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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 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
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(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
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 par value
(Title of class)
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 [ ]
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of February 21, 2001, the aggregate market value of the voting stock
held by non-affiliates of the registrant (based on the closing sale price of
such stock on such date) was approximately $51,296,497.
The number of shares of common stock of the registrant outstanding at
February 21, 2001 was 7,890,847.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's definitive Proxy Statement to be filed
not later than 120 days after December 31, 2000, in connection with the Annual
Meeting of Stockholders to be held in 2001 are incorporated by reference into
Part III in this report on Form 10-K.
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PART I
ITEM 1. BUSINESS
GENERAL
Hycor Biomedical Inc. ("Hycor" or the "Company") was incorporated as a
Delaware corporation on April 7, 1981. Hycor is engaged in the research,
development, manufacturing, and marketing of medical diagnostic products
throughout the United States and many foreign countries.
The Company operates two wholly owned subsidiaries, Hycor Biomedical
GmbH ("Hycor GmbH"), located in Kassel, Germany and Hycor Biomedical, LTD
("Hycor Ltd.), formally known as Cogent Diagnostics Limited, located in
Edinburgh, Scotland. Hycor GmbH primarily manufactures and sells allergy
diagnostic products in Europe. Hycor Ltd. develops, manufactures and markets a
broad line of test kits for the diagnosis of autoimmune disease.
PRODUCTS
The Company engages in business activity in only one operating segment
that entails the development, manufacture, and sale of medical and diagnostic
products with a focus on allergy and autoimmune testing and urinalysis products.
While the Company offers a wide range of items for sale, many are manufactured
at common production facilities.
As part of a strategic redirection taken in 1995, the Company focused a
great deal of effort on the development of its HY-TEC(TM) automated immunoassay
system. The system includes an instrument, software, and test reagents. The
"reagent rental" business, common to the diagnostic market, requires the
placement of an instrument in laboratories of customers that pay for the system
over an agreed contract period by the purchase of test reagents. The Company's
HY-TEC reagent rental program is similar in that instruments are placed in use
with direct customers and paid for over an agreed contract period by the
purchase of test reagents, but also includes the sale of instruments to
distributors. The instruments that are sold to distributors are sold with a
minimal gross profit to assist them with their instrument placements. The HY-TEC
288 instrument was launched in Europe in October 1998, in the U.S. in February
1999 and is expected to increase the Company's capital requirements in the
future as the HY-TEC business continues to grow.
The KOVA(TM) Microscopic Urinalysis System is the Company's largest
product line accounting for approximately 54%, 55%, and 51% of revenues for
2000, 1999, and 1998, respectively. The KOVA System provides laboratories with
the capability to perform uniform and reliable microscopic analyses of urine
specimens. It is composed of plastic collection containers, tubes and pipettes,
patented microscopic slides, and human urine-based control materials.
The Company's clinical immunology product lines consist of allergy and
autoimmune diagnostic products.
The Company's allergy diagnostic product line, which accounted for
approximately 31%, 30%, and 31% of revenues for 2000, 1999, and 1998,
respectively, includes tests for general screening for the diagnosis of allergy
as well as a complete line of RIA ("radioimmunoassay") and
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EIA ("enzymatic immunoassays") procedures to test for specific allergies to more
than 900 different allergens such as grasses, weeds, trees, epidermals (i.e.
animal hair), dust, dust mites, molds, and foods. Unlike the traditional prick
puncture and intradermal testing methods of diagnosing allergies, the Company's
products permit a physician to diagnose allergies by testing a sample of the
patient's blood for the presence of the specific IgE or IgG antibody, which
reacts with the corresponding allergen. This method has many advantages over the
traditional methods of allergy diagnosis, not the least of which is patient
comfort. Additionally, the Company markets the HY-TEC 480 and HY-TEC 288
automated diagnostic systems. The HY-TEC instruments provide clinical
laboratories with significant productivity capabilities.
The Company's Autoimmune diagnostic product line, which accounted for
approximately 9%, 9%, and 8% of revenues in 2000, 1999, and 1998, respectively,
includes tests utilized for the diagnosing and monitoring of autoimmune
disorders such as rheumatoid arthritis and systemic lupus erythematosus among
others. Autoimmune diseases may be systemic or organ-specific and the need for
this type of diagnostic testing is expected to increase as the population ages
and primary care physicians are educated about autoimmune diseases. The
Company's tests are based on enzyme immunoassay technology in a microplate
format, which can be automated in the clinical laboratory, unlike traditional
methods like immunofluorescence, which requires a dedicated and highly trained
technologist to read slides manually through a microscope one at a time.
SALES AND MARKETING
Primarily clinical laboratories and certain specialty physicians use
the Company's products. In the United States, the Company's product lines are
generally sold through both independent and clinical laboratory distributors.
The majority of sales in the United States are to two major U.S. distributors,
Allegiance Healthcare Corporation and Fisher Scientific. The allergy product
line is sold directly to the end user through the Company's direct sales force.
In foreign countries the Company's products are sold primarily through
a network of independent distributors. The Company sells its allergy and
autoimmune products to the German and U.K. market through a direct sales force.
Export sales (all to unaffiliated customers) accounted for
approximately $1,924,000, $2,016,000, and $2,363,000 in 2000, 1999, and 1998,
respectively, which represents approximately 11%, 11%, and 13% of total
consolidated sales for each of the respective years. The primary geographical
area was Europe, which, including sales by the Company and its foreign
subsidiaries, accounted for sales of $5,295,000, $5,986,000, and $6,328,000 in
2000, 1999, and 1998, respectively. (See Note 10 to the Consolidated Financial
Statements.)
The Company's two largest distributors, Allegiance Healthcare
Corporation and Fisher Scientific, accounted for 20% and 13% of net product
sales in 2000; 21% and 14% of net product sales in 1999; and 19% and 12% in
1998. A loss of one or both of these distributors could significantly affect
sales. However, there are other national, regional, and foreign clinical
laboratory products distributors, as well as the Company's sales force that
could market the Company's products.
The Company did not have a significant backlog of orders at December
31, 2000 and December 31, 1999. Because of the short time between order receipt
and expected delivery, the
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Company, consistent with industry practice, carries a large inventory to meet
the expected flow of orders. Backlog is not a significant factor in the
Company's business.
The Company's business is not considered seasonal in nature but is
slightly affected in the third quarter by the general slowdown in Europe during
the traditional vacation months.
RAW MATERIALS
Although a substantial amount of the Company's total purchases for raw
materials and finished products were from a limited number of suppliers during
the last fiscal year, a number of alternative sources are available to the
Company should they be required.
RESEARCH AND DEVELOPMENT
The Company maintains an ongoing research and development effort. The
purpose of this effort is to evaluate new technologies, improve the Company's
current product lines, and develop new products. Current projects in progress
are focused on programs to support and enhance the HY-TEC diagnostic system and
develop new urinalysis, allergy, and autoimmune diagnostic products.
Total research and development expenditures were $1,823,000,
$2,280,000, and $2,392,000 for 2000, 1999, and 1998, respectively.
GOVERNMENT REGULATIONS
The Company is indirectly affected by government regulations directed
towards containing the cost of medical services and limiting the amount of
reimbursement to service providers. These types of regulations, which are
applicable to both domestic and international markets, will tend to limit growth
rates in the Company's target markets. The Company's products, including the
HY-TEC automated diagnostic system, are designed to provide a cost effective
solution to service providers, thereby aiding in the cost containment efforts.
However, the Company cannot predict the long-term affect on revenue growth
resulting from these regulations.
The Company is registered as a manufacturer of medical devices and a
licensed biological manufacturer with the Food and Drug Administration ("FDA").
To comply with FDA requirements, the Company must manufacture its products in
conformance with the FDA's medical device Good Manufacturing Practice
regulations. The Company's existing products are also subject to certain
pre-market notification requirements of the FDA.
The receipt, use, and disposal of radioactive materials is subject to
licensing requirements of the Nuclear Regulatory Commission ("NRC"). The Company
holds a radioactive materials license from the NRC for its radioactive labeling
activities and its facilities are inspected periodically by the NRC.
The Company would be adversely affected if it were unable to maintain
its governmental licenses or continue to comply with applicable federal and
state regulations, but the Company does not expect this to occur. The Company
cannot predict whether future changes in government regulations
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might substantially increase compliance costs, adversely affect the time
required to develop and introduce products, or limit or preclude the sale of its
new products.
In September 1992, regulations implementing the Clinical Laboratories
Improvement Amendments of 1988 (CLIA), providing for certification procedures
and requirements for laboratories, became fully effective. The impact of CLIA
has reduced the domestic sales of the Company's allergy diagnostic products to
physician office laboratories, as the testing has shifted toward the larger
clinical laboratory. The HY-TEC automated diagnostic system was designed to meet
the needs of these larger laboratories.
Compliance with federal, state, and local regulations relating to
environmental matters is not expected to have a material effect upon capital
expenditures, earnings, or the competitive position of the Company.
COMPETITION
The Company's product lines have several different competitors. The
KOVA Microscopic Urinalysis System has significant competition from at least two
national diagnostic product manufacturing and distribution companies that market
supplies that perform similar functions. Management believes that the Company is
the leading supplier of standardized microscopic urinalysis systems.
Pharmacia and Upjohn, Inc. and Diagnostic Product Corporation have
products that compete with the Company's allergy diagnostic products.
A substantial number of the Company's competitors are larger and have
greater resources than the Company. The Company competes on the basis of price,
promotion, quality of products, design of product, strength of the Company's
relationship with dealers, and other methods relevant to the business.
PATENTS
The Company has maintained an aggressive patent policy and currently
holds a number of domestic and foreign patents. While these patents offer some
protection to its product lines and related technology, management believes that
continued improvements to the product lines are more important for the
protection of its market position. The most recent patent was issued in April
1999.
EMPLOYEES
As of February 16, 2001, the Company had approximately 154 employees.
None of the employees are covered by collective bargaining agreements and
management believes that the Company's relations with its employees are
satisfactory.
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ITEM 2. PROPERTIES
At December 31, 2000, the Company had three separate facilities.
1) The Company's corporate headquarters, principal
administrative, and manufacturing facility is located in a
leased 76,000 square foot two-story freestanding facility at
7272 Chapman Avenue, Garden Grove, California. The lease has a
ten-year term ending December 31, 2007. The Company has the
option to extend the lease term for an additional five-year
period.
2) The Company leases a freestanding building located at
Otto-Hahn Stra(beta)e 16, 34123 Kassel, Germany. The lease has
a ten-year term ending March 31, 2005. The Company has the
option to extend the term of the lease for an additional five
years. The Company uses this facility for the laboratory,
manufacturing, warehousing, distribution, and administrative
functions of its wholly owned subsidiary, Hycor Biomedical
GmbH.
3) The Company leases the 7000 square foot ground floor of a
two-story building located at Pentlands Science Park, Bush
Loan Penicuik, EH26 OPL Scotland. The lease has a five year
term ending September 30, 2001. The Company has the option to
extend the term of the lease for an additional five years. The
Company uses this facility for the laboratory, manufacturing,
warehousing, distribution, and administrative functions of its
wholly owned subsidiary, Hycor Ltd.
In management's opinion, in general, its plant and equipment are
adequately maintained, in good operating condition and adequate for the
Company's present needs. The Company upgrades and modernizes its facilities and
equipment and expands its facilities as necessary to meet customer requirements.
ITEM 3. LEGAL PROCEEDINGS
To the best of management's knowledge, there are no material pending
legal proceedings other than ordinary routine litigation incidental to the
business to which the Company is a party or to which the Company's property is
subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended December 31, 2000,
there were no matters submitted to a vote of security holders.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
MARKET PRICE OF COMMON STOCK
Hycor Biomedical Inc.'s common stock trades on The Nasdaq Stock Market
under the symbol HYBD. The following table sets forth the range of high and low
trading prices for the common stock for the periods indicated as reported. The
prices do not include retail markups, markdowns, or commissions.
Year Ended High Low
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December 31, 1999
1st Quarter 1-1/2 1
2nd Quarter 2 29/32
3rd Quarter 1-11/16 1-1/16
4th Quarter 3-1/32 1-5/32
December 31, 2000
1st Quarter 9 1-11/16
2nd Quarter 7-7/8 4-3/16
3rd Quarter 8-9/16 6
4th Quarter 7-1/4 4-11/16
There were 907 shareholders of record as of February 21, 2001. No dividends have
been paid to stockholders since the Company was founded and the Company has no
current intentions of paying cash dividends in the foreseeable future. The
Company's new bank line of credit also precludes the payment of dividends.
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ITEM 6. SELECTED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
2000 1999 1998(a) 1997(b) 1996
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OPERATING RESULTS
Net sales $ 17,072 $ 18,426 $ 18,410 $ 19,289 $ 20,084
Net income (loss) $ 981 $ 249 $ (6,600) $ (4,254) $ 17
Basic earnings per share $ 0.13 $ 0.03 $ (0.91) $ (0.60) $ 0.00
Diluted earnings per share $ 0.12 $ 0.03 $ (0.91) $ (0.60) $ 0.00
FINANCIAL POSITION
Working capital $ 7,232 $ 5,679 $ 5,011 $ 8,433 $ 11,458
Net property and equipment $ 3,082 $ 3,560 $ 4,239 $ 5,243 $ 4,908
Total assets $ 14,868 $ 15,039 $ 15,983 $ 22,301 $ 24,278
Long-term debt $ 29 $ 87 $ 678 $ 2,240 $ --
Total Stockholder's equity $ 11,469 $ 10,542 $ 10,677 $ 16,814 $ 21,918
a) 1998 results include the $2,248,000 write-off of goodwill related to
the acquisition of Medical Specialties International Inc. In addition,
the Company recognized an increase in the valuation allowance against
deferred taxes of $3,189,000. See Management's Discussion and Analysis
of Financial Condition and Results of Operations and Notes 7 and 11 to
the Consolidated Financial Statements.
b) 1997 results included the acquired in-process research and development
write-off of $3,300,000 related to the acquisition of Hycor Ltd.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
This Section and this entire Annual Report contain forward-looking
statements and includes 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; and changes in
government laws and regulations, including taxes.
In addition, during the year ended December 31, 2000 and continuing
into the first quarter of 2001, businesses in the state of California
experienced problems with the availability and cost of electrical power. While
the Company presently believes that it will be able to maintain its planned
operating and manufacturing schedules, unexpected power supply constraints or
price increases could adversely affect future operating results.
RESULTS OF OPERATIONS
2000 COMPARED TO 1999 Overall, 2000 sales decreased $1,354,000 or 7.3% when
compared to 1999. Sales of urinalysis and clinical immunology product lines
decreased $1,241,000 or 7.2% compared to 1999, while sales of other non-core
products decreased $113,000 or 9.0% over the same period. Sales in the year 2000
were heavily affected by the strengthening dollar resulting in a negative
foreign exchange impact to reported sales of approximately $550,000 or 3.0%
compared to 1999. In the United States, sales to distributors decreased in 2000
compared to 1999 approximately $700,000 as they adjusted inventory levels.
Additionally, 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 sales increased from 52.4% in 1999 to
54.8% in 2000 due primarily to changes in the product mix and improvements in
manufacturing efficiencies.
Selling, general, and administration expenses decreased $854,000 or
11.6% in 2000 over 1999. The decrease is primarily the result of cost
containment efforts initiated in 1999 on the reorganization of the selling,
general and administration support services in the Company's European
subsidiaries, which resulted in a savings of approximately $366,000. In
addition, the stronger U.S. dollar generated a positive foreign exchange impact
of approximately $215,000 to reported expenses compared to 1999.
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Research and development costs decreased $457,000 or 20% (12% of sales
in 1999 versus 11% in 2000) primarily due to the completion of several projects
related to the HY-TEC 288 instrument system.
Interest income increased $19,000 or 12% over the prior year due to
increased average monthly balances in cash and investments during the year.
Interest expense decreased $127,000 or 57% over the prior year due primarily to
the payment of the principle balance in July 2000 on the outstanding notes
issued in 1997 in relation to the acquisition of Hycor, Ltd.
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 twelve months ended December 31, 2000 reflects
the provision for federal, state, and foreign liabilities that are not offset by
operating losses. (See Note 7 to the Consolidated Financial Statements.)
1999 COMPARED TO 1998 Overall, 1999 sales remained flat when compared to 1998.
Sales of urinalysis and clinical immunology product lines increased $696,000 or
4.2% compared to 1998, while sales of other non-core products decreased $680,000
or 35% over the same period. Additionally, 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 sales increased from 50.3% in 1998 to
52.4% in 1999 due primarily to changes in the product mix.
Selling, general, and administration expenses decreased $1,214,000 in
1999 over 1998. Included in the 1998 expenses are the costs of the negotiated
separation of the Company's prior president and chief executive officer of over
$500,000. The remaining decrease is primarily as a result of cost containment
efforts that included the consolidation of the Irvine operations into the
Company's Garden Grove facility in July of last year, resulting in savings of
$168,000, and headcount and other cost containment efforts reduced expenses an
additional $546,000.
Research and development costs decreased $112,000 (13% of sales in 1998
versus 12% in 1999) primarily due to the completion of several projects related
to the HY-TEC 288 instrument system as it approached its commercial launch.
Interest income increased $34,000 over the prior year due primarily to
interest received from the IRS resulting from the tax audit for the periods 1993
and 1994. Interest expense increased $52,000 over the prior year due primarily
to interest associated with the IRS audit for the same periods ($103,000),
partially offset by reductions in interest expense related to the debt incurred
for the purchase of Hycor Ltd. ($55,000).
The provision for income taxes decreased substantially from $2,618,000
to $10,000 due to a non-cash charge of $3,189,000 in 1998 related to the
increase of the deferred tax valuation allowance thereby eliminating the
carrying value of deferred tax assets from the balance sheet. (See Note 7 to the
Consolidated Financial Statements.)
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FINANCIAL CONDITION
The Company's working capital increased $1,553,000 from December 31,
1999 to December 31, 2000 primarily as the result of profitable operations. Also
contributing to the increase was an excess of depreciation and amortization over
capital expenditures of approximately ($522,000).
The Company's principal capital commitments are for lease payments
under non-cancelable operating leases. Additionally, the HY-TEC business
requires the purchase of instruments, which 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. The Company has entered into a long-term product manufacturing
and sales agreement ("the Supply Agreement") with an equipment manufacturer
located in Europe. The Supply Agreement provides for the European manufacturer
to supply and the Company to purchase certain minimum levels of HY-TEC
instruments. At December 31, 2000, the approximate future minimum payments under
the Supply Agreement are $213,000, $213,000 and $280,000 for the years 2001,
2002, and 2003, respectively. Working capital, operating results, and the
available line of credit are expected to be sufficient to satisfy these
commitments and the needs of operations for the foreseeable future.
The Company has a line of credit that provides for borrowings of up to
$2,000,000 and expires in July 31, 2001. The loan is collateralized by the
Company's accounts receivable, inventories, and property, plant and equipment.
At December 31, 2000, $1,000,000 was outstanding. Advances under the line bear
interest at the prime rate or at LIBOR plus 2%, payable monthly, with the
principal due at maturity. At December 31, 2000, the Company's interest rate was
8.8%.
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 ("Other Ratio"). At December 31,
2000, the Company was in compliance with such covenants. The Company believes it
will be able to meet the requirements through the remainder of the credit term.
RECENTLY ISSUED ACCOUNTING STANDARDS
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting
for Derivative Instruments and Hedging Activities, is effective for all fiscal
years beginning after June 15, 2000. SFAS 133, as amended, establishes
accounting and reporting standards for derivative instruments embedded in other
contracts and for hedging activities. Under SFAS 133, certain contracts that
were not formerly considered derivatives may now meet the definition of a
derivative. The Company adopted SFAS 133 effective January 1, 2001. The adoption
of SFAS 133 will not have a significant impact on the financial position,
results of operations, or cash flows of the Company.
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, was required to be implemented
during the Company's fourth quarter of fiscal 2000. The adoption of SAB 101 did
not have a material impact on the Company's consolidated results of operations
or financial condition.
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In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"),
Accounting for Certain Transactions involving Stock Compensation. FIN 44 is an
interpretation of APB Opinion No. 25, Accounting for Stock Issued to Employees.
Among other matters, FIN 44 clarifies the application of APB Opinion No. 25
regarding the definition of employee for purposes of applying APB Opinion No.
25, the criteria for determining whether a plan qualifies as non compensatory
and the accounting consequences of modifications to the terms of a previously
issued stock options or similar awards. The Company adopted the provisions of
FIN 44 in the third quarter of fiscal 2000. The adoption of FIN 44 did not have
a material impact on the Company's consolidated results of operations or
financial condition.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to a variety of risks, including foreign
currency fluctuations and changes in interest rates affecting its debt.
FOREIGN CURRENCY
Approximately 26% of the Company's net sales in fiscal 2000 were
generated by the Company's foreign subsidiaries ("Foreign Subs"). The financial
position and results of operations of the Foreign Subs are measured using the
local currency as the functional currency. The Foreign Subs sell product in
various European currencies that are collected at future dates and purchase raw
materials and finished goods in both U.S. Dollars and other European currencies.
Accordingly, the Company is exposed to transaction gains and losses that could
result from changes in foreign currency exchange rates. Realized gains and
losses from foreign currency transactions are included in operations as
incurred.
For financial reporting purposes, the Foreign Subs' statements of
operations are translated from the local currency into U.S. Dollars at the
exchange rates in effect during the reporting period. When the local currency
strengthens compared to the U.S. Dollar, there is a positive effect on the
Foreign Subs' sales as reported in the Company's Consolidated Financial
Statements. Conversely, when the U.S. Dollar strengthens, there is a negative
effect. In fiscal 2000, the net impact to the Company's reported sales from the
effect of exchange rate fluctuations was a decrease of approximately $550,000.
Certain countries in which the Company operates adopted the Euro as a
legal currency effective January 1, 1999. Euro notes and coins are expected to
begin circulation after a three-year transition period on January 1, 2002. The
Company's information systems are capable of processing transactions in Euros.
While the Company is uncertain as to the ultimate impact of the conversion, the
Company does not expect costs in connection with the Euro conversion to be
material.
INTEREST RATES
At December 31, 2000, $1,000,000 was outstanding on the Company's line
of credit. Advances under the line bear interest at the prime rate or at LIBOR
plus 2%. The weighted average interest rate for the year ended December 31, 2000
was 8.7%. If rates were to increase by 10%, the estimated impact on the
Company's Consolidated Financial Statements would be to reduce net income
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by approximately $9,000 before taxes based on amounts outstanding and weighted
average rates in effect throughout the year ended December 31, 2000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following documents are filed as part of this report:
Page Number
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Independent Auditors' Report 15
Consolidated Balance Sheets as of 16-17
December 31, 2000 and 1999
Consolidated Statements of Operations and 18
Comprehensive Operations for the years
ended December 31, 2000, 1999, and 1998
Consolidated Statements of Stockholders' 19
Equity for the years ended December 31,
2000, 1999, and 1998
Consolidated Statements of Cash 20-21
Flows for the years ended December 31,
2000, 1999, and 1998
Notes to Consolidated Financial Statements 22-33
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INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Hycor Biomedical Inc.
Garden Grove, California
We have audited the accompanying consolidated balance sheets of Hycor Biomedical
Inc. and subsidiaries (the Company) as of December 31, 2000 and 1999, and the
related consolidated statements of operations and comprehensive operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 2000. Our audits also included the financial statement
schedule listed in the index at Item 14(a)(2). These financial statements and
this financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Hycor Biomedical Inc. and
subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/s/ Deloitte & Touche LLP
Costa Mesa, California
February 16, 2001
15
16
HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
ASSETS 2000 1999
------ ------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 694,764 $ 551,295
Investments (Note 3) 1,616,587 1,757,599
Accounts receivable, net of allowance for
doubtful accounts of $138,208 (2000) and
$335,064 (1999) (Note 5) 3,215,869 3,203,180
Inventories (Notes 4 and 5) 4,719,050 4,269,301
Prepaid expenses and other current assets 355,712 306,769
------------ ------------
Total current assets 10,601,982 10,088,144
------------ ------------
PROPERTY AND EQUIPMENT, at cost (Note 5):
Leasehold improvements 1,930,676 2,130,757
Machinery and equipment 5,809,345 6,077,716
Furniture, fixtures, and office equipment 2,601,284 2,380,880
------------ ------------
10,341,305 10,589,353
Accumulated depreciation and amortization (7,259,584) (7,028,894)
------------ ------------
Property and equipment, net 3,081,721 3,560,459
------------ ------------
GOODWILL AND OTHER INTANGIBLE ASSETS, net of
accumulated amortization of $1,020,728 (2000) and
$915,642 (1999) 1,147,987 1,329,861
OTHER ASSETS 36,180 60,598
------------ ------------
Total assets $ 14,867,870 $ 15,039,062
============ ============
See notes to consolidated financial statements
16
17
HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999
------------------------------------ ---- ----
CURRENT LIABILITIES:
Accounts payable $ 584,629 $ 776,844
Accrued liabilities 735,678 1,314,547
Accrued payroll expenses 995,122 731,755
Current portion of long-term debt (Note 5) 1,054,684 1,586,341
------------ ------------
Total current liabilities 3,370,113 4,409,487
------------ ------------
Long-term debt (Note 5) 28,925 87,389
------------ ------------
Total liabilities 3,399,038 4,496,876
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' EQUITY (Notes 6 and 8):
Preferred stock, $0.01 par value;
authorized -- 3,000,000 shares;
none outstanding -- --
Common stock, $0.01 par value;
authorized -- 20,000,000 shares;
Issued and outstanding: 7,738,858
Shares in 2000 and 7,348,677 shares in 1999 77,389 73,487
Paid-in capital 12,640,536 12,544,005
Accumulated deficit (390,505) (1,371,933)
Accumulated other comprehensive loss (858,588) (703,373)
------------ ------------
Total stockholders' equity 11,468,832 10,542,186
------------ ------------
Total liabilities and stockholders' equity $ 14,867,870 $ 15,039,062
============ ============
See notes to consolidated financial statements
17
18
HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
2000 1999 1998
------------ ------------ ------------
NET SALES $ 17,071,584 $ 18,425,523 $ 18,410,255
COST OF SALES 7,714,694 8,761,747 9,150,505
------------ ------------ ------------
Gross profit 9,356,890 9,663,776 9,259,750
------------ ------------ ------------
OPERATING EXPENSES:
Selling, general, and administrative 6,503,389 7,357,669 8,572,099
Research and development 1,822,643 2,280,098 2,391,893
Impairment loss on long-lived assets (Note 11) -- -- 2,247,861
------------ ------------ ------------
Total operating expenses 8,326,032 9,637,767 13,211,853
------------ ------------ ------------
OPERATING INCOME (LOSS) 1,030,858 26,009 (3,952,103)
INTEREST EXPENSE (95,993) (223,372) (171,010)
INTEREST INCOME 178,079 158,925 124,742
(LOSS) GAIN ON FOREIGN CURRENCY TRANSACTIONS (60,516) (27,717) 16,277
GAIN ON SALE OF PATENT (NOTE 11) -- 325,426 --
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAX
PROVISION 1,052,428 259,271 (3,982,094)
INCOME TAX PROVISION (Note 7) 71,000 10,000 2,618,000
------------ ------------ ------------
NET INCOME (LOSS) $ 981,428 $ 249,271 $ (6,600,094)
============ ============ ============
BASIC EARNINGS PER SHARE (Note 2) $ 0.13 $ 0.03 $ (0.91)
============ ============ ============
DILUTED EARNINGS PER SHARE (Note 2) $ 0.12 $ 0.03 $ (0.91)
============ ============ ============
CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
NET INCOME (LOSS) $ 981,428 $ 249,271 $ (6,600,094)
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX
Foreign currency translation adjustments (139,685) (496,398) 309,075
Unrealized (losses) gains on securities (17,278) (11,519) 2,833
Plus: reclassification adjustment for losses included in net income 1,748 -- 323
------------ ------------ ------------
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX (155,215) (507,917) 312,231
------------ ------------ ------------
COMPREHENSIVE INCOME (LOSS) $ 826,213 $ (258,646) $ (6,287,863)
============ ============ ============
See notes to consolidated financial statements
18
19
HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
Common Stock Retained Accumulated
------------------------- Earnings Other
Number of Par Paid-in (Accumulated Comprehensive
Shares Value Capital Deficit) Income (Loss) Total
--------------------------------------------------------------------------------------------
BALANCE AT JANUARY 1, 1998 7,156,954 $71,570 $12,271,207 $4,978,890 $(507,687) $16,813,980
ISSUANCE OF COMMON STOCK,
UNDER EMPLOYEE BENEFIT
PLANS (Note 8) 126,502 1,265 149,313 -- -- 150,578
NET LOSS -- -- -- (6,600,094) -- (6,600,094)
OTHER COMPREHENSIVE INCOME -- -- -- -- 312,231 312,231
--------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998 7,283,456 72,835 12,420,520 (1,621,204) (195,456) 10,676,695
ISSUANCE OF COMMON STOCK,
UNDER EMPLOYEE BENEFIT
PLANS (Note 8) 65,221 652 63,485 -- -- 64,137
ISSUANCE OF STOCK WARRANT FOR
SERVICES (Note 6) -- -- 60,000 -- -- 60,000
NET INCOME -- -- -- 249,271 -- 249,271
OTHER COMPREHENSIVE LOSS -- -- -- -- (507,917) (507,917)
--------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999 7,348,677 73,487 12,544,005 (1,371,933) (703,373) 10,542,186
ISSUANCE OF COMMON STOCK,
UNDER EMPLOYEE BENEFIT
PLANS (Note 8) 377,996 3,780 96,653 -- -- 100,433
EXERCISE OF COMMON STOCK
WARRANTS (Note 6) 12,185 122 (122) -- -- --
NET INCOME -- -- -- 981,428 -- 981,428
OTHER COMPREHENSIVE LOSS -- -- -- -- (155,215) (155,215)
--------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2000 7,738,858 $77,389 $12,640,536 $(390,505) $(858,588) $11,468,832
============================================================================================
See notes to consolidated financial statements
19
20
HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
2000 1999 1998
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 981,428 $ 249,271 $(6,600,094)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 1,117,462 1,318,212 1,701,642
Stock based expense for services -- 60,000 --
Provision for doubtful accounts receivable (7,581) 150,379 162,174
Provision for excess and obsolete inventories 200,025 1,139,819 226,582
Gain on sale of intangibles -- (325,426) --
Deferred income tax provision -- -- 2,580,000
Impairment loss on long-lived assets -- 159,000 2,247,861
Change in assets and liabilities, net of effects of acquisitions,
dispositions, and foreign currency adjustments:
Accounts receivable (92,828) (425,483) 127,203
Inventories (718,337) (1,472,307) (672,610)
Prepaid expenses and other current assets (45,124) 106,550 159,274
Accounts payable (163,556) (302,540) (155,427)
Accrued liabilities (565,676) 8,030 555,175
Accrued payroll expenses 273,692 366,699 (243,105)
----------- ----------- -----------
Total adjustments (1,923) 782,933 6,688,769
----------- ----------- -----------
Net cash provided by operating activities 979,505 1,032,204 88,675
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments (1,158,934) (1,671,137) --
Proceeds from sales of investments 1,271,368 1,150,000 205,247
Purchases of property and equipment (595,337) (634,741) (1,507,811)
Purchases of intangible assets (27,181) (105,593) (92,566)
Proceeds from sales of intangible assets -- 700,000 --
Proceeds from sales of property and equipment 13,942 2,500 1,247,395
Proceeds from collection of notes receivable 35,382 55,090 95,193
----------- ----------- -----------
Net cash used in investing activities (460,760) (503,881) (52,542)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt -- -- 49,370
Principal payments on long-term debt (583,369) (710,937) (398,565)
Proceeds from issuance of common stock 100,433 64,137 150,578
----------- ----------- -----------
Net cash used in financing activities (482,936) (646,800) (198,617)
----------- ----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 107,660 14,056 3,292
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 143,469 (104,421) (159,192)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 551,295 655,716 814,908
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 694,764 $ 551,295 $ 655,716
=========== =========== ===========
See notes to consolidated financial statements
20
21
HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
2000 1999 1998
-------- -------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION-
Cash paid during the year -- interest $120,112 $246,193 $177,701
-- income taxes $ 73,883 $ 75,806 $ 18,221
Reduction of goodwill and debt due to post closing adjustment to the purchase
price of Hycor Ltd. $ -- $115,533 $ --
======== ======== ========
See notes to consolidated financial statements
21
22
HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000, 1999, and 1998
NOTE 1: DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS Hycor Biomedical Inc. ("Hycor" or the "Company") is
engaged in developing, manufacturing, and marketing medical and diagnostic
products. The Company's products are primarily used in the clinical laboratory
and specialty physician markets in the United States and Europe. The majority of
sales are through independent and clinical laboratory distributors.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION 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.
FOREIGN CURRENCY The financial position and results of operations of the
Company's foreign subsidiaries are measured using the local currency as the
functional currency. Assets and liabilities of the subsidiaries are translated
at the exchange rate in effect at each year-end. Income statement accounts are
translated at the average rate of exchange prevailing during the year.
Translation adjustments arising from differences in exchange rates from period
to period are included in the accumulated other comprehensive loss account in
stockholders' equity. Realized gains or losses from foreign currency
transactions are included in operations as incurred.
CASH EQUIVALENTS Cash equivalents are deemed to be highly liquid investments
with an original maturity of three months or less.
INVESTMENTS The Company accounts for investments pursuant to Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." At December 31, 2000 and 1999,
marketable equity and debt securities have been categorized as available for
sale and, as a result, are stated at fair value. Marketable equity and debt
securities available for current operations are classified in the balance sheet
as current assets. Unrealized holding gains and losses are included as a
component of accumulated other comprehensive income (loss), net of tax, until
realized.
CREDIT RISK Most of the Company's business activity is with medical products
distributors that are primarily located in the United States and Europe. The
Company grants normal trade credit to customers without requiring collateral or
other security. The Company maintains reserves for potential credit losses, and
those losses have been within management's expectations.
INVENTORIES Inventories are valued at the lower of cost (first-in, first-out
method) or market. Cost includes material, direct labor, and manufacturing
overhead.
22
23
PROPERTY AND EQUIPMENT Property and equipment are recorded at cost. Depreciation
is computed using the straight-line method over the assets' estimated useful
lives that range from three to twenty years. Leasehold improvements are
amortized over the life of the lease. Maintenance, repairs, and minor renewals
are charged to expense as incurred. Additions and improvements are capitalized.
GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill represents the excess of purchase
price over the fair market value of tangible assets resulting from business
acquisitions. Other intangible assets include patents, trademarks, and license
fees that are recorded at cost. Goodwill is amortized over 10 to 15 years on a
straight-line basis. Other intangible assets are amortized on a straight-line
basis over the assets' estimated useful lives that range from 5 to 15 years. The
Company assesses the recoverability of its goodwill on an annual basis or
whenever adverse events occur or changes in circumstances or business climate
indicate that expected undiscounted future operating cash flows may not be
sufficient to support recorded goodwill. If expected undiscounted operating cash
flows are not sufficient to support the recorded asset, an impairment is
recognized to reduce the carrying value of the goodwill. (See Note 11).
OTHER ASSETS Other assets consist primarily of notes receivable and long-term
deposits.
LONG-LIVED ASSETS The Company accounts for the impairment and disposition of
long-lived assets in accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." In
accordance with SFAS No. 121, long-lived assets are reviewed for events or
changes in circumstances, which indicate that their carrying value may not be
recoverable.
STOCK-BASED COMPENSATION The Company accounts for stock-based awards to
employees using the intrinsic value method in accordance with Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees."
INCOME TAXES The Company accounts for income taxes pursuant to SFAS No. 109,
"Accounting for Income Taxes." Accordingly, income taxes are provided for the
tax effects of transactions reported in the financial statements and consist of
taxes currently due plus deferred taxes related primarily to operating losses
that are available to offset future taxable income and tax credits that are
available to offset future income taxes. The deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or
settled. Deferred taxes also are recognized for differences between the bases of
assets and liabilities for financial and tax reporting purposes. A valuation
allowance reduces deferred tax assets when it is "more likely than not" that
some portion or all of the deferred tax assets will not be realized.
REVENUE RECOGNITION Revenue on product sales is recognized when products are
shipped and title passes.
23
24
EARNINGS PER SHARE The Company reports earnings per share pursuant to SFAS No.
128, "Earnings per Share" ("EPS"). Basic EPS is based on the weighted average
number of shares outstanding during the periods, while diluted EPS additionally
includes the dilutive effect of the Company's outstanding options and warrants
computed using the treasury stock method. Common stock equivalents have been
excluded from the calculation of diluted EPS in loss years as the impact is
anti-dilutive. The numbers of shares used in computing earnings per share are as
follows:
2000 1999 1998
- ----------------------------------------------------------------------
Weighted-average number
of shares outstanding 7,494,868 7,295,435 7,217,928
Common stock equivalents 503,813 14,885 N/A
- ----------------------------------------------------------------------
7,998,681 7,310,320 7,217,928
======================================================================
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS Certain items in the 1999 and 1998 consolidated financial
statements have been reclassified to conform with the 2000 presentation.
NEW ACCOUNTING PRONOUNCEMENTS SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, is effective for all fiscal years beginning
after June 15, 2000. SFAS 133, as amended, establishes accounting and reporting
standards for derivative instruments embedded in other contracts and for hedging
activities. Under SFAS 133, certain contracts that were not formerly considered
derivatives may now meet the definition of a derivative. The Company adopted
SFAS 133 effective January 1, 2001. The adoption of SFAS 133 will not have a
significant impact on the financial position, results of operations, or cash
flows of the Company.
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, was required to be implemented
during the Company's fourth quarter of fiscal 2000. The adoption of SAB 101 did
not have a material impact on the Company's consolidated results of operations
or financial condition.
In March 2000, the FASB issued Interpretation No. 44 (FIN 44),
Accounting for Certain Transactions involving Stock Compensation. FIN 44 is an
interpretation of APB Opinion No. 25 Accounting for Stock Issued to Employees.
Among other matters, FIN 44 clarifies the application of APB Opinion No. 25
regarding the definition of employee for purposes of applying APB Opinion No.
25, the criteria for determining whether a plan qualifies as non compensatory
and the accounting consequences of modifications to the terms of a previously
issued stock options or similar awards. The Company adopted the provisions of
FIN 44 in the third quarter of fiscal 2000. The adoption of FIN 44 did not have
a material impact on the Company's consolidated results of operations or
financial condition.
24
25
NOTE 3: INVESTMENTS
Investments consist principally of corporate debt securities,
categorized as available for sale, with scheduled maturities all within one to
six years. As of December 31, 2000, such investments cost and fair value were
$1,656,214 and $1,616,587, respectively. As of December 31, 1999, the cost and
fair value were $1,771,342 and $1,757,599, respectively.
Gross unrealized holding gains at December 31, 2000 and 1999, were
$14,738 and zero, offset by unrealized holding losses of $54,365 and $13,743,
respectively. For the purpose of determining gross realized gains and losses,
the cost of securities sold is based on specific identification. During 2000,
the Company sold investments with an aggregate book value of $1,274,282 for
total cash proceeds of $1,271,368, resulting in a net realized loss of $2,914.
During 1999, the Company sold investments with an aggregate book value of
$1,150,000 for total cash proceeds of $1,150,000, resulting in no net realized
gain or loss.
NOTE 4: INVENTORIES
Inventories at December 31, 2000 and 1999 consisted of:
2000 1999
- ------------------------------------------------
Raw materials $1,128,822 $ 868,876
Work-in-process 2,181,753 1,392,527
Finished goods 1,408,475 2,007,898
- ------------------------------------------------
$4,719,050 $4,269,301
================================================
NOTE 5: LONG-TERM DEBT
The Company has a line of credit that provides for borrowings up to
$2,000,000 and expires in July 31, 2001. The loan is collateralized by the
Company's accounts receivable, inventories, and property, plant, and equipment.
At December 31, 2000, $1,000,000 was outstanding. Advances under the line bear
interest at the prime rate or at LIBOR plus 2% (8.8% at December 31, 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, and liquid assets plus accounts
receivable-to-current liabilities requirements. At December 31, 2000, 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 approximately
$84,000 with a weighted-average interest rate of approximately 9.7%.
25
26
Principal payments on long-term debt are due as follows:
Year Ending December 31: Amount
- ------------------------------------------
2001 $1,054,684
2002 26,897
2003 2,028
2004 --
2005 --
Thereafter --
- ------------------------------------------
$1,083,609
==========================================
NOTE 6: STOCKHOLDERS' EQUITY
In December 1998, the Company granted warrants to purchase 150,000
shares of the Company's common stock to certain consultants of the Company. The
warrants are exercisable at $1.44 per share and expire on December 3, 2002.
During the year ended December 31, 2000, 15,000 warrants were exercised for
which the Company issued 12,185 shares of common stock, net of 2,815 shares
surrendered in payment of the exercise price. As of December 31, 2000, warrants
to purchase 135,000 shares of the Company's common stock were outstanding.
During the year ended December 31, 1999, the Company recorded expense
of $60,000, which was equivalent to the estimated fair market value of the
warrants at the date the services were completed. The fair market value was
computed using the Black-Scholes option pricing model and assumptions similar to
those used to value the Company's stock options as described in Note 8.
NOTE 7: INCOME TAXES
The income tax provision consists of the following:
2000 1999 1998
- ----------------------------------------------------------
Current:
Federal $ 10,000 $ -- $ --
State 50,000 10,000 38,000
Foreign 11,000 -- --
- ----------------------------------------------------------
Total 71,000 10,000 38,000
Deferred:
Federal -- -- 1,576,000
State -- -- 437,000
Foreign -- -- 567,000
- ----------------------------------------------------------
Total -- -- 2,580,000
$ 71,000 $ 10,000 $2,618,000
==========================================================
26
27
A reconciliation of the Company's effective tax rate compared to the federal
statutory tax rate is as follows:
2000 1999 1998
- -----------------------------------------------------------------------------------------
Provision computed at federal
statutory rate $ 358,000 $ 88,000 $(1,393,000)
Increase (decrease) resulting from:
State taxes, net 33,000 7,000 62,000
Research and development credits (16,000) -- --
Foreign sales corporation (5,000) -- --
Intangibles 14,000 1,000 774,000
Meals and entertainment 11,000 10,000 9,000
Other (21,000) (18,000) (23,000)
Valuation allowance (303,000) (78,000) 3,189,000
- -----------------------------------------------------------------------------------------
$ 71,000 $ 10,000 $ 2,618,000
=========================================================================================
The components of the Company's deferred income tax benefit as of
December 31, 2000 and 1999, are as follows:
2000 1999
- --------------------------------------------------------------------
Allowance for doubtful accounts $ 24,000 $ 127,000
Inventory reserves 116,000 499,000
Depreciation (83,000) (105,000)
Accrued payroll 306,000 175,000
Tax credits 804,000 661,000
Net operating loss carryforwards 2,264,000 2,356,000
Deferred state taxes 5,000 3,000
Capital loss carryforwards -- 24,000
Unrealized foreign exchange gain (65,000) (65,000)
Other 112,000 111,000
- --------------------------------------------------------------------
Subtotal 3,483,000 3,786,000
Valuation allowance (3,483,000) (3,786,000)
- --------------------------------------------------------------------
Total $ -- $ --
====================================================================
The Company evaluates a variety of factors in determining the amount of
deferred income assets to be recognized pursuant to SFAS No. 109, "Accounting
for Income Taxes". The Company has determined that a valuation allowance for the
entire net deferred tax asset is required.
As of December 31, 2000, the Company has approximately $3.7 million and
$0.6 million of federal and state domestic net operating loss carry-forwards,
respectively. Utilization of a portion of
27
28
the federal net operating losses has been limited, due to a change in ownership,
to approximately $893,000 per year by Internal Revenue Code Section 382.
Approximately $2.2 million in federal net operating losses expire in 2001 to the
extent not utilized by the Company, with the remainder expiring on an annual
basis through 2018. In addition, the Company has foreign net operating loss
carry-forwards of approximately $2.7 million of which $0.8 million is currently
expiring on an annual basis through 2005 with the remainder having no
expiration.
NOTE 8: EMPLOYEE BENEFIT PLANS
STOCK OPTION PLANS At December 31, 2000, the Company had reserved 906,375 shares
of common stock for issuance to employees and directors under four stock option
plans. Options are generally granted at fair market value and become exercisable
over periods of up to ten years. These options generally expire 10 years from
the date of grant.
Option activity under the plans is as follows:
Weighted
Average
Number of Exercise
Shares Price
- -------------------------------------------------------------------------------
Outstanding, January 1, 1998 1,348,316 $ 4.34
Granted (weighted-average fair value of $0.80) 597,500 1.72
Exercised (80,549) 1.31
Canceled (602,333) 4.58
---------
Outstanding, December 31, 1998 (385,101 1,262,934 3.18
exercisable at a weighted-average price
of $4.56)
Granted (weighted-average fair value of $0.68) 80,000 1.13
Canceled (54,934) 2.49
---------
Outstanding, December 31, 1999 (518,375 1,288,000 3.08
exercisable at a weighted-average price
of $3.88)
Granted (weighted-average fair value of $3.85) 78,000 4.97
Exercised (569,625) 3.52
Canceled (13,500) 4.46
---------
Outstanding, December 31, 2000 782,875 $ 2.93
=========
The Company's option plan allows employees to exercise options by
exchanging an equivalent value of previously owned Hycor common shares in lieu
of the cash exercise price. The employee must have held such shares for at least
six months prior to the exercise date. As a result, 249,736 common shares were
remitted by employees and retired by the Company during fiscal year 2000.
28
29
Additional information regarding options outstanding as of December 31, 2000, is
as follows:
Options Outstanding Options Exercisable
---------------------------------- ----------------------------
Weighted-Avg. Weighted- Weighted-
Remaining Avg. Avg.
Range of Number Contractual Life Exercise Number Exercise
Exercise Prices Outstanding (Yrs) Price Exercisable Price
- ------------------------------------------------------------------------------------------------------------------------------
$1.00 - 1.94 379,250 7.6 $1.57 95,500 $1.67
2.00 - 3.00 95,000 7.0 2.13 29,000 2.31
4.00 - 4.89 260,625 5.4 4.56 111,000 4.63
5.75 - 6.63 48,000 6.4 6.32 18,000 6.63
- ------------------------------------------------------------------------------------------------------------------------------
$1.00 - 6.63 782,875 6.7 $2.93 253,500 $3.39
At December 31, 2000, 123,500 shares were available for grant.
STOCK PURCHASE PLAN The Company has reserved 314,905 shares of its common stock
for issuance to employees under two employee stock purchase plans. The plans
allows eligible employees to have salary withholdings to purchase shares of
common stock at a price equal to 85% of the lower of the market value of the
stock at the beginning or end of each three or six-month offer period, subject
to an annual limitation.
The Company has 19,261 shares reserved for future issuance under its
1988 Employee Stock Purchase Plan. Stock issued under this plan was 53,751,
65,221, and 53,147 shares in 2000, 1999, and 1998 at weighted-average prices of
$1.12, $0.98, and $1.20 respectively. This plan will terminate during 2001.
On February 25, 2000, the Board of Directors adopted the Hycor
Biomedical Inc. 2000 Employee Stock Purchase Plan (2000 ESPP) under which up to
300,000 shares could be sold to the employees. The Company has 295,644 shares
reserved for future issuance under its 2000 ESPP. Stock issued under this plan
in 2000 was 4,356 shares at the weighted-average price of $4.95.
ADDITIONAL STOCK PLAN INFORMATION As discussed in Note 2, the Company continues
to account for its employee stock-based awards using the intrinsic value method
in accordance with APB Opinion No. 25, and its related interpretations.
SFAS No. 123, "Accounting for Stock-Based Compensation," requires the
disclosure of pro forma net income (loss) and net income (loss) per share had
the Company adopted the fair value method. Under SFAS No. 123, the fair value of
stock-based awards to employees is calculated through the use of option pricing
models, even though such models were developed to estimate the fair value of
freely tradable, fully transferable options without vesting restrictions, which
significantly differ from the Company's stock option awards. These models also
require subjective assumptions, including future stock price volatility and
expected time to exercise, which greatly affect the calculated values. The
Company's calculations were made using the Black-Scholes option-pricing model
with the following weighted-average assumptions: expected life, 72 months; stock
volatility, 89% in 2000, 59% in 1999, and 37% in 1998; risk-free interest rates,
6.2% in 2000, 4.9% in 1999, and 5.6% in 1998; and no dividends during the
expected term. The Company's calculations are based on a single option valuation
approach, and forfeitures are recognized as they occur. If the computed fair
values of the 2000, 1999, and 1998 awards had been amortized to expense over the
vesting period of the awards, pro forma net income (loss) would have been as
follows:
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2000 1999 1998
-----------------------------------------
Pro forma net income (loss) $ 871,417 $ 83,551 $ (6,683,000)
Pro forma basic income (loss) per share $ 0.12 $ 0.01 $ (1.05)
Pro forma diluted income (loss) per share $ 0.11 $ 0.01 $ (1.05)
401(k) PLAN The Company has established a profit sharing plan under Internal
Revenue Code Section 401(k). The 401(k) plan allows employees to contribute up
to fifteen percent of their salary to the plan. The Company matches 50 percent
of the first two percent of an employee's contribution and 100 percent of the
next one percent of contribution. In prior periods, a portion of the Company's
contribution was made in the Company's common stock. In the period ended
December 31, 1998, the Company depleted its stock reserves allocated to the
401(k) plan and therefore has issued no shares in 2000 or 1999 under this plan.
The Company issued 5,912 shares of its common stock under this plan in 1998.
Compensation expense related to these plans was $162,277, $115,385, and $107,860
in 2000, 1999, and 1998, respectively.
NOTE 9: COMMITMENTS AND CONTINGENCIES
OPERATING LEASES The Company leases office, laboratory, and warehouse space and
laboratory equipment under non-cancelable operating leases. During the year
ended December 31, 1998, the Company relocated its administrative office from
its Irvine, California, facility to its Garden Grove, California, facility. The
Irvine facility was subleased until August 2000 when the lease was terminated.
Rental expense under operating leases for the years ended December 31,
2000, 1999, and 1998 was approximately $692,000 (net of sublease income of
$249,000), $789,000 (net of sublease income of $353,000), and $895,000,
respectively. Future annual minimum lease payments under the noncancelable
operating leases as of December 31, 2000 are as follows:
Year Amount
- --------------------------------------------------------------
2001 $ 696,000
2002 694,000
2003 692,000
2004 690,000
2005 582,000
Thereafter 1,478,000
- --------------------------------------------------------------
$4,832,000
==============================================================
OTHER COMMITMENTS The Company has entered into a long-term product manufacturing
and sales agreement ("the Supply Agreement") with an equipment manufacturer
located in Europe. The Supply Agreement provides for the European manufacturer
to supply and the Company to purchase certain minimum levels of HY-TEC
instruments. At December 31, 2000, the approximate future minimum payments under
the Supply Agreement are $213,000, $213,000 and $280,000 for the years 2001,
30
31
2002, and 2003, respectively.
LITIGATION The Company is involved in litigation which is incidental to its
business. The Company believes that the ultimate outcome of the litigation will
not have a material adverse effect on the Company's consolidated financial
position or results of operations.
NOTE 10: SEGMENT INFORMATION
The Company engages in business activity in only one operating segment
that entails the development, manufacture, and sale of medical and diagnostic
products with a focus on clinical immunology testing and urinalysis products.
While the Company offers a wide range of items for sale, most are manufactured
at common production facilities. In addition, the Company's products are
marketed through a common sales organization and are sold to a similar customer
base made up primarily of clinical laboratories and specialty physician offices.
The Company sells its products primarily through distributors. Sales to
the Company's two largest distributors accounted for 20% and 13% of net product
sales in 2000; 21% and 14% in 1999; and 19% and 12% in 1998. A decision by a
significant customer to substantially decrease or delay purchases from the
Company or the Company's inability to collect receivables from these customers
could have a material adverse effect on the Company's financial condition and
results of operations.
In addition to its United States operations, the Company has
subsidiaries in Scotland, France, and Germany. Information about the Company's
products and operations in different geographic locations is shown below.
(In Thousands)
- -------------------------------------------------------------------------------------------------------------
Revenues by Product Line: 2000 % 1999 % 1998 %
- -------------------------------------------------------------------------------------------------------------
Urinalysis $ 9,188 54% $10,046 55% $ 9,309 51%
Clinical Immunology 6,745 39% 7,128 38% 7,169 39%
Other 1,139 7% 1,252 7% 1,932 10%
-------------------------------------------------------------------------------
$17,072 100% $18,426 100% $18,410 100%
-------------------------------------------------------------------------------
Geographical Information: 2000 % 1999 % 1998 %
- -------------------------------------------------------------------------------------------------------------
Revenues (a)
United States $12,656 74% $13,377 73% $13,264 72%
Foreign:
Germany 2,734 16% 3,281 18% 3,234 18%
Scotland 1,682 10% 1,768 9% 1,912 10%
-------------------------------------------------------------------------------
Subtotal-Foreign 4,416 26% 5,049 27% 5,146 28%
-------------------------------------------------------------------------------
Total Revenues $17,072 100% $18,426 100% $18,410 100%
===============================================================================
a = Revenues are allocated to countries based on the source of the product.
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2000 1999
Long-Lived Assets (Net):
- ------------------------------------------------------------
United States $ 2,743 $ 2,824
Foreign:
Germany 1,308 1,685
Other Europe 215 442
---------------------
Subtotal-Foreign 1,523 2,127
---------------------
Total Long-Lived Assets $ 4,266 $ 4,951
=====================
Deferred Tax Assets 2000 1999
- ------------------------------------------------------------
United States $ 2,526 $ 3,026
Foreign:
Germany 941 408
Other Europe 16 352
---------------------
Subtotal-Foreign 957 760
---------------------
Subtotal 3,483 3,786
---------------------
Valuation Allowance (3,483) (3,786)
---------------------
Total Deferred Tax Assets $ -- $ --
=====================
NOTE 11: IMPAIRMENT LOSS ON LONG-LIVED ASSETS AND GAIN ON SALE OF PATENT
During the year ending December 31, 1999, the Company sold the patent
associated with its Hematology line of products for $700,000. The patent and
certain related assets had a net book value of approximately $375,000, resulting
in a gain of approximately $325,000, which is included in the accompanying
statement of operations.
In 1994, the Company acquired Medical Specialties International, Inc.
(MSI) and recorded total goodwill resulting from the acquisition of
approximately $2,829,000. During 1998, changes in the market place, the
introduction of new technologies and the loss of the Company's sole distributor
of the MSI product line caused the goodwill related to the acquisition to be
considered impaired. Impairment of goodwill was determined based on the
Company's expected inability to generate positive future operating cash flows to
support the recorded value of goodwill. The Company, in accordance with SFAS No.
121 and APB Opinion No. 17 "Intangible Assets", recorded a non-cash pre-tax
charge of $2,248,000 relating to MSI goodwill and other assets. This write down
eliminates all remaining goodwill related to this acquisition.
NOTE 12: FINANCIAL INSTRUMENTS
Derivative financial instruments were used by the Company in the
management of its foreign currency exposures on firm commitments. The Company
had entered into forward exchange contracts to hedge its outstanding notes,
issued in 1997 in the acquisition of Hycor Ltd., which were payable in British
pounds. Gains and losses on foreign currency firm commitment hedges are deferred
and included in the basis of the transactions underlying the commitments.
The foreign currency notes were paid in full in July 2000 and there
were no firm commitment
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hedges outstanding at December 31, 2000.
A summary of forward exchange contracts as of December 31, 1999 is as follows:
December 31, 1999
- ---------------------------------------------------
US Dollar Fair
Equivalent Maturity Value
---------- -------- -----
$492,188 July 2000 $504,789
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is included under the captions
"Election of Directors," "Executive Officers," and "Executive Compensation -
Compliance with Section 16(a) of the Exchange Act" of the Company's Proxy
Statement for the 2001 Annual Meeting of Stockholders and is incorporated herein
by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is included under the caption
"Executive Compensation" of the Company's Proxy Statement for the 2001 Annual
Meeting of Stockholders and is incorporated herein by reference; provided,
however, that the Compensation Committee Report on Executive Compensation and
the Performance Graph (i) shall not be deemed incorporated by reference in this
Annual Report on Form 10-K and (ii) shall not otherwise be deemed "filed" as
part of this Annual Report on Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is included under the caption
"Stock Ownership of Management and Certain Beneficial Owners" of the Company's
Proxy Statement for the 2001 Annual Meeting of Stockholders and is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
33
34
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT.
1. FINANCIAL STATEMENT SCHEDULES
The following financial schedule is filed as part of this
Report:
Schedule Page
Number Description Number
II Valuation and Qualifying S-1
Accounts
Schedules other than those listed above have been omitted
because they are not applicable or the required information is
included in the financial statements or notes thereto.
2. EXHIBITS
3(1). Restated Certificate of Incorporation of Hycor
Biomedical Inc., previously filed with the Secretary of
State of Delaware on December 29, 1993, previously filed
as Exhibit 3(1). to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993, and
incorporated herein by reference.
3(2). By-Laws of Hycor Biomedical Inc. as amended, previously
filed as Exhibit 3(2). to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991,
and incorporated herein by reference.
MATERIAL CONTRACTS - RELATING TO MANAGEMENT COMPENSATION PLANS
OR ARRANGEMENTS
10(1). Employment Agreement of J. David Tholen, dated April 30,
2000.
10(2). Employment Agreement of Mary Jo Deal, dated September 1,
1997, previously filed as Exhibit 10(2). to the
Company's 10-Q for September 1997, and incorporated
herein by reference.
10(3). Employment Agreement of Reginald P. Jones, dated April
30, 2000.
10(4). Employment Agreement of Thomas M. Li, dated June 20,
1997, previously filed as Exhibit 10(4). to the
Company's 10-Q for September 1997, and incorporated
herein by reference.
34
35
10(5). Employment Agreement of Nelson F. Thune, dated June 20,
1997, previously filed as Exhibit 10(5). to the
Company's 10-Q for September 1997, and incorporated
herein by reference.
10(6). 1981 Incentive Stock Option Plan, as amended, previously
filed as Exhibit 4(1). to the Company's Registration
Statements on Form S-8 (No. 33-25429 and No. 33-32767),
and incorporated herein by reference.
10(7). 1988 Employee Stock Purchase Plan, previously filed as
Exhibit 4(1). to the Company's Registration Statement on
Form S-8 (No. 33-25427), and incorporated herein by
reference.
10(8). Hycor Biomedical Incentive Profit Sharing Plan,
previously filed as Exhibit 4(1). to the Company's
Registration Statement on Form S-8 (No. 33-25430), and
incorporated herein by reference.
10(9). Long Term Executive Incentive Plan - 1988, previously
filed as Exhibit 4(1). to the Company's Registration
Statement on Form S-8 (No. 33-43280) and incorporated
herein by reference.
10(10). 1992 Incentive Stock Plan, previously filed as Exhibit
10(17). to the Company's 10-Q for June 30, 1992, and
incorporated herein by reference.
10(11). Nonqualified Stock Option Plan for Non-Employee
Directors, previously filed as Exhibit 10(18). to the
Company's 10-Q for June 30, 1992, and incorporated
herein by reference.
10(12). 2000 Employee Stock Purchase Plan, previously filed as
Exhibit 4(1). to the Company's Registration Statement on
Form S-8 (No. 333-45110), and incorporated herein by
reference.
OTHER MATERIAL CONTRACTS
10(13). Lease Agreement for the Company's Garden Grove,
California facility dated December 1, 1990, previously
filed as Exhibit 10(8). to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31,
1991, and incorporated herein by reference.
10(14). Lease agreement for the Company's Kassel, Germany
facility, dated January 13, 1994, previously filed as
Exhibit 10(26). to the Company's Annual Report on 10-K
for fiscal year ended December 31, 1994, and
incorporated herein by reference.
10(15). Business Loan Agreement between Hycor Biomedical Inc.
and Tokai Bank of California, dated July 11, 1997,
previously filed as Exhibit 10.01 to the Company's 10-Q
for June 30, 1997, and incorporated herein by reference.
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36
10(16). Investment Banking Agreement by and between Hycor
Biomedical Inc. and Schneider Securities, Inc. dated
December 3, 1998. Previously filed as Exhibit 10(28) to
the Company's Annual Report on 10-K for fiscal year
ended December 31, 1998, and incorporated herein by
reference.
21. Subsidiaries of Hycor Biomedical Inc.
23. Consent of Deloitte & Touche LLP, dated March 28, 2001.
(b) REPORTS ON FORM 8-K
None
36
37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant)
Date: 3/25/01 By: /s/ J. David Tholen
----------------------- ------------------------------------
J. David Tholen
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: 3/28/01 By: /s/ J. David Tholen
----------------------- -------------------------------------
J. David Tholen
President and Chief Executive Officer
Date: 3/28/01 By: /s/ Samuel D. Anderson
----------------------- -------------------------------------
Samuel D. Anderson
Chairman
Date: 3/28/01 By: /s/ David S. Gordon
----------------------- -------------------------------------
David S. Gordon
Director
Date: 3/28/01 By: /s/ Reginald P. Jones
------------------------ -------------------------------------
Reginald P. Jones
Senior Vice President, Chief Financial
Officer
Date: 3/28/01 By: /s/ James R. Phelps
------------------------ -------------------------------------
James R. Phelps
Director
Date: 3/28/01 By: /s/ Richard E. Schmidt
------------------------ -------------------------------------
Richard E. Schmidt
Director
Date: 3/28/01 By: /s/ David A. Thompson
------------------------ -------------------------------------
David A. Thompson
Director
Date: 3/28/01 By: /s/ David A. Thompson
------------------------ -------------------------------------
David A. Thompson
Director
Date: 3/28/01 By: /s/ Armando Correa
------------------------ -------------------------------------
Armando Correa
Director, Finance and
Principal Accounting Officer
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Schedule II
HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
Balance at Charged to
Beginning Costs and Balance at
of Year Expenses Deductions End of Year
----------------------------------------------------------------
Allowance for doubtful accounts
receivable
1998 $ 120,684 $ 162,174 $ 71,376 $ 211,482
1999 211,482 150,379 26,797 335,064
2000 335,064 (7,581) 189,275 138,208
Allowance for excess, obsolete,
and short-dated inventories
1998 $ 381,426 $ 226,582 $ 165,136 $ 442,872
1999 442,872 1,139,819 310,652 1,272,039
2000 1,272,039 200,025 386,152 1,085,912
S - 1
39
Exhibit List
Exhibit No. Name of Exhibit
- ----------- ---------------
10 (1). Employment Agreement of J. David Tholen
10 (3). Employment Agreement of Reginald P. Jones
21. Subsidiaries of Hycor Biomedical Inc.
23. Consent of Deloitte & Touche LLP,
dated March 28, 2001.