<PAGE>1
United States
Securities & 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 June 30, 1994
( ) 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 3 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 July 31, 1994.
Class Outstanding at July 31, 1994
- ------------------------------------------------------------------------------
Common stock, par value $1.00 11,072,610
<PAGE>2
VWR CORPORATION
INDEX
- -----
Page No.
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1994, and December 31, 1993 3
Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 1994 and 1993 4
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 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 4 - Submission of Matters to a Vote of
Security Holders 9
Item 6 - Exhibits and Reports on Form 8-K 9
SIGNATURES 10
INDEX 11
EXHIBIT 12
<PAGE>3
VWR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------
June 30, 1994 December 31, 1993
(Thousands of dollars) (Unaudited)
------------- -----------------
ASSETS
Receivables $ 74,380 $ 64,178
Inventories 42,409 30,243
Other 7,873 8,484
-------- --------
Total Current Assets 124,662 102,905
Property and Equipment-net 40,372 41,562
Other Assets 10,496 5,727
-------- --------
$175,530 $150,194
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank Checks Outstanding, Less Cash in Bank $ 2,239 $ 1,062
Current Portion of Long-term Debt 150
Accounts Payable and Other 58,310 36,496
-------- --------
Total Current Liabilities 60,549 37,708
Long-term Debt 64,529 61,757
Deferred Income Taxes and Other 9,728 9,672
Shareholders' Equity 40,724 41,057
-------- --------
$175,530 $150,194
======== ========
See notes to condensed consolidated financial statements.
<PAGE>4
VWR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- ------------------------------------------------------------------------------
Three Months Six Months
(Thousands of dollars, Ended June 30, Ended June 30,
except per-share data) 1994 1993 1994 1993
-------------------- ---------------------
Sales $130,896 $127,101 $252,940 $252,586
Cost of Sales 103,980 98,477 199,518 195,408
-------- -------- -------- ---------
Gross Margin 26,916 28,624 53,422 57,178
Operating Expenses 24,998 25,172 50,086 50,624
-------- -------- -------- ---------
Operating Income 1,918 3,452 3,336 6,554
Interest Expense 1,060 1,165 2,171 2,161
-------- -------- -------- ---------
Income before Income Taxes 858 2,287 1,165 4,393
Income Taxes 342 867 466 1,668
-------- -------- -------- ---------
Income before Cumulative
Effect of Accounting Change 516 1,420 699 2,725
Cumulative effect of change in
accounting for post retirement
benefits, net of tax (1,400)
-------- -------- -------- ----------
Net Income $ 516 $ 1,420 $ 699 $ 1,325
======== ======== ======== ==========
Earnings (Loss) per share:
Income before cumulative
effect of accounting change $ 0.05 $ 0.13 $ 0.06 $ 0.24
Cumulative effect of
accounting change (0.12)
-------- -------- -------- ---------
Net Income $ 0.05 $ 0.13 $ 0.06 $ 0.12
======== ======== ======== =========
Weighted average number of
common shares outstanding-
(thousands) 11,127 11,165 11,125 11,161
See notes to condensed consolidated financial statements.
<PAGE>5
VWR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
- ------------------------------------------------------------------------------
Six Months Ended June 30,
(Thousands of dollars) 1994 1993
- ------------------------------------------------------------------------------
Operating Activities
Net Income $ 699 $ 1,325
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Cumulative effect of accounting change 1,400
Depreciation and amortization 4,632 4,362
Changes in assets and liabilities:
Receivables (10,202) (6,193)
Inventories (12,166) (6,718)
Other current assets 19 (2,824)
Accounts payable and other 21,267 3,212
--------- --------
Cash Provided (Used) by Operating Activities 4,249 (5,436)
--------- --------
Investing Activities
Additions to property and equipment, net (1,908) (11,630)
Investment in Joint Venture (2,881)
Other (763) (482)
-------- --------
Cash Used by Investing Activities (5,552) (12,112)
-------- --------
Financing Activities
Proceeds from long-term debt 73,509 136,850
Repayment of long-term debt (70,887) (120,130)
Cash dividends (2,204) (2,195)
Proceeds from exercise of stock options 63 75
Other (355) (20)
-------- --------
Cash Provided by Financing Activities 126 14,580
--------- --------
Net Decrease in Cash (1,177) (2,968)
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 $(2,239) $(4,771)
======== ========
Supplemental disclosures of cash flow information:
Cash paid (received) during period for:
Interest (net of capitalized interest) $ 2,182 $ 2,028
Income taxes (986) 1,627
See notes to condensed consolidated financial statements
<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 of only normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three and six-month periods ended June 30, 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. Inventory Costing
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 June 30, 1994 and December 31, 1993,
were approximately $27.8 million and $26.8 million, respectively, less than
current cost.
4. Dividends
For the three months ended June 30, 1994 and 1993, dividends of $.10 per share
were paid. For the six months ended June 30, 1994, and 1993, dividends of
$.20 per share were paid.
<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 of financial condition and results of operations
included in the Company's Annual Report on Form 10-K.
Operations and Earnings
Sales increased 3.0% for the three months ended June 30, 1994, when compared
to the three months ended June 30, 1993. The increase for the three month
period was due to improvements in all areas of our business, including our
Canadian business, when sales are measured in local currency. Although our
Canadian operation is showing signs of sales growth, competitive pressures
continue to affect its profits.
Gross margin percentages of 20.6% and 21.1% for the respective three- and
six-month periods ended June 30, 1994 were below the 22.5% and 22.6% achieved
in the comparable periods of the prior year. The decrease is a result of
continued competitive price pressures in our U.S. domestic and Canadian
businesses and customer mix.
Operating expenses as a percentage of sales of 19.1% and 19.8% for the
respective three- and six-month periods ended June 30, 1994 were below the
19.8% and 20.0% achieved in the comparable periods of the prior year. The
decrease is a result of lower personnel related costs.
Operating income for the three- and six-month periods ended June 30, 1994 was
1.5% and 1.3%, respectively, of sales compared to the 2.7% and 2.6% levels
achieved in comparable 1993 periods. The decrease is a result of the Company's
lower gross margin, including continued operating losses in our Canadian
business.
Interest expense for the three months ended June 30, 1994 decreased 9.0% when
compared to the three months ended June 30, 1993. The decrease is a result of
replacing the Company's expired interest rate collars with fixed rate interest
swaps.
Income before the cumulative effect of an accounting change for the three- and
six-month periods ended June 30, 1994 decreased 63.7% and 74.3%, respectively,
from the comparable 1993 periods. The decrease is primarily the effect of
lower than expected margins.
<PAGE>8
FINANCIAL CONDITION AND LIQUIDITY
For the six months ended June 30, 1994, Operating Income, plus depreciation
and amortization was 3.7 times interest expense. VWR continued to have a
liquid financial position. VWR's current ratio was 2.1 at June 30, 1994 and
2.7 at December 31, 1993. Accounts receivable and inventory accounted for
approximately 67% 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 study is
complete, various marketing programs, and to supporting new supplier
partnerships with several customers including Glaxo Pharmaceutical in Research
Triangle Park, North Carolina. Additionally, inventory has increased at our
Sargent-Welch division in order to support the seasonal high school education
business.
The Company has unsecured revolving credit agreements, expiring in 1996, with
three banks which provide for committed facilities of $75 million (increased
to $85 million through November 1994) subject to the maintenance of certain
levels of accounts receivable and inventory. It is expected that we will have
sufficient accounts receivable and inventory to provide full availability
under these facilities. 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 second quarter
of 1994 and lower profits, the Company's liabilities at June 30, 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 $20 million expired on March 27, 1994 and $5 million
expired on May 3, 1994. These collars were replaced with an interest rate
swap which fixes our rate of interest on $10 million of revolving credit debt.
<PAGE>9
OTHER INFORMATION
ITEM 4 Submission of Matters to a Vote of Security Holders
a. Annual Meeting - May 5, 1994
b. Not Applicable
c. 1. Election of Directors for a three year term
FOR WITHHELD
--------- --------
Curtis P. Lindley 9,223,886 123,817
N. Stewart Rogers 9,247,913 99,790
Edward A. McGrath, Jr. 9,250,924 96,779
2. Approve the adoption of the agreement and plan of
merger which will change the Corporation's State of
Incorporation from Delaware to Pennsylvania.
FOR 7,438,901
AGAINST 566,864
ABSTAIN 380,913
BROKER NON-VOTES 961,025
3. Ratify the selection of Ernst & Young as independent
auditors for the year ending December 31, 1994.
FOR 9,242,837
AGAINST 70,924
ABSTAIN 33,942
ITEM 6 Exhibits and Reports on From 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 August 9, 1994
<PAGE>11
EXHIBIT INDEX
- -------------
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ----
11 Computation of Earnings per Share 12
<PAGE>12
COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11
Three Months Ended June 30,
1994 1993
---- ----
(Amounts in thousands except per share data)
PRIMARY
Average shares outstanding 11,025 11,003
Net effect of dilutive stock options-
based on the treasury stock method using
average market price 102 162
------- -------
TOTAL 11,127 11,165
======= =======
Net Income $ 516 $ 1,420
Per Share Amount 0.05 0.13
======= =======
FULLY DILUTED
Average shares outstanding 11,025 11,003
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 105 166
------- -------
TOTAL 11,130 11,169
======= =======
Net Income $ 516 $ 1,420
Per Share Amount 0.05 0.13
======= =======
<PAGE>13
COMPUTATION OF EARNINGS PER SHARE
Six Months Ended June 30,
1994 1993
---- ----
(Amounts in thousands except per share data)
PRIMARY
Average shares outstanding 11,022 10,988
Net effect of dilutive stock options-
based on the treasury stock method using
average market price 103 173
------- -------
TOTAL 11,125 11,161
======= =======
Income Before Cumulative Effect
of Accounting Change $ 699 $ 2,725
Per Share Amount 0.06 0.24
======= =======
Cumulative Effect of Accounting Change --- $ 1,400
Per Share Amount --- 0.12
======= =======
Net Income $ 699 $ 1,325
Per Share Amount .06 0.12
======= =======
FULLY DILUTED
Average shares outstanding 11,022 10,988
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 106 179
------- -------
TOTAL 11,128 11,167
======= =======
Income Before Cumulative Effect
of Accounting Change $ 699 $ 2,725
Per Share Amount 0.06 0.24
======= =======
Cumulative Effect of Accounting Change --- $ 1,400
Per Share Amount --- 0.12
======= =======
Net Income $ 699 $ 1,325
Per Share Amount .06 0.12
======= =======
Since the effect of full dilution is not material, such amount is not
included in the Quarterly Report to Shareholders.
