-----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, K/qwl/VaZUHWRBl08/ADfHq50vwGvSyYpN8QJkCC0ziflpD6aKKUa4PnK9ctcEua 82k+qu+awyEJsMFqlQzyqw== 0000912057-96-026309.txt : 19961118 0000912057-96-026309.hdr.sgml : 19961118 ACCESSION NUMBER: 0000912057-96-026309 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FISHER SCIENTIFIC INTERNATIONAL INC CENTRAL INDEX KEY: 0000880430 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES [5040] IRS NUMBER: 020451017 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10920 FILM NUMBER: 96663516 BUSINESS ADDRESS: STREET 1: LIBERTY LANE CITY: HAMPTON STATE: NH ZIP: 03842 BUSINESS PHONE: 6039265911 MAIL ADDRESS: STREET 1: LIBERTY LANE CITY: LIBEHAMPTON STATE: NH ZIP: 03842 10-Q 1 FORM 10-Q This Form 10-Q consists of 18 sequentially numbered pages. The exhibit index appears on sequentially numbered page 16. FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 Commission file number: 01-10920 Fisher Scientific International Inc. (Exact name of registrant as specified in its charter) Delaware 02-0451017 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Liberty Lane Hampton, New Hampshire 03842 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (603) 926-5911 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x . No . ------- -------- The number of shares of Common Stock outstanding at October 31, 1996 was 20,089,606. 1 FISHER SCIENTIFIC INTERNATIONAL INC. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996 INDEX Page No. Part I - Financial Information: Item 1 - Financial Statements: Introduction to the Financial Statements.................. 3 Income Statements - Three and Nine Months Ended September 30, 1996 and 1995... 4 Balance Sheets - September 30, 1996 and December 31, 1995.................. 5 Statements of Cash Flows - Nine Months Ended September 30, 1996 and 1995............. 6 Notes to Financial Statements............................. 7 Item 2 - Management's Discussion and Analysis of Results of Operations and Financial Condition........................ 9 Part II - Other Information: Item 6 - Exhibits and Reports on Form 8-K.......................... 13 SIGNATURE............................................................... 14 EXHIBIT INDEX........................................................... 16 2 FISHER SCIENTIFIC INTERNATIONAL INC. PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS INTRODUCTION TO THE FINANCIAL STATEMENTS The condensed financial statements included herein have been prepared by Fisher Scientific International Inc. ("Fisher" or the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The December 31, 1995 balance sheet was derived from the audited balance sheet included in the Company's 1995 Annual Report on Form 10-K. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. The financial information presented herein reflects all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are not necessarily indicative of the results to be expected for the full year. 3 FISHER SCIENTIFIC INTERNATIONAL INC. INCOME STATEMENTS (in millions, except per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 ------ ------ -------- ----- Sales $541.0 $333.7 $1,589.2 $951.7 Cost of sales 394.6 243.6 1,164.3 686.3 Selling, general and administrative expense 121.0 80.1 358.4 224.9 Restructuring charge -- 34.3 -- 34.3 ----- ------ ------- ----- Income (loss) from operations 25.4 (24.3) 66.5 6.2 Interest expense 5.7 2.4 22.1 7.2 Other (income) expense, net (1.5) (0.1) (0.4) (2.0) ----- ------ ------- ----- Income before income taxes 21.2 (26.6) 44.8 1.0 Income tax provision (benefit) 9.7 (10.8) 20.4 (0.2) ----- ------ ------- ----- Net income (loss) $11.5 $(15.8) $24.4 $1.2 ===== ====== ======= ===== Earnings (loss) per common share: Primary $.56 $(.96) $1.35 $.07 ===== ====== ======= ===== Fully diluted $.56 $(.96) $1.29 $.07 ===== ====== ======= ===== See the accompanying notes to financial statements. 4 FISHER SCIENTIFIC INTERNATIONAL INC. BALANCE SHEETS (in millions) September 30, December 31, 1996 1995 -------- -------- (unaudited) ASSETS Current Assets: Cash and cash equivalents $13.6 $63.7 Receivables, net 321.0 297.3 Inventories 236.9 242.7 Other current assets 63.3 69.9 -------- -------- Total current assets 634.8 673.6 Property, plant and equipment, net 209.1 207.6 Goodwill 272.9 270.4 Other assets 107.0 118.9 -------- -------- $1,223.8 $1,270.5 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short-term debt $7.9 $11.7 Accounts payable 215.8 231.2 Accrued and other current liabilities 153.2 146.7 -------- -------- Total current liabilities 376.9 389.6 Long-term debt 276.5 446.3 Other liabilities 195.5 208.6 -------- -------- Total liabilities 848.9 1,044.5 Stockholders' equity 374.9 226.0 -------- -------- $1,223.8 $1,270.5 ======== ======== See the accompanying notes to financial statements. 5 FISHER SCIENTIFIC INTERNATIONAL INC. STATEMENTS OF CASH FLOWS (in millions) (unaudited) Nine Months Ended September 30, 1996 1995 -------- -------- Cash flows from operating activities: Net income $24.4 $1.2 Adjustments to reconcile net income to cash provided (used) by operating activities: Noncash restructuring charge -- 34.3 Depreciation and amortization 32.4 17.7 Gain on sale of property, plant and equipment (1.5) -- Deferred income taxes 7.4 (11.9) Changes in working capital: Receivables, net (25.0) (14.4) Inventories 4.5 (17.4) Payables, accrued and other current liabilities (26.1) (2.0) Other working capital changes 5.2 0.2 Other assets and liabilities -- (9.7) -------- -------- Cash provided (used) by operating activities 21.3 (2.0) -------- -------- Cash flows from investing activities: Acquisitions, net of cash acquired (4.7) (25.3) Marketable securities proceeds -- 21.3 Capital expenditures (24.4) (17.2) Proceeds from sale of property, plant and equipment 2.4 -- Other investing activities (0.4) (2.9) -------- -------- Cash used in investing activities (27.1) (24.1) -------- -------- Cash flows from financing activities: Proceeds from stock options exercised 6.6 3.2 Dividends paid (1.1) (1.0) Long-term debt proceeds 5.5 3.7 Long-term debt payments (55.3) (1.5) -------- -------- Cash provided (used) by financing activities (44.3) 4.4 -------- -------- Net change in cash and cash equivalents (50.1) (21.7) Cash and cash equivalents - beginning of period 63.7 36.9 -------- -------- Cash and cash equivalents - end of period $13.6 $15.2 ======== ======== See the accompanying notes to financial statements. 6 FISHER SCIENTIFIC INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION Fisher Scientific International Inc.'s ("Fisher" or the "Company") operations are conducted by wholly owned and majority-owned subsidiaries, joint ventures, equity interests and agents, located in North and South America, Europe, the Far East, the Middle East, Africa and Australia. The Company's activities relate principally to one business segment -- scientific and clinical products. This includes operations engaged in the supply, marketing, service and manufacture of scientific, clinical, educational and occupational health and safety products. Certain prior period amounts have been reclassified to conform to their current presentation. NOTE 2 - ACCOUNTING PRONOUNCEMENTS Effective January 1,1996, the Company adopted Statement of Financial Accounting Standards Number 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The new standard did not have any effect on the Company's financial statements. Also effective January 1, 1996, the Company adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation". This statement allowed for, and the Company retained, the current method of accounting for employee stock-based compensation arrangements in accordance with Accounting Principles Board No. 25, "Accounting for Stock Issued to Employees". The new standard did not have a material effect on the Company's financial statements. NOTE 3 - INVENTORIES On January 1, 1996, the Company changed its method of accounting for substantially all inventories of its newly acquired subsidiary Curtin Matheson Scientific Inc. (approximately $84 million) from the first-in, first-out (FIFO) method to the last-in, first-out (LIFO) method to conform CMS's accounting policies with that of Fisher Scientific Company, the Company's principal United States operating subsidiary. The Company believes the LIFO method better matches current costs with current selling prices. The change did not have a significant effect on the results of operations. NOTE 4 - DEBT September 30, December 31, 1996 1995 -------- -------- in millions Bank Credit Facility $113.4 $161.5 7 1/8% Notes (net of a discount of $1.2 million at September 30, 1996 and December 31, 1995) 148.8 148.8 Convertible subordinated notes -- 125.0 Capital lease obligations 6.1 7.8 Other 16.1 14.9 Less current portion of long-term debt (7.9) (11.7) -------- -------- $276.5 $446.3 ======== ======== 7 On June 12, 1996, the Company called for the redemption of its $125 million step-up convertible subordinated notes due 2003, at a price of 103.65% of principal, plus accrued interest. The notes could also be converted into common stock at a conversion price of $35 1/8 per share. On June 25, 1996, approximately 97%, or $121.6 million, of the notes were converted into 3,463,154 shares of the Company's common stock. On July 2, 1996, the Company redeemed the remaining notes for $3.5 million plus accrued interest. The conversion resulted in an increase in stockholders' equity and a reduction in long-term debt of approximately $125 million. NOTE 5 - STOCKHOLDERS' EQUITY
Capital in Common Excess of Retained Stock Par Value Other Earnings Total ----- --------- ----- -------- ------- in millions Balance, December 31, 1995 $0.2 $135.5 $(2.8) $93.1 $226.0 Net Income -- -- -- 24.4 24.4 Proceeds from stock options -- 6.6 -- -- 6.6 Tax benefit from exercise of stock options -- 1.3 -- -- 1.3 Dividends ($0.06 per share) -- -- -- (1.1) (1.1) Other -- -- (7.7) -- (7.7) Conversion of Convertible Subordinated Notes -- 125.4 -- -- 125.4 ----- ------ ----- ------ ------ Balance, September 30, 1996 $0.2 $268.8 $(10.5) $116.4 $374.9 ===== ====== ===== ====== ======
On September 18, 1996, Fisher's Board of Directors declared a quarterly cash dividend of $0.02 per share, payable October 17, 1996 to shareholders of record October 3, 1996. 8 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include those factors discussed in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition - Overview" contained in the Company's Form 10-K for the year ended December 31, 1995. RESULTS OF OPERATIONS SALES Sales for the three and nine months ended September 30, 1996 increased 62% and 67% to $541.0 million and $1,589.2 million, respectively, from $333.7 million and $951.7 million for the comparable periods in 1995. The sales increases in both periods primarily reflect sales of the laboratory supplies division of Fisons plc acquired in October 1995, which consisted of Curtin Matheson Scientific Inc. ("CMS") and Fisons Scientific Equipment Ltd. ("FSE" - -now named Fisher Scientific U.K. Ltd.), as well as growth in Fisher's historical North American operations. GROSS PROFIT Fisher's gross profit for the three and nine month periods ended September 30, 1996 increased 62% and 60% to $146.4 million and $424.9 million, respectively, from $90.1 million and $265.4 million for the comparable periods in 1995, primarily resulting from the aforementioned sales growth. Gross profit as a percent of sales for the three and nine month periods ended September 30, 1996 was 27.1% and 26.7%, respectively, compared with 27.0% and 27.9% for the corresponding periods in 1995. The decrease in gross profit as a percent of sales for the nine months ended September 30, 1996 reflects the inclusion of lower gross margins associated with the recently acquired CMS and FSE businesses (including $1.0 million of costs associated with the revaluation of acquired inventory) partially offset by improvements in gross margins of Fisher's historical North American operations. The slight increase in gross profit as a percent of sales for the three months ended September 30, 1996 is due to an increase in the effect of the improvements at the historical North American operations throughout the year. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE Selling, general and administrative expense for the three and nine months ended September 30, 1996 increased 51.1% and 59.4% to $121.0 million and $358.4 million, respectively, from $80.1 million and $224.9 million for the comparable periods in 1995. These increases resulted from the inclusion of selling, general and administrative expenses of recently acquired businesses, 9 nonrecurring costs to integrate CMS into Fisher and nonrecurring costs associated with the implementation of the restructuring plan that began in the third quarter of 1995. Certain costs resulting from the temporary duplication of operations, relocation of inventories and employees, hiring and training new employees, and other one-time and redundant costs, which should be eliminated as the restructuring plan is fully implemented, are recognized as incurred. For the three and nine month periods ended September 30, 1996, approximately $4.6 million and $14.6 million, respectively, of such charges have been recorded and are included in selling, general and administrative expense. Operations outside of the United States continue to have significantly higher selling, general and administrative expense as a percentage of sales as compared with that of Fisher's domestic operations. These higher costs are being incurred as part of a plan to develop an integrated worldwide supply capability, the benefit of which has not been realized. INCOME FROM OPERATIONS Income (loss) from operations for the three and nine month periods ended September 30, 1996 increased to $25.4 million and $66.5 million, respectively, compared with ($24.3) million and $6.2 million for the corresponding periods in 1995. These increases reflect the effect of the restructuring charge of $34.3 million recorded in the third quarter of 1995 as well as the factors described above. INTEREST EXPENSE Interest expense for the three and nine month periods ended September 30, 1996 increased to $5.7 million and $22.1 million, respectively, from $2.4 million and $7.2 million for the comparable periods in 1995. The increases primarily reflect interest on borrowings used to finance the acquisition of CMS and FSE in the fourth quarter of 1995 partially offset by the June 1996 redemption of the Company's $125 million step-up convertible notes discussed below. OTHER (INCOME) EXPENSE, NET Other (income) expense, net for the three month period ended September 30, 1996 increased to ($1.5) million from ($0.1) million for the comparable period in 1995. This increase is primarily due to $1.5 million of gains on sales of fixed assets, $0.7 million of which are due to fixed assets sales related to the restructuring plan. Other (income) expense, net for the nine month period ended September 30, 1996 decreased to ($0.4) million from ($2.0) million as the gains on sales of fixed assets discussed above were offset by reduced income from an inactive insurance subsidiary and by other expenses. 10 INCOME TAX PROVISION The income tax provision for the three and nine month periods ended September 30, 1996 increased to $9.7 million and $20.4 million, respectively, compared with an income tax benefit of $10.8 million and $0.2 million for the corresponding periods in 1995. The effective tax rate for the nine months ended September 30, 1996 increased to 45.5% compared with (20.0%) for the same period in 1995. The effective tax rate for the comparable period in 1995 was benefited by certain domestic net operating loss carryforwards. NET INCOME Net income (loss) for the three and nine months ended September 30, 1996 increased to $11.5 million and $24.4 million, respectively, from ($15.8) million and $1.2 million for the comparable periods in 1995 as a result of the factors discussed above. LIQUIDITY AND CAPITAL RESOURCES During the nine months ended September 30, 1996, the Company's operations provided $21.3 million of cash compared with the $2.0 million of cash used during the same period in 1995. This $23.3 million increase in cash flow from operations primarily resulted from an increase in net income adjusted for depreciation and amortization, deferred income taxes and the noncash restructuring charges. The Company's operating working capital (defined as receivables plus inventories less accounts payable and accrued liabilities) increased to $188.9 million at September 30, 1996 from $162.1 million at December 31, 1995. The increase in operating working capital is primarily due to increases in receivables which were due to increases in sales volume and the impact of the integration of CMS into Fisher. Excluding the effect, if any, of future acquisitions and anticipated temporary inventory duplications as the Company completes its consolidation and relocation of logistical functions, the Company's operating working capital requirements are not anticipated to increase substantially throughout the remainder of 1996. During the nine months ended September 30, 1996, the Company used $27.1 million of cash for investing activities compared with $24.1 million for the same period in 1995. The increase in cash used for investing activities is primarily due to increases in capital expenditures. For the nine months ended September 30, 1996 the Company's capital expenditures increased to $24.4 million from $17.2 million for the comparable period in 1995, reflecting capital expenditures associated with the consolidation and relocation of logistical and administrative functions. During the nine months ended September 30, 1996, the Company's financing activities used $44.3 million compared with providing $4.4 million in the same period in 1995. This change is primarily due to approximately $48 million in prepayments of the Company's bank credit facility. The Company may continue to prepay this debt to the extent of its surplus cash. 11 On June 12, 1996, the Company called for the redemption of its $125 million step-up convertible subordinated notes due 2003, at a price of 103.65% of principal, plus accrued interest. The notes could also be converted into common stock at a conversion price of $35 1/8 per share. On June 25, 1996, approximately 97%, or $121.6 million, of the notes were converted into 3,463,154 shares of the Company's common stock. On July 2, 1996, the Company redeemed the remaining notes for $3.5 million plus accrued interest. The conversion resulted in an increase in stockholders' equity and a reduction in long-term debt of approximately $125 million. Fisher expects that cash flows from operations, together with cash and cash equivalents on hand and funds available under existing credit facilities, will be sufficient to meet ongoing operating and capital expenditure requirements. On September 18, 1996, Fisher's Board of Directors declared a quarterly cash dividend of $.02 per share, payable October 17, 1996 to shareholders of record October 3, 1996. 12 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 11 - Computation of Earnings Per Common Share for the Three and Nine Months Ended September 30, 1996 and 1995. Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K: None. 13 SIGNATURE 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. FISHER SCIENTIFIC INTERNATIONAL INC. Date: November 13, 1996 /S/ PAUL F. PATEK ----------------- ------------------------------------- PAUL F. PATEK Vice President - Controller 14 _______________________________________________________________________________ _______________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________ FISHER SCIENTIFIC INTERNATIONAL INC. EXHIBITS TO FORM 10-Q for the quarter ended September 30, 1996 _______________________________________________________________________________ _______________________________________________________________________________ 15 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION PAGE 11 Computation of Earnings 17 Per Common Share for the Three and Nine Months Ended September 30, 1996 and 1995 27 Financial Data Schedule 18 16 EX-11 2 EXHIBIT 11 EXHIBIT 11 FISHER SCIENTIFIC INTERNATIONAL INC. COMPUTATION OF EARNINGS PER COMMON SHARE (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) (unaudited) PRIMARY EARNINGS PER SHARE WERE CALCULATED AS FOLLOWS: Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1996 1995 1996 1995 ---- ---- ---- ---- Total income (loss) used for primary earnings per share $11.5 $(15.8) $24.4 $ 1.2 ===== ======= ===== ===== Average common shares outstanding 20.0 16.0 17.7 16.0 Other 0.5 0.4 0.4 0.4 ----- ------- ----- ----- Average shares and equivalents 20.5 16.4 18.1 16.4 ===== ======= ===== ===== Primary earnings (loss) per share $ .56 $(0.96) $1.35 $0.07 ===== ======= ===== ===== FULLY DILUTED EARNINGS PER SHARE WERE CALCULATED AS FOLLOWS: Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net income (loss) $11.5 $(15.8) $24.4 $ 1.2 Interest expense of Convertible Subordinated Notes, net of taxes -- 1.1 2.1 3.1 ----- ------- ----- ----- Total income (loss) used for fully diluted earnings per share $11.5 $(14.7) $26.5 $ 4.3 ===== ======= ===== ===== Average common shares outstanding 20.0 16.0 17.7 16.0 Common equivalent shares for Convertible Subordinated Notes -- 3.6 2.3 3.6 Other 0.6 0.4 0.5 0.4 ----- ------- ----- ----- Average shares and equivalents 20.6 20.0 20.5 20.0 ===== ======= ===== ===== Fully diluted earnings (loss) per share $ .56 $(0.73) $1.29 $0.22 ===== ======= ===== ===== Note: Amounts may not calculate due to rounding. 17 EX-27 3 EXHIBIT 27 - FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND THE INCOME STATEMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 9-MOS DEC-31-1995 JAN-01-1996 SEP-30-1996 14 0 321 0 237 635 209 0 1,224 377 277 0 0 0 375 1,224 1,589 1,589 1,164 1,164 0 0 22 45 20 24 0 0 0 24 1.35 1.29
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