This document consists
of 15 pages, of which
this page is number 1 .
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ]Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997.
------------------
or
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ______________ to _______________.
(Amended by Exch Act Rel No. 312905. eff 4/26/93.)
Commission File Number. 000-21930
BIOSOURCE INTERNATIONAL, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 77-0340829
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
820 Flynn Road, Camarillo, California 93012
- ------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(805)987-0086
None
- -----------------------------------------------------------------
(Former name, former address, and former fiscal year
if changed since last report)
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.
Outstanding at November 11, 1997 8,296,015
<PAGE 2>
BIOSOURCE INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS
Item Description Page
PART I FINANCIAL INFORMATION
1. Financial Statements
Consolidated Balance Sheets as of September 30, 1997
and December 31, 1996 .......................... 3
Consolidated Statements of Operations for the nine
months ended September 30, 1997 and 1996......... 4
Consolidated Statements of Operations for the three
months ended September 30, 1997 and 1996......... 5
Consolidated Statements of Cash Flows for the nine
months ended September 30, 1997 and 1996......... 6
Notes to Consolidated Financial Statements........... 7-10
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............. 11-13
PART II OTHER INFORMATION
1-6 Other Information, Exhibits and Reports on
Form 8-K........................................... 14
SIGNATURES............................................. 15
<PAGE 3>
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
BIOSOURCE INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
<CAPTION>
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,379,042 $ 3,606,904
Short-term investments, held to maturity 9,184,677 5,766,905
Accounts receivable, net of $55,500
allowance for doubtful accounts 4,518,883 4,286,237
Inventories 7,397,540 7,228,918
Prepaid expenses and other current assets 1,548,485 1,316,416
Deferred income taxes 256,996 202,000
----------- -----------
Total current assets 27,285,623 22,407,380
Long-term investments, held to maturity 816,429 5,561,669
Property and equipment, net 4,584,065 4,788,404
Other assets 671,484 712,374
Deferred income taxes 400,000 400,000
----------- -----------
$ 33,757,601 $ 33,869,827
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of notes payable $ 29,743 $ 28,510
Current maturities of capital lease obligation 3,480 --
Accounts payable 1,540,460 1,895,310
Accrued expenses 1,534,935 2,318,284
Income taxes payable 67,848 77,767
----------- -----------
Total current liabilities 3,176,466 4,319,871
----------- -----------
Notes payable, less current maturities 1,291,969 1,314,359
Capital lease obligation, less current maturities 9,806 --
Deferred income taxes 84,200 75,000
Stockholders' equity:
Preferred stock, $.001 par value. Authorized
1,000,000 shares; none issued -- --
Common stock, $0.001 par value. Authorized
20,000,000 shares; issued and outstanding
8,315,065 shares at September 30,1997 and
8,318,971 shares at December 31,1996 8,315 8,319
Additional paid-in capital 29,036,614 28,837,102
Retained earnings (accumulated deficit) 1,810,167 (679,824)
Common stock in treasury, at cost, 109,500 shares
at September 30, 1997 (725,736) --
Accumulated translation adjustment (934,200) (5,000)
----------- -----------
Net stockholders' equity 29,195,160 28,160,597
----------- -----------
$ 33,757,601 $ 33,869,827
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE 4>
BIOSOURCE INTERNATIONAL, INC.
AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
1997 1996
<CAPTION> -------------- -------------
<S> <C> <C>
Revenue $ 15,675,306 $ 10,820,724
Cost of goods sold 5,639,688 3,875,821
----------- -----------
Gross profit 10,035,618 6,944,903
----------- -----------
Operating expenses:
Research and development 1,525,811 984,505
Sales & marketing 3,016,994 1,699,434
General and administrative 2,593,877 1,669,503
----------- -----------
Total operating expenses 7,136,682 4,353,442
----------- -----------
Operating income 2,898,936 2,591,461
----------- -----------
Other income, net 665,140 263,134
----------- -----------
Income before income taxes 3,564,076 2,854,595
Provision for income taxes 1,074,085 937,567
----------- -----------
Net income $ 2,489,991 $ 1,917,028
=========== ===========
Income per share:
Net income per share $ 0.28 $ 0.27
=========== ===========
Weighted average number of common shares outstanding 9,004,972 7,130,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE 5>
<TABLE>
BIOSOURCE INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
1997 1996
<CAPTION> --------------- -------------
<S> <C> <C>
Revenue $ 5,182,450 $ 5,039,529
Cost of goods sold 1,869,937 1,888,683
----------- -----------
Gross profit 3,312,513 3,150,846
----------- -----------
Operating expenses:
Research and development 477,506 451,002
Sales & marketing 943,067 867,240
General and administrative 890,179 852,913
----------- -----------
Total operating expenses 2,310,752 2,171,155
----------- -----------
Operating income 1,001,761 979,691
----------- -----------
Other income, net 185,030 162,689
----------- -----------
Income before income taxes 1,186,791 1,142,380
Provision for income taxes 331,390 336,000
----------- -----------
Net income $ 855,401 $ 806,380
=========== ===========
Income per share:
Net income per share $ 0.10 $ 0.10
=========== ===========
Weighted average number of common shares outstanding 8,889,485 8,450,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE 6>
<TABLE>
BIOSOURCE INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
1997 1996
<CAPTION> --------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,489,991 $ 1,917,028
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 544,590 306,332
Gain on sale of fixed assets (7,646) --
Unrealized exchange loss 41,074 --
Changes in assets and liabilities:
Accounts receivable (621,448) (2,798,440)
Inventories (620,870) (3,811,238)
Prepaid expenses and other current assets (449,387) (2,134,143)
Deferred income taxes (45,800) --
Other assets 64,053 6,580,302
Accounts payable (222,817) 607,694
Accrued expenses and other liabilities (543,431) 1,753,320
Income taxes payable 2,648 --
------------ ------------
Net cash provided by operating activities 630,957 2,420,855
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (508,808) (3,395,581)
Proceeds from sale of fixed assets 21,546 --
Purchase of European subsidiary -- (6,868,000)
Purchase of investments (16,226,345) --
Proceeds from sale of investments 17,553,813 --
------------ ------------
Net cash provided by (used in) investing activities 840,206 (10,263,581)
------------ ------------
Cash flows from financing activities:
Proceeds from the exercise of options 134,744 131,229
Proceeds from the exercise of warrants 64,750 59,365
Proceeds from issuance of common stock -- 19,315,959
Borrowings from bank -- 1,957,000
Repayments to bank (21,155) (714,515)
Payments to acquire tresury stock (725,736) --
Payments of capital lease obligations (1,634) (23,000)
------------ ------------
Net cash provided by (used in) financing activities (549,031) 20,726,038
------------ ------------
Effect of exchange rate on cash (149,994) (7,000)
------------ ------------
Net increase in cash and cash equivalents 772,138 12,876,312
Cash and cash equivalents at beginning
of period 3,606,904 1,393,092
------------ ------------
Cash and cash equivalents at end
of period $ 4,379,042 $ 14,269,404
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE 7>
BIOSOURCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The unaudited financial statements as of September 30, 1997 and
for the nine month and three month periods ended September 30,
1997 and 1996 included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations. However, the Company believes that the
disclosures are adequate to prevent the information presented
from being misleading. These financial statements should be read
in conjunction with the financial statements and the notes
thereto included in the Company's Form 10-K, which contains
financial information for the year ended December 31, 1996.
The information provided in this report reflects all adjustments
that are, in the opinion of management, necessary to present
fairly the results of operations for these periods. The results
of these periods are not necessarily indicative of the results to
be expected for the full year.
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
BioSource International, Inc. and its wholly owned
subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
The Company is engaged in the licensing, development,
manufacture, marketing and distribution of immunological
reagents, test kits and oligonucleotides used in biomedical
research. The types of products supplied by the Company
include a range of bioactive proteins, enzymes, substrates,
antibodies, human and murine cytokines, growth factors and a
variety of assay systems for the detection of biological
molecules. These products focus on areas of research such as
immunology, AIDS and cancer. The Company focuses its sales
efforts on academic, industrial and governmental
laboratories.
Cash and Cash Equivalents
Cash and cash equivalents includes all cash balances and
highly liquid investments with an original maturity of three
months or less.
Investments
The Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," as of January 1,
1994. At September 30, 1997, the Company has investments in
U.S. Treasury securities that are classified in the
consolidated balance sheet as short-term (mature in more than
91 days but no more than one year) or long-term (maturities
beyond one year). These investments are categorized as held
to maturity and are carried at cost as the Company has both
the intent and the ability to hold these investments until
they mature.
<PAGE 8>
BIOSOURCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Inventories
Inventories are stated at the lower of cost (first-in, first-
out) or market (net realizable value) for raw materials and
work in process and the average-cost method for finished
goods.
Property and Equipment
Property and equipment are stated at cost. Depreciation is
provided using the straight-line method over the estimated
useful lives which range from three to seven years.
Leasehold improvements are amortized using the straight-line
method over the estimated useful life or the lease term,
whichever is shorter.
License Agreements
License agreements are recorded at cost and are amortized
using the straight-line method over the shorter of the
estimated useful lives of the license or the license term
(generally five to ten years). These costs are included with
other assets in the accompanying consolidated balance sheet.
Income Taxes
Income taxes are accounted for under the asset and liability
method of Statement 109, deferred income taxes are recognized
for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under Statement 109, the effect on
deferred taxes of a change in tax rates is recognized in
income in the period that includes the enacted date.
Long Lived Assets
In March 1995, Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of," was issued.
This statement provides guidelines for recognition of
impairment losses related to long-term assets. Effective
January 1, 1996, the Company adopted Statement No. 121. The
adoption of this new standard did not have a material effect
on the Company's consolidated financial statements.
Accounting for Stock Options
In October 1995, Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation"
("Statement No. 123"), was issued. This statement
encourages, but does not require a fair value based method of
accounting for employee stock options. The Company will
continue to measure compensation costs pursuant to APB
Opinion No. 25, "Accounting for Stock Issued to Employees"
and comply with the pro forma disclosure requirements of
Statement No. 123. Effective January 1, 1996, the Company
adopted Statement No. 123 which had no impact on the
Company's consolidated financial statements.
Net Income per Share
Net income per share has been computed using the weighted
average number of common shares outstanding each quarter.
The Company's common share equivalents associated with
dilutive stock options and warrants are immaterial, and
accordingly, primary and fully diluted net income per share
are approximately the same.
<PAGE 9>
BIOSOURCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Inventories
Sept 30, Dec 31,
1997 1996
------------ -----------
Raw materials..................... $ 1,020,334 $ 767,378
Work in process................... 2,844,929 3,243,766
Finished goods.................... 3,532,277 3,217,774
----------- ----------
$ 7,397,540 $ 7,228,918
=========== ==========
3. Property and Equipment
Sept 30, Dec 31,
1997 1996
----------- ------------
Land.............................. $ 360,000 $ 360,000
Building and improvements......... 1,916,682 1,852,075
Machinery and equipment........... 2,811,548 2,797,638
Office furniture and equipment.... 1,095,593 975,258
----------- -----------
6,183,823 5,984,971
Less accumulated depreciation
and amortization......... 1,599,758 1,196,567
----------- -----------
$ 4,584,065 $ 4,788,404
=========== ===========
4. Notes Payable
Long-term debt consists of the following:
Sept 30, Dec 31,
1997 1996
----------- -----------
9.4% first mortgage note payable in monthly
installments of $6,896,
including interest, with final
payment of $535,178 due April
2006........................ $ 724,594 $ 735,155
7.6% second mortgage note payable
due June 2016, payable in monthly
installments of $5,369,
including interest................ 597,120 607,714
----------- -----------
1,321,714 1,342,869
Less current portion.............. 29,743 28,510
----------- -----------
$ 1,291,971 $ 1,314,359
=========== ===========
<PAGE 10>
BIOSOURCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Shares used in the earnings per share computations are as
follows:
<TABLE>
Three Months Ended Nine Months Ended
------------------ -----------------
Sept 30, 1997 Sept 30, 1996 Sept 30, 1997 Sept 30, 1996
<CAPTION> ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Primary:
Weighted average
number of common
shares 8,305,620 8,312,160 8,353,275 6,982,017
Dilutive effect of
stock options and
warrants 583,865 137,840 651,697 147,983
---------- ---------- ---------- ----------
Average common and
common equivalent
shares outstanding 8,889,485 8,450,000 9,004,972 7,130,000
========== ========== ========== ==========
Fully diluted:
Weighted average
number of common
shares 8,305,650 8,312,160 8,353,275 6,982,017
Dilutive effect of
stock options and
warrants 583,920 138,260 650,331 148,950
---------- ---------- ---------- ----------
Average common and
common equivalent
shares outstanding 8,889,570 8,450,420 9,003,606 7,130,967
========== ========== ========== ==========
</TABLE>
Fully diluted earnings per share are not separately reported
since the effect of dilution is less than three percent.
6. Financial Accounting Standards, No. 128
The Financial Accounting Standards Board recently issued
Statements of Financial Accounting Standards No. 128, "Earnings
Per Share," which is required to be adopted for financial
statements issued for periods ending after December 15, 1997.
This statement establishes new, simplified standards for
computing and presenting earnings per share. It replaces the
traditional presentations of primary earnings per share and fully
diluted earnings per share with presentations of basic earnings
per share and diluted earnings per share, respectively. When
adopted by the Company, basic earnings per share is expected to
increase slightly from primary earnings per share and diluted
earnings per share is expected to approximate fully diluted
earnings per share.
7. Financial Accounting Standards, No. 130
The company will also be subject to Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income" ("SFAS No. 130") for
interim and annual financial statements issued for periods beginning
after December 15, 1997. SFAS No. 130 establishes standards for the
reporting and display of comprehensive income and its components.
Comprehensive income is defined as revenue, expenses, gains and losses
under generally accepted accounting principles are excluded from net income
(such as extraordinary and non-recurring gains and losses). SFAS No. 130
requires that items of comprehensive income be classified seperately in
the financial statements. The statement also requires that the
accumulated balance of comprehensive income items be reported seperately
from retained earnings and paid-in capital in the equity section of the
balance sheet. Management does not expect that the implementation of
SFAS No. 130 will have a material effect on the Company's financial
position or results of operations.
8. Financial Accounting Standards, No. 131
The Company will be subject to Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("SFAS No. 131") for annual financial statements
issued for periods beginning after December 15, 1997. SFAS No. 131 is
not required in interim financial statements in the initial year of
application. SFAS No. 131 requires that financial and descriptive
information about operating segments of a company be provided. Generally,
financial information will need to be reported on the same basis that is
used internally for evaluating segment performance and deciding how to
allocate resources to segments. SFAS No. 131 will require additional
financial disclosure by the Company, but will not have any effect on the
Company's financial position or results of operations.
<PAGE 11>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read
together with the financial statements and the notes thereto
included elsewhere herein.
OVERVIEW
BioSource International, Inc. ("BioSource") develops,
manufactures, markets and distributes products that are widely
used in biomedical research and are instrumental in the
development of new medical diagnostic methods and pharmaceutical
products. The Company's products enable scientists to better
understand the biochemistry, immunology and cell biology of the
human body, aging and certain diseases such as cancer, arthritis
and other inflammatory diseases, AIDS and certain other
infectious diseases. The Company's products include
immunological reagents, including bioactive proteins (cytokines,
growth factors and adhesion molecules) and monoclonal and
polyclonal antibodies. The Company also develops, manufactures,
markets and distributes oligonucleotides and ELISA test kits, and
uses recombinant DNA technology to produce cytokines and other
proteins. Because the Company's products are currently sold only
to the research market, the Company is not subject to regulation
by the FDA, and therefore undertakes none of the risks associated
with the research and development of new drugs.
BioSource maintains manufacturing, laboratories and its
executive offices in Camarillo, California. The Company
manufactures oligonucleotides at its laboratory facilities
located in Menlo Park, California.
BioSource Europe, S.A. ("BioSource Europe"), the Company's
wholly owned subsidiary is incorporated under Belgian law and
maintains manufacturing laboratories and administrative offices
in Fleurus, Belgium. BioSource Europe also has wholly owned
subsidiaries in France, Germany, Italy and the Netherlands. On
May 31, 1997 BioSource Europe closed down its Italian sales office
located in Milan, Italy replacing the direct sales force with a
direct distributor.
Results of Operations
Revenue. Revenue for the quarter ended September 30, 1997
increased $142,921 or 2.84% to $5,182,450 from $5,039,529 when
compared to the quarter ended September 30, 1996. Revenue for
the nine months ended September 30, 1997 increased $4,854,582 or
44.9% to $15,675,306 from $10,820,724 when compared to the nine
months ended September 30, 1996. Domestic revenue increased
$429,421 (16.8%) and $1,332,682 (17.6%) for the quarter and nine
months ended September 30, 1997, respectively. BioSource Europe
revenue decreased for the quarter ended $286,500 (-11.5%) and
increased $3,521,900 (108.4%) for the nine months ended September
30, 1997.
Consolidated revenue increased due to the increased sales from
domestic operations. The Company increased sales domestically
through the continued efforts of increasing sales to both
international and domestic customers of its core product lines.
Although revenue increased for BioSource Europe in its functional
currency, revenue recognized at the consolidated level decreased
due to the strengthening of the U.S. dollar in Europe when
translated into U.S. dollars from the foreign subsidiaries functional
currencies.
<PAGE 12>
Gross margins. Gross margins as percentage of revenue for the
quarter ended September 30, 1997 were 63.9%, an increase of 1.4%,
when compared to 62.5% for the quarter ended September 30, 1996.
Gross margins for the nine months ended September 30, 1997 were
stable at 64.0% when compared to 64.2% for the nine months ended
September 30, 1996. Domestic gross margins for BioSource for the
quarter ended September 30, 1997 remained relatively flat at 69.1%
when compared to 68.8% for the quarter ended September 30, 1996.
BioSource Europe recognized gross margins of 49.4% and 50.7% for
the quarter and nine months ended September 30, 1997, respectively.
The Company recognizes lower margins in Europe due to higher costs
associated with the manufacturing of RIA (Radioimmunoassay) assays and
higher labor and fixed costs when compared to that of the United
States.
Research and development. The Company's research and development
expenses increased $26,504 (5.9%) and $541,306 (54.9%) for the
quarter and nine months ended September 30, 1996, respectively.
Domestic research and development increased $12,844 (5.2%) and
$37,146 (18.9%) for the quarter and nine months ended September
30, 1997, respectively. Research and development expenses for
BioSource Europe amounted to $216,500 and $661,000 for the
quarter ended and nine months ended September 30, 1997. The increase
in expenses for the nine months ended September 30, 1997, as
compared to the prior period, was mainly due to the incremental
expenses associated with the acquisition of BioSource Europe. The
company also recognized additional expenses domestically due to the
continued development of its core product lines including new Elisa
assays and other biomedical research reagents. The Company is also
continuing its research and product development efforts in the area
of molecular diagnostic assays which include quantitative and
qualitative assay test kits.
Sales and marketing. Sales and marketing expenses increased
$68,625 (7.9%) and $1,294,553 (75.2%) for the quarter and nine
months ended September 30, 1997, respectively. Domestic sales
and marketing expenses increased $140,627 (43.1%) and $416,755
(42.0%) for the quarter and nine months ended September 30, 1997,
respectively. BioSource Europe sales and marketing expenses were
$ 475,898 and $1,606,698 for the quarter and nine months ended
September 30, 1997, respectively. The majority of the consolidated
sales and marketing expense increase was due to the incremental
sales and marketing expenses associated with BioSource Europe for
the nine months ended September 30, 1997. For the quarter ended
September 30, 1997, BioSource Europe sales and marketing expenses
decreased due to the closure of the Italian subsidiary in May 1997
and management's successful efforts in controlling expenses in each
of the subsidiaries. Domestic expenses increased in the areas of
additional marketing staff, travel, sales promotion expenditures,
which include advertising, catalog expenses, mailings and trade
show attendance.
General and administrative. General and administrative increased
$44,468 (5.3%) and $947,381 (57.6%) for the quarter and nine
months ended September 30, 1997. Domestically, general and
administrative increased $92,159 (21.1%) and $240,059 (21.0%) for
the quarter and nine months ended September 30. 1997. BioSource
Europe general and administrative expenses were $359,500 and
$1,201,800 for the quarter and nine months ended September 30,
1997, respectively. The majority of the consolidated general and
administrative expenses increase for the nine months ended
September 30, 1997 was due to the incremental increase in expenses
assosciated with the acquisition of BioSource Europe. For the quarter
ended September 30, 1997, BioSource Europe expenses decreased when
compared to the quarter ended September 30, 1996, due to decreases
in expenses associated with the Italian subsidary closure and decreases
in expenses as a result of management's successful efforts of controlling
expenses in Germany and France. Domestically, increased expenditures
were predominately in the areas of added personnel to support the growth of
the Company and the incremental increased expenses associated with being
a public company.
Provision for income taxes. The provision for income taxes for
the quarter and nine months ended September 30, 1997 was provided
at the effective rates of approximately 27.9% and 30.1% of
consolidated pretax earnings when compared to 35.9% and 35.1% for
the quarter and nine months ended September 30, 1996. U.S.
corporate taxes reflect the tax benefits of a foreign sales
corporation, credits for increased research and development
expenditures and the California manufacturers tax credit.
Net Income. As a result of the above factors, net income
increased $49,021 (6.1%) $572,963 and (29.9%) for the three and
nine months ended September 30, 1997.
<PAGE 13>
Liquidity and Capital Resources
At September 30, 1997 cash and cash equivalents, short &
long term marketable securities were $14,380,148 compared to
$14,935,478 at December 31, 1996. Long term marketable
securities at September 30, 1997 amounted to $816,429 all of
which mature in 1998. The Company invests its cash on hand in
low risk short-term commercial paper and U.S. treasury strips.
The Company's policy is to obtain the highest possible return,
maintain liquidity in its investments, to provide working capital
and to have the ability to react to future potential long term
investment opportunities in complimentary business, products or
technologies.
Cash provided by operating activities was $630,957 for
the nine months ended September 30, 1997, a decrease of $1,789,898
when compared to $2,420,855 for the nine months ended
September 30, 1996. Cash provided by operating activities for the
nine months ended September 30, 1997 resulted primarily from
positive operating results.
Capital expenditures for the nine months ended September 30,
1997 amounted to $508,808, a decrease of $2,886,773 when compared
to $3,395,581 for the nine months ended September 30, 1996.
The capital expenditures for the nine months ended September 30, 1996
were abnormally high due to the acquisition of BioSource Europe and
equity offering. Capital expenditures for the nine months ended
September 30, 1997 included laboratory and computer equipment for
both BioSource Europe and domestic operations. The Company also
purchased a fully integrated manufacturing and accounting software package
for BioSource Europe, which is the same as that used by its
domestic operations. Management believes this investment will
improve reporting, increase efficiencies in manufacturing,
customer support and customer service.
During the nine months ended on September 30, 1997, the
Company repurchased 109,500 shares of Company common
stock at a market value of $725,736. In addition, $134,744 was
received upon the exercise of stock options for the nine months
ended September 30, 1997 under the Company's stock incentive
plan. In addition, $64,750 was received upon the exercise of a
warrant for 35,000 shares of common stock.
Management of the Company expects to be able to meet its
future cash and working capital requirements for operations and
capital additions through currently available funds and cash
generated from operations.
FORWARD-LOOKING STATEMENTS
Certain statements contained in the Quarterly Report on Form
10-Q, including without limitation, statements containing the words
"believes," "anticipates," "expects," and words of similar import,
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward looking
statements involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or achievements
of the Company or industry results to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Given these uncertainties, prospective
investors are cautioned not to place undue reliance on such forward-
looking statements and are encouraged to review the risk factors
contained in the Company's annual report on Form 10-K for the year ended
December 31, 1996.
<PAGE 14>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
<PAGE 15>
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 thereunto duly authorized.
BIOSOURCE INTERNATIONAL, INC.
By: /s/ Anna Anderson
--------------------------------
Anna Anderson
November 14, 1997 Vice President and Chief Financial Officer
/s/ James H. Chamberlain
--------------------------------
James H. Chamberlain
November 14, 1997 President and Chief Executive Officer
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