SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended September 30, 1995 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: 908-287-1200
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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 .
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There are 3,588,932 Common shares outstanding as of November 10, 1995.
NEW BRUNSWICK SCIENTIFIC CO., INC.
Index
PAGE NO.
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PART I. FINANCIAL INFORMATION:
Item 1:
Consolidated Condensed Balance Sheets -
September 30, 1995 and December 31, 1994 3
Consolidated Statements of Operations -
Three and Nine Months Ended September 30, 1995 and 1994 4
Consolidated Condensed Statements of
Cash Flows - Nine Months Ended September 30, 1995 and 1994 5
Notes to Consolidated Condensed Financial
Statements 6
Item II:
Management's Discussion and Analysis of Results
of Operations and Financial Condition 7
PART II. OTHER INFORMATION 9
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except for share data)
ASSETS
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September 30, December 31,
1995 1994
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(Unaudited)
Current Assets
- - --------------
Cash and cash equivalents $ 5,188 $ 7,142
Accounts receivable, net 7,318 7,700
Deferred income tax benefit 302 302
Inventories:
Raw materials and sub-assemblies 7,380 7,126
Work-in-process 2,505 1,826
Finished goods 4,422 3,757
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Total inventories 14,307 12,709
Prepaid expenses and other current assets 1,343 1,218
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Total current assets 28,458 29,071
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Property, plant and equipment, net 5,058 4,922
Other assets 511 511
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$ 34,027 $ 34,504
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current Liabilities
- - -------------------
Current installments of long-term debt $ 126 $ 176
Accounts payable and accrued expenses 5,272 5,928
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Total current liabilities 5,398 6,104
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Long-term debt, net of current installments 603 665
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Shareholders' equity:
Common stock, $.0625 par, authorized 25,000,000
shares; shares issued and outstanding, 1995 -
3,588,932 and 1994 - 3,581,283 net of shares
held in treasury, 338,500 224 224
Capital in excess of par 19,246 19,213
Retained earnings 8,800 8,495
Currency translation adjustment (244) (197)
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Total shareholders' equity 28,026 27,735
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$ 34,027 $ 34,504
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See notes to consolidated condensed financial statements.
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 30, September 30,
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1995 1994 1995 1994
---- ---- ---- ----
Net sales $ 8,266 $ 9,436 $ 27,224 $ 28,666
Operating costs and expenses:
Cost of sales 4,973 5,868 16,431 17,881
Selling, general and
administrative expenses 2,754 2,768 8,797 8,594
Research, development and
engineering expenses 536 429 1,510 1,316
-------- -------- -------- --------
Total operating costs
and expenses 8,263 9,065 26,738 27,791
-------- -------- -------- --------
Income from operations 3 371 486 875
Other income (expense):
Interest income 52 39 172 94
Interest expense (12) (19) (44) (51)
Other income (expense), net (6) (3) (9) (7)
-------- -------- -------- --------
34 17 119 36
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Income before income taxes 37 388 605 911
Income taxes 7 117 121 273
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Net income $ 30 $ 271 $ 484 $ 638
-------- -------- -------- --------
Earnings per Common share $ .01 $ .08 $ .14 $ .18
-------- -------- -------- --------
Weighted average number of
shares outstanding 3,589 3,575 3,584 3,571
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See notes to consolidated condensed financial statements.
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30
1995 1994
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Cash flows from operating activities:
Net income $ 484 $ 638
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 404 481
Change in related balance sheet accounts:
Accounts receivable 354 (216)
Inventories (1,619) 1,201
Prepaid expenses and other current assets (130) (295)
Accounts payable and accrued expenses (1,299) 177
Advance payments from customers 579 (534)
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Net cash used by operating activities (1,227) 1,452
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Cash flows from investing activities:
Additions to property, plant and equipment (567) (412)
Sale of equipment 16 --
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Net cash used by investing activities (551) (412)
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Cash flows from financing activities:
Dividends (179) --
Repayment of long-term debt (107) (137)
Proceeds from issuance of Common stock
under Employee Stock Purchase Plan 33 24
Proceeds from issuance of Common stock under
Stock Option Plan for nonemployee directors -- 2
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Net cash used by financing activities (253) (111)
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Net effect of exchange rate changes on cash 77 108
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Net decrease in cash and cash equivalents (1,954) 1,037
Cash and cash equivalents at beginning of period 7,142 4,773
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Cash and cash equivalents at end of period $ 5,188 $ 5,810
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 49 $ 60
Income taxes 172 161
See notes to consolidated condensed financial statements.
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Interim Results:
In the opinion of the Company, the accompanying unaudited consolidated condensed
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly, its financial position as of
September 30, 1995 and the results of its operations and cash flows for the nine
months ended September 30, 1995 and 1994. Interim results may not be indicative
of the results that may be expected for the year.
Note 2 - Earnings per share:
Earnings per Common share are based on the weighted average number of shares
outstanding. Stock options are not included in the calculation as they had no
significant dilutive effect on earnings per share.
Note 3 - Consolidated Condensed Statements of Shareholders' Equity:
Nine Months Ended
September 30,
1995 1994
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(In thousands)
Balance at beginning of period $27,735 $26,253
Net income 484 638
Currency translation adjustment (47) 472
Dividends ($.05 per share) (179) --
Issue of shares under
Employee Stock Purchase Plan 33 24
Issue of shares under Stock Option Plan
for nonemployee directors -- 2
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Balance at end of period $28,026 $27,389
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NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following is Management's discussion and analysis of significant factors
that have affected the Company's operating results and financial condition
during the quarter and nine months ended September 30, 1995.
Results of Operations
----------------------
Quarter Ended September 30, 1995 vs. Quarter Ended September 30 1994.
- - ---------------------------------------------------------------------
For the quarter ended September 30, 1995, net sales were $8,266,000 compared
with net sales of $9,436,000 for the quarter ended September 30, 1994. Net
income for the 1995 quarter was $30,000 or $.01 per share compared with net
income of $271,000 or $.08 per share for the third quarter of 1994.
The decline in net sales resulted primarily from a decrease in domestic sales
due to soft market conditions in the United States, the traditionally weak
summer months and delays in some planned shipments which will not be made until
the fourth quarter. Income from operations decreased to $3,000 from $371,000 in
the 1994 quarter as a result of the sales decline, an increase in research,
development and engineering expenses due to the establishment late in 1994 of a
bioprocess equipment division and partially offset by an increase in the gross
profit percentage from 37.8 in 1994 to 39.8% in 1995 as a result of the
Company's continuing efforts to improve operating efficiencies and to control
costs as well as the positive effects of the weaker dollar on the product costs
of the Company's European subsidiaries. Interest income increased to $52,000
from $39,000 in the 1994 quarter due primarily to higher interest rates.
Interest expense declined to $12,000 from $19,000 in 1994 due to the continuing
amortization of the principal on the Company's long-term debt.
Provision for income taxes as a percentage of income before taxes decreased in
the 1995 period due to a larger proportion of the 1995 income coming from the
Company's foreign subsidiaries, a significant portion of which is not subject to
income taxes due to carryforward tax losses on which income tax benefits were
not previously recognized.
Nine Months Ended September 30, 1995 vs. Nine Months Ended September 30 1994.
- - -----------------------------------------------------------------------------
For the nine months ended September 30, 1995, net sales were $27,224,000
compared with net sales of $28,666,000 for the nine months ended September 30,
1994. Net income for the 1995 period was $484,000 or $.14 per share compared
with net income of $638,000 or $.18 per share for the first nine months of 1994.
The decline in net sales resulted primarily from a decrease in domestic sales
due to soft market conditions in the United States, the traditionally weak
summer months and delays in some planned shipments which will not be made until
the fourth quarter. The shortfall in domestic sales has been partially offset by
stronger export sales and higher sales by the Company's European subsidiaries.
Income from operations decreased to $486,000 from $875,000 in the 1994 period as
a result of the decline in sales, an increase in research, development and
engineering expenses due to the establishment late in 1994 of a bioprocess
equipment division and partially offset by an increase in the gross profit
percentage from 37.6% in 1994 to 39.6% in 1995 due to the Company's continuing
efforts to improve operating efficiencies and to control costs as well as the
positive effects of the weaker dollar on the product costs of the Company's
European subsidiaries. Interest income increased to $172,000 from $94,000 in the
1994 period due to higher average cash and cash equivalents and higher interest
rates. Provision for income taxes as a percentage of income before taxes
decreased in the 1995 period due to a larger proportion of the 1995 income
coming from the Company's foreign subsidiaries, a significant portion of which
is not subject to income taxes due to carryforward tax losses on which income
tax benefits were not previously recognized.
Financial Condition
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Liquidity and Capital Resources
- - -------------------------------
During the period ended September 30, 1995, Cash and Cash Equivalents decreased
to $5,188,000 from $7,142,000 at December 31, 1994. The decrease in cash
resulted primarily from an increase in inventories from $12,709,000 at December
31, 1994 to $14,307,000 at September 30, 1995. Inventories increased primarily
as a result of the in-process construction of custom fermentation systems which
are expected to be shipped during the fourth quarter and to the need to be in a
stock position for many core products in anticipation of the traditionally
strong fourth quarter. Cash also decreased due to the reduction in Accounts
Payable and Accrued Expenses from $5,928,000 at December 31, 1994 to $5,272,000
at September 30, 1995 as a result of normal cyclical payments.
New Business Activity
- - ---------------------
On October 18, 1995, the Company announced that it was entering the drug lead
discovery business by forming a new company to develop a novel, small molecule
drug discovery platform. The company, called DGI BioTechnologies LLC (DGI), is
majority-owned and fully funded by the Company and will utilize specially
designed new laboratory space at the Company's headquarters facility in Edison,
New Jersey. DGI's operations are expected to have a significant negative impact
on the Company's earnings during its development phase, which is estimated at
between two and three years.
Cash Flows from Operating Activities
- - ------------------------------------
During the period ended September 30, 1995 net cash used by operating activities
amounted to $1,227,000 vs. net cash provided by operating activities of
$1,452,000 for the period ended September 30, 1994. The primary reasons for the
$2,679,000 decrease between the two periods were: (a) inventories increased
$1,619,000 vs. a decrease of $1,201,000 in 1994; (b) accounts payable and
accrued expenses decreased $1,299,000 vs. an increase of $177,000 in 1994 and
were offset by (a) a decrease in accounts receivable of $354,000 vs. an increase
of $216,000 in 1994 and (b) an increase in advance payments from customers of
$579,000 vs. a decrease of $534,000 in 1994.
Cash Flows from Investing Activities
- - ------------------------------------
Net cash used by investing activities amounted to $551,000 in 1995 vs. $412,000
in 1994, primarily as a result of additions to property, plant and equipment.
Cash Flows from Financing Activities
- - ------------------------------------
Net cash used by financing activities amounted to $253,000 in the 1995 period
vs. $111,000 in the 1994 period. The major reason for the difference resulted
from a Common stock dividend paid by the Company in the amount of $179,000 in
1995.
Management believes that the resources available to the Company, including its
line of credit which has been extended to May 1997, are sufficient to meet its
near and intermediate-term needs, including present funding commitments for DGI,
and its strong unleveraged balance sheet provides the basis for any long-term
financing if the need should arise.
NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- - ------------------------------------------
(a)
(10.1) Termination Agreement with Samuel Eichenbaum.
(10.2) Organizational Structure and Development Agreement.
No reports on Form 8-K have been filed during the quarter ended September 30,
1995.
SIGNATURES
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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.
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(Registrant)
Date: November 13, 1995 /s/ Ezra Weisman
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Ezra Weisman
President
(Chief Executive Officer)
/s/ Samuel Eichenbaum
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Samuel Eichenbaum
Vice President - Finance
(Principal Accounting Officer)