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_____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
__________________________
Form 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
__________________________
For Quarter Ended November 30, 1993 Commission File Number 0-8640
SYNCOR INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 85-0229124
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
20001 Prairie Street, Chatsworth, California 91311
(Address of principal executive offices) (Zip Code)
(818) 886-7400
(Registrant's telephone number, including area code)
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. As of November 30, 1993
10,283,384 shares of $0.05 par value common stock were outstanding.
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<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Consolidated Condensed Financial Statements
Page
____
Balance Sheets as of
November 30, 1993 and May 31, 1993.............................2
Statements of Income for three months
ended November 30, 1993 and 1992...............................3
Statements of Income for six months
ended November 30, 1993 and 1992...............................4
Statements of Cash Flows for six months
ended November 30, 1993 and 1992...............................5
Notes to Consolidated Condensed Financial Statements.............6
Item 2. Management's Discussion and Analysis of Financial Condition......7
Part II. Other Information................................................9
Item 4 Submission of Matters to a Vote of Security Holders..............9
SIGNATURE..................................................................10
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
November 30, May 31,
1993 1993
____________ _______
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 14,834 $ 19,093
Short-term investments 3,582 1,844
Accounts receivable, net 34,409 34,378
Inventories and other current assets 8,160 5,416
________ ________
Total current assets 60,985 60,731
________ ________
Property and equipment, net 25,015 23,362
Excess of purchase price over net assets
acquired, net 14,534 13,256
Other 9,720 6,604
________ ________
$110,254 $103,953
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,367 $ 19,858
Accrued liabilities 2,851 2,655
Accrued wages and related costs 3,422 8,472
Federal and state taxes payable - 619
Current maturities of long-term debt 3,866 1,697
________ ________
Total current liabilities 30,506 33,301
________ ________
Deferred income taxes 776 353
Long-term debt, net of current maturities 6,161 4,515
Stockholders' equity:
Common stock, $.05 par value 516 510
Additional paid-in capital 42,425 41,553
Employee stock ownership loan guarantee (2,970) (3,430)
Foreign currency translation adjustment 121 139
Retained earnings 32,719 27,012
________ ________
Net Stockholders' Equity 72,811 65,784
________ ________
$110,254 $103,953
======== ========
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended November 30,
_______________________________
1993 1992
____ ____
(Unaudited)
<S> <C> <C>
Net sales $61,249 $56,852
Cost of sales 41,428 38,000
_______ _______
Gross profit 19,821 18,852
Operating, selling and administrative expenses 15,239 15,020
_______ _______
Operating income 4,582 3,832
Other income, net 148 6
_______ _______
Income from continuing operations before
income taxes and discontinued operations 4,730 3,838
Provision for income taxes 1,882 1,515
_______ _______
Income from continuing operations before
discontinued operations 2,848 2,323
Discontinued operations, net of taxes - (213)
_______ _______
Net income $ 2,848 $ 2,110
Net income per share:
Income from continuing operations $ .27 $ .22
Discontinued operations, net - (.02)
_____ _____
Net income per share $ .27 $ .20
===== =====
Weighted average shares outstanding 10,721 10,698
====== ======
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended November 30,
_____________________________
1993 1992
____ ____
(Unaudited)
<S> <C> <C>
Net sales $121,717 $112,521
Cost of sales 82,127 74,870
________ ________
Gross profit 39,590 37,651
Operating, selling and administrative expenses 30,445 29,810
________ ________
Operating income 9,145 7,841
Other income, net 299 28
________ ________
Income from continuing operations before
income taxes and discontinued operations 9,444 7,869
Provision for income taxes 3,737 3,108
________ ________
Income from continuing operations before
discontinued operations 5,707 4,761
Discontinued operations, net of taxes - (411)
________ ________
Net income $ 5,707 $ 4,350
======== ========
Net income per share:
Income from continuing operations $ .53 $ .45
Discontinued operations, net - (.04)
_____ _____
Net income per share $ .53 $ .41
===== =====
Weighted average shares outstanding 10,748 10,664
====== ======
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended November 30,
_____________________________
1993 1992
____ ____
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,707 $4,350
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,391 3,410
Amortization of ESSOP loan guarantee 460 460
Increase in net receivables (31) (514)
(Increase) in inventories and other
current assets (2,744) (3,427)
Increase in other assets (5,512) (704)
Increase (decrease) in accounts payable 509 (2,511)
Increase in accrued liabilities 196 628
(Decrease) in accrued wages and
related costs (5,050) (2,370)
Increase in short-term borrowings - 945
Increase (decrease) in Federal and state taxes (619) 1,037
Increase (decrease) in deferred income taxes 423 (116)
_______ ______
Total adjustments (7,977) (3,162)
Net cash (used) provided by operating (2,270) 1,188
activities _______ ______
Cash flows from investing and financing activities:
Purchase of property and equipment, net (4,944) (4,602)
(Increase) decrease in short-term investments (1,738) 913
Issuance of common stock 878 583
Issuance (repayment) of long-term debt 3,815 (780)
_______ ______
Net cash flows (used) in investing and
financing activities (1,989) (3,886)
_______ ______
Net increase in cash and cash equivalents (4,259) (2,689)
Cash and cash equivalents at beginning of period 19,093 4,900
_______ ______
Cash and cash equivalents at end of period $14,834 $2,202
======= ======
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
1. GENERAL. The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included. The
results of the six months ended November 30, 1993, are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Form 10K for the year ended May 31,
1993.
2. DISCONTINUED OPERATIONS. On February 17, 1993, the Company announced the
divestiture of a minor segment of its business, referred to as its Home
Infusion business. The Company's consolidated statement of income
reflects a net loss from discontinued operations of $.2 million and $.4
million for the three and six months of operations and ended November 30,
1993. This divestiture was completed on May 31, 1993.
3. SUBSEQUENT EVENTS. On December 3, 1993, the Company entered into a long-
term supplier distribution agreement with its principal supplier of
radiopharmaceutical products, the Radiopharmaceutical Division of the
DuPont Merck Pharmaceutical Company. The agreement, which becomes
effective February 1, 1994, will replace an existing supply agreement
between the companies which has been in place since 1988.
For administrative purposes, the Company changed its fiscal year-end to
December 31 from May 31, beginning with the seven months ending December
31, 1993.
Both events were reported in Form 8-K filed with the Securities and
Exchange Commission on December 17, 1993. Such filing is incorporated
herein by this reference.
On December 31, 1993, the Company entered into an agreement to increase
its line of credit financing to $20 million from $8 million. Terms and
conditions were substantially the same between the new and prior
agreement.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Net Sales
_________
Net sales for the second quarter of fiscal 1994 rose 7.7% or $4.4 million to
$61.2 million versus $56.9 million for the first quarter of fiscal 1993. For
the six month period ended November 30, 1993, net sales climbed to $121.7
million, a $9.2 million or 8.2% increase. The Company's net sales growth
continues to be fueled by the increase in the cardiology sector of nuclear
medicine, the opening and acquisition of new pharmacies and increased market
share, offset by net price decreases in certain segments.
Gross Profit
____________
Gross profit for the second quarter and six month period ended November 30,
1993 increased 5.1% or $1 million and 5.1% or $1.9 million respectively.
However, during the current quarter and six month period ended November 30,
1993, the Company experienced a continued decline in its gross profit as a
percent of net sales. Gross profit declined to 32.4% from 33.2% for the
second quarter and to 32.5% versus the reported 33.5% for the six month
period. The decline in the gross profit percentage is attributable to a
number of factors. As the cardiology marketplace expands, the Company's
traditional net sales mix is changing. This changing mix delivers a higher
volume of dollars to the gross profit line, but at a lesser rate as a
percentage of sales when compared to the Company's traditional
radiopharmaceutical margins.
Additionally, the Company has experienced price increases from its suppliers
which have not been entirely passed through to its customers. In response to
competitive pressures, the Company has also restructured pricing for its
national accounts for key cardiology products, further impacting the gross
margin percentage. New pharmacy openings also negatively impact the gross
margin percentage until they are able to reach maturity.
In addition to those factors mentioned above, the Company continues to be
challenged by the competitive marketplace and uncertainty surrounding health-
care reform.
Operating, Selling and Administrative Expenses
______________________________________________
Operating, selling and administrative expenses rose 1.5% for the second
quarter of fiscal 1994 and declined as a percentage of sales to 24.9% from
26.4% in the same period of fiscal 1993. For the six month period ended
November 30, these expenses increased 2.1% and declined as a percentage of
sales to 25% from 26.5%. This decrease was primarily attributable to an
increase in net sales which the Company was able to support without a
proportionate increase in operating, selling and administrative expenses. The
Company continues to make significant investments in infrastructure to improve
overall efficiencies. The Company considers these investments to be of long-
term strategic importance and will require the continued commitment of
resources in order to maintain a competitive advantage.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Operating, Selling and Administrative Expenses (continued)
______________________________________________
The Company continues, as a part of its overall business strategy, to invest
in developmental business opportunities. These opportunities require ongoing
resources in the area of operating, selling and administrative expenses.
Liquidity and Capital Resources
_______________________________
The Company's balance sheet has been significantly strengthened with the
divestiture of the Home Infusion Services Division which was completed at the
end of fiscal 1993. The divestiture resulted in a cash infusion of $9.1
million. At November 30, 1993, both working capital and the current ratio
rose as compared to May 31, 1993. Working capital increased $3.0 million to
$30.5 million while the current ratio rose to 2.00 from 1.82. Days Sales
Outstanding were 51 days at November 30, 1993 compared to 52 days at May 31,
1993, and 54 days a year ago.
The Company continues expenditures for the acquisition of independent
pharmacies, start-up of new pharmacies, the re-equipping of existing
pharmacies and information technology for both internal and customer uses.
These acquisitions and start-up programs are expected to continue through
fiscal 1994 and will be funded with proceeds from operations.
The nature of the Company's business is not capital intensive and, as new
products become available, the capital requirement to accommodate these
products will be minimal. The Company believes sufficient internal and
external capital sources exist to fund operations and future expansion
programs. However, on December 31, 1993, the Company's line of credit was
increased to $20 million from $8 million (See Note 3). This increase in
financing further positions the Company to take advantage of growth
opportunities. The were no borrowings outstanding on the line of credit at
November 30, 1993 and May 31, 1993.
See notes to consolidated condensed financial statements.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
____________________________________________________________
(a) The Annual Meeting of Security Holders was held on November 15, 1993.
(b) There was no solicitation in opposition to the management's nominees as
listed in the Proxy Statement and all of such nominees were elected.
(c) (i) At such meeting, Registrant proposed amendments to the 1990 Master
Stock Option Plan (the "Plan") to increase the authorized number of shares of
common stock issuable under the Plan, as set forth in the Proxy Statement in
summary on page 16. In addition to increasing the number of shares available
under the Plan by 500,000 shares, the amendments change the name of the Plan
to 1990 Master Stock Incentive Plan (the "1990 MSIP"), reduce the minimum
vesting period for awards from 12 months to six months, delete certain
specific limits on incentive stock options in favor of applicable limits under
the Internal Revenue Code (as from time to time amended), substitute
applicable law instead of specific standards for determining whether future
amendments to the 1990 MSIP will require shareholder approval, reflect certain
cash-only awards under the 1990 MSIP, expressly articulate certain
interpretations of the 1990 MSIP, permit limited exceptions to restrictions on
transferability of awards, respond to certain changes in Rule 16b-3
promulgated under the Securities Exchange Act of 1934, and make certain
editorial refinements. The amendments were approved with 4,759,289 shares
(54.5%) voting in favor of the proposal, 3,902,743 (44.7%) voting against the
proposal and 76,403 shares abstaining from voting on the proposal. The total
number of votes cast with respect to the proposal was 8,738,444.
(ii) Up to 8,731,835 shares were voted in the election of each of the
four nominees for Director and the voting results were as follows:
<TABLE>
<CAPTION>
Votes in Favor
Nominee of Election Voted in Favor
_______ ___________ ______________
Number of Shares Percent
<S> <C> <C>
Monty Fu 8,572,657 98.2
Joseph Kleiman 8,511,804 97.5
Henry N. Wagner, Jr., M.D. 8,512,103 97.5
Dr. Gail R. Wilensky 8,509,321 97.5
<PAGE>
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.
SYNCOR INTERNATIONAL CORPORATION
(Registrant)
January 14, 1994 By: /s/ Michael A. Piraino
____________________________
Michael A. Piraino
Senior Vice President and
Chief Financial Officer
(Principal Financial/Accounting
Officer)
</TABLE>
