0000009892-95-000015.txt : 19950809 0000009892-95-000015.hdr.sgml : 19950809 ACCESSION NUMBER: 0000009892-95-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950808 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARD C R INC /NJ/ CENTRAL INDEX KEY: 0000009892 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 221454160 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06926 FILM NUMBER: 95559545 BUSINESS ADDRESS: STREET 1: 730 CENTRAL AVE CITY: MURRAY HILL STATE: NJ ZIP: 07974 BUSINESS PHONE: 9082778000 MAIL ADDRESS: STREET 1: 730 CENTRAL AVENUE CITY: MURRAY HILL STATE: NJ ZIP: 07974 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 June 30, 1995 Commission File Number 1-6926 C. R. BARD, INC. (Exact name of registrant as specified in its charter) New Jersey (State of incorporation) 22-1454160 (I.R.S. Employer Identification No.) 730 Central Avenue, Murray Hill, New Jersey 07974 (Address of principal executive offices) Registrant's telephone number, including area code: (908) 277-8000 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at July 31, 1995 Common Stock - $.25 par value 52,271,756 C. R. BARD, INC. AND SUBSIDIARIES INDEX Page No. PART I - FINANCIAL INFORMATION Condensed Consolidated Balance Sheets - June 30, 1995 and December 31, 1994 1 Condensed Statements of Consolidated Income and Retained Earnings For The Quarter and Six Months Ended June 30, 1995 and 1994 2 Condensed Consolidated Statements of Cash Flows For The Six Months Ended June 30, 1995 and 1994 3 Notes to Consolidated Financial Statements 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II - OTHER INFORMATION 6 C. R. BARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (thousands of dollars)
June 30, December 31, 1995 1994 (Unaudited) ASSETS Current Assets: Cash and short-term investments $ 39,400 $ 34,200 Accounts receivable, net 207,000 187,300 Inventories 213,300 199,200 Other current assets 15,200 7,300 Total current assets 474,900 428,000 Long-term investments 11,700 13,300 Property, plant and equipment, net 198,300 199,900 Intangible assets, net of amortization 280,200 265,400 Other assets 52,600 51,800 $1,017,700 $958,400
LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Short-term borrowings and current maturities of long-term debt $ 105,400 $195,900 Accounts payable 37,100 39,200 Accrued expenses 122,800 121,500 Federal and foreign income taxes 7,400 8,000 Total current liabilities 272,700 364,600 Long-term debt 199,200 78,300 Other long-term liabilities 53,400 75,700 Shareholders' Investment Preferred stock, $1 par value, authorized 5,000,000 shares; none issued --- --- Common stock, $.25 par value, authorized 300,000,000 shares; issued and outstanding 52,177,853 shares and 52,047,524 shares 13,000 13,000 Capital in excess of par value 24,000 20,500 Retained earnings 433,900 403,300 Other 21,500 3,000 492,400 439,800 $1,017,700 $958,400
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. -1- C. R. BARD, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED INCOME AND RETAINED EARNINGS (thousands except per share amounts) (Unaudited)
For Quarter Ended For Six Months Ended June 30, June 30, 1995 1994 1995 1994 Net sales $277,200 $256,300 $541,300 $503,700 Costs and expenses: Cost of goods sold 135,900 124,500 265,200 245,800 Marketing, selling and administrative 83,200 74,900 161,000 146,700 Research and development 19,200 18,700 37,600 34,400 238,300 218,100 463,800 428,900 Operating income 38,900 38,200 77,500 74,800 Interest expense 6,000 3,200 11,700 5,800 Other income(expense), net 1,500 (1,200) 3,200 (2,200) Income before taxes and effect of accounting change 34,400 33,800 69,000 66,800 Provision for income taxes 10,300 10,500 20,700 20,700 Net income 24,100 23,300 48,300 46,100 Retained earnings, beginning of period 418,100 377,900 403,300 367,400 Treasury stock retired (400) (2,700) (2,000) (7,700) Cash dividends (7,900) (7,300) (15,700) (14,600) Retained earnings, end of period $433,900 $391,200 $433,900 $391,200 Weighted average shares outstanding 52,047 51,992 Net income per share $ .46 $ .45 $ .93 $ .89 Cash dividends per share $ .15 $ .14 $ .30 $ .28
The accompanying notes to condensed consolidated financial statements are an integral part of these statements. -2- C. R. BARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands of dollars) (Unaudited)
For The Six Months Ended June 30, 1995 1994 Cash flows from operating activities: Net income $ 48,300 $ 46,100 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 25,500 17,100 Other non-cash items 1,800 1,900 Changes in assets and liabilities: Current assets (41,700) (22,800) Current liabilities (1,400) (32,800) Other long-term liabilities (22,300) (15,300) 10,200 (5,800) Cash flows from investing activities: Capital expenditures (10,700) (18,900) Other long-term investments, net (10,500) 3,000 (21,200) (15,900) Cash flows from financing activities: Purchase of common stock (2,000) (7,700) Dividends paid (15,700) (14,600) Short-term borrowings and other (87,000) 41,400 Long-term borrowings 120,900 --- 16,200 19,100 Increase(decrease) in cash and short-term investments 5,200 (2,600) Cash and short-term investments- beginning of year 34,200 75,000 Cash and short-term investments- end of period $ 39,400 $ 72,400
The accompanying notes to condensed consolidated financial statements are an integral part of these statements. -3- C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company believes that it has included all adjustments, consisting only of normal recurring adjustments, which are necessary to present fairly the results of operations for these periods. The results of operations for the interim periods are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements, as filed by the Company in the 1994 Annual Report on Form 10-K. Acquisitions On May 24, 1995, the Company announced an agreement for a stock- for-stock merger of MedChem Products, Inc. into Bard. Under the terms of the agreement each of MedChem's approximately 11 million shares outstanding would be valued at $9.25, subject to adjustment under certain circumstances. The merger is subject to government approval and approval at a MedChem special meeting of shareholders later this summer. The transaction is expected to be a tax-free reorganization and to be accounted for as a pooling of interests. MedChem manufactures topical hemostatic products which arrest bleeding during surgery, vascular access catheters and a wound closure device, all of which complement Bard's existing product lines. Short-Term Borrowings and Long-Term Debt In June 1995, the Company completed the arrangement of a $350,000,000 five-year syndicated credit facility. This loan commitment by a group of 15 banks will allow Bard to borrow at interest rates slightly over LIBOR while securing a well-balanced debt structure. As a result of this loan facility, the Company has reclassified $120,000,000 of its short-term borrowings at June 30, 1995 as long-term debt. Resolution With FDA Of Applications Integrity Policy On June 30, 1995 the Company announced that the Food and Drug Administration (FDA) had lifted the Applications Integrity Policy (AIP) imposed on the Company's USCI division in January 1994. With this lifting, the FDA began reviewing USCI's pre-market approval and 510(k) applications. The Company hopes to begin receiving 510(k) approvals on new USCI applications late in 1995, with new PMA supplement approvals beginning sometime in 1996. - 4 - C. R. BARD, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Consolidated net sales for the second quarter of $277,200,000 increased 8 percent over the second quarter 1994 net sales of $256,300,000. Sales for the first six months of 1995 of $541,300,000 increased 7 percent over the $503,700,000 for the same period last year. Sales in the U.S. for the second quarter of 1995 were $177,600,000, down 1 percent from 1994, while international sales of $99,600,000 were up 31 percent against last year. The currency translation effect increased sales outside the U.S. in the second quarter of 1995 by 12 percent. For the first six months of 1995, U.S. sales totaled $355,200,000, down 1 percent, while international sales increased 29 percent to $186,100,000. Currency translation for the first half of 1995 increased worldwide sales by approximately 2 percent. The Company's international revenues were aided in part by its 1994 acquisitions which continued to strengthen and generate positive results. PRODUCT GROUP SUMMARY OF NET SALES (in thousands) Quarter Ended June 30, Six Months Ended June 30, Percent Percent 1995 1994 Change 1995 1994 Change Cardiovascular $ 98,100 $ 97,500 1 $189,000 $189,900 - Urological 79,500 71,600 11 158,300 142,600 11 Surgical 99,600 87,200 14 194,000 171,200 13 Net Sales $277,200 $256,300 8 $541,300 $503,700 7 The gross profit of 51.0 percent for both the second quarter and six month period in 1995 was slightly lower than in 1994 due to competitive pricing pressure in the U.S. health care market. Marketing, selling and administrative expenses in 1995 have increased faster than sales mainly as a result of the additional amortization of goodwill resulting from the acquisitions made in late 1994. Interest expense for the second quarter and six month period of 1995 have increased due to an increase in borrowings used for acquisitions. Other income(expense), net, totaled $3,200,000 in income for the first half of 1995 and $2,200,000 in expense for the same period last year. The 1995 other income is mainly a result of favorable foreign exchange transactions. - 5 - C. R. BARD, INC. AND SUBSIDIARIES Second quarter consolidated net income of $24,100,000 increased 3 percent from the $23,300,000 second quarter results of last year. Net income for the six months of 1995 of $48,300,000 reflects an increase of 5 percent from $46,100,000 for the same period last year. Net income per share for the second quarter of 1995 of $.46 increased 2 percent over the $.45 earned in the prior year's second quarter. The second quarter earnings performance was impacted by approximately 2 cents per share due to a reduction in receipt of anticipated royalty income from a balloon angioplasty patent license. This matter is currently awaiting a decision from a U.S. District Court. Total borrowings increased from $274,200,000 at December 31, 1994 to $304,600,000 at June 30, 1995. In June 1995, the Company entered into an arrangement for $350,000,000 five-year syndicated credit facility. Drawing on this facility, the Company has reduced its short-term borrowings and increased its long-term debt. The Company believes it could borrow adequate funds at competitive terms and rates should the need arise. Other long-term liabilities decreased by $22,300,000 during the six month period ended June 30, 1995. This reduction was mainly a result of the Company reclassifying $15,300,000 from long-term to short-term for its obligations under the Department of Justice settlement agreement. Other shareholders' investment has increased by $18,500,000 in the first six months of 1995 mainly as a result of translation adjustments. During the first six months of 1995 and 1994, the Company acquired 75,000 and 300,000 respectively, of its common shares which were retired. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (b) Registrant filed a Current Report on Form 8-K dated May 31, 1995 with respect to announcing a merger agreement between C. R. Bard, Inc. and MedChem Products, Inc. - 6 - C. R. BARD, INC. AND SUBSIDIARIES 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. C. R. BARD, INC. (Registrant) William C. Bopp /s/ William C. Bopp Senior Vice President and Chief Financial Officer Charles P. Grom /s/ Vice President and Controller and Chief Accounting Officer August 8, 1995 - 7 -