September 13, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: BioWhittaker, Inc. (the "Company")
10-Q for the Quarterly Period Ended July 31, 1996
Dear Ladies and Gentlemen:
For filing with the Securities and Exchange Commission pursuant to
Instruction G of Form 10-Q is an electronically transmitted copy with exhibits
of the Company's Quarterly Report on Form 10-Q for the Quarterly period ended
July 31, 1996.
Please acknowledge receipt of this filing.
/s/ F. Dudley Staples, Jr.
------------------------------
F. Dudley Staples, Jr.
Secretary and General Counsel
cc: Mr. Philip L. Rohrer, Jr. (w/encl.)
File
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
|X| Quarterly Report Pursuant to Section 13 or 15(d)of the Securities
Exchange Act of 1934
For the period ended July 31, 1996.
|_| 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 1-10870
-------
BIOWHITTAKER, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 95-3917176
------------------------------ -----------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
8830 Biggs Ford Road, Walkersville, Maryland 21793-0127
- -------------------------------------------- ------------------
(Address of Principal Executive Offices) (zip code)
(301) 898-7025
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check 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
The number of shares outstanding of the Registrant's only class of
common stock as of July 31, 1996 was 10,759,199.
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
BIOWHITTAKER, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
For the Three For the Nine
Months Ended Months Ended
July 31, July 31,
-------------- ---------------
1996 1995 1996 1995
---- ---- ---- ----
Sales.................................. $ 12,253 $ 13,571 $ 37,724 $ 42,248
Costs and expenses
Cost of sales........................ 6,169 7,554 19,834 22,780
Research and development............. 704 694 1,938 2,122
Selling, general and administrative.. 3,398 3,311 10,429 11,174
----- ----- ------ ------
10,271 11,559 32,201 36,076
------ ------ ------ ------
Income From Operations ................ 1,982 2,012 5,523 6,172
Other(income)/expenses
Purchased research and development.... -- -- 4,000 --
Litigation expenses .................. 3,500 -- 3,500 --
Gain on sale of joint venture ........ -- -- -- (2,054)
Gain on Pharmacia settlement.......... -- -- -- (1,732)
Gain on sale of product line.......... -- -- (1,322) --
Other income ......................... (91) (91) (272) (236)
Equity in loss of joint venture....... -- -- -- 749
Interest.............................. 67 93 226 428
Loss/(gain)on foreign currency
transactions....................... (37) 11 (9) 34
------ ----- ----- ------
3,439 13 6,123 (2,811)
----- ----- ----- ------
Loss)/Income Before Income Taxes........ (1,457) 1,999 (600) 8,983
Provision for income taxes.............. (547) 712 902 3,376
Net(Loss)/Income........................ $ (910) $ 1,287 $ (1,502) $ 5,607
====== ======= ======== =======
Net (Loss)/Income Per Share............. $(0.08) $ 0.12 $ ( 0.14) $ 0.51
====== ======= === ==== =======
Average common and common equivalent
shares outstanding (in thousands)...... 10,759 10,894 10,759 11,011
====== ====== ====== ======
Unaudited
See Notes to Consolidated Financial Statements
2
<PAGE>
BIOWHITTAKER, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
July 31, October 31,
1996 1995
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents .................... $ 550 $ 359
Accounts receivable .......................... 7,485 8,624
Other receivables ............................ 1,794 --
Inventories .................................. 20,738 19,138
Assets held for disposal ..................... -- 10,379
Prepaid income taxes ......................... 1,381 --
Prepaid expenses ............................. 1,891 556
------ ------
Total Current Assets ..................... 33,839 39,056
------ ------
PROPERTY, PLANT AND EQUIPMENT ................ 33,329 30,506
Less accumulated depreciation and amortization 16,692 14,631
------ ------
16,637 15,875
------ ------
OTHER ASSETS
Intangibles .................................. 11,246 4,682
Deferred income taxes ........................ 81 --
Miscellaneous ................................ 265 188
------ -----
11,592 4,870
------ ------
$ 62,068 $ 59,801
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable ................................ $ 1,300 $ 900
Current portion of long-term debt ............ 222 1,101
Accounts payable ............................. 4,637 3,183
Accrued liabilities .......................... 7,731 4,581
Deferred income taxes ........................ 28 410
------ ------
Total Current Liabilities ................ 13,918 10,175
------ ------
LONG-TERM DEBT ............................... 1,515 2,936
----- -----
DEFERRED INCOME TAXES ........................ 2,181 732
----- -----
STOCKHOLDERS' EQUITY
Common stock ................................. 108 108
Additional paid-in capital ................... 26,389 26,389
Retained earnings ............................ 17,978 19,480
Translation adjustment ....................... (21) (19)
------ ------
Total Stockholders' Equity ............... 44,454 45,958
------ ------
$ 62,068 $ 59,801
======== ========
July 31, 1996 - Unaudited
See Notes to Consolidated Financial Statements
3
<PAGE>
BIOWHITTAKER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the Nine Months
Ended July 31,
--------------
1996 1995
---- ----
OPERATING ACTIVITIES
Net (loss)/income ...................................... $ (1,502) $ 5,607
Adjustments to reconcile net (loss)/ income to net cash
provided by operating activities:
Depreciation and amortization ........................ 2,606 3,367
Purchased research and development ................... 4,000 --
Gain on sale of BioWhittaker International
and BioWhittaker France ............................ -- (2,054)
Gain on sale of product line ......................... (1,322) --
Equity in loss of joint venture ...................... -- 749
Deferred income taxes ................................ (754) (606)
Loss on disposal of property, plant and equipment .... 53 99
Write-down of property, plant and equipment .......... -- 824
Changes in operating assets and liabilities,
excluding the affect of acquisitions:
Accounts receivable .............................. 2,009 (396)
Inventories ...................................... (213) (4,295)
Prepaid expenses and other assets ................ (1,149) 387
Accounts payable and accrued liabilities ......... (95) (434)
------ -----
Net Cash Provided by Operating Activities ........ 3,633 3,248
----- -----
INVESTING ACTIVITIES
Purchases of property, plant and equipment ............. (2,085) (1,923)
Proceeds from sale of product line ..................... 12,281 --
Proceeds from sale of joint venture .................... -- 4,674
Purchase of Clonetics, net of cash received ............ (8,226) --
Purchases of other businesses .......................... (1,039) --
Prepaid royalty ........................................ (1,294) --
------ -----
Net Cash (Used in)/Provided by Investing Activities (363) 2,751
----- -----
FINANCING ACTIVITIES
Net borrowings/(repayments) of notes payable ........... 400 (1,400)
Payment of long-term debt .............................. (3,425) (4,511)
Stock options exercised ................................ -- (185)
Other .................................................. (54) 21
------ -----
Net Cash Used in Financing Activities ............ (3,079) (6,075)
------ ------
Net Change In Cash and Cash Equivalents .......... 191 (76)
Cash and Cash Equivalents At Beginning Of Year ... 359 638
------ ------
Cash and Cash Equivalents At End Of Period ....... $ 550 $ 562
====== ======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ....................................... $ 285 $ 628
====== ======
Income taxes ................................... $ 2,852 $ 3,070
====== ======
Notes 1. In connection with the acquisition of all of the common stock of
Clonetics Corporation for $8,733 in cash, the Company acquired
assets with a value of $8,236, assumed liabilities of $3,503 and
expensed $4,000 of purchased research and development.
Unaudited
See Notes to Consolidated Financial Statements
4
<PAGE>
BIOWHITTAKER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands, Except Per Share Data)
Basis of Presentation: The accompanying unaudited 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 normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the nine months
ended July 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending October 31, 1996. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Annual Report on Form 10-K for the year ended October 31, 1995 for BioWhittaker,
Inc. and its subsidiaries ("the Company" or "BioWhittaker").
Reclassifications: Certain prior years' amounts in the consolidated
financial statements have been reclassified to conform to the 1996 presentation.
Net Income Per Share: Net income per share is computed by dividing net
income by the weighted average number of common and common equivalent shares
outstanding. Common equivalent shares include the dilutive effect of outstanding
stock purchase options and Anasco's right to maintain its aggregate percentage
voting interest in the Company calculated, in each case, under the treasury
stock method. Net income per share determined on a fully diluted basis is not
materially different from the primary net income per share presented.
Inventories: Inventories consisted of the following:
July 31, October 31,
1996 1995
---- ----
Raw material ................................... $ 3,735 $ 2,903
Work in process ................................ 5,775 5,153
Finished goods ................................. 11,228 11,082
------ ------
$ 20,738 $ 19,138
======= =======
Litigation: The statements of operations for the quarter and nine months
ended July 31, 1996 include litigation expenses of $3,500 which is the pre-tax
cost associated with the Company's lawsuit against Minnesota Mining and
Manufacturing, Inc.
Impact of Recently Issued Accounting Standards: In March, 1995, the FASB
issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of", which requires that impairment
losses be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount. Statement 121 also
addresses the accounting for long-lived assets that are expected to be disposed
of. The Company adopted Statement 121 in the first quarter of fiscal 1996. The
adoption had no impact on the Company's financial position or net income for the
three and nine months ended July 31, 1996.
In December 1994, the Accounting Standards Executive Committee issued
Statement of Position 94-6, "Disclosure of Certain Significant Risks and
Uncertainties", which requires companies to include in their financial
statements disclosures about the nature of their operations and the use of
estimates in the preparation of financial statements. In addition, companies may
be required to include disclosures about certain significant estimates and
current vulnerability due to certain concentrations. The Company will adopt SOP
94-6 in its annual financial statements for fiscal 1996 and, based on current
circumstances, does not believe that significant additional disclosures will be
required.
5
<PAGE>
BIOWHITTAKER, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share data)
Acquisitions and Divestitures. On January 17, 1996, the Company acquired
100% of the stock of Clonetics Corporation ("Clonetics"), a leading manufacturer
of normal human cells, for $8,733 in cash and the assumption of approximately
$3,500 in liabilities. The operations of Clonetics are included in the
consolidated statement of income from the date of acquisition. The acquisition
was accounted for as a purchase transaction and resulted in the recording of
$7.0 million in intangibles that will be amortized over periods ranging from 7
to 15 years. $4,000 of the purchase price was allocated to purchased research
and development and expensed on the Company's statement of income for the
quarter ended January 31, 1996. The expense for purchased research and
development is not deductible for income tax purposes.
On December 18, 1995, the Company sold to Carter-Wallace, Inc. ("Carter")
its diagnostic test kit business in the ELISA format for $9,000 and on February
2, 1996 sold its related FIAX line for $1,000. Carter also purchased ELISA and
FIAX finished goods inventory for approximately $1,400. BioWhittaker has agreed
to continue to manufacture ELISA and FIAX products for Carter for up to one and
five years, respectively. Under a separate agreement with one of Carter's
contract manufacturers, BioWhittaker has agreed to sell certain raw material and
work in process inventory over a two year period. This inventory has an
estimated book value of $900.
BioWhittaker has also agreed to provide to Carter's customers certain
diagnostic testing instrumentation associated with the ELISA and FIAX product
lines and to service the equipment for up to two years. The equipment surcharge
typically paid on each kit purchased by customers will be collected by Carter
and remitted to the Company in the amount of approximately $1,200, the book
value of such diagnostic equipment owned by the Company at closing.
As a result of this transaction, BioWhittaker recorded an after-tax gain of
$1,104 or $0.10 per share on it's consolidated statement of income for the
quarter ended January 31, 1996. Additional gain could result based on actual
sales of assets and the effects of the manufacturing transition.
The following table presents proforma consolidated results of operations
for the three and nine months ended July 31, 1995 and 1996, assuming that the
purchase of Clonetics Corporation and the sale of the diagnostic test kit
business to Carter-Wallace, Inc. had occurred at the beginning of each of the
respective fiscal periods.
For the Three For the Nine
Months Ended Months Ended
July 31, July 31,
-------------- --------------
1996 1995 1996 1995
---- ---- ---- ----
Sales ................................. $ 12,253 $ 12,542 $ 37,553 $ 38,795
Net(Loss)/Income ...................... $ (910) $ 1,424 $ 1,162 $ 6,038
Net(Loss)/Income Per Share ............ $ (0.08) $ 0.13 $ 0.11 $ 0.55
The above proforma information has been derived from the historical
financial statements as adjusted for the proforma results of operations of
Clonetics Corporation prior to its purchase by BioWhittaker, the reduction in
revenue and expenses as a result of the sale to Carter-Wallace, Inc. and an
estimated income tax provision related to the historical results and foregoing
adjustments. The gain on the sale to Carter-Wallace, Inc. and the write-down of
purchased research and development have been excluded from the proforma results
of operations as they are non-recurring events.
The above proforma information is presented for illustrative purposes only
and is not necessarily indicative of the operating results had the acquisition
of Clonetics Corporation and the sale to Carter-Wallace, Inc. occurred as of
November 1, 1994 and November 1, 1995.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
Results of Operations
Comparison of the first nine months of fiscal 1996 to the first nine months of
fiscal 1995.
Sales for the first nine months of fiscal 1996 of $37.7 million were less
than fiscal 1995 sales of $42.2 million by $4.5 million, or 10.7%. Fiscal year
1996 revenues reflect lower sales volume due to the December 1995 sale of the
Company's EIA and FIAX test kit product lines (the "EIA and FIAX Product
Lines")and to the April 1995 sale of BioWhittaker France. These declines were
partially offset by increased sales resulting from the January 1996 acquisition
of Clonetics Corporation("Clonetics")(see "Notes to Consolidated Financial
Statements" and "- Liquidity and Financial Condition").
Cell culture product sales increased by $3.1 million, or 17.5%, to $21.0
million, due primarily to an additional $3.4 million in sales as a result of the
acquisition of Clonetics and to higher sales volume for the Company's tissue
culture media product line. These increases were partially offset by lower sales
volume for cell cultures.
Endotoxin detection product sales decreased by $0.3 million, or 3.0%, to
$10.0 million, primarily due to a decrease in sales mark-up as a result of the
April 1995 sale of the Company's former subsidiary, BioWhittaker France.
Excluding the effects of the sale of BioWhittaker France, sales for endotoxin
detection products increased $0.5 million, or 5.5%.
Clinical diagnostic testing product sales decreased by $7.3 million, or
52.0% to $6.8 million, due to the sale of the EIA and FIAX Product Lines. The
Company expects diagnostic product sales for each quarter of fiscal 1996 to be
lower than those in the comparable periods of fiscal 1995 as a result of this
transaction. Sales for the Company's allergy product line declined, as expected,
because of continuing lower international sales volume. In addition, revenues,
starting in the fourth quarter of fiscal 1996, will be lower because of the
completion of a subcontract to manufacture botulinum antitoxin. In the first
three quarters of fiscal 1996, the subcontract generated $1.2 million in
revenues and net earnings of approximately $0.6 million.
Gross margins were 47.4% of sales for the first nine months of fiscal 1996
compared with 46.1% during the comparable period of fiscal 1995 reflecting, for
the first nine months of fiscal 1996, proportionally higher margins associated
with Clonetics and the favorable impact of the sale of the EIA and FIAX Product
Lines.
Research and development expenses as a percentage of sales increased
slightly to 5.1% for the first nine months of fiscal 1996 from 5.0% for the
comparable period of fiscal 1995, primarily as a result of proportionally higher
expenses associated with Clonetics.
Selling, general and administrative expenses as a percentage of sales
increased to 27.6% for the first nine months of fiscal 1996 from 26.4% for
fiscal 1995, reflecting proportionally higher expenses for Clonetics.
"Purchased research and development" represents the expensing of in-process
research and development acquired as a part of the purchase of Clonetics. "Gain
on the sale of product line" represents the gain, before the effect of taxes, as
a result of the sale of the EIA and FIAX Product Lines. See "Notes to
Consolidated Financial Statements" and "- Liquidity and Financial Condition" for
further discussion of these transactions. "Litigation expenses" reflects costs
associated with the Company's lawsuit against Minnesota Mining and
Manufacturing, Inc. ("3M"). As a result of an adverse jury verdict in the
litigation, the Company recorded a one- time, pre-tax charge to earnings of $3.5
million. For fiscal 1996, "Other Income" is comprised primarily of payments
received from Boehringer Ingelheim for technology assistance under the terms of
its agreement with the Company. "Equity in loss of joint venture" reflects the
Company's $0.7 million pre-tax share of operating losses that occurred during
the first six months of fiscal 1995 of its joint venture with Boehringer
Ingelheim. The Company's interest in the joint venture was sold in April, 1995.
7
<PAGE>
"Provision for income taxes" reflects the lack of income tax benefit
associated with the expensing of purchased research and development, favorable
treatment of the gain associated with the sale of the Company's diagnostic test
kit business and tax savings associated with the litigation expenses. Before the
effect of non-recurring items, the "Provision for income taxes" as a percentage
of Income Before Income Taxes was 34.0% for the first nine months of fiscal 1996
compared to 36.2% for the comparable period of fiscal 1995. The lower percentage
for the first nine months of fiscal 1996 is primarily due to lower tax rates on
the income of Clonetics.
Comparison of the third quarter of fiscal 1996 to the third quarter of fiscal
1995.
Sales for the third quarter of fiscal 1996 of $12.3 million were less than
fiscal 1995 sales of $13.6 million by $1.3 million, or 9.7%, reflecting lower
sales volume due to the sale of the EIA and FIAX Product Lines. This decline was
partially offset by increased sales resulting from the acquisition of Clonetics.
Cell culture product sales increased by $1.4 million, or 24.7%, to $7.1
million due primarily to $1.6 million in sales as a result of the acquisition of
Clonetics and to higher sales for the Company's tissue culture media product
line. These increases were partially offset by a $0.4 million decline in
periodic orders to a single customer for cell cultures.
Endotoxin detection product sales increased by $0.2 million, or 5.0%, to
$3.3 million, due to higher sales volume.
Clinical diagnostic testing product sales decreased by $2.9 million, or
60.7% to $1.9 million due to the sale of the EIA and FIAX Product Lines. The
Company expects diagnostic product sales for each quarter of fiscal 1996 to be
lower than those in the comparable periods of fiscal 1995 as a result of this
transaction. In addition, sales for the Company's allergy product line declined,
as expected, because of continuing lower international sales volume.
Gross margins were 49.7% of sales for the third quarter of fiscal 1996
compared with 44.3% during the comparable period of fiscal 1995 reflecting, for
the third quarter of fiscal 1996, proportionally higher margins associated with
Clonetics and the favorable impact of the sale of the EIA and FIAX Product
Lines.
Research and development expenses as a percentage of sales increased to
5.7% for the third quarter of fiscal 1996 from 5.1% for the comparable period of
fiscal 1995 primarily as a result of proportionally higher expenses associated
with Clonetics.
Selling, general and administrative expenses as a percentage of sales
increased to 27.7% for the third quarter of fiscal 1996 from 24.4% for the
comparable period of fiscal 1995 largely due to the inclusion of proportionally
higher expenses associated with Clonetics.
"Litigation expenses" reflects costs associated with the Company's lawsuit
against 3M. For fiscal 1996, "Other Income" is comprised primarily of payments
received from Boehringer Ingelheim for technology assistance under the terms of
the sale of the Company's 50% interest in its joint venture.
"Provision for income taxes" reflect the tax savings associated with the
loss of the 3M lawsuit. Before the effect of non-recurring items, the "Provision
for income taxes" as a percentage of Income Before Income Taxes was 32.6% for
the third quarter of fiscal 1996 compared to 35.6% for the comparable period of
fiscal 1996. The lower percentage for the third quarter of fiscal 1996 is
primarily due to lower tax rates on the income of Clonetics.
Liquidity and Financial Condition
During the first nine months of fiscal 1996, BioWhittaker financed its
operations, capital expenditures, acquisitions and product development
activities with cash provided by operations, cash of $12.3 million received from
the sale of its EIA and FIAX Product Lines and debt. For the nine months ended
July 31, 1996 the Company generated $3.6 million from operating activities
compared to $3.2 million for the comparable period of fiscal 1995. Cash
generated by operating activities for the first nine months of fiscal 1995
included the receipt of $4.0 million as a result of the settlement of the
Pharmacia patent infringement lawsuit.
8
<PAGE>
At July 31, 1996, total current assets were $33.8 million compared to $39.1
million at October 31, 1995. As a result of the then pending sale of the EIA and
FIAX Product Lines, current assets at October 31, 1995 included both $4.1
million of assets previously classified as non-current and $6.2 million of
inventory classified as "Assets held for disposal". Current assets at July 31,
1996 include $1.5 million due to the sale of the EIA and FIAX Product Lines and
8 $2.8 million as a result of the acquisition of Clonetics. Total current
liabilities at July 31, 1996 were $13.9 million compared to $10.2 million at
October 31, 1995 primarily reflecting the sale of the EIA and FIAX Product
Lines.
The Company's investing activities used cash of $0.4 million for the first
nine months of fiscal 1996 compared to providing $2.8 million in cash for the
comparable period of fiscal 1995. Cash received as a result of investing
activities for fiscal 1995 included $4.7 million received as a result of the
sale of the Company's joint venture. Fiscal 1996 included $12.3 million received
as a result of the sale of its EIA and FIAX Product Lines and $8.2 million used
to acquire Clonetics. Purchases of property, plant and equipment totaled $2.1
million for the first nine months of fiscal 1996 compared to $1.9 million for
the comparable period of fiscal 1995.
Financing activities consumed cash of $3.1 and $6.1 million for the first
nine months of fiscal years 1996 and 1995, respectively reflecting the repayment
of amounts outstanding under the Company's various debt facilities.
At July 31, 1996 the Company's principal short-term cash requirements were
to fund the Company's normal working capital needs, consisting primarily of
inventories and receivables, to fund capital expenditures and to fund
acquisitions. At July 31, 1996 the Company had outstanding capital commitments
of approximately $0.8 million and $7.7 million was available under the terms of
the Company's revolving credit facility. In addition, the Company expects to
receive additional amounts due related to the sale of its EIA and FIAX Product
Lines. Litigation expenses as a result of the lawsuit against 3M have been paid
largely as incurred. Remaining amounts outstanding approximately $1.3 million in
the aggregate, are expected to be paid within the next 60 days.
As a result of the sale of the EIA and FIAX Product Lines, the Company
recorded an after-tax gain in the first quarter of fiscal 1996 of approximately
$1.1 million, or $0.10 per share. This transaction could result in additional
gain in future periods primarily as a result of actual sales of inventory and of
the effects of the manufacturing transition. Proceeds from this sale were used
to fund the acquisition of Clonetics.
On January 17, 1996, the Company acquired Clonetics Corporation
("Clonetics"), a privately owned company located in San Diego, California.
Clonetics is a leading manufacturer of normal human cells. BioWhittaker acquired
100% of the stock of Clonetics for approximately $8.7 million in cash and the
assumption of an estimated $3.5 million in liabilities. The Company entered into
employment agreements with certain key individuals. The acquisition was largely
funded with proceeds from the sale of the Company's EIA and FIAX test kit
product lines. In its audited financial statements for the fiscal year ended
December 31, 1995, Clonetics reported earnings of $0.7 million on sales of $5.5
million. The acquisition was accounted for as a purchase transaction and
resulted in the recording of $7.0 million in intangibles that will be amortized
over periods ranging from 7 to 15 years.
9
<PAGE>
BIOWHITTAKER, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
11. Statement regarding Computation of Per Share Net Income for
the three months and nine months ended July 31, 1996.
27. Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended July
31, 1996.
10
<PAGE>
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.
BIOWHITTAKER, INC.
Date: September 13, 1996 By /s/Philp L. Rohrer, Jr.
------------------------ -------------------------------------
Philip L. Rohrer, Jr., Vice President
(Principal Financial Officer)
11
<PAGE>
BIOWHITTAKER, INC.
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
11 Computation of Per Share Net(Loss)/Income 13
27 Financial Data Schedule 14
12
<PAGE>
Exhibit 11
BIOWHITTAKER, INC.
COMPUTATION OF PER SHARE NET (LOSS)/INCOME
(Dollars in thousands, except per share data)
For the Three Months For the Nine Months
Ended July 31, Ended July 31,
-------------- --------------
1996 1995 1996 1995
---- ---- ---- ----
Earnings
Net(loss)/income .................. $ (910) $ 1,287 $ (1,502) $ 5,607
====== ======= ======== =======
Average Common and Common Equivalent
Shares (in 000)
Weighted average number of common
shares outstanding .............. 10,759 10,758 10,759 10,687
Dilutive effect of options and warrants
Stock options included under treasury
stock method ................... -- 114 -- 260
Proportional interest rights of
Anasco Gmb ..................... -- 22 -- 64
-------------------------------- ------ ------ ------ ------
Total ............................. 10,759 10,894 10,759 11,011
====== ====== ====== ======
Net(Loss)/Income Per Share ........ $ (0.08) $ 0.12 $ (0.14) $ 0.51
======= ======= ======= =======
Unaudited
Note: Net income per share determined on a fully diluted basis is not
materially different from primary net income per share shown above.
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
BioWhittaker's interim consolidated statement of income for the nine months
ended July 31, 1996 and it's consoidated balance sheet as of July 31, 1996 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 550
<SECURITIES> 0
<RECEIVABLES> 7,577
<ALLOWANCES> 92
<INVENTORY> 20,738
<CURRENT-ASSETS> 33,839
<PP&E> 33,329
<DEPRECIATION> 16,692
<TOTAL-ASSETS> 62,068
<CURRENT-LIABILITIES> 13,918
<BONDS> 0
0
0
<COMMON> 108
<OTHER-SE> 44,346
<TOTAL-LIABILITY-AND-EQUITY> 62,068
<SALES> 37,724
<TOTAL-REVENUES> 37,724
<CGS> 19,834
<TOTAL-COSTS> 32,201
<OTHER-EXPENSES> 5,897
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 226
<INCOME-PRETAX> (600)
<INCOME-TAX> 902
<INCOME-CONTINUING> (1,502)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,502)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
