SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1997
Commission File Number 1-6926
C. R. BARD, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1454160
(State of incorporation) (I.R.S. Employer Identification No.)
730 Central Avenue, Murray Hill, New Jersey 07974
(Address of principal executive offices)
Registrant's telephone number,
including area code: (908) 277-8000
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.
Class Outstanding at October 31, 1997
Common Stock - $.25 par value 56,906,487
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996 1
Condensed Statements of Consolidated Income
and Retained Earnings For The Quarter and
Nine Months Ended September 30, 1997 and 1996 2
Condensed Consolidated Statements of
Cash Flows For The Nine Months Ended
September 30, 1997 and 1996 3
Notes to Condensed Consolidated Financial
Statements 4
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION 10
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
<CAPTION>
September 30, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and short-term investments $ 40,300 $ 78,000
Accounts receivable, net 237,100 245,400
Inventories 247,900 245,000
Other current assets 22,900 8,500
Total current assets 548,200 576,900
Property, plant and equipment,net 217,700 226,100
Intangible assets, net of
amortization 421,200 447,200
Other assets 93,900 82,300
$1,281,000 $1,332,500
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<S> <C> <C>
Current Liabilities:
Short-term borrowings and current
maturities of long-term debt $ 101,300 $ 148,200
Accounts payable 50,400 59,200
Accrued expenses 161,200 121,500
Federal and foreign income
taxes 15,500 7,300
Total current liabilities 328,400 336,200
Long-term debt 340,800 342,800
Other long-term liabilities 50,100 52,000
Shareholders' Investment:
Preferred stock, $1 par value,
authorized 5,000,000 shares;
none issued --- ---
Common stock, $.25 par value,
authorized 300,000,000 shares;
issued and outstanding 56,971,676
shares and 56,985,983 shares 14,200 14,300
Capital in excess of par value 98,700 77,500
Retained earnings 496,100 506,700
Other (47,300) 3,000
561,700 601,500
$1,281,000 $1,332,500
<FN>
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
- 1 -
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME AND RETAINED EARNINGS
(thousands except per share amounts)
(Unaudited)
<CAPTION>
For The Quarter Ended For Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $297,500 $295,800 $902,200 $880,200
Costs and expenses:
Cost of goods sold 139,300 146,600 426,200 430,500
Marketing,selling and
administrative 97,700 90,200 288,400 266,600
Research and
development 21,600 18,700 64,200 57,800
Costs to combine
operations --- 9,000 --- 9,000
Interest Expense 8,200 6,600 24,900 18,700
Other (income)
expense, net 35,700 9,500 27,900 32,800
Total costs and
expenses 302,500 280,600 831,600 815,400
Income (loss) before
taxes (5,000) 15,200 70,600 64,800
Provision(benefit)for
income taxes (1,200) 3,800 22,100 (1,200)
Net income (loss) (3,800) 11,400 48,500 66,000
Retained earnings,
beginning of period 530,900 494,900 506,700 478,900
Treasury stock
retired (20,700) (3,800) (29,400) (24,100)
Cash dividends (10,300) (9,700) (29,700) (28,000)
Retained earnings,
end of period $496,100 $492,800 $496,100 $492,800
Weighted average shares
outstanding 57,054 57,062
Net income (loss)
per share $ (.07) $ .20 $ .85 $ 1.16
Cash dividends per
share $ .18 $ .17 $ .52 $ .49
<FN>
</TABLE>
The accompanying notes to consolidated financial statements are
an integral part of these statements.
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<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
(Unaudited)
<CAPTION>
For The Nine Months Ended
September 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 48,500 $ 66,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 44,500 42,500
Gain on sale of assets (17,800) ---
Other noncash items 43,400 14,600
Changes in assets and liabilities:
Current assets (32,400) (27,400)
Current liabilities (8,400) (5,300)
Other (2,000) (16,800)
75,800 73,600
Cash flows from investing activities:
Capital expenditures (25,200) (24,600)
Payments made for purchases of
businesses (6,500) (193,800)
Proceeds from the sale of a product
line 24,000 ---
Other long-term investments,
net (13,400) (15,100)
(21,100) (233,500)
Cash flows from financing activities:
Purchase of common stock (29,600) (24,300)
Dividends paid (29,700) (28,000)
Short-term borrowings and other (31,800) 233,600
Long-term borrowings (2,000) (3,400)
(93,100) 177,900
Net increase (decrease) in cash and
cash equivalents (38,400) 18,000
Balance at January 1, 63,600 37,400
Balance at September 30, $ 25,200 $ 55,400
<FN>
</TABLE>
The accompanying notes to consolidated financial statements are
an integral part of these statements.
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<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The financial statements contained in this filing have been
prepared in accordance with the rules and regulations of the
Securities and Exchange Commission and have not been audited,
however, C. R. Bard, Inc. ("Bard" or the "Company") believes that
it has included all adjustments, consisting only of normal
recurring adjustments, which are necessary to present fairly the
financial condition and results of operations at and for these
periods. The results of operations for the interim periods are not
necessarily indicative of results of operations for a full year.
These financial statements should be read in conjunction with the
Consolidated Financial Statements and Notes to Consolidated
Financial Statements as filed by the Company in the 1996 Annual
Report on Form 10-K.
Accounting Policies
Included in the balance sheet caption "Cash and short-term
investments" are short-term investments which have maturities
greater than ninety days and amounted to approximately
$15,100,000 at September 30, 1997. These investments have not
been treated as cash and cash equivalents for cash flow
presentation purposes.
The Company enters into foreign exchange options to help reduce the
exposure to fluctuations between certain currencies. These off-
balance sheet options are accounted for on a mark-to-market basis.
The gains and losses associated with these options are recorded on
the income statement as "other income and expense" and on the
balance sheet as "other current assets" or "accrued expenses".
Cash flows associated with the settlement of these options are
reflected as operating activities.
Effective for fiscal years ending after December 15, 1997, the
Company is required to adopt Statement of Financial Accounting
Standard No. 128 "Earnings Per Share" ("FAS 128"). FAS 128
requires the presentation of basic earnings per share and diluted
earnings per share. "Basic earnings per share" represents net
income divided by the weighted average shares outstanding and is
consistent with the Company's historical presentation. "Diluted
earnings per share" represents net income divided by weighted
average shares outstanding adjusted for the incremental dilution of
- 4 -
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Accounting Policies (continued)
outstanding employee stock options and awards. Diluted earnings
per share would have been ($.07) and $.19, respectively
for the three months ended September 30, 1997 and 1996 and $.84 and
$1.15, respectively, for the nine months ended September 30, 1997
and 1996.
Acquisitions and Dispositions
On July 1, 1997 Bard completed the sale of its surgical suction
product line for approximately $24,000,000. Other (income) expense
includes a gain of $17,800,000 ($.19 per share after tax) related
to the sale of this product line. The surgical suction line had
annual revenues of approximately $25,000,000.
On September 16, 1996 Bard completed the acquisition of IMPRA, Inc.
("IMPRA"). IMPRA, a privately held company, developed, manufactured
and marketed vascular grafts used for blood vessel replacement
surgery. The purchase and acquisition costs which approximated
$155,400,000 were financed with commercial paper. The merger was
accounted for under the purchase method of accounting.
Short Term Borrowings and Long-Term Debt
In 1996 Bard initiated a $350,000,000 commercial paper program
backed by the Company's committed line of credit. Borrowings of
$120,000,000 under the Company's commercial paper program have been
classified as long-term debt because the Company has both the
intention and ability to refinance these amounts on a long-term
basis.
In June 1996 the Company filed a shelf registration with the
Securities and Exchange Commission for the future issuance of up to
$200,000,000 of long-term debt. As part of the registration, in
December 1996, the Company issued $150,000,000 of long-term notes
due 2026. The effective interest rate, including the financing
costs, is 7.17%. These notes may be redeemed at the option of the
note holder on December 1, 2006, at a redemption price equal to the
principal amount. As a result of the long-term debt offering, the
Company amended its commercial paper program and committed line of
credit from $350,000,000 to $300,000,000 effective January 1, 1997.
- 5 -
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Restructuring Charges
During the third quarter of 1996, the Company announced and
committed to a plant closing which resulted in a $10,000,000
restructuring charge. As a result of a continuing extensive review
of operations, during the third quarter of 1997, management and the
Board of Directors authorized and committed the Company to a
restructuring of its global manufacturing operations. Five
manufacturing facilities will be closed, four additional facilities
will be downsized and several European distribution centers will be
consolidated. The products manufactured at these locations will be
redeployed to other facilities including a new plant. These
restructuring activities are in process and will be completed over
the next 24 months. The restructuring plan resulted in a charge of
$44,100,000 ($30,100,000 net of tax or $.53 per share) exclusive of
certain period costs which are required to be expensed as incurred
over the next two years. The charge has been included in other
(income) expense in the accompanying September 30, 1997 statement
of consolidated income and retained earnings.
Income Taxes
During the third quarter of 1997, the Company filed a protest at
the IRS appeals level related to tax years 1990-1992. Management
believes that the outcome of these matters will not have a
material impact on the Company's consolidated financial position or
results of operations.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Consolidated net sales for the third quarter of 1997 of
$297,500,000 was an increase of 1 percent over the third quarter
1996 sales of $295,800,000. Sales for the first nine months of
1997 of $902,200,000 increased 2 percent over the $880,200,000 for
the same period last year. Sales in the U.S. for the third quarter
of 1997 were $194,700,000, flat with 1996, while international
sales were up 3 percent against the prior year's quarter. The
impact of a strengthening dollar in the third quarter of 1997
decreased sales outside the U.S. by 8 percent. For the first nine
months of 1997, U.S. sales totaled $591,600,000, up 2 percent,
while international sales increased 3 percent to $310,600,000.
Currency translation for the first nine months of 1997 decreased
worldwide sales by approximately 2 percent.
PRODUCT GROUP SUMMARY OF NET SALES
(in thousands of dollars)
Quarter Ended Nine Months Ended
September 30, September 30,
% %
1997 1996 Change 1997 1996 Change
Vascular $113,300 $103,200 10 $341,000 $313,500 9
Urology 79,200 77,000 3 233,400 225,300 4
Oncology 56,300 53,100 6 166,700 158,800 5
Surgery 32,600 29,700 10 95,500 85,800 11
Sub-Total -
Emphasis
Products 281,400 263,000 7 836,600 783,400 7
Other 16,100 32,800 (51) 65,600 96,800 (32)
Total-
Worldwide $297,500 $295,800 1 $902,200 $880,200 2
Increased graft sales due to the IMPRA acquisition contributed to
the 10 percent increase in vascular sales for the quarter. Basic
drainage and continence products contributed to the urology
increase of 3 percent for the quarter. Third quarter increases in
specialty access products and mesh were primarily responsible for
the 6 and 10 percent growth in the oncology and surgery categories,
respectively.
Gross profits of 53.2 percent for the quarter and 52.8 percent for
the nine- month period in 1997 were higher than in 1996 primarily
due to product mix and favorable variances.
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<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
The 1996 costs to combine operations of $9,000,000 relate to
noncapitalizable expenses for the IMPRA acquisition.
In addition to recurring items such as foreign exchange and
interest income, other income and expense in the third quarter of
1997 includes the gain on the sale of the surgical suction product
line and a manufacturing restructuring charge previously described.
In addition, third quarter of 1997's other income and expense
includes a charge for the impairment of several investments,
intangible assets and the settlement of a legal claim. The
combination of these other items was $10,000,000 ($6,000,000 net of
tax or $.11 per share). For the third quarter of 1996, other
income and expense included a charge of $10,000,000 for
manufacturing restructuring.
The manufacturing restructuring charge which was taken in the third
quarter of 1997 relates to activities which will be completed
during the next twenty-four months and when completed are estimated
to result in annual pretax cost savings of approximately
$43,000,000 annually. These cost savings will take several years
to be fully realized. Management's current estimates show no cost
savings in 1998, cost savings of approximately 21 cents per share
in 1999 and cost savings of approximately 40 cents per share in
the year 2000 and beyond.
The Company's results for the quarter ended September 30, 1997 were
a net loss of $3,800,000 or negative 7 cents per share as compared
with net income of $11,400,000 or 20 cents per share for the same
quarter in 1996.
Total borrowing decreased from $491,000,000 at December 31, 1996
to $442,100,000 at September 30, 1997. The decrease is a
reflection of the Company's positive cash flow from operations and
the proceeds from the sale of the surgical suction product line.
During the first nine months of 1997 and 1996, the Company acquired
855,200 and 713,700 shares, respectively, of its common stock which
were retired.
- 8 -
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
Year 2000 Expenditures
The Company utilizes software and related technologies that will be
affected by the date change in the year 2000. The Company's third
quarter 1997 marketing, selling and administrative expense includes
$1,200,000 for Year 2000 expenditures incurred to date. Management
believes that the Company will incur additional expenses of
$2,300,000 in the fourth quarter of 1997, $5,000,000 in 1998 and
$1,000,000 in 1999.
Cautionary Statement Regarding Forward-Looking Information
Certain statements contained herein or in other Company documents
and certain statements that may be made by management of the
Company orally, including statements regarding cost savings from
manufacturing restructuring, may contain forward-looking statements
as defined in the Private Securities Litigation Reform Act of 1995.
Because actual results are affected by risks and uncertainties, the
Company cautions investors that actual results may differ
materially from those expressed or implied. Factors which could
cause the actual results to differ materially from expected and
historical results include, but are not limited to: health care
industry consolidation resulting in customer demands for price
concessions, competitor's attempts to gain market share through
aggressive marketing programs; fewer medical procedures performed
in a cost-conscious environment; the lengthy approval time by the
FDA or other government authorities to clear medical devices for
commercial release; unanticipated product failures; legislative or
administrative reforms to the U.S. Medicare and Medicaid systems or
other non-U.S. reimbursement systems in a manner that would
significantly reduce reimbursements for procedures using the
Company's medical devices; the acquisition of key patents by
competitors that would have the effect of excluding the Company
from new market segments; the uncertainty of whether increased
research and development expenditures will result in increased
sales; unpredictability of existing and future litigation including
litigation regarding product liability; uncertainty related to tax
appeals and litigation; price increases from the Company's
suppliers of critical components; foreign currency fluctuations;
unanticipated business disruptions from Year 2000 issues; the risk
that the Company may not achieve manufacturing or administrative
efficiencies as a result of the Company's recent restructuring or
in the integration of recently acquired businesses.
- 9 -
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 12.1 - Computation of Ratio of Earnings to Fixed
Charges
(b) Exhibit 27 - Financial Data Schedule
(c) There were no reports on Form 8-K filed by the Company
during the quarter ended September 30, 1997.
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.
C. R. BARD, INC.
(Registrant)
William C. Bopp /s/
William C. Bopp
Executive Vice President and
Chief Financial Officer
Charles P. Grom /s/
Charles P. Grom
Vice President and Controller
DATE: November 13, 1997
- 10 -
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
Exhibit 12.1 Computation in Support of Ratio of Earnings to
Fixed Charges
Exhibit 27 Financial Data Schedule
- 11 -
Exhibit 12.1
<TABLE>
Computation of Ratio of Earnings to Fixed Charges
<CAPTION>
Nine Months
Ending
9/30/97 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Earnings before taxes $70,600 $102,700 $123,500 $104,100 $101,400 $120,200
Add(Deduct)
Fixed Charges 29,700 33,500 31,500 23,200 18,700 19,900
Undistributed earnings
of less than 50% owned
companies carried at
equity (600) (700) (800) (400) (200) (500)
Interest capitalized 0 0 0 (200) 0 (300)
Earnings available for fixed
charges $99,700 $135,500 $154,200 $126,700 $119,900 $139,300
Fixed charges:
Interest, including
amounts capitalized 24,900 26,400 24,200 16,500 12,500 13,700
Proportion of rent
expense deemed to
represent interest
factor 4,800 7,100 7,300 6,700 6,200 6,200
Fixed Charges $29,700 $ 33,500 $ 31,500 $ 23,200 $ 18,700 $ 19,900
Ratio of earnings to fixed
charges 3.36 4.04 4.89 5.46 6.41 7.00
<FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 40300
<SECURITIES> 0
<RECEIVABLES> 237100
<ALLOWANCES> 10800
<INVENTORY> 247900
<CURRENT-ASSETS> 548200
<PP&E> 371800
<DEPRECIATION> 154100
<TOTAL-ASSETS> 1281000
<CURRENT-LIABILITIES> 328400
<BONDS> 340800
0
0
<COMMON> 14200
<OTHER-SE> 547500
<TOTAL-LIABILITY-AND-EQUITY> 1281000
<SALES> 902200
<TOTAL-REVENUES> 902200
<CGS> 426200
<TOTAL-COSTS> 426200
<OTHER-EXPENSES> 380500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24900
<INCOME-PRETAX> 70600
<INCOME-TAX> 22100
<INCOME-CONTINUING> 48500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48500
<EPS-PRIMARY> .85
<EPS-DILUTED> .85
</TABLE>
