-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AZE6AXpj45NYv4zW3B05Ws+iSQAIgQh5YGVM2fhbJqI+suNfx7CCWasAL18cq2Oz XHMbsUPtptXiB7XihMqFjg== 0000950148-97-002626.txt : 19971029 0000950148-97-002626.hdr.sgml : 19971029 ACCESSION NUMBER: 0000950148-97-002626 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971028 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAGNOSTIC PRODUCTS CORP CENTRAL INDEX KEY: 0000702259 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 952802182 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09957 FILM NUMBER: 97701741 BUSINESS ADDRESS: STREET 1: 5700 W 96TH ST CITY: LOS ANGELES STATE: CA ZIP: 90045 BUSINESS PHONE: 2137760180 10-Q 1 FORM 10-Q 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1997 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from_________________to_________________ Commission file number 1-9957 Diagnostic Products Corporation ------------------------------------------------------ (Exact name of registrant as specified in its charter) CALIFORNIA 95-2802182 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5700 WEST 96TH STREET LOS ANGELES, CALIFORNIA 90045 (Address of principal executive offices) Registrant's telephone number: (213) 776-0180 NO CHANGE (Former name, former address and former fiscal year, if changed since last report) 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 of Common Stock, no par value, outstanding as of September 30, 1997, was 13,662,023. ================================================================================ 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 1997 1996 1997 1996 ------- ------- -------- -------- SALES $46,399 $43,359 $137,562 $129,974 ------- ------- -------- -------- COSTS AND EXPENSES: Cost of sales 20,485 19,868 60,336 55,988 Selling 9,174 9,111 27,794 25,729 Research and development 5,109 4,426 14,597 13,294 General and administrative 5,415 4,552 16,762 13,303 Equity in income of affiliates (114) (199) (810) (1,002) Investment income (252) (380) (754) (1,144) ------- ------- -------- -------- Total costs and expenses 39,817 37,378 117,925 106,168 ------- ------- -------- -------- INCOME BEFORE INCOME TAXES 6,582 5,981 19,637 23,806 PROVISION FOR INCOME TAXES 1,460 1,630 4,960 6,390 ------- ------- -------- -------- NET INCOME $5,122 $ 4,351 $14,677 $17,416 ======= ======= ======== ======== NET INCOME PER SHARE $ .37 $ .31 $1.06 $1.25 WEIGHTED AVERAGE SHARES AND EQUIVALENTS OUTSTANDING 13,901 13,941 13,880 13,956
1 3 DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in Thousands) September 30, December 31, 1997 1996 ------- --------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 13,024 $ 13,781 Accounts receivable - net of allowance for doubtful accounts of $108 and $76 49,786 45,631 Inventories 48,920 42,828 Prepaid expenses and other current assets 474 375 Deferred income taxes 3,663 3,663 -------- --------- Total current assets 115,867 106,278 PROPERTY, PLANT AND EQUIPMENT: Land and buildings 28,643 29,195 Machinery and equipment 50,332 46,043 Leasehold improvements 6,736 6,701 Construction in progress 839 700 -------- --------- Total 86,550 82,639 Less accumulated depreciation and amortization 40,227 37,192 -------- --------- Property, plant and equipment - net 46,323 45,447 SALES-TYPE AND OPERATING LEASES 25,608 22,056 DEFERRED INCOME TAXES 2,772 2,772 INVESTMENTS IN AFFILIATED COMPANIES 16,475 15,666 EXCESS OF COST OVER NET ASSETS ACQUIRED - Net of amortization of $7,113 and $6,357 14,254 14,783 -------- --------- TOTAL ASSETS $221,299 $ 207,002 ======== ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 13,508 $ 4,005 Accounts payable 13,532 13,024 Accrued liabilities 5,116 6,057 Income taxes payable 1,405 1,629 -------- --------- Total current liabilities 33,561 24,715 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common Stock - no par value, authorized 30,000,000 shares; outstanding 13,662,023 shares and 13,597,124 shares. 37,760 36,584 Retained earnings 157,352 147,579 Foreign currency translation adjustments (7,374) (1,876) -------- --------- Total shareholders' equity 187,738 182,287 -------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $221,299 $ 207,002 ======== =========
2 4 DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands) Nine Months Ended September 30, -------------------- 1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 14,677 $ 17,416 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 11,157 10,348 Equity in undistributed income of unconsolidated affiliates (809) (1,002) Accounts receivable (6,128) (2,435) Inventories (7,217) (6,245) Prepaid expenses and other current assets (99) (50) Accounts payable 2,040 (3,464) Accrued liabilities (941) (1,081) Income taxes payable (138) (2,315) -------- -------- Net Cash Flows from Operating Activities 12,542 11,172 CASH FLOWS FROM (USED FOR) INVESTING ACTIVITIES: Additions to property, plant and equipment (7,922) (6,654) Sales-type and operating leases (7,551) (8,655) Investment in affiliated company (46) (481) -------- -------- Net Cash from (used for) Investing Activities (15,519) (15,790) CASH FLOWS FROM (USED FOR) FINANCING ACTIVITIES: Borrowing 6,605 8,072 Proceeds from exercise of stock options 1,176 614 Cash dividends paid (4,904) (4,876) -------- -------- Net Cash from (used for) Financing Activities 2,877 3,810 EFFECT OF EXCHANGE RATE CHANGES ON CASH (657) (350) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (757) (1,158) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 13,781 16,519 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 13,024 $ 15,361 ======== ========
3 5 DIAGNOSTIC PRODUCTS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 -- BASIS OF PRESENTATION The information for the nine months ended September 30, 1997 and 1996 has not been audited by independent accountants, but includes all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for such periods. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the requirements of the Securities and Exchange Commission, although the Company believes that the disclosures included in these financial statements are adequate to make the information not misleading. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1996 annual report on Form 10-K as filed with the Securities and Exchange Commission. The results of operations for the nine-month period ending September 30, 1997 are not necessarily indicative of the results to be expected for the year ended December 31, 1997. Net income per share has been computed using the weighted-average number of common shares and common share equivalents outstanding during each period. Common share equivalents represent the dilutive effect of outstanding stock options. In December 1997, the Company will be required to adopt Statement of Financial Accounting Standard No. 128, "Earnings per Share." The provisions of this statement will require a change in the method of calculating earnings per share which will result in an insignificant difference from currently reported earnings per share. NOTE 2 -- INVENTORIES Inventories by major categories are summarized as follows:
September 30, December 31, 1997 1996 ----------- ----------- Raw materials $19,015,000 $14,896,000 Work in process 17,967,000 17,472,000 Finished goods 11,938,000 10,460,000 ----------- ----------- Total $48,920,000 $42,828,000 =========== ===========
4 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sales of $46.4 million were achieved in the third quarter of 1997, a 7% increase over the corresponding 1996 quarter. Record sales for the nine months were $137.6 million, an increase of 6% over 1996. Rapid growth in sales of IMMULITE instrumentation and reagents was partially offset by the continual decline of the Company's mature RIA product line. In periods when the U.S. dollar is strengthening, the effect of the translation of the financial statements of the consolidated foreign affiliates is that of lower sales, costs and net income. The stronger U.S. dollar in the third quarter 1997 and the nine months 1997 when compared to the corresponding 1996 periods resulted in lower reported sales of approximately 6% in the third quarter and 5% in the nine month period. The effect on net income in both periods was less than 1%. As of April 1, 1997, the Company acquired the distribution rights in France for the Company's allergy and IMMULITE product lines. The former distributor will continue to distribute the Company's radioimmunoassay (RIA) product line. Losses, including start up costs, for the 1997 second and third quarters for this French subsidiary were approximately $740,000. Cost of sales as a percentage of sales was 44% in the 1997 third quarter and nine month period compared to 46% in the 1996 third quarter and 43% in the 1996 nine month period. Selling expenditures as a percentage of sales were 20% in the 1997 third quarter and nine month period compared to 21% and 20% in the corresponding 1996 periods. Research and development expenses as a percentage of sales were approximately 11% in the 1997 third quarter and nine month period compared to 10% in the corresponding 1996 periods. General and administrative expenses as a percentage of sales were 12% in the 1997 periods compared to 11% and 10% in the 1996 periods. The increased costs in 1997 resulted primarily from the loss on the exchange rate recorded by the European subsidiaries on the strengthening of the U.S. dollar. Included in general and administrative expenses is the amortization of the excess of cost over net assets acquired and minority interest. Equity in income of affiliates represents the Company's share of earnings of the nonconsolidated affiliates, principally the 45%-owned Italian affiliate. The Company's effective tax rate includes Federal, state and foreign taxes. The 1997 rate of 25% is slightly less than the 1996 rate of 27%. The Company has adequate working capital and sources of capital to carry on its current business and to meet its existing capital requirements. During the 1997 second quarter the Company increased its unsecured line of credit from $10 million to $20 million and has $6 million outstanding at September 30, 1997. Cash flow from operating activities was $12.5 million in 1997 compared to $11.1 million in 1996. Cash flow use for plant and equipment additions and renovations was $7.9 million in 1997 and $6.7 million in 1996. Cash flow used for sales-type and operating leases was $7.6 million in 1997 and $8.7 in 1996. During 1996 and 1997 the Company has paid a quarterly cash dividend of $.12 per share. 5 7 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits 27 Financial Data Schedule (b) Reports on Form 8-K. None 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. DIAGNOSTIC PRODUCTS CORPORATION (Registrant) OCTOBER 28, 1997 SIGI ZIERING - ------------------------------- ------------------------------------------ Date Sigi Ziering, Ph.D., Chairman of the Board Chief Executive Officer OCTOBER 28, 1997 JULIAN R. BOCKSERMAN - ------------------------------- ------------------------------------------ Date Julian R. Bockserman, Vice President Chief Financial Officer 6 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 13,024 0 49,786 108 48,920 115,867 86,550 40,227 221,299 33,561 0 0 0 37,760 149,978 221,299 137,562 137,562 60,336 60,336 57,589 0 0 19,637 4,960 4,677 0 0 0 14,677 1.06 0
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