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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______
FORM 10-Q
Mark One
[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
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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)
______________
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_____
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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 25, 1995
----- -----------------------------
Common Stock, par value $.01 per share 15,032,084 shares
________________________________________________________________________________
<PAGE>
PART I
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FINANCIAL INFORMATION
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Item 1. Financial Statements
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CONSOLIDATED BALANCE SHEET
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $10,870 $13,246
Accounts receivable, net 45,310 36,163
Inventories:
Materials and supplies 8,588 8,812
In process and finished 53,287 49,893
LIFO reserve (5,977) (5,995)
--------- ---------
55,898 52,710
Prepaid expenses 2,549 1,974
Current deferred tax assets 3,478 3,475
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Total current assets 118,105 107,568
Property, plant, and equipment 83,926 79,348
Less accumulated depreciation (33,293) (31,305)
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50,633 48,043
Investments and other assets 10,298 9,796
Excess of cost over net assets of
businesses acquired, net 6,265 6,340
--------- ---------
Total assets $185,301 $171,747
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $17,488 $14,358
Dividends payable 750 749
Income taxes 14,247 11,326
Accrued liabilities and expenses 11,498 11,593
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Total current liabilities 43,983 38,026
Deferred income taxes and tax credits 1,880 1,871
Minority interests 502 541
Other deferred items 1,177 1,180
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Total liabilities 47,542 41,618
Stockholders' equity:
Common stock 150 150
Additional paid-in capital 42,968 42,561
Retained earnings 94,056 89,184
Currency exchange effects 585 (1,766)
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Total stockholders' equity 137,759 130,129
--------- ---------
Total liabilities and
stockholders' equity $185,301 $171,747
========= =========
Equity per share $9.18 $8.69
Amounts as of March 31, 1995 are unaudited.
</TABLE>
2
<PAGE>
Part I - Financial Statements (continued)
CONSOLIDATED STATEMENT OF INCOME
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------------------
1995 1994 Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Net sales $66,243 $58,069 + 14%
Net royalties - 67 -
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66,243 58,136 + 14%
Operating expenses:
Cost of sales 33,884 30,282 + 12%
Marketing and 20,004 16,441 + 22%
administrative
Research and development 3,916 4,044 - 3%
-------- --------
57,804 50,767 + 14%
-------- --------
Operating income 8,439 7,369 + 15%
Other income (expense):
Investment income 141 108 + 31%
Interest expense (3) (18) - 83%
Other, net 12 22 - 45%
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150 112 + 34%
-------- --------
Income before income taxes 8,589 7,481 + 15%
Income taxes 3,006 2,693 + 12%
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Income before minority 5,583 4,788 + 17%
interest
Minority interest (39) 109 -
-------- --------
Net income $ 5,622 $ 4,679 + 20%
======== ========
Average shares outstanding 15,127 15,061 -
Net income per share $0.37 $0.31 + 19%
Dividends per share $0.05 $0.05 -
</TABLE>
Amounts are unaudited.
3
<PAGE>
Part I - Financial Statements (continued)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
CASH INFLOWS (OUTFLOWS)
Operations:
Net income $5,622 $4,679
Non-cash items:
Depreciation and amortization 1,864 1,527
Other 233 200
Changes in assets and liabilities (5,865) (5,035)
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1,854 1,371
Investments:
Capital expenditures (3,880) (2,709)
Other (391) -
------- -------
(4,271) (2,709)
Financing:
Dividends paid (749) (748)
Proceeds from exercise of stock options 382 108
------- -------
(367) (640)
Effect of exchange rate changes on cash 408 108
------- -------
Increase (decrease) in cash and cash equivalents (2,376) (1,870)
Cash and cash equivalents at beginning of period 13,246 7,927
------- -------
Cash and cash equivalents at end of period $10,870 $ 6,057
======== ========
</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
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Condition and Results of Operations
-----------------------------------
Net sales were $66.2 million for the first quarter of 1995, an increase of 14%
over the comparable quarter of 1994. Sales of products other than fetal bovine
serum (FBS) increased by 13%, when comparing the first quarter of 1995 with the
comparable period in 1994 and excluding the effect of changes due to different
currency translation rates. Lower unit sales of FBS, principally to
biopharmaceutical manufacturers, decreased net sales by $1.3 million while
higher unit selling prices of FBS increased net sales $0.6 million when
comparing the first quarter of 1995 with the first quarter of 1994. FBS sales
represented 16% of net sales in the first quarter of 1995 and 18% in the first
quarter of 1994. The effect of changes in currency exchange rates increased
first quarter 1995 sales by $2.7 million when compared with the first quarter of
1994.
Gross margins were 48.8% of net sales in the first quarter of 1995 compared with
47.9% in the first quarter of 1994. Gross margins on products other than FBS
improved in the 1995 period. The improvement was partly attributable to the
Company realizing higher gross margins in markets such as Sweden, Italy, Taiwan
and Australia that it served directly in the first quarter of 1995 where these
markets had been served by distributors in the comparable period of 1994. FBS
gross margins were lower in the first quarter of 1995 than in the comparable
quarter a year earlier as FBS unit costs increased at a faster rate than the
increase in unit selling prices.
Marketing and administrative expenses were 30.2% of net sales in the first
quarter of 1995 and 28.3% in the first quarter of 1994. Expenses related to the
Company's new direct sales offices increased marketing and administrative
expenses by 1.1% of net sales. Marketing and administrative expenses increased
an additional 0.4% of net sales in the first quarter of 1995 for costs related
to the start-up and operation of the Company's new custom oligonucleotide
business. Research and development expenses were $3.9 million in the first three
months of 1995 compared with $4.0 million for the first three months of 1994.
Operating income of $8.4 million for the quarter ended March 31, 1995 was a
record for the Company and represented a 15% increase over the first quarter of
1994. When comparing the first quarter of 1995 with the first quarter of the
previous year, operating income growth was greater than the growth in net sales
principally due to higher gross margins in the 1995 period. These higher gross
margins were largely due to the Company capturing higher value for its products
in markets it now serves directly. The higher margins more than offset the
additional costs incurred to support its new sales and marketing efforts.
First quarter 1995 net income of $5.6 million reached the highest quarterly
level ever reported by the Company and represented a 20% increase over the
comparable period a year earlier. The Company's effective income tax rate was
35% in the first quarter of 1995 compared with 36% in the first quarter of the
5
<PAGE>
Part I - (continued)
previous year. Net income before minority interests was $5.6 million in the
first quarter of 1995, representing a 17% increase over the $4.8 million for the
first quarter of 1994. Earnings per share of $0.37 in the first quarter of 1995
were 19% greater than the $0.31 per share reported in the prior year's first
quarter.
LIQUIDITY - FINANCIAL RESOURCES
Operating activities provided $1.9 million in cash during the first three months
of 1995. Net income after adjustments for depreciation and amortization was the
principal source of cash from operations in 1995. Working capital increases,
largely related to higher sales or seasonal factors, was the principal use of
cash from operations.
The Company paid $3.9 million for capital expenditures in the first three months
of 1995, including a significant investment in new management information
systems. The Company also made an additional equity investment of $0.3 million
in a life sciences company in North America.
Cash used for financing activities included $0.7 million paid in the first three
months of 1995 for the Company's quarterly dividend. There were no borrowings
outstanding at March 31, 1995 and the Company was debt-free throughout the first
quarter of 1995.
Capital expenditures in 1995 are expected to be approximately $15-$18 million
largely for new and replacement machinery, equipment and management information
systems as well as for facilities modernization, including the Company's new
corporate R&D center in Maryland. The Company believes it will be able to
generate sufficient cash from its operations and its existing credit line from
The Dexter Corporation, an affiliate of the Company, to meet its anticipated
working capital and capital expenditure requirements in 1995.
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.
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Item 4. Submission of Matters to a Vote of Security Holders - Not applicable.
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Item 5. Other Information - Not applicable.
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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 three months ended
March 31, 1995.
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: April 28, 1995 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 its subsidiaries as of March 31, 1995 and the related
consolidated statement of income for the three-month periods ended March 31,
1995 and 1994, and the related condensed consolidated statement 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, 1994 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
23, 1995 we expressed an unqualified opinion on those consolidated financial
statements.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Washington, D.C.
April 10, 1995
9
<PAGE>
EXHIBIT INDEX
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<TABLE>
<CAPTION>
Page
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<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
EXHIBIT 11
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STATEMENT RE COMPUTATION OF
---------------------------
PER SHARE EARNINGS
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11
<PAGE>
Exhibit 11
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LIFE TECHNOLOGIES, INC.
STATEMENT RE COMPUTATION OF PRIMARY PER SHARE EARNINGS
------------------------------------------------------
for the three months ended
March 31, 1995 and 1994
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------
1995 1994
---- ----
<S> <C> <C>
Net income $ 5,622 $ 4,679
======= =======
Weighted avg. shares outstanding 14,996 14,959
Weighted average effect of
common stock equivalents 131 102
------- -------
15,127 15,061
======= =======
Primary net income per share $ .37 $ .31
======= =======
</TABLE>
12
<PAGE>
Exhibit 11
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LIFE TECHNOLOGIES, INC.
STATEMENT RE COMPUTATION OF FULLY DILUTED PER SHARE EARNINGS
------------------------------------------------------------
for the three and nine months ended
March 31, 1995 and 1994
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------
1995 1994
---- ----
<S> <C> <C>
Net income $ 5,622 $ 4,679
======= =======
Weighted avg. shares outstanding 14,996 14,959
Weighted average effect of
common stock equivalents 149 102
------- -------
15,145 15,061
======= =======
Fully diluted net income
per share $ .37 $ .31
======= =======
Primary net income per share $ .37 $ .31
======= =======
</TABLE>
13
EXHIBIT 15
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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 April 10, 1995 on our review of interim
financial information of Life Technologies, Inc. (the Company) for the three-
month periods ended March 31, 1995 and 1994, 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/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Washington, D.C.
April 10, 1995
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> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 10870
<SECURITIES> 0
<RECEIVABLES> 45893
<ALLOWANCES> 583
<INVENTORY> 55898
<CURRENT-ASSETS> 118105
<PP&E> 83926
<DEPRECIATION> 33293
<TOTAL-ASSETS> 185301
<CURRENT-LIABILITIES> 43983
<BONDS> 0
<COMMON> 150
0
0
<OTHER-SE> 137609
<TOTAL-LIABILITY-AND-EQUITY> 185301
<SALES> 66243
<TOTAL-REVENUES> 66243
<CGS> 33884
<TOTAL-COSTS> 33884
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> 8589
<INCOME-TAX> 3006
<INCOME-CONTINUING> 5622
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5622
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
</TABLE>
