<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended September 30, 1997 Commission File No. 0-6994
------
NEW BRUNSWICK SCIENTIFIC CO., INC.
State of Incorporation - New Jersey E. I. #22-1630072
-----------
44 Talmadge Road, Edison, N.J. 08818-4005
Registrant's Telephone Number: 732-287-1200
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 twelve (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 ninety (90) days.
Yes X No
--- ---
There are 4,197,743 Common shares outstanding as of November 4, 1997.
Page 1
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NEW BRUNSWICK SCIENTIFIC CO., INC.
Index
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C>
PART I. FINANCIAL INFORMATION:
Item 1:
Consolidated Condensed Balance Sheets -
September 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations -
Three and Nine Months Ended September 30, 1997 and 1996 4
Consolidated Condensed Statements of
Cash Flows - Nine Months Ended September 30, 1997 and 1996 5
Notes to Consolidated Condensed Financial
Statements 6
Item II:
Management's Discussion and Analysis of Results
of Operations and Financial Condition 7
PART II. OTHER INFORMATION 9
</TABLE>
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NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except for share data)
ASSETS
September 30, December 31,
1997 1996
------- -------
Current Assets (Unaudited)
Cash and cash equivalents $ 3,835 $ 5,196
Accounts receivable, net 7,475 10,108
Refundable income taxes 234 334
Deferred income tax benefit 97 97
Inventories:
Raw materials and sub-assemblies 6,789 6,762
Work-in-process 3,315 2,327
Finished goods 5,418 3,891
------- -------
Total inventories 15,522 12,980
Prepaid expenses and other current assets 1,804 1,880
------- -------
Total current assets 28,967 30,595
------- -------
Property, plant and equipment, net 5,431 5,701
Other assets 1,241 930
------- -------
$35,639 $37,226
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current installments of long-term debt $ 131 $ 135
Accounts payable and accrued expenses 6,622 7,014
-------- --------
Total current liabilities 6,753 7,149
-------- --------
Long-term debt, net of current installments 258 401
Other liabilities 425 425
-------- --------
Shareholders' equity:
Common stock, $.0625 par, authorized 25,000,000
shares; shares issued and outstanding,
1997 - 4,197,743 and 1996 - 3,808,932 net of
shares held in treasury, 1997 - 390,967 and
1996 - 355,425 262 238
Capital in excess of par 23,814 20,738
Retained earnings 5,813 9,092
Currency translation adjustment (1,261) (392)
Pension liability adjustment (425) (425)
-------- --------
Total shareholders' equity 28,203 29,251
-------- --------
$ 35,639 $ 37,226
======== ========
See notes to consolidated condensed financial statements.
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NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 9,856 $ 9,658 $ 31,468 $ 29,074
Operating costs and expenses:
Cost of sales 5,723 5,783 19,203 17,611
Selling, general and administrative
expenses 3,062 2,962 9,525 8,752
Research, development and engineering
expenses 1,024 894 3,113 2,616
-------- -------- -------- --------
Total operating costs and expenses 9,809 9,639 31,841 28,979
-------- -------- -------- --------
Income (loss) from operations 47 19 (373) 95
Other income (expense):
Interest income 35 40 108 149
Interest expense (26) (12) (53) (36)
Other income (expense), net (3) 3 (7) 2
-------- -------- -------- --------
6 31 48 115
-------- -------- -------- --------
Income (loss) before income taxes 53 50 (325) 210
Income taxes (benefit) 11 10 (65) 42
-------- -------- -------- --------
Net income (loss) $ 42 $ 40 $ (260) $ 168
======== ======== ======== ========
Earnings (loss) per Common share $ .01 $ .01 $ (.06) $ .04
======== ======== ======== ========
Weighted average number of shares outstanding 4,198 4,163 4,193 4,159
======== ======== ======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
-------------------
1997 1996
------- -------
Cash flows from operating activities:
Net income (loss) $ (260) $ 168
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 712 528
Change in related balance sheet accounts:
Accounts receivable 2,067 1,001
Refundable income taxes 100 --
Inventories (2,889) (1,692)
Prepaid expenses and other current assets (41) (272)
Accounts payable and accrued expenses (620) (1,041)
Advance payments from customers 610 588
------- -------
Net cash used by operating activities (321) (720)
------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (616) (1,145)
Investment (250) --
Sale of equipment 17 22
------- -------
Net cash used by investing activities (849) (1,123)
------- -------
Cash flows from financing activities:
Repayment of long-term debt (93) (98)
Discount from fair market value upon issue
of options under stock option plan for
nonemployee directors 35 --
Proceeds from issue of shares under Employee
Stock Purchase Plan 38 36
Proceeds from issue of Common stock under
stock option plan for nonemployee directors 8 3
------- -------
Net cash used by financing activities (12) (59)
------- -------
Net effect of exchange rate changes on cash (179) (65)
------- -------
Net decrease in cash and cash equivalents (1,361) (1,967)
Cash and cash equivalents at beginning of period 5,196 6,382
------- -------
Cash and cash equivalents at end of period $ 3,835 $ 4,415
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 54 $ 31
Income taxes 363 195
See notes to consolidated condensed financial statements.
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NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Interim results:
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly, its financial position
as of September 30, 1997 and the results of its operations and cash flows for
the nine months ended September 30, 1997 and 1996. Interim results may not be
indicative of the results that may be expected for the year.
Note 2 - Earnings per Common share:
Earnings per Common share is based on the weighted average number of shares
outstanding. Stock options are not included in the calculation as they had no
significant dilutive effect on earnings per Common share. A 10% stock dividend
was declared on February 26, 1997 and distributed on May 15, 1997. The
weighted average number of shares outstanding for prior periods have been
restated to reflect this dividend.
Note 3 - Consolidated condensed statements of shareholders' equity:
Nine Months Ended
September 30,
----------------------
1997 1996
-------- --------
(In thousands)
Balance at beginning of period $ 29,251 $ 28,181
Net income (loss) (260) 168
Currency translation adjustment (869) (324)
Issue of shares under Employee Stock
Purchase Plan 38 36
Discount from fair market value upon issue
of options under stock option plan
for nonemployee directors 35 --
Issue of shares under stock option plan
for nonemployee directors 8 3
-------- --------
Balance at end of period $ 28,203 $ 28,064
======== ========
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<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," "seeks," "estimates," and similar expressions are intended to
identify forward-looking statements. There are a number of important factors
that could cause the results of the Company to differ materially from those
indicated by such forward-looking statements.
The following is Management's discussion and analysis of significant factors
that have affected the Company's operating results and financial condition
during the quarter and nine months ended September 30, 1997.
Results of Operations
Quarter Ended September 30, 1997 vs. Quarter Ended September 30, 1996.
For the quarter ended September 30, 1997, net sales were $9,856,000 compared
with net sales of $9,658,000 for the quarter ended September 30, 1996, an
increase of 2.1%. Net income for the 1997 quarter of $42,000 or $.01 per share
compared with net income of $40,000 or $.01 per share for the third quarter of
1996.
Research, development and engineering expenses increased to $1,024,000 in the
1997 quarter from $894,000 in 1996 due primarily to support the operations of
DGI BioTechnologies, the Company's drug-lead discovery operation.
Interest income declined during the 1997 quarter due to the lower amount of
cash and cash equivalents available for investment. Interest expense increased
during the 1997 quarter due to interest incurred as a result of a tax audit.
Nine Months Ended September 30, 1997 vs. Nine Months Ended September 30, 1996
For the nine months ended September 30, 1997, net sales were $31,468,000
compared with net sales of $29,074,000 for the nine months ended September 30,
1996, an increase of 8.2%. There was a net loss for the 1997 period of
$260,000 or $.06 per share compared with net income of $168,000 or $.04 per
share for the first nine months of 1996.
The increase in net sales in the 1997 period was primarily attributable to
increased sales in the United States.
Selling, general and administrative expenses increased to $9,525,000 in the
1997 period from $8,752,000 in 1996 due primarily to normal year to year
increases and to the effect of a decrease in 1996 expenses as a result of the
recovery of certain legal expenses. Research, development and engineering
expenses increased to $3,113,000 in the 1997 period from $2,616,000 in 1996
due primarily to support the operations of DGI BioTechnologies, the Company's
drug lead discovery operation.
Interest income declined during the 1997 period due to the lower amount of
cash and cash equivalents available for investment. Interest expense increased
during the 1997 period due to interest incurred as a result of tax audits.
Page 7
<PAGE>
Financial Condition
Liquidity and Capital Resources
During the period ended September 30, 1997, Cash and Cash Equivalents
decreased to $3,835,000 from $5,196,000 at December 31, 1996. The decrease in
cash resulted primarily from an increase in inventories from $12,980,000 at
December 31, 1996 to $15,522,000 at September 30, 1997 and the net loss for
the period of $260,000, partially offset by a decrease in accounts receivable
to $7,475,000 at September 30, 1997 from $10,108,000 at December 31, 1996. The
increase in inventories consisted primarily of $988,000 of work-in-process
inventory, largely due to a significant increase in orders for custom
bioprocess equipment and $1,527,000 of finished goods inventory as a result of
the need to build stocks to compensate for the Company's annual two week
summer plant shutdown of its manufacturing facility and to prepare for
anticipated higher demand during the fourth quarter. The decrease in accounts
receivable, resulted from the lower volume of sales during the quarter ended
September 30, 1997 as compared with the quarter ended December 31, 1996.
Cash Flows from Operating Activities
During the period ended September 30, 1997, net cash used by operating
activities amounted to $321,000 compared with net cash used of $720,000 for
the period ended September 30, 1996. The primary reasons for the $399,000
positive change between the two periods were a decrease in accounts receivable
of $2,067,000 in 1997 vs. a decrease of $1,001,000 in 1996 and a decrease in
accounts payable and accrued expenses of $620,000 in 1997 vs. a decrease of
$1,041,000 in 1996 and were partially offset by an increase in inventories of
$2,889,000 in 1997 vs. an increase of $1,692,000 in 1996 and a net loss of
$260,000 in 1997 vs. net income of $168,000, in 1996.
Cash Flows from Investing Activities
Net cash used by investing activities amounted to $849,000 in 1997 vs.
$1,123,000 in 1996, primarily as a result of additions to property, plant and
equipment and from an investment in another entity in 1997. A significant
portion of the 1996 capital additions were attributable to building
laboratories and purchasing equipment for DGI BioTechnologies and the
installation by the Company of a state-of-the-art powder coat paint facility.
Cash Flows from Financing Activities
Net cash used by financing activities amounted to $12,000 in 1997 vs. $59,000
used in 1996. The 1997 amount includes $35,000 related to the discount from
fair market value upon issuance of options under the Company's stock option
plan for nonemployee directors.
Management believes that the resources available to the Company, including its
line of credit are sufficient to meet its near and intermediate-term needs,
including funding commitments for DGI BioTechnologies, and its strong
unleveraged balance sheet and debt-free real estate provide the basis for any
long-term financing if the need should arise.
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NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended September 30,
1997.
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<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 thereunto duly authorized.
NEW BRUNSWICK SCIENTIFIC CO., INC.
----------------------------------
(Registrant)
Date: November 12, 1997 /s/ Ezra Weisman
----------------------------------
Ezra Weisman
President
(Chief Executive Officer)
/s/ Samuel Eichenbaum
----------------------------------
Samuel Eichenbaum
Vice President, Finance
(Principal Accounting Officer)
Page 10
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000071241
<NAME> NEW BRUNSWICK SCIENTIFIC CO., INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,835,000
<SECURITIES> 0
<RECEIVABLES> 7,475,000
<ALLOWANCES> 0
<INVENTORY> 15,522,000
<CURRENT-ASSETS> 28,967,000
<PP&E> 5,431,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 35,639,000
<CURRENT-LIABILITIES> 6,753,000
<BONDS> 0
0
0
<COMMON> 262,000
<OTHER-SE> 27,941,000
<TOTAL-LIABILITY-AND-EQUITY> 35,639,000
<SALES> 31,468,000
<TOTAL-REVENUES> 31,468,000
<CGS> 19,203,000
<TOTAL-COSTS> 31,841,000
<OTHER-EXPENSES> (101,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,000
<INCOME-PRETAX> (325,000)
<INCOME-TAX> (65,000)
<INCOME-CONTINUING> (260,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (260,000)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> 0
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