UNITED STATES
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 quarterly period ended December 31, 2002
Commission File Number 001-11091
APOGENT TECHNOLOGIES INC.
(Exact name of Registrant as specified in its charter)
| Wisconsin |
22-2849508 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
30 Penhallow Street, Portsmouth, New Hampshire 03801
(Address of principal executive offices, including zip code)
(603) 433-6131
(Registrant’s telephone number, including area code)
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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
At January 31, 2003, there were 105,199,912 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.
APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED DECEMBER 31, 2002
| Page | ||||
| PART I—FINANCIAL INFORMATION |
||||
| Item 1: |
Financial Statements |
|||
| Consolidated Balance Sheets as of December 31, 2002 (unaudited) and September 30, 2002 |
1 | |||
| Consolidated Statements of Income for the Three Months Ended December 31, 2002 and 2001 (unaudited) |
2 | |||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| Item 2: |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
17 | ||
| 25 | ||||
| Item 3: |
29 | |||
| Item 4: |
29 | |||
| PART II—OTHER INFORMATION |
||||
| Item 4: |
29 | |||
| Item 5: |
30 | |||
| Item 6: |
30 | |||
| 30 | ||||
| 31 | ||||
| 33 | ||||
PART I—FINANCIAL INFORMATION
Item 1: Financial Statements
APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES
(In thousands, except share and per share data)
| December 31, 2002 |
September 30, 2002 |
|||||||
| (unaudited) |
||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
15,755 |
|
$ |
16,327 |
| ||
| Accounts receivable (less allowance for doubtful accounts of $4,940 and $5,723, respectively) |
|
170,068 |
|
|
186,950 |
| ||
| Inventories |
|
219,582 |
|
|
203,997 |
| ||
| Deferred income taxes |
|
14,127 |
|
|
14,127 |
| ||
| Prepaid expenses and other current assets |
|
19,502 |
|
|
19,689 |
| ||
| Assets of Vacuum Process Technology, Inc. (“VPT”) avail. for sale |
|
5,880 |
|
|
5,436 |
| ||
| Total current assets |
|
444,914 |
|
|
446,526 |
| ||
| Available for sale security |
|
59,592 |
|
|
60,183 |
| ||
| Property, plant and equipment, net |
|
272,375 |
|
|
270,893 |
| ||
| Intangible assets |
|
1,268,550 |
|
|
1,243,113 |
| ||
| Other assets |
|
14,155 |
|
|
15,370 |
| ||
| Total assets |
$ |
2,059,586 |
|
$ |
2,036,085 |
| ||
| Liabilities and Shareholders' Equity |
||||||||
| Current liabilities: |
||||||||
| Short-term debt and overdrafts |
$ |
13,539 |
|
$ |
10,640 |
| ||
| Accounts payable |
|
46,566 |
|
|
53,779 |
| ||
| Current portion of long-term debt |
|
25,348 |
|
|
25,352 |
| ||
| Income taxes payable |
|
50,394 |
|
|
53,064 |
| ||
| Accrued payroll and employee benefits |
|
28,271 |
|
|
32,009 |
| ||
| Accrued interest expense |
|
8,187 |
|
|
16,630 |
| ||
| Restructuring reserve |
|
886 |
|
|
1,548 |
| ||
| Other current liabilities |
|
29,195 |
|
|
23,074 |
| ||
| Liabilities of Vacuum Process Technology, Inc. |
|
293 |
|
|
305 |
| ||
| Total current liabilities |
|
202,679 |
|
|
216,401 |
| ||
| Long-term debt |
|
650,618 |
|
|
635,020 |
| ||
| Securities lending agreement |
|
59,592 |
|
|
60,183 |
| ||
| Deferred income taxes |
|
134,904 |
|
|
132,100 |
| ||
| Other liabilities |
|
17,244 |
|
|
17,243 |
| ||
| Commitments and contingent liabilities |
|
— |
|
|
— |
| ||
| Shareholders’ equity: |
||||||||
| Preferred stock, $0.01 par value; authorized 20,000,000 shares |
|
— |
|
|
— |
| ||
| Common stock, $0.01 par value; authorized 250,000,000 shares issued 106,985,276 and 106,976,877 shares respectively; outstanding 105,139,332 and 105,967,853 shares respectively |
|
1,070 |
|
|
1,070 |
| ||
| Equity rights, 50 rights at $1.09 per right |
|
— |
|
|
— |
| ||
| Additional paid-in capital |
|
272,427 |
|
|
271,682 |
| ||
| Retained earnings |
|
777,526 |
|
|
748,791 |
| ||
| Accumulated other comprehensive income (loss) |
|
(18,383 |
) |
|
(26,419 |
) | ||
| Treasury common stock, 1,845,944 and 1,009,024 shares at cost |
|
(38,091 |
) |
|
(19,986 |
) | ||
| Total shareholders’ equity |
|
994,549 |
|
|
975,138 |
| ||
| Total liabilities and shareholders' equity |
$ |
2,059,586 |
|
$ |
2,036,085 |
| ||
See the accompanying notes to the unaudited consolidated financial statements
1
APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
| Three Months Ended December 31, |
||||||||
| 2002 |
2001 |
|||||||
| Net sales |
$ |
266,537 |
|
$ |
243,187 |
| ||
| Cost of sales |
|
138,064 |
|
|
124,454 |
| ||
| Gross profit |
|
128,473 |
|
|
118,733 |
| ||
| Selling, general and administrative expenses |
|
72,151 |
|
|
61,683 |
| ||
| Operating income |
|
56,322 |
|
|
57,050 |
| ||
| Other income (expense): |
||||||||
| Interest expense |
|
(10,399 |
) |
|
(10,232 |
) | ||
| Amortization of deferred financing fees |
|
(912 |
) |
|
(827 |
) | ||
| Other, net |
|
497 |
|
|
1,476 |
| ||
| Income from continuing operations before income taxes |
|
45,508 |
|
|
47,467 |
| ||
| Income taxes |
|
16,610 |
|
|
17,378 |
| ||
| Income from continuing operations |
|
28,898 |
|
|
30,089 |
| ||
| Discontinued operations (loss from operations of VPT, net of income tax benefit of $89 and $82, respectively) |
|
(163 |
) |
|
(122 |
) | ||
| Net income |
$ |
28,735 |
|
$ |
29,967 |
| ||
| Basic earnings per common share from continuing operations |
$ |
0.27 |
|
$ |
0.28 |
| ||
| Discontinued operations |
|
— |
|
|
— |
| ||
| Basic earnings per common share |
$ |
0.27 |
|
$ |
0.28 |
| ||
| Diluted earning per common share from continuing operations |
$ |
0.27 |
|
$ |
0.28 |
| ||
| Discontinued operations |
|
— |
|
|
— |
| ||
| Diluted earnings per common share |
$ |
0.27 |
|
$ |
0.28 |
| ||
| Weighted average basic shares outstanding |
|
105,719 |
|
|
106,128 |
| ||
| Weighted average diluted shares outstanding |
|
107,010 |
|
|
108,949 |
| ||
See accompanying notes to the unaudited consolidated financial statements.
2
APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES
Consolidated Statement of Shareholders’ Equity
For the Three Months Ended December 31, 2002
(In thousands)
(Unaudited)
| Common Stock |
Equity Rights |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Income |
Treasury Common Stock |
Total Shareholders' Equity |
||||||||||||||||||
| Balance at September 30, 2002 |
$ |
1,070 |
$ |
— |
$ |
271,682 |
$ |
748,791 |
$ |
(26,419 |
) |
$ |
(19,986 |
) |
$ |
975,138 |
| |||||||
| Comprehensive income: |
||||||||||||||||||||||||
| Net income |
|
— |
|
— |
|
— |
|
28,735 |
|
— |
|
|
— |
|
| |||||||||