-----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, EBYwR4bjRDYqrlVMj930tIQbahJIK+jfQGRGm8mdKYP2LM+dr3OqUcCBogAGqs0e YY5rEc6E0vV3T/Rht7NhSA== 0000009892-97-000019.txt : 19971113 0000009892-97-000019.hdr.sgml : 19971113 ACCESSION NUMBER: 0000009892-97-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: SEC FILE NUMBER: 001-06926 FILM NUMBER: 97716871 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 September 30, 1997 Commission File Number 1-6926 C. R. BARD, INC. (Exact name of registrant as specified in its charter) New Jersey 22-1454160 (State of incorporation) (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 October 31, 1997 Common Stock - $.25 par value 56,906,487 C. R. BARD, INC. AND SUBSIDIARIES INDEX Page No. PART I - FINANCIAL INFORMATION Condensed Consolidated Balance Sheets - September 30, 1997 and December 31, 1996 1 Condensed Statements of Consolidated Income and Retained Earnings For The Quarter and Nine Months Ended September 30, 1997 and 1996 2 Condensed Consolidated Statements of Cash Flows For The Nine Months Ended September 30, 1997 and 1996 3 Notes to Condensed Consolidated Financial Statements 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION 10 C. R. BARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (thousands of dollars)
September 30, December 31, 1997 1996 (Unaudited) ASSETS Current Assets: Cash and short-term investments $ 40,300 $ 78,000 Accounts receivable, net 237,100 245,400 Inventories 247,900 245,000 Other current assets 22,900 8,500 Total current assets 548,200 576,900 Property, plant and equipment,net 217,700 226,100 Intangible assets, net of amortization 421,200 447,200 Other assets 93,900 82,300 $1,281,000 $1,332,500
LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Short-term borrowings and current maturities of long-term debt $ 101,300 $ 148,200 Accounts payable 50,400 59,200 Accrued expenses 161,200 121,500 Federal and foreign income taxes 15,500 7,300 Total current liabilities 328,400 336,200 Long-term debt 340,800 342,800 Other long-term liabilities 50,100 52,000 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 56,971,676 shares and 56,985,983 shares 14,200 14,300 Capital in excess of par value 98,700 77,500 Retained earnings 496,100 506,700 Other (47,300) 3,000 561,700 601,500 $1,281,000 $1,332,500
The accompanying notes to consolidated financial statements are an integral part of these statements. - 1 - C. R. BARD, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF CONSOLIDATED INCOME AND RETAINED EARNINGS (thousands except per share amounts) (Unaudited)
For The Quarter Ended For Nine Months Ended September 30, September 30, 1997 1996 1997 1996 Net sales $297,500 $295,800 $902,200 $880,200 Costs and expenses: Cost of goods sold 139,300 146,600 426,200 430,500 Marketing,selling and administrative 97,700 90,200 288,400 266,600 Research and development 21,600 18,700 64,200 57,800 Costs to combine operations --- 9,000 --- 9,000 Interest Expense 8,200 6,600 24,900 18,700 Other (income) expense, net 35,700 9,500 27,900 32,800 Total costs and expenses 302,500 280,600 831,600 815,400 Income (loss) before taxes (5,000) 15,200 70,600 64,800 Provision(benefit)for income taxes (1,200) 3,800 22,100 (1,200) Net income (loss) (3,800) 11,400 48,500 66,000 Retained earnings, beginning of period 530,900 494,900 506,700 478,900 Treasury stock retired (20,700) (3,800) (29,400) (24,100) Cash dividends (10,300) (9,700) (29,700) (28,000) Retained earnings, end of period $496,100 $492,800 $496,100 $492,800 Weighted average shares outstanding 57,054 57,062 Net income (loss) per share $ (.07) $ .20 $ .85 $ 1.16 Cash dividends per share $ .18 $ .17 $ .52 $ .49
The accompanying notes to 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 Nine Months Ended September 30, 1997 1996 Cash flows from operating activities: Net income $ 48,500 $ 66,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 44,500 42,500 Gain on sale of assets (17,800) --- Other noncash items 43,400 14,600 Changes in assets and liabilities: Current assets (32,400) (27,400) Current liabilities (8,400) (5,300) Other (2,000) (16,800) 75,800 73,600 Cash flows from investing activities: Capital expenditures (25,200) (24,600) Payments made for purchases of businesses (6,500) (193,800) Proceeds from the sale of a product line 24,000 --- Other long-term investments, net (13,400) (15,100) (21,100) (233,500) Cash flows from financing activities: Purchase of common stock (29,600) (24,300) Dividends paid (29,700) (28,000) Short-term borrowings and other (31,800) 233,600 Long-term borrowings (2,000) (3,400) (93,100) 177,900 Net increase (decrease) in cash and cash equivalents (38,400) 18,000 Balance at January 1, 63,600 37,400 Balance at September 30, $ 25,200 $ 55,400
The accompanying notes to consolidated financial statements are an integral part of these statements. - 3 - C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The financial statements contained in this filing have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and have not been audited, however, C. R. Bard, Inc. ("Bard" or the "Company") believes that it has included all adjustments, consisting only of normal recurring adjustments, which are necessary to present fairly the financial condition and results of operations at and 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 1996 Annual Report on Form 10-K. Accounting Policies Included in the balance sheet caption "Cash and short-term investments" are short-term investments which have maturities greater than ninety days and amounted to approximately $15,100,000 at September 30, 1997. These investments have not been treated as cash and cash equivalents for cash flow presentation purposes. The Company enters into foreign exchange options to help reduce the exposure to fluctuations between certain currencies. These off- balance sheet options are accounted for on a mark-to-market basis. The gains and losses associated with these options are recorded on the income statement as "other income and expense" and on the balance sheet as "other current assets" or "accrued expenses". Cash flows associated with the settlement of these options are reflected as operating activities. Effective for fiscal years ending after December 15, 1997, the Company is required to adopt Statement of Financial Accounting Standard No. 128 "Earnings Per Share" ("FAS 128"). FAS 128 requires the presentation of basic earnings per share and diluted earnings per share. "Basic earnings per share" represents net income divided by the weighted average shares outstanding and is consistent with the Company's historical presentation. "Diluted earnings per share" represents net income divided by weighted average shares outstanding adjusted for the incremental dilution of - 4 - C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Accounting Policies (continued) outstanding employee stock options and awards. Diluted earnings per share would have been ($.07) and $.19, respectively for the three months ended September 30, 1997 and 1996 and $.84 and $1.15, respectively, for the nine months ended September 30, 1997 and 1996. Acquisitions and Dispositions On July 1, 1997 Bard completed the sale of its surgical suction product line for approximately $24,000,000. Other (income) expense includes a gain of $17,800,000 ($.19 per share after tax) related to the sale of this product line. The surgical suction line had annual revenues of approximately $25,000,000. On September 16, 1996 Bard completed the acquisition of IMPRA, Inc. ("IMPRA"). IMPRA, a privately held company, developed, manufactured and marketed vascular grafts used for blood vessel replacement surgery. The purchase and acquisition costs which approximated $155,400,000 were financed with commercial paper. The merger was accounted for under the purchase method of accounting. Short Term Borrowings and Long-Term Debt In 1996 Bard initiated a $350,000,000 commercial paper program backed by the Company's committed line of credit. Borrowings of $120,000,000 under the Company's commercial paper program have been classified as long-term debt because the Company has both the intention and ability to refinance these amounts on a long-term basis. In June 1996 the Company filed a shelf registration with the Securities and Exchange Commission for the future issuance of up to $200,000,000 of long-term debt. As part of the registration, in December 1996, the Company issued $150,000,000 of long-term notes due 2026. The effective interest rate, including the financing costs, is 7.17%. These notes may be redeemed at the option of the note holder on December 1, 2006, at a redemption price equal to the principal amount. As a result of the long-term debt offering, the Company amended its commercial paper program and committed line of credit from $350,000,000 to $300,000,000 effective January 1, 1997. - 5 - C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Restructuring Charges During the third quarter of 1996, the Company announced and committed to a plant closing which resulted in a $10,000,000 restructuring charge. As a result of a continuing extensive review of operations, during the third quarter of 1997, management and the Board of Directors authorized and committed the Company to a restructuring of its global manufacturing operations. Five manufacturing facilities will be closed, four additional facilities will be downsized and several European distribution centers will be consolidated. The products manufactured at these locations will be redeployed to other facilities including a new plant. These restructuring activities are in process and will be completed over the next 24 months. The restructuring plan resulted in a charge of $44,100,000 ($30,100,000 net of tax or $.53 per share) exclusive of certain period costs which are required to be expensed as incurred over the next two years. The charge has been included in other (income) expense in the accompanying September 30, 1997 statement of consolidated income and retained earnings. Income Taxes During the third quarter of 1997, the Company filed a protest at the IRS appeals level related to tax years 1990-1992. Management believes that the outcome of these matters will not have a material impact on the Company's consolidated financial position or results of operations. - 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Consolidated net sales for the third quarter of 1997 of $297,500,000 was an increase of 1 percent over the third quarter 1996 sales of $295,800,000. Sales for the first nine months of 1997 of $902,200,000 increased 2 percent over the $880,200,000 for the same period last year. Sales in the U.S. for the third quarter of 1997 were $194,700,000, flat with 1996, while international sales were up 3 percent against the prior year's quarter. The impact of a strengthening dollar in the third quarter of 1997 decreased sales outside the U.S. by 8 percent. For the first nine months of 1997, U.S. sales totaled $591,600,000, up 2 percent, while international sales increased 3 percent to $310,600,000. Currency translation for the first nine months of 1997 decreased worldwide sales by approximately 2 percent. PRODUCT GROUP SUMMARY OF NET SALES (in thousands of dollars) Quarter Ended Nine Months Ended September 30, September 30, % % 1997 1996 Change 1997 1996 Change Vascular $113,300 $103,200 10 $341,000 $313,500 9 Urology 79,200 77,000 3 233,400 225,300 4 Oncology 56,300 53,100 6 166,700 158,800 5 Surgery 32,600 29,700 10 95,500 85,800 11 Sub-Total - Emphasis Products 281,400 263,000 7 836,600 783,400 7 Other 16,100 32,800 (51) 65,600 96,800 (32) Total- Worldwide $297,500 $295,800 1 $902,200 $880,200 2 Increased graft sales due to the IMPRA acquisition contributed to the 10 percent increase in vascular sales for the quarter. Basic drainage and continence products contributed to the urology increase of 3 percent for the quarter. Third quarter increases in specialty access products and mesh were primarily responsible for the 6 and 10 percent growth in the oncology and surgery categories, respectively. Gross profits of 53.2 percent for the quarter and 52.8 percent for the nine- month period in 1997 were higher than in 1996 primarily due to product mix and favorable variances. - 7 - C. R. BARD, INC. AND SUBSIDIARIES The 1996 costs to combine operations of $9,000,000 relate to noncapitalizable expenses for the IMPRA acquisition. In addition to recurring items such as foreign exchange and interest income, other income and expense in the third quarter of 1997 includes the gain on the sale of the surgical suction product line and a manufacturing restructuring charge previously described. In addition, third quarter of 1997's other income and expense includes a charge for the impairment of several investments, intangible assets and the settlement of a legal claim. The combination of these other items was $10,000,000 ($6,000,000 net of tax or $.11 per share). For the third quarter of 1996, other income and expense included a charge of $10,000,000 for manufacturing restructuring. The manufacturing restructuring charge which was taken in the third quarter of 1997 relates to activities which will be completed during the next twenty-four months and when completed are estimated to result in annual pretax cost savings of approximately $43,000,000 annually. These cost savings will take several years to be fully realized. Management's current estimates show no cost savings in 1998, cost savings of approximately 21 cents per share in 1999 and cost savings of approximately 40 cents per share in the year 2000 and beyond. The Company's results for the quarter ended September 30, 1997 were a net loss of $3,800,000 or negative 7 cents per share as compared with net income of $11,400,000 or 20 cents per share for the same quarter in 1996. Total borrowing decreased from $491,000,000 at December 31, 1996 to $442,100,000 at September 30, 1997. The decrease is a reflection of the Company's positive cash flow from operations and the proceeds from the sale of the surgical suction product line. During the first nine months of 1997 and 1996, the Company acquired 855,200 and 713,700 shares, respectively, of its common stock which were retired. - 8 - C. R. BARD, INC. AND SUBSIDIARIES Year 2000 Expenditures The Company utilizes software and related technologies that will be affected by the date change in the year 2000. The Company's third quarter 1997 marketing, selling and administrative expense includes $1,200,000 for Year 2000 expenditures incurred to date. Management believes that the Company will incur additional expenses of $2,300,000 in the fourth quarter of 1997, $5,000,000 in 1998 and $1,000,000 in 1999. Cautionary Statement Regarding Forward-Looking Information Certain statements contained herein or in other Company documents and certain statements that may be made by management of the Company orally, including statements regarding cost savings from manufacturing restructuring, may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because actual results are affected by risks and uncertainties, the Company cautions investors that actual results may differ materially from those expressed or implied. Factors which could cause the actual results to differ materially from expected and historical results include, but are not limited to: health care industry consolidation resulting in customer demands for price concessions, competitor's attempts to gain market share through aggressive marketing programs; fewer medical procedures performed in a cost-conscious environment; the lengthy approval time by the FDA or other government authorities to clear medical devices for commercial release; unanticipated product failures; legislative or administrative reforms to the U.S. Medicare and Medicaid systems or other non-U.S. reimbursement systems in a manner that would significantly reduce reimbursements for procedures using the Company's medical devices; the acquisition of key patents by competitors that would have the effect of excluding the Company from new market segments; the uncertainty of whether increased research and development expenditures will result in increased sales; unpredictability of existing and future litigation including litigation regarding product liability; uncertainty related to tax appeals and litigation; price increases from the Company's suppliers of critical components; foreign currency fluctuations; unanticipated business disruptions from Year 2000 issues; the risk that the Company may not achieve manufacturing or administrative efficiencies as a result of the Company's recent restructuring or in the integration of recently acquired businesses. - 9 - C. R. BARD, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 12.1 - Computation of Ratio of Earnings to Fixed Charges (b) Exhibit 27 - Financial Data Schedule (c) There were no reports on Form 8-K filed by the Company during the quarter ended September 30, 1997. 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 Executive Vice President and Chief Financial Officer Charles P. Grom /s/ Charles P. Grom Vice President and Controller DATE: November 13, 1997 - 10 - EXHIBIT INDEX Exhibit No. Description Exhibit 12.1 Computation in Support of Ratio of Earnings to Fixed Charges Exhibit 27 Financial Data Schedule - 11 - EX-12 2 Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges
Nine Months Ending 9/30/97 1996 1995 1994 1993 1992 Earnings before taxes $70,600 $102,700 $123,500 $104,100 $101,400 $120,200 Add(Deduct) Fixed Charges 29,700 33,500 31,500 23,200 18,700 19,900 Undistributed earnings of less than 50% owned companies carried at equity (600) (700) (800) (400) (200) (500) Interest capitalized 0 0 0 (200) 0 (300) Earnings available for fixed charges $99,700 $135,500 $154,200 $126,700 $119,900 $139,300 Fixed charges: Interest, including amounts capitalized 24,900 26,400 24,200 16,500 12,500 13,700 Proportion of rent expense deemed to represent interest factor 4,800 7,100 7,300 6,700 6,200 6,200 Fixed Charges $29,700 $ 33,500 $ 31,500 $ 23,200 $ 18,700 $ 19,900 Ratio of earnings to fixed charges 3.36 4.04 4.89 5.46 6.41 7.00
EX-27 3
5 1,000 9-MOS DEC-31-1997 SEP-30-1997 40300 0 237100 10800 247900 548200 371800 154100 1281000 328400 340800 0 0 14200 547500 1281000 902200 902200 426200 426200 380500 0 24900 70600 22100 48500 0 0 0 48500 .85 .85
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