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<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 September 30, 1996
Transition Report Pursuant to Section 13 or 15(d) of the
--- Securities Exchange Act of 1934
Commission File No. 0-10005
BIOCHEM INTERNATIONAL INC.
A DELAWARE CORPORATION IRS EMPLOYER IDENTIFICATION
NO. 39-1272816
Address Telephone Number
- ------- ----------------
W238 N1650 Rockwood Drive (414) 542-3100
Waukesha, WI 53188-1199
Indicate by check mark 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 months (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
--- ---
The number of shares outstanding of the Company's Common Stock, par value $.02,
on September 30, 1996 was 13,091,284.
Page 1 of 8
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOCHEM INTERNATIONAL INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
September 30 June 30
1996 1996
------------ -----------
ASSETS
<S> <C> <C>
Current Assets:
Cash and equivalents $7,426,000 $6,034,286
Accounts receivable, less $128,376 and $140,000 allowance
for doubtful accounts, respectively 3,417,089 4,512,728
Note receivable 494,166 448,090
Inventories 3,769,918 3,296,635
Deferred income taxes 362,400 362,400
Prepaid expenses 42,809 49,593
----------- -----------
Total Current Assets 15,512,382 14,703,732
Investment 1,859,846 1,863,882
Property, plant and equipment, net 1,733,152 1,711,920
Related party receivable 143,748 143,748
Other 5,483 5,483
----------- -----------
Total Assets $19,254,611 $18,428,765
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $1,484,160 $1,959,992
Accrued liabilities:
Salaries, wages and commissions 417,078 677,968
Other 199,578 203,861
Income taxes 489,219 80,000
----------- -----------
Total current liabilities 2,590,035 2,921,821
Deferred income taxes 22,400 22,400
Stockholders' equity:
Common Stock, $.02 par value 261,806 261,736
Additional Paid-in Capital 11,707,370 11,699,651
Retained Deficit 4,673,000 3,523,157
----------- -----------
Total Stockholders' Equity 16,642,176 15,484,544
----------- -----------
Total liabilities and stockholders' equity $19,254,611 $18,428,765
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
Page 2 of 8
<PAGE> 3
BIOCHEM INTERNATIONAL INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30
1996 1995
---------- ----------
<S> <C> <C>
Revenues:
Net sales $6,024,687 $6,678,377
Other income 181,425 85,487
---------- ----------
Total Revenues 6,206,112 6,763,864
Costs and Expenses:
Cost of goods sold 2,545,644 2,915,969
Selling, general and administrative 1,461,019 1,648,821
Engineering, regulatory and development 460,887 342,487
---------- ----------
Total Costs and Expenses 4,467,550 4,907,277
---------- ----------
Income before income tax expense $1,738,562 $1,856,587
Income tax expense:
Current 588,719 10,825
Deferred --- 674,575
---------- ----------
Net Income $1,149,843 $1,171,187
========== ==========
Net Income per Common Share $.09 $.09
========== ==========
Weighted Average Number of Common
Shares Outstanding 13,267,784 13,231,284
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3 of 8
<PAGE> 4
BIOCHEM INTERNATIONAL INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Three Months Ended
September 30
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $1,149,843 $1,171,187
Adjustments to reconcile net cash provided
by operating activities:
Depreciation 89,618 74,900
Deferred income taxes --- 674,575
Change in assets and liabilities:
Accounts and notes receivable 1,049,563 46,708
Inventories (473,283) (277,870)
Prepaid expenses and other 10,820 9,100
Accounts payable and accrued liabilities (331,786) 210,235)
---------- ----------
Net cash provided by operating activities 1,494,775 1,908,835
---------- ----------
Cash flows from investing activities:
Property, plant and equipment additions (110,850) (59,614)
---------- ----------
Cash flows from financing activities:
Issuance of common stock 7,789 1,235
---------- ----------
Net increase in cash and equivalents 1,391,714 1,850,456
Cash and equivalents:
Beginning of period 6,034,286 2,628,445
---------- ----------
End of period $7,426,000 $4,478,901
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $- $-
========== ==========
Cash paid during the period for income taxes $182,500 $10,825
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4 of 8
<PAGE> 5
BIOCHEM INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS
1. The accompanying unaudited financial statements should be read in
conjunction with the Company's 1996 Annual Report on Form 10-KSB. In the
opinion of management, all adjustments necessary to a fair statement of
operations and financial position of the Company have been included in the
accompanying statements of operations and balance sheets. All adjustments
made to the interim financial statements were of a normal, recurring
nature.
The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles.
2. Inventories are comprised of:
<TABLE>
<CAPTION>
September 30 June 30
1996 1996
------------ ----------
<S> <C> <C>
Finished goods $ 246,641 $ 286,067
Loaner and demonstration 896,727 951,472
Work in process 884,394 775,098
Purchased material 1,742,156 1,283,998
------------ ----------
$ 3,769,918 $3,296,635
============ ==========
</TABLE>
3. Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
September 30 June 30
1996 1996
------------ ----------
<S> <C> <C>
Land $ 342,262 $ 342,262
Building 724,699 724,699
Leasehold improvements 126,841 126,841
Machinery and equipment 1,477,721 1,366,871
Office furniture and equipment 181,704 181,704
------------ ----------
2,853,227 2,742,377
Less accumulated depreciation 1,120,075 1,030,457
------------ ----------
$ 1,733,152 $1,711,920
============ ==========
</TABLE>
4. Net Income Per Share:
Net income per common and common equivalent share is computed based on the
weighted average common shares outstanding, including common stock
equivalents.
Page 5 of 8
<PAGE> 6
BIOCHEM INTERNATIONAL INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition
Working capital at September 30, 1996 was $12,922,000 as compared to
$11,782,000 at June 30, 1996. The increase in working capital is primarily a
function of the cash flow from operating activities. The cash and equivalents
balance has increased due to the positive cash flows the company experienced
during the first three months of fiscal 1997.
Company management believes that sales revenues to be generated by current
products and anticipated new product introductions, and financing arrangements
currently in place will be sufficient to meet future cash needs.
Results of Operations
Net sales for the three-month period ended September 30, 1996 decreased 9.8%
from the corresponding prior year period. This decrease results from a
decrease in sales to both our domestic (direct and OEM) customers and to our
international dealers. The decrease in the domestic market sales of 20% and
19% for direct and OEM sales, respectively, are primarily due to decreased
handheld pulse oximeter sales and sales of our other oximetry products. Sales
to our international dealers and distributors, which are down 26% from the
first quarter of fiscal 1996 are also down in oximetry products. Sales to our
international OEM customers increased 24% over the first quarter of fiscal
1996, principally due to sales of our higher end monitoring products such as
capnographs and multigas monitors.
Other income for the three-month period ended September 30, 1996 consists
primarily of interest income.
Cost of goods sold as a percentage of net sales was approximately 42.3% during
the three-month period ended September 30, 1996 compared to 43.7% for the
corresponding period ended September 30, 1995. This fluctuation is
attributable primarily to decreased raw material costs and a change in the mix
of products sold between the two periods.
Selling, general and administrative expenses were 24.3% of net sales in the
three-month period ending September 30, 1996 compared to 24.7% during the same
period of the prior year. The decrease in spending was due to decreases in all
areas of discretionary expense items such as travel and advertising.
Additionally, decreases in legal expenses and provisions were incurred.
The increase in engineering, research and development expenditures noted during
the three-month period ended September 30, 1996 of 34.6% when compared to the
similar period in the prior year reflects increases in expenses related to
payroll, outside consultants and miscellaneous project expenses. The increase
in payroll expenses is the result of additional staffing when comparing the
first quarter of fiscal 1997 to the same period in fiscal 1996. BCI has also
increased spending on new product development and we have increased the use of
outside consultants.
Page 6 of 8
<PAGE> 7
The Company began paying regular income taxes in the third quarter of fiscal
1996 when the net operating loss carryforward in which it had benefit was
depleted. Prior to this, the Company was incurring a deferred income tax
expense as it depleted a deferred income tax asset resulting from the
provisions of Statement of Financial Accounting Standards (SFAS) No. 109.
All other costs and expenses of the Company remained relatively constant when
comparing the first three months of fiscal 1997 to that of fiscal 1996.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
There were no exhibits or reports on Form 8-K filed during the quarter ended
September 30. 1996.
Page 7 of 8
<PAGE> 8
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 thereunto duly authorized.
Dated: November 12, 1996 By /s/ David H. Sanders
-------------------------
David H. Sanders
Chairman of the Board and
Chief Executive Officer
Dated: November 12, 1996 By /s/ Frank A. Katarow
-------------------------
Frank A. Katarow
President and Chief
Operating Officer
Dated: November 12, 1996 By /s/ Ann M. Johnson
-------------------------
Ann M. Johnson
Vice President of Finance
and Operations
Page 8 of 8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,426
<SECURITIES> 0
<RECEIVABLES> 3,911
<ALLOWANCES> 0
<INVENTORY> 3,770
<CURRENT-ASSETS> 15,512
<PP&E> 2,853
<DEPRECIATION> 1,120
<TOTAL-ASSETS> 19,255
<CURRENT-LIABILITIES> 2,590
<BONDS> 0
0
0
<COMMON> 262
<OTHER-SE> 16,380
<TOTAL-LIABILITY-AND-EQUITY> 19,255
<SALES> 6,025
<TOTAL-REVENUES> 6,206
<CGS> 2,546
<TOTAL-COSTS> 2,546
<OTHER-EXPENSES> 1,922
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,739
<INCOME-TAX> 589
<INCOME-CONTINUING> 1,150
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,150
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
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