<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 December 31, 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 December 31, 1996 was 13,090,284.
Page 1 of 8
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOCHEM INTERNATIONAL INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
December 31 June 30
1996 1996
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $8,148,912 $6,034,286
Accounts receivable, less $144,720 and $140,000 allowance
for doubtful accounts, respectively 3,484,274 4,512,728
Note receivable 487,501 448,090
Inventories 3,436,338 3,296,635
Deferred income taxes 362,400 362,400
Prepaid expenses 25,976 49,593
----------- -----------
Total Current Assets 15,945,401 14,703,732
Investment 1,855,811 1,863,882
Property, plant and equipment, net 1,681,092 1,711,920
Related party receivable 144,720 143,748
Other 5,987 5,483
----------- -----------
Total Assets $19,633,011 $18,428,765
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 1,432,726 $ 1,959,992
Accrued liabilities:
Salaries, wages and commissions 534,059 677,968
Other 134,082 283,861
----------- -----------
Total Current Liabilities 2,100,867 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 Earnings 5,540,568 3,523,157
----------- -----------
Total Stockholders' Equity 17,509,744 15,484,544
----------- -----------
Total Liabilities and Stockholders' Equity $19,633,011 $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 Six Months Ended
December 31 December 31
1996 1995 1996 1995
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Net sales 6,428,079 7,169,534 $12,452,766 $13,847,911
Other income 132,937 106,831 314,362 192,318
---------- ---------- ----------- -----------
Total Revenues 6,561,016 7,276,365 12,767,128 14,040,229
Costs and Expenses:
Cost of goods sold 2,953,714 3,250,559 5,499,358 6,166,528
Selling, general and administrative 1,705,307 1,531,223 3,166,326 3,180,044
Engineering, research and development 424,726 428,651 885,614 771,138
---------- ---------- ----------- -----------
Total Costs and Expenses 5,083,747 5,210,433 9,551,297 10,117,710
---------- ---------- ----------- -----------
Income Before Income Tax Expense 1,477,269 2,065,932 $3,215,831 $ 3,922,519
Income tax expense:
Current 609,701 90,000 1,198,420 100,825
Deferred - 687,898 - 1,362,473
---------- ---------- ----------- -----------
Net Income 867,568 1,288,034 $ 2,017,411 2,459,221
========== ========== =========== ===========
Net Income per Common Share $.07 $.10 $.15 $.19
========== ========== =========== ===========
Weighted Average Number of Common
Shares Outstanding 13,267,784 13,243,784 13,267,784 13,243,784
========== ========== =========== ===========
</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>
<CAPTION>
Six Months Ended
December 31
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $2,017,411 $2,459,221
Adjustments to reconcile net cash provided
by operating activities:
Depreciation 182,507 157,800
Deferred income taxes -- 1,362,473
Change in assets and liabilities:
Accounts and notes receivable 987,567 (581,958)
Inventories (139,703) (210,124)
Prepaid expenses and other 31,688 13,498
Accounts payable and accrued liabilities (820,954) (145,190)
---------- ----------
Net cash provided by operating activities 2,258,516 3,055,720
---------- ----------
Cash flows from investing activities:
Property, plant and equipment additions (151,679) (134,822)
---------- ----------
Cash flows from financing activities:
Issuance of common stock 7,789 1,235
---------- ----------
Net increase in cash and equivalents 2,114,626 2,922,133
Cash and equivalents:
Beginning of period 6,034,286 2,628,445
---------- ----------
End of period $8,148,912 $5,550,578
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes $1,319,500 $100,825
========== ==========
</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>
December 31 June 30
1996 1996
----------- ----------
<S> <C> <C>
Finished goods $ 358,081 $ 286,067
Loaner and demonstration 835,909 951,472
Work in process 905,342 775,098
Purchased material 1,337,006 1,283,998
----------- ----------
$3,436,338 $3,296,635
=========== ==========
</TABLE>
3. Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
December 31 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 1,515,550 1,366,871
Office furniture and equipment 181,704 181,704
----------- ----------
2,891,056 2,742,377
Less accumulated depreciation 1,209,964 1,030,457
----------- ----------
$1,681,092 $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 December 31, 1996 was $13,844,000 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 six months of fiscal 1996.
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 December 31, 1996 decreased 10.3%
from the corresponding prior year period. This decrease results from a
decrease in sales to our direct domestic customers and to both our
international dealers and OEM customers. The decrease in the direct domestic
market sales of 18% is primarily due to decreased handheld pulse oximeter sales
and sales of our other oximetry products. Sales to our international dealers
and OEM customers, which are down 2% and 27% respectively from the first
quarter of fiscal 1996 are also down in oximetry products. Sales to our
domestic OEM customers increased 33% over the second quarter of fiscal 1996,
principally due to sales of oximetry products to new customers.
Net sales for the six-month period ended December 31, 1996 decreased 10%. This
decrease is due to the above mentioned factors.
Other income for the three- and six-month periods ended December 31, 1996
consists primarily of interest income.
Cost of goods sold as a percentage of net sales was approximately 45.9% and
44.2%, respectively, during the three- and six-month periods ended December 31,
1996 compared to 45.3% and 44.5% for the corresponding periods ended December
31, 1995. These fluctuations are attributable to changes in the mix of
products sold among the periods.
Selling, general and administrative expenses were 26.5% and 25.3%,
respectively, of net sales in the three- and six-month periods ending December
31, 1996 compared to 21.4% and 23.4% during the same periods of the prior year.
The increased percentage in the three- and six-month periods ending December
31, 1996 is due in part to the decrease in sales over the same periods.
Additionally, expenses are up due to increased labor costs and travel expenses
to support the sales territories.
The decrease in engineering, research and development expenditures noted during
the three-month period ended December 31, 1996 of 0.9% compared to the similar
period in the prior year reflects decreases in expenses related to
miscellaneous new project expenses. The 14.9% increase in
Page 6 of 8
<PAGE> 7
expenditures over the six-month period ended December 31, 1996 when
compared to the similar period in the prior year reflects increases in expenses
related to payroll, outside consultants and miscellaneous project expenses is
the result of additional staffing when comparing the first half of fiscal 1997
to the same period in fiscal 1996. The increased staff, with the outside
consultants, continue to develop new products that BCI feels will meet the
needs of the marketplace.
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 six 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
The Company has not filed any reports on Form 8-K for the quarter ended
December 31, 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.
By /s/ David H. Sanders
------------------------------
David H. Sanders
Chairman of the Board and
Chief Executive Officer
By /s/ Frank A. Katarow
-----------------------
Frank A. Katarow
President and Chief
Operating Officer
Dated: February 7, 1997 By /s/ Ann M. Johnson
---------------------------
Ann M. Johnson
Vice President of Finance
and Operations
Page 8 of 8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 8,149
<SECURITIES> 0
<RECEIVABLES> 3,972
<ALLOWANCES> 0
<INVENTORY> 3,436
<CURRENT-ASSETS> 15,945
<PP&E> 2,891
<DEPRECIATION> 1,210
<TOTAL-ASSETS> 19,633
<CURRENT-LIABILITIES> 2,101
<BONDS> 0
0
0
<COMMON> 262
<OTHER-SE> 17,248
<TOTAL-LIABILITY-AND-EQUITY> 19,633
<SALES> 6,428
<TOTAL-REVENUES> 6,428
<CGS> 2,954
<TOTAL-COSTS> 2,954
<OTHER-EXPENSES> 2,130
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,477
<INCOME-TAX> 610
<INCOME-CONTINUING> 867
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 867
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
