-----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, H7DrUV8yE9mpaQONUf/zDnoNjbtpi8X+EvewWIs5l5o8l0gRnq9VmdpclZRN5PCT MdstSdylC9Ur53N3B3KCGA== /in/edgar/work/20000810/0001095811-00-002527/0001095811-00-002527.txt : 20000921 0001095811-00-002527.hdr.sgml : 20000921 ACCESSION NUMBER: 0001095811-00-002527 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HYCOR BIOMEDICAL INC /DE/ CENTRAL INDEX KEY: 0000719447 STANDARD INDUSTRIAL CLASSIFICATION: [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: 690785 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 e10-q.txt FORM 10-Q QUARTERLY PERIOD ENDED JUNE 30, 2000 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: JUNE 30, 2000 [ ] 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.) 7272 Chapman Avenue, Garden Grove, California 92841 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (714) 933-3000 No Change - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 July 24, 2000 ----- ---------------------------- Common Stock, $.01 Par Value 7,443,637 2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 30, December 31, ASSETS 2000 1999 ------------ ------------ (unaudited) CURRENT ASSETS: Cash and cash equivalents $ 972,398 $ 551,295 Investments 1,774,793 1,757,599 Accounts receivable, net of allowance for doubtful accounts of $155,800 (2000) and $335,000 (1999) 2,899,316 3,203,180 Inventories (Note 2) 4,349,525 4,269,301 Prepaid expenses and other current assets 355,805 306,769 ------------ ------------ Total current assets 10,351,837 10,088,144 ------------ ------------ PROPERTY AND EQUIPMENT, at cost 10,803,527 10,589,353 Less accumulated depreciation (7,339,850) (7,028,894) ------------ ------------ 3,463,677 3,560,459 ------------ ------------ GOODWILL AND OTHER INTANGIBLE ASSETS, net of accumulated amortization of $959,300 (2000) and $915,600 (1999) 1,218,930 1,329,861 OTHER ASSETS 60,598 60,598 ------------ ------------ Total assets $ 15,095,042 $ 15,039,062 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 607,719 $ 776,844 Accrued liabilities 1,208,900 1,314,547 Accrued payroll expenses 618,147 731,755 Current portion of long-term debt (Note 3) 1,582,175 1,586,341 ------------ ------------ Total current liabilities 4,016,941 4,409,487 ------------ ------------ Long-term debt (Note 3) 54,155 87,389 ------------ ------------ Total liabilities 4,071,096 4,496,876 ------------ ------------ STOCKHOLDERS' EQUITY: Common stock 74,368 73,487 Paid-in capital 12,657,815 12,544,005 Accumulated deficit (882,081) (1,371,933) Accumulated other comprehensive loss (826,156) (703,373) ------------ ------------ Total stockholders' equity 11,023,946 10,542,186 ------------ ------------ Total liabilities and stockholders' equity $ 15,095,042 $ 15,039,062 ============ ============
Page 2 3 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS (unaudited)
Three Months Ended Six Months Ended June 30, June 30, ----------------------------- ----------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- NET SALES $ 4,303,482 $ 4,641,107 $ 8,931,577 $ 9,402,834 COST OF SALES 1,807,966 2,237,837 3,952,150 4,621,225 ----------- ----------- ----------- ----------- Gross profit 2,495,516 2,403,270 4,979,427 4,781,609 ----------- ----------- ----------- ----------- OPERATING EXPENSES: Selling, general, and administrative 1,828,222 1,899,028 3,560,399 3,781,981 Research and development 443,918 577,479 882,222 1,116,076 ----------- ----------- ----------- ----------- 2,272,140 2,476,507 4,442,621 4,898,057 ----------- ----------- ----------- ----------- OPERATING INCOME (LOSS) 223,376 (73,237) 536,806 (116,448) INTEREST EXPENSE 25,249 35,045 48,641 69,334 INTEREST INCOME 46,726 21,361 83,584 48,157 LOSS ON FOREIGN CURRENCY TRANSACTIONS (5,257) (7,737) (43,337) (1,579) ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE INCOME TAX PROVISION 239,596 (94,658) 528,412 (139,204) INCOME TAX PROVISION 16,915 2,000 38,560 14,000 ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ 222,681 $ (96,658) $ 489,852 $ (153,204) =========== =========== =========== =========== BASIC EARNINGS (LOSS) PER SHARE $ 0.03 $ (0.01) $ 0.07 $ (0.02) =========== =========== =========== =========== DILUTED EARNINGS (LOSS) PER SHARE $ 0.03 $ (0.01) $ 0.06 $ (0.02) =========== =========== =========== =========== AVERAGE COMMON SHARES OUTSTANDING: Basic 7,386,946 7,283,456 7,369,374 7,283,456 =========== =========== =========== =========== Diluted 8,093,773 7,283,456 8,066,917 7,283,456 =========== =========== =========== =========== CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Net Income (Loss) $ 222,681 $ (96,658) $ 489,852 $ (153,204) OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX Foreign currency translation adjustments 57,271 (176,763) (103,725) (488,170) Unrealized (losses) on securities (3,801) (1,874) (19,058) (2,630) ----------- ----------- ----------- ----------- OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX 53,470 (178,637) (122,783) (490,800) ----------- ----------- ----------- ----------- COMPREHENSIVE INCOME (LOSS) $ 276,151 $ (275,295) $ 367,069 $ (644,004) =========== =========== =========== ===========
Page 3 4 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
June 30, June 30, 2000 1999 --------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 489,852 $ (153,204) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 596,180 689,894 Provision for doubtful accounts receivable 19,970 59,604 Provision for excess and obsolete inventories 257,691 568,804 Change in assets and liabilities, net of effects of foreign currency adjustments Accounts receivable 222,238 (515,939) Inventories (406,661) (476,536) Prepaid expenses and other current assets (40,554) 93,719 Accounts payable (148,475) (231,944) Accrued liabilities (97,214) (76,287) Accrued payroll expenses (105,683) 290,384 --------- ----------- Total adjustments 297,492 401,699 --------- ----------- Net cash provided by operating activities 787,344 248,495 --------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments (848,964) -- Proceeds from sales of investments 800,000 700,000 Purchases of intangible assets (11,571) (22,772) Purchases of property, plant and equipment (485,800) (389,116) Proceeds from sale of property, plant, and equipment 5,951 -- Proceeds from collection of notes receivable 17,288 29,763 --------- ----------- Net cash (used in) provided by investing activities (523,096) 317,875 --------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt (32,926) (124,493) Proceeds from issuance of common stock 114,691 -- --------- ----------- Net cash provided by (used in) financing activities 81,765 (124,493) --------- ----------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 75,090 (25,279) --------- ----------- INCREASE IN CASH AND CASH EQUIVALENTS 421,103 416,598 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 551,295 655,716 --------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 972,398 $ 1,072,314 ========= =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION- Cash paid during the year - interest $ 63,198 $ 79,881 - income taxes $ 50,550 $ 12,766
Page 4 5 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 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 June 30, 2000 and December 31, 1999, the results of operations and the cash flows for the three and six-month periods ended June 30, 2000 and 1999. 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 1999 annual report on Form 10-K as filed with the Securities and Exchange Commission. Certain items in the 1999 consolidated financial statements have been reclassified to conform to the 2000 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, while diluted EPS additionally includes the dilutive effect of the Company's outstanding options and warrants computed using the treasury stock method. 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 June 30, 2000 and December 31, 1999 consist of: 6/30/00 12/31/99 ---------- ---------- Raw materials $ 932,814 $ 868,876 Work in process 1,576,023 1,392,527 Finished goods 1,840,688 2,007,898 ---------- --------- $4,349,525 $4,269,301 ========== ========== 3. LONG TERM DEBT The Company has a line of credit that provides for borrowings up to $2,000,000 and expires on July 31, 2001. The loan is collateralized by the Company's accounts receivable, inventories, and property, plant, and equipment. At June 30, 2000, $1,000,000 was outstanding. Advances under the line bear interest at the prime rate or at LIBOR plus 2% (8.4% at June 30, 2000). Page 5 6 The line of credit contains restrictive covenants, the most significant of which relate to the maintenance of minimum tangible net worth, debt-to-tangible net worth requirements, and liquid assets plus accounts receivable-to-current liabilities requirements. At June 30, 2000, the Company was in compliance with such covenants. At June 30, 2000 the Company had outstanding notes in the amount of $525,000. These notes were issued to the seller group in executing the acquisition of Cogent Diagnostics LTD in July 1997. Interest on the notes accrued at a rate of 6.85% and was payable quarterly. The principal balance on these notes was paid in July 2000. In addition, the Company and one of its foreign subsidiaries has long-term debt, payable to financial institutions, aggregating approximately $111,000 at June 30, 2000 with weighted average interest rate of approximately 9%. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL This Section and this entire report contain forward-looking statements and include assumptions concerning the Company's operations, future results and prospects. These forward-looking statements are based on current expectations and are subject to a number of risks, uncertainties, and other factors. In connection with the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statements identifying important factors which, among other things, could cause the actual results and events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions contained in this Section and in this entire Report. Such factors include, but are not limited to, product demand and market acceptance risks; the effect of economic conditions; the impact of competitive products and pricing; product development; commercialization and technological difficulties; capacity and supply constraints or difficulties; availability of capital resources; general business and economic conditions, including currency risks based on the relative strength or weakness of the U.S. dollar, euro conversions, and changes in government laws and regulations, including taxes. While the Company has returned to profitability it still needs additional sales and marketing resources. To help in managing the opportunities ahead of us, the Company engaged the services of investment banking firm Prudential Vector Healthcare Group to act as an intermediary in negotiations involving the Company and potential strategic partnerships or M&A opportunities. Prudential Vector Healthcare Group, a unit of Prudential Securities Incorporated, is one of the largest investment banking groups focused exclusively on the healthcare industry. LIQUIDITY The Company has adequate working capital and sources of capital to carry on its current business and to meet its existing and expected future capital requirements. As of June 30, 2000 the Company increased its working capital approximately $656,000 when compared to December 31, 1999, as a result of normal operations. Page 6 7 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 that 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. RESULTS OF OPERATIONS During the three and six-month periods ended June 30, 2000, sales decreased approximately $338,000 or 7.3% and $471,000 or 5.0%, respectively, compared to the same periods last year. In periods when the U.S. dollar is strengthening, the translation impact on the financial statements of the consolidated foreign affiliates is that of lower sales, costs, and net income. The stronger U.S. dollar in the three and six-month periods ended June 30, 2000 resulted in lower reported sales of approximately $108,000 or 2.5% and $200,000 or 2.2%, respectively, when compared to the corresponding 1999 periods. In addition, a new reimbursement system in Germany has affected our customers there and resulted in what we expect to be a temporary decrease in sales. Also, continued cost control pressures in the health care industry affect the Company's revenue. The Company anticipates that these pricing pressures will continue in the future. Gross profit as a percentage of product sales increased for the three and six-month periods ended June 30, 2000 from approximately 51.8% to 58.0% and 50.9% to 55.8%, respectively, compared to the same periods last year. This increase was due primarily to changes in the product mix and improved manufacturing efficiencies. Selling, general and administrative expenses decreased for the three and six-month periods ended June 30, 2000 approximately $71,000 or 3.7% and $222,000 or 5.9%, respectively, compared to the same periods last year. The reductions are due primarily as a result of restructuring the European sales and marketing organization. Additional decreases are the result of non-recurring expenses during 1999. Research and development costs decreased for the three and six-month periods ended June 30, 2000 approximately $134,000 or 23.1% and $234,000 or 21.0%, respectively, when compared to the same periods last year. This decrease is primarily due to the completion of several projects related to the HY-TEC 288 instrument system and related diagnostic tests. Effective with the fourth quarter of 1998, the Company adopted a position wherein a 100% valuation allowance was taken against all deferred tax assets. The tax provision for the three and six-month periods ended June 30, 2000 reflects the provision for estimated federal and state tax liabilities that are not offset by operating losses. Page 7 8 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On June 14, 2000, Hycor Biomedical Inc. held its Annual Meeting of Stockholders. At such meeting, the following seven persons were elected as directors of the Company to serve until the Annual Meeting of Stockholders in 2001 and until their successors are elected and qualified. The tabulation of the votes cast for the election of the directors was as follows: Nominee Votes For Votes Withheld - ------- --------- -------------- J. David Tholen 6,140,398 301,795 Samual D. Anderson 6,137,723 304,470 David S. Gordon 6,139,930 302,263 Reginald P. Jones 6,139,819 302,374 James R. Phelps 6,140,137 302,056 Richard E. Schmidt 6,138,416 303,777 David A. Thompson 6,140,923 301,270 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: August 10, 2000 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 9 EXHIBIT INDEX EXHIBIT INDEX DESCRIPTION ------- ----------- 27 Financial Data Schedule EX-27 2 ex27.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2000. 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 972,398 1,774,793 3,055,109 155,793 4,349,525 10,351,837 10,803,527 (7,339,850) 15,095,042 4,016,941 0 0 0 74,368 10,949,578 15,095,042 8,931,577 8,931,577 3,952,150 3,952,150 4,442,621 0 48,641 489,852 38,560 489,852 0 0 0 489,852 0.07 0.06
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