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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMForm 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended SeptemberJune 30, 1996,1997, 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 number 0-21615
-------000-21615
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BOSTON BIOMEDICA, INC.
----------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS(Exact name of Registrant as Specified in its Charter)
Massachusetts 04-2652826
------------- ----------- ------------------------ ----------------------
(State or other (I.R.S. Employer
Jurisdiction of (I.R.S. EmployerIdentification No.)
Incorporation or
Organization)
Identification No.)
375 WEST STREET, WEST BRIDGEWATER, MASSACHUSETTSWest Street,
West Bridgewater,
Massachusetts 02379
- ------------------------------------------------ ----------------------------- ----------------------
(Address of Principal (Zip Code)
Executive Offices)
(zip code)
(508) 580-1900
--------------
(Registrant'sRegistrant's telephone number, including area code)code (508) 580-1900
--------------
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.
[ ] Yes [X] No [ ]
The number of shares outstanding of the Registrant's only class of common
stock as of September 30, 1996July 31, 1997 was 2,690,064, and increased to 4,290,064 as of
December 13, 1996, as a result of shares issued on October 31, 1996 from
Registrant's initial public offering.4,426,900.
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PART
Part I. FINANCIAL INFORMATION
ITEMFinancial Information
Item 1. FINANCIAL STATEMENTSFinancial Statements
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)INCOME
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBERFor the Three Months For the Six Months
Ended June 30 ENDED SEPTEMBEREnded June 30
-------------------------------------------------------------------------------------------------------- -------------------------
1997 1996 19951997 1996
1995
----------------- ----------------- ----------------- ---------------------------- ----------- ----------- -----------
REVENUE:
Product sales $ 2,021,462 $ 1,394,551 $ 5,967,221 $ 4,419,180$2,416,956 $2,130,278 $4,543,912 $3,945,759
Services 1,993,269 1,501,343 4,975,893 4,041,194
----------------- ----------------- ----------------- -----------------2,231,998 1,714,096 4,314,091 2,982,624
----------- ----------- ----------- -----------
Total revenue 4,014,731 2,895,894 10,943,114 8,460,3744,648,954 3,844,374 8,858,003 6,928,383
COSTS AND EXPENSES:
Cost of product sales 1,044,513 737,969 3,051,346 2,384,5631,271,662 1,107,007 2,327,084 2,006,833
Cost of services 1,218,193 1,050,705 3,467,803 3,011,0201,456,194 1,116,171 2,931,726 2,249,610
Research and development 169,157 98,623 530,776 257,658256,995 195,054 493,745 361,619
Selling and marketing 593,523 325,952 1,508,812 963,519775,594 500,277 1,388,954 915,289
General and administrative 641,501 624,162 1,729,949 1,680,752
----------------- ----------------- ----------------- -----------------694,875 551,945 1,374,082 1,088,448
---------- ---------- ---------- ----------
Total operating costs and expenses 3,666,887 2,837,411 10,288,686 8,297,5124,455,320 3,470,454 8,515,591 6,621,799
Income from operations 347,844 58,483 654,428 162,862193,634 373,920 342,412 306,584
Interest expense,income (expense), net 76,757 86,779 245,226 251,348
----------------- ----------------- ----------------- -----------------99,184 (74,909) 196,670 (168,469)
----------- ----------- ----------- -----------
Income (loss) before income taxes 271,087 (28,296) 409,202 (88,486)
(Provision) benefit292,818 299,011 539,082 138,115
Provision for income taxes (108,435) 8,935 (163,681) 32,969
----------------- ----------------- ----------------- -----------------(117,128) (119,604) (215,634) (55,246)
----------- ----------- ----------- -----------
Net income (loss) $ 162,652175,690 $ (19,361)179,407 $ 245,521323,448 $ (55,517)
================= ================= ================= =================
Income (loss)82,869
=========== =========== =========== ===========
Net income per share $ 0.050.04 $ (0.01)0.06 $ 0.080.07 $ (0.02)
================= ================= ================= =================0.03
=========== =========== =========== ===========
Weighted average common and common
equivalent shares outstanding 3,313,108 2,581,227 3,251,885 2,591,1254,851,623 3,263,711 4,831,747 3,252,643
See Notes to Consolidated Financial Statements.Statements
2
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
SEPTEMBERJune 30, SEPTEMBER 30, DECEMBERDecember 31,
------------ -------------
1997 1996
1996 1995
PRO FORMA ACTUAL ACTUAL
----------------- ------------------ ----------------------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 75,6945,777,048 $ 75,694 $ 11,4638,082,642
Accounts receivable, less allowances of $212,110$361,540 in 1997 and
$352,058 in 1996 and $142,372 in 1995 3,186,070 3,186,070 3,075,8703,389,579 3,415,994
Inventories 3,956,974 3,956,974 3,676,8514,560,927 4,180,334
Prepaid expense and other 800,015 800,015 254,199316,342 239,950
Deferred income taxes 213,538 213,538 110,766
----------------- ------------------ -----------------302,948 283,200
----------- -----------
Total current assets 8,232,291 8,232,291 7,129,149
----------------- ------------------ -----------------14,346,844 16,202,120
Property and equipment, net 2,690,560 2,690,560 2,614,9823,193,896 2,699,158
OTHER ASSETS:
Notes receivable and other 75,998 75,998 83,422Long term investment 1,482,500 732,500
Goodwill and other intangibles, net 98,547 98,547 100,820
----------------- ------------------ -----------------
174,545 174,545 184,242
----------------- ------------------ -----------------86,085 95,302
Notes receivable and other 989,322 69,234
2,557,907 897,036
----------- -----------
TOTAL ASSETS $ 11,097,396 $ 11,097,396 $ 9,928,373
================= ================== =================$20,098,647 $19,798,314
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long term debt $ 490,85313,458 $ 490,853 $ 436,50912,820
Accounts payable 805,193 805,193 745,2161,074,882 991,839
Accrued compensation 740,102 840,666
Accrued income taxes 27,607 427,140
Other accrued expenses 874,461 874,461 595,089307,738 264,262
Deferred revenue 757,351 757,351 523,401
----------------- ------------------ -----------------1,104,415 829,477
----------- -----------
Total current liabilities 2,927,858 2,927,858 2,300,215
----------------- ------------------ -----------------3,268,202 3,366,204
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 3,454,545 3,454,545 4,215,501
Deferred rent 80,874 80,874 141,06834,055 40,948
Deferred income taxes 240,747 240,747 84,64189,673 101,580
COMMITMENTS AND CONTINGENCIES
REDEEMABLE COMMON STOCK
$.01 par value; 117,647 shares authorized, issued
and outstanding - 898,503 -
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 20,000,000 shares in
19961997 and 15,000,000 in 1995;1996; issued and outstanding 2,690,0644,426,900 in 1997 and
4,378,157 in 1996 pro forma and
2,572,417 actual; issued 2,640,417 in 1995 26,901 25,724 26,40444,269 43,782
Additional paid-in capital 3,615,027 2,717,701 2,798,62015,351,856 15,258,656
Retained earnings 751,444 751,444 505,924
----------------- ------------------ -----------------
4,393,372 3,494,869 3,330,948
Less treasury stock, at cost-80,000 shares - - (144,000)
----------------- ------------------ -----------------1,310,592 987,144
----------- -----------
Total stockholders' equity 4,393,372 3,494,869 3,186,948
----------------- ------------------ -----------------16,706,717 16,289,582
----------- -----------
TOTAL LIABILITIES AND& STOCKHOLDERS' EQUITY $ 11,097,396 $ 11,097,396 $ 9,928,373
================= ================== =================$20,098,647 $19,798,314
=========== ===========
See Notes to Consolidated Financial Statements.Statements
3
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the NineSix Months Ended
September 30,
---------------------------------------------------------------------
1997 1996
1995
------------------ ------------------------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 245,520323,448 $ (55,517)82,869
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 432,490 304,821353,843 280,426
Provision for doubtful accounts 186,992 72,34477,781 77,145
Deferred rent (60,194) (29,174)(53,916) (33,236)
Deferred income taxes 53,334 40,083(31,655) (29,514)
Changes in operating assets and liabilities:
Accounts receivable (297,192) (265,831)
Note(51,366) 132,324
Other assets (27,083) 4,385
Inventories (380,593) (188,368)
Prepaid expenses (76,392) (40,447)
Accounts payable 83,043 70,730
Accrued compensation and other expenses (402,705) 20,846
Deferred revenue 274,938 307,843
------------ -------------
Net cash provided by operating activities 89,343 685,003
------------ -------------
CASH FLOWS FOR INVESTING ACTIVITIES:
Payments for additions to property and equipment (839,364) (282,518)
Advances under notes receivable and other assets (2,575) (19,077)
Inventories (280,123) (254,472)
Prepaid expenses (43,278) (109,572)
Accounts payable 59,977 239,901
Accrued expenses 279,373 (38,337)
Deferred revenue 233,950(893,005) -
------------------ -----------------Purchase of long term investment (750,000) -
------------ -------------
Net cash used in investing activities (2,482,369) (282,518)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long term debt - 226,300
Repayments of long-term debt (6,255) (1,590,603)
Proceeds of common stock issued 93,687 960,903
------------ -------------
Net cash provided by (used in) operating activities 808,274 (114,831)
------------------ -----------------
CASH FLOWS FOR INVESTING ACTIVITIES:
Additions to property and equipment (495,797) (391,223)
------------------ -----------------
Net cash used in investing activities (495,797) (391,223)
------------------ -----------------
CASH FLOWS FOR FINANCING ACTIVITIES:
Proceeds from notes payable 226,300 764,969
Proceeds from redeemable common stock, net 898,503 -
Proceeds of common stock issued, net 62,401 116,026
Initial public offering costs (502,538) -
Repayments of long-term debt (932,912) (210,500)
Purchase of treasury stock - (144,000)
------------------ -----------------
Net cash (used in) provided by financing activities (248,246) 526,495
------------------ -----------------
Increase in87,432 (403,400)
------------ -------------
DECREASE IN CASH: (2,305,594) (915)
Cash and cash 64,231 20,441
Cash,equivalents, beginning of period 8,082,642 11,463
89,129
------------------ ----------------------------- -------------
Cash and cash equivalents, end of period $ 75,6945,777,048 $ 109,570
================== =================
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
Conversion of note payable to common stock $ _ $ 9,60010,548
============ =============
See Notes to Consolidated Financial Statements.Statements
4
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation:Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for the interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of only normal
recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three and ninesix months ended SeptemberJune
30, 19961997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996.1997. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Final Prospectus contained in a registration
statement on Form S-1 dated October10-K filing for the fiscal year ended December 31,
1996 for Boston Biomedica, Inc. and Subsidiaries ("the Company" or
"Boston Biomedica"). Certain prior years' amounts in the consolidated
financial statements may have been reclassified to conform to the
current year's presentation.
(2) Inventories:Inventories
Inventories consisted of the following:
Sept.June 30, Dec.December 31,
1997 1996
1995
--------------- ------------------------- -----------
Raw material $1,401,122 $1,298,131
Work in process 633,487 565,667materials......................... $ 1,456,895 $ 1,359,569
Work-in-process....................... 667,078 697,749
Finished goods 1,922,365 1,813,053
--------------- --------------
$3,956,974 $3,676,851
=============== ==============goods........................ 2,436,954 2,123,016
----------- -----------
$ 4,560,927 $ 4,180,334
=========== ===========
(3) Computation of Income (Loss) Per Share
Net income (loss) per common share is computed based upon the weighted
average number of common shares and as appropriate, common equivalent
shares (using the treasury stock method) outstanding after certain
adjustments described below. Common equivalent shares consist of common
stock options and warrants outstanding. In accordance with Securities
and Exchange Commission Staff Accounting Bulletin No. 83, all common,
redeemable common, and common equivalent shares issued during the twelve
month period prior to the proposed date of the initial filing of the
Registration Statement have been included in the calculation as if they
were outstanding for all periods prior to the Initial Public Offering
(IPO) using the treasury stock method and an initial
public offering price of $8.50 per
share. Fully diluted net income (loss) per common share is not presented as it
does not materially differ from primary earnings per share.
(4) Income TaxesIn February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share." SFAS 128 establishes a different method of
computing net income per share than is currently required under the
provisions of Accounting Principles Board Opinion No. 15. Under SFAS No.
128, the Company will be required to present both basic net income per
share and diluted net income per share. Basic net income per share for
the three and six months ended June 30, 1997 and 1996 would have been
the same as the reported primary net income per share. The Company's effective tax rateimpact of
SFAS 128 on the calculation of diluted net income per share for these
quarters does not significantlymaterially differ from basic net income per share. The
Company plans to adopt SFAS 128 for periods after December 15, 1997 and
at that time all historical net income per share data presented will be
restated to conform to the federal and state income tax statutory rates.
(5) Subsequent Events
Initial Public Offering
On October 31, 1996,provisions of SFAS No. 128.
(4) Investment in BioSeq, Inc. (BioSeq).
In April 1997, the Company commenced tradingexercised its option to purchase an
additional 165,000 shares of BioSeq stock at an aggregate cost of
$750,000, thereby increasing its ownership of BioSeq to 19%. The
investment is carried at cost of $1,482,000 and classified as a result of its
initial public offering of its common stock ("IPO"), raising net proceeds of
$12,648,000 from sale of 1,600,000 shares at $8.50 per share. Completion of the
IPO terminates the redemption feature of the redeemable common stock and causes
its reclassification into 117,647 shares of common stock. As a result, the
unaudited pro forma balance sheet has been prepared assuming the
reclassification of the redeemable common stock into common stock as of
September 30, 1996.long
term investment.
5
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(5) Subsequent Events (Continued)
BioSeq, Inc.Event
In October 1996, the Company entered into a License Agreement, Purchase
Agreement, Stockholders' Agreement and Warrant Agreement with BioSeq, a
privately held, technology based development stage company.
The Company has agreed to purchase convertible preferred stock equivalent to
approximately 19% of the capital stock of BioSeq for an aggregate of $1,482,500
in three installments. Of the $1,482,500, $210,000 was invested at the date of
the agreements and $522,500 was invested in November, 1996. The Company must
make the remaining $750,000 installment if BioSeq attains certain technical
milestones by July 31, 1997. If such milestones are not attained by BioSeq by
July 31, 1997, the Company, through its wholly owned subsidiary
BBI-Source Scientific, Inc., completed the acquisition of all of the
assets, business, and selected liabilities of Source Scientific, Inc.
upon the cash payment of $1,894,000. The acquisition will still have the option to make the remaining
$750,000 investment until December 31, 1997. Under the operative documents, the
Company has price anti-dilution protection, pre-emptive rights and the right to
board representation.be accounted
for as a purchase. In addition the Company was granted warrants to acquire
additional shares of common stock of BioSeq for additional consideration under
certain conditions, provided that this right is not exercisable to the extent it
would causecash payment, the Company's ownershiptotal purchase
price will include consulting, legal, accounting and other acquisition
costs. The purchase price will be allocated to equal or exceed 20%. The Company is
accounting for its investment in BioSeq on the cost basis in accordance with the
provisions of APB 18 since its cumulative investment is and must remain less
that 20%fair market value of
the equity of BioSeqassets and the Company does not exert significant
influence or control. Due to the uncertainty of technology based development
stage enterprises and in accordance with the provisions of SFAS 121, the Company
will perform a periodic analysis of the investment to determine whether the
carrying value of its investment in BioSeq has been impaired. If so determined,
the Company would adjust the carrying value of its investment by taking a charge
to earnings.
Upon the earlier of payment of the final installment of the Company's
aggregate $1,482,500 investment and December 31, 1997, the Companyliabilities acquired. Any remaining portion will be
grantedallocated to goodwill and amortized over a worldwide right to use the BioSeq technology relating to sequencingten year period.
6
Item 2. Management's Discussion and analysis services. The License will be exclusive until BioSeq commences
selling on a commercial basis the equipment used in the DNA sequencingAnalysis of Results of Operations
and analysis process, at which time the License will become non-exclusive. The
License provides that the Company will pay BioSeq royalties ranging from five
percent to ten percent of net revenues arising out of the services performed by
the Company with the licensed technology. The Company will account for the
royalty as a cost of revenue as the revenues are earned.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
THREE MONTHS ENDED SEPTEMBERFinancial Condition.
Three Months Ended June 30, 1997 and 1996 AND 1995
Total revenue increased 38.6%20.9%, or $1,119,000,$805,000, to $4,015,000$4,649,000 for
the quarterthree months ended SeptemberJune 30, 19961997 from $2,896,000$3,844,000 in the prior year
period. This increase was the result of an increase in product sales of
45.0%13.5%, or $626,000,$287,000, to $2,021,000$2,417,000 from $1,395,000$2,130,000 and an increase in
specialty laboratory services of 32.8%30.2%, or $492,000,$518,000, to $1,993,000$2,232,000 from
$1,501,000.$1,714,000. Product revenue increased primarily as a result of an overall sales increase of 75.1% in Quality Control
Products, due tocontinued
strong sales of new and existing Accurun( run controls and TQS products,
particularly for
Accurun TM, as well as Seroconversion and OEM panels.but was partially offset by lower than expected sales to diagnostic test
kit manufacturers. The increase in service revenue was primarily
attributable to a 53.7%45.7% increase in Specialty Clinical Laboratory
Testing revenue, particularlydriven once again by HIV molecular and tick borne diseases
(which typically peak in the third quarter), and the addition of two new
research contracts with the National Institutes of Health in the fourth quarter
of 1995.(PCR) tests needed
for disease management programs.
Gross profit increased 58.2%18.5%, or $645,000,$300,000, to $1,752,000$1,921,000 for the
current quarterthree months from $1,107,000$1,621,000 in the prior year period. The gross
profit margin increaseddecreased to 43.6%41.3% for the current quarterthree months versus
38.2%42.2% in the prior year period. The gross margin improvementThis decrease was primarily driven by improved marginsa
shift in the mix of revenue towards services (30.0% to 38.9%)(48% of total revenue in
the current quarter versus 45% in the prior year period) as a result of
the Company benefited from both the addition of
several new tests and higher volumegrowth in Specialty Clinical Laboratory Testing.Testing noted above. The
Company's services generally carry lower margins than its Quality
Control Products.
Research and development expenses increased 71.5%31.8%, or $70,000,$62,000,
to $169,000$257,000 for the current quarterthree months from $99,000$195,000 in the prior year
period. This increase was primarily the result of additional research
project expenditures for new Quality Control Products, including panels
and Accurun TM,Accurun(, as well as continued work on additional molecular QC procucts.tests
for our Specialty Clinical Laboratory.
Selling and marketing expenses increased 82.1%55.0%, or $268,000,$275,000, to
$594,000$776,000 for the current quarterthree months from $326,000$500,000 in the prior year
period. This increase was primarily attributable to increased personnel
costs associated with the addition of tele-salesfield staff for Quality Control Products, particularly Accurun TM,
increased advertisingAccurun( and trade show costs due to the commencement of the
Company's "Total Quality System" (TQS) marketing campaign, and costs associated
with participation by the Company's
Specialty Clinical Laboratory, in the Roche
Diagnostics' Amplicor(R) Access program in connection with Roche's launch of
their new FDA approved HIV PCR test kit. The Amplicor(R) kit is primarily used
to monitor the HIV viral load (level) in patients prior toincreased spending for promotional
materials, and during drug
therapy.increased travel costs.
General and administrative expenses increased 2.8%25.9%, or
$17,000,$143,000, to $641,000$695,000 for the current quarterthree months from $624,000$552,000 in the
prior year period. This modest
increase reflects management's continued close monitoringwas primarily a result of expense levels.
Interest expense decreased 11.5%, or $10,000, to $77,000increased MIS
and other support personnel, as well as the increased costs incurred as
a public company.
Net interest income of $99,000 was earned for the current
quarter from $87,000three months
of 1997 versus a ($75,000) expense in the prior year period as the
prime rate increases in
late 1995 were more than offset by reduced borrowing due toCompany repaid most of its debt repayments from
additional private equity raised in the first halffourth quarter of 1996 as well as
prepayments from certain customers for contract research services.and
invested its available cash in short term, investment grade securities.
For the 1996 third quarter,both periods, the Company provided taxes at the combined
federal and state statutory rate of 40%, whereas the tax benefit of the loss in
1995's third quarter was recorded at a lower rate due to a current state tax
liability.
NINE MONTHS ENDED SEPTEMBER.
Six Months Ended June 30, 1997 and 1996 AND 1995
Total revenue increased 29.3%27.9%, or $2,483,000,$1,930,000, to $10,943,000$8,858,000 for
the ninesix months ended SeptemberJune 30, 19961997 from $8,460,000$6,928,000 in the prior year
period. This increase was the result of an increase in product sales of
35.0%15.2%, or $1,548,000,$598,000, to $5,967,000$4,544,000 from $4,419,000$3,946,000 and an increase in
specialty laboratory services of 23.1%44.6%, or $935,000,$1,331,000, to $4,976,000$4,314,000
from $4,041,000.$2,983,000. Product revenue increased primarily as a result of an
overall sales increase of 47.6%24.4% in Quality Control Products, due to
continued strong sales of both new and existing Accurun( and panel products
particularly
for Accurun TM, as well as Seroconversion and OEM panels.partially offset by a decrease of 13.8% in sales of Diagnostic
Components. The increase in service revenue was primarily attributable
to a 7
30.1%57.1% increase in Specialty Clinical Laboratory Testing revenue,
particularly from HIV molecular testing, and the addition of two new research contracts with the
National Institutes of Health in the fourth quarter of 1995.(PCR) tests.
Gross profit increased 44.3%34.7%, or $1,359,000,$927,000, to $4,424,000$3,599,000 for the
first
ninecurrent six months of 1996 from $3,065,000$2,672,000 in the prior year period. The gross
profit margin increased to 40.4%40.6% for the first ninecurrent six months of 1996 versus 36.2%38.6%
in the prior year period. GrossThe gross margin improvement was almost
entirely driven by improved margins in products (46.0%services (24.6% in 1996 to 48.9%), as well as
services (25.5% to 30.3%)32.0%
in 1997) as the Company benefitedcontinued to benefit from an improved revenue mix
atboth the addition of
several new tests and higher volume level.in Specialty Clinical Laboratory
Testing.
7
Research and development expenses increased 106.0%36.5%, or $273,000,$132,000,
to $531,000$494,000 for the 1996 periodcurrent six months from $258,000$362,000 in the prior year
period. This increase was primarily the result of increased costs of personnel hired in the second half of
1995 to step-up the rate of new product introductions, and increasedadditional research
project expenditures.expenditures for new Quality Control Products, including panels
and Accurun(, as well as continued work on additional molecular tests
for our Specialty Clinical Laboratory.
Selling and marketing expenses increased 56.6%51.8%, or $545,000,$474,000, to
$1,509,000$1,389,000 for the 1996 periodcurrent six months from $964,000$915,000 in the prior year
period. This increase was primarily attributable to increased personnel
costs as well as increased costs for travel and promotional materials.
The increased personnel costs are associated with the addition of
tele-salesmarketing, technical support, and field sales staff for Quality Control Products, particularly Accurun TM,
increased advertisingboth Accurun(
and trade show costs due to the commencement of the
Company's "Total Quality System" (TQS) marketing campaign, and costs associated
with participation by the Company's Specialty Clinical Laboratory in the Roche
Diagnostics' Amplicor(R) Access program in connection with Roche's launch of
their new FDA approved HIV PCR test. The Amplicor(R) kit is primarily used to
monitor the HIV viral load (level) in patients prior to and during drug therapy.Laboratory.
General and administrative expenses increased 2.9%26.2%, or
$49,000,$286,000, to $1,730,000$1,374,000 for the first ninecurrent six months of 1996 from $1,681,000$1,088,000 in
the prior year period. This modest increase reflects management's continued close monitoringwas primarily a result of expense levels.
Interest expense decreased 2.4%, or $6,000, to $245,000increased
MIS and other support personnel, as well as the increased costs incurred
as a public company.
Net interest income of $197,000 was earned for the 1996 period
from $251,000six months of
1997 versus a ($168,000) expense in the prior year period as the prime rate increases in late 1995
were more than offset byCompany
repaid most of its debt reduction from additional private equity raised in the first halffourth quarter of 1996 as well as prepayments from certain customers for
contract research services.and invested its
available cash in short term, investment grade securities.
For the first nine months of 1996,both periods, the Company provided taxes at the combined
federal and state statutory rate of 40%, whereas the tax benefit of the
loss in 1995 was recorded at a lower rate due to a current state tax liability.
LIQUIDITY AND FINANCIAL CONDITION
On October 31, 1996 the Company commenced trading as a result of its initial
public offering of its common stock ("IPO"), selling 1,600,000 shares at $8.50
per share. Net proceeds raised after underwriting discounts.
Liquidity and commissions (but
before offering costs) was $12,648,000. On November 5, 1996, the Company repaid
substantially all of its outstanding bank debt which totaled approximately $3.9
million.Financial Condition
The Company has financed its operations for the nine months ended September
30, 1996to date through cash
flow from operations, borrowings from banks and sales of equity. At September 30, 1996With
the repayment of debt from the IPO proceeds, the Company had $2,172,000 outstandingexpects its
cash flow and $1,328,000
of availability under its $3.5 million Revolving Line of Credit Agreement due
June 30, 1998 (the "Revolver"). The Revolver bears interest at a rate equalcash position to the prime rate plus 0.5% per annum, currently 8.75%. Under the terms of the
Revolver,meet existing operational needs. In
addition, the Company operates underhas available to it a zero balance account arrangement whereby
cash receipts are received into a lock box at the$7.5 million
uncollateralized revolving line of credit with its bank and reduce the Revolver,
while disbursements for payroll and accounts payable items increase the
outstanding balance of the Revolver. Borrowings under the Revolver are limited
to 80% of eligible accounts receivable plus the lesser of 40% of inventory or
$1.5 million. The Revolver contains various covenants and restrictions and the
amounts outstanding are secured by all of the Company's assets and a $2 million
life insurance
8
policy on an officer/stockholder. As noted above, the Company used a portion of
the proceeds of its initial public offering to repay the outstanding amount
under the Revolver, which was approximately $2,310,000 on the day of repayment.should
additional needs arise.
Net cash provided by operations for the ninesix months ended SeptemberJune
30, 19961997 was $808,000$89,000 as compared to cash used of $115,000$685,000 in the prior year period.
This increasedecrease in cash flow was primarily attributable to an increase in net incomeincreased
working capital requirements related to new product inventory and an increase in deferred revenue from net
payments of $234,000 under a
research contract for future clinical trial services.income taxes and commissions.
Cash used in investing activities for the ninesix months ended SeptemberJune
30, 19961997 was $496,000$2,482,000 as compared to $391,000$283,000 in the prior year
period. This increase in investing activities was the result ofof: 1)
increased capital expenditures asfor improvements at its Massachusetts
manufacturing facility, 2) financing $800,000 of certain working capital
needs in connection with the acquisition of the assets and business of
Source Scientific, Inc.("Source"), and 3) the Company continuesexercising its
option to invest in manufacturing equipmentpurchase an additional 165,000 shares of BioSeq stock at an
aggregate cost of $750,000, thereby increasing its ownership of BioSeq
to 19%. On July 2, 1997, the Company completed the acquisition of
Source's assets and information systems relatedbusiness at a contractually reduced purchase price
of $1.9 million as Source's net worth had fallen below an agreed upon
minimum amount. The Company is accounting for the acquisition as an
asset purchase, and expects to operations, sales, and finance.amortize goodwill approximating the
purchase price plus acquisition costs over a ten year period.
Cash used inprovided by financing activities for the ninesix months ended
SeptemberJune 30, 19961997 was $248,000$87,000 as compared to $526,000 provided by financing activities$403,000 used in the prior
comparable year period. NetThe prior year period use of cash was used in financing activities
primarily
as a result of the repayment of $933,000 of debt and payment of
$503,000 of initial public offering costs, partially offset by $899,000 raised
through$960,000 receipt from the sale of 117,647 shares of redeemable common stock to Kyowa Medex,
Co., Ltd.offset by debt
repayments of approximately $1,364,000. The net cash provided in April 1996.1997
resulted from $94,000 received for the exercise of 48,750 stock options.
The Company anticipates capital expenditures to increase over
the near term as it expects to usespend approximately $1.0 million from the proceeds of its IPO$400,000 more to
expand its manufacturing capacity in West Bridgewater over the next 12 months,
of which approximately $500,000 will be spent on building expansion and
approximately $500,000 will be spent on equipment.six
months. In November 1996,addition, the Company used $522,500 of IPO proceedshas entered into a ten year lease
agreement for space for its Maryland operation and expects to fundincur
costs for tenant improvements over the second installment of the Company's
purchase of capital stock of BioSeq. The Company must make the remaining
$750,000 installment if BioSeq attains certain technical milestones by July 31,
1997. If the milestones are not achieved, the Company will have the option to
purchase the additional $750,000 of BioSeq capital stock until December 31,
1997.next six months. The Company
believes that existing cash balances, the borrowing capacity available
under the Revolver,its revolving line of credit and cash generated from operations and the proceeds
of its IPO
are sufficient to fund operations and anticipated capital expenditures
for at least the foreseeable future.next twelve months. There were no material financial
commitments for capital expenditures as of SeptemberJune 30, 1996,1997, and currently
there are no
8
material commitments for capital or investment expenditures other than
the BioSeq investment, andSource Scientific, Inc. asset acquisition, the manufacturing
expansion, and tenant improvements all as previously discussed above.
RECENT ACCOUNTING PRONOUNCEMENTSRecent Accounting Pronouncements
In March 1995,February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting128,
"Earnings per Share." SFAS 128 establishes a different method of
computing net income per share than is currently required under the
provisions of Accounting Principles Board Opinion No. 15. Under SFAS No.
128, the Company will be required to present both basic net income per
share and diluted net income per share. Basic net income per share for
the Impairmentthree and six months ended June 30, 1997 and 1996 would have been
the same as the reported primary net income per share. The impact of
Long-Lived Assets andSFAS 128 on the calculation of diluted net income per share for Long-Lived Assets to Be Disposed Of" ("SFAS 121").
SFAS 121 requires that an impairment loss be recognized for long-lived assets
and certain identified intangibles when the carrying amount of these
assets mayquarters does not be recoverable.materially differ from basic net income per share. The
Company has adoptedplans to adopt SFAS 121 effective in 1996 and the
adoption did not have a material impact on the financial statements.
In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123 ("SFAS 123") "Accounting128 for Stock-Based Compensation," which
becomes effective for fiscal years beginningperiods after December 15, 1995. SFAS 123
establishes new financial accounting1997 and
reporting standards for stock-based
compensation plans. However, entities are allowed to elect whether to measure
compensation expense for stock-based compensation under SFAS 123 or APB No. 25,
"Accounting for Stock Issued to Employees." The Company has elected to continue
to account under APB No. 25 and will make the required pro forma disclosures ofat that time all historical net income and earnings per share as ifdata presented will be
restated to conform to the provisions of SFAS 123 had been
applied in its December 31, 1996 financial statements. The potential impact of
adopting this standard on the Company's pro forma disclosures of net income and
earnings per share has not been quantified at this time.
FORWARD-LOOKING STATEMENTSNo. 128.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking
statements concerning the Company's financial performance and business
operations. The Company wishes to caution readers of this Quarterly
Report on Form 10-Q that actual results might differ materially from
those projected in any forward-looking statements.
Factors which might cause actual results to differ materially
from those projected in the forward-looking statements contained herein
include the following: the inability of the Company to increase sales of quality control
products to end-users of infectious disease test kits;develop the entrance of one or
more quality control manufacturers for non-infectious disease test kits into the
quality control market for infectious disease test kits, particularly the
end-userend user
market for quality control products for infectious disease test kits;
any material impairment of the carrying value of any investment made by the
Company, including, without limitation, the Company's investment in BioSeq,
Inc., a technology based development stage company; theproducts; inability of the Company to
maintainintegrate the business of BBI-Source Scientific, Inc. into the Company's
business; inability of the Company to grow the sales of BBI-Source
Scientific, Inc. to the extent anticipated; a material adverse change in
the business, financial condition or prospects of BioSeq, Inc., an early
stage biotechnology company in which the Company has made a significant
investment; inability of the Company to obtain an adequate supply of the
unique and rare specimens of plasma and serum necessary for certain of
its products; significant reductions or delays in procurementspurchases by any of the
Company's products by any of its major customers; imposition
by foreign governments of restrictions on the importation of blood and blood
derivatives; litigation seeking to restrict the use of intellectual property
used by the Company; potential product liability claims against the Company; and the potential insufficiency of Company
resources, including human resources, plant and equipment and management
systems, to accommodate any future growth. Reference is madeCertain of these and other
factors which might cause actual results to differ materially from those
projected are more fully set forth under the caption "Risk Factors" in
the Company's Registration Statement on Form S-1 (Reg.(SEC File No.
333-10759) for a more complete description of these and other risks.
9
BOSTON BIOMEDICA, INC.
PARTPart II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
AtOther Information
Item 4. Submission of Matters to a special meeting in lieuVote of annual meeting of the stockholders of theShareholders.
The Company held on September 5, 1996, the stockholders, among other actions,
approved Amended and Restated Articlesits Annual Meeting of OrganizationsStockholders of June 12,
1997. Approximately 3,484,851 shares, or 79.4%, of the Company and
Amended and Restated By-Laws of the Company.
The Amendments made to the Company's Articles of Organization, as amended,
included the following: (1) a one-for-two reverse stock split of the common
stock, $.01 par value ("Common Stock"), pursuant to which every two shares of Common Stock
issued and outstanding were reclassified and changed into one share
of Common Stock; (2) a provision for classificationas of the Company's Board of
Directors into three classes, such that one class will be elected each year for
a three-year term; (3) provisions increasing from a majority to 80% the
stockholder vote required to enlarge the Board of Directors or remove a member
of the Board of Directors, whether with or without cause; (4) a so-called "fair
price provision," adopted in lieu of the statutory Fair Price Provision
contained in the Massachusetts General Laws, that is intended to protect
stockholders who do not tender their shares in a takeover bid, by guaranteeing
them a minimum price for their stock in any subsequent attempt by the bidder to
purchase their shares at a price lower than the bidder's original acquisition
price; and (5) a provision which permits the Company to repurchase shares of
stock from a stockholder of the Company upon fair and reasonable terms, without
offering any other stockholder the opportunity to sell their shares to the
Company.
The amendments made to the Company's By-Laws, as amended, included the
following: (1) conforming provisions to reflect the classification of the
Company's Board of Directors, as described above; (2) a provision regarding the
procedures to be followed by a stockholder in nominating one or more persons for
election as a director; including a requirement that nominations be made at
least ninety days prior to the anniversaryrecord date, of the immediately preceding
annual meeting of stockholders; and (3) a provision by which the Company elected
to opt out of Chapter 110D of the Massachusetts General Laws, a law which
restricts the ability of persons holding certain percentages of voting power
from voting their stock, unless the Company's stockholders so authorize. The
effect of opting out of Chapter 110D is that a person holding the amounts of
voting power specified in Chapter 110D will be able to freely vote their shares
without the authorization of the other stockholders of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On September 5, 1996, a special meeting in lieu of annual meeting of the
stockholders of the Company was held at the Company's offices in West
Bridgewater, Massachusetts. 4,812,307 of the Company's 5,380,130 issued and
outstanding shares of Common Stock were represented at the
meeting either in person or by proxy. 4 proposals were submitted toSet forth below is a brief description of
the stockholdersmatter voted upon at the meeting and the voting results of such
matter.
Voted: To elect each of the following persons as Class I
Directors of the Company, for considerationto serve as such until the Year 2000
Annual Meeting of Stockholders and approval: (1) election of Directors; (2) adoption
ofuntil their successors have
been duly elected and qualified:
Francis E. Capitanio
Calvin A. Saravis
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits
Exhibit No.
3.1 Amended and Restated Articles of Organization of the
Company; (3) adoption ofCompany**
3.2 Amended and Restated By-LawsBylaws of the Company; and (4) ratificationCompany**
4.1 Specimen Certificate for Shares of a proposed
formthe Company's Common
Stock**
4.2 Description of indemnification contract to be entered into with officers and directorsCapital Stock (contained in the Restated
Articles of Organization of the Company infiled as Exhibit
3.1) **
10.1 Agreement, dated January 17, 1994, between Roche
Molecular Systems, Inc. and the discretionCompany**
10.2 Exclusive License Agreement, dated December 6, 1994,
between the University of North Carolina at Chapel Hill
and the Company**
10.3 Contract, dated September 30, 1995, between the National
Institutes of Health and the Company (No. 1-AI55273) **
10.4 Contract, dated September 30, 1995, between the National
Institutes of Health and the Company (No. 1-AI-55277) **
10.6 Agreement, dated October 1, 1995, between Ajinomoto Co.,
Inc. and the Company**
10.7 Lease Agreement, dated June 30, 1992, for Rockville,
Maryland Facility between Cambridge Biotech Corporation
and the Company**
10.8 Lease Agreement, dated July 28, 1995, for New Britain,
Connecticut Facility between MB Associates and the
Company**
10.9 Worcester County Institution for Savings Warrant dated
December 1, 1995 (No. 1) **
10.10 Worcester County Institution for Savings Warrant dated
July 26, 1993 (No. 2) **
10.11 Stock Purchase Agreement, dated June 5, 1990, between
G&G Diagnostics Limited Partnership I and the Company,
as amended**
10.14 Stock Purchase Agreement, dated April 26, 1996, between
Kyowa Medex Co., Ltd. And the Company**
10.15 1987 Non-Qualified Stock Option Plan**++
10.16 Employee Stock Option Plan**++
10
10.17 Underwriters Warrants, each dated November 4, 1996,
between the Company and each of Oscar Gruss & Son
Incorporated and Kaufman Bros., L.P. **
10.20 Purchase Agreement, dated October 7, 1996, between
BioSeq, Inc. and the Company**
10.21 Warrant Agreement, dated October 7, 1996, between
BioSeq, Inc. and the Company**
10.22 Stockholders' Agreement, dated October 7, 1996, between
BioSeq, Inc. and the Company**
10.23 License Agreement, dated October 7, 1996, between
BioSeq, Inc. and the Company**
10.24.1 Commercial Loan Agreement, dated as of March 28, 1997,
between The First National Bank of Boston and the
Company**
10.25 Asset Purchase Agreement, dated March 26, 1997 between
Source Scientific, Inc. and the Company**
10.26 Contract, dated March 1, 1997, between National Cancer
Institute and the Company**
10.27 Lease Agreement, dated May 16, 1997, for Rockville,
Maryland facility between B.F. Saul Real Estate
Investment Trust and the Company
11 Statement re: Computation of Per Share Earnings
21.1 Subsidiaries of the Board of Directors.
The following persons were elected to serve as Directors of the Company
with votes being cast as follows:
FOR AGAINST ABSTAIN
Richard T. Schumacher 4,812,307 -0- -0-
Henry A. Malkasian 4,812,307 -0- -0-
Francis E. Capitanio 4,812,307 -0- -0-
Kevin W. Quinlan 4,812,307 -0- -0-
Calvin A. Saravis 4,812,307 -0- -0-
The Company's stockholders approved the proposal to adopt the Company's
Amended and Restated Articles of Organization. 4,812,307 shares were voted "For"
the proposal, and no shares were voted against or abstained from voting with
respect to the proposal.
The Company's stockholders approved the proposal to adopt the Company's
Amended and Restated By-Laws. 4,812,307 shares were voted "FOR" the proposal,
and no shares were voted against or abstained from voting with respect to the
proposal.
The Company's stockholders approved the proposed form of indemnification
contract for officers and directors of the Company. 4,812,307 shares were voted
"FOR" the proposal, and no shares were voted against or abstained from voting
with respect to the proposal.
All foregoing results are prior to the one-for-two reverse stock split.
ITEM 6. EXHIBITS AND REPORTS.
(A) EXHIBITS
Exhibit
Number Description
3.1 Amended and Restated Articles of Organization of the Registrant*
3.2 Amended and Restated By-Laws of the Registrant*
4.1 Description of Certificate for Shares of the Registrant's Common Stock*
10.18.7 Note Payable to The First National Bank of Boston, dated July 1996, in the
amount of $250,0002*
10.20 Purchase Agreement, dated October 7, 1996, between BioSeq, Inc. and the
Registrant*
10.21 Warrant Agreement, dated October 7, 1996, between BioSeq, Inc. and the
Registrant*
10.22 Stockholders' Agreement, dated October 7, 1996, between BioSeq, Inc. and the
Registrant*
10.23 License Agreement, dated October 7, 1996, between BioSeq, Inc. and the
Registrant*
11 Statement re Computation of Per Share Earnings for the three months and nine
months ended September 30, 1996 and 1995
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K:
No reports________________________
++ Management contract or compensatory plan or arrangement.
** In accordance with Rule 12b-32 under the Securities Exchange Act
of 1934, as amended, reference is made to the documents
previously filed with the Securities and Exchange Commission,
which documents are hereby incorporated by reference.
(b) Reports on Form 8-K were8K
The Company filed fora form 8K dated July 17, 1997 regarding the
quarter ended
September 30, 1996.
10acquisition of the assets, business, and selected liabilities of
Source Scientific, Inc.
11
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.
BOSTON BIOMEDICA, INC.
Date: December 13, 1996August 14, 1997 By /s/ KEVIN W. QUINLAN
---------------------- --------------------------------------------------------- ---------------------
Kevin W. Quinlan, Chief Financial Officer
(Principal Financial Officer)
1112
BOSTON BIOMEDICA, INC.
EXHIBIT INDEX
EXHIBIT INDEX
- -------------
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
-Exhibit No. Reference
----------- ----------- -------------
3.1 Amended and Restated Articles of Organization of the Registrant*Company A**
3.2 Amended and Restated By-LawsBylaws of the Registrant*Company A**
4.1 Description ofSpecimen Certificate for Shares of the Registrant'sCompany's Common Stock*
10.18.7 Note Payable to The FirstStock A**
4.2 Description of Capital Stock (contained in the Restated A**
Articles of Organization of the Company filed as Exhibit 3.1)
10.1 Agreement, dated January 17, 1994, between Roche Molecular A**
Systems, Inc. and the Company
10.2 Exclusive License Agreement, dated December 6, 1994, between A**
the University of North Carolina at Chapel Hill and the
Company
10.3 Contract, dated September 30, 1995, between the National BankA**
Institutes of Boston,Health and the Company (No. 1-AI55273)
10.4 Contract, dated September 30, 1995, between the National A**
Institutes of Health and the Company (No. 1-AI-55277)
10.6 Agreement, dated October 1, 1995, between Ajinomoto Co., Inc. A**
and the Company
10.7 Lease Agreement, dated June 30, 1992, for Rockville, Maryland A**
Facility between Cambridge Biotech Corporation and the Company
10.8 Lease Agreement, dated July 28, 1995, for New Britain, A**
Connecticut Facility between MB Associates and the Company
10.9 Worcester County Institution for Savings Warrant dated A**
December 1, 1995 (No. 1)
10.10 Worcester County Institution for Savings Warrant dated A**
July 26, 1993 (No. 2)
10.11 Stock Purchase Agreement, dated June 5, 1990, between G&G A**
Diagnostics Limited Partnership I and the Company, as amended
10.14 Stock Purchase Agreement, dated April 26, 1996, inbetween Kyowa A**
Medex Co., Ltd. and the amountCompany
10.15 1987 Non-Qualified Stock Option Plan* A**
10.16 Employee Stock Option Plan* A**
10.17 Underwriters Warrants, each dated November 4, 1996, between B**
the Company and each of $250,0001*Oscar Gruss & Son Incorporated and
Kaufman Bros., L.P.
10.20 Purchase Agreement, dated October 7, 1996, between BioSeq, A**
Inc. and the Registrant*Company
13
10.21 Warrant Agreement, dated October 7, 1996, between BioSeq, Inc. A**
and the Registrant*Company
10.22 Stockholders' Agreement, dated October 7, 1996, between A**
BioSeq, Inc. and the Registrant*Company
10.23 License Agreement, dated October 7, 1996, between BioSeq, Inc. A**
and the Registrant*Company
10.24.1 Commercial Loan Agreement, as of dated March 28, 1997, between C**
The First National Bank of Boston and the Company
10.25 Asset Purchase Agreement, dated March 26, 1997 between Source C**
Scientific, Inc. and the Company
10.26 Contract, dated March 1, 1997, between National Cancer D**
Institute and the Company
10.27 Lease Agreement, dated May 16, 1997, for Rockville, Maryland Filed herewith
facility between B.F. Saul Real Estate Investment Trust and the
Company
11 Statement rere: Computation of Per Share Earnings forFiled herewith
21.1 Subsidiaries of the three months and nine
months ended September 30, 1996 and 1995
27 Financial Data Schedule
- --------
* Previously filed (with the same Exhibit number) as an Exhibit to Amendment No. 1 to the Registrant's
Registration Statement on Form S-1 (Securities and Exchange Commission File No. 333-10759).
* Previously filed (with the same Exhibit number) as an Exhibit to Amendment No. 1 to the Registrant's
Registration Statement on Form S-1 (Securities and Exchange Commission FileCompany Filed herewith
27 Financial Data Schedule
________________________
A Incorporated by reference to the Company's Registration
Statement on Form S-1 (Registration No. 333-10759)(the "Registration
Statement").
12The number set forth herein is the number of the
Exhibit in said registration statement.
B Incorporated by reference to the Registration Statement, where
the Exhibit was filed as Exhibit No. 10.17 and contained in
Exhibit 1.1.
C Incorporated by reference to the Company's Form 10K filed
March 31, 1997
D Incorporated by reference to the Company's Form 10Q filed
May 14, 1997
* Management contract or compensatory plan or arrangement.
** In accordance with Rule 12b-32 under the Securities Exchange Act
of 1934, as amended, reference is made to the documents
previously filed with the Securities and Exchange Commission, which
documents are hereby incorporated by reference.
14