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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K 405
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
Commission File Number 0-6994
NEW BRUNSWICK SCIENTIFIC CO., INC.
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(Exact name of registrant as specified in its charter)
New Jersey 22-1630072
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(State of incorporation) (I.R.S. Employer Identification Number)
44 Talmadge Road, Edison, N.J. 08818-4005
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(Address of principal office)
Registrant's telephone number: (732) 287-1200
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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None N/A
Securities registered pursuant to Section 12(g) of the Act:
Title of class
Common stock - par value $0.0625
Common stock Purchase Rights
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.
The aggregate market value of the voting stock held by non-affiliates of the
registrant was $26,134,080 as of February 10, 1998. This figure was calculated
by reference to the high and low prices of such stock on February 10, 1998.
The number of shares outstanding of the Registrant's Common stock as of February
10, 1998: 4,204,845
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's Proxy Statement and Annual Report to be filed within 120 days after
the end of the fiscal year 1997, are incorporated in Part III herein.
The EXHIBITS INDEX is on Page 36.
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PART I
Item 1. BUSINESS
New Brunswick Scientific Co., Inc. and its subsidiaries ("NBS"
or "the Company") design, manufacture and market a variety of equipment used in
biotechnology to create, maintain, measure and control the physical and
biochemical conditions required for the growth and detection of microorganisms.
This equipment is used in medical, biological, chemical, and environmental
research and for the commercial development of antibiotics, proteins, hormones,
enzymes, monoclonal antibodies, agricultural products, fuels, vitamins, vaccines
and other substances. The equipment sold by NBS includes fermentation equipment,
bioreactors, biological shakers, nutrient sterilizing and dispensing equipment,
low temperature freezers and tissue culture apparatus. Laboratory equipment and
instrumentation manufactured by NBS and others is distributed by five
wholly-owned subsidiaries in Europe.
DGI BioTechnologies, L.L.C. (DGI) was established in 1995 by
the Company to develop and commercialize a novel technology, the Diogenesis(TM)
process, that facilitates the discovery of new drugs. DGI is eighty percent
(80%) owned and fully funded by the Company and occupies specially designed
laboratory space at the Company's headquarters facility in Edison, New Jersey.
Diogenesis(TM) is being developed to provide the pharmaceutical and
biotechnology industries with site-directed assay systems to rapidly generate
small, orally available, organic drug leads. Unlike other techniques, leads
generated by DGI's process will uniformly possess the defining characteristics
of effective drugs: activity, selectivity and affinity for the biological
target.
DGI has applied for U.S. and foreign patents covering its
proprietary drug lead discovery technology which utilizes state-of-the-art
molecular-biological and immunological tools to scan known pharmaceutical
targets in a manner that offers major advantages over existing drug discovery
approaches. DGI's strategy is to enter into partnership agreements with multiple
pharmaceutical and/or biotechnology companies whereby DGI will generate focused
libraries of small molecule compounds known to be active against the partner's
target. DGI will generate revenues from research on behalf of corporate
partners, milestone payments for the identification of leads and product
royalties.
The founders of DGI hold options which can be exercised under
certain conditions and the employees, certain consultants and the Board of
Managers have been issued options, which if exercised, in the aggregate
represent approximately 12.9% of DGI.
NBS was incorporated in 1958 as the successor to a business
founded in 1946 by David and Sigmund Freedman, its principal stockholders and
two of its directors and executive officers. The company owns its 243,000 square
foot headquarters and primary production facility located on 17 acres of land in
Edison, New Jersey.
Products
Fermentation Equipment and Bioreactors. A fermentor is a
device used to create, maintain and control the physical, chemical, and
biochemical environmental conditions required for growing bacteria, yeast, fungi
and other similar microorganisms. Bioreactors serve an
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identical purpose for propagation of animal and plant cells. The Company's
fermentors and bioreactors range in size from laboratory benchtop models as
small as 1-liter to pilot scale systems as large as 10,000 liters. The larger
systems are typically sold under contract. The number of larger systems sold in
any reporting period may materially affect the sales and profitability of the
Company.
NBS has supplied fermentors and bioreactors to universities
and pharmaceutical company laboratories since the 1950's. NBS' fermentors and
bioreactors are being used for applications which have received increased
attention in the scientific and commercial community; namely, applications using
microorganisms engineered by recombinant DNA techniques; immunology; and the
production of monoclonal antibodies. Animal and plant cells as well as bacteria
and viruses are usually grown on a small scale for research purposes. As the
process is scaled up (i.e., replicated, using larger volumes), physical and
chemical parameters, such as pH, vessel pressure and chemical composition may
change, and the equipment used may require increasingly sophisticated control
systems. Scale-up, which is one of the important uses of the Company's pilot
scale systems is a complex technical procedure critical to successful
commercialization of biological processes. Pilot scale systems may be used to
set parameters or to determine the feasibility of production at greater volumes,
depending upon the goal of the customer. Particularly in the area of
bioreactors, the Company has developed unique designs and has applied for
patents to protect its technology. The Company's fermentors and bioreactors
incorporate sophisticated instrumentation systems to measure, record and control
a multiplicity of process variables.
The Company manufactures digital instrumentation for control
of fermentors and bioreactors. This instrumentation significantly enhances the
utility of any size fermentor or bioreactor. Consisting of an operator display
and a series of microprocessor-controlled instrument modules, this control unit
uses software developed by the Company to simplify the operation of fermentors
and bioreactors while enhancing their performance. It automatically monitors,
displays, analyzes, and makes immediately available, data concerning the culture
process and permits automatic modification of the various growth conditions
without the need of a host computer. This system is designed to replace manually
operated controls as well as more complex and more costly automatic systems.
Since maintenance of pure culture conditions is critical for
the proper functioning of fermentors and bioreactors, NBS offers devices and
procedures which it has developed for sterilizing its systems and maintaining an
aseptic environment over long operating periods. NBS designs, manufactures and
sells benchtop and pilot scale fermentors that are sterilizable in place.
Although significantly more expensive than other models, these devices eliminate
the need to move the fermentor from its place of use for sterilization.
Biological Shakers. Biological shakers perform a function
similar to fermentors and bioreactors, as they are also used in the process of
growing and propagating biological cultures. Shakers agitate flasks under
controlled conditions containing biological cultures in a liquid media in which
nutrients are dissolved. Nutrients are the source of energy needed for growth,
while shaking furnishes the dissolved oxygen needed to permit life processes to
take place within the microorganism. NBS Shakers are in worldwide use in
biological laboratories for research, development, and in some cases, for
production of various medical, biological and
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chemical products. In addition, shakers are widely used in microbiological and
recombinant DNA research.
The Company manufactures an extensive line of biological
shakers ranging in size from portable laboratory benchtop models to large
multitier industrial machines. Some models of the Company's shakers are designed
to agitate flasks under controlled environmental conditions of temperature,
atmosphere and light. Each shaker incorporates a variable speed regulator and
may be equipped to accommodate flasks of various sizes. To permit culture growth
under constant and reproducible conditions, shakers manufactured by NBS are
precision engineered and manufactured to agitate flasks uniformly and
continuously over prolonged periods.
The Company currently manufactures three distinct lines of
shakers. Its INNOVA(R) line, which is its most sophisticated shaker, its
original Gyrotory(R) shaker line, and, its new "Classic" Line, which was
introduced in early 1997. The Classic line is intended primarily for sale to
distributors and is expected to supercede the original Gyrotory(R) line in the
foreseeable future.
Nutrient Sterilizing and Dispensing Equipment. The Company
manufactures devices that automatically sterilize biological nutrients and then
maintain those nutrients at the required temperature for subsequent use. This
product line includes benchtop models used in laboratories as well as larger
industrial models. As a complement to its nutrient sterilizers, NBS sells an
apparatus which automatically fills culture dishes with sterile nutrient.
Tissue Culture Apparatus. The Company manufactures apparatus
to rotate bottles and test tubes slowly and constantly for the purpose of
growing animal and plant cells. Certain models of this apparatus may be placed
into an incubator and equipped to regulate the speed of rotation. The Company
also markets carbon dioxide incubators used in the propagation of tissue
cultures. This apparatus has applications in vaccine production, cancer and
heart disease research, and the commercial production of pharmaceuticals.
Other Scientific Products. NBS distributes a line of
centrifuges for separating cells from fermentation broth, and a line of low
temperature freezers.
Product Development
NBS designs and develops substantially all the products it
sells. Its personnel, who include biochemical, electrical, chemical, mechanical,
electronic and software engineers as well as scientists and technical support
staff, formulate plans and concepts for new products and improvements or
modifications to existing products. The Company develops specialized software
for use with its computer-coupled systems and the microprocessor-controlled
instrumentation systems for shakers, fermentors and bioreactors.
Manufacturing
Manufacturing is conducted according to planning and
production control procedures primarily on a lot production basis rather than on
an assembly line. NBS fabricates its parts from purchased raw materials and
components and produces most of its subassemblies.
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These parts, components and subassemblies are carried in inventory in
anticipation of projected sales and are then assembled into finished products
according to production schedules. In general, manufacturing is commenced in
anticipation of orders. The manufacturing processes for the Company's products
range from two weeks to many months, depending upon the product size, complexity
and quantity. However, a substantial portion of orders received are for items in
the process of being manufactured or in inventory.
The raw materials used by the Company include stainless steel,
copper, brass, aluminum and various plastics. Some components are purchased from
others, including pumps, compressors, plumbing fittings, electrical and
electronic components, gauges, meters, motors, glassware and general purpose
hardware. Many of these components are built to the Company's specifications.
NBS is not dependent upon any single supplier for any raw material or component,
but delay in receipt of key components can affect the manufacturing schedule.
The Company's products are designed to operate continuously
over long periods with precision and regularity so that research and production
may be conducted under controlled, constant and reproducible conditions. The
Company manufactures its products from materials which it selects as having
characteristics necessary to meet its requirements. In addition, to ensure that
its manufacturing processes result in products meeting exacting specifications
and tolerances, NBS follows rigorous inspection procedures. NBS maintains a
Quality Assurance Department which is responsible for inspecting raw materials
and parts upon arrival at its plant as well as inspecting products during
manufacture. It also tests every piece of equipment prior to shipment. NBS'
products are serviced at its plant and at its customers' premises by Company
technicians, distributors' technicians or, in the case of minor repairs, by
sales personnel.
Marketing and Sales
The Company sells its equipment to pharmaceutical companies,
agricultural and chemical companies, other industrial customers engaged in
biotechnology, and to medical schools, universities, research institutes,
hospitals, private laboratories and laboratories of Federal, State and Municipal
government departments and agencies in the United States. While only a small
percentage of the Company's sales are made directly to United States government
departments and agencies, its domestic business is significantly affected by
government expenditures and grants for research to educational research
institutions and to industry. The Company regularly evaluates credit granted to
customers and generally requires progress payments for the purchase of custom
fermentation equipment.
NBS also sells its equipment, both directly and through
scientific equipment dealers, to foreign companies, institutions, and
governments. The major portion of its foreign sales are made in Canada, Western
Europe, Israel, China, Japan and Australia. NBS also sells its products in the
former Soviet Union, Eastern Europe and Latin America. These sales may be
substantially affected by changes in the capital investment policies of foreign
governments, or by the availability of hard currency.
Fisher Scientific is the exclusive U.S. distributor of the
Company's Gyrotory(R) line of biological shakers, its Classic line of biological
shakers and its automated equipment for the preparation of diagnostic agar
plates. While Fisher is the exclusive U.S. distributor for these
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NBS Shakers and media preparation equipment, NBS markets and sells its shakers
and other products on a direct basis as well. Fisher also distributes a few
selected INNOVA models.
For information concerning net sales in the United States and
foreign countries, income (loss) from operations derived therefrom, identifiable
assets located in the United States and foreign countries, and export sales for
each of the three years ended December 31, 1997, see Note 9 of Notes to
Consolidated Financial Statements under the heading "Operations by Geographic
Areas." Export sales consist of all sales by the Company's Domestic Operations
to customers located outside the United States. Hence, foreign sales include
export sales.
Substantially all of the orders of the Company's domestic
operations, including export orders are booked in United States dollars and are
payable promptly upon delivery of the equipment. The Company's wholly-owned
European subsidiaries book orders for equipment in local currencies and in some
instances in U.S. dollars. The assets and liabilities of the Company's European
subsidiaries are valued in local currencies. Fluctuations in exchange rates
between those currencies and the dollar have had an impact upon the Company's
consolidated financial statements, as measured in United States dollars.
Export sales are influenced by changes in the exchange rate of
the dollar as those changes affect the cost of the Company's equipment to
foreign purchasers. Certain countries, particularly those in Eastern Europe and
the former Soviet Union, may not be able to make substantial capital purchases
in dollars for economic or political reasons.
NBS maintains five European sales offices through wholly-owned
subsidiaries, New Brunswick Scientific (U.K.) Limited in England, NBS Benelux
B.V. in The Netherlands, New Brunswick Scientific GmbH in Germany, New Brunswick
Scientific N.V. in Belgium and NBS S.A.R.L. in France. Foreign sales of the
Company's standard products (i.e., those listed in its product catalogs) are
generally made directly by these subsidiaries.
At December 31, 1997, NBS had a backlog of unfilled orders of
approximately $7,858,000, compared with $7,353,000 at the end of 1996. The
December 31, 1997 backlog was comprised of orders for standard equipment as well
as orders for larger systems. NBS expects to fill all of its existing backlog
during the coming year.
One customer based in the United States accounted for
approximately 12.0%, 10.0% and 12.1%, respectively, of consolidated net sales
during the years ended December 31, 1997, 1996 and 1995.
Research and Development
Research and development expenditures, all of which are
sponsored by the Company, amounted to $2,637,000, in 1997, $2,141,000 in 1996
and $826,000 in 1995.
Twenty-nine (29) of the Company's professional employees were
engaged full time in research and development activities.
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Investment in Organica, Inc.
Since November 1994, the Company has invested $950,000 (less
than a twenty percent interest) in Organica, Inc. (Organica) which was formed in
1993 to develop and commercialize various "environmentally friendly" products
produced via fermentation processes. Organica isolates and cultures naturally
occurring microorganisms and fungi and blends them with various nutrient sources
and carriers to create its products, which are offered as alternatives to
various hazardous products. Organica has focused primarily on natural turf
products, compost accelerators, hydrocarbon remediation products and non-caustic
drain openers. In 1997, Organica completed a $2.3 million private placement;
none of the securities were purchased by the Company.
Competition
The competitive factors affecting the Company's position as a
manufacturer of biotechnology equipment include availability, reliability, ease
of operation, the price of its products, its responsiveness to the technical
needs and service requirements of customers, and product innovation.
NBS encounters competition from approximately 11 domestic and
16 foreign competitors in the sale of its products. The Company's principal
competitor in the sale of fermentation equipment and bioreactors both in the
United States and overseas is B. Braun Biotech, a German company. Additional
competitors include LSL-Biolafitte, a French company, part of Cellex Biosciences
Inc., a U.S. company; L.E. Marubishi Co., Ltd. located in Japan; Applikon, B.V.,
located in The Netherlands; Abec, located in Pennsylvania and L.H. Engineering
Ltd., located in England, a part of Inceltech, located in France. Although
financial information concerning these firms is not readily available, the
Company believes that many of its competitors have substantially greater
financial resources than the Company. NBS believes that B. Braun Biotech has
significantly greater sales of fermentation equipment than the Company, although
Braun's market share is not as significant in benchtop size models.
The Company believes that it has the largest worldwide market
share for biological shakers. LabLine Instruments, Inc. and Forma Scientific in
the United States as well as several manufacturers in Europe are strong
competitors of the Company in this market.
NBS encounters substantial competition in the sale of most of
its other equipment where its sales do not represent major market shares.
Although the Company does not encounter substantial competition in the sale of
its nutrient sterilizing and dispensing equipment in the U.S. market,
substantial competition exists in foreign markets.
Employees
NBS employs approximately 412 people, including 212 people
engaged in manufacturing and supervision, 54 in research, development and
engineering (including 19 employed by DGI), 102 in sales and marketing, and 44
in administrative and clerical duties. Manufacturing employees currently work a
single shift, however, in certain areas a second shift has been employed. The
Company's New Jersey manufacturing employees are represented by
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District 15 of the International Association of Machinists, AFL-CIO under a
contract which expires in December 1999. The Company considers its labor
relations to be good.
Working Capital
NBS maintains a substantial inventory of parts, components and
subassemblies to fill orders for its products. Management believes it has
adequate working capital for its present level of operations.
The Company has a $5 million secured line of credit with
Summit Bank, primarily for working capital and letters of credit, and a $1
million revolving credit line for equipment acquisition purposes, effective
through May 31, 1999.
Patents and Trademarks
NBS holds and has filed applications for United States and
foreign patents relating to many of its products, their integral components and
significant accessories. NBS also has certain registered trademarks. However,
NBS believes that its business is not dependent upon patent, trademark, or other
proprietary protection in any material respect. DGI has filed patent
applications covering its platform technology and certain assays. DGI has also
applied for a number of trademarks.
Cautionary Statement
Statements included herein which are not historical facts are
forward looking statements. Such forward looking statements are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The forward looking statements involve a number of risks and
uncertainties, including but not limited to, changes in economic conditions,
demand for the Company's products, pricing pressures, intense competition in the
industries in which the Company operates, the need for the Company to keep pace
with technological developments and timely respond to changes in customer needs,
the Company's dependence on third party suppliers, the effect on foreign sales
of currency fluctuations, acceptance of new products, consistency in the level
of orders for custom bioprocess systems, the ability of DGI to achieve its
scientific objectives and enter into corporate partnering and/or licensing
agreements, the labor relations of the Company and its customers and other
factors identified in the Company's Securities and Exchange Commission filings.
Item 2. PROPERTY
The Company's executive, administrative, engineering and
domestic sales offices and its manufacturing operations, warehouse and other
facilities are located in a Company owned 243,000 square foot one-story steel
and concrete block building situated on a 17-acre site in Edison, New Jersey.
Approximately 50,000 square feet is office space, approximately 14,000 square
feet is laboratory space (including 7,500 square feet occupied by DGI), and the
balance is devoted to manufacturing and warehouse facilities. The Company's NBS
Benelux B.V. subsidiary owns its 13,000 square foot building in Nijmegen, The
Netherlands.
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The Company's wholly-owned European subsidiaries lease
facilities as follows: New Brunswick Scientific (UK) Limited - 17,000 square
feet, NBS GmbH - 1,400 square feet and New Brunswick Scientific N.V./S.A.
- - 825 square feet.
Item 3. LEGAL PROCEEDINGS
No material legal proceedings are currently pending.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
(A) The Company's Common stock is traded in the National
over-the-counter market (Nasdaq symbol NBSC). The following table sets forth the
high and low prices for the Company's Common stock as reported by Nasdaq for the
periods indicated. The prices represent quotations between dealers reflecting
prevailing market factors which may include anticipated markups or markdowns and
do not necessarily represent actual transactions.
HIGH LOW
1996
First Quarter $ 7-3/4 $ 5-1/4
Second Quarter 8-3/4 6-1/8
Third Quarter 7-3/4 6
Fourth Quarter 7-3/4 6-1/4
1997
First Quarter $ 8-1/4 $ 6-1/2
Second Quarter 8 6-1/4
Third Quarter 7-1/4 6
Fourth Quarter 9-1/2 6-7/8
1998
First Quarter
(through February 10, 1998) $10-11/32 $ 8-3/8
(B) The number of holders, including beneficial owners, of
NBS' Common stock as of February 10, 1998, is 1,437.
(C) NBS paid a 10% common stock dividend on May 15, 1997 and a
5% common stock dividend on May 15, 1996.
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Item 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial
information regarding the Company's financial position and operating results.
This information should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the Consolidated
Financial Statements and Notes thereto which appear elsewhere herein.
<TABLE>
<CAPTION>
Year Ended December 31,
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1997 1996 1995 1994 1993
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(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Net sales $45,596 $42,927 $39,085 $38,789 $35,950
Net income 1,012 882 1,172 1,068 392
Basic earnings per
share (a) $ .24 $ .21 $ .28 $ .26 $ .10
Diluted earnings per
share (a) $ .24 $ .21 $ .28 $ .26 $ .10
Total assets (b) 38,153 37,226 35,685 34,504 32,628
Long-term debt, net of
current installments (b) 247 401 564 665 792
Dividends per share $ -- -- $ .05 -- --
</TABLE>
(a) Adjusted to reflect 10% and 5% stock dividends distributed on May 15, 1997
and May 15, 1996, respectively.
(b) At year-end
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Statements included herein which are not historical facts are
forward looking statements. Such forward looking statements are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The forward looking statements involve a number of risks and
uncertainties, including but not limited to, changes in economic conditions,
demand for the Company's products, pricing pressures, intense competition in the
industries in which the Company operates, the need for the Company to keep pace
with technological developments and timely respond to changes in customer needs,
the Company's dependence on third party suppliers, the effect on foreign sales
of currency fluctuations, acceptance of new products, consistency in the level
of orders for custom bioprocess systems, the ability of DGI to achieve its
scientific objectives and enter into corporate partnering and/or licensing
agreements, the labor relations of the Company and its customers and other
factors identified in the Company's Securities and Exchange Commission filings.
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Results of Operations
1997 vs. 1996
For the year ended December 31, 1997, the Company had net
income of $1,012,000 or $.24 per diluted share on net sales of $45,596,000
compared with net income of $882,000 or $.21 per diluted share on net sales of
$42,927,000 for the year ended December 31, 1996.
In 1997, net sales increased 6.2% due to a 19% increase in
U.S. domestic sales and higher sales in the United Kingdom which benefited from
the delivery of a large custom bioprocess system. Gross margins improved to
40.1% in 1997 from 38.8% in 1996 due to continuing improvements in productivity
in the Company's manufacturing operations and from the higher component of
domestic sales which tends to carry a somewhat higher margin than export sales,
a large portion of which go through dealers and distributors. Research,
development and engineering expenses increased 13.9% in 1997 primarily to
support the operations of DGI BioTechnologies, L.L.C. (DGI), the Company's
majority-owned drug lead discovery operation. Interest income decreased to
$149,000 in 1997 from $244,000 in 1996 primarily as a result of lower average
cash available for investment.
During 1997, the U.S. dollar strengthened against the
currencies of the European countries where the Company has subsidiary
operations. The effect of these currency movements decreased income from foreign
operations by approximately $102,000 to $1,542,000. The effects of balance sheet
translation resulted in a currency translation adjustment of $723,000 which is
reflected in the equity section of the Consolidated Balance Sheet.
1996 vs. 1995
For the year ended December 31, 1996, the Company had net
income of $882,000 or $.21 per diluted share on net sales of $42,927,000
compared with net income of $1,172,000 or $.28 per diluted share on net sales of
$39,085,000 for the year ended December 31, 1995.
In 1996 sales increased 9.8% due equally to higher sales in
the U.S. domestic market and in Western Europe. The increase of 9.9% in cost of
sales is directly attributable to the increase in net sales. Research,
development and engineering expenses increased 64% in 1996 due primarily to the
full year effect of the start-up in October 1995 of DGI BioTechnologies, L.L.C.
(DGI), the Company's drug discovery operation. Interest expense increased to
$75,000 in 1996 from $55,000 in 1995 due primarily to the accrual of interest on
deferred compensation. Other income (expense), net in 1996 of $26,000 consisted
primarily of bank charges and credit facility renewal fees.
Provision for income taxes as a percentage of income before
taxes decreased to 9.8% from 16.3% in 1995 since all of the Company's income
emanated from its foreign subsidiaries, a significant portion of which is not
subject to income taxes due to carryforward tax losses on which income tax
benefits were not previously recognized. U.S. operations were in a
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net taxable loss situation due to the significant increase in research and
development costs in 1996 to support the operations of DGI.
During 1996, the U.S. dollar strengthened against two and
weakened against one of the currencies of the European countries where the
Company has subsidiary operations. The effect of these currency movements
decreased income from foreign operations by approximately $25,000 to $1,311,000.
The effects of balance sheet translation resulted in a currency translation
adjustment of $48,000 which is reflected in the equity section of the
Consolidated Balance Sheet.
Financial Condition
Liquidity and Capital Resources
During the year ended December 31, 1997, cash and cash
equivalents decreased to $3,968,000 from $5,196,000 at December 31, 1996. The
decrease in cash resulted primarily from an increase in inventories to
$14,862,000 at December 31, 1997 from $12,980,000 at December 31, 1996,
partially offset by an increase in accounts payable and accrued expenses to
$7,709,000 at December 31, 1997 from $7,014,000 at December 31, 1996.
Finished goods inventory increased to $4,701,000 at the end of
1997 from $3,891,000 at December 31, 1996, raw materials and sub-assemblies
increased to $7,493,000 at December 31, 1997 from $6,762,000 at December 31,
1996 and work-in-process increased to $2,668,000 at December 31, 1997 from
$2,327,000 at December 31, 1996. These increases are primarily attributable to
an overlap of shaker lines due to the addition of the Company's Classic line of
shakers which is intended to eventually supercede its Gyrotory(R) line of
shakers and to orders for custom bioprocess systems which were in process at
December 31, 1997 and which are expected to be delivered in 1998.
Accounts payable and accrued expenses increased as a result of
higher advance payments from customers which amounted to $1,476,000 at December
31, 1997 vs. $846,000 at December 31, 1996.
Other liabilities of $425,000 at December 31, 1996, consisted
of a pension liability which was a non-cash item which was offset by a direct
reduction in shareholders' equity of a like amount. This pension liability was
reduced to zero at December 31, 1997 due to the positive investment performance
of the Company's defined benefit pension plan.
Drug Lead Discovery Business
In October 1995, the Company entered the drug-lead discovery
business by forming a new company to develop a novel, small molecule drug
discovery platform. The company, DGI BioTechnologies, L.L.C. (DGI), is
majority-owned and fully funded by the Company and occupies specially designed
laboratory space at the Company's headquarters facility in Edison, New Jersey.
DGI's operations have had a significant negative impact on the Company's 1997
and 1996 earnings and will continue to do so during the balance of its
development phase, which is expected to last through 1998. During 1997 and 1996,
$1,923,000 and $1,535,000, respectively, was charged to operations. It is
currently anticipated that expenditures
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for 1998 will exceed $2,000,000. This amount could be affected by revenues from
licensing agreements and other corporate collaborations which are currently
being pursued.
Recently Issued Accounting Standards
In 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings per Share ("SFAS No. 128"). SFAS No. 128 requires the
presentation of earnings per share (EPS) information in the form of Basic
Earnings per share and as Diluted Earnings per Share on the face of the income
statements. Basic EPS excludes dilution and Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Company. As required, the
Company has reflected SFAS No. 128 in its 1997 financial statements and all
prior periods have been restated accordingly.
Year 2000 Issues
Based upon a review of its computer operations, the Company
has determined that its costs related to the Year 2000 problem will be
insignificant. The Company has no internally developed software that it utilizes
for its operations, but uses Computer Associates ManMan Classic software,
Version 11 of which, is compatible with the Year 2000. The Company expects to
upgrade its system to Version 11 in late 1998 or early 1999 and will receive
that upgrade in the normal course of business as a consequence of its
maintenance contract with Computer Associates.
Cash Flows from Operating Activities
During the year ended December 31, 1997, net cash used by
operating activities amounted to $45,000 vs. net cash provided by operating
activities of $551,000 for the year ended December 31, 1996. The primary reasons
for the $596,000 net decrease from 1996 to 1997 were: an increase in inventories
of $2,171,000 in 1997 vs. an increase of $310,000 in 1996, offset by an increase
in accounts payable and accrued expenses of $536,000 in 1997 vs. an increase of
$92,000 in 1996, and a decrease in prepaid expenses and other current assets of
$37,000 in 1997 vs. a decrease of $520,000 in 1996.
Cash Flows from Investing Activities
Net cash used by investing activities which amounted to
$965,000 in 1997 resulted primarily from $733,000 of additions to property plant
and equipment and $250,000 from an investment made in another entity. In 1996,
net cash used was primarily from additions to property, plant and equipment of
$1,355,000 and from an investment made in another entity of $400,000.
Cash Flows from Financing Activities
During 1997, repayments of $134,000 of long-term debt were
partially offset with the proceeds of $87,000 from stock purchase and option
plans and in 1996, repayments of long-
-13-
<PAGE>
term debt of $154,000 were partially offset with proceeds from stock purchase
and option plans of $128,000.
Management believes that the resources available to the
Company, including its line of credit which has been extended to May 31, 1999,
are sufficient to meet its near and intermediate-term needs, including present
funding commitments for DGI, and its strong unleveraged balance sheet provides
the basis for any long-term financing if the need should arise.
-14-
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report
The Board of Directors and Shareholders
New Brunswick Scientific Co., Inc.:
We have audited the accompanying consolidated balance sheets of New Brunswick
Scientific Co., Inc. and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1997. In
connection with our audits of the consolidated financial statements, we also
have audited the related financial statement schedule as listed in Part IV, Item
14(a)2. The consolidated financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of New Brunswick
Scientific Co., Inc. and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1997 in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
KPMG Peat Marwick LLP
Short Hills, New Jersey
February 12, 1998
-15-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(In thousands, except for share data)
<TABLE>
<CAPTION>
1997 1996
-------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,968 $ 5,196
Accounts receivable, net of allowance for
doubtful accounts, 1997 - $284 and 1996 - $224 10,602 10,108
Refundable income taxes 314 334
Deferred income tax benefit (Note 6) 134 97
Inventories (Note 2) 14,862 12,980
Prepaid expenses and other current assets (Note 7) 1,819 1,880
-------- --------
Total current assets 31,699 30,595
-------- --------
Property, plant and equipment, net (Notes 3 and 4) 5,354 5,701
Other assets (Note 11) 1,100 930
-------- --------
$ 38,153 $ 37,226
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (Note 4) $ 110 $ 135
Accounts payable and accrued expenses (Note 5) 7,709 7,014
-------- --------
Total current liabilities 7,819 7,149
-------- --------
Long-term debt, net of current installments (Note 4) 247 401
Other liabilities (Note 7) -- 425
-------- --------
Commitments and contingencies (Notes 10 and 11)
Shareholders' equity (Note 8):
Common stock, $0.0625 par; authorized 25,000,000 shares; issued and
outstanding, 1997 - 4,204,845 shares; 1996 - 3,808,932 shares; net of shares
held in treasury,
1997 - 390,967 and 1996 - 355,425 263 238
Capital in excess of par 23,854 20,738
Retained earnings 7,085 9,092
Currency translation adjustment (1,115) (392)
Pension liability adjustment (Note 7) -- (425)
-------- --------
30,087 29,251
-------- --------
$ 38,153 $ 37,226
======== ========
</TABLE>
See notes to consolidated financial statements
-16-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net sales $ 45,596 $ 42,927 $ 39,085
Operating costs and expenses:
Cost of sales 27,319 26,280 23,919
Selling, general and administrative
expenses 13,086 12,179 11,717
Research, development and engineering
expenses 4,139 3,633 2,215
-------- -------- --------
44,544 42,092 37,851
-------- -------- --------
Income from operations 1,052 835 1,234
-------- -------- --------
Other income (expense):
Interest income 149 244 222
Interest expense (71) (75) (55)
Other income (expense), net (9) (26) (1)
-------- -------- --------
69 143 166
-------- -------- --------
Income before income taxes 1,121 978 1,400
Income taxes (Note 6) 109 96 228
-------- -------- --------
Net income $ 1,012 $ 882 $ 1,172
======== ======== ========
Basic earnings per share $ .24 $ .21 $ .28
======== ======== ========
Diluted earnings per share $ .24 $ .21 $ .28
======== ======== ========
Basic weighted average number of shares
outstanding 4,195 4,162 4,147
======== ======== ========
Diluted weighted average number of shares
outstanding 4,305 4,222 4,188
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
-17-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Common Stock Capital Currency Pension
----------------------- in Excess Retained Translation Liability
Shares Amount of Par Earnings Adjustment Adjustment Total
--------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 3,581,283 $ 224 $ 19,213 $ 8,495 $ (197) $ -- $ 27,735
Issue of shares under employee
stock purchase plan 14,368 1 70 71
Equity adjustment for additional
minimum pension liability (471) (471)
Dividends ($.05 per share) (179) (179)
Net income 1,172 1,172
Currency translation adjustment (147) (147)
--------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 1995 3,595,651 $ 225 $ 19,283 $ 9,488 $ (344) $ (471) $ 28,181
Issue of shares under employee
stock purchase plan 13,492 1 75 76
Issue of shares under stock
option plans 20,065 1 113 114
Equity adjustment for additional
minimum pension liability 46 46
5% stock dividend 179,724 11 1,267 (1,278) --
Net income 882 882
Currency translation adjustment (48) (48)
--------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 1996 3,808,932 $ 238 $ 20,738 $ 9,092 $ (392) $ (425) $ 29,251
Issue of shares under employee
stock purchase plan 13,997 1 78 79
Discount from fair market value
upon issue of options under
stock option plan for
nonemployee directors 35 35
Issue of shares under stock
option plans 1,050 8 8
Equity adjustment for additional
minimum pension liability 425 425
10% stock dividend 380,866 24 2,995 (3,019)
Net income 1,012 1,012
Currency translation adjustment (723) (723)
--------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 1997 4,204,845 $ 263 $ 23,854 $ 7,085 $ (1,115) $ -- $ 30,087
========== ========== ========== ========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
-18-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(In thousands)
<TABLE>
<CAPTION>
1997 1996 1995
-------- --------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,012 $ 882 $ 1,172
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation 931 858 585
Deferred income taxes (37) 91 114
Discount from fair market value upon issue of options under stock option
plan for nonemployee directors 35 -- --
Change in related balance sheet accounts:
Accounts receivable (964) (1,005) (1,522)
Refundable income taxes 20 (118) (216)
Inventories (2,171) (310) (51)
Prepaid expenses and other current assets (37) (520) (160)
Accounts payable and accrued expenses 536 92 413
Advance payments from customers 630 581 109
------- ------- -------
Net cash provided (used) by operating activities (45) 551 444
------- ------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (733) (1,355) (950)
Sale of equipment 18 22 16
Investment (250) (400) (100)
------- ------- -------
Net cash used by investing activities (965) (1,733) (1,034)
------- ------- -------
Cash flows from financing activities:
Cash dividends -- -- (179)
Repayments of long-term debt (134) (154) (131)
Proceeds from issuance of shares under stock
purchase and option plans 87 128 71
------- ------- -------
Net cash used by financing activities
(47) (26) (239)
Net effect of exchange rate changes on cash (171) 22 69
------- ------- -------
Net decrease in cash and cash equivalents (1,228) (1,186) (760)
Cash and cash equivalents at beginning of year 5,196 6,382 7,142
------- ------- -------
Cash and cash equivalents at end of year $ 3,968 $ 5,196 $ 6,382
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 58 $ 63 $ 58
Income taxes 377 128 152
Supplemental disclosure of non cash financing
activities:
Shares issued for note receivable $ -- $ 62 $ --
</TABLE>
See notes to consolidated financial statements.
-19-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. Summary of significant accounting policies:
Principles of consolidation:
The consolidated financial statements include the accounts of New
Brunswick Scientific Co., Inc., its wholly-owned subsidiaries and
majority owned limited liability company (the Company). Investments
in which the Company's ownership is less than 20% are accounted for
using the cost method. All significant intercompany transactions and
balances have been eliminated.
Translation of foreign currencies:
Translation adjustments for the Company's foreign operations are
accumulated as a separate component of shareholders' equity.
Transaction gains and losses, which are not significant in amount,
are included in the consolidated statements of operations as part of
"Other income (expense), net."
Cash and Cash Equivalents:
The Company considers all highly liquid debt instruments with
original maturities of three months or less to be cash equivalents in
the statement of cash flows.
Inventories:
Inventories are stated at the lower of cost (first-in, first-out or
average) or market. Cost elements include material, labor and
manufacturing overhead.
Property, plant and equipment:
Property, plant and equipment are stated at cost. Gains and losses
resulting from sales or disposals, which are not significant in
amount, are included in "Other income (expense), net". The cost of
repairs, maintenance and replacements which do not significantly
improve or extend the life of the respective assets is charged to
expense as incurred.
Depreciation is provided by the straight-line method over the
estimated useful lives of the related assets, generally 33-1/3 years
for buildings and 10 years for machinery and equipment. Depreciation
expense amounted to $931,000 in 1997, $858,000 in 1996 and $585,000
in 1995.
Research and development:
Research and development costs are expensed as incurred.
-20-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Income taxes:
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date.
Earnings per share:
Basic earnings per share is calculated by dividing net income by the
weighted average number of shares outstanding. Diluted earnings per
share is calculated by dividing net income by the sum of the weighted
average number of shares outstanding plus the dilutive effect of
stock options which have been issued by the Company. A 10% stock
dividend was declared on February 26, 1997 and distributed on May 15,
1997 and a 5% stock dividend was declared on March 29, 1996 and
distributed on May 15, 1996. The weighted average number of shares
outstanding for prior periods have been restated to reflect these
dividends.
Stock option plans:
Prior to January 1, 1996, the Company accounted for its stock option
plans in accordance with the provisions of Accounting Principles
Board ("APB") Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. As such, compensation expense
would be recorded on the date of grant only if the current market
price of the underlying stock exceeded the exercise price. On January
1, 1996, the Company adopted SFAS No. 123, Accounting for Stock-Based
Compensation, which permits entities to recognize as expense over the
vesting period the fair value of all stock-based awards on the date
of grant. Alternatively, SFAS No. 123 also allows entities to
continue to apply the provisions of APB Opinion No. 25 and provide
pro forma net income and pro forma earnings per share disclosures for
employee stock option grants made in 1995 and future years as if the
fair-value-based method defined in SFAS No. 123 had been applied. The
Company has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of
SFAS No. 123.
Treasury stock:
Repurchase of the Company's outstanding Common stock is accounted for
by treating the stock as if retired.
-21-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Financial instruments:
The carrying values of the Company's financial instruments at
December 31, 1997 approximate their estimated fair values. The
carrying amounts of cash and cash equivalents, accounts receivable
and accounts payable and accrued expenses approximate fair value due
to the short-term maturity of such instruments. The carrying value of
long-term debt approximates fair value based on the current rates
offered on debt with similar maturities and characteristics.
Derivative financial instruments (forward exchange contracts) are
recorded at market value, with resultant gains or losses recognized
in the statement of operations immediately, unless the instrument is
an effective hedge of a firm, committed transaction, in which case
the associated gain or loss is deferred and recognized in connection
with the underlying transaction exposure.
Use of estimates:
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare the
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
2. Inventories:
1997 1996
---- ----
(In thousands)
Raw materials and sub-assemblies $ 7,493 $ 6,762
Work-in-process 2,668 2,327
Finished goods 4,701 3,891
------- -------
$14,862 $12,980
======= =======
3. Property, plant and equipment, net:
1997 1996
---- ----
(In thousands)
Land $ 800 $ 800
Buildings and improvements 3,983 4,009
Machinery and equipment 10,572 10,214
------- -------
15,355 15,023
Less accumulated depreciation 10,001 9,322
------- -------
$ 5,354 $ 5,701
======= =======
-22-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4. Long-term debt and credit agreement:
There is a mortgage on the facility of the Company's Netherlands
subsidiary which bears interest of 7.5% per annum. During the twenty-year
term of the mortgage, the Company is obligated to make monthly payments
of interest and 80 equal quarterly payments of principal. At December 31,
1997 and 1996, $272,000 and $345,000, respectively, was outstanding.
In 1993, the Company entered into a capitalized lease obligation, due
September 1998, with imputed interest of 6.85%, relating to the purchase
of equipment. At December 31, 1997 and 1996, $85,000 and $191,000,
respectively, was outstanding.
Property, plant and equipment with a net book value of $532,000 and
$637,000, is pledged as security for long-term debt as indicated above at
December 31, 1997 and 1996, respectively. Machinery and equipment (see
Note 3) includes equipment under capital lease of $490,000, which has a
net book value of $274,000 and $323,000 at December 31, 1997 and 1996,
respectively.
Aggregate annual maturities of long-term debt, including capitalized
lease obligations, are as follows:
Year ending December 31 Amount
----------------------- ------
(In thousands)
1998 $110
1999 25
2000 25
2001 25
2002 25
After 2002 147
---
$357
====
The Company has a $5 Million Secured Revolving Credit Agreement (the
Agreement) with Summit Bank (the Bank) effective through May 31, 1999.
The agreement provides the Company with a facility for both working
capital and for letters of credit. In addition, the Bank has provided a
$1 million Revolving Line of Credit for equipment acquisition purposes.
There are no compensating balance requirements and any borrowings under
the Agreement bear interest at the Bank's prime rate. All of the
Company's domestic assets, with the exception of its headquarters
facility, which are not otherwise subject to lien have been pledged as
security for any borrowings under this Agreement. As of and during the
years ended December 31, 1997 and 1996, there were no outstanding
balances.
-23-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
5. Accounts payable and accrued expenses:
<TABLE>
<CAPTION>
1997 1996
---- ----
(In thousands)
<S> <C> <C> <C>
Accounts payable-trade $ 2,652 $ 2,781
Accrued salaries, wages and payroll taxes 1,712 1,683
Accrued foreign dealer commissions 761 692
Advance payments from customers 1,476 846
Other accrued liabilities 1,108 1,012
-------- --------
$ 7,709 $ 7,014
====== =======
6. Income taxes:
1997 1996 1995
---- ---- ----
(In thousands)
Income (loss) before income taxes:
Domestic $ (446) $ (327) $ 155
Foreign 1,567 1,305 1,245
------ --------- --------
$1,121 $ 978 $ 1,400
====== ========= ========
Income taxes (benefit):
Federal:
Current $ - $ (106) $ (20)
Deferred (37) 91 114
State-current 7 15 -
Foreign-current 139 96 134
------ --------- --------
$ 109 $ 96 $ 228
====== ========= ========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1997
and 1996 are as follows:
-24-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996
---- ----
(In thousands)
<S> <C> <C>
Deferred tax asset/(liability):
Accumulated depreciation $(221) $(199)
Inventories 296 258
Allowance for doubtful accounts 53 29
Accrued expenses 184 148
Other liabilities (162) (177)
Alternative minimum tax credit carryforward 138 138
Domestic net operating loss carryforward 107 27
Domestic capital loss and contribution carryforwards 69 67
Foreign net operating loss carryforwards 176 424
----- -----
640 715
Less: Valuation allowance 506 618
----- ------
Net deferred tax asset $ 134 $ 97
==== =====
</TABLE>
The valuation allowance for deferred tax assets as of January 1, 1997 and
1996 was $506,000 and $618,000, respectively. The net change in the total
valuation allowance for the years ended December 31, 1997 and 1996 was a
decrease of $112,000 and $124,000, respectively. In assessing the
realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods
in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods which the deferred
tax assets are deductible, management believes it is more likely than not
the Company will realize the benefits of these deductible differences,
net of the existing valuation allowances at December 31, 1997. The amount
of the deferred tax asset considered realizable, however, could be
reduced in the near term if estimates of future taxable income during the
carryforward period are reduced.
The foreign net operating loss carryforwards relate to operations in the
United Kingdom and the Netherlands and are not subject to expiration date
limitations.
The Company's effective income tax rates for 1997, 1996 and 1995 were
9.7%, 9.8%, and 16.3%, respectively. These rates differ from the
statutory Federal income tax rates as follows:
-25-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Percentage of income before taxes
----------------------------------------------
1997 1996 1995
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Computed "expected" tax expense 34.0% 34.0% 34.0%
Increase (decrease) in taxes resulting
from:
Rate differential between U.S. and
foreign income taxes (13.0) (10.0) -
Change in valuation allowance (10.0) (12.7) (24.9)
Other (1.3) (1.5) 7.2
----- ---- ----
9.7% 9.8% 16.3%
===== ==== ====
</TABLE>
7. Pension plans:
The Company has a noncontributory defined benefit pension plan covering
qualified U.S. salaried employees, including officers. Additionally, the
Company made contributions to a union sponsored multi-employer defined
benefit plan, in the amount of $110,000, $107,000 and $104,000 in 1997,
1996 and 1995, respectively.
Pension expense attributable to the defined benefit plan covering U.S.
employees includes the following components:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Service cost $ 224 $ 202 $ 169
Interest cost on projected obligation 343 312 298
Actual return on plan assets (609) (311) (468)
Net amortization and deferral 375 104 281
------ ------ ------
Net pension expense $ 333 $ 307 $ 280
====== ====== ======
</TABLE>
The following table sets forth the plan's funded status and amounts
recognized in the Company's consolidated balance sheet:
-26-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996
---- ----
(In thousands)
<S> <C> <C>
Actuarial present value of:
Vested benefit $ 4,467 $ 4,068
====== =======
obligation
Accumulated benefit $ 4,506 $ 4,096
====== ======
obligation
Projected benefit obligation $ 5,159 $ 4,693
Plan assets at fair value 4,635 4,017
------- --------
Excess of projected benefit obligation over
plan assets 524 676
Unrecognized net loss (893) (1,021)
Unrecognized transition obligation (168) (187)
Unrecognized prior service cost 35 39
Adjustment for additional liability - 573
------- --------
(Prepaid) accrued pension cost $ (502) $ 80
===== =========
</TABLE>
The projected benefit obligation was determined using the following
assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.25% 7.25% 7.25%
Rate of return 7.5 % 7.5 % 7.5 %
Future compensation increases 4.0 % 4.0 % 4.0 %
</TABLE>
The 1996 minimum additional pension liability is a non-cash item which is
offset by a direct reduction in shareholders' equity of $425,000. In
1997, there was no additional pension liability.
The Company has a defined contribution plan for its U.S. employees, with
a specified matching Company contribution. The expense to the Company in
1997, 1996 and 1995 was $130,000, $123,000 and $113,000, respectively.
International pension expense in 1997, 1996 and 1995 was not material.
Foreign plans generally are insured or otherwise fully funded.
8. Stock options, rights and stock purchase plan:
The 1996 and 1995 data for the stock options and rights plans described
below have been restated to reflect a 10% stock dividend which was
distributed on May 15, 1997 and a 5% stock dividend which was distributed
on May 15, 1996.
-27-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
The 1991 Non-Qualified Stock Option Plan (the 1991 Plan) for officers and
key employees of the Company provides for the granting of options to
purchase up to 662,000 shares of the Company's Common stock. Options are
exercisable in five equal installments commencing one year after date of
grant. Options expire up to 5 years from the date of grant. The exercise
price per share of each option may not be less than the fair market value
on the date of grant.
Shares under option at December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------ ------------------------ ------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding,
beginning of
year 204,435 $ 4.63 284,995 $4.84 197,215 $4.82
Granted 126,000 10.17 - - 88,935 4.87
Exercised - - (21,205) 5.25 - -
Cancelled (3,465) 4.44 (3,753) 5.41 (1,155) 5.41
Expired - (55,602) 5.41 - -
------- ------- -------
- -
Outstanding,
end of year 326,970 $5.77 204,435 $4.63 284,995 $4.84
======= ======= =======
</TABLE>
During 1997, options were granted at $6.00, $10.00, $15.00 and $20.00 per
share and during 1995, options were granted at $6.06 and at $4.65 per
share. No options were granted in 1996. At December 31, 1997, 89,628,
30,030, and 5,544 options were exercisable at prices of $4.44, $4.65 and
$6.06 per share, respectively, and 313,825 options were available for
future grant. The weighted-average remaining contractual life for the
options outstanding at December 31, 1997 was 2.5 years.
In 1987, the Company adopted an Employee Stock Purchase Plan. Under the
Stock Purchase Plan, employees may purchase shares of the Company's
Common stock at 85% of fair market value on specified dates. The Company
has reserved 231,000 shares of its authorized shares of Common stock for
this purpose. During 1997, 1996 and 1995, 13,997, 14,841 and 15,086
Common shares, respectively, were issued under the plan.
In 1989, the Company adopted a stock option plan for nonemployee
directors. The plan provides for the granting of options to purchase up
to 215,500 shares of the Company's Common stock. No options may be
granted under the Plan after April 30, 1999. Options
-28-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
may be exercised over five years in cumulative installments of 20% per
year and expire up to ten years after grant. The exercise price per share
of each option may not be less than eighty-five percent (85%) of the fair
market value on the date of grant.
Shares under option at December 31, are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------ ------------------------ ------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding,
beginning of
year 79,982 $5.57 85,177 $5.53 38,977 $5.60
Granted 123,000 6.76 - - 46,200 5.46
Exercised (1,155) 5.84 (865) 4.33 - -
Cancelled - (4,330) 4.94 - -
------- ------- -------
-
Outstanding,
end of year 201,827 $6.29 79,982 $5.57 85,177 $5.53
======= ====== ======
</TABLE>
During 1997, options were granted at $6.09 and $7.00 per share and during
1995, options were granted at $5.46 per share. No options were granted in
1996. At December 31, 1997, 31,473, 3,464 and 17,556 options were
exercisable at prices of $5.84, $4.33 and $5.46 per share, respectively,
and 11,136 options were available for future grant. The weighted-average
remaining contractual life for the options outstanding at December 31,
1997 was 4.7 years.
At December 31, 1997, there were 324,961 additional shares available for
grant under the stock option plans. The per share weighted-average fair
value of stock options granted during 1997 and 1995 was $2.23 and $2.93,
respectively, on the date of grant using the Black Scholes option-pricing
model with the following weighted-average assumptions: 1997 - no expected
dividend yield, risk-free interest rate of 6.46%, volatility factor of
45.2%, and an expected life of 3 years; 1995 - no expected dividend
yield, risk-free interest rate of 6.12%, volatility factor of 49%, and an
expected life of 5.57 years.
The Company applies APB Opinion No. 25 in accounting for its Plans and,
accordingly, no compensation cost has been recognized for its stock
options in the financial statements with the exception of $35,000
relating to the discount from fair market value of options issued under
the stock option plan for nonemployee directors. Had the Company
determined compensation cost based on the fair value at the grant date
for its stock options under SFAS No. 123, the Company's 1997, 1996 and
1995 net income and earnings per share would have been reduced to the
proforma amounts as follows:
-29-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net income (in thousands):
As reported $1,012 $882 $1,172
Proforma 921 812 1,150
Basic earnings per share:
As reported $ .24 $ .21 $ .28
Proforma .22 $ .20 $ .28
Diluted earnings per share:
As reported $ .24 $ .21 $ .28
Proforma .21 $ .19 .27
</TABLE>
Pro forma net income reflects only options granted in 1997 and 1995, no
options were granted in 1996. Therefore, the full impact of calculating
compensation cost for stock options under SFAS No. 123 is not reflected
in the pro forma net income amounts presented above because compensation
cost is reflected over the options' vesting periods of 5 and 10 years and
compensation cost for options granted prior to January 1, 1995 is not
considered.
On October 27, 1989, the Company declared a dividend of one common share
purchase right (the "Rights") on each share of Common stock outstanding.
The rights entitle the holder to purchase one share of Common stock at
$25.97 per share. Upon the occurrence of certain events related to
non-negotiated attempts to acquire control of the Company, the Rights:
(i) will entitle holders to purchase at the exercise price that number of
shares of Common stock having an aggregate fair market value of two times
the exercise price; (ii) will become exchangeable at the Company's
election for that number of shares of Common stock having a fair market
value of two times the exercise price; and (iii) will become tradable
separately from the Common stock. Further, if the Company is a party to a
merger or business combination transaction, the Rights will entitle the
holders to purchase at the exercise price, shares of Common stock of the
surviving company having a fair market value of two times the exercise
price.
In 1989, the Company adopted an Employee Stock Ownership Plan and
Declaration of Trust ("ESOP"). The ESOP provides for the annual
contribution by the Company of cash, Company stock or other property to a
trust for the benefit of eligible employees. The amount of the Company's
annual contribution to the ESOP is within the discretion of the Board of
Directors but must be of sufficient amount to repay indebtedness incurred
by the ESOP trust, if any, for the purpose of acquiring the Company's
stock. The Company made contributions to the ESOP of $4,235, $9,330 and
$4,170 during 1997, 1996 and 1995, respectively.
-30-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
9. Operations by geographic areas:
The Company sells its equipment to pharmaceutical companies, agricultural
and chemical companies, other industrial customers engaged in
biotechnology, and to medical schools, universities, research institutes,
hospitals, private laboratories and laboratories of Federal, State and
Municipal government departments and agencies in the United States and
abroad.
While only a small percentage of the Company's sales are made directly to
United States government departments and agencies, its domestic business
is significantly affected by government expenditures and grants for
research to educational research institutions and to industry. The
Company regularly evaluates credit granted to customers and generally
requires progress payments for the purchase of custom bioprocess
equipment which is typically sold under contract. The number of these
larger systems sold in any reporting period may materially affect the
sales and profitability of the Company.
The following table sets forth the Company's operations by geographic
area for 1997, 1996 and 1995. The information shown under the caption
"Europe" represents the operations of the Company's wholly-owned foreign
subsidiaries (in thousands):
<TABLE>
<CAPTION>
Transfers and
eliminations
United between geo- Conso-
States Europe graphic areas lidated
------ ------ ------------- -------
<S> <C> <C> <C> <C>
Net sales:
1997 $ 34,270 $ 15,586 $4,260 $45,596
1996 32,939 14,172 4,184 42,927
1995 30,456 12,117 3,488 39,085
Income from operations:
1997 $ (490) $ 1,542 $ 1,052
1996 (476) 1,311 835
1995 (12) 1,246 1,234
Identifiable assets:
1997 $ 29,306 $ 8,847 $38,153
1996 28,341 8,885 37,226
1995 28,156 7,529 35,685
</TABLE>
Total sales by geographic area include both sales to unaffiliated
customers and transfers between geographic areas. Such transfers are
accounted for at prices comparable to normal unaffiliated customer sales.
One customer based in the United States accounted for
-31-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
approximately 12.0%, 10.0% and 12.1%, respectively, of consolidated net
sales during the years ended December 31, 1997, 1996 and 1995.
Income from operations from the United States has been significantly
affected by the research and development costs of DGI BioTechnologies,
the Company's drug lead discovery operation which costs amounted to
$1,923,000, $1,535,000 and $205,000, respectively, during the years ended
December 31, 1997, 1996 and 1995.
During 1997, 1996 and 1995, net sales from domestic operations to foreign
customers were $9,442,000, $11,413,000 and $11,622,000, respectively.
Export sales from the U.S. are made to many countries and areas of the
world including the Far East, the Middle East, Canada, South America,
India and Australia.
10. Commitments and contingencies:
The Company is obligated under the terms of various operating leases.
Rental expense under such leases for 1997, 1996 and 1995 was $616,000,
$614,000 and $533,000, respectively. As of December 31, 1997, estimated
future minimum annual rental commitments under noncancelable leases
expiring through 2014 are as follows (in thousands):
1998 $ 537
1999 395
2000 318
2001 241
2002 169
After 2002 2,559
-----
Total minimum payments required $4,219*
======
* Minimum payments have not been reduced by minimum sublease rentals
of $404,000 due in the future under noncancelable subleases.
At December 31, 1997, the Company was involved in litigation, which
Company management believes, after consultation with counsel, that the
ultimate disposition of such litigation will not have a material adverse
effect on the Company's consolidated financial position.
11. Other matters:
The Company enters into forward foreign exchange contracts to hedge
certain firm and anticipated sales commitments, net of offsetting
purchases, denominated in certain foreign currencies. The purpose of such
foreign currency hedging activities is to protect the Company from the
risk that the eventual cash flows resulting from the sale of products to
-32-
<PAGE>
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
certain foreign customers (net of purchases from applicable foreign
suppliers) will be adversely affected by fluctuations in exchange rates.
At December 31, 1997 and 1996, the Company had $5,965,000 and $2,640,000,
respectively, of forward exchange contracts outstanding, primarily to
exchange various European currencies for U.S. dollars. Substantially, all
contracts mature within a period of 13 months. Gains and losses on
forward exchange contracts in connection with firm commitments that are
designated and effective as hedges of such transactions are deferred and
recognized in income in the same period as the hedged transactions. At
December 31, 1997, less than $200,000 of unrecognized net gains were
deferred on such contracts. Gains and losses on forward exchange
contracts in connection with anticipated transactions are marked to
market monthly with the resulting gain or loss recognized immediately in
the consolidated statement of operations.
Other assets includes a non-interest bearing note receivable from the
President and Chief Executive Officer of the Company due in 2006 in the
amount of $62,500. Inputed interest on the loan amounted to $4,013 in
1997.
Item 9. DISAGREEMENT ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
-33-
<PAGE>
PART III
The information required by Part III is contained in the
Registrant's proxy statement which will be filed pursuant to Regulation 14A or
an information statement pursuant to Regulation 14C of the General Rules and
Regulations under the Securities Exchange Act of 1934 not later than 120 days
after the close of the fiscal year ended December 31, 1997. The information is
incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. Financial statements and supplementary data included
in Part II of this report:
New Brunswick Scientific Co., Inc. and Subsidiaries,
consolidated financial statements:
Consolidated Balance Sheets as of December 31, 1997
and 1996
Consolidated Statements of Operations for the years
ended December 31, 1997, 1996 and 1995
Consolidated Statements of Shareholders' Equity for
the years ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years
ended December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
2. Financial statement schedules included in part IV of
this report:
Schedule II
Schedules other than those listed above have been
omitted because they are not applicable or the
required information is shown in the financial
statements or notes thereto.
3. Exhibits:
The Exhibits index is on page 36.
-34-
<PAGE>
Schedule II
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(In thousands)
<TABLE>
<CAPTION>
Additions
--------------
Charged to Balance
Balance Costs and Charged to At End
Beginning (Credited) Other of
of Period Expenses Accounts Deductions Period
--------- -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Allowance deducted
from asset to which
it applies:
Allowance for
doubtful accounts:
Year ended
December 31, 1997 $ 224 $ 60 $ - $ - $284
Year ended
December 31, 1996 306 (82) - - 224
Year ended
December 31, 1995 340 (27) - (7)(a) 306
</TABLE>
- ----------
Notes:
(a) Uncollected receivables written off.
-35-
<PAGE>
EXHIBIT INDEX
(3a) Restated Certificate of Incorporation, as amended is incorporated
herein by reference from Exhibit (4) to the Registrant's Registration
Statement on Form S-8 on file with the commission (No. 33-15606), and
with respect to two amendments to said Restated Certificate of
Incorporation, to Exhibit (4b) of Registrant's Registration Statement
on Form S-8 (No. 33-16024).
(3b) By laws of the Company as amended and restated as of August 19, 1991 is
incorporated herein by reference to Exhibit (3b) from Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991.
(3c) Rights Agreement dated as of October 31, 1989 between the Company and
American Stock Transfer & Trust Company as Rights Agent, incorporated
therein by reference to Exhibit 1 to the Company's Report on Form 8-K
filed with the Commission on or about November 22, 1989.
(4) See the provisions relating to capital structure in the Restated
Certificate of Incorporation, amendment thereto, incorporated herein by
reference from the Exhibits to the Registration Statements identified
in Exhibit (3) above.
(10-2) Pension Plan is incorporated herein by reference from Registrant's Form
10-K for the year ended December 31, 1985.
(10-3) The New Brunswick Scientific Co., Inc., 1989 Stock Option Plan for
Nonemployee Directors is incorporated herein by reference to Exhibit
"A" appended to the Company's Proxy Statement filed with the Commission
on or about April 22, 1989.
(10-5) Employment Agreement with David Freedman is incorporated herein by
reference to Exhibit (10-3) of the Registrant's Report on Form 10-Q for
the quarter ended March 31, 1996.
(10-6) Employment Agreement with Ezra Weisman is incorporated herein by
reference to Exhibit 10-6 of Registrants Report on Form 10-K for the
year ended December 31, 1993.
(10-7) Nonqualified stock option agreement with Ezra Weisman is incorporated
herein by reference to Exhibit (10-7) of the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1990.
(10-8) Termination Agreement with David Freedman is incorporated herein by
reference to Exhibit (10-8) of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990.
-36-
<PAGE>
(10-9) Termination Agreement with Samuel Eichenbaum is incorporated herein by
reference to Exhibit (10-9) of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1991.
(10-10) Termination Agreement with Ezra Weisman is incorporated herein by
reference to Exhibit (10-10) of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990.
(10-11) Termination Agreement with Sigmund Freedman is incorporated herein by
reference to Exhibit (10-11) of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990.
(10-12) 1991 Nonqualified Stock Option Plan is incorporated herein by reference
to Exhibit (10-12) of the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1991.
(10-13) Indemnification Agreements in substantially the same form as with all
the Directors and Officers of the Company is incorporated herein by
reference to Schedule A to Exhibit (10-13) of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1991.
(10-14) Loan and Security Agreement with Summit Bank, the successor to United
Jersey Bank/Central NA dated February 17, 1993, is incorporated herein
by reference to Exhibit (10-14) of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992.
(10-16) Nonqualified stock option agreement with Ezra Weisman is incorporated
herein by reference to the Registrant's Report on Form 10-K for the
year ended December 31, 1993.
(10-17) Amendment dated December 29, 1995 to Loan and Security Agreement with
Summit Bank, the successor to United Jersey Bank/Central NA dated
February 17, 1993.
(13) Annual Report to Shareholders, to be filed within 120 days of the end
of the fiscal year ended December 31, 1997, is incorporated herein by
reference.
(22) Subsidiaries of the Company appear on Page 38.
(24a)* Consent of KPMG Peat Marwick LLP.
* Filed herewith.
-37-
<PAGE>
EXHIBIT 22
SUBSIDIARIES OF THE COMPANY
Percentage of
Name and Place of Incorporation Ownership
------------------------------- ---------
New Brunswick Scientific (U.K.) Limited
Incorporated in The United Kingdom 100%
NBS Benelux B.V.
Incorporated in The Netherlands 100%
New Brunswick Scientific N.V.
Incorporated in Belgium 100%
New Brunswick Scientific GmbH
Incorporated in Germany 100%
New Brunswick Scientific of Delaware, Inc.
Incorporated in the State of Delaware 100%
New Brunswick Scientific International, Inc.
Incorporated in the State of Delaware 100%
NBS Sales Co., Limited
Incorporated in Jamaica 100%
New Brunswick Scientific West Inc.
Incorporated in the State of California 100%
New Brunswick Scientific S.A.R.L.
Incorporated in France 100%
-38-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 17, 1998 By: /s/ Ezra Weisman
-------------------------------------------
Ezra Weisman
President (Principal Executive Officer) and
Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Dated: March 17, 1998 By: /s/ David Freedman
-------------------------------------
David Freedman
Chairman of the Board
Dated: March 17, 1998 By: /s/ Adele Lavender
-------------------------------------
Adele Lavender
Corporate Secretary
Dated: March 17, 1998 By: /s/ Sigmund Freedman
-------------------------------------
Sigmund Freedman
Treasurer and Director
Dated: March 17, 1998 By: /s/ Samuel Eichenbaum
-------------------------------------
Samuel Eichenbaum
Vice President, Finance
-39-
<PAGE>
Dated: By:
-------------------------------------
Ernest Gross
Director
Dated: March 17, 1998 By: /s/ Bernard Leon
-------------------------------------
Bernard Leon
Director
Dated: March 17, 1998 By: /s/ Kiyoshi Masuda
-------------------------------------
Kiyoshi Masuda
Director
Dated: March 17, 1998 By: /s/ Dr. David Pramer
-------------------------------------
Dr. David Pramer
Director
Dated: March 17, 1998 By: /s/ Martin Siegel
-------------------------------------
Martin Siegel
Director
Dated: March 17, 1998 By: /s/ Dr. Marvin Weinstein
-------------------------------------
Dr. Marvin Weinstein
Director
-40-
<PAGE>
Exhibit (24a)
Independent Auditors' Consent
The Board of Directors
New Brunswick Scientific Co., Inc.
We consent to incorporation by reference in the registration statements (No.
33-70452, No. 333-06029 and No. 33-16024) on Form S-8 of New Brunswick
Scientific Co., Inc. of our report dated February 12, 1998, relating to the
consolidated balance sheets of New Brunswick Scientific Co., Inc. and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity, and cash flows and related
schedule for each of the years in the three-year period ended December 31, 1997,
which report appears in the December 31, 1997 annual report on Form 10-K of New
Brunswick Scientific Co., Inc.
KPMG Peat Marwick LLP
Short Hills, New Jersey
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000071241
<NAME> NEW BRUNSWICK SCIENTIFIC CO., INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,968,000
<SECURITIES> 0
<RECEIVABLES> 10,602,000
<ALLOWANCES> 0
<INVENTORY> 14,862,000
<CURRENT-ASSETS> 31,699,000
<PP&E> 5,354,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 38,153,000
<CURRENT-LIABILITIES> 7,819,000
<BONDS> 0
0
0
<COMMON> 263,000
<OTHER-SE> 29,824,000
<TOTAL-LIABILITY-AND-EQUITY> 38,153,000
<SALES> 45,596,000
<TOTAL-REVENUES> 45,596,000
<CGS> 27,319,000
<TOTAL-COSTS> 44,544,000
<OTHER-EXPENSES> (140,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,000
<INCOME-PRETAX> 1,121,000
<INCOME-TAX> 109,000
<INCOME-CONTINUING> 1,012,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,012,000
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
