<PAGE> 1
CONFORMED
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, 1997
_ 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, 1997 was 13,091,284.
Page 1 of 9
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOCHEM INTERNATIONAL INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30 June 30
1997 1997
------------ -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $12,494,621 $10,892,915
Accounts receivable, less $139,675 and $125,000 allowance
for doubtful accounts, respectively 4,544,443 4,158,002
Inventories 3,709,360 3,747,955
Deferred income taxes 320,000 320,000
Prepaid expenses 48,011 43,376
----------- -----------
Total Current Assets 21,116,435 19,162,248
Investment 1,845,000 1,847,739
Property, plant and equipment, net 1,678,442 1,599,679
Related party receivable 144,770 144,770
Other 6,898 5,987
----------- -----------
Total Assets $24,791,545 $22,760,423
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 1,912,296 $ 1,813,985
Accrued liabilities:
Salaries, wages and commissions 626,233 754,165
Other 213,423 212,018
Income taxes 768,845 35,000
----------- -----------
Total Current Liabilities 3,520,797 2,815,168
Stockholders' Equity:
Common Stock, $.02 par value 261,826 261,826
Additional Paid-in Capital 11,707,975 11,707,975
Retained Earnings 9,488,447 8,162,954
Less: Treasury Stock (187,500) (187,500)
----------- -----------
Total Stockholders' Equity 21,270,748 19,945,255
----------- -----------
Total Liabilities and Stockholders' Equity $24,791,545 $22,760,423
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
Page 2 of 9
<PAGE> 3
BIOCHEM INTERNATIONAL INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30
1997 1996
---------- ----------
<S> <C> <C>
Revenues:
Net sales $7,420,457 $6,024,687
Other income 178,390 181,425
---------- ----------
Total Revenues 7,598,847 6,206,112
Costs and Expenses:
Cost of goods sold 3,221,349 2,545,644
Selling, general and administrative 1,701,624 1,461,019
Engineering, regulatory and development 481,484 460,887
---------- ----------
Total Costs and Expenses 5,404,457 4,467,550
---------- ----------
Income before income tax expense $2,194,390 $1,738,562
Income tax expense:
Current 868,898 588,719
Deferred - -
---------- ----------
Net Income $1,325,492 $1,149,843
========== ==========
Net Income per Common Share $.10 $.09
========== ==========
Weighted Average Number of Common
Shares Outstanding 13,165,149 13,203,764
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3 of 9
<PAGE> 4
BIOCHEM INTERNATIONAL INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $1,325,492 $1,149,843
Adjustments to reconcile net cash provided
by operating activities:
Depreciation 85,250 89,618
Change in assets and liabilities:
Accounts and notes receivable (387,351) 1,049,563
Inventories 38,595 (473,283)
Prepaid expenses and other (1,896) 10,820
Accounts payable and accrued liabilities 705,629 (331,786)
---------- ---------
Net cash provided by operating activities 1,765,719 1,494,775
---------- ---------
Cash flows from investing activities:
Property, plant and equipment additions (188,236) (110,850)
Proceeds from disposal of property and equipment 24,223 -
---------- ---------
Net cash used for investing activities (164,013) (110,850)
---------- ---------
Cash flows from financing activities:
Issuance of common stock - 7,789
---------- ---------
Net increase in cash and equivalents 1,601,706 1,391,714
Cash and equivalents:
Beginning of period 10,892,915 6,034,286
---------- ---------
End of period $12,494,621 $7,426,000
=========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $- $-
=========== ==========
Cash paid during the period for income taxes $126,778 $182,500
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4 of 9
<PAGE> 5
BIOCHEM INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS
1. The accompanying unaudited financial statements should be read in
conjunction with the Company's 1997 Annual Report on Form 10-K. 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
1997 1997
---- ----
<S> <C> <C>
Finished goods $ 334,652 $ 230,390
Loaner and demonstration 944,319 920,734
Work in process 967,194 1,070,564
Purchased material 1,463,195 1,526,267
---------- ----------
$3,709,360 $3,747,955
========== ==========
</TABLE>
3. Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
September 30 June 30
1997 1997
---- ----
<S> <C> <C>
Land $ 342,262 $ 342,262
Building 724,699 724,699
Leasehold improvements 126,841 126,841
Machinery and equipment 1,745,271 1,605,481
Office furniture and equipment 184,295 184,295
---------- ----------
3,123,368 2,983,578
Less accumulated depreciation 1,444,926 1,383,899
---------- ----------
$1,678,442 $1,599,679
========== ==========
</TABLE>
Page 5 of 9
<PAGE> 6
4. Net Income Per Share:
The computation of net income per common and common equivalent share
assumes that stock options are exercised and are reflected in weighted
average common shares outstanding net of treasury shares assumed to be
purchased with the exercise proceeds. There is no significant difference
between primary and fully diluted net income per share. The number of
weighted average shares used for computing primary net income per share is
as follows:
<TABLE>
<CAPTION>
Sept. 30, 1997 Sept. 30, 1996
-------------- --------------
<S> <C> <C>
Beginning shares outstanding 13,091,284 13,086,784
Equivalent shares:
Dilutive stock options based on Treasury
Stock method using average market price 73,865 116,980
---------- ----------
13,165,149 13,203,764
========== ==========
</TABLE>
Page 6 of 9
<PAGE> 7
BIOCHEM INTERNATIONAL INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition
Working capital at September 30, 1997 was $17,596,000 as compared to
$16,347,000 at June 30, 1997. 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 1998.
BCI has entered into a contract to buy a new facility, consisting of land and
building, near its current location for $1,975,000, with the closing on the new
facility scheduled for November, 1997. The Company intends to move all of its
operations into the new building, which is approximately 55,600 square feet.
The building is newly erected, and BCI estimates it will cost approximately
$900,000 to build out the interior to suit the Company's needs. Current cash
and investment balances will be used to fund the purchase and the build-out.
The build-out will not be complete until near the end of the current fiscal
year, at which time operations will move. Once the move is complete, BCI will
sell its current building and adjacent property. It is not anticipated that
there will be any disruption in the operations of BCI, and the new building
will allow BCI the space needed for growth and efficient operations.
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, 1997 increased 23.2%
from the corresponding prior year period. This increase results from an
increase in sales to both our direct and OEM domestic customers and to our
international dealers. The increase in the domestic market sales of 40.6% is
primarily due to increased sales of our handheld pulse oximeters and
capnometers in addition to sales of our new Clarity(R) line of products, which
is being well received in the marketplace. The Clarity(R) series are a new
line of compact, tabletop pulse oximeters, CO2 monitors and NIBP monitors.
Sales to our international dealers, distributors and OEM customers, which are
up 9.3% from the first quarter of fiscal 1997, are up as a result of increased
sales of our handheld pulse oximeters and sales of our new Clarity(R) line of
products.
Other income for the three- month period ended September 30, 1997 consists
primarily of interest income.
Cost of goods sold as a percentage of net sales was approximately 43.4% during
the three-month period ended September 30, 1997 compared to 42.3% for the
corresponding period ended September 30, 1996. This fluctuation is
attributable to a change in the mix of products sold between the two periods.
Selling, general and administrative expenses were 22.9% of net sales in the
three-month period ending September 30, 1997 compared to 24.3% during the same
period of the prior year. The decrease in percentage is solely due to the
increase in sales, as actual expenses increased $240,000 over the period. This
increase is due to
Page 7 of 9
<PAGE> 8
increased commission expenses resulting from the increase in sales noted
above. Additionally, increases in travel expenses to support the increased
sales were incurred.
The increase in engineering, research and development expenditures noted during
the three-month period ended September 30, 1997 of 4.5% when compared to the
similar period in the prior year reflects increases in expenses related to
payroll. This $21,000 increase in payroll expense is due to additional
staffing when comparing the first quarter of fiscal 1998 to the same period in
fiscal 1997.
All other costs and expenses of the Company remained relatively constant when
comparing the first three months of fiscal 1998 to that of fiscal 1997.
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. 1997.
Page 8 of 9
<PAGE> 9
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: October 29, 1997 By /s/ David H. Sanders
----------------------------
David H. Sanders
Chairman of the Board and
Chief Executive Officer
Dated: October 29, 1997 By /s/ Frank A. Katarow
----------------------------
Frank A. Katarow
President and Chief
Operating Officer
Dated: October 29, 1997 By /s/ Ann M. Johnson
----------------------------
Ann M. Johnson
Vice President of Finance
and Operations
Page 9 of 9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 12,994
<SECURITIES> 0
<RECEIVABLES> 4,544
<ALLOWANCES> 0
<INVENTORY> 3,709
<CURRENT-ASSETS> 21,116
<PP&E> 3,123
<DEPRECIATION> 1,445
<TOTAL-ASSETS> 24,791
<CURRENT-LIABILITIES> 3,521
<BONDS> 0
0
0
<COMMON> 262
<OTHER-SE> 21,009
<TOTAL-LIABILITY-AND-EQUITY> 24,791
<SALES> 7,420
<TOTAL-REVENUES> 7,599
<CGS> 3,221
<TOTAL-COSTS> 3,221
<OTHER-EXPENSES> 2,183
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,194
<INCOME-TAX> 869
<INCOME-CONTINUING> 1,325
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,325
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
