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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 MARCH 31, 1996 COMMISSION FILE NUMBER 0-8640
SYNCOR INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 85-0229124
(State or other jurisdiction (I.R.S. Employer Identification No.)
of 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 March 31, 1996, 10,412,509 shares of $.05 par
value common stock were outstanding.
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SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
INDEX
_____
Page
____
Part I. Financial Information
Item 1. Consolidated Condensed Financial Statements
Balance Sheets as of
March 31, 1996 and December 31, 1995 . . . . . 2
Statements of Income for three months
ended March 31, 1996 and 1995 . . . . . . . . . 3
Statements of Cash Flows for three months
ended March 31, 1996 and 1995 . . . . . . . . . 4
Notes to Consolidated Condensed Financial
Statements . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of
Financial Condition . . . . . . . . . . . . . . . 6
Part II. Other Information . . . . . . . . . . . . . . . . 7
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . 8
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
___________ ___________
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 26$ ,084 $ 23,022
Short-term investments 2,013 2,296
Accounts receivable, net 54,399 50,857
Inventory 4,961 5,159
Prepaids and other current assets 240 2,306
Total current assets 87,697 83,640
Marketable investment securities 1,246 1,241
Property and equipment, net 22,612 23,006
Excess of purchase price over net assets
acquired, net 14,334 14,414
Other assets 11,531 11,379
_________ _________
$137,420 $133,680
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 36,005 $ 33,286
Accrued liabilities 3,023 2,395
Accrued wages and related costs 8,747 10,060
Federal and state taxes payable 669 755
Current maturities of long-term debt 2,213 2,224
_________ _________
Total current liabilities 50,657 48,720
Long-term debt, net of current maturities 4,711 5,200
Deferred compensation 864 864
Minority interest 772 634
Stockholders' equity:
Common stock, $.05 par value 533 533
Additional paid-in capital 47,169 47,169
Unrealized loss on investments (21) (24)
Employee stock ownership loan guarantee (2,548) (2,998)
Foreign currency translation adjustment (110) (105)
Retained earnings 37,304 35,598
Treasury stock, at cost; 250 shares (1,911) (1,911)
_________ _________
Net stockholders' equity 80,416 78,262
_________ _________
$137,420 $133,680
========= =========
<FN>
See notes to consolidated condensed financial statements.
/TABLE
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
____________________________
1996 1995
______ ______
(UNAUDITED)
<S> <C> <C>
Net sales $92,317 $83,001
Cost of sales 72,103 65,164
_________ _________
Gross profit 20,214 17,837
Operating, selling and administrative expenses 18,101 16,213
_________ _________
Operating income 2,113 1,624
Other income, net 731 76
_________ _________
Income before taxes 2,844 1,700
Provision for income taxes 1,138 680
_________ _________
Net income $ 1,706 $ 1,020
========= =========
Net income per share $ .16 $ .10
========= =========
Weighted average shares outstanding 10,468 10,428
========= =========
<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>
THREE MONTHS ENDED MARCH 31,
____________________________
1996 1995
________ ________
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,706 $1,020
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,506 2,683
Amortization of ESSOP loan guarantee 450 242
Decrease (increase) in:
Accounts receivables, net (3,542) 906
Inventory 198 317
Other current assets 2,066 (393)
Increase (decrease) in:
Accounts payable 2,719 (5,358)
Accrued liabilities 628 245
Accrued wages and related costs (1,313) 806
Federal and state taxes payable (86) 541
Foreign currency translation adjustment (5) -
Minority interest 138 (37)
--------- ---------
Net cash provided by operating activities 5,465 972
--------- ---------
Cash flows from investing and financing activities:
Purchase of property and equipment, net (1,474) (1,284)
(Decrease) Increase in short-term investments 283 (182)
(Increase) in other long-term assets (715) (104)
Repayment of short-term debt (11) -
Repayment of long-term debt (489) (303)
Unrealized gain on investments 3 -
--------- ---------
Net cash used in investing and financing
activities (2,403) (1,873)
--------- ---------
Net increase (decrease) in cash and cash
equivalents 3,062 (901)
Cash and cash equivalents at beginning of period 23,022 17,761
--------- ---------
Cash and cash equivalents at end of period $26,084 $16,860
========= =========
<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 three
months ended March 31, 1996, 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 Annual Report
and Form 10-K for the period ended December 31, 1995.
2. ADOPTION OF FINANCIAL ACCOUNTING STANDARDS No. 123 "ACCOUNTING
FOR STOCK-BASED COMPENSATION." In October 1995, the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 123, "Accounting for Stock-
Based Compensation" (Statement 123). Statement 123
established a fair value based method of accounting for stock-
based compensation as compared to the intrinsic value based
method prescribed under APB Opinion No. 25. Companies have
the option of either adopting the fair value method of
Statement 123 or continuing to use the intrinsic value based
method of APB No. 25 and including pro forma net income and
earnings per share amounts in the footnotes as if the fair
value method had been adopted. The disclosure provisions of
Statement 123, including the pro forma information, are
effective for fiscal years beginning after December 15, 1995.
The Company will continue to use the intrinsic value of APB
Opinion No. 25 and implement the disclosure provisions of
Statement 123 in fiscal 1996.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
NET SALES
Consolidated net sales for the first quarter of 1996 increased 11.2
percent or $9.3 million to $92.3 million versus $83.0 million for
the first quarter of 1995. During the first quarter of 1996, the
Company was successful in achieving price increases on technetium
based products of approximately 2 percent to 3 percent. These
price increases were in response to expected price increases from
the Company's suppliers. Sales growth during the quarter was also
positively influenced from the opening or acquisitions of
radiopharmacies that were made during 1995. Finally, the Company
continues to experience strong growth in volume across all product
lines, especially cardiology. Sales from cardiology products now
account for approximately 65 percent of the Company's net sales, up
from 64 percent for the same period in 1995.
GROSS PROFIT
Gross profit for the first quarter of 1996 increased $2.4 million
to $20.2 million, or 21.9 percent of net sales compared to $17.8
million or 21.5 percent of net sales for the comparable quarter in
1995. The Company's successful ability to implement price
increases was a positive factor affecting the improvement in the
gross margin during the first quarter of 1996. Also, the continued
success in converting customers from thallium, a generic product,
to Cardiolite(R), a proprietary higher margin product, was a
positive contributor to the gross margin. In addition, the Company
continues its on-going success in converting customers to its full
service unit dose compounding services, rather than supplying those
same customers with the raw materials which allow them to perform
their own compounding services.
OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
Operating, selling and administrative expenses rose 11.6 percent
for the first quarter of 1996 or $1.9 million to $18.1 million, and
as a percentage of sales to 19.6 percent from 19.5 percent for the
same period in 1995.
The Company is making significant investments in new business
opportunities which are aimed at increasing its long-term
competitiveness. These opportunities include the entry into the
Positron Emission Tomography (PET) business, continued domestic and
international expansion and the re-engineering of critical business
practices and associated information systems. The first quarter of
1996 reflects the expenditures required for these opportunities.
The Company expects to continue the increased level of expenditures
in the operating, selling and administrative category as it
accelerates its spending in the PET and re-engineering
opportunities for the next two to three years. As a consequence,
overall Company earnings may be reduced over the same period.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash, cash equivalents and short-term investments
of $29.3 million at March 31, 1996, compared with $26.6 million at
December 31, 1995. The Company's total debt position of $6.9
million at March 31, 1996, was $.5 million lower than the debt
position at December 31, 1995. Working capital increased by $2.1
million to $37 million at March 31, 1996, compared to $34.9 million
at December 31, 1995. Days sales outstanding on receivable
decreased to 54 days at March 31, 1996, compared to 55 days at
December 31, 1995.
The Company believes sufficient internal and external sources exist
to fund operations and future expansion programs. At March 31,
1996, the Company had unused lines of credit of $17.9 million to
fund short-term needs.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
P.E.T.Net(TM) Pharmaceutical Services, LLC
___________________________________________
On May 1, 1996, the Company announced that it has entered into a
joint venture with CTI, Inc. to develop positron emission
tomography radiopharmaceuticals for clinical diagnostic imaging.
The Company will invest $10 million over the next three years. The
name of the joint venture is P.E.T.Net(TM) Pharmaceutical Services,
LLC.
Mallinckrodt Medical, Inc.
__________________________
On April 17, 1996, the Company announced that it signed a new
supply agreement with Mallinckrodt Medical, Inc. As a result of
the agreement, the Company will have access to the full range of
Mallinckrodt radiopharmaceuticals and Syncor will provide to
Mallinckrodt access to DuPont Merck's Cardiolite(R), Neurolite(R)
and Persantine(R).
Stock Repurchase
________________
In June 1995, the Company's Board of Director approved the
repurchase of up to 500,000 shares of the Company's common stock.
In May 1996, the Company plans to begin the first phase of the
repurchase program.
<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)
/S/ MICHAEL E. MIKITY
April 10, 1996 BY:_____________________________
Michael E. Mikity
Vice President and
Chief Financial Officer
(Principal Financial /
Accounting Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> 12/31/96
<PERIOD-START> 01/01/96
<PERIOD-END> 03/31/96
<CASH> 28,097
<SECURITIES> 1,246
<RECEIVABLES> 55,496
<ALLOWANCES> (1,097)
<INVENTORY> 4,961
<CURRENT-ASSETS> 87,697
<PP&E> 61,865
<DEPRECIATION> (39,253)
<TOTAL-ASSETS> 137,420
<CURRENT-LIABILITIES> 50,657
<BONDS> 0
0
0
<COMMON> 533
<OTHER-SE> 79,883
<TOTAL-LIABILITY-AND-EQUITY> 137,420
<SALES> 92,317
<TOTAL-REVENUES> 92,317
<CGS> 72,103
<TOTAL-COSTS> 72,103
<OTHER-EXPENSES> 18,101
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (228)
<INCOME-PRETAX> 2,844
<INCOME-TAX> 1,138
<INCOME-CONTINUING> 1,706
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,706
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>