-----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, Oej6QS5TCiy2MfHNmQRUTcTzv/Rc/Aaos++hVqgsTSkSKX5w0TcNEx7lg3Eqj+Jq oCrK1iPdM9WfGG8YeATjpw== 0000950130-95-002442.txt : 19951119 0000950130-95-002442.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950130-95-002442 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNETIC INC CENTRAL INDEX KEY: 0000850436 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 222975182 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17822 FILM NUMBER: 95591936 BUSINESS ADDRESS: STREET 1: 669 RIVER DRIVE CITY: ELMWOOD PARK STATE: NJ ZIP: 07407 BUSINESS PHONE: 2017033400 MAIL ADDRESS: STREET 1: 669 RIVER DRIVE CITY: ELMWOOD PARK STATE: NJ ZIP: 07407 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [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 OR [_] 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 0-17822 SYNETIC, INC. (Exact name of registrant as specified in its charter) Delaware 22-2975182 (State or other jurisdiction of (I.R.S Employer incorporation or organization) Identification No.) River Drive Center 2 669 River Driver Elmwood Park, New Jersey 07407 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (201) 703-3400 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, 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 November 10, 1995 - ------------------ -------------------------------- Common Stock 16,653,129 shares par value $.01 per share SYNETIC, INC. AND SUBSIDIARIES
Index ----- Page ---- Part I. FINANCIAL INFORMATION: Item 1. Financial Statements Consolidated Balance Sheets -- September 30, 1995 and June 30, 1995 3 Consolidated Statements of Income -- Three Months Ended September 30, 1995 and 1994 5 Consolidated Statements of Cash Flows -- Three Months Ended September 30, 1995 and 1994 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 9 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11
-2- SYNETIC, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) ASSETS ------
September 30, June 30, 1995 1995 -------------- --------- (unaudited) CURRENT ASSETS: Cash and cash equivalents................ $ 10,952 $ 7,499 Marketable securities.................... 97,000 98,000 Accounts receivable, net of allowances for doubtful accounts and sales returns of $675 and $636 at September 30, 1995 and June 30, 1995, respectively........................... 6,374 6,665 Inventories.............................. 5,299 5,446 Other current assets..................... 4,547 4,031 -------- -------- Total current assets................... 124,172 121,641 -------- -------- PROPERTY, PLANT AND EQUIPMENT: Land and improvements.................... 798 780 Buildings and improvements............... 8,297 8,286 Machinery and equipment.................. 17,865 17,389 Furniture and fixtures................... 2,778 2,696 Construction in progress................. 1,443 1,331 -------- -------- 31,181 30,482 Less: Accumulated depreciation........ (14,106) (13,523) -------- -------- Property, plant and equipment, net... 17,075 16,959 -------- -------- OTHER ASSETS: Marketable securities.................... 46,833 46,854 Other.................................... 1,723 2,720 -------- -------- Total other assets..................... 48,556 49,574 -------- -------- $189,803 $188,174 ======== ========
The accompanying notes are an integral part of these balance sheets. -3- SYNETIC, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED) (in thousands, except share data) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------
September 30, June 30, 1995 1995 -------------- --------- (unaudited) CURRENT LIABILITIES: Current portion of long-term debt........... $ - $ 216 Accounts payable............................ 1,055 648 Accrued liabilities......................... 8,201 9,337 Income taxes payable........................ 5,922 6,161 -------- -------- Total current liabilities................. 15,178 16,362 -------- -------- DEFERRED TAXES AND OTHER LIABILITIES.......... 4,980 4,980 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 10,000,000 shares authorized; none issued.................................... - - Common stock, $.01 par value; 50,000,000 shares authorized; 16,650,796 and 16,598,530 shares issued at September 30, 1995 and June 30 1995, respectively.............................. 219 219 Paid-in capital............................. 153,445 152,556 Treasury stock, at cost; 5,268,463 shares at September 30, 1995..................... (36,575) (36,575) Retained earnings........................... 52,556 50,632 -------- -------- Total stockholders' equity................ 169,645 166,832 -------- -------- $189,803 $188,174 ======== ========
The accompanying notes are an integral part of these balance sheets. -4- SYNETIC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, 1995 and 1994 (in thousands, except per share data) (unaudited)
September 30, 1995 1994 ------- ------- Net sales................................ $11,036 $ 8,954 ------- ------- Costs and expenses: Cost of sales.......................... 6,340 5,454 Selling, general and administrative.... 3,612 2,618 Interest and other income.............. (2,052) (1,389) Interest expense....................... 9 1,478 ------- ------- 7,909 8,161 ------- ------- Income from continuing operations before provision for income taxes...... 3,127 793 Provision for income taxes............... 1,203 313 ------- ------- Income from continuing operations........ 1,924 480 ------- ------- Discontinued operations: Income from operations, net of income taxes of $415 for the quarter ended September 30, 1994..................... - 535 ------- ------- Income from discontinued operations...... - 535 ------- ------- Net income............................... $ 1,924 $ 1,015 ======= ======= Net income per share: Continuing operations.................. $ .11 $ .03 Discontinued operations................ .00 .03 ------- ------- Net income per share..................... $ .11 $ .06 ======= ======= Weighted average shares outstanding...... 17,830 18,133 ======= =======
The accompanying notes are an integral part of these statements. -5- SYNETIC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended September 30, 1995 and 1994 (in thousands) (unaudited)
September 30, 1995 1994 --------- --------- Cash flows from operating activities: Net income.................................... $ 1,924 $ 1,015 Adjustments to reconcile net income to net cash provided by operating activities: Income from Discontinued Operations....... - (535) Depreciation and amortization............. 640 568 Changes in operating assets and liabilities: Accounts receivable, net.................. 291 (647) Inventories............................... 147 84 Other assets.............................. 424 2,049 Accounts payable.......................... 407 (67) Accrued liabilities....................... (1,137) 3,073 Income taxes payable...................... (43) (2,715) --------- -------- Net cash provided by operating activities.................. 2,653 2,825 --------- -------- Cash flows from investing activities: Sales of marketable securities................ 205,021 35,069 Purchases of marketable securities............ (204,000) (36,049) Capital expenditures.......................... (699) (1,437) --------- -------- Net cash provided by (used for) investing activities.................... 322 (2,417) --------- -------- Cash flows from financing activities: Proceeds from exercise of stock options and 401(k) purchases............................ 694 551 Payments and redemption of long-term debt..... (216) (114) --------- -------- Net cash provided by financing activities...................... 478 437 --------- -------- Net increase in cash and cash equivalents....... 3,453 845 Cash and cash equivalents, beginning of period.. 7,499 5,549 --------- -------- Cash and cash equivalents, end of period........ $ 10,952 $ 6,394 ========= ========
The accompanying notes are an integral part of these statements. -6- SYNETIC, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Financial statement presentation: In the opinion of management, the accompanying consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the financial position of Synetic, Inc. and subsidiaries (the "Company") as of September 30, 1995 (unaudited) and June 30, 1995 (audited), and the results of their operations and their cash flows for the three months ended September 30, 1995 and 1994 (unaudited). Principles of Consolidation-- The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned operating subsidiary, Porex Technologies Corp. ("Porex"), after elimination of all material intercompany accounts and transactions. All periods and related notes thereto have been restated to reflect the sale of the Institutional Pharmacy Business, consummated on December 14, 1994. The accounting policies followed by the Company are set forth in the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995 (the "Annual Report"), which notes are incorporated herein by reference. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full fiscal year. Certain reclassifications have been made to prior year amounts to conform to the current year presentation. (2) Inventories: Inventories consisted of the following (in thousands):
September 30, June 30, 1995 1995 ------------- -------- (unaudited) Raw materials and supplies.. $2,731 $2,843 Work-in-process............. 545 549 Finished goods.............. 2,023 2,054 ------ ------ $5,299 $5,446 ====== ======
(3) Marketable securities: At September 30, 1995, marketable securities consisted primarily of U.S. Treasury Notes and Money Market Preferred Stock. -7- (4) Computation of net income per share: Net income per share is determined by dividing net income by the weighted average number of shares of common stock and common stock equivalents outstanding during the applicable period. Common stock equivalents consist of common stock which may be issuable upon exercise of outstanding stock options as calculated using the treasury stock method. (5) Supplemental cash flow information (in thousands):
September 30, Cash paid during the periods for: 1995 1994 ------ ------ Interest...................... $ 6 $ 10 Income taxes.................. 1,225 9
-8- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Consolidated Results of Operations: - ---------------------------------- Net sales for the three months ended September 30,1995 increased by $2,082,000, or 23.3% over the comparable prior year period as a result of sales increases across several product lines, principally increased sales of writing instrument components in the consumer sector and medical products in the health care sector. Cost of sales for the three months ended September 30, 1995 increased by $886,000, or 16.24%, over the comparable prior year period due to the increased sales volume noted above. As a percent of net sales, cost of sales for the three months ended September 30, 1995 decreased to 57.4% from 60.9% in the comparable prior year period principally due to increased sales of higher margin products and the reduction of certain fixed manufacturing costs. Selling, general and administrative expenses for the three months ended September 30, 1995 increased by $994,000 or 38% over the comparable prior year period due primarily to an increase in sales commissions due to the increase in sales volume noted above and increased corporate overhead. As a percent of net sales, selling, general and administrative expenses for the three months ended September 30, 1995 increased to 32.7% from 29.2% primarily due to the increase in corporate overhead noted above. Interest and other income for the three months ended September 30, 1995 increased by $663,000 or 47.7% over the comparable prior year period as a result of higher interest rates on the Company's marketable securities and the income on the net proceeds received from the sale of the Institutional Pharmacy Business. Interest expense for the three months ended September 30, 1995 decreased by $1,469,000 from the comparable prior year period as a result of the conversion and redemption of the Company's 7% Convertible Subordinated Debentures into common stock of the Company in February 1995. The effective tax rate for the three months ended September 30, 1995 did not vary materially from the comparable prior year period. -9- Capital Resources and Liquidity: - ------------------------------- Cash, cash equivalents and marketable securities increased by $2,432,000 to $154,785,000 during the three months ended September 30, 1995 principally due to the income earned from operations. The Company believes that its cash flow from operations and the income earned on its investments are sufficient to meet the anticipated working capital requirements of its business. The Company continues to pursue an acquisition program pursuant to which it seeks to effect one or more acquisitions or other similar business combinations with businesses it believes have significant growth potential. For a further description of the Company's Acquisition Program, see "Item 1. Business - Acquisition Program" in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995. -10- SYNETIC INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibit No. Description 27 Financial Data Schedule (b) No reports on Form 8-K were filed by the Company during the quarter for which this report was filed. 11 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. SYNETIC, INC. /s/ VICTOR L. MARRERO ----------------------------------- Victor L. Marrero Vice President - Finance and Chief Financial Officer Dated: November 14, 1995 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SYNETIC, INC.'S QUARTERLY REPORT FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-1996 JUL-01-1995 SEP-30-1995 10,952 143,833 7,049 675 5,299 124,172 31,181 14,106 189,803 15,178 0 219 0 0 169,426 189,803 11,036 11,036 6,340 6,340 0 0 9 3,127 1,203 1,924 0 0 0 1,924 .11 0
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