<PAGE> 1
================================================================================
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, 1996
/ / 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 1-9957
DIAGNOSTIC PRODUCTS CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-2802182
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5700 WEST 96TH STREET
LOS ANGELES, CALIFORNIA 90045
(Address of principal executive offices)
Registrant's telephone number: (213) 776-0180
NO CHANGE
(Former name, former address and former fiscal year, if changed
since last report)
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 of Common Stock, no par value, outstanding as of March
31, 1996, was 13,539,336.
================================================================================
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
(In thousands, except per share data) Three Months Ended
March 31,
----------------------------
1996 1995
-------- --------
<S> <C> <C>
SALES $ 43,246 $ 39,201
-------- --------
COSTS AND EXPENSES:
Cost of sales 18,088 17,262
Selling 8,057 6,603
Research and development 4,384 3,870
General and administrative 4,649 4,142
Equity in income of affiliates (446) (320)
Investment income (407) (311)
-------- --------
Total costs and expenses 34,325 31,246
-------- --------
INCOME BEFORE INCOME TAXES 8,921 7,955
PROVISION FOR INCOME TAXES 2,420 2,150
-------- --------
NET INCOME $ 6,501 $ 5,805
======== ========
NET INCOME PER SHARE $ .47 $ .42
WEIGHTED AVERAGE SHARES
AND EQUIVALENTS OUTSTANDING 13,942 13,683
</TABLE>
1
<PAGE> 3
DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Dollars in Thousands) March 31, December 31,
1996 1995
========== -----------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 12,411 $ 16,519
Accounts receivable - net of allowance for
doubtful accounts of $88 and $77 43,724 40,802
Inventories 37,947 35,521
Prepaid expenses and other current assets 161 358
Deferred income taxes 3,451 3,451
--------- ---------
Total current assets 97,694 96,651
PROPERTY, PLANT AND EQUIPMENT:
Land and buildings 27,553 27,553
Machinery and equipment 40,421 38,607
Leasehold improvements 6,662 6,635
Construction in progress 496 836
--------- ---------
Total 75,132 73,631
Less accumulated depreciation and amortization 32,911 31,707
--------- ---------
Property, plant and equipment - net 42,221 41,924
SALES-TYPE AND OPERATING LEASES 18,210 18,128
DEFERRED INCOME TAXES 3,200 3,200
INVESTMENTS IN AFFILIATED COMPANIES 14,205 13,279
EXCESS OF COST OVER NET ASSETS ACQUIRED -
Net of amortization of $5,619 and $5,373 15,979 16,280
--------- ---------
TOTAL ASSETS $ 191,509 $ 189,462
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 13,716 $ 16,969
Accrued liabilities 6,075 5,708
Income taxes payable 3,926 3,435
--------- ---------
Total current liabilities 23,717 26,112
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common Stock - no par value, authorized 30,000,000 shares;
outstanding 13,539,336 shares and 13,524,051 shares. 35,444 35,179
Retained earnings 136,013 131,136
Foreign currency translation adjustments (3,665) (2,965)
--------- ---------
Total shareholders' equity 167,792 163,350
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 191,509 $ 189,462
========= =========
</TABLE>
2
<PAGE> 4
DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
(Dollars in Thousands) Three Months Ended
March 31,
-------------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 6,501 $ 5,805
Adjustments to reconcile net income to net cash flows from operating
activities:
Depreciation and amortization 1,698 1,684
Equity in undistributed income of
unconsolidated affiliates (445) 12
Accounts receivable (3,251) (5,307)
Inventories (2,556) (1,875)
Prepaid expenses and other current assets 197 294
Accounts payable (2,908) 324
Accrued liabilities 367 898
Income taxes payable 499 1,579
-------- --------
Net Cash Flows from Operating Activities 102 3,414
CASH FLOWS FROM (USED FOR) INVESTING ACTIVITIES:
Additions to property, plant and equipment (1,964) (1,936)
Sales-type and operating leases (276) (1,292)
Investment in affiliated company (481)
-------- --------
Net Cash from (used for) Investing Activities (2,721) (3,228)
CASH FLOWS FROM (USED FOR) FINANCING ACTIVITIES:
Proceeds from exercise of stock options 265 1,552
Cash dividends paid (1,624) (1,297)
-------- --------
Net Cash from (used for) Financing Activities (1,359) 255
EFFECT OF EXCHANGE RATE CHANGES ON CASH (130) 1,215
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,108) 1,656
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 16,519 14,833
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,411 $ 16,489
======== ========
</TABLE>
3
<PAGE> 5
DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 -- BASIS OF PRESENTATION
The information for the three months ended March 31, 1996 and 1995 has not been
audited by independent accountants, but includes all adjustments (consisting of
normal recurring accruals) which are, in the opinion of management, necessary to
a fair statement of the results for such periods.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted pursuant to the requirements of the Securities and Exchange
Commission, although the Company believes that the disclosures included in these
financial statements are adequate to make the information not misleading.
The consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
1995 annual report on Form 10-K as filed with the Securities and Exchange
Commission.
The results of operations for the three-month period ending March
31, 1996 are not necessarily indicative of the results to be expected for the
year ended December 31, 1996.
Net income per share has been computed using the weighted-average number of
common shares and common share equivalents outstanding during each period.
Common share equivalents represent the dilutive effect of outstanding stock
options.
NOTE 2 -- INVENTORIES
Inventories by major categories are summarized as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- -----------
<S> <C> <C>
Raw materials $12,094,000 $11,414,000
Work in process 15,807,000 14,567,000
Finished goods 10,046,000 9,540,000
----------- -----------
Total $37,947,000 $35,521,000
=========== ===========
</TABLE>
4
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Record sales of $43.2 million were achieved in the first quarter of 1996, a 10%
increase over the first quarter 1995. The sales increases are principally a
result of the continuing increased worldwide acceptance of the fully automated,
random access IMMULITE system. The system is expected to account for the
greatest amount of growth of all the Company's product lines for the foreseeable
future. In periods when the U.S. dollar is strengthening, the effect of
translation of the financial statements of the consolidated foreign affiliates
is that of lower sales, costs and net income. The stronger U.S. dollar in the
first quarter 1996 when compared to the first quarter 1995 resulted in lowered
reported sales of approximately 1% and had a negligible effect on net income.
Cost of sales as a percentage of sales was 42% as compared to 44% in the
corresponding 1995 quarter. The 1996 results continue the improvement trend set
in the 1995 fourth quarter principally resulting from increased utilization at
the Wales manufacturing facility and at the New Jersey IMMULITE instrument
manufacturing facility.
Selling expenditures increased 22% in the 1996 quarter compared to the 1995
quarter representing 19% of sales in 1996 and 17% of sales in 1995. These
increased costs are a result of the continual expansion of the marketing and
sales effort, especially for the IMMULITE system.
Research and development expenditures increased 13% in 1996 over 1995. These
expenditures have increased to support the IMMULITE system.
General and administrative costs were about 11% of sales in both 1996 and 1995.
Included in general and administrative expenses is the amortization of the
excess of cost over net assets acquired.
Equity in income of affiliates, which increased 39% in the 1996 first quarter
compared to the 1995 quarter, represents the Company's share of earnings of
nonconsolidated affiliates, principally the 45%-owned Italian affiliate.
Profitability in Italy which in prior quarters had declined was modestly higher
in the 1996 quarter when compared to 1995. The other affiliates reported
increases in their first quarter net income.
The Company's effective tax rate includes Federal, state and foreign taxes. The
1996 rate of 27% approximates the 1995 rate of 27%.
The Company has adequate working capital and sources of capital to carry on its
current business and to meet its existing capital requirements. Cash flow from
operating activities was $102,000 in the first quarter 1996 compared to $3.4
million in the 1995 quarter. Cash flow in the 1996 quarter was primarily used
for increases in accounts receivables and inventories and reduction of accounts
payable.
During the first quarter of 1995, the Company paid a quarterly cash dividend of
$.10 per share. Commencing with the second quarter of 1995, the quarterly
dividend was increased to $.12 per share.
5
<PAGE> 7
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K. None.
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.
<TABLE>
<S> <C>
DIAGNOSTIC PRODUCTS CORPORATION
(Registrant)
APRIL 24, 1996 SIGI ZIERING
- ---------------------------------------------- ------------------------------------------
Date Sigi Ziering, Ph.D., Chairman of the Board
Chief Executive Officer
APRIL 24, 1996 JULIAN R. BOCKSERMAN
- ---------------------------------------------- ------------------------------------------
Date Julian R. Bockserman, Vice President
Chief Financial Officer
</TABLE>
6
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 12,411
<SECURITIES> 0
<RECEIVABLES> 43,724
<ALLOWANCES> 88
<INVENTORY> 37,947
<CURRENT-ASSETS> 97,694
<PP&E> 75,132
<DEPRECIATION> 32,911
<TOTAL-ASSETS> 191,509
<CURRENT-LIABILITIES> 23,717
<BONDS> 0
0
0
<COMMON> 35,444
<OTHER-SE> 136,013
<TOTAL-LIABILITY-AND-EQUITY> 191,509
<SALES> 43,246
<TOTAL-REVENUES> 43,246
<CGS> 18,088
<TOTAL-COSTS> 18,088
<OTHER-EXPENSES> 16,237
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,921
<INCOME-TAX> 2,420
<INCOME-CONTINUING> 6,501
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,501
<EPS-PRIMARY> .47
<EPS-DILUTED> 0
</TABLE>
