-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Wuzh/uhvyI6073m0bSlkR8BsPZck8AbH5TW8vwbZNCtkPZZQD50jcfGwchjcq4nL 1sqW1dh5eXX1zkfpc0CV2g== 0000202763-95-000015.txt : 19950517 0000202763-95-000015.hdr.sgml : 19950516 ACCESSION NUMBER: 0000202763-95-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NASD 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: 95537583 BUSINESS ADDRESS: STREET 1: 20001 PRAIRIE ST CITY: CHATSWORTH STATE: CA ZIP: 91311 BUSINESS PHONE: 8188867400 MAIL ADDRESS: STREET 2: 20001 PRAIRIE ST CITY: CHATSWORTH STATE: CA ZIP: 91311 FORMER COMPANY: FORMER CONFORMED NAME: NUCLEAR PHARMACY INC DATE OF NAME CHANGE: 19860309 10-Q 1 ================================================================= ================================================================= 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, 1995 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) 20001 PRAIRIE STREET, CHATSWORTH, CALIFORNIA 91311 (Address of principal executive offices) (Zip Code) (818) 886-7400 (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 March 31, 1995, 10,570,333 shares of $.05 par value common stock were outstanding. ================================================================= ================================================================= SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES INDEX _____ Page ____ Part I. Financial Information Item 1. Consolidated Condensed Financial Statements Balance Sheets as of March 31, 1995 and December 31, 1994. . . . . . . . . . . . . 2 Statements of Income for three months ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . 3 Statements of Cash Flows for three months ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . 4 Notes to Consolidated Condensed Financial Statements. . . . . . 5 Item 2. Management's Discussion and Analysis of Financial Condition . . 6 Part II. Other Information . . . . . . . . . . . . . . . . . . . . . . . 8 SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands, except per share data) MARCH 31, DECEMBER 31, 1995 1994 ____ ____ (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 16,860 $ 17,761 Short-term investments 411 230 Accounts receivable, net 49,066 49,972 Inventory 5,052 5,369 Prepaids and other current assets 3,357 2,964 _______________________ Total current assets 74,746 76,296 Marketable investment securities 1,211 1,210 Property and equipment, net 26,183 26,766 Excess of purchase price over net assets acquired, net 13,762 13,874 Other assets 9,938 10,538 _______________________ $125,840 $128,684 ======================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 33,747 $ 39,105 Accrued liabilities 3,136 2,928 Accrued wages and related costs 6,300 5,494 Federal and state taxes payable 541 - Current maturities of long-term debt 2,130 2,153 ________________________ Total current liabilities 45,854 49,680 ________________________ Long-term debt, net of current maturities 4,874 5,154 Stockholders' equity: Common stock, $.05 par value 529 529 Additional paid-in-capital 46,508 46,508 Unrealized loss on investments (52) (52) Employee stock ownership loan guarantee (1,692) (1,934) Foreign currency translation adjustment 133 133 Retained earnings 31,949 30,929 Treasury stock, at cost; 250 shares (2,263) (2,263) ________________________ Net stockholders' equity 75,112 73,850 ________________________ $125,840 $128,684 ======================= See notes to consolidated condensed financial statements. SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (in thousands, except per share data) THREE MONTHS ENDED MARCH 31, ____________________________ 1995 1994 ____ ____ (UNAUDITED) Net sales $83,001 $74,800 Cost of sales 65,164 56,379 _______________________ Gross profit 17,837 18,421 Operating, selling and administrative expenses 16,213 15,103 _______________________ Operating income 1,624 3,318 Other income, net 76 126 ________________________ Income before income taxes 1,700 3,444 Provision for income taxes 680 1,354 ________________________ Net income $ 1,020 $ 2,090 ======================== Net income per share $ .10 $ .19 ========================= Weighted average shares outstanding 10,428 10,981 ========================= See notes to consolidated condensed financial statements. SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) Three Months Ended March 31, ____________________________ 1995 1994 ____ ____ (Unaudited) Cash flows from operating activities: Net income $1,020 $2,090 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,683 2,583 Amortization of ESSOP loan guarantee 242 311 Decrease (increase) in: Accounts receivables, net 906 (10,003) Inventory 317 (876) Other current assets (393) (2,220) Other assets (104) 1,572 Increase (decrease) in: Accounts payable (5,358) 16,179 Accrued alliance development costs - (2,983) Accrued liabilities 208 (901) Accrued wages and related costs 806 (1,165) Federal and state taxes payable 541 - Foreign currency translation adjustment - (6) _______________________ Net cash provided by operating activities 868 4,581 _______________________ Cash flows from investing and financing activities: Purchase of property and equipment, net (1,284) (2,829) Decrease (increase) in short-term/long-term investments (182) 1,991 Issuance of common stock - 1,632 Repayment of long-term debt (303) (2,029) _______________________ Net cash used in investing and financing activities (1,769) (1,235) ______________________ Net increase (decrease) in cash and cash equivalents (901) 3,346 Cash and cash equivalents at beginning of period 17,761 15,110 _______________________ Cash and cash equivalents at end of period $16,860 $18,456 ======================== See notes to consolidated condensed financial statements. SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. GENERAL. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles 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 of the three months ended March 31, 1995, 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 the Company's Annual Report and Form 10-K for year ended December 31, 1994. SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET SALES Consolidated net sales for the first quarter of 1995 rose 11% or $8.2 million to $83.0 million versus $74.8 million for the first quarter of 1994. The Company's net sales growth is primarily the result of activity associated with the strategic alliance entered into with its principal supplier of radiopharmaceutical products, the Radiopharmaceutical Division of the DuPont Merck Pharmaceutical Company (DuPont Merck). The agreement, which became effective February 1, 1994, replaced an existing supply agreement between the companies which had been in place since 1988. Under the terms of the new agreement, DuPont Merck relies upon Syncor as the primary distribution channel for its radiopharmaceutical products in the United States. The first quarter of 1995 includes three months of sales associated with this strategic alliance, compared to only two months of sales activity for the first quarter of 1994. Sales in the cardiology sector of the business continues to be the driving force in nuclear medicine and the Company's sales growth. Cardiology sales represented approximately 62% of the Company's net sales for the first quarter of 1995, compared to 55% of net sales for the first quarter of 1994. Other favorable factors affecting sales growth in the first quarter of 1995 include the start-up of new and the acquisition of existing pharmacies during the prior year which are now fully operational and the increased sales volume resulting from the expansion of certain managed care contracts. Sales growth was negatively impacted in the first quarter of 1995 due to a decision by one of the Company's suppliers to stop selling its proprietary products through Syncor's national pharmacy network effective January 16, 1995. During the first quarter of 1995, the loss in sales as a direct result of this decision was approximately $2.6 million. The Company continues to focus on improving profitability in 1995, in spite of several challenges. The introduction of a new cardiac imaging agent which would compete directly against Cardiolite is one of these challenges. Although this new agent has not yet been approved by the FDA for distribution, the Company believes that it will be approved during 1995. A new competing imaging agent by its nature will impact the Company's sales and profit, however, the degree in which it will affect the overall marketplace will depend on the introduction and penetration strategy employed. GROSS PROFIT Gross profit for the first quarter of 1995 declined $.6 million to $17.8 million or 21.5% of sales compared to $18.4 million or 24.6% of sales for the comparable quarter in 1994. The decline in the gross profit percentage is the continued result of a variety of factors which impacted the Company during 1994. These factors include general price reductions in 1994 across the majority of Syncor's product line in response to competitive market pressures, material cost increases, and the entering into several large managed care contracts that traditionally have lower profit margins. In 1994, the Company reduced prices on the majority of its product line by approximately 8% in response to market conditions. Beginning in 1995, the Company began to experience price stability in the marketplace. In the first quarter of 1995, the Company announced that it will increase prices compatible with its responsible pricing commitment to recover some portion of the material cost increases it received from suppliers during 1994. The vast majority of these price increases will range between 4% and 6%, depending on the specific product. In early January 1995, the Company also concluded a joint review and modification of the strategic alliance agreement with DuPont Merck. The resulting changes are anticipated to improve the gross margin as a percentage of sales beginning in early 1995 and the Company expects this trend to continue. OPERATING, SELLING AND ADMINISTRATIVE EXPENSES Operating, selling and administrative expenses increased 7.4% for the first quarter or $1.1 million to $16.2 million but declined as a percentage of sales to 19.5% from 20.2% for the same period of 1994. The increase for the first quarter is due primarily to depreciation and amortization expense associated with the acquisition of existing and start-up of new radiopharmacies, additional expenses associated with the DuPont Merck strategic alliance, offset by improved controls over Company expenditures. In late 1994, the Company initiated several programs to reduce losses, certain overhead and improve control over radiopharmacy expenditures. These cost control programs will continue in 1995. The Company continues, as a part of its overall business strategy, to invest in developmental business opportunities. These opportunities require ongoing resources in the area of operating, selling and administrative expenses. IMPROVEMENTS IN GROSS PROFIT AND OPERATING, SELLING AND ADMINISTRATIVE EXPENSES OVER THE THIRD AND FOURTH QUARTERS 1994 Gross profit for the first quarter of 1995 increased to $17.8 million from $15.6 million or $2.2 million compared to the fourth quarter of 1994 and $15.0 million or $2.8 million in the third quarter of 1994. Gross profit as a percentage of sales also improved during the current quarter to 21.5% versus 19.1% in the fourth quarter of 1994 and 18.4% in the third quarter of 1994. This improvement is the direct result of the joint review and modification made to the DuPont Merck strategic alliance in January 1995, as well as actions taken in the fourth quarter to improve pharmacy productivity. Operating, selling and administrative expenses decreased $.3 million to $16.2 million and as a percentage of net sales to 19.5% compared to $16.5 million or 20.2% of net sales in the fourth quarter of 1994 and $17 million or 20.8% of net sales in the third quarter of 1994. The decline was a direct result of several programs initiated by the Company in late 1994 to reduce losses, certain overhead and improve control over radiopharmacy expenditures. LIQUIDITY AND CAPITAL RESOURCES The Company had cash and cash equivalents and short and long-term investments of $18.5 million at March 31, 1995, compared with $19.2 million at December 31, 1994. The Company's total debt position of $ 7.0 million at March 31, 1995 was $.4 million lower than the debt position at December 31, 1994. Working capital increased from $26.6 million at December 31, 1994 to $28.9 million at March 31, 1995. Days Sales Outstanding decreased to 53 days at March 31, 1995 compared to 55 days at December 31, 1994. The nature of the Company's business is not capital intensive and, as new products become available, the capital requirement to accommodate these products will be minimal. The Company believes sufficient internal and external capital sources exist to fund operations and future expansion programs. At March 31, 1995, the Company had unused lines of credit of approximately $17.2 million to fund short-term cash needs. SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION Stock Repurchase ________________ On June 15, 1994, the Company announced that the Board of Directors had approved the repurchase of up to 500,000 shares of its common stock from time to time in the open market. Up to 250,000 shares could be contributed to the Syncor Employees' Savings and Stock ownership Plan (ESSOP). During the period of June 1994 and July 1994, the Company purchased 250,000 shares in the open market at an average price of $9.05 per share. These shares were classified as treasury stock. During the first quarter of 1995, the Company began the second phase of the repurchase program. As of this filing, the Company had purchased 250,000 shares in the open market at an average price of $7.65. The Company intends to allocate these shares to the ESSOP. 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 12, 1995 By: /s/ Michael E. Mikity ____________________________ Michael E. Mikity Vice President and Chief Financial Officer (Principal Financial / Accounting Officer) EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 1,000 3-MOS DEC-31-1995 MAR-31-1995 16,860 1,211 50,214 (1,148) 5,052 74,746 59,869 (33,686) 125,840 45,854 0 529 0 0 74,583 125,840 83,001 83,001 65,164 65,164 16,213 0 (177) 1,700 680 1,020 0 0 0 1,020 .10 .10
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