<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 June 30, 1997 Commission File No. 0-6994
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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 August 4, 1997.
Page 1
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NEW BRUNSWICK SCIENTIFIC CO., INC.
Index
PAGE NO.
PART I. FINANCIAL INFORMATION:
Item 1:
Consolidated Condensed Balance Sheets -
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations -
Three and Six Months Ended June 30, 1997 and 1996 4
Consolidated Condensed Statements of
Cash Flows - Six Months Ended June 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
Page 2
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NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except for share data)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
-------- ------------
Current Assets (Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 3,221 $ 5,196
Accounts receivable, net 7,816 10,108
Refundable income taxes 235 334
Deferred income tax benefit 97 97
Inventories:
Raw materials and sub-assemblies 7,004 6,762
Work-in-process 3,147 2,327
Finished goods 4,781 3,891
------- -------
Total inventories 14,932 12,980
Prepaid expenses and other current assets 1,647 1,880
------- -------
Total current assets 27,948 30,595
------- -------
Property, plant and equipment, net 5,593 5,701
Other assets 1,241 930
------- -------
$34,782 $37,226
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current installments of long-term debt $ 131 $ 135
Accounts payable and accrued expenses 5,628 7,014
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Total current liabilities 5,759 7,149
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Long-term debt, net of current installments 299 401
Other liabilities 425 425
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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 5,771 9,092
Currency translation adjustment (1,123) (392)
Pension liability adjustment (425) (425)
--------- ---------
Total shareholders' equity 28,299 29,251
--------- ---------
$34,782 $37,226
========= =========
</TABLE>
See notes to consolidated condensed financial statements.
Page 3
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $11,517 $9,709 $21,612 $19,416
Operating costs and expenses:
Cost of sales 7,098 5,848 13,480 11,828
Selling, general and administrative expenses 3,315 2,839 6,463 5,731
Research, development and engineering expenses 1,088 976 2,089 1,781
------- ------- ------- -------
Total operating costs and expenses 11,501 9,663 22,032 19,340
------- ------- ------- -------
Income (loss) from operations 16 46 (420) 76
Other income (expense):
Interest income 40 58 73 109
Interest expense (19) (12) (27) (24)
Other income (expense), net (5) - (4) (1)
------- ------- ------- -------
16 46 42 84
------- ------- ------- -------
Income (loss) before income taxes 32 92 (378) 160
Income taxes (benefit) 6 18 (76) 32
------- ------- ------- -------
Net income (loss) $ 26 $ 74 $ (302) $ 128
======= ======= ======= =======
Earnings (loss) per Common share $ .01 $ .02 $ (.07) $ .03
======= ======= ======= =======
Weighted average number of shares 4,193 4,159 4,191 4,157
outstanding ======= ======= ======= =======
</TABLE>
See notes to consolidated condensed financial statements.
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NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------------
1997 1996
---------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (302) $ 128
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 429 357
Change in related balance sheet accounts:
Accounts receivable 1,816 615
Refundable income taxes 99 -
Inventories (2,244) (1,514)
Prepaid expenses and other current assets 134 (139)
Accounts payable and accrued expenses (733) (439)
Advance payments from customers (334) 353
-------- --------
Net cash used by operating activities (1,135) (639)
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (470) (926)
Investment (250) -
Sale of equipment 17 22
-------- --------
Net cash used by investing activities (703) (904)
-------- --------
Cash flows from financing activities:
Repayment of long-term debt (60) (78)
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 -
-------- --------
Net cash provided (used) by financing activities 21 (42)
-------- --------
Net effect of exchange rate changes on cash (158) (76)
-------- --------
Net decrease in cash and cash equivalents (1,975) (1,661)
Cash and cash equivalents at beginning of period 5,196 6,382
-------- --------
Cash and cash equivalents at end of period $ 3,221 $ 4,721
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 26 $ 18
Income taxes 213 5
See notes to consolidated condensed financial statements.
</TABLE>
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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
June 30, 1997 and the results of its operations and cash flows for the six
months ended June 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:
Six Months Ended
June 30,
---------------------
1997 1996
---- ----
(In thousands)
Balance at beginning of period $29,251 $28,181
Net income (loss) (302) 128
Currency translation adjustment (731) (187)
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 -
-------- --------
Balance at end of period $28,299 $28,158
======== ========
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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 six months ended June 30, 1997.
Results of Operations
Quarter Ended June 30, 1997 vs. Quarter Ended June 30, 1996.
For the quarter ended June 30, 1997, net sales were $11,517,000 compared with
net sales of $9,709,000 for the quarter ended June 30, 1996, an increase of
18.6%. Net income for the 1997 quarter of $26,000 or $.01 per share compared
with net income of $74,000 or $.02 per share for the second quarter of 1996. The
increase in net sales in the 1997 quarter was primarily attributable to the
delivery to a customer of a large Custom BioProcess System and from increased
sales in the United States. Cost of sales as a percentage of net sales increased
to 61.6% in the 1997 quarter from 60.2% in the 1996 quarter due primarily to a
less profitable product mix and to the continuing effects of foreign currency
exchange rate fluctuations on the Company's European operations as a result of
the strong dollar.
Selling, general and administrative expenses increased to $3,315,000 in the 1997
quarter from $2,839,000 in 1996 due primarily to increases to support the growth
in operations 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 $1,088,000 in the 1997 quarter from $976,000 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 equivalent available for investment. Interest expense increased during
the 1997 quarter due to interest incurred as a result of a tax audit.
Six Months Ended June 30, 1997 vs. Six Months Ended June 30, 1996
For the six months ended June 30, 1997, net sales were $21,612,000 compared with
net sales of $19,416,000 for the six months ended June 30, 1996, an increase of
11.3%. There was a net loss for the 1997 period of $302,000 or $.07 per share
compared with net income of $128,000 or $.03 per share for the first half of
1996.
The increase in net sales in the 1997 period was primarily attributable to the
delivery to a customer of a large Custom BioProcess System and from increased
sales in the United States. Cost of sales as a percentage of net sales increased
to 62.4% in the 1997 period from 60.9% in the 1996 period due primarily to a
less profitable product mix and to the continuing effects of foreign currency
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exchange rate fluctuations on the Company's European operations as a result of
the strong dollar.
Selling, general and administrative expenses increased to $6,463,000 in the 1997
period from $5,731,000 in 1996 due primarily to increases to support the growth
in operations 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 $2,089,000 in the 1997 period from $1,781,000 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.
Financial Condition
Liquidity and Capital Resources
During the period ended June 30, 1997, Cash and Cash Equivalents decreased to
$3,221,000 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 $14,932,000 at June 30, 1997. The increase in inventories consisted of
$820,000 of work-in-process inventory and $890,000 of finished good inventory in
preparation for the introduction of new products and in anticipation of the
Company's two week summer plant shutdown; the net loss for the period of
$302,000; and a reduction in accounts payable and accrued expenses of $1,386,000
for the period, partially offset by a decrease in accounts receivable to
$7,816,000 at June 30, 1997 from $10,108,000 at December 31, 1996. The decrease
in accounts receivable, resulted from the lower volume of sales during the
quarter ended June 30, 1997 as compared with the quarter ended December 31,
1996.
Cash Flows from Operating Activities
During the period ended June 30, 1997, net cash used by operating activities
amounted to $1,135,000 compared with net cash used of $639,000 for the period
ended June 30, 1996. The primary reasons for the $496,000 negative change
between the two periods were the following: (a) inventories increased $2,244,000
in 1997 vs. an increase of $1,514,000 in 1996: (b) a decrease in accounts
payable and accrual expenses of $733,000 in 1997 vs. a decrease of $439,000 in
1996; (c) advance payments from customers decreased $334,000 in 1997 vs. an
increase of $353,000 in 1996 and there was a net loss of $302,000 in 1997 vs.
net income of $128,000 in 1996 and were partially offset by a decrease in
accounts receivable of $1,816,000 in 1997 vs. a decrease of $615,000 in 1996.
Cash Flows from Investing Activities
Net cash used by investing activities amounted to $703,000 in 1997 vs. $904,000
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 provided by financing activities amounted to $21,000 in 1997 vs.
$42,000 of net cash 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.
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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.
Page 9
<PAGE>
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 June 30, 1997.
Page 10
<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: August 5, 1997 /s/ Ezra Weisman
-------------------------------
Ezra Weisman
President
(Chief Executive Officer)
/s/ Samuel Eichenbaum
------------------------------
Samuel Eichenbaum
Vice President - Finance
(Principal Accounting Officer)
Page 11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000071241
<NAME> NEW BRUNSWICK SCIENTIFIC CO., INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,221,000
<SECURITIES> 0
<RECEIVABLES> 7,816,000
<ALLOWANCES> 0
<INVENTORY> 14,932,000
<CURRENT-ASSETS> 27,948,000
<PP&E> 5,593,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,782,000
<CURRENT-LIABILITIES> 5,759,000
<BONDS> 0
0
0
<COMMON> 262,000
<OTHER-SE> 28,037,000
<TOTAL-LIABILITY-AND-EQUITY> 34,782,000
<SALES> 21,612,000
<TOTAL-REVENUES> 21,612,000
<CGS> 13,480,000
<TOTAL-COSTS> 22,032,000
<OTHER-EXPENSES> (69,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,000
<INCOME-PRETAX> (378,000)
<INCOME-TAX> (76,000)
<INCOME-CONTINUING> (302,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (302,000)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
</TABLE>
