-----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, TjQwsYDfB3xrwP+pb1PR5JxOt6zCJssoSLHJFiSKdFnKHov7HWyExFh9CWke1EXu JKNesHtxnB69jtfwY0XFfw== 0000950130-96-004378.txt : 19961115 0000950130-96-004378.hdr.sgml : 19961115 ACCESSION NUMBER: 0000950130-96-004378 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNETIC INC CENTRAL INDEX KEY: 0000850436 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] 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: 96661625 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 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, 1996 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 Drive 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 8, 1996 - --------------------- ------------------------------- Common Stock 16,864,351 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, 1996 and June 30, 1996 3 Consolidated Statements of Income -- Three Months Ended September 30, 1996 and 1995 5 Consolidated Statements of Cash Flows -- Three Months Ended September 30, 1996 and 1995 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 10 ------------------------------------------ This report contains certain forward-looking statements and information relating to Synetic, Inc. (the "Company") that are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company management. When used in this report, the words "anticipate", "believe", "estimate", "expect" and similar expressions, as they relate to the Company or the Company's management, are intended to indentify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. The Company does not intend to update these forward-looking statements. SYNETIC INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) ASSETS
September 30, June 30, 1996 1996 -------------- --------- (unaudited) CURRENT ASSETS: Cash and cash equivalents............. $ 25,437 $ 22,210 Marketable securities................. 140,598 140,268 Accounts receivable, net of allowances for doubtful accounts and sales returns of $700 and $671 at September 30, 1996 and June 30, 1996, respectively.................. 7,030 7,299 Inventories........................... 5,909 5,253 Other current assets.................. 5,386 4,821 -------- -------- Total current assets................ 184,360 179,851 -------- -------- PROPERTY, PLANT AND EQUIPMENT: Land and improvements................. 831 823 Building and improvements............. 9,296 8,992 Machinery and equipment............... 19,919 19,295 Furniture and fixtures................ 2,977 2,856 Construction in progress.............. 1,717 1,306 -------- -------- 34,740 33,272 Less: Accumulated depreciation....... (16,907) (16,014) -------- -------- Property, plant and equipment, net.. 17,833 17,258 -------- -------- OTHER ASSETS: Other................................. 2,030 2,483 -------- -------- Total other assets 2,030 2,483 -------- -------- $204,223 $199,592 ======== ========
The accompanying notes are an integral part of these consolidated balance sheets. -3- SYNETIC INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, June 30, 1996 1996 -------------- --------- (unaudited) CURRENT LIABILITIES: Accounts payable........................... $ 1,310 $ 1,303 Accrued liabilities........................ 7,597 7,014 Income taxes payable....................... 4,960 5,206 -------- -------- Total current liabilities................. 13,867 13,523 -------- -------- 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; 16,829,793 and 16,738,827 shares issued at September 30, 1996 and June 30, 1996, respectively.............................. 221 220 Paid-in capital............................ 161,836 158,227 Treasury stock, at cost; 5,268,463 shares at September 30, 1996..................... (38,287) (36,575) Retained earnings.......................... 61,606 59,217 -------- -------- Total stockholders' equity................ 185,376 181,089 -------- -------- $204,223 $199,592 ======== ========
The accompanying notes are an integral part of these consolidated balance sheets. -4- SYNETIC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, 1996 and 1995 (in thousands, except per share data) (unaudited)
September 30, 1996 1995 -------------- -------- Net Sales.................................. $11,185 $11,036 Cost of sales............................. 6,126 6,340 Selling, general and administrative....... 3,751 3,612 Interest and other income................. (2,219) (2,043) ------- ------- 7,658 7,909 ------- ------- Income before provision for income taxes. 3,527 3,127 Provision for income taxes................. 1,138 1,203 ------- ------- Net income................................. $ 2,389 $ 1,924 ======= ======= Net income per share....................... $.13 $.11 ======= ======= Weighted average shares outstanding........ 18,257 17,830 ======= =======
The accompanying notes are an integral part of these consolidated statements. -5- SYNETIC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended September 30, 1996 and 1995 (in thousands) (unaudited)
1996 1995 ---------- ---------- Cash flows from operating activities: Net income..................................... $ 2,389 $ 1,924 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.............. 921 640 Changes in operating assets and liabilities: Accounts receivable, net................... 269 291 Inventories................................ (656) 147 Other assets............................... (140) 424 Accounts payable........................... 7 407 Accrued liabilities........................ 583 (1,137) Income taxes payable....................... 2,228 (43) --------- --------- Net cash provided by (used for) operating activities................... 5,601 2,653 --------- --------- Cash flows from investing activities: Sales of marketable securities................. 162,021 205,021 Purchase of marketable securities.............. (162,351) (204,000) Capital expenditures (1,468) (699) --------- --------- Net cash provided by (used for) investing activities................... (1,798) 322 --------- --------- Cash flows from financing activities: Payments for treasury stock.................... (1,712) - Proceeds from exercise of stock options and 401(k) purchases............................. 1,136 694 Payments of long-term debt..................... - (216) --------- --------- Net cash provided by (used for) financing activities................... (576) 478 --------- --------- Net increase (decrease) in cash and cash equivalents................................... 3,227 3,453 Cash and cash equivalents, beginning of period.. 22,210 7,499 --------- --------- Cash and cash equivalents, end of period........ $ 25,437 $ 10,952 ========= =========
The accompanying notes are an integral part of these consolidated 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, 1996 (unaudited) and June 30, 1996 (audited), and the results of their operations and their cash flows for the three months ended September 30, 1996 and 1995 (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, 1996 (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, 1996 1996 ----------------------- -------- (unaudited) Raw materials and supplies.. $2,695 $2,468 Work-in-process............. 524 548 Finished goods.............. 2,690 2,237 ------ ------ $5,909 $5,253 ====== ====== (3) Marketable securities: At September 30, 1996, marketable securities consisted primarily of U.S. Treasury Notes, Agency Notes and Money Market Preferred Stock. (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. -7- (5) Supplemental cash flow information (in thousands): For the quarters ended September 30, 1996 and 1995, the Company recognized tax benefits related to the exercise of stock options as increases to additional paid-in capital and decreases to income taxes payable of $2,473,000 and $198,000, respectively. September 30, Cash paid during the periods for: 1996 1995 ---- ---- Interest...................... $ - $ 6 Income taxes.................. 940 1,225 -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, 1996 increased by $149,000, or 1.4% over the comparable prior year period primarily due to sales increases in medical OEM porous parts in the healthcare sector partially offset by declines in the consumer and industrial sectors. Cost of sales for the three months ended September 30, 1996 decreased by $214,000, or 3.4% over the comparable prior year period due to increased sales of higher margin products and the reduction of certain fixed manufacturing costs. As a percent of net sales, cost of sales for the three months ended September 30, 1996 decreased to 54.8% from 57.4% in the comparable prior year period due to the decrease in costs noted above. Selling, general and administrative expenses for the quarter ended September 30, 1996 increased by $139,000 or 3.9% over the comparable prior year period due primarily to an increase in expenses associated with the increase in sales volume noted above and an increase in corporate overhead expenses. As a percent of net sales, selling, general and administrative expenses for the three months ended September 30, 1996 did not vary materially from the comparable prior year. Interest and other income for the three months ended September 30, 1996 increased by $176,000 or 8.6% over the comparable prior year period due to the increase in funds invested resulting from increased cash flows from operations. The effective tax rate for the three months ended September 30, 1996 decreased to 32.3% from 38.5% in the comparable prior year period as a result of an increase in income in the current year eligible for dividends received reduction. Capital Resources and Liquidity: - ------------------------------- Cash, cash equivalents and marketable securities increased by $3,557,000 to $166,035,000 during the three months ended September 30, 1996 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. Financing for such acquisitions may come from several other sources, including, without limitation, (a) its cash, cash equivalents and marketable securities and (b) proceeds from the incurrence of additional indebtedness or the issuance of common stock, preferred stock, convertible debt or other securities. For a further description of the Company's Acquisition Program, see "Item 1. Business - - Acquisition Program" in the 1996 10-K. -9- 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. -10- 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 13, 1996 -11- EXHIBIT INDEX Number Description ------ ----------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM Synetic, Inc.'s 9/30/96 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1996 25,437 140,598 7,730 700 5,909 184,360 34,740 16,907 204,223 13,867 0 0 0 221 185,155 204,223 11,185 11,185 6,126 6,126 0 0 0 3,527 1,138 2,389 0 0 0 2,389 .13 0
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