<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 September 30, 1994
---------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-14991
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LIFE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 34-0431300
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
8717 Grovemont Circle, Gaithersburg, MD 20877
(Address of principal executive offices) (Zip Code)
---------------
Registrant's telephone number, including area code: (301) 840-8000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at October 31, 1994
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<S> <C>
Common Stock, par value $.01 per share 14,979,582 shares
</TABLE>
- - --------------------------------------------------------------------------------
<PAGE>
PART I
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FINANCIAL INFORMATION
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Item 1. Financial Statements
--------------------
CONSOLIDATED BALANCE SHEET
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
-------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,840 $ 7,927
Accounts receivable, net 39,600 29,901
Inventories:
Materials and supplies 9,879 11,562
In process and finished 47,020 41,209
LIFO reserve (5,766) (5,094)
-------- --------
51,133 47,677
Prepaid expenses 2,262 2,352
Current deferred tax assets 3,776 3,776
-------- --------
Total current assets 103,611 91,633
Property, plant, and equipment 76,333 65,464
Less accumulated depreciation (29,983) (25,070)
-------- --------
46,350 40,394
Investments and other assets 9,129 8,475
Excess of cost over net assets of
businesses acquired, net 6,429 5,288
-------- --------
Total assets $165,519 $145,790
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 12,489 $ 13,217
Dividends payable 749 748
Income taxes 11,170 9,460
Accrued liabilities and expenses 11,012 9,285
-------- --------
Total current liabilities 35,420 32,710
Deferred income taxes and tax credits 1,950 1,923
Other deferred items 1,803 1,157
-------- --------
Total liabilities 39,173 35,790
Stockholders' equity:
Common stock 150 150
Additional paid-in capital 42,540 42,184
Retained earnings 85,395 73,972
Currency exchange effects (1,739) (6,306)
-------- --------
Total stockholders' equity 126,346 110,000
-------- --------
Total liabilities and
stockholders' equity $165,519 $145,790
======== ========
Equity per share $8.44 $7.36
</TABLE>
Amounts as of September 30, 1994 are unaudited.
2
<PAGE>
Part I - Financial Statements (continued)
CONSOLIDATED STATEMENT OF INCOME
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------------- -----------------------------
1994 1993 Change 1994 1993 Change
-------- -------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales $59,098 $51,030 + 16% $176,339 $154,006 + 15%
Net royalties - - - 67 - -
------- ------- -------- --------
59,098 51,030 + 16% 176,406 154,006 + 15%
Operating expenses:
Cost of sales 31,538 25,712 + 23% 92,697 76,111 + 22%
Marketing and 17,531 15,535 + 13% 51,309 47,515 + 8%
administrative
Research and development 3,533 3,596 - 2% 11,460 10,709 + 7%
------- ------- -------- --------
52,602 44,843 + 17% 155,466 134,335 + 16%
------- ------- -------- --------
Operating income 6,496 6,187 + 5% 20,940 19,671 + 6%
Other income (expense):
Investment income 111 99 + 12% 411 221 + 86%
Interest expense (1) (2) - 50% (24) (38) - 37%
Other, net 43 (129) - 161 (52) -
------- ------- -------- --------
153 (32) - 548 131 -
------- ------- -------- --------
Income before income taxes 6,649 6,155 + 8% 21,488 19,802 + 9%
Income taxes 2,394 2,216 + 8% 7,736 7,129 + 9%
------- ------- -------- --------
Income before minority 4,255 3,939 + 8% 13,752 12,673 + 9%
interest
Minority interest 97 - - (83) - -
------- ------- -------- --------
Net income $ 4,352 $ 3,939 + 10% $ 13,669 $ 12,673 + 8%
======= ======= ======== ========
Average shares outstanding 15,077 15,080 - 15,065 15,099 -
Net income per share $0.29 $0.26 + 12% $0.91 $0.84 + 8%
Dividends per share $0.05 $0.05 - $0.15 $0.15 -
</TABLE>
Amounts are unaudited.
3
<PAGE>
Part I - Financial Statements (continued)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
------------------
1994 1993
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<S> <C> <C>
CASH INFLOWS (OUTFLOWS)
Operations:
Net income $ 13,669 $12,673
Non-cash items:
Depreciation and
amortization 4,887 4,282
Other 1,026 (199)
Changes in assets and
liabilities (7,992) (9,341)
-------- -------
11,590 7,415
Investments:
Capital expenditures (9,848) (5,942)
Other (1,191) 212
-------- -------
(11,039) (5,730)
Financing:
Dividends paid (2,245) (2,241)
Proceeds from exercise of
stock options 290 367
-------- -------
(1,955) (1,874)
Effect of exchange rate
changes on cash 317 (227)
-------- -------
Increase (decrease) in
cash and cash equivalents (1,087) (416)
Cash and cash equivalents
at beginning of period 7,927 7,652
-------- -------
Cash and cash equivalents
at end of period $ 6,840 $ 7,236
======== =======
</TABLE>
Amounts are unaudited.
Notes To Financial Statements:
- - -----------------------------
Net income per share figures in the Consolidated Statement of Income are based
on the weighted average number of shares and common stock equivalents
outstanding as indicated for each period.
In the opinion of the Company's management, the unaudited financial statements
reflect all adjustments (which consist of normal recurring adjustments)
necessary to present a fair statement of the results for the interim periods.
The financial data included herein have been reviewed by the registrant's
independent public accountants, Coopers & Lybrand L.L.P., and their report is
attached.
4
<PAGE>
Part I - (continued)
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Third Quarter Results
Net sales were $59.1 million for the third quarter of 1994, an increase of $8.1
million, or 16%, over the comparable quarter of 1993. Operating income of $6.5
million for the quarter ended September 30, 1994 represented a 5% increase over
the third quarter of 1993. Third quarter 1994 net income of $4.4 million
increased 10% compared with net income of $3.9 million for the comparable period
a year earlier. Earnings per share of $0.29 in the third quarter of 1994 were
12% greater than the $0.26 per share reported in the prior year's third quarter.
In the third quarter of 1994, sales of products other than fetal bovine serum
(FBS) increased by $6.6 million, or 16%, when compared with the third quarter of
1993. The effect of changes in currency exchange rates increased third quarter
1994 sales of products other than FBS by $1.1 million, or 3%, when compared with
the prior year's third quarter. Third quarter 1994 FBS sales were $1.5 million
higher than in the third quarter of 1993. Higher unit sales of FBS increased net
sales by $1.8 million while lower unit selling prices reduced net sales of $0.5
million when comparing the third quarter of 1994 with the third quarter of 1993.
Changes in currency exchange rates increased third quarter 1994 FBS sales by
$0.2 million, compared with the third quarter of 1993. FBS sales represented
18% of net sales in the third quarters of both 1994 and 1993.
Gross margins were 46.6% of net sales in the third quarter of 1994 compared with
49.6% in the comparable quarter of 1993. FBS gross margins were lower in the
third quarter of 1994 principally due to a decline in unit selling prices and an
increase in unit costs. Marketing and administrative expenses were 29.7% of net
sales in the third quarter of 1994 and 30.4% in the third quarter of 1993.
Research and development (R&D) expenses were $3.5 million in the quarter ended
September 30, 1994 compared with $3.6 million for the comparable quarter of
1993. Operating income of $6.5 million in the third quarter of 1994 was 5% more
than the $6.2 million reported in the third quarter a year earlier.
Nine Month Results
For the first nine months of 1994, net sales were $176.3 million, an increase of
$22.3 million, or 15%, over the first nine months of 1993. Sales of products
other than FBS increased $17.9 million, or 14%, compared with the first nine
months of 1993. Changes in currency exchange rates used to translate sales of
products other than FBS to U.S. dollars increased net sales in the first nine
months of 1994 by $0.1 million when compared with the first nine months of last
year. FBS sales were $4.4 million higher in the 1994 period than in the first
nine months of last year. Higher unit sales of FBS increased net sales by $7.0
million while lower unit selling prices reduced net sales by
5
<PAGE>
Part I - (continued)
$2.6 million in the first nine months of 1994. FBS sales represented 18% of net
sales in the first nine months of both 1994 and 1993.
Gross margins for the first nine months of 1994 were 47.4% of net sales compared
with 50.6% in the first nine months of 1993. Gross margins declined in the 1994
period principally due to lower FBS gross margins and higher royalty expense in
the 1994 period. FBS gross margins were lower because of a decline in unit
selling prices and an increase in unit costs. Marketing and administrative
expenses represented 29.1% of net sales in the first nine months of 1994
compared with 30.9% of net sales in the comparable period of 1993. R&D expenses
were $11.5 million in the first nine months of 1994, an increase of 7% over the
first nine months of 1993.
Operating income increased 6% to $20.9 million in the first nine months of 1994.
Operating income growth was less than the growth in net sales due to reduced
gross margins in the first nine months of 1994.
Net income of $13.7 million, or $0.91 per share, for the first nine months of
1994 was 8% greater than the $12.7 million or $0.84 per share, for the
comparable period in 1993.
Liquidity - Financial Resources
Operating activities provided $11.6 million in cash during the first nine months
of 1994. The Company paid $9.8 million for capital expenditures in the first
nine months of 1994, reflecting continuing investment in the Company's worldwide
facilities and equipment modernization program. The Company invested $1.2
million to establish a direct sales presence in Sweden and to acquire an equity
position in a life sciences company in North America.
Cash used for financing activities included $2.2 million paid in the first nine
months of 1994 for the Company's quarterly dividends. The Company borrowed
various amounts up to $3.1 million during the first nine months of 1994 at
prevailing market rates of interest under a revolving line of credit made
available by The Dexter Corporation (Dexter), an affiliate of the Company, to
meet short-term working capital needs. There were no borrowings outstanding at
September 30, 1994.
Capital expenditures in 1994 are expected to be approximately $12 - $15 million
largely due to the continuation of the Company's facilities and equipment
modernization program in the U.S., U.K., and New Zealand. The Company believes
it will be able to generate sufficient cash from its operations and its existing
credit line from Dexter to meet its anticipated working capital and capital
expenditure requirements in 1994.
6
<PAGE>
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings - Not applicable.
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Item 2. Changes in Securities - Not applicable.
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Item 3. Defaults Upon Senior Securities - Not applicable.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders - Not applicable.
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Item 5. Other Information
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On July 19, 1994, the Company announced that Jerry E. Robertson,
Ph.D. had become a member of the Board of Directors and will serve
for a term that will expire at the Company's Annual Meeting in
1997 or until the election and qualification of his successor.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
11. Statement re computation of per share earnings.
15. Letter re unaudited interim financial statements.
27. Financial data schedule
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed for the nine months ended
September 30, 1994.
7
<PAGE>
SIGNATURES
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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 thereto duly authorized.
LIFE TECHNOLOGIES, INC.
Date: November 4, 1994 By:/s/ Joseph C. Stokes, Jr.
------------------------------
Joseph C. Stokes, Jr.
Vice President-Finance,
Secretary and Treasurer
(Principal Financial Officer
and Authorized Signatory)
By:/s/ C. Eric Winzer
----------------------------
C. Eric Winzer
Controller
(Principal Accounting
Officer)
8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Life Technologies, Inc.
We have reviewed the accompanying consolidated balance sheet of Life
Technologies, Inc. and subsidiaries as of September 30, 1994 and the related
consolidated statements of income for the three-month and nine-month periods
ended September 30, 1994 and 1993, and the related condensed consolidated
statements of cash flows for the nine-month periods then ended. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1993 and the
related consolidated statements of income, stockholders' equity and cash flows
for the year then ended (not presented herein), and in our report dated January
26, 1994 we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1993 is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Washington, D.C.
October 10, 1994
9
<PAGE>
EXHIBIT INDEX
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Exhibit 11 Statement re computation of per share earnings 11-13
Exhibit 15 Letter re unaudited interim financial statements 14-15
Exhibit 27 Financial data schedule 16
</TABLE>
10
<PAGE>
EXHIBIT 11
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STATEMENT RE COMPUTATION OF
---------------------------
PER SHARE EARNINGS
------------------
11
<PAGE>
Exhibit 11
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LIFE TECHNOLOGIES, INC.
STATEMENT RE COMPUTATION OF PRIMARY PER SHARE EARNINGS
------------------------------------------------------
for the three and nine months ended
September 30, 1994 and 1993
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------- ------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 4,352 $ 3,939 $13,669 $12,673
======= ======= ======= =======
Weighted avg. shares outstanding 14,974 14,945 14,968 14,938
Weighted average effect of
common stock equivalents 103 135 97 161
------- ------- ------- -------
15,077 15,080 15,065 15,099
======= ======= ======= =======
Primary net income per share $ .29 $ .26 $ .91 $ .84
======= ======= ======= =======
</TABLE>
12
<PAGE>
Exhibit 11
----------
LIFE TECHNOLOGIES, INC.
STATEMENT RE COMPUTATION OF FULLY DILUTED PER SHARE EARNINGS
------------------------------------------------------------
for the three and nine months ended
September 30, 1994 and 1993
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------- ------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 4,352 $ 3,939 $13,669 $12,673
======= ======= ======= =======
Weighted avg. shares outstanding 14,974 14,945 14,968 14,938
Weighted average effect of
common stock equivalents 130 158 133 160
-------- ------- ------- ------
15,104 15,103 15,101 15,098
======= ======= ======= =======
Fully diluted net income
per share $ .29 $ .26 $ .91 $ .84
======= ======= ======= =======
Primary net income per share $ .29 $ .26 $ .91 $ .84
======= ======= ======= =======
</TABLE>
13
<PAGE>
EXHIBIT 15
----------
LETTER RE UNAUDITED INTERIM FINANCIAL STATEMENTS
------------------------------------------------
14
<PAGE>
Exhibit 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We are aware that our report dated October 10, 1994 on our review of interim
financial information of Life Technologies, Inc. (the Company) for the three-
month and nine-month periods ended September 30, 1994 and 1993, included in this
Form 10-Q is incorporated by reference in the Company's registration statements
on Form S-8, Registration No. 33-21807 and Registration No. 33-956, and the
Company's registration statement on Form S-3, Registration No. 33-29536.
Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not
be considered a part of the registration statements prepared or certified by us
within the meaning of Section 7 and 11 of that Act.
/s/ Cooper & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Washington, D.C.
October 10, 1994
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet, Income Statement and Exhibit 11 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 6840
<SECURITIES> 0
<RECEIVABLES> 39211
<ALLOWANCES> 478
<INVENTORY> 51133
<CURRENT-ASSETS> 103611
<PP&E> 76333
<DEPRECIATION> 29983
<TOTAL-ASSETS> 165519
<CURRENT-LIABILITIES> 35420
<BONDS> 0
<COMMON> 150
0
0
<OTHER-SE> 126196
<TOTAL-LIABILITY-AND-EQUITY> 165519
<SALES> 176339
<TOTAL-REVENUES> 176406
<CGS> 92697
<TOTAL-COSTS> 92697
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24
<INCOME-PRETAX> 21488
<INCOME-TAX> 7736
<INCOME-CONTINUING> 13669
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13669
<EPS-PRIMARY> 0.91
<EPS-DILUTED> 0.00
</TABLE>
