Syncor 1st 10Q 2002

0000202763-02-000121.txt : 20020515 0000202763-02-000121.hdr.sgml : 20020515 20020515141411 ACCESSION NUMBER: 0000202763-02-000121 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNCOR INTERNATIONAL CORP /DE/ CENTRAL INDEX KEY: 0000202763 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 850229124 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08640 FILM NUMBER: 02650766 BUSINESS ADDRESS: STREET 1: 6464 CANOGA AVENUE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 818.737.4000 MAIL ADDRESS: STREET 1: 6464 CANOGA AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 FORMER COMPANY: FORMER CONFORMED NAME: NUCLEAR PHARMACY INC DATE OF NAME CHANGE: 19860309 10-Q 1 q1st2002.htm SYNCOR 2002 1ST QUARTER 10Q Syncor 1st 10Q 2002

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10‑Q

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For Quarter Ended March 31, 2002

Commission File Number 0‑8640

SYNCOR INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)


Delaware		85‑0229124
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

6464 Canoga Avenue, Woodland Hills, California		91367
(Address of principal executive offices)		(Zip Code)

(818) 737-4000
(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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of April 30, 2002, 24,778,273 shares of $.05 par value common stock were outstanding.

SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES

INDEX

			Page

	Part I. Financial Information

	Item 1. Condensed Consolidated Financial Statements

	Balance Sheets as of March 31, 2002 and December 31, 2001		3

	Statements of Income for Three Months Ended March 31, 2002 and 2001		4

	Statements of Cash Flows for Three Months Ended March 31, 2002 and 2001		5

	Notes to Condensed Consolidated Financial Statements		6

	Item 2. Management's Discussion and Analysis of Financial Condition		10

	Item 3. Quantitative and Qualitative Disclosures about Market Risk		13

	Part II. Other Information		14

	SIGNATURE		15

Item 1.

SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)

	March 31, 2002		December 31, 2001

ASSETS
Current assets:
Cash and cash equivalents	$ 14,682		$ 17,634
Short‑term investments	9,393		11,908
Trade receivables, net	109,613		102,759
Patient receivables, net	57,916		52,944
Inventory	28,339		30,630
Prepaids and other current assets	27,485		31,521

Total curent assets	247,428		247,396

Marketable investment securities	1,006		1,006
Property and equipment, net	180,896		177,364
Excess of purchase price over net assets acquired, net	143,160		141,333
Other assets	21,881		20,742

	$594,371		$587,841


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$ 65,893		$ 65,853
Accrued liabilities	28,803		26,858
Accrued wages and related costs	16,702		16,427
Federal and state taxes payable	9,950		6,482
Current maturities of long-term debt	12,371		16,048

Total current liabilities:	133,719		131,668

Long-term debt, net of current maturities	203,973		210,649
Deferred taxes	11,187		10,696

Stockholders' equity:
Common stock, $.05 par value	1,425		1,420
Additional paid-in capital	126,251		124,909
Notes receivable-related parties	(3,461	)	(6,197	)
Accumulated other comprehensive income	(3,584	)	(3,653	)
Retained earnings	162,797		151,888
Treasury stock, at cost; 3,750 shares at March 31, 2002 and
3,575 shares at December 31, 2001	(37,936	)	(33,539	)


Total stockholders' equity	245,492		234,828

	$594,371		$587,841

See notes to condensed consolidated financial statements.

SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(in thousands, except per share data)

	THREE MONTHS ENDED MARCH 31,

	2002		2001


Net sales	$215,484		$181,416

Cost of sales	133,029		112,727

Gross profit	82,455		68,689

Operating, selling and administrative expenses	51,007		39,011

Depreciation and amortization	10,140		8,659

Operating income	21,308		21,019

Other expense, net	(3,569	)	(4,008	)

Income before taxes	17,739		17,011

Provision for income taxes	6,830		6,804

Net income	$10,909		$10,207


Net income per share – Basic	$0.44		$0.42

Weighted average shares outstanding – Basic	24,766		24,473

Net income per share – Diluted	$0.41		$0.38

Weighted average shares outstanding – Diluted	26,732		27,101

See notes to condensed consolidated financial statements.

SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

	THREE MONTHS ENDED MARCH 31,
		2002		2001

Cash flows from operating activities:

Net income		$10,909		$10,207
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization		10,140		8,659
Provision for losses on receivables		2,557		1,882
Amortization of loan guarantee		-		421
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables		(7,258	)	(8,180	)
Patient receivables		(7,128	)	(10,630	)
Inventory		2,350		37,225
Prepaids and other current assets		3,874		(4,279	)
Other assets		(910	)	619
Accounts payable		212		(53,025	)
Accrued liabilities		2,269		(265	)
Accrued wages and related costs		279		(6,480	)
Federal and state taxes payable		4,152		5,651
Deferred taxes		491		1,102

Net cash provided by (used in) operating activities		21,937		(17,093	)

Cash flows from investing activities:

Purchase of property and equipment, net		(8,995	)	(10,219	)
Acquisitions of businesses, net of cash acquired		(1,747	)	(15,678	)
Net decrease (increase) in short-term investments		2,522		(1,569	)
Net increase in long-term investment		-		(2	)
Unrealized gain on investments		-		3

Net cash used in investing activities		(8,220	)	(27,465	)

Cash flow from financing activities:

Proceeds from long-term debt		1,172		38,688
Repayment of long-term debt		(16,188	)	(1,104	)
Notes receivable-related parties		2,736		5,489
Issuance of common stock		510		2,288
Reacquisition of common stock for treasury		(4,397	)	(5,893	)

Net cash (used in) provided by financing activities		(16,167	)	39,468

Net decrease in cash and cash equivalents		(2,450	)	(5,090	)

Effect of exchange rate on cash		(502	)	247

Cash and cash equivalents at beginning of period		17,634		24,330

Cash and cash equivalents at end of period		$14,682		$19,487

See notes to condensed consolidated financial statements.

SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

1. GENERAL. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10‑Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. The results for the three months ended March 31, 2002, are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2001. Certain line items in the prior year’s consolidated condensed financial statements have been reclassified to conform to the current year’s presentation.

2. SUMMARY OF CRITICAL ACCOUNTING POLICIES.

Our critical accounting policies are as follows:

Revenue Recognition. We recognize our revenue primarily from two sources: (i) product revenue, which includes sales from our radiopharmacies and (ii) services revenue, primarily from our imaging business. As described below, significant judgments and estimates must be used by management in connection with the revenue recognized in any period for the imaging business. Material differences may impact the amount of revenue recorded in any period if management judgments or estimates are significantly different than actual.

We provide imaging services to patients that generally have medical insurance through a governmental payor, managed care payor, or a commercial third-party payor. Our Medical Imaging business has several hundred contracts. These contracts can change or be amended frequently due to changes in the payors’ or governmental agencies’ reimbursement. Additionally, as we acquire medical imaging centers, new contracts have to be entered into our computer systems. If the contracts have not been updated in our systems, we need to make estimates about the anticipated contracted amounts that we will ultimately receive from all of our various payors. This requires us to record estimates when recording imaging revenues based upon historical data and trends. These estimates have to be continually evaluated and compared to actual reimbursements from the various payors to ensure that we have properly recorded revenues and appropriately adjusted for shifts in our payor mix. Accordingly, these recorded revenues are based on current information available, but subject to estimation, which may lead to adjustments in future periods as actual reimbursement rates are determined. Such adjustments have not been material in the first quarter of 2002 and 2001.

Estimating Valuation Allowances for Doubtful Accounts. The preparation of financial statements requires our management to make estimates and assumptions on the collectibility of our accounts receivable. Management specifically analyzes historical bad debts, customer concentrations, customer credit-worthiness, current economic trends, aging of accounts and changes in payment terms when evaluating the adequacy of the allowance for doubtful accounts. Any changes in these estimates or assumptions could cause material differences in recorded allowances.

Valuation of Long-Lived Assets and Goodwill. We assess the impairment of identifiable intangibles, long-lived assets and related goodwill and enterprise level goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:

	•	Adverse changes in legal factors, business climate, or regulatory environment,
	•	Unanticipated competition,
	•	Loss of key personnel,
	•	A more-likely-than-not expectation that a reporting unit or a significant portion of a reporting until will be sold or otherwise disposed of,
	•	A significant asset group within a reporting until is tested for recoverability under FAS 121, and
	•	A subsidiary that is a component of the reporting unit recognizes a goodwill impairment loss in its separate financial statements.

3. NEW ACCOUNTING STANDARDS. In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standards (SFAS) No. 141, "Business Combinations" and No. 142 "Goodwill and Other Intangible Assets." SFAS requires that the purchase method of accounting be used for all business combinations completed after June 30, 2001, clarifies the recognition of intangible assets separately from goodwill and requires that unallocated negative goodwill be written off immediately as an extraordinary gain. SFAS No. 142, which was effective for fiscal years beginning after December 15, 2001, requires that ratable amortization of goodwill be replaced with periodic tests of goodwill impairment and that intangible assets, other than goodwill, which have determinable useful lives, be amortized over their useful lives. The Company has adopted these accounting standards effective January 1, 2002 and is still analyzing any possible impairment of goodwill. There were no adjustments to identifiable intangible assets’ useful lives or recorded balances as a result of the adoption of SFAS No.142. The following is a reconciliation of net income and earnings per share between the amounts reported in the first quarter of 2001 and the adjusted amounts reflecting these new accounting rules:

		Three Months Ended,
(Dollars in thousands, except per share data)		March 31, 2001

Net income
Reported net income		$10,207
Goodwill amortization (net of taxes)		918
Adjusted net income		$11,125

Earnings per share: Basic
Reported		$ 0.42
Goodwill		0.03
Adjusted earnings per share		$ 0.45

Earnings per share: Diluted
Reported		$ 0.38
Goodwill		0.03
Adjusted earnings per share		$ 0.41

In August 2001, the Financial Accounting Standards Board issued FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (Statement 144), which supersedes both FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (Statement 121) and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions (Opinion 30), for the disposal of a segment of a business (as previously defined in that Opinion). Statement 144 retains the fundamental provisions in Statement 121 for recognizing and measuring impairment losses on long-lived assets held for use and long-lived assets to be disposed of by sale, while also resolving significant implementation issues associated with Statement 121. Statement 144 retains the basic provisions of Opinion 30 on how to present discontinued operations in the income statement but broadens that presentation to include a component of an entity (rather than a segment of a business). Unlike Statement 121, an impairment assessment under Statement 144 will never result in a write-down of goodwill. Rather, goodwill is evaluated for impairment under Statement No. 142, Goodwill and Other Intangible Assets.

The Company is required to adopt Statement 144 no later than the year beginning after December 15, 2001. Accordingly, the Company will adopted Statement 144 in the first quarter of 2002. Management does not expect the adoption of Statement 144 for long-lived assets held for use to have a material impact on the Company’s financial statements because the impairment assessment under Statement 144 is largely unchanged from Statement 121. The provisions of Statement 144 for assets held for sale or other disposal generally are required to be applied prospectively after the adoption date to newly initiated disposal activities. Therefore, we cannot determine what the potential effects of adoption of the Statement will have on our financial statements.

4. COMPREHENSIVE INCOME. Other comprehensive income includes foreign currency translation adjustments and net unrealized gains and losses on investments in equity securities. Such amounts are as follows:

	March 31, 2002				March 31, 2001
	Before-Tax Amount	Tax Expense		Net-of-Tax Amount		Before-Tax Amount		Tax Expense		Net-of-Tax Amount

Foreign currency translation adjustments	$69	-		$69		$(139	)	-		$(139)

Unrealized gains (losses) on investments:
Unrealized holding gains (losses)
arising during period	-	-		-		4		(1	)	3


Other comprehensive income	69	-		69		(135	)	(1	)	(136)

Net income	17,739	(6,830	)	10,909		17,011		(6,804	)	10,207


Total comprehensive income	$17,808	$(6,830	)	$10,978		$16,876		$(6,805	)	$10,071

5. SEGMENT INFORMATION. Syncor has identified three primary operating segments: U.S. Pharmacy Services, U.S. Medical Imaging and International Operations. Segment selection was based upon internal organizational structures, the process by which these operations are managed and evaluated, the availability of separate financial results, and materiality considerations. Segment detail is summarized as follows:

	THREE MONTHS ENDED,
	March 31, 2002		March 31, 2001

U.S. Pharmacy Services Business

Revenues	$164,121		$133,309
Operating Income	$ 23,778		$ 19,782

U.S. Medical Imaging Business

Revenues	$ 39,998		$ 38,504
Operating Income	$ 4,101		$ 4,526

International Operations

Revenues	$ 11,365		$ 9,603
Operating (Loss) Income	$ (316	)	$ 44

Unallocated Corporate

Operating Loss	$ (6,255	)	$ (3,333	)

6. NET INCOME PER SHARE. Basic earnings per share (EPS) amounts are computed by dividing earnings applicable to common stockholders by the weighted average number of shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive equivalents outstanding. Anti-dilutive outstanding stock options of 3,273,636 and 2,598,747 for the three months ended March 31, 2002 and 2001, respectively have been excluded from the diluted calculation, respectively.

The reconciliation of the numerator and denominators of the basic and diluted earnings per share computations are as follows for the three months ended March 31, 2002 and 2001:

	THREE MONTHS ENDED,
	March 31, 2002			March 31, 2001
	Income (Numerator)	Shares (Denominator)	Per Share Amount	Income (Numerator)	Shares (Denominator)	Per Share Amount


Net income	$10,909			$10,207

Basic EPS	$10,909	24,766	$0.44	$10,207	24,473	$0.42

Effect of Dilutive Stock Options		1,966			2,628

Diluted EPS	$10,909	26,732	$0.41	$10,207	27,101	$0.38

7. NOTES RECEIVABLE-RELATED PARTIES. We initiated a Senior Management Stock Purchase Plan effective June 16, 1998, pursuant to which our officers and key employees purchased shares of Syncor stock. The shares were paid with a five-year interest bearing promissory note payable to us. Interest on each note is payable on each anniversary date, with the entire outstanding principal and unpaid interest due on the fifth anniversary date. As of March 31, 2002 we had nine employees with loans outstanding of $3.5 million, as compared to twenty-one employees with $11.3 million outstanding at March 31, 2001.

8. ACQUISITION OF BUSINESSES. During the first quarter of 2002, we acquired a radiopharmacy in Alaska for a purchase price of $2.0 million.

During the first quarter of 2001, we acquired three imaging center sites in California for a purchase price of $13.4 million. In addition, in March 2001, we acquired a Gamma knife venture in Brazil for a purchase price of $2.0 million and a distributor of radiopharmaceuticals in New Zealand for a purchase price of $0.3 million plus the assumption of $0.2 million of debt.

Item 2.

SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of Operations
For the Three Months Ended March 31, 2002 and 2001

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are as follows:

Revenue Recognition. We recognize our revenue primarily from two sources: (i) product revenue, which includes sales from our radiopharmacies and (ii) services revenue, primarily from our imaging business. As described below, significant judgments and estimates must be used by management in connection with the revenue recognized in any period for the imaging business. Material differences may impact the amount of revenue recorded in any period if management judgments or estimates are significantly different than actual.

Estimating Valuation Allowances for Doubtful Accounts. The preparation of financial statements requires our management to make estimates and assumptions on the collectibility of our accounts receivable. Management specifically analyzes historical bad debts, customer concentrations, customer credit-worthiness, current economic trends, aging of accounts and changes in payment terms when evaluating the adequacy of the allowance for doubtful accounts. Any changes in these estimates or assumptions could cause material differences in recorded allowances.

Valuation of Long-Lived Assets and Goodwill. We assess the impairment of identifiable intangibles, long-lived assets and related goodwill and enterprise level goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:

	•	Adverse changes in legal factors, business climate, or regulatory environment,
	•	Unanticipated competition,
	•	Loss of key personnel,
	•	A more-likely-than-not expectation that a reporting unit or a significant portion of a reporting until will be sold or otherwise disposed of,
	•	A significant asset group within a reporting until is tested for recoverability under FAS 121, and
	•	A subsidiary that is a component of the reporting unit recognizes a goodwill impairment loss in its separate financial statements.

NET SALES

Net sales increased 18.8%, or $34.1 million, to $215.5 million. All three of our business segments had sales growth during the quarter. U.S. Pharmacy Services revenue increase was primarily same store radiopharmacy growth. The sales growth for Internationl operations was primarily from acquisitions and growth in our Taiwan businesses. Medical Imaging services growth was primarily from new imaging centers opened since the first quarter of 2001 and acquisitions.

	Revenues
	Three Months Ended March 31,
	2002		2001

U.S. Pharmacy Services Business	$164,121	$133,309
U.S. Medical Imaging Business	39,998	38,504
International Operations	11,365	9,603

Total	$215,484	$181,416

U.S. Radiopharmacy Business

Net sales increased 23.1%, or $30.8 million, to $164.1 million driven primarily by increased sales of cardiology imaging agents. During the first quarter of 2002, sales related to cardiology imaging agents increased 12.3%, or $11.7 million, as a result of price and volume increases. This business also had increases of 26.0%, or $3.9 million, in oncology sales during the quarter. Overall, pharmacy sales increased 16.3%, or $21.7 million, compared to the prior year quarter. Acquisitions made during 2001 accounted for the remainder of the increase for this business during the first quarter of 2002.

U.S. Medical Imaging Business

Net sales increased 3.9%, or $1.5 million, to $40.0 million. Sales at existing centers, which means centers open all months in 2001 compared to 2002, decreased by 2.0%, or $0.6 million, compared to the prior year. During late 2001 and the first quarter of 2002, the Medical Imaging business decided to terminate or not renew several contracts with payors that had low reimbursement rates or with payors that were very slow paying. This decision negatively impacted same store sales for the first quarter 2002, especially in the Arizona and South Florida markets. The remaining increase in sales was the result of acquisitions and start-up centers. The volume of imaging procedures performed at our existing centers decreased 2% for MRI and increased 2% for CT compared to the same period in 2001.

International Operations

Net sales increased 18.3%, or $1.8 million, to $11.4 million due primarily to start-up businesses and acquisitions. Acquisitions accounted for the majority of the sales increase. Net sales at our existing centers or facilities were lower during the quarter primarily as a result of adverse economic conditions in Argentina, lower sales in the Shanghai seeds facility and slowing sales in our Puerto Rico pharmacy. The Taiwan market did have higher same store sales, which increased 6%.

GROSS PROFIT

Gross profit increased 20.0%, or $13.8 million, to $82.5 million. Our consolidated gross profit margin as a percentage of sales improved to 38.3% in 2002 as compared to 37.9% in 2001 driven by continued improvement in product mix, price increases, and operating efficiencies in our radiopharmacy network and increased margins from new business in the Pharmacy Services Business.

	Gross Profit
	Three Months Ended March 31,
	2002	2001

U.S. Pharmacy Services Business	$51,321	$39,154
U.S. Medical Imaging Business	26,958	25,753
International Operations	4,176	3,782

Total	$82,455	$68,689

U.S. Radiopharmacy Business

Gross profit increased 31.1%, or $12.2 million, to $51.3 million. Gross profit margin as a percentage of sales improved to 31.3% in 2002 as compared to 29.4% in 2001. This gross profit margin increase was due primarily to improved margins associated with new businesses, such as FDG, and higher margins associated with recent acquisitions. These initiatives accounted for 1.7% of the overall margin increase. The remainder of the gross profit margin increase was the result of continued leveraging of our radiopharmacy network; we continue to successfully increase volumes without comparable increases in material, labor and delivery costs.

U.S. Medical Imaging Business

Gross profit increased 4.7%, or $1.2 million, to $27.0 million. Our gross profit margin as a percentage of sales increased in 2002 to 67.4% compared to 66.9% in 2001. Our gross profit increased due to better labor utilization in the quarter.

International Operations

Gross profit increased 10.4%, or $0.4 million, to $4.2 million. Our gross profit margin as a percentage of sales decreased in 2002 to 36.7% compared to 39.4% in 2001. Margin growth at our existing radiopharmacy sites and imaging centers was flat in 2002 compared to the prior year. Our margins were reduced by acquired businesses, which have a lower margin than our existing businesses, and the adverse conditions in the Argentina market.

OPERATING, SELLING AND ADMINISTRATIVE EXPENSES

Operating, selling and administrative expenses increased 30.8%, or $12.0 million, to $51.0 million. The ratio of these expenses to net sales for the quarter was 23.7% compared to 21.5% for the same period in 2001. Operating, selling and administrative costs at our medical imaging business are higher than such costs at our radiopharmacy business. Acquisitions in the Radiopharmacy Business caused the majority of the increase in addition to higher Corporate costs primarily from increased IT costs associated with new systems and increased telecommunications expenses.

	Operating, Selling and Administrative Expenses
	Three Months Ended March 31,
	2002	2001

U.S. Pharmacy Services Business	$25,275	$17,836
U.S. Medical Imaging Business	17,739	16,357
International Operations	3,481	2,789
Unallocated Corporate	4,512	2,029

Total	$51,007	$39,011

U.S. Radiopharmacy Business

Operating, selling and administrative costs increased 41.7%, or $7.4 million, to $25.3 million. This increase was due primarily to increased costs associated with acquired businesses, which accounted for $3.4 million of this increase. Costs associated with opening new cyclotrons, used in the production of FDG, accounted for an additional $1.4 million. The remainder of the increase is the result of increased costs in our radiopharmacy network, as well as higher costs in start-up businesses in this segment. As a percentage of sales, operating, selling and administrative expenses increased from 13.4% in 2001 to 15.4% in 2002.

U.S. Medical Imaging Business

Operating, selling and administrative costs increased 8.4%, or $1.4 million, to $17.7 million. These expenses increased primarily as a result of increased payroll and bad debt expenses in the quarter. As a percentage of sales, these expenses increased from 42.5% in 2001 to 44.3% in 2002.

International Business

Operating, selling and administrative expenses increased 24.8%, or $0.7 million, to $3.5 million. These expenses increased primarily as a result of new businesses and start-up centers. As a percentage of sales, these expenses increased from 29.0% in 2001 to 30.6% in 2002.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased 17.1%, or $1.5 million, to $10.1 million. This was offset by amortization of goodwill in the first quarter of 2001 of $1.5 million with none in the first quarter of 2002. Of the increase, $0.2 million was attributable to our medical imaging business. The remainder of the increase was attributable to our pharmacy services business, primarily in new FDG production facilities, with an increase of $0.7 million; and our corporate operations, primarily for new IT systems costs with an increase of $0.4 million.

	Depreciation and Amortization
	Three Months Ended March 31,
	2002	2001

U.S. Pharmacy Services Business	$2,291	$1,543
U.S. Medical Imaging Business	5,118	4,870
International Operations	1,011	949
Unallocated Corporate	1,720	1,297

Total	$10,140	$8,659

ACQUISITION OF BUSINESSES

During the first quarter of 2002, we acquired a radiopharmacy in Alaska for a purchase price of $2.0 million.

LIQUIDITY AND CAPITAL RESOURCES

We had cash, cash equivalents and investments of $24.1 million at March 31, 2002 compared to $29.5 million at December 31, 2001. Total debt was $216.3 million at March 31, 2002 compared to $226.7 million at December 31, 2001, a reduction of $10.4 million. We had a positive cash flow from operations of $21.9 million during the first quarter of 2002. We used a portion of this cash to pay down debt balances. Working capital decreased slightly to $113.7 million from $115.7 million at December 31, 2001.

On January 17, 2002, we completed an asset securitization agreement using the trade receivables as collateral. At March 31, 2002, we had $61.2 million extended on this $65 million agreement. In addition, we had borrowings of $102.0 million outstanding on our $167.5 million credit line. Based upon our current acquisition and capital plans we believe we have sufficient resources available to fund our 2002 capital needs.

FORWARD LOOKING STATEMENT

Except for the historical information and discussions contained herein, statements contained in this Report on Form 10-Q may constitute "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including: changes in the regulation of the healthcare industry at either or both of the federal and state levels; changes or delays in reimbursement for our services by governmental or private payers; our failure to continue to develop and market new products and services and to keep pace with technological change; competitive pressures; failure to obtain or protect intellectual property rights; quarterly fluctuations in revenues and volatility of our stock price; our ability to attract and retain key personnel; currency risks; dependence on certain suppliers; our ability to successfully manage acquisitions and alliances; legal, political and economic changes; and other risks, uncertainties and factors discussed in the "Risk Factors" section in the Annual Report on Form 10-K for December 31, 2001 and elsewhere herein, in our other filings with the SEC or in materials incorporated by reference. Given these uncertainties, undue reliance should not be placed on such forward-looking statements.

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Interest income earned on our investment portfolio is affected by changes in the general level of U.S. interest rates. Our line of credit borrowings effectively bear interest at variable rates and therefore, changes in U.S. interest rates affect interest expense incurred thereon. Changes in interest rates do not affect interest expense incurred on our fixed rate debt. There have been no significant changes in the debt instruments from the table as filed in the annual report on Form 10K at December 31, 2001.

SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES

Part II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

10. Material Contracts

10.1 Severance and Release Agreement, dated January 31, 2002, between Haig Bagerdjian and the Company.

10.2 Severance and Release Agreement, dated April 5, 2002, between David Ward and the Company.

(b) Reports on Form 8-K

None.

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.

	Syncor International Corporation
	(Registrant)


May 15, 2002	By: /s/ William P. Forster
	William P. Forster
	Senior Vice President and Chief Financial Officer
	(Principal Financial/Accounting Officer)

Top of the Document

EX-10.1 3 haig.htm SEVERANCE & RELEASE AGREEMENT SEVERANCE AND RELEASE AGREEMENT

SEVERANCE AND RELEASE AGREEMENT

This Severance and Release Agreement (“Agreement”) is made by and between HAIG S. BAGERDJIAN (“Executive”) and SYNCOR INTERNATIONAL CORPORATION (“Syncor”).

WHEREAS, Executive has been employed as an Executive Vice President of Syncor and President and Chief Executive Officer of Syncor Overseas Ltd. (“Overseas”); and

WHEREAS, Syncor and Executive agree to the termination of Executive’s employment in return for certain benefits as described in Paragraph 2 of this Agreement, which benefits are also provided by Syncor for and in consideration of the other covenants of Executive contained in this Agreement.

NOW THEREFORE, the parties agree as follows:

1. Employment Status and Termination of Employment.

(a) Active Employment Period. From the date of this Agreement until January 31, 2002 (the “Active Employment Period”), Executive will continue to serve as an Executive Vice President of Syncor and as the President and Chief Executive Officer of Overseas, and will continue to be a member of the boards of directors of any subsidiaries of Syncor of which he is a member as of the date of this Agreement and will also continue to be an officer of any other subsidiaries of Syncor as to which he is an officer as of the date of this Agreement. During the Active Employment Period, Executive will report to Robert G. Funari and have the following responsibilities:

(i) He will work to close those transactions that have been approved by Syncor’s officers and its board of directors and will not initiate any new transactions.

(ii) He will participate in the design and implementation of the communications strategy regarding the change in his role—both internal and external.

(iii) He will assist any designated executives of Overseas in gaining an in-depth understanding of the current status of Overseas’ business.

(iv) He will assist Monty Fu and Robert G. Funari in developing strategic alternatives for Syncor, including acting as an advisor in discussions with respect to any business combinations or strategic alliances.

Executive will be provided with the same e-mail and voice mail access which he now enjoys and, to the extent necessary to him to perform the duties specified in this Paragraph 1(a), an office, secretarial services and other support services as appropriate. Effective January 31, 2002, Executive will relinquish his title of President and Chief Executive Officer of Overseas, and will resign from the boards of directors of any subsidiaries of Syncor of which he is then a member, and will also resign as an officer of any other subsidiaries of Syncor as to which he is then an officer.

(b) Inactive Employment Period. Effective February 1, 2002, Executive will continue to be employed by Syncor as Executive Vice President through the earlier of January 31, 2004 or the 30th day after Executive tenders notice of termination of his employment (the period being referred to hereinafter as the “Inactive Employment Period,” and the date on which the Inactive Employment Period ends being referred to hereinafter as the “Employment Termination Date”), on the following basis:

(i) He will remain available to consult with Monty Fu and Robert G. Funari or their designees at Syncor’s offices during business hours upon reasonable advance notice. Any travel he is asked to undertake will be by business class.

(ii) He will not be required to consult for more than 20 hours in any calendar month on a non-cumulative basis.

(iii) He will be entitled to render services to others in an employment or consulting capacity for additional compensation.

(iv) He will be provided with the same e-mail and voice mail access which he now enjoys and, to the extent he is called upon to consult, an office, secretarial services and other support services as appropriate.

2. Benefits Subject to Executive’s Continued Fulfillment of His Obligations Under This Agreement. Syncor will provide Executive with the following benefits, in lieu of any benefits that may be available under any other program, plan, or agreement with Syncor providing severance or other post-employment commitments or arrangements, except as otherwise provided in Paragraphs 4, 5 or 18:

(a) Base Pay Continuation. Syncor agrees to continue to pay Executive his base annual salary of $275,000 from the date of this Agreement through the Employment Termination Date. The base pay continuation will be paid in regular payroll installments beginning on the first regular pay date after the date of this Agreement. These payments are subject to withholding and other deductions as required by law or otherwise. Notwithstanding the foregoing, on or after January 31, 2002, upon 30 days’ written notice to Syncor, Executive may elect to terminate his employment with Syncor and receive at the Employment Termination Date, in lieu of the base pay continuation described in this Paragraph 2(a), a lump-sum payment representing Executive’s base salary ($275,000) for the remaining months from and after giving such notice to and including the month of January 2004. This lump-sum payment will be subject to withholding and other deductions as required by law or otherwise.

(b) Additional Payments. Syncor agrees to pay Executive a total additional amount of $1,000,000 in quarterly installments of $125,000 on the last day of each calendar quarter, beginning March 31, 2002 and ending December 31, 2003. These payments are subject to withholding and other deductions as required by law or otherwise. Notwithstanding the foregoing,

(i) If Executive elects to terminate his employment in accordance with Paragraph 2(a); or

(ii) At Syncor’s election at any time prior to the termination of the Executive’s employment,

Executive will receive, in lieu of the remaining additional payments described in this Paragraph 2(b), a lump-sum payment representing the sum of the remaining additional payments. Any such lump-sum payment will be subject to withholding and other deductions as required by law or otherwise.

(i) On June 16, 1998, Executive was granted options to purchase 50,000 shares of Syncor common stock under the Syncor International Corporation 1990 Master Stock Incentive Plan, as amended and restated as of June 18, 1997 (the “1990 Master Plan”). As of August 1, 2001, Syncor will deem as satisfied the performance goals set forth in Executive’s option grant such that Executive will be vested in said options as of that date.

(ii) If, at the Employment Termination Date, Executive is not already fully vested in the options to purchase 57,936 shares of Syncor common stock granted to him on June 20, 2000 under the Syncor International Corporation Executive Long Term Performance Equity Plan (“Long-Term Plan”), in accordance with the terms of Executive’s option grant, he will at that time become fully vested in said options as if the stock price targets specified in connection with said option grant had been met.

(iii) Subject to the foregoing, Executive shall be entitled to continued vesting of the options previously granted to him under the 1990 Master Plan and the 2000 Master Stock Incentive Plan in accordance with their respective terms.

(d) Vacation. On the first regular pay date following the date of this Agreement, Syncor will pay Executive his accrued but unused vacation time as of December 31, 2001, in the form of (i) a lump-sum payment in the gross amount of $41,600 and (ii) a lump-sum payment of $51,149, equal to the value of 385 hours of additional vacation time which Executive would have accrued but for the 320-hour limit in Syncor’s vacation policy. Said payments will be subject to withholding and other deductions as required by law. Executive will continue to accrue vacation time for the period after December 31, 2001, based on his employment during such period. Upon the Employment Termination Date, Executive will be paid for all accrued but unused vacation time.

(e) Outplacement Counseling and Services. Syncor will pay all reasonable fees associated with Executive’s enrollment in an outplacement counseling program of Executive’s choice for the time period of February 1, 2002, through January 31, 2004.

(f) Attorneys/Advisors Fees. Syncor will pay all reasonable attorneys fees and advisors fees incurred by Executive in connection with the negotiation of this Agreement, not to exceed $35,000.

(g) Long-Term Care Insurance Premiums. In the event Executive, on termination of his employment, elects to continue long-term care insurance coverage under the Syncor International Corporation Executive Benefit Plan for Officers (which includes health, life, and long term care provisions) (the “Executive Benefit Plan”), Syncor will pay all remaining premiums due for such long term care insurance coverage.

In the event of Executive’s death during the Active Employment Period or the Inactive Employment Period, his Beneficiary will be entitled to the payments and other benefits that Executive would have received if he had been employed throughout the Active Employment and the Inactive Employment Period (other than continuation as a participant in employee benefit plans to the extent dependent upon continued employment). For purposes of the preceding sentence, the Executive’s “Beneficiary” is, collectively, the person or persons or other entity or entities designated by him in writing to the Vice President, Human Resources and Communications, of Syncor to receive such payments and other benefits in the event of Executive’s death. If Executive designates more than one person or entity as Beneficiary, such payments and other benefits will be paid in equal shares to such persons or entities whom Executive has designated as Beneficiary who survive him or are in existence at the time of his death, unless he otherwise indicates in the instrument designating the Beneficiary. Executive may revoke his designation of a Beneficiary, and may designate a new Beneficiary, at any time. If Executive fails to designate a Beneficiary, of if no designated Beneficiary is in existence at the time of Executive’s death, the Beneficiary will be the Executive’s estate.

3. “Executive’s Continued Fulfillment of His Obligations Under This Agreement.” As used in Paragraph 2 of this Agreement, the term “Executive’s continued fulfillment of his obligations under this Agreement” will mean his substantial compliance with all material terms of this Agreement, and Executive will not be considered to have failed to fulfill his obligations under this Agreement unless he has been determined by a final order of a court of competent jurisdiction to have materially breached a material obligation under this Agreement while Syncor has materially complied with all of its obligations under this Agreement. If Syncor has a good faith and reasonable belief that Executive has materially breached a material obligation under this Agreement, Syncor will provide forty-five days (45) written notice to Executive explaining in detail the material breach. At any time during the forty-five (45)-day period following his receipt of that notice, Executive will have an opportunity to cure such material breach.

4. Participation in Other Benefit Plans and Programs. For so long as Executive remains employed by Syncor, and in addition to his existing rights under benefit plans and programs described in Paragraph 2, Executive will be entitled to continue to participate in the following benefit plans and programs sponsored by Syncor, in accordance with their respective terms, to-wit: the Syncor International Corporation Deferred Compensation Plan, the Executive Benefit Plan, the Syncor International Corporation Employees’ Savings and Stock Ownership Plan, the Long-Term Plan and the Syncor International Corporation 2001 Officer Incentive Plan (the “Incentive Plan”); provided, however, that:

(a) Executive’s benefits, if any, under the Incentive Plan will be determined on a basis consistent with the benefits, if any, of other officers of Syncor participating in the Incentive Plan;

(b) Executive will not be eligible to participate in the Long-Term Plan after January 31, 2002 (except as provided in Paragraph 2(c)(ii) of this Agreement); and

(c) Any acceleration of vesting or payment of benefits under any plan described in Paragraph 2 or this Paragraph 4 which occurs prior to the later of the termination of this Agreement or the expiration of any stock options or other rights or benefits and which applies to officers generally who participate in such plan, whether on account of an “event” or a “change in control” (as they may be defined in such plan) or for any other reason, will also apply to Executive.

In the event Executive’s employment with Syncor terminates for any reason, Syncor will, upon reasonable notice from Executive, assist Executive in the acquisition of a portable medical insurance policy covering him and his eligible dependents, with Executive as the policyholder and with the premiums thereunder to be paid by Executive.

5. Indemnification. Syncor will indemnify Executive if Executive was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding based on acts or omissions that occurred on or before the Employment Termination Date, whether civil, criminal, administrative, or investigative, and whether formal or informal, by reason of the fact that Executive is or was a director, officer, advisory director, executive or agent of Syncor, against expenses, including attorneys fees, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Executive in connection with such action, suit or proceeding, to the fullest extent and in the manner permitted by law, provided that Executive acted in good faith and in a manner Executive reasonably believed to be in or not opposed to the best interests of Syncor and, with respect to a criminal action or proceeding, provided that Executive had no reasonable cause to believe that his conduct was unlawful.

6. Further Assistance. At Syncor’s reasonable request, Executive agrees to provide Syncor with cooperation in any lawsuits arising out of events during Executive’s employment at Syncor, provided such assistance does not unreasonably and materially interfere with Executive’s duties or responsibilities under any subsequent employment. Upon reasonable notice from Syncor, Executive agrees to participate in discovery and trial preparation, and to assist Syncor’s legal counsel as and where needed, including attendance at depositions and trials (“Litigation Assistance”). Executive will use reasonable efforts to timely respond to Syncor’s requests for Litigation Assistance and to provide such Litigation Assistance. Upon termination of any lawsuit in which Executive provides services, Executive will, at Syncor’s request, deliver to Syncor all materials related to the lawsuit. It is understood that Executive’s Litigation Assistance will be rendered only because of his knowledge of the facts underlying any such lawsuits and he will not be required to render assistance of a legal nature because he is an attorney. Syncor will use its best efforts to schedule any appearances by Executive so as to minimize any inconvenience to him. To the extent that he renders Litigation Assistance, he will be compensated for his time at a reasonable rate on a per diem basis. In addition, Executive will be reimbursed for reasonable out-of-pocket expenses associated with Executive’s assistance, including travel, lodging, meals, telephone, and similar expenses in accordance with Syncor’s usual policies. This compensation is not related to or conditioned on the nature or content of Executive’s testimony, if any, nor on the outcome of any lawsuit. Rather, it is intended solely to provide Executive with reasonable compensation for his time and actual expenses incurred in rendering Litigation Assistance.

7. Waiver and Release.

(a) In exchange for the payments described above, Executive hereby waives, releases, gives up, and promises never to make any claims of any kind (whether Executive knows of them now or not) that Executive may have against Syncor, its related entities, parent companies, and subsidiaries (collectively referred to as the “Companies”), or any officer, director, agent, executive, owner or other representative of the Companies as a result of facts now in existence, relating to the following:

(i) any claims for further compensation or benefits as an employee from the Companies except as set forth in this Agreement or the other agreements or plans specifically referred to herein;

(ii) any claims arising out of Executive’s employment or termination of employment with Syncor;

(iii) any claims under the federal Age Discrimination in Employment Act; the federal Civil Rights Act of 1964; 42 U.S.C. § 1981; the federal Family and Medical Leave Act; the federal Equal Pay Act; the federal Fair Labor Standards Act; the federal Older Workers Benefit Protection Act; the federal Americans With Disabilities Act; the federal Worker Adjustment and Retraining Notification Act; or California Government Code § 12920, California Government Code § 12940, California Labor Code § 2856, or California Labor Code § 970;

(iv) any claims under any contract, agreement (except this Agreement or the other agreements or plans specifically referred to herein), promise or Syncor policy relating to Executive’s employment by Syncor;

(v) any claim for violation of any other public policy; and

(vi) any claim for attorney fees relating to the foregoing. Executive accepts the payments described above in Paragraph 2 in full satisfaction of all such claims. Executive’s above waiver and release also does not include “future claims or rights” within the meaning of that phrase under the federal Older Workers Benefit Protection Act.

(b) Syncor, on behalf of itself and any of the Companies, hereby waives, releases, gives up, and promises never to make any claims of any kind (whether it knows of them now or not) that it may have against Executive as a result of facts now in existence, relating to the following:

(i) Executive’s employment relationship or termination of employment with Syncor;

(ii) any claims under any contract, agreement (except this Agreement or the other agreements or plans specifically referred to herein), promise or Syncor policy relating to Executive’s employment by Syncor;

(iii) any claim for violation of any other public policy; and

(iv) any claim for attorney fees relating to the foregoing.

The provisions of this Paragraph 7(b) will not apply to claims by any of the Companies against Syncor (1) which do not, as to all of the Companies in the aggregate, exceed $250,000; (2) which relate to or arise out of Executive’s duties as the President and Chief Executive Officer of Overseas (other than where Executive has acted in good faith in what he reasonably believed to be in the best interests of the Companies); and (3) as to which, as of the date of this Agreement, the Companies have no knowledge nor should they have such knowledge.

(c) Syncor and Executive each agrees that it or he, as the case may be, has been fully advised of the contents of §1542 of the California Civil Code (“§1542”), and said section and the benefits thereof are expressly waived as to any claims, known or unknown, which exist up to and including the date of this Agreement. Section 1542 reads as follows:

                                    §1542. (General release - claim extinguished.) A general
                        release does not extend to claims which the creditor does not know
                        or suspect to exist in his favor at the time of executing the release,
                        which if known to him must have materially affected his settlement
                        with the debtor.

Syncor and Executive each represents that it or he, as the case may be, understands and acknowledges the significance and the consequences of its or his release, as well as the specific waiver of §1542.

8. Confidential Information.

(a) Executive has been employed by Syncor in a position of great trust and responsibility that gives him access to sensitive information of a confidential nature, about the executives, officers and consultants of the Companies (collectively referred to as the “Management”), as well as access to confidential or proprietary information about the Companies. For the purposes of this Agreement, the term “Confidential Information” will include, without limitation, sensitive information of a confidential or any nonpublic information relating to the Management or Companies and with regard to the Companies, nonpublic financial information, information concerning compensation or benefit programs, internal projections, budgets, financial plans, marketing and advertising strategies or plans, promotional materials, vendor and product information, cost and price information, the identity and lists of actual or potential customers, vendors, executives, suppliers and distributors, sources of supply for capital equipment, test results or market studies concerning competitors and competitive products and any other matters not specifically mentioned above which would constitute a trade secret. Executive acknowledges that the Confidential Information derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use and that reasonable efforts have been made to maintain the secrecy of such Confidential Information.

(b) Executive agrees to keep such Confidential Information confidential at all times during and for a period of thirty-six (36) months from the date of this Agreement, and agrees further that he will neither disclose, furnish, disseminate, make available nor use any Confidential Information, for his own or a third party’s benefit nor disclose or communicate such information to any third party, person or entity, either before or during such period. Executive’s obligations under this Paragraph 8 will not apply to any part of the Confidential Information that was or became generally available to the public other than as a result of disclosure by Executive. Further, Executive’s obligations under this Paragraph 8 will not apply to the disclosure of Confidential Information where such disclosure is required by law and Executive is subject to civil or criminal sanctions or penalties for failing to disclose information, provided Executive gives Syncor prompt notice of any such situation and endeavors, and cooperates fully (to the extent consistent with his legal or ethical obligations) with Syncor’s efforts, to prevent such disclosures, keep such disclosures to a minimum, and secure protective orders or similar arrangements with respect to such Confidential Information.

(c) Executive will return to Syncor, prior to February 1, 2002, all materials including, without limitation, all Confidential Information, reports, files, memoranda, and records, keys, access cards, security passes or badges, computer files or disks and all other physical or personal property which Executive received, prepared or helped to prepare, in connection with Executive’s employment, together with copies in whatever form; provided, however, that he may retain possession of the Dell computer and cell phone until the termination of his employment.

9. Non-Solicitation. While employed by Syncor, Executive will not directly or indirectly recruit or solicit for employment any person who was employed by Syncor at any time. In addition, during the six-month period following the Active Employment Period, Executive will not directly or indirectly recruit or solicit for employment any person who was employed by Syncor at any time during the one-month period prior to the date of this Agreement; provided, however, that, so long as Executive is no longer employed by Syncor, Executive may recruit and solicit any employee of Syncor who was involuntarily terminated by Syncor.

10. Prohibition Against Disparagement. The Companies will not disparage, defame or denigrate the reputation of, or cause or encourage any other person to so disparage, defame or denigrate the reputation of, Executive; and Executive will not disparage, defame or denigrate the reputation of, or cause or encourage any other person to so disparage, defame or denigrate the reputation of, the Companies or any of their officers. This Paragraph 10 will not, however, prevent a party from truthfully testifying as required by compulsion of law.

11. Enforcement. Because Executive’s services are unique and because Executive has access to Confidential Information and work product, the parties hereto agree that Syncor would be damaged irreparably in the event any of the provisions of Paragraphs 6, 7, 8, or 9 hereof were not performed in accordance with their specific terms or were otherwise breached and that money damages would be an inadequate remedy for any such non-performance or breach. Therefore, Syncor or its successors or assigns will be entitled, in addition to other rights and remedies existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security). Similarly, Syncor or its successors or assigns and Executive will be entitled, in addition to other rights and remedies existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach by the other of any of the provisions of Paragraphs 5, 7, and 10 and to enforce such provisions specifically (without posting a bond or other security). Notwithstanding anything else in this Agreement to the contrary, absent a determination by a final judgment of a court of competent jurisdiction (which judgment is no longer subject to appeal or, if appealed, the judgment has been confirmed) that Executive has breached this Agreement and quantification of damages therefor, Syncor shall have no right to withhold any payments hereunder or offset any such damages against amounts otherwise payable to Executive hereunder.

12. Costs of Enforcement. If Syncor complies with this Agreement but Executive violates Executive’s commitments in Paragraphs 6, 7, 8, or 9 of this Agreement, it is agreed that Syncor may seek judicial enforcement of its rights under Paragraphs 6, 7, 8, or 9, and it is agreed that Syncor will be entitled to recover from Executive any costs it incurs (including reasonable attorney fees) in obtaining judicial enforcement, provided that such cost recoveries will not exceed the net amounts paid to Executive under Paragraph 2 of this Agreement. If Executive complies with this Agreement but Syncor violates its commitments in Paragraphs 1, 2, 3, 4, 5, 6, or 7 of this Agreement, it is agreed that Executive may seek judicial enforcement of its rights under Paragraphs 1, 2, 3, 4, 5, 6, or 7 and Executive will be entitled to recover from Syncor any costs it incurs (including reasonable attorney fees) in obtaining judicial enforcement.

13. Period for Review and Consultation. Executive has been advised by Syncor to consult with an attorney regarding this Agreement before signing it. Executive has been given twenty-two (22) days after the date on which Executive received this Agreement to decide whether to sign it. By signing this Agreement Executive acknowledges that Executive has read this Agreement, understands all of its provisions, and knowingly and voluntarily agrees to all of its terms and provisions.

14. Revocation Period. Once Executive has signed this Agreement, Executive may still revoke it at any time during the eight (8)-day period after Executive received this Agreement, by delivering written notice of revocation to Syncor within this eight (8)-day period. This Agreement will not become effective or enforceable until this revocation period has expired without Executive having revoked this Agreement. Once this revocation period expires, if Executive has not revoked this Agreement it will be a binding, non-revocable agreement between Executive and Syncor.

15. Notices. Any notices or other communications required or permitted under this Agreement will be given in writing and either (i) delivered in person, (ii) transmitted by facsimile, or (iii) mailed by certified or registered mail, postage prepaid, as set forth below (or to such other address or facsimile number as either party will have last designated by notice to the other party). Each such notice or other communication will be effective (a) if given by facsimile, when transmitted to the number specified in or pursuant to this Paragraph 15 with evidence of such transmission by the transmitting equipment, (ii) if given by mail, two (2) days after such notice or communication is deposited in the United States mails, first class postage prepaid, addressed as set forth in or pursuant to this Paragraph 15, or (iii) if given by other means, when actually delivered at such address.

	If to Syncor, addressed to:

	Sheila H. Coop
	Senior Vice President, Human Resources
	and Communications
	Syncor International Corporation
	6464 Canoga Avenue
	Woodland Hills, CA 91367-2407
	Facsimile No.: (818) 737-4898

	If to Executive, addressed to:

	Haig S. Bagerdjian, Esq.
	14410 Mulholland Drive
	Bel Air, CA 90077
	Facsimile No.: (310) 472-0730
	With a copy addressed to:

	Heller Ehrman White & McAuliffe LLP
	601 South Figueroa Street, 40th Floor
	Los Angeles, CA 90017-5758
	Attention: Neal H. Brockmeyer, Esq.
	Facsimile No.: (213) 614-1868

16. Severability. The provisions of this Agreement are severable. If any part of it is found to be unenforceable, all other provisions will remain fully valid and enforceable.

17. Choice of Laws. This Agreement will be governed by the substantive laws of the State of California as applied to contracts entered into and to be performed entirely within such state by residents thereof.

18. Entire Agreement.

(a) This Agreement is the complete understanding between Syncor and Executive on the matters to which the parties agree in it, and Executive is not relying on any statement other than the provisions of this Agreement. No other promises or agreements will be binding unless in a writing signed by the parties to this Agreement. Except to the extent set forth below or elsewhere in this Agreement, any and all prior agreements, written or oral, if any, between Syncor and Executive are cancelled by this Agreement.

(b) Notwithstanding Paragraph 18(a), the Benefits Agreement between Syncor and Executive, dated December 18, 1989, will remain in full force and effect in accordance with its terms throughout the period which ends upon the later of the termination of this Agreement or the expiration of any stock options or other rights or benefits described in Paragraph 2 hereof.

(c) Notwithstanding Paragraph 18(a), the Severance Agreement between Syncor and Executive, dated August 24, 2001 (the “Severance Agreement”), will remain in full force and effect in accordance with its terms, except that (A) in the event Executive’s employment is terminated following a Change in Control, (i) by Syncor other than for Cause or (ii) by Executive for Good Reason, Executive only will be entitled to Severance Payments to the extent set forth in Paragraphs 6.1(A), 6.1(B) and 6.1(C) [calculated without taking into account the additional payment under Paragraph 2(b) of this Agreement] of the Severance Agreement, and (B) Paragraphs 5 and 6.1 will have no application after January 30, 2004. The payment under said Paragraph 6.1(A) will be offset by any payments which had been made to Executive under Paragraph 2(a) of this Agreement and will be in lieu of any remaining payments due under said Paragraph 2(a). Executive will be entitled to the payments under Paragraph 2(b) of this Agreement in addition to any Severance Payments under the Severance Agreement. For purposes of the first sentence of this Paragraph 18(c), the terms “Change in Control,” “Severance Payments,” “Cause” and “Good Reason” have the meanings set forth in Paragraph 15 of the Severance Agreement, provided that any termination by Executive of his employment after any Change in Control shall be deemed to be for Good Reason.

(d) Notwithstanding Paragraph 18(a), the Indemnitee Agreement between Syncor and Executive, dated June 20, 1996 (the “Indemnitee Agreement”), will remain in full force and effect in accordance with its terms. Any conflict between the Indemnitee Agreement and Paragraph 5 of this Agreement will be resolved so as to provide Executive with the more favorable indemnification as between the two agreements. In addition, Executive will be provided indemnification under Syncor’s charter and bylaws and applicable law, and coverage under director and officer liability insurance, no less favorable than other present and former officers of Syncor.

19. Counterparts. This Agreement may be executed in counterparts and each counterpart will be deemed an original and, when taken together with other signed counterparts, will constitute one agreement.

20. Headings. Captions and Paragraph headings are used herein for convenience only, are no part of this Agreement and will not be used in interpreting or construing this Agreement.

Dated this 31st day of January, 2002.

	SYNCOR INTERNATIONAL CORPORATION
	By: /s/ Sheila Coop
	Its: Sr. Vice President, Human Resources & Communications


	HAIG S. BAGERDJIAN

EX-10.2 4 david.htm SEVERANCE & RELEASE AGREEMENT SEVERANCE AND RELEASE AGREEMENT

SEVERANCE AND RELEASE AGREEMENT

This Severance and Release Agreement (“Agreement”) is made by and between David L. Ward (“Executive”) and SYNCOR INTERNATIONAL CORPORATION (“Syncor”).

WHEREAS, Executive has been employed as Executive Vice President of Syncor and President and Chief Executive Officer of Comprehensive Medical Imaging, Inc. ("CMI"), a subsidiary of Syncor; and

WHEREAS, in anticipation of Syncor's decision to make changes to its overall strategies with respect to its investments in the medical imaging business, Syncor and Executive have agreed to the termination of Executive’s employment with Syncor, CMI and all other subsidiaries and affiliates of Syncor (all of which companies shall be included, for purposes of this Agreement, in any reference to "Syncor") in return for certain benefits as described in Paragraphs 3 and 5 of this Agreement, which benefits are also provided by Syncor for and in consideration of the other covenants of Executive contained in this Agreement, including Executive’s confidentiality and non-solicitation commitments in Paragraphs 10 and 11 of this Agreement.

NOW THEREFORE, the parties agree as follows:

1. Employment Status and Change in Employment Status. Syncor and Executive agree that Executive will change employment status with Syncor to a non-working status (the "Status Date") upon the earliest of the following dates: (a) consummation of the sale of CMI to a third party or a combination of third parties that results in 90%or more of CMI's centers being sold; (b) January 1, 2003; or (c) a date mutually agreed upon between the Chief Executive Officer of Syncor and Executive. It is agreed that on the Status Date, Executive will relinquish the positions (and corresponding job duties and responsibilities) of Executive Vice President of Syncor and President and Chief Executive Officer of CMI, and all other positions and titles that Executive may have with any Syncor subsidiary or affiliate.

2. Status Date and Termination Date. For a period of twenty seven (27) months immediately following the Status Date, Executive will be on inactive status. It is agreed that Executive's last day of employment (the "Termination Date") with Syncor will be the date that is twenty seven (27) months following the Status Date.

3. Compensation and Benefits Subject to Executive’s Continued Fulfillment of Executive’s Obligations Under This Agreement. Subject to Executive's continued fulfillment of his obligations under this Agreement, Syncor will provide Executive with the following benefits, in lieu of any benefits that may be available under any other program, plan, or agreement with Syncor providing severance or other post-employment commitments or arrangements:

(a) Base Pay Continuation. Syncor will continue to pay Executive his current salary for all hours up to and including the Status Date, less standard withholdings and authorized deductions. Syncor agrees to continue to pay Executive his base annual salary of $285,000 from the Status Date through the Termination Date. The base pay continuation will be paid in regular payroll installments beginning on the first regular pay date after the Status Date. These payments are subject to withholding and other deductions as required by law.

(b) Vacation. On the first regular pay date following the Status Date, Syncor will pay Executive his accrued but unused vacation time and floating holidays as of the Status Date, in the form of a lump sum payment. This payment is subject to withholding and other deductions as required by law. Executive shall continue to accrue vacation time for the period after the Status Date through the Termination Date, based on his employment during such period.

(c) Outplacement Counseling and Services. Syncor will pay all fees, up to $42,750, which represents 15% of annual base salary, associated with Executive’s enrollment in Kevin Hand & Associate’s Career Transition Senior Executive Program. Syncor and Executive agree that at Executive's option, Executive can waive the outplacement services described in this paragraph in exchange for $42,750, less authorized withholdings and deductions. Such payment will be included in Executive's regular paycheck on the first payday following the Status Date.

(d) Mortgage Differential Payments. Executive and Syncor agree that Syncor will continue to pay Executive's mortgage differential payments each month through the final date originally agreed between Syncor and Executive.

(e) Special Bonus Payment. Executive and Syncor agree that Syncor will provide a special bonus payment (the "Special Bonus Payment") to Executive in the amount of $240,469, less authorized withholdings and deductions. The Special Bonus Payment will be paid to Executive on the first regular payday following the Status Date.

(f) Incentive Bonus Payment - 2002. Executive shall also be eligible to receive an additional payment of $500,000 (the "Incentive Bonus Payment") after the Status Date if, and only if, Syncor's Board of Directors makes a determination, based on the recommendation of the Chief Executive Officer, that Executive has acted in the best interest of Syncor from the effective date of this Agreement until the Status Date, which determination will be made within 15 days after the Status Date. If the foregoing condition is satisfied, Executive shall be entitled to receive the Incentive Bonus Payment within 30 days after the Status Date.

4. “Executive’s Continued Fulfillment of His Obligations Under This Agreement.” As used in Paragraphs 3 and 5 of this Agreement, the term “Executive’s continued fulfillment of his obligations under this Agreement” shall mean his substantial compliance with all material terms of this Agreement. If Syncor has a good faith and reasonable belief that Executive has materially breached a material obligation under this Agreement, Syncor shall provide forty-five days (45) written notice to Executive explaining in detail the material breach. At any time during the forty-five day period following his receipt of that notice, Executive shall have an opportunity to cure such material breach.

5. Participation in Other Benefit Plans and Programs. Subject to Executive's continued fulfillment of his obligations under this Agreement, during the term of this Agreement, concluding on the Termination Date, unless specifically stated otherwise in this paragraph, Executive shall be entitled to continue to participate in the following benefit plans and programs sponsored by Syncor, in accordance with their respective terms:

(a) Syncor Executive Benefit Plan. Executive will continue to participate in all health, life and long-term care plans afforded to Syncor officers. Following the Status Date, Executive and Syncor will continue to make contributions to this plan in the same manner and form as when Executive was a working employee. The benefits otherwise receivable by Executive pursuant to the Syncor Executive Benefit Plan, however, shall be reduced to the extent benefits of the same type are received by Executive at any time during the term of this Agreement (and any such benefits received by Executive shall be reported to Syncor by Executive).

(b) Syncor International Corporation Employees' Savings and Stock Ownership Plan ("ESSOP"). Executive may continue to participate in the ESSOP as an active, regular employee through the Termination Date.

(c) Executive Long Term Performance Equity Plan (the "Traunch Plan"). Notwithstanding the conditions and provisions agreed to in paragraph 5(e), Executive and Syncor agree that Executive will continue to participate in the Traunch Plan as a regular participant through the Termination Date; however, Executive shall not be eligible to participate in any new targets that may be offered under the Traunch Plan after the effective date of this Agreement.

(d) Syncor International Corporation Deferred Compensation Plan (the "Deferred Compensation Plan"). Executive will continue to participate in the Deferred Compensation Plan as an active and regular participant through the Termination Date. Executive will continue to receive employer contributions in the same form and manner as other participants in this plan.

(e) 2002 Corporate Management Incentive Plan. Executive and Syncor agree that Executive will not be eligible to participate in the 2002 Corporate Management Incentive Plan.

(f) Stock Options. Executive shall not be eligible to participate in any new option grants that may be offered after the effective date of this Agreement; however, any acceleration of vesting or material amendment of any stock option previously granted to Executive under any of Syncor's stock option plans which occurs prior to the later of the Termination Date or the expiration of any stock options, whether on account of a "change in control" (as it may be defined in any such plan) or for any other reason, shall also apply to Executive.

(g) Portable Medical Insurance Policy. In the event that Executive's employment with Syncor terminates after the Status Date, for any reason, Syncor shall, upon reasonable notice from Executive, assist Executive in the acquisition of a portable medical insurance policy covering him and his eligible dependents, with Executive as the policyholder and with the premiums thereunder to be paid by Executive.

6. Non-Participation in Other Benefit Plans. Except as described in Paragraphs 3 and 5 above, Executive shall not be eligible to participate in any other compensation plan, bonus plan, or any other employee benefit plan offered by Syncor, and Executive hereby waives any right to participate in such plans. Without limiting the scope of the foregoing sentence, except as provided under this Agreement, Executive specifically waives any rights that he would have been entitled to receive under the Severance Agreement, dated August 24, 2001, between Executive and Syncor, and the Benefits Agreement, dated March 8, 1999, between Executive and Syncor.

7. Indemnification. Syncor shall indemnify Executive if Executive was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding based on acts or omissions that occurred on or before the Status Date, whether civil, criminal, administrative, or investigative, and whether formal or informal, by reason of the fact that Executive is or was a director, officer, advisory director, executive or agent of Syncor, against expenses, including attorneys fees, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Executive in connection with such action, suit or proceeding, to the fullest extent and in the manner permitted by law, provided that Executive acted in good faith and in a manner Executive reasonably believed to be in or not opposed to the best interests of Syncor and, with respect to a criminal action or proceeding, provided that Executive had no reasonable cause to believe that his conduct was unlawful.

8. Further Assistance. At Syncor’s reasonable request, Executive agrees to provide Syncor with cooperation in any lawsuits arising out of events during Executive’s employment at Syncor, provided such assistance does not unreasonably and materially interfere with Executive’s duties or responsibilities under any subsequent employment. Upon reasonable notice from Syncor, Executive agrees to participate in discovery and trial preparation, and to assist Syncor’s legal counsel as and where needed, including attendance at depositions and trials (“Litigation Assistance”). Executive will use reasonable efforts to timely respond to Syncor’s requests for Litigation Assistance and to provide such Litigation Assistance. Upon termination of any Lawsuit in which Executive provides services, Executive shall, at Syncor’s request, deliver to Syncor all materials related to the Lawsuit. Executive will be reimbursed for out-of-pocket expenses associated with Executive’s assistance, including travel, lodging, meals, telephone, and similar expenses in accordance with Syncor’s usual policies. This compensation is not related to or conditioned on the nature or content of Executive’s testimony, if any, nor on the outcome of any lawsuit. Rather, it is intended solely to provide Executive with reasonable compensation for actual expenses incurred in Litigation Assistance.

9. Waiver and Release. In exchange for the payments described above, Executive hereby waives, releases, gives up, and promises never to make any claims of any kind (whether Executive knows of them now or not) that Executive may have against Syncor, its related entities, parent companies, and subsidiaries (collectively referred to as the “Companies”), or any officer, director, agent, executive, owner, insurer, benefit plan, or other representative of the Companies as a result of facts now in existence. The claims that Executive is waiving, releasing, giving up, and promising never to make include, but are not limited to, all of the following:

(a) any claims for further compensation or benefits from the Companies except as set forth in this Agreement;

(b) any claims arising out of Executive’s employment or termination of employment with Syncor;

(c) any claims under the federal Age Discrimination in Employment Act; the federal Civil Rights Act of 1964; 42 U.S.C. § 1981; the federal Family and Medical Leave Act; the federal Equal Pay Act; the federal Fair Labor Standards Act; the federal Older Workers Benefit Protection Act; the federal Americans With Disabilities Act; the federal Employee Retirement Income Security Act of 1974; the federal Worker Adjustment and Retraining Notification Act; California Government Code § 12920, California Government Code § 12940, California Labor Code § 2856, California Labor Code § 970, and any other state, federal or local statute, ordinance, order or regulation;

(d) Executive agrees that he has been fully advised of the contents of § 1542 of the California Civil Code (“§ 1542"), and said section and the benefits thereof are expressly waived as to any claims, known or unknown, which exist up to and including the date of this Agreement. Section 1542 reads as follows:

                                    § 1542. (General release – claims extinguished.) A
                        general release does not extend to claims which the creditor
                        does not know or suspect to exist in his favor at the time of
                        executing the release, which if known to him must have
                        materially affected his settlement with the debtor.

Executive represents that he understands and acknowledges the significance and the consequences of his release, as well as the specific waiver of § 1542.

(e) any claim under any contract, agreement (except this Agreement), promise or Syncor policy;

(f) any claim for violation of any other legal duty or public policy;

(g) any claim for attorneys' fees; and

(h) Executive expressly acknowledges and agrees that, by entering into this Agreement, Executive is waiving any and all rights and claims that Executive may have arising under the Age Discrimination in Employment Act of 1967, as amended, which have arisen on or before the date of execution of this Agreement. Executive further expressly acknowledges and agrees that:

(i) In return for entering into this Agreement, Executive will receive compensation beyond that which Executive was already entitled to receive before entering into this Agreement;

(ii) Executive was given a copy of this revised Agreement on April 5, 2002. Executive understands that Executive has a period of 45 days within which to consider this Agreement;

(iii) Executive understands that for a period of seven (7) days after Executive signs this Agreement that Executive may revoke this Agreement;

(iv) Executive acknowledges receipt of Attachment A, which provides the required information under the Older Workers Benefit and Protection Act (OWBPA) regarding the ages and titles of other Syncor or CMI employees selected or not selected for termination in connection with the changes to CMI’s overall business strategy;

(v) Executive understands that this Agreement will not become effective until eight (8) days after the Executive signs this Agreement; and

(vi) Executive agrees and represents as follows:

"I hereby acknowledge and understand that I have a period of 45 days to review and consider this Agreement prior to signing it, and that by executing and delivering this Agreement to Syncor, I am expressly waiving any remaining portion of such 45 day period. I may revoke this Agreement within seven (7) days of the date I sign this Agreement. I understand and agree that such revocation will only be effective if an originally executed written notice thereof is in the possession of Sheila Coop, Senior Vice President, Human Resources, on or before 5:00 p.m. Eastern Standard Time on the seventh (7th) day after I sign this Agreement. The foregoing release will bind my heirs, executors, administrators, spouse, successors and assigns and it may not be changed except by a writing signed by both Syncor and me."

Executive accepts the payments described above in Paragraphs 3 and 5 in full satisfaction of all such claims.

10. Confidential Information. Executive has been and will continue to be employed by Syncor in a position that gives him access to sensitive information of a confidential nature, about the executives, officers and consultants of the Companies (collectively referred to as the “Management”), as well as access to confidential or proprietary information about the Companies.

For the purposes of this Agreement, the term “Confidential Information” shall include, without limitation, sensitive information of a confidential nature or any nonpublic information relating to the Management or Companies and with regard to the Companies, nonpublic financial information, information concerning compensation or benefit programs, internal projections, budgets, financial plans, marketing and advertising strategies or plans, promotional materials, vendor and product information, cost and price information, the identity and lists of actual or potential customers, vendors, executives, suppliers and distributors, sources of supply for capital equipment, test results or market studies concerning competitors and competitive products and any other matters not specifically mentioned above which would constitute a trade secret. Executive acknowledges that the Confidential Information derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use and that reasonable efforts have been made to maintain the secrecy of such Confidential Information.

(a) In addition to the obligations under any agreement regarding confidentiality, trade secrets and intellectual property signed by Executive (which shall remain in full force and effect to the extent not inconsistent with this Agreement), and any ethical commitments and common law obligations Executive may have to keep confidences, but except as limited by Paragraphs 10(b) and 10(c) below, Executive further covenants and agrees to hold in confidence all Confidential Information, whether or not in written form and without limitation as to when or how Executive may have acquired such information, regarding the Management or the Companies, their agents, officers, directors, executives, representatives, and their predecessors, successors, heirs, executors, administrators and assigns, both present and former. Executive agrees to keep such Confidential Information confidential at all times during and after Executive’s employment with Syncor, and that Executive will neither disclose, furnish, disseminate, make available nor use any Confidential Information, for Executive’s own or a third party’s benefit nor disclose or communicate such information to any third party, person or entity, either before or after Executive’s termination of employment with Syncor.

(b) Syncor agrees that once the sale of a CMI center has been consummated, Executive's covenants under Paragraph 10(a) above shall not apply to any part of the Confidential Information that deals specifically and solely with the operations of that CMI center that was sold, but only so long as such Confidential Information does not constitute a valuable Syncor asset. For example, Confidential Information involving the financial performance, marketing and advertising strategies, or cost or price information of the sold CMI center will be covered by the foregoing exception to Paragraph 10(a). Any other Confidential Information of Syncor involving that sold CMI center, including, without limitation, Confidential Information of that CMI center that relates to or that reveals Syncor's management of and strategies with respect to CMI or the operations of Syncor, or Confidential Information that relates to a valuable Syncor asset, such as information relating to Project Light, shall not be included within the foregoing exception, it being understood that such Confidential Information will continue to be governed by Paragraph 10(a).

(c) Executive’s obligations under Paragraph 10(a) shall not apply to any part of the Confidential Information that was or became generally available to the public other than as a result of disclosure by Executive. Further, Executive’s obligations under Paragraph 10(a) shall not apply to the disclosure of Confidential Information where such disclosure is required by law and Executive is subject to civil or criminal sanctions or penalties for failing to disclose information, provided Executive gives Syncor prompt notice of any such situation and endeavors, and cooperates fully (to the extent consistent with his legal or ethical obligations) with Syncor’s efforts, to prevent such disclosures, keep such disclosures to a minimum, and secure protective orders or similar arrangements with respect to Confidential Information.

(d) Executive will return to Syncor, prior to the Status Date, all materials including, without limitation, all Confidential Information, reports, files, memoranda, and records, keys, access cards, security passes or badges, computer files or disks and all other physical or personal property which Executive received, prepared or helped to prepare, in connection with Executive’s employment, together with copies in whatever form.

11. Non-Solicitation.

(a) Non-Solicitation of Employees. During the term of this Agreement and continuing for a period of six months after the Termination Date, Executive shall not directly or indirectly recruit or solicit any Syncor employee. Notwithstanding the foregoing, after the Status Date, Executive may solicit: (i) any Syncor employee who is no longer an employee of Syncor; (ii) any CMI employee whose employment with Syncor has been placed under inactive status in connection with Syncor's decision to change its overall strategies with respect to its investments in the medical imaging business; and (iii) beginning in January 1, 2003, any employee in Syncor's corporate headquarters whose principal responsibilities as of the date hereof are to CMI.

(b) Non-Solicitation of Business. During the term of this Agreement, Executive shall not directly or indirectly solicit any customer of or business from a CMI facility so long as such CMI facility remains part of Syncor. During the term of this Agreement, Executive shall not directly or indirectly solicit any customer of or business from any non-CMI, Syncor facility.

(c) Application of Restrictions. The provisions of this Paragraph 11 of this Agreement shall apply regardless of whether Executive’s employment with Syncor is, or is deemed to be, terminated voluntarily or involuntarily.

(d) Abatement of Period of Restriction in Case of Breach. In the event of any breach or violation of the restrictions contained in this Paragraph 11, the specified time period for observance of those restrictions shall abate during the time of any such breach or violation, and such time period remaining at the time of the breach shall not begin to run again until the breach has been fully and finally cured.

12. Enforcement. Because Executive’s services are unique and because Executive has access to Confidential Information and work product, the parties hereto agree that Syncor would be damaged irreparably in the event any of the provisions of Paragraphs 8, 9, 10 or 11 hereof were not performed in accordance with their specific terms or were otherwise breached and that money damages would be an inadequate remedy for any such non-performance or breach. Therefore, Syncor or its successors or assigns shall be entitled, in addition to other rights and remedies existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security).

13. Costs of Enforcement. If Syncor complies with this Agreement but Executive violates Executive’s commitments in Paragraphs 8, 9, 10 or 11 of this Agreement, it is agreed that Syncor may seek judicial enforcement of its rights under Paragraphs 8, 9, 10 or 11, and it is agreed that Syncor shall be entitled to recover from Executive any costs it incurs (including reasonable attorney fees) in obtaining judicial enforcement, provided that such costs recoveries shall not exceed the net amounts paid to Executive under Paragraphs 3 and 5 of this Agreement. If Executive complies with this Agreement but Syncor violates its commitments in Paragraphs 1, 3, 5, or 7 of this Agreement, it is agreed that Executive may seek judicial enforcement of its rights under Paragraphs 1, 3, 5, or 7 and Executive shall be entitled to recover from Syncor any costs it incurs (including reasonable attorney fees) in obtaining judicial enforcement.

14. No Admission. This Agreement is not an admission by any party of any violation of law or intention to violate any law.

15. Period for Review and Consultation. Executive has been advised by Syncor to consult with an attorney regarding this Agreement before signing it. Executive has been given 45 days after the date on which Executive received this Agreement to decide whether to sign it, but has waived such 45-day period pursuant to Paragraph 9(h)(vi) above. By signing this Agreement, Executive acknowledges that Executive has read this Agreement, understands all of its provisions, and knowingly and voluntarily agrees to all of its terms and provisions.

16. Revocation Period. Once Executive has signed this Agreement, Executive may still revoke it at any time during the 7-day period after Executive received this Agreement, by delivering written notice of revocation to Syncor within this 7-day period, as provided in Paragraph 9(h)(vi) above. This Agreement shall not become effective or enforceable until this revocation period has expired without Executive having revoked this Agreement. Once this revocation period expires, if Executive has not revoked this Agreement it will be a binding, nonrevocable agreement between Executive and Syncor.

17. Notice. Any notice or delivery under this Agreement shall be made respectively to:

	Sheila E. Coop
	Senior Vice President, Human Resources and Communications
	Syncor International Corporation
	6464 Canoga Avenue
	Woodland Hills, CA 91367-2407

	David L. Ward
	2535 Montecito Avenue
	Thousand Oaks, CA 91362

18. No Mitigation. Syncor agrees that the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by Syncor. Further, the amount of any payment or benefit provided in this Agreement (other than as provided for in Paragraph 5(a)) shall not be reduced by any compensation earned by the Executive as a result of Employment by another employer.

19. Successors; Binding Agreement. In addition to any obligations imposed by law upon any successor to Syncor, Syncor will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Syncor, to expressly assume and agree to perform this Agreement in the same manner and extent to which Syncor would be required to perform it if no such succession had taken place. Failure of Syncor to obtain such assumption and agreement shall constitute a breach of this Agreement and shall entitle the Executive to compensation and benefits from Syncor in the same amount and on the same terms herein.

This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors or heirs. If the Executive shall die while any amount would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts will be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

20. Severability. The provisions of this Agreement are severable. If any part of it is found to be unenforceable, all other provisions shall remain fully valid and enforceable.

21. Choice of Laws. This Agreement shall be governed by the substantive laws of the State of California as applied to contracts entered into and to be performed entirely within such state by residents thereof.

22. Entire Agreement. This Agreement is the complete understanding between Syncor and Executive on the matters to which the parties agree in it, and Executive is not relying on any statement other than the provisions of this Agreement. No other promises or agreements shall be binding unless in a writing signed by the parties to this Agreement. This Agreement cancels any and all prior employment agreements, written or oral, if any, between Syncor and Executive, except that any commitment of Executive concerning confidentiality, non-competition, non-solicitation and intellectual property shall remain in effect until the Status Date, it being understood that such commitments would strictly be governed by this Agreement thereafter.

	SYNCOR INTERNATIONAL CORPORATION
	By: /s/ Sheila Coop
	Its: Sr. Vice President, Human Resources & Communications
	Date: April 5, 2002

	DAVID L. WARD
	Date: April 5, 2002

March 31, 2002

December 31, 2001

March 31, 2002

March 31, 2001

THREE MONTHS ENDED,

March 31, 2001

CRITICAL ACCOUNTING POLICIES

FORWARD LOOKING STATEMENT

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Part II. OTHER INFORMATION