-----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, L3UjdoEZ6cs8R4qFzMNAMi9YPcALs6l0H0XZltxr1OBd4ZutUj3I+jm665DB4ReO /vbNai0kmgFWZMWdady1jQ== 0000950116-98-002197.txt : 19981116 0000950116-98-002197.hdr.sgml : 19981116 ACCESSION NUMBER: 0000950116-98-002197 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 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-Q SEC ACT: SEC FILE NUMBER: 000-06994 FILM NUMBER: 98746588 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-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarter Ended September 30, 1998 Commission File No. 0-6994 ------ NEW BRUNSWICK SCIENTIFIC CO., INC. State of Incorporation - New Jersey E. I. #22-1630072 ----------- 44 Talmadge Road, Edison, N.J. 08818-4005 Registrant's Telephone Number: 732-287-1200 ------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days. Yes X No --- --- There are 4,762,259 Common shares outstanding as of November 6, 1998. Page 1 NEW BRUNSWICK SCIENTIFIC CO., INC. Index PAGE NO. -------- PART I. FINANCIAL INFORMATION: Item 1: Consolidated Condensed Balance Sheets - September 30, 1998 and December 31, 1997 3 Consolidated Condensed Statements of Operations - Three and Nine Months Ended September 30, 1998 and 1997 4 Consolidated Condensed Statements of Cash Flows - Nine Months Ended September 30, 1998 and 1997 5 Consolidated Condensed Statements of Comprehensive Operations - Three and Nine Months Ended September 30, 1998 and 1997 6 Notes to Consolidated Condensed Financial Statements 7 Item II: Management's Discussion and Analysis of Results of Operations and Financial Condition 8 PART II. OTHER INFORMATION 12 Page 2 NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands, except for share data) ASSETS September 30, December 31, 1998 1997 ------------- ------------ Current Assets (Unaudited) - -------------- Cash and cash equivalents $ 2,211 $ 3,968 Accounts receivable, net 9,052 10,602 Refundable income taxes 178 314 Deferred income tax benefit 134 134 Inventories: Raw materials and sub-assemblies 7,617 7,493 Work-in-process 3,775 2,668 Finished goods 5,143 4,701 -------- ------- Total inventories 16,535 14,862 Prepaid expenses and other current assets 2,079 1,819 -------- ------- Total current assets 30,189 31,699 -------- ------- Property, plant and equipment, net 5,656 5,354 Other assets 1,063 1,037 -------- ------- $ 36,908 $38,090 ======== ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities - ------------------- Current installments of long-term debt $ 27 $ 110 Accounts payable and accrued expenses 6,603 7,709 -------- ------- Total current liabilities 6,630 7,819 -------- ------- Long-term debt, net of current installments 239 247 -------- ------- Shareholders' equity: Common stock, $.0625 par value, authorized 25,000,000 shares; shares issued and outstanding, 1998 - 4,762,259 and 1997 - 4,204,845 net of shares held in treasury, 1998 - 430,063 and 1997 - 390,967 298 263 Capital in excess of par 28,317 23,854 Retained earnings 2,400 7,085 Accumulated other comprehensive loss (610) (1,115) Notes receivable from exercise of stock options (366) (63) -------- ------- Total shareholders' equity 30,039 30,024 -------- ------- $ 36,908 $38,090 ======== ======= See notes to consolidated condensed financial statements. Page 3 NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 1998 1997 1998 1997 ---- ---- ---- ---- Net sales $11,711 $9,856 $32,737 $31,468 Operating costs and expenses: Cost of sales 7,074 5,723 20,049 19,203 Selling, general and administrative expenses 3,381 3,062 10,372 9,525 Research, development and engineering expenses 1,208 1,024 3,548 3,113 ------- ------ ------- ------- Total operating costs and expenses 11,663 9,809 33,969 31,841 ------- ------ ------- ------- Income (loss) from operations 48 47 (1,232) (373) Other income (expense): Interest income 29 35 91 108 Interest expense (1) (26) (6) (53) Other income (expense), net (10) (3) (29) (7) ------- ------ ------- ------- 18 6 56 48 ------- ------ ------- ------- Income (loss) before income taxes 66 53 (1,176) (325) Income taxes (benefit) 16 11 (283) (65) ------- ------ ------- ------- Net income (loss) $ 50 $ 42 $ (893) $ (260) ======= ====== ======= ======= Basic earnings (loss) per share $ .01 $ .01 $ (.19) $ (.06) ======= ====== ======= ======= Diluted earnings (loss) per share $ .01 $ .01 $ (.19) $ (.06) ======= ====== ======= ======= Basic weighted average number of shares outstanding 4,720 4,619 4,671 4,614 ======= ====== ======= ======= Diluted weighted average number of shares outstanding 4,797 4,691 4,671 4,614 ======= ====== ======= =======
See notes to consolidated condensed financial statements. Page 4 NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended September 30, ------------------------ 1998 1997 ---------- ---------- Cash flows from operating activities: Net loss $ (893) $ (260) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation 805 712 Discount from fair market value upon issue of options under stock option plan for nonemployee directors - 35 Change in assets and liabilities: Accounts receivable 1,749 2,067 Refundable income taxes 136 100 Inventories (1,584) (2,888) Prepaid expenses and other current assets (239) (41) Accounts payable and accrued expenses (985) (621) Advance payments from customers (172) 610 ------ ------ Net cash used by operating activities (1,183) (286) ------ ------ Cash flows from investing activities: Capital expenditures (1,042) (616) Investment - (250) Sale of equipment 56 17 ------ ------ Net cash used by investing activities (986) (849) ------ ------ Cash flows from financing activities: Repayment of long-term debt (77) (93) Proceeds from issue of shares under Employee Stock Purchase Plan 44 38 Proceeds from exercise of stock options 359 8 ------ ------ Net cash provided (used) by financing activities 326 (47) ------ ------ Net effect of exchange rate changes on cash 86 (179) ------ ------ Net decrease in cash and cash equivalents (1,757) (1,361) Cash and cash equivalents at beginning of period 3,968 5,196 ------ ------ Cash and cash equivalents at end of period $2,211 $3,835 ====== ====== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 7 $ 54 Income taxes 100 363 Non-cash financing activities: Notes received upon exercise of stock options (303) - See notes to consolidated condensed financial statements. Page 5 NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE OPERATIONS (In thousands) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 1998 1997 1998 1997 ---- ---- ---- ---- Net income (loss) $ 50 $ 42 $(893) $ (260) Other comprehensive income (loss): Foreign currency translation adjustment 322 (138) 505 (869) ---- ----- ----- ------- Net comprehensive income (loss) $372 $( 96) $(388) $(1,129) ==== ===== ===== =======
See notes to consolidated condensed financial statements. Page 6 NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 1 - Interim results: In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly, its financial position as of September 30, 1998 and the results of its operations and cash flows for the nine months ended September 30, 1998 and 1997. Interim results may not be indicative of the results that may be expected for the year. Note 2 - Earnings (loss) per Common share: Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding. Diluted earnings (loss) per share is calculated by dividing net income by the sum of the weighted average number of shares outstanding plus the dilutive effect, if any, of stock options which have been issued by the Company. The weighted average number of shares outstanding for the three and nine month periods ended September 30, 1997, have been restated to reflect a 10% stock dividend distributed on May 15, 1998. Note 3 - Consolidated condensed statements of shareholders' equity: Nine Months Ended September 30, --------------------- 1998 1997 ------ ------ (In thousands) Balance at beginning of period $30,024 $29,188 Net loss (893) (260) Other comprehensive income (loss) 505 (869) Discount from fair market value upon issue of options under stock option plan for nonemployee directors - 35 Issue of shares under Employee Stock Purchase Plan 44 38 Stock option exercises (including tax benefits of $127,000 in 1998) 662 8 Notes receivable from exercise of stock options (303) - ------- ------- Balance at end of period $30,039 $28,140 ======= ======= Page 7 NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, are made throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," "seeks," "estimates," and similar expressions are intended to identify forward-looking statements. There are a number of important factors that could cause the results of the Company to differ materially from those indicated by such forward-looking statements. The following is Management's discussion and analysis of significant factors that have affected the Company's operating results and financial condition during the quarter and nine months ended September 30, 1998. Results of Operations --------------------- Quarter Ended September 30, 1998 vs. Quarter Ended September 30, 1997. - ---------------------------------------------------------------------- For the quarter ended September 30, 1998, net sales were $11,711,000 compared with net sales of $9,856,000 for the quarter ended September 30, 1997, an increase of 18.8%. Net income for the 1998 quarter of $50,000 or $.01 per diluted share compares with net income of $42,000 or $.01 per diluted share for the third quarter of 1997. During the quarter ended September 30, 1998, shipments of custom bioprocess systems were significantly higher than in the comparable 1997 quarter. Sales of core products in the U.S. and European markets also increased, however, there has been a decrease in export sales, particularly to Asia due to the adverse financial situation in that part of the world. Cost of sales as a percentage of net sales increased to 60.4% for the quarter ended September 30, 1998 from 58.1% for the comparable 1997 quarter due primarily to the higher shipments of custom bioprocess systems which carry lower profit margins than core products. Selling, general and administrative expenses increased due to normal annual increases and as the result of an effort to strengthen the Company's sales and service capabilities. Research, development and engineering expenses increased to $1,208,000 in the 1998 quarter from $1,024,000 in the third quarter of 1997 due primarily to the strengthening of the Company's bioprocess engineering division as well as its new product development efforts and included $535,000 and $475,000, respectively, for the quarters ended September 30, 1998 and 1997 related to costs to support the research efforts of DGI BioTechnologies, the Company's drug lead discovery operation. The reduction in interest expense in the 1998 period is the result of the 1997 period including interest costs related to the settlement of tax audits. Nine Months Ended September 30, 1998 vs. Nine Months Ended September 30, 1997 - ----------------------------------------------------------------------------- For the nine months ended September 30, 1998, net sales were $32,737,000 compared with net sales of $31,468,000 for the nine months ended September 30, 1997. The net loss for the 1998 period of $893,000 or $.19 per diluted share compares with a net loss of $260,000 or $.06 per diluted share for the nine months ended September 30, 1997. Page 8 Selling, general and administrative expenses increased due to normal annual increases and as the result of an effort to strengthen the Company's sales and service capabilities. Research, development and engineering expenses increased to $3,548,000 in the 1998 period from $3,113,000 in the first nine months of 1997 due primarily to the strengthening of the Company's bioprocess engineering division as well as its new product development efforts and included $1,572,000 and $1,449,000, respectively, for the nine months ended September 30, 1998 and 1997 related to costs to support the research efforts of DGI BioTechnologies, the Company's drug lead discovery operation. The reduction in interest expense in the 1998 period is the result of the 1997 period including interest costs related to the settlement of tax audits. The increase in the loss from operations in the 1998 period over the 1997 period is directly attributable to the increased operating expenses indicated above. Financial Condition ------------------- Liquidity and Capital Resources - ------------------------------- During the nine months ended September 30, 1998, Cash and Cash Equivalents decreased to $2,211,000 from $3,968,000 at December 31, 1997. The decrease in cash resulted primarily from the net loss for the period of $893,000, an increase in inventories of $1,673,000, and a decrease in accounts payable and accrued expenses of $1,106,000, partially offset by a decrease in accounts receivable of $1,550,000. Work-in-process inventories increased to $3,775,000 at September 30, 1998 from $2,668,000 at December 31, 1997, primarily as a result of contracts for custom bioprocess systems which will be delivered during the fourth quarter. Cash Flows from Operating Activities - ------------------------------------ During the period ended September 30, 1998 and 1997 net cash used by operating activities amounted to $1,183,000 and $286,000, respectively. The primary reasons for the $897,000 change between the two periods were a decrease in accounts receivable of $1,749,000 in 1998 vs. a decrease of $2,067,000 in 1997 a decrease in advance payments from customers in 1998 of $172,000 vs. an increase of $610,000 in 1997, a decrease in accounts payable and accrued expenses in 1998 of $985,000 vs. a decrease of $621,000 in 1997 and the net loss of $893,000 in 1998 vs. the net loss of $260,000 in 1997 and were partially offset by an increase in inventories of $1,584,000 in 1998 vs. an increase of $2,888,000 in 1997. Cash Flows from Investing Activities - ------------------------------------ Net cash used by investing activities amounted to $986,000 in 1998 vs. $849,000 in 1997, primarily as a result of additions to property, plant and equipment during 1998 and 1997 as well as from an investment in another entity in 1997. Cash Flows from Financing Activities - ------------------------------------ Net cash provided by financing activities amounted to $326,000 in 1998 vs. cash used of $47,000 in 1997. The 1998 amount includes $359,000 from the exercise of stock options of which includes $127,000 of related tax benefits and $44,000 from the issue of shares under the Company's Employee Stock Purchase Plan, partially offset by the repayment of long-term debt. The 1997 amount includes $8,000 from the exercise of stock options and $38,000 from the issue of shares under the Company's Employee Stock Purchase Plan, partially offset by repayment of long-term debt. Page 9 Management believes that the resources available to the Company, including its line of credit are sufficient to meet its near and intermediate-term needs, including funding commitments for DGI BioTechnologies, and its strong unleveraged balance sheet and debt-free real estate provide the basis for any long-term financing if the need should arise. Year 2000 - --------- The Company has no internally developed software that it utilizes for its operations, but uses Version 11 of Computer Associates ManMan Classic software, a total MRPII system which it employs for its manufacturing, sales and accounting needs and Windows NT which is used for the Company's network. Management believes, based on the representations of the software companies that both of these software packages are Year 2000 (Y2K) compliant. In addition, the Company uses a number of computer controlled machine tools which it is in the process of evaluating, as well as numerous personal computers, some of which are not Y2K compliant but are scheduled to be replaced in the normal course of business during 1999. Most of the Company's products have no date functions and consequently do not have a Y2K problem with the exception of its process control software products which do have data related functions but with one exception are Y2K compliant. The exception is a now obsolete DOS-based process control system introduced in 1987 for which a Y2K compliant upgrade is available. The Company has sent letters to the majority of its suppliers requesting information as to their readiness for the Y2K and is in the process of evaluating responses. The Company expects to complete the survey of its suppliers during the first quarter of 1999 and make changes as it sees necessary in order to ensure that its operations are not negatively affected. The Company also intends to replace obsolete, non-compliant personal computers by the middle of 1999 in the normal course of events since these older machines are not capable of running the latest software upgrades. Any costs which will be incurred as the result of the acceleration of purchases due to Y2K considerations are not material to the consolidated financial statements. The Company is beginning the process of developing business contingency plans to mitigate the risk of the potential of a noncompliant vendor or system and will continue to assess its exposure to possible Y2K problems or potential disruptions. Based upon all of the information it has developed to date, Management believes that no disruptions will occur in the Company's operations. However, the Company is subject to financial and other risks should the Company or a third party vendor or service provider be unable to resolve issues related to the Year 2000. Costs of addressing the Year 2000 issue have not been material to date and, based on information gathered to date from the Company and its vendors, are not currently expected to have a material adverse impact on the Company's financial position, results of operations or cash flows. Euro Conversion - --------------- On January 1, 1999, eleven of the fifteen member countries of the European Union (the "participating countries") - are scheduled to establish fixed conversion rates between their existing sovereign currencies (the "legacy currencies") and the euro. The participating countries have agreed to adopt the euro as their common legal currency on that date. The euro will then trade on currency exchanges and be available for non-cash transactions. The participating countries will issue sovereign debt exclusively in euro, and will redenominate outstanding sovereign debt. Presently, the Company does not believe that, the euro-conversion will have a material operational or financial impact. Recent Accounting Pronouncements - -------------------------------- In June 1997, Statement of Financial Accounting Standards (SFAS) No. 131 "Disclosure About Segments of an Enterprise and Related Information", was issued to establish standards for public Page 10 business enterprises reporting information regarding operating segments in annual and interim financial statements issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas and major customers. This statement is effective for financial statements for periods beginning after December 15, 1997. The Company has adopted SFAS 131 which does not require interim period reporting in the year of adoption. The Company is completing its evaluation of the disclosure requirements of SFAS 131 and will begin such disclosures in its Form 10-K filing for the year ended December 31, 1998. This statement does not have any effect on the results of operations or financial position of the Company. In June 1998, SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities", was issued to establish standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for all quarters of fiscal years beginning after June 15, 1999. The Company does not believe that this statement will have a material impact on the financial statements. Page 11 NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- The exhibits to this report are listed on the Exhibit Index included elsewhere herein. No reports on Form 8-K have been filed during the quarter ended September 30, 1998. Page 12 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. NEW BRUNSWICK SCIENTIFIC CO., INC. ------------------------------------------- (Registrant) Date: November 13, 1998 /s/ Ezra Weisman ------------------------------------------- Ezra Weisman President (Chief Executive Officer) /s/ Samuel Eichenbaum ------------------------------------------- Samuel Eichenbaum Vice President - Finance (Principal Accounting Officer) Page 13 NEW BRUNSWICK SCIENTIFIC CO., INC. AND SUBSIDIARIES EXHIBIT INDEX ------------- Exhibit No. Exhibit Page No. - ----------- ------- -------- 27 Financial Data Schedule Attached (Filed electronically with SEC only) Page 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000071241 NEW BRUNSWICK SCIENTIFIC CO., INC. 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 2,211,000 0 9,052,000 0 16,535,000 30,189,000 5,656,000 0 36,908,000 6,630,000 0 0 0 298,000 29,741,000 36,908,000 32,737,000 32,737,000 20,049,000 33,969,000 (62,000) 0 6,000 (1,176,000) (283,000) (893,000) 0 0 0 (893,000) (.19) (.19)
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