<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1996
----------------
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
----- -----
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, 1996
----- -----------------------------
Common Stock, par value $.01 per share 15,241,534 shares
<PAGE>
PART I
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FINANCIAL INFORMATION
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Item 1. Financial Statements
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CONSOLIDATED STATEMENT OF INCOME
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Net sales $76,630 $66,243
Operating expenses:
Cost of sales 35,817 33,884
Marketing and administrative 25,331 20,004
Research and development 4,569 3,916
------- -------
Total operating expenses 65,717 57,804
------- -------
Operating income 10,913 8,439
Other income (expense):
Investment income 118 141
Interest expense (42) (3)
Other, net 3 12
------- -------
Total other income 79 150
------- -------
Income before income taxes 10,992 8,589
Income taxes 3,957 3,006
------- -------
Income before minority interests 7,035 5,583
Minority interests (353) 39
------- -------
Net income $ 6,682 $ 5,622
======= =======
Average shares outstanding 15,532 15,127
Primary net income per share $0.43 $0.37
Dividends declared per share $0.05 $0.05
</TABLE>
Amounts are unaudited.
2
<PAGE>
Part I - Financial Statements (continued)
CONSOLIDATED BALANCE SHEET
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,598 $ 23,201
Accounts receivable, net 55,408 48,722
Inventories:
Materials and supplies 9,391 10,508
In process and finished 58,599 56,598
LIFO reserve (5,717) (6,261)
-------- --------
Total inventory 62,273 60,845
Prepaid expenses 4,327 3,697
Current deferred tax assets 5,553 5,557
-------- --------
Total current assets 144,159 142,022
Property, plant, and equipment 95,481 89,691
Less accumulated depreciation (39,750) (37,830)
-------- --------
Total property, plant, and equipment 55,731 51,861
Investments and other assets 7,940 8,671
Excess of cost over net assets of
businesses acquired, net 13,331 6,190
-------- --------
Total assets $221,161 $208,744
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 1,413 $ 1,934
Accounts payable 16,362 15,102
Dividends payable 761 759
Income taxes 16,445 13,645
Accrued liabilities and expenses 15,838 13,821
-------- --------
Total current liabilities 50,819 45,261
Long-term debt 1,413 1,451
Deferred income taxes 2,400 2,421
Deferred items 3,925 3,334
Minority interests 3,125 2,352
-------- --------
Total liabilities 61,682 54,819
Stockholders' equity:
Common stock 152 152
Additional paid-in capital 46,855 45,995
Retained earnings 114,365 108,444
Currency exchange effects (1,893) (666)
-------- --------
Total stockholders' equity 159,479 153,925
-------- --------
Total liabilities and
stockholders' equity $221,161 $208,744
======== ========
Equity per share $10.48 $10.14
</TABLE>
Amounts as of March 31, 1996 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
------------------
1996 1995
-------- -------
<S> <C> <C>
CASH INFLOWS (OUTFLOWS)
Operations:
Net income $ 6,682 $ 5,622
Non-cash items:
Depreciation and amortization 2,548 1,864
Other 283 233
Changes in assets and liabilities (2,603) (5,865)
-------- -------
6,910 1,854
Investments:
Acquisitions (7,203) (391)
Capital expenditures (4,968) (3,880)
-------- -------
(12,171) (4,271)
Financing:
Dividends paid (759) (749)
Proceeds from exercise of stock options 679 382
Loan repayments (464) -
-------- -------
(544) (367)
Effect of exchange rate changes on cash (798) 408
-------- -------
Decrease in cash and cash equivalents (6,603) (2,376)
Cash and cash equivalents at beginning of period 23,201 13,246
-------- -------
Cash and cash equivalents at end of period $ 16,598 $10,870
======== =======
</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 March 31, 1996 are not necessarily
indicative of the results for the year ended December 31, 1996.
The financial data included herein have been reviewed by the Company'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 $76.6 million for the first quarter of 1996, an increase of 16%
over the comparable quarter of 1995. The impact of consolidating the results of
the Company's Japanese subsidiary represented 6% of the 16% increase in net
sales. Sales of products other than fetal bovine serum ("FBS") increased by
16%, when comparing the first quarter of 1996 with the comparable period in 1995
and excluding the effect of changes due to different currency translation rates.
First quarter 1996 FBS sales were $0.8 million higher than in the first quarter
of 1995. Higher unit selling prices for FBS increased net sales by $0.4 million
and higher FBS unit sales contributed another $0.4 million to the increase in
the first quarter 1996 net sales. FBS sales represented 15% of net sales in the
first quarter of 1996 and 16% in the first quarter of 1995. The effect of
changes in currency exchange rates increased first quarter 1996 sales by $0.4
million when compared with the first quarter of 1995.
Gross margins were 53.3% of net sales in the first quarter of 1996 compared with
48.8% in the first quarter of 1995. Gross margins improved in the 1996 period
as the Company realized higher unit selling prices in Japan, FBS gross margins
increased and the Company reduced product costs. Selling prices in Japan were
higher as a result of the Company's acquisition of a controlling interest in its
Japanese subsidiary in September 1995. FBS gross margins improved as unit
selling prices were higher and unit costs were lower in the 1996 period.
Marketing and administrative expenses were 33.1% of net sales in the first
quarter of 1996 and 30.2% in the first quarter of 1995. The increase in
marketing and administrative expenses as a percentage of net sales was mostly
the result of consolidating the sales and expenses of the Company's Japanese
joint venture in the first quarter of 1996 where these results had not been
consolidated in the first quarter of 1995. Research and development expenses
were $4.6 million in the first three months of 1996 compared with $3.9 million
for the first three months of 1995.
Operating income of $10.9 million for the quarter ended March 31, 1996
represented a 29% increase over the first quarter of 1995. When comparing the
first quarter of 1996 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 1996 period.
The Company's effective income tax rate was 36% in the first quarter of 1996
compared with 35% in the first quarter of 1995.
Income attributable to minority interests is principally related to earnings
from the Company's serum collection joint venture and its Japanese subsidiary.
LIQUIDITY - FINANCIAL RESOURCES
Operating activities provided $6.9 million in cash during the first three months
of 1996. Net income after adjustments for depreciation and amortization was the
5
<PAGE>
Part I - (continued)
principal source of cash from operations in 1996. Working capital increases,
largely related to higher sales or seasonal factors, was the principal use of
cash from operations.
The Company paid $5.0 million for capital expenditures in the first three months
of 1996. The Company also completed its acquisition of Custom Primers Inc., a
custom oligonucleotide producer, for $7.1 million. The purchase agreement
provides for possible earn-out contingencies based on sales of oligonucleotides
over the next five years.
Cash used for financing activities included a $0.8 million dividend payment paid
in the first three months of 1996. The Company paid $0.5 million to a joint
venture partner to reduce an outstanding loan. The Company received $0.7 million
from the exercise of stock options.
Capital expenditures in 1996 are expected to range from $30-35 million. The
Company expects to spend approximately $20 million in 1996 for its new corporate
R&D center in Maryland and another $5 million for other facilities upgrades and
improvements elsewhere around the world. The balance of expected 1996 capital
spending is anticipated to be for new and replacement machinery, equipment and
management information systems. 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 1996.
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.
---------------------------------------------------
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 information.
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, 1996.
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 thereunto duly authorized.
LIFE TECHNOLOGIES, INC.
Date: April 29, 1996 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, 1996 and the related
consolidated statement of income for the three-month periods ended March 31,
1996 and 1995, 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, 1995 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
22, 1996 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 11, 1996
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 information 14-15
Exhibit 27 Financial data schedule 16
</TABLE>
10
<PAGE>
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, 1996 and 1995
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Net income $ 6,682 $ 5,622
======= =======
Weighted avg. shares outstanding 15,204 14,996
Weighted average effect of
common stock equivalents 328 131
------- -------
15,532 15,127
======= =======
Primary net income per share $ .43 $ .37
======= =======
</TABLE>
12
<PAGE>
Exhibit 11
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LIFE TECHNOLOGIES, INC.
STATEMENT RE COMPUTATION OF FULLY DILUTED PER SHARE EARNINGS
------------------------------------------------------------
for the three months ended
March 31, 1996 and 1995
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
1996 1995
---- ----
<S> <C> <C>
Net income $ 6,682 $ 5,622
======= =======
Weighted avg. shares outstanding
15,204 14,996
Weighted average effect of
common stock equivalents
354 149
------- -------
15,558 15,145
======= =======
Fully diluted net income
per share
$ .43 $ .37
======= =======
Primary net income per share
$ .43 $ .37
======= =======
</TABLE>
13
<PAGE>
EXHIBIT 15
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LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION
-------------------------------------------------
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 11, 1996 on our review of interim
financial information of Life Technologies, Inc. (the Company) for the three-
month periods ended March 31, 1996 and 1995, 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 11, 1996
15
<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
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 16,598
<SECURITIES> 0
<RECEIVABLES> 56,621
<ALLOWANCES> 1,213
<INVENTORY> 62,273
<CURRENT-ASSETS> 144,159
<PP&E> 95,481
<DEPRECIATION> 39,750
<TOTAL-ASSETS> 221,161
<CURRENT-LIABILITIES> 50,819
<BONDS> 0
0
0
<COMMON> 152
<OTHER-SE> 159,327
<TOTAL-LIABILITY-AND-EQUITY> 221,161
<SALES> 76,630
<TOTAL-REVENUES> 76,630
<CGS> 35,817
<TOTAL-COSTS> 35,817
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 10,992
<INCOME-TAX> 3,957
<INCOME-CONTINUING> 6,682
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,682
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>
