<PAGE>
================================================================================
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 June 30, 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 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 Aug. 4, 1995
----- -----------------------------
Common Stock, par value $.01 per share 15,072,526 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,
1995 1994
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 14,746 $ 13,246
Accounts receivable, net 47,282 36,163
Inventories:
Materials and supplies 11,901 8,812
In process and finished 51,918 49,893
LIFO reserve (6,118) (5,995)
-------- --------
57,701 52,710
Prepaid expenses 3,341 1,974
Current deferred tax assets 3,483 3,475
-------- --------
Total current assets 126,553 107,568
Property, plant, and equipment 85,672 79,348
Less accumulated depreciation (35,240) (31,305)
-------- --------
50,432 48,043
Investments and other assets 11,390 9,796
Excess of cost over net assets of
businesses acquired, net 6,192 6,340
-------- --------
Total assets $194,567 $171,747
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,417 $ 14,358
Dividends payable 752 749
Income taxes 14,829 11,326
Accrued liabilities and expenses 13,458 11,593
-------- --------
Total current liabilities 46,456 38,026
Deferred income taxes and tax credits 1,884 1,871
Minority interests 412 541
Other deferred items 1,172 1,180
-------- --------
Total liabilities 49,924 41,618
Stockholders' equity:
Common stock 150 150
Additional paid-in capital 43,467 42,561
Retained earnings 98,918 89,184
Currency exchange effects 2,108 (1,766)
-------- --------
Total stockholders' equity 144,643 130,129
-------- --------
Total liabilities and stockholders' equity $194,567 $171,747
======== ========
</TABLE>
Amounts as of June 30, 1995 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 Six months ended
June 30 June 30
--------------------------- ------------------------------
1995 1994 Change 1995 1994 Change
-------- -------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales $68,853 $59,172 + 16% $135,096 $117,241 + 15%
Net royalties - - - - 67 -
------- ------- -------- ----------
68,853 59,172 + 16% 135,096 117,308 + 15%
Operating expenses:
Cost of sales 35,480 30,877 + 15% 69,364 61,159 + 13%
Marketing and 21,047 17,337 + 21% 41,051 33,778 + 22%
administrative
Research and development 4,142 3,883 + 7% 8,058 7,927 + 2%
------- ------- -------- ----------
60,669 52,097 + 16% 118,473 102,864 + 15%
------- ------- -------- ----------
Operating income 8,184 7,075 + 16% 16,623 14,444 + 15%
Other income (expense):
Investment income 224 192 + 17% 365 300 + 22%
Interest expense (2) (5) - 60% (5) (23) - 78%
Other, net 231 96 +141% 243 118 +106%
------- ------- -------- ----------
453 283 + 60% 603 395 + 53%
------- ------- -------- ----------
Income before income taxes 8,637 7,358 + 17% 17,226 14,839 + 16%
Income taxes 3,023 2,649 + 14% 6,029 5,342 + 13%
------- ------- -------- ----------
Income before minority 5,614 4,709 + 19% 11,197 9,497 + 18%
interests
Minority interests - (71) - 39 (180) -
------- ------- -------- ----------
Net income $ 5,614 $ 4,638 + 21% $ 11,236 9,317 + 21%
======= ======= ======== ==========
Average shares outstanding 15,220 15,057 + 1% 15,164 15,059 + 1%
======= ======= ======== ==========
Net income per share $0.37 $0.31 + 19% $0.74 $0.62 + 19%
======= ======= ======== ==========
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)
<TABLE>
<CAPTION>
Six months ended
June 30
-----------------
1995 1994
----------------------------------------------------------------------------------------------
<S> <C> <C>
CASH INFLOWS (OUTFLOWS)
Operations:
Net income $11,236 $ 9,317
Non-cash items:
Depreciation and amortization 3,910 3,118
Other (81) 74
Changes in assets and liabilities (6,991) (3,656)
------- -------
8,074 8,853
Investments:
Capital expenditures (5,888) (6,482)
Other (481) 500
------- -------
(6,369) (6,982)
Financing:
Dividends paid (1,499) (1,496)
Proceeds from exercise of stock options 862 184
------- -------
(637) (1,312)
Effect of exchange rate changes on cash 432 402
------- -------
Increase in cash and cash equivalents 1,500 961
Cash and cash equivalents at beginning of period 13,246 7,927
------- -------
Cash and cash equivalents at end of period $14,746 $ 8,888
======= =======
</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 results for the three-month period ended June 30, 1995 are not necessarily
indicative of the results for the entire year 1995.
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
-----------------------------------
SECOND QUARTER RESULTS
Net sales were $68.9 million for the second quarter of 1995, an increase of 16%
over the comparable quarter of 1994. Sales of products other than fetal bovine
serum (FBS) increased by 12%, when comparing the second quarter of 1995 with the
comparable period in 1994 and excluding the effect of changes due to different
currency translation rates. Higher unit sales of FBS increased net sales by
$0.4 million while higher unit selling prices of FBS increased net sales by $0.3
million when comparing the second quarter of 1995 with the second quarter of
1994. FBS sales represented 18% of net sales in the second quarter of 1995 and
19% in the second quarter of 1994. The effect of changes in currency exchange
rates increased second quarter 1995 net sales by $3.1 million when compared with
the second quarter of 1994.
Gross margins were 48.5% of net sales in the second quarter of 1995 compared
with 47.8% in the second quarter of 1994. Gross margins on products other than
FBS improved in the 1995 period as the Company realized higher gross margins in
markets such as Sweden, Italy, Taiwan and Australia that it served directly in
the second quarter of 1995 where these markets had been served by distributors
in the comparable period of 1994. FBS gross margins were lower in the second
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 30.6% of net sales in the second
quarter of 1995 and 29.3% in the second quarter of 1994. Expenses related to
the Company's new direct sales offices increased marketing and administrative
expenses by 1.2% of net sales. Marketing and administrative expenses also
increased by 0.3% of net sales in the second 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 $4.1 million in the second
quarter of 1995 representing a 7% increase over the $3.9 million reported in the
second quarter of 1994.
Operating income of $8.2 million for the quarter ended June 30, 1995 represented
a 16% increase over the second quarter of 1994. Other income increased 60% when
comparing the second quarter of 1995 with the second quarter of the previous
year, principally due to realized currency gains of $73,000 in the 1995 period
compared with losses of $55,000 in the 1994 period. The Company's effective
income tax rate was 35% in the second quarter of 1995 compared with 36% in the
second quarter of the previous year.
Second quarter 1995 net income of $5.6 million increased 21% over the comparable
period a year earlier. Earnings per share of $0.37 in the second quarter of
1995 were 19% greater than the $0.31 per share reported in the prior year's
second quarter.
5
<PAGE>
Part I - (continued)
SIX MONTHS RESULTS
For the first half of 1995, net sales were $135.1 million, an increase of $17.9
million, or 15%, over the first half of 1994. Sales of products other than FBS
increased by 13% when comparing the first six months 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 reduced net sales by $0.9 million in
the first half on 1995, while higher FBS unit selling prices increased net sales
by $0.9 million in the first six months of 1995. FBS sales represented 17% of
net sales in the first half of 1995 and 18% in the comparable period of 1994.
Changes in currency exchange rates used to translate sales to U.S. dollars
increased net sales in the first six months of 1995 by $5.8 million when
compared with the first six months of last year.
Gross margins for the first six months of 1995 were 48.7% of net sales compared
with 47.8% in the first six months of 1994. Gross margins on products other
than FBS improved in the 1995 period, mostly because the Company reported higher
gross margins in markets it served directly in the first half of 1995 where
these markets were served by distributors in the first half of 1994. FBS gross
margins were lower in the first half of 1995 as FBS costs increased at a faster
rate than the increase in unit selling prices.
Marketing and administrative expenses represented 30.4% of net sales in the
first half of 1995 compared with 28.8% of net sales in the comparable period of
1994. The increase as a percentage of sales is principally due to the Company's
new direct sales offices and new custom oligonucleotide business. Research and
Development expenses were $8.1 million in the first six months of 1995, an
increase of 2% over the first six months of 1994.
Operating income increased 15% to $16.6 million in the first half of 1995
compared with the first six months of 1994. Other income increased 53% in the
first six months of 1995 principally due to realized currency gains and higher
interest income in the 1995 period. The Company's effective income tax rate was
35% in the first half of 1995 compared with 36% in the first half of 1994.
Net income of $11.2 million for the first six months of 1995 was 21% greater
than the $9.3 million for the comparable period in 1994. Earnings per share of
$0.74 in the first half of 1995 represented a 19% increase over earnings per
share in the comparable period of 1994.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities provided $8.1 million in cash during the first six 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 $5.9 million for capital expenditures in the first six 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
6
<PAGE>
sciences company in North America and made deferred payments of $0.2
million related to the 1994 purchase of its Swedish operations
Cash used for financing activities included $1.5 million paid in the first six
months of 1995 for the Company's quarterly dividend. There were no borrowings
outstanding at June 30, 1995 and the Company was debt-free throughout the first
half of 1995. The Company received $0.9 million in cash related to the exercise
of options to acquire the Company's common stock in the first six months 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.
The Company is actively evaluating licensing possibilities, as well as
acquisition candidates which complement the Company's core cell and molecular
biology and cell culture product lines. The Company may fund these transactions
using cash from operations, debt, equity or other sources.
PART II - OTHER INFORMATION
------- -----------------
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 11, 1995,
where the following actions were taken:
Kathleen Burdett, Betsy Z. Cohen and J. Stark Thompson were elected as directors
for three-year terms that expire in 1998, pursuant to the following vote
tabulation:
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
---- ---------- --------------
<S> <C> <C>
Burdett 13,743,288 12,655
Cohen 13,743,808 12,135
Thompson 13,743,886 12,057
</TABLE>
In addition, the following directors continue in office for terms expiring as
indicated: Frederick R. Adler (1996), Paul A. Marks (1996), Donald C.
Sutherland (1996), Thomas H., Adams (1997), Richard Axel (1997), Jerry E.
Robertson (1997) and K. Grahame Walker (1997).
7
<PAGE>
Part II - Other Information - continued
In addition to the election of directors (1) a proposal to adopt the Company's
1995 Long-Term Incentive Plan was approved with 12,764,602 in favor, 514,918
against, and 476,423 abstained and (2) the selection of Coopers & Lybrand as
auditors of the Company for the year 1995 was ratified, with 13,746,598 in
favor, 4,436 against and 4,909 abstained.
Item 5. Other Information - Not applicable.
-----------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
10. 1995 Long-Term Incentive Plan previously filed from the Company's
Registration Statement on Form S-8 No.33-59741, dated June 1,
1995, which is incorporated herein by reference.
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
June 30, 1995.
8
<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. 9, 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)
9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
Life Technologies, Inc.
We have reviewed the accompanying consolidated balance sheet of Life
Technologies, Inc. and its subsidiaries as of June 30, 1995 and the related
consolidated statements of income for the three-month and six-month periods
ended June 30, 1995 and 1994, 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, 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.
July 13, 1995
10
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EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Exhibit 10 1995 Long-Term Incentive Plan previously filed --
from the Company's Registration Statement on
Form S-8 No. 33-59741, dated June 1, 1995, which
is incorporated herein by reference.
Exhibit 11 Statement re computation of per share earnings 12-14
Exhibit 15 Letter re unaudited interim financial statements 15-16
Exhibit 27 Financial data schedule 17
</TABLE>
11
<PAGE>
EXHIBIT 11
----------
STATEMENT RE COMPUTATION OF
---------------------------
PER SHARE EARNINGS
------------------
12
<PAGE>
Exhibit 11
----------
LIFE TECHNOLOGIES, INC.
STATEMENT RE COMPUTATION OF PRIMARY PER SHARE EARNINGS
------------------------------------------------------
for the three and six months ended
June 30, 1995 and 1994
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------------------- -----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 5,614 $ 4,638 $11,236 $ 9,317
======= ======= ======= =======
Weighted avg. shares outstanding 15,031 14,970 15,002 14,964
Weighted average effect of
common stock equivalents 189 87 162 95
------- ------- ------- -------
15,220 15,057 15,164 15,059
======= ======= ======= =======
Primary net income per share $ .37 $ .31 $ .74 $ .62
======= ======= ======= =======
</TABLE>
13
<PAGE>
Exhibit 11
----------
LIFE TECHNOLOGIES, INC.
STATEMENT RE COMPUTATION OF FULLY DILUTED PER SHARE EARNINGS
------------------------------------------------------------
for the three and six months ended
June 30, 1995 and 1994
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------------------- ----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 5,614 $ 4,638 $11,236 $ 9,317
======= ======= ======= =======
Weighted avg. shares outstanding 15,031 14,970 15,002 14,964
Weighted average effect of
common stock equivalents 234 110 238 113
------- ------- ------- -------
15,265 15,080 15,240 15,077
======= ======= ======= =======
Fully diluted net income
per share $ .37 $ .31 $ .74 $ .62
======= ======= ======= =======
Primary net income per share $ .37 $ .31 $ .74 $ .62
======= ======= ======= =======
</TABLE>
14
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EXHIBIT 15
----------
LETTER RE UNAUDITED INTERIM FINANCIAL STATEMENTS
------------------------------------------------
15
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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 July 13, 1995 on our review of interim
financial information of Life Technologies, Inc. (the Company) for the three-
month and six month periods ended June 30, 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. 33-59741, 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.
July 13, 1995
16
<TABLE> <S> <C>
<PAGE>
<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> JUN-30-1995
<CASH> 14,746
<SECURITIES> 0
<RECEIVABLES> 47,903
<ALLOWANCES> 621
<INVENTORY> 57,701
<CURRENT-ASSETS> 126,553
<PP&E> 85,672
<DEPRECIATION> 35,240
<TOTAL-ASSETS> 194,567
<CURRENT-LIABILITIES> 46,456
<BONDS> 0
<COMMON> 150
0
0
<OTHER-SE> 144,493
<TOTAL-LIABILITY-AND-EQUITY> 194,567
<SALES> 135,096
<TOTAL-REVENUES> 135,096
<CGS> 69,364
<TOTAL-COSTS> 69,364
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 17,226
<INCOME-TAX> 6,029
<INCOME-CONTINUING> 11,236
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,236
<EPS-PRIMARY> 0.74
<EPS-DILUTED> 0.74
</TABLE>
