-----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, DVc5wLhuse1DHMTwGV4YcmKzy3Va0c/RkoZn0kpLd/22vvXeJv1nPpUu2gMKdFpS A50rq6Pth9yl3ncR6fB+iA== 0000892569-98-001465.txt : 19980515 0000892569-98-001465.hdr.sgml : 19980515 ACCESSION NUMBER: 0000892569-98-001465 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: SEC FILE NUMBER: 000-11647 FILM NUMBER: 98621449 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 FOR PERIOD ENDING MARCH 31, 1998 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: MARCH 31, 1998 [ ] 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 58-143178 ------------------------------- ------------------- (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 18800 Von Karman Avenue, Irvine, California 92612-1517 ------------------------------------------------------ (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 April 30, 1998 - ---------------------------- ----------------------------- Common Stock, $.01 Par Value 7,200,003 2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, December 31, ASSETS 1998 1997 ----------- ----------- CURRENT ASSETS: (unaudited) Cash and cash equivalents $ 614,033 $ 814,908 Investments 1,281,701 1,490,192 Accounts receivable, net of allowance for doubtful accounts of $126,957 and $120,684 3,344,685 3,312,857 Income tax receivable 857,683 713,251 Inventories (Note 2) 3,596,588 3,772,777 Prepaid expenses and other current assets 508,438 562,879 Deferred income tax benefit 1,012,094 1,012,541 ----------- ----------- Total current assets 11,215,222 11,679,405 ----------- ----------- PROPERTY AND EQUIPMENT, at cost 12,754,102 12,602,155 Less accumulated depreciation (7,709,801) (7,358,809) ----------- ----------- 5,044,301 5,243,346 ----------- ----------- GOODWILL AND OTHER INTANGIBLES, net of amortization of $1,175,613 and $1,101,528 4,269,719 4,363,971 DEFERRED INCOME TAX BENEFIT 854,162 854,000 OTHER ASSETS 128,551 160,174 ----------- ----------- Total assets $21,511,955 $22,300,896 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 912,510 $ 1,247,642 Accrued liabilities 606,494 774,177 Accrued payroll expenses 551,498 613,698 Current portion - debt (Notes 4 & 5) 619,793 611,159 ----------- ----------- Total current liabilites 2,690,295 3,246,676 ----------- ----------- Long-Term Debt (Notes 4 & 5) 2,261,026 2,240,240 ----------- ----------- Total Liabilities 4,951,321 5,486,916 ----------- ----------- STOCKHOLDERS' EQUITY: Common stock 72,000 71,570 Paid-in capital 12,322,005 12,271,207 Retained earnings 4,787,373 4,978,890 Accumulated other comprehensive income (loss) (620,744) (507,687) ----------- ----------- Total stockholders' equity 16,560,634 16,813,980 ----------- ----------- Total liabilities and stockholders' equity $21,511,955 $22,300,896 =========== ===========
Page 2 3 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended March 31, ---------------------------- 1998 1997 ---------- ---------- NET SALES $4,691,907 $4,582,669 COST OF SALES 2,320,419 2,184,742 ---------- ---------- Gross profit 2,371,488 2,397,927 ---------- ---------- OPERATING EXPENSES Selling, general and administrative 2,077,464 2,030,502 Research and development 626,045 659,382 ---------- ---------- 2,703,509 2,689,884 ---------- ---------- OPERATING (LOSS) (332,021) (291,957) INTEREST EXPENSE (45,081) -- INTEREST INCOME 27,977 73,297 GAIN (LOSS) ON FOREIGN CURRENCY TRANSACTIONS (4,976) 2,186 ---------- ---------- LOSS BEFORE PROVISION (BENEFIT) FOR INCOME TAXES (354,101) (216,474) BENEFIT FOR INCOME TAXES (162,584) (72,681) ---------- ---------- NET LOSS $ (191,517) $ (143,793) ========== ========== BASIC AND DILUTED EARNINGS PER SHARE $ (0.03) $ (0.02) ========== ========== AVE. COMMON SHARES OUTSTANDING 7,177,604 7,269,077
Page 3 4 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended March 31, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: --------- --------- Net income (loss) $(191,517) $(143,793) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 454,026 401,778 Deferred income tax provision (7,091) (59,847) Gain on foreign currency transactions -- (2,186) Change in assets and liabilities, net of effects of foreign currency adjustments Accounts receivable (34,570) 402,708 Income tax receivable (144,648) (19,922) Inventories 161,698 284,502 Prepaid expenses and other current assets 50,921 (66,485) Accounts payable (332,725) (53,762) Accrued liabilities (166,851) (165,069) Accrued payroll expenses (61,298) (58,644) ---------- --------- Total adjustments (80,538) 663,073 ---------- --------- Net cash provided by (used in) operating activities (272,055) 519,280 ---------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of investments 205,247 499,248 Purchases of intangible assets (12,469) (18,109) Direct costs of acquisition (6,250) (31,696) Purchases of property, plant and equipment (209,452) (504,965) Proceeds from sale of property and equipment 1,000 35,402 Proceeds from collection of notes receivable 23,734 12,086 ---------- --------- Net cash provided by (used in) investing activities 1,810 (8,034) ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 48,716 -- Principal payments on long-term debt (22,372) -- Proceeds from issuance of common stock 51,229 40,604 Purchases of Hycor common stock -- (443,851) ---------- --------- Net cash provided by (used in) financing activities 77,573 (403,247) ---------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (8,203) (103,980) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (200,875) 4,019 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 814,908 631,404 ---------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 614,033 $ 635,423 ========== ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year - interest $ 50,680 -- - income taxes $ 4,532 $ 6,402
Page 4 5 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998 1. BASIS OF PRESENTATION In the opinion of the Company, the accompanying unaudited financial statements include all adjustments necessary to present fairly the financial position as of March 31, 1998 and December 31, 1997, the results of operations and the cash flows for the three-month periods ended March 31, 1998 and 1997. 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1997 annual report on Form 10-K as filed with the Securities and Exchange Commission. Certain items in the 1997 consolidated financial statements have been reclassified to conform with the 1998 presentation. The results of operations for any interim period are not necessarily indicative of results to be expected for the full year. Basic earnings per share is computed by dividing net income by the weighted-average number of shares outstanding. Common stock equivalents have been excluded from the calculation of diluted EPS in loss periods as the impact is anti-dilutive. 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 March 31, 1998 and December 31, 1997 consist of:
3/31/98 12/31/97 ---------- ---------- Raw materials $1,033,007 $1,141,205 Work in process 1,416,975 1,280,960 Finished goods 1,146,606 1,350,612 ---------- ---------- $3,596,588 $3,772,777 ========== ==========
Page 5 6 3. COMPREHENSIVE INCOME (LOSS) In June of 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 130 "Reporting Comprehensive Income." The statement, which the company adopted in the first quarter of 1998, establishes standards for reporting and displaying comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income is summarized as follows: Statement of Comprehensive Income (Loss)
Three Months Ended March 31, ------------------------ 1998 1997 --------- --------- Net loss $(191,517) $(143,793) Other comprehensive income (loss), net of tax: Foreign currency translation adjustments (116,483) (305,487) Unrealized gains (losses) on securities 3,426 (24,960) ---------- --------- Other comprehensive income (loss) (113,057) (330,447) --------- --------- Comprehensive Income (loss) $(304,574) $(474,240) ========= =========
Disclosure of Related Tax Effects Quarter Ended March 31, 1998
Before - Tax Tax (Expense) Net-of-Tax Amount or Benefit Amount ------------ ------------ ---------- Foreign currency translation adjustments $(116,483) -- $(116,483) Unrealized holding gains arising during 5,582 2,177 3,405 period Less: reclassification adjustments for gains realized in net income (35) (14) (21) --------- ------ --------- Net unrealized gains 5,617 2,191 3,426 --------- ------ --------- Other comprehensive income (loss) $(110,866) $2,191 $(113,057) ========= ====== =========
The Company does not provide for U.S. income taxes on foreign currency translation adjustments because it does not provide for such taxes on undistributed earnings of foreign subsidiaries. Page 6 7 Disclosure of Accumulated Other Comprehensive Income (Loss) Balances
Accumulated Foreign Unrealized Other Currency Gains on Comprehensive Items Securities Income (loss) --------- ---------- ------------- Beginning balance 12/31/97 $(507,804) $ 117 $(507,687) Current period change (116,483) 3,426 (113,057) --------- ------ --------- Ending balance 3/31/98 $(624,287) $3,543 $(620,744) ========= ====== =========
4. ACQUISITION On July 21, 1997, the Company acquired from unrelated third parties all of the outstanding stock of Cogent Diagnostics Limited ("Cogent") for approximately $1,453,000 in cash and $1,574,000 in three year notes to the seller group. The acquisition was accounted for using the purchase method of accounting, and Cogent's operating results have been included in the accompanying consolidated statements of operations from the date of acquisition. Cogent is based in Edinburgh, Scotland and develops, manufactures and markets a broad line of test kits for diagnosis of autoimmune disease. 5. LONG TERM DEBT The Company has a line of credit which provides for borrowings up to $2,000,000 and expires in July, 1999. The loan is collateralized by the Company's accounts receivable, inventories, and property, plant and equipment. At March 31, 1998, $1,000,000 was outstanding. Advances under the line bear interest at the prime rate or at LIBOR plus 2%, payable monthly, with the principal due at maturity. At March 31, 1998 the Company's interest rate was 8.25%. The Company has outstanding notes in the amount of $1,574,000. These notes were issued to the seller group in executing the acquisition of Cogent Diagnostics LTD (Cogent). Interest on the notes accrues at a rate of 6.85% and is payable quarterly. Principal payments are due in three equal annual installments commencing in July, 1998. In addition, one of the Company's foreign subsidiaries has long term debt, payable to financial institutions, aggregating $277,000 with weighted average interest rate of approximately 9%. Page 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for historical information contained herein, the matters discussed in this report are forward-looking statements which involve risk and uncertainties that could cause actual results to differ materially from the results anticipated in the forward looking statements. These risks and uncertainties include, but are not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices and other factors discussed in the Company's filings with the Securities and Exchange Commission. On September 30, 1996, the Company formed Hycor Biomedical SAS ("Hycor SAS") as a wholly owned subsidiary. Located in Paris, France, Hycor SAS markets allergy diagnostic products in France. Hycor SAS commenced direct commercial activities during the quarter ended September 30, 1997. On July 21, 1997, the Company acquired from unrelated third parties all of the outstanding stock of Cogent Diagnostics Limited ("Cogent") for approximately $1,453,000 in cash and $1,574,000 in three year notes to the seller group. The acquisition was accounted for using the purchase method of accounting, and Cogent's operating results have been included in the accompanying consolidated statements of operations from the date of acquisition. Cogent is based in Edinburgh, Scotland and develops, manufactures and markets a broad line of test kits for diagnosis of autoimmune disease. The Company has adequate working capital and sources of capital to carry on its current business and to meet its existing capital requirements. The Company increased its working capital $92,198 as of March 31, 1998, compared to December 31, 1997 primarily as a result of normal operations. The Company's principal capital commitments are for lease payments under non-cancelable operating leases and note payments related to the acquisition of Cogent. Additionally, the HY-TEC(TM) business requires the purchase of instruments which in many cases are placed in use in laboratories of the Company's direct customers and paid for over an agreed contract period by the purchase of test reagents. This "reagent rental" sales program, common to the diagnostic market, creates negative cash flows in the initial years. Working capital, operating results, and the available line of credit are expected to be sufficient to satisfy these commitments and the needs of operations for the foreseeable future. During the three-month period ended March 31, 1998, sales decreased 2%, compared to the same period last year. Revenue declines were due primarily to the loss of sales resulting from the 1995 Restructuring Plan and the related discontinued product lines. Revenues in the first quarter of 1997 from discontinued products were $319,000. In addition, in periods when the U.S. dollar is strengthening, the effect of the translation of the financial statements of the consolidated foreign affiliates is that of lower sales, cost, and net income. The stronger U.S. dollar in the first quarter 1998 when compared to the corresponding 1997 period resulted in lower reported sales of approximately 2%. Page 8 9 Gross profit as a percentage of product sales decreased for the three-month period ended March 31, 1998 from approximately 52% to 51% due primarily to the reduction in sales and continued pricing pressures from our customers. Selling, general and administrative expenses for the three-month period ended March 31, 1998 have increased approximately 2% over the prior year period. The cost increase is primarily due to the inclusion of both Cogent and Hycor SAS in the current quarter results. There were no significant changes in research and development spending levels for the three-month period ended March 31, 1998 over the prior year period (a reduction of approximately $33,000 or 5%). All programs continue to focus on the HY-TEC equipment platform and related tests and assays. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 27 : Financial Data Schedule (b) Reports on Form 8K : 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: May 12, 1998 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 9 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 THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998. 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 614,033 1,281,701 3,471,642 126,957 3,596,588 11,215,222 12,754,102 7,709,801 21,511,955 2,690,295 0 0 0 72,000 16,488,634 21,511,955 4,691,907 4,691,907 2,320,419 2,320,419 2,703,509 0 45,081 (354,101) (162,584) (191,517) 0 0 0 (191,517) (0.03) (0.03)
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