<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended March 31, 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 No. 0-14139
VWR CORPORATION
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 91-1319190
- - -------------------------------------------------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1310 Goshen Parkway, West Chester, PA 19380
- - ---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (610) 431-1700
--------------
- - ---------------------------------------------------------------------
(Former name, address, and fiscal year, if changed since last report)
Indicate by a 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.
(x) Yes ( ) No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of April 30, 1994.
Class Outstanding at April 30, 1994
----- --------------------------
Common stock, par value $1.00 11,044,665 shares
<PAGE> 2
VWR CORPORATION
INDEX
-----
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1994, and December 31, 1993 3
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1994, and 1993 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1994, and 1993 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 9
SIGNATURES 10
INDEX 11
EXHIBIT 12
<PAGE> 3
<TABLE>
<CAPTION>
VWR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
- - -------------------------------------------------------------------------------
March 31, 1994 December 31, 1993
(Thousands of dollars) (Unaudited)
-------------- -----------------
ASSETS
<S> <C> <C>
Receivables $ 70,472 $ 64,178
Inventories 36,967 30,243
Other 8,159 8,484
------- -------
Total Current Assets 115,598 102,905
Property and Equipment-net 41,152 41,562
Other Assets 8,220 5,727
------- -------
$164,970 $150,194
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank checks outstanding, less cash in bank $ 5,708 $ 1,062
Current portion of long-term debt 150
Accounts payable and other 42,397 36,496
------- -------
Total Current Liabilities 48,105 37,708
Long-term Debt 66,161 61,757
Deferred Income Taxes and Other 9,717 9,672
Shareholders' Equity 40,987 41,057
------- -------
$164,970 $150,194
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 4
<TABLE>
<CAPTION>
VWR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- - -------------------------------------------------------------------------------
Three Months Ended March 31,
(Thousands of dollars, except per-share data) 1994 1993
- - -------------------------------------------------------------------------------
<S> <C> <C>
Sales $122,044 $125,485
Cost of sales 95,538 96,931
------- -------
Gross margin 26,506 28,554
Operating expenses 25,088 25,452
------- -------
Operating income 1,418 3,102
Interest expense 1,111 996
------- -------
Income before income taxes and
cumulative effect of accounting change 307 2,106
Income taxes 124 801
------- -------
Income before cumulative effect of
accounting change 183 1,305
Cumulative effect of change in accounting
for postretirement benefits, net of
income taxes of $860 (1,400)
------- -------
Net Income (Loss) $ 183 $ (95)
======= =======
Earnings (Loss) per share:
Income before cumulative effect
of accounting change $ 0.02 $ 0.12
Cumulative effect of accounting change 0.13
------- -------
Net Income (Loss) $ 0.02 $ (0.01)
======= =======
Weighted average number of
common shares outstanding 11,124 11,165
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5
<TABLE>
<CAPTION>
VWR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
- - -------------------------------------------------------------------------------
Three Months Ended March 31,
----------------------------
(Thousands of dollars) 1994 1993
- - -------------------------------------------------------------------------------
Operating Activities
<S> <C> <C>
Net Income (Loss) $ 183 $ (95)
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Depreciation and amortization 2,440 2,179
Cumulative effect of accounting change 1,400
Changes in assets and liabilities:
Receivables (6,294) (5,506)
Inventories (6,724) 427
Other current assets (144) (1,407)
Accounts payable and other 7,044 (64)
------- -------
Cash Used by Operating Activities (3,495) (3,066)
------- -------
Investing Activities
Additions to property and equipment (1,117) (8,296)
Investment in joint venture (2,881)
Other 18 (193)
------- -------
Cash Used by Investing Activities (3,980) (8,489)
------- -------
Financing Activities
Proceeds from long-term debt 43,283 94,216
Repayment of long-term debt (39,029) (86,383)
Cash dividends (1,098) (1,095)
Proceeds from exercise of stock options 22 28
Other (349) 102
------- -------
Cash Provided by Financing Activities 2,829 6,868
------- -------
Net Decrease In Cash (4,646) (4,687)
Bank checks outstanding, less cash in bank
at beginning of year (1,062) (1,803)
------- -------
Bank checks outstanding, less cash in bank
at end of period $ (5,708) $ (6,490)
======= =======
Supplemental disclosures of cash flow information:
Cash paid (received) during period for:
Interest (net of capitalized interest) $ 1,138 $ 827
Income taxes (986) 635
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE> 6
VWR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- - -------------------------------------------------------------------------------
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three-
month period ended March 31, 1994, are not necessarily indicative of the
results which may be expected for the year ended December 31, 1994. Refer to
the consolidated financial statements and footnotes thereto included in the
Company's 1993 annual report on Form 10-K for further information.
2. Joint Venture
On January 1, 1994 the Company formed a joint venture with E. Merck of Germany
to acquire an interest in Bender & Hobein GmbH, a distributor of laboratory
supplies and equipment in Germany. The investment will be accounted for using
the cost method of accounting and was funded through the Company's revolving
credit line.
3. Dividends
For the three months ended March 31, 1994, and 1993, dividends of $.10 per
share were paid.
4. Inventory Pricing
The LIFO method of determining inventory cost is used for substantially all of
the Company's inventory. Because the actual inventory determination under the
LIFO method is an annual calculation, interim financial results are based on
estimated LIFO amounts and are subject to final year-end LIFO inventory
adjustments. Inventory values under the LIFO method at March 31, 1994 and
December 31, 1993 were approximately $27.6 million and $26.8 million,
respectively, less than current cost.
<PAGE> 7
VWR CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
This discussion and analysis of financial condition and results of operations
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto for the year ended December 31, 1993, and Management's Discussion
and Analysis included in the Company's 1993 Annual Report on Form 10-K.
RESULTS OF OPERATIONS
Sales decreased 2.7% for the three months ended March 31, 1994, when compared
to the three months ended March 31, 1993. Among the reasons for this decrease
were the harsh winter weather in the east and midwest; continued low levels of
industry growth; conservative posture toward R&D spending in the pharmaceutical
and biotech industries resulting from uncertainties in U.S. healthcare
policies; and continued downsizing in both government and industry. Although
our Canadian operations showed strong sales growth, competitive pressures
adversely affected Canadian profits, while our Sargent-Welch business continued
to show strong sales growth during the quarter.
Gross margin of 21.7% for the three months ended March 31, 1994, was below the
22.8% achieved in the comparable 1993 period. The decrease is a result of
customer mix and competitive price pressures.
Operating expenses for the three months ended March 31, 1994 decreased 1.4%
compared to the three months ended March 31, 1993, due primarily to lower
personnel related costs, but increased as a percentage of sales to 20.6% for
the three months ended March 31, 1994 compared to 20.3% in the comparable 1993
period.
Operating income for the three months ended March 31, 1994 was 1.2% of sales
compared to the 2.5% achieved in the comparable 1993 period. The decrease is
due to the Company's lower gross margin.
Interest expense for the three months ended March 31, 1994 increased 11.5% when
compared to the three months ended March 31, 1993. The increase is due to
increased borrowing levels which occurred primarily from the Company's
investment in a joint venture with E. Merck in Germany, and working capital
requirements.
Income before the cumulative effect of an accounting change decreased 86.0%
from the comparable 1993 period. The decrease is primarily due to a 54.3%
decrease in operating income along with higher interest costs and a higher
effective tax rate of 40.4% in 1994 compared to 38.0% in 1993.
<PAGE> 8
FINANCIAL CONDITION AND LIQUIDITY
For the three months ended March 31, 1994, Income before Cumulative Effect of
Accounting Change, plus depreciation and amortization, was 2.4 times interest
expense. VWR continued to have a liquid financial position. VWR's current
ratio was 2.4 at March 31, 1993 and 2.7 at December 31, 1993. Accounts
receivable and inventory accounted for approximately 65% of total assets. The
increase in accounts receivable is due to transition issues related to the
consolidation of the Company's credit department. The increase in inventory is
primarily due to maintaining duplicate inventory at locations until the
facilities consolidation is complete, and to supporting our new three-year
supplier partnership with Glaxo Pharmaceutical in Research Triangle Park, North
Carolina.
The Company has unsecured revolving credit agreements, expiring in 1996, with
three banks which provide for committed facilities of $75 million. Our
revolving credit agreements give us the option to convert up to $37.5 million
to a five-year term loan. As a result of the increase in inventory and
accounts receivable levels during the first quarter of 1994 and lower profits,
the Company's liabilities at March 31, 1994 exceeded a limit for such date
contained in the Company's credit agreement with its banks. The banks waived
compliance with that covenant as of such date. Interest rate collars of $25
million expired and were replaced with an interest rate swap which fixes our
rate of interest on $10 million of revolving credit debt.
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 11--Computation of Earnings per Share
b. Reports on Form 8-K
None.
<PAGE> 10
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
(REGISTRANT) VWR CORPORATION
BY (SIGNATURE)
(NAME AND TITLE) WALTER S. SOBON
VICE-PRESIDENT FINANCE
(Principal Financial and Accounting Officer)
DATE May 13, 1994
<PAGE> 11
EXHIBIT INDEX
-------------
EXHIBIT NUMBER DESCRIPTION PAGE
- - -------------- ----------- ----
11 Computation of Earnings per Share 12
<PAGE> 12
EXHIBIT 11
----------
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
Three Months Ended March 31,
1994 1993
---- ----
(Amounts in thousands, except per share data)
<S> <C> <C>
PRIMARY
Average shares outstanding 11,020 10,982
Net effect of dilutive stock options-
based on the treasury stock method using
average market price 104 183
----- -----
TOTAL 11,124 11,165
====== ======
Income before Cumulative Effect
of Accounting Change $ 183 $ 1,305
Per Share Amount 0.02 0.12
======= =======
Cumulative Effect of Accounting Change $ 1,400
Per Share Amount 0.13
======= =======
Net Income (Loss) $ 183 $ (95)
Per Share Amount .02 (0.01)
======= =======
FULLY DILUTED
Average shares outstanding 11,020 10,982
Net effect of dilutive stock options-
based on the treasury stock method using
the period-end market price, if higher than
the average market price 107 191
----- -----
TOTAL 11,127 11,173
====== ======
Income before Cumulative Effect of
Accounting Change $ 183 $ 1,305
Per Share Amount 0.02 0.12
======= =======
Cumulative Effect of Accounting Change $ 1,400
Per Share Amount 0.13
======= =======
Net Income (Loss) $ 183 $ (95)
Per Share Amount 0.02 (0.01)
======= =======
</TABLE>
Since the effect of full dilution is not material, such amount is not included
in the Quarterly Report to Shareholders.
