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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, 1995
[ ] 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.
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(Exact name of registrant as specified in its charter)
Delaware 58-1437178
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18800 Von Karman Avenue, Irvine, California 92715-1517
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 440-2000
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 31, 1995
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Common Stock, $.01 Par Value 8,298,175
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
HYCOR BIOMEDICAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 1995 1994
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CURRENT ASSETS: (unaudited)
Cash and cash equivalents 4,000,081 1,404,763
Investments 2,117,097 2,308,269
Accounts Receivable, net of allowance for
doubtful accounts of $144,550 and $170,841 4,350,380 4,263,335
Income Tax Receivable 0 90,170
Inventories (Note 2) 6,726,162 6,725,565
Deposits and other prepaids 559,042 750,418
Deferred income tax benefit 690,962 610,000
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Total current assets 18,443,724 16,152,520
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PROPERTY AND EQUIPMENT, at cost 12,180,190 12,058,248
Less accumulated depreciation (6,498,601) (5,639,674)
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5,681,589 6,418,574
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GOODWILL AND OTHER INTANGIBLES, net of
amortization of $1,052,878 and $741,543 5,507,940 5,459,039
DEFERRED INCOME TAX BENEFIT 620,000 620,000
OTHER ASSETS, net 393,824 350,166
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Total assets 30,647,077 29,000,299
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 540,205 1,104,520
Accrued income tax payable 889,868 0
Accrued liabilities 1,473,071 1,726,461
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Total current liabilites 2,903,144 2,830,981
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STOCKHOLDERS' EQUITY:
Common stock 82,982 82,269
Paid-in capital 17,173,213 16,971,456
Retained earnings 10,192,613 9,084,739
Foreign currency translation adjustments 321,296 144,138
Unrealized losses on investments, net (26,171) (113,284)
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Total stockholders' equity 27,743,933 26,169,318
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Total liabilities and
stockholders' equity 30,647,077 29,000,299
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HYCOR BIOMEDICAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1995 1994 1995 1994
--------- --------- ---------- ----------
NET SALES 6,764,393 7,058,068 13,257,327 13,611,179
COST OF SALES 2,929,991 3,212,171 5,825,004 5,978,288
--------- --------- --------- ---------
Gross profit 3,834,402 3,845,897 7,432,323 7,632,891
--------- --------- --------- ---------
OPERATING EXPENSES
Selling, general and
administrative 2,335,835 2,257,232 4,670,108 4,411,966
Research and development 527,484 465,277 1,162,045 962,100
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2,863,319 2,722,509 5,832,153 5,374,066
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OPERATING INCOME 971,083 1,123,388 1,600,170 2,258,825
INTEREST INCOME, net 54,647 98,943 115,374 223,553
FOREIGN EXCHANGE G/(L) (78,290) - 153,037 -
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INCOME BEFORE TAXES 947,440 1,222,331 1,868,581 2,482,378
PROVISION FOR INCOME TAXES 375,358 408,618 746,976 892,118
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NET INCOME 572,082 813,713 1,121,605 1,590,260
========= ========= ========= =========
NET INCOME PER SHARE $.07 $.10 $.14 $.19
==== ==== ==== ====
AVE. COMMON SHARES OUTSTANDING 8,345,901 8,452,532 8,289,609 8,399,912
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HYCOR BIOMEDICAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 30,
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 1,121,603 1,590,260
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,185,576 779,009
Deferred income tax benefit 80,962 181,811
Gain on foreign currency transactions 217,517 -
Change in assets and liabilities, net of effects of
foreign currency adjustments and noncash transactions:
Accounts receivables (33,654) 435,921
Inventories 26,368 (841,552)
Prepaid expenses and other assets 158,629 212,647
Accounts payable (569,650) (114,878)
Accrued liabilities (250,007) (289,862)
Accrued payroll expenses (59,821) 62,782
Accrued income taxes 867,619 141,491
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Total adjustments 1,623,539 567,369
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Net cash provided by (used in) operating activities 2,745,142 2,157,629
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net sales of marketable securities 325,275 1,965,703
Business acquisition net of cash acquired 0 (1,989,488)
Purchases of property, plant and equipment (469,112) (605,801)
Purchases of tangible and intangible assets, net (32,273) (152,704)
Net book value of property and equipment sold 4,079 24,045
Proceeds from collection of notes receivable 13,606 11,153
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Net cash provided by (used in) investing activities (158,425) (747,092)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 202,470 207,799
Purchases of common stock 0 (1,173,475)
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Net cash provided by (used in) financing activities 202,470 (965,676)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH (193,869) 276,756
INCREASE IN CASH AND CASH EQUIVALENTS 2,595,318 721,617
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,404,763 683,573
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CASH AND CASH EQUIVALENTS, END OF PERIOD 4,000,081 1,405,190
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year - interest - -
- income taxes 1,171,137 92,400
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HYCOR BIOMEDICAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
1. BASIS OF PRESENTATION
In the opinion of the Company, the accompanying
financial statements contain adjustments necessary to present fairly
the financial position as of June 30, 1995 and December 31, 1994, the
results of operations and the cash flows for the three and six-month
periods ended June 30, 1995 and 1994. The results of operations for
any interim period are not necessarily indicative of results for the
full year.
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 financial
information contained in this report reflects all adjustments which,
in the opinion of management, are necessary for a fair statement of
the results of the interim periods. All adjustments are of a normal
recurring nature except for those costs described in the following
Item 2. "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
The consolidated financial statements include the
accounts of Hycor Biomedical Inc. and its wholly-owned subsidiaries.
All material intercompany amounts and transactions have been
eliminated.
Reference is made to the audited financial statements
and related notes included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994.
Net income per share is based upon the weighted average
number of shares outstanding during the periods plus common stock
equivalents relating to warrants and options. The number of common
stock equivalents relating to options and warrants is determined using
the treasury stock method. Common stock equivalents are not included
when their effect is antidilutive. Fully diluted net income per share
approximates primary net income per share in each period.
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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, 1995 and December 31,
1994 consist of:
6/30/95 12/31/94
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Raw materials $1,756,401 $2,122,387
Work in process 2,325,195 2,836,388
Finished goods 3,144,762 2,536,877
Allowance for short-dated inventory (500,196) (770,087)
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$6,726,162 $6,725,565
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3. FOREIGN CURRENCY
Realized gains or losses from foreign currency
transactions are included in operations as incurred and relate to
intercompany balances amounting to approximately $1,671,000 between
Hycor and its German subsidiary. The Company has hedged the majority
of this foreign currency exchange rate position.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FINANCIAL CONDITION
The Company increased its working capital $2,219,000 as
of June 30, 1995, compared to December 31, 1994. This was primarily as a
result of continued profitability. The Company expects to be able to fund
operations from current working capital and profits generated from operations.
Cash and cash equivalents, marketable securities and
receivables fluctuate throughout the year based upon the sales of products
through distributors and the timing of the distributors related payments to the
Company. These fluctuations do not have a significant seasonal component.
Income taxes have gone from a net receivable of $90,170
at December 31, 1994 to a net payable of $889,868 at June 30, 1995. This was
due primarily to the recovery of foreign taxes paid in association with the
January 1994 acquisition of Melja Diagnostik GmbH.
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The Company's principal capital commitments are for
lease payments under non-cancelable operating leases and leasehold
improvements. Working capital and operating profits are anticipated to be
sufficient to satisfy these commitments.
The Company is continuing to evaluate for acquisition
additional product lines and companies in the medical diagnostics field. The
Company could use sources other than cash from operations, such as issuance of
debt or equity securities, to finance any such acquisition. If such an
acquisition were completed, the Company's operating results and financial
condition could change significantly in future periods.
RESULTS OF OPERATIONS
During the three month and six-month periods ended June
30, 1995, sales decreased 4% and 3%, respectively, compared to the same periods
last year, primarily due to a general softness in the health care industry.
Gross profit as a percentage of product sales increased for the quarter from
approximately 55% to 57% and remained at 56% for the same period year-to-date,
primarily due to volume efficiencies at the German facility and the addition of
MSI.
Selling, general and administrative expenses for the
three and six-month periods ended June 30, 1995 have increased approximately 3%
and 6%, respectively, over the prior year period due to the additional expenses
from MSI and the marketing and sales support on the HY.TEC launch.
For the three and six-months periods ended June 30,
1995, research and development costs increased approximately 13% and 21%,
respectively, primarily due to continuing development on the HY.TEC product
line.
On July 27, 1995, the Company announced plans for a major
restructuring designed to focus operations on high potential clinical
immunology segments. As part of this restructuring, Hycor anticipates
recording a one-time, extraordinary, pre-tax charge in the third quarter of
1995 ranging from $1.0 to $2.0 million.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On June 1, 1995, 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
1996 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
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Richard D. Hamill 6,096,034 153,268
Dick P. Allen 6,214,576 34,726
Samual D.Anderson 6,215,356 33,946
David S. Gordon 6,216,314 32,988
Reginald P. Jones 6,209,664 39,638
James R. Phelps 6,215,472 33,830
Thomas H. Witmer 6,216,356 32,946
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: 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, 1995 By: ARMANDO CORREA
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Armando Correa, Director of Finance
(Mr. Correa is the Principal
Accounting Officer and has been duly
authorized to sign on behalf of the
registrant.)
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