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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 March 31, 1994
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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
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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)
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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 April 26, 1994
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Common Stock, par value $.01 per share 14,969,914 shares
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PART I
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FINANCIAL INFORMATION
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Item 1. Financial Statements
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CONDENSED CONSOLIDATED BALANCE SHEET
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
- ------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,057 $ 7,927
Accounts receivable, net 39,245 29,901
Inventories:
Materials and supplies 12,848 11,562
In process and finished 41,654 41,209
LIFO reserve (4,930) (5,094)
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49,572 47,677
Prepaid expenses 2,640 2,352
Current deferred tax assets 3,776 3,776
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Total current assets 101,290 91,633
Property, plant, and equipment 68,824 65,464
Less accumulated depreciation (26,435) (25,070)
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42,389 40,394
Investments and other assets 8,604 8,475
Excess of cost over net assets of
businesses acquired, net 5,233 5,288
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Total assets $157,516 $145,790
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,933 $ 13,217
Dividends payable 748 748
Income taxes 10,280 9,460
Accrued liabilities and expenses 10,643 9,285
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Total current liabilities 38,604 32,710
Deferred items 3,728 3,080
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Total liabilities 42,332 35,790
Stockholders' equity:
Common stock 150 150
Additional paid-in capital 42,332 42,184
Retained earnings 77,903 73,972
Currency exchange effects (5,201) (6,306)
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Total stockholders' equity 115,184 110,000
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Total liabilities and
stockholders' equity $157,516 $145,790
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Equity per share $7.70 $7.36
Amounts as of March 31, 1994 are unaudited.
</TABLE>
2
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Part I - Financial Statements (continued)
CONSOLIDATED STATEMENT OF INCOME
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31
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1994 1993 Change
- --------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Net sales $58,069 $51,307 +13%
Net royalties 67 -- --
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58,136 51,307 +13%
Operating expenses:
Cost of sales 30,282 25,061 +21%
Marketing and administrative 16,441 16,051 + 2%
Research and development 4,044 3,515 +15%
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50,767 44,627 +14%
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Operating income 7,369 6,680 +10%
Other income (expense):
Investment income 108 64 +69%
Interest expense (18) (22) -18%
Other, net 22 94 -77%
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112 136 -18%
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Income before income taxes 7,481 6,816 +10%
Income taxes 2,693 2,454 +10%
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Income before minority interest 4,788 4,362 +10%
Minority interest (109) -- --
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Net income $ 4,679 $ 4,362 +7%
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Average shares outstanding 15,061 15,144 -1%
Net income per share $0.31 $0.29 +7%
Dividends per share $0.05 $0.05 --
</TABLE>
Amounts are unaudited.
3
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Part I - Financial Statements (continued)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in thousands)
<TABLE>
<CAPTION> Three months ended
March 31
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1994 1993
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<S> <C> <C>
CASH INFLOWS (OUTFLOWS)
Operations:
Net income $ 4,679 $ 4,362
Non-cash items:
Depreciation and amortization 1,527 1,373
Other 200 (529)
Changes in assets and liabilities (5,035) (6,506)
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1,371 (1,300)
Investments:
Capital expenditures (2,709) (2,923)
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(2,709) (2,923)
Financing:
Dividends paid (748) (746)
Proceeds from exercise of stock options 108 157
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(640) (589)
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Effect of exchange rate changes on cash 108 85
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Decrease in cash and cash equivalents (1,870) (4,727)
Cash and cash equivalents at beginning of period 7,927 7,652
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Cash and cash equivalents at end of period $ 6,057 $ 2,925
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</TABLE>
Amounts are unaudited.
Notes To Financial Statements:
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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
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Part I - (continued)
Item 2. Management's Discussion and Analysis of Financial
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Condition and Results of Operations
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First Quarter Results
Net sales were $58.1 million for the first quarter of 1994, an increase of 13%
over the comparable quarter of 1993. Sales of products other than fetal bovine
serum (FBS) increased by $6.3 million, or 15%, when compared with the same
period in 1993. First quarter 1994 FBS sales were $1.1 million higher than in
the first quarter of 1993. Higher unit sales of FBS increased net sales by $2.3
million while lower unit selling prices reduced net sales $1.2 million when
comparing the first quarter of 1994 with the first quarter of 1993. FBS sales
represented 18% of net sales in the first quarter of 1994 and 19% in the first
quarter of 1993. The effect of changes in currency exchange rates lowered first
quarter 1994 net sales by $0.6 million when compared with the first quarter of
1993.
Gross margins were 47.9% of net sales in the first quarter of 1994 compared with
51.2% in the first quarter of 1993. FBS gross margins were lower in the first
quarter of 1994 than in the comparable quarter a year earlier. The decrease in
FBS gross margins was attributable to a decline in unit selling prices and an
increase in unit costs in the first quarter of 1994 compared with the first
quarter of 1993. The Company increased its FBS LIFO reserve by $0.1 million in
the first three months of 1994 compared with a decrease in the reserve of $0.5
million in the first three months of last year due to changing FBS costs.
Marketing and administrative expenses were 28.3% of net sales in the first
quarter of 1994 and 31.3% in the first quarter of 1993. Research and
development (R&D) expenses were $4.0 million in the first three months of 1994
compared with $3.5 million for the first three months of 1993.
Operating income of $7.4 million in the first quarter of 1994 was 10% more than
the $6.7 million reported in the first quarter a year earlier. Operating income
growth was less than the growth in net sales due to lower gross margins, largely
on FBS products, and the
5
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Part I - (continued)
Company's substantial increase in R&D spending.
Net income before minority interests was $4.8 million in the first quarter of
1994 representing a 10% increase over the $4.4 million for the first quarter
of 1993. The Company reported a minority interest charge of $0.1 million in
the first quarter of 1994 reflecting its joint venture partner's interest in the
Company's consolidated serum collection joint venture. First quarter 1994 net
income of $4.7 million increased 7% compared with net income of $4.4 million
for the same period a year earlier. Earnings per share of $0.31 in the first
quarter of 1994 were 7% greater than the $0.29 per share reported in the prior
year's first quarter.
Liquidity - Financial Resources
Operating activities provided $1.4 million in cash during the first three months
of 1994. The Company paid $2.7 million in cash for capital expenditures in the
first quarter of 1994 reflecting continuing investment in the Company's
worldwide facilities and equipment modernization program.
Cash used for financing activities included $0.7 million paid to the Company's
stockholders in the first quarter of 1994 as a quarterly dividend.
The Company borrowed various amounts up to $3.1 million during the first quarter
of 1994 at prevailing market rates of interest under its 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 March 31, 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.
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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.
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Item 4. Submission of Matters to a Vote of Security Holders
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The Annual Meeting of Stockholders of the Company was held on April 26, 1994,
where the following actions were taken:
Proposal No. 1
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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:
<TABLE>
<CAPTION>
Director For Withheld Broker nonvotes
-------- --- -------- ---------------
<S> <C> <C> <C>
Adams 13,506,534 3,557 none
Axel 13,509,040 1,051 none
Walker 13,391,405 118,686 none
</TABLE>
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
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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.
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Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
11. Calculation of earnings per share.
15. Awareness letter of Coopers & Lybrand.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed for the three months ended March
31, 1994.
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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: May 3, 1994 By:/s/ Joseph C. Stokes, Jr.
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Joseph C. Stokes, Jr.
Vice President-Finance,
Secretary and Treasurer
(Principal Financial Officer
and Authorized Signatory)
By:/s/ C. Eric Winzer
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C. Eric Winzer
Controller
(Principal Accounting
Officer)
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Life Technologies, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of Life
Technologies, Inc. and subsidiaries as of March 31, 1994 and the related
consolidated statements of income for the three-month periods ended March 31,
1994 and 1993, and the related condensed consolidated statements of cash flows
for the three-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.
April 12, 1994
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EXHIBIT INDEX
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Page
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Exhibit 11 Calculation of Earnings Per Share 11-13
Exhibit 15 Awareness Letter of Coopers & Lybrand 14-15
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EXHIBIT 11
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CALCULATION OF
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EARNINGS PER SHARE
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Exhibit 11
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LIFE TECHNOLOGIES, INC.
CALCULATION OF PRIMARY EARNINGS PER SHARE
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for the three months ended
March 31, 1994 and 1993
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
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1994 1993
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<S> <C> <C>
Net income $ 4,679 $ 4,362
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Weighted avg. shares outstanding 14,959 14,933
Weighted average effect of
common stock equivalents 102 211
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15,061 15,144
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Primary net income per share $ .31 $ .29
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</TABLE>
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Exhibit 11
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LIFE TECHNOLOGIES, INC.
CALCULATION OF FULLY DILUTED EARNINGS PER SHARE
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for the three months ended
March 31, 1994 and 1993
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
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1994 1993
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<S> <C> <C>
Net income $ 4,679 $ 4,362
======= =======
Weighted avg. shares outstanding 14,959 14,933
Weighted avg. effect of common
stock equivalents 102 211
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15,061 15,144
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Fully diluted net income
per share $ .31 $ .29
======= =======
Primary net income per share $ .31 $ .29
======= =======
</TABLE>
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EXHIBIT 15
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AWARENESS LETTER OF COOPERS & LYBRAND
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Exhibit 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We are aware that our report dated April 12, 1994 on our review of interim
financial information of Life Technologies, Inc. (the Company) for the three-
month periods ended March 31, 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.
April 12, 1994
