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 27, 2003 Commission File No. 0-6994
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NEW BRUNSWICK SCIENTIFIC CO., INC.
State of Incorporation - New Jersey E. I. #22-1630072
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44 Talmadge Road, Edison, N.J. 08818-4005
Registrant's Telephone Number: 732-287-1200
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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 twelve (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 ninety (90) days. Yes X No __
--
Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Act). Yes No X
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There are 8,609,475 Common shares outstanding as of November 3, 2003.
1
NEW BRUNSWICK SCIENTIFIC CO., INC.
Index
PAGE NO.
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PART I. .FINANCIAL INFORMATION:
Consolidated Balance Sheets -
September 27, 2003 and December 31, 2002 . . . . . . . . 3
Consolidated Statements of Operations -
Three and Nine Months Ended September 27, 2003 and
September 30, 2002. . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 27, 2003 and
September 30, 2002 . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Comprehensive (Loss) Income -
Three and Nine Months Ended September 27, 2003 and
September 30, 2002. . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements. . . . . . . . 7
Management's Discussion and Analysis of Results
of Operations and Financial Condition. . . . . . . . . . 13
PART II..OTHER INFORMATION 21
2
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
ASSETS
------
September 27, December 31,
2003 2002
--------------- --------------
Current Assets
Cash and cash equivalents. . . . . . . . . . . . . . . $ 7,392 $ 9,718
Accounts receivable, net . . . . . . . . . . . . . . . 8,217 9,991
Inventories:
Raw materials and sub-assemblies . . . . . . . . . . 5,419 4,514
Work-in-process. . . . . . . . . . . . . . . . . . . 2,625 1,705
Finished goods . . . . . . . . . . . . . . . . . . . 5,060 5,457
--------------- --------------
Total inventories. . . . . . . . . . . . . . . . . 13,104 11,676
Deferred income taxes. . . . . . . . . . . . . . . . . 962 962
Prepaid expenses and other current assets. . . . . . . 1,551 766
--------------- --------------
Total current assets . . . . . . . . . . . . . . . . 31,226 33,113
--------------- --------------
Property, plant and equipment, net . . . . . . . . . . . 5,706 5,615
Excess of cost over net assets acquired, net . . . . . . 4,848 4,707
Other assets . . . . . . . . . . . . . . . . . . . . . . 2,006 1,829
--------------- --------------
$ 43,786 $ 45,264
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
- --------------------------------------------------------
Current installments of long-term debt . . . . . . . . $ 394 $ 373
Accounts payable and accrued expenses. . . . . . . . . 6,689 6,489
--------------- --------------
Total current liabilities. . . . . . . . . . . . . . 7,083 6,862
--------------- --------------
Long-term debt, net of current installments. . . . . . . 5,013 5,213
Other liabilities. . . . . . . . . . . . . . . . . . . . 2,484 2,547
Commitments and contingencies
Shareholders' equity:
Common stock, $0.0625 par value per share,
authorized 25,000,000 shares; issued and outstanding,
2003 - 8,609,475 and 2002 - 7,790,796 . . . . . . . . 538 487
Capital in excess of par . . . . . . . . . . . . . . . 51,722 47,959
Accumulated deficit. . . . . . . . . . . . . . . . . . (19,773) (13,756)
Accumulated other comprehensive loss . . . . . . . . . (3,247) (4,003)
Notes receivable from exercise of stock options. . . . (34) ( 45)
--------------- --------------
Total shareholders' equity . . . . . . . . . . . . . 29,206 30,642
--------------- --------------
$ 43,786 $ 45,264
=============== ==============
See notes to consolidated financial statements.
3
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 27, September 30, September 27, September 30,
2003 2002 2003 2002
-------------------- ------------------- --------------- ---------------
Net sales . . . . . . . . . . . . . . . . . . . . . . $ 11,478 $ 13,057 $ 33,810 $ 42,433
Operating costs and expenses:
Cost of sales . . . . . . . . . . . . . . . . . . . 7,009 7,498 21,693 24,757
Selling, general and administrative expenses. . . . 4,016 4,028 12,165 12,446
Research, development and engineering expenses. . . 775 795 2,526 2,117
-------------------- ------------------- --------------- ---------------
Total operating costs and expenses. . . . . . . . 11,800 12,321 36,384 39,320
-------------------- ------------------- --------------- ---------------
(Loss) income from operations
(322) 736 (2,574) 3,113
Other income (expense):
Interest income . . . . . . . . . . . . . . . . . . 12 15 49 32
Interest expense. . . . . . . . . . . . . . . . . . (114) (115) (334) (351)
Other, net. . . . . . . . . . . . . . . . . . . . . (35) (158) 95 (144)
-------------------- ------------------- --------------- ---------------
(137) (258) (190) (463)
-------------------- ------------------- --------------- ---------------
(Loss) income before income tax (benefit) expense . . (459) 478 (2,764) 2,650
Income tax (benefit) expense. . . . . . . . . . . . . 263 220 (415) 980
-------------------- ------------------- --------------- ---------------
Net (loss) income . . . . . . . . . . . . . . . . . . $ (722) $ 258 $ (2,349) $ 1,670
==================== =================== =============== ===============
Basic net (loss) income per share . . . . . . . . . . $ (0.08) $ .03 $ (.27) $ .20
==================== =================== =============== ===============
Diluted net (loss) income per share . . . . . . . . . $ (0.08) $ .03 $ (.27) $ .19
==================== =================== =============== ===============
Basic weighted average number of shares outstanding. 8,606 8,489 8,584 8,375
==================== =================== =============== ===============
Diluted weighted average number of shares outstanding 8,606 8,620 8,584 8,612
==================== =================== =============== ===============
See notes to consolidated financial statements.
4
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 27 September 30,
2003 2002
-------------------------------------
Cash flows from operating activities:
Net (loss) income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,349) $ 1,670
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . 903 859
Gain on sale of property . . . . . . . . . . . . . . . . . . . . . . . . . (201) -
Change in related balance sheet accounts:
Accounts and notes receivable. . . . . . . . . . . . . . . . . . . . . . . 2,014 4,119
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,235) 1,358
Prepaid expenses and other current assets. . . . . . . . . . . . . . . . . (760) (167)
Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (177) (444)
Accounts payable and accrued expenses. . . . . . . . . . . . . . . . . . . (155) (1,561)
Advance payments from customers. . . . . . . . . . . . . . . . . . . . . . 363 (1,393)
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (63) (23)
---------------------------------------- --------
Net cash (used in) provided by operating activities. . . . . . . . . . . . . (1,660) 4,418
----------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment . . . . . . . . . . . . . . . . (963) (462)
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . 261 -
---------------------------------------- --------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . (702) (462)
---------------------------------------- --------
Cash flows from financing activities:
Repayment of long-term debt. . . . . . . . . . . . . . . . . . . . . . . . (227) (1,440)
Proceeds from issue of shares under stock purchase and option plans 140 1,154
Payments on notes receivable related to exercised stock options. . . . . . 11 12
---------------------------------------- --------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . . . (76) (274)
---------------------------------------- --------
Net effect of exchange rate changes on cash. . . . . . . . . . . . . . . . . 112 154
---------------------------------------- --------
Net (decrease) increase in cash and cash equivalents. . . . . . . . . . . . (2,326) 3,836
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . 9,718 3,794
---------------------------------------- --------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . $ 7,392 $ 7,630
======================================== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 332 $ 352
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 839 903
Exchange of mature shares upon exercise of options . . . . . . . . . . . . - 506
See notes to consolidated financial statements.
5
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 27, September 30, September 27, September 30,
2003 2002 2003 2002
-------------------- ------------------- --------------- --------------
Net (loss) income . . . . . . . . . . . . $ (722) $ 258 $ (2,349) $ 1,670
Other comprehensive income:
Foreign currency translation adjustment 230 (60) 756 842
-------------------- ------------------- --------------- --------------
Comprehensive (loss) income . . . . . . . $ (492) $ 198 $ (1,593) $ 2,512
==================== =================== =============== ==============
See notes to consolidated financial statements.
6
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Interim results:
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly, the financial position of the Company
as of September 27, 2003 and the results of its operations for the three and
nine months ended September 27, 2003 and September 30, 2002 and its cash flows
for the nine months ended September 27, 2003 and September 30, 2002. Interim
results may not be indicative of the results that may be expected for the year.
During the first quarter of 2003, the Company adopted a 4 week, 4 week, 5 week
quarterly closing schedule resulting in a reporting date of September 27, 2003.
The effect of this change on the consolidated financial statements is not
material.
The accompanying consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's annual report on Form 10-K.
Note 2 - Net (loss) income per share:
Basic net (loss) income per share is calculated by dividing net (loss) income by
the weighted average number of shares outstanding. Diluted net (loss) income
per share is calculated by dividing net (loss) income by the sum of the weighted
average number of shares outstanding plus the dilutive effect of stock options
which have been issued by the Company using the treasury stock method.
Antidilutive options are excluded from the calculation of diluted net (loss)
income per share. Information related to dilutive and antidilutive stock
options is as follows: (in thousands of shares)
Three Months Ended Nine Months Ended
September 27, September 30, September 27, September 30,
2003 2002 2003 2002
------------------ ----------------- ------------- -------------
Dilutive effect. . . - 131 - 237
Antidilutive options 326 - 326 -
Note 3 - Long-term debt and credit agreement:
The Company is a party to first and second mortgages on the facility of the
Company's Netherlands subsidiary, which bear interest of 5.50% and 5.65%,
respectively, per annum. During the terms of the mortgages, the Company is
obligated to make monthly payments of interest and quarterly payments of
principal. At September 27, 2003, $137,000 and $162,000 was outstanding under
7
the first and second mortgages, respectively. Each mortgage requires 80 equal
quarterly payments of principal.
On March 15, 2002, the Company and Wachovia Bank, National Association (formerly
First Union National Bank) ("the Bank") entered into an amendment to extend
their agreement (the Bank Agreement) by three years to May 31, 2005. The
amendment to the Bank Agreement did not change the maturity date of the
acquisition credit line component, which remains at December 1, 2006. On
September 26, 2003 the Bank Agreement was further amended to temporarily ease
the financial ratio requirements under the negative covenant provisions of the
Bank Agreement and to reduce the acquisition line from $12.5 million to $10
million. Among the changes was to omit the requirement to meet the debt service
ratio during the period ended September 27, 2003, a change in the minimum equity
that must be maintained as well as the maintenance of a minimum $3 million cash
balance. In addition, the interest rate on new borrowings under the Bank
Agreement will increase by 50 basis points. At such time as the Company meets
the financial ratios that were in force prior to this amendment (expected to be
September 30, 2004), all of the terms, financial ratios and requirements as well
as interest rates will revert to what they were prior to the September 26, 2003
amendment. No other provisions of the Bank Agreement were materially amended.
The $27.0 million secured line of credit provides the Company with a $5 million
revolving credit facility for both working capital and letters of credit, a $2
million revolving line of credit for equipment acquisition purposes, a $10
million credit line for acquisitions and a $10 million foreign exchange
facility. There are no compensating balance requirements and any borrowings
under the Bank Agreement other than the fixed term acquisition debt, bear
interest at the bank's prime rate less 75 basis points or libor plus 175 basis
points, at the discretion of the Company. At September 27, 2003, the bank's
prime rate was 4.0% and libor was 1.125%. All of the Company's domestic assets,
which are not otherwise subject to lien, have been pledged as security for any
borrowings under the Bank Agreement. The Bank Agreement contains various
business and financial covenants including among other things, a debt service
ratio, a net worth covenant and a ratio of total liabilities to tangible net
worth. The Company is in compliance with its covenants pursuant to the Bank
Agreement, as amended, at September 27, 2003 and expects to be in
Compliance with such covenants through at least September 30, 2004.
At September 27, 2003, $4,693,000 was outstanding under the Bank Agreement
related to acquisition loans bearing fixed interest at 8% per annum, $140,000
was being utilized for letters of credit and $56,000 for foreign exchange
transactions. The following amounts were available at September 27, 2003 under
the Bank Agreement: $4,860,000 for working capital and letters of credit,
$2,000,000 for equipment acquisitions, $5,307,000 for acquisitions and
$9,944,000 under the foreign exchange facility.
In November 1999, the Company issued notes in the amount of 250,000 ($392,500
at the date of acquisition) in connection with the acquisition of DJM
Cryo-Research Group. The notes bear interest at 6% which are payable annually
and principal is payable in five equal annual installments commencing November
2003. At September 27, 2003 the balance of the notes was $415,000.
8
Note 4 - Adoption of new accounting standards:
In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations ("SFAS No. 143"). SFAS No. 143 requires the Company to record the
fair value of an asset retirement obligation as a liability in the period in
which it incurs a legal obligation associated with the retirement of tangible
long-lived assets that result from the acquisition, construction, development
and/or normal use of the assets. The Company also records a corresponding asset
which is depreciated over the life of the asset. Subsequent to the initial
measurement of the asset retirement obligation, the obligation will be adjusted
at the end of each period to reflect the passage of time and changes in the
estimated future cash flows underlying the obligation. The Company adopted SFAS
No. 143 on January 1, 2003. The adoption did not have any effect on the
Company's consolidated financial statements.
In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement nullifies EITF
Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." Statement No. 146 is different from EITF Issue No. 94-3 in
that Statement No. 146 requires that a liability be recognized for a cost
associated with an exit or disposal activity only when the liability is
incurred, that is when it meets the definition of a liability in the FASB's
conceptual framework. Statement No. 146 also establishes fair value as the
objective for initial measurement of liabilities related to exit or disposal
activities. In contrast, under EITF Issue 94-3, a company recognized a
liability for an exit cost when it committed to an exit plan. Statement No. 146
is effective for exit or disposal activities that are initiated after December
31, 2002. The adoption of Statement No. 146 can be expected to impact the
timing of liability recognition associated with any future exit activities.
In May 2003, the FASB issued SFAS 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity," effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. This statement establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. It requires that an issuer classify a freestanding financial
instrument that is within its scope as a liability (or an asset in some
circumstances). The adoption of SFAS 150 did not have an impact on the
Company's consolidated financial position, results of operations or cash flows.
In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others." This Interpretation elaborates on the disclosures to
be made by a guarantor in its interim and annual financial statements about its
obligations under guarantees issued. The Interpretation also clarifies that a
guarantor is required to recognize, at inception of a guarantee, a liability for
the fair value of the obligation undertaken. The initial recognition and
measurement provisions of the Interpretation are applicable to guarantees issued
or modified after December 31, 2002. The adoption of this interpretation did
not have a material effect on the Company's consolidated financial statements.
9
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities" (FIN 46). This interpretation of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements", addresses
consolidation of variable interest entities. FIN 46 requires certain variable
interest entitles ("VIE's") to be consolidated by the primary beneficiary if the
entity does not effectively disperse risks among the parties involved. The
provisions of FIN 46 are effective immediately for those variable interest
entities created after January 31, 2003. The provisions, as amended, are
effective for the first interim or annual period ending after December 15, 2003
for those variable interests held prior to February 1, 2003. The Company
believes this Interpretation will not have a material effect on its financial
position or results of operations.
Note 5 - Contingencies:
In June 2003, the U.S. Department of Commerce notified the Company that it
believes the Company may have failed to comply with certain export control
requirements in connection with certain equipment sales to Asia. The applicable
statutory framework gives the Commerce Department authority to impose civil
monetary penalties (up to a maximum of $176,000 based on the agency's
preliminary assessment) and other sanctions. The Company responded to the
agency's invitation to settle the matter informally and has provided an
explanation of the transactions in question and information about the Company's
compliance measures. The Company has made a settlement offer, which it has
accrued, in an amount significantly lower than $176,000 reflecting the Company's
belief that the matter should be settled at a substantially reduced level.
While the ultimate outcome of this matter cannot be determined at this time,
management believes that it will not have a material effect on the Company's
financial condition or liquidity but could have a material effect on the
Company's results of operations in any one period.
Note 6 - Stockholders' Equity:
On February 20, 2003 and February 12, 2002, respectively, the Company declared
10% stock dividends. The February 20, 2003 stock dividend was paid on May 15,
2003 to shareholders of record as of April 18, 2003. The weighted average
number of shares outstanding used in the computation of basic and diluted (loss)
income per share for the 2002 periods have been restated to reflect this
dividend.
At September 27, 2003, the Company has stock based employee compensation plans.
The Company accounts for its stock option plans in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations. As such, compensation
expense is recorded on the date of grant only if the current market price of the
underlying stock exceeds the exercise price. No stock based employee
compensation cost is reflected in net (loss) income, as all options granted
under those plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. The Company has adopted the
disclosure standards of Statement of Financial Accounting Standards (SFAS) No.
123, "Accounting for Stock-Based Compensation", which requires the Company to
10
provide pro forma net income and pro forma earnings per share disclosures for
employee stock option grants made in 1995 and future years as if the
fair-value-based method of accounting for stock options as defined in SFAS No.
123 had been applied.
The following table illustrates the effect on net (loss) income and per share
amounts if the Company had applied the fair value recognition provisions of SFAS
No. 123 to stock based employee compensation:
Three Months Ended Nine Months Ended
September 27, September 30, September 27, September 30,
2003 2002 2003 2002
-------------------- ------------------ --------------- --------------
Net (loss) income, as reported:. . . . . . . . . $ (722) $ 258 $ (2,349) $ 1,670
Total stock-based employee
compensation expense determined under fair
value based method, net of related tax effects 100 106 340 359
-------------------- ------------------ --------------- --------------
Pro forma net (loss) income. . . . . . . . . . . $ (822) $ 152 $ (2,689) $ 1,311
Net (loss) income per share:
Basic-as reported. . . . . . . . . . . . . . . $ (.08) $ .03 $ (.27) $ .20
Basic-pro forma. . . . . . . . . . . . . . . . $ (.10) $ .02 $ (.31) $ .16
Diluted-as reported. . . . . . . . . . . . . . $ (.08) $ .03 $ (.27) $ .19
Diluted-pro forma. . . . . . . . . . . . . . . $ (.10) $ .02 $ (.31) $ .15
The fair value of each stock option granted during the period is estimated on
the date of grant using the Black-Scholes option pricing model with the
following assumptions:
Three Months Ended Nine Months Ended
September 27, September 30, September 27, September 30,
2003 2002 2003 2002
------------------ ----------------- --------------- ---------------
Expected life (years). . . . . . . . . - - 6.0 5.2
Expected volatility. . . . . . . . . . - - 75.80% 63.67%
Expected dividend yield. . . . . . . . - - - -
Risk-free interest rate. . . . . . . . - - 3.10% 4.34%
Weighed average fair value of options
granted during the period. . . . . . - - $ 4.90 $ 3.09
Note 7 - Reclassifications:
Certain amounts in the 2002 consolidated financial statements have been
reclassified to conform to the 2003 financial statement presentation.
Note 8 - Investment in Antyra Inc.:
As previously reported, the Company has an equity investment in Antyra Inc.
(formerly DGI BioTechnologies, Inc.) ("Antyra") that was written down to zero in
2001. Antyra had anticipated closing a significant financing transaction with
an investment group during the first half of 2003, however, the financing with
11
this group did not take place. On May 12, 2003, Antyra closed on certain new
short-term financing. Under the terms of the agreement, Antyra issued preferred
shares in exchange for a $200,000 cash infusion from an investment group
consisting of certain members of Antyra management and other investors and
warrants to BankInvest (an existing equity investor) to purchase up to $100,000
of Antyra preferred stock exercisable through October 2003. At October 31, 2003,
BankInvest chose not to exercise the warrant and it has expired. The agreement
includes a provision that if such warrant is not exercised, the investment group
has the right, but not the obligation, to invest an additional $100,000 in
preferred stock under the same terms as the BankInvest warrant. Additionally,
under the terms of the agreement, the Company agreed to accept additional shares
of Antyra preferred stock on a monthly basis in lieu of the next 12 months of
rent payments due the Company from Antyra (rent is due at $12,367 per month).
For financial reporting purposes, the Company will attribute no value to the
shares received under this arrangement. Antyra management believes that the new
short-term financing, together with its expected limited revenues during 2003,
should enable Antyra to continue operating into the first quarter of 2004. As a
result of the short-term financing obtained by Antyra, the Company's fully
diluted interest in Antyra was reduced and will increase to 23.4% upon the
receipt of the Antyra stock in lieu of rent over the 12-month period.
12
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Forward-looking statements, within the meaning of Section 21E of the Securities
Exchange Act of 1934, are made throughout this Management's Discussion and
Analysis of Results of Operations and Financial Condition. For this purpose,
any statements contained herein that are not statements of historical fact may
be deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects," "seeks," "estimates," and
similar expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause the results of the Company to
differ materially from those indicated by such forward-looking statements.
The following is Management's discussion and analysis of significant factors
that have affected the Company's operating results and financial condition
during the three and nine month periods ended September 27, 2003 and September
30, 2002, respectively, which should be read in conjunction with the Company's
December 31, 2002 financial statements.
Results of Operations
---------------------
Quarter Ended September 27, 2003 vs. Quarter Ended September 30, 2002
- -------------------------------------------------------------------------------
For the quarter ended September 27, 2003, the Company incurred a net loss of
$722,000 or $0.08 per diluted share on net sales of $11,478,000 compared with
net income of $258,000 or $0.03 per diluted share on net sales of $13,057,000
for the third quarter of 2002.
Net sales decreased $1,579,000 or 12.1% for the quarter ended September 27, 2003
as compared to the corresponding quarter of the prior year. Net sales for the
2003 quarter have been negatively affected both in the United States and in
Europe by the lingering weakness in the market for life science equipment,
however export sales to other areas, particularly to Asia, have strenghtened.
Sales of the Company's shakers (particularly those sold through Fisher
Scientific) and cell culture products were primarily impacted by lower sales
volume during the quarter partially offset by increased sales of ultra-low
temperature freezers. The backlog of unfilled orders increased to $8,494,000 at
September 27, 2003 from $6,097,000 at June 28, 2003 due primarily to increased
orders for the Company's new sterilizable-in-place fermentors, other
fermentation products and new Innova 44 incubator shakers.
Gross profit for the 2003 quarter of $4,469,000 is down 19.6% from the
$5,559,000 reported in the third quarter of 2002 due primarily to the decrease
in net sales and unabsorbed manufacturing overhead due to lower manufacturing
activity. Consolidated gross margins decreased to 38.9% for the 2003 quarter
from 42.6% for the third quarter of 2002, however, margins improved considerably
from the 32.1% realized during the second quarter of 2003. The margin decrease
is primarily attributable to the aforementioned unabsorbed manufacturing
overhead, and downward pressure on prices.
13
Selling, general and administrative expenses of $4,016,000 in 2003 decreased
slightly when compared with $4,028,000 in the 2002 quarter. During the third
quarter of 2003 the Company relocated certain operations and assigned the lease
for a facility in the United Kingdom to another company incurring approximately
$270,000 of related expenses in the quarter. The assignment will relieve the
Company from the on-going expenses of the facility, which will result in annual
savings of approximately $160,000, net of the costs of a new, smaller leased
facility. Offsetting the aforementioned $270,000 of lease related expenses was
a reduction in expenses from the effect of a reduction-in-force effected in
early April and reduced commission expense as a result of lower sales.
Research, development and engineering expenses of $775,000 in 2003 were down
slightly from $795,000 in the 2002 quarter.
Interest income decreased to $12,000 in the 2003 quarter from $15,000 in the
prior year quarter due to lower interest rates.
Interest expense remained relatively flat at $114,000 compared with $115,000 for
the prior year quarter.
Other expense, net of $35,000 in the 2003 quarter compares with other expense,
net of $158,000 in the 2002 quarter. The change is due primarily to equity in
loss of Antyra Inc.(formerly DGI BioTechnologies, Inc.) incurred during the
third quarter of 2002.
For the three months ended September 27, 2003 $263,000 of income tax expense was
provided despite a pre tax loss of $459,000. The need for a tax expense rather
than a tax benefit for the quarter resulted from the current estimated losses of
the Company's foreign subsidiaries for the balance of the year. At the end of
the previous quarter, based on loss estimates for the full year for those
subsidiaries, it appeared that an overall effective tax benefit rate of 30%
would be necessary for the year. However, the current fourth quarter estimate,
together with actual third quarter results for those subsidiaries, indicate that
a tax benefit rate of 15% for the year ended December 31, 2003 will be required.
Since the ability to carryback losses is limited, no financial tax benefit has
been recognized for certain of the losses incurred. Consequently, the reduction
in the effective tax benefit rate of 30% used for the first six months of the
year to 15% has resulted in a tax expense of $263,000 for the third quarter in
order to reflect an effective tax benefit of 15% for the nine months ended
September 27, 2003. In addition, the 2002 effective tax rate of 41.8% is higher
than might be expected due to the valuation allowance established in 2002 on the
deferred tax asset as a result of the inability to carryback losses at certain
of the Company's European subsidiaries and the equity in loss of Antyra, Inc. in
2002 for which no tax benefit was recorded.
Nine Months Ended September 27, 2003 vs. Nine Months Ended September 30, 2002
- --------------------------------------------------------------------------------
For the nine months ended September 27, 2003, the Company incurred a net loss of
$2,349,000 or $0.27 per diluted share on net sales of $33,810,000 compared with
net income of $1,670,000 or $0.19 per diluted share on net sales of $42,433,000
for the first nine months of 2002.
14
Net sales decreased $8,623,000 or 20.3% for the nine months ended September 27,
2003 as compared to the corresponding period of the prior year. Net sales for
the 2003 period have been negatively affected both in the United States and in
export markets by the lingering weakness in demand for life science equipment.
All of the Company's product lines (including its shakers sold through Fisher
Scientific) were impacted by lower sales volume during the period with the
exception of ultra-low temperature freezers. The backlog of unfilled orders
increased to $8,494,000 at September 27, 2003 from $6,668,000 at December 31,
2002 due primarily to increased orders for the Company's new
sterilizable-in-place fermentors, other fermetation products and new Innova 44
incubator shakers.
Gross profit for the nine months ended September 27, 2003 of $12,117,000 is down
31.4% from the $17,676,000 reported in the first nine months of 2002 due
primarily to the decrease in net sales and unabsorbed manufacturing overhead due
to lower manufacturing activity, a less favorable product mix and downward
pressure on prices. Consolidated gross margins decreased to 35.8% for the 2003
period from 41.7% for the first nine months of 2002. The margin decrease is
primarily attributable to the aforementioned unabsorbed manufacturing overhead,
less favorable product mix and downward pressure on prices.
Selling, general and administrative expenses of $12,165,000 in 2003 decreased
2.3% compared with $12,446,000 in the 2002 period. The decrease resulted from
the effect of a reduction-in-force effected in April, reduced commission
accruals as a result of lower sales and the absence of incentive bonus accruals
in 2003 due to the operating loss. During the third quarter of 2003 the Company
relocated certain operations and assigned the lease for a facility in the United
Kingdom to another company incurring approximately $270,000 of expenses in the
period. The assignment will relieve the Company from the on-going expenses of
the facility, which will result in annual savings of approximately $160,000, net
of the costs of a new, smaller leased facility.
Research, development and engineering expenses increased 19.3% to $2,526,000 in
2003 from $2,117,000 in the 2002 period due primarily to normal increases and
expenditures related to the Company's product development program including the
cost of prototypes and consultants.
Interest income increased to $49,000 in the 2003 period from $32,000 in the
prior year period due to higher average invested cash, partially offset by lower
interest rates.
Interest expense decreased to $334,000 in the 2003 period from $351,000 in 2002
due primarily to lower average outstanding debt due to normal repayments of
principal.
Other income of $95,000 in the 2003 period compares with other expense of
$144,000 in the 2002 period. The change is due primarily to a $201,000 gain on
the sale of property during 2003 partially offset by greater realized foreign
exchange losses during the 2003 period. The 2002 period includes $150,000 of
equity in loss in Antyra Inc.
Income tax benefit for the nine months ended September 27, 2003 was $415,000, an
effective rate of 15% compared with income tax expense of $980,000 in 2002, an
15
effective rate of 37%. The 2003 effective tax benefit rate is lower than the
rate utilized in 2002 due to the inability to carryback losses incurred by
certain of the Company's European subsidiaries resulting in the recognition of
no financial statement tax benefit and the equity in loss of Antyra, Inc. in
2002 for which no tax benefit was recorded.
Financial Condition
-------------------
Liquidity and Capital Resources
- ----------------------------------
Working capital decreased to $24,143,000 at September 27, 2003 from $26,251,000
at December 31, 2002. The decrease is primarily due to decreases in cash and
accounts receivable partially offset by an increase in inventories.
Inventories increased to $13,104,000 at September 27, 2003 from $11,676,000 at
December 31, 2002 principally as a result of purchases and work-in-process
related to new sterilizable-in-place fermentors as well as existing fermentors
and the new Innova 44 incubator shakers.
Net cash used in operating activities was $1,660,000 in the first nine months of
2003 as compared with cash provided of $4,418,000 in the first nine months of
2002. The $1,660,000 of cash used in operating activities for the first nine
months of 2003 was due to changes in operating assets and liabilities in the
ordinary course of business, primarily (i) net loss of $2,349,000, (ii) a gain
on sale of property of $201,000, (iii) an increase in inventories of $1,235,000
primarily to support the new sterilizable-in-place fermentors, other
fermentation products and the new Innova 44 incubator shakers, (iv) an increase
in prepaid expenses and other current assets of $760,000 due primarily to taxes
receivable related to the benefit for income taxes recorded on the losses
incurred during the 2003 period, (v) an increase in other assets of $177,000 due
to an increase in cash surrender value of life insurance and (vi) a decrease in
accounts payable and accrued expenses of $155,000, partially offset by (i)
depreciation and amortization of $903,000, (ii) a decrease in accounts
receivable of $2,014,000 due to the lower sales volume, and (iii) an increase in
advance payments from customers of $363,000.
Net cash used in investing activities amounted to $702,000 in the first nine
months of 2003 as compared with $462,000 in the first nine months of 2002 and
primarily represented capital expenditures for equipment and leasehold
improvements partially offset by $261,000 from the sale of property and
equipment in 2003. During the fourth quarter of 2003 the Company took delivery
of a piece of CNC equipment for its sheet metal operations which has both laser
and punching capabilities at a cost of approximately $900,000.
Net cash used in financing activities amounted to $76,000 in the first nine
months of 2003 as compared with net cash used of $274,000 in the first nine
months of 2002. Both periods reflect the repayment of long-term debt and the
2003 and 2002 periods include $140,000 and $1,154,000, respectively, of proceeds
resulting from the exercise of stock options under the Company's stock option
plans and the purchase of shares under the Company's employee stock purchase
plan.
16
The Company is a party to first and second mortgages on the facility of the
Company's Netherlands subsidiary, which bear interest of 5.50% and 5.65%,
respectively, per annum. During the terms of the mortgages, the Company is
obligated to make monthly payments of interest and quarterly payments of
principal. At September 27, 2003, $137,000 and $162,000 was outstanding under
the first and second mortgages, respectively. Each mortgage requires 80 equal
quarterly payments of principal.
On March 15, 2002, the Company and Wachovia Bank, National Association (formerly
First Union National Bank) ("the Bank") entered into an amendment to extend
their agreement (the Bank Agreement) by three years to May 31, 2005. The
amendment to the Bank Agreement did not change the maturity date of the
acquisition credit line component, which remains at December 1, 2006. On
September 26, 2003 the Bank Agreement was further amended to temporarily ease
the financial ratio requirements under the negative covenant provisions of the
Bank Agreement and to reduce the acquisition line from $12.5 million to $10
million. Among the changes was to omit the requirement to meet the debt service
ratio during the period ended September 27, 2003, a change in the minimum equity
that must be maintained as well as the maintenance of a minimum $3 million cash
balance. In addition, the interest rate on new borrowings under the Bank
Agreement will increase by 50 basis points. At such time as the Company meets
the financial ratios that were in force prior to this amendment (expected to be
September 30, 2004), all of the terms, financial ratios and requirements as well
as interest rates will revert to what they were prior to the September 26, 2003
amendment. No other provisions of the Bank Agreement were materially amended.
The $27.0 million secured line of credit provides the Company with a $5 million
revolving credit facility for both working capital and letters of credit, a $2
million revolving line of credit for equipment acquisition purposes, a $10
million credit line for acquisitions and a $10 million foreign exchange
facility. There are no compensating balance requirements and any borrowings
under the Bank Agreement other than the fixed term acquisition debt, bear
interest at the bank's prime rate less 75 basis points or libor plus 175 basis
points, at the discretion of the Company. At September 27, 2003, the bank's
prime rate was 4.0% and libor was 1.125%. All of the Company's domestic assets,
which are not otherwise subject to lien, have been pledged as security for any
borrowings under the Bank Agreement. The Bank Agreement contains various
business and financial covenants including among other things, a debt service
ratio, a net worth covenant and a ratio of total liabilities to tangible net
worth. The Company is in compliance with its covenants pursuant to the Bank
Agreement, as amended, at September 27, 2003 and expects to be in
Compliance with such covenants through at least September 30, 2004.
At September 27, 2003, $4,693,000 was outstanding under the Bank Agreement
related to acquisition loans bearing fixed interest at 8% per annum, $140,000
was being utilized for letters of credit and $56,000 for foreign exchange
transactions. The following amounts were available at September 27, 2003 under
the Bank Agreement: $4,860,000 for working capital and letters of credit,
$2,000,000 for equipment acquisitions, $5,307,000 for acquisitions and
$9,944,000 under the foreign exchange facility.
In November 1999, the Company issued notes in the amount of 250,000 ($392,500
at the date of acquisition) in connection with the acquisition of DJM
Cryo-Research Group. The notes bear interest at 6% which are payable annually
17
and principal is payable in five equal annual installments commencing November
2003. At September 27, 2003 the balance of the notes was $415,000.
The Company's contractual obligations and commitments principally include
obligations associated with outstanding indebtedness and future minimum
operating lease obligations as set forth in the following table:
Payments Due by Period as of September 27, 2003
-------------------------------------------------
(In thousands)
Contractual Obligations:
Within. 1-2 3-4 After 4
Total 1 Year Years Years Years
------ ----- ----- ------ ------
Long-term debt, notes and
credit facility. . . . . $ 5,407 $ 394 $ 855 $4,119 $ 39
Operating leases. . . . . 3,723 852 1,241 790 840
------------------------------------------------- ------ -------- ------ ----
Total contractual
cash obligations . . . . $ 9,130 $1,246 $ 2,096 $4,909 $879
================================================= ====== ======== ====== ====
As previously reported, the Company has an equity investment in Antyra Inc.
(formerly DGI BioTechnologies, Inc.) ("Antyra") that was written down to zero in
2001. Antyra had anticipated closing a significant financing transaction with
an investment group during the first half of 2003, however, the financing with
this group did not take place. On May 12, 2003, Antyra closed on certain new
short-term financing. Under the terms of the agreement, Antyra issued preferred
shares in exchange for a $200,000 cash infusion from an investment group
consisting of certain members of Antyra management and other investors and
warrants to BankInvest (an existing equity investor) to purchase up to $100,000
of Antyra preferred stock exercisable through October 2003. At October 31, 2003,
BankInvest chose not to exercise the warrant and it has expired. The agreement
includes a provision that if such warrant is not exercised, the investment group
has the right, but not the obligation, to invest an additional $100,000 in
preferred stock under the same terms as the BankInvest warrant. Additionally,
under the terms of the agreement, the Company agreed to accept additional shares
of Antyra preferred stock on a monthly basis in lieu of the next 12 months of
rent payments due the Company from Antyra (rent is due at $12,367 per month).
For financial reporting purposes, the Company will attribute no value to the
shares received under this arrangement. Antyra management believes that the new
short-term financing, together with its expected limited revenues during 2003,
should enable Antyra to continue operating into the first quarter of 2004. As a
result of the short-term financing obtained by Antyra, the Company's fully
diluted interest in Antyra was reduced and will increase to 23.4% upon the
receipt of the Antyra stock in lieu of rent over the 12-month period.
Management believes that the resources available to the Company, including
current cash and cash equivalents, working capital, cash to be generated from
operations and its line of credit which matures May 31, 2005, will satisfy its
expected working capital needs and capital expenditures for the near and
intermediate term.
18
Recently Adopted Accounting Standards
-------------------------------------
In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations ("SFAS No. 143"). SFAS No. 143 requires the Company to record the
fair value of an asset retirement obligation as a liability in the period in
which it incurs a legal obligation associated with the retirement of tangible
long-lived assets that result from the acquisition, construction, development
and/or normal use of the assets. The Company also records a corresponding asset
which is depreciated over the life of the asset. Subsequent to the initial
measurement of the asset retirement obligation, the obligation will be adjusted
at the end of each period to reflect the passage of time and changes in the
estimated future cash flows underlying the obligation. The Company adopted SFAS
No. 143 on January 1, 2003. The adoption did not have any effect on the
Company's consolidated financial statements.
In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement nullifies EITF
Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." Statement No. 146 is different from EITF Issue No. 94-3 in
that Statement No. 146 requires that a liability be recognized for a cost
associated with an exit or disposal activity only when the liability is
incurred, that is when it meets the definition of a liability in the FASB's
conceptual framework. Statement No. 146 also establishes fair value as the
objective for initial measurement of liabilities related to exit or disposal
activities. In contrast, under EITF Issue 94-3, a company recognized a
liability for an exit cost when it committed to an exit plan. Statement No. 146
is effective for exit or disposal activities that are initiated after December
31, 2002. The adoption of Statement No. 146 can be expected to impact the
timing of liability recognition associated with any future exit activities.
In May 2003, the FASB issued SFAS 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity," effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. This statement establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. It requires that an issuer classify a freestanding financial
instrument that is within its scope as a liability (or an asset in some
circumstances). The adoption of SFAS 150 did not have an impact on the
Company's consolidated financial position, results of operations or cash flows.
In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others. This Interpretation elaborates on the disclosures to be
made by a guarantor in its interim and annual financial statements about its
obligations under guarantees issued. The Interpretation also clarifies that a
guarantor is required to recognize, at inception of a guarantee, a liability for
the fair value of the obligation undertaken. The initial recognition and
measurement provisions of the Interpretation are applicable to guarantees issued
or modified after December 31, 2002. The adoption of this interpretation did not
have a material effect on the Company's consolidated financial statements.
19
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities" (FIN 46). This interpretation of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements", addresses
consolidation of variable interest entities. "FIN 46" requires certain variable
interest entitles ("VIE's") to be consolidated by the primary beneficiary if the
entity does not effectively disperse risks among the parties involved. The
provisions of FIN 46 are effective immediately for those variable interest
entities created after January 31, 2003. The provisions, as amended, are
effective for the first interim or annual period ending after December 15, 2003
for those variable interests held prior to February 1, 2003. The Company
believes this Interpretation will not have a material effect on its financial
position or results of operations.
Critical Accounting Policies
----------------------------
No changes have been made in the Company's critical accounting policies during
the nine months ended September 27, 2003.
20
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- ----------------------------
In June 2003, the U.S. Department of Commerce notified the Company that it
believes the Company may have failed to comply with certain export control
requirements in connection with certain equipment sales to Asia. The applicable
statutory framework gives the Commerce Department authority to impose civil
monetary penalties (up to a maximum of $176,000 based on the agency's
preliminary assessment) and other sanctions. The Company responded to the
agency's invitation to settle the matter informally and has provided an
explanation of the transactions in question and information about the Company's
compliance measures. The Company has made a settlement offer, which it has
accrued, in an amount significantly lower than $176,000 reflecting the Company's
belief that the matter should be settled at a substantially reduced level.
While the ultimate outcome of this matter cannot be determined at this time,
management believes that it will not have a material effect on the Company's
financial condition or liquidity but could have a material effect on the
Company's results of operations in any one period.
Item 2. Quantitative and Qualitative Disclosures about Market Risk
- --------------------------------------------------------------------------
The information required by Item 3 has been disclosed in Item 7 of the Company's
Annual Report on Form 10-K for the year ended December 31, 2002. There has been
no material change in the disclosures regarding market risk.
Item 3. Controls and Procedures
- -----------------------------------
As required by Rule 13a-15 under the Exchange Act, an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures was conducted by the Company's Chief Executive Officer along with
the Company's Chief Financial Officer. Based upon that evaluation, the
Company's Chief Executive Officer and the Company's Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective as
of the end of the period covered by this Report. There have been no significant
changes in the Company's internal controls or in other factors, which could
significantly affect internal controls during the period ended September 30,
2003.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
21
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer as appropriate, to allow timely
decisions regarding disclosure.
Item 4. Exhibits and Reports on Form 8-K
- ------------------------------------------------
The exhibits to this report are listed on the Exhibit Index included elsewhere
herein.
No reports on Form 8-K have been filed during the quarter ended September 27,
2003 with the exception of the report filed on September 3, 2003 reporting the
retirement and resignation of Sigmund Freedman, the Treasurer, a director and
co-founder of the Company.
22
------
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.
NEW BRUNSWICK SCIENTIFIC CO., INC.
--------------------------------------
(Registrant)
Date: November 10, 2003 /s/ David Freedman
--------------------
David Freedman
Chairman and
Chief Executive Officer
Date: November 10, 2003 /s/ Samuel Eichenbaum
-----------------------
Samuel Eichenbaum
Vice President, Finance,
Chief Financial Officer
and Treasurer
(Principal Accounting Officer)
23
EXHIBIT 31
CERTIFICATION
I, David Freedman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of New Brunswick
Scientific Co., Inc. (the "Registrant");
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Registrant as
of, and for, the periods presented in this report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
c) disclosed in this report any change in the Registrant's internal control
over financial reporting that occurred during the Registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial reporting;
and
5. The Registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
Registrant's auditors and the audit committee of the Registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the Registrant's ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal control over
financial reporting.
Date: November 10, 2003 /s/ David Freedman
--------------------
Chairman and
Chief Executive Officer
24
EXHIBIT 31
CERTIFICATION
I, Samuel Eichenbaum, certify that:
1. I have reviewed this quarterly report on Form 10-Q of New Brunswick
Scientific Co., Inc. (the "Registrant");
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Registrant as
of, and for, the periods presented in this report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
c) disclosed in this report any change in the Registrant's internal control
over financial reporting that occurred during the Registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial reporting;
and
5. The Registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
Registrant's auditors and the audit committee of the Registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the Registrant's ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal control over
financial reporting.
Date: November 10, 2003 /s/ Samuel Eichenbaum
-----------------------
Vice President, Finance,
Chief Financial Officer
and Treasurer
25
EXHIBIT 32
CERTIFICATIONS
--------------
I, David Freedman, hereby certify that the periodic report being filled
herewith containing financial statements fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (16 U.S. C. 78m or
78o(d)) and that the information contained in said periodic report fairly
presents, in all material respects, the financial condition and results of
operations of New Brunswick Scientific Co., Inc. for the period covered by said
periodic report.
November 10, 2003 /s/ David Freedman
--------------------
Name: David Freedman
Chairman and
Chief Executive Officer
I, Samuel Eichenbaum, hereby certify that the periodic report being filled
herewith containing financial statements fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (16 U.S. C. 78m or
78o(d)) and that the information contained in said periodic report fairly
presents, in all material respects, the financial condition and results of
operations of New Brunswick Scientific Co., Inc. for the period covered by said
periodic report.
November 10, 2003 /s/ Samuel Eichenbaum
-----------------------
Name: Samuel Eichenbaum
Vice President, Finance,
Chief Financial Officer
and Treasurer
A signed original of this written statement required by Section 906 has been
provided to New Brunswick Scientific Co., Inc. and will be retained by New
Brunswick Scientific Co., Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.
26
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
EXHIBIT INDEX
-------------
Exhibit No. Exhibit Page No.
- ----------- ------- --------
31 Section 302 Certification - David Freedman 21
31 Section 302 Certification - Samuel Eichenbaum 22
32 Section 906 Certifications 23
3b Restated By-Laws of the Company, as amended and restated
10-33 Sixth Amendment to Credit Agreement between New Brunswick Scientific
Co., Inc. and Wachovia Bank, National Association (previously
First Union National Bank) dated April 1, 1999
27