-----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, U63UvzNGi+gXsXxQvCbsTRnighw6ZKF/NskL9riyJZi5zilkl78iNVcPNQ2J0Le3 EkM/GfLQoorNHuXVfBwv1Q== 0000009892-99-000019.txt : 19990517 0000009892-99-000019.hdr.sgml : 19990517 ACCESSION NUMBER: 0000009892-99-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 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: 99622330 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 PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1999 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 April 30, 1999 Common Stock - $.25 par value 51,396,606 C. R. BARD, INC. AND SUBSIDIARIES INDEX Page No. PART I - FINANCIAL INFORMATION Condensed Consolidated Balance Sheets - March 31, 1999 and December 31, 1998 1 Condensed Consolidated Statements of Income For The Three Months Ended March 31, 1999 and 1998 2 Condensed Consolidated Statements of Shareholders' Investment For The Three Months Ended March 31, 1999 and 1998 3 Condensed Consolidated Statements of Cash Flows For The Three Months Ended March 31, 1999 and 1998 4 Notes to Condensed Consolidated Financial Statements 5 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION 11 C. R. BARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (thousands of dollars)
March 31, December 31, 1999 1998 (Unaudited) ASSETS Current Assets: Cash and short-term investments $ 47,300 $ 42,400 Accounts receivable, net 220,600 217,800 Inventories 199,400 182,500 Other current assets 45,200 45,800 Total current assets 512,500 488,500 Property, plant and equipment, net 171,300 172,700 Intangible assets, net of amortization 354,400 358,900 Other assets 55,100 59,700 $1,093,300 $1,079,800
LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Short-term borrowings and current maturities of long-term debt $ 100,000 $ 2,000 Accounts payable 53,200 67,400 Accrued expenses 168,900 187,400 Federal and foreign income taxes 29,100 46,000 Total current liabilities 351,200 302,800 Long-term debt 159,500 160,000 Other long-term liabilities 38,600 49,400 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 51,131,592 shares and 51,497,564 shares 14,500 14,300 Capital in excess of par value 149,700 132,300 Retained earnings 430,300 452,200 Accumulated other comprehensive income (33,100) (23,100) Unamortized expenses under stock plans (17,400) (8,100) 544,000 567,600 $1,093,300 $1,079,800
The accompanying notes to condensed consolidated financial statements are an integral part of these statements. - 1 - C. R. BARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (thousands of dollars except per share amounts) (Unaudited)
For The Three Months Ended March 31, 1999 1998 Net sales $248,500 $296,300 Costs and expenses: Cost of goods sold 109,400 140,900 Marketing, selling and administrative 80,700 95,300 Research and development expense 13,800 19,200 Interest expense 4,200 8,200 Other(income)expense, net 500 (3,600) Total costs and expenses 208,600 260,000 Income before taxes 39,900 36,300 Provision for income taxes 13,300 11,400 Net income 26,600 24,900 Basic earnings per share $ .52 $ .44 Diluted earnings per share $ .51 $ .44 Cash dividends per share $ .19 $ .18 Average common shares outstanding - basic 51,332 56,819 Average common shares outstanding - diluted 52,040 57,119
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 SHAREHOLDERS' INVESTMENT (thousands of dollars except per share amounts) (Unaudited)
Three Months Ended March 31, 1999 Unamortized Expenses Cumulative Under Capital in Retained Translation Stock Shares Amount Excess of Par Earnings Adjustment Plan Total Balance at December 31, 1998 51,497,564 $14,300 $132,300 $452,200 $(23,100) $ (8,100) $567,600 Net income 26,600 26,600 Currency translation adjustments (10,000) (10,000) Comprehensive income 16,600 Cash dividends ($.19 per share) (9,800) (9,800) Treasury stock acquired (940,600) (49,300) (49,300) Employee stock plans 574,628 200 17,400 10,600 (9,300) 18,900 Balance at March 31, 1999 51,131,592 $14,500 $149,700 $430,300 $(33,100) $(17,400) $544,000
Three Months Ended March 31, 1998 Unamortized Cumulative Under Capital in Retained Translation Stock Shares Amount Excess of Par Earnings Adjustment Plan Total Balance at December 31, 1997 56,784,551 $14,100 $101,100 $506,700 $(38,500) $(10,300) $573,100 Net income 24,900 24,900 Currency translation adjustments (13,400) (13,400) Comprehensive income 11,500 Cash dividends ($.18 per share) (10,300) (10,300) Treasury stock acquired 0 Employee stock plans 85,001 2,000 700 2,700 Balance at March 31, 1998 56,869,552 $14,100 $103,100 $521,300 $(51,900) $ (9,600) $577,000
The accompanying notes to condensed consolidated financial statements are an integral part of these statements. - 3 - C. R. BARD, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands of dollars) (Unaudited)
March 31, 1999 1998 Cash flows from operating activities: Net income $ 26,600 $ 24,900 Noncash items and other (65,900) 29,800 (39,300) 54,700 Cash flows from investing activities: Capital expenditures (6,500) (9,900) Other long-term investments, net (3,200) (11,900) (9,700) (21,800) Cash flows from financing activities: Purchase of common stock (49,300) 0 Dividends paid (9,800) (10,300) Other financing activities 113,000 (1,900) 53,900 (12,200) Cash and cash equivalents: Increase (decrease) during the period 4,900 20,700 Balance at January 1, 41,200 36,400 Balance at March 31, $ 46,100 $ 57,100
The accompanying notes to consolidated financial statements are an integral part of these statements. - 4 - 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 to the interim financial statements, consisting only of normal recurring adjustments, which are necessary to present fairly Bard's financial condition and results of operations at the dates and for the periods presented. 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 1998 Annual Report on Form 10-K. Consolidation The consolidated financial statements include the accounts of the company and its majority-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. Earnings Per Share "Basic earnings per share" represents net income divided by the weighted average shares outstanding. "Diluted earnings per share" represents net income divided by weighted average shares outstanding adjusted for the incremental dilution of outstanding employee stock options and awards. Unless indicated otherwise per share amounts are calculated on a diluted basis. Derivative Instruments In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133"). FAS 133 establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. FAS 133 requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. FAS 133 is effective for fiscal years beginning after June 15, 1999 with early adoption permitted. The company does not expect that the adoption of FAS 133 will have a material impact on its financial statements. Use of Estimates The financial statements and related disclosures have been prepared in conformity with generally accepted accounting principles and, accordingly, include amounts based on estimates and judgments of management with consideration given to materiality. Actual results could differ from those estimates. - 5 - C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) Short Term Borrowings and Long-Term Debt 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. These notes may be redeemed at the option of the note holders on December 1, 2006, at a redemption price equal to the principal amount. 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. Segment Information The company's management considers its business to be a single segment entity - the manufacture and sale of medical devices. The company's products generally share similar distribution channels and customers. The company designs, manufactures, packages, distributes and sells medical, surgical, diagnostic and patient care devices which, for the most part, are purchased by hospitals, physicians and nursing homes, used once and discarded. Management evaluates its various global product portfolios on a revenue basis, which is presented below. Management generally evaluates profitability on an enterprise-wide basis due to shared infrastructures. For the Three Months Ended March 31: (thousands of dollars)
Percent 1999 1998 Change Sales: Vascular $ 52,600 $ 50,500 4 Urology 84,900 79,200 7 Oncology 57,100 51,500 11 Surgery 40,200 35,000 15 Other ongoing products 13,700 14,900 (8) Total ongoing products 248,500 231,100 8 Divested products 0 65,200 --- Net sales $ 248,500 $ 296,300 (16) Income before taxes $ 39,900 $ 36,300 Total assets $1,093,300 $1,283,000 Capital expenditures $ 6,500 $ 9,900 Depreciation and amortization $ 12,300 $ 16,000
- 6 - C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) The following table presents sales of ongoing products by geography based on the location of the external customer. For the Three Months Ended March 31, (thousands of dollars) 1999 1998 United States $ 179,200 $ 165,500 Europe 46,400 41,400 Japan 10,600 13,200 Rest of world 12,300 11,000 Total ongoing products $ 248,500 $ 231,100 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Consolidated net sales of ongoing products for the first quarter of 1999 of $248,500,000 increased 8 percent from the first quarter 1998 net sales of $231,100,000. Net sales of ongoing products in the U.S. for the first quarter of 1999 were $179,200,000, an increase of 8 percent from the first quarter of 1998, while international net sales of ongoing products for the first quarter of 1999 were $69,300,000, up 6 percent against last year's first quarter. First quarter international net sales growth was favorably affected by foreign currency translation and negatively affected by reporting certain foreign sales in 1998 on a current month basis. Adjusting for these items, net sales of ongoing products outside the U.S. would have increased 8 percent in the first quarter of 1999. Vascular sales increased by 4 percent due to electrophysiology and radiology product growth. Urological sales increased by 7 percent due to infection control catheters and brachytherapy growth. Sales increases in specialty access products and soft tissue repair products were primarily responsible for the 11 and 15 percent growth in the oncology and surgery categories, respectively. The company's gross profit margin of 56.0 percent improved from the prior year's gross profit margin of 52.4 as a result of the company's divestitures of several cardiology businesses and improvements resulting from steps to improve global manufacturing efficiencies. - 7 - C. R. BARD, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Other income and expense for the first quarter of 1999 and 1998 are composed primarily of interest income and foreign exchange. The translation of receivables and payables denominated in a currency other than the functional currency of subsidiaries had a favorable impact on net income for the first quarter of 1998 which, when combined with the favorable net income impact of certain foreign sales being reported on a current month basis (compared with 1997 and prior periods being reported on a one-month lag), the negative impact of ongoing period costs associated with the manufacturing restructuring plan announced in the third quarter of 1997 and the negative impact of costs incurred during the quarter to address the Year 2000 issue resulted in a favorable impact of 4 cents per diluted share. During the first three months of 1999, the company acquired 940,600 of its common shares. No shares were acquired during the first three months of 1998. Restructuring Charges In connection with the company's restructuring plans, restructuring accruals during the three-month period ended March 31, 1999, have decreased by approximately $1,000,000 primarily for cash expenditures related to employees severed during 1998. Facility closing plans proceeded as planned with no additional facilities closed during the first quarter. Year 2000 Functionality Bard has a company-wide initiative to address Year 2000 functionality. A team of management and technical representatives oversees the Year 2000 effort. The company divides its Year 2000 initiative into two components, information technology (IT) and non-information technology (Non-IT). The IT initiative includes purchased and internally developed mainframe and desktop computer systems and applications. The Non-IT initiative includes suppliers, manufacturing and support systems and the company's customers. Internal and external resources are being used to identify needs, make the required IT modifications and test Year 2000 functionality. The identification process of all critical IT applications is complete. The company is currently on schedule to - 8 - C. R. BARD, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) complete the implementation of all modifications to these applications by the third quarter of 1999. The company is utilizing both internal and external resources to provide independent system verification and validation of Year 2000 functionality. This process will continue through the end of 1999 and includes the development and implementation of contingency plans to address unforeseen problems. The company's Non-IT efforts include ensuring suppliers, manufacturing and support systems and the company's larger customers are Year 2000 functional. The company is communicating with suppliers that provide critical products or services and customers. The company is testing significant manufacturing and support systems. If as a result of the company's communications or as a result of the company's testing of Non-IT systems there appear to be potential Year 2000 functionality problems, additional contingency plans under development should address these risks. There can be no guarantee that the systems of other companies on which the company's systems rely will be converted in a timely manner, or that a failure to convert by another company (including the company's suppliers and customers), or a conversion that is incompatible with the company's systems, would not have a material adverse effect on the company. In addition, there are many risks associated with the Year 2000 issue, including but not limited to the possible failure of the company's computer and information technology systems. Any such failure may have a material adverse financial or operational effect on the company. The company's marketing, selling and administrative expense included $800,000 for IT-related Year 2000 expenditures during the first quarter of 1999 and $1,200,000 during the first quarter of 1998. Management believes that the company will incur additional expenses of approximately $2,200,000 in 1999. These incremental costs do not include existing internal resources allocated to the project effort. These costs and the date on which the company plans to complete the Year 2000 modification and testing processes are based on management's best estimates, which were derived utilizing numerous assumptions of future events including the continued availability of certain resources, third-party modification plans and other factors. However, there can be no guarantee that these estimates will be achieved and actual results could differ from those plans. - 9 - C. R. BARD, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) 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 without limitation statements regarding the use of net proceeds from the sale of the company's cardiology businesses, statements regarding cost savings from restructuring, Year 2000 functionality and statements regarding the company's future performance, 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; competitors' attempts to gain market share through aggressive marketing programs; fewer medical procedures performed in a cost-conscious environment; the unpredictability of the 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 without limitation 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 restructuring and/or in the integration of acquired businesses or divestitures. - 10 - C. R. BARD, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. (a) The registrant held its Annual Meeting of Shareholders on April 21, 1999. (b) Proxies for the meeting were solicited pursuant to Regulation 14; there was no solicitation in opposition to management's nominees for directors as listed in the Proxy Statement and all such nominees were elected. The results of voting for the three Class III Directors elected for a term of three years to serve until the 2003 Annual Meeting were as follows: T. Kevin Dunnigan, For - 45,021,123 Authority Withheld - 302,711; Regina E. Herzlinger, For - 44,939,786 Authority Withheld - 384,048 and William H. Longfield, For - 45,011,529 Authority Withheld - 312,305. The results of voting for the one Class II Director elected for a term of two years to serve until the 2002 Annual Meeting was as follows: Anthony Welters, For - 45,014,799 Authority Withheld - 309,035. (c) Briefly described below is each other matter voted upon at the Annual Meeting and the number of affirmative votes, negative votes and abstentions and broker nonvotes with respect to each matter. (I) To approve an amendment to, and reapprove certain provisions of, the Company's 1993 Long Term Incentive Plan. For 41,382,588 Against 3,255,202 Abstain and Broker Nonvotes 686,044 (II) To reapprove certain provisions of the 1994 Executive Bonus Plan of C. R. Bard, Inc. For 43,567,618 Against 1,055,872 Abstain and Broker Nonvotes 700,344 (III) Ratification of the appointment of Arthur Andersen LLP as independent public accountants for the year 1999. For 45,141,932 Against 59,731 Abstain and Broker Nonvotes 122,171 - 11 - C. R. BARD, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION (continued) 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 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) Charles P. Slacik /s/ Charles P. Slacik Senior Vice President and Chief Financial Officer Charles P. Grom /s/ Charles P. Grom Vice President and Controller and Chief Accounting Officer DATE: May 13, 1999 - 12 - EX-12 2 Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges
Three Months Ending 3/31/99 1998 1997 1996 1995 1994 Earnings before taxes $39,900 $464,400 $104,900 $102,700 $123,500 $104,100 Add(Deduct) Fixed Charges 5,500 31,400 38,200 33,500 31,500 23,200 Undistributed earnings of less than 50% owned companies carried at equity (500) (800) (500) (700) (800) (400) Interest capitalized 0 0 0 0 0 (200) Earnings available for fixed charges $44,900 $495,000 $142,600 $135,500 $154,200 $126,700 Fixed charges: Interest, including amounts capitalized 4,200 26,400 32,900 26,400 24,200 16,500 Proportion of rent expense deemed to represent interest factor 1,300 5,000 5,300 7,100 7,300 6,700 Fixed Charges $ 5,500 $ 31,400 $ 38,200 $ 33,500 $ 31,500 $ 23,200 Ratio of earnings to fixed charges 8.16 15.76 3.73 4.04 4.89 5.46
EX-27 3
5 1,000 3-MOS DEC-31-1999 MAR-31-1999 19800 27500 220600 9300 199400 512500 293200 121900 1093300 351200 159500 0 0 14500 580000 1093300 248500 248500 109400 203900 500 0 4200 39900 13300 26600 0 0 0 26600 .52 .51
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