1
CONFORMED COPY
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
X Quarterly Report Pursuant to Section 13 or 15(d) of the
- Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
Transition Report Pursuant to Section 13 or 15(d) of the
- Securities Exchange Act of 1934
Commission File No. 0-10005
BIOCHEM INTERNATIONAL INC.
A DELAWARE CORPORATION IRS EMPLOYER IDENTIFICATION
NO. 39-1272816
Address Telephone Number
- ------------------------- ----------------
W238 N1650 Rockwood Drive (414) 542-3100
Waukesha, WI 53188-1199
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---
The number of shares outstanding of the Company's Common Stock, par value $.02,
on March 31, 1996 was 13,086,284.
Page 1 of 8
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOCHEM INTERNATIONAL INC.
BALANCE SHEETS
(UNAUDITED)
March 31 June 30
1996 1995
----------- -----------
ASSETS
Current Assets:
Cash and equivalents $ 6,481,589 $ 2,628,445
Accounts receivable, less $150,278 and $100,000 allowance
for doubtful accounts, respectively 4,679,584 3,751,377
Inventories 3,049,321 2,686,501
Deferred income taxes 150,000 1,470,000
Prepaid expenses 292,852 43,538
----------- -----------
Total Current Assets 14,653,346 10,579,861
Deferred income taxes 180,000 180,000
Property, plant and equipment, net 1,438,388 1,437,690
Related party receivable 143,748 101,828
Other 5,483 5,483
----------- -----------
Total Assets $16,420,965 $12,304,862
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 1,887,801 $ 1,463,067
Accrued liabilities:
Salaries, wages and commissions 410,163 502,055
Other 195,510 226,413
----------- -----------
Total Current Liabilities 2,493,474 2,191,535
Stockholders' Equity:
Common Stock, $.02 par value 261,726 261,666
Additional Paid-in Capital 11,699,348 11,698,173
Retained Earnings (Deficit) 1,966,417 (1,846,512)
----------- -----------
Total Stockholders' Equity 13,927,491 10,113,327
----------- -----------
Total Liabilities and Stockholders' Equity $16,420,965 $12,304,862
=========== ===========
The accompanying notes are an integral part of these financial statements
Page 2 of 8
3
BIOCHEM INTERNATIONAL INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
March 31 March 31
1996 1995 1996 1995
---------- ---------- ----------- -----------
Revenues:
Net sales 7,566,499 6,263,164 $21,414,410 $18,347,990
Other income 88,664 39,250 280,982 129,508
---------- ---------- ----------- -----------
Total Revenues 7,655,163 6,302,414 21,695,392 18,477,498
Costs and Expenses:
Cost of goods sold 3,354,397 2,887,553 9,520,925 8,275,065
Selling, general and administrative 1,562,599 1,573,825 4,742,644 4,291,816
Engineering, research and development 568,431 323,958 1,339,569 768,057
Interest - 2,006 - 105,676
---------- ---------- ----------- -----------
Total Costs and Expenses 5,485,428 4,787,342 15,603,138 13,440,614
---------- ---------- ----------- -----------
Income Before Income Tax Expense 2,169,735 1,515,072 $6,092,254 $5,036,884
Income tax expense:
Current 816,027 35,500 1,189,325 106,525
Deferred - 557,050 1,090,000 1,917,900
---------- ---------- ----------- -----------
Net Income 1,353,708 922,522 $3,812,929 $3,012,459
========== ========== =========== ===========
Net Income per Common Share $.10 $.07 $.29 $.23
==== ==== ==== ====
Weighted Average Number of Common
Shares Outstanding 13,243,784 13,183,284 13,243,784 13,183,284
========== ========== =========== ===========
The accompanying notes are an integral part of these financial statements.
Page 3 of 8
4
BIOCHEM INTERNATIONAL INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
March 31
1996 1995
---------- -----------
Cash flows from operating activities:
Net income $3,812,929 $3,012,459
Adjustments to reconcile net cash provided
by operating activities:
Deferred interest - 105,379
Depreciation 170,125 91,281
Deferred income taxes 1,320,000 1,918,400
Change in assets and liabilities:
Accounts receivable (970,127) (1,029,901)
Inventories (362,820) 852,035
Prepaid expenses and other (249,314) (12,672)
Current portion of long term debt - (4,261,688)
Accounts payable and accrued liabilities 301,939 (587,505)
---------- ----------
Net cash provided by operating activities 4,022,732 87,788
---------- ----------
Cash flows from investing activities:
Property, plant and equipment additions (170,823) (227,896)
---------- ----------
Cash flows from financing activities:
Issuance of common stock 1,235 2,500
---------- ----------
Net increase in cash and equivalents 3,853,144 (137,608)
Cash and equivalents:
Beginning of period 2,628,445 1,756,578
---------- ----------
End of period $6,481,589 $1,618,970
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ - $2,182,645
========== ==========
Cash paid during the period for income taxes $1,189,325 $ 106,525
========== ==========
The accompanying notes are an integral part of these financial statements.
Page 4 of 8
5
BIOCHEM INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS
1. The accompanying unaudited financial statements should be read in
conjunction with the Company's 1995 Annual Report on Form 10-KSB. In the
opinion of management, all adjustments necessary to a fair statement of
operations and financial position of the Company have been included in the
accompanying statements of operations and balance sheets. All adjustments
made to the interim financial statements were of a normal, recurring
nature.
The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles.
2. Inventories are comprised of:
March 31 June 30
1996 1995
---------- ---------
Finished goods $ 328,277 $ 311,751
Loaner and demonstration 917,932 804,708
Work in process 712,210 644,977
Purchased material 1,090,902 925,065
---------- ----------
$3,049,321 2,686,501
========== ==========
3. Property, plant and equipment consists of the following:
March 31 June 30
1995 1995
---------- ----------
Land $ 88,200 $ 88,200
Building 724,699 724,699
Leasehold improvements 126,841 126,841
Machinery and equipment 1,350,342 1,110,868
Office furniture and equipment 208,541 207,993
---------- ----------
2,498,623 2,258,601
Less accumulated depreciation 1,060,236 820,911
---------- ----------
$1,438,387 $1,437,690
========== ==========
4. Net Income Per Share:
Net income per common and common equivalent share is computed based on
the weighted average common shares outstanding, including common stock
equivalents.
Page 5 of 8
6
BIOCHEM INTERNATIONAL INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
Working capital at March 31, 1996 was $12,160,000 as compared to $8,388,000 at
June 30, 1995. The increase in working capital is primarily a function of the
cash flow from operating activities. The cash and equivalents balance has
increased due to the positive cash flows the company experienced during the
first nine months of fiscal 1996.
Company management believes that sales revenues to be generated by current
products and anticipated new product introductions, and financing arrangements
currently in place will be sufficient to meet future liquidity and capital
needs.
Results of Operations
Net sales for the three-month period ended March 31, 1996 increased 21% over
the corresponding prior year period. This increase results primarily from an
increase in sales to our international OEM customers, both in the Pacific Rim
and in the European community. The increase is largely due to increased sales
of our oximetry products and high end OEM monitors. Additionally, our handheld
pulse oximeter continues to be very well received in the marketplace, and has
allowed us to enter some markets, such as emergency medicine, which we did not
serve in the past. The handheld pulse oximeter sales to our domestic customers
and our other international customers continue to be strong and account for the
balance of the increase in sales.
Net sales for the nine-month period ended March 31, 1996 increased 17%. This
increase is due to the above mentioned factors.
Other income for the three- and nine-month periods ended March 31, 1996
consists primarily of interest income.
Cost of goods sold as a percentage of net sales was approximately 44.3% and
44.5%, respectively, during the three- and nine-month periods ended March 31,
1996 compared to 46.1% and 45.1% for the corresponding periods ended March 31,
1995. This fluctuation is attributable to a change in the product mix sold and
decreased raw material costs.
Selling, general and administrative expenses were 20.7% and 22.2%,
respectively, of net sales in the three- and nine-month periods ending March
31, 1996 compared to 25.1% and 23.4% during the same periods of the prior year.
The decrease in percentage for the three-month period ended March 31, 1996 is
largely due to the increase in sales. Actual expenses did decrease slightly
when compared to the same period in the prior year. The decreased percentage
in the nine-month period ended March 31, 1996 is solely due to the increase in
sales in the same period, as actual dollars spent over the period increased. We
have increased staffing in our domestic sales departments, adding two new sales
territories in fiscal 1996, to support an increase in sales. Additionally, BCI
has been spending more on its marketing efforts, to better promote both our
name and our products.
Page 6 of 8
7
The increase in engineering, research and development expenditures noted during
the three- and nine-month periods ended March 31, 1996 of 75.5% and 74.4%,
respectively, when compared to the similar periods in the prior year reflects
increases in expenses related to payroll, outside consultants and miscellaneous
new project expenses. The increase in payroll expenses is the result of
additional staffing when comparing the first nine months of fiscal 1996 to the
same period in fiscal 1995. The increased staff, with the outside consultants,
continue to develop new products that BCI feels will meet the needs of the
marketplace.
There was no interest expense in the nine-month period ended March 31, 1996.
The long-term debt and related accrued interest were paid off in full during
the third quarter of fiscal 1995.
The increase in total income tax expense for the three- and nine-month periods
ended March 31, 1996 when compared to the same periods in the prior year
reflect the higher income earned during fiscal 1996. The shift in tax expense
from deferred to current is due to the decrease in the company's net operating
loss carryforward. In the third quarter of fiscal 1996 the company used up
the balance of its federal income tax net operating loss carryforward. During
all of fiscal 1995, the carryforward was used by the company to offset income
for regular federal tax calculation purposes and as a result, BCI was liable
for paying alternate minimum taxes only. As the carryforward is now exhausted,
BCI is liable for regular federal income taxes.
All other costs and expenses of the Company remained relatively constant when
comparing the first nine months of fiscal 1996 to that of fiscal 1995.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The company has not filed any reports on form 8-K for the quarter ended March
31, 1996.
Page 7 of 8
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: April 25, 1996 By /s/ David H. Sanders
---------------------------
David H. Sanders
Chairman of the Board and
Chief Executive Officer
Dated: April 25, 1996 By /s/ Frank A. Katarow
---------------------------
Frank A. Katarow
President and Chief
Operating Officer
Dated: April 25, 1996 By /s/ Ann M. Johnson
---------------------------
Ann M. Johnson
Vice President of Finance
and Operations
Page 8 of 8