-----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, I4BiklMpO+2ZV2gB+MHmiVFW2+fkmrjjw3naRVM+iVnCxgKDd1ae2LnHXmP+4lib mony2lujC/ZCsBzcM/yPHg== 0000892569-95-000641.txt : 19951119 0000892569-95-000641.hdr.sgml : 19951119 ACCESSION NUMBER: 0000892569-95-000641 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HYCOR BIOMEDICAL INC /DE/ CENTRAL INDEX KEY: 0000719447 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 581437178 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11647 FILM NUMBER: 95589575 BUSINESS ADDRESS: STREET 1: 7272 CHAPMAN AVE CITY: GARDEN GROVE STATE: CA ZIP: 92641 BUSINESS PHONE: 7148959558 MAIL ADDRESS: STREET 2: 18800 VON KARMAN AVE CITY: IRVINE STATE: CA ZIP: 92715-1517 FORMER COMPANY: FORMER CONFORMED NAME: HYBRIDOMA SCIENCES INC DATE OF NAME CHANGE: 19860813 10-Q 1 FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1995 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________ TO ___________________ Commission File Number: 0-11647 HYCOR BIOMEDICAL INC. (Exact name of registrant as specified in its charter) Delaware 58-1437178 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 18800 Von Karman Avenue, Irvine, California 92715-1517 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (714) 440-2000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class Outstanding at October 31, 1995 ----- ------------------------------- Common Stock, $.01 Par Value 8,060,074
2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS HYCOR BIOMEDICAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31, ASSETS 1995 1994 ------------- ------------ CURRENT ASSETS: (unaudited) Cash and cash equivalents 4,227,668 1,404,262 Investments 2,122,694 2,293,644 Accounts Receivable, net of allowance for doubtful accounts of $187,314 and $170,841 3,684,183 4,263,335 Income Tax Receivable 0 90,170 Inventories (Note 2) 6,941,339 6,725,565 Deposits and other prepaids 553,984 765,544 Deferred income tax benefit 745,745 610,000 ---------- ---------- Total current assets 18,275,613 16,152,520 ---------- ---------- PROPERTY AND EQUIPMENT, at cost 12,632,799 12,058,248 Less accumulated depreciation (6,881,158) (5,639,674) ---------- ---------- 5,751,641 6,418,574 ---------- ---------- GOODWILL AND OTHER INTANGIBLES, net of amortization of $1,162,724 and $741,543 5,276,696 5,459,039 DEFERRED INCOME TAX BENEFIT 620,000 620,000 OTHER ASSETS, net 386,810 350,166 ---------- ---------- Total assets 30,310,760 29,000,299 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable 698,236 1,104,520 Accrued income tax payable 686,220 0 Accrued liabilities 1,756,665 1,726,461 ---------- ---------- Total current liabilites 3,141,121 2,830,981 ---------- ---------- STOCKHOLDERS' EQUITY: Common stock 81,241 82,269 Paid-in capital 16,504,557 16,971,456 Retained earnings 10,340,712 9,084,739 Foreign currency translation adjustments 265,886 144,138 Unrealized losses on investments, net (22,757) (113,284) ---------- ---------- Total stockholders' equity 27,169,639 26,169,318 ---------- ---------- Total liabilities and stockholders' equity 30,310,760 29,000,299 ========== ==========
Page 2 3 HYCOR BIOMEDICAL INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ----------------------- 1995 1994 1995 1994 --------- --------- ---------- ---------- NET SALES 5,680,775 5,708,550 18,938,102 19,319,674 COST OF SALES 2,607,538 2,588,777 8,432,542 8,567,065 --------- --------- ---------- ---------- Gross profit 3,073,237 3,119,773 10,505,560 10,752,609 --------- --------- ---------- ---------- OPERATING EXPENSES Selling, general and administrative 2,348,314 2,075,705 7,018,422 6,487,671 Research and development 595,837 358,297 1,757,882 1,320,397 --------- --------- ---------- ---------- 2,944,151 2,434,002 8,776,304 7,808,068 --------- --------- ---------- ---------- OPERATING INCOME 129,086 685,771 1,729,256 2,944,541 INTEREST INCOME, net 93,199 84,258 208,573 307,811 FOREIGN EXCHANGE G/(L) 29,199 191,881 182,236 191,881 --------- --------- ---------- ---------- INCOME BEFORE TAXES 251,484 961,910 2,120,065 3,444,233 PROVISION FOR INCOME TAXES 103,389 402,263 850,366 1,294,381 --------- --------- ---------- ---------- NET INCOME 148,095 559,647 1,269,699 2,149,852 ========= ========= ========== ========== NET INCOME PER SHARE $.02 $.07 $.15 $.26 ==== ==== ==== ==== AVE. COMMON SHARES OUTSTANDING 8,286,333 8,455,717 8,315,209 8,417,616
Page 3 4 HYCOR BIOMEDICAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended September 30, --------------------------- 1995 1994 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income 1,269,699 2,149,852 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,752,700 1,095,155 Deferred income tax benefit 135,745 (21,858) Gain on foreign currency transactions (182,236) (191,881) Change in assets and liabilities, net of effects of foreign currency adjustments and noncash transactions: Accounts receivables 618,400 908,972 Inventories (193,607) (1,474,142) Prepaid expenses and other assets 178,732 334,989 Accounts payable (409,629) (162,874) Accrued liabilities 8,188 (278,767) Accrued payroll expenses (14,872) (34,386) Accrued income taxes 592,640 337,024 --------- --------- Total adjustments 2,486,061 512,232 --------- --------- Net cash provided by (used in) operating activities 3,755,760 2,662,084 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Net sales of marketable securities 310,650 2,089,549 Business acquisition net of cash acquired 0 (1,989,488) Purchases of property, plant and equipment (991,093) (943,460) Purchases of tangible and intangible assets, net (42,266) (355,813) Net book value of property and equipment sold 4,079 24,045 Proceeds from collection of notes receivable 20,620 17,618 --------- --------- Net cash provided by (used in) investing activities (698,010) (1,157,549) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 245,746 290,359 Purchases of common stock (713,673) (1,173,475) --------- --------- Net cash provided by (used in) financing activities (467,927) (883,116) --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 233,583 319,686 INCREASE IN CASH AND CASH EQUIVALENTS 2,823,406 941,105 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,404,262 683,573 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD 4,227,668 1,624,678 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year - interest - - - income taxes 1,461,771 824,142
Page 4 5 HYCOR BIOMEDICAL INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1995 1. BASIS OF PRESENTATION In the opinion of the Company, the accompanying financial statements contain adjustments necessary to present fairly the financial position as of September 30, 1995 and December 31, 1994, the results of operations and the cash flows for the three and nine month periods ended September 30, 1995 and 1994. The results of operations for any interim period are not necessarily indicative of results for the full year. These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and do not include all the information and note disclosures required by generally accepted accounting principles for complete financial statements and may be subject to year-end adjustments. The financial information contained in this report reflects all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods. All adjustments are of a normal recurring nature except for those costs described in the following Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations." The consolidated financial statements include the accounts of Hycor Biomedical Inc. and its wholly-owned subsidiaries. All material intercompany amounts and transactions have been eliminated. Reference is made to the audited financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994. Certain items in the 1994 consolidated financial statements have been reclassified to conform with the 1995 presentation. Net income per share is based upon the weighted average number of shares outstanding during the periods plus common stock equivalents relating to warrants and options. The number of common stock equivalents relating to options and warrants is determined using the treasury stock method. Common stock equivalents are not included when their effect is antidilutive. Fully diluted net income per share approximates primary net income per share in each period. Page 5 6 2. INVENTORIES Inventories are valued at the lower of cost (first-in, first-out method) or market. Cost includes material, direct labor and manufacturing overhead. Inventories at September 30, 1995 and December 31, 1994 consist of:
9/30/95 12/31/94 ---------- ---------- Raw materials $1,619,044 $2,122,387 Work in process 2,603,168 2,836,388 Finished goods 3,285,796 2,536,877 Allowance for excess, obsolete, and short dated inventory (566,669) (770,087) ---------- ---------- $6,941,339 $6,725,565 ========== ==========
3. FOREIGN CURRENCY Realized gains or losses from foreign currency transactions are included in operations as incurred and relate to intercompany balances amounting to approximately $932,000 between Hycor and its German subsidiary. The Company has hedged the majority of this foreign currency exchange rate position. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION The Company increased its working capital $1,813,000 as of September 30, 1995, compared to December 31, 1994. This was primarily as a result of continued profitability. The Company expects to be able to fund operations from current working capital and profits generated from operations. Cash and cash equivalents, marketable securities and receivables fluctuate throughout the year based upon the sales of products through distributors and the timing of the distributors related payments to the Company. These fluctuations do not have a significant seasonal component. Income taxes have gone from a net receivable of $90,170 at December 31, 1994 to a net payable of $686,220 at September 30, 1995. This was due primarily to the standard accrual of estimated income taxes which have been offset by the utilization of net operating loss carry forwards in the computation of estimated quarterly tax deposits. Page 6 7 The Company's principal capital commitments are for lease payments under non-cancelable operating leases and leasehold improvements. Working capital and operating profits are anticipated to be sufficient to satisfy these commitments. The Company is continuing to evaluate for acquisition additional product lines and companies in the medical diagnostics field. The Company could use sources other than cash from operations, such as issuance of debt or equity securities, to finance any such acquisition. If such an acquisition were completed, the Company's operating results and financial condition could change significantly in future periods. RESULTS OF OPERATIONS On July 27, 1995, the Company announced plans for a major restructuring designed to focus operations on high potential clinical immunology segments. Included in the strategy is the discontinuation of several product areas in which the company currently participates. As part of this restructuring, Hycor had anticipated recording a one-time, extraordinary, pre-tax charge in the third quarter of 1995 ranging from $1.0 to $2.0 million. Several parties have expressed interest in product lines that are being divested. These developments, along with recent SEC directives on the recognition of various restructuring charges and the advice of our auditors, lead us to postpone recording the one-time charge announced on July 27th. We currently anticipate that this action, combined with ongoing developments, will result in our posting a charge in the fourth quarter of this year lower than previously announced. During the three and nine month periods ended September 30, 1995, sales decreased .5% and 2%, respectively, compared to the same periods last year. The increase in international allergy product was offset by lower sales in certain product lines that are being discontinued. Gross profit as a percentage of product sales for the three and nine month periods decreased from approximately 55% to 54% and from 56% to 55%, respectively, compared to the same periods last year. Selling, general and administrative expenses for the three and nine month periods ended September 30, 1995 have increased approximately 13% and 8%, respectively, over the prior year period due to the additional expenses from the activities of Medical Specialties International (MSI), acquired in October 1994, and the expanded marketing and sales programs related to the implementation of the Company's restructuring plan. Page 7 8 For the three and nine month periods ended September 30, 1995, research and development costs increased approximately 66% and 33%, respectively. This increase is also primarily due to the implementation of the restructuring plan. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K: None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HYCOR BIOMEDICAL INC. Date: November 8, 1995 By: /s/ ARMANDO CORREA --------------------------------- Armando Correa, Director of Finance (Mr. Correa is the Principal Accounting Officer and has been duly authorized to sign on behalf of the registrant.) Page 8 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995. 1 U.S. DOLLARS 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 1 4,227,668 2,122,694 3,871,497 187,314 6,941,339 18,275,613 12,632,799 6,881,158 30,310,760 3,141,121 0 81,241 0 0 27,088,398 30,310,760 18,938,102 18,938,102 8,432,542 8,432,542 8,776,304 0 0 2,120,065 850,366 1,269,699 0 0 0 1,269,699 0.15 0.15
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