-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M8VaDGwqnPqhLBszifE7NeDjt/o10tqCrCbq0QvXnP8Yv81oxtlJVYXC43AbQ7kU xwcEukACm/Uv37D0mDI6mA== 0000912057-96-005821.txt : 19960402 0000912057-96-005821.hdr.sgml : 19960402 ACCESSION NUMBER: 0000912057-96-005821 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960401 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-08640 FILM NUMBER: 96543191 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-K405 1 FORM 10-K - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------------------------ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] ------------------------------------------------------ FOR THE YEAR ENDED DECEMBER 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 incorporation or organization) Identification No.) 20001 PRAIRIE STREET, CHATSWORTH, CALIFORNIA 91311-2185 (Address of principal executive offices) (Zip Code) (818) 886-7400 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK $.05 PAR VALUE (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X -- The aggregate market value of the voting stock held by non-affiliates of the Registrant, computed by reference to the average bid and asked prices of such stock on March 1, 1996 is $62,730,993. The number of shares outstanding of the Registrant's $0.05 par value common stock as of March 29, 1996 was 10,412,509 shares. DOCUMENTS INCORPORATED BY REFERENCE Portions of Registrant's Annual Report to Shareholders for the year ended December 31, 1995, are incorporated by reference into Parts I, II and IV of this report. Portions of Registrant's definitive Proxy Statement for Registrant's Annual Meeting of Shareholders on June 26, 1996, are incorporated by reference into Part III of this report. - -------------------------------------------------------------------------------- SYNCOR INTERNATIONAL CORPORATION TABLE OF CONTENTS FORM 10-K ANNUAL REPORT DECEMBER 31, 1995 PART I PAGE Item 1. BUSINESS........................................................... 1 Item 2. PROPERTIES......................................................... 4 Item 3. LEGAL PROCEEDINGS.................................................. 5 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................ 6 PART II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............................................................ 6 Item 6. SELECTED FINANCIAL DATA............................................ 6 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.............................................. 6 Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA............ 6 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE............................................... 6 PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................. 7 Item 11. EXECUTIVE COMPENSATION............................................. 7 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......................................................... 7 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................... 7 PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.... 7 PART I ITEM I. BUSINESS. Unless otherwise indicated, the term "Syncor" or the "Company" as used in this report refers to Syncor International Corporation, incorporated in 1985 under the laws of the State of Delaware, and its consolidated subsidiaries. GENERAL DEVELOPMENT OF BUSINESS The general development of the Company's business for the year ended December 31, 1995, is covered in the letter from the Chairman of the Board, Chief Executive Officer and President to the Company's shareholders in the Company's Annual Report to Shareholders for said year and is hereby incorporated herein by reference. A copy of the Company's Annual Report to Shareholders is attached hereto as Exhibit 13. DESCRIPTION OF BUSINESS PRINCIPAL PRODUCTS PRODUCED AND SERVICES RENDERED The Company is a pharmacy services company primarily engaged in compounding, dispensing and distributing radiopharmaceutical products to hospitals and clinics through its nationwide network of 118 nuclear pharmacy service centers and four Positron Emission Tomography ("PET") pharmacy service centers. The radiopharmaceuticals provided by the Company are principally used for diagnostic imaging of physiological functions and organ systems. In addition, the Company provides various services in connection with the sale of radiopharmaceuticals, including radiopharmaceutical record keeping required by Federal and state government agencies, and radiopharmaceutical technical consulting. The Company estimates that its pharmacies service approximately 7,000 hospitals and clinics in 39 states throughout the United States. During each of the last three fiscal years, these pharmacies contributed more than 95 percent of the consolidated net sales of the Company. Other activities of the Company include the marketing and distribution of imaging cold kits, isotopes and medical reference sources in addition to nuclear and pharmacy equipment and accessories. The description of Syncor's various activities in the Company's Annual Report to Shareholders for the year ended December 31, 1995 are hereby incorporated herein by reference. SOURCES AND AVAILABILITY OF RAW MATERIALS The Company's pharmacies dispensed approximately 60 different radiopharmaceutical products, which are obtained primarily from six suppliers, including The Radiopharmaceutical Division of The DuPont Merck Pharmaceutical Company ("DuPont"). The majority of the products are supplied by DuPont. If DuPont is not able to supply its proprietary products to the Company, the Company's operations could be negatively impacted. Management believes that if any one of the other suppliers of radiopharmaceuticals to the Company failed to supply products, then the Company's other current suppliers would be able to supply additional products to make up most of the shortfall. The failure of two or more suppliers to provide products at a particular time, however, could have an adverse effect on the Company's business. Although periodic product 1 outages and shortages occur, to date, the Company's pharmacies have not experienced any significant difficulty in securing sufficient supplies of radiopharmaceutical products. On January 16, 1995, Medi-Physics stopped selling its proprietary radiopharmaceutical products (including Ceretec-Registered Trademark-, a brain imaging agent) through Syncor's national pharmacy network, and began its own network with formerly non-affiliated, independent radiopharmacies. In 1994, Syncor had approximately $19 million in sales and earned approximately $2.4 million gross margin from Medi-Physics' proprietary products. In 1995, the Company was able to successfully overcome a portion of the loss of Medi-Physics' proprietary products by providing its customers with Neurolite-Registered Trademark-, a brain imaging agent, and other services, such as custom compounding. The Company is consistently in pursuit of improving its relationships with current suppliers and developing new long-term relationships. PATENTS, TRADEMARKS, LICENSES AND DISTRIBUTION AGREEMENTS The Company owns a number of trademarks and has a variety of license agreements. In addition, the Company has entered into exclusive radiopharmacy distribution agreements with two suppliers for certain proprietary radiopharmaceutical products. While certain of the foregoing trademarks and agreements are considered to be of value to the Company, management believes at present its competitive position is dependent principally on the efficient operation of its pharmacies and high quality of its customer service. Since February 1, 1994, the Company has participated in a long-term distribution agreement with its principal supplier of radiopharmaceutical products, DuPont. Under the terms of the agreement, DuPont relies upon the Company as the primary distribution channel for its radiopharmaceutical products in the United States. Upon concluding a joint review of the agreement with DuPont in early 1995, the original terms of the agreement were modified to allow the Company to begin distribution, in unit-dose and bulk form, of the newly approved radiopharmaceutical agent Neurolite-Registered Trademark-, which utilizes Single Photon Emission Computed Tomography ("SPECT") for brain imaging. Modifications to the agreement also resulted in enhanced margins and cash flow for the Company. DEPENDENCE ON CUSTOMERS The Company's operations are such that none of its business is dependent upon a single customer. However, if two or more customers were to merge and cease to use the Company's services, such a loss could have a short-term negative impact on the Company's operations. COMPETITIVE CONDITIONS The Company's pharmacies compete primarily with large manufacturers of radiopharmaceuticals, which directly supply radiopharmaceutical products to hospitals. Two of such manufacturers have set up their own centralized radiopharmacies to supply customers. Following the loss of Medi-Physics' proprietary products, Syncor offered its customers an alternative product, Neurolite-Registered Trademark-, a brain imaging agent, and offered increased compounding services. The Company also competes with a number of other independent entities, each of which operates one or more radiopharmacies. In certain markets, there is competition with universities which own and operate centralized radiopharmacies. The principal competitive practices of the manufacturers, and others, involve price and service. Management believes that the advantages to end-users of using a centralized radiopharmacy rather than preparing their own radiopharmaceutical products include: i) reduced risk of radiation exposure to hospital personnel; (ii) cost savings due to the Company's volume purchasing power; (iii) better utilization of time-sensitive 2 products purchased from the radiopharmaceutical manufacturers; and (iv) reduction in the time needed to maintain extensive records required by regulatory agencies. In brief, the Company's pharmacies have continued to provide quality controlled unit-dose radiopharmaceuticals, a nearly comprehensive nuclear medicine product line, professional consultation and delivery services, and computer hardware and proprietary software products for use in nuclear medicine department operations. GOVERNMENT REGULATION Each of the Company's pharmacies is licensed by and must comply with the regulations of the United States Nuclear Regulatory Commission ("NRC") or corresponding state agencies. In addition, each pharmacy is licensed and regulated by the Board of Pharmacy in the state where it is located. Periodic inspections of the Company's pharmacies are conducted by the NRC and various other Federal and state agencies. Unsatisfactory inspection results could lead to escalated enforcement action, the imposition of fines or the suspension, revocation or denial of renewal of the licenses for the location inspected. The Company devotes substantial human and financial resources to ensure continued regulatory compliance and believes that it is currently in compliance with all material rules and regulations. The Company is subject to the various Federal and state regulations relating to occupational safety and health and the use and disposal of bio-hazardous materials. In addition, the Company's products are subject to Federal and state regulations relating to drugs and medical devices. The Company is seeking to challenge the FDA's announcement on February 27, 1995 of its intention to regulate the development of positron emission tomography ("PET") nuclear medicine because such regulation would increase the Company's cost of operations. Compliance with the applicable environmental control laws and regulations, such as those regulating the use and disposal of radioactive materials, is inherent in the industry and the normal operations of the Company's pharmacies. Historically, compliance with such laws and regulations has not had a material adverse effect on the capital expenditures, earnings or competitive position of the Company. FOREIGN OPERATIONS Syncor owns and operates nuclear pharmacies at four non-U.S. sites: Hong Kong (British Crown Colony); Taipei and Kaoshiung (Taiwan Republic of China); and Manila (Republic of the Philippines). The Company continues its joint ventures with various parties in the Peoples' Republic of China, with pharmacies operating in Beijing and Shanghai. In 1995, the Company continued its plans to expand internationally, and opened radiopharmacies in Mexico City (United States of Mexico) and in Bangkok (Kingdom of Thailand). In early 1996, Syncor opened its ninth international pharmacy in Puerto Rico. By the end of 1998, Syncor plans to have an international distribution network in 25 markets outside the United States. The Company's foreign operations are not immune to the inherent uncertainties and risks of currency fluctuations, political instability, trade restrictions, or inconsistent product regulations associated with each jurisdiction. EMPLOYEES As of December 31, 1995, Syncor employed approximately 2,161 people. However, the full-time equivalent personnel for the same period was approximately 1,314 people. 3 ITEM 2. PROPERTIES. The Company and its consolidated subsidiaries lease (and in one location own) and operate a number of pharmacies whose locations are set forth in the following table:(1)
STATE LOCATION STATE LOCATION - ----- -------- ----- -------- ALABAMA Birmingham MISSOURI Kansas City Mobile Overland (St. Louis) ARIZONA Gilbert (Mesa) Springfield Phoenix* NEBRASKA Lincoln Tucson Omaha* ARKANSAS Little Rock NEVADA Las Vegas CALIFORNIA Bakersfield Reno Berkeley NEW JERSEY Kenilworth (Newark) Colton NEW MEXICO Albuquerque Fresno NEW YORK The Bronx Los Angeles** Cheektowaga (Buffalo) Modesto Franklin Square(Long Island) Orange Newburgh Sacramento* Rochester San Diego Syracuse San Jose Troy (Albany) Torrance NORTH CAROLINA Charlotte Van Nuys (Los Angeles) Greensboro COLORADO Colorado Springs OHIO Cincinnati Denver Columbus CONNECTICUT Glastonbury (Hartford) Girard (Youngstown) Stamford Holland (Toledo) DELAWARE Seaford Miamisburg (Dayton) FLORIDA Fort Myers Uniontown (Akron) Gainesville Valley View (Cleveland) Jacksonville OKLAHOMA Oklahoma City Jupiter (West Palm Beach) Tulsa Miami Lakes (Miami) OREGON Portland Pensacola PENNSYLVANIA Allentown Pompano Beach (Ft.Lauderdale) Bloomsburg Sarasota Bristol (N. Philadelphia) Tampa Duncansville (Altoona) Winter Park (Orlando) Hummelstown (Harrisburg) GEORGIA Augusta Pittsburgh Columbus Sharon Hill (Philadelphia) Doraville (Atlanta) RHODE ISLAND Providence ILLINOIS Des Plaines SOUTH CAROLINA Columbia Chicago TENNESSEE Chattanooga Springfield Jackson INDIANA Ft. Wayne Knoxville Indianapolis Memphis Munster Memphis (Med-Center) West Lafayette (Purdue) Nashville IOWA Des Moines TEXAS Amarillo KANSAS Wichita Austin KENTUCKY Lexington Beaumont Louisville Corpus Christi LOUISIANA New Orleans Dallas MARYLAND Lanham (Washington DC) El Paso Timonium (Baltimore) Fort Worth MASSACHUSETTS Woburn (Boston) Houston MICHIGAN Grand Rapids Lubbock Southfield (Detroit) North Dallas Swartz Creek (Flint) San Antonio MINNESOTA Moorhead (Fargo ND) VIRGINIA Richmond St. Paul Virginia Beach MISSISSIPPI Flowood (Jackson) WASHINGTON Seattle Gulfport Spokane WEST VIRGINIA Huntington WISCONSIN Appleton (Green Bay) Wauwatosa (Milwaukee)
------------------------- (1) The Company also owns an interest in pharmacies in Salt Lake City, Utah; Midland, Texas, and Huntsville, Alabama. * Cities where the Company has both a nuclear and PET pharmacy. ** PET pharmacy only. 4 Pharmacy lease terms vary from less than one year up to approximately ten years, and average approximately five years. Leased areas average approximately 4,500 square feet. The Company's Corporate Offices are located in two facilities. The Company leases its main Corporate Office facility in Chatsworth, California, pursuant to a lease that commenced on March 1, 1987. The lease is for a term of ten years with two successive five-year renewal options. Presently, the Company leases approximately 76,464 square feet at such location which is adequate for the Company's current needs. The Company subleases a second Corporate Office facility in Norcross, Georgia, pursuant to a sublease that commenced on August 13, 1993. The sublease is for a term of three years. Presently, the Company subleases approximately 9,593 square feet at such location which is adequate for the Company's current needs. ITEM 3. LEGAL PROCEEDINGS. There are various litigation proceedings in which the Company and its subsidiaries are involved. Many of the claims asserted against the Company in these proceedings are covered by insurance. The results of litigation proceedings cannot be predicted with certainty. However, in the opinion of the Company's General Counsel, such proceedings either are without merit or do not have a potential liability which would materially affect the financial condition of the Company and its subsidiaries on a consolidated basis. The Company has also undertaken several pieces of litigation where it is the plaintiff. In SYNCOR V. FOOD AND DRUG ADMINISTRATION ("FDA"), filed in the U.S. District Court for the District of Columbia on August 24, 1995, Syncor is seeking to challenge the FDA announcement on February 27, 1995 of its intention to regulate the development of positron emission tomography ("PET") nuclear medicine. Syncor bases its case on: (1) violation of the Administrative Procedure Act; (2) violation of the Federal Food, Drug, and Cosmetic Act; (3) usurping of States' rights by seeking to define the practice of pharmacy, in violation of the Tenth Amendment; and (4) abuse of discretion in denying Syncor's Citizen Petition of May 4, 1992. The Company's goals are to convince the court to declare FDA's PET regulatory scheme null and void, and to allow state licensed pharmacies to compound PET radiotracers. The parties have filed respective summary judgment motions and the issues will be heard on May 1, 1996. In SYNCOR V. PYRAMID DIAGNOSTIC SERVICES, INC. ("Pyramid") filed on April 6, 1995 in the United States District Court Western District of Michigan - Southern Division, Syncor sought to prevent Pyramid's unauthorized procurement of DuPont's Cardiolite-Registered Trademark- (a major product for the Company) in violation of a bailment and license agreement, criminal drug conversion, unfair competition, tortious interference with business relationships, and infringement of Syncor's exclusivity to Cardiolite-Registered Trademark-. Syncor first obtained a preliminary injunction against Pyramid on April 17, 1995, prohibiting Pyramid from buying or selling Cardiolite-Registered Trademark-. A settlement agreement was later executed with Pyramid on October 5, 1995, and a Stipulated Judgment was filed in favor of Syncor in the amount of $6 million dollars. The preliminary injunction against Pyramid was made permanent, and confidentiality over the case was lifted. Pyramid filed for bankruptcy on October 6, 1995. In connection therewith, on November 13, 1995, Syncor purchased all of Pyramid's assets for $3,150,000. As a result, three new sites were added to Syncor's pharmacy network (of eight sites purchased from Pyramid, five were closed). Pyramid is currently in the process of liquidating its assets. The Stipulated Judgment in favor of Syncor is subject to appeal by other creditors of Pyramid and court approval. If Syncor's claims are not contested, Syncor may receive its portion of the assets. 5 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The information relating to the Company's Common Stock which appears in the Company's Annual Report to Shareholders for the year ended December 31, 1995, under Note 14, "Selected Quarterly Results of Operations" and Shareholder Information, included in this Form 10-K Annual Report as Exhibit 13, is hereby incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA. The selected financial data which appears in the Company's Annual Report to Shareholders for the year ended December 31, 1995, under the heading of "Selected Financial Data", included in this Form 10-K Annual Report as Exhibit 13, is hereby incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Management's discussion and analysis of financial condition and results of operations which appears in the Company's Annual Report to Shareholders for the year ended December 31, 1995, under the heading of "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in this Form 10-K Annual Report as Exhibit 13, is hereby incorporated herein by reference. ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA. The consolidated financial statements and the notes thereto which appear in the Company's Annual Report to Shareholders for the year ended December 31, 1995, under the headings of "Consolidated Statements of Income" and "Consolidated Balance Sheets", included in this Form 10-K Annual Report as Exhibit 13, are hereby incorporated herein by reference. Schedules containing certain supporting information are also included. See Financial Statement Schedules on page 7 hereof. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 6 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information called for by Item 10 of Form 10-K is hereby incorporated by reference from the Company's definitive Proxy Statement for its Annual Meeting of Shareholders, to be held on June 26, 1996, which will be filed with the Commission pursuant to Regulation 14A of the Securities and Exchange Commission ("Regulation 14A") within 120 days from December 31, 1995. Based solely upon its review of Forms 3 and 4 furnished to the Company, the Company believes that all reports required to be filed during 1995 pursuant to Section 16(b) of the Securities Exchange Act of 1934 were timely filed. ITEM 11. EXECUTIVE COMPENSATION. The information called for by Item 11 of Form 10-K is hereby incorporated by reference from the Company's definitive Proxy Statement for its Annual Meeting of Shareholders to be held on June 26, 1996, which will be filed with the Commission pursuant to Regulation 14A within 120 days from December 31, 1995. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information called for by Item 12 of Form 10-K is hereby incorporated by reference from the Company's definitive Proxy Statement for its Annual Meeting of Shareholders to be held on June 26, 1996, which will be filed with the Commission pursuant to Regulation 14A within 120 days from December 31, 1995. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information called for by Item 13 of Form 10-K is hereby incorporated by reference from the Company's definitive Proxy Statement for its Annual Meeting of Shareholders to be held on June 26, 1996, which will be filed with the Commission pursuant to Regulation 14A within 120 days from December 31, 1995. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) 1. CONSOLIDATED FINANCIAL STATEMENTS. The consolidated financial statements listed below, together with the report thereon of KPMG Peat Marwick LLP, dated March 8, 1996, which appear in the Company's Annual Report to Shareholders for the year ended December 31, 1995, included in this Form 10-K Annual Report as Exhibit 13, are hereby incorporated herein by reference. Independent Auditors' Report Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements 7 2. FINANCIAL STATEMENT SCHEDULES. The following schedule supporting the financial statements of the Company is included herein: Page ---- Schedule II Valuation and Qualifying Accounts..........10 All other schedules and financial statements of the Company are omitted because they are not applicable, not required or because the required information is included in the consolidated financial statements or notes thereto. 3. INDEX TO EXHIBITS. The list of exhibits filed as part of this report on Form 10-K or incorporated herein by reference appear as Index to Exhibits on page 11 hereof. (b) REPORTS ON FORM 8-K FILED IN THE QUARTER ENDED DECEMBER 31, 1995. None. (c) EXHIBITS. The exhibits required by Item 601 of Regulation S-K are filed herewith or are incorporated herein by reference and are listed in the Index to Exhibits on page 11 hereof. (d) ADDITIONAL INFORMATION. In January 1996, Joseph Kleiman, a member of the Company's Board of Directors since 1985, died. 8 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 By /s/ Robert G. Funari ------------------------------ Robert G. Funari President and Chief Operating Officer Date: 3/31/96 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Monty Fu - -------------------------------------------- Monty Fu, Chairman of the Board and Director Date: 3/31/96 /s/ Gene R. McGrevin - -------------------------------------------- Gene R. McGrevin, Vice Chairman of the Board, Chief Executive Officer (Principal Executive Officer) and Director Date: 3/31/96 /s/ Robert G. Funari - -------------------------------------------- Robert G. Funari, President and Chief Operating Officer and Director Date: 3/31/96 /s/ Michael E. Mikity - -------------------------------------------- Michael E. Mikity, Vice-President and Chief Financial Officer (Principal Financial and Accounting Officer) Date: 3/31/96 /s/ George S. Oki - -------------------------------------------- George S. Oki, Director Date: 3/31/96 /s/ Arnold E. Spangler - -------------------------------------------- Arnold E. Spangler, Director Date: 3/31/96 /s/ Steven B. Gerber - -------------------------------------------- Steven B. Gerber, Director Date: 3/31/96 /s/ Henry N. Wagner, Jr. - -------------------------------------------- Henry N. Wagner, Jr., Director Date: 3/31/96 /s/ Gail R. Wilensky - -------------------------------------------- Gail R. Wilensky, Director Date: 3/31/96 9 SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- BALANCE BALANCE AT COSTS AT END BEGINNING AND DEDUCTIONS OF DESCRIPTION OF PERIOD EXPENSES (A) PERIOD - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Year Ended December 31, 1995 Allowance for doubtful accounts $1,154 $ 609 $ 666 $1,097 Year Ended December 31, 1994 Allowance for doubtful accounts $1,200 $ 358 $ 404 $1,154 Seven-Months Ended December 31, 1993 Allowance for doubtful accounts $1,502 $ 224 $ 526 $1,200 Year Ended May 31, 1993 Allowance for doubtful accounts $1,681 $1,123 $1,302 $1,502
(A) Uncollectible accounts written-off, net of recoveries and reduction of reserve. 10 INDEX TO EXHIBITS EXHIBIT NO. 3. Certificate of Incorporation and By-Laws 3.1 Restated Certificate of Incorporation of the Company filed as Exhibit 3.1 to the 8/28/87 Form 10-K and incorporated herein by reference. 3.2 Restated By-Laws of the Company. 4. Instruments Defining the Rights of Security Holders 4.1 Stock Certificate for Common Stock of the Company filed as Exhibit 4.1 to the 8/26/86 Form 10-K and incorporated herein by reference. 4.2 Rights Agreement dated as of 11/8/89 between the Company and American Stock Transfer & Trust Company filed as Exhibit 2.1 to the Registration Statement on Form 8-A dated 11/3/89 and incorporated herein by reference. 10. Material Contracts 10.1 Employment Agreement dated 2/1/89, between the Company and Gene R. McGrevin filed as Exhibit 10.2 to 1/27/89 Form 8-K and incorporated herein by reference.* 10.2 First Amendment dated 7/11/89 to Employment Agreement dated 2/1/89 between the Company and Gene R. McGrevin filed as Exhibit 10.5 to 8/30/90 Form 10-K and incorporated herein by reference.* 10.3 Second Amendment dated 10/16/89 to Employment Agreement dated 2/1/89 between the Company and Gene R. McGrevin filed as Exhibit 10.6 to 8/30/90 Form 10-K and incorporated herein by reference.* 10.4 Third amendment dated 1/1/91 to Employment Agreement dated 2/1/89 between the Company and Gene R. McGrevin filed as Exhibit 10.7 to 8/29/91 Form 10-K and incorporated herein by reference.* 10.5 Syncor International Corporation 1981 Master Stock Option Plan as amended filed as part of Company's Proxy Statement dated 11/5/85, for its Annual Meeting of Shareholders held 11/26/85, and incorporated herein by reference.* 10.6 Stock Option Agreement of Gene R. McGrevin dated 1/2/92 filed as Exhibit 10.16 to 8/27/92 Form 10-K and incorporated herein by reference.* 10.7 Form of Indemnity Agreement substantially as entered into between Company and each Director and Officer filed herein as Exhibit 3.2 Appendix A.* 10.8 Form of Benefits Agreement substantially as entered into between Company and each Director.* 10.9 Form of Benefits Agreement substantially as entered into between Company and certain employees, filed herein as Exhibit 10.8.* 11 10.10 Syncor International Corporation 1990 Master Stock Incentive Plan As Amended and Restated filed as part of Company's Proxy Statement dated 10/4/93 for its Annual Meeting of Shareholders held 11/15/93 and incorporated herein by reference.* 10.11 Syncor International Corporation Deferred Compensation Plan effective July 1, 1991, as Amended and Restated effective April 19, 1993, filed as Exhibit 10.11 to 3/30/93 Form 10-K and incorporated herein by reference.* 10.12 Employment Agreement dated July 21, 1993, between the Company and Robert G. Funari filed as Exhibit 10.12 to 3/30/94 Form 10-K and incorporated herein by reference.* 10.13 Syncor International Corporation McGrevin Deferred Compensation Plan, Amended and Restated, effective October 23, 1995.* 10.14 Split Ownership/Split Dollar Life Insurance Assignment Agreement effective June 10, 1993, between the Company and Gene R. McGrevin filed as Exhibit 10.14 to 8/30/90 Form 10-K and incorporated herein by reference.* 10.15 Form of Stock Option Agreement substantially as entered into between the Company and certain employee Directors and employees filed as Exhibit 10.15 to 3/30/94 Form 10-K and incorporated herein by reference.* 10.16 Form of Stock Option Agreement substantially as entered into between the Company and certain non-employee Directors filed as Exhibit 10.16 to 3/30/94 Form 10-K and incorporated herein by reference.* 10.17 Non-qualified stock option award agreement dated January 24, 1995 entered into between the Company and Arnold E. Spangler.* 10.18 Non-qualified stock option award agreement dated January 24, 1995 entered into between the Company and George S. Oki.* 10.19 Non-qualified stock option award agreement dated January 24, 1995 entered into between the Company and Henry Wagner, Jr.* 11. Statement Re: Computation of Per Share Earnings Computation can be clearly determined from the material contained in the Company's Annual Report to Shareholders for year ended December 31, 1995. 13. Annual Report to Security Holders Syncor International Corporation Annual Report to Shareholders for the year ended December 31, 1995, except for specific information in such Annual Report expressly incorporated herein by reference, is furnished for the information of the Commission and is not to be deemed "filed" as part hereof. 12 21. Subsidiaries of the Registrant State or Country Name of Subsidiary of Organization ------------------ ---------------- Syncor Investment Management Corporation Delaware Syncor Management Corporation California Syncor Midland, Inc. Texas Syncor Global Holdings Ltd. British Virgin Islands Syncor International (Thailand) Co., Ltd. Kingdom of Thailand Specialised Medicial Trading Pty Ltd Commonwealth of Australia** Syncor de Mexico, S.A. de C.V. United States of Mexico** Syncor Hong Kong Limited Hong Kong B.C.C.** Syncor Korea, Inc. Republic of Korea** Syncor Pharmacies Australia Pty Ltd Commonwealth of Australia** Syncor Philippines, Inc. Republic of the Philippines** Syncor New Zealand Ltd. New Zealand** Syncor Taiwan, Inc. Taiwan Republic of China** 23. Consents of Experts and Counsel Consent of KPMG Peat Marwick LLP.*** - -------------------------------- * Management contracts or compensatory plan ** Subsidiaries of Syncor Global Holdings Ltd. *** Included herewith 13 EX-3.2 2 EXHIBIT 3.2 EXHIBIT 3.2 RESTATED BY-LAWS OF SYNCOR INTERNATIONAL CORPORATION (A DELAWARE CORPORATION) (RESTATED AS OF JUNE 20, 1995) ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE. The registered office of the Corporation within the State of Delaware shall be in the City of Wilmington, County of New Castle. SECTION 2. OTHER OFFICES. The Corporation may also have an office or offices other than said registered office at such place or places, either within or without the State of Delaware, as the Board of Directors shall from time to time determine or the business of the Corporation may require. Page 1 of 24 ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders for the election of directors or for any other purpose shall be held at any such place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of meeting or in a duly executed waiver thereof. SECTION 2. ANNUAL MEETING. The annual meeting of stockholders, commencing with the year 1996, shall be held at 2:00 p.m. on the second Wednesday of June, if not a legal holiday, and if a legal holiday, then on the next succeeding day not a legal holiday, at 2:00 p.m., or at such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of meeting or in a duly executed waiver thereof. At such annual meeting, the stockholders shall elect a Board of Directors and transact such other business as may properly be brought before the meeting. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be received at the principal executive offices of the corporation: (1) not less than 60 days in advance of such meeting if such meeting is to be held on a day which is within 30 days preceding the anniversary of the previous year's annual meeting or 90 days in advance of such meeting if such meeting is to be held on or after the anniversary of the previous year's annual meeting; and (2) with respect to any other annual meeting of stockholders, on or before the close of business on the 15th day following the date (or the first date, if there be more than one) of public disclosure of the date of such meeting. For the purposes of this Section 2, the date of public disclosure of a meeting shall include, but not be limited to, the date on which disclosure of the date of the meeting is made in a press release reported by the Dow Jones News Services, Associated Press or comparable national news service, or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) (or the rules and regulations thereunder) of the Securities Exchange Act of 1934, as amended. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name, age and business and residential Page 2 of 24 address, as they appear on the Corporation's records, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business. Notwithstanding anything in the by-laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 2. The chairman of the annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 2 and if the chairman should so determine, the chairman shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. SECTION 3. SPECIAL MEETINGS. Except as otherwise required by law and subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, special meetings of the stockholders may be called only by the Chairman of the Board, by the President or by the Secretary upon the request of the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors. Business transacted at all special meetings of the stockholders shall be confined to the purpose or purposes stated in the notice of the special meeting. SECTION 4. NOTICE OF MEETINGS. Except as otherwise expressly required by statute, written notice of each annual and special meeting of stockholders stating the date, place and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each stockholder of record entitled to vote thereat not less than ten nor more than sixty days before the date of the meeting. Notice shall be given personally or by mail and, if by mail, shall be sent in a postage prepaid envelope, addressed to the stockholder at such stockholder's address as it appears on the records of the Corporation. Notice by mail shall be deemed given at the time when the same shall be deposited in the United States mail, postage prepaid. Notice of any meeting shall not be required to be given to any person who attends such meeting, except when such person attends the meeting in person or by proxy for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, or who, either before or after the meeting, shall submit a signed written waiver of notice, in person or by proxy. Neither the business to be transacted at, nor the purpose of, an annual or special meeting of stockholders need be specified in any written waiver of notice. SECTION 5. LIST OF STOCKHOLDERS. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such stock list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city, town or village where the meeting is to be held, which place Page 3 of 24 shall be specified in the notice of the meeting, or, if not specified, at the place where the meeting is to be held. The stock list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock list shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the Corporation, or to vote in person or by proxy in any meeting of stockholders. SECTION 6. QUORUM, ADJOURNMENTS. The holders of shares of stock of the Corporation representing a majority of the voting power of the issued and outstanding stock of the Corporation entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented by proxy at any meeting of stockholders, the holders of shares of stock of the Corporation representing a majority of the voting power of the issued and outstanding stock, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time to another time and place, without notice other than announcement at the meeting of such time and place, until a quorum shall be present or represented by proxy. At such adjourned meeting at which a quorum shall be present or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty days, or, if after adjournment a new record date is set, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Once a quorum has been established, the stockholders present at a duly organized meeting can conduct the business properly brought before the meeting until adjournment, notwithstanding the withdrawal of stockholders from the meeting. SECTION 7. ORGANIZATION. At each meeting of stockholders, the Chairman of the Board, if one shall have been elected, or, in the Chairman's absence or if one shall not have been elected, the President, shall act as chairman of the meeting. The Secretary or, in the Secretary's absence or inability to act, the person whom the chairman of the meeting shall appoint secretary of the meeting shall act as secretary of the meeting to keep the minutes thereof. SECTION 8. ORDER OF BUSINESS. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at such meeting by the person presiding over the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be received after the time set for the closing of the polls. The Board of Directors may adopt by resolution such rules or regulations for the conduct of meetings of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chair of any meeting of stockholders shall have the absolute right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chair, are appropriate for the proper conduct of the meeting, and there shall be no appeal from the ruling of the chair. Such rules, Page 4 of 24 regulations or procedures, whether adopted by the Board of Directors or prescribed by the chair of the meeting, may include, without limitation, the following: (1) the establishment of an agenda or order of business for the meeting; (2) rules and procedures for maintaining order at the meeting and the safety of those present; (3) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chair shall permit; (4) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (5) limitations on the time allotted to questions or comments by participants. Unless, and to the extent determined by the Board of Directors or the chair of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure. A resolution or motion on business properly brought before a meeting shall be considered for vote only if proposed by a stockholder or a duly authorized proxy, and seconded by an individual, who is a stockholder or a duly authorized proxy, other than the individual who proposed the resolution. SECTION 9. VOTING, PROXIES. Except as otherwise provided by statute or the Certificate of Incorporation, each stockholder of the Corporation shall be entitled at each meeting of stockholders to one vote for each share of capital stock of the Corporation standing in such stockholder's name on the record of stockholders of the Corporation. Each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons to act for such stockholder by a proxy signed by such stockholder or such stockholder's attorney-in-fact, but no proxy shall be voted after three years from its date, unless the proxy provides for a longer period. Any such proxy shall be delivered at or prior to the time designated in the order of business for so delivering such proxies. When a quorum is present at any meeting, the affirmative vote of the holders of a majority of the voting power of the shares present in person or represented by a proxy at the meeting entitled to vote on the subject matter shall be the act of the stockholders on any question brought before such meeting, except (a) for the election of directors, which shall be decided by a plurality of the voting power of the shares of the stock of the Corporation entitled to vote in the election of such directors, present in person or represented by proxy, and (b) where the question is one upon which by express provision of statute or of the Certificate of Incorporation or of these By-Laws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Unless required by statute, or determined by the chairman of the meeting to be advisable, the vote on any question need not be by ballot. On a vote by ballot, each ballot shall be signed by the stockholder voting, or by such stockholder's proxy, if there be such proxy, and shall state the number of votes voted. A proxy must be in writing and dated and executed by the stockholder or the stockholder's duly authorized officer, director, employee, attorney or agent. To the extent permitted by law, a proxy may be transmitted in a telegram, cablegram or other means of electronic transmission provided that the telegram, cablegram or electronic transmission either sets forth or is submitted with Page 5 of 24 information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. A copy, facsimile transmission or other reliable reproduction of a written or electronically-transmitted proxy may be substituted for or used in lieu of the original writing or electronic transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile transmission or other reproduction shall be a complete reproduction of the entire original writing or transmission. SECTION 10. INSPECTORS. The Board of Directors shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof and make a written report thereof. If any of the inspectors so appointed shall fail to appear or act, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of such person's duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of such person's ability. The inspectors shall determine the number of shares of capital stock of the Corporation outstanding and the voting power of each such share, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies and ballots, receive votes and ballots, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes and ballots and determine the results. The inspectors shall make and retain for a reasonable period a written report of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders, the inspectors may consider such information as is permitted by applicable law. No director or candidate for the office of director shall act as an inspector of an election of directors. Inspectors need not be stockholders. SECTION 11. CONFIDENTIAL VOTING. All proxies, ballots and vote tabulations that identify the particular vote of a stockholder shall be kept confidential, except that disclosure may be made (1) to allow the inspectors to certify the results of the vote; (2) as necessary to meet applicable legal requirements, including the pursuit or defense of judicial actions; or (3) when expressly requested by such stockholder. Proxy cards shall be returned in envelopes addressed to the inspectors (in care of the transfer agent), which shall receive, inspect and tabulate the proxies. Comments written on proxies, consents or ballots shall be transcribed and provided to the Secretary with the name and address of the stockholder. The vote of the stockholder shall not be disclosed at the time any such comment is provided to the Secretary except where such vote is included in the comment or disclosure is necessary, in the opinion of the inspector, for an understanding of the comment. Nothing in this by-law shall prohibit the inspector from making available to the Corporation, during the period prior to any annual or special meeting, information as to which stockholders have not voted and periodic status reports on the aggregate vote. Page 6 of 24 ARTICLE III BOARD OF DIRECTORS SECTION 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The Board of Directors may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or the Certificate of Incorporation directed or required to be exercised or done by the stockholders. SECTION 2. NUMBER AND TERMS. Except as otherwise fixed pursuant to the provisions of the Certificate of Incorporation relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect additional Directors under specified circumstances, the number of the Directors of the Corporation shall be fixed from time to time by majority vote of the entire Board of Directors. The Directors, other than those who may be elected by the holders of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation, shall be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible. As determined by the Board of Directors, one class to be originally elected for a term expiring at the annual meeting of stockholders to be held in 1987, another class to be originally elected for a term expiring at the annual meeting of stockholders to be held in 1988, and another class to be originally elected for a term expiring at the annual meeting of stockholders to be held in 1989, with the members of each class to hold office until their successors are elected and qualified. At each annual meeting of the stockholders of the Corporation, the successors of the class of Directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. SECTION 3. NOMINATIONS. Subject to the rights of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect Directors under specified circumstances, nominations for the election of Directors may be made by the Board of Directors or a committee appointed by the Board of Directors or by any stockholder entitled to vote in the election of Directors generally. However, any stockholder entitled to vote in the election of Directors generally may nominate one or more persons for election as Director at a meeting only if timely written notice of such stockholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation. To be timely, a stockholder's notice must be received at the principal executive offices of the corporation: (1) not less than 60 days in advance of such meeting if such meeting is to be held on a day which is within 30 days preceding the anniversary of the previous year's annual meeting or 90 days in advance of such meeting if such meeting is to be held on or after the anniversary of the previous year's annual meeting; and Page 7 of 24 (2) with respect to any other annual meeting of stockholders, on or before the close of business on the 15th day following the date (or the first date, if there be more than one) of public disclosure of the date of such meeting. For the purposes of this Section 3, the date of public disclosure of a meeting shall include, but not be limited to, the date on which disclosure of the date of the meeting is made in a press release reported by the Dow Jones News Services, Associated Press or comparable national news service, or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) (or the rules and regulations thereunder) of the Securities Exchange Act of 1934, as amended. Each such notice shall set forth: (a) the name, age and business and residential address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (e) the written consent of each nominee to serve as a Director of the Corporation if so elected. The chairman of the meeting shall refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. SECTION 4. PLACE OF MEETINGS. Meetings of the Board of Directors shall be held at such place or places, within or without the State of Delaware as the Board of Directors may from time to time determine or as shall be specified in the notice of any such meeting. SECTION 5. ANNUAL MEETING. The Board of Directors shall meet for the purpose of corporate organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. In the event such annual meeting is not so held, the annual meeting of the Board of Directors may be held at such other time or place (within or without the State of Delaware) as shall be specified in a notice thereof given as hereinafter provided in Section 8 of this Article III. SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at such time and place as the Board of Directors may fix. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day. Notice of regular meetings of the Board of Directors need not be given except as otherwise required by statute or these By-Laws. Page 8 of 24 SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the Chairman of the Board, if one shall have been elected, or by a majority of the Directors of the Corporation or by the President. SECTION 8. NOTICE OF MEETINGS. Notice of each special meeting of the Board of Directors (and of each regular meeting for which notice shall be required) shall be given by the Secretary as hereinafter provided in this Section 8, in which notice shall be stated the time and place of the meeting. Except as otherwise required by these By-Laws, such notice need not state the purposes of such meeting. Notice of each such meeting shall be mailed, postage prepaid, to each Director, addressed to such Director at such Director's residence or usual place of business, by mail, at least twenty (20) days before the day on which such meeting is to be held, or shall be sent addressed to such Director at such place by telegraph, cable, telex, telecopier or other similar means, or be delivered to such Director personally at least 48 hours prior to the meeting. Notice of any such meeting need not be given to any Director who shall, either before or after the meeting, submit a signed waiver of notice or who shall attend such meeting, except when such Director shall attend for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Notices are deemed to have been given: by telephone, at the time of delivery to the recipient; by telegram or similar means, at the time of transmission; and by mail, when deposited in the United States mail, postage prepaid. SECTION 9. QUORUM AND MANNER OF ACTING. A majority of the total number of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and, except as otherwise expressly required by statute or the Certificate of Incorporation or these By-Laws, the act of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum at any meeting of the Board of Directors, a majority of the Directors present thereat may adjourn such meeting to another time and place. Notice of the time and place of any such adjourned meeting shall be given to all of the Directors unless such time and place were announced at the meeting at which the adjournment was taken, in which case such notice shall only be given to the Directors who were not present thereat. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Except as otherwise provided by law, the Directors shall act only as a Board and the individual Directors shall have no power as such. SECTION 10. ORGANIZATION. At each meeting of the Board of Directors, the Chairman of the Board, if one shall have been elected, or, in the absence of the Chairman of the Board or if one shall not have been elected, the President (or, in the President's absence, another Director chosen by a majority of the Directors present) shall act as Chairman of the meeting and preside thereat. The Secretary or, in the Secretary's absence, any person appointed by the Chairman shall act as Secretary of the meeting and keep the minutes thereof. Page 9 of 24 SECTION 11. RESIGNATIONS. Any Director of the Corporation may resign at any time by giving written notice of such Director's resignation to the President or the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt. Unless specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 12. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Except as otherwise fixed pursuant to the provisions of the Certificate of Incorporation relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect additional Directors under specified circumstances, newly created directorships resulting from any increase in the number of Directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board of Directors. Any Director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director's successor shall have been elected and qualified. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director. SECTION 13. REMOVAL OF DIRECTORS. Subject to the rights of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances, any director may be removed from office, with cause, by the affirmative vote of the holders of record of a majority of the combined voting power of the outstanding shares of Stock entitled to vote generally in the election of Directors, voting together as a single class and without cause, only by the affirmative vote of the holders of 75% of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of Directors, voting together as a single class. SECTION 14. COMPENSATION. The Board of Directors shall have authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity. SECTION 15. COMMITTEES. The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, including an executive committee, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Page 10 of 24 Except to the extent restricted by statute or the Certificate of Incorporation, each such committee, to the extent provided in the resolution creating it, shall have and may exercise all the powers and authority of the Board of Directors (including the power and authority to declare a dividend, authorize the issuance of stock, adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of the State of Delaware (the "General Corporation Law") and, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in subsection (a) of Section 151 of the General Corporation Law, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series) and may authorize the seal of the Corporation to be affixed to all papers which require it. Each such committee shall serve at the pleasure of the Board of Directors and have such name as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors. Each committee of the Board of Directors shall fix its own rules or procedure consistent with the provisions of applicable law and of any resolutions of the Board of Directors governing such committee. Each committee shall meet as provided by such rules or such resolutions of the Board of Directors. Unless otherwise provided by such rules or by such resolutions, the provisions of these By-Laws relating to the place of holding meetings and notice required for meetings of the Board of Directors shall govern the place of meetings and notice of meetings for committees of the Board of Directors. Except in cases where it is otherwise provided by the rules of such committee or by the resolution of the Board of Directors, the vote of a majority of the members present at a duly constituted meeting at which a quorum is present shall be sufficient to pass any measure by the committee. In the event that the Board of Directors shall designate a committee that shall have the power to recommend changes in the compensation of senior management of the Corporation, recommended or retain an auditor for the Corporation and/or recommend nominees for election as directors of the Corporation, the membership of such committee shall consist solely of such directors who are not employees of the Corporation or of any subsidiary of the Corporation. SECTION 16. ACTION BY CONSENT. Unless restricted by the Certificate of Incorporation, any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Board of Directors or such committee, as the case may be. Page 11 of 24 SECTION 17. TELEPHONIC MEETING. Unless restricted by the Certificate of Incorporation, any one or more members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means shall constitute presence in person at the meeting. Page 12 of 24 ARTICLE IV OFFICERS SECTION 1. NUMBER AND QUALIFICATIONS. The officers of the Corporation shall be elected annually by the Board of Directors at the meeting immediately following the annual meeting of stockholders. The officers of the Corporation shall include the President, one or more Vice-Presidents, the Secretary and the Treasurer. If the Board of Directors wishes, it may also elect as an officer of the Corporation a Chairman of the Board and may elect other officers (including one or more Assistant Treasurers and one or more Assistant Secretaries) as may be necessary or desirable for the business of the Corporation. Any two or more offices may be held by the same person, and no officer except the Chairman of the Board need be a Director. Each officer shall hold office until such officer's successor shall have been duly elected and shall have qualified, or until such officer's death, or until such officer shall have resigned or have been removed, as hereinafter provided in these By-Laws. In its discretion, the Board of Directors may leave unfilled for any period it may fix any office to the extent allowed by law. Any vacancy in any of the above offices may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting. In the case of the absence or disability of an officer or for any other reason that is determined to be sufficient to the Board of Directors, the Board of Directors or any officer designated by it, may, for the time of the absence or disability, delegate such officer's duties and powers to any other officer of the Corporation. The Board of Directors also may elect, appoint or provide for the appointment of such other officers and agents as may from time to time appear necessary or advisable in the conduct of the affairs of the Corporation. SECTION 2. RESIGNATIONS. Any officer of the Corporation may resign at any time by giving written notice of such officer's resignation to the President or Secretary of the Corporation. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon receipt. Unless otherwise specified therein, the acceptance of any such resignation shall not be necessary to make it effective. SECTION 3. REMOVAL. Any officer of the Corporation may be removed, either with or without cause, at any time, by the affirmative vote of a majority of the members of the Board of Directors at any meeting thereof. SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be such an officer, shall, if present, preside at all meetings of the stockholders and the Board of Directors, and exercise and perform such other powers and duties as established in an employment contract, and as may be from time to time assigned to the Chairman by the Board of Directors or prescribed by the By-Laws. Page 13 of 24 SECTION 5. PRESIDENT. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the President shall be the Chief Executive Officer of the Corporation if so elected by the Board of Directors and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the corporation, its business and its officers. In the absence of the Chairman of the Board, or if there be none, the President shall preside at all meetings of the stockholders and the Board of Directors. Subject to the final sentence of Section 15 of Article III, the President shall be an EX-OFFICIO member of all the standing committees, including the executive committee, if any, and shall have the general powers and duties of management usually vested in the office of President of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors. The President may sign any deeds, mortgages, bonds, contracts or other instruments which the Board of Directors has authorized to be executed or which are in the ordinary course of business of the Corporation. The President may vote, either in person or by proxy all of the shares of the capital stock of any company which the Corporation owns or is otherwise entitled to vote at any and all meetings of the stockholders of such company and shall have the power to accept or waive notice of such meetings. SECTION 6. EXECUTIVE VICE PRESIDENT. Each Executive Vice-President shall perform all such duties as from time to time may be assigned him/her by the Board of Directors or the President. At the request of the President, in the absence of the President, or in the event of the President's inability or refusal to act, the Executive Vice-President, or if there shall be more than one, the Executive Vice-Presidents, in the order determined by the Board of Directors (or if there is no such determination, then the Executive Vice-Presidents in the order of their election), shall perform the duties of the President and, when so acting, shall have the powers of and be subject to the restrictions placed upon the President in respect of the performance of such duties. SECTION 7. SENIOR VICE-PRESIDENT. Each Senior Vice-President shall perform all such duties as from time to time may be assigned to such Senior Vice- President by the Board of Directors, or the President. SECTION 8. VICE PRESIDENT. Each Vice President shall perform all such duties as from time to time may be assigned to such Vice-President by the Board of Directors, or the President. SECTION 9. TREASURER. The Treasurer shall: (a) have charge and custody of, and be responsible for, all of the funds and securities of the Corporation; (b) keep full and accurate records of receipts and disbursements in books belonging to the Corporation; Page 14 of 24 (c) deposit all moneys and other valuables to the credit of the Corporation in such depositories as may be designated by the Board of Directors or pursuant to its direction; (d) receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; (e) disburse the funds of the Corporation and supervise the investments of its funds, taking proper vouchers therefore; (f) render to the Board of Directors, whenever the Board of Directors may require, an account of the financial conditions of the Corporation; and (g) in general, perform all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to the Treasurer by the Board of Directors. SECTION 10. SECRETARY. The Secretary shall: (a) keep or cause to be kept in one or more books provided for the purpose, the minutes of all meetings of the Board of Directors, the committees of the Board of Directors and the stockholders; (b) see that all notices are duly given in accordance with the provisions of these By-Laws and as required by law; (c) be custodian of the records and the seal of the Corporation and affix and attest the seal to all certificates for shares of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; (d) see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and (e) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to the Secretary by the Board of Directors. SECTION 11. OFFICERS' BONDS OR OTHER SECURITY. If required by the Board of Directors, any officer of the Corporation shall give a bond or other security for the faithful performance of such officer's duties, in such amount and with such surety as the Board of Directors may require. Page 15 of 24 SECTION 12. COMPENSATION. The compensation of the officers of the Corporation for their services as such officers shall be fixed from time to time by the Board of Directors. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that the officer is also a director of the Corporation. Page 16 of 24 ARTICLE V STOCK CERTIFICATES AND THEIR TRANSFER SECTION 1. STOCK CERTIFICATES. Every holder of stock in the Corporation shall be entitled to have a certificate, signed by, or in the name of the Corporation by, the Chairman of the Board or the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by the holder in the Corporation. Stock certificates of the Corporation shall be in such form as may be approved by the Board of Directors. Such stock certificates shall be numbered and registered, and shall exhibit the holder's name and shares. SECTION 2. FACSIMILE SIGNATURES. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. SECTION 3. LOST CERTIFICATES. The Corporation may issue a new certificate of stock or uncertificated shares in place of any certificate therefore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen, or destroyed certificate, or the owner's legal representative to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. A new certificate may be issued without requiring any bond when, in the judgment of the Board of Directors, it is proper to do so. SECTION 4. TRANSFERS OF STOCK. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its records; provided, however, that the Corporation shall be entitled to recognize and enforce any lawful restriction on transfer. Whenever any transfer of stock shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of transfer if, when the certificates are presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so. SECTION 5. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint, or authorize any officer or officers to appoint, one or more transfer agents and one or more registrars. Page 17 of 24 SECTION 6. REGULATIONS. The Board of Directors may make such additional rules and regulations, not inconsistent with these By-Laws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. SECTION 7. FIXING THE RECORD DATE. (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the date next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. SECTION 8. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to recognize the exclusive right of a person registered on its records as the owner of shares of stock to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments a person registered on its records as the owner of shares of stock, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares of stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware. Page 18 of 24 ARTICLE VI INDEMNIFICATION OF DIRECTORS AND OFFICERS SECTION 1. GENERAL. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by reason of the fact that such person, or a person for whom such person is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, nonprofit entity or other enterprise, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and actually reasonably incurred by such person in connection with the proceeding. However, the Corporation shall be required to indemnify a person in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. SECTION 2. INDEMNIFICATION IN CERTAIN CASES. To the extent that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any proceeding, or in defense of any claim, issue or matter therein (or if Section 145(c) of the General Corporation law is amended after February 1, 1994 so as to broaden indemnification rights thereunder, then to the fullest extent permitted by the General Corporation Law), such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. SECTION 3. PROCEDURE. Any indemnification under Section 1 of this Article VI (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because the person has met the applicable standard of conduct set forth in such Section 1. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders. SECTION 4. ADVANCES FOR EXPENSES. The Corporation shall pay the expenses (including attorneys' fees) incurred by a director or officer of the Corporation in defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER, that the payment of expenses incurred by a director or officer in advance of the final disposition of the proceeding shall be Page 19 of 24 made only upon a receipt of an undertaking by the director or officer to repay all costs advanced if it should be ultimately determined that the director or officer is not entitled to be indemnified under this Article or otherwise. Payment of such expenses incurred by other employees and agents of the Corporation may be made by the Board of Directors in its discretion upon such terms and conditions, if any, as it deems appropriate. SECTION 5. RIGHTS NOT EXCLUSIVE. The rights conferred on any person by this Article VI shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested directors or otherwise. The indemnification and advancement of expenses provided for by this Article VI shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 6. INSURANCE. To the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, the Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any other capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VI. SECTION 7. INDEMNITY AGREEMENTS WITH DIRECTORS AND OFFICERS. The Corporation may enter into indemnity agreements with the Directors and Officers of this Corporation substantially in the form attached hereto as Appendix A and hereby incorporated by reference; provided, however, such indemnity agreements shall exclude indemnity for the Directors' and Officers' knowing fraud, deliberate dishonesty or willful misconduct. SECTION 8. CLAIMS. Notwithstanding any other provision of this Article VI, if a claim for indemnification or advancement of expenses under this Article is not paid in full within sixty days after a written claim therefor has been received by the Corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law. SECTION 9. OTHER INDEMNIFICATION. The Corporation's obligation, if any, to indemnify and advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, nonprofit entity or other enterprise, including service with respect to employee benefit plans, shall be Page 20 of 24 reduced by any amount such person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, nonprofit entity or other enterprise, including service with respect to employee benefit plans. SECTION 10. AMENDMENT OR REPEAL. Any repeal or modification of the foregoing provisions of this Article VI shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. Page 21 of 24 ARTICLE VII GENERAL PROVISIONS SECTION 1. DIVIDENDS. Subject to the provisions of statute and the Certificate of Incorporation, dividends upon the shares of capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property or in shares of stock of the Corporation, unless otherwise provided by statute or the Certificate of Incorporation. SECTION 2. RESERVES. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors may, from time to time, in its absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors may think conducive to the interests of the Corporation. The Board of Directors may modify or abolish any such reserve in the manner in which it was created. SECTION 3. SEAL. The seal of the Corporation shall be in such form as shall be approved by the Board of Directors. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. The seal may be affixed by any officer of the Corporation to any instrument executed by authority of the Corporation, and the seal when so affixed may be attested by the signature of any officer of the Corporation. SECTION 4. FISCAL YEAR. The fiscal year of the Corporation shall be fixed, and once fixed, may thereafter be changed, by resolution of the Board of Directors. SECTION 5. CHECKS, NOTES, DRAFTS, ETC.. All checks, notes, drafts or other orders for the payment of money of the Corporation shall be signed, endorsed or accepted in the name of the Corporation by such officer, officers, person or persons as from time to time may be designated by the Board of Directors or by an officer or officers authorized by the Board of Directors to make such designation. SECTION 6. EXECUTION OF CONTRACTS, DEEDS, ETC. The Board of Directors may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances. Page 22 of 24 SECTION 7. FORM OF RECORDS. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account, and minutes books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotography or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The Corporation shall convert any records so kept upon the written request of any person entitled to inspect such records. Page 23 of 24 ARTICLE VIII AMENDMENTS Except as otherwise provided by these by-laws, the Certificate of Incorporation, or by operation of law, the by-laws of the Corporation may be made, altered or repealed by vote of holders of shares of stock representing a majority of the voting power of the issued and outstanding stock and entitled to vote thereon present in person or represented by a proxy at any annual or special meeting of stockholders at which a quorum is present called for that purpose or by the affirmative vote of a majority of the Directors then in office given at any regular or special meeting of the Board of Directors. Page 24 of 24 APPENDIX A INDEMNITEE AGREEMENT This Agreement, made and entered into as of the ____ day of _______________ 199_ ("Agreement'), by and between Syncor International Corporation, a Delaware corporation ("Company"), and __________________ ("Indemnitee"): WHEREAS, highly competent persons justifiably are reluctant to serve publicly-held corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation; and WHEREAS, the Board of Directors of the Company (the "Board") has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself; and WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining qualified persons; and WHEREAS, the Board has determined that the increased difficulty in attracting and retaining qualified persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of protection in the future; and WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified; and WHEREAS, Indemnitee is willing to serve, continue to serve and to take on a additional service for or on behalf of the Company on the condition that he be so indemnified; Appendix A Page 1 of 13 NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows: SECTION 1. SERVICES BY INDEMNITEE. Indemnitee agrees to serve as an officer of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in any such position. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries) and Indemnitee. Indemnitee specifically acknowledges that Indemnitee's employment with the Company (or any of its subsidiaries), if any, is at will, and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Company (or any of its subsidiaries), other applicable formal severance policies duly adopted by the Board, or by the Company's Certificate of Incorporation, By-Laws, and the General Corporation Law of the State of Delaware. The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as an officer or director of the Company. SECTION 2. INDEMNIFICATION - GENERAL. The Company shall indemnify, and advance expenses (as hereinafter defined) to Indemnitee as provided in this Agreement and (subject to the provisions of this Agreement) to the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights of Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other Sections of this Agreement. SECTION 3. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of his Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to or participant in any threatened, pending, or completed Proceeding (as hereinafter defined), other than a Proceeding by or in the right of the Company. Pursuant to this Section 3, Indemnitee shall be indemnified against Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful. SECTION 4. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section, Indemnitee shall be indemnified against Appendix A Page 2 of 13 Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company if applicable law prohibits such indemnification; PROVIDED, HOWEVER, that, if applicable law so permits, indemnification against Expenses shall nevertheless be made by the Company in such event if and only to the extent that the Court of Chancery of the State of Delaware, or the Court in which such Proceeding shall have been brought or is pending, shall determine. SECTION 5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is successful, on the merits or otherwise, in (i) defending any Proceeding brought against the Indemnitee by reason of his Corporate Status or (ii) in prosecuting any Proceeding described in the last sentence of Section 14 hereof, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in any such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in any such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. SECTION 6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. SECTION 7. ADVANCEMENT OF EXPENSES. The Company shall advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding within ten days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such expenses. Appendix A Page 3 of 13 SECTION 8. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. (a) To obtain Indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. (b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 8(a) hereof, a determination, if required by applicable law, with respect to Indemnitee's entitlement thereto shall be made in the specific case: (i) if a Change in Control (as hereinafter defined) shall have occurred, by Independent Counsel (as hereinafter defined) (unless Indemnitee shall request that such determination be made by a majority vote of the Disinterested Directors (as hereinafter defined) even though less than a quorum of the Board or by the stockholders, in which case by the person or persons or in the manner provided for in clauses (ii) or (iii) of this Section 8(b)) in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by a majority vote of the Disinterested Directors even though less than a quorum of the Board, or (B) if there are no such Disinterested Directors or if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (C) by the stockholders of the Company; or (iii) as provided in Section 9(b) of this Agreement; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. (c) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) hereof, the Independent Counsel shall be selected as provided in this Section 8(c). If a Change of Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change of Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Appendix A Page 4 of 13 Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and Indemnitee shall give written consent to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 7 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 17 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the Independent Counsel so selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 8(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom an objection is so resolved or the person so appointed shall act as Independent Counsel under Section 8(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 8(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 8(c), regardless of the manner in which such Independent Counsel was selected or appointed. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 10(a)(iii) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing). SECTION 9. PRESUMPTION AND EFFECT OF CERTAIN PROCEEDINGS. (a) If a Change of Control shall have occurred, in making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 8(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. (b) If the person, persons or entity empowered or selected under Section 8 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within 60 days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Appendix A Page 5 of 13 Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; PROVIDED, HOWEVER, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and PROVIDED, FURTHER, that the foregoing provisions of this Section 9(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 8(b) of this Agreement and if (A) within 15 days after receipt by the Company of the request for such determination the Board of Directors has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within 75 days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within 15 days after such receipt for the purpose of making such determination, such meeting is held for such purpose within 60 days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) of this Agreement. (c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful. SECTION 10. REMEDIES OF INDEMNITEE. (a) In the event that (i) a determination is made pursuant to Section 8 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement (ii) advancement of Expenses is not timely made pursuant to Section 7 of this Agreement (iii) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) of this Agreement and such determination shall not have been made and delivered in a written opinion within 90 days after receipt by the Company of the request for indemnification, or (iv) payment of indemnification is not made pursuant to Section 5 or Section 6 of this Agreement within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 8 or 9 of this Agreement, Indemnitee shall be entitled to an adjudication in the Court of Chancery of the State of Delaware of his entitlement to such Appendix A Page 6 of 13 indemnification or advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association, Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 10(a); PROVIDED, HOWEVER, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his rights under Section 5 of this Agreement. The Company shall not oppose Indemnitee's right to seek any such adjudication or award in arbitration. (b) In the event that a determination shall have been made pursuant to Section 8 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 10 shall be conducted in all respects as a DE NOVO trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control shall have occurred, in any judicial proceeding or arbitration commenced pursuant to this Section 10, the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be. (c) If a determination shall have been made or deemed to have been made pursuant to Section 8 or 9 of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 10, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material act necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. (d) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 10 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. (e) In the event that Indemnitee, pursuant to this Section 10, seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all expenses (of the types described in the definition of Expenses in Section 17 of this Agreement) actually and reasonably incurred by him in such judicial adjudication or arbitration, but only if he prevails therein. If it shall be determined in said judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advancement or expenses sought, the expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated. Appendix A Page 7 of 13 SECTION 11. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION. (a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or termination of this Agreement or any provision hereof shall be effective as to any Indemnitee with respect to any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or termination. (b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies (c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. (d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise. (e) The Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. SECTION 12. DURATION OF AGREEMENT. This Agreement shall continue until and terminate upon the later of: (a) 10 years after the date that Indemnitee shall have ceased to serve as an officer, or (b) the final termination of all pending Proceedings in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of Appendix A Page 8 of 13 any proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement relating thereto. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his heirs, executors and administrators. SECTION 13. SEVERABILITY. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. SECTION 14. EXCEPTION TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF EXPENSES. Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification or advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein, brought or made by him against the Company unless such shall have been approved in writing in advance of the filing of such Proceeding, or claim therein, by or at the direction of, the Board. Notwithstanding the preceding sentence, Indemnitee shall, however, be entitled to indemnification or advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein, brought or made by him against the Company to recover and receive any amounts or benefits due to him pursuant to (i) the Company's Certificate of Incorporation or By-laws; (ii) any agreement; arrangement or understanding between him and the Company, or (iii) any agreement, arrangement, or understanding between the Company and any third party for his benefit. SECTION 15. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence or this Agreement. SECTION 16. HEADINGS. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. Appendix A Page 9 of 13 SECTION 17. DEFINITIONS. For purposes of this Agreement: (a) "Change in Control" means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is then subject to such reporting requirement; PROVIDED HOWEVER, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date (i) any "person" (as such term is used in Section 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such person attaining such percentage interest, (ii) the Company is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or (iii) during any period of two consecutive years, individual who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board. (b) "Corporate Status" describes the status of a person who is or was a director, officer; employee; or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company. (c) "Disinterested Director" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee. (d) "Effective Date" means _________ , 199 . (e) "Expenses" shall include all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in a Proceeding. (f) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has Appendix A Page 10 of 13 been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnities rights under this Agreement. (g) "Proceeding" includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative, except one initiated by an Indemnitee pursuant to Section 10 of this Agreement to enforce his rights under this Agreement. SECTION 18. MODIFICATION AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. SECTION 19. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. SECTION 20. NOTICES. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed: (a) If to Indemnitee, to: (b) If to the Company to: Syncor International Corporation 20001 Prairie Street Chatsworth, CA 91311 or such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be. SECTION 21. CONTRIBUTION. To the fullest extent permissible under applicable law, If the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason Appendix A Page 11 of 13 whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s). SECTION 22. GOVERNING LAW; SUBMISSION TO JURISDICTION; APPOINTMENT OF AGENT FOR SERVICE OF PROCESS. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 10(a) of this Agreement, each of the Company and Indemnitee hereby irrevocably and unconditionally (i) agrees that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the "Delaware Court"), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consents to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoints, to the extent such party is not a resident of the State of Delaware, irrevocably ____________________________________________________ as its agent in the State of Delaware as such party's agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waives any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waives, and agrees not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or otherwise inconvenient forum. SECTION 23. MISCELLANEOUS. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. Appendix A Page 12 of 13 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. ATTEST: SYNCOR INTERNATIONAL CORPORATION BY: --------------------------------------- INDEMNITEE: - ------------------------------------------- Address: ----------------------------- ----------------------------- Appendix A Page 13 of 13 EX-10.8 3 EXHIBIT 10.8 EXHIBIT 10.8 BENEFITS AGREEMENT This Benefits Agreement is entered into as of the (____________) day of (____________________), 199__ between SYNCOR INTERNATIONAL CORPORATION (hereinafter sometimes referred to as "CORPORATION") and ______________________ ("EMPLOYEE"). The parties hereto agree as follows: 1. ADDITIONAL BENEFITS. Corporation hereby grants to Employee the additional benefits, hereinafter set forth in the event of a "change in control" (defined below) while Employee is in Employee's present position or in an equivalent or higher position as determined by the Corporation's President, in order to induce Employee to continue to serve the Corporation. 2. VESTING. Notwithstanding the vesting schedule set forth in Employee's option grants, and in other documents for the Corporation's incentive plans, in the event of "change of control", Employee's vesting in all of the (i) grants to Employee of stock option shares, (ii) contemplated and/or earned incentives awarded under the Management Incentive Plan in force at that time and/or any replacement plans, and (iii) contemplated and/or earned incentives awarded under the Long Term Incentive Plan in force at that time and/or any replacement plans shall be accelerated and such stock option shares, and all contemplated and/or earned incentive awards shall be fully vested, and calculated using the highest multiplier at such level as if all objectives for the year have been achieved and exceeded as of the date of such "change in control". A "change in control" shall be defined as both (i) the failure by the Board of Directors to determine a "Qualified Offer" as that term is defined in Section 1 (a) of that certain Rights Agreement dated as of September 8, 1989 between Syncor International Corporation and the American Stock Transfer & Trust Company and (ii) the acquisition of 30% or more of the outstanding common stock of the Corporation by a person, or group of related persons (as defined by SEC Rule 13d-3), that is not affiliated with Corporation as of the date hereof. 3. TERMINATION AFTER "CHANGE IN CONTROL". In the event of a "change in control" as defined in Paragraph 2 above, termination for purposes of this Agreement shall include (i) termination of Employee's employment by Corporation within twenty-four (24) months from the date of "change in control" other than for "good cause" and (ii) termination 1 of Employee's employment by Employee within twenty-four (24) months from the date of "change in control" after a material modification in Employee's duties and responsibilities, a relocation of his office to a less desirable location, or a change in the support personnel allocated to him. "Good cause" shall be defined exclusively for purposes of this Agreement to mean one or more of the following events: (a) A material breach of this Agreement by Employee provided such breach is continuing for a period of thirty (30) days after the Corporation has given notice of breach, and such breach is not cured by Employee during such period; (b) Employee shall be adjudicated a bankrupt or be convicted of a crime punishable by imprisonment; or (c) Employee shall engage in an activity that constitutes a conflict of interest with the Corporation and such activity has not been approved by a disinterested majority of the Board of Directors after full disclosure thereof. If Employee terminates following a "change in control" as set forth above, then in addition to those benefits vesting under Section 2 above, Employee shall be paid upon the effective date of such termination, one year's compensation at the compensation rate for the Employee in effect on such date; any bonus provided by Corporation prorated up to the date of termination or the full bonus if all objectives for the year during which the termination occurred shall have been met; full and immediate vesting of all other Corporation benefits then enjoyed by the Employee; and coverage under current benefit plans of the Corporation then enjoyed by the Employee for one year from the effective date of the termination. 4. EMPLOYEE HANDBOOK. Corporation maintains an Employee Handbook which applies to Corporation's employees, including its officers and managers, and which contains additional terms and conditions of employment of Employee. Those terms and conditions, as they may be revised from time to time by Corporation, are hereby incorporated by reference into this Agreement. In the event any provision of the Employee Handbook conflicts with a provision of this Agreement, the terms of this Agreement shall govern. 5. NOTICE. Any notice required or permitted to be given under this Benefits Agreement shall be sufficient if in writing and sent by certified mail by Corporation to the residence of Employee, or by Employee to Corporation's principal office. 6. ASSIGNABILITY. This Agreement and the rights, interests and benefits hereunder shall not be assignable or in any way alienated by Employee. Corporation shall have the right of assignment and transfer of its rights hereunder to any successor to the majority of its assets 2 and any such successor shall be bound by the terms hereof. 7. WAIVER OF BREACH. The waiver by Corporation or Employee of a breach of any provisions of this Agreement by the other shall not operate or be construed as a waiver of any subsequent breach. 8. ENTIRE AGREEMENT. This instrument contains the entire Agreement of the parties. It may not be changed orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. 9. ATTORNEY'S FEES. In the event that there shall be any litigation or court proceeding with respect to this Agreement or the obligations of the parties hereunder, the prevailing party shall be entitled to recover reasonable attorneys fees and costs from the other party. 10. GOVERNING LAW. This Benefits Agreement shall be governed by the laws of California. IN WITNESS WHEREOF, Corporation has caused this Benefits Agreement to be executed in its corporate name by its duly authorized corporate officers, and Employee has executed this Benefits Agreement. E M P L O Y E E ----------------------------------- SYNCOR INTERNATIONAL CORPORATION By: -------------------------------- Title: ----------------------------- 3 EX-10.13 4 EXHIBIT 10.13 EXHIBIT 10.13 SYNCOR INTERNATIONAL CORPORATION MCGREVIN DEFERRED COMPENSATION PLAN AMENDED AND RESTATED EFFECTIVE OCTOBER 23, 1995 WHEREAS Syncor International Corporation, a Delaware corporation (the "CORPORATION") desires to retain the services of Gene R. McGrevin ("MCGREVIN") and recognizes that the loss of the services of his services would result in substantial loss to the Corporation; and WHEREAS on or about July 10, 1993 the Corporation adopted a Deferred Compensation Plan for McGrevin; WHEREAS the Corporation desires to recognize the services rendered in the past and to be rendered in the future by him until the date of his termination, retirement or death and wishes to amend and restate the Plan; NOW THEREFORE, the Corporation hereby amends and restates the Plan for McGrevin as hereinafter set forth. ARTICLE 1 - DEFINITIONS 1.1 BENEFIT: The Corporation shall pay to McGrevin or his Beneficiary a lump sum cash benefit according to the terms of Article 3 and no less then the amounts stated therein. At the option of the Corporation as determined by and at the sole discretion of the Board of Directors, the benefit can be greater. 1.2 BENEFICIARY: Any person or persons, as designated pursuant to Article 4.1, to whom any benefits may be payable upon the death of McGrevin pursuant to Article 3.2. 1.3 CONSTRUCTION: The masculine gender shall be deemed to include the feminine and neuter genders; the singular to include the plural; and the plural to include the singular; in each case where appropriate. 1.4 CORPORATION OR EMPLOYER: Syncor International Corporation, any subsidiary thereof which participates in this Plan and which employs McGrevin, any predecessor corporation or business, and any corporation or business which was merged into or consolidated with or substantially all of whose assets were acquired by the Corporation. 1 1.5 DEFERRED AMOUNT: The Corporation shall maintain a bookkeeping account to record the deferred amounts. On the last day of each Plan Year, the Corporation shall credit such account according to Section 3.1. 1.6 EFFECTIVE DATE OF PLAN: June 30, 1993 1.7 COMPENSATION COMMITTEE: The Compensation Committee of the Employer's Board of Directors. 1.8 PLAN: The Plan shall consist of this document and any amendments thereto. 1.9 PLAN YEAR: The first plan year shall be from June 30, 1993 to June 30, 1994. Thereafter, the plan year shall be from June 30 of each year to June 30 of the following year. ARTICLE 2 - PARTICIPATION 2.1 Eligibility for participation in this Plan shall be restricted to McGrevin. 2.2 McGrevin shall continue to be covered by this Plan until the earlier date on which any of the following events occur: (a) the Plan is terminated pursuant to Article 5.1; (b) Termination of employment; or (c) Death. ARTICLE 3 - BENEFITS 3.1 TERMINATION OR RETIREMENT BENEFIT: If McGrevin's coverage under this Plan ceases for any reason, he shall be paid a lump sum benefit. Such benefit will be as set forth below for each Plan Year of participation under the Plan. McGrevin will be credited with a year of participation if he has been employed by the Employer on the last day of each Plan Year or the prorated amount earned up to the last full quarter of employment. Complete Years Minimum Annual Minimum Cumulative of Participation Deferred Amount Deferred Amount 1 23,000 23,000 2 32,000 55,000 3 56,000 111,000 4 65,000 176,000 5 74,000 250,000 6 83,000 333,000 7 92,000 425,000 8 98,000 523,000 9 106,000 629,000 10 111,000 740,000 2 The payment of the cumulative benefit amount shall be made in a lump sum within thirty (30) days following such termination or retirement provided, however, in the event McGrevin is terminated without cause or if there is a change in control of the Corporation as defined in McGrevin's employment agreement with the Corporation (which is in effect at the time of such event), then the benefit amount shall be equal to the greater of Seven Hundred Forty Thousand Dollars ($740,000) or the total cumulative benefits. 3.2 DEATH BENEFITS: If McGrevin should die while under the Plan his Beneficiary shall be paid a lump sum benefit equal to the cumulative Deferred Amounts. This payment shall be made in a lump sum within thirty (30) days following the date the Corporation receives the claimant's statement form pursuant to Article 6.5. 3.3 DISABILITY: At the discretion of the Board of Directors the Corporation may accelerate the payment of benefit equal to the greater of Seven Hundred Forty Thousand Dollars ($740,000) or the total cumulative benefits (the "BENEFITS"), to McGrevin in the event the Corporation determines that McGrevin has become totally disabled in that he is prevented from engaging in any suitable gainful employment or occupation, based on medical evidence satisfactory to the Corporation confirming that such disability will be permanent and continuous for the remainder of his life. Notwithstanding the foregoing, the discretionary payment shall not be less than the sum of the vested portion of the Minimum Cumulative Deferred Amount and forty percent (40%) of the remaining of the Benefits. Payments to McGrevin in accordance with this Article shall be made within thirty (30) days following the date the Corporation determines McGrevin is eligible for such payment and approval of such payment by the Board of Directors. ARTICLE 4 - BENEFICIARY 4.1 McGrevin shall designate on a form, satisfactory to the Corporation, a Beneficiary or Beneficiaries for any benefits which may become payable hereunder in the event of his death. Any such Beneficiary can be changed by McGrevin upon giving written notice to the Corporation. 4.2 The Beneficiary will be the person or persons named in the Beneficiary designation most recently filed with the Corporation at the time of McGrevin's death. ARTICLE 5 - AMENDMENT AND TERMINATION 5.1 By a mutual agreement of the parties this Plan can be amended at any time; provided, however, that no such action shall reduce the amount accrued by McGrevin or Beneficiary under the Plan prior to the date of amendment or termination. 3 ARTICLE 6 - MISCELLANEOUS 6.1 The Plan shall under no circumstance be deemed to have any effect upon the terms or conditions of employment of McGrevin by the Corporation. The establishment and maintenance of this Plan shall not be construed as creating or modifying any contract between the Corporation and McGrevin, nor is it in lieu of any other benefits. 6.2 Participation by McGrevin in this Plan shall not give such person the right to be retained in the employ of the Corporation or any right or interest in this Plan other than as provided herein. 6.3 Benefits under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance by McGrevin or Beneficiary and any attempt to do so shall be null and void. Benefits under this Plan shall not be subject to or liable for the debts, contracts, liabilities, engagements or torts of McGrevin or any Beneficiary, nor may the same be subject to attachment or seizure by any creditor of McGrevin or any Beneficiary under any circumstances. 6.4 The Corporation, at its sole discretion, shall have the right to waive any of its rights under this Plan. 6.5 In the event of McGrevin's termination, retirement or death, he or his Beneficiary, as the case may be, should notify the Corporation promptly, and the Corporation will then provide a claimant's statement form for completion which should be returned to the Corporation, together with an official death certificate, if applicable. In the event that any claim hereunder is denied, the Corporation will provide adequate notice, in writing, to McGrevin or Beneficiary, setting forth the specific reason for such denial and, in addition, the Corporation will afford reasonable opportunity for a full and fair review of those reasons. 6.6 For purposes of Title I of ERISA, this Plan is intended to qualify as an unfunded plan maintained primarily for the purpose of providing deferred compensation for McGrevin and shall be interpreted accordingly. No action by the Corporation or its Board of Directors under this Plan shall be construed as creating a trust, escrow or other secured or segregated fund or other fiduciary relationship of any kind in favor of McGrevin, his Beneficiary, or any other persons otherwise entitled to the Plan benefits. The status of McGrevin and his Beneficiary with respect to any liabilities assumed by the Corporation hereunder shall be solely those of unsecured creditors of the Corporation. Any asset acquired or held by the Corporation in connection with liabilities assumed by it hereunder, shall not be deemed to be held under any trust, escrow or other secured or segregated fund or other fiduciary relationship of any kind for the benefit of McGrevin or his Beneficiary or to be security for the performance of the obligations of the Corporation, but shall be, and remain a general, unpledged, unrestricted asset of the Corporation at all times subject to the claims of general creditors of the Corporation. 4 6.7 The Plan shall be administered by the Corporation. The Corporation shall have the exclusive authority and responsibility for all matters in connection with the operation and administration of the Plan. The Corporation's powers and duties shall include, but not be limited to, the following: (a) responsibility for the compilation and maintenance of all records necessary in connection with the Plan; (b) authorizing the payment of all benefits under the Plan and expenses of the Plan; and (c) authority to engage such legal, accounting and other professional services as it may deem proper. The Corporation, from time to time, may allocate to other persons or organizations any of its rights, powers, and duties with respect to the operation and administration of the Plan. Any such allocation shall be reviewed from time to time by the Corporation; shall, unless the Corporation specifies otherwise, carry such discretionary authority as the Corporation possesses regarding the matter; and shall be terminable upon such notice as the Corporation, in its sole discretion, deems reasonable and prudent under the circumstances. 6.8 Any payment to McGrevin or Beneficiary or the legal representative of either, in accordance with the terms of this Plan shall to the extent thereof be in full satisfaction of all claims such person may have against the Corporation under this Plan. The Corporation may require such payee, as a condition to such payment, to execute a receipt and release therefore in such form as shall be determined by the Corporation. 6.9 The Plan shall be construed, administered, and governed in all respects in accordance with the laws of the State of California to the extent not preempted by ERISA. If any provision of this Plan shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions shall continue to be fully effective. ACKNOWLEDGED: /s/ HAIG S. BAGERDJIAN - ---------------------------------- ---------------------------- Syncor International Corporation Date Haig S. Bagerdjian, Vice President 5 EX-10.17 5 EXHIBIT 10.17 EXHIBIT 10.17 SYNCOR INTERNATIONAL CORPORATION NON-EMPLOYEE DIRECTOR 1995 STOCK INCENTIVE AWARD AGREEMENT NAME OF NON-EMPLOYEE DIRECTOR ("PARTICIPANT") : ARNOLD SPANGLER ADDRESS OF PARTICIPANT : 1165 PARK AVE., APT. 9B NEW YORK, NY 10128 SOCIAL SECURITY NUMBER : ###-##-#### NUMBER OF SHARES : 4,200 EXERCISE PRICE PER SHARE : $8.50 AWARD DATE : JANUARY 24, 1995 EXPIRATION DATE : JANUARY 24, 2005 WHEREAS, pursuant to the Corporation's 1995 Non-Employee Director Stock Incentive Plan (the "Plan"), which is not exempt from the limitation of Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Participant has been granted a Nonqualified Stock Option (the "Option" or "Award") to purchase shares of Common Stock of the Corporation upon the terms and conditions hereinafter set forth; NOW, THEREFORE, the Participant and the Corporation agree as follows: 1. GRANT OF OPTION. The Corporation has granted to the Participant as a matter of separate inducement and agreement in connection with his or her status as a Non-Employee Director, and not in lieu of any salary or other compensation for his or her services, the right and option to purchase, in accordance with the Plan and on the terms and conditions of the Plan and those hereinafter set forth, all or any part of the number of shares of Common Stock stated above (the "Common Stock") at the price stated above (the "Price"), exercisable from time to time subject to the provisions of this Award Agreement prior to the close of business on the Expiration Date stated above. 2. EXERCISABILITY OF OPTION. Except as otherwise provided in the Plan or this Award Agreement, the Option shall become exercisable from time to time as follows: (i) 50% of the Common Stock shall become purchasable twelve months after the Award Date; and (ii) an additional 50% of the Common Stock shall become purchasable twenty-four months after the Award Date; provided, however, that the Option may not be exercised as to less than 10 shares at any one time unless the number of shares purchased is the total number at the time 1 available for purchase under an installment of the Option. If the Participant does not, in any given installment period, purchase all of the shares which he or she is entitled to purchase in such installment period, the Participant's right to purchase any shares not so purchased shall continue until the Expiration Date, unless theretofore terminated in accordance with the provisions hereof and of the Plan. The Option may be exercised only as to whole shares. 3. METHOD OF EXERCISE AND PAYMENT. Each exercise of the Option shall be by means of written notice of exercise duly delivered to the Corporation, specifying the number of whole shares with respect to which the Option is being exercised, together with any written statements required pursuant to Section 8 below and payment of the Price. 4. EFFECT OF TERMINATION OF DIRECTORSHIP. The Option and all other rights hereunder, to the extent such rights shall not have been exercised prior thereto, shall terminate on the date the Participant ceases to serve as a director of the Corporation; provided, however, that the Participant may, to the extent the Option shall have become exercisable prior to such date, exercise the Option at any time within (1) up to twelve months after such termination; or (2) up to twelve months after the Participant's death, if the Participant dies while serving as a director of the Corporation or during the period referred to in clause (1) above. During the period after death, the Option may, to the extent exercisable on the date of death (or earlier termination), be exercised by the person or persons to whom the Participant's rights under the Plan and this Award Agreement shall pass by will or by the applicable laws of descent and distribution. Unless sooner terminated pursuant to the Plan, the Option shall expire at the end of the applicable period specified in clauses (1) or (2) above, to the extent not exercised within that period. In no event may the Option be exercised by any person after the Expiration Date. 5. NON-ASSIGNABILITY OF OPTION. The Option shall not be subject to sale, transfer, pledge, assignment or alienation other than by will or the laws of descent and distribution regardless of any community property or other interest therein of the Participant's spouse or such spouse's successor in interest. In the event that the spouse of the Participant shall have acquired a community property interest in the Option, the Participant, or such transferees, may exercise it on behalf of the spouse of the Participant or such spouse's successor in interest. 6. ACCELERATION. Upon the occurrence of an Event, as defined in Sycor's 1990 Master Stock Incentive Plan ("MSIP"), including a Change of Control, the Award shall become immediately exercisable to the full extent theretofore not exercisable unless prior to an Event the Board determines otherwise; subject, however, to compliance with applicable regulatory requirements including without limitation Rule 16b-3 promulgated by the Exchange Act. 7. PARTICIPANT NOT A SHAREHOLDER. Neither the Participant nor any other person entitled to exercise the Option shall have any of the rights or privileges of a shareholder of the Corporation as to any shares of Common Stock for which stock certificates have not been actually issued and delivered to him or her. No adjustment will be made for dividends or other 2 rights for which the record date is prior to the date on which such stock certificate or certificates are issued even if such record date is subsequent to the date upon which notice of exercise was delivered and the tender of payment was accepted. 8. APPLICATION OF SECURITIES LAWS. a. No shares of Common Stock may be purchased pursuant to the Option unless and until any then applicable requirements of federal and state securities laws and regulations, and any exchanges upon which the Common Stock may be listed, shall have been fully satisfied. The Participant represents, agrees and certifies that: (a) If the Participant exercises the Option in whole or in part at a time when there is not in effect under the Securities Act of 1933, as amended (the "Securities Act"), a registration statement relating to the Common Stock issuable upon exercise and available for delivery to him or her a prospectus meeting the requirements of Section 10 of the Securities Act ("Prospectus"), the Participant will acquire the Common Stock issuable upon such exercise for the purpose of investment and not with a view to resale or distribution and that, as a condition to each such exercise, he or she will furnish to the Corporation a written statement to such effect, satisfactory in form and substance to the Corporation; and (b) of and when the Participant proposes to publicly offer or sell the Common Stock issued to him or her upon exercise of the Option, the Participant will notify the Corporation prior to any such offering or sale and will abide by the opinion of counsel to the Corporation as to whether and under what conditions and circumstances, if any, he or she may offer and sell such shares, but such procedure need not be followed if a Prospectus was delivered to the Participant with the shares of Common Stock and the Common Stock was and is listed on a national securities exchange or traded as a National Market System security through the facilities of NASDAQ. b. The Participant understands that the certificates representing the Common Stock acquired pursuant to the Option may bear a legend referring to the foregoing matters and any limitations under the Securities Act and state securities laws with respect to the transfer of such Common Stock, and the Corporation may impose stop transfer instructions to implement such limitations, if applicable. Any person or persons entitled to exercise the Option under the provisions of Section 4 above shall be bound by and obligated under the provisions of this Section 9 to the same extent as is the Participant. c. The Board of Directors of the Corporation may impose such conditions on an Award or on its exercise or acceleration or on the payment of any withholding obligation (including without limitation restricting the time of exercise to specified periods) as may be required to satisfy applicable regulatory requirements, including, without limitation, Rule 16b-3 (or any successor rule) promulgated by the Commission pursuant to the Exchange Act. 3 9. NOTICES. Any notice to be given to the Corporation under the terms of the Award Agreement or pursuant to the Plan shall be in writing and addressed to the Secretary of the Corporation at its principal office and any notice to be given to the Participant shall be addressed to him or her at the address stated above, or at such other address as either party may hereafter designate in writing to the other party. Any such notice shall be deemed to have been duly given when enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. 10. TAX WITHHOLDING. The provisions of Section 6.6 of the MSIP are hereby incorporated and shall govern any withholding that the Corporation is required to make with respect to an exercise of the Option, as well as the Corporation's right to condition a transfer of Common Stock upon compliance with the applicable withholding requirements of federal, state and local authorities. 11. LAW APPLICABLE TO CONSTRUCTION. The interpretation, performance and enforcement of the Award and this Award Agreement shall be governed by the laws of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Award Agreement to be executed on its behalf by a duly authorized officer and the Participant has hereunto set his or her hand as of the Award Date. COMPANY: OPTIONEE: SYNCOR INTERNATIONAL CORPORATION a Delaware corporation By: /s/ Gene R. McGrevin --------------------------- ----------------------------------- GENE R. MCGREVIN ARNOLD SPANGLER President & Chief Executive Officer Date: Date: ------------------------- ------------------------------- CONSENT OF SPOUSE I join with my spouse, the Participant herein named, in executing the foregoing Non-Employee Director Stock Option Award Agreement and agree to be bound by all of the terms and provisions thereof and of the Plan. ------------------------------------ SIGNATURE OF PARTICIPANT'S SPOUSE 4 EX-10.18 6 EXHIBIT 10.18 EXHIBIT 10.18 ------------- SYNCOR INTERNATIONAL CORPORATION NON-EMPLOYEE DIRECTOR 1995 STOCK INCENTIVE AWARD AGREEMENT NAME OF NON-EMPLOYEE DIRECTOR ("PARTICIPANT") : GEORGE S. OKI ADDRESS OF PARTICIPANT : 2382 SHOREWOOD CARMICHAEL, CA 95608 SOCIAL SECURITY NUMBER : ###-##-#### NUMBER OF SHARES : 4,200 EXERCISE PRICE PER SHARE : $8.50 AWARD DATE : JANUARY 24, 1995 EXPIRATION DATE : JANUARY 24, 2005 WHEREAS, pursuant to the Corporation's 1995 Non-Employee Director Stock Incentive Plan (the "Plan"), which is not exempt from the limitation of Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Participant has been granted a Nonqualified Stock Option (the "Option" or "Award") to purchase shares of Common Stock of the Corporation upon the terms and conditions hereinafter set forth; NOW, THEREFORE, the Participant and the Corporation agree as follows: 1. GRANT OF OPTION. The Corporation has granted to the Participant as a matter of separate inducement and agreement in connection with his or her status as a Non-Employee Director, and not in lieu of any salary or other compensation for his or her services, the right and option to purchase, in accordance with the Plan and on the terms and conditions of the Plan and those hereinafter set forth, all or any part of the number of shares of Common Stock stated above (the "Common Stock") at the price stated above (the "Price"), exercisable from time to time subject to the provisions of this Award Agreement prior to the close of business on the Expiration Date stated above. 2. EXERCISABILITY OF OPTION. Except as otherwise provided in the Plan or this Award Agreement, the Option shall become exercisable from time to time as follows: (i) 50% of the Common Stock shall become purchasable twelve months after the Award Date; and (ii) an additional 50% of the Common Stock shall become purchasable twenty-four months after the Award Date; provided, however, that the Option may not be exercised as to less than 10 shares at any one time unless the number of shares purchased is the total number at the time 1 available for purchase under an installment of the Option. If the Participant does not, in any given installment period, purchase all of the shares which he or she is entitled to purchase in such installment period, the Participant's right to purchase any shares not so purchased shall continue until the Expiration Date, unless theretofore terminated in accordance with the provisions hereof and of the Plan. The Option may be exercised only as to whole shares. 3. METHOD OF EXERCISE AND PAYMENT. Each exercise of the Option shall be by means of written notice of exercise duly delivered to the Corporation, specifying the number of whole shares with respect to which the Option is being exercised, together with any written statements required pursuant to Section 8 below and payment of the Price. 4. EFFECT OF TERMINATION OF DIRECTORSHIP. The Option and all other rights hereunder, to the extent such rights shall not have been exercised prior thereto, shall terminate on the date the Participant ceases to serve as a director of the Corporation; provided, however, that the Participant may, to the extent the Option shall have become exercisable prior to such date, exercise the Option at any time within (1) up to twelve months after such termination; or (2) up to twelve months after the Participant's death, if the Participant dies while serving as a director of the Corporation or during the period referred to in clause (1) above. During the period after death, the Option may, to the extent exercisable on the date of death (or earlier termination), be exercised by the person or persons to whom the Participant's rights under the Plan and this Award Agreement shall pass by will or by the applicable laws of descent and distribution. Unless sooner terminated pursuant to the Plan, the Option shall expire at the end of the applicable period specified in clauses (1) or (2) above, to the extent not exercised within that period. In no event may the Option be exercised by any person after the Expiration Date. 5. NON-ASSIGNABILITY OF OPTION. The Option shall not be subject to sale, transfer, pledge, assignment or alienation other than by will or the laws of descent and distribution regardless of any community property or other interest therein of the Participant's spouse or such spouse's successor in interest. In the event that the spouse of the Participant shall have acquired a community property interest in the Option, the Participant, or such transferees, may exercise it on behalf of the spouse of the Participant or such spouse's successor in interest. 6. ACCELERATION. Upon the occurrence of an Event, as defined in Sycor's 1990 Master Stock Incentive Plan ("MSIP"), including a Change of Control, the Award shall become immediately exercisable to the full extent theretofore not exercisable unless prior to an Event the Board determines otherwise; subject, however, to compliance with applicable regulatory requirements including without limitation Rule 16b-3 promulgated by the Exchange Act. 7. PARTICIPANT NOT A SHAREHOLDER. Neither the Participant nor any other person entitled to exercise the Option shall have any of the rights or privileges of a shareholder of the Corporation as to any shares of Common Stock for which stock certificates have not been actually issued and delivered to him or her. No adjustment will be made for dividends or other 2 rights for which the record date is prior to the date on which such stock certificate or certificates are issued even if such record date is subsequent to the date upon which notice of exercise was delivered and the tender of payment was accepted. 8. APPLICATION OF SECURITIES LAWS. a. No shares of Common Stock may be purchased pursuant to the Option unless and until any then applicable requirements of federal and state securities laws and regulations, and any exchanges upon which the Common Stock may be listed, shall have been fully satisfied. The Participant represents, agrees and certifies that: (a) If the Participant exercises the Option in whole or in part at a time when there is not in effect under the Securities Act of 1933, as amended (the "Securities Act"), a registration statement relating to the Common Stock issuable upon exercise and available for delivery to him or her a prospectus meeting the requirements of Section 10 of the Securities Act ("Prospectus"), the Participant will acquire the Common Stock issuable upon such exercise for the purpose of investment and not with a view to resale or distribution and that, as a condition to each such exercise, he or she will furnish to the Corporation a written statement to such effect, satisfactory in form and substance to the Corporation; and (b) If and when the Participant proposes to publicly offer or sell the Common Stock issued to him or her upon exercise of the Option, the Participant will notify the Corporation prior to any such offering or sale and will abide by the opinion of counsel to the Corporation as to whether and under what conditions and circumstances, if any, he or she may offer and sell such shares, but such procedure need not be followed if a Prospectus was delivered to the Participant with the shares of Common Stock and the Common Stock was and is listed on a national securities exchange or traded as a National Market System security through the facilities of NASDAQ. b. The Participant understands that the certificates representing the Common Stock acquired pursuant to the Option may bear a legend referring to the foregoing matters and any limitations under the Securities Act and state securities laws with respect to the transfer of such Common Stock, and the Corporation may impose stop transfer instructions to implement such limitations, if applicable. Any person or persons entitled to exercise the Option under the provisions of Section 4 above shall be bound by and obligated under the provisions of this Section 9 to the same extent as is the Participant. c. The Board of Directors of the Corporation may impose such conditions on an Award or on its exercise or acceleration or on the payment of any withholding obligation (including without limitation restricting the time of exercise to specified periods) as may be required to satisfy applicable regulatory requirements, including, without limitation, Rule 16b-3 (or any successor rule) promulgated by the Commission pursuant to the Exchange Act. 3 9. NOTICES. Any notice to be given to the Corporation under the terms of the Award Agreement or pursuant to the Plan shall be in writing and addressed to the Secretary of the Corporation at its principal office and any notice to be given to the Participant shall be addressed to him or her at the address stated above, or at such other address as either party may hereafter designate in writing to the other party. Any such notice shall be deemed to have been duly given when enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. 10. TAX WITHHOLDING. The provisions of Section 6.6 of the MSIP are hereby incorporated and shall govern any withholding that the Corporation is required to make with respect to an exercise of the Option, as well as the Corporation's right to condition a transfer of Common Stock upon compliance with the applicable withholding requirements of federal, state and local authorities. 11. LAW APPLICABLE TO CONSTRUCTION. The interpretation, performance and enforcement of the Award and this Award Agreement shall be governed by the laws of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Award Agreement to be executed on its behalf by a duly authorized officer and the Participant has hereunto set his or her hand as of the Award Date. COMPANY: OPTIONEE: SYNCOR INTERNATIONAL CORPORATION a Delaware corporation By: /s/ Gene R. Mcgrevin /s/ George S. Oki -------------------------------- ------------------------------ GENE R. MCGREVIN President & Chief Executive Officer Date: Date: ------------------------------ ------------------------------ CONSENT OF SPOUSE I join with my spouse, the Participant herein named, in executing the foregoing Non-Employee Director Stock Option Award Agreement and agree to be bound by all of the terms and provisions thereof and of the Plan ------------------------------------ SIGNATURE OF PARTICIPANT'S SPOUSE 4 EX-10.19 7 EXHIBIT 10.19 EXHIBIT 10.19 SYNCOR INTERNATIONAL CORPORATION NON-EMPLOYEE DIRECTOR 1995 STOCK INCENTIVE AWARD AGREEMENT NAME OF NON-EMPLOYEE DIRECTOR ("PARTICIPANT") : HENRY WAGNER, JR. ADDRESS OF PARTICIPANT : 5607 WILDWOOD AVE. BALTIMORE, MD 21209 SOCIAL SECURITY NUMBER : ###-##-#### NUMBER OF SHARES : 16,600 EXERCISE PRICE PER SHARE : $8.50 AWARD DATE : JANUARY 24, 1995 EXPIRATION DATE : JANUARY 24, 2005 WHEREAS, pursuant to the Corporation's 1995 Non-Employee Director Stock Incentive Plan (the "Plan"), which is not exempt from the limitation of Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Participant has been granted a Nonqualified Stock Option (the "Option" or "Award") to purchase shares of Common Stock of the Corporation upon the terms and conditions hereinafter set forth; NOW, THEREFORE, the Participant and the Corporation agree as follows: 1. GRANT OF OPTION. The Corporation has granted to the Participant as a matter of separate inducement and agreement in connection with his or her status as a Non-Employee Director, and not in lieu of any salary or other compensation for his or her services, the right and option to purchase, in accordance with the Plan and on the terms and conditions of the Plan and those hereinafter set forth, all or any part of the number of shares of Common Stock stated above (the "Common Stock") at the price stated above (the "Price"), exercisable from time to time subject to the provisions of this Award Agreement prior to the close of business on the Expiration Date stated above. 2. EXERCISABILITY OF OPTION. Except as otherwise provided in the Plan or this Award Agreement, the Option shall become exercisable from time to time as follows: (i) 50% of the Common Stock shall become purchasable twelve months after the Award Date; and (ii) an additional 50% of the Common Stock shall become purchasable twenty-four months after the Award Date; provided, however, that the Option may not be exercised as to less than 10 shares at any one time unless the number of shares purchased is the total number at the time 1 available for purchase under an installment of the Option. If the Participant does not, in any given installment period, purchase all of the shares which he or she is entitled to purchase in such installment period, the Participant's right to purchase any shares not so purchased shall continue until the Expiration Date, unless theretofore terminated in accordance with the provisions hereof and of the Plan. The Option may be exercised only as to whole shares. 3. METHOD OF EXERCISE AND PAYMENT. Each exercise of the Option shall be by means of written notice of exercise duly delivered to the Corporation, specifying the number of whole shares with respect to which the Option is being exercised, together with any written statements required pursuant to Section 8 below and payment of the Price. 4. EFFECT OF TERMINATION OF DIRECTORSHIP. The Option and all other rights hereunder, to the extent such rights shall not have been exercised prior thereto, shall terminate on the date the Participant ceases to serve as a director of the Corporation; provided, however, that the Participant may, to the extent the Option shall have become exercisable prior to such date, exercise the Option at any time within (1) up to twelve months after such termination; or (2) up to twelve months after the Participant's death, if the Participant dies while serving as a director of the Corporation or during the period referred to in clause (1) above. During the period after death, the Option may, to the extent exercisable on the date of death (or earlier termination), be exercised by the person or persons to whom the Participant's rights under the Plan and this Award Agreement shall pass by will or by the applicable laws of descent and distribution. Unless sooner terminated pursuant to the Plan, the Option shall expire at the end of the applicable period specified in clauses (1) or (2) above, to the extent not exercised within that period. In no event may the Option be exercised by any person after the Expiration Date. 5. NON-ASSIGNABILITY OF OPTION. The Option shall not be subject to sale, transfer, pledge, assignment or alienation other than by will or the laws of descent and distribution regardless of any community property or other interest therein of the Participant's spouse or such spouse's successor in interest. In the event that the spouse of the Participant shall have acquired a community property interest in the Option, the Participant, or such transferees, may exercise it on behalf of the spouse of the Participant or such spouse's successor in interest. 6. ACCELERATION. Upon the occurrence of an Event, as defined in Sycor's 1990 Master Stock Incentive Plan ("MSIP"), including a Change of Control, the Award shall become immediately exercisable to the full extent theretofore not exercisable unless prior to an Event the Board determines otherwise; subject, however, to compliance with applicable regulatory requirements including without limitation Rule 16b-3 promulgated by the Exchange Act. 7. PARTICIPANT NOT A SHAREHOLDER. Neither the Participant nor any other person entitled to exercise the Option shall have any of the rights or privileges of a shareholder of the Corporation as to any shares of Common Stock for which stock certificates have not been actually issued and delivered to him or her. No adjustment will be made for dividends or other 2 rights for which the record date is prior to the date on which such stock certificate or certificates are issued even if such record date is subsequent to the date upon which notice of exercise was delivered and the tender of payment was accepted. 8. APPLICATION OF SECURITIES LAWS. a. No shares of Common Stock may be purchased pursuant to the Option unless and until any then applicable requirements of federal and state securities laws and regulations, and any exchanges upon which the Common Stock may be listed, shall have been fully satisfied. The Participant represents, agrees and certifies that: (a) If the Participant exercises the Option in whole or in part at a time when there is not in effect under the Securities Act of 1933, as amended (the "Securities Act"), a registration statement relating to the Common Stock issuable upon exercise and available for delivery to him or her a prospectus meeting the requirements of Section 10 of the Securities Act ("Prospectus"), the Participant will acquire the Common Stock issuable upon such exercise for the purpose of investment and not with a view to resale or distribution and that, as a condition to each such exercise, he or she will furnish to the Corporation a written statement to such effect, satisfactory in form and substance to the Corporation; and (b) If and when the Participant proposes to publicly offer or sell the Common Stock issued to him or her upon exercise of the Option, the Participant will notify the Corporation prior to any such offering or sale and will abide by the opinion of counsel to the Corporation as to whether and under what conditions and circumstances, if any, he or she may offer and sell such shares, but such procedure need not be followed if a Prospectus was delivered to the Participant with the shares of Common Stock and the Common Stock was and is listed on a national securities exchange or traded as a National Market System security through the facilities of NASDAQ. b. The Participant understands that the certificates representing the Common Stock acquired pursuant to the Option may bear a legend referring to the foregoing matters and any limitations under the Securities Act and state securities laws with respect to the transfer of such Common Stock, and the Corporation may impose stop transfer instructions to implement such limitations, if applicable. Any person or persons entitled to exercise the Option under the provisions of Section 4 above shall be bound by and obligated under the provisions of this Section 9 to the same extent as is the Participant. c. The Board of Directors of the Corporation may impose such conditions on an Award or on its exercise or acceleration or on the payment of any withholding obligation (including without limitation restricting the time of exercise to specified periods) as may be required to satisfy applicable regulatory requirements, including, without limitation, Rule 16b-3 (or any successor rule) promulgated by the Commission pursuant to the Exchange Act. 3 9. NOTICES. Any notice to be given to the Corporation under the terms of the Award Agreement or pursuant to the Plan shall be in writing and addressed to the Secretary of the Corporation at its principal office and any notice to be given to the Participant shall be addressed to him or her at the address stated above, or at such other address as either party may hereafter designate in writing to the other party. Any such notice shall be deemed to have been duly given when enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification prepaid) in a post office or branch post office regularly maintained by the United States Government. 10. TAX WITHHOLDING. The provisions of Section 6.6 of the MSIP are hereby incorporated and shall govern any withholding that the Corporation is required to make with respect to an exercise of the Option, as well as the Corporation's right to condition a transfer of Common Stock upon compliance with the applicable withholding requirements of federal, state and local authorities. 11. LAW APPLICABLE TO CONSTRUCTION. The interpretation, performance and enforcement of the Award and this Award Agreement shall be governed by the laws of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Award Agreement to be executed on its behalf by a duly authorized officer and the Participant has hereunto set his or her hand as of the Award Date. COMPANY: OPTIONEE: SYNCOR INTERNATIONAL CORPORATION a Delaware corporation By: /s/ GENE R. MCGREVIN /s/ HENRY WAGNER, JR. -------------------------------- ---------------------------- GENE R. MCGREVIN President & Chief Executive Officer Date: Date: ------------------------------ ------------------------- CONSENT OF SPOUSE I join with my spouse, the Participant herein named, in executing the foregoing Non-Employee Director Stock Option Award Agreement and agree to be bound by all of the terms and provisions thereof and of the Plan. -------------------------------- SIGNATURE OF PARTICIPANT'S SPOUSE 4 EX-13 8 EXHIBIT 13 SYNCOR INTERNATIONAL CORPORATION 1995 Annual Report Front Cover: Combination Photos of Syncor employees and customers and a Map of the World. TABLE OF CONTENTS _________________ Pharmacy Location Map Inside Front Cover Financial Highlights 1 Letter to Shareholders 2 Editorial 5 Selected Financial Data 9 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Consolidated Financial Statements 15 Notes to Consolidated Financial Statements 19 Report of Independent Auditors 30 Corporate Information Inside Back Cover CORPORATE PROFILE _________________ Syncor International Corporation operates an expanding network of 118 domestic and eight international nuclear pharmacy service centers and four Positron Emission Tomography radiopharmacies. The Company compounds and dispenses patient specific unit dose radiopharmaceutical prescriptions, as well as distributes bulk radiopharmaceutical products for use in diagnostic imaging and provides a complete range of advanced pharmacy services. Syncor services more than 7,000 customers and is the only national pharmacy network of its kind that provides a combination of diagnostic and information services to hospitals and alternate site markets. SYNCOR'S MISSION ________________ Syncor's Mission is to be the premier provider of prepared time-critical pharmaceuticals and comprehensive value-added pharmacy services which meet the needs of the professional health care community and their patients. FINANCIAL HIGHLIGHTS ____________________ Combination Photos of Syncor demployees and a Map of the World Reported net sales of $332.5 million Posted net income of $4.7 million, a significant increase over 1994 Increased cash position by $7.4 million to $26.6 million Compounded and delivered 5.2 million prescriptions. FINANCIAL DATE ______________
(In thousands, except per share date) 1995 1994 1993 ____________________________________________________________________________ (unaudited) Net Sales $332,460 $319,994 $241,289 Net Income $ 4,669 $ 1,213 $ 7,773 Net Income Per Share $ .45 $ .11 $ .72 Cash, Cash Equivalents and Marketable Securities $ 26,559 $ 19,201 $ 18,700 Cash Flow From Operations $ 15,586 $ 13,333 $ 9,672 ____________________________________________________________________________
NUMBER OF DOMESTIC RADIOPHARMACIES AS OF DECEMBER 31, 1995 Syncor - 118 Independents - 69 Mallinckrodt - 35 Amersham/Medi+Physics - 26 NUMBER OF RADIOPHARMACIES IN SYNCOR'S DOMESTIC NETWORK Dec. 31, 1995 118 Dec. 31, 1994 117 Dec. 31, 1993 109 May 31, 1993 100 May 31, 1992 95 May 31, 1991 87 TO OUR FELLOW SHAREHOLDERS: ___________________________ We are pleased to report that 1995 was a year of dramatic financial improvement and operational achievement for Syncor. We believe that our rebound from a very difficult 1994 validates the soundness of the Company's business strategy and demonstrates its ability to perform successfully in today's challenging health care environment. 1995 PERFORMANCE ________________ Profit improvement was Syncor's primary objective for 1995. We achieved net income of $4.7 million, or $.45 per share, a significant increase over net income of $1.2 million, or $.11 per share, in 1994. Photo of Monty Fu, Chairman of the Board Net sales for 1995 increased to $332.5 million, up four percent from $320.0 million in 1994. This gain is especially significant because it was achieved despite a January 1995 decision by one of our major suppliers to discontinue using Syncor's pharmacy network for the distribution of its products. This achievement's significance can best be measured by noting that the sales increase from 1994 to 1995 would have been nine percent had this supplier's products not been included in the 1994 results. Syncor's balance sheet also continued to improve with cash, cash equivalents and marketable securities reaching $26.6 million at December 31, an increase of $7.4 million over the prior year. Working capital totaled $34.3 million, an increase of $7.7 million over 1994, while the current ratio stood at 1.69 to 1 at year end. TURNAROUND FACTORS __________________ Turnaround Factors Syncor's 1995 financial turnaround was achieved as a result of steps taken in respect to pricing, sales mix and operating costs. Pricing: In 1995, strong competition continued to erode prices throughout our industry. Rather than devalue Syncor's products and services through pricing concessions, we concentrated on selling the Syncor "Service Difference(SM)." As a result, Syncor was able to minimize price erosion in 1995 compared with 1994. Sales Mix: Cardiology products continue to represent the largest and fastest-growing segment of Syncor's sales mix. Cardiolite(R), a proprietary compound manufactured by our alliance partner, The DuPont Merck Pharmaceutical Company ("DuPont Merck"), is replacing thallium as the nuclear medicine industry's "gold standard" for stress testing. During 1995, sales of Cardiolite(R) increased by 46 percent. Syncor's continuing efforts to convert customers from buying products in bulk to more efficient unit dose purchasing have also been successful. In 1995, unit dose products represented 82 percent of Syncor's sales, compared with 80 percent in 1994. Operating Costs: As a result of cost savings programs initiated at the end of 1994, Syncor was able to maintain 1995 general and administrative expenses as a percent of sales at 20 percent while keeping the Company's core business infrastructure intact. In April, 1995, Syncor launched a three-year, $8 million business process reengineering program that will dramatically improve the Company's information technology and linkages to customers and suppliers while increasing overall operating efficiency. OPERATIONAL HIGHLIGHTS ______________________ Syncor achieved a number of operational successes in 1995. Among the year's highlights: Rebalancing of DuPont Merck alliance: Early in the year, Syncor completed a review and modification of our strategic alliance agreement with DuPont Merck. As anticipated, the modified agreement improved communication and teamwork between Syncor and DuPont Merck and resulted in enhanced margins and increased cash flow. New distribution agreements: Consistent with our mission to be the premier provider of radiopharmaceuticals, Syncor signed two new distribution agreements with major suppliers in 1995. Under the first, we are now distributing Adenoscan(R), a pharmacologic stress agent, which is licensed from Medco Research and manufactured by Fujisawa USA. Following approval from the U.S. Food and Drug Administration, Syncor will begin distributing Neoprobe Corporation's RIGScan(R), a radiopharmaceutical product for surgical detection of colorectal cancer. As the FDA approves new radiopharmaceuticals, Syncor will continue to be proactive in partnering with manufacturers in order to provide the nuclear medicine community with superior diagnostic and therapeutic products. In February 1996, we announced the signing of an agreement with Cypros Pharmaceutical Corporation for the exclusive distribution of unit dose GLOFIL, a product that provides convenient and accurate measurement of renal function in patients with kidney disease. In March 1996, we entered into a distribution agreement with Diatide, Inc. for the countries of Hong Kong and Taiwan to distribute Techtide P829, a peptide for detecting and localizing cancerous tumors. Unit dose business expansion: Syncor's unit dose business is expanding rapidly through our relationships with major national managed care providers and group purchasing organizations. In 1995, unit dose business associated with national contracts increased by 28 percent over the previous year and now represents nearly 50 percent of our total unit dose sales. Information Systems: Syncor helps large customers manage their nuclear medicine departments through its proprietary Unit Dose Manager(TM) integrated software and hardware system. At year end, Syncor was supporting 1,300 systems at customer sites nationwide. Late in 1995, we launched NucLink(TM), a UDM(TM)-based software program that provides an electronic link between our local radiopharmacies and users. Through NucLink(TM), customers can enjoy the convenience and accuracy of remote order entry. Future enhancements will expand messaging and electronic-mail capabilities and further simplify the ordering process. During 1996, Syncor will be seeking opportunities to continue the expansion of its health care information systems business through strategic partnering arrangements with customers and suppliers. Domestic pharmacy expansion: Syncor is committed to expanding its nationwide network of radiopharmacies through acquisitions, start-ups, and joint ventures. In November 1995, Syncor added three pharmacies to its U.S. network through the acquisition of Pyramid Diagnostic Services, Inc. There are currently 118 pharmacies in Syncor's domestic network. Photo of Gene R. McGrevin, Vice Chairman and Chief Executive Officer International pharmacy expansion: Having successfully pioneered the concept of centralized radiopharmacies in the United States, Syncor is also expanding its overseas business. During 1995, we added three foreign pharmacies, bringing our international network from five to eight pharmacies. In early 1996, Syncor opened its ninth international pharmacy in Puerto Rico. By the end of 1998, Syncor plans to have an international distribution network in 25 markets outside the U.S. INVESTING IN THE FUTURE _______________________ Nuclear medicine is uniquely positioned as both the leading diagnostic modality and the modality most capable of improving diagnostic accuracy while lowering health care costs. Syncor's goal is to be the partner of choice for both providers and suppliers in the nuclear medicine industry. Syncor believes that the timing is right for the Company to make major investments in order to improve its strategic position, significantly increase sales and earnings potential, and build shareholder value. In addition to Syncor's investments in core business redesign and pharmacy network expansion, we have committed to investing $14 million over the next three to five years to develop a nationwide network for Positron Emission Tomography (PET), an emerging diagnostic modality. Syncor currently operates four PET distribution centers in the U.S. and plans to expand to 20 centers by the end of 1998. The following section of this annual report provides a description of PET and what makes it especially attractive to Syncor in the era of managed care. Photo of Robert G. Funari, President and Chief Operating Officer In order to support Syncor's commitments, the responsibilities of our senior management team have been realigned. In January 1996, Syncor founder Monty Fu became President and Chief Executive Officer of Syncor Global Holdings, Ltd., the subsidiary that operates our growing international pharmacy network. Gene McGrevin, previously President and Chief Executive Officer of Syncor International, is now the Company's Vice Chairman and CEO. In this capacity, Gene is focusing on the development of PET and other opportunities for the diversification and expansion of Syncor's health care business. Later in the year, Gene will also assume the position of Chairman of the Board, at which time Monty Fu, our current Chairman, will become Chairman Emeritus. Robert Funari, previously Syncor's Executive Vice President and Chief Operating Officer, has been appointed President and Chief Operating Officer. His primary role is to strengthen and expand Syncor's core nuclear medicine business in the U.S. While reporting Board changes, we note with sadness the January 1996 passing of our long-time friend and colleague, Joseph Kleiman. Joe joined Syncor's Board of Directors in 1985. His sheer brilliance, energy, objectivity, fairness and marvelous sense of humor are already sorely missed. BUILDING SHAREHOLDER VALUE __________________________ In closing, we want to recognize Syncor's 2,200 valued employees, whose efforts are directly responsible for the Company's financial and operational success in 1995. During the year, the Board demonstrated its commitment to fostering employee ownership by authorizing the Syncor Employee Savings and Stock Ownership Plan to purchase 250,000 shares of Syncor's common stock. Through this plan, employees now own approximately 13 percent of the Company a stake that helps keep everyone at Syncor focused on building shareholder value. For more on how Syncor invests in its most important resource its people please see page 8. We would also like to take this opportunity to thank our suppliers, customers, and you our shareholders for your continued support. Moreover, as a consequence of the large investments we are making in our Company's future, we are not expecting earnings to rise substantially over the next two or three years. Nevertheless, we are confident that the foundation we are building will ensure the continued growth of Syncor's core business and result in improved earnings performance over the long-term. Sincerely, /S/ MONTY FU _______________________________________ Monty Fu Chairman of the Board /S/ GENE R. MCGREVIN _______________________________________ Gene R. McGrevin Vice Chairman & Chief Executive Officer /S/ ROBERT G. FUNARI _______________________________________ Robert G. Funari President & Chief Operating Officer OUR COMMITMENT TO POSITRON EMISSION TOMOGRAPHY ______________________________________________ Positron Emission Tomography (PET) is a proven imaging modality that has been used primarily as a medical research tool for more than 20 years. Positron imaging is widely respected for its superior accuracy and the unique metabolic information it provides. In today's managed care environment, PET is gaining recognition for its potential to be cost effective in routine clinical applications, particularly in the diagnosis and management of certain cancers, heart disease and neurological disorders. Combination Photos of Cyclotron, Physicians and technicians preparing patient for PET scan, and a Map of the World Syncor has been providing positron radiopharmaceuticals since 1990. In January 1996, the Syncor Board of Directors approved the commitment of $14 million to fund the expansion of the Company's PET business. This expansion will include the development, over the next three to five years, of a nationwide network of PET radiopharmacies. Funds will also be used to support activities that will document and communicate the value of positron imaging to the appropriate clinical and managed care audiences. Syncor is investing in PET because we believe that positron imaging can play a significant role in improving the quality of care in key patient populations while lowering health care costs. Among the advantages of PET: - - PET provides unique metabolic diagnostic information. No other imaging technology measures and localizes differences in metabolic activity throughout the body. - - PET has demonstrated superiority in the diagnosis, staging and therapeutic monitoring of lung, colorectal and breast cancer, as well as brain disorders and heart disease. - - PET is expected to lower the cost of health care by enabling providers to make more informed decisions regarding the appropriateness of invasive interventional procedures, whether diagnostic (e.g., biopsies) or therapeutic (tumor resections, transplants, etc.). Photo of Physician and Technician preparing patient for PET scan - - PET has become more affordable. The cost of PET scanners is declining, while the development of new collimation and coincidence counting technology is making positron imaging capability less costly for medical facilities to provide. Moreover, Syncor's demonstrated ability to compound and distribute PET isotopes is eliminating the need for institutions to invest in the staff and equipment required to compound their own positron radiopharmaceuticals. PET PROVIDES UNIQUE DIAGNOSTIC INFORMATION __________________________________________ Positron imaging works by measuring and localizing differences in cellular metabolism. In the PET procedure, a specially compounded form of glucose incorporating a radioactive agent is injected into the patient and then tracked through the tissues with a special type of camera. Because malignant cells extract glucose from the blood more rapidly than normal cells, oncologists use PET images of above-normal metabolic activity to locate malignancies. Metabolic activity measurements can also be used to determine the health of an organ. For example, heart tissue with near-normal metabolic activity indicates that the organ may be salvageable through angioplasty or coronary by-pass and, therefore, transplant surgery may not be required. With its unique ability to provide highly accurate, real-time imagery of physiologic functions at the molecular level, PET complements today's most widely used diagnostic imaging technologies, Computed Tomography (CT) and Magnetic Resonance Imaging (MRI) - modalities that identify abnormalities only at the structural level. PET HAS DEMONSTRATED DIAGNOSTIC SUPERIORITY AND CLINICAL RELEVANCE __________________________________________________________________ Recent studies in peer review journals are demonstrating that PET is a clinically effective modality whose superior accuracy can enable health care providers to make better, more cost-effective patient management decisions. Originally used primarily as a research tool in studies of brain function and to localize certain brain disorders, PET has more recently been employed in combination with CT and MRI not only in diagnostic imaging procedures but also to demonstrate early physiological responses to drug therapies something that the nonmetabolic imaging techniques cannot do. Cancers that are being evaluated by PET include breast, colorectal, lung, brain, head and neck, melanoma, lymphoma, ovarian, and prostate. As mentioned above, PET is employed in cardiology to differentiate viable from nonviable heart tissue. PET has also demonstrated great usefulness in neurology where it has played an important role in the evaluation and management of epilepsy, Alzheimer's disease, dementia, stroke and other neurological and neuropsychiatric disorders. PET IS AFFORDABLE - AT LAST ___________________________ Until recently, PET usage has been limited chiefly because positron imaging has been well beyond the economic reach of most medical institutions. The PET camera itself is very expensive. Moreover, the isotopes employed in metabolic imaging have considerably shorter half-lives than those of most isotopes used in nuclear medicine. Because of this time sensitivity, most institutions with PET capability have had to compound their own positron radiopharmaceuticals in on-site cyclotrons or accelerators -- another major capital outlay and operating expense. In 1990, Syncor - originator of the centralized radiopharmacy concept - began producing PET isotopes at the first of what are now four pilot PET radiopharmacies. These pharmacies - located at the U.S.C. University Hospital in Los Angeles; the Northern California PET Imaging Center in Sacramento; Creighton University in Omaha; and the Good Samaritan Medical Center in Phoenix - have been used to demonstrate to the health care community that Syncor, working in conjunction with its efficient distribution network can satisfy the positron radiopharmaceutical requirements of entire geographic regions. Syncor's new funding commitment will assist in the creation of a national network of 20 PET radiopharmacies in states where the regulatory climate and health care environment are favorable for our expansion. By providing a centralized source for positron radiopharmaceuticals and removing the need for institutions to invest in production, Syncor expects to significantly enhance the availability and utilization of PET throughout the nuclear medicine community. The U.S. Food and Drug Administration's recent approval of a coincidence counting technology allows PET imaging to be performed on the newest cameras used for SPECT (Single Photon Emission Computed Tomography, the core of Syncor's diagnostic nuclear medicine business.) The ability to add PET capability by upgrading existing equipment, plus the potential efficiency and flexibility of dual purpose cameras, could add significatly to the numbr of institutions able to take advantage of this valuable technology. PET CAN LOWER HEALTHCARE COSTS ______________________________ As noted above, PET can lower health care costs by enabling physicians to make better patient-management decisions. According to the Institute for Clinical PET (ICP), the U.S. health care community could save as much as $2.5 billion annually by including or substituting PET in the diagnostic and staging protocols for cancers and in the evaluation of heart disease. One of the most promising applications of PET is in the diagnosis of lung cancer, one of the nation's leading causes of death. Each year, 170,000 cases of lung cancer are diagnosed in the U.S., generally through a combination of diagnostic imaging and surgical modalities. Cost savings of approximately $300 million have been estimated from the potential reduction in less accurate diagnostic procedures and the elimination of exploratory surgeries through the use of PET. PET BUILDS ON SYNCOR'S CORE COMPETENCIES ________________________________________ Combination Photos of PET Pharmacists, the Map of the World and Physicians and Technicians preparing patient for PET scan Syncor has been the leading distributor of radiopharmaceuticals to the nuclear medicine industry since 1974. Our expansion into the PET marketplace will build upon the core competencies developed in the creation of our nuclear pharmacy business. These competencies include: - - The demonstrated ability to provide radiopharmacy services 24 hours a day, 365 days a year, to institutions serving 95 percent of the nation's health care markets. - - The demonstrated ability to operate cost-effectively within the regulatory environment of 39 states and eight foreign countries. The demonstrated ability to form long-term, mutually beneficial relationships with health care providers and group purchasing organizations. - - The demonstrated ability to recruit, train and retain high-skilled employees, including 400 licensed nuclear pharmacists. - - The demonstrated ability to make a positive difference in the cost and quality of patient care by providing outstanding service. With our increased commitment to PET, Syncor is aggressively pursuing a leadership role in this emerging diagnostic modality. We expect Syncor's investment in positron imaging to reduce overall Company earnings over the next two to three year period. However, we believe this investment will provide a firm foundation for future sales and earnings increases that will, in turn, build shareholder value. INVESTING IN OUR PEOPLE _______________________ Photo of the Chairman's Award Recipient, Haig Bagerdjian While the health care environment in which Syncor operates is changing rapidly, our strong commitment to the training and development of employees remains constant. We are committed to increasing the depth, breadth and flexibility of our people's skills because it is only through their development that we can continue to serve our customers effectively while achieving Syncor's business objectives. Photo of the General Manager of the Year, Lou Juliano Continuing education and career development programs offered by Syncor in 1995 included the following: Photo of the Sales Manager of the Year, Suzi Mattingly Syncor's Advanced Management Program (SAM) -- SAM was custom-designed to increase the skills of senior managers in the areas of marketing, financial analysis and people management. Facilitated by external experts in each field, this eight-month program involved the formation of cross-functional management teams that improved individual and group abilities to anticipate and satisfy customer needs by researching and analyzing marketplace challenges and exploring directions for future growth. Photo of the Manager of the Year, Paul Gotti Strategic Selling Program -- All Syncor sales consultants and field managers were required to take this two-day course in recognizing changing customer needs and creating "win-win" solutions for the customer and the Company. Photo of the Pharmacy Manager of the Year, Dan Littlefield Photo of the National Accounts Manager of the Year, Kathy Hill Responsible Management Program -- The basics of being a good Syncor manager, including how to select quality people and support the continuous development of their skills, is part of the training required for all new managerial employees. Authorized User Program -- Pharmacists and technicians who work at Syncor's pharmacies are trained in the safe handling and preparation of radiopharmaceuticals through this Nuclear Regulatory Commission-sanctioned program. Safety Training -- All pharmacy personnel receive comprehensive training in biohazard, radiation and driver safety. Information Systems Training -- Syncor is in the process of expanding, networking and integrating its business management, communications, and training information systems. During 1995, all Syncor managers were trained on new budgeting software and all pharmacies were upgraded with state-of-the-art hardware for running this more efficient new program. Advanced Degree Award Program -- Syncor offers substantial financial support to employees who are pursuing a graduate degree in a job related field and who have demonstrated leadership potential. Candidates qualify for assistance through a rigorous interview and selection process. Tuition Reimbursement Program -- Through Syncor's tuition reimbursement program, all employees are encouraged to complete undergraduate and advanced degrees and take advantage of continuing education opportunities offered by local colleges, universities and other accredited institutions. The program provides reimbursement up to $2,000 per year for any courses that are related to the employee's current job or that prepare the employee to assume new responsibilities in the future. Syncor's investment in its people demonstrates our commitment to growing our business through customer service -- the competitive edge that only flexible, creative, and well-trained employees can provide. SYNCOR'S VALUES _______________ Syncor's Values reflect our shared beliefs as a Company of people. Our Values are our codes of conduct in working together, setting priorities and making decisions. They guide us individually and as a team to make the best decisions each day for our customers, employees and shareholders. CUSTOMERS _________ Our customers are number one. We are dedicated to providing quality services which exceed their expectations and maintain their trust. TEAMWORK ________ Teamwork is the result of open communication and the free exchange of ideas and information in an environment which values and encourages respect and dignity for every individual. PROFESSIONALISM _______________ Our employees are professionals who demonstrate knowledge, skills and accountability in performing their jobs. HEALTH AND SAFETY _________________ The health and safety of our employees, customers and community will never be compromised. EMPLOYEE OWNERSHIP __________________ We support employee ownership to share responsibility in creating future value for all shareholders. COMMUNITY SERVICE _________________ We believe in community service and encourage employee participation in community activities.
SELECTED FINANCIAL DATA Seven Months Ended Twelve Months Ended December Twelve Months Ended December 31, 31, May 31, In thousands, except per share date 1995 1994 1993 1993 1993 1992 ____________________________________________________________________________________________________________ Net Sales $332,460 $319,994 $241,289 $142,237 $230,949 $195,989 Gross Profit 73,591 66,026 78,926 45,187 77,306 67,451 Income Continuing operations 4,669 1,213 6,633 1,684 10,191 7,709 Discontinued operations, net - - 120 - (379) (810) Cumulative effect of accounting change - - 1,020 1,020 - - Net income $ 4,669 $ 1,213 $ 7,773 $ 2,704 $ 9,812 $ 6,899 ____________________________________________________________________________________________________________ Earnings per share: Continuing operations $.45 $.11 $.62 $.16 $.95 $.70 Discontinued operations, net - - .01 - (.03) (.07) Cumulative effect of accounting change - - .09 .09 - - Net income per share $.45 $.11 $.72 $.25 $.92 $.63 ============================================================================================================ Cash, cash equivalents and investments $ 26,559 $ 19,201 $ 18,700 $ 18,700 $ 20,937 $ 9,970 Working capital 34,286 26,616 27,121 27,121 27,430 20,279 Total assets 133,680 128,684 114,586 114,586 103,953 90,847 Long-term debt 5,200 5,154 6,837 6,837 4,515 6,008 Stockholders' equity $ 78,262 $ 73,850 $ 71,181 $ 71,181 $ 65,784 $ 52,359 Weighted average shares outstanding 10,481 10,889 10,779 10,762 10,708 10,865 ============================================================================================================ Current ratio 1.69 1.54 1.74 1.74 1.82 1.64 Number of domestic radiopharmacies 118 117 109 109 100 95 Days sales outstanding 55 55 52 52 52 59 ============================================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS CALENDAR YEARS 1995 AND 1994 NET SALES _________ Consolidated net sales in 1995 totaled $332.5 million, an increase of 3.9 percent or $12.5 million, over 1994. The Company's 1995 sales growth was influenced by a number of factors. Cardiac imaging continues to be the driving force behind the sales growth. Sales from cardiac imaging now account for approximately 63 percent of the Company's sales up from the 56 percent in 1994. These sales continue to be driven by the increasing market share of Cardiolite(R). Cardiolite(R) experienced a 46 percent increase in 1995 sales over 1994 sales. In addition to cardiac imaging, additional sales growth came from several other sources. The Company continues to see growth in its compounding services as more customers, who formerly performed these services in-house, switch to using the Company's services. During 1995, the Company opened two new radiopharmacies, closed four radiopharmacies due to business reasons, plus acquired a competing chain of radiopharmacies (see Note 2) in November of 1995. In addition, a new brain imaging agent, Neurolite(R), was introduced in 1995 and experienced strong sales. The Company expects these trends to continue in 1996. NET SALES (in millions) _______________________ Dec. 31, 1995 $332.5 Dec. 31, 1994 $320.0 Dec. 31, 1993 $241.3 Conversely, sales were negatively affected by conditions which continue to play a role in health care economics including competition, declining but still significant price erosion, and competing modalities. In addition, the Company was unable to market certain products due to a decision by one of the Company's suppliers to deny access to their proprietary products. The Company expects these trends to continue, and expects some price stabilization to occur in the marketplace. GROSS PROFIT ____________ The Company's gross profit as a percentage of net sales increased to 22.1 percent in 1995 compared to 20.6 percent in 1994. The increase in gross profit is attributable to a number of factors. In late 1994, the Company instituted several programs to reduce costs. Some of the areas that were targeted for cost reductions included material and direct labor costs. In the materials area, the Company concluded a joint review and modification of the strategic alliance agreement with The Radiopharmaceutical Division of The DuPont Merck Pharmaceutical Company (DuPont). The modification of the agreement provided for the reduction in the acquisition price of certain products which in turn yielded savings in terms of material costs in 1995 over comparable costs in 1994. In addition, the Company continues to enjoy success in converting more of its customers to its compounding services rather than supplying those same customers with the raw materials which allows the customer to perform their own compounding services. These conversions provided the Company with a larger gross margin percentage on the same corresponding sales. In the area of direct labor, the Company carefully evaluated its needs in late 1994. It was determined that savings could be achieved in this area and successful plans were put in place to achieve these savings in 1995. On the negative side, the Company was unable to fully arrest the price decline experienced in 1994. Although the price decline in 1995 was marginal, it continued to have some effect on the gross margin. Additionally, the Company continues to experience a product mix shift from some of its core (non-cardiology) products, to cardiology products due to changes in certain physician practice patterns. These core products traditionally provided a higher gross margin than the Company achieves with the cardiology products. Managed care continues to play a very active role in the Company's strategic direction. Pricing pressures from this group of customers continues to pressure margins. OPERATING, SELLING AND ADMINISTRATIVE EXPENSES ______________________________________________ Operating, selling and administrative expenses increased $2.0 million in 1995 compared to 1994 and as a percent of sales remained constant at 16.8 percent in both 1995 and 1994. The Company instituted several cost savings programs in 1994 and continued to control expenses in 1995 through a variety of programs. The primary cause for the absolute increase in 1995 expenses was due to the incentive compensation plans. It is the Company's philosophy not to pay any incentive compensation unless certain levels of earnings are achieved. During 1994, these levels were not achieved, and accordingly, no incentive compensation was paid. However, 1995 earnings levels improved significantly which allowed managers to achieve certain levels of incentive compensation. During 1996, it is the intention of management to aggressively explore new business opportunities. The expenditures required for these different opportunities are currently expected to increase the level of expenditures in the operating, selling, and administrative category over the 1995 levels. While these levels can be supported in our 1996 business plan, if certain opportunities prove successful, greater expenditures could be required. DEPRECIATION AND AMORTIZATION _____________________________ Depreciation and amortization in 1995 increased to $10.8 million or 1.9 percent from $10.6 million in 1994. The increase is due to the opening or acquisition of radiopharmacies since December 31, 1994 and an extensive remodeling and relocation program of the Company's facilities which was initiated in prior years. ALLIANCE DEVELOPMENT COSTS __________________________ On December 3, 1993, the Company entered into a long-term supplier distribution agreement with its principal supplier of radiopharmaceutical products, DuPont Merck. The agreement, which became effective February 1, 1994, and subsequently amended as discussed above, 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 the Company as the primary distribution channel for its radiopharmaceutical products in the United States. PROVISION FOR INCOME TAXES __________________________ The provision for income taxes as a percentage of income before taxes decreased to 40 percent in 1995 from 41.8 percent in 1994. The decrease in the effective tax rate is a result of the reduction in non-tax deductible expenses as a percentage of pre-tax income. RESULTS OF OPERATIONS CALENDAR YEARS 1994 AND 1993 NET SALES _________ Consolidated net sales in 1994 totaled $320.0 million, an increase of 32.6 percent, or $78.7 million, over 1993. The Company's net sales growth was primarily the result of activity associated with the strategic alliance that the Company entered into with its principal supplier of radiopharmaceutical products (see Note 6). Sales in the cardiology sector of the business continued to be the driving force in nuclear medicine and the Company's sales growth. Cardiology sales represented approximately 56 percent of the Company's net sales. Other favorable factors affecting sales growth included the addition of significant sales volume due to the expansion of certain large managed care contracts, plus the opening and acquisition of eight new pharmacies during 1994. Sales growth was negatively affected by recent trends in national health care economics, primarily aggressive price competition, plus the strategic decision made during the first quarter of 1994 to reduce the price of the Company's leading cardiology product. GROSS PROFIT ____________ The Company's gross profit as a percentage of net sales decreased to 20.6 percent in 1994 compared to 32.7 percent in 1993. The decline in gross profit was the result of a variety of factors. These factors included general price reductions across most of Syncor's product line including the cardiology area, in response to competitive market pressures, in addition to the acquisition of several large managed care contracts that traditionally have lower profit margins. The Company also experienced a decline in the volume of some of its core (non-cardiology) products, due to changes in certain physician practice patterns. Material costs, as a percentage of net sales, rose due to price increases from suppliers, while the current governmental focus on cost containment and managed care made it difficult to recover these material cost increases through price increases to customers. OPERATING, SELLING AND ADMINISTRATIVE EXPENSES ______________________________________________ Operating, selling and administrative expenses decreased $1.9 million in 1994 compared to 1993, despite a significant increase in net sales, and decreased as a percentage of net sales from 23.1 percent to 16.8 percent. The decline was a direct result of several programs initiated by the Company in 1994 to reduce losses, reduce certain overhead, and improve control over radiopharmacy expenditures. The Company continued, as a part of its business strategy, to invest in developmental business opportunities. These opportunities required ongoing resources in the area of operating, selling and administrative expenses. DEPRECIATION AND AMORTIZATION _____________________________ Depreciation and amortization in 1994 increased to $10.6 million or 24 percent from $8.5 million in 1993. The increase was due to the opening or acquiring of eight new radiopharmacies since December 31, 1993, and an extensive remodeling and relocation program of the Company's facilities which was initiated in prior years. ALLIANCE DEVELOPMENT COSTS __________________________ On December 3, 1993, the Company entered into a long-term supplier distribution agreement with its principal supplier of radiopharmaceutical products, DuPont Merck. In connection with this agreement, the Company established a reserve for alliance development costs of $4.5 million during the year ended December 31, 1993. These costs, which resulted in cash outlays, included $2.8 million related to launch and implementation of the strategic alliance program, $1.1 million of employee-related expenses associated with the consolidation, relocation and reorganization of certain sales and service operations, and $.6 million for incremental accounting, legal and regulatory fees. Accrued alliance development costs of $4.1 million at December 31, 1993, were fully utilized in 1994 as the strategic alliance with DuPont Merck was implemented. PROVISION FOR INCOME TAXES __________________________ The provision for income taxes as a percentage of income before taxes increased to 41.8 percent in 1994 from 39.7 percent in 1993. The increase in the effective tax rate was due to an increase in goodwill amortization and other non-tax deductible expenses as a percentage of pre-tax book income. RECENT ACCOUNTING PRONOUNCEMENTS ________________________________ In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (Statement 123). Statement 123 established a fair value based method of accounting for stock-based compensation as compared to the intrinsic value based method prescribed under APB opinion No. 25. Companies have the option of either adopting the fair value method of Statement 123 or continuing to use the intrinsic value based method of APB No. 25 and including pro forma net income and earnings per share amounts in the footnotes as if the fair value method had been adopted. The disclosure provisions of Statement 123, including the pro forma information, are effective for fiscal years beginning after December 15, 1995. The Company intends to implement the disclosure provisions of Statement 123 in fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES _______________________________ In 1995, total cash and investments, which includes cash and cash equivalents and short and long-term investments, increased to $26.6 million from $19.2 million at December 31, 1994. The Company's debt position of $7.4 million was $.1 million higher than the debt position at December 31, 1994. Working capital increased from $26.6 million in 1994 to $34.3 million in 1995. This change reflects an aggressiveness on the Company to focus on asset management, collection of receivables, inventory turnover and cost control on operating, selling and administrative expenses. Days sales outstanding on receivables were 55 days at December 31, 1995 and 1994. CORPORATE CASH AND INVESTMENTS (in millions) ____________________________________________ Dec. 31, 1995 $26.6 Dec. 31, 1994 $19.2 Dec. 31. 1993 $18.7 The nature of the Company's business is not capital intensive and as new products become available, the capital requirements to accommodate these products will be minimal. However, in January 1996, the Company announced that it is making significant investments in its nuclear business both within the United States and overseas. The Company is committing $14 million to the development of a distribution network to support the future growth of Positron Emission Tomography (P.E.T.). This investment will be made over a three to five year period. Also, an $8 million commitment over the next three years has been made to redesign key business processes and improve information technology and linkages to customers and suppliers. The Company believes sufficient internal and external capital sources exist to fund operations and future expansion programs. At December 31, 1995, the Company had unused lines of credit of approximately $17.6 million to fund short-term needs.
CONSOLIDATED STATEMENTS OF INCOME SYNCOR INTERNATIONAL CORPORATION & SUBSIDIARIES Seven Months Twelve Ended Months Twelve Months Ended December Ended December 31, 31, May 31, In thousands, except per share data 1995 1994 1993 1993 1993 _______________________________________________________________________________________________________ (unaudited) Net Sales $332,460 $319,994 $241,289 $142,237 $230,949 Cost of sales 258,869 253,968 162,363 97,050 153,643 _______________________________________________________________________________________________________ Gross profit 73,591 66,026 78,926 45,187 77,306 Operating, selling and admin. expenses 55,780 53,802 55,696 32,949 53,879 Depreciation and amortization 10,826 10,592 8,548 5,248 7,156 Alliance development costs - - 4,500 4,500 - ________________________________________________________________________________________________________ Operating income 6,985 1,632 10,182 2,490 16,271 Other income (expense): Interest income 1,227 658 804 450 614 Interest expense (743) (747) (528) (311) (613) Other, net 313 542 546 145 622 ________________________________________________________________________________________________________ Other income, net 797 453 822 284 623 Income from continuing operations before income taxes and cumulative effect of accounting change 7,782 2,085 11,004 2,774 16,894 Provision for income taxes 3,113 872 4,371 1,090 6,703 ________________________________________________________________________________________________________ Income from continuing operations before cumulative effect of accounting change 4,669 1,213 6,633 1,684 10,191 Discontinued operations: Discontinued operations, net of taxes - - (162) - (661) Gain on sale of discontinued operations, net of taxes - - 282 - 282 Cumulative effect of change in method of accounting for income taxes - - 1,020 1,020 - ________________________________________________________________________________________________________ Net income $ 4,669 $ 1,213 $ 7,773 $ 2,704 $ 9,812 ======================================================================================================== Net income per share: Income from continuing operations $.45 $.11 $.62 $.16 $.95 Discontinued operations: Discontinued operations, net of taxes - - (.02) - (.06) Gain on sale of discontinued operations, net of taxes - - .03 - .03 Cumulative effect of change in method of accounting for income taxes - - .09 .09 - Net income per share $.45 $.11 $.72 $.25 $.92 ======================================================================================================= Weighted average shares outstanding 10,481 10,889 10,779 10,762 10,708 ======================================================================================================= See Accompanying Notes To Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS SYNCOR INTERNATIONAL CORPORATION & SUBSIDIARIES December 31, December 31, In thousands, except per share data 1995 1994 ______________________________________________________________________________________________________________ Assets Current Assets: Cash and cash equivalents $ 23,022 $ 17,761 Short-term investments 2,296 230 Accounts receivable, less allowances for doubtful accounts of $1,097 and $1,154, respectively 50,857 49,972 Inventory 5,159 5,369 Prepaids and other currents assets 2,306 2,964 ______________________________________________________________________________________________________________ Total current assets 83,640 76,296 Marketable investment securities 1,241 1,210 Property and equipment, net 23,006 26,766 Excess of purchase price over net assets acquired, net of accumulated amortization of $4,270 and $3,810, respectively 14,414 13,874 Other 11,379 10,538 _________ _________ $133,680 $128,684 ============================================================================================================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 33,286 $ 39,105 Accrued liabilities 3,029 2,928 Accrued wages and related costs 10,060 5,494 Federal and state taxes payable 755 - Current maturities of long-term debt 2,224 2,153 ______________________________________________________________________________________________________________ Total current liabilities 49,354 49,680 ______________________________________________________________________________________________________________ Long-term debt, net of current maturities 5,200 5,154 Deferred compensation 864 - Stockholders' Equity: Common stock; $.05 par value; authorized 20,000 shares; issued 10,662 and 10,570 shares at December 31, 1995 and 1994, respectively 533 529 Additional paid-in-capital 47,169 46,508 Unrealized loss on investments (24) (52) Employee savings and stock ownership loan guarantee (2,998) (1,934) Foreign currency translation adjustment (105) 133 Retained earnings 35,598 30,929 Treasury stock, at cost; 250 shares at December 31, 1995 and 1994 (1,911) (2,263) _______________________________________________________________________________________________________________ Total stockholders' equity 78,262 73,850 _______________________________________________________________________________________________________________ $133,680 $128,684 =============================================================================================================== See Accompanying Notes To Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY SYNCOR INTERNATIONAL CORPORATION & SUBSIDIARIES Employee Foreign Un- Savings Currency Addi- realized & Stock Trans- Total tional Loss on Owner- lation Stock- -Common Stock- Paid-in Invest- ship Loan Adjust- Retained Treasury holders' In thousands Shares Amount Capital ments Guarantee ment Earnings Stock Equity ________________________________________________________________________________________________________________ BALANCE AT MAY 31, 1992 9,979 $499 $38,689 - $(4,350) $ 321 $17,200 - $52,359 Issuance of common stock 212 11 1,659 1,670 Tax benefit from the exercise of stock options 1,205 1,205 Foreign currency translation adjustment (182) (182) Amortization of loan guarantee 920 920 Net income 9,812 9,812 ________________________________________________________________________________________________________________ BALANCE AT MAY 31, 1993 10,191 510 41,553 - (3,430) 139 27,012 - 65,784 Issuance of common stock 164 8 1,615 1,623 Tax benefit from the exercise of stock options 618 618 Foreign currency translation adjustment (8) (8) Amortization of loan guarantee 460 460 Net income 2,704 2,704 ________________________________________________________________________________________________________________ BALANCE AT DECEMBER 31, 1993 10,355 518 43,786 - (2,970) 131 29,716 - 71,181 Issuance of common stock 215 11 1,827 1,838 Tax benefit from the exercise of stock options 895 895 Unrealized loss on investments (52) (52) Foreign currency translation adjustment 2 2 Amortization of loan guarantee 1,036 1,036 Reacquisition of common stock for treasury (250) (2,263) (2,263) Net income 1,213 1,213 ________________________________________________________________________________________________________________ BALANCE AT DECEMBER 31, 1994 10,320 529 46,508 (52) (1,934) 133 30,929 (2,263) 73,850 Issuance of common stock 92 4 550 554 Issuance of treasury stock 250 Tax benefit from the exercise of stock options 61 61 Unrealized loss on investments 28 28 Foreign currency translation adjustment (238) (238) ESSOP loan guarantee (2,313) (2,313) Reacquisition of common stock for treasury (250) (1,911) (1,911) Amortization of loan guarantee 1,249 1,249 Net income 4,669 4,669 ________________________________________________________________________________________________________________ BALANCE AT DECEMBER 31, 1995 10,412 $533 $47,169 $(24) $(2,998) $(105) $35,598 $(1,911) $78,262 ================================================================================================================ See Accompanying Notes To Consolidated Financial Statements
CONSOLIDATE STATEMENTS OF CASH FLOWS SYNCOR INTERNATIONAL CORPORATION & SUBSIDIARIES Seven Months Twelve Twelve Ended Months Months Ended December Ended December 31, 31, May 31, In thousands 1995 1994 1993 1993 1993 _________________________________________________________________________________________________________________ (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,669 $ 1,213 $ 7,773 $ 2,704 $ 9,812 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 10,827 10,592 8,548 5,248 7,156 Provision for losses on receivables (57) (46) (530) (302) (179) Amortization of loan guarantee 1,249 1,036 920 460 920 Net gain on sale of assets from discontinued operations - - (282) - (282) Loss on discontinued operations - - 162 - 661 Cumulative effect of change in method of accounting for income taxes - - 1,020 1,020 - Decrease (increase) in: Accounts receivable (828) (14,874) (54) (372) 795 Inventory 263 (847) 529 47 (951) Prepaids and other current assets 658 3,346 (1,088) (1,210) (713) Other assets (1,485) (1,328) (10,577) (5,885) (1,266) Increase (decrease) in: Accounts payable (5,819) 18,288 4,379 959 110 Accrued alliance development costs - (4,066) 4,066 4,066 - Accrued liabilities 101 (145) (1,898) 418 (253) Accrued wages and related costs 4,566 162 (116) (3,140) 1,611 Federal and state taxes payable 816 - (1,459) (619) 1,824 Deferred income taxes - - (1,632) (1,373) (375) Foreign currency translation adjustment (238) 2 (89) (8) (182) Deferred compensation 864 - - - - __________________________________________________________________________________________________________________ Net cash provided by (used in) operating activities 15,586 13,333 9,672 (727) 18,688 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net (3,865) (9,209) (7,292) (5,538) (10,646) Payments for acquisitions (3,150) (336) (1,500) (1,500) (563) Net decrease (increase) in short-term investments (2,066) 3,360 691 (1,745) 3,226 Net (increase) in long-term investments (31) (1,210) - - - Unrealized gain (loss) in investments 28 (52) - - - Proceeds from sales of discontinued operations - - 9,100 - 9,100 Disposition of assets from discontinued operations - - (4,618) - (4,618) _________________________________________________________________________________________________________________ Net cash used in investing activities (9,084) (7,447) (3,619) (8,784) (3,501) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 554 1,838 3,111 1,623 1,670 Issuance of treasury stock 2,313 - - - - Reacquisition of common stock (1,911) (2,263) - - - Increase in ESSOP loan guarantee (2,313) - - - - Proceeds from (repayment of) short-term debt (3,547) - (1,094) - 1,000 Proceeds from (repayment of) long-term debt 3,663 (2,810) 2,932 3,905 (1,664) _________________________________________________________________________________________________________________ Net cash provided by (used in) financing activities (1,241) (3,235) 4,949 5,528 (994) _________________________________________________________________________________________________________________ Net increase (decrease) in cash and cash equivalents 5,261 2,651 11,002 (3,983) 14,193 _________________________________________________________________________________________________________________ Cash and cash equivalents at beginning of period 17,761 15,110 4,108 19,093 4,900 _________________________________________________________________________________________________________________ Cash and cash equivalents at end of period $23,022 $17,761 $15,110 $15,110 $19,093 ================================================================================================================= See Accompanying Notes To Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SYNCOR INTERNATIONAL CORPORATION & SUBSIDIARIES (Dollars In Thousands, Except Per Share Data) NOTE ONE - Summary of Significant Accounting Policies Principles Of Consolidation: The Company's business is primarily compounding, dispensing and distributing radiopharmaceuticals to hospitals and clinics. The consolidated financial statements of Syncor International Corporation include the assets, liabilities and operations of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. General: The unaudited operating results have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, include all adjustments necessary for a fair presentation for the periods presented. Change in Fiscal Year: Beginning with the seven month transition period ended December 31, 1993, the Company changed its fiscal year-end to December 31 from May 31. Cash and Cash Equivalents and Short-Term Investments: The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Short-term investments consist principally of time deposits and tax-exempt municipal securities and are carried at cost, which approximates market value. Financial Instruments: The carrying value of financial instruments such as cash and cash equivalents, trade receivables, payables and floating rate short and long-term debt, approximate their fair value. Inventory: Inventories, consisting of purchased products, are stated at the lower of cost (first-in, first-out) or market. Property and Equipment: Property and equipment are stated at cost and depreciated or amortized on a straight-line basis over the estimated useful lives ranging from two to 15 years. Self Insurance: The Company is generally self-insured for losses and liabilities related primarily to vehicle claims, medical claims and general product liability. Losses are accrued based upon the Company's estimates of the aggregate liability for claims incurred using certain actuarial assumptions followed in the insurance industry and based on Company experience. Depending on the nature of the liability claim, the Company's maximum self-insured exposure is one-hundred thousand dollars per claim. Excess of Purchase Price Over Net Assets Acquired: The cost in excess of net assets of acquired businesses is being amortized on a straight-line basis over periods of 15 to 40 years. The Company periodically evaluates the carrying value of these assets and, accordingly, considers the ability to generate positive cash flow through projected undiscounted future operating cash flows of the acquired operation as the key factor in determining whether the assets have been impaired. The Company's accounting treatment is consistent with Statement of Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." Marketable Investment Securities: Marketable investment securities consist primarily of corporate debt and United States government obligations. In the first quarter 1994, the Company adopted the provisions of Statement of Financial Accounting Standard No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (Statement 115) on a prospective basis. Under Statement 115, the Company classifies its debt and marketable equity securities in one of three categories: trading, available-for-sale or held-to-maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those securities that the Company has the ability and intent to hold until maturity. All other securities not included in trading or held-to-maturity are classified as available-for-sale. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Unrealized holding gains and losses on trading securities are included in earnings. Unrealized holding gains and losses, net of the related tax effect, on available-for-sale securities are excluded from earnings and are reported as a separate component of stockholders' equity until realized. Foreign Currency Translation: Assets and liabilities of foreign operations are translated into U.S. dollars based upon the prevailing exchange rates in effect at the balance sheet date. Foreign exchange gains and losses resulting from these translations are included as a separate component of stockholders' equity. Actual gains or losses incurred on currency transactions in other than the country's functional currency are included in net income currently. Stock Options: In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123,"Accounting for Stock-Based Compensation" (Statement 123). Statement 123 established a fair value based method of accounting for stock-based compensation as compared to the intrinsic value based method prescribed under APB Opinion No. 25. Companies have the option of either adopting the fair value method of Statement 123 or continuing to use the intrinsic value based method of APB No. 25 and including pro forma net income and earnings per share amounts in the footnotes as if the fair value method had been adopted. The disclosure provisions of Statement 123, including the pro forma information, are effective for fiscal years beginning after December 15, 1995. The Company intends to implement the disclosure provisions of Statement 123 in fiscal 1996. Income Taxes: Effective June 1, 1993, the Company adopted the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" (Statement 109) and has reported the cumulative effect of that change in the method of accounting for income taxes in the consolidated statement of income for the seven months ended December 31, 1993. Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Pursuant to the deferred method under APB Opinion 11, which was applied in the fiscal year ended May 31, 1993, and prior years, deferred income taxes are recognized for income and expense items that are reported in different years for financial reporting purposes and income tax purposes using the tax rate applicable for the year of the calculation. Under the deferred method, deferred taxes are not adjusted for subsequent changes in tax rates. Net Income Per Share: Income per share amounts are based upon the weighted average number of shares outstanding during each period adjusted for dilutive common stock equivalents. Reclassifications: Certain items in the prior years' consolidated financial statements have been reclassified to conform to the current year's presentation. Pre-Opening Costs: Costs, included in "Other" in the consolidated balance sheets relating to the opening of new radiopharmacies, are deferred and amortized ratably over a 24 month period commencing at the date of opening. NOTE TWO - Acquisitions In November 1995, the Company acquired all the assets and certain contracts of Pyramid Diagnostic Services, Inc. (Pyramid), a radiopharmaceutical chain that competed directly with existing Syncor sites in the Midwest and Southeast regions of the United States. The acquisition was pursuant to a Tennessee bankruptcy court decision to approve the sale of the assets, and the assumption and assignment of certain contracts to the Company for $3.15 million in cash. The purchase culminated eight months of legal proceedings involving allegations against some of Pyramid's business practices, which the Company claimed were illegal. The Company closed five of the acquired radiopharmacies and incorporated the remaining three sites into Syncor's nationwide distribution network. In 1993, the Company acquired certain net assets of three existing radiopharmacies in Florida and Nebraska for total consideration of approximately $4.9 million. The consideration consisted of $1.5 million in cash and $3.4 million in promissory notes payable over a three-to five-year period. These acquisitions have been accounted for as purchases and the purchase prices were allocated to fixed assets, non-compete and consulting agreements, customer lists and goodwill. The results of these operations are included in the Company's consolidated financial statements from the effective acquisition dates. Pro forma information is not presented since the acquisitions are not material to the accompanying consolidated financial statements. NOTE THREE - Disposition of Business On May 31, 1993, the Company divested itself of nine home infusion sites for $9.1 million in cash and closed four remaining sites. Accordingly, this business segment was classified as a discontinued operation in the consolidated financial statements. All prior periods have been restated to conform to this presentation. Net sales for the home infusion business were $14,116 for the year ended May 31, 1993. The net loss from discontinued operations for the year ended May 31, 1993, included losses from operations up to the measurement date, losses during the phase-out period of $1,212 and expenses associated with the sale and closure of facilities offset by a net gain on disposal of assets. A tax benefit of $431 for the year ended May 31, 1993, was recognized as a result of losses from discontinued operations. Tax expense of $184 was recognized from the gain on disposal of assets for the year ended May 31, 1993. The remaining net assets are not material. NOTE FOUR - Property and Equipment, Net The major classes of property and equipment are:
December 31, December 31, 1995 1994 _______________________________________________________________________ Land and buildings $ 3,089 $ 3,089 Furniture and equipment 44,215 41,674 Leasehold improvements 13,561 13,822 _______________________________________________________________________ 60,865 58,585 Less accumulated depreciation and amortization 37,859 31,819 ________________________________________________________________________ $23,006 $26,766 ========================================================================
NOTE FIVE - Marketable Securities Marketable investment securities consist of:
December 31, December 31, 1995 1994 _______________________________________________________________________ Available-for-sale, at fair value, net of tax effect $ 672 $ 645 Held-to-maturity, at amortized cost 569 565 _______________________________________________________________________ $ 1,241 $ 1,210 ========================================================================
The amortized cost, gross unrealized holding gains and losses and fair value for available-for-sale and held-to-maturity securities by major security type at December 31, 1995 and 1994 were as follows:
1995 Unrealized 1994 Unrealized Amortized Holding Holding Fair Amortized Holding Holding Fair Cost Gains Losses Value Cost Gains Losses Value __________________________________________________________________________________________________________________________ Available-for-sale: Corporate debt securities $696 $ - $(24) $672 $696 $ - $(52) $645 ___________________________________________________________________________________________________________________________ $696 $ - $(24) $672 $696 $ - $(52) $645 =========================================================================================================================== Held-to-maturity: U.S. Treasury securities 500 - (1) 499 500 - (19) 481 Mortgage-backed securities 69 - (18) 51 65 - (16) 49 ___________________________________________________________________________________________________________________________ $569 $ - $(19) $550 $565 $ - $(35) $530 ===========================================================================================================================
The unrealized holding losses on held-to-maturity securities have not been recognized in the accompanying consolidated financial statements.
1995 1994 Amortized Fair Amortized Fair Cost Value Cost Value ____________________________________________________________________________________________ Available-for-sale Due after one year through five years - - - - Due after five years through ten years $499 $482 $499 $476 Due after ten years 197 190 197 169 Held-to-maturity: Due within one year $500 $499 $ - $ - Due after one year through five years 69 51 565 530 ============================================================================================
NOTE SIX - Accrued Alliance Development Costs On December 3, 1993, the Company entered into a long-term supplier distribution agreement 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 agreement, DuPont Merck relies upon the Company as the primary distribution channel for its radiopharmaceutical products in the United States. In connection with this agreement, the Company established a reserve for alliance development costs of $4,500 during the year ended December 31, 1993. Included in these charges were $2,800 of costs related to launch and implementation of the strategic alliance program, $1,100 of employee-related expenses associated with the consolidation, relocation and reorganization of certain sales and service operations and $600 for incremental accounting, legal and regulatory fees. Accrued alliance development costs of $4,066 at December 31, 1993 were fully utilized in 1994 as the strategic alliance was implemented. NOTE SEVEN - Line of Credit At December 31, 1995, the Company had an unsecured line of credit for short-term borrowings aggregating $20,000, bearing interest at the bank's reference rate (8.5 percent at December 31, 1995) and expiring on May 1, 1997. The availability of this line of credit at December 31, 1995, has been reduced by $2,427 as a result of standby letters of credit. To maintain this line of credit, the Company is required to pay a quarterly commitment fee of 1/8 of one percent per annum on the unused portion. There were no amounts outstanding under the line of credit at December 31, 1995. The line of credit agreement contains covenants that include requirements to maintain certain financial covenants and ratios (including minimum quick ratio, cash flow ratio and tangible net worth) and limitations on payments of dividends, new borrowings and purchases of its stock. At December 31, 1995, the Company was in compliance with these covenants. NOTE EIGHT - Long-Term Debt The Company's long-term debt was as follows:
December 31, December 31, 1995 1994 ____________________________________________________________________________________________________________ Capital lease obligations, payable in varying installments through 1999, with interest rates ranging from 10.5% to 12% $1,446 $1,742 Notes payable, unsecured, payable in installments through 1999, with effective interest rates ranging from 6% to 12.75% 1,529 2,054 Notes payable, unsecured, payable in installments through 1997 with a floating interest rate of either the lower of prime, LIBOR plus 1.0% (6.63% at December 31, 1995) 2,998 1,934 Notes payable, secured, payable in installments through 2000 with a non-interest bearing rate, net of unamortized discount at 6% of $149 and $222 at December 31, 1995 and 1994, respectively 1,451 1,577 ____________________________________________________________________________________________________________ 7,424 7,307 Less current maturities of long-term debt 2,224 2,153 ____________________________________________________________________________________________________________ Long-term debt, net of current maturities $5,200 $5,154 ============================================================================================================
At December 31, 1995, long-term debt maturing over the next five years is as follows: 1996, $2,224; 1997, $2,042; 1998, $2,163; 1999 $663; 2000, $332 and none thereafter. Interest paid was $666, $694 and $725 for the years ended December 31, 1995, 1994 and 1993 (unaudited), $268 for the seven months ended December 31, 1993, and $601 for the year ended May 31, 1993. NOTE NINE - Income Taxes As discussed in Note 1, the Company adopted Statement 109 as of June 1, 1993. The cumulative effect of this change in method of accounting of $1,020 was determined as of June 1, 1993, and is reported separately in the consolidated statement of income for the seven month period ended December 31, 1993. Prior years' financial statements were not restated to apply the provisions of Statement 109. Total income tax expense for the years ended December 31, 1995 and 1994 was allocated as follows:
Twelve Months Ended December 31, 1995 1994 _________________________________________________________________________________________ Income from continuing operations $3,113 $ 872 Stockholders' equity for compensation expenses for tax purposes in excess of amounts recognized for financial reporting (61) (895) _________________________________________________________________________________________ $3,052 $ (23) =========================================================================================
Income tax expense (benefit) attributable to income from continuing operations consisted of:
Seven Months Twelve Twelve Ended Months Months Ended December Ended December 31, 31, May 31, 1995 1994 1993 1993 1993 _____________________________________________________________________________ (unaudited) Current: Federal $3,700 $1,329 $3,859 $ 717 $6,411 State 724 127 583 48 1,240 _____________________________________________________________________________ 4,424 1,456 4,442 765 7,651 Deferred: Federal (1,207) (505) (156) 241 (800) State (104) (79) 85 84 (148) _____________________________________________________________________________ (1,311) (584) (71) 325 (948) _____________________________________________________________________________ $3,113 $ 872 $4,371 $1,090 $6,703 =============================================================================
The amounts differed from the amounts computed by applying the federal income tax rate of 35 percent (34 percent for the periods ending prior to December 31, 1993) to pretax income from continuing operations as a result of the following:
Seven Months Twelve Twelve Ended Months Months Ended December Ended December 31, 31, May 31, 1995 1994 1993 1993 1993 _________________________________________________________________________________________________________________ (unaudited) Federal income taxes at "expected" rate $ 2,724 $ 730 $3,851 $ 971 $5,744 Increase (reduction) in income taxes resulting from: Tax exempt interest (117) (92) (50) (29) (45) Amortization of intangible assets 143 143 146 84 139 State taxes, net of Federal benefits 403 31 434 86 721 Utilization of general business credits - - (10) (10) - Other (40) 60 - (12) 144 _________________________________________________________________________________________________________________ $ 3,113 $ 872 $4,371 $1,090 $6,703 =================================================================================================================
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1995 and 1994, are presented below:
December 31, December 31, 1995 1994 _______________________________________________________________________________________________________________ Deferred tax assets: Compensated absences, principally due to accrual for financial reporting purposes $1,127 $ 873 Accounts receivable, due to allowance for doubtful accounts 439 420 Accrued liabilities, primarily due to self-insurance accrual for financial reporting purposes 544 712 Deferred compensation, primarily due to accrual for financial reporting purposes 973 796 Deferred subsidiary start-up expenses 267 178 Other 343 137 _______________________________________________________________________________________________________________ Total gross deferred tax assets 3,693 3,116 Deferred tax liabilities: Plant and equipment, principally due to difference in depreciation and lease capitalization 341 653 Other assets, principally due to difference in intangible capitalization and amortization for income tax and financial reporting purposes 575 1,342 _______________________________________________________________________________________________________________ Total gross deferred tax liabilities 916 1,995 _______________________________________________________________________________________________________________ Net deferred tax asset $2,777 $1,121 ===============================================================================================================
Management has reviewed the recoverability of deferred income tax assets and has determined that it is more likely than not that the deferred tax assets will be fully realized through future taxable earnings. Income tax payments amounted to $3,280, $539 and $6,036, for the years ended December 31, 1995, 1994 and 1993 (unaudited), $4,056 for the seven months ended December 31, 1993, and $4,753 for the year ended May 31, 1993. NOTE TEN - Commitments The Company leases facilities, vehicles and equipment with terms ranging from three years to 15 years. The majority of property leases contain renewal options and some have escalation clauses for increases in property taxes, Consumer Price Index and other items. The Company leases a building and certain items of equipment under capital leases which had an approximate cost of $3,738 at December 31, 1995 and $3,744 at December 31, 1994 and 1993 and accumulated depreciation of $2,841, $2,647 and $2,357, respectively. The Company was not utilizing this building and, accordingly, sublet this building to a third party for the balance of the lease term. Future minimum lease payments under capital leases and noncancelable operating leases with terms greater than one year and related sublease income were as follows at December 31, 1995:
Capital Operating Sublease Lease Lease Income ________________________________________________________________________________ Year ending December 31, 1996 $ 496 $ 5,842 $307 1997 496 4,309 276 1998 496 3,022 194 1999 248 2,090 95 2000 - 1,211 - Thereafter - 1,967 - ________________________________________________________________________________ $1,736 $18,441 $872 _______________________________________________________ ======================= Less amount representing interest (290) _______________________________________________________ Present value of net minimum lease payments $1,446 =======================================================
Rental expense under operating leases was $6,054, $6,575 and $5,470 for the years ended December 31, 1995, 1994 and 1993 (unaudited), $3,208 for the seven months ended December 31, 1993, and $4,861 for the year ended May 31, 1993. NOTE ELEVEN - Stock Options and Rights Options to purchase common stock have been granted under various plans to officers, directors and other key employees at prices equal to the fair market value at date of grant. At December 31, 1995, 407,054 shares are reserved for issuance under the various plans. In July 1994, the Company's Board of Directors authorized Syncor to offer to its current employees holding stock options under the Syncor 1990 Master Stock Incentive Plan, the opportunity to exchange their options within a certain price range for a reduced number of option shares at the price as of the close of market on July 14, 1994. All option holders who were employees and held unexercised option shares exercisable at prices of $9.125 or greater were offered exchange options at the price of $8.50, with the replacement option being for a lesser number of shares, in accordance with a formula approved by the Board of Directors. To further enhance the exchange program, the new options are valid for a period of ten years instead of five years with an accelerated vesting schedule. The Company canceled 831,240 option shares and reissued 675,752 option shares as a result of this exchange offer. A summary of employee stock options is as follows:
Number of Shares Price Range Per Share _____________________________________________________________________________ Outstanding at June 1, 1992 1,948 $ 3.90 - $26.50 Granted 66 $17.12 - $23.75 Exercised (204) $ 3.90 - $21.75 Cancelled (50) $ 4.15 - $21.75 _____________________________________________________________________________ Outstanding at May 31, 1993 1,760 $ 4.75 - $26.50 Granted 205 $17.12 - $21.00 Exercised (164) $ 5.28 - $21.00 Cancelled (40) $ 9.12 - $21.75 _____________________________________________________________________________ Outstanding at December 31, 1993 1,761 $ 4.75 - $26.50 Granted 973 $ 8.25 - $23.25 Exercised (215) $ 5.10 - $21.75 Cancelled (882) $ 4.80 - $26.50 _____________________________________________________________________________ Outstanding at December 31, 1994 1,637 $ 4.75 - $21.88 Granted 134 $ 7.75 - $10.00 Exercised (92) $ 5.10 - $ 8.50 Cancelled (139) $ 6.58 - $21.00 _____________________________________________________________________________ Outstanding at December 31, 1995 1,540 $ 4.75 - $21.88 ============================================================================= Exercisable at December 31, 1995 925 $ 4.75 - $21.88 =============================================================================
The Company derives a tax benefit from the options exercised and sold by employees and the benefit is credited to additional paid-in capital. In November 1989, the Company made a rights distribution of one common share purchase right on each outstanding share of common stock. When exercisable, each right will entitle its holder to buy from the Company one-fourth of a share of the Company's common stock at a price of $5 per share subject to adjustments (the "Purchase Price"). The rights expire on September 30, 1999. With certain exceptions, subject to the approval of the Board of Directors, the rights will become exercisable if a person has acquired or makes an offer, the consummation of which will result in beneficial ownership of 20 percent or more of the Company's general voting power ("Acquiring Person"). At such time (the "Distribution Date"), the rights will be evidenced by the certificates representing the common shares and will be transferred with and only with the common shares. Except for certain transactions approved by the Board of Directors, in the event: (i) the Company is acquired in a merger; (ii) 50 percent or more of its consolidated assets or earning power are sold; or (iii) any person becomes an Acquiring Person, proper provisions shall be made so that each holder of the right (other than rights beneficially owned by the Acquiring Person) receives, upon the exercise thereof at the adjusted exercise price of the right, which shall be four times the Purchase Price, that number shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the adjusted exercise price of the right. NOTE TWELVE - Employee Benefit Plans On July 31, 1986, the Company adopted a defined contribution 401(k) plan. The plan is open to all employees who are at least 21 years of age and have a minimum of six consecutive months of service. In 1989, the Company's Board of Directors amended the plan to an Employee Savings and Stock Ownership Plan (ESSOP) to allow the plan to acquire one million of the Company's shares through a leveraged employee stock ownership plan transaction. In June 1995, an additional 250,000 shares which were purchased during 1994 in the open market were contributed to the plan. These shares were originally classified as "treasury stock." The contribution totaled $2,313 and reflected the fair market value at the time of contribution. In connection with these transactions, the Company has guaranteed the repayment of the ESSOP loan which had an outstanding balance of $2,998 at December 31, 1995. Prior to the ESSOP transaction, participants were able to contribute one percent to ten percent of their compensation to the plan. The Company made matching contributions to 50 percent of the employees' contributions up to a maximum of four percent of the employees compensation. Matching contributions were used to purchase Company stock. With the adoption of the ESSOP, participants may contribute one percent to fourteen percent of their compensation to 401(k) investment options and an additional two percent of their compensation to purchase Company stock. The Company may make discretionary matching contributions to 50 percent of the employees' 401(k) investment contributions of up to a maximum of four percent of the employees compensation and may make discretionary matching contributions to 100 percent of the employees Company stock purchases up to two percent of the employees' compensation. The Company's matching contribution is made in cash and reflects the ESSOP loan payment. The number of shares of stock available to match employee contributions is directly related to the amount of principal payments made on the ESSOP loan. Once the number of available shares is determined, the Company matches the employees' contributions as described above by determining the fair market value of the available stock. The remainder of any shares not allocated after all matching is complete will be allocated to all eligible employees based on relative compensation. Participants are fully and immediately vested in their contributions and vest in employer contributions over a five-year period of continuous employment. After five years of continuous employment, any further employer contributions are fully and immediately vested. The Company's contributions for the years ended December 31, 1995 and 1994, amounted to $1,433 and $1,165 of which $1,249 and $1,036 were used to pay down principal on the ESSOP loan and $185 and $129 to pay interest. For the seven months ended December 31, 1993 and the year ended May 31, 1993, contributions to the ESSOP amounted to $1,006 and $1,098, respectively, and were used to satisfy principal and interest obligations in those years. NOTE THIRTEEN - Litigation and Contingencies There are various litigation proceedings in which the Company and its subsidiaries are involved. Many of the claims asserted against the Company in these proceedings are covered by insurance. The results of litigation proceedings cannot be predicted with certainty. However, in the opinion of the Company's general counsel, such proceedings either are without merit or do not have a potential liability which would materially affect the financial condition of the Company and its subsidiaries on a consolidated basis. NOTE FOURTEEN - Selected Quarterly Results Of Operations Unaudited calendar quarterly data is summarized below:
March 31 June 30 Sept. 30 Dec. 31 1995 __________________________________________________________________________________________________ Net sales $83,001 $83,299 $81,014 $85,146 $332,460 Gross profit $17,837 $18,611 $18,087 $19,056 $ 73,591 Net income $ 1,020 $ 1,277 $ 1,243 $ 1,129 $ 4,669 Net income per share $ 0.10 $ 0.12 $ 0.12 $ 0.11 $ 0.45 Weighted average shares outstanding 10,428 10,503 10,607 10,482 10,481 ================================================================================================== Market price per share: High $ 9.13 $ 11.31 $ 11.38 $ 10.13 $ 11.38 Low $ 6.75 $ 7.38 $ 8.88 $ 6.38 $ 6.38 ================================================================================================== March 31 June 30 Sept. 30 Dec. 31 1994 __________________________________________________________________________________________________ Net sales $74,800 $81,888 $81,625 $81,671 $319,984 Gross profit $18,421 $17,015 $14,996 $15,594 $ 66,026 Net income (loss) $ 2,090 $ 744 $(1,084) $ (537) $ 1,213 Net income (loss) per share $ 0.19 $ 0.07 $ (0.10) $ (0.05) $ 0.11 Weighted average shares outstanding 10,981 10,830 10,684 10,567 10,889 ================================================================================================== Market price per share: High $ 24.00 $ 20.50 $ 9.50 $ 8.75 $ 24.00 Low $ 24.00 $ 8.50 $ 6.75 $ 6.75 $ 6.75 ==================================================================================================
Independent Auditors' Report THE BOARD OF DIRECTORS AND STOCKHOLDERS SYNCOR INTERNATIONAL CORPORATION We have audited the accompanying consolidated balance sheets of Syncor International Corporation and Subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, stockholders' equity and cash flows for each of the years in the two-year period ended December 31, 1995, the seven-month period ended December 31, 1993, and the year ended May 31, 1993. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Syncor International Corporation and Subsidiaries as of December 31, 1995 and 1994, and results of their operations and their cash flows for each of the years in the two-year period ended December 31, 1995, the seven-month period ended December 31, 1993, and the year ended May 31, 1993, in conformity with generally accepted accounting principles. As discussed in Notes 1 and 9 to the consolidated financial statements, the Company changed its method of accounting for income taxes in the seven-month period ended December 31, 1993 to adopt the provisions of the Financial Accounting Standard Board's Statement No. 109, "Accounting for Income Taxes." KMPG Peat Marwick, LLP Los Angeles, California March 8, 1996 MANAGEMENT'S REPORT The Management of Syncor International Corporation is responsible for the consolidated financial statements and all other information presented in this report. The consolidated financial statements have been prepared in conformity with generally accepted accounting principles appropriate in the circumstances and, therefore, included in the consolidated financial statements are certain amounts based on management's informed estimates and judgments. Management is responsible for establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting. The concept of reasonable assurance is based on the recognition that there are inherent limitations in all systems of internal control, and that the cost of such systems should not exceed the benefits to be derived therefrom. Other financial information in this report is consistent with that in the consolidated financial statements. The consolidated financial statements have been examined by Syncor International Corporation's independent certified public accountants and have been reviewed by the Audit Committee of the Board of Directors. CORPORATE INFORMATION BOARD OF DIRECTORS __________________ Monty Fu, Chairman of the Board Director Since 1985 Gene R. McGrevin, Vice Chairman and Chief Executive Officer Director since 1989 Robert G. Funari, President and Chief Operating Officer Director since 1995 George S. Oki, Chairman of the Board Meta Information Services, Inc. Director since 1985 Arnold E. Spangler, Managing Director, Mancuso & Company Director since 1985 Steven B. Gerber, MD, Senior Vice President, Oppenheimer & Co. Director since 1990 Henry N. Wagner, Jr., MD, Professor of Medicine and Director of Nuclear Medicine The John Hopkins Medical Institutions Director since 1992 Gail R. Wilensky, PhD, Senior Fellow, Project HOPE, former HCFA Administrator and Deputy Assistant to President Bush Director since 1993 OFFICERS ________ Monty Fu, Chairman of the Board Gene R. McGrevin, Vice Chairman and Chief Executive Officer Robert G. Funari, President and Chief Operating Officer Michael E. Mikity, Vice President and Chief Financial Officer Jack L. Coffey, Vice President, Eastern Field Operations Sheila H. Coop, Vice President, Human Resources Haig S. Bagerdjian, Vice President, Secretary and General Counsel Charles A. Smith, Vice President, Corporate Development SHAREHOLDER INFORMATION _______________________ Inquiries: Shareholders, interested investors and investment professionals are invited to contact the Company for further information throughout the year. The Company also has available a news-on-demand service whereby individuals can obtain information via facsimile. Individuals may call (800) 546-8172 to obtain press releases and other related information via facsimile. Annual Meeting: The Company's Annual Meeting of Shareholders will be held at 1:00 pm, Tuesday, June 26, 1996 at the Warner Center Marriott Hotel, 21800 Oxnard Street, Woodland Hills, California 91367. Shareholders of record on April 29, 1996 are invited to attend and vote at that meeting. Form 10-K: To receive a copy of the Company's Annual Report or form 10-K filed with the Securities and Exchange Commission, contact the Corporate Headquarters, Syncor International Corporation, Attn: Investor Relations Department, 20001 Prairie Street, Chatsworth, California 91311. Independent Auditors: KPMG Peat Marwick LLP, 725 South Figueroa Street, Los Angeles, California 90017. Stock Data: The Company's common stock is quoted on the National Association of Securities Dealers Automated Quotation System (NASDAQ) under the symbol SCOR. Transfer Agent and Registrar: Stockholders wishing to report a change of address may forward details, including both the old and new addresses to: American Stock Transfer & Trust Company 40 Wall Street, 46th Floor New York, New York 10015 (212) 936-5100 Stock Market Information: Stock price quotations are printed daily in major newspapers, including the Wall Street Journal As of March 29, 1996, there were 10,412,509 shares of common stock outstanding. Shareholders of record at that date amounted to 1,422. The Company has not paid cash dividends on its stock and has no current intention of paying cash dividends in the foreseeable future. Back Cover: Photo of President, Chairman, and Vice Chairman with a Map of the World EX-23 9 EXHIBIT 23 EXHIBIT 23 [KPMG Peat Marwick LLP Letterhead] 725 South Figueroe Street Los Angeles, CA 90017 INDEPENDENT AUDITORS' REPORT ON SCHEDULES AND CONSENT The Board of Directors and Stockholders Syncor International Corporation The audits referred to in our report dated March 8, 1996, included the related financial statement schedule as of December 31, 1995, and 1994, and for each of the years in the two-year period ended December 31, 1995, the seven-month period ended December 31, 1993, and the year ended May 31, 1993, included in the registration statement of Syncor International Corporation. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We consent to incorporation by reference in the registration statements on Form S-3 (No.33-44395) and Forms S-8 (Nos. 33-7325, 33-39251, 33-43692, 33-57762, 33- 52607) of Syncor International Corporation of our report dated March 8, 1996, relating to the consolidated balance sheets of Syncor International Corporation and Subsidiaries as of December 31, 1995 and 1994 and the related consolidated statements of income, stockholders' equity and cash flows and related schedule for each of the years in the two-year period ended December 31, 1995, the seven-month period ended December 31, 1993, and the year ended May 31, 1993 which report appears in the December 31, 1995 annual report on Form 10-K of Syncor International Corporation. Our report refers to a change in accounting method to adopt Financial Accounting Standard Board's Statement No. 109. /s/ KPMG Peat Marwick LLP March 29, 1996 EX-27 10 FINANCIAL DATA SCHEDULE
5 12-MOS DEC-31-1995 JAN-01-1995 DEC-31-1995 23,022 1,241 51,954 1,097 5,159 83,640 60,865 (37,859) 133,680 49,354 0 0 0 533 77,729 133,680 332,460 332,460 258,869 258,869 66,606 0 (743) 7,782 3,113 4,669 0 0 0 4,669 .45 .45
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