1
As filed with the Securities and Exchange Commission on July 2, 2001
Registration No. 333-62182
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------
APOGENT TECHNOLOGIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WISCONSIN 3843 22-2849508
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
AND ITS GUARANTOR SUBSIDIARIES
Delaware Apogent Finance Company 02-0522134
California Applied Biotech, Inc. 33-0447325
Delaware Barnstead Thermolyne Corporation 13-3326802
Massachusetts BioRobotics Inc. 04-3394825
Wisconsin Chase Scientific Glass, Inc. 62-1711339
Wisconsin Consolidated Technologies, Inc. 74-2951231
Delaware Erie Scientific Company 13-3326819
Delaware Erie Scientific Company of Puerto Rico 22-2855227
Delaware Erie UK Holding Company 02-0523659
Wisconsin Ever Ready Thermometer Co., Inc. 22-3329530
New York Genevac Inc. 13-3614495
Delaware Lab-Line Instruments, Inc. 36-2160341
California Lab Vision Corporation 94-3204455
2
Delaware Matrix Technologies Corporation 04-2876817
Delaware Microgenics Corporation 68-0148167
California Molecular BioProducts, Inc. 95-3244122
Delaware Nalge Nunc International Corporation 13-3326816
Wisconsin National Scientific Company 58-2315507
Connecticut The Naugatuck Glass Company 06-0465440
Wisconsin NERL Diagnostics Corporation 05-0486109
Wisconsin Owl Separation Systems, Inc. 39-1915146
Wisconsin Remel Inc. 74-2826694
Wisconsin Richard-Allan Scientific Company 38-3235594
California Robbins Scientific Corporation 94-2456711
Delaware Samco Scientific Corporation 95-3145731
Delaware Sybron Transition Corp. 13-3326805
Delaware Vacuum Process Technology, Inc. 04-3538751
(STATE OR OTHER JURISDICTION (EXACT NAME OF GUARANTOR AS SPECIFIED (I.R.S. EMPLOYER
OF INCORPORATION OR IN ITS CHARTER) IDENTIFICATION NUMBER)
ORGANIZATION)
48 CONGRESS STREET MICHAEL K. BRESSON
PORTSMOUTH, NEW HAMPSHIRE 03801 EXECUTIVE VICE PRESIDENT -
(603) 433-6131 GENERAL COUNSEL AND SECRETARY
(Address, including zip code, and telephone APOGENT TECHNOLOGIES INC.
number, including area code, of registrant's 10 PLEASANT STREET, SUITE 300
principal executive offices) PORTSMOUTH, NEW HAMPSHIRE 03801
(603) 433-6131
(Name, address, including zip
code, and telephone number,
including area code of agent
for service)
3
---------
Copies Of All Communications, Including All Communications
Sent To The Agent Should Be Sent To:
BRUCE C. DAVIDSON
JOSEPH D. MASTERSON
QUARLES & BRADY LLP
411 EAST WISCONSIN AVENUE
MILWAUKEE, WI 53202
(414) 277-5000
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ] _____________
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _____________
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] _____________
THE REGISTRANTS HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
4
Prospectus
APOGENT TECHNOLOGIES INC.
OFFER TO EXCHANGE UP TO $325,000,000 IN PRINCIPAL AMOUNT OF ITS SERIES B
8% SENIOR NOTES DUE 2011 FOR ANY AND ALL OF ITS OUTSTANDING $325,000,000 IN
PRINCIPAL AMOUNT OF 8% SENIOR NOTES DUE 2011
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME ON AUGUST 15,
2001, UNLESS EXTENDED
Apogent Technologies Inc. ("Apogent" or the "Company") is offering the Series B
8% Senior Notes due 2011 (the "Exchange Notes"). We are offering to exchange
(the "Exchange Offer") up to $325,000,000 in aggregate principal amount of
Exchange Notes for $325,000,000 aggregate principal amount of our outstanding 8%
Senior Notes due 2011 (the "Original Notes"). We sometimes refer to the Original
Notes and the Exchange Notes collectively as the "notes."
The terms of the Exchange Notes are substantially identical in all respects
(including principal amount, interest rate and maturity) to the terms of the
Original Notes for which they may be exchanged pursuant to the Exchange Offer,
except that the Exchange Notes will be freely transferable to holders thereof
(other than as described herein), are issued free of any covenant restricting
transfer absent registration and will not have the right to earn additional
interest in the event of a failure to register the Exchange Notes. The Exchange
Notes will evidence the same debt as the Original Notes and contain terms that
are substantially identical as the terms of the Original Notes. For a
description of the terms of the notes, see "Description of the Notes." There
will be no cash proceeds to Apogent from the Exchange Offer.
The Exchange Notes will bear interest from the most recent date to which
interest has been paid on the Original Notes, or if no interest has been paid on
the Original Notes, from April 4, 2001. Holders whose Original Notes are
accepted for exchange will not receive any payment in respect of interest on the
Original Notes otherwise payable on any interest payment date the record date
for which occurs on or after consummation of the Exchange Offer. See "The
Exchange Offer - Terms of the Exchange Offer."
Like the Original Notes, the Exchange Notes will mature on April 1, 2011.
Interest is fixed at an annual rate of 8% and is payable on April 1 and October
1 of each year, beginning on October 1, 2001. Interest will accrue from April 4,
2001. We may redeem some or all of the notes at any time. The redemption price
is described on page 45. There is no sinking fund for the notes.
The notes will be guaranteed on a senior unsecured basis by our wholly-owned
subsidiaries that have guaranteed, and our subsidiaries who will in the future
guarantee, obligations under our bank credit facility. These guarantees will be
senior obligations of our subsidiary guarantors. If we fail to make payments on
either the Original Notes or the Exchange Notes, our subsidiary guarantors must
make them instead.
5
The Original Notes were sold on April 4, 2001, in a transaction that was not
registered under the Securities Act. Accordingly, the Original Notes may not be
offered or sold within the United States or to U.S. persons, except to qualified
institutional buyers in reliance on the exemption from registration provided by
Rule 144A and to certain persons in offshore transactions in reliance on
Regulation S. We are offering the Exchange Notes to satisfy our obligations
under the Exchange and Registration Rights Agreement relating to the Original
Notes. See "The Exchange Offer - Purposes and Effects of the Exchange Offer."
Each broker-dealer that receives Exchange Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of the Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with any resales of
Exchange Notes received in exchange for Original Notes where the Original Notes
were acquired by the broker-dealer as a result of market-making activities or
other trading activities. Apogent has agreed that, for a period of 180 days
after the Expiration Date (as defined herein), it will make this prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
The notes are not listed and will not be listed on any national securities
exchange.
The notes have not been recommended by the SEC or any state securities
commission or regulatory authority. The foregoing authorities have not confirmed
the accuracy or determined the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
The date of this prospectus is July 2, 2001.
6
IN MAKING YOUR INVESTMENT DECISION, YOU SHOULD RELY ONLY ON THE
INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT, AND THE INITIAL
PURCHASERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT
INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION,
YOU SHOULD NOT RELY ON IT. YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN
THIS PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS
ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY
HAVE CHANGED SINCE THAT DATE. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE ON THE COVER OF THIS
PROSPECTUS.
TABLE OF CONTENTS
PAGE
----
Where You Can Find More Information........................................................... ii
Incorporation by Reference.................................................................... iii
Prospectus Summary............................................................................ 1
The Exchange Offer............................................................................ 9
Use of Proceeds............................................................................... 16
Ratio of Earnings to Fixed Charges............................................................ 16
Capitalization................................................................................ 17
Management's Discussion and Analysis of Financial Condition and Results of Operations......... 18
Business...................................................................................... 36
Description of the Notes...................................................................... 44
Exchange Offer and Registration Rights Agreement.............................................. 52
Book-Entry; Delivery and Form................................................................. 57
Certain United States Federal Income Tax Considerations....................................... 63
Plan of Distribution.......................................................................... 65
Legal Matters................................................................................. 66
Experts....................................................................................... 66
Index to Financial Statements................................................................. F-1
Apogent Technologies Inc. is a Wisconsin corporation. Our principal executive
offices are located at 48 Congress Street, Portsmouth, New Hampshire 03801, and
our telephone number at that address is (603) 433-6131. Our World Wide Web site
address is http://www.apogent.com. The information in our website is not part of
this prospectus.
This prospectus has been prepared based on information provided by us and by
other sources that we believe are reliable. This prospectus summarizes certain
documents and other information in a manner we believe to be accurate, but we
refer you to the actual documents for a more complete understanding of what we
discuss in this prospectus. You must rely on your own examination of our company
and the terms of the offering and the notes, including the merits and risks
involved.
We are not making any representation to you regarding the legality of an
investment in the notes by you under any legal investment or similar laws or
regulations. You should not consider any information in this prospectus to be
legal, business, tax or other advice. You should consult your own attorney,
business advisor and tax advisor for legal, business and tax advice regarding an
investment in the notes.
The distribution of this prospectus and the offer and sale of the notes may be
restricted by law in certain jurisdictions. Persons in whose possession this
prospectus or any of the notes is delivered must inform themselves about, and
observe, any such restrictions.
This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the notes to any person in any jurisdiction where it is
unlawful to make such an offer or solicitation.
We expect that the notes sold pursuant to this prospectus will be represented by
one or more global notes, which will be deposited with, or on behalf of, The
Depository Trust Company and registered in the name of Cede & Co. Beneficial
interests in
i
7
the global notes representing the notes will be shown on, and transfers thereof
will be effected through, records maintained by The Depository Trust Company and
its participants. After the initial issuance of the global notes, notes in
certificated form will be issued in exchange for the global notes only under
limited circumstances on the terms set forth in the indenture.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE
HAS BEEN FILED UNDER RSA 421-B WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT
A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW
HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT
FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH
FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR
A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY
PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH
THE PROVISIONS OF THIS PARAGRAPH.
FORWARD-LOOKING STATEMENTS
This prospectus contains and incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Words such as "anticipate," "believe," "continue," "estimate," "expect,"
"goal," "objective," "outlook" and similar expressions signify forward-looking
statements. These statements are based upon our expectations at the time we made
them and are subject to risks and uncertainties, many of which are beyond our
control, that could cause actual results to differ materially from those
contemplated in the forward-looking statements. In addition to the assumptions
and other factors referred to specifically in connection with forward-looking
statements, factors that could cause our actual results to differ materially
include the factors described under the caption "Cautionary Factors" in this
prospectus and in our SEC filings incorporated by reference into this
prospectus. The risks and uncertainties so identified are not the only ones
facing our company. Additional risks and uncertainties not presently known to us
or that we currently believe to be immaterial also may adversely affect us.
Should any risks and uncertainties develop into actual events, these
developments could have material adverse effects on our business, financial
condition and results of operations. For these reasons, we caution you not to
place undue reliance on our forward-looking statements.
INDUSTRY AND MARKET DATA
In this prospectus we rely on and refer to information and statistics regarding
Apogent's markets and our market share in the sectors in which we compete. We
obtained this information and statistics from various third-party sources,
discussions with our customers and our own internal estimates. We believe that
these sources and estimates are reliable, but have not independently verified
them and cannot guarantee their accuracy or completeness.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements, and other
documents with the Securities and Exchange Commission under the Securities
Exchange Act of 1934. Our SEC filings are available to the public at the SEC's
website at http://www.sec.gov. You may also read and copy any document we file
at the following SEC public reference rooms:
Judiciary Plaza, Room 1024 Citicorp Center, Suite 1400 7 World Trade Center
450 Fifth Street, N.W. 500 West Madison Street Suite 1300
Washington, D.C. 20549 Chicago, Illinois 60621 New York, New York 10048
You may obtain information regarding the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330.
ii
8
In addition, because our common stock is listed on the New York Stock Exchange
(ticker symbol "AOT"), you may read our reports, proxy statement, and other
documents at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" information in documents that we
file with it. We have elected to use this procedure in connection with this
prospectus, which means that we can disclose important information by referring
you to those documents that are considered part of this prospectus. Information
that we file later with the SEC will automatically update and supersede the
previously filed information. Note that we filed our documents under the name
Sybron International Corporation until our name was formally changed to Apogent
Technologies Inc. on January 31, 2001, so you may need to look under both names
to find all information that is of interest to you. We incorporate by reference
into this prospectus:
o our annual report on Form 10-K for the fiscal year ended
September 30, 2000;
o our quarterly report on Form 10-Q for the quarter ended
December 31, 2000;
o our quarterly report on Form 10-Q for the quarter ended March
31, 2001;
o our current reports on Form 8-K or 8-K/A dated as of October
10, 2000, November 8, 2000, December 11, 2000, March 21, 2001
and April 4, 2001; and
o any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until we sell all of the securities offered by this prospectus
or terminate the offering.
You may request copies of these filings at no cost, by writing or calling us at
Apogent Technologies Inc., Attn: Investor Relations, 48 Congress Street,
Portsmouth, New Hampshire 03801, (603) 433-6131.
We maintain an Internet web site at http://www.apogent.com. Our web site and
information at that site, or connected to that site, is not incorporated into
this prospectus.
iii
9
PROSPECTUS SUMMARY
The following summary contains basic information about the notes and is not
intended to be complete. It does not contain all the information that is
important to you. For more complete information about Apogent, its business, its
financial statements and related matters, you should refer to the documents
mentioned in the section of this prospectus entitled "Incorporation by
Reference." For a more complete understanding of the notes, please refer to the
section of this document entitled "Description of the Notes."
On December 11, 2000, we spun off our dental business by way of a pro rata
distribution to our shareholders of all the outstanding common stock and related
preferred stock purchase rights of Sybron Dental Specialties, Inc. ("SDS"). As a
result of the spin-off, SDS became an independent public company operating what
was our dental business. Included in the dental business are certain allocations
of corporate expenses directly attributable to those businesses. We continue to
operate our labware and life sciences, clinical and industrial, diagnostics and
microbiology and laboratory equipment businesses, as described herein. We
changed our name from Sybron International Corporation to Apogent Technologies
Inc. after obtaining shareholder approval at our 2001 annual meeting. Apogent's
financial statements presented in this prospectus reflect the dental business
among our discontinued operations. The continuing operations consist of the
labware and life sciences, clinical and industrial, diagnostics and microbiology
and laboratory equipment businesses. See Note 15 in notes to consolidated
financial statements included in this prospectus.
In this document, references to "Apogent," "us," "we," and "our" refer to
Apogent Technologies Inc. and all of its subsidiaries unless the context
otherwise requires, without the dental business. However, for purposes of the
description of the notes included in this prospectus, references to "Company"
and "Apogent Technologies" refer only to Apogent Technologies Inc. and do not
include our subsidiaries. References to "Guarantors" mean our material U.S.
subsidiaries, who will guarantee the notes and also guarantee our bank
indebtedness, and do not include our non-U.S. subsidiaries. References to the
"Guarantees" refer to the guarantees of the notes by the Guarantors.
APOGENT TECHNOLOGIES INC.
Through our subsidiaries, we are a leading manufacturer of value-added products
for the labware and life sciences, clinical and industrial, diagnostics and
microbiology, and laboratory equipment industries. We offer a unique mix of
products, with over 70% of our sales consisting of high profit, industry staples
that are typically consumable products. The remaining sales represent life
science products in higher-growth platforms used in diagnostic, biotechnology
and pharmaceutical laboratories. Our goal is to consistently grow our worldwide
sales and earnings by focusing on product development and manufacturing and
marketing efforts to increase our range of specialty and value-added products
and to increase the range of end-users of our products.
The following table sets forth our net sales by business segment for the periods
indicated.
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
------------------------------ -------------------
2000 1999 1998 2001 2000
-------- -------- -------- -------- --------
Labware and Life Sciences ....... $347,437 $268,788 $228,775 $182,528 $165,482
Clinical and Industrial ......... 208,686 176,059 135,438 118,270 106,577
Diagnostics and Microbiology .... 210,147 171,647 114,683 114,313 103,795
Laboratory Equipment ............ 97,305 98,543 78,866 50,751 47,103
-------- -------- -------- -------- --------
Total Net Sales ................. $863,575 $715,037 $557,762 $465,862 $422,957
======== ======== ======== ======== ========
For additional segment information see Note 16 in notes to consolidated
financial statements included in this prospectus.
1
10
SUMMARY HISTORICAL FINANCIAL DATA
We present below summary consolidated financial data of Apogent. We derived the
historical balance sheet data as of March 31, 2001, and the historical statement
of operations data for the six months ended March 31, 2001 and 2000 from the
unaudited condensed consolidated financial statements included elsewhere in this
prospectus. We derived the balance sheet data as of September 30, 2000 and 1999,
and the historical statement of operations data for the years ended September
30, 2000, 1999 and 1998, from Apogent's audited consolidated financial
statements and related notes, which are included elsewhere in this prospectus.
We derived the historical balance sheet data as of September 30, 1998, 1997 and
1996, and the historical statement of operations data for the years ended
September 30, 1997 and 1996, from Apogent's audited financial statements which
are not included in this prospectus.
In the opinion of management, the following data include all necessary
adjustments for the fair presentation of the information set forth. Results for
interim periods are not necessarily indicative of the results for the full year.
The information in the table should be read together with other information
contained in this prospectus under the captions "Capitalization" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and with the consolidated financial statements and notes thereto.
SIX MONTHS
YEARS ENDED SEPTEMBER 30, ENDED MARCH 31,
--------------------------------------------------------------- ------------------------
2000 1999 1998 1997 1996 2001 2000
-------- -------- -------- --------- -------- --------- ---------
(In thousands)
Consolidated Statement
of Income Data(a):
Net sales $863,575 $715,037 $557,762 $ 439,940 $361,184 $ 465,862 $ 422,957
Income from
continuing operations 86,724 77,411 52,122 47,045 31,603 52,377 45,801
Discontinued operations 41,597(c) 47,965(c) 23,921(d) 41,493(c) 31,291(c) (11,824)(c) 23,598(c)
Income before
extraordinary items 128,321 125,376 76,043 88,538 62,894 40,553 69,399
Extraordinary items -- 17,171(e) -- (404)(b) -- (745)(f) --
Net income 128,321 142,547 76,043 88,134 62,894 39,808 69,399
AS OF AS OF SEPTEMBER 30,
MARCH 31, ---------------------------------------------------------------
2001 2000 1999 1998 1997 1996
---------- ---------- ----------- ----------- --------- ----------
(In thousands)
Consolidated Balance Sheet Data(j):
Net assets of discontinued operations $ -- $ 152,970 $ 155,595 $ 129,508 $ 104,800 $ 175,403
Total assets 1,715,701 1,792,364 1,539,975 1,227,852 975,084 843,579
Advances and loans from SDS -- 77,762 56,777 29,088 55,176 84,137
Long-term debt(i) 594,250 649,409 591,807 541,914 416,740 317,384
Securities lending agreement 53,540 54,444 50,461 -- -- --
Shareholders' equity 783,249 749,516 625,344 475,244 378,649 291,616
Other Financial Data:
EBITDA(g) 269,829 218,366 169,851 133,515 104,768
EBITDA Margin(h) 31.2% 30.5% 30.5% 30.3% 29.0%
Ratio of Earnings to Fixed Charges 3.8 4.0 3.5 3.8 3.1
(a) Includes results of acquired companies since their effective dates of
acquisition with the exception of the merger of National Scientific
Company ("National") with a wholly owned subsidiary of Apogent formed
for that purpose, whose results are included from October 1, 1996, the
beginning of the fiscal year in which the merger occurred. (Results of
National prior to October 1, 1996 qualified as an immaterial pooling of
interests in relation to the operations taken as a whole.) See Note 15
in the notes to consolidated financial statements contained elsewhere
in this prospectus.
(b) Amount resulted from the refinancing of our debt. See Note 7 in the
notes to consolidated financial statements contained elsewhere in this
prospectus.
(c) Amounts resulted from the operations of Nalge Process Technologies
Group, Inc ("NPT") of $121, $4,698 and $2,840 in 1999, 1997 and 1996,
respectively, which was sold on March 31, 1999, and the operations of
SDS and its affiliates
2
11
of $41,597, $47,844, $36,795 and $28,451 in 2000, 1999, 1997 and 1996,
respectively, which became an unaffiliated company on December 11, 2000
as a result of the spin-off. For the six months ended March 31, 2001
and 2000, the Company included a net loss of $11,824 and net income of
$23,598 from discontinued operations, respectively. The net loss in the
first six months of fiscal 2001 included transaction expenses related
to the spin-off of $12,462. See Note 15 in the notes to consolidated
financial statements.
(d) Amount includes an expense of $7,750 from the settlement of
environmental litigation relating to a facility which was sold in 1983
as part of a discontinued operation, income of $3,848 from the
operations of NPT, sold on March 31, 1999, and $27,823 from the
operations of SDS and its affiliates, spun off on December 11, 2000.
See Notes 15 and 16 in the notes to consolidated financial statements.
(e) Amount represents a gain on the March 31, 1999 sale of NPT.
(f) Amount resulted from the write-off of deferred financing costs, net of
income taxes.
(g) "EBITDA" is defined as operating earnings before depreciation and
amortization, and excludes restructuring charges. EBITDA does not
represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted
accounting principles, and our calculation thereof may not be
comparable to that reported by other companies. We believe that EBITDA
provides useful information regarding our ability to service and/or
incur indebtedness. EBITDA does not take into account our working
capital requirements, debt service requirements and other commitments
and, accordingly, is not necessarily indicative of amounts that may be
available for discretionary use.
(h) "EBITDA Margin" is defined as the ratio of EBITDA to net sales.
(i) Total debt as of September 30, 2000 and 1999 was $683,736 and $599,198,
respectively. Total debt as of March 31, 2001 was $635,792.
(j) The total assets and shareholders' equity at September 30, 2000, 1999,
1998, 1997 and 1996 include net assets and shareholders' equity
allocated to SDS. SDS was spun-off on December 11, 2000. At the time of
the spin-off, Apogent received a cash dividend of $67,900 from SDS and
settled certain intercompany loans and advances. The long-term debt
reported above as of various dates prior to the spin-off does not
reflect the receipt of this dividend, which was used to reduce debt.
3
12
THE EXCHANGE OFFER
Purpose of Exchange We sold the Original Notes in a private offering to
certain accredited institutions through Chase
Securities Inc., Banc of America Securities LLC, Banc
One Capital Markets, Inc., Credit Suisse First Boston
Corporation and First Union Securities, Inc. (the
"Initial Purchasers"). In connection with that
offering, we executed and delivered for the benefit
of holders of the Original Notes an Exchange and
Registration Rights Agreement, which is an exhibit to
the registration statement of which this prospectus
is a part, providing for, among other things, the
Exchange Offer. The Exchange Offer is intended to
make the Exchange Notes freely transferable by the
holders thereof without registration or any
prospectus delivery requirements under the Securities
Act, except that a "dealer" or any "affiliate" of a
"dealer" (as those terms are defined under the
Securities Act) who exchanges Original Notes held for
its own account (a "Restricted Holder") will be
required to deliver copies of this prospectus in
connection with any resale of the Exchange Notes
issued in exchange for those Original Notes. See "The
Exchange Offer - Purposes and Effects of the Exchange
Offer" and "Plan of Distribution."
The Exchange Offer We are offering to exchange pursuant to the Exchange
Offer up to $325 million aggregate principal amount
of our new Series B 8% Senior Notes Due 2011 (the
"Exchange Notes") for $325 million aggregate
principal amount of our outstanding 8% Senior Notes
Due 2011 (the "Original Notes"). We sometimes refer
to the Original Notes and the Exchange Notes
collectively as the "notes." The terms of the
Exchange Notes are substantially identical in all
respects (including principal amount, interest rate
and maturity) to the terms of the Original Notes,
except that the Exchange Notes are freely
transferable by the holders thereof (other than as
provided herein), and are not subject to any covenant
regarding registration under the Securities Act. See
"The Exchange Offer -Terms of the Exchange Offer" and
"The Exchange Offer - Procedures for Tendering." The
Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Original Notes being
tendered for exchange.
Expiration Date The Exchange Offer will expire at 5:00 p.m., New York
City time on August 15, 2001, unless extended (the
"Expiration Date").
Conditions of the Our obligation to consummate the Exchange Offer is
Exchange Offer subject to certain conditions. We will not be
required to accept for exchange any Original Notes
tendered and may terminate the Exchange Offer before
acceptance of any Original Notes if, among other
things, legal actions or proceedings are instituted
that challenge or seek to prohibit the exchange or
there shall have been proposed, adopted or enacted
any law, statute or regulation materially affecting
the benefits of the Exchange Offer. See "The Exchange
Offer - Conditions of the Exchange Offer." We reserve
the right to terminate or amend the Exchange Offer at
any time prior to the Expiration Date upon the
occurrence of any of the conditions.
4
13
Procedures for Tendering To accept the Exchange Offer, you must complete, sign
Original Notes and date the Letter of Transmittal, or a facsimile of
it, in accordance with the instructions in this
prospectus and contained in the Letter of
Transmittal, and mail or otherwise deliver the Letter
of Transmittal or facsimile, together with the
Original Notes and any other required documentation
to the exchange agent (the "Exchange Agent") at the
address set forth herein. Physical delivery of the
Original Notes is not required if a confirmation of a
book-entry transfer of the Original Notes to the
Exchange Agent's account at The Depository Trust
Company ("DTC" or the "Depository") is timely
delivered. By executing the Letter of Transmittal,
you will represent to us that:
o you are acquiring the Exchange Notes in the
ordinary course of business,
o you are not engaged in, do not intend to
engage in, and have no arrangement or understanding
with any person to participate in, the distribution
of the Original Notes or the Exchange Notes within
the meaning of the Securities Act, and
o you are not an "affiliate" of Apogent as
defined under the Securities Act, or if you are an
affiliate, that you will comply with the registration
and prospectus delivery requirements of the
Securities Act, to the extent applicable.
In addition, each broker or dealer that receives
Exchange Notes for its own account in exchange for
any Original Notes that were acquired by the broker
or dealer as a result of market-making activities or
other trading activities must acknowledge that it
will deliver a prospectus in connection with any
resale of the Exchange Notes. See "The Exchange Offer
- Procedures for Tendering" and "Plan of
Distribution."
Special Procedures for If you are a beneficial owner whose Original Notes
Beneficial Owners are registered in the name of a broker dealer,
commercial bank, trust company or other nominee and
you wish to tender, you should contact the registered
holder promptly and instruct the registered holder to
tender on your behalf. If the Original Notes are in
certificated form and you are a beneficial owner who
wishes to tender on the owner's behalf, prior to
completing and executing the Letter of Transmittal
and delivering the Original Notes, you must either
make appropriate arrangements to register ownership
of the Original Notes in your name or obtain a
properly completed bond power from the registered
holder. The transfer of registered ownership may take
considerable time. See "The Exchange Offer -
Procedures for Tendering."
Guaranteed Delivery If the Original Notes are in certificated form and
Procedures you wish to tender your Original Notes in the
Exchange Offer and your Original Notes are not
immediately available for delivery, you may still
tender your shares by completing, signing and
delivering the Letter of Transmittal and any other
documents required by the Letter of Transmittal to
the Exchange Agent prior to the Expiration Date and
tendering your Original Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer - Guaranteed Delivery Procedures."
5
14
Withdrawal Rights You may withdraw your tenders at any time prior to
5:00 p.m. New York City time on the Expiration Date.
See "The Exchange Offer - Withdrawal of Tenders."
Acceptance of Original We will accept for exchange any and all Original
Notes and Delivery of Notes that are properly tendered to the Exchange
Exchange Notes Agent prior to 5:00 p.m. New York City time on the
Expiration Date. The Exchange Notes issued pursuant
to the Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
Exchange Agent The Bank of New York, New York, New York, is serving
as the Exchange Agent in connection with the Exchange
Offer. See "The Exchange Offer - Exchange Agent."
Effect on Holders of the As a result of making this Exchange Offer, and upon
Original Notes acceptance for exchange of all validly tendered
Original Notes pursuant to the terms of this Exchange
Offer, we will have fulfilled one of our obligations
contained in the Exchange and Registration Rights
Agreement and, accordingly, there will be no increase
in the interest rate on the Original Notes pursuant
to the Exchange and Registration Rights Agreement.
Holders of Original Notes who do not tender their
Original Notes will continue to be entitled to all
the rights and limitations applicable thereto under
the Indenture dated as of April 4, 2001, among
Apogent Technologies Inc., the Guarantors, and The
Bank of New York, as trustee (the "Trustee") relating
to the Original Notes and the Exchange Notes (the
"Indenture"), except for any rights under the
Indenture or the Exchange and Registration Rights
Agreement which by their terms terminate or cease to
have further effectiveness as a result of the making
of, and the acceptance for exchange of all validly
tendered Original Notes pursuant to, the Exchange
Offer. All Original Notes that remain outstanding
will continue to be subject to the restrictions on
transfer provided for in the Original Notes and the
Indenture. To the extent that Original Notes are
tendered and accepted in the Exchange Offer, the
trading market for Original Notes could be adversely
affected. For a summary of certain federal income tax
consequences of the ownership and disposition of the
notes see "Certain United States Federal Income Tax
Considerations."
Use of Proceeds There will be no cash proceeds to Apogent from the
exchange pursuant to the Exchange Offer.
Terms of the Notes
The Exchange Offer applies to the entire outstanding $325 million
principal amount of Original Notes. The terms of the Exchange Notes are
identical in all material respects to the Original Notes, except for certain
transfer restrictions and registration and other rights relating to the exchange
of the Original Notes for Exchange Notes. The Exchange Notes will evidence the
same debt as the Original Notes and will be governed by the same Indenture under
which the Original Notes were issued. See "Description of the Notes."
6
15
Issuer............................................... Apogent Technologies Inc.
Notes Offered........................................ $325,000,000 in principal amount of Series B 8% Senior
Notes Due 2011.
Maturity Date........................................ April 1, 2011.
Interest Payment Dates............................... April 1 and October 1 of each year beginning October 1, 2001.
Optional Redemption.................................. The Original Notes are and the Exchange Notes will be
redeemable, at our option, in whole at any time or in part
from time to time, at a redemption price equal to the greater
of (i) 100% of their principal amount and (ii) the sum of the
present values of the remaining scheduled payments of
principal and interest thereon discounted, on a semi-annual
basis, at the treasury rate plus 35 basis points, plus
accrued interest to the date of redemption. When we refer to
the treasury rate, we mean the treasury rate at the time of
redemption for treasury notes with a maturity comparable to
the remaining term of the notes, determined as described in
"Description of the Notes."
Guarantees........................................... The Original Notes are and the Exchange Notes will be
unconditionally guaranteed, jointly and severally, by each of
our existing and future material U.S. subsidiaries, which are
the same subsidiaries that guarantee our obligations under
our bank credit facility. Apogent Technologies and its U.S.
subsidiaries have approximately 88% of our assets and
generated approximately 89% of our income from continuing
operations for the fiscal year ended September 30, 2000. The
guarantees are unsecured senior indebtedness of our
subsidiary guarantors. In the event the obligations of any
subsidiary guarantor under our bank credit facility are
terminated, such subsidiary guarantor will also be released
from its obligations under its subsidiary guarantee. In the
event an existing or future subsidiary of Apogent guarantees
any indebtedness of Apogent under our bank credit facility,
then such subsidiary will also guarantee Apogent's
indebtedness under the notes.
Ranking.............................................. Both the Original Notes and the Exchange Notes rank equally
in right of payment with all our existing and future
unsecured senior debt and are senior in right of payment to
all our future subordinated debt. The indenture relating to
the notes permits us to incur additional senior indebtedness.
Certain Covenants.................................... We issued the Original Notes and will issue the Exchange
Notes under an indenture with the trustee. Among other
things, the indenture limits our ability and the ability of
our subsidiaries to:
o incur certain liens;
o engage in sale-leaseback transactions; and
o merge or consolidate or sell all or substantially all of
our assets.
Exchange Offer; Registration Rights.................. Under the Exchange and Registration Rights Agreement executed
as part of the offering of the Original Notes, we agreed
7
16
to use our reasonable best efforts to register notes with the
Securities and Exchange Commission (which we refer to as the
"Exchange Notes") having substantially identical terms as the
Original Notes as part of an offer to exchange freely tradable
Exchange Notes for the Original Notes. We agreed to use our
reasonable best efforts to cause this registration statement to
be declared effective within 150 days after the closing date of
the offering and the exchange to be completed within 180 days
after the closing. Holders of Original Notes will be entitled to
the payment of additional interest if we do not comply with these
obligations within the specified time periods, but this provision
does not apply to the Exchange Notes. The registration statement
of which this prospectus is a part has been filed to satisfy
these requirements of the Exchange and Registration Rights
Agreement. See "Description of the Notes - Exchange Offer;
Registration Rights."
Absence of a Public Market for the Notes............. The Original Notes have been and the Exchange Notes will be
issued in the form of one or more registered notes in global
form through The Depository Trust Company ("DTC"). There is
currently no established market for the Original Notes or the
Exchange Notes. Accordingly, there can be no assurance as to
the development or liquidity of any market for the Original
Notes or the Exchange Notes. The initial purchasers have
advised us that they currently intend to make a market in the
Original Notes and, if issued, the Exchange Notes. However,
they are not obligated to do so, and any market making with
respect to the Original Notes or the Exchange Notes may be
discontinued without notice. We do not intend to apply for a
listing of the Original Notes, or, if issued, the Exchange
Notes, on any securities exchange or any automated dealer
quotation system.
8
17
THE EXCHANGE OFFER
PURPOSES AND EFFECTS OF THE EXCHANGE OFFER
We sold the Original Notes on April 4, 2001 to the initial purchasers, who
resold the Original Notes to "qualified institutional buyers" (as defined in
Rule 144A under the Securities Act) in a private offering. In connection with
the sale of the Original Notes, we and the initial purchasers entered into an
Exchange and Registration Rights Agreement dated as of April 4, 2001 (the
"Registration Rights Agreement") pursuant to which we agreed to file with the
SEC a registration statement (the "Exchange Offer Registration Statement") with
respect to an offer to exchange the Original Notes for Exchange Notes within 60
days following the issuance of the Original Notes (the "Issue Date"). In
addition, we agreed to use our best efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act within 150
days after the Issue Date and to offer the Exchange Notes pursuant to the
Exchange Offer. A copy of the Registration Rights Agreement has been filed as an
exhibit to the registration statement of which this prospectus is a part.
This prospectus is a part of the Exchange Offer Registration Statement that we
have filed with the SEC. The Exchange Offer is being made pursuant to the
Registration Rights Agreement to satisfy our obligations thereunder. You are a
"holder" with respect to the Exchange Offer, if your Original Notes are
registered in your name on Apogent's books or if you have obtained a properly
completed bond power from the registered holder, or any person whose Original
Notes are held of record by the Depository. Upon completion of the Exchange
Offer we generally will not be required to file any registration statement to
register any outstanding Original Notes. If you do not tender your Original
Notes or your Original Notes are tendered but not accepted, you generally will
have to rely on exemptions to registration requirements under the securities
laws, including the Securities Act, if you wish to sell your Original Notes.
Based on interpretations by the staff of the SEC set forth in no-action letters
issued to third parties unrelated to Apogent, we believe that you may offer for
resale, resell or otherwise transfer the Exchange Notes issued to you, unless
you are an "affiliate" of Apogent within the meaning of Rule 405 under the
Securities Act and except as set forth in the next paragraph, without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that you acquire the Exchange Notes in the ordinary course of business
and you are not engaged, do not intend to engage, and have no arrangement or
understanding with any person to engage, in the distribution of the Exchange
Notes.
If you participate in the Exchange Offer for the purpose of distributing
securities in a manner not permitted by the SEC's interpretation, (a) the
position of the staff of the SEC enunciated in the interpretive letters is
inapplicable to you and (b) you are required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives Exchange Notes for its own
account as a result of market-making activities or other trading activities,
must acknowledge that it will deliver a prospectus in connection with any resale
of the Exchange Notes. See "Plan of Distribution."
The Exchange Offer is not being made to you, nor may you participate in the
Exchange Offer in any jurisdiction in which the Exchange Offer or the acceptance
thereof would not be in compliance with the securities laws of that
jurisdiction. Prior to the Exchange Offer, however, we will use our best efforts
to register or qualify the Exchange Notes for offer and sale under the
securities or laws of any jurisdictions necessary to permit completion of the
Exchange Offer and do any and all other acts or things necessary or advisable to
enable the offer and sale of the Exchange Notes in those jurisdictions.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus and in
the accompanying Letter of Transmittal, we will accept any and all Original
Notes validly tendered prior to 5:00 p.m., New York City time, on the Expiration
Date (as defined). We will issue up to $325 million aggregate principal amount
of Exchange Notes in exchange for a like principal amount of outstanding
Original Notes that are validly tendered and accepted in the Exchange Offer.
Subject to the conditions of the Exchange Offer described below, we will accept
any and all Original Notes that are validly tendered. You may tender some or all
of your Original Notes pursuant to the Exchange Offer.
The Exchange Offer is not conditioned upon any number of Original Notes being
tendered.
The form and terms of the Exchange Notes will be the same in all material
respects as the form and terms of the Original Notes,
9
18
except that the Exchange Notes will be registered under the Securities Act and
hence will not bear legends restricting their transfer. The Exchange Notes will
not represent additional indebtedness of Apogent and will be entitled to the
benefits of the Indenture, which is the same Indenture under which the Original
Notes were issued.
Interest on the Exchange Notes will accrue from the most recent date to which
interest has been paid on the Original Notes or, if no interest has been paid,
from April 4, 2001. Accordingly, registered holders of Exchange Notes on the
relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from April 4, 2001. Original Notes accepted for exchange will cease to accrue
interest from and after the date the Exchange Offer closes. If your Original
Notes are accepted for exchange, you will not receive any payment in respect of
interest on the Original Notes otherwise payable on any interest payment date
the record date for which occurs on or after completion of the Exchange Offer.
You do not have any appraisal or dissenters' rights under the Indenture in
connection with the Exchange Offer. We intend to conduct the Exchange Offer in
accordance with the provisions of the Registration Rights Agreement. If you do
not tender for exchange or if your tender is not accepted, the Original Notes
will remain outstanding and you will be entitled to the benefits of the
Indenture, but generally will not be entitled to any registration rights under
the Registration Rights Agreement.
We will be deemed to have accepted validly tendered Original Notes when, as and
if we have given oral or written notice of acceptance to the Exchange Agent for
the Exchange Offer. The Exchange Agent will act as agent for the tendering
holders for the purpose of receiving the Exchange Notes from Apogent.
If any tendered Original Notes not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise, we
will return the certificates (if any) for the unaccepted Original Notes to the
tendering holder of that note, without expense, as promptly as practicable after
the Expiration Date.
If you tender your Original Notes in the Exchange Offer, you will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letters of Transmittal, transfer taxes with respect to the exchange of
Original Notes pursuant to the Exchange Offer. Apogent will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "Fees and Expenses."
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, Apogent will not be
required to accept for exchange any Original Notes for any Exchange Notes
tendered and may terminate or amend the Exchange Offer as provided herein before
the acceptance of any Original Notes, if any of the following conditions exist:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency or regulatory authority with
respect to the Exchange Offer which, in Apogent's judgment, could
reasonably be expected to materially impair our ability to proceed with
the Exchange Offer or have a material adverse effect on the
contemplated benefits of the Exchange Offer; or
(b) there shall have been proposed, adopted or enacted any law,
statute, rule, regulation or order which, in Apogent's judgment, could
reasonably be expected to materially impair our ability to proceed with
the Exchange Offer or have a materially adverse effect on the
contemplated benefits of the Exchange Offer.
The foregoing conditions are for Apogent's sole benefit and may be asserted
regardless of the circumstances giving rise to the conditions or may be waived
by us in whole or in part at any time and from time to time in our sole
discretion. If we waive or amend the foregoing conditions, we will, if required
by applicable law, extend the Exchange Offer for a minimum of five business days
from the date that we first give notice, by public announcement or otherwise, of
such waiver of amendment, if the Exchange Offer would otherwise expire within
that five business-day period. Any determination by Apogent concerning the
events described above will be final and binding upon all parties.
10
19
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENTS
The Exchange Offer will expire at 5:00 p.m., New York City time, on August 15,
2001, unless extended (the "Expiration Date"). We reserve the right to extend
the Exchange Offer at our discretion, in which event the term "Expiration Date"
shall mean the time and date on which the Exchange Offer as so extended shall
expire. We will notify the Exchange Agent of any extension by oral or written
notice and will make a public announcement thereof, each prior to 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
We reserve the right, in our sole discretion, to:
o delay accepting for exchange any Original Notes for any
Exchange Notes or to extend or terminate the Exchange Offer
and not accept for exchange any Original Notes for any
Exchange Notes if any of the events set forth under the
caption "Conditions of the Exchange Offer" shall have occurred
and shall not have been waived by giving oral or written
notice of the delay or termination to the Exchange Agent, or
o amend the terms of the Exchange Offer in any manner.
Any delay in acceptance for exchange, extension or amendment will be followed as
promptly as practicable by a public announcement of the delay. If we amend the
Exchange Offer in a manner we determine constitutes a material change, we will
promptly disclose the amendment in a manner reasonably calculated to inform the
holders of Exchange Notes of the amendment and we will extend the Exchange Offer
for a period of five to ten business days, depending upon the significance of
the amendment and the manner of disclosure to the holders of the Exchange Notes,
if the Exchange Offer would otherwise expire during that five to ten
business-day period. The rights we have reserved in this paragraph are in
addition to our rights set forth under the caption "Conditions of the Exchange
Offer."
PROCEDURES FOR TENDERING
Only a holder of Original Notes may tender them in the Exchange Offer. To tender
in the Exchange Offer, you must complete, sign and date the Letter of
Transmittal, or a facsimile of it, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver the Letter
of Transmittal or the facsimile, together with the Original Notes (unless such
tender is being effected pursuant to the procedure for book-entry transfer
described below) and any other required documents, to the Exchange Agent prior
to 5:00 p.m., New York City time, on the Expiration Date.
Any financial institution that is a participant in the Depositary's Book-Entry
Transfer Facility system may make book-entry delivery of the Original Notes by
causing the Depositary to transfer the Original Notes into the Exchange Agent's
account in accordance with the Depositary's procedure for transfer. Although
delivery of Original Notes may be effected through book-entry transfer into the
Exchange Agent's account at the Depositary, the Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received or
confirmed by the Exchange Agent at its addresses set forth in "Exchange Agent"
below prior to 5:00 p.m., New York City time, on the Expiration Date. DELIVERY
OF DOCUMENTS TO THE DEPOSITARY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
If you tender an Original Note, and do not validly withdraw your tender, your
actions will constitute an agreement with us in accordance with the terms and
subject to the conditions set forth in this prospectus and in the Letter of
Transmittal.
The method of delivery of your Original Notes and the Letter of Transmittal and
all other required documents to the Exchange Agent is at your election and risk.
Instead of delivery by mail, we recommend that you use an overnight or hand
delivery service. In all cases, you should allow sufficient time to assure
delivery to the Exchange Agent before the Expiration Date. No Letter of
Transmittal or Original Note should be sent to Apogent; instead, they should be
sent to the Exchange Agent. You may request that your broker, dealer, commercial
bank, trust company or nominee effect the tender for you.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, must be guaranteed by an Eligible Institution (as defined below) unless the
Original Notes are being tendered (a) by a registered holder who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal, or (b) for the account of an
Eligible Institution. If signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, are
11
20
required to be guaranteed, the guarantee must be by a member of a signature
guarantee program within the meaning of Rule 17Ad-15 under the Exchange Act (an
"Eligible Institution").
If the Letter of Transmittal or any Original Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, those
persons should so indicate when signing, and unless waived by Apogent, provide
evidence satisfactory to Apogent of their authority to act must be submitted
with the Letter of Transmittal.
We will determine, in our sole discretion, all questions as to the validity,
form, eligibility (including time of receipt) and acceptance and withdrawal of
tendered Original Notes. Our determination will be final and binding. We reserve
the absolute right to reject any and all Original Notes not properly tendered or
any Original Notes our acceptance of which would, in the opinion of our counsel,
be unlawful. We also reserve the right to waive any defects, irregularities or
conditions of tender as to particular Original Notes. Apogent's interpretation
of the terms and conditions of the Exchange Offer (including the instructions in
the Letter of Transmittal) will be final and binding on all parties.
Unless waived, you must cure any defects or irregularities in connection with
tenders of your Original Notes within a time period we will determine. Although
we intend to request that the Exchange Agent notify you of defects or
irregularities with respect to your tender of Original Notes, neither Apogent,
the Exchange Agent nor any other person will incur any liability for failure to
give you any notification. Tenders of Original Notes will not be deemed to have
been made until any defects or irregularities have been cured or waived. Any
Original Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
In addition, we reserve the right in our sole discretion (subject to the
limitations contained in the Indenture) (a) to purchase or make offers for any
Original Notes that remain outstanding subsequent to the Expiration Date and (b)
to the extent permitted by applicable law, to purchase Original Notes in the
open market, in privately negotiated transactions or otherwise. The terms of any
purchases or offers could differ from the terms of the Exchange Offer.
By tendering, you will be representing to Apogent, among other things, that:
(1) you are obtaining the Exchange Notes in the ordinary course of
business whether or not you are the holder,
(2) you do not have an arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, and
(3) you are not an "affiliate," as defined in Rule 405 under the
Securities Act, of Apogent or, if you are an affiliate of Apogent, that
you will comply with the registration and prospectus delivery
requirements of the Securities Act, to the extent applicable.
If you are a broker-dealer that will receive Exchange Notes for your own account
in exchange for Original Notes that were acquired as a result of market-making
activities or other trading activities, you must acknowledge that you will
deliver a prospectus in connection with any resale of the Exchange Notes.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your Original Notes and (1) your Original Notes are not
immediately available, or (2) you cannot deliver your Original Notes and other
required documents to the Exchange Agent, or cannot complete the procedure for
book-entry transfer prior to the Expiration Date, you may effect a tender if:
(a) You make a tender through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from the
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth your name and address, the certificate number(s) of the
Original Notes (if available) and the principal amount of Original
Notes tendered together with a duly executed Letter of Transmittal (or
a facsimile thereof), stating that the
12
21
tender is being made thereby and guaranteeing that, within three
business days after the Expiration Date, the certificate(s)
representing the Original Notes to be tendered in proper form for
transfer (or a confirmation of a book-entry transfer into the Exchange
Agent's account at the Depositary of Original Notes delivered
electronically) and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) The certificate(s) representing all tendered Original Notes in
proper form for transfer (or confirmation of a book-entry transfer into
the Exchange Agent's account at the Depositary of Original Notes
delivered electronically) and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within three
business days after the Expiration Date.
Upon request to the Exchange Agent, you will be sent a Notice of Guaranteed
Delivery if you wish to tender your Original Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, you may withdraw any tenders of Original
Notes at any time prior to 5:00 p.m., New York City time, on the Expiration
Date, unless previously accepted for exchange.
For your withdrawal to be effective, the Exchange Agent must receive a written
or facsimile transmission notice of withdrawal at its address set forth herein
prior to 5:00 p.m., New York City time, on the Expiration Date, and prior to
acceptance for exchange thereof by Apogent. Any notice of withdrawal must:
(a) specify the name of the person having deposited the Original Notes
to be withdrawn (the "Depositor"),
(b) identify the Original Notes to be withdrawn (including the
certificate number or numbers, if applicable, and principal amount of
the Original Notes),
(c) be signed by the Depositor in the same manner as the original
signature on the Letter of Transmittal by which the Original Notes were
tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee
with respect to the Original Notes register the transfer of the
Original Notes into the name of the person withdrawing the tender, and
(d) specify the name in which any Original Notes are to be registered,
if different from that of the Depositor.
We will determine all questions as to the validity, form and eligibility
(including time of receipt) of withdrawal notices. This determination shall be
final and binding on all parties. Any Original Notes so withdrawn will be deemed
not to have been validly tendered for purposes of the Exchange Offer and no
Exchange Notes will be issued with respect to them unless the Original Notes so
withdrawn are validly re-tendered. Any Original Notes which have been tendered
but which are not accepted for exchange or which are withdrawn will be returned
to you, without cost, as soon as practicable after withdrawal, rejection of
tender or termination of the Exchange Offer. You may re-tender properly
withdrawn Original Notes by following one of the procedures described above
under "Procedures for Tender" at any time prior to the Expiration Date.
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be borne
by Apogent. The principal solicitation for tenders pursuant to the Exchange
Offer is being made by mail; however, additional solicitation may be made by
telegraph, telephone or in person by officers and regular employees of Apogent
and its affiliates.
Apogent has not retained any dealer-manager in connection with the Exchange
Offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the Exchange Offer. However, Apogent will pay the Exchange Agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith. Apogent may also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this prospectus,
Letters of Transmittal and related documents to the beneficial owners of the
Original Notes and in handling or forwarding tenders for exchange. Apogent will
pay the other expenses to be incurred in connection with the Exchange Offer,
including fees and expenses of the Trustee, accounting and legal fees and
printing costs.
13
22
Apogent will pay all transfer taxes, if any, applicable to the exchange of
Original Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or Original Notes for principal amounts not tendered
or accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the Original Notes tendered,
or if tendered Original Notes are registered in the name of any person other
than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Original Notes pursuant to the
Exchange Offer, then the amount of any transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of any taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of any transfer taxes will
be billed directly to the tendering holder.
RESALE OF EXCHANGE NOTES
Based on an interpretation by the staff of the SEC set forth in no-action
letters issued to third parties, we believe that, unless you are a broker-dealer
or an affiliate of Apogent, you may offer for resale, resell or otherwise
transfer the Exchange Notes issued to you pursuant to the Exchange Offer without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that you acquire the Exchange Notes in the ordinary
course business and you do not intend to participate and have no arrangement or
understanding with any person to participate in the distribution of the Exchange
Notes. If you tender in the Exchange Offer with the intention to participate, or
for the purpose of participating, in a distribution of the Exchange Notes, you
may not rely on the position of the staff of the SEC enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988) and Morgan Stanley & Co.,
Incorporated (available June 5, 1991), or similar no-action letters, but rather
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. In addition, any such
resale transaction should be covered by an effective registration statement
containing the selling security holders information required by Item 507 of
Regulation S-K of the Securities Act. Each broker-dealer that receives Exchange
Notes for its own account in exchange for Original Notes, where the Original
Notes were acquired by the broker-dealer as a result of market-making activities
or other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of the Exchange Notes. See "Plan of Distribution."
By tendering in the Exchange Offer, you will represent to Apogent that,
among other things:
(1) you are obtaining the Exchange Notes in the ordinary course of
business,
(2) you do not have an arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, and
(3) you acknowledge that if you participate in the Exchange Offer for
the purpose of distributing the Exchange Notes,
(a) you must, in the absence of an exemption therefrom, comply
with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale of the
Exchange Notes and cannot rely on the no-action letters
referenced above, and
(b) your failure to comply with those requirements could
result in you incurring liability under the Securities Act for
which your are not indemnified by Apogent. Further, by
tendering in the Exchange Offer, each holder that may be
deemed an "affiliate" (as defined under Rule 405 of the
Securities Act) of Apogent will represent to Apogent that the
holder understands and acknowledges that the Exchange Notes
may not be offered for resale, resold or otherwise transferred
by that holder without registration under the Securities Act
or an exemption therefrom.
As set forth above, affiliates of Apogent are not entitled to rely on the
foregoing interpretations of the staff of the SEC with respect to resales of the
Exchange Notes without compliance with the registration and prospectus delivery
requirements of the Securities Act.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of making of this Exchange Offer, Apogent will have fulfilled one of
its obligations under the Registration Rights Agreement. You generally will not
have any further registration rights under the Registration Rights Agreement or
14
23
otherwise if you do not tender your Original Notes. Accordingly, if you do not
exchange your Original Notes for Exchange Notes, you will continue to hold your
untendered Original Notes and will be entitled to all the rights and limitations
applicable thereto under the Indenture, except to the extent of those rights or
limitations that, by their terms, terminate or cease to have further
effectiveness as a result of the Exchange Offer (including the right to receive
additional interest, under certain circumstances, as Liquidated Damages).
The Original Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, you may only
resell the Original Notes
(a) to Apogent (upon redemption thereof or otherwise),
(b) pursuant to an effective registration statement under the
Securities Act,
(c) so long as the Original Notes are eligible for resale pursuant to
Rule 144A, to a qualified institutional buyer within the meaning of
Rule 144A under the Securities Act in a transaction meeting the
requirements of 144A,
(d) outside the United States to a foreign person pursuant to the
exemption from the registration requirements of the Securities Act
provided by Regulation S thereunder,
(e) to an institutional accredited investor that, prior to such
transfer, furnishes to the Trustee a signed letter containing certain
representations and agreements relating to the restrictions on transfer
of the Original Notes evidenced thereby (the form of which letter can
be obtained from the Trustee), or
(f) pursuant to another available exemption from the registration
requirements of the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States.
Accordingly, if any Original Notes are tendered and accepted in the Exchange
Offer, the trading market for the untendered Original Notes could be adversely
affected. See "Termination of Certain Rights."
TERMINATION OF CERTAIN RIGHTS
You will not be entitled to certain rights under the Registration Rights
Agreement following the completion of the Exchange Offer. The rights that
generally will terminate are the rights (a) to have Apogent file with the SEC
and use its best efforts to have declared effective a shelf registration
statement to cover resales of the Original Notes by the holders thereof and (b)
to receive additional interest as Liquidated Damages if the registration
statement of which this prospectus is a part or the shelf registration statement
are not filed with, or declared effective by, the SEC within certain specified
time periods or the Exchange Offer is not consummated within a specified time
period.
OTHER
Participation in the Exchange Offer is voluntary and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your decision on what action to take.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this prospectus. If given or made, that information or those representations
should not be relied upon as having been authorized by us. Neither the delivery
of this prospectus nor any exchange made pursuant to the Exchange Offer, will,
under any circumstances, create any implication that there has been no change in
the affairs of Apogent or its subsidiaries since the respective dates as of
which the information contained in this prospectus is given. The Exchange Offer
is not being made to (nor will tender be accepted from or on behalf of) holders
of Original Notes in any jurisdiction in which the making of the Exchange Offer
or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, Apogent intends to take any action it deems necessary to
make the Exchange Offer in any jurisdiction and to extend the Exchange Offer to
holders of Original Notes in that jurisdiction.
Apogent may in the future seek to acquire Original Notes in open market or
privately negotiated transactions, through subsequent exchange offers or
otherwise. We have no present plans to acquire any Original Notes that are not
tendered in the Exchange Offer or to file a registration statement to permit
resales of any Original Notes except to the extent that we may be required to do
so under the Registration Rights Agreement.
15
24
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Original
Notes, as reflected in our accounting records on the date of the exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes upon
the completion of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the Exchange Notes under generally accepted
accounting principles.
EXCHANGE AGENT
The Bank of New York, New York, New York has been appointed as Exchange Agent
for the Exchange Offer. All correspondence in connection with the Exchange Offer
and the Letter of Transmittal should be addressed to the Exchange Agent, as
follows:
By registered or certified mail:
The Bank of New York, Reorganization Unit
101 Barcley Street, 7E
New York, NY 10286
Attn: Mr. Duong Nguyen
By Hand or Overnight Courier Facsimile Transmission:
The Bank of New York (212) 815-6339
101 Barcley Street (For Eligible Institutions Only)
Corporate Trust Services Window
Ground Level Confirm by Telephone:
New York, NY 10286 (212) 815-3687
Attn: Mr. Duong Nguyen
Requests for additional copies of this prospectus or the Letter of Transmittal
should be directed to the Exchange Agent.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of our obligations
under the Purchase Agreement and the Registration Rights Agreement. We will not
receive any cash proceeds from the issuance of the Exchange Notes offered in
this prospectus. In consideration for issuing the Exchange Notes contemplated by
this prospectus, we will receive the Original Notes in like principal amount,
the form and terms of which are substantially the same as the form and terms of
the Exchange Notes (which replace the Original Notes, except as otherwise
described herein, and which represent the same indebtedness). The Original Notes
surrendered in exchange for the Exchange Notes will be retired and canceled and
cannot be reissued. Accordingly, the issuance of the Exchange Notes will not
result in any increase or decrease in our indebtedness.
We received approximately $321 million of net proceeds from the
offering of the Original Notes (after deducting the offering discount, the
initial purchasers' discount and the estimated offering expenses). We used the
net proceeds from the offering to fund the repayment of our term loan facility,
which bore a variable rate of interest based on several index rates (6.49% per
annum at March 15, 2001) and matured in 2005, and for repayment of a portion of
our revolving credit facility. Each of the initial purchasers, or an affiliate
thereof, was a lender under the term loan facility.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our historical ratio of earnings to fixed charges
for Apogent for the periods indicated:
YEARS ENDED SEPTEMBER 30,
---------------------------------------- SIX MONTHS ENDED
2000 1999 1998 1997 1996 MARCH 31, 2001
---- ---- ---- ---- ---- ----------------
Ratio of earnings to fixed charges 3.8 4.0 3.5 3.8 3.1 4.3
For this purpose, "earnings" consists of income from continuing operations
before income taxes and fixed charges (exclusive of capitalized, amortized
premiums related to indebtedness, an estimate of interest within rental expense
and preferred stock dividends). "Fixed charges" consists of interest expense and
capitalized, amortized premiums related to indebtedness and an estimate of
interest within rental expense. Apogent did not pay any preferred stock
dividends during the periods indicated.
16
25
CAPITALIZATION
The following table sets forth the consolidated capitalization of Apogent as of
March 31, 2001 on a historical basis and as adjusted to give effect to the sale
of the Original Notes and the application of the proceeds therefrom. This table
should be read in conjunction with the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and notes thereto appearing elsewhere in this prospectus.
(In thousands except shares and per share data)
MARCH 31, 2001
------------------------------
AS ADJUSTED FOR
ACTUAL ORIGINAL NOTES(1)
----------- -----------------
Cash and cash equivalents $ 12,113 $ 12,113
=========== ===========
Total Debt (2):
The Apogent Credit Facilities
Term loan facility maturing December 1, 2005 $ 300,000 $ --
Revolving credit facility 257,300 236,269
Other 78,492 78,492
The notes (3) -- 323,531
----------- -----------
Total debt 635,792 638,292
Shareholders' equity:
Preferred Stock, $0.01 par value; authorized 20,000,000 shares; none issued
Common Stock, $0.01 par value; authorized 250,000,000 shares;
105,406,437 issued 1,054 1,054
Equity Rights, 50 rights at $1.09 per right -- --
Additional paid-in capital 248,097 248,097
Retained earnings 571,509 571,509
Accumulated other comprehensive income (37,411) (37,411)
Treasury common stock, 220 shares at cost -- --
----------- -----------
Total shareholders' equity 783,249 783,249
----------- -----------
Total capitalization $ 1,419,041 $ 1,421,541
=========== ===========
(1) Gives effect to the issuance of the Original Notes (net of the
estimated fees and expenses related thereto) and the application of the
proceeds therefrom. Apogent has estimated note issuance expenses of
$2,500.
(2) Excludes securities lending agreement.
(3) $325,000 face amount less discount of $1,469.
17
26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The subsidiaries of Apogent are leading manufacturers and providers of
value-added products under four business segments - labware and life sciences,
clinical and industrial, diagnostics and microbiology, and laboratory equipment.
Our fiscal year ends on September 30 and, accordingly, all references to
quarters refer to our fiscal quarters. The quarters ended March 31, 2000 and
2001 are Apogent's first quarters of fiscal 2000 and 2001, respectively. We
encourage you to review our consolidated financial statements, including the
notes thereto, copies of which are included herein.
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 2001
COMPARED TO THE QUARTER ENDED MARCH 31, 2000
NET SALES.
DOLLAR PERCENT
Net Sales: (Dollars in thousands) 2001 2000 CHANGE CHANGE
-------- -------- -------- -------
Labware and Life Sciences $ 97,665 $ 85,584 $ 12,081 14.1%
Clinical and Industrial 61,762 54,666 7,096 13.0%
Diagnostics and Microbiology 59,801 53,179 6,622 12.5%
Laboratory Equipment 25,876 24,645 1,231 5.0%
-------- -------- --------
Total Net Sales $245,104 $218,074 $ 27,030 12.4%
======== ======== ========
Overall Company. Net sales for the second quarter of fiscal 2001 increased by
$27.0 million or 12.4% from the corresponding fiscal 2000 quarter.
Labware and Life Sciences. Increased net sales in the labware and life sciences
segment resulted primarily from: (a) net sales of products of acquired companies
(approximately $5.5 million), (b) increased net sales of new products
(approximately $4.5 million), (c) price increases (approximately $3.5 million),
and (d) increased net sales of existing products (approximately $0.4 million).
Net sales were partially reduced by foreign currency fluctuations (approximately
$1.6 million).
Clinical and Industrial. Increased net sales in the clinical and industrial
segment resulted primarily from: (a) net sales of products of acquired companies
(approximately $7.4 million), (b) increased net sales of new products
(approximately $0.5 million), and (c) price increases (approximately $0.3
million). Net sales were partially reduced by: (a) foreign currency fluctuations
(approximately $0.5 million) and (b) decreased net sales of existing products
(approximately $0.5 million).
Diagnostics and Microbiology. Increased net sales in the diagnostics and
microbiology segment resulted primarily from: (a) net sales of products of
acquired companies (approximately $5.1 million), (b) increased net sales of new
products (approximately $0.9 million), (c) price increases (approximately $0.4
million), and (d) increased net sales of existing products (approximately $0.4
million). Net sales were partially reduced by foreign currency fluctuations
(approximately $0.2 million).
Laboratory Equipment. Increased net sales in the laboratory equipment segment
resulted primarily from: (a) increased net sales of new products (approximately
$1.7 million) and (b) price increases (approximately $0.6 million). Net sales
were partially reduced by: (a) decreased net sales of existing products
(approximately $0.9 million) and (b) foreign currency fluctuations
(approximately $0.1 million).
18
27
GROSS PROFIT.
PERCENT OF PERCENT OF DOLLAR PERCENT
Gross Profit: (Dollars in thousands) 2001 SALES 2000 SALES CHANGE CHANGE
-------- --------- -------- ---------- -------- --------
Labware and Life Sciences $ 51,848 21.2% $ 45,166 20.7% $ 6,682 14.8%
Clinical and Industrial 25,552 10.4% 23,264 10.7% 2,288 9.8%
Diagnostics and Microbiology 31,985 13.0% 28,434 13.0% 3,551 12.5%
Laboratory Equipment 11,128 4.5% 10,301 4.7% 827 8.0%
-------- -------- --------
Total Gross Profit $120,513 49.2% $107,165 49.1% $ 13,348 12.5%
======== ======== ========
Overall Company. Gross profit from the quarter ended March 31, 2001 increased by
$13.3 million or 12.5% from the corresponding fiscal 2000 period.
Labware and Life Sciences. Increased gross profit in the labware and life
sciences segment resulted primarily from: (a) price increases (approximately
$3.5 million), (b) the effects of acquired companies (approximately $3.3
million), (c) the effects of new products (approximately $1.9 million), and (d)
increased volume (approximately $0.9 million). Gross profit was partially
reduced by: (a) product mix (approximately $1.6 million), (b) foreign currency
fluctuations (approximately $0.8 million), and (c) inventory adjustments
(approximately $0.4 million).
Clinical and Industrial. Increased gross profit in the clinical and industrial
segment resulted primarily from: (a) the effects of acquired companies
(approximately $2.2 million), (b) decreased manufacturing overhead
(approximately $1.5 million), (c) price increases (approximately $0.3 million),
(d) product mix (approximately $0.2 million), and (e) the effects of new
products (approximately $0.1 million). Gross profit was partially reduced by:
(a) reduced volume (approximately $1.6 million) and (b) foreign currency
fluctuations (approximately $0.4 million).
Diagnostics and Microbiology. Increased gross profit in the diagnostics and
microbiology segment resulted primarily from: (a) the effects of acquired
companies (approximately $3.7 million), (b) product mix (approximately $1.8
million), (c) increased volume (approximately $1.0 million), (d) price increases
(approximately $0.4 million), and (e) the effects of new products (approximately
$0.4 million). Gross profit was partially reduced by: (a) increased factory
overhead (approximately $2.8 million) and (b) inventory adjustments
(approximately $0.8 million).
Laboratory Equipment. Increased gross profit in the laboratory equipment segment
resulted primarily from: (a) the effects of new products (approximately $0.8
million) and (b) price increases (approximately $0.6 million). Gross profit was
partially reduced by: (a) decreased volume (approximately $0.5 million) and (b)
foreign currency fluctuations (approximately $0.1 million).
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.
Selling General and
Administrative Expenses: DOLLAR PERCENT
(Dollars in thousands) 2001 2000 CHANGE CHANGE
------- ------- ------- -------
Labware and Life Sciences $27,113 $23,773 $ 3,340 14.0%
Clinical and Industrial 11,626 9,248 2,378 25.7%
Diagnostics and Microbiology 16,635 14,022 2,613 18.6%
Laboratory Equipment 5,758 5,292 466 8.8%
Corporate Office 2,548 1,869 679 36.3%
------- ------- -------
Total Selling, General and
Administrative Expenses $63,680 $54,204 $ 9,476 17.5%
======= ======= =======
Overall Company. Selling, general and administrative expenses for the quarter
ended March 31, 2001 increased by $9.5 million or 17.5% from the corresponding
fiscal 2000 quarter. Selling, general and administrative expenses at the
corporate offices increased by $0.7 million over the second fiscal quarter of
2001 as compared to the corresponding fiscal 2000 quarter. Corporate office
expenses increased primarily due to non-recurring special charges relating to
the transition of the corporate headquarters from Milwaukee, Wisconsin to
Portsmouth, New Hampshire.
Labware and Life Sciences. Increased selling, general and administrative
expenses in the labware and life sciences segment resulted primarily from: (a)
acquired businesses (approximately $1.9 million), (b) general and administrative
expenses (approximately $0.7 million), (c) marketing expenses (approximately
$0.5 million), and (d) research and development expense
19
28
(approximately $0.2 million). Selling, general and administrative expenses were
partially reduced by foreign currency fluctuations (approximately $0.4 million).
Clinical and Industrial. Increased selling, general and administrative expenses
in the clinical and industrial segment resulted primarily from: (a) acquired
businesses (approximately $1.1 million), (b) marketing expenses (approximately
$0.9 million), (c) increased amortization of intangibles primarily as a result
of acquisitions (approximately $0.3 million), and (d) research and development
expense (approximately $0.1 million).
Diagnostics and Microbiology. Increased selling, general and administrative
expenses in the diagnostic and microbiology segment resulted primarily from:
(a) marketing expenses (approximately $1.3 million), (b) increased amortization
of intangibles primarily as a result of acquisitions (approximately $1.2
million), and (c) general and administrative expenses (approximately $0.6
million). Selling, general and administrative expenses were partially reduced
by: (a) research and development expense (approximately $0.2 million) and (b)
foreign currency fluctuations (approximately $0.1 million).
Laboratory Equipment. Increased selling, general and administrative expenses in
the laboratory equipment segment resulted primarily from: (a) general and
administrative expenses (approximately $0.3 million) and (b) research and
development expenses (approximately $0.2 million). Selling, general and
administrative expenses were partially reduced by foreign currency fluctuations
(approximately $0.1 million).
SPECIAL CHARGES.
As noted above our results for the quarter ended March 31, 2001 include a charge
of approximately $0.6 million ($0.4 million after tax) relating to adjustments
made to the 2000 restructuring reserve, consisting of additional severance. This
charge is included in the corporate selling, general and administrative
expenses.
OPERATING INCOME.
DOLLAR PERCENT
Operating Income: (Dollars in thousands) 2001 2000 CHANGE CHANGE
-------- -------- --------- --------
Labware and Life Sciences $ 24,734 $ 21,393 $ 3,341 15.6 %
Clinical and Industrial 13,926 14,016 (90) (0.6)%
Diagnostics and Microbiology 15,350 14,412 938 6.5 %
Laboratory Equipment 5,371 5,009 362 7.2 %
Corporate Office (2,548) (1,869) (679) 36.3 %
-------- -------- --------
Total Operating Income $ 56,833 $ 52,961 $ 3,872 7.3 %
======== ======== ========
As a result of the foregoing, operating income in the second quarter of fiscal
2001 increased by 7.3% of $3.9 million over operating income in the
corresponding quarter of fiscal 2000.
INTEREST EXPENSE.
Interest expense for the second quarter of fiscal 2001 decreased by $0.1 million
to $11.9 million from the corresponding quarter of fiscal 2000. Although
interest rates increased as compared to corresponding period in fiscal 2000, the
related expense decreased as a result of lower debt levels for the fiscal 2001
quarter.
OTHER INCOME.
Other income in the second quarter of fiscal 2001 was $5.3 million, an increase
of $5.1 million over the corresponding 2000 quarter. The increase resulted
primarily from the gain on the sale of an asset of $4.1 million during the
second quarter of fiscal 2001.
INCOME TAXES.
Taxes on income from continuing operations in the second quarter of fiscal 2001
were $20.1 million, an increase of $4.2 million from the corresponding 2000
quarter. The increase resulted primarily from increased taxable earnings.
INCOME FROM CONTINUING OPERATIONS.
As a result of the foregoing, the Company had net income from continuing
operations of $30.2 million for the second quarter of fiscal 2001, as compared
to $25.3 million in the corresponding 2000 period, representing an increase of
19.1%.
20
29
DISCONTINUED OPERATIONS.
Losses from discontinued operations were $0.8 million in the second quarter of
fiscal 2001 as compared to income of $13.6 million (net of income tax of $9.2
million) in the second fiscal quarter of 2000. The 2001 loss from discontinued
operations resulted from transaction expenses related to the spin-off of SDS
which occurred on December 11, 2000.
NET INCOME.
As a result of the foregoing, we had net income of $29.4 million in the second
quarter of fiscal 2001, as compared to net income of $39.0 million in the
corresponding 2000 period.
DEPRECIATION AND AMORTIZATION EXPENSE.
Depreciation and amortization expense is allocated among cost of sales, selling,
general and administrative expenses and other expense. Depreciation expense and
amortization expense increased $3.2 million in the second quarter of fiscal 2001
due to additional depreciation and amortization from goodwill and intangibles
recorded from the various acquisitions as well as routine operating capital
expenditures.
SIX MONTHS ENDED MARCH 31, 2001
COMPARED TO SIX MONTHS ENDED MARCH 31, 2000
NET SALES.
DOLLAR PERCENT
Net Sales: (Dollars in thousands) 2001 2000 CHANGE CHANGE
-------- -------- -------- --------
Labware and Life Sciences $182,528 $165,482 $ 17,046 10.3%
Clinical and Industrial 118,270 106,577 11,693 11.0%
Diagnostics and Microbiology 114,313 103,795 10,518 10.1%
Laboratory Equipment 50,751 47,103 3,648 7.7%
-------- -------- --------
Total Net Sales $465,862 $422,957 $ 42,905 10.1%
======== ======== ========
Overall Company. Net sales for the six months ended March 31, 2001 increased by
$42.9 million or 10.1% over the corresponding period in fiscal 2000.
Labware and Life Sciences. Increased net sales in the labware and life sciences
segment resulted primarily from: (a) increased net sales of new products
(approximately $8.1 million), (b) net sales of products of acquired companies
(approximately $7.8 million), (c) price increases (approximately $4.2 million),
and (d) increased net sales of existing products (approximately $0.8 million).
Net sales were partially reduced by foreign currency fluctuations (approximately
$3.7 million).
Clinical and Industrial. Increased net sales in the clinical and industrial
segment resulted primarily from: (a) net sales of products of acquired companies
(approximately $13.2 million), (b) increased net sales of new products
(approximately $1.1 million), and (c) price increases (approximately $0.7
million). Net sales were partially reduced by: (a) foreign currency fluctuations
(approximately $1.9 million) and (b) decreased net sales of existing products
(approximately $1.3 million).
Diagnostic and Microbiology. Increased net sales in the diagnostics and
microbiology segment resulted primarily from: (a) net sales of products of
acquired companies (approximately $11.1 million), (b) increased net sales of new
products (approximately $1.4 million), and (c) price increases (approximately
$0.8 million). Net sales were partially reduced by: (a) decreased net sales of
existing products (approximately $2.3 million) and (b) foreign currency
fluctuations (approximately $0.5 million).
Laboratory Equipment. Increased net sales in the laboratory equipment segment
resulted primarily from: (a) increased net sales of new products (approximately
$2.4 million), (b) price increases (approximately $1.2 million), and (c)
increased net sales of existing products (approximately $0.4 million). Net sales
were partially reduced by foreign currency fluctuations (approximately $0.3
million).
21
30
GROSS PROFIT.
PERCENT OF PERCENT OF DOLLAR PERCENT
Gross Profit: (Dollars in thousands) 2001 SALES 2000 SALES CHANGE CHANGE
-------- ---------- -------- ---------- -------- --------
Labware and Life Sciences $ 95,097 20.4% $ 86,023 20.3% $ 9,074 10.5%
Clinical and Industrial 48,786 10.5% 44,910 10.6% 3,876 8.6%
Diagnostics and Microbiology 60,820 13.1% 56,433 13.3% 4,387 7.8%
Laboratory Equipment 21,763 4.7% 19,890 4.7% 1,873 9.4%
-------- -------- --------
Total Gross Profit $226,466 48.6% $207,256 49.0% $ 19,210 9.3%
======== ======== ========
Overall Company. Gross profit for the six months ended March 31, 2001 increased
by $19.2 million or 9.3% over the corresponding fiscal 2000 period.
Labware and Life Sciences. Increased gross profit in the labware and life
sciences segment resulted primarily from: (a) the effects of acquired companies
(approximately $5.3 million), (b) price increases (approximately $4.3 million),
(c) the effects of new products (approximately $3.8 million), and (d) increased
volume (approximately $2.2 million). Gross profit was partially reduced by: (a)
product mix (approximately $4.1 million), (b) unfavorable foreign currency
fluctuations (approximately $1.6 million), (c) increased manufacturing overhead
(approximately $0.6 million) , and (d) inventory adjustments (approximately $0.1
million).
Clinical and Industrial. Increased gross profit in the clinical and industrial
segment resulted primarily from: (a) the effects of acquired companies
(approximately $3.9 million), (b) decreased manufacturing overhead
(approximately $1.5 million), (c) price increases (approximately $0.7 million),
and (d) the effects of new products (approximately $0.4 million). Gross profit
was partially reduced by: (a) reduced volume (approximately $1.8 million) and
(b) unfavorable foreign currency fluctuations (approximately $0.9 million).
Diagnostics and Microbiology. Increased gross profit in the diagnostics and
microbiology segment resulted primarily from: (a) the effects of acquired
companies (approximately $7.9 million), (b) product mix (approximately $3.2
million), (c) price increases (approximately $0.8 million), and (d) the effects
of new products (approximately $0.4 million). Gross profit was partially reduced
by: (a) increased factory overhead (approximately $4.3 million), (b) inventory
adjustments (approximately $2.6 million), (c) decreased volume (approximately
$1.0 million), and (d) foreign currency fluctuations (approximately $0.1
million).
Laboratory Equipment. Increased gross profit in the laboratory equipment segment
resulted primarily from: (a) price increases (approximately $1.2 million), (b)
the effects of new products (approximately $1.0 million), and (c) increased
volume (approximately $0.2 million). Gross profit was partially reduced by: (a)
foreign currency fluctuations (approximately $0.2 million), (b) an increase in
manufacturing overhead (approximately $0.2 million), and (c) inventory
adjustments (approximately $0.1 million).
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.
Selling General and
Administrative Expenses: DOLLAR PERCENT
(Dollars in thousands) 2001 2000 CHANGE CHANGE
-------- -------- -------- --------
Labware and Life Sciences $ 51,106 $ 46,978 $ 4,128 8.8%
Clinical and Industrial 21,597 18,195 3,402 18.7%
Diagnostics and Microbiology 31,742 28,862 2,880 10.0%
Laboratory Equipment 10,715 10,362 353 3.4%
Corporate Office 4,636 3,807 829 21.8%
-------- -------- --------
Total Selling, General and
Administrative Expenses $119,796 $108,204 $ 11,592 10.7%
======== ======== ========
Overall Company. Selling, general and administrative expenses for the six months
ended March 31, 2001 increased by $11.5 million or 10.6% from the corresponding
fiscal 2000 period. Selling, general and administrative expenses at the
corporate offices increased by $0.8 million over the six months ended March 31,
2001 as compared to the corresponding fiscal 2000 period.
22
31
Corporate office expenses increased primarily due to non-recurring special
charges relating to the transition of the corporate headquarters from Milwaukee,
Wisconsin to Portsmouth, New Hampshire.
Labware and Life Sciences. Increased selling, general and administrative
expenses in the labware and life sciences segment resulted primarily from: (a)
acquired businesses (approximately $3.3 million), (b) general and administrative
expenses (approximately $0.1 million, (c) increased amortization of intangibles
primarily as a result of acquisitions (approximately $0.9 million), and (d)
research and development expense (approximately $0.2 million). Selling, general
and administrative expenses were partially reduced by: (a) foreign currency
fluctuations (approximately $0.3 million) and (b) marketing expense
(approximately $0.1 million).
Clinical and Industrial. Increased selling, general and administrative expenses
in the clinical and industrial segment resulted primarily from: (a) acquired
business (approximately $1.7 million), (b) marketing expenses (approximately
$1.2 million), (c) increased amortization of intangibles primarily as a result
of acquisitions (approximately $0.6 million), and (d) research and development
expenses (approximately $0.1 million). Selling, general and administrative
expenses were partially reduced by foreign currency fluctuations (approximately
$0.3 million).
Diagnostics and Microbiology. Increased selling, general and administrative
expenses in the diagnostic and microbiology segment resulted primarily from: (a)
increased amortization of intangibles primarily as a result of acquisitions
(approximately $2.1 million), (b) marketing expenses (approximately $1.1
million), (c) general and administrative expenses (approximately $0.5 million),
and (d) acquired businesses (approximately $0.1 million). Selling, general and
administrative expenses were partially reduced by: (a) research and development
expense (approximately $0.7 million) and (b) foreign currency fluctuations
(approximately $0.2 million).
Laboratory Equipment. Increased selling, general and administrative expenses in
the laboratory equipment segment resulted primarily from: (a) research and
development expenses (approximately $0.4 million) and (b) general and
administrative expenses (approximately $0.1 million). Selling, general and
administrative expenses were partially reduced by foreign currency fluctuations
(approximately $0.1 million).
SPECIAL CHARGES.
As noted above our results for the six-months ended March 31, 2001 include a
charge of approximately $0.6 million ($0.4 million after tax) relating to
adjustments made to the 2000 restructuring reserve, consisting of additional
severance. This charge is included in the corporate selling, general and
administrative expenses.
OPERATING INCOME.
DOLLAR PERCENT
Operating Income: (Dollars in thousands) 2001 2000 CHANGE CHANGE
--------- --------- -------- ---------
Labware and Life Sciences $ 43,990 $ 39,045 $ 4,945 12.7%
Clinical and Industrial 27,189 26,715 474 1.8%
Diagnostics and Microbiology 29,078 27,571 1,507 5.5%
Laboratory Equipment 11,049 9,528 1,521 16.0%
Corporate Office (4,636) (3,807) (829) 21.8%
--------- --------- ---------
Total Operating Income $ 106,670 $ 99,052 $ 7,618 7.7%
========= ========= =========
As a result of the foregoing, operating income in the first six months of fiscal
2001 increased by $7.6 million or 7.7% over the corresponding period in fiscal
2000.
INTEREST EXPENSE.
Interest expense was $24.4 million in the first six months of fiscal 2001, an
increase of $0.5 from the corresponding fiscal 2000 period. The increase
resulted primarily from an increase in interest rates partially offset by lower
debt levels for the six months ended 2001 as compared to the corresponding
fiscal 2000 period.
23
32
OTHER INCOME.
Other income in the first six months of fiscal 2001 was $5.5 million, an
increase of $5.1 million over the corresponding 2000 period. The increase
resulted primarily from the gain on the sale of an asset of $4.1 million during
the second quarter of fiscal 2001.
INCOME TAXES.
Taxes on income from continuing operations in the first six months of fiscal
2001 were $34.9 million, an increase of $5.7 million from the corresponding
fiscal 2000 period. The increase resulted primarily from increased taxable
earnings.
INCOME FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY ITEM
As a result of the foregoing, we had income from continuing operations of $52.4
million in the first six months of fiscal 2001 as compared to $45.8 million in
the corresponding fiscal 2000 period.
DISCONTINUED OPERATIONS.
Losses from discontinued operations were $11.8 million (net of income taxes of
$0.4 million) in the first six months of fiscal 2001, as compared to income of
$23.6 million (net of income tax $16.0 million) in the first six months of
fiscal 2000. The 2001 loss from discontinued operations resulted from
transaction expenses relating to the spin-off of approximately $12.4 million
offset by the operating results of SDS (through December 11, 2000) of $0.6
million. On December 11, 2000 we completed the spin-off of SDS.
EXTRAORDINARY ITEM.
As a result of the December, 2000 debt refinancing, we wrote off deferred
financing costs of approximately $1.2 million that related to prior debt
agreements and recorded an extraordinary item of $0.7 million, net of income
taxes.
NET INCOME.
As a result of the foregoing, the Company had net income of $39.8 million for
the first six months of fiscal 2001, as compared to net income of $69.4 million
for the corresponding fiscal 2000 period.
DEPRECIATION AND AMORTIZATION.
Depreciation and amortization expense is allocated among cost of sales, selling,
general and administrative expenses and other expense. Depreciation expense and
amortization expense increased $5.9 million in the first six months of fiscal
2001 due to additional depreciation and amortization from goodwill and
intangibles recorded from the various acquisitions as well as routine operating
capital expenditures.
YEAR ENDED SEPTEMBER 30, 2000
COMPARED TO THE YEAR ENDED SEPTEMBER 30, 1999
NET SALES.
DOLLAR PERCENT
Net Sales: (Dollars in thousands) 2000 1999 CHANGE CHANGE
--------- --------- --------- ---------
Labware and Life Sciences $ 347,437 $ 268,788 $ 78,649 29.3%
Clinical and Industrial 208,686 176,059 32,627 18.5%
Diagnostics and Microbiology 210,147 171,647 38,500 22.4%
Laboratory Equipment 97,305 98,543 (1,238) (1.3)%
--------- --------- ---------
Total Net Sales $ 863,575 $ 715,037 $ 148,538 20.8%
========= ========= =========
Overall Company. Net sales for the year ended September 30, 2000 increased by
$148.5 million or 20.8% from 1999.
24
33
Labware and Life Sciences. Increased net sales in the labware and life sciences
segment resulted primarily from: (a) net sales of products of acquired companies
(approximately $65.4 million), (b) increased net sales of existing products
(approximately $8.9 million), (c) increased net sales of new products
(approximately $4.1 million) and (d) price increases (approximately $3.0
million). Increased net sales were partially offset by foreign currency
fluctuations (approximately $2.7 million).
Clinical and Industrial. Increased net sales in the clinical and industrial
segment resulted primarily from: (a) net sales of products of acquired companies
(approximately $30.0 million), (b) price increases (approximately $4.6 million)
and (c) increased net sales of existing products (approximately $0.5 million).
Increased net sales were partially offset by foreign currency fluctuations
(approximately $2.5 million).
Diagnostics and Microbiology. Increased net sales in the diagnostics and
microbiology segment resulted primarily from: (a) net sales of products of
acquired companies (approximately $30.1 million), (b) increased net sales of new
products (approximately $3.9 million), (c) increased net sales of existing
products (approximately $3.4 million) and (d) price increases (approximately
$1.7 million). Increased net sales were partially offset by foreign currency
fluctuations (approximately $0.6 million).
Laboratory Equipment. Decreased net sales in the laboratory equipment segment
resulted primarily from: (a) decreased net sales of existing products
(approximately $4.4 million) and (b) foreign currency fluctuations
(approximately $0.2 million). Decreased net sales were partially offset by: (a)
net sales of new products (approximately $2.1 million), (b) price increases
(approximately $1.1 million) and (c) net sales of products of acquired companies
(approximately $0.1 million).
GROSS PROFIT.
PERCENT OF PERCENT OF DOLLAR PERCENT
Gross Profit: (Dollars in thousands) 2000 SALES 1999 SALES CHANGE CHANGE
-------- ---------- -------- ---------- -------- --------
Labware and Life Sciences $179,460 51.7% $136,004 50.6% $ 43,456 32.0%
Clinical and Industrial 89,667 43.0% 75,407 42.8% 14,260 18.9%
Diagnostics and Microbiology 111,651 53.1% 89,458 52.1% 22,193 24.8%
Laboratory Equipment 41,352 42.5% 41,089 41.7% 263 0.6%
-------- -------- --------
Total Gross Profit $422,130 48.9% $341,958 47.8% $ 80,172 23.4%
======== ======== ========
Overall Company. Gross profit for the year ended September 30, 2000 increased by
$80.2 million or 23.4% from 1999.
Labware and Life Sciences. Increased gross profit in the labware and life
sciences segment resulted primarily from: (a) the effects of acquired companies
(approximately $36.2 million), (b) increased volume (approximately $7.2
million), (c) a favorable product mix (approximately $4.6 million), (d) price
increases (approximately $3.0 million), (e) favorable foreign currency
fluctuations (approximately $1.0 million) and (f) inventory adjustments
(approximately $1.1 million). Gross profit was partially reduced by: (a)
increased manufacturing overhead (approximately $7.8 million) and (b) the
non-recurring 2000 Special Charges (as defined below under the heading "Special
Charges") (approximately $1.8 million).
Clinical and Industrial. Increased gross profit in the clinical and industrial
segment resulted primarily from: (a) the effects of acquired companies
(approximately $11.3 million), (b) a favorable product mix (approximately $2.1
million), (c) price increases (approximately $4.6 million), (d) increased volume
(approximately $0.9 million) and (e) inventory adjustments (approximately $0.4
million). Gross profit was partially reduced by: (a) increased manufacturing
overhead (approximately $4.8 million) and (b) foreign currency fluctuations
(approximately $0.3 million).
Diagnostics and Microbiology. Increased gross profit in the diagnostics and
microbiology segment resulted primarily from: (a) the effects of acquired
companies (approximately $19.9 million), (b) a favorable product mix
(approximately $5.3 million), (c) price increases (approximately $1.7 million)
and (d) increased volume (approximately $0.4 million). Gross profit was
partially reduced by: (a) increased manufacturing overhead (approximately $2.5
million), (b) the non-recurring 2000 Special Charges (approximately $2.4
million) and (c) foreign currency fluctuations (approximately $0.3 million).
Laboratory Equipment. Increased gross profit in the laboratory equipment segment
resulted primarily from: (a) price increases (approximately $1.1 million), (b) a
favorable product mix (approximately $0.5 million) and (c) the effects of
acquired companies (approximately $0.2 million). Gross profit was partially
reduced by: (a) reduced volume (approximately $1.2 million),
25
34
(b) increased manufacturing overhead (approximately $0.1 million), (c) the
non-recurring 2000 Special Charges (approximately $0.1 million) and (d) foreign
currency fluctuations (approximately $0.1 million).
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.
Selling General and
Administrative Expenses: PERCENT OF PERCENT OF DOLLAR PERCENT
(Dollars in thousands) 2000 SALES 1999 SALES CHANGE CHANGE
-------- ---------- -------- ---------- -------- --------
Labware and Life Sciences $100,365 28.9% $ 68,600 25.5% $ 31,765 46.3%
Clinical and Industrial 37,077 17.8% 30,102 17.1% 6,975 23.2%
Diagnostics and Microbiology 60,797 28.9% 46,246 26.9% 14,551 31.5%
Laboratory Equipment 21,148 21.7% 20,632 20.9% 516 2.5%
Corporate Office 9,754 N/A 7,252 N/A 2,502 34.5%
-------- -------- --------
Total Selling, General and
Administrative Expenses $229,141 26.5% $172,832 24.2% $ 56,309 32.6%
======== ======== ========
Overall Company. Selling, general and administrative expenses for the year ended
September 30, 2000 increased by $56.3 million or 32.6% from 1999.
Labware and Life Sciences. Increased selling, general and administrative
expenses in the labware and life sciences segment resulted primarily: (a) as a
result of acquired businesses (approximately $19.9 million), (b) from increased
amortization of intangibles primarily as a result of acquisitions (approximately
$6.2 million), (c) from increased marketing expenses (approximately $4.3
million), (d) from the non-recurring 2000 Special Charges (approximately $1.3
million) and (e) from increased general and administrative expenses
(approximately $1.2 million), partially reduced by favorable foreign currency
fluctuations (approximately $1.2 million).
Clinical and Industrial. Increased selling, general and administrative expenses
in the clinical and industrial segment resulted primarily: (a) as a result of
acquired businesses (approximately $6.2 million), (b) from increased marketing
expenses (approximately $1.3 million), (c) from increased amortization of
intangibles primarily as a result of acquisitions (approximately $1.0 million)
and (d) from the non-recurring 2000 Special Charges (approximately $0.1
million), partially reduced by: (a) a reduction in general and administrative
expenses (approximately $1.2 million) and (b) favorable foreign currency
fluctuations (approximately $0.5 million).
Diagnostics and Microbiology. Increased selling, general and administrative
expenses in the diagnostics and microbiology segment resulted primarily: (a) as
a result of acquired businesses (approximately $6.8 million), (b) from increased
amortization of intangibles primarily as a result of acquisitions (approximately
$4.6 million), (c) from the non-recurring 2000 Special Charges (approximately
$2.1 million) and (d) from increased marketing expenses (approximately $3.1
million), partially reduced by: (a) decreased general and administrative
expenses (approximately $1.1 million), (b) decreased research and development
expense (approximately $0.6 million) and (c) favorable foreign currency
fluctuations (approximately $0.3 million).
Laboratory Equipment. Increased selling, general and administrative expenses in
the laboratory equipment segment resulted primarily: (a) as a result of acquired
businesses (approximately $0.5 million), (b) from the non-recurring 2000 Special
Charges (approximately $0.5 million), (c) from increased research and
development expenses (approximately $0.3 million) and (d) from increased
amortization of intangibles primarily as a result of acquisitions (approximately
$0.2 million), partially reduced by: (a) decreased marketing expenses
(approximately $0.8 million) and (b) decreased general and administrative
expenses (approximately $0.2 million).
Corporate Office. Increased general and administrative expenses at the corporate
office resulted primarily from: (a) the non- recurring 2000 Special Charges
(approximately $1.7 million), (b) a decrease in expenses charged to SDS as a
result of a decrease in domestic sales at SDS in proportion to the domestic
sales of Apogent (approximately $1.3 million) and (c) an increase in legal and
professional fees (approximately $0.3 million), partially reduced by a reduction
in employee compensation and benefits (approximately $0.8 million).
26
35
SPECIAL CHARGES.
Our results for 2000 include charges of approximately $11.3 million ($7.5
million after tax) with respect to the restructuring of various parts of our
business. These charges relate primarily to restructured staffing (approximately
$5.5 million), operating location rationalization (approximately $2.7 million),
product rationalization (approximately $2.1 million), and a tax expense from the
restructuring of our U.K. operations (approximately $1.0 million). Of these
charges approximately $7.4 million will be cash expenditures. Through September
30, 2000, approximately $1.1 million has been paid. These charges are referred
to as the "2000 Special Charges." The actions related to the 2000 Special
Charges are expected to eliminate annual costs of approximately $6.6 million.
Savings were projected to result from: i) reduced salaries and related expenses
as a result of consolidating our CASCO operations with our Microgenics
operation, a reduction of workforce at Nalge Nunc International Corporation's
("NNI") Naperville facility, and the elimination of corporate personnel in
Milwaukee (approximately $5.6 million); ii) the consolidation of several
facilities, including those of CASCO, NNI Biotech and Naperville (approximately
$0.8 million); and iii) the elimination of product lines that are either
duplicative or no longer meet management's profitability expectations
(approximately $0.2 million). We do not anticipate, and have not experienced to
date, significant offsets to savings in either increased expenses or reduced
revenues.
Our results for 1999 include a charge of approximately $0.3 million ($0.2
million after tax) relating to adjustments made to the 1998 restructuring
reserve, consisting of additional severance. This charge is referred to herein
as the "1999 Special Charge." All historical financial data relating to SDS and
its affiliates and NPT, which was sold in 1999, have been reclassified to
discontinued operations.
OPERATING INCOME.
PERCENT OF PERCENT OF DOLLAR PERCENT
Operating Income: (Dollars in thousands) 2000 SALES 1999 SALES CHANGE CHANGE
-------- ---------- --------- ---------- --------- --------
Labware and Life Sciences $ 79,095 22.8% $ 67,404 25.1% $ 11,691 17.3%
Clinical and Industrial 52,590 25.2% 45,305 25.7% 7,285 16.1%
Diagnostics and Microbiology 50,854 24.2% 43,212 25.2% 7,642 17.7%
Laboratory Equipment 20,204 20.8% 20,457 20.8% (253) (1.2)%
Corporate Office (9,754) N/A (7,252) N/A (2,502) 34.5%
--------- --------- ---------
Total Operating Income $ 192,989 22.3% $ 169,126 23.7% $ 23,863 14.1%
========= ========= =========
As a result of the foregoing, operating income in 2000 increased by 14.1% or
$23.9 million over operating income in 1999.
INTEREST EXPENSE.
Interest expense was $48.7 million in 2000, an increase of $8.6 million from
1999. The increase resulted from higher average debt balances resulting
primarily from funding acquisitions and increased interest rates in 2000.
INCOME TAXES.
Taxes on income from continuing operations were $57.6 million, an increase of
$7.6 million from 1999. The increase resulted primarily from increased taxable
earnings.
INCOME FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY ITEM.
As a result of the foregoing we had net income from continuing operations of
$86.7 million in 2000, as compared to $77.4 million in 1999.
DISCONTINUED OPERATIONS.
Income from discontinued operations was $41.6 million in 2000, a decrease of
$6.4 million from income of $48.0 million in 1999. The decrease in income from
discontinued operations resulted primarily from restructuring charges incurred
at SDS in 2000 of approximately $5.9 million, net of tax.
27
36
EXTRAORDINARY ITEM.
Income from an extraordinary item decreased by $17.2 million and related to a
non-recurring gain on the sale of NPT in 1999.
NET INCOME.
As a result of the foregoing, we had net income of $128.3 million in 2000, as
compared to net income of $142.5 million in 1999.
DEPRECIATION AND AMORTIZATION.
Depreciation and amortization expense is allocated among cost of sales, selling,
general and administrative expenses and other expense. Depreciation and
amortization increased $17.6 million in 2000 due to additional depreciation and
amortization from the step-up of assets and goodwill recorded from the various
acquisitions as well as routine operating capital expenditures.
YEAR ENDED SEPTEMBER 30, 1999
COMPARED TO THE YEAR ENDED SEPTEMBER 30, 1998
NET SALES.
DOLLAR PERCENT
Net Sales: (Dollars in thousands) 1999 1998 CHANGE CHANGE
-------- -------- -------- --------
Labware and Life Sciences $268,788 $228,775 $ 40,013 17.5%
Clinical and Industrial 176,059 135,438 40,621 30.0%
Diagnostics and Microbiology 171,647 114,683 56,964 49.7%
Laboratory Equipment 98,543 78,866 19,677 24.9%
-------- -------- --------
Total Net Sales $715,037 $557,762 $157,275 28.2%
======== ======== ========
Overall Company. Net sales for the year ended September 30, 1999 increased by
$157.3 million or 28.2% from 1998.
Labware and Life Sciences. Increased net sales in the labware and life sciences
segment resulted primarily from: (a) net sales of products of acquired companies
(approximately $22.1 million), (b) increased net sales of existing products
(approximately $10.5 million), (c) increased net sales of new products
(approximately $3.6 million), (d) price increases (approximately $2.2 million)
and (e) favorable foreign currency fluctuations (approximately $1.6 million).
Clinical and Industrial. Increased net sales in the clinical and industrial
segment resulted primarily from: (a) net sales of products of acquired companies
(approximately $32.4 million), (b) increased net sales of existing products
(approximately $4.0 million), (c) price increases (approximately $3.9 million)
and (d) increased net sales of new products (approximately $0.2 million).
Diagnostics and Microbiology. Increased net sales in the diagnostics and
microbiology segment resulted primarily from: (a) net sales of products of
acquired companies (approximately $50.1 million), (b) increased net sales of
existing products (approximately $4.9 million), (c) price increases
(approximately $1.2 million) and (d) increased net sales of new products
(approximately $0.8 million).
Laboratory Equipment. Increased net sales in the laboratory equipment segment
resulted primarily from: (a) net sales of products of acquired companies
(approximately $21.6 million), (b) net sales of new products (approximately $2.8
million) and (c) price increases (approximately $1.4 million). Net sales were
partially reduced by decreased net sales of existing products (approximately
$6.0 million).
GROSS PROFIT.
PERCENT OF PERCENT OF DOLLAR PERCENT
Gross Profit: (Dollars in thousands) 1999 SALES 1998 SALES CHANGE CHANGE
-------- ---------- -------- ---------- -------- --------
Labware and Life Sciences $136,004 50.6% $115,724 50.6% $ 20,280 17.5%
Clinical and Industrial 75,407 42.8% 57,351 42.3% 18,056 31.5%
Diagnostics and Microbiology 89,458 52.1% 59,407 51.8% 30,051 50.6%
Laboratory Equipment 41,089 41.7% 34,697 44.0% 6,392 18.4%
-------- -------- --------
Total Gross Profit $341,958 47.8% $267,179 47.9% $ 74,779 28.0%
======== ======== ========
28
37
Overall Company. Gross profit for the year ended September 30, 1999 increased by
$74.8 million or 28.0% from 1998.
Labware and Life Sciences. Increased gross profit in the labware and life
sciences segment resulted primarily from: (a) the effects of acquired companies
(approximately $12.0 million), (b) increased volume (approximately $5.9
million), (c) price increases (approximately $2.2 million), (d) favorable
foreign currency fluctuations (approximately $1.1 million) and (e) the
non-recurring 1998 Special Charges (as defined below under the heading "Special
Charges") (approximately $0.8 million). Gross profit was partially reduced by:
(a) increased manufacturing overhead (approximately $1.2 million) and (b)
product mix (approximately $0.5 million).
Clinical and Industrial. Increased gross profit in the clinical and industrial
segment resulted primarily from: (a) the effects of acquired companies
(approximately $12.1 million), (b) price increases (approximately $3.9 million),
(c) an improved product mix (approximately $1.2 million), (d) increased volume
(approximately $1.1 million) and (e) inventory adjustments (approximately $0.2
million). Gross profit was partially reduced by: (a) foreign currency
fluctuations (approximately $0.4 million) and (b) increased manufacturing
overhead (approximately ($0.2 million).
Diagnostics and Microbiology. Increased gross profit in the diagnostics and
microbiology segment resulted primarily from: (a) the effects of acquired
companies (approximately $28.7 million), (b) a favorable product mix
(approximately $2.4 million), (c) price increases (approximately $1.2 million),
(d) increased volume (approximately $1.2 million) and (e) the non-recurring 1998
Special Charges (approximately $0.7 million). Gross profit was partially reduced
by: (a) increased manufacturing overhead (approximately $4.0 million) and (b)
inventory adjustments (approximately $0.3 million).
Laboratory Equipment. Increased gross profit in the laboratory equipment segment
resulted primarily from: (a) the effects of acquired companies (approximately
$7.3 million), (b) price increases (approximately $1.4 million), (c) inventory
adjustments (approximately $1.0 million) and (d) a favorable product mix
(approximately $0.1 million). Gross profit was partially reduced by: (a) reduced
volume (approximately $1.3 million) and (b) increased manufacturing overhead
(approximately $2.1 million).
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.
PERCENT OF PERCENT OF DOLLAR PERCENT
1999 SALES 1998 SALES CHANGE CHANGE
-------- ---------- -------- ---------- -------- --------
Selling, General and Administrative
Expenses: (Dollars in thousands)
Labware and Life Sciences $ 68,600 25.5% $ 65,570 28.7% $ 3,030 4.6%
Clinical and Industrial 30,102 17.1% 23,082 17.0% 7,020 30.4%
Diagnostics and Microbiology 46,246 26.9% 34,294 29.9% 11,952 34.9%
Laboratory Equipment 20,632 20.9% 16,405 20.8% 4,227 25.8%
Corporate Office 7,252 N/A 5,410 N/A 1,842 34.0%
-------- -------- --------
Total Selling General and
Administrative Expenses $172,832 24.2% $144,761 26.0% $ 28,071 19.4%
======== ======== ========
Overall Company. Selling, general and administrative expenses for the year ended
September 30, 1999 increased by $28.1 million or 19.4% from 1998.
Labware and Life Sciences. Increased selling, general and administrative
expenses in the labware and life sciences segment resulted primarily: (a) as a
result of acquired businesses (approximately $4.9 million), (b) from increased
general and administrative expenses (approximately $1.6 million), (c) from
increased amortization of intangibles primarily as a result of acquisitions
(approximately $0.9 million) and (d) from foreign currency fluctuations
(approximately $0.5 million), partially reduced by: (a) decreased marketing
expenses (approximately $2.3 million) and (b) the non-recurring 1998 Special
Charges (approximately $2.4 million).
Clinical and Industrial. Increased selling, general and administrative expenses
in the clinical and industrial segment resulted primarily: (a) from increased
general and administrative expenses (approximately $2.8 million), (b) as a
result of acquired businesses (approximately $2.6 million), (c) from increased
amortization of intangibles primarily as a result of acquisitions (approximately
$1.4 million), (d) from increased marketing expenses (approximately $0.3
million), (e) from foreign currency
29
38
fluctuations (approximately $0.2 million) and (f) from the non-recurring 1999
special charges (approximately $0.2 million), partially reduced by non-recurring
1998 Special Charges (approximately $0.4 million).
Diagnostics and Microbiology. Increased selling, general and administrative
expenses in the diagnostics and microbiology segment resulted primarily: (a) as
a result of acquired businesses (approximately $11.4 million), (b) from
increased amortization of intangibles primarily as a result of acquisitions
(approximately $3.0 million), (c) from increased general and administrative
expenses (approximately $0.6 million), (d) from increased marketing expenses
(approximately $0.3 million) and (e) from increased research and development
expense (approximately $0.1 million), partially reduced by non-recurring 1998
Special Charges (approximately $3.6 million).
Laboratory Equipment. Increased selling, general and administrative expenses in
the laboratory equipment segment resulted primarily: (a) as a result of acquired
businesses (approximately $3.5 million), (b) from increased amortization of
intangibles primarily as a result of acquisitions (approximately $0.4 million),
(c) from increased general and administrative expenses (approximately $0.6
million), (d) from increased marketing expenses (approximately $0.3 million) and
(e) from increased research and development expenses (approximately $0.1
million), partially reduced by: (a) the non-recurring 1998 Special Charges
(approximately $0.4 million) and (b) favorable foreign currency fluctuations
(approximately $0.1 million).
Corporate Office. Increased general and administrative expenses at the corporate
office resulted primarily from: (a) an increase in legal expense and
professional fees (approximately $0.8 million), (b) increased salaries and
benefits (approximately $0.7 million) and (c) a decrease in the expenses charged
to SDS (approximately $0.3 million).
30
39
SPECIAL CHARGES.
As noted above, our results for 1999 include a charge of approximately $0.3
million ($0.2 million after tax) relating to adjustments made to the 1998
restructuring reserve, consisting of additional severance. All historical
financial data relating to SDS and its affiliates and NPT, which was sold in
1999, have been reclassified to discontinued operations.
Our results for 1998 contain charges with respect to the restructuring of our
laboratory group. These charges are collectively referred to herein as the "1998
Special Charges." The 1998 Special Charges totaled $8.5 million ($5.4 million
after tax) and consisted of items relating to the realignment of our laboratory
subsidiaries under Sybron Laboratory Products Corporation ("SLP"). This
restructuring charge consisted primarily of severance expenditures associated
with the consolidation of certain functions, the restructuring of sales and
marketing activities, and costs associated with exiting certain product lines.
In 1999, an additional $0.3 million was added to this reserve as an adjustment
to original severance estimates. We expect no additional adjustments to this
reserve. Approximately $3.9 million of these charges are cash expenditures of
which $1.0 million was paid in 1998, $2.0 was paid in 1999 and $0.7 million was
paid in 2000. Of the remaining $0.2 million, we expect to pay the remaining
balance in 2001. Actions related to the 1998 Special Charges eliminated annual
costs of approximately $5.3 million. Apogent has achieved actual savings in line
with these expectations. We do not anticipate, and have not experienced to date,
significant offsets to savings in either increased expenses or reduced revenues.
OPERATING INCOME.
PERCENT OF PERCENT OF DOLLAR PERCENT
Operating Income: (Dollars in thousands) 1999 SALES 1998 SALES CHANGE CHANGE
--------- ---------- --------- ---------- --------- --------
Labware and Life Sciences $ 67,404 25.1% $ 50,154 21.9% $ 17,250 34.4%
Clinical and Industrial 45,305 25.7% 34,269 25.3% 11,036 32.2%
Diagnostics and Microbiology 43,212 25.2% 25,113 21.9% 18,099 72.1%
Laboratory Equipment 20,457 20.8% 18,292 23.2% 2,165 11.8%
Corporate Office (7,252) N/A (5,410) N/A (1,842) 34.0%
--------- --------- ---------
Total Operating Income $ 169,126 23.7% $ 122,418 21.9% $ 46,708 38.2%
========= ========= =========
As a result of the foregoing, operating income in 1999 increased by 38.2% or
$46.7 million over operating income in 1998.
INTEREST EXPENSE.
Interest expense was $40.1 million in 1999, an increase of $6.3 million from
1998. The increase resulted from a higher average debt balance in 1999,
resulting primarily from funding acquisitions, partially offset by the reduction
of debt from our sale of NPT.
INCOME TAXES.
Taxes on income from continuing operations were $50.0 million, an increase of
$15.3 million from 1998. The increase resulted primarily from increased taxable
earnings offset partially by a lower effective tax rate.
INCOME FROM CONTINUING OPERATIONS.
As a result of the foregoing we had net income from continuing operations of
$77.4 million in 1999, as compared to $52.1 million in 1998.
DISCONTINUED OPERATIONS.
Income from discontinued operations was $48.0 million in 1999, an increase of
$24.0 million from $23.9 million in 1998. The 1998 discontinued operations
resulted from income from the operations of SDS of $27.9 million net of tax, a
non-recurring charge of $7.8 million net of tax related to a legal settlement
partially offset by the operating results of NPT of $3.8 million net of tax. The
1999 discontinued operations represent results of SDS of $47.8 million and the
results of NPT of $0.1 million through the sale date of March 31, 1999.
31
40
EXTRAORDINARY ITEM.
On March 31, 1999 Sybron completed the sale of NPT to Norton Performance
Plastics Corporation. Net proceeds from the sale, net of $1.9 million of selling
expenses and a reduction to the original purchase price of approximately $2.6
million, amounted to $83.2 million. Apogent realized a gain on this sale of
$17.2 million (net of tax of $15.8 million). The proceeds of the sale net of tax
and expenses were used to repay approximately $67.9 million of debt under
Apogent's credit facilities.
NET INCOME.
As a result of the foregoing, we had net income of $142.5 million in 1999, as
compared to net income of $76.0 million in 1998.
DEPRECIATION AND AMORTIZATION.
Depreciation and amortization expense is allocated among cost of sales, selling,
general and administrative expenses and other expense. Depreciation and
amortization increased $10.2 million in 1999 due to additional depreciation and
amortization from the step-up of assets and goodwill recorded from the various
acquisitions as well as routine operating capital expenditures.
INFLATION
We do not believe that inflation has had a material impact on net sales or
income during any of the periods presented above. There can be no assurance,
however, that our business will not be affected by inflation in the future.
INTERNATIONAL OPERATIONS
Apogent Technologies and its U.S. subsidiaries have approximately 88% of our
assets and generated approximately 89% of our income from continuing operations
for the fiscal year ended September 30, 2000, with the balance attributable to
our foreign subsidiaries. Portions of our sales, income and cash flows from both
domestic and foreign subsidiaries are derived internationally. The financial
position and the results of operations from substantially all of our
international operations, other than most U.S. export sales, are measured using
the local currency of the countries in which such operations are conducted and
are then translated into U.S. dollars. While the reported income of foreign
subsidiaries will be impacted by a weakening or strengthening of the U.S. dollar
in relation to a particular local currency, the effects of foreign currency
fluctuations are partially mitigated by the fact that manufacturing costs and
other expenses of foreign subsidiaries are generally incurred in the same
currencies in which sales are generated. Such effects of foreign currency
fluctuations are also mitigated by the fact that such subsidiaries' operations
are conducted in numerous foreign countries and, therefore, in numerous foreign
currencies. In addition, our U.S. export sales may be impacted by foreign
currency fluctuations relative to the value of the U.S. dollar as foreign
customers may adjust their level of purchases upward or downward according to
the weakness or strength of their respective currencies versus the U.S. dollar.
From time to time we may employ currency hedges to mitigate the effect of
foreign currency fluctuations. If currency hedges are not employed, we may be
exposed to earnings volatility as a result of foreign currency fluctuations. Two
foreign currency hedges aggregating $33.6 million were in place as of March 15,
2001.
The following table sets forth our domestic sales and sales outside the United
States in fiscal 2000, 1999 and 1998, respectively. See also Note 16 of notes to
consolidated financial statements contained in this prospectus.
YEAR ENDED SEPTEMBER 30,
------------------------------
2000 1999 1998
-------- -------- --------
Domestic net sales .................... $643,188 $543,846 $422,055
International net sales ............... 220,387 171,191 135,707
-------- -------- --------
Total net sales ................... $863,575 $715,037 $557,762
======== ======== ========
32
41
LIQUIDITY AND CAPITAL RESOURCES
As a result of the acquisition of Apogent's predecessor in 1987 and the
acquisitions we completed since 1987, we have increased the carrying value of
certain tangible and intangible assets consistent with generally accepted
accounting principles. Accordingly, our results of operations include a
significant level of non-cash expenses related to the depreciation of fixed
assets and the amortization of intangible assets, including goodwill. Goodwill
and intangible assets, net of amortization, increased by approximately $47.9
million in the first six months of fiscal 2001, primarily as a result of
continued acquisition activity. It is currently our intent to continue to
pursue our current acquisition strategy. If acquisitions continue at our
historical pace, of which there can be no assurance, we may require
financing beyond the capacity of our Credit Facilities (as defined below).
Our capital requirements arise principally from indebtedness incurred in
connection with the permanent financing for the 1987 acquisition and our
subsequent refinancings, our obligation to pay rent under a sale/leaseback
facility associated with the 1987 acquisition, our working capital needs,
primarily related to inventory and accounts receivable, our capital
expenditures, primarily related to purchases of machinery and molds, the
purchase of various businesses and product lines in execution of our acquisition
strategy, and the periodic expansion of our physical facilities.
Approximately $65.3 million of cash was generated from operating activities in
the first six months of fiscal 2001, an increase of $28.7 million or 78% from
the corresponding period in 2000. Non-cash depreciation and amortization charged
against net income increased approximately $5.9 million for the first six months
of fiscal 2001 as compared to the corresponding period in fiscal 2000. The cash
flow resulting from the net change in working capital, net of the effects of
acquisitions and divestitures, was an increase of $20.8 million in the six
months ended March 31, 2001. This represents a decrease of $23.5 million or
53.1% from the corresponding period in fiscal 2000. These changes are set forth
in detail in the Consolidated Statement of Cash Flows. The increase in working
capital accounts over the first six months of fiscal 2001 is attributable to
the higher level of business activity as reflected in our increased sales. The
Company is focused on maximizing the cash flow from its operating businesses.
From our efforts we were able to achieve increased cash flows of approximately
$11.9 million through improvements in accounts receivable, as compared to the
corresponding fiscal 2000 period.
Investing activities in the first six months of fiscal 2001 used approximately
$18.2 million in cash. Increased cash flow from investing activities as compared
to fiscal 2000 resulted primarily from a decrease in net payments for
businesses acquired of approximately $70.5 million, and an increase in
proceeds from sales of property, plant and equipment of $10.4 million.
Approximately $49.1 million of cash was used in financing activities in the
first six months of fiscal 2001, primarily due to payments made on the
revolving Credit Facilities in excess of proceeds, of approximately $80.1
million offset by proceeds from long-term debt of $33.6 million relating to
acquisitions.
Approximately $116.5 million of cash was generated from operating activities in
2000, an increase of $1.4 million from 1999. Increased cash flow resulted from
an increase in non-cash depreciation and amortization charged against net income
(approximately $17.6 million) partially offset by a decrease in cash flow from
operating activities resulting primarily from a decrease in net income
(approximately $14.2 million) and an increase in net assets (approximately $2.0
million). Approximately $193.2 million of cash was used in investing activities
in 2000, a decrease of $2.3 million, or 1.2%, from 1999. Decreased investing
activities resulted primarily from a decrease in acquisitions (approximately
$42.8 million), a non-recurring purchase of a security in 1999 (approximately
$50.5 million), an increase in dividends from Sybron Dental Management, Inc.
("SDM"), now a subsidiary of SDS, (approximately $22.0 million) partially offset
by non-recurring sale of NPT in 1999 (approximately $88.4 million), increased
capital expenditures (approximately $12.6 million), an increase in capital
contributions to SDM (approximately $5.2 million) and a decrease in the net
change in advances and loans to SDM (approximately $6.7 million). Approximately
$77.7 million of cash was provided from financing activities, primarily from
proceeds from the Company's Old Credit Facilities (as defined later herein) (net
of repayments) (approximately $57.8 million), proceeds from the exercise of
employee stock options (approximately $12.6 million) and other financing sources
(approximately $7.3 million). With respect to the 2000 Special Charges of
approximately $11.3 million, of which approximately $8.0 million represents cash
expenditures, as of March 31, 2001 we have made cash payments of approximately
$2.9 million. The Company expects to make future cash payments of approximately
$3.9 million in the remainder of fiscal 2001 and approximately $1.2 million in
fiscal 2002 and beyond.
On December 1, 2000, we entered into a Credit Agreement, which provides for a
term loan facility of $300 million (the "Term Loan Facility") due in a single
payment on December 1, 2005, and a revolving credit facility of up to $500
million for a period of up to five years (the "Revolving Credit Facility" and
together with the Term Loan Facility, the "Credit Facilities"). On December 11,
2000, we borrowed approximately $563.0 million under the Credit Facilities and
together with funds aggregating $375.0 million ($307.1 million, the amount equal
to the outstanding amounts under our old credit facilities attributable to SDS
on December 11, 2000 including accrued interest plus a cash dividend of $67.9
million from SDS to Apogent), used such funds to repay all of the outstanding
amounts under our old credit facilities, aggregating $938.0 million (including
accrued interest).
On April 4, 2001 the Company issued the $325 Original Notes in a private
placement with registration rights. The Company used the proceeds from the
issuance to repay all of its "Term Loan Facility" ($300 million) and a portion
of its Revolving Credit Facility. The Original Notes were offered at a discount
of approximately $1,469,000. They will mature on April 1, 2011. Interest is
fixed at an annual rate of 8% and is payable on April 1 and October 1 of each
year, beginning on October 1, 2001. Interest accrues from April 4, 2001. The
Original Notes are redeemable by the Company at any time in whole, or from time
to time in part, at a price equal to the greater of (i) 100% of the principal
amount of the notes to be redeemed or (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon (exclusive of
interest accrued to the date of redemption) discounted to the date of redemption
on a semiannual basis at the applicable Treasury Yield (as defined in the bond
agreement) plus 35 basis points, plus accrued interest to date of redemption.
We intend to fund our acquisitions, working capital requirements, capital
expenditure requirements, principal and interest payments, obligations under the
sale/leaseback facility mentioned above, restructuring expenditures, other
liabilities and periodic expansion of facilities, to the extent available, with
funds provided by operations and short-term borrowings under the Revolving
33
42
Credit Facility. To the extent that funds are not available from those sources,
particularly with respect to our acquisition strategy, we intend to raise
additional capital.
The statements contained in the preceding paragraphs concerning our intent to
continue to pursue our acquisition strategy and our anticipated sources of
liquidity are forward-looking statements. Our ability to continue our
acquisition strategy and our capital finance plans are subject to a number of
uncertainties, including, but not limited to, our ability to raise capital
beyond the capacity of our Credit Facilities and the availability of suitable
acquisition candidates at reasonable prices. See "Cautionary Factors" below.
CAUTIONARY FACTORS
This prospectus contains various forward-looking statements concerning our
prospects that are based on the current expectations and beliefs of management.
We may also make forward-looking statements from time to time in other reports
and documents as well as oral presentations. When used in written documents or
oral statements, the words "anticipate," "believe," "continue," "estimate,"
"expect," "goal," "objective," "outlook," and similar expressions are intended
to identify forward-looking statements. The statements contained herein and such
future statements involve or may involve certain assumptions, risks and
uncertainties, many of which are beyond our control, that could cause our actual
results and performance to differ materially from what is expected. In addition
to the assumptions and other factors referenced specifically in connection with
such statements, the following factors could impact our business and financial
prospects:
o We have operations outside the United States. We are therefore
subject to factors affecting our international operations,
including relevant foreign currency exchange rates, which can
affect the cost to produce our products or the ability to sell
our products in foreign markets, and the value in U.S. dollars
of sales made in foreign currencies. Other factors include our
ability to obtain effective hedges against fluctuations in
currency exchange rates; foreign trade, monetary and fiscal
policies; laws, regulations and other activities of foreign
governments, agencies and similar organizations; risks
associated with having major manufacturing facilities located
in countries, such as Mexico and Hungary, which have
historically been less stable than the United States in
several respects, including fiscal and political stability;
and risks associated with the economic downturn in other
countries.
o A significant portion of our growth over the past several
years has been achieved through our acquisition program, which
has generated approximately 70 acquisitions since 1993. Our
rate of continued growth is therefore subject to factors
affecting our ability to continue pursuing our current
acquisition strategy and to be successful with that strategy.
These factors include our ability to raise capital beyond the
capacity of our existing credit facilities or to use stock for
acquisitions, the cost of the capital required to effect our
acquisition strategy, the availability of suitable acquisition
candidates at reasonable prices, competition for appropriate
candidates, our ability to realize the synergies expected to
result from acquisitions, and the ability of our existing
personnel to efficiently handle increased transitional
responsibilities resulting from acquisitions.
o We are organized as a holding company. As a result all of our
revenues are generated through our subsidiaries, including
foreign subsidiaries. Consequently, our operating cash flow
and ability to service indebtedness and other obligations
depend upon the operating cash flow of our U.S. and foreign
subsidiaries and the payment of funds by them to us in the
form of loans, dividends or otherwise. Their ability to pay
dividends and make loans, advances and other payments to us
depends upon statutory restrictions (including insolvency and
fraudulent conveyance laws) and contractual restrictions
(which may include requirements to maintain minimum levels of
working capital and other assets).
o Our reliance on major independent distributors for a
substantial portion of our sales subjects our sales
performance to volatility in demand from distributors. We can
experience volatility when distributors merge or consolidate,
when inventories are not managed to end-user demand, or when
distributors experience a softness in their sales. This
volatility in demand can also arise with large OEM customers
to whom we sell direct. Sales to our distributors and OEM
customers are sometimes unpredictable and wide variances
sometimes occur quarter to quarter.
34
43
o Our ability to increase revenues and to profitably distribute
and sell our products is subject to a number of risks, such as
changes in our business relationships with our principal
distributors or OEM customers, competitive factors such as the
entrance of additional competitors into our markets, pricing
and technological competition, risks associated with the
development and marketing of new products in order to remain
competitive by keeping pace with advancing laboratory and life
science technologies, particularly in the genomics and other
rapidly developing technologies, factors affecting certain
high growth industries we serve, such as consolidation in the
drug discovery and diagnostics industries, and risks of
unanticipated technological developments that result in
competitive disadvantages and create the potential for
impairment of our existing assets.
o Our business is subject to quarterly variations in operating
results caused by a number of factors, including business and
industry conditions, timing of acquisitions, distribution and
OEM customer issues, and other factors listed here. All these
factors make it difficult to predict operating results for any
particular period.
o With respect to the clinical and industrial segment, factors
affecting our Erie Electroverre S.A. subsidiary's ability to
manufacture the glass used by the clinical and industrial
segment's worldwide manufacturing operations, including delays
encountered in connection with the periodic rebuild of the
sheet glass furnace and furnace malfunctions at a time when
inventory levels are not sufficient to sustain this segment's
flat glass operations.
o Factors affecting our ability to obtain raw materials at
reasonable prices, especially white glass, which comes from a
single source, our Electroverre, SA facility in Switzerland.
o Our ability to hire and retain competent employees is subject
to a number of risks, including unionization of our non-union
employees and changes in relationships with our unionized
employees. There is a risk of strikes or other labor disputes
at those locations that are unionized, which could affect our
operations.
o Our business currently has a significant amount of floating
rate debt and can be adversely affected by a rise in interest
rates.
o Our ability to continue manufacturing and selling those of our
products that are subject to regulation by the FDA or other
domestic or foreign governments or agencies is subject to a
number of risks, including the promulgation of stricter laws
or regulations, reclassification of our products into
categories subject to more stringent requirements, or the
withdrawal of the approval needed to sell one or more of our
products.
o The impact of changing public and private health care budgets,
including reimbursement by private or governmental insurance
programs, may affect demand for or pricing of our products.
o Our business is subject to the risks of claims involving our
products and other legal and administrative proceedings,
including the expense of investigating, litigating and
settling any claims.
o SDS has agreed to indemnify Apogent from and after the
spin-off with respect to certain liabilities and obligations.
Our ability to collect on such indemnities, if applicable,
from SDS will depend upon SDS's financial strength at the time
of any such indemnity claim.
o Our financial performance or condition may be affected by
changes in tax legislation, changes in applicable accounting
principles or environmental laws and regulations.
o We may be subject to risks arising from other business and
investment considerations that may be disclosed from time to
time in our SEC filings or in other publicly available written
documents.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
35
44
BUSINESS
GENERAL
Apogent Technologies Inc. is a Wisconsin corporation, incorporated in 1993 to be
the successor by merger in January 1994 to Sybron Corporation, a Delaware
corporation. The merger was accomplished to change Apogent's corporate domicile
from Delaware to Wisconsin. Many of our operating subsidiaries or their
predecessors, and their related brands, have been known and respected in our
markets for many decades.
Apogent and its predecessor companies' history extends back to the founding of
Barnstead Company (now a subsidiary of Apogent) in 1878. We were listed on the
New York Stock Exchange in 1965 (as Ritter Pfaulder Corporation) and became
Sybron Corporation in 1968 after our merger with Taylor Instrument Companies. We
were taken private by Forstmann Little in 1986 and subsequently sold to another
LBO firm headed by Hicks & Haas and Donaldson, Lufkin & Jenrette. We again went
public in 1992.
In May 1998, we realigned our laboratory and related products subsidiaries under
a single management team and holding company in Portsmouth, New Hampshire, known
as Sybron Laboratory Products Corporation ("SLP"). We did this in order to take
advantage of sales, marketing, administrative and manufacturing synergies among
companies which have related product lines, customers and methods of
distribution. This team is responsible for managing subsidiaries in our four
business segments: labware and life sciences, clinical and industrial,
diagnostics and microbiology and laboratory equipment.
On December 11, 2000, we spun off our dental business by way of a pro rata
distribution to our shareholders of all of the outstanding common stock and
related preferred stock purchase rights of SDS. As a result of the spin-off, SDS
became an independent public company operating what was our dental business. In
order to effect the spin-off, Apogent and SDS entered into a number of
interrelated agreements. These agreements describe the reorganization of Apogent
in preparation for the spin-off and define the ongoing relationship between the
parties after the spin-off. Although most of these relationships have now been
largely concluded, Apogent and SDS continue to assist one another with regard to
certain transitional matters.
Promptly after the spin-off of our dental business, Apogent's corporate
headquarters (located in Milwaukee, Wisconsin) were relocated to Portsmouth, New
Hampshire under the SLP management team. In January, 2001, the Company's name
was officially changed from "Sybron International Corporation" to "Apogent
Technologies Inc."
BUSINESSES AND PRODUCTS
Our subsidiaries are leading manufacturers of value-added products for the
labware and life sciences, clinical and industrial, diagnostics and
microbiology, and laboratory equipment industries worldwide. The primary U.S.
and foreign subsidiaries in each of our business segments are as follows:
LABWARE AND LIFE SCIENCES CLINICAL AND INDUSTRIAL
Advanced Biotechnologies Ltd. Chase Scientific Glass, Inc.
BioRobotics Group Limited Erie Electroverre S.A.
Genevac Limited Erie Scientific Company
Matrix Technologies Corporation Gerhard Menzel Glasbearbeitungswerk
Molecular BioProducts, Inc. GmbH & Co. K.G.
Nalge Nunc International Corporation Microm International GmbH
Nalge Nunc International K.K. The Naugatuck Glass Company
National Scientific Corporation Richard-Allan Scientific Company
Nunc A/S Samco Scientific Corporation
Robbins Scientific Corporation
DIAGNOSTICS AND MICROBIOLOGY LABORATORY EQUIPMENT
Applied Biotech, Inc. Barnstead Thermolyne Corporation
Microgenics Corporation Eletrothermal Engineering, Ltd.
Remel Inc. Lab-Line Instruments, Inc.
Labware and Life Sciences. Products in our labware and life sciences business
segment include:
o reusable plastic products (bottles, carboys, graduated ware,
beakers and flasks);
o disposable plastic products (microfiltration and cryogenic
storage products);
36
45
o products for critical packaging applications (bottles for
packaging diagnostic and other reagents, media,
pharmaceuticals and specialty chemicals);
o safety products (hazard labeled containers and biohazard
disposal products);
o environmental containers;
o autosampler vials and seals used in chromatography analysis;
and
o instrumentation and consumable products for cell culture,
filtration, molecular biology, cryopreservation, immunology,
electrophoresis, liquid handling, genomics, high throughput
screening, and other life sciences applications.
The labware and life sciences business segment accounted for approximately 40%,
38% and 41%, of our consolidated net sales in 2000, 1999 and 1998, respectively.
Clinical and Industrial. Products in our clinical and industrial business
segment include:
o microscope slides, cover glass, glass tubes and vials, stains
and reagents and histology and immunochemistry instrumentation
for clinical testing;
o thin glass for watch crystals, cosmetic mirrors, precision and
coated glass used in various optic applications; and
o precision thin film optical coating equipment.
The clinical and industrial business segment accounted for approximately 24% of
our consolidated net sales in each of 2000, 1999 and 1998.
Diagnostics and Microbiology. Products in our diagnostics and microbiology
business segment are used for drug testing, therapeutic drug monitoring,
infectious disease detection, pregnancy testing, glucose tolerance testing,
blood bank saline testing, clinical diagnostic liquid standards and research
application temperature measurement. Products include:
o diagnostic test kits;
o culture media;
o diagnostic reagents; and
o other products used in detecting causes of various infections
or diseases.
The diagnostics and microbiology business segment accounted for approximately
25%, 24% and 21% of our consolidated net sales in 2000, 1999 and 1998,
respectively.
Laboratory Equipment. Products in our laboratory equipment business segment
include:
o heating, stirring and temperature control apparatus such as
hot plates, stirrers, shakers, heating tapes, muffle furnaces,
incubators, dri-baths, bench top sterilizers and cryogenic
storage apparatus, which are fundamental to basic procedures
performed in the laboratory;
o systems for producing ultra pure water;
o bottle top dispensers, positive displacement micropipettors,
and small mixers used in biomolecular research;
37
46
o constant temperature equipment including
refrigerators/freezers, ovens, water baths, environmental
chambers; and
o furnaces and fluorometers, spectrophotometers, and strip chart
recorders.
The laboratory equipment business segment accounted for approximately 11%, 14%
and 14% of our consolidated net sales in 2000, 1999 and 1998, respectively.
EMPLOYEES
Our companies employed approximately 6,100 people at March 31, 2001,
approximately 400 of whom in the U.S. are covered by collective bargaining
agreements. We believe our employee relations are generally good.
38
47
PATENTS, TRADEMARKS AND LICENSES
Our subsidiaries' products are sold under a variety of trademarks and trade
names. They own or license all of the trademarks and trade names we believe to
be material to the operation of their businesses, including the NALGE(R),
NALGENE(R), NUNC(TM), SUPERFROST(R), COLORFROST(R), THERMOLYNE(R), BARNSTEAD(R),
REMEL(R), RICHARD-ALLAN(TM), ART(R), and LAB-LINE(R) trademarks, each of which
we believe to have widespread name brand recognition in its respective field and
all of which we intend to continue to protect. Our subsidiaries also own various
patents, employ various patented processes, and from time to time acquire
licenses from owners of patents. We rely upon a combination of non-disclosure
and other contractual agreements and trade secret, copyright, patent and
trademark laws to protect our intellectual property rights. Except for the
trademarks referred to above, we do not believe any single patent, trademark or
license is material to the operations of our business as a whole.
BUSINESS STRATEGY
Our goals are to consistently grow our worldwide sales and earnings. Key
elements of our strategy to achieve these goals are described below.
NEW PRODUCTS
Apart from the addition of new products through its acquisition program, product
development efforts at Apogent's subsidiaries are focused on expanding product
offerings in the laboratory markets currently served. Product offerings are
designed to develop and improve products for new and existing technologies. This
allows laboratories, lab technicians and researchers to more efficiently perform
tests and experiments, and thus reduce the cost of their procedures and provide
faster diagnostic tests with improved accuracy.
ACQUISITIONS
We have an active acquisition program. Since 1993, when we adopted this element
of our strategy, we have made more than 70 acquisitions in the United States and
abroad, including 10 completed in 2000 and four in 2001 through May 1, 2001.
(See Note 15 of notes to consolidated financial statements included in this
prospectus.) Our operating subsidiaries have been able to use their existing
distribution channels to market many of the acquired product lines and in some
cases have acquired additional distribution channels through which the
subsidiaries' existing products can be sold. We have also achieved other
synergies, such as the elimination of duplicative administrative functions or
the combining of manufacturing operations, with some of these acquisitions.
PRODUCT DISTRIBUTION
We estimate that the worldwide laboratory and life sciences market includes more
than 150,000 industrial, academic, clinical, governmental and biotechnology
laboratories. Our products reach this market in several ways. Products from our
labware and life sciences segment are sold primarily through distributors,
although some of our businesses in this segment, such as Matrix and Robbins,
have direct sales forces and sell directly to end-users. Products in the
clinical and industrial and laboratory equipment business segments are also sold
primarily through distributors. Exceptions in these business segments include
Richard-Allan and Microm, who primarily sell directly to end-users. Most of the
products from our diagnostics and microbiology business segment are sold
directly to end-users or to OEMs, with fewer products sold through distributors.
For example, the microbiology products of Remel are primarily sold directly to
end-users through Remel's national distribution system, while the drugs of abuse
testing products of Microgenics are primarily sold to manufacturers of automated
testing equipment and to a limited extent through distribution. Most of our
subsidiaries maintain their own sales forces, whether they sell directly to
end-users, through distribution, or otherwise.
As indicated, a large portion of our labware and life sciences, clinical and
industrial, and laboratory equipment products are sold through domestic and
foreign distributors. Three (primarily domestic) distributors, Fisher
Scientific, VWR Scientific, and Allegiance Healthcare Corporation, accounted in
the aggregate for approximately 35%, 41% and 43% of our labware and life
sciences segment sales in 2000, 1999 and 1998, respectively, approximately 44%,
44% and 41% of our clinical and industrial segment sales in 2000, 1999 and 1998,
respectively, and approximately 42%, 39%, and 35% of our laboratory equipment
segment sales in 2000, 1999 and 1998, respectively.
39
48
Laboratory supply distributors offer a wide variety of supplies, apparatus and
instruments for the laboratory, primarily through catalogs and, increasingly,
through their e-commerce web sites. End-users rely heavily on these catalogs and
web sites in identifying suitable products and making purchase decisions, and
the prominence of and the number of product items listed for a particular vendor
are critical marketing variables. We believe the number of our products offered
by the major distributors is among the highest of any of our competitors. Also,
the major distributors often have contracts with large end-users or purchasing
organizations to supply such users or organizations with a broad array of
laboratory products and supplies. Our ability to manufacture and supply a broad
range of products can help distributors be more efficient in these situations
and is, we believe, an advantage to us.
We have numerous private label and OEM relationships, in many cases providing
specialized products to our customers that would be difficult to source
elsewhere. Sales to OEMs accounted for approximately 37% of our diagnostics and
microbiology business segment in 2000.
40
49
INTERNATIONAL
As noted above, Apogent Technologies and its U.S. subsidiaries have
approximately 88% of our assets and generate approximately 89% of our income
from continuing operations for the fiscal year ended September 30, 2000, with
the balance attributable to our foreign subsidiaries. Portions of our sales,
income and cash flows from both domestic and foreign subsidiaries are derived
internationally. In addition to an extensive distributor network, our
subsidiaries maintain sales offices and manufacturing plants in international
locations. Foreign sales offices are located in the United Kingdom, Japan,
Germany, Spain, Hong Kong, Australia and Switzerland. International
manufacturing facilities are located in Denmark, Germany, Switzerland, Hungary,
the United Kingdom, Hong Kong, Mexico and Puerto Rico.
Domestic and international sales of our products by business segment are as
follows:
YEARS ENDED SEPTEMBER 30,
------------------------------
2000 1999 1998
-------- -------- --------
(In thousands)
Labware and Life Sciences:
Domestic $232,665 $176,618 $146,950
International 114,772 92,170 81,825
-------- -------- --------
Total $347,437 $268,788 $228,775
======== ======== ========
Clinical and Industrial:
Domestic $165,234 $141,524 $106,898
International 43,452 34,535 28,540
-------- -------- --------
Total $208,686 $176,059 $135,438
======== ======== ========
Diagnostics and Microbiology:
Domestic $171,318 $147,929 $104,745
International 38,829 23,718 9,938
-------- -------- --------
Total $210,147 $171,647 $114,683
======== ======== ========
Laboratory Equipment:
Domestic $ 73,971 $ 77,775 $ 63,462
International 23,334 20,768 15,404
-------- -------- --------
Total $ 97,305 $ 98,543 $ 78,866
======== ======== ========
MARKET PENETRATION AND COMPETITIVE FOCUS
Our products serve a large number of markets worldwide, each of which has its
own inherent growth rates. For 2000, our consolidated internal sales growth
tracked closely with our historical rates, which ranged from 3% to 5% for fiscal
years 1998 through 2000. The clinical and industrial business segment
experienced higher than average growth in demand in its core microscope slide,
coverglass, histology, and cytology products. Domestic growth was higher than
average while international sales of products from our clinical and industrial
business segment were generally less than the prior year. The diagnostics and
microbiology business segment returned average growth for the year. The
diagnostic product lines for infectious disease, drugs of abuse, therapeutic
drug monitoring, and pregnancy testing reported high growth rates while the
manual microbiology lines, utilized in clinical settings, were about even with
the prior year. The majority of the growth in this segment was domestic. Growth
in sales of the laboratory equipment business segment was slightly down in
fiscal year 2000 due to the continued softness in foreign markets, laboratory
consolidation, and tough competition. The labware and life sciences business
segment reported strong growth, particularly in the areas of chromatography,
electrophoresis, packaging, labware, molecular biology, and high throughput
screening for drug discovery applications by pharmaceuticals.
Growth in each of these business segments requires the continuous development of
new products which enable laboratories, lab technicians and researchers to do
more tests and procedures more efficiently and which enable professionals and
consumers to obtain diagnoses faster and with improved accuracy. We believe that
one of our principal competitive advantages is our ability to respond to this
dynamic marketplace with new products. Other competitive advantages include the
breadth and depth of our product lines, significant brand recognition, the
economies associated with vertical integration in certain product lines,
long-term relationships with key industry distributors and, in several lines of
business, expertise in plastic molding technology and glass making.
41
50
There are significant competitors in each of our business segments. Our
principal competitors in the labware and life sciences business segment include
Corning Incorporated, Meridian Diagnostics, Millipore Corporation, Becton
Dickinson, and Greiner Holding AG. Principal competitors in the clinical and
industrial business segment include Shandon (a subsidiary of Thermo Electron
Corporation), Knittel Glaser, Kimble Glass, Surgipath Medical Industries, Inc.,
Sigma-Aldrich Company, Copan Diagnostics Company and Elkay Products, Inc.
Principal competitors in the diagnostics and microbiology business segment
include Becton Dickinson, Meridian Diagnostics, Dade Behring, Roche Diagnostics,
Quidel Corporation, Biokit S.A., Dyno Particles AS and Princeton Biomeditech
Corporation. Principal competitors in the laboratory equipment business segment
include Corning Incorporated, Millipore Corporation, New Brunswick Scientific
Company, Inc., Forma Scientific, Inc. and Lindberg/Blue M (owned by SPX
Corporation).
INTERNET STRATEGY
We have developed and implemented a multi-pronged internet strategy, which gives
our products high visibility to our customers.
In the clinical and industrial business segment, we list our distributed
products on the Allegiance business information system. All of our distributed
products carried by VWR are available through its e-commerce site. Many of our
products are also listed by our largest distributor, Fisher Scientific, on its
web site. In addition to the natural extensions in its distribution network, we
have our own e.commerce site for the Nalgene retail (outdoor) product line,
nalgene-outdoor.com.
As opposed to using non-distributor websites, we have chosen, primarily, to work
with our experienced distribution partners in adding the internet as another
avenue for customers worldwide to utilize when ordering our products. This
solution has little added costs for us, was implemented quickly, and allows our
products high visibility on the web.
RESEARCH AND DEVELOPMENT
We have a number of R&D programs in our various business segments, which we
consider to be of importance in maintaining our market positions. We spent
approximately $18.3 million, $12.6 million and $8.7 million on research and
development in 2000, 1999 and 1998, respectively, focused primarily on product
development.
Our research and development expenditures by business segment are as follows:
YEARS ENDED SEPTEMBER 30,
---------------------------
2000 1999 1998
------- ------- -------
(In thousands)
Labware and Life Sciences $ 6,964 $ 4,265 $ 4,140
Clinical and Industrial 1,703 498 505
Diagnostics and Microbiology 6,531 5,485 2,125
Laboratory Equipment 3,104 2,314 1,968
------- ------- -------
Total $18,302 $12,562 $ 8,738
======= ======= =======
REGULATION
MEDICAL DEVICES
Certain of our products are medical devices, which are subject to regulation by
the FDA and by the counterpart agencies of the foreign countries where our
products are sold. Some of the regulatory requirements of these foreign
countries are more stringent than those applicable in the United States.
Pursuant to the Federal Food, Drug, and Cosmetic Act (the "FDCA"), the FDA
regulates virtually all phases of the manufacture, sale, and distribution of
medical devices, including their introduction into interstate commerce and their
advertising, labeling, packaging, marketing, distribution and record keeping.
Pursuant to the FDCA and FDA regulations, certain facilities of our operating
subsidiaries are registered with the FDA as medical device manufacturing
establishments. These facilities and operations are regularly inspected by the
FDA.
42
51
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
Our operations entail a number of environmentally sensitive production
processes. Compliance with environmental laws and regulations, along with
regulations relating to workplace safety, is a priority in our businesses. Our
domestic facilities are subject to federal, state and local laws and regulations
concerning, among other things, solid and hazardous waste disposal, air
emissions and waste water discharge, and our foreign facilities are subject to
local laws and regulations regarding the environment. Our operations are also
subject to regulation relating to workplace safety, both in the United States
and abroad. Violations of any of these laws or regulations or the release of
toxic or hazardous materials used in our operations into the environment could
expose us to significant liability. Similarly, third party lawsuits relating to
environmental and workplace safety issues could result in substantial liability.
43
52
DESCRIPTION OF THE NOTES
The Original Notes were issued and the Exchange Notes will be issued under an
Indenture dated as of April 4, 2001 (the "Indenture"), among Apogent
Technologies, the Guarantors and The Bank of New York, as trustee (the
"Trustee"). The terms of the notes include those expressly set forth in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
This description of the notes is intended to be a useful overview of the
material provisions of the notes and the Indenture. Since this description of
the notes is only a summary, you should refer to the Indenture for a complete
description of our obligations and your rights.
GENERAL
THE NOTES.
The notes:
o are general unsecured, senior obligations of the Company;
o constitute a series of debt securities issued under the
Indenture, initially limited to an aggregate principal amount
of $325 million;
o will mature on April 1, 2011;
o have been and will be guaranteed by each subsidiary of the
Company which guarantees our obligations under the Credit
Agreement;
o have been and will be issued in denominations of $1,000 and
integral multiples of $1,000; and
o will be represented by one or more registered notes in global
form, but in certain circumstances may be represented by notes
in definitive form. See "Book-Entry, Delivery and Form."
INTEREST.
Interest on the notes will:
o accrue at the rate of 8% per annum;
o accrue from the date of issuance of the Original Notes or the
most recent interest payment date;
o be payable in cash semi-annually in arrears on April 1 and
October 1 of each year, commencing on October 1, 2001;
o be payable to the holders of record on the March 15 and
September 15 immediately preceding the related interest
payment date; and
o be computed on the basis of a 360-day year comprised of twelve
30-day months.
PAYMENT AND TRANSFER.
Principal of, premium, if any, and interest on the notes will be payable, and
the notes may be exchanged or transferred, at the office or agency maintained by
us for such purpose (which initially will be the corporate trust office of the
Trustee located at One Wall Street, New York, New York). Payment of principal
of, premium, if any, and interest on notes in global form registered in the name
of or held by the Depositary or its nominee will be made in immediately
available funds to the Depositary or its nominee, as the case may be, as the
registered holder of such global note. If any of the notes are no longer
represented by global
44
53
notes, payment of interest on the notes in definitive form may, at our option,
be made by check mailed directly to holders at their registered addresses.
A holder may transfer or exchange notes in definitive form at the same location
given in the preceding paragraph. No service charge will be made for any
registration of transfer or exchange of notes, but we may require payment of a
sum sufficient to cover any transfer tax or other similar governmental charge
payable in connection therewith. We are not required to transfer or exchange any
note selected for redemption or for a period of 15 days before a selection of
notes to be redeemed.
The registered holder of a note will be treated as the owner of it for all
purposes.
OPTIONAL REDEMPTION
The notes will be redeemable, at our option, at any time in whole, or from time
to time in part, upon not less than 30 and not more than 60 days' notice mailed
to each holder of notes to be redeemed at the holder's address appearing in the
note register, at a price equal to the greater of (i) 100% of the principal
amount of the notes to be redeemed or (ii) the sum of the present values of the
remaining scheduled payments of principal and interest (at the rate in effect on
the date of calculation of the redemption price) thereon (exclusive of interest
accrued to the date of redemption) discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve 30 day months) at
the applicable Treasury Yield plus 35 basis points, plus accrued interest to the
date of redemption.
Notes called for redemption become due on the date fixed for redemption (the
"Redemption Date"). Notices of redemption will be mailed by first-class mail at
least 30 but not more than 60 days before the Redemption Date to each noteholder
to be redeemed at its registered address. The notice of redemption for the notes
will state the amount to be redeemed. On and after the Redemption Date, interest
ceases to accrue on any notes that are redeemed. If less than all the notes are
redeemed at any time, the Trustee will select notes on a pro rata basis or by
any other method the Trustee deems fair and appropriate.
For purposes of determining the optional redemption price, the following
definitions are applicable:
"Treasury Yield" means, with respect to any Redemption Date applicable to the
notes, the rate per annum equal to the semiannual equivalent yield to maturity
(computed as of the third business day immediately preceding such Redemption
Date) of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
applicable Comparable Treasury Price for such Redemption Date.
"Comparable Treasury Issue" means the United States Treasury security selected
by an Independent Investment Banker as having a maturity comparable to the
remaining term of the notes that would be utilized, at the time of selection and
in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining terms of the
notes.
"Independent Investment Banker" means JPMorgan, a division of Chase Securities
Inc., or, if such firm is unwilling or unable to select the applicable
Comparable Treasury Issue, an independent investment banking institution of
national standing appointed by the Trustee and reasonably acceptable to the
Company.
"Comparable Treasury Price" means, with respect to any Redemption Date, (a) the
bid price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) at 4:00 P.M. on the third business day preceding such
Redemption Date, as set forth on "Telerate Page 500" (or such other page as may
replace Telerate Page 500), or (b) if such page (or any successor page) is not
displayed or does not contain such bid prices at such time (i) the average of
the Reference Treasury Dealer Quotations obtained by the Trustee for such
Redemption Date, after excluding the highest and lowest of four such Reference
Treasury Dealer Quotations, or (ii) if the Trustee is unable to obtain at least
four such Reference Treasury Dealer Quotations, the average of all Reference
Treasury Dealer Quotations obtained by the Trustee.
"Reference Treasury Dealer" means Chase Securities Inc. (and its successors) and
three other primary U.S. government securities dealers in New York City selected
by the Independent Investment Banker (each, a "Primary Treasury Dealer");
provided, however, that if any of the foregoing shall cease to be a Primary
Treasury Dealer, the Company shall substitute therefor another Primary Treasury
Dealer.
45
54
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date for the notes, an average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury issue
for the notes (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third business day preceding such Redemption Date.
Except as set forth above, the notes will not be redeemable by the Company prior
to maturity and will not be entitled to the benefit of any sinking fund.
FURTHER ISSUES
We may from time to time, without the consent of existing note holders, create
and issue further notes having the same terms and conditions as the notes in all
respects, except for issue date, issue price and first payment of interest
thereon. Additional notes issued in this manner will be consolidated with and
will form a single series with the previously outstanding notes.
RANKING
The Original Notes are and the Exchange Notes will be unsecured and
unsubordinated indebtedness of the Company and will rank equally with all other
existing and future unsecured and unsubordinated indebtedness of the Company.
The indebtedness evidenced by the Original Notes and the Exchange Notes will
effectively rank junior to any future secured indebtedness of the Company to the
extent of the assets securing such indebtedness and to all indebtedness and
other liabilities of its subsidiaries.
GUARANTEES
Each Guarantor has unconditionally guaranteed, jointly and severally, to each
holder and the Trustee the full and prompt payment of principal of, premium, if
any, and interest on the Original Notes and Exchange Notes, when and as the same
become due and payable, whether at maturity, upon redemption or repurchase, by
declaration of acceleration or otherwise; provided that if for any reason, the
obligations of a Guarantor terminate under the Credit Agreement (including,
without limitation, upon agreement of the lenders thereunder or upon the
replacement thereof with a credit facility not requiring such guarantees or upon
such Guarantor ceasing to be a Subsidiary), such Guarantor will be deemed
released from all its obligations under the Indenture and its Guarantee will
terminate.
The obligations of each Guarantor under its Guarantee are limited as necessary
to prevent that Guarantee from constituting a fraudulent conveyance or
fraudulent transfer under applicable law.
CERTAIN COVENANTS
Except as set forth below, neither the Company nor the Guarantors are restricted
by the Indenture from incurring any type of indebtedness or other obligation,
from paying dividends or making distributions on its capital stock or purchasing
or redeeming its capital stock. The Indenture does not require the maintenance
of any financial ratios or specified levels of net worth or liquidity. In
addition, the Indenture does not contain any provisions that would require the
Company to repurchase or redeem or otherwise modify the terms of any of the
notes upon a change in control or other events involving the Company which may
adversely affect the creditworthiness of the notes.
LIMITATIONS ON LIENS.
The Indenture provides that the Company will not, nor will it permit any
Subsidiary to, create, assume, incur or suffer to exist any mortgage, lien,
security interest, pledge, charge or other encumbrance ("liens") other than
Permitted Liens (as defined below) upon any Principal Property (as defined
below) or upon any shares of capital stock or indebtedness of any Subsidiary
owning or leasing any Principal Property, whether owned or leased on the date of
the Indenture or thereafter acquired, to secure any notes, bonds, debentures or
similar evidence of indebtedness for borrowed money ("debt") incurred or
guaranteed by the Company or any Subsidiary (other than the notes), without in
any such case making effective provision whereby all of the notes outstanding
(together with, if the Company so determines, any other debt or guarantee
thereof by the Company or any such Subsidiary ranking equally with the notes or
the Guarantees) shall be secured equally and ratably with, or prior to, such
debt so long as such debt shall be so secured.
46
55
"Consolidated Net Tangible Assets" means, at any date of determination, the
total amount of assets of the Company and its consolidated subsidiaries after
deducting therefrom:
(1) all current liabilities (excluding any current liabilities that by
their terms are extendable or renewable at the option of the obligor
thereon to a time more than 12 months after the time as of which the
amount thereof is being computed);
(2) total prepaid expenses and deferred charges; and
(3) all goodwill, trade names, trademarks, patents, licenses,
copyrights and other intangible assets, all as set forth, or on a
proforma basis would be set forth, on the consolidated balance sheet of
the Company and its consolidated subsidiaries for the Company's most
recently completed fiscal quarter, prepared in accordance with
generally accepted accounting principles.
"Permitted Liens" means:
(1) any lien which secures debt owing by a Subsidiary to the Company or
another Subsidiary;
(2) any lien in favor of the United States of America or any state
thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any state thereof, to
secure partial, progress, advance, or other payments pursuant to any
contract or statute, or any debt incurred by the Company or any
Subsidiary for the purpose of financing all or any part of the purchase
price of, or the cost of constructing or improving the property subject
to such lien, including, without limitation, any lien securing
industrial development, pollution control or similar revenue bonds;
(3) any lien upon any property created at the time of acquisition of
such property by the Company or any Subsidiary or within six months
after such time to secure all or a portion of the purchase price for
such property or debt incurred to finance such purchase price, whether
such debt was incurred prior to, at the time of or within six months
after the date of such acquisition; or any lien upon any property to
secure all or part of the cost of construction thereof or to secure
debt incurred prior to, at the time of, or within six months after
completion of such construction or the commencement of full operations
thereof (whichever is later), to provide funds for such purpose;
(4) any lien upon any property owned by the Company or its Subsidiaries
on the date hereof or existing thereon at the time of the acquisition
thereof by the Company or any Subsidiary and any lien upon any property
of a person existing thereon at the time such person becomes a
Subsidiary by acquisition, merger or otherwise; provided that, in each
case, such lien only encumbers the property or assets so acquired or
owned by such person at the time such person becomes a Subsidiary;
(5) any extension, renewal or replacement (or successive extensions,
renewals or replacements) of liens, in whole or in part, referred to in
clauses (1) through (4) above; provided, however, that any such
extension, renewal or replacement lien shall be limited to the property
covered by the lien extended, renewed or replaced; or
(6) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not material in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Company or its Subsidiaries.
"Principal Property" means, whether owned or leased on the date of the Indenture
or thereafter acquired, each manufacturing or processing plant or facility of
the Company or a Subsidiary located in the United States of America (other than
its territories and possessions) or Puerto Rico.
"Subsidiary" means any corporation, limited liability company or other business
entity of which more than 50% of the total voting power of the equity interests
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof or any partnership of which
more than 50% of the partners' equity interests (considering all partners'
equity interests as a single class) is, in each case, at the time owned or
controlled, directly or indirectly, by the Company, one or more of the
Subsidiaries of the Company, or a combination thereof.
47
56
RESTRICTION ON SALE-LEASEBACKS.
The Indenture provides that the Company will not, nor will it permit any
Subsidiary to, engage in the sale or transfer by the Company or any Subsidiary
of any Principal Property to a person (other than the Company or a Subsidiary)
and the taking back by the Company or any Subsidiary, as the case may be, of a
lease of such Principal Property (a "sale-leaseback transaction"), unless:
(1) such sale-leaseback transaction occurs within six months from the
date of the acquisition of the Principal Property subject thereto or
the date of the completion of construction or commencement of full
operations of such Principal Property, whichever is later;
(2) the sale-leaseback transaction involves a lease for a period,
including renewals, of not more than three years; or
(3) the Company or such Subsidiary, within a one-year period after such
sale-leaseback transaction, applies or causes to be applied an amount
not less than the Attributable Indebtedness from such sale-leaseback
transaction to the prepayment, repayment, redemption, reduction or
retirement of any debt of the Company or any Subsidiary having a
maturity of more than one year ("funded debt") that is not subordinated
to the notes.
This restriction does not prohibit the continuation of the sale-leaseback
arrangement entered into by the Company on December 21, 1988, as amended in
connection with the spin-off.
"Attributable Indebtedness," when used with respect to any sale-leaseback
transaction, means, as at the time of determination, the present value
(discounted at the rate of interest set forth in or implicit in the terms of the
lease) of the total obligations of the lessee for rental payments (other than
amounts required to be paid on account of property taxes, maintenance, repairs,
insurance, assessments, utilities, operating and labor costs and other items
that do not constitute payments for property rights) during the remaining term
of the lease included in such sale-leaseback transaction (including any period
for which such lease has been extended). In the case of any lease that is
terminable by the lessee upon the payment of a penalty or other termination
payment, such amount shall be the amount determined assuming termination upon
the first date such lease may be terminated (in which case the amount shall also
include the amount of the penalty or termination payment, but no rent shall be
considered as required to be paid under such lease subsequent to the first date
upon which it may be so terminated).
Notwithstanding the foregoing restrictions on liens and sale-leaseback
transactions, the Indenture provides that the Company may, and may permit any
Subsidiary to, create, assume, incur, or suffer to exist any lien other than a
Permitted Lien upon any Principal Property to secure debt incurred or guaranteed
by the Company or any Subsidiary (other than the notes) or effect any
sale-leaseback transaction of a Principal Property that is not excepted by
clauses (1) through (3), inclusive, of the first paragraph under "Restriction On
Sale-Leasebacks," without equally and ratably securing the notes provided that,
after giving effect thereto, the aggregate principal amount of outstanding debt
(other than the notes) secured by liens other than Permitted Liens upon
Principal Property plus the Attributable Indebtedness from sale-leaseback
transactions of Principal Property not so excepted, do not exceed 10% of
Consolidated Net Tangible Assets.
MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Indenture provides that the Company may not consolidate with or merge with
or into, or sell, lease, convey all or substantially all of its assets to,
another Person unless:
(1) the resulting, surviving or transferee Person (the "successor") is
either the Company or is a Person organized under the laws of the
United States, any state or the District of Columbia and assumes by
supplemental indenture all of the Company's obligations under the
Indenture and the notes; and
(2) immediately after giving effect to the transaction no Event of
Default or event which with notice or lapse of time would be an Event
of Default has occurred and is continuing.
The successor will be substituted for the Company in the Indenture with the same
effect as if it had been an original party to the Indenture. Thereafter, the
successor may exercise the rights and powers of the Company under the Indenture.
48
57
FUTURE GUARANTORS.
The Indenture provides that the Company will cause each Subsidiary created or
acquired by the Company and which becomes a Guarantor under the Credit Agreement
to execute and deliver to the Trustee a Guarantee pursuant to which such
Subsidiary will unconditionally guarantee, on a joint and several basis, the
full and prompt payment of the principal of, premium, if any and interest on the
notes.
EVENTS OF DEFAULT.
Each of the following is an Event of Default under the Indenture:
(1) default in any payment of interest or additional interest (as
required by the exchange and registration rights agreement) on any note
when due, continued for 30 days;
(2) default in the payment of principal of or premium, if any, on any
note when due at its stated maturity, upon optional redemption, upon
declaration or otherwise;
(3) failure by the Company or the Guarantors to comply for 60 days
after notice with its other agreements contained in the Indenture;
(4) (A) failure by the Company or any Guarantor to pay indebtedness for
money borrowed by the Company or such Guarantor, as the case may be, in
an aggregate principal amount of at least $25,000,000, at the later of
final maturity or the expiration of any applicable grace period or (B)
acceleration of the maturity of indebtedness for money borrowed by the
Company or any Guarantor, as the case may be, in an aggregate principal
amount of at least $25,000,000, if that acceleration results from a
default under the instrument giving rise to or securing such
indebtedness for money borrowed; or
(5) certain events of bankruptcy, insolvency or reorganization of the
Company, the Guarantors or any of their respective Subsidiaries which
is a "significant subsidiary" under Regulation S-X of the Securities
and Exchange Commission (the "bankruptcy provisions").
However, a default under clause (3) of this paragraph will not constitute an
Event of Default until the Trustee or the holders of 25% in principal amount of
the outstanding notes notify the Company or the Guarantors, as the case may be,
of the default and such default is not cured within the time specified in clause
(3) of this paragraph after receipt of such notice.
If an Event of Default (other than an Event of Default described in clause (5)
above) occurs and is continuing, the Trustee by notice to the Company or the
holders of at least 25% in principal amount of the outstanding notes by notice
to the Company and the Trustee, may, and the Trustee at the request of such
holders shall, declare the principal of, premium, if any, and accrued and unpaid
interest, if any, on all the notes to be due and payable. Upon such a
declaration, such principal, premium and accrued and unpaid interest will be due
and payable immediately. If an Event of Default described in clause (5) above
occurs and is continuing, the principal of, premium, if any, and accrued and
unpaid interest on all the notes will become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any holders.
The holders of a majority in aggregate principal amount of the outstanding notes
may waive all past defaults (except with respect to nonpayment of principal,
premium or interest) and rescind any such acceleration with respect to the notes
and its consequences if rescission would not conflict with any judgment or
decree of a court of competent jurisdiction and all existing Events of Default,
other than the nonpayment of the principal of, premium, if any, and interest on
the notes that have become due solely by such declaration of acceleration, have
been cured or waived.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders unless such holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium, if any, or interest when due, no holder may pursue any
remedy with respect to the Indenture or the notes unless:
o such holder has previously given the Trustee notice that an
Event of Default is continuing;
49
58
o holders of at least 25% in principal amount of the outstanding
notes have requested the Trustee to pursue the remedy;
o such holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense;
o the Trustee has not complied with such request within 60 days
after the receipt of the request and the offer of security or
indemnity; and
o the holders of a majority in principal amount of the
outstanding notes have not given the Trustee a direction that,
in the opinion of the Trustee, is inconsistent with such
request within such 60-day period.
Subject to certain restrictions, the holders of a majority in principal amount
of the outstanding notes are given the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee will be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
The Indenture provides that if a default occurs and is continuing and is known
to the Trustee, the Trustee must mail to each holder notice of the default
within 90 days after it occurs. Except in the case of a default in the payment
of principal of, premium, if any, or interest on any note, the Trustee may
withhold notice if the Trustee determines that withholding notice is in the
interests of the holders. In addition, the Company is required to deliver to the
Trustee, within 120 days after the end of each fiscal year, a certificate
indicating whether the signers thereof know of any default that occurred during
the previous year.
AMENDMENTS AND WAIVERS.
Modifications and amendments of the Indenture may be made by the Company, the
Guarantors and the Trustee with the consent of the holders of a majority in
principal amount of all debt securities (including the notes) then outstanding
under the Indenture (including consents obtained in connection with a tender
offer or exchange offer for the notes). However, without the consent of each
holder of an outstanding note affected, no amendment may, among other things:
o reduce the amount of notes whose holders must consent to an
amendment;
o reduce the stated rate of or extend the stated time for
payment of interest on any note;
o reduce the principal of or change the stated maturity of any
note;
o reduce the amount payable upon the redemption of any note or
change the time at which any note may be redeemed;
o make any note payable in money other than that stated in the
note;
o impair the right of any holder to receive payment of principal
of, premium, if any, and interest on such holder's notes on or
after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such holder's
notes;
o make any change in the amendment provisions which require each
holder's consent or in the waiver provisions; or
o release the Guarantors or modify the Guarantees other than in
accordance with the Indenture.
The holders of a majority in aggregate principal amount of the outstanding
notes, on behalf of all holders of notes, may waive compliance by the Company
with certain restrictive provisions of the Indenture. Subject to certain rights
of the Trustee as provided in the Indenture, the holders of a majority in
aggregate principal amount of the notes, on behalf of all holders, may
50
59
waive any past default under the Indenture (including any such waiver obtained
in connection with a tender offer or exchange offer for the notes), except a
default in the payment of principal, premium or interest or a default in respect
of a provision that under the Indenture that cannot be modified or amended
without the consent of the holder of each note that is affected.
Without the consent of any holder, the Company, the Guarantors and the Trustee
may amend the Indenture to:
o cure any ambiguity, omission, defect or inconsistency;
o provide for the assumption by a successor of the obligations
of the Company under the Indenture;
o provide for uncertificated notes in addition to or in place of
certificated notes; provided, however, that the uncertificated
notes are issued in registered form for purposes of Section
163(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), or in a manner such that the uncertificated notes are
described in Section 163(f)(2)(B) of the Code;
o add guarantees with respect to the notes;
o secure the notes;
o add to the covenants of the Company for the benefit of the
holders or surrender any right or power conferred upon the
Company;
o make any change that does not adversely affect the rights of
any holder;
o provide for the issuance of the exchange notes, which will
have terms substantially identical in all material respects to
the notes (except that the transfer restrictions contained in
the notes will be modified or eliminated, as appropriate), and
which will be treated, together with any outstanding notes, as
a single issue of securities; or
o comply with any requirement of the Securities and Exchange
Commission in connection with the qualification of the
Indenture under the Trust Indenture Act.
The consent of the holders is not necessary under the Indenture to approve the
particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment. After an amendment under the
Indenture becomes effective, the Company is required to mail to the holders a
notice briefly describing such amendment. However, the failure to give such
notice to all the holders, or any defect therein, will not impair or affect the
validity of the amendment.
DEFEASANCE.
The Company at any time may terminate all its obligations under the notes and
the Indenture ("legal defeasance"), except for certain obligations, including
those respecting the defeasance trust and obligations to register the transfer
or exchange of the notes, to replace mutilated, destroyed, lost or stolen notes
and to maintain a registrar and paying agent in respect of the notes. If the
Company exercises its legal defeasance option, the Guarantee will terminate with
respect to that series.
The Company at any time may terminate its obligations under covenants described
under "Certain Covenants" (other than "Merger and Consolidation"), cross
acceleration provisions and bankruptcy provisions with respect to the Company
described under "Events of Default" above ("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If the Company exercises its legal
defeasance option, payment of the notes may not be accelerated because of an
Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the notes may not be accelerated because of an
Event of Default specified in clause (3) or (5) under "Events of Default" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium, if any, and
interest on the notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of
51
60
an opinion of counsel (subject to customary exceptions and exclusions) to the
effect that holders of the notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance and will
be subject to Federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred. In the case of legal defeasance only, such opinion of counsel must
be based on a ruling of the Internal Revenue Service or other change in
applicable Federal income tax law.
CONCERNING THE TRUSTEE
The Bank of New York is the Trustee under the Indenture and has been appointed
by the Company as Registrar and Paying Agent with regard to the notes. The Bank
of New York is a participating bank under our Credit Facilities. As of March 15,
2001, we were indebted to it or its affiliates in the amount of $17.6 million.
GOVERNING LAW
The Indenture provides that it, the notes and the Guarantees will be governed
by, and construed in accordance with, the laws of the State of New York.
EXCHANGE OFFER AND REGISTRATION RIGHTS AGREEMENT
We, our subsidiary Guarantors, and the initial purchasers entered into the
exchange and registration rights agreement concurrently with the issuance of the
Original Notes. Under that agreement, we and our subsidiary Guarantors agreed
to:
o file with the Securities and Exchange Commission on or before
60 days after the date of issuance of the Original Notes a
registration statement on an appropriate form under the
Securities Act which we refer to as the exchange offer
registration statement, relating to a Exchange Offer for the
Original Notes and the Guarantees under the Securities Act;
and
o use our reasonable best efforts to cause the exchange offer
registration statement to be declared effective under the
Securities Act within 150 days after the date of issuance of
the Original Notes. As soon as practicable after the
effectiveness of the exchange offer registration statement, we
will offer to the holders of transfer restricted securities,
as defined below, who are not prohibited by any law or policy
of the Securities and Exchange Commission from participating
in the exchange offer, the opportunity to exchange their
transfer restricted securities for an issue of a new series of
notes, which we refer to as the Exchange Notes, that are
identical in all material respects to the Original Notes,
except that the Exchange Notes will not contain transfer
restrictions and will be registered under the Securities Act.
We promised to keep the Exchange Offer open for not less than
20 business days, or longer if required by applicable law,
after the date on which notice of the Exchange Offer is mailed
to the holders of the Original Notes.
52
61
If
o we are not permitted to effect the Exchange Offer as
contemplated by this prospectus because of any change in law
or applicable interpretations of the law by the staff of the
Securities and Exchange Commission;
o for any other reason the Exchange Offer is not consummated
within 180 days after the date of issuance of the Original
Notes;
o any Original Notes validly tendered pursuant to the Exchange
Offer are not exchanged for Exchange Notes within 10 days of
being accepted in the Exchange Offer;
o any initial purchaser so requests with respect to Original
Notes held by the initial purchasers that are not eligible to
be exchanged for Exchange Notes in the Exchange Offer;
o any applicable law or interpretations do not permit any holder
of Original Notes to participate in the Exchange Offer; or
o any holder of Original Notes that participates in the Exchange
Offer does not receive freely transferable Exchange Notes in
exchange for tendered notes,
then we will file as promptly as practicable, but in no event more than 20 days
after so required or requested, with the Securities and Exchange Commission,
which we refer to as the shelf filing date, a shelf registration statement to
cover resales of transfer restricted securities by those holders who satisfy
various conditions relating to the provision of information in connection with
the shelf registration statement.
For purposes of the above, "transfer restricted securities" means each Original
Note, until the earliest to occur of:
o the date on which that Original Note has been exchanged for a
freely transferable Exchange Security in the Exchange Offer;
o the date on which that Original Note has been effectively
registered under the Securities Act and disposed of in
accordance with the shelf registration statement; or
o the date on which that Original Note is distributed to the
public pursuant to Rule 144 under the Securities Act or may be
sold under Rule 144(k) under the Securities Act.
We are required to use our reasonable best efforts to have the exchange offer
registration statement or, if applicable, the shelf registration statement
declared effective by the Securities and Exchange Commission as promptly as
practicable after it is filed. Unless the Exchange Offer would not be permitted
by policy of the Securities and Exchange Commission, we promised to commence the
Exchange Offer and to use our reasonable best efforts to consummate the Exchange
Offer as promptly as practicable, but in any event before 150 days after the
date of issuance of the Original Notes. If applicable, we are required to use
our reasonable best efforts to keep the shelf registration statement effective
for a period ending on the earlier of two years after the date of issuance of
the Original Notes or the date all transfer restricted securities become
eligible for resale without volume restrictions under Rule 144 under the
Securities Act.
The registration statement of which this prospectus is a part is the exchange
offer registration statement described above, and the exchange offer described
in this prospectus is the Exchange Offer described above. For each Original Note
surrendered to us pursuant to the Exchange Offer, we will issue to the holder an
Exchange Security having a principal amount equal to that of the surrendered
Original Note. Interest on the Exchange Security will accrue from the last
interest payment date on which interest was paid on the Original Note
surrendered in exchange therefor or, if no interest has been paid on that
Original Note, from the date interest began to accrue on that Original Note.
Under the Registration Rights Agreement, if any of the following events (each, a
"registration default") occur:
53
62
o the exchange offer registration statement is not filed with
the Securities and Exchange Commission on or before 60 days
after the date of issuance of the Original Notes or the shelf
registration statement is not filed with the Securities and
Exchange Commission on or before the shelf filing date;
o the exchange offer registration statement is not declared
effective within 150 days after the date of issuance of the
Original Notes or the shelf registration statement is not
declared effective within 90 days after the shelf filing date;
o the Exchange Offer is not consummated on or before 180 days
after the date of issuance of the Original Notes; or
o the shelf registration statement is filed and declared
effective within 90 days after the shelf filing date but
thereafter ceases to be effective, at any time that we and our
subsidiary Guarantors are obligated to maintain its
effectiveness, without being succeeded within 30 days by an
additional registration statement filed and declared effective
we and our subsidiary guarantors will be obligated to pay additional interest to
each holder of transfer restricted securities, during the period of one or more
registration defaults, in an amount equal to .25% per annum of the principal
amount of the notes constituting transfer restricted securities held by the
holder during the first 90 day period following such registration default,
increasing by an additional .25% per annum during each subsequent 90 day period
up to a maximum of .50%, until the applicable registration statement is filed,
the exchange offer registration statement is declared effective and the Exchange
Offer is consummated, or the shelf registration statement is declared effective
or again becomes effective, as the case may be. The required filing and
effectiveness of the exchange offer registration statement have now been
accomplished. All accrued additional interest will be paid to holders in the
same manner as interest payments on the notes on semi-annual payment dates that
correspond to interest payment dates for the notes. Additional interest only
accrues during a registration default.
The Registration Rights Agreement also provides that we will:
o make available, for a period of 180 days after the
consummation of the Exchange Offer, a prospectus meeting the
requirements of the Securities Act to any broker-dealer for
use in connection with any resale of any Exchange Notes; and
o pay all expenses incident to the Exchange Offer, including the
expense of one counsel to the holders of the notes, and will
indemnify certain holders of the notes, including any
broker-dealer, against some liabilities, including liabilities
under the Securities Act.
A broker-dealer that delivers a prospectus to purchasers in connection with
resales of the Exchange Notes will be subject to certain of the civil liability
provisions under the Securities Act and will be bound by the provisions of the
Registration Rights Agreement, including indemnification rights and obligations.
Each holder of Original Notes who wishes to exchange its Original Notes for
Exchange Notes in the Exchange Offer will be required to make representations,
including representations that:
o any Exchange Notes to be received by it will be acquired in
the ordinary course of its business;
o it has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes; and
o it is not an "affiliate," as defined in Rule 405 under the
Securities Act, of ours, or if it is an affiliate, that it
will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
If the holder is not a broker-dealer, it will be required to represent that it
is not engaged in, and does not intend to engage in, the distribution of the
Exchange Notes. If the holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Original Notes that were acquired as a
result of market-making activities or other trading activities, it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of its Exchange Notes.
54
63
Holders of the Original Notes will be required to make representations to us, as
described above, in order to participate in the Exchange Offer. They will also
be required to deliver information to be used in connection with the shelf
registration statement in order to have their Original Notes included in the
shelf registration statement and benefit from the provisions regarding
additional interest set forth in the preceding paragraphs. A holder who sells
notes pursuant to the shelf registration statement generally will be required to
be named as a selling securityholder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with these sales and will be
bound by the provisions of the Registration Rights Agreement that are applicable
to such a holder, including indemnification obligations.
For so long as the Original Notes are outstanding, we and, so long as the
Guarantees are not released, our subsidiary Guarantors will continue to provide
to holders of the Original Notes and to prospective purchasers of the Original
Notes the information required by Rule 144A(d)(4) under the Securities Act.
The above description of the Registration Rights Agreement is a summary only. It
is not complete and does not describe all of the provisions of the Registration
Rights Agreement. We will provide a copy of the Registration Rights Agreement to
prospective purchasers of Original Notes who are identified to us by an initial
purchaser upon request.
TRANSFER RESTRICTIONS
Each purchaser of Original Notes from the initial purchasers, by its acceptance
of the Original Notes, is deemed to have acknowledged, represented to and agreed
with us and the initial purchasers as follows:
(1) It understands and acknowledges that:
o neither the Original Notes nor the Guarantees have been
registered under the Securities Act or any other applicable
securities law; and
o the Original Notes were offered for resale in transactions
that do not require registration under the Securities Act or
any other securities laws; and
o unless so registered, the Original Notes may not be offered,
sold or otherwise transferred except in compliance with the
registration requirements of the Securities Act or any other
applicable securities laws, under an exemption from the
securities laws or in a transaction not subject to the
securities laws, and in each case in compliance with the
conditions for transfer set forth in paragraph (4) below.
(2) It is not an "affiliate," as defined in Rule 144 under the
Securities Act, of ours or acting on our behalf, and it is either:
o a "qualified institutional buyer," as defined in Rule 144A
(referred to as a "QIB"), and is aware that any sale of the
Original Notes to it has been or will be made in reliance on
Rule 144A and the acquisition will be for its own account or
for the account of another QIB; or
o not a "U.S. person," as defined in Regulation S, or purchasing
for the account or benefit of a U.S. person, other than a
distributor, and it purchased or is purchasing Original Notes
in an offshore transaction in accordance with Regulation S.
(3) It acknowledges that neither we, the initial purchasers nor any
person representing us or the initial purchasers has made any
representation to it with respect to us or the offering of the Original
Notes, other than the information contained in the offering circular
dated March 30, 2001, which has been delivered to it and upon which it
relied or is relying in making its investment decision with respect to
the Original Notes. It has had access to financial and other
information concerning us and the Original Notes as it has deemed
necessary in connection with its decision to purchase the Original
Notes, including an opportunity to ask questions of and request
information from us and the initial purchasers.
55
64
(4) It purchased or is purchasing the Original Notes for its own
account, or for one or more investor accounts for which it is acting as
a fiduciary or agent, in each case not with a view to, or for offer or
sale in connection with, any distribution of the Original Notes in
violation of the Securities Act, subject to any requirement of law that
the disposition of its property or the property of that investor
account or accounts be at all times within its or their control and
subject to its or their ability to resell the Original Notes pursuant
to Rule 144A or any other available exemption from registration under
the Securities Act. It agrees on its own behalf and on behalf of any
investor account for which it is purchasing the Original Notes, and
each subsequent holder of the Original Notes by its acceptance of the
notes will agree, to offer, sell or otherwise transfer the Original
Notes before the date that is two years after the later of the date of
original issue of the Original Notes and the last date that we or any
of our affiliates was the owner of the Original Notes, or any
predecessor of the Original Notes (referred to as the "resale
restriction termination date") only:
o to us;
o pursuant to a registration statement that has been declared
effective under the Securities Act;
o for so long as the Original Notes are eligible for resale
pursuant to Rule 144A, to a person it reasonably believes is a
QIB that is purchasing for its own account or for the account
of a QIB to whom notice is given that the transfer is being
made in reliance on Rule 144A;
o pursuant to offers and sales that occur outside the United
States within the meaning of Regulation S under the Securities
Act;
o to an "accredited investor," within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act, that is
an institutional investor (referred to as an "institutional
accredited investor") purchasing for its own account or for
the account of an institutional accredited investor, in each
case in a minimum principal amount of the Original Notes of
$250,000; or
o pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in
each of the above cases to any requirement of law that the
disposition of its property or the property of that investor
account or accounts be at all times within its or their
control.
The above restrictions on resale will not apply to the Exchange Notes,
and they will not apply to Original Notes after the resale restriction
termination date. If any resale or other transfer of the Original Notes
is proposed to be made according to the fifth clause above before the
resale restriction termination date, the transferor must deliver to us
and the trustee a letter from the transferee substantially in the form
of Annex A to the offering circular dated March 30, 2001, which must
provide, among other things, that the transferee is an institutional
accredited investor that is acquiring the Original Notes not for
distribution in violation of the Securities Act. Each purchaser
acknowledges that we and the trustee reserve the right before any
offer, sale or other transfer before the resale restriction termination
date of the Original Notes according to the fourth, fifth and sixth
clauses above to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to us and the
trustee. Each purchaser acknowledges that each Original Note contains
or will contain a legend substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS
OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS
PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE")
THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY
(A) TO THE ISSUER,
56
65
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT,
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES
OF $250,000 OF SECURITIES, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
(5) Each holder of an Original Note acknowledges that we, the initial
purchasers and others will rely upon the truth and accuracy of the
above acknowledgments, representations and agreements and agrees that,
if any of the acknowledgments, representations or agreements deemed to
have been made by it by its purchase of Original Notes is no longer
accurate, it shall promptly notify us and the initial purchasers. If it
acquired or is acquiring any Original Notes as a fiduciary or agent for
one or more investor accounts, it represents that it has sole
investment discretion with respect to each of those accounts and that
it has full power to make the above acknowledgments, representations
and agreements on behalf of each account.
BOOK-ENTRY; DELIVERY AND FORM
The Original Notes were offered and sold in the initial offering in the United
States solely to QIBs, under Rule 144A and in offshore transactions to persons
other than "U.S. persons," as defined in Regulation S under the Securities Act,
in reliance on Regulation S. Following the initial offering, the Original Notes
may be sold to:
o QIBs under Rule 144A;
o non-U.S. persons in reliance on Regulation S; and
o under other exemptions from, or in transactions not subject
to, the registration requirements of the Securities Act, as
described under "Transfer Restrictions," including sales to
institutional accredited investors within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act that are
not QIBs.
These restrictions do not apply to the Exchange Notes.
THE GLOBAL NOTES
Rule 144A Global Note. Original Notes offered and sold to QIBs under Rule 144A
were issued in the form of one or more registered notes in global form, without
interest coupons (referred to collectively as the "Rule 144A Global Note"). The
Rule 144A Global Note was deposited on the date of the closing of the sale of
the Original Notes with, or on behalf of, The Depository Trust Company and
registered in the name of Cede & Co., as nominee of DTC, or remains in the
custody of the Trustee pursuant to the FAST Balance Certificate Agreement
between DTC and the Trustee. Interests in the Rule 144A Global Note are
available for purchase only by QIBs.
57
66
Regulation S Global Notes. Original Notes offered and sold in offshore
transactions to non-U.S. persons in reliance on Regulation S have been or will
be issued in the form of one or more registered notes in global form, without
interest coupons (referred to collectively as the "Regulation S Global Note").
The Regulation S Global Note has been deposited upon issuance with, or on behalf
of, a custodian for DTC in the manner described in the preceding paragraph for
credit to the respective accounts of the purchasers, or to other accounts as
they may direct, at Euroclear Bank S.A./N.V., as operator of the Euroclear
System ("Euroclear"), or Clearstream Bank, societe anonyme ("Clearstream").
Investors may hold their interests in the Regulation S Global Note directly
through Euroclear or Clearstream, if they are participants in these systems, or
indirectly through organizations that are participants in these systems. After
the expiration of the restricted period, as defined below, investors may also
hold these interests through organizations other than Euroclear or Clearstream
that are participants in the DTC system. Euroclear and Clearstream hold or will
hold the interests in the Regulation S Global Note on behalf of their
participants through customers' securities accounts in their respective names on
the books of their respective depositaries. These depositaries, in turn, hold or
will hold the interests in the Regulation S Global Note in customers' securities
accounts in the depositaries' names on the books of DTC.
Institutional Accredited Investor Global Note. In connection with the resale of
Original Notes to an institutional accredited investor, beneficial interests in
any of the global notes may be exchanged for interests in a separate note in
registered form, without interest coupons (referred to as the "Institutional
Accredited Investor Global Note"), which was deposited on the date of the
closing of the sale of the Original Notes with, or on behalf of, a custodian for
DTC in the manner described in the preceding paragraphs.
Exchange Security Global Note. Exchange Notes issued in the Exchange Offer will
be issued in the form of one or more registered notes in global form, without
interest coupons (referred to collectively as the "Exchange Security Global
Note"). The Exchange Security Global Note will be deposited on the date of the
closing of the Exchange Offer with, or on behalf of, The Depository Trust
Company and registered in the name of Cede & Co., as nominee of DTC, or remain
in the custody of the Trustee pursuant to the FAST Balance Certificate Agreement
between DTC and the Trustee.
Except as set forth below, the Rule 144A Global Note, the Regulation S Global
Note, the Institutional Accredited Investor Global Note and the Exchange
Security Global Note may be transferred, in whole and not in part, solely to
another nominee of DTC or to a successor of DTC or its nominee. Beneficial
interests in the global notes may not be exchanged for notes in physical,
certificated form except in the limited circumstances described below.
The Original Notes are and will continue to be subject to various restrictions
on transfer and will bear a restrictive legend as set forth under "Transfer
Restrictions." The Exchange Notes will not be subject to those transfer
restrictions.
All interests in the global notes, including those held through Euroclear or
Clearstream, may be subject to the procedures and requirements of DTC. Those
interests held through Euroclear or Clearstream may also be subject to the
procedures and requirements of their systems.
EXCHANGES AMONG THE GLOBAL NOTES
Before the 40th day after the later of the commencement of the offering of the
Original Notes and the date of the closing of the sale of the Original Notes
(this period through and including such 40th day is referred to as the
"restricted period" and it ends May 14, 2001), transfers by an owner of a
beneficial interest in the Regulation S Global Note to a transferee who takes
delivery of that interest through the Rule 144A Global Note or the Institutional
Accredited Investor Global Note will be made only in accordance with applicable
procedures and upon receipt by the trustee of a written certification from the
transferor of the beneficial interest in the form provided in the indenture to
the effect that the transfer is being made to:
o a QIB within the meaning of Rule 144A in a transaction meeting
the requirements of Rule 144A; or
o an institutional accredited investor purchasing for its own
account, or for the account of an institutional accredited
investor, in a minimum principal amount of the notes of
$250,000.
The written certification will no longer be required after the expiration of the
restricted period. In addition, in the case of a transfer pursuant to the second
bullet point above, whether before or after the expiration of the restricted
period, the transferor
58
67
may be required to deliver to the trustee a letter from the transferee
substantially in the form of Annex A hereto, which must provide, among other
things, that the transferee is an institutional accredited investor that is
acquiring the Original Notes not for distribution in violation of the Securities
Act.
Transfers by an owner of a beneficial interest in the Rule 144A Global Note or
the Institutional Accredited Investor Global Note to a transferee who takes
delivery of the interest through the Regulation S Global Note, whether before or
after the expiration of the restricted period, will be made only upon receipt by
the Trustee of a certification from the transferor to the effect that the
transfer is being made in accordance with Regulation S or, if available, Rule
144 under the Securities Act, and that, if the transfer is being made before the
expiration of the restricted period, the interest transferred will be held
immediately after the transfer through Euroclear or Clearstream.
Any beneficial interest in one of the global notes that is transferred to a
person who takes delivery in the form of an interest in another global note
will, upon transfer, cease to be an interest in that global note and become an
interest in the other global note and, accordingly, will then be subject to any
transfer restrictions and other procedures applicable to beneficial interests in
the other global note.
BOOK-ENTRY PROCEDURES FOR THE GLOBAL NOTES
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream set forth below are provided solely as a matter of convenience.
These operations and procedures are solely within the control of these
settlement systems and are subject to change by them from time to time. Neither
we nor the initial purchasers take any responsibility for these operations or
procedures, and investors are urged to contact the relevant system or its
participants directly to discuss these matters.
DTC has advised us that it is:
o a limited purpose trust company organized under the laws of
the State of New York;
o a "banking organization" within the meaning of the New York
Banking Law;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended; and
o a "clearing agency" registered under Section 17A of the
Securities Exchange Act of 1934.
DTC was created to hold securities for its participants and facilitates the
clearance and settlement of securities transactions between its participants
through electronic book-entry changes to the accounts of its participants, which
eliminates the need for physical transfer and delivery of certificates. DTC's
participants include securities brokers and dealers, including the initial
purchasers; banks and trust companies; clearing corporations and some other
organizations. Indirect access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies; these indirect
participants clear through or maintain a custodial relationship with a
participant in DTC, either directly or indirectly. Investors who are not DTC
participants may beneficially own securities held by or on behalf of DTC only
through participants or indirect participants in DTC.
We expect that pursuant to procedures established by DTC:
o upon deposit of each global note, DTC will credit the accounts
of participants in DTC designated by the initial purchasers
with an interest in the global note; and
o ownership of the notes will be shown on, and the transfer of
ownership of the notes will be effected only through, records
maintained by DTC, with respect to the interests of
participants in DTC, and the records of participants and
indirect participants, with respect to the interests of
persons other than participants in DTC.
The laws of some jurisdictions may require that some purchasers of securities
take physical delivery of the securities in definitive form. Accordingly, the
ability to transfer interests in the notes represented by a global note to these
persons may be limited. In addition, because DTC can act only on behalf of its
participants, who in turn act on behalf of persons who hold interests through
59
68
participants, the ability of a person having an interest in notes represented by
a global note to pledge or transfer that interest to persons or entities that do
not participate in DTC's system, or to otherwise take actions in respect of that
interest, may be affected by the lack of a physical definitive security in
respect of the interest.
So long as DTC or its nominee is the registered owner of a global note, DTC or
the nominee, as the case may be, will be considered the sole owner or holder of
the notes represented by the global note for all purposes under the indenture.
Except as provided below, owners of beneficial interests in a global note:
o will not be entitled to have notes represented by the global
note registered in their names;
o will not receive or be entitled to receive physical delivery
of certificated notes; and
o will not be considered the owners or holders of the notes
under the indenture for any purpose, including with respect to
the giving of any direction, instruction or approval to the
trustee under the indenture.
Accordingly, each holder owning a beneficial interest in a global note must rely
on the procedures of DTC and, if the holder is not a participant or an indirect
participant in DTC, on the procedures of the DTC participant through which the
holder owns its interest, to exercise any rights of a holder of notes under the
indenture or the global note. We understand that under existing industry
practice, if we request any action of holders of notes, or a holder that is an
owner of a beneficial interest in a global note desires to take any action that
DTC, as the holder of the global note, is entitled to take, then DTC would
authorize its participants to take the action and the participants would
authorize holders owning through participants to take the action or would
otherwise act upon the instruction of such holders. Neither we nor the Trustee
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of notes by DTC, or for maintaining, supervising
or reviewing any records of DTC relating to the notes.
Payments with respect to the principal of, and premium, if any, and interest
(including additional interest, if any) on, any notes represented by a global
note registered in the name of DTC or its nominee on the applicable record date
will be payable by the Trustee to or at the direction of DTC or its nominee in
its capacity as the registered holder of the global note representing those
notes under the indenture. Under the terms of the indenture, we and the Trustee
may treat the persons in whose names the notes, including the global notes, are
registered as the owners of the notes for the purpose of receiving payment on
the notes and for any and all other purposes whatsoever. Accordingly, neither we
nor the Trustee has or will have any responsibility or liability for the payment
of amounts to owners of beneficial interests in a global note, including
principal, premium, if any, liquidated damages, if any, and interest. Payments
by the participants and the indirect participants in DTC to the owners of
beneficial interests in a global note will be governed by standing instructions
and customary industry practice and will be the responsibility of the
participants or the indirect participants and DTC.
Transfers between participants in DTC will be effected in accordance with DTC's
procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the notes,
cross-market transfers between the participants in DTC, on the one hand, and
Euroclear or Clearstream participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary. These
cross-market transactions, however, will require delivery of instructions to
Euroclear or Clearstream, as the case may be, by the counterparty in that system
in accordance with the rules and procedures and within the established
deadlines, Brussels time, of that system. If the transaction meets its
settlement requirements, Euroclear or Clearstream, as the case may be, will
deliver instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the relevant
global notes in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Clearstream participants may not deliver instructions directly
to the depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a global note from a
participant in DTC will be credited, and any crediting will be reported to the
relevant Euroclear or Clearstream participant, during the securities settlement
processing day, which must be a business day for Euroclear and Clearstream,
immediately following the settlement date of DTC. Cash received in Euroclear or
Clearstream as a result of sales of
60
69
interest in a global note by or through a Euroclear or Clearstream participant
to a participant in DTC will be received with value on the settlement date of
DTC but will be available in the relevant Euroclear or Clearstream cash account
only as of the business day for Euroclear or Clearstream following DTC's
settlement date.
Although DTC, Euroclear and Clearstream have agreed to the above procedures to
facilitate transfers of interests in the global notes among participants in DTC,
Euroclear and Clearstream, they are under no obligation to perform or to
continue to perform the procedures, and the procedures may be discontinued at
any time. Neither we nor the Trustee will have any responsibility for the
performance by DTC, Euroclear or Clearstream or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
61
70
CERTIFICATED NOTES
If:
o DTC notifies us that it is at any time unwilling or unable to
continue as a depositary or DTC ceases to be registered as a
clearing agency under the Securities Exchange Act of 1934 and
a successor depositary is not appointed within 90 days of such
notice or cessation;
o we, at our option, notify the Trustee in writing that we elect
to cause the issuance of notes in definitive form under the
indenture; or
o upon the occurrence of some other events as provided in the
indenture;
then, upon surrender by DTC of the global notes, certificated notes will be
issued to each person that DTC identifies as the beneficial owner of the notes
represented by the global notes. Upon the issuance of certificated notes, the
Trustee is required to register the certificated notes in the name of that
person or persons, or their nominee, and cause the certificated notes to be
delivered thereto.
Neither we nor the Trustee will be liable for any delay by DTC or any
participant or indirect participant in DTC in identifying the beneficial owners
of the related notes and each of those persons may conclusively rely on, and
will be protected in relying on, instructions from DTC for all purposes,
including with respect to the registration and delivery, and the respective
principal amounts, of the notes to be issued.
62
71
CERTAIN UNITED STATED FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain material federal income tax
consequences of the ownership and disposition of the notes. This discussion is
based upon laws, regulations, rulings and decisions currently in effect, all of
which are subject to change, retroactively or prospectively.
This discussion is for general information only and pertains only to notes held
as capital assets within the meaning of Section 1221 of the Code. This summary
applies only to a beneficial owner of a note who acquires a note at the initial
offering and for the original offering price thereof and may not apply to
certain categories of investors subject to special treatment under the Code,
such as banks, thrift institutions, real estate investment trusts, regulated
investment companies, other financial institutions, insurance companies, dealers
in securities or currencies, pension plans, tax exempt organizations, persons
that are passthrough entities or investors in passthrough entities, traders in
securities that elect to use a mark-to-market method of accounting for their
securities holdings, persons liable for the alternative minimum tax, holders of
notes whose "functional currency" is not the U.S. dollar, and persons who have
acquired notes as part of a straddle, hedge, conversion or constructive sale
transaction or other integrated investment. Moreover, this discussion summarizes
only federal income tax consequences and does not address any other federal tax
consequences or any state, local or other tax consequences. Controversy and
uncertainty exist in many areas of the federal income tax law that may affect an
investment in notes. Accordingly, there can be no assurance that some of the
views expressed herein will not be challenged by the IRS.
ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT, AND MUST DEPEND UPON,
THEIR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE
OWNERSHIP AND DISPOSITION OF THE NOTES TO THEM, INCLUDING ANY FEDERAL, STATE,
LOCAL OR OTHER TAX CONSEQUENCES (INCLUDING ANY TAX RETURN FILING OR OTHER TAX
REPORTING REQUIREMENTS) OF THE OWNERSHIP AND DISPOSITION OF THE NOTES.
As used herein the term "United States Holder" means a beneficial owner of a
note that is, for United States federal income tax purposes, (i) a citizen or
resident alien of the United States, (ii) a corporation created or organized in
or under the laws of the United States or of any political subdivision thereof,
(iii) an estate the income of which is subject to United States federal income
taxation regardless of its source, or (iv) a trust (X) that is subject to the
supervision of a court within the United States and the control of one or more
United States persons as described in section 7701(a)(30) of the Code or (Y)
that has a valid election in effect under applicable U.S. Treasury regulations
to be treated as a United States person. The term "Non-U.S. Holder" means a
beneficial owner of a note that is not a United States Holder.
If a partnership holds the notes, the tax treatment of a partner will generally
depend on the status of the partner and the activities of the partnership. If
you are a partner of a partnership holding the notes, you should consult your
tax advisors.
UNITED STATES TAXATION OF NON-U.S. HOLDERS
Payments of Interest
Interest paid to a Non-U.S. Holder will not be subject to United States federal
income or withholding tax if such interest is not effectively connected with the
conduct of a trade or business within the United States by the Non-U.S. Holder
and (i) the Non-U.S. Holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of our stock entitled to vote,
(ii) the Non-U.S. Holder is not a controlled foreign corporation that is related
to us actually or constructively though stock ownership and (iii) either (a) the
Non-U.S. Holder provides its name and address on an IRS Form W-8BEN (or other
applicable form) and certifies, under penalty of perjury, that it is not a
United States person or (b) the Non-U.S. Holder holds its notes through certain
foreign intermediaries or certain foreign partnerships, and it satisfies the
certification requirements of applicable United States Treasury regulations.
Special certification rules apply to certain Non-United States Holders that are
entities rather than individuals.
As more fully described under "Exchange Offer and Registration Rights
Agreement," upon the occurrence of certain enumerated events we may be required
to pay "additional interest." Notwithstanding the above, it is possible that
such payments might be subject to U.S. federal income or withholding tax.
If a Non-U.S. Holder cannot satisfy the requirements described above, payments
of premium, if any, and interest made to such Non-U.S. Holder will be subject to
the 30% United States federal withholding tax, unless the Non-U.S. Holder
provides us with
63
72
a properly executed IRS Form W-8BEN (or other applicable form) claiming an
exemption from, or reduction in, withholding under the benefit of an applicable
tax treaty; or IRS Form W-8ECI (or other applicable form) stating that interest
paid on the notes is not subject to withholding tax because it is effectively
connected with the Non-U.S. Holder's conduct of a trade or business in the
United States.
The 30% United States federal withholding tax generally will not apply to any
gain that a Non-U.S. Holder realizes on the sale, exchange, retirement or other
disposition of a note.
Disposition of the Notes
Subject to the discussion of backup withholding below, a Non-U.S. Holder
generally will not be subject to United States federal income tax with respect
to gains realized on the disposition of a note, unless (i) the gain is
effectively connected with a United States trade or business conducted by the
Non-U.S. Holder, or (ii) the Non-U.S. Holder is an individual who is present in
the United States for 183 or more days during the taxable year of the
disposition and certain other requirements are satisfied, unless an applicable
income tax treaty exempts the gain from U.S. tax. If a Non-U.S. Holder is
subject to tax pursuant to (ii) in the immediately preceding sentence, the tax
is imposed at the rate of 30%. Gains described in this paragraph are exempt from
United States federal withholding tax.
The exchange of a note for an exchange note pursuant to the exchange offer
described in "Exchange Offer and Registration Rights Agreement" should not
constitute a "significant modification" of the note for United States federal
income tax purposes and, accordingly, the exchange note received should be
treated as a continuation of the note in the hands of the holder. As a result,
there will be no United States federal income tax consequences to a Non-U.S.
Holder who exchanges a note for an exchange note pursuant to the exchange offer.
Effectively Connected Income
If interest and other payments received by a Non-U.S. Holder with respect to the
notes (including proceeds from the disposition of the notes) are effectively
connected with a conduct by the Non-U.S. Holder of a trade or business within
the United States (or the Non-U.S. Holder is otherwise subject to United States
federal income taxation on a net basis with respect to such holder's ownership
of the notes), such Non-U.S. Holder will generally be subject to U.S. federal
income tax, subject to any modification provided under an applicable income tax
treaty. Stated interest payable on the notes generally will generally be taxable
as interest income at the time accrued or received, in accordance with the
holder's method of accounting for United States federal income tax purposes.
Interest income is taxed at ordinary applicable graduated income tax rates. Upon
the sale, exchange or other disposition of a note, capital gain or loss will be
recognized in an amount equal to the difference between the amount realized by
the holder (except to the extent such amount is attributable to accrued but
unpaid interest, which will be includible in income as interest to the extent
not previously included in income and in accordance with the holder's method of
accounting) and the holder's adjusted tax basis in the note. Holders are advised
to consult their tax advisors regarding the taxation of capital gains and
losses.
A Non-U.S. Holder may also be subject to the "branch profits tax" if such holder
is a corporation.
Income effectively connected with the conduct of a trade or business within the
United States is not subject to United States federal withholding tax.
Backup Withholding and Information Reporting
In general, no information reporting or backup withholding will be required
regarding payments that we make to a holder of a note provided that we do not
have actual knowledge that such holder is a United States person and we have
received from such holder the statement described above under "United States
Taxation of Non-U.S. Holders -- Payments of Interest."
In addition, no information reporting or backup withholding will be required
regarding the proceeds of the sale of a note made within the United States or
conducted through certain United States related financial intermediaries, if the
payor receives the statement described above and does not have actual knowledge
that the holder of the note is a United States person, or such holder otherwise
establishes an exemption.
The amount of any backup withholding imposed on a payment to a holder of a note
will be allowed as a credit against such holder's United States federal income
tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
64
73
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Original Notes where such Original Notes were acquired as a result
of market-making activities or other trading activities. Apogent has agreed
that, for a period of 180 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
Apogent will not receive any proceeds from any sale of
Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Notes. Any broker-dealer that resells Exchange Notes that were received by it
for its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commission or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date Apogent
will promptly send additional copies of this prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. Apogent has agreed to pay all expenses incident to
the Exchange Offer (including the expenses of one counsel for the holders of the
Original Notes and the Exchange Notes) other than commissions or concessions of
any broker-dealers and will indemnify the holders of the Original Notes and the
Exchange Notes (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
65
74
LEGAL MATTERS
The validity of the notes offered hereby will be passed upon for us by
Quarles & Brady LLP, Milwaukee, Wisconsin.
EXPERTS
Our consolidated balance sheets as of September 30, 2000 and 1999, the
related consolidated statements of income, shareholders' equity and cash flows
for each of the years in the three-year period ended September 30, 2000, have
been included herein and in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
66
75
[This Page Intentionally Left Blank]
76
APOGENT TECHNOLOGIES INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Independent Auditors' Report F-2
Consolidated Balance Sheets as of September 30, 2000 and 1999 and
March 31, 2001 (unaudited) F-3
Consolidated Statements of Income for the years ended September 30,
2000, 1999 and 1998 and for the six months ended March 31, 2001
and 2000 (unaudited) F-4
Consolidated Statements of Shareholders' Equity for the years ended
September 30, 1998, 1999 and 2000 and for the six months ended
March 31, 2001 (unaudited) F-5
Consolidated Statements of Cash Flows for the years ended September 30,
2000, 1999 and 1998 and for the six months ended March 31, 2001
and 2000 (unaudited) F-6
Notes to Consolidated Financial Statements F-7
F-1
77
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Apogent Technologies Inc.:
We have audited the accompanying consolidated balance sheets of Apogent
Technologies Inc. and subsidiaries as of September 30, 2000 and 1999, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the years in the three-year period ended September 30, 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Apogent Technologies
Inc. and subsidiaries as of September 30, 2000 and 1999, and the results of
their operations and their cash flows for each of the years in the three-year
period ended September 30, 2000, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Milwaukee, Wisconsin
November 13, 2000 except as to footnote 19
which is as of December 11, 2000.
F-2
78
APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
SEPTEMBER 30, MARCH 31,
2000 1999 2001
------------- ------------- -------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 12,411 $ 12,401 $ 12,113
Accounts receivable (less allowance for doubtful
receivables of $3,098 and $4,041 in 1999 and 2000,
respectively) (note 2) 173,585 147,296 177,830
Inventories (note 3) 141,779 123,628 156,075
Deferred income taxes (note 4) 13,226 18,325 13,055
Net assets held for discontinued operations (note 15) 152,970 155,595 --
Prepaid expenses and other current assets 16,564 9,083 19,951
------------- ------------- -------------
Total current assets 510,535 466,328 379,024
Available for sale security (note 7) 54,444 50,900 53,540
Property, plant and equipment, net (notes 5 and 7) 208,094 187,759 212,394
Intangible assets (note 6) 1,008,153 820,475 1,056,094
Deferred income taxes (note 4) 7,870 7,667 7,888
Other assets 3,268 6,846 6,761
------------- ------------- -------------
Total assets $ 1,792,364 $ 1,539,975 $ 1,715,701
============= ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 51,899 $ 49,296 $ 44,049
Advances and loans from SDS (note 13) 77,762 56,777 --
Current portion of long-term debt (notes 7 and 8) 34,327 7,391 41,542
Income taxes payable (note 4) 16,604 18,372 34,089
Accrued payroll and employee benefits (note 10) 30,509 35,594 28,619
Restructuring reserve (note 11) 5,609 987 4,256
Deferred income taxes (note 4) 807 717 905
Other current liabilities (note 11 and 15) 23,622 29,045 31,143
------------- ------------- -------------
Total current liabilities 241,139 198,179 184,603
Long-term debt (note 7 and 8) 649,409 591,807 594,250
Securities lending agreement (note 7) 54,444 50,461 53,540
Deferred income taxes (note 4) 93,048 69,888 93,649
Other liabilities (note 10) 4,808 4,296 6,410
Commitments and contingent liabilities (notes 8, 10, 13 and 14)
Shareholders' equity (note 12):
Preferred stock, $0.01 par value; authorized 20,000,000 shares -- -- --
Common stock, $0.01 par value; authorized
250,000,000 shares issued 104,023,917,
105,191,692, and 105,406,437 shares in 1999, 2000, and 2001,
respectively; outstanding 104,023,697,
105,191,692 and 105,406,437 shares in 1999, 2000, and 2001,
respectively 1,052 1,040 1,054
Equity rights, 50 rights at $1.09 per right and -- -- --
Additional paid-in capital 271,739 251,251 248,097
Retained earnings 531,701 403,380 571,509
Accumulated other comprehensive income (note 17) (54,976) (30,327) (37,411)
Treasury common stock, 220 shares at cost -- -- --
------------- ------------- -------------
Total shareholders' equity 749,516 625,344 783,249
------------- ------------- -------------
Total liabilities and shareholders' equity $ 1,792,364 $ 1,539,975 $ 1,715,701
============= ============= =============
See accompanying notes to consolidated financial statements.
F-3
79
APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
----------------------------------- ----------------------
2000 1999 1998 2001 2000
--------- --------- --------- --------- ---------
(UNAUDITED)
Net sales $ 863,575 $ 715,037 $ 557,762 $ 465,862 $ 422,957
Cost of sales:
Cost of products sold 436,508 372,528 288,522 239,128 215,433
Restructuring charge (note 11) 4,413 -- 1,510 -- --
Depreciation of purchase accounting adjustments 524 551 551 268 268
--------- --------- --------- --------- ---------
Total cost of sales 441,445 373,079 290,583 239,396 215,701
--------- --------- --------- --------- ---------
Gross profit 422,130 341,958 267,179 226,466 207,256
--------- --------- --------- --------- ---------
Selling, general and administrative expenses 186,418 147,883 118,523 97,932 91,035
Restructuring charge (note 11) 5,840 245 7,093 583 --
Depreciation and amortization of purchase
accounting adjustments 36,883 24,704 19,145 21,281 17,169
--------- --------- --------- --------- ---------
Total selling, general and administrative expenses 229,141 172,832 144,761 119,796 108,204
--------- --------- --------- --------- ---------
Operating income 192,989 169,126 122,418 106,670 99,052
--------- --------- --------- --------- ---------
Other income (expense):
Interest expense (notes 7 and 10) (48,684) (40,073) (33,772) (24,392) (23,895)
Interest expense--SDS (note 13) (766) (1,151) (1,498) -- --
Amortization of deferred financing fees (note 7) (533) (224) (151) (249) (261)
Other, net 1,319 (286) (161) 5,266 167
--------- --------- --------- --------- ---------
Income from continuing operations
before income taxes and extraordinary items 144,325 127,392 86,836 87,295 75,063
Income taxes (note 4) 57,601 49,981 34,714 34,918 29,262
--------- --------- --------- --------- ---------
Income from continuing operations 86,724 77,411 52,122 52,377 45,801
Discontinued operations (net of income
tax expense of $16,347, $30,930 and
$28,339) (notes 14 and 15) 41,597 47,965 23,921 (11,824) 23,598
--------- --------- --------- --------- ---------
Income before extraordinary items 128,321 125,376 76,043 40,553 69,399
Extraordinary items--
Gain on sale of discontinued operations
(net of income tax expense of $415,828) (note 15) -- 17,171 --
Loss from early extinguishment of debt
(net of income tax of $496) (note 7) -- -- -- (745) --
--------- --------- --------- --------- ---------
Net income $ 128,321 $ 142,547 $ 76,043 $ 39,808 $ 69,399
========= ========= ========= ========= =========
Basic earnings per common share from
continuing operations $ 0.83 $ 0.75 $ 0.51 $ 0.50 $ 0.44
Discontinued operations 0.40 0.46 0.23 (0.11) 0.23
Extraordinary items -- 0.17 -- (0.01) --
--------- --------- --------- --------- ---------
Basic earnings per common share $ 1.23 $ 1.38 $ 0.74 $ 0.38 $ 0.67
========= ========= ========= ========= =========
Diluted earnings per common share from
continuing operations $ 0.81 $ 0.73 $ 0.49 $ 0.49 $ 0.43
Discontinued operations 0.39 0.45 0.23 (0.11) 0.22
Extraordinary items -- 0.16 -- (0.01) --
--------- --------- --------- --------- ---------
Diluted earnings per common share $ 1.20 $ 1.34 $ 0.72 $ 0.37 $ 0.65
========= ========= ========= ========= =========
See accompanying notes to consolidated financial statements.
F-4
80
APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
ACCUMULATED
ADDITIONAL OTHER TREASURY TOTAL
COMMON EQUITY PAID-IN RETAINED COMPREHENSIVE COMMON SHAREHOLDERS'
STOCK RIGHTS CAPITAL EARNINGS INCOME STOCK EQUITY
-------- ------ ---------- -------- ------------- -------- -------------
Balance at September 30, 1997 ...................... $ 1,014 $ -- $ 212,665 $189,952 $ (24,981) $ (1) $ 378,649
Comprehensive income:
Net income ...................................... -- -- -- 76,043 -- -- 76,043
Translation adjustment .......................... -- -- -- -- 4,293 -- 4,293
-------- ------ --------- -------- --------- -------- ---------
Total comprehensive income ......................... -- -- -- 76,043 4,293 -- 80,336
Shares issued in connection with 1,445,760
stock options ................................... 15 -- 12,970 -- -- -- 12,985
Conversion of 200 equity rights to 872
shares of common stock .......................... -- -- -- (1) -- 1 --
Tax benefit related to stock options ............... -- -- 7,291 -- -- -- 7,291
Dividends paid by "A" Company prior to the
merger .......................................... -- -- 314 (479) -- -- (165)
Dividends paid by Pinnacle Products prior to
the merger ...................................... -- -- -- (4,682) -- -- (4,682)
Shares issued--Deferred Compensation Plan "A"
Company ......................................... -- -- 830 -- -- -- 830
-------- ------ --------- -------- --------- -------- ---------
Balance at September 30, 1998 ...................... 1,029 -- 234,070 260,833 (20,688) -- 475,244
Comprehensive income:
Net income ...................................... -- -- -- 142,547 -- -- 142,547
Translation adjustment .......................... -- -- -- -- (9,905) -- (9,905)
Unrealized gain on security available for sale... -- -- -- -- 266 -- 266
-------- ------ --------- -------- --------- -------- ---------
Total comprehensive income ......................... -- -- -- 142,547 (9,639) -- 132,908
Shares issued in connection with 1,121,421 stock
options ......................................... 11 -- 10,680 -- -- -- 10,691
Tax benefit related to stock options ............... -- -- 6,501 -- -- -- 6,501
-------- ------ --------- -------- --------- -------- ---------
Balance at September 30, 1999 ...................... 1,040 -- 251,251 403,380 (30,327) -- 625,344
Comprehensive income:
Net income ...................................... -- -- -- 128,321 -- -- 128,321
Translation adjustment .......................... -- -- -- -- (26,773) -- (26,773)
Unrealized gain on security available for sale... -- -- -- -- 2,124 -- 2,124
-------- ------ --------- -------- --------- -------- ---------
Total comprehensive income ......................... -- -- -- 128,321 (24,649) -- 103,672
Shares issued in connection with 1,167,775 stock
options ......................................... 12 -- 12,587 -- -- -- 12,599
Tax benefit related to stock options ............... -- -- 7,901 -- -- -- 7,901
-------- ------ --------- -------- --------- -------- ---------
Balance at September 30, 2000....................... $ 1,052 $ -- $ 271,739 $531,701 $ (54,976) $ -- $ 749,516
Comprehensive income:
Cumulative effect of accounting change
for cash flow hedge, net of tax effect
of $1,687................................... -- -- -- -- 2,530 -- 2,530
Net income....................................... -- -- -- 39,808 -- -- 39,808
Translation adjustment........................... -- -- -- -- 4,381 -- 4,381
Adjustment to interest rate swap
agreement upon sale, net of tax
benefit of $984............................. -- -- -- -- (1,475) -- (1,475)
Amortization of gain on sale of interest
rate swaps, net of tax benefit of $169...... -- -- -- -- (255) -- (255)
Unrealized loss on security available
for sale, net of tax benefit of $362........ -- -- -- -- (542) -- (542)
-------- ------ --------- -------- --------- -------- ---------
Total comprehensive income.......................... -- -- -- 39,808 4,639 -- 44,447
Shares issued in connection with
stock options.................................... 2 -- 2,302 -- -- -- 2,304
Tax benefit related to stock options................ -- -- 1,083 -- -- -- 1,083
Distribution of the equity of Sybron Dental
Specialties, Inc. on December 11, 2000,
net of dividends of $142,880..................... -- -- (27,027) -- 12,926 -- (14,101)
-------- ------ --------- -------- --------- -------- ---------
Balance at March 31, 2001 (Unaudited)............... $ 1,054 $ -- $ 248,097 $571,509 $ (37,411) $ -- $ 783,249
======== ====== ========= ======== ========= ======== =========
See accompanying notes to consolidated financial statements.
F-5
81
APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
----------------------------------- ----------------------
2000 1999 1998 2001 2000
--------- --------- --------- --------- ---------
(UNAUDITED)
Cash flows from operating activities:
Net income $ 128,321 $ 142,547 $ 76,043 $ 39,808 $ 69,399
Adjustments to reconcile net income to net cash
provided by operating activities:
Discontinued operations (41,597) (47,965) (23,921) 11,824 (23,598)
Depreciation 27,957 24,105 18,970 16,536 14,127
Amortization 38,630 24,890 19,860 20,610 17,159
Loss (gain) on sales of property, plant and equipment 79 (39) 50 (4,962) 68
Provision for losses on doubtful receivables 863 907 462 (290) 242
Inventory provisions (833) 706 (599) 1,161 (485)
Deferred income taxes 10,258 17,876 (5,072) 632 4,006
Extraordinary items -- (17,171) -- 745 --
Changes in assets and liabilities, net of effects of
businesses acquired:
Increase in accounts receivable (15,537) (19,817) (6,001) (3,445) (15,392)
Increase in inventories (7,248) (12,646) (5,870) (15,629) (7,033)
(Increase) decrease in prepaid expenses
and other current assets (7,200) 4,627 (2,359) (2,647) (2,945)
Increase (decrease) in accounts payable (294) 2,436 2,196 (8,871) (4,032)
Increase (decrease) in income taxes payable (1,768) (1,269) 13,892 17,136 (1,636)
Decrease in other current liabilities (6,211) (5,812) (11,410) (7,184) (10,204)
Increase (decrease) in accrued payroll and employee benefits (4,993) 7,212 2,549 4,670 (4,607)
Increase (decrease) in restructuring reserve 1,744 (7,036) 14,037 (4,081) (367)
Net change in other assets and liabilities (5,627) 1,551 11,828 (744) 1,895
--------- --------- --------- --------- ---------
Net cash provided by operating activities 116,544 115,102 104,655 65,269 36,597
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Capital expenditures (42,493) (29,920) (32,797) (24,171) (18,768)
Security purchased -- (50,461) -- -- --
Proceeds from sales of property, plant and equipment 924 945 5,129 10,731 289
Proceeds from sale of NPT (2,600) 85,841 -- -- (2,600)
Dividends received from SDS 58,512 36,483 47,225 67,900 --
Capital contributions paid to SDS (21,399) (16,210) (49,268) (4,623) (20,398)
Net change in advances and loans to SDS 20,985 27,689 (26,088) (2,782) 61,275
Distribution of the net equity of SDS -- -- -- (14,101) --
Net payments for businesses acquired (207,153) (249,923) (192,017) (51,206) (121,664)
--------- --------- --------- ---------
Net cash provided by (used in) investing activities (193,224) (195,556) (247,816) (18,252) (101,866)
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from long-term debt -- 180,000 100,000 333,619 --
Principal payments on long-term debt (450) (66,770) (19,562) (381,012) (583)
Securities lending agreement 3,544 50,461 -- -- --
Proceeds from the exercise of stock options 12,599 10,691 12,985 2,304 4,645
Refinancing fees -- (4,163) (357) (3,900) (197)
Proceeds--revolving credit facility 332,640 351,060 291,960 359,540 192,000
Principal payments--revolving credit facility (274,320) (448,980) (243,960) (358,640) (133,500)
Other 3,646 6,093 521 (1,042) (2,676)
--------- --------- --------- --------- ---------
Net cash provided by financing activities 77,659 78,392 141,587 (49,131) 59,689
Effect of exchange rate changes on cash and cash equivalents (969) (146) 429 1,816 (433)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents 10 (2,208) (1,145) (298) (6,013)
Cash and cash equivalents at beginning of year 12,401 14,609 15,754 12,411 12,401
--------- --------- --------- --------- ---------
Cash and cash equivalents at end of year $ 12,411 $ 12,401 $ 14,609 $ 12,113 $ 6,388
========= ========= ========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 55,833 $ 41,718 $ 32,645 $ 25,665 $ 33,639
========= ========= ========= ========= =========
Income taxes $ 42,412 $ 32,431 $ 20,462 $ 21,147 $ 32,829
========= ========= ========= ========= =========
Capital lease obligations incurred $ 25 $ 457 $ 183 $ -- $ 43
========= ========= ========= ========= =========
See accompanying notes to consolidated financial statements.
F-6
82
APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The subsidiaries of Apogent Technologies Inc. are leading manufacturers of
value-added products for the laboratory market in the United States and abroad.
The Company's laboratory subsidiaries manufacture products for the Labware and
Life Sciences, Clinical and Industrial, Diagnostic and Microbiology and
Laboratory Equipment business segments. See note 16.
On November 8, 2000, Sybron International Corporation (which subsequently
changed its name to Apogent Technologies Inc.) announced that it had declared a
pro rata distribution to its shareholders of the common stock and related
preferred stock purchase rights of Sybron Dental Specialties, Inc. (formerly
known as SDS Holding Co.) (the "Distribution"). On December 11, 2000,
shareholders of record as of November 30, 2000 received one share of Sybron
Dental Specialties, Inc. common stock for every three shares of Sybron
International common stock they owned as of the record date. Sybron Dental
Specialties, Inc. owns all of the outstanding stock of Sybron Dental Management,
Inc., formerly named Sybron Dental Specialties, Inc. Prior to the Distribution,
Sybron Dental Management, Inc. was a direct wholly-owned subsidiary of the
Company and operated the Company's dental business. Immediately prior to the
Distribution, the Company contributed all of the stock of Sybron Dental
Management, Inc. to Sybron Dental Specialties, Inc. As used in these Notes to
the Consolidated Financial Statements, the term "SDS" means Sybron Dental
Management, Inc. (formerly known as Sybron Dental Specialties, Inc.) for the
periods prior to the Distribution, and Sybron Dental Specialties, Inc. (formerly
known as SDS Holding Co.) for periods after the Distribution.
(a) Principles of Consolidation and Fiscal Year End
The consolidated financial statements reflect the accounts of Apogent
Technologies Inc. and its subsidiaries. The term "Company" or "Apogent" as used
herein refers to Apogent Technologies Inc. and its subsidiaries and their
respective predecessors, unless the context otherwise requires. All significant
intercompany balances and transactions have been eliminated. The Company's
fiscal year ends on September 30. The fiscal years ended September 30, 2000,
1999 and 1998 are hereinafter referred to as "2000," "1999" and "1998"
respectively. On March 31, 1999 and December 11, 2000, respectively, the Company
sold Nalge Process Technologies Group, Inc. ("NPT") (the "NPT Sale") and
completed the Distribution. The net assets and results of operations of SDS and
NPT have been presented as discontinued operations in all years presented
herein.
(b) Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include
investments in debt obligations with original maturities of three months or
less.
(c) Inventories
Inventories are stated at the lower of cost or market. Elements of cost included
in inventories are: raw materials, direct labor, manufacturing overhead (which
includes indirect labor, fringe benefits, consumable supplies, depreciation of
production equipment and tooling) and retained costs representing the excess of
manufacturing or production costs over amounts charged to cost of sales. Certain
domestic inventories of approximately $50,854 and $53,884 at September 30, 2000
and 1999, respectively, are valued on the last-in, first-out (LIFO) method. The
remaining inventories are valued on the first-in, first-out (FIFO) method.
(d) Securities
When securities are purchased they are classified as held-to-maturity, available
for sale or trading securities. Held to maturity securities are those which the
Company has the positive intent and ability to hold until maturity. Trading
securities are those purchased and held with the intent to sell in the near
term. Available for sale securities include debt securities which are held for
an indefinite period but are neither held to maturity nor trading securities. At
September 30, 2000 and 1999, the Company held a U.S. Treasury Bond classified as
an available for sale security. Available for sale securities are reported at
fair market value.
F-7
83
Unrealized gains and losses for this security are included in comprehensive
income as a separate component of shareholders' equity. See note 7.
(e) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation.
Depreciation is provided over the estimated useful lives of depreciable assets
(5 to 45 years for land improvements, buildings and building improvements, and 3
to 12 years for machinery and equipment) using the straight-line method. The
Company assesses the recoverability of assets by comparing the carrying amount
of an asset to future net cash flows expected to be generated by that asset. If
such assets are considered impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceed the fair market
value of the assets.
(f) Intangible Assets
Intangible assets are recorded at cost and are amortized, using the
straight-line method, over their estimated useful lives. Excess costs over net
asset values acquired (goodwill) are amortized over 10 to 40 years; proprietary
technology, trademarks, customer lists and other intangibles are amortized over
12 to 20 years, 5 to 40 years, 7 to 40 years, and 1 to 40 years, respectively.
The Company assesses the recoverability of its goodwill by determining whether
the amortization of the goodwill balance over its remaining life can be
recovered through projected undiscounted future cash flows of the acquired
businesses. If projected future cash flows indicate that unamortized goodwill
will not be recovered, an adjustment would be made to reduce the net goodwill to
fair value. Cash flow projections are based on trends of historical performance
and management's estimate of future performance, giving consideration to
existing and anticipated competitive and economic conditions. Adjustments to
goodwill were made in 1998 as referred to in note 11. No adjustments were made
to goodwill in 2000 or 1999.
(g) Revenue Recognition
The Company recognizes revenue upon shipment of products when persuasive
evidence of a sales arrangement exists, the price to the buyer is fixed and
determinable and collectibility of the sales price is reasonably assured. A
large portion of the Company's sales are sold through distributors. Revenues
associated with sales to distributors are also recognized upon shipment of
products when all risks and rewards of ownership of the product are passed. The
Company is not obligated to allow for returns.
(h) Income Taxes
Income taxes are accounted for under the asset and liability method wherein
deferred tax assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income or other comprehensive income in the period that
includes the enactment date.
(i) Research and Development Costs
Research and development costs are charged to selling, general and
administrative expenses in the year they are incurred. Research and development
costs for 2000, 1999 and 1998 were approximately $18,302, $12,562 and $8,738,
respectively.
(j) Foreign Currency Translation
The functional currency for the Company's foreign operations is the applicable
local currency. The translation from the applicable foreign currencies to U.S.
dollars is performed for balance sheet accounts using current exchange rates in
effect at the balance sheet date and for revenue and expense accounts using a
weighted average exchange rate during the period. The gains or losses, net of
applicable deferred income taxes, resulting from such translations are included
in shareholders' equity. Gains and losses resulting from foreign currency
transactions are included in net income. Foreign currency transaction gains for
2000, 1999 and 1998 were approximately $1,306, $403 and $247, respectively.
F-8
84
(k) Pensions
The Company and its subsidiaries have various pension plans covering
substantially all employees. U.S. pension obligations are funded by payments to
pension fund trustees. Other foreign pensions are funded as expenses are
incurred. The Company's policy with respect to its defined benefit plans is
generally to fund the minimum amount required under the Employee Retirement
Income Security Act of 1974, as amended, for plans subject thereto.
(l) Earnings Per Common Share
Basic earnings per common share is calculated by dividing net income by the
weighted average number of common shares outstanding in the period presented.
Diluted earnings per common share is calculated by dividing net income by the
weighted average number of common shares outstanding plus dilutive effects of
potential common shares outstanding during the period. A reconciliation of
shares used in calculating basic and diluted earnings per share follows:
SIX MONTHS ENDED
MARCH 31,
------------------------
2000 1999 1998 2001 2000
---------- ---------- ---------- ---------- ---------
(UNAUDITED)
Basic 104,570 103,412 102,320 105,332 104,130
Effect of assumed conversion
of employee stock options 2,233 3,158 3,541 2,226 2,358
---------- ---------- ---------- ---------- ---------
Diluted 106,803 106,570 105,861 107,558 106,488
========== ========== ========== ========== =========
Options to purchase 4,162,920 shares of common stock at prices ranging from
$23.81 to $24.50 per share were outstanding during a portion of 1998 but were
not included in the computation of diluted earnings per share because the
options' exercise price was greater than the average market price of the common
shares. The options, which expire in fiscal 2008, were still outstanding at the
end of fiscal year 1998.
Options to purchase 570,724 shares of common stock at prices ranging from $25.74
to $26.75 per share were outstanding during a portion of 1999 but were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the common shares.
The options, which expire in fiscal 2009, were still outstanding at the end of
fiscal year 1999.
Options to purchase 904,844 shares of common stock at prices ranging from $25.31
to $32.00 per share were outstanding during a portion of 2000 but were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the common shares.
The options, which expire in fiscal 2010, were still outstanding at the end of
fiscal year 2000.
(m) Deferred Financing Fees
Deferred financing fees are capitalized and amortized as a separate component of
other income over the life of the related debt agreements.
(n) Advertising Costs
Advertising costs included in selling, general and administrative expenses are
expensed as incurred and were $6,014, $5,730 and $4,480 in 2000, 1999 and 1998,
respectively.
(o) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-9
85
(p) Derivative Financial Instruments
Derivative financial instruments are used by the Company in the management of
its interest rate and foreign currency exposures.
The Company uses interest rate swaps to manage its interest rate risk. The net
amounts to be paid or received under interest rate swap agreements designated as
hedges are accrued as interest rates change and are recognized over the life of
the swap agreements, as an adjustment to interest expense from the underlying
debt to which the swap is designated. The related amounts payable to, or
receivable from, the counterparties are included in other current assets or
other current liabilities. See note 9.
The Company, from time to time, enters into foreign exchange options relating to
the anticipated cash flow in local currencies of certain foreign operations.
These options allow the Company to exchange foreign currencies for U.S. dollars.
The purpose of the Company's foreign currency hedging activities is to protect
the Company from the risk that eventual cash flows from foreign activities will
be adversely affected by changes in exchange rates. The recognition of gains or
losses on foreign currency option contracts entered into to hedge sales are
recorded as "net sales." The Company had no foreign exchange option contracts at
September 30, 2000 or 1999.
On October 1, 2000, the Company adopted Financial Accounting Standard Board
Opinions No. 133 ("SFAS 133") as modified by FASB Opinion No. 138. These
standards establish accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and hedging activities. They require the recognition of all
derivative instruments as assets or liabilities in the balance sheet at fair
value. The accounting treatment of changes in fair value is dependent upon
whether or not a derivative instrument is designated as a hedge and if so, the
type of hedge. For derivatives designated as a cash flow hedge, changes in fair
value are recognized in other comprehensive income until the hedged item is
recognized in earnings. At October 1, 2000 the Company had no freestanding
derivatives in place other than interest rate swaps used to hedge variable rate
long-term debt and had no material embedded derivatives. The interest rate swaps
meet the criteria for cash flow hedge accounting. As a result, the swaps are
recorded on the balance sheet as an asset at fair value with the corresponding
gain or loss recorded in other comprehensive income beginning October 1, 2000.
The impact on other comprehensive income upon adoption of the standard was an
unrealized gain, net of tax, of approximately $2,530.
On December 11, 2000, the Company extinguished the variable rate long-term debt
to which the swaps were designated and as a result the interest rate swaps
ceased to be accounted for as hedges. On December 12, 2000, the Company sold the
interest rate swaps for an aggregate gain of $1,055, net of tax. Upon sale of
the interest rate swaps, the Company reduced the unrealized gain recorded at
October 1, 2000 in other comprehensive income to reflect the fair market value
net of tax on the date of sale. The Company will recognize the aggregate gain
recorded in other comprehensive income over the original life of the respective
interest rate swaps sold as an adjustment of interest expense. For the period
December 12, 2000 through March 31, 2001, the Company recognized a gain of $255,
net of tax.
In March 2001, we entered into two foreign currency options to hedge against the
effect of fluctuations in foreign exchange rates on two notes issued in British
Pounds. The options of $11,500 GPB and $11,750 GPB have maturity dates
approximating those of the notes, of July 31, 2002 and July 2003, respectively.
Both options were priced at $0.69 GBP.
On September 29, 2000, the Financial Accounting Standard Board issued Statement
of Financial Accounting Standards No. 140, Accounting of Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities ("SFAS 140"). SFAS 140
modifies and replaces Statement of Financial Accounting Standards No. 125. SFAS
140 provides the accounting and reporting guidance for transfers and servicing
of financial assets and extinguishments of liabilities and will be the
authoritative accounting literature for: (1) securitization transactions
involving financial assets; (2) sales of financial assets (including loan
participations); (3) factoring transactions; (4) wash sales; (5) servicing
assets and liabilities; (6) collateralized borrowing arrangements; (7)
securities lending transactions; (8) repurchase agreements; and (9)
extinguishment of liabilities, and is applicable prospectively. Adoption of the
statement in 2001 is not expected to have any material affect on the
consolidated financial position or results of operations.
In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation"--an interpretation of APB Opinion No.
25 ("FIN 44"). This Interpretation clarifies the definition of employee for
purposes of applying Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employee ("APB #25"), the criteria for determining whether a
plan qualifies as a non-compensatory plan, the accounting consequence of various
modifications to the
F-10
86
terms of a previously fixed stock option or award, and the accounting for an
exchange of stock compensation awards in a business combination. This
Interpretation is effective July 1, 2000, but certain conclusions in this
Interpretation cover specific events that occur after either December 15, 1998,
or January 12, 2000. We adopted FIN 44 during the year ended September 30, 2000.
This adoption did not have a material effect on out consolidated financial
position or results of operations
(q) Environmental Expenditures
Environmental expenditures that relate to current ongoing operations or to
conditions caused by past operations are expensed. The Company determines its
liability on a site by site basis and records a liability at the time when the
liability is probable and can be reasonably estimated. The estimated liability
is not reduced for possible recoveries from insurance carriers.
(r) Unaudited Information
All references to the three and six months ended March 31, 2001 and 2000, refer
to unaudited information. In the opinion of management, all adjustments that are
necessary for a fair statement of the results for the interim periods presented
have been included. The results for the three-month and six-month periods, ended
March 31, 2001 are not necessarily indicative of the results to be expected for
the full year.
(2) BUSINESS AND CREDIT CONCENTRATIONS
Many of the Company's products are sold through major distributors, two of which
have exceeded 10% of the Company's consolidated net sales in prior years. These
distributors accounted for 13.9% and 9.7%, respectively of the Company's net
sales in 2000, 14.9% and 10.7%, respectively of the Company's net sales in 1999,
and approximately 15.0% and 11.6%, respectively of the Company's net sales in
1998. Accounts receivable from these distributors comprised approximately 16.9%
and 11.8%, respectively of the outstanding consolidated accounts receivable
balances at September 30, 1999 and approximately 15.8% and 8.6%, respectively of
the outstanding consolidated accounts receivable balances at September 30, 2000.
(see note 16)
(3) INVENTORIES
Inventories at September 30, 2000 and 1999 and March 31, 2001 consist of the
following:
SEPTEMBER 30,
---------------------- MARCH 31,
2000 1999 2001
--------- --------- -----------
(UNAUDITED)
Raw materials and supplies $ 59,178 $ 44,505 $ 64,705
Work in process 29,848 28,332 26,802
Finished goods 60,887 59,413 75,876
Excess and obsolescence reserves (3,872) (3,880) (4,289)
LIFO reserve (4,262) (4,742) (7,019)
--------- --------- ---------
$ 141,779 $ 123,628 $ 156,075
========= ========= =========
During 2000, Quantities of inventory valued on a LIFO basis were consumed. This
resulted in the liquidation of LIFO inventories valued at lower prevailing costs
when such LIFO quantities were originally acquired in prior years. If these LIFO
quantities had not been consumed, but replenished with the quantities valued at
current costs, net income in 2000 would have been decreased by approximately
$125 and would have had no impact on either basic or diluted earnings per share.
(4) INCOME TAXES
Total income tax expense (benefit) for the years ended September 30, 2000, 1999
and 1998 is allocated as follows:
2000 1999 1998
-------- -------- --------
Income from continuing operations $ 57,601 $ 49,981 $ 34,714
Extraordinary items -- 15,828 --
Discontinued operations 28,339 30,930 16,347
Shareholders' equity for unrealized gain on
security available for sale (1,420) (173) --
Shareholders' equity for compensation expense for
tax purposes in excess of amounts recognized
for financial reporting purposes (7,901) (6,501) (7,291)
-------- -------- --------
$ 76,619 $ 90,065 $ 43,770
======== ======== ========
F-11
87
Income tax expense (benefit) attributable to income from continuing operations
consists of:
CURRENT DEFERRED TOTAL
-------------- -------------- -------------
Year ended September 30, 1998:
U.S., state and local $ 33,353 $ (2,577) $ 30,776
Foreign 6,433 (2,495) 3,938
-------------- -------------- -------------
$ 39,786 $ (5,072) $ 34,714
============== ============== =============
Year ended September 30, 1999:
U.S., state and local $ 30,294 $ 14,700 $ 44,994
Foreign 1,811 3,176 4,987
-------------- -------------- -------------
$ 32,105 $ 17,876 $ 49,981
============== ============== =============
Year ended September 30, 2000:
U.S., state and local $ 42,664 $ 8,401 $ 51,065
Foreign 4,679 1,857 6,536
-------------- -------------- -------------
$ 47,343 $ 10,258 $ 57,601
============== ============== =============
The domestic and foreign components of income from continuing operations before
income taxes, discontinued operations and extraordinary items are as follows:
2000 1999 1998
-------- -------- --------
United States $123,422 $111,930 $ 74,081
Foreign 20,903 15,462 12,755
-------- -------- --------
Income before income taxes, discontinued
operations and extraordinary items $144,325 $127,392 $ 86,836
======== ======== ========
Income tax expense attributable to income from continuing operations was
$57,601, $49,981 and $34,714 in 2000, 1999 and 1998, respectively, and differed
from the amounts computed by applying the U.S. Federal income tax rate of 35
percent to income from continuing operations before income taxes, discontinued
operations and extraordinary items in 1998, 1999 and 2000 as a result of the
following:
2000 1999 1998
-------- -------- --------
Computed "expected" tax expense $ 50,514 $ 44,587 $ 30,393
Increase (reduction) in income taxes resulting from:
Change in beginning of year valuation allowance for
deferred tax assets allocated to income tax expense (21) (277) (1,541)
Amortization of goodwill 3,931 2,332 1,807
State and local income taxes, net of Federal income tax benefit 3,898 3,077 1,740
Foreign income taxed at rates higher than U.S. Federal income (836) (561) (588)
Foreign tax credits utilized in excess of U.S.
tax on foreign earnings 205 512 325
Other, net (90) 311 2,578
-------- -------- --------
$ 57,601 $ 49,981 $ 34,714
======== ======== ========
The significant components of deferred income tax benefit attributable to income
from continuing operations for 2000, 1999 and 1998 are as follows:
F-12
88
2000 1999 1998
-------- -------- --------
Deferred tax (benefit)/expense (exclusive of
the effects of other components listed below) $ 10,038 $ 18,388 $ (3,410)
Decrease in the valuation allowance for
deferred tax assets 220 (512) (1,662)
-------- -------- --------
$ 10,258 $ 17,876 $ (5,072)
======== ======== ========
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at September 30, 2000
and 1999 are presented below.
2000 1999
-------- --------
Deferred tax assets:
Inventories $ 3,560 $ 2,115
Compensation 2,679 2,766
Sale/Leaseback 4,531 4,622
Employee benefits 1,979 1,726
Net operating loss carryforwards 1,111 891
Warranty and other accruals 8,347 14,763
-------- --------
Total gross deferred tax assets 22,207 26,883
Less valuation allowance (1,111) (891)
-------- --------
Net deferred tax assets 21,096 25,992
-------- --------
Deferred tax liabilities:
Depreciation (16,928) (13,675)
Purchase accounting (74,474) (56,144)
Unrealized appreciation on securities available for sale (1,593) (173)
Other (860) (613)
-------- --------
Total gross deferred tax liabilities (93,855) (70,605)
-------- --------
Net deferred tax liability $(72,759) $(44,613)
======== ========
The change in the net deferred tax liability contains $1,420 and $16,295 of
deferred tax liabilities related to acquisitions and the unrealized appreciation
on securities available-for-sale. The valuation allowance for deferred tax
assets as of October 1, 1998 was $1,403. The net change in the total valuation
allowance for the years ended September 30, 2000 and 1999 was an increase of
$220, decrease of $512 respectively. The valuation allowance relates primarily
to net operating loss carryforwards in certain foreign jurisdictions and U.S.
states, in which there is a history of pre-tax accounting losses. Management is
unable to conclude that there will be pre-tax accounting income in those
jurisdictions in the near term. In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and tax planning strategies in
making this assessment.
At September 30, 2000, the Company has an aggregate of $1,200 of foreign net
operating loss carry forwards from certain foreign jurisdictions, the majority
of which have no expiration. The Company has an aggregate of $13,000 of various
state net operating losses, the majority of which expire between 2005 and 2007.
Accumulated earnings of foreign subsidiaries at September 30, 2000, 1999 and
1998 of approximately $11,000, $1,000 and $2,000, respectively, have been
reinvested in the business and no provision for income taxes has been made for
the repatriation of these earnings.
(5) PROPERTY, PLANT AND EQUIPMENT
Major classifications of property, plant and equipment at September 30, 2000 and
1999 are as follows:
F-13
89
2000 1999
--------- ---------
Land and land improvements $ 12,813 $ 13,445
Buildings and building improvements 94,556 87,192
Machinery and equipment 259,112 223,688
Construction in progress 17,444 15,196
--------- ---------
383,925 339,521
Less: Accumulated depreciation (175,831) (151,762)
--------- ---------
$ 208,094 $ 187,759
========= =========
(6) INTANGIBLE ASSETS
Intangible assets at September 30, 2000 and 1999 are as follows:
2000 1999
----------- -----------
Excess costs over net asset values acquired (goodwill) $ 881,593 $ 708,109
Proprietary technology 48,302 38,029
Trademarks 45,409 36,988
Customer lists 107,419 113,159
Other 71,444 33,893
----------- -----------
1,154,167 930,178
Less: Accumulated amortization (146,014) (109,703)
----------- -----------
$ 1,008,153 $ 820,475
=========== ===========
The increases in intangible assets from 1999 to 2000 were primarily due to
acquisitions accounted for as purchases net of removal of fully written off
intangible assets.
(7) LONG-TERM DEBT
Long-term debt at September 30, 2000 and 1999 consists of the following:
2000 1999
--------- ---------
Term Loan Facility $ 380,920 $ 381,370
Revolving Credit Facility 256,400 198,080
Sale/Leaseback Obligation 12,024 12,273
Capital leases and other (See Note 8) 34,392 7,475
--------- ---------
683,736 599,198
Less: Current portion of long-term debt (34,327) (7,391)
--------- ---------
$ 649,409 $ 591,807
========= =========
Securities lending agreement $ 54,444 $ 50,461
========= =========
Credit Agreements: Until December 11, 2000, the Company and its principal
domestic subsidiaries (including certain subsidiaries of SDS) were parties to a
credit agreement (as amended, the "Previous Credit Agreement") with The Chase
Manhattan Bank ("Chase") and certain other lenders providing for a term A loan
facility of $300,000 (the "Tranche A Term Loan Facility"), a term B loan
facility of $300,000 (the "Tranche B Term Loan Facility") and a revolving credit
facility of up to $600,000 (the "Previous Revolving Credit Facility"). In
connection with the Distribution, on December 1, 2000, the Company entered into
a new credit agreement (the "Credit Agreement") with Chase and certain other
lenders providing for a term loan of $300,000 (the "Term Loan Facility") and a
revolving credit facility up to $500,000 (the "Revolving Credit Facility" and
together with the Term Loan Facility, the "Credit Facilities"). Borrowings under
the Credit Facilities are unsecured. On December 11, 2000, the Company borrowed
approximately $563,000 under the Credit Facilities and together with funds
aggregating $375,000 (approximately $307,100, the amount equal to the
outstanding amounts under the Previous Credit Agreement attributable to SDS on
December 11, 2000 including accrued interest plus a cash dividend of $67,900
from SDS to the Company), used such funds to repay all of the outstanding
amounts under the Previous Credit Agreement (including amounts attributable to
SDS and accrued interest) aggregating $938,000. The Company recorded an
extraordinary loss of $745 after taxes as a result of entering
F-14
90
into the Credit Agreement. This loss related to the write-off of deferred
financing costs associated with the Previous Credit Agreement. For the six
months ended March 31, 2001, the Company recorded an extraordinary loss of $745
after taxes as a result of entering into the Credit Agreement. This loss related
to the write-off of deferred financing associated with the Previous Credit
Agreement. On April 4, 2001 the Company repaid The Term Loan Facility in full.
The Credit Agreement contains financial and operating covenants, including,
among other things: restrictions on investments; requirements that the Company
maintain certain financial ratios; restrictions on the ability of the Company
and its subsidiaries to create or permit liens, or to pay dividends or make
other restricted payments (as defined) in excess of $100,000 plus 50% of the
defined consolidated net income of the Company for each fiscal quarter ending
after September 30, 2000, less any dividends paid or other restricted payments
made after September 30, 2000; and limitations on incurrence of additional
indebtedness.
Term Loan Facility: Borrowings under the Term Loan Facility are required to be
repaid in one installment due on December 1, 2005. The Term Loan Facility
provides for an annual interest rate, at the option of the Company, equal to (a)
the alternate base rate ("ABR") plus 0% to 1% (the "Term ABR Margin") where ABR
is the higher of (i) the rate from time to time publicly announced by Chase in
New York City as its prime rate, (ii) the federal funds rate plus 1/2 of 1%, and
(iii) the base CD rate plus 1% or (b) the adjusted interbank offered rate for
Eurodollar deposits ("Eurodollar Rates") plus 3/4% to 2.0% (the "Term Loan
Eurodollar Rate Margin"). The Term ABR Margin and the Eurodollar Rate Margin
depend upon the Company's credit rating from Standard and Poor's Rating Group
("S&P") and Moody's Investors Service, Inc. ("Moody's"). Based on the Company's
current credit rating, the Term ABR Margin and the Term Loan Eurodollar Margin
would be 0.25% and 1.25%, respectively.
Revolving Credit Facility: Borrowings under the Revolving Credit Facility mature
on December 1, 2005. The Revolving Credit Facility provides for an annual
interest rate at the option of the Company, equal to (a) ABR plus 0% to .375%
(the "Revolving ABR Margin") or (b) the Eurodollar Rates plus .375% to 1.375%
(the "Revolving Loan Eurodollar Rate Margin"). In addition, the Company has a
third option to set the rate by a competitive bid process among the parties to
the Revolving Credit Facility (the "CAF"). The Company also will pay a facility
fee of .125% to .375% for all commitments from the lenders, whether drawn or
undrawn and a will pay a utilization fee of 0.25% per annum if more than 50% of
the Revolving Credit Facility is drawn or the Term Loan Facility is still
outstanding. The Revolving ABR Margin, the Revolving Loan Eurodollar Rate Margin
and the facility fee depend upon the Company's credit rating from S&P and
Moody's. Based upon the Company's current credit rating, the Revolving ABR
Margin, the Revolving Loan Eurodollar Rate Margin and the facility fee would be
0%, 0.8% and 0.2%, respectively. The Revolving Credit Facility also provides for
a multi currency sub facility providing up to $100,000 in sub commitments in
non-dollar currencies. Terms and conditions on the multi currency sub facility
are to be agreed upon between the Company and Chase and the lenders providing
funding under such facility. The Company may not exceed a total of $500,000 in
dollar and non-dollar commitments under this Revolving Credit Facility. The
Credit Facility also provides for the issuance of standby letters of credit and
commercial letters of credit on behalf of the Company's subsidiaries as required
in the ordinary course of business as part of the working capital line.
Tranche A Term Loan Facility: Borrowings under the Tranche A Term Loan Facility
were required to be repaid in 21 consecutive quarterly installments of
principal. On July 31, 1997 the Company began repaying the principal balance by
paying the $8,750 due in 1997, $35,000 due in 1998 and $17,500 of the $36,250
due in fiscal 1999. On March 31, 1999 as a result of the sale of NPT, the
Company received approximately $87,500 ($83,200 net of fees, expenses and an
adjustment to the purchase price). Net proceeds of the sale, after a reduction
for applicable income taxes, were required to be used to repay amounts owed by
the Company under the Tranche A Term Loan Facility. On March 31, 1999, the
Company paid approximately $67,900 due under the Tranche A Term Loan Facility.
In connection with the Distribution on December 11, 2000, the Company repaid the
remaining balance (including amounts attributable to SDS and accrued interest)
of approximately $260,600 of the Tranche A Term Loan Facility.
Tranche B Term Loan Facility: Borrowings under the Tranche B Term Loan Facility
were required to be repaid in consecutive quarterly installments beginning
January 31, 2000 as follows: $750 due in fiscal 2000, $1,000 due in fiscal 2001,
$1,000 due in fiscal 2002, $120,250 due in fiscal 2003 and $177,000 due in
fiscal 2004, with the final payment due on July 31, 2004. In connection with the
Distribution, on December 11, 2000, the Company repaid the remaining balance
(including amounts attributable to SDS and accrued interest) of $301,300 of the
Tranche B Term Loan Facility.
Borrowings under the Tranche A and Tranche B Term Loan Facilities (and the
Revolving Credit Facility) were secured by the capital stock of the Company's
domestic subsidiaries, and by 65% of the stock held by the domestic subsidiaries
in their direct
F-15
91
foreign subsidiaries. The Tranche A Term Loan Facility provided for an annual
interest rate, at the option of the Company, equal to (a) the higher of (i) the
rate from time to time publicly announced by Chase in New York City as its prime
rate, (ii) the federal funds rate plus 1/2 of 1%, and (iii) the base CD rate
plus 1% (collectively referred to as "ABR") or (b) the adjusted interbank
offered rate for Eurodollar deposits ("Eurodollar Rates") plus 1/2% to 7/8% (the
"Tranche A Eurodollar Rate Margin") depending upon the ratio of the Company's
total debt to Consolidated Adjusted Operating Profit (as defined).
The Tranche B Term Loan Facility provided for an annual interest rate, at our
option, equal to (a) the higher of (i) the rate from time to time publicly
announced by Chase in New York City as its prime rate plus 1% to 1 1/4%, (ii)
the federal funds rate plus of 1 1/2% to 1 3/4%, and (iii) the base CD rate plus
2% to 2 1/4%, depending upon the ratio of our total debt to Consolidated
Adjusted Operating Profit or (b) the Eurodollar Rate plus 2% to 2 1/4% depending
upon the ratio of our total debt to Consolidated Adjusted Operating Profit.
As of September 30, 2000, the Company has seven interest rate swaps outstanding
aggregating a notional amount of $381,000. Under the terms of the swap
agreements, the Company is required to pay a fixed rate amount equal to the swap
agreement rate listed below. In exchange for the payment of the fixed rate
amount, the Company receives a floating rate amount equal to the three-month
LIBOR rate in effect on the date of the swap agreements and the subsequent reset
dates. For each of the swap agreements the rate resets on each quarterly
anniversary of the swap agreement date until the swap expiration date. The net
interest rate paid by the Company is approximately equal to the sum of the swap
agreement rate plus the applicable Eurodollar Rate Margin. In 2000, the Tranche
A and Revolver Eurodollar Rate Margins were .75%. The Tranche B Eurodollar
Margin was 2.0%. The swap agreement rates and duration as of September 30, 2000
are as follows:
Expiration Date NOTIONAL AMOUNT SWAP AGREEMENT DATE SWAP AGREEMENT RATE
--------------- ------------------- -------------------
February 7, 2001 $ 50,000 August 7, 1997 5.910%
August 7, 2001 $ 50,000 August 7, 1997 5.900%
September 10, 2001 $ 50,000 December 8, 1995 5.623%
December 31, 2001 $ 6,000 March 24, 1999 5.500%
June 8, 2002 $ 50,000 December 8, 1995 5.500%
July 31, 2002 $ 75,000 May 7, 1997 6.385%
July 31, 2002 $ 50,000 October 23, 1998 4.733%
October 1, 2002 $ 50,000 October 1, 1999 6.260%
The Company's risk with regard to the swaps is limited to the counterparty's
(Bank of America, Illinois, with a notional amount of $131,000, The Sumitomo
Bank Limited, The Bank of Nova Scotia, The Bank of New York, Bank of Tokyo
Mitsubishi and First Union with notional amounts of $50,000 each) ability to
meet the payment terms of the contract. All interest expense for all debt is
calculated using the interest method.
On December 11, 2000, due to the extinguishment of debt, interest rate swaps
previously designated as cash flow hedges ceased to meet hedge criteria under
SFAS 133 as modified by SFAS 138. The approximate fair value on December 11,
2000 was $1,700. The Company sold these interest rate swaps on December 12, 2000
for approximately $1,700, and realized a gain of $1,100 (net of tax). Because
these interest rate swaps were designated as a hedge against future variable
rate interest payments and the extinguished debt, the gain will continue to be
carried in other comprehensive income and recognized as an adjustment of yield
interest expense of the Credit Facilities over the remaining term of the
interest rate contract.
Previous Revolving Credit Facility: The Company paid a commitment fee of .20%
with the ability to increase or reduce the amount from .225% to .15% depending
upon the ratio of the Company's total debt to Consolidated Adjusted Operating
Profit. The Revolving Credit Facility also provided for the issuance of standby
letters of credit and commercial letters of credit on behalf of the Company's
subsidiaries as required in the ordinary course of business as part of the
working capital line. Borrowings under the Revolving Credit Facility were
similar in terms of interest as those under the Tranche A Term Loan Facility
described above, except that the Company had a third option to set the rate by a
competitive bid process among the parties to the Revolving Credit Facility (the
"CAF"). In connection with the Distribution, on December 11, 2000, the Company
repaid the remaining balance (including amounts attributable to SDS and accrued
interest) of approximately $376,100 of the Previous Revolving Credit Facility.
F-16
92
The Company paid fees on the average unused portion of credit commitments under
the Previous Revolving Credit Facility of approximately $327, $201 and $479 in
1998, 1999 and 2000, respectively. The Company paid fees of approximately $55,
$38 and $59 for standby letters of credit under the Previous Revolving Credit
Facility in 1998, 1999 and 2000, respectively. Standby letters of credit were
approximately $2,985 and $18,562 at September 30, 1999 and 2000, respectively.
Securities Lending Agreement: On September 29, 1999, the Company purchased a
United States Treasury Bond ("Treasury") with a par value of $50,000, an
interest rate of 6.15% and a maturity date of August 15, 2029. Concurrent with
the purchase of the Treasury, the Company lent the security to an unrelated
third party for a period of 23 years. In exchange for the loaned Treasury, the
Company has received collateral equal to the market value of the Treasury on the
date of the loan, and adjusted on a weekly basis. This securities lending
transaction is related to the Company's existing lending policy by fixing
$50,000 of its floating rate debt. For a period of five years, the Company is
obligated to pay a rebate on the loaned collateral at an annual fixed rate of
6.478% and is entitled to receive a fee for the loan of the security at a
floating rate equal to LIBOR minus .75%. The weighted-average pay and receive
rates in 2000 were 6.478% and 5.26%, respectively, at a weighted average
notional amount of $52,500. Thereafter, the Company is required to pay the
unrelated third party a collateral fee equal to the one-week general collateral
rate of interest (as determined weekly in good faith by the unrelated third
party, provided that such rate shall not exceed the federal funds rate in effect
as of the day of determination plus .25%) and the Company receives all
distributions made on or in respect to the Treasury. This transaction is
accounted for as a secured borrowing under Statement of Financial Accounting
Standards No. 125.
Sale/Leaseback: On December 22, 1988, the Company completed the sale and
leaseback (the "Sale/Leaseback") of its then principal domestic manufacturing
and office facilities with an unaffiliated third party. The proceeds of $22,500
(net of approximately $1,100 in fees) were used to retire debt. The transaction
has been accounted for as a financing for financial statement purposes and as a
sale for income tax purposes. The financing obligation is being amortized over
the initial 25-year lease term.
The Company pays all costs of maintenance and repair, insurance, taxes, and all
other expenses associated with the properties. In addition, each of the leases
is unconditionally guaranteed by the Company.
The initial term of each lease is 25 years with five five-year renewal options.
The initial aggregate annual payments relating to the Company under the leases
were $1,727 payable monthly in advance. On the fifth anniversary of the leases
and every five years thereafter (including renewal terms), the rent is increased
by the percentage equal to 75% of the percentage increase in the Consumer Price
Index over the preceding five years. The percentage increase to the rent in any
five-year period will be capped at 15%. Beginning January 1, 1999 annual
payments increased to $2,176. The next adjustment will not occur until January
1, 2004.
The Company has the option to purchase the facilities according to the terms of
any bona fide offer received by the lessor from a third party (the "Third Party
Offer") at any time during the term of the leases. The purchase price upon
exercise of the option will be an amount equal to the purchase price contained
in the Third Party Offer. The Company also has the option to purchase the
facilities, subject to complying with the notice provision in the leases, on any
date between June 1, 2008 and May 31, 2009. The purchase price upon the exercise
of the option is the greater of the fair market value of the leased premises or
the sum of the landlord's acquisition cost for the leased premises and any
prepayment premiums that would be payable under the landlord's financing for the
premises.
In the event of a breach of certain covenants which include, subject to certain
exceptions, restrictions on the Company's and its subsidiaries' incurrence of
certain additional indebtedness, payment of dividends or the making of other
distributions or the repurchase of the Company's capital stock, or the creation
of liens on their respective properties, the Company must cause each subsidiary
to make a rejectable offer to the lessor to purchase its facility. If the lessor
accepts the rejectable offer, each subsidiary will pay to the lessor a formula
price based upon the lessor's equity in the property and the lessor's
pre-payment premium to its lender. The Company may also be obligated to
repurchase the property upon the occurrence of certain other events.
F-17
93
Maturities of Long-Term Debt: As of September 30, 2000, maturities of long-term
debt, including capital leases, are as follows:
Fiscal
2001 $ 34,327
2002 566
2003 473
2004 504
2005 556
Thereafter 701,754
------------
$ 738,180
------------
Maturity of long term debt related to the Term Loan Facility and the Revolving
Credit Facility are based upon their maturity dates of December 11, 2005.
(8) LEASE COMMITMENTS
As of September 30, 2000, minimum rentals, excluding rent payments under the
Sale/Leaseback described in note 7, under capital and noncancellable operating
leases consisting primarily of machinery and equipment, and building leases are:
CAPITAL OPERATING
--------- -----------
2001 $ 336 $ 8,019
2002 178 7,176
2003 48 5,922
2004 3 4,331
2005 -- 3,703
Thereafter -- 17,610
--------- -----------
$ 565 $ 46,761
========= ===========
Less amounts representing interest 67
---------
Present value of net minimum lease payments 498
Less current portion 264
---------
Long-term obligations under capital leases $ 234
=========
Amortization of assets held under capital leases is included with depreciation
expense.
Rental expense under operating leases was $9,434, $6,704 and $4,028 in 2000,
1999 and 1998, respectively.
(9) FAIR MARKET VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments approximate fair value due to the
short maturity of those instruments except as follows:
Long-Term Debt
Term Loan Facility and Revolving Credit Facility: The fair value was determined
by estimating the interest rate margins (the premium over the Eurodollar Rate)
on each of the Tranche A Term Loan Facility, Tranche B Term Loan Facility and
the Previous Revolving Credit Facility for companies with credit risk similar to
that of the Company. In 2000 the Company's spread over the Eurodollar Rate was
75 basis points for the Tranche A Term Loan Facility and the Previous Revolving
Credit Facility and a spread of the Eurodollar Rate plus 200 basis points on the
Tranche B Term Loan Facility. Since the Company has refinanced these facilities
on December 11, 2000 at a rate of LIBOR + 125 basis points, LIBOR + 125 basis
points was used for the calculations of fair market value.
Sale/Leaseback: The fair value was determined by estimating the interest rate at
which the Company could refinance the Sale/Leaseback given the same maturity
period.
F-18
94
Interest Rate Swap Agreements: The fair values of interest rate swap agreements
are obtained from dealer quotes. These values represent the estimated amount the
Company would receive/(pay) if the agreements were terminated as quoted by the
bank with which the Company executed the swap agreements.
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
--------------------------- --------------------------
REPORTED ESTIMATED REPORTED ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ------------- ------------- ----------
Long-term debt (including current portion)................ $ 738,180 $ 742,132 $ 649,959 $ 654,126
Interest rate swap agreements............................. -- 4,221 -- 2,768
Derivatives: The Company uses derivative financial instruments to manage its
foreign currency exposures and interest rate risk. The Company does not hold or
issue financial instruments for trading purposes. The notional amounts of these
contracts do not represent amounts exchanged by the parties and, thus, are not a
measure of the Company's risk. The net amounts exchanged are calculated on the
basis of the notional amounts and other terms of the contracts, such as interest
rates or exchange rates, and only represent a small portion of the notional
amounts. The credit and market risk under these agreements is minimized through
diversification among counter parties with high credit ratings. Depending on the
item being hedged, gains and losses on derivative financial instruments are
either recognized in the results of operations as they accrue or are deferred
until the hedged transaction occurs. Derivatives used as hedges are effective at
reducing the risk associated with the exposure being hedged and are designated
as a hedge at the inception of the derivative contract. Accordingly, changes in
the market value of the derivative are highly correlated with changes in the
market value of the underlying hedged item at the inception of the hedge and
over the life of the hedge contract.
Foreign Exchange Contracts: The Company enters into foreign exchange hedging
contracts to hedge certain sales commitments and loans made to foreign
subsidiaries denominated in foreign currencies. The term of these contracts is
less than one year. The purpose of the Company's foreign currency hedging
activities is to protect the Company from the risk that the eventual cash flows
resulting from foreign activities will be adversely affected by changes in
exchange rates. The recognition of gains and losses on contracts entered into to
hedge sales commitments are included in net income as an adjustment to net
sales. At September 30, 2000 and 1999, the Company had no foreign exchange
option contracts.
Interest Rate Swaps: The Company enters into interest rate swaps to stabilize
funding costs by minimizing the effect of potential interest rate increases on
floating-rate debt in a rising interest rate environment. Under these
agreements, the Company contracts with a counter party to exchange the
difference between a fixed rate and a floating rate applied to the notional
amount of the swap. Swap contracts are principally between one and five years in
duration. The differential to be paid or received on interest rate swap
agreements is accrued as interest rates change and is recognized in net income
as an adjustment to interest expense. Gains and losses resulting from terminated
interest rate swap agreements are deferred and recognized in net income over the
shorter term of the remaining contractual life of the swap agreement or the
remaining term of the debt underlying the swap agreement. If swap agreements are
terminated due to the underlying debt being extinguished, any resulting gain or
loss is recognized in net income as an adjustment to interest expense at the
time of the termination. The Company has not terminated any interest rate swap
agreements. The weighted-average pay and receive rates for the swaps outstanding
at September 30, 2000, were 5.79% and 6.24%, respectively, at a weighted average
notional amount of $382,000. The weighted-average pay and receive rates for the
swaps outstanding at September 30, 1999 were 5.78% and 5.22%, respectively at a
weighted average notional amount of $382,000.
(10) EMPLOYEE BENEFIT PLANS
Effective September 30, 1999, the Company adopted Statement of Financial
Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." This standard only modifies the financial statement
presentation of the Company's pension and post retirement benefit obligations
and does not impact measurement of such obligations.
Pension and Other Postretirement Benefits: The Company has defined benefit
pension plans covering approximately 48 percent of its U.S. employees. The
benefits are generally based on various formulas, the principal factors of which
are years of service and compensation. The Company's funding policy is to
generally make the minimum annual contributions required by applicable
regulations. Plan assets are invested primarily in U.S. stocks, bonds and
International stocks. In addition to the defined benefit plans, the Company
provides certain health care benefits for eligible retired employees which are
funded as costs are
F-19
95
incurred. Certain employees who reached the age of 55 prior to January 1, 1996
will become eligible for postretirement health care only if they reach
retirement age while working for the Company. The Company accrues, as current
costs, the future lifetime retirement benefits for both qualifying active and
retired employees and their dependents. The postretirement health care plans for
subsidiaries of the Company and certain divested operations are generally
contributory, with retiree contributions adjusted annually. In 1986, the Company
instituted a policy with respect to postretirement medical premiums where the
Company's contributions were frozen at the levels equal to the Company's
contribution on December 31, 1988, except where collective bargaining agreements
prohibited such a freeze.
F-20
96
The following assumptions were used in determining the funded status of the
Company's defined benefit plans:
2000 1999
------- -------
Discount rate 8.0% 7.75%
Rate of increase in compensation levels 4.0% 4.0%
Expected long-term rate of return on assets 10.0% 10.0%
The following assumptions were used in determining the accumulated
postretirement benefit obligation of the Company's postretirement plans
2000 1999
------- -------
Discount rate 8.0% 7.75%
Average increase in medical costs 5.5% 5.5%
PENSION BENEFITS OTHER BENEFITS
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
Change in benefit obligations:
Obligations at beginning of year $ 44,275 $ 50,761 $ 5,556 $ 8,961
Service cost 2,032 2,818 12 28
Interest cost 3,691 3,435 399 557
Actuarial (gain) loss 3,129 (10,497) (68) (2,555)
Benefit payments (2,118) (2,242) (1,442) (1,435)
-------- -------- -------- --------
Obligations at end of year $ 51,009 $ 44,275 $ 4,457 $ 5,556
Change in fair value of plan assets:
Fair value of plan assets at
beginning of year $ 44,898 $ 42,343 $ -- $ --
Actual return on plan assets 6,463 4,614 -- --
Employer contributions 1,240 184 -- --
Benefit payments (2,118) (2,242) -- --
-------- -------- -------- --------
Fair value of plan assets at end of year $ 50,483 $ 44,899 $ -- $ --
Funded Status:
Funded status at end of year $ (526) $ 624 $ (4,457) $ (5,556)
Unrecognized transition (asset)
obligation 6 113 -- --
Unrecognized prior service cost 144 92 -- --
Unrecognized (gain) loss (6,869) (7,979) 245 314
Remaining excess of fair value of
plan assets over projected
benefit obligation recognized
as a result of the 1987 acquisition
of Sybron Corporation 1,869 2,341 -- --
-------- -------- -------- --------
Net amount recognized at measurement date (5,376) (4,809) (4,212) (5,242)
Employer contribution paid after
measurement date 167 -- -- --
-------- -------- -------- --------
Net amount recognized at end of year $ (5,209) $ (4,809) $ (4,212) $ (5,242)
======== ======== ======== ========
F-21
97
The following table provides the amounts recognized in the Company's
consolidated balance sheets:
PENSION BENEFITS OTHER BENEFITS
------------------ ------------------
2000 1999 2000 1999
------- ------- ------- -------
Prepaid benefit cost $ 188 $ 124 $(4,212) $(5,242)
Accrued benefit liability (7,433) (7,274) -- --
Remaining excess of fair value of plan
assets over projected benefit
obligation recognized as a result
of the 1987 acquisition of Sybron
Corporation 1,869 2,341 -- --
------- ------- ------- -------
Net amount recognized at measurement date (5,376) (4,809) (4,212) (5,242)
Employer contribution paid after
measurement date 167 -- -- --
------- ------- ------- -------
Net amount recognized at September 30 $(5,209) $(4,809) $(4,212) $(5,242)
======= ======= ======= =======
The following table provides disclosure of the net periodic benefit cost:
PENSION BENEFITS OTHER BENEFITS
----------------------------- ---------------------------
2000 1999 1998 2000 1999 1998
------- ------- ------- ------- ------- -------
Service cost $ 2,032 $ 2,818 $ 2,544 $ 12 $ 28 $ 23
Interest cost 3,691 3,435 3,074 399 557 662
Expected return on plan assets (4,509) (4,123) (4,118) -- -- --
Amortization of transition
(asset) obligation 107 108 107 -- -- --
Amortization of prior service cost (52) (52) (52) -- -- --
Amortization of net (gain) loss 65 126 13 -- 66 42
------- ------- ------- ------- ------- -------
Net periodic benefit cost $ 1,334 $ 2,312 $ 1,568 $ 411 $ 651 $ 727
======= ======= ======= ======= ======= =======
The projected benefit obligation, accumulated benefit obligation, and fair value
of plan assets for the pension plans with accumulated benefit obligations in
excess of fair value of plan assets were $2,880, $1,732 and $0, respectively as
of September 30, 2000 and $4,139, $1,853, and $0, respectively, as of September
30, 1999.
An increase of one percentage point in the per capita cost of health care costs
associated with the plans for which the Company contributions are not frozen
would increase the accumulated postretirement benefit obligation and service and
interest cost components as of September 30, 2000 by approximately $61 and $3,
respectively.
Because the majority of the postretirement plans are remaining liabilities from
certain divested operations and more than 85% of the 2000, 1999 and 1998 net
periodic postretirement benefit costs relate to interest costs, the Company has
classified such interest costs as interest expense. This results in a non-cash
increase in interest expense of approximately $399, $557 and $662 in 2000, 1999
and 1998, respectively.
Savings Plans: Employees in the United States are eligible to participate in
contributory savings plans maintained by the Company under Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code"). Company matching
contributions under the plans, net of forfeitures, were approximately $2,770,
$2,324 and $2,321 for 2000, 1999 and 1998, respectively.
(11) RESTRUCTURING CHARGES
In June 1998, the Company recorded a restructuring charge of approximately
$8,500 (approximately $5,400 after tax or $.05 per share on a diluted basis) for
the rationalization of certain acquired companies, combination of certain
duplicate production facilities, movement of certain customer service and
marketing functions, and the exiting of several product lines. The
F-22
98
restructuring charge was classified as components of cost of sales
(approximately $1,800 relating to the write-off of inventory discussed below),
selling, general and administrative expenses (approximately $6,700).
Restructuring activity since June 30, 1998 and its components are as
follows:
LEASE INVENTORY FIXED
SEVERANCE PAYMENTS WRITE-OFF ASSETS GOODWILL
(IN THOUSANDS) (a) (b) (c) (c) (d) TOTAL
- -------------- --------- -------- --------- -------- --------- --------
1998 Restructuring Charge $ 3,400 $ 200 $ 1,800 $ 1,000 $ 2,100 $ 8,500
1998 Cash Payments 900 100 -- -- -- 1,000
1998 Non-Cash Charges -- -- 1,800 1,000 2,100 4,900
-------- -------- -------- -------- -------- --------
September 30, 1998 balance $ 2,500 $ 100 $ -- $ -- $ -- $ 2,600
1999 Cash Payments 1,900 100 -- -- -- 2,000
Adjustments(a) 300 -- -- -- -- 300
-------- -------- -------- -------- -------- --------
September 30, 1999 balance $ 900 $ -- $ -- $ -- $ -- $ 900
2000 Cash Payments 700 -- -- -- -- 700
-------- -------- -------- -------- -------- --------
September 30, 2000 balance $ 200 $ -- $ -- $ -- $ -- $ 200
-------- -------- -------- -------- -------- --------
2001 Cash Payments 100 -- -- -- -- 100
-------- -------- -------- -------- -------- --------
March 31, 2001 balance $ 100 $ -- $ -- $ -- $ -- $ 100
-------- -------- -------- -------- -------- --------
(a) Amount represents severance and termination costs for approximately 65
terminated employees (primarily sales and marketing personnel). As of
March 31, 2001, all employees have been terminated as a result of the
restructuring plan. Payments will continue to certain employees
previously terminated under this restructuring plan. An adjustment of
approximately $300 was made in the third quarter of fiscal 1999 to
adjust the accrual primarily representing under accruals for
anticipated costs associated with outplacement services, accrued fringe
benefits, and severance associated with employees who were previously
notified of termination. No additional employees will be terminated
under this restructuring plan.
(b) Amount represents lease payments on exited facilities.
(c) Amount represents write-offs of inventory and fixed assets associated
with discontinued product lines.
(d) Amount represents goodwill associated with exited product lines.
The Company expects to make future cash payments of approximately $100
during the remainder of fiscal 2001.
In September 2000, the Company recorded a restructuring charge of
approximately $11,300 (approximately $7,500 after tax or $.07 per share on a
diluted basis) for the consolidation of certain businesses, product
rationalizations, changes in management structure and taxes associated with
restructuring the U.K. operations. The restructuring charge was classified as
components of cost of sales (approximately $4,400 relating to the write-off of
inventory, write-offs of fixed assets, certain lease terminations and severance
associated with employees in production activities), selling, general and
administrative expense at $5,800 and income tax expense of $1,000, related to
the companies restructuring of its U.K. operations. Restructuring activity since
its inception in September 2000 and its components is as follows:
FIXED LEASE SHUT-DOWN
SEVERANCE INVENTORY ASSETS COMMITMENTS COSTS TAX
(a) (b) (b) (c) (c) (d) OTHER TOTAL
--------- --------- --------- ----------- --------- --------- --------- ---------
2000 Restructuring charge $ 5,500 $ 2,100 $ 1,000 $ 500 $ 300 $ 1,000 $ 900 $ 11,300
2000 Cash payments 1,100 -- -- -- -- -- -- 1,100
2000 Non-cash charges -- 2,100 1,000 -- -- -- 800 3,900
--------- --------- --------- --------- --------- --------- --------- ---------
September 30, 2000 balance $ 4,400 $ -- $ -- $ 500 $ 300 $ 1,000 $ 100 $ 6,300
Adjustments(e) 600 -- -- -- -- -- -- 600
2001 Cash payments 1,600 -- -- 100 100 -- -- 1,800
--------- --------- --------- --------- --------- --------- --------- ---------
March 31, 2000 balance $ 3,400 $ -- $ -- $ 400 $ 200 $ 1,000 $ 100 $ 5,100
========= ========= ========= ========= ========= ========= ========= =========
F-23
99
(a) Amount represents severance and termination costs for 151 terminated
employees (primarily sales, marketing and corporate personnel). As of
March 31, 2001, 151 employees have been terminated as a result of the
restructuring plan.
(b) Amount represents write-offs of inventory and fixed assets associated
with discontinued product lines.
(c) Amount represents lease payments and shut down costs on exited
facilities.
(d) Amount represents income tax expense associated with the restructuring
of our U.K. facilities.
(e) Amount represents an increase in the severance costs for 16 employees
(primarily corporate personnel). These employees are included in the
total 151 terminated employees referenced above.
The Company expects to make cash payments of approximately $3,500 and $400 in
each of the remaining two quarters of fiscal 2001, respectively and $1,200 in
fiscal 2002 and beyond.
(12) CAPITAL STOCK
Stock Option Plans: The Company has five stock option plans. As of September 30,
2000, there were options with respect to 5,616 shares of Common Stock
outstanding under the 1988 Stock Option Plan (the "1988 Plan"), and there were
no shares available for the granting of options under such plan; there were
options with respect to 26,800 shares of Common Stock outstanding under the 1990
Stock Option Plan (the "1990 Plan") and there were no shares remaining available
for the granting of options under such plan; there were options with respect to
7,869,242 shares of Common Stock outstanding under the Amended and Restated 1993
Long-Term Incentive Plan (the "1993 Plan") and there were 980,896 shares
remaining available for the granting of options under such plan; there were
options with respect to 324,000 shares of Common Stock outstanding under the
Amended and Restated 1994 Outside Directors' Stock Option Plan (the "1994
Outside Directors' Plan"), and there were no shares available for the granting
of options under such plan; there were options with respect to 168,000 shares of
Common Stock outstanding under the 1999 Outside Directors' Stock Option Plan
(the "1999 Outside Directors' Plan"), and there were 312,000 shares remaining
available for the granting of options under such plan. Changes in stock options
outstanding are as follows:
NUMBER OF WEIGHTED AVERAGE
SHARES PRICE PER SHARE EXERCISE PRICE
----------- ----------------- ----------------
Options outstanding at September 30, 1997 6,943,280 $ 5.99-$15.35 $ 9.36
Granted 4,188,064 $ 23.81-$24.50 $ 24.42
Exercised (1,455,760) $ 5.99-$15.35 $ 8.63
Canceled and available for reissue (277,556) $ 8.34-$23.81 $ 10.92
-----------
Options outstanding at September 30, 1998 9,398,028 $ 5.99-$24.50 $ 16.14
Granted 896,748 $ 25.31-$26.75 $ 26.18
Exercised (1,121,421) $ 5.99-$24.34 $ 9.53
Canceled and available for reissue (145,584) $ 11.55-$26.75 $ 20.86
-----------
Options outstanding at September 30, 1999 9,027,771 $ 6.06-$26.75 $ 17.88
Granted 764,040 $ 22.00-$32.00 $ 24.05
Exercised (1,167,775) $ 6.06-$26.75 $ 10.79
Canceled and available for reissue (230,378) $ 11.54-$26.75 $ 24.13
-----------
Options outstanding at September 30, 2000 8,393,658 $ 6.36-$32.00 $ 19.27
Options exercisable at September 30, 2000 5,212,321 $ 6.36-$26.75 $ 16.09
Options available for grant at September 30, 2000 1,292,896
===========
The range of exercise prices for options outstanding at September 30, 2000 was
$6.06 to $26.75. The range of exercise prices for options is wide due to the
increasing price of the Company's stock (upon which the exercise price is based)
over the period of the grants.
F-24
100
The following table summarizes information about options outstanding and
outstanding and exercisable on September 30, 1999:
OPTIONS OUTSTANDING
---------------------------------- OPTIONS OUTSTANDING AND EXERCISABLE
WEIGHTED AVERAGE -----------------------------------
RANGE OF NUMBER OF REMAINING WEIGHTED AVERAGE NUMBER OF WEIGHTED AVERAGE
EXERCISE PRICES SHARES CONTRACTUAL LIFE EXERCISE PRICE SHARES EXERCISE PRICE
- --------------- ------------- ---------------- ---------------- ------------- ----------------
$5.00-$10.00 2,327,718 4.0 $ 8.43 2,327,718 $ 8.43
$10.01-$15.00 392,270 5.4 11.94 392,270 11.94
$15.01-$20.00 257,124 6.3 15.36 187,328 15.36
$20.01-$25.00 4,511,702 7.8 24.22 2,051,778 24.36
$25.01-$30.00 799,844 8.3 26.20 253,227 26.34
$30.01-$35.00 105,000 9.6 31.02 -- --
------------- ------ -------- ------------- ---------
8,393,658 6.7 19.27 5,212,321 16.09
============= ====== ======== ============= =========
1988, 1990 and 1993 Plans
No options may be granted under the plans after ten years from the date the
plans are approved by the shareholders of the Company. Options granted pursuant
to the plans shall be either incentive options which are intended to meet the
requirements of section 422 of the Code or nonstatutory options. The exercise
price of the options will be determined by the Compensation/Stock Option
Committee. The exercise price of any incentive option shall not be less than the
fair market value per share of the Common Stock on the date of the grant of such
option. An optionee under the plans must pay the full option price of an option
either (a) in cash or its equivalent, (b) with the Compensation/Stock Option
Committee's consent, by delivering previously acquired shares of Common Stock
having a fair market value at the time of the exercise equal to the total option
price, (c) with the Compensation/Stock Option Committee's consent, by a cashless
exercise as permitted under The Federal Reserve Board's Regulation T or (d) in
any combination of the foregoing.
In general, options granted under the 1990 Plan after May 14, 1992, and under
the 1993 Plan, vest in equal annual installments on each of the first four
anniversaries following the date of grant. The Company made significant
management changes in connection with the Spin-Off, including a change in the
Chief Executive Officer, Chief Financial Officer and General Counsel. The Board
of Directors and the Compensation Committee amended certain stock options
previously granted to each of the executive officers so replaced to provide for
the vesting of any unvested portion of the options granted to each of them in
April of 1998, provided the individual remains an employee of the Company until
June 1, 2001. If the individual is terminated prior to that date, the options
would fully vest at that time. These options were also amended to provide for a
five year period (rather than a three month period) to exercise the options
after termination of employment. The amendments to these options had no earnings
impact because the options had no intrinsic value (i.e. there was no positive
spread between the market price and exercise price of the option shares) at the
time of the amendment.
Outside Directors' Plans
The 1994 Outside Directors' Plan provided for the automatic granting of
nonstatutory stock options to those of the Company's directors who qualify as
"outside directors" at the time of grant. Following each annual meeting of
shareholders prior to September 30, 1998, the plan's expiration date, each
outside director was automatically granted an option to purchase 12,000 shares
of Common Stock at an exercise price equal to the fair market value of the
Common Stock on the date of grant. Each option granted under the 1994 Outside
Directors' Plan became exercisable six months after the date of grant,
regardless of whether the grantee was still a director of the Company on such
date. All rights to exercise an option granted under the 1994 Outside Directors'
Plan terminate upon the earlier of ten years from the date of grant or two years
from the date the grantee ceases to be a director of the Company. The exercise
price must be paid in full at the time of exercise, and such payment may be made
in cash, by delivering shares of Common Stock which the optionee or the
optionee's spouse or both have beneficially owned for at least six months prior
to the time of exercise, or through a combination of cash and such delivered
Common Stock.
The 1999 Outside Directors' Plan provides for the automatic granting of
nonstatutory stock options to those of the Company's directors who qualify as
"outside directors" at the time of grant. Following each annual meeting of
shareholders beginning in 1999, when the plan was approved by the shareholders,
each outside director is automatically granted an option to purchase 12,000
shares of Common Stock at an exercise price equal to the fair market value of
the Common Stock on the date of grant.
F-25
101
Each option granted under the 1999 Outside Directors' Plan is exercisable
immediately upon grant. All rights to exercise an option granted under the 1999
Outside Directors' Plan terminate upon the earlier of ten years from the date of
grant or two years from the date the grantee ceases to be a director of the
Company. The exercise price must be paid in full at the time of exercise, and
such payment may be made in cash, by delivering shares of Common Stock which the
optionee or the optionee's spouse or both have beneficially owned for at least
six months prior to the time of exercise, or through a combination of cash and
such delivered Common Stock.
The Company has adopted the provisions of Statement of Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS 123"), and continues to
apply Accounting Principles Board Opinion No. 25 and related interpretations in
accounting for its stock plans. If the Company had elected to recognize
compensation cost for all of the plans based upon the fair value at the grant
dates for awards under those plans, consistent with the method prescribed by
SFAS 123, net income and earnings per share would have been changed to the pro
forma amounts indicated below:
2000 1999 1998
----------- ----------- -----------
Pro forma net income $ 116,437 $ 130,902 $ 68,966
Basic pro forma earnings per share 1.11 1.27 .67
Diluted pro forma earnings per share 1.09 1.23 .65
The fair value of the Company's stock options used to compute pro forma net
income and earnings per share disclosures is the estimated present value at
grant date using the Black-Scholes option pricing model with the following
weighted average assumptions:
2000 1999 1998
----------- ----------- -----------
Volatility 35.0% 28.8% 34.1%
Risk-free interest rate 6.50% 4.99% 5.66%
Expected holding period 7.8 years 7.7 years 8.7 years
Dividend yield 0 0 0
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's options have characteristics significantly different from traded
options, and because changes in the subjective input assumptions can materially
affect the fair value estimate, in the opinion of management, the existing
models do not necessarily provide a reliable single value of its options and may
not be representative of the future effects on reported net income or the future
stock price of the Company. The weighted average estimated fair value of
employee stock options granted in 2000, 1999 and 1998 was $14.54, $13.53 and
$13.13 per share, respectively. For purposes of pro forma disclosure, the
estimated fair value of the options is amortized to expense over the options'
vesting period.
On December 11, 2000, in connection with the spin-off of SDS, certain employees
of SDS exchanged 1,320,515 outstanding options to purchase Sybron International
Corporation common stock for 2,331,214 options to purchase Sybron Dental
Specialties, Inc. common stock. All remaining stock options (owned by remaining
employees and directors of the Company) were adjusted by adjusting the exercise
price and the number of shares subject to each such option to reflect the change
in market value of the Company's common stock resulting from the spin-off, so
that the intrinsic value of the options (the spread between the market value and
the exercise price of the option shares) after the spin-off was equal to their
intrinsic value immediately prior to the spin-off. The spread on options for
fractional shares resulting from the exchange or adjustment was paid in cash. As
a result of these exchanges and adjustments, the number of outstanding employee
and director stock options increased by 391,458 shares and the average exercise
price decreased by approximately $3.80.
Equity Rights: As of September 30, 2000, the Company holds 220 shares of
treasury stock for delivery to equity right holders who have not yet surrendered
their certificates. Equity right holders are entitled to receive 4.375 shares of
Common Stock upon surrender of such certificates.
F-26
102
(13) TRANSACTIONS WITH SYBRON DENTAL SPECIALTIES
Cash management and advances: The Company has managed the cash not considered
necessary for current operating requirements of its subsidiaries, including the
operations of SDS. Cash collected from and cash payments to the operations of
SDS are collected or funded from a centralized treasury operation and are either
credited or charged to SDS. Advances to and collections from SDS are indirectly
charged or credited with interest as such advances to or collections from SDS
were applied to borrowings or repayments under the Old Credit Facilities. On an
annual basis, outstanding balances are cleared via an intercompany dividend to
or capital contribution from Apogent Technologies.
Dividends Paid to Apogent Technologies: From time to time, SDS has paid
dividends to the Company. Dividends in 2000, 1999 and 1998 were $58,512, $36,483
and $47,225, respectively.
Capital Contributions to SDS. From time to time, the Company has made capital
contributions to SDS. Capital contributions in 2000, 1999 and 1998 were $21,399,
$16,210 and $49,268, respectively.
Apogent Technologies Credit Facilities: Apogent Technologies, consistent with
the terms of its Old Credit Facilities, has historically recorded a portion of
its outstanding debt (and associated interest expense) under its Old Credit
Facilities to certain of its subsidiaries, including the operations of SDS.
SDS's historical debt outstanding under the Old Credit Facilities at September
30, 2000 and 1999 were $311,772 and $273,192, respectively. SDS's historical
interest expense was $25,899, $17,074 and $20,195 in 2000, 1999 and 1998,
respectively.
Apogent Technologies Charges: Apogent Technologies performs certain functions
for its subsidiaries (legal, tax, treasury, consolidation accounting, financial
reporting and insurance) and therefore charges its corporate office, general and
administration expenses to its subsidiaries. Such costs charged to SDS amounted
to $2,979, $4,228 and $3,620 in 2000, 1999 and 1998, respectively. Services
performed at the corporate office generally benefit the domestic operations, and
therefore Sybron International corporate office, general and administrative
expenses are generally charged based on SDS's domestic revenues as a percentage
of total Sybron International domestic revenues. Because corporate office
general and administrative expenses at Sybron International generally benefit
domestic operations, Sybron International considers this method to be a
reasonable basis for allocation. Management estimates that costs incurred by SDS
if it had operated as an unaffiliated entity would have exceeded the amounts
actually charged by approximately $2,500 in each of the three years reported.
Intercompany Loans with Sybron Dental Specialties: Loans due from (to) SDS at
September 30, 1998, 1999 and 2000 were as follows:
AMOUNT RATE MATURITY
---------- ----- ---------
1998:
Sybron Holdings A/S $ (21,098) 8.00% On Demand
Sybron Deutchland GmbH (342) 6.50% 12/31/98
Sybron Deutchland GmbH (1,497) 6.50% 8/3/99
Sybron Deutchland GmbH (493) 3.75% On Demand
1999:
Sybron Holdings A/S $ (11,472) 5.50% On Demand
Electrothermal (1,647) 8.00% 8/9/00
Sybron Deutchland GmbH (1,367) 6.50% 8/3/00
Sybron U.K (554) 8.00% 7/30/00
Sybron Deutchland GmbH (454) 3.75% On Demand
Sybron Deutchland GmbH (110) 6.50% 12/31/99
Nalge U.K 1,071 0.00% None
2000:
Sybron Holdings A/S $ (1,773) 5.50% On Demand
F-27
103
(14) COMMITMENTS AND CONTINGENT LIABILITIES
Applied Biotech, Inc. ("ABI"), a subsidiary in our Diagnostics and Microbiology
business segment, manufactures and supplies immunoassay pregnancy tests to
Warner Lambert Co. (now part of Pfizer Inc.). Warner Lambert sells the tests to
retailers who sell them over-the-counter to consumers. ABI supplies the product
to Warner Lambert pursuant to a supply agreement which Warner Lambert claims
requires ABI to defend and indemnify Warner Lambert with respect to any
liability arising out of claims that the product infringes any patents held by
third parties. On January 8, 1999, Conopco, Inc. d/b/a Unipath Diagnostics
Company filed a lawsuit against Warner Lambert in the U.S. District Court for
the District of New Jersey. Conopco claims in the suit that the Warner Lambert
pregnancy test supplied by ABI infringes certain patents owned by Conopco. ABI
has agreed to defend the lawsuit on behalf of Warner Lambert. In November 2000,
the U.S. District Court granted a motion for summary judgment in favor of Warner
Lambert and ABI, ruling that ABI's product does not infringe on the Conopco
patents. The Company therefore believes the resolution of this lawsuit will not
have a material adverse effect on the results of operations or financial
condition of the Company. Additionally, another third party has contacted Warner
Lambert regarding patents it holds which may apply to the Warner Lambert
pregnancy test. Thus, Warner Lambert or ABI may in the future be subject to
additional lawsuits by third parties for patent infringement with respect to
these products. ABI believes it has meritorious defenses to these patents and
will vigorously defend any such lawsuits against it, if brought.
The Company or its subsidiaries are at any one time parties to a number of
lawsuits or subject to claims arising out of their respective operations, or the
operation of businesses divested in the 1980's for which certain subsidiaries
may continue to have legal or contractual liability, including product
liability, patent and trademark or other intellectual property infringement,
contractual liability, workplace safety and environmental claims and cases, some
of which involve claims for substantial damages. The Company and its
subsidiaries are vigorously defending lawsuits and other claims against them.
Based upon the insurance available under an insurance program and the potential
for liability with respect to claims which are uninsured, the Company believes
that any liabilities which might reasonably result from any of the pending cases
and claims would not have a material adverse effect on the results of operations
or financial condition of the Company. There can be no assurance as to this,
however, or that litigation having such a material adverse effect will not arise
in the future. The Company does not reduce legal or contractual liabilities for
possible recoveries from insurance companies.
On September 30, 1999, the Company assigned its rights to receive in 2022 a
Treasury with a par value of $50,000 to an unrelated third party. The third
party has also agreed to assume any obligations for which the security has been
pledged.
(15) ACQUISITIONS AND DISCONTINUED OPERATIONS
The Company has completed 43 acquisitions, sold one business and spun off one
business since the beginning of 1998. The acquired companies are all engaged in
businesses which are similar to the Company's existing businesses. The divested
company was engaged in the business of process technologies. The spun off
company was engaged in the dental business.
1998
During 1998, the Company completed 17 acquisitions for cash. The aggregate cash
purchase price of the acquisitions was approximately $192,382, including fees
and expenses. The Company is not subject to future purchase price adjustments
based upon earnout provisions under any of the purchase and sale agreements. All
acquisitions were accounted for as purchases. The results of the acquisitions
were included as of the date they were acquired. The following table outlines
sales and operating income for the most recent available twelve-month period
prior to acquisition, and total assets at the most recent available date prior
to acquisition, for each of the acquired companies accounted for as purchases.
The total goodwill for the acquired companies was $143,886.
F-28
104
BUSINESS SEGMENT OPERATING TOTAL TYPE OF
COMPANY ACQUIRED DATE SALES INCOME ASSETS ACQUISITION
- ---------------- ------------- ---------- --------- --------- -----------
LABWARE AND LIFE SCIENCES:
Lida Manufacturing Corporation October 1997 $ 5,694 $ 379 $ 1,585 Stock
CLINICAL AND INDUSTRIAL:
Chase Instruments Corp. October 1997 21,592 1,957 11,946 Asset
Cel-Line Associates, Inc. January 1998 1,878 39 155 Asset
SciCan Scientific April 1998 5,483 311 2,982 Asset
Marks Polarized Corporation May 1998 935 84 263 Asset
Scherf Prazision GmbH August 1998 2,621 184 1,327 Asset
DIAGNOSTICS AND MICROBIOLOGY:
Clinical Standards Labs, Inc. November 1997 2,759 106 911 Stock
Diagnostic Reagents, Inc. January 1998 7,609 3,057 5,795 Stock
Criterion Sciences April 1998 5,572 2,731 686 Asset
Custom Laboratories, Inc. April 1998 1,444 72 1,616 Asset
DiMed Corporation April 1998 1,830 154 1,248 Asset
Summit Biotechnology, Inc. May 1998 1,237 414 455 Asset
Applied Biotech, Inc. August 1998 25,141 13,663 12,920 Stock
Seradyn, Inc. August 1998 12,038 (535) 8,518 Asset
MicroBio Products, Inc. August 1998 3,675 22 1,032 Stock
LABORATORY EQUIPMENT:
Electrothermal Engineering Ltd. July 1998 5,565 (21) 2,627 Stock
Lab-Line Instruments, Inc. July 1998 20,323 633 8,995 Stock
See note 16 for a description of business segments.
1999
ACQUISITIONS
During 1999, the Company completed 16 acquisitions for cash. The aggregate cash
price of the acquisitions (none of which individually or aggregated was
significant) was $251,332. The Company is not subject to future purchase price
adjustments based upon earnout provisions under any of the purchase and sale
agreements. All acquisitions were accounted for as purchases. The results of the
acquisitions were included as of the date they were acquired. The following
table outlines sales and operating income for the most recent date prior to the
acquisition, and total assets at the most recent available date prior to
acquisition, for each of the acquired companies. The type of acquisition refers
to whether the Company purchased assets or the stock of the acquired companies.
The total goodwill for the acquired companies was $182,926.
F-29
105
BUSINESS SEGMENT OPERATING TOTAL TYPE OF
COMPANY ACQUIRED DATE SALES INCOME ASSETS ACQUISITION
- ---------------- -------------- ---------- --------- --------- -----------
LABWARE AND LIFE SCIENCES:
InVitro Scientific Products, Inc. October 1998 $ 5,095 $ 708 $ 1,897 Assets
Pacofin Intersep Filtration
Products Business of Pacofin, Ltd. November 1998 902 343 952 Assets
Scientific Resources, Inc. January 1999 4,480 165 1,043 Assets
Molecular BioProducts, Inc. January 1999 15,617 4,217 6,727 Stock
Matrix Technologies Corporation September 1999 16,775 1,313 8,419 Stock
CLINICAL AND INDUSTRIAL:
Corning Samco Corporation October 1998 22,996 2,316 15,690 Stock
HistoScreen(TM)and Histogel(TM)
product lines of Perk Scientific January 1999 932 254 227 Assets
Stahmer, Weston & Co., Inc. February 1999 2,961 (74) 873 Stock
System Sales Associates, Inc. August 1999 4,382 565 1,810 Assets
Novelty Glass & Mirror Co., Inc. February 1999 280 (9) 4,949 Assets
DIAGNOSTICS AND MICROBIOLOGY:
Rascher & Betzold, Inc. January 1999 104 (9) 200 Assets
Microgenics Corporation June 1999 37,165 8,034 25,573 Stock
MicroTest, Inc. July 1999 1,631 1,033 320 Assets
Bioreagent and ELISA
immunochemistry product
lines of Genzyme Diagnostics July 1999 3,391 2,465 434 Assets
LABORATORY EQUIPMENT:
Laboratory Devices, Inc. January 1999 940 202 273 Assets
Stem Corporation Ltd. August 1999 1,655 714 1,090 Stock
See note 16 for a description of business segments.
2000
ACQUISITIONS
During 2000, the Company completed 10 acquisitions, nine for all cash and one
for cash and notes in the amount of $30,600. The aggregate cash price of the
acquisitions (none of which individually or aggregated was significant) was
$206,900. The Company may be subject to future purchase price adjustments based
upon earnout provisions under one of the purchase and sale agreements. Such
earnout provision has a maximum payout of $6,000. The earnout provision is
subject to the achievement of certain financial goals and is not contingent upon
employment. The entire earnout is expected to be paid in fiscal 2001 and will be
accounted for as additional goodwill. All acquisitions were accounted for as
purchases. The results of the acquisitions were included as of the date they
were acquired. The following table outlines sales and operating income for the
most recent date prior to the acquisition, and total assets at the most recent
available date prior to acquisition, for each of the acquired companies. The
type of acquisition refers to whether the Company purchased assets or the stock
of the acquired companies. The total goodwill for the acquired companies was
approximately $205,100. which will be amortized over 20 to 40 years.
F-30
106
BUSINESS SEGMENT OPERATING TOTAL TYPE OF
COMPANY ACQUIRED DATE SALES INCOME ASSETS ACQUISITION
- ---------------- ------------- ---------- --------- --------- -----------
LABWARE AND LIFE SCIENCES:
Robbins Scientific Corporation October 1999 $ 19,601 $ 4,088 $ 9,876 Stock
Versi Dry(TM) product line of
National Packaging Services Corporation February 2000 2,494 1,300 Asset
Sun International February 2000 5,818 (270) 2,269 Asset
Genevac Limited May 2000 10,624 1,082 4,165 Stock
Genevac Inc. May 2000 1,626 -- N/A Stock
CLINICAL AND INDUSTRIAL:
Microm Laborgorate GmbH October 1999 20,676 1,112 7,907 Asset
Lab Vision Corporation August 2000 7,487 1,146 4,426 Stock
DIAGNOSTICS AND MICROBIOLOGY:
Consolidated Technologies, Inc. March 2000 7,782 2,888 6,100 Asset
Murex bacteriology latex
agglutination product line of
Abbott Laboratories August 2000 20,461 10,026 N/A Asset
The thyroid and coagulation
product line of Axis Shield September 2000 4,507 2,174 N/A Asset
See note 16 for a description of business segments.
The following pro forma financial information presents the combined results of
the operations of the Company and the purchased businesses referred to above as
if the 1999 acquisitions had occurred as of the beginning of 1998, after giving
effect to certain adjustments, including amortization of goodwill, additional
depreciation expense, increased interest expense on debt related to the
acquisition and related tax effects. The pro forma information does not
necessarily reflect the results of operations that would have occurred had the
Company and the purchased companies listed above constituted a single entity
during such periods.
YEAR ENDED SEPTEMBER 30,
--------------------------
2000 1999
----------- ----------
Net sales $ 903,781 $ 816,114
Net income $ 128,936 $ 140,151
Basic earnings per common share $ 1.23 $ 1.36
Diluted earnings per common share $ 1.21 $ 1.32
F-31
107
Discontinued Operations:
CHARGE RELATED TO FORMER OPERATIONS
In 1998, the Company incurred after tax charges of $7,750 related to legal
proceedings commenced by Combustion Engineering, Inc. against the Company with
respect to the former Taylor Instruments facility in Rochester, New York (the
"Site"), an operation accounted for as a discontinued operation when the
decision was made to exit the industrial capital goods business in 1983. See
note 12.
DIVESTITURE
On March 31, 1999, Sybron completed the sale of NPT to Norton Performance
Plastics Corporation, a subsidiary of Saint-Gobain--France. Net proceeds from
the sale, net of approximately $1,900 of selling expenses and a reduction to the
purchase price of approximately $2,600 paid subsequent to September 30, 1999,
amounted to approximately $83,200. The proceeds of the sale net of tax and
expenses were used to repay approximately $67,900 previously owed under the
Company's credit facilities.
Net sales from NPT were approximately $47,800 in 1998. Certain expenses were
allocated to discontinued operations in 1998 and 1999 (up to the date of sale),
including interest expense, which was allocated based upon the historical
purchase prices and cash flows of the companies comprising NPT. Income from the
discontinued operations of NPT in 1999 and 1998 were $121 and $3,848,
respectively.
DISTRIBUTION
On November 8, 2000, Apogent Technologies Inc. announced that it had declared a
pro rata distribution (or spin-off) to its shareholders of the common stock and
related preferred stock purchase rights of Sybron Dental Specialties, Inc. (the
"Distribution"). Shareholders of record as of November 30, 2000 received one
share of Sybron Dental Specialties, Inc. ("SDS") common stock for every three
shares of Sybron International common stock they own. These consolidated
financial statements have reclassified SDS and its affiliates to discontinued
operations. On December 11, 2000 the Distribution was completed. No proceeds
will be received by the Company in connection with the Distribution. Income
included in discontinued operations for 2000, 1999 and 1998 was $41,597, $47,844
and $27,823, respectively. SDS will issue its own financial statements as of
September 30, 2000.
For the six months ended March 31, 2001 and 2000, the Company has included a net
loss of $11,800 and net income of $23,600 from discontinued operations,
respectively. The net loss in 2001 included transaction expenses of $12,500
relating to the spin-off of SDS. Revenues and net income from SDS through the
date of the Distribution (through December 11, 2000) were $67,400 and $638,
respectively and offset the transaction expenses. Revenues and net income from
SDS for the six months ended March 31, 2000 and 1999 were $201,600 and $23,600,
respectively.
As a result, these consolidated financial statements have reclassified SDS and
its affiliates to discontinued operations. SDS included the business segments,
Professional Dental, Orthodontics and Infection Control Products. The components
of net assets held for sale of discontinued operations included in the
consolidated balance sheets at September 30, 2000 and 1999 are as follows:
F-32
108
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------- -------------
Cash $ 5,783 $ 6,090
Net account receivables 85,767 84,210
Net inventories 74,383 79,574
Other current assets 6,497 6,336
Advances and loans to Sybron International 77,762 56,777
Property plant and equipment--net 55,326 57,488
Intangible assets 220,705 207,606
Other assets 6,967 6,263
Current portion of long term debt (21,761) (1,571)
Accounts payable (11,351) (13,122)
Income taxes payable (5,680) (3,918)
Accrued liabilities (27,859) (29,402)
Deferred income taxes--net (6,252) (6,203)
Long term debt (298,482) (283,447)
Other liabilities (8,835) (11,086)
--------- ---------
$ 152,970 $ 155,595
========= =========
2001
ACQUISITIONS
During fiscal 2001, the Company has thus far completed 4 acquisitions for cash.
The aggregate cash price of the acquisitions (none of which individually or
aggregated was significant) was $135,575. The results of these acquisitions were
included as of the date they were acquired. The following table outlines sales
and operating income for the most recent date prior to the acquisition, and
total assets at the most recent available date prior to acquisition, for each of
the acquired companies. The type of acquisition refers to whether the Company
purchased assets or the stock of the acquired companies.
BUSINESS SEGMENT OPERATING TOTAL TYPE OF
COMPANY ACQUIRED DATE SALES INCOME ASSETS ACQUISITION
- ---------------- ---------- ---------- --------- --------- -----------
(Unaudited)
LABWARE AND LIFE SCIENCES
BioRobotics Group Limited March 2001 $ 10,500 $ 2,500 $ 4,592 Asset
Advanced Biotechnologies Limited April 2001 21,500 6,700 14,265 Asset
CLINICAL AND INDUSTRIAL
Vacuum Process Technology, Inc. November 2000 $ 5,051 $ (19) $ 2,609 Asset
Disposable Glass Culture Tube Business April 2001 5,800 331 - Asset
of Kimble Glass, Inc.
See note 16 for a description of business segments.
(16) SEGMENT INFORMATION
The Company's operating subsidiaries are engaged in the manufacture and sale of
laboratory products in the United States and other countries. The Company's
products are categorized in the business segments of Labware and Life Sciences;
Clinical and Industrial; Diagnostics and Microbiology; and Laboratory Equipment.
A description of the business segments follows:
Products in the Labware and Life Sciences business segment include approximately
4,900 items, including reusable plastic products (bottles, carboys, graduated
ware, beakers and flasks) and disposable plastic products (microfiltration and
cryogenic storage products). Other labware products include products for
critical packaging applications (bottles for packaging diagnostic and other
reagents, media, pharmaceuticals and specialty chemicals), safety products
(hazard labeled containers and biohazard
F-33
109
disposal products), environmental containers, and autosampler vials and seals
used in chromatography analysis. Life sciences products include applications of
cell culture, filtration, molecular biology, cryopreservation, immunology,
electrophoresis, liquid handling and high throughput screening for
pharmaceutical drug discovery.
Products in the Clinical and Industrial business segment include microscope
slides, cover glass, glass tubes and vials, stains and reagents and histology
and immunochemistry instrumentation for clinical testing, thin glass for watch
crystals, cosmetic mirrors, precision and coated glass used in various optic
applications, and precision thin film optical coating equipment.
Products in the Diagnostics and Microbiology business segment are used for drug
testing, therapeutic drug monitoring, infectious disease detection, pregnancy
testing, glucose tolerance testing, blood bank saline testing, clinical
diagnostic liquid standards and research application temperature measurement.
Products include diagnostic test kits, culture media, diagnostic reagents, and
other products used in detecting causes of various infections or diseases.
Products in the Laboratory Equipment business segment include heating, stirring
and temperature control apparatus such as hot plates, stirrers, shakers, heating
tapes, muffle furnaces, incubators, dri-baths, bench top sterilizers and
cryogenic storage apparatus, which are fundamental to basic procedures performed
in the laboratory; systems for producing ultra pure water; bottle top
dispensers, positive displacement micropipettors, and small mixers used in
biomolecular research; constant temperature equipment including
refrigerators/freezers, ovens, water baths, environmental chambers; and furnaces
and fluorometers, spectrophotometers, and strip chart recorders.
F-34
110
Inter-business segment sales are not material. Information on these business
segments is summarized as follows:
LABWARE CLINICAL DIAGNOSTICS
AND LIFE AND AND LABORATORY
SCIENCES INDUSTRIAL MICROBIOLOGY EQUIPMENT ELIMINATIONS TOTAL SLP OTHER(a) TOTAL
--------- ---------- ------------ ---------- ------------ --------- --------- ---------
1998
Revenues:
External customer 228,775 135,438 114,683 78,866 -- 557,762 -- 557,762
Intersegment 717 5,608 352 972 (6,761) 888 (888) --
--------- --------- --------- --------- --------- --------- --------- ---------
Total revenues 229,492 141,046 115,035 79,838 (6,761) 558,650 (888) 557,762
Gross profit 115,724 57,351 59,407 34,697 -- 267,179 -- 267,179
Selling, general and
administration 65,570 23,082 34,294 16,405 -- 139,351 5,410 144,761
Operating income 50,154 34,269 25,113 18,292 -- 127,828 (5,410) 122,418
Depreciation and
amortization 16,551 8,271 8,477 4,082 -- 37,381 1,449 38,830
Interest income 433 66 66 11 -- 576 47 623
Interest expense 138 201 10 16 -- 365 33,407 33,772
Segment assets 362,637 220,886 320,190 118,306 -- 1,022,019 205,833 1,227,852
Expenditures for
property, plant
and equipment 19,493 7,456 3,430 2,686 -- 33,065 180 33,245
1999
Revenues:
External customer 268,788 176,059 171,647 98,543 -- 715,037 -- 715,037
Intersegment 976 5,833 392 804 (7,367) 638 (638) --
--------- --------- --------- --------- --------- --------- --------- ---------
Total revenues 269,764 181,892 172,039 99,347 (7,367) 715,675 (638) 715,037
Gross profit 136,004 75,407 89,458 41,089 -- 341,958 -- 341,958
Selling, general and
administration 68,600 30,102 46,246 20,632 -- 165,580 7,252 172,832
Operating income 67,404 45,305 43,212 20,457 -- 176,378 (7,252) 169,126
Depreciation and
amortization 18,768 11,696 12,401 4,393 -- 47,258 1,737 48,995
Interest income 183 66 79 12 -- 340 421 761
Interest expense 233 204 203 45 -- 685 39,388 40,073
Segment assets 465,648 290,598 417,313 131,942 -- 1,305,501 234,474 1,539,975
Expenditures for
property, plant
and equipment 15,598 7,377 4,743 2,254 -- 29,972 405 30,377
2000
Revenues:
External customer 347,437 208,686 210,147 97,305 -- 863,575 -- 863,575
Intersegment 1,087 6,962 463 305 (8,817) -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total revenues 348,524 215,648 210,610 97,610 (8,817) 863,575 -- 863,575
Gross profit 179,460 89,667 111,651 41,352 -- 422,130 -- 422,130
Selling, general
and administration 100,365 37,077 60,797 21,148 -- 219,387 9,754 229,141
Operating income 79,095 52,590 50,854 20,204 -- 202,743 (9,754) 192,989
Depreciation and
amortization 27,962 13,049 18,921 4,649 -- 64,581 2,006 66,587
Interest income 217 120 353 14 -- 704 133 837
Interest expense 933 110 25 1 -- 1,069 47,615 48,684
Segment assets 428,044 274,968 521,987 88,439 -- 1,313,438 478,926 1,792,364
Expenditures for
property, plant
and equipment 21,670 8,511 10,527 1,726 -- 42,434 84 42,518
(a) Includes the elimination of intercompany activity and corporate office
assets consisting primarily of cash, assets held for sale, securities
available for sale (2000 and 1999), deferred taxes, and property, plant
and equipment.
F-35
111
LABWARE CLINICAL DIAGNOSTICS
AND LIFE AND AND LABORATORY
SCIENCES INDUSTRIAL MICROBIOLOGY EQUIPMENT ELIMINATIONS OTHER(a) TOTAL
--------- ---------- ------------ ---------- ------------ -------- ----------
SIX MONTHS ENDED 3/31/2000 (UNAUDITED)
Revenues:
External customer $ 165,482 $ 106,577 $ 103,795 $ 47,103 -- $ 422,957
Intersegment 638 3,326 193 443 (4,315) 285
Total revenues 166,120 109,903 103,988 47,546 (4,315) 423,242
Gross profit 86,023 44,910 56,433 19,890 -- 207,256
Selling, general and admin 46,978 18,195 28,862 10,362 -- 3,807 108,204
Operating income 39,045 26,715 27,571 9,528 -- (3,807) 99,052
SIX MONTHS ENDED 3/31/2001 (UNAUDITED)
Revenues:
External customer 182,528 118,270 114,313 50,751 465,862
Intersegment 637 4,144 299 264 (5,276) 68
Total revenues 183,165 122,413 114,612 51,016 (5,276) 465,930
Gross profit 95,097 48,786 60,820 21,763 226,466
Selling, general and admin 51,106 21,597 31,742 10,715 4,636 119,796
Operating income 43,990 27,189 29,078 11,049 (4,636) 106,670
Segment Assets 639,155 329,942 523,810 124,987 97,807 1,715,701
(a) Includes the elimination of intercompany and corporate office activity.
The Company's international operations are conducted principally in Europe.
Inter-geographic sales are made at prices approximating market.
2000 1999 1998
--------- --------- ---------
Net Sales:
United States:
Customers $ 643,188 $ 543,846 $ 422,055
Inter-geographic 55,616 43,777 37,237
--------- --------- ---------
698,804 587,623 459,292
--------- --------- ---------
Europe:
Customers 133,437 103,097 83,488
Inter-geographic 28,059 23,653 21,069
--------- --------- ---------
161,496 126,750 104,557
--------- --------- ---------
All other areas:
Customers 86,950 68,094 52,219
Inter-geographic 8,934 7,798 8,021
--------- --------- ---------
95,884 75,892 60,240
Inter-geographic sales (92,609) (75,228) (66,327)
--------- --------- ---------
Total net sales $ 863,575 $ 715,037 $ 557,762
========= ========= =========
Net Property:
United States $ 168,472 $ 147,802 $ 127,181
Europe 38,766 39,174 40,424
All other areas 856 783 733
--------- --------- ---------
Total net property $ 208,094 $ 187,759 $ 168,338
========= ========= =========
Major customer information:
During 2000, 1999 and 1998, one customer, Fisher Scientific, accounted for 10%
or more of the Company's net revenues. During 1999 and 1998, another customer,
VWR, accounted for 10% or more of the Company's net revenues. The table below
lists by segment the 2000, 1999 and 1998 sales to Fisher Scientific and the 1999
and 1998 sales to VWR.
F-36
112
FISHER SCIENTIFIC VWR
------------------------------ -------------------
2000 1999 1998 1999 1998
-------- -------- -------- -------- --------
Labware and Life Sciences $ 60,818 $ 55,514 $ 47,957 $ 53,391 $ 48,504
Clinical and Industrial 35,953 24,490 15,040 7,736 5,245
Laboratory Equipment 22,189 20,119 16,025 17,044 11,037
Diagnostics and Microbiology 5,571 6,230 4,602 450 190
-------- -------- -------- -------- --------
$124,531 $106,353 $ 83,624 $ 78,621 $ 64,976
======== ======== ======== ======== ========
(17) COMPREHENSIVE INCOME
The components of other comprehensive income (loss) are as follows:
PRETAX TAX AFTER TAX
------------ ------------ -------------
Year ended September 30, 1998
Translation Adjustment $ 4,293 $ -- $ 4,293
============ ============ =============
Year ended September 30, 1999
Translation Adjustment $ (9,905) $ -- $ (9,905)
Unrealized gain on security 439 (173) 266
------------ ------------ -------------
Total other comprehensive income $ (9,466) $ (173) $ (9,639)
============ ============ =============
Year ended September 30, 2000
Translation Adjustment $ (26,773) $ -- $ (26,773)
Unrealized gain on security 3,544 (1,420) 2,124
------------ ------------ -------------
Total other comprehensive income $ (23,229) $ (1,420) $ (24,649)
============ ============ =============
F-37
113
(18) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
First Second Third Fourth
1999 Quarter Quarter Quarter Quarter Total Year
----------- ----------- ----------- ----------- -----------
Net sales $ 156,412 $ 175,406 $ 183,559 $ 199,660 $ 715,037
=========== =========== =========== =========== ===========
Gross profit $ 73,620 $ 83,094 $ 88,142 $ 97,102 $ 341,958
=========== =========== =========== =========== ===========
Income from continuing operations $ 14,951 $ 20,596 $ 20,860 $ 21,004 $ 77,411
Discontinued operation 8,909 11,496 12,484 15,076 $ 47,965
Income before extraordinary
item Extraordinary item -- 18,796 (838) (787) 17,171
----------- ----------- ----------- ----------- -----------
Net income $ 23,860 $ 50,888 $ 32,506 $ 35,293 $ 142,547
=========== =========== =========== =========== ===========
Basic Per Common Share Earnings:
Income from continuing operations $ .14 $ .20 $ .20 $ .20 $ .75
Discontinued operations .09 .11 .12 .15 .46
Extraordinary item -- .18 (.01) (.01) .17
----------- ----------- ----------- ----------- -----------
Net income $ .23 $ .49 $ .31 $ .34 $ 1.38
=========== =========== =========== =========== ===========
Diluted Per Common Share Earnings:
Income from continuing operations
Before extraordinary item $ .14 $ .19 $ .19 $ .20 $ .73
Discontinued operations .09 .11 .12 .14 .45
Extraordinary item -- .18 (.01) (.01) .16
----------- ----------- ----------- ----------- -----------
Net income $ .23 $ .48 $ .30 $ .33 $ 1.34
=========== =========== =========== =========== ===========
First Second Third Fourth
2000 Quarter Quarter Quarter Quarter Total Year
----------- ----------- ----------- ----------- -----------
Net sales $ 204,883 $ 218,074 $ 212,029 $ 228,589 $ 863,575
=========== =========== =========== =========== ===========
Gross profit $ 100,091 $ 107,165 $ 105,409 $ 109,465 $ 422,130
=========== =========== =========== =========== ===========
Income from continuing operations $ 20,461 $ 25,340 $ 23,943 $ 16,980 $ 86,724
Discontinued operation $ 9,963 $ 13,635 $ 11,275 $ 6,724 $ 41,597
----------- ----------- ----------- ----------- -----------
Net income $ 30,424 $ 38,975 $ 35,218 $ 23,704 $ 128,321
=========== =========== =========== =========== ===========
Basic Per Common Share Earnings:
Income from continuing operations $ .20 $ .24 $ .23 $ .16 $ .83
Discontinued operations .09 .13 .11 .07 .40
----------- ----------- ----------- ----------- -----------
Net income $ .29 $ .37 $ .34 $ .23 $ 1.23
=========== =========== =========== =========== ===========
Diluted Per Common Share Earnings:
Income from continuing operations
Before extraordinary item $ .20 $ .24 $ .22 $ .16 $ .81
Discontinued operations .09 .13 .11 .06 .39
----------- ----------- ----------- ----------- -----------
Net income $ .29 $ .37 $ .33 $ .22 $ 1.20
=========== =========== =========== =========== ===========
(19) SUBSEQUENT EVENTS
On December 11, 2000 (the "Distribution Date"), the Company completed the
Spin-Off. Just prior to the Spin-Off, the Company received a cash dividend of
approximately $67,900 from SDS as well as a non-cash dividend equal to the net
intercompany payable from the Company to SDS and its affiliates on the
Distribution Date. On the Distribution Date, the Company borrowed approximately
$563,000 under the Credit Facilities and, together with funds aggregating
$375,000 (approximately $307,100, the amount equal to the outstanding amounts
under the Previous Credit Agreement attributable to SDS on the Distribution Date
including accrued interest, plus the cash dividend of $67,900 from SDS to the
Company), used such funds to repay all of the outstanding amounts under the
Previous Credit Agreement (including amounts attributable to
F-38
114
SDS and accrued interest) aggregating approximately $938,000. See footnote 7
regarding terms and amount of the Credit Facilities.
On April 4, 2001 the Company issued $325,000 unsecured senior notes in a private
placement with registration rights. The notes were offered at a discount of
approximately $1,469. They will mature on April 1, 2011. Interest is fixed at an
annual rate of 8% and is payable on April 1, and October 1 of each year,
beginning on October 1, 2001. Interest will accrue from April 4, 2001. The notes
are redeemable by the Company at any time in whole, or from time to time in
part, at a price equal to the greater of (i) 100% of the principal amount of the
notes to be redeemed or (ii) the sum of the present value of the remaining
scheduled payments of principal and interest thereon (exclusive of interest
accrued to the date of redemption) discounted to the date of redemption on a
semiannual basis at the applicable Treasury Yield (as defined in the bond
agreement) plus 35 basis points, plus accrued interest to the date of
redemption.
Under the private placement the notes have not been registered under the
Securities Act of 1933 and were only offered to qualified institutional buyers
under Rule 144A and outside the United States under Regulation S. However, the
Company has agreed to file a registration statement with the Securities Exchange
Commission relating to an exchange offer for the notes or, under certain
circumstances, to file a shelf registration statement for the notes.
The Company used the proceeds from the issuance to repay all of its Term Loan
Facility ($300 million) and a portion of its Revolving Credit Facility. (See
Note 6 to the unaudited consolidated financial statements). Debt issuance costs
incurred of approximately $2,500 will be capitalized and amortized over 10
years.
On December 11, 2000, due to the extinguishment of debt, interest rate swaps
previously designated as cash flow hedges ceased to meet hedge criteria under
SFAS 133 as modified by SFAS 138. The approximate fair value on December 11,
2000 was $1,700. The Company sold these interest rate swaps on December 12, 2000
for approximately $1,700, and realized a gain of $1,100 (net of tax). Because
these interest rate swaps were designated as a hedge against future variable
rate interest payments and the extinguished debt, the gain will continue to be
carried in other comprehensive income and recognized as an adjustment of yield
interest expense of the Credit Facilities over the remaining term of the
interest rate contract. Options under Sybron's employee stock option programs
with respect to 1,320,515 shares of Company common stock were exchanged for
options to purchase SDS common stock by SDS employees in connection with the
Spin-Off.
On November 8, 2000, the Board of Directors adopted, effective upon completion
of the Distribution, a Rights Agreement, dated as of December 11, 2000, pursuant
to which Rights are distributed as a dividend at the rate of one Right for each
share of common stock, par value $.01 per share, of the Company held by
shareholders of record as of the close of business on December 12, 2000, the day
after the Distribution, or issued thereafter. Each Right initially will entitle
shareholders to buy one one-hundredth of a share of a series of preferred stock
for one hundred forty dollars. The Rights generally will be exercisable if a
person or group acquires beneficial ownership of 15 percent or more of the
Company's common stock or commences a tender or exchange offer upon consummation
of which such person or group would beneficially own 15 percent or more of the
Company's common stock. Thereafter, or if thereafter the Company is involved in
a merger or certain other business combinations not approved by the Board of
Directors, each right will entitle its holder, other than the acquiring person
or group, to purchase common stock of either the Company or the acquirer having
a value of twice the exercise price of the Right. The Rights are attached to the
common stock unless and until they become exercisable and will expire on
December 12, 2010, unless earlier redeemed for $.01 each, or exchanged by the
Company as provided in the Rights Agreement.
(20) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Below are the condensed consolidating balance sheets, statements of operations
and statements of cash flows of Apogent Technologies Inc., as of and for the
fiscal years ended September 30, 2000 and 1999 and for the three month and six
month periods ended March 31, 2001 and 2000.
Certain general corporate expenses have not been allocated to the subsidiaries,
and are all included under the Apogent Technologies Inc. heading. As a matter of
course, the Company retains certain assets and liabilities at the corporate
level that are not allocated to the subsidiaries including, but not limited to,
certain employee benefit, insurance and tax liabilities. Income tax provisions
for subsidiaries are typically recorded using an estimate and finalized in total
with an adjustment recorded at the corporate level. Certain debt under which
Apogent Technologies is listed as the debtor has been allocated to the Guarantor
subsidiaries. Intercompany balances include receivables/payables incurred in the
normal course of business in addition to investments and loans transacted
between subsidiaries of the Company or with Apogent Technologies Inc.
F-39
115
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF SEPTEMBER 30, 2000
------------------------------------------------------------------------
NON
APOGENT GUARANTOR GUARANTOR
TECHNOLOGIES SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 7,086 $ -- $ 7,902 $ (2,577) $ 12,411
Accounts receivable, net -- 146,564 27,021 -- 173,585
Inventories, net 1,187 120,399 24,020 (3,827) 141,779
Net assets held for
discontinued operations 152,970 -- -- -- 152,970
Other current assets 16,467 28,387 4,112 (19,176) 29,790
----------- ----------- ----------- ----------- -----------
Total current assets 177,710 295,350 63,055 (25,580) 510,535
Property, plant and equipment, net 8,840 162,431 36,823 -- 208,094
Intangible assets 2,922 895,583 109,648 -- 1,008,153
Deferred income taxes 12,563 (4,693) -- -- 7,870
Investment in subsidiaries 813,152 51,069 -- (864,221) --
Other assets 52,154 3,914 1,644 -- 57,712
----------- ----------- ----------- ----------- -----------
Total assets $ 1,067,341 $ 1,403,654 $ 211,170 $ (889,801) $ 1,792,364
=========== =========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 594 $ 37,361 $ 16,521 $ (2,577) $ 51,899
Advances and loans from SDS 77,762 -- -- -- 77,762
Current portion of long-term debt -- 34,252 75 -- 34,327
Income taxes payable 34,117 -- 2,523 (20,036) 16,604
Accrued expenses and other current
liabilities 17,331 29,782 13,434 -- 60,547
----------- ----------- ----------- ----------- -----------
Total current liabilities 129,804 101,395 32,553 (22,613) 241,139
----------- ----------- ----------- ----------- -----------
Long-term debt -- 649,383 26 -- 649,409
Securities lending agreement 54,444 -- -- -- 54,444
Deferred income taxes 70,388 14,793 7,867 -- 93,048
Other liabilities 1,164 3,772 1,060 (1,188) 4,808
Net intercompany (receivable) payable (519,063) 463,622 55,232 209 --
Commitments and contingent liabilities
Shareholders' equity
Preferred stock -- -- -- -- --
Common stock 1,052 -- -- -- 1,052
Equity rights -- -- -- -- --
Additional paid-in-capital 271,739 786,251 77,970 (864,221) 271,739
Retained earnings (deficit) 1,055,421 (615,562) 93,830 (1,988) 531,701
Other comprehensive income 2,392 -- (57,368) -- (54,976)
Treasury stock (at cost) -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total shareholders' equity 1,330,604 170,689 114,432 (866,209) 749,516
----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $ 1,067,341 $ 1,403,654 $ 211,170 $ (889,801) $ 1,792,364
=========== =========== =========== =========== ===========
F-40
116
AS OF SEPTEMBER 30, 1999
------------------------------------------------------------------------
NON
APOGENT GUARANTOR GUARANTOR
TECHNOLOGIES SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 6,708 $ -- $ 8,126 $ (2,433) $ 12,401
Accounts receivable, net -- 128,123 19,173 -- 147,296
Inventories, net 1,189 103,501 21,772 (2,834) 123,628
Net assets held for
discontinued operations 155,595 -- -- -- 155,595
Other current assets 20,037 4,264 3,107 -- 27,408
----------- ----------- ----------- ----------- -----------
Total current assets 183,529 235,888 52,178 (5,267) 466,328
Property, plant and equipment, net 10,053 138,172 39,534 -- 187,759
Intangible assets 561 725,050 94,864 -- 820,475
Deferred income taxes 7,667 -- -- -- 7,667
Investment in subsidiaries 686,481 13,298 -- (699,779) --
Other assets 55,220 1,587 939 -- 57,746
----------- ----------- ----------- ----------- -----------
Total assets $ 943,511 $ 1,113,995 $ 187,515 $ (705,046) $ 1,539,975
=========== =========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 649 $ 32,834 $ 18,246 $ (2,433) $ 49,296
Advances and loans from SDS 56,777 -- -- -- 56,777
Current portion of long-term debt -- 7,341 50 -- 7,391
Income taxes payable 14,899 1,671 2,374 (572) 18,372
Accrued expenses and other
current liabilities 33,734 23,320 9,289 -- 66,343
----------- ----------- ----------- ----------- -----------
Total current liabilities 106,059 65,166 29,959 (3,005) 198,179
----------- ----------- ----------- ----------- -----------
Long-term debt -- 541,290 56 -- 541,346
Securities lending agreement 50,461 -- -- -- 50,461
Deferred income taxes 36,174 24,170 9,544 -- 69,888
Other liabilities 49,398 4,747 612 -- 54,757
Net intercompany payable (receivable) (435,045) 330,751 105,274 (980) --
Commitments and contingent
liabilities
Shareholders' equity
Preferred stock -- -- -- -- --
Common stock 1,040 -- -- -- 1,040
Equity rights -- -- -- -- --
Additional paid-in-capital 251,251 659,580 40,199 (699,779) 251,251
Retained earnings (deficit) 883,907 (511,709) 32,464 (1,282) 403,380
Other comprehensive income 266 -- (30,593) -- (30,327)
Treasury stock (at cost) -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total shareholders' equity 1,136,464 147,871 42,070 (701,061) 625,344
----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $ 943,511 $ 1,113,995 $ 187,515 $ (705,046) $ 1,539,975
=========== =========== =========== =========== ===========
CONDENSED CONSOLIDATING BALANCE SHEETS
As of March 31, 2001
--------------------
Non
Apogent Guarantor Guarantor
(In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 5,468 $ -- $ 11,876 $ (5,231) $ 12,113
Accounts receivable, net -- 146,734 31,096 -- 177,830
Inventories, net 1,263 131,426 28,081 (4,695) 156,075
Other current assets 14,731 13,140 5,135 -- 33,006
------------ ------------ ------------ ------------ ------------
Total current assets 21,462 291,300 76,188 (9,926) 379,024
Property, plant and equipment, net 9,207 163,499 39,688 -- 212,394
Intangible assets 6,427 898,681 150,986 -- 1,056,094
Deferred income taxes 7,888 -- -- -- 7,888
Investment in subsidiaries 1,508,388 51,496 (1,559,884) --
Other assets 53,540 5,079 1,682 -- 60,301
------------ ------------ ------------ ------------ ------------
Total assets $ 1,606,912 $ 1,410,055 $ 268,544 $ (1,569,810) $ 1,715,701
============ ============ ============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 273 $ 40,384 $ 8,623 $ (5,231) $ 44,049
Current portion of long-term debt -- 41,491 51 -- 41,542
Income taxes payable 19,999 11,574 2,516 -- 34,089
Accrued expenses and other current
liabilities 10,297 30,484 24,142 -- 64,923
------------ ------------ ------------ ------------ ------------
Total current liabilities 30,569 123,933 35,332 (5,231) 184,603
------------ ------------ ------------ ------------ ------------
Long-term debt -- 594,223 27 -- 594,250
Securities lending agreement 53,540 -- -- -- 53,540
Deferred income taxes 68,114 17,777 7,758 -- 93,649
Other liabilities 3,959 1,304 1,147 -- 6,410
Net intercompany payable/(receivable) 104,478 (195,909) 93,297 (1,866) --
Commitments and contingent liabilities
Shareholders' equity
Preferred stock -- -- -- -- --
Common stock 1,054 -- -- -- 1,054
Equity rights -- -- -- -- --
Additional paid-in-capital 248,097 1,436,394 123,490 (1,559,884) 248,097
Retained earnings (deficit) 1,094,451 (567,667) 47,554 (2,829) 571,509
Other comprehensive income 2,650 -- (40,061) -- (37,411)
Treasury stock (at cost) -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total shareholders' equity 1,346,252 868,727 130,983 (1,562,713) 783,249
------------ ------------ ------------ ------------ ------------
Total liabilities and
shareholders' equity $ 1,606,912 $ 1,410,055 $ 268,544 $ (1,569,810) $ 1,715,701
============ ============ ============ ============ ============
F-41
117
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
----------------------------------------------------------------------------
NON
APOGENT GUARANTOR GUARANTOR
TECHNOLOGIES SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
(In thousands)
Net sales $ -- $ 761,723 $ 146,223 $ (44,371) $ 863,575
Cost of sales -- 397,009 87,821 (43,385) 441,445
------------ ------------ ------------ ------------ ------------
Gross profit -- 364,714 58,402 (986) 422,130
Selling, general and
administrative expenses 9,563 184,749 34,829 -- 229,141
------------ ------------ ------------ ------------ ------------
Operating income (9,563) 179,965 23,573 (986) 192,989
Other income (expense):
Interest expense (78) (43,888) (5,484) -- (49,450)
Other, net 776 1,439 (1,429) -- 786
------------ ------------ ------------ ------------ ------------
Income before income taxes,
discontinued operations and
extraordinary items (8,865) 137,516 16,660 (986) 144,325
Income taxes (2,595) 51,859 8,624 (287) 57,601
------------ ------------ ------------ ------------ ------------
Income from continuing operations
before extraordinary items (6,270) 85,657 8,036 (699) 86,724
Discontinued operations 41,597 -- -- -- 41,597
------------ ------------ ------------ ------------ ------------
Net income $ 35,327 $ 85,657 $ 8,036 $ (699) $ 128,321
============ ============ ============ ============ ============
FOR THE YEAR ENDED SEPTEMBER 30, 1999
----------------------------------------------------------------------------
NON
APOGENT GUARANTOR GUARANTOR
TECHNOLOGIES SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
(In thousands)
Net sales $ -- $ 638,886 $ 109,883 $ (33,732) $ 715,037
Cost of sales -- 337,597 67,008 (31,526) 373,079
------------ ------------ ------------ ------------ ------------
Gross profit -- 301,289 42,875 (2,206) 341,958
Selling, general and
administrative expenses 14,943 132,418 25,471 -- 172,832
------------ ------------ ------------ ------------ ------------
Operating income (14,943) 168,871 17,404 (2,206) 169,126
Other income (expense):
Interest expense (2,948) (31,785) (6,491) -- (41,224)
Other, net 131 (585) (56) -- (510)
------------ ------------ ------------ ------------ ------------
Income before income taxes,
discontinued operations and
extraordinary items (17,760) 136,501 10,857 (2,206) 127,392
Income taxes (7,454) 50,916 6,820 (301) 49,981
------------ ------------ ------------ ------------ ------------
Income from continuing operations
before extraordinary items (10,306) 85,585 4,037 (1,905) 77,411
Discontinued operations 47,965 -- -- -- 47,965
------------ ------------ ------------ ------------ ------------
Income before extraordinary items 37,659 85,585 4,037 (1,905) 125,376
Extraordinary item 17,171 -- -- -- 17,171
------------ ------------ ------------ ------------ ------------
Net income $ 54,830 $ 85,585 $ 4,037 $ (1,905) $ 142,547
============ ============ ============ ============ ============
F-42
118
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED SEPTEMBER 30, 1998
---------------------------------------------------------------------------
NON
APOGENT GUARANTOR GUARANTOR
TECHNOLOGIES SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
(In thousands)
Net sales ............................ $ -- $ 490,145 $ 93,803 $ (26,186) $ 557,762
Cost of sales ........................ -- 260,599 55,999 (26,015) 290,583
------------ ------------ ------------ ------------ ------------
Gross profit ...................... -- 229,546 37,804 (171) 267,179
Selling, general and
administrative expenses ........... 19,438 104,727 20,596 -- 144,761
------------ ------------ ------------ ------------ ------------
Operating income ..................... (19,438) 124,819 17,208 (171) 122,418
Other income (expense):
Interest expense .................. (3,236) (32,285) 251 -- (35,270)
Other, net ........................ (44) (452) 184 -- (312)
------------ ------------ ------------ ------------ ------------
Income before income taxes,
discontinued operations and
extraordinary items ............... (22,718) 92,082 17,643 (171) 86,836
Income taxes ......................... 3,081 26,929 4,733 (29) 34,714
------------ ------------ ------------ ------------ ------------
Income from continuing operations
before extraordinary items ........ (25,799) 65,153 12,910 (142) 52,122
Discontinued operations .............. 23,921 -- -- -- 23,921
------------ ------------ ------------ ------------ ------------
Net income ........................... $ (1,878) $ 65,153 $ 12,910 $ (142) $ 76,043
============ ============ ============ ============ ============
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS - (CONTINUED)
For the Six Months Ended March 31, 2001
---------------------------------------
Non
Apogent Guarantor Guarantor
(In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
Net sales $ -- $ 410,439 $ 79,517 $ (24,094) $ 465,862
Cost of sales -- 216,009 46,604 (23,217) 239,396
----------- ----------- ----------- ---------- -----------
Gross profit -- 194,430 32,913 (877) 226,466
Selling, general and administrative expenses 16,035 85,189 18,572 119,796
----------- ----------- ----------- ---------- -----------
Operating income (16,035) 109,241 14,341 (877) 106,670
Other income (expense):
Interest expense -- (24,377) (15) -- (24,392)
Other, net 3,785 1,630 (398) -- 5,017
----------- ----------- ----------- ---------- -----------
Income before income taxes, discontinued operations
and extraordinary item (12,250) 86,494 13,928 (877) 87,295
Income taxes (5,251) 34,598 5,571 -- 34,918
----------- ----------- ----------- ---------- -----------
Income from continuing operations before
extraordinary item (6,999) 51,896 8,357 (877) 52,377
Discontinued operations (11,824) -- -- -- (11,824)
----------- ----------- ----------- ---------- -----------
Income before extraordinary item (18,823) 51,896 8,357 (877) 40,553
Extraordinary item -- (745) -- -- (745)
----------- ----------- ----------- ---------- -----------
Net income $ (18,823) $ 51,151 $ 8,357 $ (877) $ 39,808
=========== =========== =========== ========== ===========
For the Six Months Ended March 31, 2000
---------------------------------------
Non
Apogent Guarantor Guarantor
(In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
Net sales $ -- $ 371,656 $ 71,982 $ (20,681) $ 422,957
Cost of sales -- 193,390 42,541 (20,230) 215,701
------------ ----------- ----------- ----------- -----------
Gross profit -- 178,266 29,441 (451) 207,256
Selling, general and administrative expenses 3,890 87,732 16,582 -- 108,204
------------ ----------- ----------- ----------- -----------
Operating income (3,890) 90,534 12,859 (451) 99,052
Other income (expense):
Interest expense -- (23,835) (60) -- (23,895)
Other, net 459 173 (726) -- (94)
------------ ----------- ----------- ----------- -----------
Income before income taxes and discontinued
operations (3,431) 66,872 12,073 (451) 75,063
Income taxes (2,316) 26,749 4,829 29,262
------------ ----------- ----------- ----------- -----------
Income from continuing operations (1,115) 40,123 7,244 (451) 45,801
Discontinued operations 23,598 -- -- -- 23,598
------------ ----------- ----------- ----------- -----------
Net income $ 22,483 $ 40,123 $ 7,244 $ (451) $ 69,399
============ =========== =========== =========== ===========
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2001
-----------------------------------------
Non
Apogent Guarantor Guarantor
(In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
Net sales $ -- $ 213,689 $ 44,594 $ (13,179) $ 245,104
Cost of sales -- 111,386 26,204 (12,999) 124,591
----------- ------------ ---------- ----------- -----------
Gross profit -- 102,303 18,390 (180) 120,513
Selling, general and administrative expenses 11,417 42,354 9,909 63,680
----------- ------------ ---------- ----------- -----------
Operating income (11,417) 59,949 8,481 (180) 56,833
Other income (expense):
Interest expense -- (11,864) -- -- (11,864)
Other, net 4,373 1,489 (514) -- 5,348
----------- ------------ ---------- ----------- -----------
Income before income taxes and discontinued
operations (7,044) 49,574 7,967 (180) 50,317
Income taxes (2,889) 19,830 3,187 20,127
----------- ------------ ---------- ----------- -----------
Income from continuing operations (4,155) 29,744 4,780 (180) 30,190
Discontinued operations (838) -- -- -- (838)
----------- ------------ ---------- ----------- -----------
Net income $ (4,993) $ 29,744 $ 4,780 $ (180) $ 29,352
=========== ============ ========== =========== ===========
For the Three Months Ended March 31, 2000
-----------------------------------------
Non
Apogent Guarantor Guarantor
(In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
Net sales $ -- $ 191,338 $ 37,758 $ (11,022) $ 218,074
Cost of sales -- 99,391 22,374 (10,856) 110,909
------------ ------------ ----------- --------- -----------
Gross profit -- 91,947 15,384 (166) 107,165
Selling, general and administrative expenses 2,535 43,383 8,286 -- 54,204
------------ ------------ ----------- --------- -----------
Operating income (2,535) 48,564 7,098 (166) 52,961
Other income (expense):
Interest expense -- (11,948) (35) -- (11,983)
Other, net 487 319 (546) -- 260
------------ ------------ ----------- --------- -----------
Income before income taxes and discontinued
operations (2,048) 36,935 6,517 (166) 41,238
Income taxes (1,483) 14,774 2,607 -- 15,898
------------ ------------ ----------- --------- -----------
Income from continuing operations (565) 22,161 3,910 (166) 25,340
Discontinued operations 13,635 -- -- -- 13,635
------------ ------------ ----------- --------- -----------
Net income $ 13,070 $ 22,161 $ 3,910 $ (166) $ 38,975
============ ============ =========== ========= ===========
F-43
119
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
---------------------------------------------------------------------------
NON
APOGENT GUARANTOR GUARANTOR
TECHNOLOGIES SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
(In thousands)
Cash flows provided by operating
activities: ............................. $ 8,446 $ 105,872 $ 2,226 $ -- $ 116,544
Cash flows from investing activities:
Capital expenditures .................... (1,007) (33,823) (7,663) -- (42,493)
Proceeds from sales of property,
plant and equipment .................. -- 873 51 -- 924
Proceeds from sale of NPT ............... (2,600) -- -- -- (2,600)
Net cash inflow from SDS ................ 58,098 -- -- -- 58,098
Net payments for businesses
acquired ............................. (82,348) (130,992) 6,187 -- (207,153)
------------ ------------ ------------ ------------ ------------
Net cash used in investing
activities ......................... (27,857) (163,944) (1,425) -- (193,224)
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt ............ -- 332,640 -- -- 332,640
Principal payments on long-term debt .... -- (274,712) (58) -- (274,770)
Securities lending agreement ............ 3,544 -- -- -- 3,544
Proceeds from the exercise
of stock options ..................... 12,599 -- -- -- 12,599
Other ................................... 3,646 -- -- -- 3,646
------------ ------------ ------------ ------------ ------------
Net cash provided by
financing activities ............... 19,789 57,928 (58) -- 77,659
Effect of exchange rate on cash
and cash equivalents .................... -- -- (969) -- (969)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in
cash and cash equivalents ............... 378 (144) (224) -- 10
Cash and cash equivalents at
beginning of year ....................... 6,708 (2,433) 8,126 -- 12,401
------------ ------------ ------------ ------------ ------------
Cash and cash equivalents at
end of year ............................. $ 7,086 $ (2,577) $ 7,902 $ -- $ 12,411
============ ============ ============ ============ ============
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest ................................ $ -- $ 55,509 $ 324 $ -- $ 55,833
============ ============ ============ ============ ============
Income taxes ............................ $ 40,544 $ 319 $ 1,549 $ -- $ 42,412
============ ============ ============ ============ ============
Capital lease obligations incurred ......... $ -- $ 25 $ -- $ -- $ 25
============ ============ ============ ============ ============
F-44
120
FOR THE YEAR ENDED SEPTEMBER 30, 1999
---------------------------------------------------------------------------
NON
APOGENT GUARANTOR GUARANTOR
TECHNOLOGIES SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
(In thousands)
Cash flows provided by (used in)
operating activities: ............................. $ 3,519 $ 111,711 $ (128) $ -- $ 115,102
------------ ------------ ------------ ------------ ------------
Cash flows from investing activities:
Capital expenditures .............................. (1,030) (22,477) (6,413) -- (29,920)
Security purchased ................................ (50,461) -- -- -- (50,461)
Proceeds from sales of property,
plant and equipment ............................ -- 787 158 -- 945
Proceeds from sale of NPT ......................... 85,841 -- -- -- 85,841
Net cash inflow from SDS .......................... 47,962 -- -- -- 47,962
Net payments for businesses
acquired ....................................... (143,907) (104,375) (1,641) -- (249,923)
------------ ------------ ------------ ------------ ------------
Net cash used in investing
activities ................................... (61,595) (126,065) (7,896) -- (195,556)
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt ...................... -- 531,060 -- -- 531,060
Principal payments on long-term debt .............. -- (515,737) (13) -- (515,750)
Securities lending agreement ...................... 50,461 -- -- -- 50,461
Proceeds from the exercise of
stock options .................................. 10,691 -- -- -- 10,691
Other ............................................. 1,930 -- -- -- 1,930
------------ ------------ ------------ ------------ ------------
Net cash provided by (used in)
financing activities ......................... 63,082 15,323 (13) -- 78,392
Effect of exchange rate on cash
and cash equivalents .............................. -- -- (146) -- (146)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents .............................. 5,006 969 (8,183) -- (2,208)
Cash and cash equivalents at
beginning of year ................................. 1,702 (3,402) 16,309 -- 14,609
------------ ------------ ------------ ------------ ------------
Cash and cash equivalents at end
of year ........................................... $ 6,708 $ (2,433) $ 8,126 $ -- $ 12,401
============ ============ ============ ============ ============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest .......................................... $ -- $ 41,464 $ 254 $ -- $ 41,718
============ ============ ============ ============ ============
Income taxes ...................................... $ 27,009 $ 2,185 $ 3,237 $ -- $ 32,431
============ ============ ============ ============ ============
Capital lease obligations incurred ................... $ 104 $ 353 $ -- $ -- $ 457
============ ============ ============ ============ ============
F-45
121
FOR THE YEAR ENDED SEPTEMBER 30, 1998
---------------------------------------------------------------------------
NON
APOGENT GUARANTOR GUARANTOR
TECHNOLOGIES SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
(In thousands)
Cash flows provided by
operating activities: ................. $ 123,165 $ (32,882) $ 14,372 $ -- $ 104,655
------------ ------------ ------------ ------------ ------------
Cash flows from investing activities:
Capital expenditures .................. (2,223) (23,959) (6,615) -- (32,797)
Proceeds from sales of property,
plant and equipment ................ -- 5,087 42 -- 5,129
Net cash inflow from outflow
to SDS ............................. (28,131) -- -- -- (28,131)
Net payments for businesses
acquired ........................... (111,805) (79,961) (251) -- (192,017)
------------ ------------ ------------ ------------ ------------
Net cash used in investing
activities ....................... (142,159) (98,833) (6,824) -- (247,816)
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt .......... -- 100,000 -- -- 100,000
Principal payments on
long-term debt ..................... -- (19,559) (3) -- (19,562)
Proceeds from the exercise of
stock options ...................... 12,985 -- -- -- 12,985
Proceeds--revolving credit
facility ........................... -- 291,960 -- -- 291,960
Principal payments--revolving
credit facility .................... -- (243,960) -- -- (243,960)
Other ................................. 164 -- -- -- 164
------------ ------------ ------------ ------------ ------------
Net cash provided by (used in)
financing activities ............. 13,149 128,441 (3) -- 141,587
Effect of exchange rate on cash
and cash equivalents .................. -- -- 429 -- 429
------------ ------------ ------------ ------------ ------------
Net (decrease) increase in cash
and cash equivalents .................. (5,845) (3,274) 7,974 -- (1,145)
Cash and cash equivalents at
beginning of year ..................... 7,547 (128) 8,335 -- 15,754
------------ ------------ ------------ ------------ ------------
Cash and cash equivalents at
end of year ........................... $ 1,702 $ (3,402) $ 16,309 $ -- $ 14,609
============ ============ ============ ============ ============
Supplemental disclosures of cash
flow information:
Cash paid during the year for:
Interest ........................... $ -- $ 32,283 $ 362 $ -- $ 32,645
============ ============ ============ ============ ============
Income taxes ....................... $ 13,476 $ 835 $ 6,151 $ -- $ 20,462
============ ============ ============ ============ ============
Capital lease obligations incurred ....... $ -- $ 183 $ -- $ -- $ 183
============ ============ ============ ============ ============
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended March 31, 2001
---------------------------------------
Non
Apogent Guarantor Guarantor
(In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated
- -------------- ------------ ------------ ----------- ------------ ------------
Cash flows (used in) provided by operating activities: $ (52,215) $ 111,617 $ 5,867 $ -- $ 65,269
--------- --------- --------- ----------- ---------
Cash flows from investing activities:
Capital expenditures (6,738) (13,712) (3,721) -- (24,171)
Proceeds from sales of property, plant and equipment 9,679 1,017 35 -- 10,731
Net cash inflow from SDS 46,394 -- -- -- 46,394
Net payments for businesses acquired -- (51,206) -- -- (51,206)
--------- --------- --------- ----------- ---------
Net cash provided by (used in) investing activities 49,335 (63,901) (3,686) -- (18,252)
--------- --------- --------- ----------- ---------
Cash flows from financing activities:
Proceeds from long-term debt -- 693,159 -- -- 693,159
Principal payments on long-term debt -- (739,629) (23) -- (739,652)
Proceeds from the exercise of stock options 2,304 -- -- -- 2,304
Other (1,042) (3,900) -- -- (4,942)
--------- --------- --------- ----------- ---------
Net cash provided by (used in) financing activities 1,262 (50,370) (23) -- (49,131)
Effect of exchange rate on cash and cash equivalents -- -- 1,816 -- 1,816
--------- --------- --------- ----------- ---------
Net (decrease) increase in cash and cash equivalents (1,618) (2,654) 3,974 -- (298)
Cash and cash equivalents at beginning of year 7,086 (2,577) 7,902 -- 12,411
--------- --------- --------- ----------- ---------
Cash and cash equivalents at end of period $ 5,468 $ (5,231) $ 11,876 $ -- $ 12,113
========= ========= ========= =========== =========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ -- $ 25,410 $ 255 $ -- $ 25,665
========= ========= ========= =========== =========
Income taxes $ 21,147 $ -- $ -- $ -- $ 21,147
========= ========= ========= =========== =========
Capital lease obligations incurred $ -- $ -- $ -- $ -- $ --
========= ========= ========= =========== =========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS - (CONTINUED)
For the Six Months Ended March 31, 2000
---------------------------------------------------------------------
Non
Apogent Guarantor Guarantor
(In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated
- -------------- ------------ ------------ ------------ ------------ ------------
Cash flows provided by (used in) operating activities: $ 38,316 $ (367) $ (1,352) $ -- $ 36,597
Cash flows from investing activities:
Capital expenditures (418) (16,257) (2,093) -- (18,768)
Proceeds from sales of property, plant and equipment -- 280 9 -- 289
Proceeds from sale of NPT (2,600) -- -- -- (2,600)
Net cash inflow from SDS 40,877 -- -- -- 40,877
Net payments for businesses acquired (82,348) (43,422) 4,106 -- (121,664)
--------- --------- --------- -------- ---------
Net cash (used in) provided by investing activities (44,489) (59,399) 2,022 -- (101,866)
--------- --------- --------- -------- ---------
Cash flows from financing activities:
Proceeds from long-term debt -- 192,000 -- -- 192,000
Principal payments on long-term debt -- (134,055) (28) -- (134,083)
Proceeds from the exercise of stock options 4,645 -- -- -- 4,645
Other (1,033) (2,063) 223 -- (2,873)
--------- --------- --------- -------- ---------
Net cash provided by financing activities 3,612 55,882 195 -- 59,689
Effect of exchange rate on cash and cash equivalents -- -- (433) -- (433)
--------- --------- --------- -------- ---------
Net (decrease) increase in cash and cash equivalents (2,561) (3,884) 432 -- (6,013)
Cash and cash equivalents at beginning of year 6,708 (2,433) 8,126 -- 12,401
--------- --------- --------- -------- ---------
Cash and cash equivalents at end of period $ 4,147 $ (6,317) $ 8,558 $ -- $ 6,388
========= ========= ========= ======== =========
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $ -- $ 33,477 $ 162 $ -- $ 33,639
========= ========= ========= ======== =========
Income taxes $ 32,775 $ -- $ 54 $ -- $ 32,829
========= ========= ========= ======== =========
Capital lease obligations incurred $ -- $ 43 $ -- $ -- $ 43
========= ========= ========= ======== =========
F-46
122
ANNEX A
FORM OF TRANSFEREE LETTER OF REPRESENTATION
Apogent Technologies Inc.
c/o The Bank of New York
One Wall Street
New York, NY 10286
Dear Sirs:
This certificate is delivered to request a transfer of $ principal amount of the
8% Senior Notes Due 2011 (the "Notes") of Apogent Technologies Inc. (the
"Company").
Upon transfer, the Notes would be registered in the name of the new beneficial
owner as follows:
Name:
Address:
Taxpayer ID Number:
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities
Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risk of our investment in the Notes and we invest
in or purchase securities similar to the Notes in the normal course of our
business. We and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
2. We understand that the Notes have not been registered under the Securities
Act and, unless so registered, may not be sold except as permitted in the
following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Notes to offer, sell or otherwise transfer
such Notes prior to the date which is two years after the later of the date of
original issue and the last date on which the Company or any affiliate of the
Company was the owner of such Notes (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act ("Rule 144A"), to a person we reasonably believe is a qualified
institutional buyer under Rule 144A (a "QIB") that purchases for its own account
or for the account of a QIB and to whom notice is given that the transfer is
being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur
outside the United States within the meaning of Regulation S under the
Securities Act, (e) to an institutional "accredited investor" (within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that is
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Notes of
$250,000 or (f) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our property or the property of
such investor account or accounts be at all times within our or their control
and in compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed to be
made pursuant to clause (e) above prior to the Resale Restriction Termination
Date, the transferor shall deliver a letter from the transferee substantially in
the form of this letter to the Company and the Trustee, which shall provide,
among other things, that the transferee is an institutional "accredited
investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) that is acquiring such Notes for investment purposes and not for
distribution in violation of the Securities Act. We acknowledge that the Company
and the Trustee reserve the right prior to any offer, sale or other transfer
prior to the Resale Termination Date of the Notes pursuant to clause (d), (e) or
(f) above to require the delivery of an opinion of counsel, certifications
and/or other information satisfactory to the Company and the Trustee.
Transferee:
By:
---------------------------------------
A-1
123
[This Page Intentionally Left Blank]
124
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Wisconsin Law. Apogent Technologies Inc. is incorporated under the
Wisconsin Business Corporation Law (the "WBCL").
Under Section 180.0851(1) of the WBCL, Apogent is required to indemnify
a director or officer, to the extent such person is successful on the merits or
otherwise in the defense of a proceeding, for all reasonable expenses incurred
in the proceeding if such person was a party because he or she was a director or
officer of Apogent Technologies Inc. In all other cases, Apogent is required by
Section 180.0851(2) to indemnify a director or officer against liability
incurred in a proceeding to which such person was a party because he or she was
a director or officer of Apogent, unless it is determined that he or she
breached or failed to perform a duty owed to Apogent and the breach or failure
to perform constitutes:
o a willful failure to deal fairly with Apogent or its shareholders
in connection with a matter in which the director or officer has
a material conflict of interest;
o a violation of criminal law, unless the director or officer had
reasonable cause to believe his or her conduct was lawful or no
reasonable cause to believe his or her conduct was unlawful;
o a transaction from which the director or officer derived an
improper personal profit; or
o willful misconduct.
Section 180.0858(1) provides that, subject to certain limitations, the mandatory
indemnification provisions do not preclude any additional right to
indemnification or allowance of expenses that a director or officer may have
under Apogent's articles of incorporation, bylaws, any written agreement or a
resolution of the board of directors or shareholders.
Section 180.0859 of the WBCL provides that it is the public policy of
the State of Wisconsin to require or permit indemnification, allowance of
expenses and insurance to the extent required or permitted under Sections
180.0850 to 180.0858 of the WBCL, for any liability incurred in connection with
a proceeding involving a federal or state statute, rule or regulation regulating
the offer, sale or purchase of securities.
Section 180.0828 of the WBCL provides that, with certain exceptions, a
director is not liable to a corporation, its shareholders, or any person
asserting rights on behalf of the corporation or its shareholders, for damages,
settlements, fees, fines, penalties or other monetary liabilities arising from a
breach of, or failure to perform, any duty resulting solely from his or her
status as a director, unless the person asserting liability proves that the
breach or failure to perform constitutes any of the four exceptions to mandatory
indemnification under Section 180.0851(2) referred to above.
Under Section 180.0833 of the WBCL, directors of Apogent against whom
claims are asserted with respect to the declaration of improper dividends or
distributions to shareholders or certain other improper acts which they approved
are entitled to contribution from other directors who approved such actions and
from shareholders who knowingly accepted an improper dividend or distribution,
as provided therein.
Bylaws. Article VIII of Apogent's bylaws contains provisions that
generally parallel the indemnification provisions of the WBCL and cover certain
procedural matters not dealt with in the WBCL.
I-1
125
Furthermore, certain officers of Apogent are also officers of subsidiaries of
Apogent and, as a result, such officers may be entitled to indemnification
pursuant to provisions of such subsidiaries' governing corporate laws, articles
of incorporation and bylaws. Apogent has also executed an indemnity agreement
with each of its directors and certain of its officers which provides certain
indemnity rights to such individuals.
Insurance. Directors and officers of Apogent are covered by directors'
and officers' liability insurance under which they are insured (subject to
certain exceptions and limitations specified in the policy) against expenses and
liabilities arising out of proceedings to which they are parties by reason of
being or having been directors or officers, including liabilities under the
Securities Act of 1933.
ITEM 21. EXHIBITS.
See Exhibit Index following the Signatures page in this registration
statement, which Exhibit Index is incorporated herein by reference.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes (in accordance with the
corresponding lettered undertakings in Item 512 of Regulation S-K):
(a) Rule 415 Offering. (1) To file, during any period in which offers
or sales are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant with the Commission pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
I-2
126
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) of Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(g)(1) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is part of this
Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) That every prospectus: (i) that is filed pursuant to
paragraph (5) immediately preceding , or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post effective amendment shall be
deemed to be a new registration statement relating to the securities offering
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted t directors, officers and
controlling persons of the registrant pursuant to the provisions referred to in
Item 20 of this Registration statement, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby further undertakes (in accordance
with the corresponding lettered undertakings in Item 22 of Form S-4):
(b) To respond to requests for information that is
incorporated by reference into this prospectus pursuant to Items 4, 10(b), 11,
or 13 of this Form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding to
the request.
(c) To supply by means of a post-effect amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the Registration Statement
when it became effective.
I-3
127
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
APOGENT TECHNOLOGIES INC.
By: /s/ Frank H. Jellinek, Jr.
-------------------------------------
Frank H. Jellinek, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Frank H. Jellinek, Jr.** President and Chief Executive Officer and
- ----------------------------- Director (principal executive officer of the
Frank H. Jellinek, Jr. registrant)
/s/ Jeffrey C. Leathe** Executive Vice President-Finance, Chief
- ----------------------------- Financial Officer and Treasurer (principal
Jeffrey C. Leathe financial officer and principal accounting
officer of the registrant)
/s/ Don H. Davis, Jr.** Director
- -----------------------------
Don H. Davis, Jr.
/s/ Christopher L. Doerr** Director
- -----------------------------
Christopher L. Doerr
/s/ R. Jeffrey Harris** Director
- -----------------------------
R. Jeffrey Harris
/s/ Stephen R. Hardis** Director
- -----------------------------
Stephen R. Hardis
S-1
128
/s/ William U. Parfet** Director
- -----------------------------
William U. Parfet
/s/ Joe L. Roby** Director
- -----------------------------
Joe L. Roby
/s/ Richard W. Vieser** Director
- -----------------------------
Richard W. Vieser
/s/ Kenneth F. Yontz** Director
- -----------------------------
Kenneth F. Yontz
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-2
129
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Apogent Finance Company
By: /s/ Michael K. Bresson
---------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Jeffrey C. Leathe**
- ----------------------------------- President and Treasurer (principal executive officer,
Jeffrey C. Leathe principal financial officer and principal accounting
officer of the registrant)
/s/ Frank H. Jellinek, Jr.**
- ----------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ----------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ----------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
----------------------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-3
130
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Applied Biotech, Inc.
By: /s/ Michael K. Bresson
-------------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Craig Tuttle**
- ------------------------------------ President (principal executive officer of the
Craig Tuttle registrant)
/s/ Jeffrey C. Leathe**
- ------------------------------------ Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Dale Hill
- ------------------------------------ Controller (principal accounting officer of the
Dale Hill registrant)
/s/ Frank H. Jellinek, Jr.**
- ------------------------------------ Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ------------------------------------ Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ------------------------------------ Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
---------------------------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to the Power of Attorney
S-4
131
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Barnstead Thermolyne Corporation
By: /s/ Michael K. Bresson
-------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Duncan Ross**
- ------------------------------------ President (principal executive officer of the
Duncan Ross registrant)
/s/ Jeffrey C. Leathe**
- ------------------------------------ Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Brenda K. Hoefler**
- ------------------------------------ Vice President-Finance (principal accounting officer of
Brenda K. Hoefler the registrant)
/s/ Frank H. Jellinek, Jr.**
- ------------------------------------ Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ------------------------------------ Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ------------------------------------ Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-5
132
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
BioRobotics, Inc.
By: /s/ Michael K. Bresson
----------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Gary E. Nelson**
- ----------------------------------- President (principal executive officer of the
Gary E. Nelson registrant)
/s/ Jeffrey C. Leathe**
- ----------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ John L. Stowell**
- ----------------------------------- Vice President-Finance (principal accounting officer of
John L. Stowell the registrant)
/s/ Frank H. Jellinek, Jr.**
- ----------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ----------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ----------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-6
133
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
f Portsmouth, State of New Hampshire, on July 2, 2001.
Chase Scientific Glass, Inc.
By: /s/ Michael K. Bresson
--------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Stephen Munzer**
- -------------------------------- President (principal executive officer of the
Stephen Munzer registrant)
/s/ Jeffrey C. Leathe**
- -------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ David Bales**
- -------------------------------- Vice President-Finance (principal financial officer of
David Bales the registrant)
/s/ Frank H. Jellinek, Jr.**
- -------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- -------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- -------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
--------------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-7
134
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Consolidated Technologies, Inc.
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Yuh-geng Tsay**
- ---------------------------------- President (principal executive officer of the
Yuh-geng Tsay registrant)
/s/ Jeffrey C. Leathe**
- ---------------------------------- Treasurer (principal financial officer
Jeffrey C. Leathe of the registrant)
/s/ Linda M. Lechner**
- ---------------------------------- Controller (principal accounting officer of
Linda M. Lechner the registrant)
/s/ Frank H. Jellinek, Jr.**
- ---------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ---------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ---------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-8
135
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Erie Scientific Company
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Mark F. Stuppy**
- ------------------------------------ President (principal executive officer of the registrant)
Mark F. Stuppy
/s/ Jeffrey C. Leathe**
- ------------------------------------ Executive Vice President and Treasurer (principal
Jeffrey C. Leathe financial officer and principal accounting officer of
the registrant)
/s/ Gerald Prior**
- ------------------------------------ Controller (principal accounting officer of the registrant)
Gerald Prior
/s/ Frank H. Jellinek, Jr.**
- ------------------------------------ Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ------------------------------------ Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ------------------------------------ Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-9
136
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Erie Scientific Company of Puerto Rico
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Frank H. Jellinek, Jr.**
- ------------------------------------ Chairman of the Board & President (principal executive
Frank H. Jellinek, Jr. officer of the registrant)
/s/ Jeffrey C. Leathe**
- ------------------------------------ Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Gerald Prior**
- ------------------------------------ Controller (principal accounting officer of the
Gerald Prior registrant)
/s/ Frank H. Jellinek, Jr.**
- ------------------------------------ Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ------------------------------------ Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ------------------------------------ Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-10
137
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Erie UK Holding Company
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Jeffrey C. Leathe**
- ------------------------------- President and Treasurer (principal executive officer,
Jeffrey C. Leathe principal financial officer and principal accounting
officer of the registrant)
/s/ Frank H. Jellinek, Jr.**
- ------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-11
138
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Ever Ready Thermometer Co., Inc.
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Jeffrey C. Leathe**
- --------------------------------- President and Treasurer (principal executive officer and
Jeffrey C. Leathe principal financial officer of the registrant)
/s/ Vito LiLoia**
- --------------------------------- Accounting Manager (principal accounting officer of the
Vito LiLoia registrant)
/s/ Frank H. Jellinek, Jr.**
- --------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- --------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- --------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-12
139
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Genevac Inc.
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Harry Cole**
- -------------------------------------- President (principal executive officer of the
Harry Cole registrant)
/s/ Jeffrey C. Leathe**
- -------------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Debra Hall**
- -------------------------------------- General Manager (principal accounting officer of the
Debra Hall registrant)
/s/ Frank H. Jellinek, Jr.**
- -------------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- -------------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- -------------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-13
140
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Lab-Line Instruments, Inc.
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Timothy B. Weiss**
- ------------------------------- President (principal executive officer of the
Timothy B. Weiss registrant)
/s/ Jeffrey C. Leathe**
- ------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Philip T. Reid**
- ------------------------------- Controller (principal accounting officer of the
Philip T. Reid registrant)
/s/ Frank H. Jellinek, Jr.**
- ------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-14
141
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Lab Vision Corporation
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Glenn K. Takayama**
- ------------------------------ President (principal executive officer of the
Glenn K. Takayama registrant)
/s/ Jeffrey C. Leathe**
- ------------------------------ Treasurer (principal financial officer of the registrant)
Jeffrey C. Leathe
/s/ Brian Wood**
- ------------------------------ Chief Financial Officer (principal accounting officer of
Brian Wood the registrant)
/s/ Frank H. Jellinek, Jr.**
- ------------------------------ Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ------------------------------ Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ------------------------------ Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
-----------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-15
142
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Matrix Technologies Corporation
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Gary E. Nelson**
- ----------------------------------- President (principal executive officer of the
Gary E. Nelson registrant)
/s/ Jeffrey C. Leathe**
- ----------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ John L. Stowell**
- ----------------------------------- Chief Financial Officer (principal accounting officer of
John L. Stowell the registrant)
/s/ Frank H. Jellinek, Jr.**
- ----------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ----------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ----------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
**By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-16
143
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Microgenics Corporation
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Yuh-geng Tsay**
- ---------------------------------- President (principal executive officer of the
Yuh-geng Tsay registrant)
/s/ Jeffrey C. Leathe**
- ---------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Linda M. Lechner**
- ---------------------------------- Vice President Administration and Chief Financial
Linda M. Lechner Officer (principal accounting officer of the registrant)
/s/ Frank H. Jellinek, Jr.**
- ---------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ---------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ---------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-17
144
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Molecular BioProducts, Inc.
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Robert Arnold**
- ------------------------------ President (principal executive officer of the
Robert Arnold registrant)
/s/ Jeffrey C. Leathe**
- ------------------------------ Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Angela M. Egner**
- ------------------------------ Controller (principal accounting officer of the
Angela M. Egner registrant)
/s/ Frank H. Jellinek, Jr.**
- ------------------------------ Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ------------------------------ Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ------------------------------ Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
**By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-18
145
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Nalge Nunc International Corporation
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Verner Andersen**
- -------------------------------- Chief Executive Officer (principal executive officer of
Verner Andersen the registrant)
/s/ Jeffrey C. Leathe**
- -------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Jean C. Mucenski**
- -------------------------------- Vice President - Finance (principal accounting officer
Jean C. Mucenski of the registrant)
/s/ Frank H. Jellinek, Jr.**
- -------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- -------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- -------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-19
146
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
National Scientific Company
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Craig Jack**
- ----------------------------------- President (principal executive officer of the
Craig Jack registrant)
/s/ Jeffrey C. Leathe**
- ----------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Jean C. Mucenski**
- ----------------------------------- Vice President - Finance (principal accounting officer
Jean C. Mucenski of the registrant)
/s/ Frank H. Jellinek, Jr.**
- ----------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ----------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ----------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-20
147
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
The Naugatuck Glass Company
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Harold A. Racevicius**
- ----------------------------------- President (principal executive officer of the
Harold A. Racevicius registrant)
/s/ Jeffrey C. Leathe**
- ----------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Harry X. Cashin, III**
- ----------------------------------- Director of Finance (principal accounting officer
Harry X. Cashin, III of the registrant)
/s/ Frank H. Jellinek, Jr.**
- ----------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ----------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ----------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-21
148
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
NERL Diagnostics Corporation
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Donald H. McGlory, Jr.**
- ---------------------------------- President (principal executive officer of the
Donald H. McGlory, Jr. registrant)
/s/ Jeffrey C. Leathe**
- ---------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Douglas Fisher**
- ---------------------------------- Controller/Operations Manager (principal
Douglas Fisher accounting officer of the registrant)
/s/ Frank H. Jellinek, Jr.**
- ---------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ---------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ---------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-22
149
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Owl Separation Systems, Inc.
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Stephen Norton**
- ----------------------------- President (principal executive officer of the
Stephen Norton registrant)
/s/ Jeffrey C. Leathe**
- ----------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Keith Blessington**
- ----------------------------- Manager of Accounting (principal accounting officer
Keith Blessington of the registrant)
/s/ Frank H. Jellinek, Jr.**
- ----------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ----------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ----------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-23
150
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Remel Inc.*
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.**
Signature Title
--------- -----
/s/ Susan Garay***
- ------------------------------- President (principal executive officer of the
Susan Garay registrant)
/s/ Jeffrey C. Leathe***
- ------------------------------- Treasurer (principal financial officer
Jeffrey C. Leathe of the registrant)
/s/ Rick Bradshaw***
- ------------------------------- Director of Finance (principal accounting
Rick Bradshaw officer of the registrant)
/s/ Frank H. Jellinek, Jr.***
- ------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe***
- ------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ------------------------------- Director
Michael K. Bresson
* Alexon-Trend, Inc., which was previously a Guarantor Subsidiary, merged into
Remel Inc., effective June 30, 2001, with Remel Inc. being the surviving
corporation.
** Each of these signatures is affixed as of July 2, 2001.
*** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-24
151
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Richard-Allan Scientific Company
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Peter Scheu**
- --------------------------------- President (principal executive officer of the
Peter Scheu registrant)
/s/ Jeffrey C. Leathe**
- --------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Brian Wood**
- --------------------------------- Vice President - Finance (principal accounting officer
Brian Wood of the registrant)
/s/ Frank H. Jellinek, Jr.**
- --------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- --------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- --------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-25
152
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Robbins Scientific Corporation
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Paul B. Robbins**
- ---------------------------------- President (principal executive officer of the
Paul B. Robbins registrant)
/s/ Jeffrey C. Leathe**
- ---------------------------------- Treasurer (principal financial officer of the
Jeffrey C. Leathe registrant)
/s/ Cheryle Peikert**
- ---------------------------------- Controller (principal accounting officer of the
Cheryle Peikert registrant)
/s/ Frank H. Jellinek, Jr.**
- ---------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ---------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ---------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-26
153
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Samco Scientific Corporation
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Mark F. Stuppy**
- ---------------------------------- President (principal executive officer of the
Mark F. Stuppy registrant)
/s/ Jeffrey C. Leathe**
- ---------------------------------- Treasurer (principal financial officer
Jeffrey C. Leathe of the registrant)
/s/ Harry Manoushagian**
- ---------------------------------- Controller (principal accounting officer
Harry Manoushagian of the registrant)
/s/ Frank H. Jellinek, Jr.**
- ---------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ---------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ---------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-27
154
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Sybron Transition Corp.
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Frank H. Jellinek, Jr.**
- ----------------------------------- President (principal executive officer of the
Frank H. Jellinek, Jr. registrant)
/s/ Jeffrey C. Leathe**
- ----------------------------------- Vice President and Treasurer (principal financial
Jeffrey C. Leathe officer and principal accounting officer of the
registrant)
/s/ Frank H. Jellinek, Jr.**
- ----------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- ----------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- ----------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-28
155
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Portsmouth, State of New Hampshire, on July 2, 2001.
Vacuum Process Technology, Inc.
By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.*
Signature Title
--------- -----
/s/ Steven C. Eriksson**
- --------------------------------- President (principal executive officer of the registrant)
Steven C. Eriksson
/s/ Jeffrey C. Leathe**
- --------------------------------- Treasurer (principal financial officer
Jeffrey C. Leathe of the registrant)
/s/ Thomas Lawler**
- --------------------------------- Controller (principal accounting officer
Thomas Lawler of the registrant)
/s/ Frank H. Jellinek, Jr.**
- --------------------------------- Director
Frank H. Jellinek, Jr.
/s/ Jeffrey C. Leathe**
- --------------------------------- Director
Jeffrey C. Leathe
/s/ Michael K. Bresson
- --------------------------------- Director
Michael K. Bresson
* Each of these signatures is affixed as of July 2, 2001.
** By: /s/ Michael K. Bresson
------------------------------
Michael K. Bresson
Attorney-in-Fact, pursuant to Power of Attorney
S-29
156
APOGENT TECHNOLOGIES INC.
(THE "REGISTRANT") AND ITS GUARANTOR SUBSIDIARIES
(COMMISSION FILE NO. 1-11091)
EXHIBIT INDEX
TO
FORM S-4 REGISTRATION STATEMENT
INCLUDED FILED WITH
EXHIBIT INCORPORATED HEREIN IN ORIGINAL AMENDMENT
NUMBER DESCRIPTION BY REFERENCE TO FILING NO. 1
- ------ ----------- --------------- ----------- ----------
3.1(a) Composite Restated Articles of Exhibit 4.1 to the Registrant's
Incorporation of the Registrant, as Registration Statement on Form S-8
amended through February 5, 2001 to (333-47015). The amendments approved
change the name of the Registrant to by the Shareholders on January 31, 2001
Apogent Technologies Inc. and are incorporated by reference from the
increase the size of the board from Registrant's Proxy Statement dated
between six and nine to between six December 29, 2000 for the Annual Meeting
and twelve directors of Shareholders
3.1(b) Articles of Amendment containing
Certificate of Designation,
Preferences and Rights of Series A
Preferred Stock
Exhibit 3.1(b) to the Registrant's Form
3.2 Bylaws of the Registrant, as amended 10-K for the fiscal year ended
as of January 30, 2001 to amend September 30, 2000.
Section 3.01 to reflect the increase
in the maximum number of directors to
twelve Exhibit 3.2 to the Registrant's Form 10-Q
for the period ended December 31, 2000.
4.1 Indenture, dated April 4, 2001,
between Apogent Technologies Inc.,
the Subsidiary Guarantor parties
thereto, and The Bank of New York, as
Trustee Exhibit 4.1 to the Registrant's Form 10-Q
for the period ended March 31, 2001.
4.2 Exchange and Registration Rights
Agreement, dated as of April 4, 2001,
among Apogent Technologies Inc.,
Subsidiary Guarantors and Chase
Securities Inc., Bank of America Exhibit 4.2 to the Registrant's Form 10-Q
Securities LLC, Banc One Capital for the period ended March 31, 2001.
Markets Inc., Credit Suisse First
Boston Corporation and First Union
Securities Inc. (collectively, as
Initial Purchasers)
4.3 Purchase Agreement, dated March 30, X
2001, between Apogent Technologies,
Subsidiary Guarantors and Chase
Securities Inc., Bank of America
Securities LLC, Banc One Capital
Markets, Inc., Credit Suisse First
Boston Corporation and First Union
Securities (collectively, as Initial
Purchasers)
157
INCLUDED FILED WITH
EXHIBIT INCORPORATED HEREIN IN ORIGINAL AMENDMENT
NUMBER DESCRIPTION BY REFERENCE TO FILING NO. 1
- ------ ----------- --------------- ----------- ----------
5 Opinion letter of Quarles & Brady LLP X
as to the legality of the securities
being registered
12 Statements regarding computation of X
ratio of earnings to fixed charges
23 Consent of KPMG LLP X
24 Power of Attorney X
25 Statement of Eligibility on Form T-1 X
of The Bank of New York
99.1 Letter of Transmittal X