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Previous: NICOR INC, 10-Q, 1995-05-12 |
Next: NAI TECHNOLOGIES INC, 10-Q, 1995-05-12 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
---------- ----------
COMMISSION FILE #0-4829-03
NORTH AMERICAN BIOLOGICALS, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 59-1212264
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1111 Park Centre Boulevard, Third Floor, Miami, Florida 33169
--------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (305) 625-5303
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES (X) NO ( )
The number of shares outstanding of registrant's common stock at May 8, 1995
was 19,441,134 shares.
<PAGE> 2
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
NORTH AMERICAN BIOLOGICALS, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
INDEX No.
----- ---
<S> <C>
PART I FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet, March 31, 1995
and December 31, 1994 3
Consolidated Statement of Operations
for the three month periods ended
March 31, 1995 and 1994 4
Consolidated Statement of Cash Flows
for the three month periods ended
March 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
PART II OTHER INFORMATION:
Signatures 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
Exhibit 11 - Calculation of Earnings per Share
Exhibit 27 - Financial Data Schedule (for SEC use only).
</TABLE>
2
<PAGE> 3
Part I Financial Information
Item 1 Financial Statements
NORTH AMERICAN BIOLOGICALS, INC.
CONSOLIDATED BALANCE SHEET
($ THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
March 31, December 31,
1995 1994
----------- ------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $ 1,766 $ 1,982
Trade accounts receivable, net 22,568 22,875
Inventories 20,279 20,713
Prepaid expenses and other assets 3,188 2,485
------- -------
TOTAL CURRENT ASSETS 47,801 48,055
PROPERTY AND EQUIPMENT, NET 17,571 14,225
OTHER ASSETS:
Excess of acquisition cost over net assets acquired, net 16,564 16,696
Intangible assets, net 10,270 10,616
Other assets 4,508 4,225
------- -------
TOTAL ASSETS $96,714 $93,817
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Trade accounts payable $ 6,117 $ 6,559
Accrued expenses 10,159 10,465
Notes payable 7,485 5,479
------- -------
TOTAL CURRENT LIABILITIES 23,761 22,503
NOTES PAYABLE 18,181 19,549
------- -------
TOTAL LIABILITIES 41,942 42,052
------- -------
STOCKHOLDERS' EQUITY:
Convertible preferred stock, par value $.10 per share:
5,000 shares authorized; no shares outstanding -- --
Common stock, par value $.10 per share: 50,000 shares authorized,
19,456 and 19,308 shares issued and outstanding, respectively 1,946 1,931
Capital in excess of par value 37,719 37,781
Retained earnings 15,234 12,179
Treasury stock, at cost, 20 shares (127) --
------- -------
54,772 51,891
Note receivable from stockholder -- (126)
------- -------
TOTAL STOCKHOLDERS' EQUITY 54,772 51,765
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $96,714 $93,817
======= =======
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
3
<PAGE> 4
NORTH AMERICAN BIOLOGICALS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
($ THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
Three Months Ended
March 31,
--------------------
1995 1994
---- ----
<S> <C> <C>
Sales $46,477 $35,636
Costs and expenses:
Cost of products sold 37,135 28,299
Selling, general and administrative expenses 3,026 2,924
Other operating expenses 1,093 968
------- -------
Operating income 5,223 3,445
Interest expense, net 295 837
------- -------
Income before provision for income taxes 4,928 2,608
Provision for income taxes 1,873 991
------- -------
Net income $ 3,055 $ 1,617
======= =======
Earnings per share $ 0.15 $ 0.10
======= =======
Weighted average number of shares and
common share equivalents (thousands) 20,244 16,262
======= =======
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
4
<PAGE> 5
NORTH AMERICAN BIOLOGICALS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
($ THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
Three Months Ended
March 31,
----------------------
1995 1994
------ ------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $3,055 $1,617
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,049 1,075
Imputed interest and amortization of debt discount 9 286
Provision for doubtful accounts (5) 104
Compensation under employee stock plan 13 13
Change in assets and liabilities:
Decrease (increase) in accounts receivable 312 (216)
Decrease (increase) in inventories 434 (1,764)
Decrease (increase) in prepaid expenses and other assets (707) 75
Decrease (increase) in other assets (455) (125)
Increase (decrease) in accounts payable and accrued liabilities (968) (1,468)
------ ------
Total adjustments (318) (2,020)
------ ------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 2,737 (403)
------ ------
CASH FLOW FROM INVESTING ACTIVITIES:
Collection on note receivable from stockholder 126 166
Cash of business acquired, net of transaction costs -- 652
Capital expenditures (3,759) (381)
------ ------
NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES (3,633) 437
------ ------
CASH FLOW FROM FINANCING ACTIVITIES:
Borrowings under term debt agreement -- 6,125
Repayments of term debt (375) (4,875)
Net borrowings (repayments) under line of credit agreement (585) (1,772)
Other debt 1,589 694
Contingent royalty obligation payments -- (255)
Proceeds from the exercise of options and warrants 51 81
------ ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 680 (2)
------ ------
NET (DECREASE) INCREASE IN CASH (216) 32
CASH AT BEGINNING OF PERIOD 1,982 824
------ ------
CASH AT END OF PERIOD $1,766 $ 856
====== ======
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
5
<PAGE> 6
NORTH AMERICAN BIOLOGICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- GENERAL
The consolidated financial statements include the accounts of North American
Biologicals, Inc. (the "Company") and its subsidiaries. All significant
intercompany accounts and transactions are eliminated in consolidation. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report to
Stockholders for the year ended December 31, 1994.
In the opinion of management, the unaudited consolidated financial statements
include all adjustments necessary to present fairly the Company's consolidated
financial position at March 31, 1995 and the consolidated results of its
operations for the three months ended March 31, 1995 and 1994. The interim
results of operations are not necessarily indicative of the results which may
occur for the fiscal year.
NOTE 2 -- INVENTORIES
The components of inventories, stated at the lower of cost (FIFO) or market,
are as follows:
<TABLE>
<CAPTION>
(In Thousands) March 31, December 31,
1995 1994
---- ----
<S> <C> <C>
Finished goods $13,978 $15,328
Work in process 2,134 1,343
Raw materials 4,167 4,042
------- -------
$20,279 $20,713
======= =======
</TABLE>
NOTE 3 -- RECLASSIFICATIONS
Certain items in the consolidated financial statements for the three months
ended March 31, 1994 have been reclassified for comparative purposes.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The following is a discussion and analysis of the major factors contributing to
the Company's financial condition and results of operations for the three month
periods ended March 31, 1995 and 1994. The discussion and analysis should be
read in conjunction with the condensed consolidated financial statements and
notes thereto. All amounts are expressed in thousands of dollars, except per
share amounts.
RESULTS OF OPERATIONS
The following table sets forth the Company's results of operations expressed as
a percentage of sales:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-------------------------
1995 1994
---- ----
<S> <C> <C>
Sales 100.0% 100.0%
Cost of products sold 79.9 79.4
----- -----
Gross margin 20.1 20.6
Selling, general and administrative expenses 6.5 8.2
Other operating expenses 2.4 2.7
----- -----
Operating income 11.2 9.7
Interest expense, net 0.6 2.4
----- -----
Income before provision for income taxes 10.6 7.3
Provision for income taxes 4.0 2.8
----- -----
Net income 6.6% 4.5%
===== =====
</TABLE>
The following table sets forth certain information concerning sales by industry
segment:
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------
1995 % 1994 %
------- ----- ------- -----
<S> <C> <C> <C> <C>
Plasma-Source $28,445 61.2% $22,435 63.0%
-Specialty 13,661 29.4 8,262 23.2
------- ----- ------- -----
42,106 90.6 30,697 86.2
Therapeutic products 2,601 5.6 2,041 5.7
Diagnostic products and services 1,770 3.8 2,898 8.1
------- ----- ------- -----
TOTAL $46,477 100.0% $35,636 100.0%
======= ===== ======= =====
</TABLE>
7
<PAGE> 8
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
The Company achieved record sales, operating income and net income for the
quarter ended March 31, 1995. Operating income rose 52% to $5,223 in the first
quarter of 1995 compared to $3,445 in the comparable 1994 quarter. Net income
for the first quarter of 1995 was $3,055 or $0.15 per share, versus $1,617 or
$0.10 per share in the first quarter of 1994.
SALES
Sales for the first quarter of 1995 rose 30% to $46,477 compared to $35,636 for
the first quarter of 1994. The increase during the quarter was primarily
attributable to increased volume of source and specialty plasma shipments.
Premier BioResources, Inc. ("PBI") acquired on January 27, 1994, contributed
approximately $10.9 million and $7.7 million of plasma sales during the
quarters ended March 31, 1995 and 1994, respectively.
GROSS MARGIN
Gross margin in the first quarter of 1995 was $9,342 or 20.1% of sales compared
to $7,337 or 20.6% of sales in the first quarter of 1994. The decline in gross
margin as a percentage of sales was primarily attributable to increased lower
margin source plasma sales contributed by PBI and start-up expenses associated
with foreign operations. This was partially offset by an improved sales mix of
higher margin specialty plasma, improved pricing under long-term plasma supply
contracts, and the profit contribution from increased sales of therapeutic
products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expenses were $3,026, or 6.5% of sales, for
the first quarter of 1995 compared to $2,924 or 8.2% of sales in the first
quarter of 1994. The reduction in these expenses as a percentage of sales
reflects the full integration and economies associated with the PBI acquisition
and ongoing cost containment measures.
OTHER OPERATING EXPENSES
Other operating expenses were $1,093 for the first quarter of 1995, compared to
$968 for the first quarter of 1994, primarily as a result of additional freight
expenses associated with the increased volume of sales during the quarter.
INTEREST EXPENSE
Interest expense decreased to $295 in the first quarter of 1995 from $837 in
the first quarter of 1994 primarily due to the early retirement of the
Company's subordinated and other debt in the fourth quarter of 1994.
OTHER FACTORS
The effective income tax rate of 38% was consistent with the first quarter of
1994 and differed from the federal statutory rate principally due to state
income taxes and non-deductible foreign losses in 1995, offset by the effects
of foreign trade income in both the current and comparable quarter.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1995, the Company's current assets exceeded current liabilities
by $24,040 as compared to a net working capital position of $25,552 at December
31, 1994. Approximately $9.5 million in a term loan and $6.8 million in
revolving credit loans were outstanding under a credit agreement with the
Company's principal lender at March 31, 1995. The credit agreement provides
for $12 million in revolving credit borrowing capacity to satisfy the Company's
working capital requirements. In addition, the Company had approximately $5.1
million in flexible term notes outstanding, the proceeds of which were used to
finance the construction of a new biopharmaceutical facility. The flexible
term note agreement provides for a maximum outstanding principal amount of $18
million.
Projected capital expenditures for the remainder of 1995 include the
substantial completion of construction of a new biopharmaceutical manufacturing
facility, which will also include the Company's executive offices; plasma
center renovations and relocations; and recurring improvements and continued
automation of the Company's laboratories and warehouse facilities. Except for
the new facility, the Company expects that these expenditures and the Company's
working capital requirements will be furnished by a combination of funds on
hand, cash flow from operations and bank borrowings, as required, under the
Company's credit agreement.
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
11 Calculation of Earnings Per Share
27 Financial Data Schedule (for SEC purposes only)
b. Reports on Form 8-K:
None
9
<PAGE> 10
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.
NORTH AMERICAN BIOLOGICALS, INC.
DATE: May 10, 1995 By /s/ Alfred J. Fernandez
---------------------------
ALFRED J. FERNANDEZ
Vice President, Finance and
Chief Financial Officer
10
<PAGE> 1
EXHIBIT 11
NORTH AMERICAN BIOLOGICALS, INC.
CALCULATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1995 1994
------- -------
<S> <C> <C>
Net income $ 3,055 $ 1,617
======= =======
Weighted average number of common shares
outstanding during the period 19,392 14,737
Add dilutive effect of common stock equivalents:
Stock options and warrants
(as determined by the application of the
treasury stock method) 852 1,525
------- -------
Weighted average number of shares and common
share equivalents used in primary earnings
per share computations 20,244 16,262
======= =======
Earnings per share $ 0.15 $ 0.10
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1995 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,766
<SECURITIES> 0
<RECEIVABLES> 22,568
<ALLOWANCES> 0
<INVENTORY> 20,279
<CURRENT-ASSETS> 47,801
<PP&E> 17,571
<DEPRECIATION> 0
<TOTAL-ASSETS> 96,714
<CURRENT-LIABILITIES> 23,761
<BONDS> 18,181
<COMMON> 1,946
0
0
<OTHER-SE> 52,826
<TOTAL-LIABILITY-AND-EQUITY> 96,714
<SALES> 46,477
<TOTAL-REVENUES> 46,477
<CGS> 37,135
<TOTAL-COSTS> 37,135
<OTHER-EXPENSES> 4,119
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 295
<INCOME-PRETAX> 4,928
<INCOME-TAX> 1,873
<INCOME-CONTINUING> 3,055
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,055
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0
</TABLE>
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