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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, 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 No. 0-14139
VWR CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 91-1319190
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(State of Incorporation) (I.R.S. Employer Identification No.)
1310 Goshen Parkway, West Chester, PA 19380
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (610) 431-1700
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(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, 1995.
Class Outstanding at April 30, 1995
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Common stock, par value $1.00 12,893,957 shares
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VWR CORPORATION
INDEX
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Page No.
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1995 and December 31, 1994 3
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1995 and 1994 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1995 and 1994 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
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VWR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
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March 31, 1995 December 31, 1994
(Thousands of dollars) (Unaudited)
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ASSETS
Receivables $ 84,428 $ 73,530
Inventories 46,177 40,091
Other 7,493 6,378
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Total Current Assets 138,098 119,999
Property and Equipment-net 37,215 38,259
Other Assets 14,920 15,117
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$190,233 $173,375
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LIABILITIES AND SHAREHOLDERS' EQUITY
Bank checks outstanding, less cash in bank $ 7,517 $ 1,398
Current portion of long-term debt 2,250 2,250
Accounts payable and other 53,806 41,231
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Total Current Liabilities 63,573 44,879
Long-term Debt 76,848 79,170
Deferred Income Taxes and Other 9,145 9,158
Shareholders' Equity 40,667 40,168
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$190,233 $173,375
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See notes to condensed consolidated financial statements.
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VWR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
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Three Months Ended March 31,
(Thousands of dollars, except per-share data) 1995 1994
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Sales $146,376 $122,044
Cost of sales 115,444 95,538
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Gross margin 30,932 26,506
Operating expenses 28,527 25,088
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Operating income 2,405 1,418
Interest expense and other 1,487 1,111
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Income before income taxes 918 307
Income taxes 358 124
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Net Income $ 560 $ 183
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Earnings per share $ 0.05 $ 0.02
Weighted average number of
common shares outstanding 11,103 11,124
See notes to condensed consolidated financial statements.
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VWR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
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Three Months Ended March 31,
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(Thousands of dollars) 1995 1994
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Operating Activities
Net Income $ 560 $ 183
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 2,466 2,440
Changes in assets and liabilities:
Receivables (10,898) (6,294)
Inventories (6,086) (6,724)
Other current assets (1,237) (144)
Accounts payable and other 13,004 7,044
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Cash Used by Operating Activities (2,191) (3,495)
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Investing Activities
Additions to property and equipment (533) (1,117)
Investment in joint venture (2,881)
Other (496) 18
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Cash Used by Investing Activities (1,029) (3,980)
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Financing Activities
Proceeds from long-term debt 34,756 43,283
Repayment of long-term debt (37,078) (39,029)
Cash dividends (442) (1,098)
Net change in bank checks outstanding 6,119 4,646
Proceeds from exercise of stock options 22
Other (135) (349)
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Cash Provided by Financing Activities 3,220 7,475
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Net Change In Cash 0 0
Cash at beginning of year 0 0
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Cash at end of period $ 0 $ 0
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Supplemental disclosures of cash flow information:
Cash paid (received) during period for:
Interest (net of capitalized interest) $ 1,426 $ 1,138
Income taxes (61) (986)
See notes to condensed consolidated financial statements.
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VWR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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BASIS OF PRESENTATION
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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, 1995, are not necessarily indicative of the
results which may be expected for the year ended December 31, 1995. Refer to
the consolidated financial statements and footnotes thereto included in the
Company's 1994 annual report on Form 10-K for further information.
DIVIDENDS
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For the three months ended March 31, 1995, and 1994, dividends of $.04 and
$.10 per share, respectively, were paid.
INVENTORY PRICING
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Inventory valued using the LIFO method comprised approximately 88% of
inventory at March 31, 1995 and December 31, 1994. Cost of the remaining
inventories is determined using the FIFO method. 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, 1995 and December 31, 1994 were approximately $28.8
million and $27.7 million, respectively, less than current cost.
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VWR CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
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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, 1994 and
Management's Discussion and Analysis included in the Company's 1994
Annual Report on Form 10-K.
RESULTS OF OPERATIONS
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Sales increased 19.9% for the three months ended March 31, 1995, when
compared to the three months ended March 31, 1994. Approximately 46% of
the dollar increase is due to growth in our Canadian business, primarily
from the acquisition of Canlab which occurred in the fourth quarter of
1994. Our Canadian operations, also continue to show stronger margins
and improved operating results.
Gross margin of 21.1% for the three months ended March 31, 1995, was below
the 21.7% achieved in the comparable 1994 period. The decrease is a result
of competitive price pressures, increased transportation costs, and customer
mix. First quarter gross margin was slightly less than one point higher than
the fourth quarter of 1994, after eliminating the impact of vendor rebates.
Operating expenses continue to grow at a rate lower than sales growth. For
the three months ended March 31, 1995 operating expenses increased 13.7%
compared to the three months ended March 31, 1994. Approximately 36% of the
dollar increase is a result of the acquisition of Canlab. Costs associated
with the on-going consolidation of our U.S. sales offices and Canadian
transition expenses accounted for approximately 16% of the dollar increase.
Operating expenses decreased as a percentage of sales to 19.5% for the three
months ended March 31, 1995 compared to 20.6% in the comparable 1994 period.
Operating income for the three months ended March 31, 1995 was 1.6% of sales
compared to the 1.2% achieved in the comparable 1994 period. The increase is
due to operating expenses growing at a rate slower than sales growth.
Interest expense for the three months ended March 31, 1995 increased 33.8%
when compared to the three months ended March 31, 1994. The increase is due
to increased borrowing levels which occurred primarily from the acquisition
of Canlab, partially offset by replacing interest rate collars with fixed rate
interest swaps.
Net income increased 206.0% from the comparable 1994 period. The increase is
primarily due to a 69.6% increase in operating income along with a lower
effective tax rate of 39.0% in 1995 compared to 40.4% in 1994, partially offset
by higher interest costs.
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FINANCIAL CONDITION AND LIQUIDITY
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For the three months ended March 31, 1995, operating income, plus depreciation
and amortization, was 3.3 times interest expense. VWR continued to have a
liquid financial position. VWR's current ratio was 2.2 at March 31, 1995 and
2.7 at December 31, 1994. Accounts receivable and inventory accounted for
approximately 69% of total assets. The increase in accounts receivable and
inventory is due to the increase in sales.
The Company has a secured revolving credit and term loan agreement, expiring
in 1997, with four banks which provide for committed facilities of $80 million
subject to the maintenance of certain levels of accounts receivable and
inventory and a $20 million five-year term loan due in varying installments.
The facility provides for the ability to borrow Canadian dollars in an amount
up to $16 million in U.S. dollars. The Company expects to have sufficient
accounts receivable and inventory to provide availability under these
facilities.
The Consolidation of the U.S. sales offices is in process and is expected to
be completed by the end of 1995. Approximately $.4 million of the estimated $2
million in expenses, primarily personnel-related, have been incurred during the
first quarter of 1995. The savings from the consolidation will be realized
beginning in 1996.
In April 1995, the agreement with EM Industries (an affiliate of E. Merck) was
completed and the Company received $20 million which was used to retire debt.
EM Industries received approximately 1.8 million common shares representing a
14% ownership in the Company, and warrants to purchase an additional $10
million of common shares at $11 per share. Assuming exercise of the warrant,
EM Industries would own approximately 20% of the Company.
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PART II. OTHER INFORMATION
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ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 11--Computation of Earnings per Share
b. Report on Form 8-K dated February 23, 1995 was filed reporting
on Item 5.
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SIGNATURES
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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 12, 1995
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EXHIBIT INDEX
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EXHIBIT NUMBER DESCRIPTION PAGE
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11 Computation of Earnings per Share 12
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EXHIBIT 11
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COMPUTATION OF EARNINGS PER SHARE
Three Months Ended March 31,
1995 1994
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(Amounts in thousands, except per share data)
PRIMARY
Average shares outstanding 11,068 11,020
Net effect of dilutive stock options-
based on the treasury stock method using
average market price 35 104
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TOTAL 11,103 11,124
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Net Income $ 560 $ 183
Per Share Amount .05 .02
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FULLY DILUTED
Average shares outstanding 11,068 11,020
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 40 107
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TOTAL 11,108 11,127
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Net Income $ 560 $ 183
Per Share Amount .05 .02
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Since the effect of full dilution is not material, such amount is not included
in the Quarterly Report to Shareholders.
