<PAGE>
- - --------------------------------------------------------------------------------
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 June 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 ___________
Commission file number 0-14991
---------
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.
Class Outstanding at August 1, 1994
----- -----------------------------
Common Stock, par value $.01 per share 14,972,065 shares
- - --------------------------------------------------------------------------------
<PAGE>
PART I
------
FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
CONSOLIDATED BALANCE SHEET
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
- - --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,888 $ 7,927
Accounts receivable, net 40,245 29,901
Inventories:
Materials and supplies 11,904 11,562
In process and finished 43,368 41,209
LIFO reserve (5,696) (5,094)
-------- --------
49,576 47,677
Prepaid expenses 2,777 2,352
Current deferred tax assets 3,776 3,776
-------- --------
Total current assets 105,262 91,633
Property, plant, and equipment 72,861 65,464
Less accumulated depreciation (28,189) (25,070)
-------- --------
44,672 40,394
Investments and other assets 9,281 8,475
Excess of cost over net assets of
businesses acquired, net 5,180 5,288
-------- --------
Total assets $164,395 $145,790
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,812 $ 13,217
Dividends payable 749 748
Income taxes 11,586 9,460
Accrued liabilities and expenses 12,045 9,285
-------- --------
Total current liabilities 39,192 32,710
Deferred income taxes and tax credits 1,944 1,923
Other deferred items 1,899 1,157
-------- --------
Total liabilities 43,035 35,790
Stockholders' equity:
Common stock 150 150
Additional paid-in capital 42,427 42,184
Retained earnings 81,792 73,972
Currency exchange effects (3,009) (6,306)
-------- --------
Total stockholders' equity 121,360 110,000
-------- --------
Total liabilities and
stockholders' equity $164,395 $145,790
======== ========
Equity per share $8.11 $7.36
</TABLE>
Amounts as of June 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 June 30, Six months ended June 30,
------------------------------ -----------------------------
1994 1993 Change 1994 1993 Change
--------- --------- -------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales $59,172 $51,669 + 15% $117,241 $102,976 + 14%
Net royalties - - - 67 - -
------- ------- -------- --------
59,172 51,669 + 15% 117,308 102,976 + 14%
Operating expenses:
Cost of sales 30,877 25,338 + 22% 61,159 50,399 + 21%
Marketing and 17,337 15,928 + 9% 33,778 31,979 + 6%
administrative
Research and development 3,883 3,599 + 8% 7,927 7,114 + 11%
------- ------- -------- --------
52,097 44,865 + 16% 102,864 89,492 + 15%
------- ------- -------- --------
Operating income 7,075 6,804 + 4% 14,444 13,484 + 7%
Other income (expense):
Investment income 192 58 +231% 300 122 +146%
Interest expense (5) (14) - 64% (23) (36) - 36%
Other, net 96 (17) - 118 77 + 53%
------- ------- -------- --------
283 27 - 395 163 +142%
------- ------- -------- --------
Income before income taxes 7,358 6,831 + 8% 14,839 13,647 + 9%
Income taxes 2,649 2,459 + 8% 5,342 4,913 + 9%
------- ------- -------- --------
Income before minority 4,709 4,372 + 8% 9,497 8,734 + 9%
interest
Minority interest (71) - - (180) - -
------- ------- -------- --------
Net income $ 4,638 $ 4,372 + 6% $ 9,317 $ 8,734 + 7%
======= ======= ======== ========
Average shares outstanding 15,057 15,077 - 15,059 15,108 -
Net income per share $0.31 $0.29 + 7% $0.62 $0.58 + 7%
Dividends per share $0.05 $0.05 - $0.10 $0.10 -
</TABLE>
Amounts are unaudited.
3
<PAGE>
Part I - Financial Statements (continued)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in thousands)
Six months ended June 30
------------------------
1994 1993
- - -------------------------------------------------------------------------------
CASH INFLOWS (OUTFLOWS)
Operations:
Net income $ 9,317 $ 8,734
Non-cash items:
Depreciation and amortization 3,118 2,865
Other 74 (531)
Changes in assets and liabilities (3,656) (5,482)
------- -------
8,853 5,586
Investments:
Capital expenditures (6,482) (4,714)
Other (500) -
------- -------
(6,982) (4,714)
Financing:
Dividends paid (1,496) (1,493)
Proceeds from exercise of stock options 184 221
------- -------
(1,312) (1,272)
Effect of exchange rate changes on cash 402 (53)
------- -------
Increase (decrease) in cash and cash equivalents 961 (453)
Cash and cash equivalents at beginning of period 7,927 7,652
------- -------
Cash and cash equivalents at end of period $ 8,888 $ 7,199
======= =======
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, and their report is attached.
4
<PAGE>
Part I - (continued)
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Second Quarter Results
Net sales were $59.2 million for the second quarter of 1994, an increase of $7.5
million, or 15%, over the comparable quarter of 1993. Sales of products other
than fetal bovine serum (FBS) increased by $6.2 million, or 15%, when compared
with the second quarter of 1993. Second quarter 1994 FBS sales were $1.9
million higher than in the second quarter of 1993. Higher unit sales of FBS
increased net sales by $2.8 million while lower unit selling prices reduced net
sales $0.9 million when comparing the second quarter of 1994 with the second
quarter of 1993. FBS sales represented 19% of net sales in the second quarter
of 1994 and 18% in the second quarter of 1993. The effect of changes in
currency exchange rates lowered second quarter 1994 net sales by $0.6 million
when compared with the prior year's second quarter.
Gross margins were 47.8% of net sales in the second quarter of 1994 compared
with 51.0% in the comparable quarter of 1993. FBS gross margins were lower in
the second quarter of 1994 principally due to a decline in unit selling prices
and an increase in unit costs. Marketing and administrative expenses were 29.3%
of net sales in the second quarter of 1994 and 30.8% in the second quarter of
1993. Research and development (R&D) expenses were $3.9 million in the quarter
ended June 30, 1994 compared with $3.6 million for the comparable quarter of
1993.
Operating income of $7.1 million for the quarter ended June 30, 1994 represented
a 4% increase over the second quarter of 1993. Second quarter 1994 net income
of $4.6 million increased 6% compared with net income of $4.4 million for the
comparable period a year earlier. Earnings per share of $0.31 in the second
quarter of 1994 were 7% greater than the $0.29 per share reported in the prior
year's second quarter.
First Six Month Results
For the first half of 1994, net sales were $117.2 million, an increase of $14.3
million, or 14%, over the first half of 1993. Sales of products other than FBS
increased $12.4 million, or 15%, compared with the first six months of 1993.
FBS sales were $3.1 million higher in the 1994 period. Higher unit sales of FBS
increased net sales by $5.2 million while lower unit selling prices reduced net
sales by $2.1 million in the first six months of 1994. FBS sales represented
18% of net sales in the first half of both 1994 and 1993. Changes in currency
exchange rates used to translate sales to U.S. dollars decreased net sales in
the first six months of 1994 by $1.2 million when compared with the first six
months of last year.
5
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Part I - (continued)
Gross margins for the first six months of 1994 were 47.8% of net sales compared
with 51.1% in the first six months of 1993. Gross margins declined in the 1994
period principally due to lower FBS gross margins, unfavorable changes in
currency exchange rates used to purchase products 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 28.8% of net sales in the first half of 1994 compared with
31.1% of net sales in the comparable period of 1993. R&D expenses were $7.9
million in the first six months of 1994, an increase of 11% over the first six
months of 1993.
Operating income increased 7% to $14.4 million in the first half of 1994.
Operating income growth was less than the growth in net sales due to reduced
gross margins in the first half of 1994. Net income of $9.3 million, or $0.62
per share, for the first six months of 1994 was 7% greater than the $8.7 million
or $0.58 per share, for the comparable period in 1993.
Liquidity - Financial Resources
Operating activities provided $8.9 million in cash during the first half of
1994. The Company paid $6.5 million for capital expenditures in the first six
months of 1994, reflecting continuing investment in the Company's worldwide
facilities and equipment modernization program.
Cash used for financing activities included $1.5 million paid to the Company's
shareholders in the first half of 1994 as quarterly dividends. The Company
borrowed various amounts up to $3.1 million during the first six 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
June 30, 1994.
Capital expenditures in 1994 are expected to be between approximately $15-18
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.
-----------------
Item 2. Changes in Securities - Not applicable.
---------------------
Item 3. Defaults Upon Senior Securities - Not applicable.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Stockholders of the Company was held on April 26, 1994,
where the following actions were taken:
Proposal No. 1
- - --------------
Messrs. Thomas H. Adams, Richard Axel and K. Grahame Walker were re-elected as
directors for terms that expire in 1997 or until their successors are duly
elected.
The votes for each director were as follows:
Director For Withheld Broker nonvotes
-------- --- -------- ---------------
Adams 13,506,534 3,557 none
Axel 13,509,040 1,051 none
Walker 13,391,405 118,686 none
In addition, the following directors continue in office for the terms
expiring as indicated: Betsy Z. Cohen (1995), Robert E. McGill, III
(1995), J. Stark Thompson, Ph.D. (1995), Frederick R. Adler (1996), Paul A.
Marks (1996), and Donald C. Sutherland (1996).
Proposal No. 2
- - --------------
The selection of Coopers & Lybrand as auditors of the Company for the year
1994 was ratified. The votes for selection of Coopers and Lybrand were as
follows:
For Against Abstain Broker nonvotes
--- ------- ------- ---------------
13,547,565 4,404 4,185 none
Item 5. Other Information - Not applicable.
-----------------
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.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed for the six months ended
June 30, 1994.
7
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
LIFE TECHNOLOGIES, INC.
Date: Aug. 5, 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 June 30, 1994 and the related
consolidated statements of income for the three-month and six-month periods
ended June 30, 1994 and 1993, and the related condensed consolidated statements
of cash flows for the six-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
COOPERS & LYBRAND
Washington, D.C.
July 11, 1994
9
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EXHIBIT INDEX
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Page
----
Exhibit 11 Statement re computation of per share earnings 11-13
Exhibit 15 Letter re unaudited interim financial statements 14-15
10
<PAGE>
EXHIBIT 11
----------
STATEMENT RE COMPUTATION OF
---------------------------
PER SHARE EARNINGS
------------------
11
<PAGE>
Exhibit 11
----------
LIFE TECHNOLOGIES, INC.
STATEMENT RE COMPUTATION OF PRIMARY PER SHARE EARNINGS
------------------------------------------------------
for the three and six months ended
June 30, 1994 and 1993
(amounts in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
Net income $ 4,638 $ 4,372 $ 9,317 $ 8,734
======= ======= ======= =======
Weighted avg. shares outstanding 14,970 14,934 14,964 14,935
Weighted average effect of
common stock equivalents 87 143 95 173
------- ------- ------- -------
15,057 15,077 15,059 15,108
======= ======= ======= =======
Primary net income per share $ .31 $ .29 $ .62 $ .58
======= ======= ======= =======
12
<PAGE>
Exhibit 11
----------
LIFE TECHNOLOGIES, INC.
STATEMENT RE COMPUTATION OF FULLY DILUTED PER SHARE EARNINGS
------------------------------------------------------------
for the three and six months ended
June 30, 1994 and 1993
(amounts in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
Net income $ 4,638 $ 4,372 $ 9,317 $ 8,734
======= ======= ======= =======
Weighted avg. shares outstanding 14,970 14,934 14,964 14,935
Weighted average effect of
common stock equivalents 110 143 113 173
------- ------- ------- -------
15,080 15,077 15,077 15,108
======= ======= ======= =======
Fully diluted net income
per share $ .31 $ .29 $ .62 $ .58
======= ======= ======= =======
Primary net income per share $ .31 $ .29 $ .62 $ .58
======= ======= ======= =======
13
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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 July 11, 1994 on our review of interim
financial information of Life Technologies, Inc. (the Company) for the three-
month and six-month periods ended June 30, 1994 and 1993, included in this Form
10-Q is incorporated by reference in the Company's registration statements for
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
COOPERS & LYBRAND
Washington, D.C.
July 11, 1994
15
