-----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, R3JtnQVhmE60gpNj+QIKokMQCzEIP/CuXvPyNJiAXznIE1vbZt9g/qfgKryCgtST B//4Wghv/QtOSHFzKSOAag== 0000950116-98-000632.txt : 19980323 0000950116-98-000632.hdr.sgml : 19980323 ACCESSION NUMBER: 0000950116-98-000632 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980320 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW BRUNSWICK SCIENTIFIC CO INC CENTRAL INDEX KEY: 0000071241 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY APPARATUS & FURNITURE [3821] IRS NUMBER: 221630072 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-06994 FILM NUMBER: 98569468 BUSINESS ADDRESS: STREET 1: 44 TALMADGE RD STREET 2: PO BOX 4005 CITY: EDISON STATE: NJ ZIP: 08818-4005 BUSINESS PHONE: 9082871200 MAIL ADDRESS: STREET 1: 44 TALMADGE ROAD STREET 2: PO BOX 4005 CITY: EDISON STATE: NJ ZIP: 08818-4005 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K 405 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1997 Commission File Number 0-6994 NEW BRUNSWICK SCIENTIFIC CO., INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) New Jersey 22-1630072 - ------------------------ --------------------------------------- (State of incorporation) (I.R.S. Employer Identification Number) 44 Talmadge Road, Edison, N.J. 08818-4005 ----------------------------------------- (Address of principal office) Registrant's telephone number: (732) 287-1200 -------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- ---------------------- None N/A Securities registered pursuant to Section 12(g) of the Act: Title of class Common stock - par value $0.0625 Common stock Purchase Rights 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. The aggregate market value of the voting stock held by non-affiliates of the registrant was $26,134,080 as of February 10, 1998. This figure was calculated by reference to the high and low prices of such stock on February 10, 1998. The number of shares outstanding of the Registrant's Common stock as of February 10, 1998: 4,204,845 DOCUMENTS INCORPORATED BY REFERENCE Registrant's Proxy Statement and Annual Report to be filed within 120 days after the end of the fiscal year 1997, are incorporated in Part III herein. The EXHIBITS INDEX is on Page 36. PART I Item 1. BUSINESS New Brunswick Scientific Co., Inc. and its subsidiaries ("NBS" or "the Company") design, manufacture and market a variety of equipment used in biotechnology to create, maintain, measure and control the physical and biochemical conditions required for the growth and detection of microorganisms. This equipment is used in medical, biological, chemical, and environmental research and for the commercial development of antibiotics, proteins, hormones, enzymes, monoclonal antibodies, agricultural products, fuels, vitamins, vaccines and other substances. The equipment sold by NBS includes fermentation equipment, bioreactors, biological shakers, nutrient sterilizing and dispensing equipment, low temperature freezers and tissue culture apparatus. Laboratory equipment and instrumentation manufactured by NBS and others is distributed by five wholly-owned subsidiaries in Europe. DGI BioTechnologies, L.L.C. (DGI) was established in 1995 by the Company to develop and commercialize a novel technology, the Diogenesis(TM) process, that facilitates the discovery of new drugs. DGI is eighty percent (80%) owned and fully funded by the Company and occupies specially designed laboratory space at the Company's headquarters facility in Edison, New Jersey. Diogenesis(TM) is being developed to provide the pharmaceutical and biotechnology industries with site-directed assay systems to rapidly generate small, orally available, organic drug leads. Unlike other techniques, leads generated by DGI's process will uniformly possess the defining characteristics of effective drugs: activity, selectivity and affinity for the biological target. DGI has applied for U.S. and foreign patents covering its proprietary drug lead discovery technology which utilizes state-of-the-art molecular-biological and immunological tools to scan known pharmaceutical targets in a manner that offers major advantages over existing drug discovery approaches. DGI's strategy is to enter into partnership agreements with multiple pharmaceutical and/or biotechnology companies whereby DGI will generate focused libraries of small molecule compounds known to be active against the partner's target. DGI will generate revenues from research on behalf of corporate partners, milestone payments for the identification of leads and product royalties. The founders of DGI hold options which can be exercised under certain conditions and the employees, certain consultants and the Board of Managers have been issued options, which if exercised, in the aggregate represent approximately 12.9% of DGI. NBS was incorporated in 1958 as the successor to a business founded in 1946 by David and Sigmund Freedman, its principal stockholders and two of its directors and executive officers. The company owns its 243,000 square foot headquarters and primary production facility located on 17 acres of land in Edison, New Jersey. Products Fermentation Equipment and Bioreactors. A fermentor is a device used to create, maintain and control the physical, chemical, and biochemical environmental conditions required for growing bacteria, yeast, fungi and other similar microorganisms. Bioreactors serve an -2- identical purpose for propagation of animal and plant cells. The Company's fermentors and bioreactors range in size from laboratory benchtop models as small as 1-liter to pilot scale systems as large as 10,000 liters. The larger systems are typically sold under contract. The number of larger systems sold in any reporting period may materially affect the sales and profitability of the Company. NBS has supplied fermentors and bioreactors to universities and pharmaceutical company laboratories since the 1950's. NBS' fermentors and bioreactors are being used for applications which have received increased attention in the scientific and commercial community; namely, applications using microorganisms engineered by recombinant DNA techniques; immunology; and the production of monoclonal antibodies. Animal and plant cells as well as bacteria and viruses are usually grown on a small scale for research purposes. As the process is scaled up (i.e., replicated, using larger volumes), physical and chemical parameters, such as pH, vessel pressure and chemical composition may change, and the equipment used may require increasingly sophisticated control systems. Scale-up, which is one of the important uses of the Company's pilot scale systems is a complex technical procedure critical to successful commercialization of biological processes. Pilot scale systems may be used to set parameters or to determine the feasibility of production at greater volumes, depending upon the goal of the customer. Particularly in the area of bioreactors, the Company has developed unique designs and has applied for patents to protect its technology. The Company's fermentors and bioreactors incorporate sophisticated instrumentation systems to measure, record and control a multiplicity of process variables. The Company manufactures digital instrumentation for control of fermentors and bioreactors. This instrumentation significantly enhances the utility of any size fermentor or bioreactor. Consisting of an operator display and a series of microprocessor-controlled instrument modules, this control unit uses software developed by the Company to simplify the operation of fermentors and bioreactors while enhancing their performance. It automatically monitors, displays, analyzes, and makes immediately available, data concerning the culture process and permits automatic modification of the various growth conditions without the need of a host computer. This system is designed to replace manually operated controls as well as more complex and more costly automatic systems. Since maintenance of pure culture conditions is critical for the proper functioning of fermentors and bioreactors, NBS offers devices and procedures which it has developed for sterilizing its systems and maintaining an aseptic environment over long operating periods. NBS designs, manufactures and sells benchtop and pilot scale fermentors that are sterilizable in place. Although significantly more expensive than other models, these devices eliminate the need to move the fermentor from its place of use for sterilization. Biological Shakers. Biological shakers perform a function similar to fermentors and bioreactors, as they are also used in the process of growing and propagating biological cultures. Shakers agitate flasks under controlled conditions containing biological cultures in a liquid media in which nutrients are dissolved. Nutrients are the source of energy needed for growth, while shaking furnishes the dissolved oxygen needed to permit life processes to take place within the microorganism. NBS Shakers are in worldwide use in biological laboratories for research, development, and in some cases, for production of various medical, biological and -3- chemical products. In addition, shakers are widely used in microbiological and recombinant DNA research. The Company manufactures an extensive line of biological shakers ranging in size from portable laboratory benchtop models to large multitier industrial machines. Some models of the Company's shakers are designed to agitate flasks under controlled environmental conditions of temperature, atmosphere and light. Each shaker incorporates a variable speed regulator and may be equipped to accommodate flasks of various sizes. To permit culture growth under constant and reproducible conditions, shakers manufactured by NBS are precision engineered and manufactured to agitate flasks uniformly and continuously over prolonged periods. The Company currently manufactures three distinct lines of shakers. Its INNOVA(R) line, which is its most sophisticated shaker, its original Gyrotory(R) shaker line, and, its new "Classic" Line, which was introduced in early 1997. The Classic line is intended primarily for sale to distributors and is expected to supercede the original Gyrotory(R) line in the foreseeable future. Nutrient Sterilizing and Dispensing Equipment. The Company manufactures devices that automatically sterilize biological nutrients and then maintain those nutrients at the required temperature for subsequent use. This product line includes benchtop models used in laboratories as well as larger industrial models. As a complement to its nutrient sterilizers, NBS sells an apparatus which automatically fills culture dishes with sterile nutrient. Tissue Culture Apparatus. The Company manufactures apparatus to rotate bottles and test tubes slowly and constantly for the purpose of growing animal and plant cells. Certain models of this apparatus may be placed into an incubator and equipped to regulate the speed of rotation. The Company also markets carbon dioxide incubators used in the propagation of tissue cultures. This apparatus has applications in vaccine production, cancer and heart disease research, and the commercial production of pharmaceuticals. Other Scientific Products. NBS distributes a line of centrifuges for separating cells from fermentation broth, and a line of low temperature freezers. Product Development NBS designs and develops substantially all the products it sells. Its personnel, who include biochemical, electrical, chemical, mechanical, electronic and software engineers as well as scientists and technical support staff, formulate plans and concepts for new products and improvements or modifications to existing products. The Company develops specialized software for use with its computer-coupled systems and the microprocessor-controlled instrumentation systems for shakers, fermentors and bioreactors. Manufacturing Manufacturing is conducted according to planning and production control procedures primarily on a lot production basis rather than on an assembly line. NBS fabricates its parts from purchased raw materials and components and produces most of its subassemblies. -4- These parts, components and subassemblies are carried in inventory in anticipation of projected sales and are then assembled into finished products according to production schedules. In general, manufacturing is commenced in anticipation of orders. The manufacturing processes for the Company's products range from two weeks to many months, depending upon the product size, complexity and quantity. However, a substantial portion of orders received are for items in the process of being manufactured or in inventory. The raw materials used by the Company include stainless steel, copper, brass, aluminum and various plastics. Some components are purchased from others, including pumps, compressors, plumbing fittings, electrical and electronic components, gauges, meters, motors, glassware and general purpose hardware. Many of these components are built to the Company's specifications. NBS is not dependent upon any single supplier for any raw material or component, but delay in receipt of key components can affect the manufacturing schedule. The Company's products are designed to operate continuously over long periods with precision and regularity so that research and production may be conducted under controlled, constant and reproducible conditions. The Company manufactures its products from materials which it selects as having characteristics necessary to meet its requirements. In addition, to ensure that its manufacturing processes result in products meeting exacting specifications and tolerances, NBS follows rigorous inspection procedures. NBS maintains a Quality Assurance Department which is responsible for inspecting raw materials and parts upon arrival at its plant as well as inspecting products during manufacture. It also tests every piece of equipment prior to shipment. NBS' products are serviced at its plant and at its customers' premises by Company technicians, distributors' technicians or, in the case of minor repairs, by sales personnel. Marketing and Sales The Company sells its equipment to pharmaceutical companies, agricultural and chemical companies, other industrial customers engaged in biotechnology, and to medical schools, universities, research institutes, hospitals, private laboratories and laboratories of Federal, State and Municipal government departments and agencies in the United States. While only a small percentage of the Company's sales are made directly to United States government departments and agencies, its domestic business is significantly affected by government expenditures and grants for research to educational research institutions and to industry. The Company regularly evaluates credit granted to customers and generally requires progress payments for the purchase of custom fermentation equipment. NBS also sells its equipment, both directly and through scientific equipment dealers, to foreign companies, institutions, and governments. The major portion of its foreign sales are made in Canada, Western Europe, Israel, China, Japan and Australia. NBS also sells its products in the former Soviet Union, Eastern Europe and Latin America. These sales may be substantially affected by changes in the capital investment policies of foreign governments, or by the availability of hard currency. Fisher Scientific is the exclusive U.S. distributor of the Company's Gyrotory(R) line of biological shakers, its Classic line of biological shakers and its automated equipment for the preparation of diagnostic agar plates. While Fisher is the exclusive U.S. distributor for these -5- NBS Shakers and media preparation equipment, NBS markets and sells its shakers and other products on a direct basis as well. Fisher also distributes a few selected INNOVA models. For information concerning net sales in the United States and foreign countries, income (loss) from operations derived therefrom, identifiable assets located in the United States and foreign countries, and export sales for each of the three years ended December 31, 1997, see Note 9 of Notes to Consolidated Financial Statements under the heading "Operations by Geographic Areas." Export sales consist of all sales by the Company's Domestic Operations to customers located outside the United States. Hence, foreign sales include export sales. Substantially all of the orders of the Company's domestic operations, including export orders are booked in United States dollars and are payable promptly upon delivery of the equipment. The Company's wholly-owned European subsidiaries book orders for equipment in local currencies and in some instances in U.S. dollars. The assets and liabilities of the Company's European subsidiaries are valued in local currencies. Fluctuations in exchange rates between those currencies and the dollar have had an impact upon the Company's consolidated financial statements, as measured in United States dollars. Export sales are influenced by changes in the exchange rate of the dollar as those changes affect the cost of the Company's equipment to foreign purchasers. Certain countries, particularly those in Eastern Europe and the former Soviet Union, may not be able to make substantial capital purchases in dollars for economic or political reasons. NBS maintains five European sales offices through wholly-owned subsidiaries, New Brunswick Scientific (U.K.) Limited in England, NBS Benelux B.V. in The Netherlands, New Brunswick Scientific GmbH in Germany, New Brunswick Scientific N.V. in Belgium and NBS S.A.R.L. in France. Foreign sales of the Company's standard products (i.e., those listed in its product catalogs) are generally made directly by these subsidiaries. At December 31, 1997, NBS had a backlog of unfilled orders of approximately $7,858,000, compared with $7,353,000 at the end of 1996. The December 31, 1997 backlog was comprised of orders for standard equipment as well as orders for larger systems. NBS expects to fill all of its existing backlog during the coming year. One customer based in the United States accounted for approximately 12.0%, 10.0% and 12.1%, respectively, of consolidated net sales during the years ended December 31, 1997, 1996 and 1995. Research and Development Research and development expenditures, all of which are sponsored by the Company, amounted to $2,637,000, in 1997, $2,141,000 in 1996 and $826,000 in 1995. Twenty-nine (29) of the Company's professional employees were engaged full time in research and development activities. -6- Investment in Organica, Inc. Since November 1994, the Company has invested $950,000 (less than a twenty percent interest) in Organica, Inc. (Organica) which was formed in 1993 to develop and commercialize various "environmentally friendly" products produced via fermentation processes. Organica isolates and cultures naturally occurring microorganisms and fungi and blends them with various nutrient sources and carriers to create its products, which are offered as alternatives to various hazardous products. Organica has focused primarily on natural turf products, compost accelerators, hydrocarbon remediation products and non-caustic drain openers. In 1997, Organica completed a $2.3 million private placement; none of the securities were purchased by the Company. Competition The competitive factors affecting the Company's position as a manufacturer of biotechnology equipment include availability, reliability, ease of operation, the price of its products, its responsiveness to the technical needs and service requirements of customers, and product innovation. NBS encounters competition from approximately 11 domestic and 16 foreign competitors in the sale of its products. The Company's principal competitor in the sale of fermentation equipment and bioreactors both in the United States and overseas is B. Braun Biotech, a German company. Additional competitors include LSL-Biolafitte, a French company, part of Cellex Biosciences Inc., a U.S. company; L.E. Marubishi Co., Ltd. located in Japan; Applikon, B.V., located in The Netherlands; Abec, located in Pennsylvania and L.H. Engineering Ltd., located in England, a part of Inceltech, located in France. Although financial information concerning these firms is not readily available, the Company believes that many of its competitors have substantially greater financial resources than the Company. NBS believes that B. Braun Biotech has significantly greater sales of fermentation equipment than the Company, although Braun's market share is not as significant in benchtop size models. The Company believes that it has the largest worldwide market share for biological shakers. LabLine Instruments, Inc. and Forma Scientific in the United States as well as several manufacturers in Europe are strong competitors of the Company in this market. NBS encounters substantial competition in the sale of most of its other equipment where its sales do not represent major market shares. Although the Company does not encounter substantial competition in the sale of its nutrient sterilizing and dispensing equipment in the U.S. market, substantial competition exists in foreign markets. Employees NBS employs approximately 412 people, including 212 people engaged in manufacturing and supervision, 54 in research, development and engineering (including 19 employed by DGI), 102 in sales and marketing, and 44 in administrative and clerical duties. Manufacturing employees currently work a single shift, however, in certain areas a second shift has been employed. The Company's New Jersey manufacturing employees are represented by -7- District 15 of the International Association of Machinists, AFL-CIO under a contract which expires in December 1999. The Company considers its labor relations to be good. Working Capital NBS maintains a substantial inventory of parts, components and subassemblies to fill orders for its products. Management believes it has adequate working capital for its present level of operations. The Company has a $5 million secured line of credit with Summit Bank, primarily for working capital and letters of credit, and a $1 million revolving credit line for equipment acquisition purposes, effective through May 31, 1999. Patents and Trademarks NBS holds and has filed applications for United States and foreign patents relating to many of its products, their integral components and significant accessories. NBS also has certain registered trademarks. However, NBS believes that its business is not dependent upon patent, trademark, or other proprietary protection in any material respect. DGI has filed patent applications covering its platform technology and certain assays. DGI has also applied for a number of trademarks. Cautionary Statement Statements included herein which are not historical facts are forward looking statements. Such forward looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward looking statements involve a number of risks and uncertainties, including but not limited to, changes in economic conditions, demand for the Company's products, pricing pressures, intense competition in the industries in which the Company operates, the need for the Company to keep pace with technological developments and timely respond to changes in customer needs, the Company's dependence on third party suppliers, the effect on foreign sales of currency fluctuations, acceptance of new products, consistency in the level of orders for custom bioprocess systems, the ability of DGI to achieve its scientific objectives and enter into corporate partnering and/or licensing agreements, the labor relations of the Company and its customers and other factors identified in the Company's Securities and Exchange Commission filings. Item 2. PROPERTY The Company's executive, administrative, engineering and domestic sales offices and its manufacturing operations, warehouse and other facilities are located in a Company owned 243,000 square foot one-story steel and concrete block building situated on a 17-acre site in Edison, New Jersey. Approximately 50,000 square feet is office space, approximately 14,000 square feet is laboratory space (including 7,500 square feet occupied by DGI), and the balance is devoted to manufacturing and warehouse facilities. The Company's NBS Benelux B.V. subsidiary owns its 13,000 square foot building in Nijmegen, The Netherlands. -8- The Company's wholly-owned European subsidiaries lease facilities as follows: New Brunswick Scientific (UK) Limited - 17,000 square feet, NBS GmbH - 1,400 square feet and New Brunswick Scientific N.V./S.A. - - 825 square feet. Item 3. LEGAL PROCEEDINGS No material legal proceedings are currently pending. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. Item 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS (A) The Company's Common stock is traded in the National over-the-counter market (Nasdaq symbol NBSC). The following table sets forth the high and low prices for the Company's Common stock as reported by Nasdaq for the periods indicated. The prices represent quotations between dealers reflecting prevailing market factors which may include anticipated markups or markdowns and do not necessarily represent actual transactions. HIGH LOW 1996 First Quarter $ 7-3/4 $ 5-1/4 Second Quarter 8-3/4 6-1/8 Third Quarter 7-3/4 6 Fourth Quarter 7-3/4 6-1/4 1997 First Quarter $ 8-1/4 $ 6-1/2 Second Quarter 8 6-1/4 Third Quarter 7-1/4 6 Fourth Quarter 9-1/2 6-7/8 1998 First Quarter (through February 10, 1998) $10-11/32 $ 8-3/8 (B) The number of holders, including beneficial owners, of NBS' Common stock as of February 10, 1998, is 1,437. (C) NBS paid a 10% common stock dividend on May 15, 1997 and a 5% common stock dividend on May 15, 1996. -9- Item 6. SELECTED FINANCIAL DATA The following table sets forth selected consolidated financial information regarding the Company's financial position and operating results. This information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and Notes thereto which appear elsewhere herein.
Year Ended December 31, ----------------------------------------------------------------- 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- (In thousands, except per share amounts) Net sales $45,596 $42,927 $39,085 $38,789 $35,950 Net income 1,012 882 1,172 1,068 392 Basic earnings per share (a) $ .24 $ .21 $ .28 $ .26 $ .10 Diluted earnings per share (a) $ .24 $ .21 $ .28 $ .26 $ .10 Total assets (b) 38,153 37,226 35,685 34,504 32,628 Long-term debt, net of current installments (b) 247 401 564 665 792 Dividends per share $ -- -- $ .05 -- --
(a) Adjusted to reflect 10% and 5% stock dividends distributed on May 15, 1997 and May 15, 1996, respectively. (b) At year-end Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Statements included herein which are not historical facts are forward looking statements. Such forward looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward looking statements involve a number of risks and uncertainties, including but not limited to, changes in economic conditions, demand for the Company's products, pricing pressures, intense competition in the industries in which the Company operates, the need for the Company to keep pace with technological developments and timely respond to changes in customer needs, the Company's dependence on third party suppliers, the effect on foreign sales of currency fluctuations, acceptance of new products, consistency in the level of orders for custom bioprocess systems, the ability of DGI to achieve its scientific objectives and enter into corporate partnering and/or licensing agreements, the labor relations of the Company and its customers and other factors identified in the Company's Securities and Exchange Commission filings. -10- Results of Operations 1997 vs. 1996 For the year ended December 31, 1997, the Company had net income of $1,012,000 or $.24 per diluted share on net sales of $45,596,000 compared with net income of $882,000 or $.21 per diluted share on net sales of $42,927,000 for the year ended December 31, 1996. In 1997, net sales increased 6.2% due to a 19% increase in U.S. domestic sales and higher sales in the United Kingdom which benefited from the delivery of a large custom bioprocess system. Gross margins improved to 40.1% in 1997 from 38.8% in 1996 due to continuing improvements in productivity in the Company's manufacturing operations and from the higher component of domestic sales which tends to carry a somewhat higher margin than export sales, a large portion of which go through dealers and distributors. Research, development and engineering expenses increased 13.9% in 1997 primarily to support the operations of DGI BioTechnologies, L.L.C. (DGI), the Company's majority-owned drug lead discovery operation. Interest income decreased to $149,000 in 1997 from $244,000 in 1996 primarily as a result of lower average cash available for investment. During 1997, the U.S. dollar strengthened against the currencies of the European countries where the Company has subsidiary operations. The effect of these currency movements decreased income from foreign operations by approximately $102,000 to $1,542,000. The effects of balance sheet translation resulted in a currency translation adjustment of $723,000 which is reflected in the equity section of the Consolidated Balance Sheet. 1996 vs. 1995 For the year ended December 31, 1996, the Company had net income of $882,000 or $.21 per diluted share on net sales of $42,927,000 compared with net income of $1,172,000 or $.28 per diluted share on net sales of $39,085,000 for the year ended December 31, 1995. In 1996 sales increased 9.8% due equally to higher sales in the U.S. domestic market and in Western Europe. The increase of 9.9% in cost of sales is directly attributable to the increase in net sales. Research, development and engineering expenses increased 64% in 1996 due primarily to the full year effect of the start-up in October 1995 of DGI BioTechnologies, L.L.C. (DGI), the Company's drug discovery operation. Interest expense increased to $75,000 in 1996 from $55,000 in 1995 due primarily to the accrual of interest on deferred compensation. Other income (expense), net in 1996 of $26,000 consisted primarily of bank charges and credit facility renewal fees. Provision for income taxes as a percentage of income before taxes decreased to 9.8% from 16.3% in 1995 since all of the Company's income emanated from its foreign subsidiaries, a significant portion of which is not subject to income taxes due to carryforward tax losses on which income tax benefits were not previously recognized. U.S. operations were in a -11- net taxable loss situation due to the significant increase in research and development costs in 1996 to support the operations of DGI. During 1996, the U.S. dollar strengthened against two and weakened against one of the currencies of the European countries where the Company has subsidiary operations. The effect of these currency movements decreased income from foreign operations by approximately $25,000 to $1,311,000. The effects of balance sheet translation resulted in a currency translation adjustment of $48,000 which is reflected in the equity section of the Consolidated Balance Sheet. Financial Condition Liquidity and Capital Resources During the year ended December 31, 1997, cash and cash equivalents decreased to $3,968,000 from $5,196,000 at December 31, 1996. The decrease in cash resulted primarily from an increase in inventories to $14,862,000 at December 31, 1997 from $12,980,000 at December 31, 1996, partially offset by an increase in accounts payable and accrued expenses to $7,709,000 at December 31, 1997 from $7,014,000 at December 31, 1996. Finished goods inventory increased to $4,701,000 at the end of 1997 from $3,891,000 at December 31, 1996, raw materials and sub-assemblies increased to $7,493,000 at December 31, 1997 from $6,762,000 at December 31, 1996 and work-in-process increased to $2,668,000 at December 31, 1997 from $2,327,000 at December 31, 1996. These increases are primarily attributable to an overlap of shaker lines due to the addition of the Company's Classic line of shakers which is intended to eventually supercede its Gyrotory(R) line of shakers and to orders for custom bioprocess systems which were in process at December 31, 1997 and which are expected to be delivered in 1998. Accounts payable and accrued expenses increased as a result of higher advance payments from customers which amounted to $1,476,000 at December 31, 1997 vs. $846,000 at December 31, 1996. Other liabilities of $425,000 at December 31, 1996, consisted of a pension liability which was a non-cash item which was offset by a direct reduction in shareholders' equity of a like amount. This pension liability was reduced to zero at December 31, 1997 due to the positive investment performance of the Company's defined benefit pension plan. Drug Lead Discovery Business In October 1995, the Company entered the drug-lead discovery business by forming a new company to develop a novel, small molecule drug discovery platform. The company, DGI BioTechnologies, L.L.C. (DGI), is majority-owned and fully funded by the Company and occupies specially designed laboratory space at the Company's headquarters facility in Edison, New Jersey. DGI's operations have had a significant negative impact on the Company's 1997 and 1996 earnings and will continue to do so during the balance of its development phase, which is expected to last through 1998. During 1997 and 1996, $1,923,000 and $1,535,000, respectively, was charged to operations. It is currently anticipated that expenditures -12- for 1998 will exceed $2,000,000. This amount could be affected by revenues from licensing agreements and other corporate collaborations which are currently being pursued. Recently Issued Accounting Standards In 1997, the Financial Accounting Standards Board issued SFAS No. 128, Earnings per Share ("SFAS No. 128"). SFAS No. 128 requires the presentation of earnings per share (EPS) information in the form of Basic Earnings per share and as Diluted Earnings per Share on the face of the income statements. Basic EPS excludes dilution and Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. As required, the Company has reflected SFAS No. 128 in its 1997 financial statements and all prior periods have been restated accordingly. Year 2000 Issues Based upon a review of its computer operations, the Company has determined that its costs related to the Year 2000 problem will be insignificant. The Company has no internally developed software that it utilizes for its operations, but uses Computer Associates ManMan Classic software, Version 11 of which, is compatible with the Year 2000. The Company expects to upgrade its system to Version 11 in late 1998 or early 1999 and will receive that upgrade in the normal course of business as a consequence of its maintenance contract with Computer Associates. Cash Flows from Operating Activities During the year ended December 31, 1997, net cash used by operating activities amounted to $45,000 vs. net cash provided by operating activities of $551,000 for the year ended December 31, 1996. The primary reasons for the $596,000 net decrease from 1996 to 1997 were: an increase in inventories of $2,171,000 in 1997 vs. an increase of $310,000 in 1996, offset by an increase in accounts payable and accrued expenses of $536,000 in 1997 vs. an increase of $92,000 in 1996, and a decrease in prepaid expenses and other current assets of $37,000 in 1997 vs. a decrease of $520,000 in 1996. Cash Flows from Investing Activities Net cash used by investing activities which amounted to $965,000 in 1997 resulted primarily from $733,000 of additions to property plant and equipment and $250,000 from an investment made in another entity. In 1996, net cash used was primarily from additions to property, plant and equipment of $1,355,000 and from an investment made in another entity of $400,000. Cash Flows from Financing Activities During 1997, repayments of $134,000 of long-term debt were partially offset with the proceeds of $87,000 from stock purchase and option plans and in 1996, repayments of long- -13- term debt of $154,000 were partially offset with proceeds from stock purchase and option plans of $128,000. Management believes that the resources available to the Company, including its line of credit which has been extended to May 31, 1999, are sufficient to meet its near and intermediate-term needs, including present funding commitments for DGI, and its strong unleveraged balance sheet provides the basis for any long-term financing if the need should arise. -14- Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Independent Auditors' Report The Board of Directors and Shareholders New Brunswick Scientific Co., Inc.: We have audited the accompanying consolidated balance sheets of New Brunswick Scientific Co., Inc. and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1997. In connection with our audits of the consolidated financial statements, we also have audited the related financial statement schedule as listed in Part IV, Item 14(a)2. The consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 New Brunswick Scientific Co., Inc. and subsidiaries as of December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1997 in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. KPMG Peat Marwick LLP Short Hills, New Jersey February 12, 1998 -15- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1997 AND 1996 (In thousands, except for share data)
1997 1996 -------- --------- ASSETS Current assets: Cash and cash equivalents $ 3,968 $ 5,196 Accounts receivable, net of allowance for doubtful accounts, 1997 - $284 and 1996 - $224 10,602 10,108 Refundable income taxes 314 334 Deferred income tax benefit (Note 6) 134 97 Inventories (Note 2) 14,862 12,980 Prepaid expenses and other current assets (Note 7) 1,819 1,880 -------- -------- Total current assets 31,699 30,595 -------- -------- Property, plant and equipment, net (Notes 3 and 4) 5,354 5,701 Other assets (Note 11) 1,100 930 -------- -------- $ 38,153 $ 37,226 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of long-term debt (Note 4) $ 110 $ 135 Accounts payable and accrued expenses (Note 5) 7,709 7,014 -------- -------- Total current liabilities 7,819 7,149 -------- -------- Long-term debt, net of current installments (Note 4) 247 401 Other liabilities (Note 7) -- 425 -------- -------- Commitments and contingencies (Notes 10 and 11) Shareholders' equity (Note 8): Common stock, $0.0625 par; authorized 25,000,000 shares; issued and outstanding, 1997 - 4,204,845 shares; 1996 - 3,808,932 shares; net of shares held in treasury, 1997 - 390,967 and 1996 - 355,425 263 238 Capital in excess of par 23,854 20,738 Retained earnings 7,085 9,092 Currency translation adjustment (1,115) (392) Pension liability adjustment (Note 7) -- (425) -------- -------- 30,087 29,251 -------- -------- $ 38,153 $ 37,226 ======== ========
See notes to consolidated financial statements -16- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (In thousands, except per share amounts)
1997 1996 1995 ---- ---- ---- Net sales $ 45,596 $ 42,927 $ 39,085 Operating costs and expenses: Cost of sales 27,319 26,280 23,919 Selling, general and administrative expenses 13,086 12,179 11,717 Research, development and engineering expenses 4,139 3,633 2,215 -------- -------- -------- 44,544 42,092 37,851 -------- -------- -------- Income from operations 1,052 835 1,234 -------- -------- -------- Other income (expense): Interest income 149 244 222 Interest expense (71) (75) (55) Other income (expense), net (9) (26) (1) -------- -------- -------- 69 143 166 -------- -------- -------- Income before income taxes 1,121 978 1,400 Income taxes (Note 6) 109 96 228 -------- -------- -------- Net income $ 1,012 $ 882 $ 1,172 ======== ======== ======== Basic earnings per share $ .24 $ .21 $ .28 ======== ======== ======== Diluted earnings per share $ .24 $ .21 $ .28 ======== ======== ======== Basic weighted average number of shares outstanding 4,195 4,162 4,147 ======== ======== ======== Diluted weighted average number of shares outstanding 4,305 4,222 4,188 ======== ======== ========
See notes to consolidated financial statements. -17- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Dollars in thousands)
Common Stock Capital Currency Pension ----------------------- in Excess Retained Translation Liability Shares Amount of Par Earnings Adjustment Adjustment Total --------- ---------- ---------- ---------- ----------- ---------- ---------- Balance, January 1, 1995 3,581,283 $ 224 $ 19,213 $ 8,495 $ (197) $ -- $ 27,735 Issue of shares under employee stock purchase plan 14,368 1 70 71 Equity adjustment for additional minimum pension liability (471) (471) Dividends ($.05 per share) (179) (179) Net income 1,172 1,172 Currency translation adjustment (147) (147) --------- ---------- ---------- ---------- ---------- ---------- ---------- Balance, December 31, 1995 3,595,651 $ 225 $ 19,283 $ 9,488 $ (344) $ (471) $ 28,181 Issue of shares under employee stock purchase plan 13,492 1 75 76 Issue of shares under stock option plans 20,065 1 113 114 Equity adjustment for additional minimum pension liability 46 46 5% stock dividend 179,724 11 1,267 (1,278) -- Net income 882 882 Currency translation adjustment (48) (48) --------- ---------- ---------- ---------- ---------- ---------- ---------- Balance, December 31, 1996 3,808,932 $ 238 $ 20,738 $ 9,092 $ (392) $ (425) $ 29,251 Issue of shares under employee stock purchase plan 13,997 1 78 79 Discount from fair market value upon issue of options under stock option plan for nonemployee directors 35 35 Issue of shares under stock option plans 1,050 8 8 Equity adjustment for additional minimum pension liability 425 425 10% stock dividend 380,866 24 2,995 (3,019) Net income 1,012 1,012 Currency translation adjustment (723) (723) --------- ---------- ---------- ---------- ---------- ---------- ---------- Balance, December 31, 1997 4,204,845 $ 263 $ 23,854 $ 7,085 $ (1,115) $ -- $ 30,087 ========== ========== ========== ========== ========== ========== ==========
See notes to consolidated financial statements. -18- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (In thousands)
1997 1996 1995 -------- --------- -------- Cash flows from operating activities: Net income $ 1,012 $ 882 $ 1,172 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 931 858 585 Deferred income taxes (37) 91 114 Discount from fair market value upon issue of options under stock option plan for nonemployee directors 35 -- -- Change in related balance sheet accounts: Accounts receivable (964) (1,005) (1,522) Refundable income taxes 20 (118) (216) Inventories (2,171) (310) (51) Prepaid expenses and other current assets (37) (520) (160) Accounts payable and accrued expenses 536 92 413 Advance payments from customers 630 581 109 ------- ------- ------- Net cash provided (used) by operating activities (45) 551 444 ------- ------- ------- Cash flows from investing activities: Additions to property, plant and equipment (733) (1,355) (950) Sale of equipment 18 22 16 Investment (250) (400) (100) ------- ------- ------- Net cash used by investing activities (965) (1,733) (1,034) ------- ------- ------- Cash flows from financing activities: Cash dividends -- -- (179) Repayments of long-term debt (134) (154) (131) Proceeds from issuance of shares under stock purchase and option plans 87 128 71 ------- ------- ------- Net cash used by financing activities (47) (26) (239) Net effect of exchange rate changes on cash (171) 22 69 ------- ------- ------- Net decrease in cash and cash equivalents (1,228) (1,186) (760) Cash and cash equivalents at beginning of year 5,196 6,382 7,142 ------- ------- ------- Cash and cash equivalents at end of year $ 3,968 $ 5,196 $ 6,382 ======= ======= ======= Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 58 $ 63 $ 58 Income taxes 377 128 152 Supplemental disclosure of non cash financing activities: Shares issued for note receivable $ -- $ 62 $ --
See notes to consolidated financial statements. -19- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 1. Summary of significant accounting policies: Principles of consolidation: The consolidated financial statements include the accounts of New Brunswick Scientific Co., Inc., its wholly-owned subsidiaries and majority owned limited liability company (the Company). Investments in which the Company's ownership is less than 20% are accounted for using the cost method. All significant intercompany transactions and balances have been eliminated. Translation of foreign currencies: Translation adjustments for the Company's foreign operations are accumulated as a separate component of shareholders' equity. Transaction gains and losses, which are not significant in amount, are included in the consolidated statements of operations as part of "Other income (expense), net." Cash and Cash Equivalents: The Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents in the statement of cash flows. Inventories: Inventories are stated at the lower of cost (first-in, first-out or average) or market. Cost elements include material, labor and manufacturing overhead. Property, plant and equipment: Property, plant and equipment are stated at cost. Gains and losses resulting from sales or disposals, which are not significant in amount, are included in "Other income (expense), net". The cost of repairs, maintenance and replacements which do not significantly improve or extend the life of the respective assets is charged to expense as incurred. Depreciation is provided by the straight-line method over the estimated useful lives of the related assets, generally 33-1/3 years for buildings and 10 years for machinery and equipment. Depreciation expense amounted to $931,000 in 1997, $858,000 in 1996 and $585,000 in 1995. Research and development: Research and development costs are expensed as incurred. -20- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 Income taxes: Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the 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 in the period that includes the enactment date. Earnings per share: Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding. Diluted earnings per share is calculated by dividing net income by the sum of the weighted average number of shares outstanding plus the dilutive effect of stock options which have been issued by the Company. A 10% stock dividend was declared on February 26, 1997 and distributed on May 15, 1997 and a 5% stock dividend was declared on March 29, 1996 and distributed on May 15, 1996. The weighted average number of shares outstanding for prior periods have been restated to reflect these dividends. Stock option plans: Prior to January 1, 1996, the Company accounted for its stock option plans in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. On January 1, 1996, the Company adopted SFAS No. 123, Accounting for Stock-Based Compensation, which permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of APB Opinion No. 25 and provide pro forma net income and pro forma earnings per share disclosures for employee stock option grants made in 1995 and future years as if the fair-value-based method defined in SFAS No. 123 had been applied. The Company has elected to continue to apply the provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123. Treasury stock: Repurchase of the Company's outstanding Common stock is accounted for by treating the stock as if retired. -21- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 Financial instruments: The carrying values of the Company's financial instruments at December 31, 1997 approximate their estimated fair values. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable and accrued expenses approximate fair value due to the short-term maturity of such instruments. The carrying value of long-term debt approximates fair value based on the current rates offered on debt with similar maturities and characteristics. Derivative financial instruments (forward exchange contracts) are recorded at market value, with resultant gains or losses recognized in the statement of operations immediately, unless the instrument is an effective hedge of a firm, committed transaction, in which case the associated gain or loss is deferred and recognized in connection with the underlying transaction exposure. Use of estimates: Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare the financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 2. Inventories: 1997 1996 ---- ---- (In thousands) Raw materials and sub-assemblies $ 7,493 $ 6,762 Work-in-process 2,668 2,327 Finished goods 4,701 3,891 ------- ------- $14,862 $12,980 ======= ======= 3. Property, plant and equipment, net: 1997 1996 ---- ---- (In thousands) Land $ 800 $ 800 Buildings and improvements 3,983 4,009 Machinery and equipment 10,572 10,214 ------- ------- 15,355 15,023 Less accumulated depreciation 10,001 9,322 ------- ------- $ 5,354 $ 5,701 ======= ======= -22- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 4. Long-term debt and credit agreement: There is a mortgage on the facility of the Company's Netherlands subsidiary which bears interest of 7.5% per annum. During the twenty-year term of the mortgage, the Company is obligated to make monthly payments of interest and 80 equal quarterly payments of principal. At December 31, 1997 and 1996, $272,000 and $345,000, respectively, was outstanding. In 1993, the Company entered into a capitalized lease obligation, due September 1998, with imputed interest of 6.85%, relating to the purchase of equipment. At December 31, 1997 and 1996, $85,000 and $191,000, respectively, was outstanding. Property, plant and equipment with a net book value of $532,000 and $637,000, is pledged as security for long-term debt as indicated above at December 31, 1997 and 1996, respectively. Machinery and equipment (see Note 3) includes equipment under capital lease of $490,000, which has a net book value of $274,000 and $323,000 at December 31, 1997 and 1996, respectively. Aggregate annual maturities of long-term debt, including capitalized lease obligations, are as follows: Year ending December 31 Amount ----------------------- ------ (In thousands) 1998 $110 1999 25 2000 25 2001 25 2002 25 After 2002 147 --- $357 ==== The Company has a $5 Million Secured Revolving Credit Agreement (the Agreement) with Summit Bank (the Bank) effective through May 31, 1999. The agreement provides the Company with a facility for both working capital and for letters of credit. In addition, the Bank has provided a $1 million Revolving Line of Credit for equipment acquisition purposes. There are no compensating balance requirements and any borrowings under the Agreement bear interest at the Bank's prime rate. All of the Company's domestic assets, with the exception of its headquarters facility, which are not otherwise subject to lien have been pledged as security for any borrowings under this Agreement. As of and during the years ended December 31, 1997 and 1996, there were no outstanding balances. -23- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 5. Accounts payable and accrued expenses:
1997 1996 ---- ---- (In thousands) Accounts payable-trade $ 2,652 $ 2,781 Accrued salaries, wages and payroll taxes 1,712 1,683 Accrued foreign dealer commissions 761 692 Advance payments from customers 1,476 846 Other accrued liabilities 1,108 1,012 -------- -------- $ 7,709 $ 7,014 ====== ======= 6. Income taxes: 1997 1996 1995 ---- ---- ---- (In thousands) Income (loss) before income taxes: Domestic $ (446) $ (327) $ 155 Foreign 1,567 1,305 1,245 ------ --------- -------- $1,121 $ 978 $ 1,400 ====== ========= ======== Income taxes (benefit): Federal: Current $ - $ (106) $ (20) Deferred (37) 91 114 State-current 7 15 - Foreign-current 139 96 134 ------ --------- -------- $ 109 $ 96 $ 228 ====== ========= ========
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 1997 and 1996 are as follows: -24- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 ---- ---- (In thousands) Deferred tax asset/(liability): Accumulated depreciation $(221) $(199) Inventories 296 258 Allowance for doubtful accounts 53 29 Accrued expenses 184 148 Other liabilities (162) (177) Alternative minimum tax credit carryforward 138 138 Domestic net operating loss carryforward 107 27 Domestic capital loss and contribution carryforwards 69 67 Foreign net operating loss carryforwards 176 424 ----- ----- 640 715 Less: Valuation allowance 506 618 ----- ------ Net deferred tax asset $ 134 $ 97 ==== =====
The valuation allowance for deferred tax assets as of January 1, 1997 and 1996 was $506,000 and $618,000, respectively. The net change in the total valuation allowance for the years ended December 31, 1997 and 1996 was a decrease of $112,000 and $124,000, respectively. 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. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances at December 31, 1997. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. The foreign net operating loss carryforwards relate to operations in the United Kingdom and the Netherlands and are not subject to expiration date limitations. The Company's effective income tax rates for 1997, 1996 and 1995 were 9.7%, 9.8%, and 16.3%, respectively. These rates differ from the statutory Federal income tax rates as follows: -25- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Percentage of income before taxes ---------------------------------------------- 1997 1996 1995 ---- ---- ---- (In thousands) Computed "expected" tax expense 34.0% 34.0% 34.0% Increase (decrease) in taxes resulting from: Rate differential between U.S. and foreign income taxes (13.0) (10.0) - Change in valuation allowance (10.0) (12.7) (24.9) Other (1.3) (1.5) 7.2 ----- ---- ---- 9.7% 9.8% 16.3% ===== ==== ====
7. Pension plans: The Company has a noncontributory defined benefit pension plan covering qualified U.S. salaried employees, including officers. Additionally, the Company made contributions to a union sponsored multi-employer defined benefit plan, in the amount of $110,000, $107,000 and $104,000 in 1997, 1996 and 1995, respectively. Pension expense attributable to the defined benefit plan covering U.S. employees includes the following components:
1997 1996 1995 ---- ---- ---- (In thousands) Service cost $ 224 $ 202 $ 169 Interest cost on projected obligation 343 312 298 Actual return on plan assets (609) (311) (468) Net amortization and deferral 375 104 281 ------ ------ ------ Net pension expense $ 333 $ 307 $ 280 ====== ====== ======
The following table sets forth the plan's funded status and amounts recognized in the Company's consolidated balance sheet: -26- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 ---- ---- (In thousands) Actuarial present value of: Vested benefit $ 4,467 $ 4,068 ====== ======= obligation Accumulated benefit $ 4,506 $ 4,096 ====== ====== obligation Projected benefit obligation $ 5,159 $ 4,693 Plan assets at fair value 4,635 4,017 ------- -------- Excess of projected benefit obligation over plan assets 524 676 Unrecognized net loss (893) (1,021) Unrecognized transition obligation (168) (187) Unrecognized prior service cost 35 39 Adjustment for additional liability - 573 ------- -------- (Prepaid) accrued pension cost $ (502) $ 80 ===== =========
The projected benefit obligation was determined using the following assumptions:
1997 1996 1995 ---- ---- ---- Discount rate 7.25% 7.25% 7.25% Rate of return 7.5 % 7.5 % 7.5 % Future compensation increases 4.0 % 4.0 % 4.0 %
The 1996 minimum additional pension liability is a non-cash item which is offset by a direct reduction in shareholders' equity of $425,000. In 1997, there was no additional pension liability. The Company has a defined contribution plan for its U.S. employees, with a specified matching Company contribution. The expense to the Company in 1997, 1996 and 1995 was $130,000, $123,000 and $113,000, respectively. International pension expense in 1997, 1996 and 1995 was not material. Foreign plans generally are insured or otherwise fully funded. 8. Stock options, rights and stock purchase plan: The 1996 and 1995 data for the stock options and rights plans described below have been restated to reflect a 10% stock dividend which was distributed on May 15, 1997 and a 5% stock dividend which was distributed on May 15, 1996. -27- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 The 1991 Non-Qualified Stock Option Plan (the 1991 Plan) for officers and key employees of the Company provides for the granting of options to purchase up to 662,000 shares of the Company's Common stock. Options are exercisable in five equal installments commencing one year after date of grant. Options expire up to 5 years from the date of grant. The exercise price per share of each option may not be less than the fair market value on the date of grant. Shares under option at December 31 are as follows:
1997 1996 1995 ------------------------ ------------------------ ------------------------ Weighted- Weighted- Weighted- Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price ------ -------- ------ -------- ------ -------- Outstanding, beginning of year 204,435 $ 4.63 284,995 $4.84 197,215 $4.82 Granted 126,000 10.17 - - 88,935 4.87 Exercised - - (21,205) 5.25 - - Cancelled (3,465) 4.44 (3,753) 5.41 (1,155) 5.41 Expired - (55,602) 5.41 - - ------- ------- ------- - - Outstanding, end of year 326,970 $5.77 204,435 $4.63 284,995 $4.84 ======= ======= =======
During 1997, options were granted at $6.00, $10.00, $15.00 and $20.00 per share and during 1995, options were granted at $6.06 and at $4.65 per share. No options were granted in 1996. At December 31, 1997, 89,628, 30,030, and 5,544 options were exercisable at prices of $4.44, $4.65 and $6.06 per share, respectively, and 313,825 options were available for future grant. The weighted-average remaining contractual life for the options outstanding at December 31, 1997 was 2.5 years. In 1987, the Company adopted an Employee Stock Purchase Plan. Under the Stock Purchase Plan, employees may purchase shares of the Company's Common stock at 85% of fair market value on specified dates. The Company has reserved 231,000 shares of its authorized shares of Common stock for this purpose. During 1997, 1996 and 1995, 13,997, 14,841 and 15,086 Common shares, respectively, were issued under the plan. In 1989, the Company adopted a stock option plan for nonemployee directors. The plan provides for the granting of options to purchase up to 215,500 shares of the Company's Common stock. No options may be granted under the Plan after April 30, 1999. Options -28- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 may be exercised over five years in cumulative installments of 20% per year and expire up to ten years after grant. The exercise price per share of each option may not be less than eighty-five percent (85%) of the fair market value on the date of grant. Shares under option at December 31, are as follows:
1997 1996 1995 ------------------------ ------------------------ ------------------------ Weighted- Weighted- Weighted- Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price ------ ----- ------ ----- ------ ----- Outstanding, beginning of year 79,982 $5.57 85,177 $5.53 38,977 $5.60 Granted 123,000 6.76 - - 46,200 5.46 Exercised (1,155) 5.84 (865) 4.33 - - Cancelled - (4,330) 4.94 - - ------- ------- ------- - Outstanding, end of year 201,827 $6.29 79,982 $5.57 85,177 $5.53 ======= ====== ======
During 1997, options were granted at $6.09 and $7.00 per share and during 1995, options were granted at $5.46 per share. No options were granted in 1996. At December 31, 1997, 31,473, 3,464 and 17,556 options were exercisable at prices of $5.84, $4.33 and $5.46 per share, respectively, and 11,136 options were available for future grant. The weighted-average remaining contractual life for the options outstanding at December 31, 1997 was 4.7 years. At December 31, 1997, there were 324,961 additional shares available for grant under the stock option plans. The per share weighted-average fair value of stock options granted during 1997 and 1995 was $2.23 and $2.93, respectively, on the date of grant using the Black Scholes option-pricing model with the following weighted-average assumptions: 1997 - no expected dividend yield, risk-free interest rate of 6.46%, volatility factor of 45.2%, and an expected life of 3 years; 1995 - no expected dividend yield, risk-free interest rate of 6.12%, volatility factor of 49%, and an expected life of 5.57 years. The Company applies APB Opinion No. 25 in accounting for its Plans and, accordingly, no compensation cost has been recognized for its stock options in the financial statements with the exception of $35,000 relating to the discount from fair market value of options issued under the stock option plan for nonemployee directors. Had the Company determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, the Company's 1997, 1996 and 1995 net income and earnings per share would have been reduced to the proforma amounts as follows: -29- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995 ---- ---- ---- Net income (in thousands): As reported $1,012 $882 $1,172 Proforma 921 812 1,150 Basic earnings per share: As reported $ .24 $ .21 $ .28 Proforma .22 $ .20 $ .28 Diluted earnings per share: As reported $ .24 $ .21 $ .28 Proforma .21 $ .19 .27
Pro forma net income reflects only options granted in 1997 and 1995, no options were granted in 1996. Therefore, the full impact of calculating compensation cost for stock options under SFAS No. 123 is not reflected in the pro forma net income amounts presented above because compensation cost is reflected over the options' vesting periods of 5 and 10 years and compensation cost for options granted prior to January 1, 1995 is not considered. On October 27, 1989, the Company declared a dividend of one common share purchase right (the "Rights") on each share of Common stock outstanding. The rights entitle the holder to purchase one share of Common stock at $25.97 per share. Upon the occurrence of certain events related to non-negotiated attempts to acquire control of the Company, the Rights: (i) will entitle holders to purchase at the exercise price that number of shares of Common stock having an aggregate fair market value of two times the exercise price; (ii) will become exchangeable at the Company's election for that number of shares of Common stock having a fair market value of two times the exercise price; and (iii) will become tradable separately from the Common stock. Further, if the Company is a party to a merger or business combination transaction, the Rights will entitle the holders to purchase at the exercise price, shares of Common stock of the surviving company having a fair market value of two times the exercise price. In 1989, the Company adopted an Employee Stock Ownership Plan and Declaration of Trust ("ESOP"). The ESOP provides for the annual contribution by the Company of cash, Company stock or other property to a trust for the benefit of eligible employees. The amount of the Company's annual contribution to the ESOP is within the discretion of the Board of Directors but must be of sufficient amount to repay indebtedness incurred by the ESOP trust, if any, for the purpose of acquiring the Company's stock. The Company made contributions to the ESOP of $4,235, $9,330 and $4,170 during 1997, 1996 and 1995, respectively. -30- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 9. Operations by geographic areas: The Company sells its equipment to pharmaceutical companies, agricultural and chemical companies, other industrial customers engaged in biotechnology, and to medical schools, universities, research institutes, hospitals, private laboratories and laboratories of Federal, State and Municipal government departments and agencies in the United States and abroad. While only a small percentage of the Company's sales are made directly to United States government departments and agencies, its domestic business is significantly affected by government expenditures and grants for research to educational research institutions and to industry. The Company regularly evaluates credit granted to customers and generally requires progress payments for the purchase of custom bioprocess equipment which is typically sold under contract. The number of these larger systems sold in any reporting period may materially affect the sales and profitability of the Company. The following table sets forth the Company's operations by geographic area for 1997, 1996 and 1995. The information shown under the caption "Europe" represents the operations of the Company's wholly-owned foreign subsidiaries (in thousands):
Transfers and eliminations United between geo- Conso- States Europe graphic areas lidated ------ ------ ------------- ------- Net sales: 1997 $ 34,270 $ 15,586 $4,260 $45,596 1996 32,939 14,172 4,184 42,927 1995 30,456 12,117 3,488 39,085 Income from operations: 1997 $ (490) $ 1,542 $ 1,052 1996 (476) 1,311 835 1995 (12) 1,246 1,234 Identifiable assets: 1997 $ 29,306 $ 8,847 $38,153 1996 28,341 8,885 37,226 1995 28,156 7,529 35,685
Total sales by geographic area include both sales to unaffiliated customers and transfers between geographic areas. Such transfers are accounted for at prices comparable to normal unaffiliated customer sales. One customer based in the United States accounted for -31- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 approximately 12.0%, 10.0% and 12.1%, respectively, of consolidated net sales during the years ended December 31, 1997, 1996 and 1995. Income from operations from the United States has been significantly affected by the research and development costs of DGI BioTechnologies, the Company's drug lead discovery operation which costs amounted to $1,923,000, $1,535,000 and $205,000, respectively, during the years ended December 31, 1997, 1996 and 1995. During 1997, 1996 and 1995, net sales from domestic operations to foreign customers were $9,442,000, $11,413,000 and $11,622,000, respectively. Export sales from the U.S. are made to many countries and areas of the world including the Far East, the Middle East, Canada, South America, India and Australia. 10. Commitments and contingencies: The Company is obligated under the terms of various operating leases. Rental expense under such leases for 1997, 1996 and 1995 was $616,000, $614,000 and $533,000, respectively. As of December 31, 1997, estimated future minimum annual rental commitments under noncancelable leases expiring through 2014 are as follows (in thousands): 1998 $ 537 1999 395 2000 318 2001 241 2002 169 After 2002 2,559 ----- Total minimum payments required $4,219* ====== * Minimum payments have not been reduced by minimum sublease rentals of $404,000 due in the future under noncancelable subleases. At December 31, 1997, the Company was involved in litigation, which Company management believes, after consultation with counsel, that the ultimate disposition of such litigation will not have a material adverse effect on the Company's consolidated financial position. 11. Other matters: The Company enters into forward foreign exchange contracts to hedge certain firm and anticipated sales commitments, net of offsetting purchases, denominated in certain foreign currencies. The purpose of such foreign currency hedging activities is to protect the Company from the risk that the eventual cash flows resulting from the sale of products to -32- NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 certain foreign customers (net of purchases from applicable foreign suppliers) will be adversely affected by fluctuations in exchange rates. At December 31, 1997 and 1996, the Company had $5,965,000 and $2,640,000, respectively, of forward exchange contracts outstanding, primarily to exchange various European currencies for U.S. dollars. Substantially, all contracts mature within a period of 13 months. Gains and losses on forward exchange contracts in connection with firm commitments that are designated and effective as hedges of such transactions are deferred and recognized in income in the same period as the hedged transactions. At December 31, 1997, less than $200,000 of unrecognized net gains were deferred on such contracts. Gains and losses on forward exchange contracts in connection with anticipated transactions are marked to market monthly with the resulting gain or loss recognized immediately in the consolidated statement of operations. Other assets includes a non-interest bearing note receivable from the President and Chief Executive Officer of the Company due in 2006 in the amount of $62,500. Inputed interest on the loan amounted to $4,013 in 1997. Item 9. DISAGREEMENT ON ACCOUNTING AND FINANCIAL DISCLOSURE None. -33- PART III The information required by Part III is contained in the Registrant's proxy statement which will be filed pursuant to Regulation 14A or an information statement pursuant to Regulation 14C of the General Rules and Regulations under the Securities Exchange Act of 1934 not later than 120 days after the close of the fiscal year ended December 31, 1997. The information is incorporated herein by reference. PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this report: 1. Financial statements and supplementary data included in Part II of this report: New Brunswick Scientific Co., Inc. and Subsidiaries, consolidated financial statements: Consolidated Balance Sheets as of December 31, 1997 and 1996 Consolidated Statements of Operations for the years ended December 31, 1997, 1996 and 1995 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1997, 1996 and 1995 Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995 Notes to Consolidated Financial Statements 2. Financial statement schedules included in part IV of this report: Schedule II Schedules other than those listed above have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. 3. Exhibits: The Exhibits index is on page 36. -34- Schedule II NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (In thousands)
Additions -------------- Charged to Balance Balance Costs and Charged to At End Beginning (Credited) Other of of Period Expenses Accounts Deductions Period --------- -------- -------- ---------- ------ Allowance deducted from asset to which it applies: Allowance for doubtful accounts: Year ended December 31, 1997 $ 224 $ 60 $ - $ - $284 Year ended December 31, 1996 306 (82) - - 224 Year ended December 31, 1995 340 (27) - (7)(a) 306
- ---------- Notes: (a) Uncollected receivables written off. -35- EXHIBIT INDEX (3a) Restated Certificate of Incorporation, as amended is incorporated herein by reference from Exhibit (4) to the Registrant's Registration Statement on Form S-8 on file with the commission (No. 33-15606), and with respect to two amendments to said Restated Certificate of Incorporation, to Exhibit (4b) of Registrant's Registration Statement on Form S-8 (No. 33-16024). (3b) By laws of the Company as amended and restated as of August 19, 1991 is incorporated herein by reference to Exhibit (3b) from Registrant's Annual Report on Form 10-K for the year ended December 31, 1991. (3c) Rights Agreement dated as of October 31, 1989 between the Company and American Stock Transfer & Trust Company as Rights Agent, incorporated therein by reference to Exhibit 1 to the Company's Report on Form 8-K filed with the Commission on or about November 22, 1989. (4) See the provisions relating to capital structure in the Restated Certificate of Incorporation, amendment thereto, incorporated herein by reference from the Exhibits to the Registration Statements identified in Exhibit (3) above. (10-2) Pension Plan is incorporated herein by reference from Registrant's Form 10-K for the year ended December 31, 1985. (10-3) The New Brunswick Scientific Co., Inc., 1989 Stock Option Plan for Nonemployee Directors is incorporated herein by reference to Exhibit "A" appended to the Company's Proxy Statement filed with the Commission on or about April 22, 1989. (10-5) Employment Agreement with David Freedman is incorporated herein by reference to Exhibit (10-3) of the Registrant's Report on Form 10-Q for the quarter ended March 31, 1996. (10-6) Employment Agreement with Ezra Weisman is incorporated herein by reference to Exhibit 10-6 of Registrants Report on Form 10-K for the year ended December 31, 1993. (10-7) Nonqualified stock option agreement with Ezra Weisman is incorporated herein by reference to Exhibit (10-7) of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. (10-8) Termination Agreement with David Freedman is incorporated herein by reference to Exhibit (10-8) of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. -36- (10-9) Termination Agreement with Samuel Eichenbaum is incorporated herein by reference to Exhibit (10-9) of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991. (10-10) Termination Agreement with Ezra Weisman is incorporated herein by reference to Exhibit (10-10) of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. (10-11) Termination Agreement with Sigmund Freedman is incorporated herein by reference to Exhibit (10-11) of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. (10-12) 1991 Nonqualified Stock Option Plan is incorporated herein by reference to Exhibit (10-12) of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991. (10-13) Indemnification Agreements in substantially the same form as with all the Directors and Officers of the Company is incorporated herein by reference to Schedule A to Exhibit (10-13) of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991. (10-14) Loan and Security Agreement with Summit Bank, the successor to United Jersey Bank/Central NA dated February 17, 1993, is incorporated herein by reference to Exhibit (10-14) of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. (10-16) Nonqualified stock option agreement with Ezra Weisman is incorporated herein by reference to the Registrant's Report on Form 10-K for the year ended December 31, 1993. (10-17) Amendment dated December 29, 1995 to Loan and Security Agreement with Summit Bank, the successor to United Jersey Bank/Central NA dated February 17, 1993. (13) Annual Report to Shareholders, to be filed within 120 days of the end of the fiscal year ended December 31, 1997, is incorporated herein by reference. (22) Subsidiaries of the Company appear on Page 38. (24a)* Consent of KPMG Peat Marwick LLP. * Filed herewith. -37- EXHIBIT 22 SUBSIDIARIES OF THE COMPANY Percentage of Name and Place of Incorporation Ownership ------------------------------- --------- New Brunswick Scientific (U.K.) Limited Incorporated in The United Kingdom 100% NBS Benelux B.V. Incorporated in The Netherlands 100% New Brunswick Scientific N.V. Incorporated in Belgium 100% New Brunswick Scientific GmbH Incorporated in Germany 100% New Brunswick Scientific of Delaware, Inc. Incorporated in the State of Delaware 100% New Brunswick Scientific International, Inc. Incorporated in the State of Delaware 100% NBS Sales Co., Limited Incorporated in Jamaica 100% New Brunswick Scientific West Inc. Incorporated in the State of California 100% New Brunswick Scientific S.A.R.L. Incorporated in France 100% -38- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NEW BRUNSWICK SCIENTIFIC CO., INC. Dated: March 17, 1998 By: /s/ Ezra Weisman ------------------------------------------- Ezra Weisman President (Principal Executive Officer) and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Dated: March 17, 1998 By: /s/ David Freedman ------------------------------------- David Freedman Chairman of the Board Dated: March 17, 1998 By: /s/ Adele Lavender ------------------------------------- Adele Lavender Corporate Secretary Dated: March 17, 1998 By: /s/ Sigmund Freedman ------------------------------------- Sigmund Freedman Treasurer and Director Dated: March 17, 1998 By: /s/ Samuel Eichenbaum ------------------------------------- Samuel Eichenbaum Vice President, Finance -39- Dated: By: ------------------------------------- Ernest Gross Director Dated: March 17, 1998 By: /s/ Bernard Leon ------------------------------------- Bernard Leon Director Dated: March 17, 1998 By: /s/ Kiyoshi Masuda ------------------------------------- Kiyoshi Masuda Director Dated: March 17, 1998 By: /s/ Dr. David Pramer ------------------------------------- Dr. David Pramer Director Dated: March 17, 1998 By: /s/ Martin Siegel ------------------------------------- Martin Siegel Director Dated: March 17, 1998 By: /s/ Dr. Marvin Weinstein ------------------------------------- Dr. Marvin Weinstein Director -40- Exhibit (24a) Independent Auditors' Consent The Board of Directors New Brunswick Scientific Co., Inc. We consent to incorporation by reference in the registration statements (No. 33-70452, No. 333-06029 and No. 33-16024) on Form S-8 of New Brunswick Scientific Co., Inc. of our report dated February 12, 1998, relating to the consolidated balance sheets of New Brunswick Scientific Co., Inc. and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of operations, shareholders' equity, and cash flows and related schedule for each of the years in the three-year period ended December 31, 1997, which report appears in the December 31, 1997 annual report on Form 10-K of New Brunswick Scientific Co., Inc. KPMG Peat Marwick LLP Short Hills, New Jersey EX-27 2 FINANCIAL DATA SCHEDULE
5 0000071241 NEW BRUNSWICK SCIENTIFIC CO., INC. 12-MOS DEC-31-1997 DEC-31-1997 3,968,000 0 10,602,000 0 14,862,000 31,699,000 5,354,000 0 38,153,000 7,819,000 0 0 0 263,000 29,824,000 38,153,000 45,596,000 45,596,000 27,319,000 44,544,000 (140,000) 0 71,000 1,121,000 109,000 1,012,000 0 0 0 1,012,000 .24 .24
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