . . . . . . . 77,318 69,738
Prepaid expenses, taxes and other current assets. . . . . 22,278 21,612
Total current assets . . . . . . . . . . . . . . . . . 201,855 198,535
Net property, plant and equipment . . . . . . . . . . . . 71,867 71,862
Marketable securities . . . . . . . . . . . . . . . . . . 11,132 7,432
Other assets . . . . . . . . . . . . . . . . . . . . . . 7,225 7,096
Total assets . . . . . . . . . . . . . . . . . . . . $292,079 $284,925
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable and current maturities of long-term debt. . $ 6,611 $ 5,542
Accounts payable . . . . . . . . . . . . . . . . . . . . 24,629 21,262
Accrued payroll and employee benefits . . . . . . . . . . 21,794 23,717
Sales, income and other taxes payable . . . . . . . . . . 2,242 3,988
Other current liabilities . . . . . . . . . . . . . . . . 24,302 24,630
Total current liabilities . . . . . . . . . . . . . . 79,578 79,139
Long-term debt, net of current maturities . . . . . . . . 2,100 6,721
Deferred tax liabilities . . . . . . . . . . . . . . . . 15,969 15,557
Total liabilities . . . . . . . . . . . . . . . . . . 97,647 101,417
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 - 9,793,288 at June 30, 1997
and 9,740,922 at December 31, 1996 . . . . . . . . . . 9,793 9,741
Class B common stock, $1.00 par value, 6,000,000 shares
authorized; outstanding - 2,614,803 at June 30, 1997
and 2,579,803 at December 31, 1996 . . . . . . . . . . 2,615 2,580
Additional paid-in capital . . . . . . . . . . . . . . . 18,152 17,067
Class A treasury stock, 84,933 shares at June 30, 1997
and 31,216 shares at December 31, 1996 at cost. . . . . (2,277) (839)
Class B treasury stock, 30,000 shares at June 30, 1997
and 30,000 shares at December 31, 1996 at cost. . . . . (800) (800)
Retained earnings . . . . . . . . . . . . . . . . . . . . 163,330 151,003
Currency translation . . . . . . . . . . . . . . . . . . 639 3,570
Net unrealized holding gain on marketable securities. . . 2,980 1,186
Total stockholders' equity . . . . . . . . . . . . . . 194,432 183,508
Total liabilities and stockholders' equity . . . . $292,079 $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>
Six Months Ended
June 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . . . . $205,601 $208,862
Cash paid to suppliers and employees . . . . . . . . . . . (192,327) (175,453)
Interest paid. . . . . . . . . . . . . . . . . . . . . . . (584) (1,677)
Income tax payments . . . . . . . . . . . . . . . . . . . (6,371) (8,502)
Miscellaneous receipts . . . . . . . . . . . . . . . . . . 268 83
Net cash provided by operating activities. . . . . . . . . 6,587 23,313
Cash flows from investing activities:
Capital expenditures, net. . . . . . . . . . . . . . . . . (9,051) (6,289)
Marketable securities investment activity, net . . . . . . (1,340) 308
Foreign currency hedges, net . . . . . . . . . . . . . . . 2,076 1,114
Net cash used in investing activities. . . . . . . . . . . (8,315) (4,867)
Cash flows from financing activities:
Net borrowings under line-of-credit arrangements. . . . . 1,446 (7,649)
Long-term borrowings . . . . . . . . . . . . . . . . . . 15,375 --
Payments on long-term debt. . . . . . . . . . . . . . . . (20,113) (433)
Proceeds from issuance of common stock. . . . . . . . . . 1,172 720
Treasury stock activity, net. . . . . . . . . . . . . . . (1,504) --
Net cash used in financing activities . . . . . . . . . . (3,624) (7,362)
Effect of exchange rate changes on cash . . . . . . . . . . . . 1,445 571
Net increase (decrease) in cash and cash equivalents. . . . . . (3,907) 11,655
Cash and cash equivalents at beginning of period. . . . . . . . 9,390 14,774
Cash and cash equivalents at end of period. . . . . . . . . . . $ 5,483 $ 26,429
======== ========
Reconciliation of net income to net cash provided
by operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,393 $ 16,972
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . 8,955 7,935
Foreign currency hedge transactions, net . . . . . . . . (2,260) (1,138)
Gains on disposition of marketable securities. . . . . . (585) (656)
(Increase) decrease in accounts receivable . . . . . . . (3,108) 1,972
(Increase) decrease in inventories . . . . . . . . . . . (9,095) 1,938
(Increase) decrease in other current assets. . . . . . . (902) 643
Increase (decrease) in accounts payable and other
current liabilities. . . . . . . . . . . . . . . . . . 3,383 (606)
Decrease in income taxes payable . . . . . . . . . . . . (1,604) (2,518)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . (590) (1,229)
Net cash provided by operating activities . . . . . . . . . . . $ 6,587 $ 23,313
======== ========
</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>
June 30, December 31,
1997 1996
(in thousands)
<S> <C> <C>
Raw materials $ 30,080 $ 26,920
Work in process 19,617 19,866
Finished goods 27,621 22,952
$ 77,318 $ 69,738
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
The principal components of property, plant and equipment are as
follows:
<CAPTION>
June 30, December 31,
1997 1996
(in thousands)
<S> <C> <C>
Land and improvements $ 8,057 $ 8,057
Buildings and leasehold
improvements 52,149 52,050
Equipment 109,344 107,847
-------- --------
169,550 167,954
Less accumulated depreciation 97,683 96,092
-------- --------
Net property, plant and equipment $ 71,867 $ 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 certain 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 Six Months Ended Year Ended
June 30, June 30, December 31,
1997 1996 1997 1996 1996
<S> <C> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0 100.0
Cost of goods sold 44.5 41.7 42.9 42.5 43.5
Gross profit 55.5 58.3 57.1 57.5 56.5
Selling, general and
administrative 38.3 38.7 38.4 36.8 37.1
Product research and
development 10.6 9.6 10.4 9.2 9.5
Restructuring costs - - - - 0.6
Income from operations 6.6 10.0 8.3 11.5 9.3
===== ===== ===== ===== =====
</TABLE>
Three Months Ended June 30, 1997 Compared to
Three Months Ended June 30, 1996
Corporate Results - Sales, Margins and Expenses
Bio-Rad's net sales (sales) in the second quarter of 1997
increased 6% to $105.8 million from $100.0 million reported in
the second quarter of 1996. The effects of a strengthened U.S.
dollar reduced the increase in consolidated sales compared to
sales based on 1996 exchange rates by approximately $4 million or
4%. Compared to the second quarter of 1996, sales increased 20%
in Analytical Instruments, 4% in Life Science and 2% in Clinical
Diagnostics. During the second quarter of 1997, the increased
Analytical Instruments sales were principally to U.S.
semiconductor customers and included sales that resulted from an
accommodation to customers relating to terms of delivery from the
first quarter. Sales growth in the Life Science segment is
attributed to new product introductions in the latter part of
1996 and early 1997. The modest growth in Clinical Diagnostics
6
<PAGE>
is attributable to the segment's control business and a sale to
the U.S. military of the Company's flow cytometry products.
Competition remains fierce and globally governments continue to
try to limit the growth in healthcare related spending.
Consolidated gross margin decreased to 55.5% for the second
quarter of 1997 from 58.3% for the second quarter of 1996. The
decrease occurred in all segments of the Company's business and
was impacted by foreign exchange, discounts given to stimulate
sales and post sales support. Because a large portion of the
Company's products are manufactured in the U.S., a strengthened
U.S. dollar has the effect of lowering the gross margin of
international sales when competition from local manufacturers
severely limits Bio-Rad's ability to raise prices.
Selling, general and administrative expense (SG&A) declined to
38.3% of sales in the second quarter of 1997 from 38.7% of sales
in the second quarter of 1996. In response to the lack of sales
growth in the first quarter of 1997, the Company moderated SG&A
spending in the second quarter to better balance its SG&A
spending with the slower than expected sales.
Product research and development expense (R&D) increased from the
second quarter of 1997, both in absolute dollars and as a percent
of sales. As part of Bio-Rad's ongoing commitment to long-term
growth, R&D spending increased in all segments of the Company's
business, with the most significant increase occurring in the
Life Science segment.
Corporate Results - Non-Operating Items
Interest expense was $0.5 million less in the second quarter of
1997 than the comparable period of 1996 principally as a result
of lower average borrowings. Average borrowings in the second
quarter of 1997 were 57% less than average borrowings in the same
period of 1996 as a result of the early extinguishment of $20.0
million of subordinated notes in December 1996.
Investment income in both years includes gains on sales of
marketable securities and interest income from short-term
investments. No significant items were included in other income
and expense for the second quarter of 1997 or the second quarter
of 1996.
The Company's effective tax rate for the second quarter of 1997
was 28% compared to 25% for all of 1996. The tax rate for both
years reflects the utilization of foreign 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.
7
<PAGE>
Six Months Ended June 30, 1997 Compared to
Six Months ended June 30, 1996
Corporate Results - Sales, Margins and Expenses
Bio-Rad's sales in the first half of 1997, at $211.6 million,
were 2% greater than sales in the first half of 1996. On a year-
to-date basis, the effects of a strengthened U.S. dollar
decreased consolidated sales compared to sales based on 1996
exchange rates by approximately $8 million. Sales increased 5%
in Life Science, but were down 1% in Clinical Diagnostics and 3%
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 effects
of the strengthened U.S. dollar, sales increased 3% in Clinical
Diagnostics and were flat in Analytical Instruments. During the
first quarter of 1996 Analytical Instruments benefited from the
Japanese government financially stimulating the local economy
with funds for capital expenditures; this was not repeated in
1997.
1997 year-to-date consolidated gross margins were down slightly
from the comparable period of 1996. Improved gross margins in
the Clinical Diagnostics segment offset minor decreases in the
Life Science and Analytical Instruments segments.
SG&A increased to 38.4% of sales in the first half of 1997 from
36.8% in the first half of 1996. Although SG&A spending was
moderated in the second quarter, it increased in absolute dollars
in all segments. The majority of the increased spending was in
personnel and advertising. Management continues to monitor SG&A
spending in an effort to improve profitability but without
sacrificing sales growth.
R&D spending increased from the first half of 1996, both in
absolute dollars and as a percent of sales. As part of Bio-
Rad's continuing commitment to long-term growth, the Company
continues to expand R&D. Compared to the first half of 1996,
spending increased in both the Life Science and Analytical
Instruments segments. R&D spending was down approximately $0.4
million in Clinical Diagnostics.
Corporate Results - Non-Operating Items
Interest expense was $1.0 million less in the first half of 1997
than the comparable period of 1996 principally as a result of
lower average borrowings. The early extinguishment of $20.0
million of subordinated notes in December 1996 has reduced the
Company's debt to a pre-1980 level.
8
<PAGE>
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 half 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 half of 1996
was primarily non-operating legal costs.
As expected, the Company's effective tax rate increased from 25%
to 28% for the first half of 1997. The tax rate for both years
reflects the utilization of foreign 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 June 30, 1997, the Company had available $5.5 million in cash
and cash equivalents, $59.4 million under its principal revolving
credit agreement and $11.1 million of marketable securities at
market value, most of which could be readily converted to cash.
Net cash provided by operations was $6.6 million for the year-to-
date June 30, 1997 compared to $23.3 million for the comparable
period of 1996. Available cash and cash provided by operations
allowed Bio-Rad to make limited capital expenditures and to
further reduce interest bearing debt. At June 30, 1997,
Bio-Rad's debt to equity ratio was at less than 5%.
During the first half of 1997, the Company continued to
repurchase common stock, an action begun in July 1996 when the
Board of Directors authorized the spending of up to $4 million.
To date, the Company has repurchased $3.8 million of common
stock, which will be used to satisfy the Company's obligations
under the employee stock purchase and stock option plans. In
early July 1997, the Board of Directors authorized the Company to
repurchase up to an additional $4 million of common stock over an
indefinite period of time. Management continues to believe
shareholder value can be improved through the selective
repurchase of the Company's stock.
Available funds and cash flow from operations are adequate to
meet the Company's objectives for operations, research and
development and modest external growth. Bio-Rad remains well
positioned to make a substantial strategic acquisition should the
opportunity arise. At the present, the Company is contemplating
at least two investment opportunities that would require the use
of approximately $15 million. Beyond these, no acquisitions
appear to have reached a stage beyond exploratory discussions.
9
<PAGE>
At June 30, 1997, consolidated accounts receivable decreased by
$1.0 million from December 31, 1996. Excluding the effects of
the strengthened U.S. dollar, accounts receivable increased by
$3.1 million. The increase is a result of local operations
continuing to opportunistically use credit in the sales process,
increased equipment sales and in some areas, a slow down in the
payment process. Management regularly reviews receivables and
takes selective steps where advantageous to accelerate customer
payments.
At June 30, 1997, consolidated net inventories were $7.6 million
higher than at December 31, 1996. The increase in inventory
occurred principally in the Life Science segment as a result of
some sourcing difficulties related to new product introductions
and planned increases in anticipation of demand in the fourth
quarter. 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 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following documents are filed as part of this report:
Exhibit No.
10.11 Employment and non-compete agreement with
Dr. Burton A. Zabin.
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, 1997.
10
<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 6, 1997 /s/ Thomas C. Chesterman
T.C. Chesterman, Vice President,
Chief Financial Officer
Date: August 6, 1997 /s/ James R. Stark
James R. Stark,
Corporate Controller
11
<PAGE>
EMPLOYMENT AND NON-COMPETE AGREEMENT
This Employment and Non-Compete Agreement (hereinafter referred to
collectively as the "Agreement") is entered into as of August 1, 1997,
between Dr. Burton A. Zabin ("Zabin"), on the one hand, and Bio-Rad
Laboratories, Inc., (hereinafter referred to as the "Company"), on the
other hand.
WHEREAS, Zabin has worked at the Company since September 1, 1963
and has extensive expertise and experience with the operations and
products of the Life Science Group and its competitors;
WHEREAS, competition by Zabin against the Company would prove
detrimental to the business of the Company;
WHEREAS, the parties wish to reach a mutually agreeable
arrangement regarding the continued utilization of Zabin's expertise and
experience after he leaves his position as Vice President, and Group
Manager of the Life Science Group ("Present Position");
WHEREAS, the parties wish to define Zabin's continued employment
relationship with the Company.
THE PARTIES HEREBY enter into the following agreement between
them, fully, finally and completely on the following terms, in
consideration of the mutual covenants and promises contained herein, and
for other good and valuable consideration, the receipt of which is
hereby acknowledged:
1. Zabin will continue his employment with the Company through March
18, 2001. During the time period from August 1, 1997 through March 18,
2001, he will work as an employee for the Company on a flexible-time
basis as noted hereafter. The Company will provide secretarial services
for correspondence and telephone messages for Zabin from August 1,
1997, to March 18, 2001. During the time from August 1, 1997, to March
18, 2001, Zabin will be available to the Company for an average of one
hundred thirty-five days on a reasonable flexible-time basis during each
successive twelve-month period, (except for the last period which shall
be approximately nine months) commencing on August 1, 1997. He will
be reasonably available to undertake reasonable assignments provided to
him which utilize his knowledge in the life science research market.
-1-
<PAGE>
Zabin shall use reasonable efforts, but shall not be required to
complete all projects that may be assigned. During the time of this
Agreement, Zabin will have the right to take reasonable amounts of time
off with adequate notice and approval by David Schwartz or his successor
in order to engage in various personal matters. In the event the
Company requires Zabin to undertake assignments necessitating his
presence at other than the Company location, the Company will reimburse
Zabin for his reasonable out-of-pocket expenses. Zabin will receive
one-half of his full present salary during such period and until March
18, 2001, and will receive a check for $4,958.25, minus normal payroll
deductions, on a semi-monthly basis, and be entitled to participate in
the 401K program and the Bio-Rad Employees Deferred Profit Sharing and
Retirement Plan, and receive basic life insurance, normal medical and
dental benefits and long term disability insurance. Zabin shall not
participate in any bonus or stock programs.
2. Upon executing this Agreement, Zabin will tender to Sanford Wadler
a written irrevocable letter of resignation from his employment at the
Company effective March 18, 2001, in the form attached as Exhibit 1. At
his sole option, he may resign from his employment sooner on six month's
notice, in which event, the amounts set forth under paragraph one
hereunder shall not be paid. The Company may not terminate Zabin's
employment prior to March 18, 2001, unless there is good cause. Good
cause for the purpose of this Agreement shall be limited to neglect of
Zabin's reasonable duties, theft, material breach of this Agreement, and
intentional misconduct. In the event that the Company claims Zabin has
neglected his reasonable duties, the Company must provide Zabin with
written notice detailing any and all such neglect of his reasonable
duties and give Zabin 30 days in which to correct any such alleged
-2-
<PAGE>
neglect of his reasonable duties before he can be terminated from his
employment for such reasons.
3. Zabin agrees to release and forever hold the Company harmless for
any potential obligation or liability to tax or other authorities for
any deductions, taxes, or other obligations with respect to the payment
of the aforesaid sums.
4. From August 1, 1997, to March 18, 2005, Zabin will not consult or
be an employee, proprietor, partner or controlling shareholder for a
direct or indirect competitor of the Company or its subsidiaries.
Further, Zabin will not be a party to the recruitment of any of the
Company's employees from August 1, 1997 to March 18, 2003.
5. Zabin shall be entitled to full COBRA rights and benefits for
continued health and dental insurance coverage following his
resignation. The Company shall do nothing to interfere with Zabin's
COBRA rights and benefits or other rights to convert to individual
policies.
6. During the period between the execution of this Agreement and
Zabin's final day of employment at the Company, Zabin shall not continue
to accrue sick leave, but shall continue to have the right to take
accrued sick leave. Zabin shall continue to accrue vacation and shall
have the right to take vacation; provided, however, that all vacation
must be taken in the year accrued. Zabin shall be paid for all of his
current accrued and unused vacation time as required by law, on August
15, 1997.
7. Zabin will remain a director for the remainder of his current
term.
8. Zabin will be permitted to exercise all vested stock options
granted prior to leaving his Present Position and all stock options
which vest during the term of this Agreement. If Zabin becomes unable
-3-
<PAGE>
to carry out his assigned duties under this Agreement, or if Zabin
retires, the Stock Option Committee has granted Zabin the right to
exercise Zabin s stock options for up to two years after Zabin ceases
employment.
9. In consideration for the payments and benefits to be paid to him
by the Company and in consideration of the Company's agreement to
perform under this Agreement, Zabin hereby releases and waives and
absolutely and forever discharges the Company, its officers, directors,
employees, subsidiaries, parent and related companies, predecessors,
successors and assigns, and any and all of them, from any and all
claims, liabilities, demands, debts, accounts, obligations, actions, and
causes of action, known or unknown, suspected or unsuspected, at law or
in equity, in arbitration, or in any state or federal administrative
proceeding, which relate to or arise out of, in any way, his employment
with the Company, or the separation of his regular employment which
Zabin claims to have or has against any or all of them, whether known or
unknown, as of the date of the Agreement, including without limitation,
contract, tort, age discrimination claims under the Age Discrimination
Act, the California Fair Employment and Housing Act or other
discrimination claims of any kind.
10. The Company hereby expressly releases and waives, and absolutely
and forever discharges Zabin, his agents, and his family, and any and
all of them, from any and all claims, liabilities, demands, debts,
accounts, obligations, actions, and causes of action, past, present or
future, known or unknown, suspected or unsuspected, at law or in equity,
or in any arbitration, of any kind or nature whatsoever which the
Company has or claims to have against either Zabin, his agents, or his
family, arising on or before the date of this Agreement.
11. As part of the above releases and not by way of limitation, Zabin
and the Company expressly, absolutely, and forever release and waive all
of their rights under Section 1542 of the Civil Code of the State of
California. Said Section states:
-4-
<PAGE>
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
EFFECTED THE SETTLEMENT WITH THE DEBTOR."
12. In connection with such waiver and relinquishment, the parties
hereto acknowledge that they are aware that they may later discover
facts in addition to those which they currently know or believe to be
true with respect to the subject matters of this Agreement, but that it
is their intent to hereby fully, finally, and forever settle and release
all of these matters which now exist, may exist, previously existed
between the parties, whether known or unknown, suspected or unsuspected.
In furtherance of such intent, the release given herein shall be and
shall remain in effect as a complete and full release, notwithstanding
the discovery or existence of such additional or different facts.
13. Zabin will at all times during the term of this Agreement and
thereafter hold in strictest confidence, and not use or disclose to
anyone outside of the Company without expressed written authorization of
an officer of the Company any confidential or propriety information of
the Company, including know-how, formulae, secret processes or
machines, inventions, and matters of a business nature, such as
information about costs, profits, markets, sales, lists of customers,
and information of a similar nature, to the extent not available to the
public. Zabin agrees to consult with his supervisor at the Company
concerning any questions that Zabin may have as to what comprises such
confidential or propriety information.
14. In the event that any action, suit or other proceeding is
instituted to remedy, prevent, or obtain relief from a breach of this
Agreement, or arising out of a breach of this Agreement, the prevailing
party shall recover all costs and expenses, including all reasonable
attorneys fees incurred by such party in each and every action, suit or
other proceeding, including any and all appeals or petitions therefrom.
-5-
<PAGE>
15. This Agreement constitutes and contains the entire agreement and
understanding concerning the subject matters between the parties hereto,
and supersedes and replaces all prior negotiations, all proposed
agreements, and all agreements, whether written or oral, express or
implied, concerning the subject matters hereof. Each party acknowledges
that she or it has not signed this Agreement in reliance on any promise,
representation, or warranty whatsoever, express or implied, written or
oral, not contained therein concerning the subject matters hereof except
the advice of their own legal counsel. The parties hereto further agree
that any oral representations or modifications of this Agreement shall
be of no force or effect unless agreed to in writing by each party
hereto.
16. This Agreement is executed and delivered within the State of
California and shall in all respects be interpreted, enforced, and
governed by and under the laws of the State of California applicable to
instruments, persons, and transactions which have legal contacts and
relationships solely within the State of California.
17. The language of this Agreement shall be construed as a whole
according to its fair meaning and not strictly for or against any of the
parties hereto. If any provision or a portion of this instrument shall
be held for any reason to be unenforceable or illegal, that provision
shall be severed from the instrument and the remainder shall be valid
and enforceable between the parties just as if the provision held to be
illegal or enforceable and never been included.
18. The parties hereto acknowledge that they have been represented by
competent counsel in connection with this matter, and that they have
executed this Agreement with the consent of and on the advice of such
counsel. All parties acknowledge that they have read this Agreement,
and fully understand and consent to all their terms and conditions
without any reservation whatsoever. All parties acknowledge that they
have had adequate opportunity to make whatever investigation or inquiry
they deem necessary and advisable in connection with the subject
matters of this Agreement prior to the execution thereof.
-6-
<PAGE>
19. The Agreement may be executed in any number of copies by the
parties hereto in several counterparts, and when each party has signed
and delivered at least one such counterpart to the other parties hereto,
each counterpart shall be deemed an original and taken together shall
constitute one and the same Agreement, which shall be binding and
effective as to all the parties hereto.
20. Zabin acknowledges that he has read each and every paragraph of
this Agreement and that he understands his respective rights and
obligations and has been advised that he can consult an attorney of his
choice. Further, Zabin acknowledges that he has been given the
opportunity to consider and review this Agreement for a period of at
least twenty-one (21) days and has the opportunity to revoke this
Agreement within seven (7) days of its execution. Should Zabin revoke
this Agreement, all monies and benefits provided herein shall cease and
benefits provided to Zabin under this Agreement prior to such revocation
shall be recoverable by the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands on the
day or days and year written below:
Dated: July 16, 1997 /s/ Burton A. Zabin
BURTON A. ZABIN
Dated: 16 July 1997 BIO-RAD LABORATORIES, INC.
By: /s/ David Schwartz, Pres.
DAVID SCHWARTZ
-7-
<PAGE>
EXHIBIT 1
(Date)
TO WHOM IT MAY CONCERN:
I hereby voluntarily resign my employment with Bio-Rad
Laboratories, to be effective ______________, 19 ___.
Very truly yours,
Burton A. Zabin
-8-
EXHIBIT 11.1 - COMPUTATION OF EARNINGS PER SHARE
Bio-Rad Laboratories, Inc.
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Computation for Consolidated Statements of Income:
<S> <C> <C> <C> <C>
Net income $ 4,899 $ 7,511 $12,393 $16,972
======= ======= ======= =======
Weighted average common shares 12,293 12,282 12,285 12,269
======= ======= ======= =======
Earnings per share $0.40 $0.61 $1.01 $1.38
======= ======= ======= =======
Additional Primary Computation (1):
Weighted average common shares per above 12,293 12,282 12,285 12,269
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 127 271 126 265
Weighted average common shares, as adjusted 12,420 12,553 12,411 12,534
======= ======= ======= =======
Primary earnings per share $0.39 $0.60 $1.00 $1.35
======= ======= ======= =======
Fully Diluted Computation (1):
Weighted average common shares per above 12,293 12,282 12,285 12,269
Add-Dilutive effect of outstanding options
(as determined by the application of
the treasury stock method) 178 283 178 285
Weighted average common shares, as adjusted 12,471 12,565 12,463 12,554
======= ======= ======= =======
Fully diluted earnings per share $0.39 $0.60 $0.99 $1.35
======= ======= ======= =======
</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, 1997 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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,483
<SECURITIES> 0
<RECEIVABLES> 96,776
<ALLOWANCES> 0
<INVENTORY> 77,318
<CURRENT-ASSETS> 201,855
<PP&E> 169,550
<DEPRECIATION> 97,683
<TOTAL-ASSETS> 292,079
<CURRENT-LIABILITIES> 79,578
<BONDS> 2,100
<COMMON> 12,408
0
0
<OTHER-SE> 182,024
<TOTAL-LIABILITY-AND-EQUITY> 292,079
<SALES> 211,606
<TOTAL-REVENUES> 211,606
<CGS> 90,744
<TOTAL-COSTS> 90,744
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 560
<INCOME-PRETAX> 17,213
<INCOME-TAX> 4,820
<INCOME-CONTINUING> 12,393
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,393
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 0
</TABLE>