-----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, U4vGQ1eCTKgroMS7br0QFSya5osWnwcULGgh4RKFy7UMBmYTfxCXjSMsTOaOSxpS DhSj8EMmGU3yMPzIdktQjg== /in/edgar/work/0001095811-00-004742/0001095811-00-004742.txt : 20001115 0001095811-00-004742.hdr.sgml : 20001115 ACCESSION NUMBER: 0001095811-00-004742 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 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: 764308 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 a67033e10-q.txt FORM 10-Q PERIOD ENDED SEPTEMBER 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: SEPTEMBER 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 October 27, 2000 ----- ------------------------------- Common Stock, $.01 Par Value 7,712,786
2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
September 30, December 31, ASSETS 2000 1999 ------------ ------------ CURRENT ASSETS: (unaudited) Cash and cash equivalents $ 571,297 $ 551,295 Investments 1,829,095 1,757,599 Accounts receivable, net of allowance for doubtful accounts of $84,300 (2000) and $335,000 (1999) 3,210,401 3,203,180 Inventories (Note 2) 4,506,389 4,269,301 Prepaid expenses and other current assets 285,939 306,769 ------------ ------------ Total current assets 10,403,121 10,088,144 ------------ ------------ PROPERTY AND EQUIPMENT, at cost 10,640,160 10,589,353 Less accumulated depreciation (7,269,054) (7,028,894) ------------ ------------ 3,371,106 3,560,459 ------------ ------------ GOODWILL AND OTHER INTANGIBLE ASSETS, net of accumulated amortization of $942,500 (2000) and $915,600 (1999) 1,122,841 1,329,861 OTHER ASSETS 36,180 60,598 ------------ ------------ Total assets $ 14,933,248 $ 15,039,062 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 630,543 $ 776,844 Accrued liabilities 962,810 1,314,547 Accrued payroll expenses 1,119,242 731,755 Current portion of long-term debt (Note 3) 1,056,824 1,586,341 ------------ ------------ Total current liabilities 3,769,419 4,409,487 ------------ ------------ Long-term debt (Note 3) 40,146 87,389 ------------ ------------ Total liabilities 3,809,565 4,496,876 ------------ ------------ STOCKHOLDERS' EQUITY: Common stock 77,128 73,487 Paid-in capital 12,700,332 12,544,005 Accumulated deficit (563,137) (1,371,933) Accumulated other comprehensive loss (1,090,640) (703,373) ------------ ------------ Total stockholders' equity 11,123,683 10,542,186 ------------ ------------ Total liabilities and stockholders' equity $ 14,933,248 $ 15,039,062 ============ ============
Page 2 3 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, -------------------------------- -------------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ------------ NET SALES $ 4,080,968 $ 4,352,865 $ 13,012,545 $ 13,755,699 COST OF SALES 1,735,928 2,093,887 5,688,078 6,715,112 ------------ ------------ ------------ ------------ Gross profit 2,345,040 2,258,978 7,324,467 7,040,587 ------------ ------------ ------------ ------------ OPERATING EXPENSES: Selling, general, and administrative 1,574,656 1,731,643 5,135,055 5,513,624 Research and development 462,163 629,052 1,344,385 1,745,128 ------------ ------------ ------------ ------------ 2,036,819 2,360,695 6,479,440 7,258,752 ------------ ------------ ------------ ------------ OPERATING INCOME (LOSS) 308,221 (101,717) 845,027 (218,165) INTEREST EXPENSE 26,823 25,585 75,464 94,919 INTEREST INCOME 56,661 21,471 139,205 69,628 GAIN (LOSS) ON FOREIGN CURRENCY TRANSACTIONS 13,761 (15,638) (28,536) (17,217) GAIN ON SALES OF PATENTS -- 320,864 -- 320,864 ------------ ------------ ------------ ------------ INCOME BEFORE INCOME TAX PROVISION 351,820 199,395 880,232 60,191 INCOME TAX PROVISION 32,876 -- 71,436 14,000 ------------ ------------ ------------ ------------ NET INCOME $ 318,944 $ 199,395 $ 808,796 $ 46,191 ============ ============ ============ ============ BASIC EARNINGS PER SHARE $ 0.04 $ 0.03 $ 0.11 $ 0.01 ============ ============ ============ ============ DILUTED EARNINGS PER SHARE $ 0.04 $ 0.03 $ 0.10 $ 0.01 ============ ============ ============ ============ AVERAGE COMMON SHARES OUTSTANDING: Basic 7,531,062 7,302,263 7,422,228 7,289,845 ============ ============ ============ ============ Diluted 8,101,832 7,311,417 7,953,738 7,297,139 ============ ============ ============ ============ CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Net Income $ 318,944 $ 199,395 $ 808,796 $ 46,191 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX Foreign currency translation adjustments (276,623) 149,240 (380,348) (338,930) Unrealized gains/(losses) on securities 12,139 (1,281) (6,919) (3,911) ------------ ------------ ------------ ------------ OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX (264,484) 147,959 (387,267) (342,841) ------------ ------------ ------------ ------------
Page 3 4 COMPREHENSIVE INCOME (LOSS) $ 54,460 $ 347,354 $ 421,529 $ (296,650) ============ ============ ============ ============
Page 4 5 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
September 30, September 30, 2000 1999 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 808,796 $ 46,191 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 874,358 1,006,233 Provision for doubtful accounts receivable 102,365 92,200 Provision for excess and obsolete inventories 331,223 1,054,959 Gain on sales of assets (14,306) (823,603) Change in assets and liabilities, net of effects of foreign currency adjustments Accounts receivable (262,263) (347,023) Inventories (720,860) (1,058,715) Prepaid expenses and other current assets 13,357 152,747 Accounts payable (112,737) (211,664) Accrued liabilities (335,601) (42,656) Accrued payroll expenses 404,113 329,335 ----------- ----------- Total adjustments 279,649 151,813 ----------- ----------- Net cash provided by operating activities 1,088,445 198,004 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments (1,158,934) -- Proceeds from sales of investments 1,076,000 950,000 Purchases of intangible assets (12,858) (25,878) Purchases of property, plant and equipment (682,491) (467,939) Proceeds from sale of property, plant, and equipment 14,691 1,052,500 Proceeds from collection of notes receivable 35,382 45,090 ----------- ----------- Net cash (used in) provided by investing activities (728,210) 1,553,773 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt (570,770) (668,423) Proceeds from issuance of common stock 159,968 27,427 ----------- ----------- Net cash used in financing activities (410,802) (640,996) ----------- ----------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 70,569 249 ----------- ----------- INCREASE IN CASH AND CASH EQUIVALENTS 20,002 1,111,030 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 551,295 655,716 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 571,297 $ 1,766,746 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION- Cash paid during the year - interest $ 95,902 $ 112,001 - income taxes $ 72,018 $ 16,906
Page 5 6 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 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 September 30, 2000 and December 31, 1999, the results of operations and the cash flows for the three and nine-month periods ended September 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. 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. 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, 2000 and December 31, 1999 consist of:
9/30/00 12/31/99 ---------- ---------- Raw materials $1,035,015 $ 868,876 Work in process 2,109,855 1,392,527 Finished goods 1,361,519 2,007,898 ---------- ---------- $4,506,389 $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 September 30, 2000, $1,000,000 was outstanding. Advances under the line bear interest at the prime rate or at LIBOR plus 2% (8.8% at September 30, 2000). 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, Page 6 7 and liquid assets plus accounts receivable-to-current liabilities requirements. At September 30, 2000, the Company was in compliance with such covenants. The Company and one of its foreign subsidiaries has long-term debt, payable to financial institutions, aggregating approximately $97,000 at September 30, 2000 with weighted average interest rate of approximately 9%. 4. NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"), which the Company is required to adopt in 2001. This statement, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contacts for hedging activities. As of September 30, 2000, the Company had no derivative instruments nor was it engaged in hedging activities, but it will continue to evaluate the effects of adopting SFAS No. 133. In December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin No. 101 ("SAB 101"), which provides the staff's view in applying generally accepted accounting principles to revenue recognition issues. SAB 101, as amended by SAB 101A and SAB 101B, is required to be implemented during the Company's fourth quarter of fiscal 2000. The Company is in compliance with the requirements of SAB 101 and does not anticipate that its consolidated financial statements will be affected. 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 Page 7 8 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 September 30, 2000 the Company increased its working capital approximately $955,000 when compared to December 31, 1999, 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 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 nine-month periods ended September 30, 2000, sales decreased approximately $272,000 or 6.3% and $743,000 or 5.4%, 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 nine-month periods ended September 30, 2000 resulted in lower reported sales of approximately $168,000 or 4.1% and $368,000 or 2.8%, 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 nine-month periods ended September 30, 2000 from approximately 51.9% to 57.5% and 51.2% to 56.3%, 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 nine-month periods ended September 30, 2000 approximately $157,000 or 9.1% and $379,000 or 6.9%, 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 nine-month periods ended September 30, 2000 approximately $167,000 or 26.5% and $401,000 or 23.0%, 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. Page 8 9 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 nine-month periods ended September 30, 2000 reflects the provision for estimated federal and state tax liabilities that are not offset by operating losses. 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: November 13, 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 9 EX-27 2 a67033ex27.txt 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, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000. 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 571,297 1,829,095 3,294,747 84,346 4,506,389 10,403,121 10,640,160 (7,269,054) 14,933,248 3,769,419 0 0 0 77,128 11,046,555 14,933,248 13,012,545 13,012,545 5,688,078 5,688,078 6,479,440 0 75,464 880,232 71,436 808,796 0 0 0 808,796 0.11 0.10
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