-----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, VtQ3o+uBAQMSdqv/Zzf7Hx7AIV5T8jNL0MWlqqaeWEo4fLqXDWuXe5SLmZT0bdx7 rq9rLOjKYMyr/KNXT6+dwA== 0001095811-01-502093.txt : 20010515 0001095811-01-502093.hdr.sgml : 20010515 ACCESSION NUMBER: 0001095811-01-502093 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 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: 1631444 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 a72282e10-q.txt FORM 10-Q QUARTERLY PERIOD ENDED MARCH 31, 2001 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, 2001 [ ] 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 April 20, 2001 ----- ----------------------------- Common Stock, $.01 Par Value 7,945,101 2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, December 31, ASSETS 2001 2000 ------------- ------------ CURRENT ASSETS: (unaudited) Cash and cash equivalents $297,090 $694,764 Investments 1,672,013 1,616,587 Accounts receivable, net of allowance for doubtful accounts of $158,603 (2001) and $138,208 (2000) 3,603,397 3,215,869 Inventories (Note 2) 4,859,276 4,719,050 Prepaid expenses and other current assets 315,634 355,712 ----------- ------------ Total current assets 10,747,410 10,601,982 ----------- ------------ PROPERTY AND EQUIPMENT, at cost 10,279,780 10,341,305 Less accumulated depreciation (7,409,773) (7,259,584) ----------- ------------ Property and equipment, net 2,870,007 3,081,721 GOODWILL AND OTHER INTANGIBLE ASSETS, net of Accumulated amortization of $1,008,833 (2001) and $1,020,728 (2000) 1,061,614 1,147,987 OTHER ASSETS 36,180 36,180 ----------- ------------ Total assets $14,715,211 $14,867,870 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 626,634 $ 584,629 Accrued liabilities 743,091 735,678 Accrued payroll expenses 678,200 995,122 Current portion of long-term debt (Note 3) 1,048,127 1,054,684 ----------- ------------ Total current liabilities 3,096,052 3,370,113 ----------- ------------ Long-term debt (Note 3) 17,783 28,925 ----------- ------------ Total Liabilities 3,113,835 3,399,038 STOCKHOLDERS' EQUITY: Common stock 79,268 77,389 Paid-in capital 12,760,902 12,640,536 Accumulated deficit (242,835) (390,505) Accumulated other comprehensive loss (995,959) (858,588) ----------- ------------ Total stockholders' equity 11,601,376 11,468,832 ----------- ------------ Total liabilities and stockholders' equity $14,715,211 $14,867,870 =========== ===========
Page 2 3 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended March 31, ----------------------------- 2001 2000 ----------- ----------- NET SALES $ 4,280,090 $ 4,628,095 COST OF SALES 1,936,317 2,144,184 ----------- ----------- Gross profit 2,343,773 2,483,911 OPERATING EXPENSES: Selling, general, and administrative 1,604,187 1,732,177 Research and development 566,887 438,304 ----------- ----------- Total operating expenses 2,171,074 2,170,481 ----------- ----------- OPERATING INCOME 172,699 313,430 INTEREST EXPENSE (15,654) (23,392) INTEREST INCOME 37,001 36,858 LOSS ON FOREIGN CURRENCY TRANSACTIONS (9,724) (38,080) ----------- ----------- INCOME BEFORE INCOME TAX PROVISION 184,322 288,816 INCOME TAX PROVISION 36,652 21,645 ----------- ----------- NET INCOME $ 147,670 $ 267,171 =========== =========== BASIC EARNINGS PER SHARE $ 0.02 $ 0.04 =========== =========== DILUTED EARNINGS PER SHARE $ 0.02 $ 0.03 =========== =========== AVERAGE COMMON SHARES OUTSTANDING: Basic 7,814,111 7,348,677 =========== =========== Diluted 8,254,947 8,051,360 =========== =========== CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS Net Income $ 147,670 $ 267,171 OTHER COMPREHENSIVE LOSS, NET OF TAX Foreign currency translation adjustments (194,543) (160,996) Unrealized gains (losses) on securities 57,172 (15,257) ----------- ----------- OTHER COMPREHENSIVE LOSS, NET OF TAX (137,371) (176,253) ----------- ----------- COMPREHENSIVE INCOME $ 10,299 $ 90,918 =========== ===========
Page 3 4 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended March 31, ------------------------- 2001 2000 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 147,670 $ 267,171 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 278,342 296,681 Provision for doubtful accounts receivable 15,399 16,338 Provision for excess and obsolete inventories 62,490 201,740 Change in assets and liabilities, net of effects of foreign currency adjustments Accounts receivable (465,974) (44,666) Inventories (268,544) (194,449) Prepaid expenses and other current assets 16,968 (20,468) Accounts payable 56,185 52,354 Accrued liabilities 131,196 (158,517) Accrued payroll expenses (311,994) (126,385) --------- --------- Total adjustments (485,932) 22,628 --------- --------- Net cash (used in) provided by operating activities (338,262) 289,799 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments -- (824,503) Proceeds from sales of investments 20,000 800,000 Purchases of property, plant and equipment (72,860) (283,705) Other (881) 1,057 --------- --------- Net cash used in investing activities (53,741) (307,151) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt (15,027) (18,058) Proceeds from issuance of common stock 8,478 35,590 --------- --------- Net cash (used in) provided by financing activities (6,549) 17,532 --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 878 (5,266) --------- --------- DECREASE IN CASH AND CASH EQUIVALENTS (397,674) (5,086) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 694,764 551,295 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 297,090 $ 546,209 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION- Cash paid during the period - interest $ 23,667 $ 31,563 - income taxes $ 9,495 $ 49,644
Page 4 5 HYCOR BIOMEDICAL INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2001 1. BASIS OF PRESENTATION In the opinion of the Company, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly the financial position as of March 31, 2001 and December 31, 2000, the results of operations and the cash flows for the three-month periods ended March 31, 2001 and 2000. 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 accounting principles generally accepted in the United States of America 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 2000 annual report on Form 10-K as filed with the Securities and Exchange Commission. Certain items in the 2000 consolidated financial statements have been reclassified to conform to the 2001 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 March 31, 2001 and December 31, 2000 consist of:
3/31/01 12/31/00 ---------- ---------- Raw materials $1,465,230 $1,128,822 Work in process 2,119,389 2,181,753 Finished goods 1,274,657 1,408,475 ---------- ---------- $4,859,276 $4,719,050 ========== ==========
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 March 31, 2001, $1,000,000 was outstanding. Advances under the line bear interest at the prime rate or at LIBOR plus 2% (6.87% at March 31, 2001). 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 March 31, 2001, the Company was in compliance with such covenants. In addition, the Company and one of its foreign subsidiaries has long-term debt, payable to financial institutions, aggregating $65,910 with a weighted average interest rate of approximately 9.5%. 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. 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 March 31, 2001 the Company increased its working capital $419,489 when compared to December 31, 2000, as a result of normal operations. The Company's principal capital commitments are to support the HY-TEC business, which requires the purchase of instruments. In many cases, the instruments 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. The Company has entered into a long-term product manufacturing and sales agreement to purchase certain minimum levels of HY-TEC instruments. Working capital, operating results, and the available line of credit are expected to be sufficient to satisfy this commitment and the needs of operations for the foreseeable future. Page 6 7 RESULTS OF OPERATIONS During the three-month period ended March 31, 2001, sales decreased approximately $348,000 or 7.5% compared to the same period last year. Sales of urinalysis and clinical immunology product lines decreased $233,000 or 5.4%, while sales of other non-core products decreased $115,000 or 35.9%, when compared to the same period 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 first quarter 2001 when compared to the corresponding 2000 period resulted in lower reported sales of approximately $104,000 or 2.4%. An additional contributing factor was related to the implementation of a primary supplier agreement between the Company and a major U.S. customer. In the first quarter 2000, the customer increased inventory levels of Hycor's products and has since established an aggressive inventory reduction program even though sales to their end-users continue to grow. Continued pressures in the health care industry for cost controls affect the Company's revenue and the Company anticipates that these pricing pressures will continue in the future. Gross profit as a percentage of product sales increased for three-month period ended March 31, 2001 from approximately 53.7% to 54.8% compared to the same period last year. This increase was due primarily to changes in the product mix and improvements in manufacturing efficiencies. Selling, general and administrative expenses decreased approximately $128,000 or 7.4% when compared to the same period last year. The decrease is primarily the result of non-recurring expenses in 2000 of approximately $50,000, and a favorable foreign exchange impact of about $35,000. Research and development costs increased approximately $129,000 or 29.3% when compared to the same period last year. This increase is due to continuing developmental efforts on the HY-TEC product line. 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-month periods ended March 31, 2001 and March 31, 2000 reflects the provision for estimated federal, state, and foreign liabilities that are not offset by net operating loss carry-forwards. Page 7 8 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) 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 14, 2001 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 -----END PRIVACY-ENHANCED MESSAGE-----