<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1995
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
incorporation or organization) Identification No.)
20001 PRAIRIE STREET, CHATSWORTH, CALIFORNIA 91311-2185
(Address of principal executive offices) (Zip Code)
(818) 886-7400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK $.05 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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K (Section 229.405 of this chapter) 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
--
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, computed by reference to the average bid and asked prices of such
stock on March 1, 1996 is $62,730,993. The number of shares outstanding of the
Registrant's $0.05 par value common stock as of March 29, 1996 was 10,412,509
shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Shareholders for the year ended
December 31, 1995, are incorporated by reference into Parts I, II and IV of this
report.
Portions of Registrant's definitive Proxy Statement for Registrant's Annual
Meeting of Shareholders on June 26, 1996, are incorporated by reference into
Part III of this report.
- --------------------------------------------------------------------------------
<PAGE>
SYNCOR INTERNATIONAL CORPORATION
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT
DECEMBER 31, 1995
PART I PAGE
Item 1. BUSINESS........................................................... 1
Item 2. PROPERTIES......................................................... 4
Item 3. LEGAL PROCEEDINGS.................................................. 5
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................ 6
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS............................................................ 6
Item 6. SELECTED FINANCIAL DATA............................................ 6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.............................................. 6
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA............ 6
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE............................................... 6
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................. 7
Item 11. EXECUTIVE COMPENSATION............................................. 7
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT......................................................... 7
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................... 7
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.... 7
<PAGE>
PART I
ITEM I. BUSINESS.
Unless otherwise indicated, the term "Syncor" or the "Company" as used in this
report refers to Syncor International Corporation, incorporated in 1985 under
the laws of the State of Delaware, and its consolidated subsidiaries.
GENERAL DEVELOPMENT OF BUSINESS
The general development of the Company's business for the year ended December
31, 1995, is covered in the letter from the Chairman of the Board, Chief
Executive Officer and President to the Company's shareholders in the Company's
Annual Report to Shareholders for said year and is hereby incorporated herein by
reference. A copy of the Company's Annual Report to Shareholders is attached
hereto as Exhibit 13.
DESCRIPTION OF BUSINESS
PRINCIPAL PRODUCTS PRODUCED AND SERVICES RENDERED
The Company is a pharmacy services company primarily engaged in compounding,
dispensing and distributing radiopharmaceutical products to hospitals and
clinics through its nationwide network of 118 nuclear pharmacy service centers
and four Positron Emission Tomography ("PET") pharmacy service centers.
The radiopharmaceuticals provided by the Company are principally used for
diagnostic imaging of physiological functions and organ systems. In addition,
the Company provides various services in connection with the sale of
radiopharmaceuticals, including radiopharmaceutical record keeping required by
Federal and state government agencies, and radiopharmaceutical technical
consulting. The Company estimates that its pharmacies service approximately
7,000 hospitals and clinics in 39 states throughout the United States. During
each of the last three fiscal years, these pharmacies contributed more than 95
percent of the consolidated net sales of the Company.
Other activities of the Company include the marketing and distribution of
imaging cold kits, isotopes and medical reference sources in addition to nuclear
and pharmacy equipment and accessories.
The description of Syncor's various activities in the Company's Annual Report to
Shareholders for the year ended December 31, 1995 are hereby incorporated
herein by reference.
SOURCES AND AVAILABILITY OF RAW MATERIALS
The Company's pharmacies dispensed approximately 60 different
radiopharmaceutical products, which are obtained primarily from six suppliers,
including The Radiopharmaceutical Division of The DuPont Merck Pharmaceutical
Company ("DuPont").
The majority of the products are supplied by DuPont. If DuPont is not able to
supply its proprietary products to the Company, the Company's operations could
be negatively impacted. Management believes that if any one of the other
suppliers of radiopharmaceuticals to the Company failed to supply products, then
the Company's other current suppliers would be able to supply additional
products to make up most of the shortfall. The failure of two or more suppliers
to provide products at a particular time, however, could have an adverse effect
on the Company's business. Although periodic product
1
<PAGE>
outages and shortages occur, to date, the Company's pharmacies have not
experienced any significant difficulty in securing sufficient supplies of
radiopharmaceutical products.
On January 16, 1995, Medi-Physics stopped selling its proprietary
radiopharmaceutical products (including Ceretec-Registered Trademark-, a
brain imaging agent) through Syncor's national pharmacy network, and began
its own network with formerly non-affiliated, independent radiopharmacies.
In 1994, Syncor had approximately $19 million in sales and earned
approximately $2.4 million gross margin from Medi-Physics' proprietary
products. In 1995, the Company was able to successfully overcome a portion
of the loss of Medi-Physics' proprietary products by providing its customers
with Neurolite-Registered Trademark-, a brain imaging agent, and other
services, such as custom compounding.
The Company is consistently in pursuit of improving its relationships with
current suppliers and developing new long-term relationships.
PATENTS, TRADEMARKS, LICENSES AND DISTRIBUTION AGREEMENTS
The Company owns a number of trademarks and has a variety of license agreements.
In addition, the Company has entered into exclusive radiopharmacy distribution
agreements with two suppliers for certain proprietary radiopharmaceutical
products. While certain of the foregoing trademarks and agreements are
considered to be of value to the Company, management believes at present its
competitive position is dependent principally on the efficient operation of its
pharmacies and high quality of its customer service.
Since February 1, 1994, the Company has participated in a long-term distribution
agreement with its principal supplier of radiopharmaceutical products, DuPont.
Under the terms of the agreement, DuPont relies upon the Company as the primary
distribution channel for its radiopharmaceutical products in the United States.
Upon concluding a joint review of the agreement with DuPont in early 1995, the
original terms of the agreement were modified to allow the Company to begin
distribution, in unit-dose and bulk form, of the newly approved
radiopharmaceutical agent Neurolite-Registered Trademark-, which utilizes Single
Photon Emission Computed Tomography ("SPECT") for brain imaging. Modifications
to the agreement also resulted in enhanced margins and cash flow for the
Company.
DEPENDENCE ON CUSTOMERS
The Company's operations are such that none of its business is dependent upon a
single customer. However, if two or more customers were to merge and cease to
use the Company's services, such a loss could have a short-term negative impact
on the Company's operations.
COMPETITIVE CONDITIONS
The Company's pharmacies compete primarily with large manufacturers of
radiopharmaceuticals, which directly supply radiopharmaceutical products to
hospitals. Two of such manufacturers have set up their own centralized
radiopharmacies to supply customers. Following the loss of Medi-Physics'
proprietary products, Syncor offered its customers an alternative product,
Neurolite-Registered Trademark-, a brain imaging agent, and offered increased
compounding services. The Company also competes with a number of other
independent entities, each of which operates one or more radiopharmacies. In
certain markets, there is competition with universities which own and operate
centralized radiopharmacies. The principal competitive practices of the
manufacturers, and others, involve price and service. Management believes
that the advantages to end-users of using a centralized radiopharmacy rather
than preparing their own radiopharmaceutical products include: i) reduced
risk of radiation exposure to hospital personnel; (ii) cost savings due to
the Company's volume purchasing power; (iii) better utilization of
time-sensitive
2
<PAGE>
products purchased from the radiopharmaceutical manufacturers; and (iv)
reduction in the time needed to maintain extensive records required by
regulatory agencies.
In brief, the Company's pharmacies have continued to provide quality controlled
unit-dose radiopharmaceuticals, a nearly comprehensive nuclear medicine product
line, professional consultation and delivery services, and computer hardware and
proprietary software products for use in nuclear medicine department operations.
GOVERNMENT REGULATION
Each of the Company's pharmacies is licensed by and must comply with the
regulations of the United States Nuclear Regulatory Commission ("NRC") or
corresponding state agencies. In addition, each pharmacy is licensed and
regulated by the Board of Pharmacy in the state where it is located.
Periodic inspections of the Company's pharmacies are conducted by the NRC and
various other Federal and state agencies. Unsatisfactory inspection results
could lead to escalated enforcement action, the imposition of fines or the
suspension, revocation or denial of renewal of the licenses for the location
inspected. The Company devotes substantial human and financial resources to
ensure continued regulatory compliance and believes that it is currently in
compliance with all material rules and regulations.
The Company is subject to the various Federal and state regulations relating to
occupational safety and health and the use and disposal of bio-hazardous
materials. In addition, the Company's products are subject to Federal and state
regulations relating to drugs and medical devices. The Company is seeking to
challenge the FDA's announcement on February 27, 1995 of its intention to
regulate the development of positron emission tomography ("PET") nuclear
medicine because such regulation would increase the Company's cost of
operations.
Compliance with the applicable environmental control laws and regulations, such
as those regulating the use and disposal of radioactive materials, is inherent
in the industry and the normal operations of the Company's pharmacies.
Historically, compliance with such laws and regulations has not had a material
adverse effect on the capital expenditures, earnings or competitive position of
the Company.
FOREIGN OPERATIONS
Syncor owns and operates nuclear pharmacies at four non-U.S. sites: Hong Kong
(British Crown Colony); Taipei and Kaoshiung (Taiwan Republic of China); and
Manila (Republic of the Philippines). The Company continues its joint ventures
with various parties in the Peoples' Republic of China, with pharmacies
operating in Beijing and Shanghai. In 1995, the Company continued its plans to
expand internationally, and opened radiopharmacies in Mexico City (United States
of Mexico) and in Bangkok (Kingdom of Thailand). In early 1996, Syncor opened
its ninth international pharmacy in Puerto Rico. By the end of 1998, Syncor
plans to have an international distribution network in 25 markets outside the
United States. The Company's foreign operations are not immune to the inherent
uncertainties and risks of currency fluctuations, political instability, trade
restrictions, or inconsistent product regulations associated with each
jurisdiction.
EMPLOYEES
As of December 31, 1995, Syncor employed approximately 2,161 people. However,
the full-time equivalent personnel for the same period was approximately 1,314
people.
3
<PAGE>
ITEM 2. PROPERTIES.
The Company and its consolidated subsidiaries lease (and in one location own)
and operate a number of pharmacies whose locations are set forth in the
following table:(1)
<TABLE>
<CAPTION>
STATE LOCATION STATE LOCATION
- ----- -------- ----- --------
<S> <C> <C> <C>
ALABAMA Birmingham MISSOURI Kansas City
Mobile Overland (St. Louis)
ARIZONA Gilbert (Mesa) Springfield
Phoenix* NEBRASKA Lincoln
Tucson Omaha*
ARKANSAS Little Rock NEVADA Las Vegas
CALIFORNIA Bakersfield Reno
Berkeley NEW JERSEY Kenilworth (Newark)
Colton NEW MEXICO Albuquerque
Fresno NEW YORK The Bronx
Los Angeles** Cheektowaga (Buffalo)
Modesto Franklin Square(Long Island)
Orange Newburgh
Sacramento* Rochester
San Diego Syracuse
San Jose Troy (Albany)
Torrance NORTH CAROLINA Charlotte
Van Nuys (Los Angeles) Greensboro
COLORADO Colorado Springs OHIO Cincinnati
Denver Columbus
CONNECTICUT Glastonbury (Hartford) Girard (Youngstown)
Stamford Holland (Toledo)
DELAWARE Seaford Miamisburg (Dayton)
FLORIDA Fort Myers Uniontown (Akron)
Gainesville Valley View (Cleveland)
Jacksonville OKLAHOMA Oklahoma City
Jupiter (West Palm Beach) Tulsa
Miami Lakes (Miami) OREGON Portland
Pensacola PENNSYLVANIA Allentown
Pompano Beach (Ft.Lauderdale) Bloomsburg
Sarasota Bristol (N. Philadelphia)
Tampa Duncansville (Altoona)
Winter Park (Orlando) Hummelstown (Harrisburg)
GEORGIA Augusta Pittsburgh
Columbus Sharon Hill (Philadelphia)
Doraville (Atlanta) RHODE ISLAND Providence
ILLINOIS Des Plaines SOUTH CAROLINA Columbia
Chicago TENNESSEE Chattanooga
Springfield Jackson
INDIANA Ft. Wayne Knoxville
Indianapolis Memphis
Munster Memphis (Med-Center)
West Lafayette (Purdue) Nashville
IOWA Des Moines TEXAS Amarillo
KANSAS Wichita Austin
KENTUCKY Lexington Beaumont
Louisville Corpus Christi
LOUISIANA New Orleans Dallas
MARYLAND Lanham (Washington DC) El Paso
Timonium (Baltimore) Fort Worth
MASSACHUSETTS Woburn (Boston) Houston
MICHIGAN Grand Rapids Lubbock
Southfield (Detroit) North Dallas
Swartz Creek (Flint) San Antonio
MINNESOTA Moorhead (Fargo ND) VIRGINIA Richmond
St. Paul Virginia Beach
MISSISSIPPI Flowood (Jackson) WASHINGTON Seattle
Gulfport Spokane
WEST VIRGINIA Huntington
WISCONSIN Appleton (Green Bay)
Wauwatosa (Milwaukee)
</TABLE>
-------------------------
(1) The Company also owns an interest in pharmacies in Salt Lake City,
Utah; Midland, Texas, and Huntsville, Alabama.
* Cities where the Company has both a nuclear and PET pharmacy.
** PET pharmacy only.
4
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Pharmacy lease terms vary from less than one year up to approximately ten years,
and average approximately five years. Leased areas average approximately 4,500
square feet.
The Company's Corporate Offices are located in two facilities. The Company
leases its main Corporate Office facility in Chatsworth, California, pursuant to
a lease that commenced on March 1, 1987. The lease is for a term of ten years
with two successive five-year renewal options. Presently, the Company leases
approximately 76,464 square feet at such location which is adequate for the
Company's current needs. The Company subleases a second Corporate Office
facility in Norcross, Georgia, pursuant to a sublease that commenced on August
13, 1993. The sublease is for a term of three years. Presently, the Company
subleases approximately 9,593 square feet at such location which is adequate for
the Company's current needs.
ITEM 3. LEGAL PROCEEDINGS.
There are various litigation proceedings in which the Company and its
subsidiaries are involved. Many of the claims asserted against the Company in
these proceedings are covered by insurance. The results of litigation
proceedings cannot be predicted with certainty. However, in the opinion of the
Company's General Counsel, such proceedings either are without merit or do not
have a potential liability which would materially affect the financial condition
of the Company and its subsidiaries on a consolidated basis.
The Company has also undertaken several pieces of litigation where it is the
plaintiff. In SYNCOR V. FOOD AND DRUG ADMINISTRATION ("FDA"), filed in the U.S.
District Court for the District of Columbia on August 24, 1995, Syncor is
seeking to challenge the FDA announcement on February 27, 1995 of its
intention to regulate the development of positron emission tomography ("PET")
nuclear medicine. Syncor bases its case on: (1) violation of the
Administrative Procedure Act; (2) violation of the Federal Food, Drug, and
Cosmetic Act; (3) usurping of States' rights by seeking to define the
practice of pharmacy, in violation of the Tenth Amendment; and (4) abuse of
discretion in denying Syncor's Citizen Petition of May 4, 1992. The Company's
goals are to convince the court to declare FDA's PET regulatory scheme null
and void, and to allow state licensed pharmacies to compound PET
radiotracers. The parties have filed respective summary judgment motions and
the issues will be heard on May 1, 1996.
In SYNCOR V. PYRAMID DIAGNOSTIC SERVICES, INC. ("Pyramid") filed on April 6,
1995 in the United States District Court Western District of Michigan - Southern
Division, Syncor sought to prevent Pyramid's unauthorized procurement of
DuPont's Cardiolite-Registered Trademark- (a major product for the Company) in
violation of a bailment and license agreement, criminal drug conversion, unfair
competition, tortious interference with business relationships, and
infringement of Syncor's exclusivity to Cardiolite-Registered Trademark-. Syncor
first obtained a preliminary injunction against Pyramid on April 17, 1995,
prohibiting Pyramid from buying or selling Cardiolite-Registered Trademark-. A
settlement agreement was later executed with Pyramid on October 5, 1995, and a
Stipulated Judgment was filed in favor of Syncor in the amount of $6 million
dollars. The preliminary injunction against Pyramid was made permanent, and
confidentiality over the case was lifted.
Pyramid filed for bankruptcy on October 6, 1995. In connection therewith, on
November 13, 1995, Syncor purchased all of Pyramid's assets for $3,150,000. As
a result, three new sites were added to Syncor's pharmacy network (of eight
sites purchased from Pyramid, five were closed). Pyramid is currently in the
process of liquidating its assets. The Stipulated Judgment in favor of Syncor is
subject to appeal by other creditors of Pyramid and court approval. If Syncor's
claims are not contested, Syncor may receive its portion of the assets.
5
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information relating to the Company's Common Stock which appears in the
Company's Annual Report to Shareholders for the year ended December 31, 1995,
under Note 14, "Selected Quarterly Results of Operations" and Shareholder
Information, included in this Form 10-K Annual Report as Exhibit 13, is
hereby incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data which appears in the Company's Annual Report to
Shareholders for the year ended December 31, 1995, under the heading of
"Selected Financial Data", included in this Form 10-K Annual Report as Exhibit
13, is hereby incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's discussion and analysis of financial condition and results of
operations which appears in the Company's Annual Report to Shareholders for
the year ended December 31, 1995, under the heading of "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
included in this Form 10-K Annual Report as Exhibit 13, is hereby
incorporated herein by reference.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.
The consolidated financial statements and the notes thereto which appear in the
Company's Annual Report to Shareholders for the year ended December 31, 1995,
under the headings of "Consolidated Statements of Income" and "Consolidated
Balance Sheets", included in this Form 10-K Annual Report as Exhibit 13, are
hereby incorporated herein by reference. Schedules containing certain
supporting information are also included. See Financial Statement
Schedules on page 7 hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
6
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information called for by Item 10 of Form 10-K is hereby incorporated by
reference from the Company's definitive Proxy Statement for its Annual Meeting
of Shareholders, to be held on June 26, 1996, which will be filed with the
Commission pursuant to Regulation 14A of the Securities and Exchange Commission
("Regulation 14A") within 120 days from December 31, 1995.
Based solely upon its review of Forms 3 and 4 furnished to the Company, the
Company believes that all reports required to be filed during 1995 pursuant to
Section 16(b) of the Securities Exchange Act of 1934 were timely filed.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by Item 11 of Form 10-K is hereby incorporated by
reference from the Company's definitive Proxy Statement for its Annual Meeting
of Shareholders to be held on June 26, 1996, which will be filed with the
Commission pursuant to Regulation 14A within 120 days from December 31, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information called for by Item 12 of Form 10-K is hereby incorporated by
reference from the Company's definitive Proxy Statement for its Annual Meeting
of Shareholders to be held on June 26, 1996, which will be filed with the
Commission pursuant to Regulation 14A within 120 days from December 31, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for by Item 13 of Form 10-K is hereby incorporated by
reference from the Company's definitive Proxy Statement for its Annual Meeting
of Shareholders to be held on June 26, 1996, which will be filed with the
Commission pursuant to Regulation 14A within 120 days from December 31, 1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. CONSOLIDATED FINANCIAL STATEMENTS.
The consolidated financial statements listed below, together with
the report thereon of KPMG Peat Marwick LLP, dated March 8, 1996,
which appear in the Company's Annual Report to Shareholders
for the year ended December 31, 1995, included in this Form 10-K
Annual Report as Exhibit 13, are hereby incorporated herein by
reference.
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
7
<PAGE>
2. FINANCIAL STATEMENT SCHEDULES.
The following schedule supporting the financial statements of
the Company is included herein:
Page
----
Schedule II Valuation and Qualifying Accounts..........10
All other schedules and financial statements of the Company are
omitted because they are not applicable, not required or because
the required information is included in the consolidated
financial statements or notes thereto.
3. INDEX TO EXHIBITS.
The list of exhibits filed as part of this report on Form 10-K
or incorporated herein by reference appear as Index to Exhibits
on page 11 hereof.
(b) REPORTS ON FORM 8-K FILED IN THE QUARTER ENDED DECEMBER 31, 1995.
None.
(c) EXHIBITS.
The exhibits required by Item 601 of Regulation S-K are filed
herewith or are incorporated herein by reference and are listed
in the Index to Exhibits on page 11 hereof.
(d) ADDITIONAL INFORMATION.
In January 1996, Joseph Kleiman, a member of the Company's Board
of Directors since 1985, died.
8
<PAGE>
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.
SYNCOR INTERNATIONAL CORPORATION
By /s/ Robert G. Funari
------------------------------
Robert G. Funari
President and Chief Operating Officer
Date: 3/31/96
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.
/s/ Monty Fu
- --------------------------------------------
Monty Fu, Chairman of the Board and Director
Date: 3/31/96
/s/ Gene R. McGrevin
- --------------------------------------------
Gene R. McGrevin, Vice Chairman of the Board, Chief Executive Officer
(Principal Executive Officer) and Director
Date: 3/31/96
/s/ Robert G. Funari
- --------------------------------------------
Robert G. Funari, President and Chief Operating Officer
and Director
Date: 3/31/96
/s/ Michael E. Mikity
- --------------------------------------------
Michael E. Mikity, Vice-President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: 3/31/96
/s/ George S. Oki
- --------------------------------------------
George S. Oki, Director
Date: 3/31/96
/s/ Arnold E. Spangler
- --------------------------------------------
Arnold E. Spangler, Director
Date: 3/31/96
/s/ Steven B. Gerber
- --------------------------------------------
Steven B. Gerber, Director
Date: 3/31/96
/s/ Henry N. Wagner, Jr.
- --------------------------------------------
Henry N. Wagner, Jr., Director
Date: 3/31/96
/s/ Gail R. Wilensky
- --------------------------------------------
Gail R. Wilensky, Director
Date: 3/31/96
9
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
(IN THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCE BALANCE
AT COSTS AT END
BEGINNING AND DEDUCTIONS OF
DESCRIPTION OF PERIOD EXPENSES (A) PERIOD
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended
December 31, 1995
Allowance for doubtful
accounts $1,154 $ 609 $ 666 $1,097
Year Ended
December 31, 1994
Allowance for doubtful
accounts $1,200 $ 358 $ 404 $1,154
Seven-Months Ended
December 31, 1993
Allowance for doubtful
accounts $1,502 $ 224 $ 526 $1,200
Year Ended May 31, 1993
Allowance for doubtful
accounts $1,681 $1,123 $1,302 $1,502
</TABLE>
(A) Uncollectible accounts written-off, net of recoveries and reduction of
reserve.
10
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO.
3. Certificate of Incorporation and By-Laws
3.1 Restated Certificate of Incorporation of the Company filed as
Exhibit 3.1 to the 8/28/87 Form 10-K and incorporated herein by
reference.
3.2 Restated By-Laws of the Company.
4. Instruments Defining the Rights of Security Holders
4.1 Stock Certificate for Common Stock of the Company filed as Exhibit
4.1 to the 8/26/86 Form 10-K and incorporated herein by reference.
4.2 Rights Agreement dated as of 11/8/89 between the Company and
American Stock Transfer & Trust Company filed as Exhibit 2.1 to the
Registration Statement on Form 8-A dated 11/3/89 and incorporated
herein by reference.
10. Material Contracts
10.1 Employment Agreement dated 2/1/89, between the Company and Gene R.
McGrevin filed as Exhibit 10.2 to 1/27/89 Form 8-K and incorporated
herein by reference.*
10.2 First Amendment dated 7/11/89 to Employment Agreement dated 2/1/89
between the Company and Gene R. McGrevin filed as Exhibit 10.5 to
8/30/90 Form 10-K and incorporated herein by reference.*
10.3 Second Amendment dated 10/16/89 to Employment Agreement dated
2/1/89 between the Company and Gene R. McGrevin filed as Exhibit
10.6 to 8/30/90 Form 10-K and incorporated herein by reference.*
10.4 Third amendment dated 1/1/91 to Employment Agreement dated 2/1/89
between the Company and Gene R. McGrevin filed as Exhibit 10.7 to
8/29/91 Form 10-K and incorporated herein by reference.*
10.5 Syncor International Corporation 1981 Master Stock Option Plan as
amended filed as part of Company's Proxy Statement dated 11/5/85,
for its Annual Meeting of Shareholders held 11/26/85, and
incorporated herein by reference.*
10.6 Stock Option Agreement of Gene R. McGrevin dated 1/2/92 filed as
Exhibit 10.16 to 8/27/92 Form 10-K and incorporated herein by
reference.*
10.7 Form of Indemnity Agreement substantially as entered into between
Company and each Director and Officer filed herein as Exhibit 3.2
Appendix A.*
10.8 Form of Benefits Agreement substantially as entered into between
Company and each Director.*
10.9 Form of Benefits Agreement substantially as entered into between
Company and certain employees, filed herein as Exhibit 10.8.*
11
<PAGE>
10.10 Syncor International Corporation 1990 Master Stock Incentive Plan
As Amended and Restated filed as part of Company's Proxy Statement
dated 10/4/93 for its Annual Meeting of Shareholders held 11/15/93
and incorporated herein by reference.*
10.11 Syncor International Corporation Deferred Compensation Plan
effective July 1, 1991, as Amended and Restated effective April 19,
1993, filed as Exhibit 10.11 to 3/30/93 Form 10-K and incorporated
herein by reference.*
10.12 Employment Agreement dated July 21, 1993, between the Company and
Robert G. Funari filed as Exhibit 10.12 to 3/30/94 Form 10-K and
incorporated herein by reference.*
10.13 Syncor International Corporation McGrevin Deferred Compensation
Plan, Amended and Restated, effective October 23, 1995.*
10.14 Split Ownership/Split Dollar Life Insurance Assignment Agreement
effective June 10, 1993, between the Company and Gene R. McGrevin
filed as Exhibit 10.14 to 8/30/90 Form 10-K and incorporated herein
by reference.*
10.15 Form of Stock Option Agreement substantially as entered into
between the Company and certain employee Directors and employees
filed as Exhibit 10.15 to 3/30/94 Form 10-K and incorporated herein
by reference.*
10.16 Form of Stock Option Agreement substantially as entered into
between the Company and certain non-employee Directors filed as
Exhibit 10.16 to 3/30/94 Form 10-K and incorporated herein by
reference.*
10.17 Non-qualified stock option award agreement dated January 24, 1995
entered into between the Company and Arnold E. Spangler.*
10.18 Non-qualified stock option award agreement dated January 24, 1995
entered into between the Company and George S. Oki.*
10.19 Non-qualified stock option award agreement dated January 24, 1995
entered into between the Company and Henry Wagner, Jr.*
11. Statement Re: Computation of Per Share Earnings
Computation can be clearly determined from the material contained in the
Company's Annual Report to Shareholders for year ended December 31, 1995.
13. Annual Report to Security Holders
Syncor International Corporation Annual Report to Shareholders for the year
ended December 31, 1995, except for specific information in such Annual
Report expressly incorporated herein by reference, is furnished for the
information of the Commission and is not to be deemed "filed" as part
hereof.
12
<PAGE>
21. Subsidiaries of the Registrant
State or Country
Name of Subsidiary of Organization
------------------ ----------------
Syncor Investment Management Corporation Delaware
Syncor Management Corporation California
Syncor Midland, Inc. Texas
Syncor Global Holdings Ltd. British Virgin Islands
Syncor International (Thailand) Co., Ltd. Kingdom of Thailand
Specialised Medicial Trading Pty Ltd Commonwealth of
Australia**
Syncor de Mexico, S.A. de C.V. United States of Mexico**
Syncor Hong Kong Limited Hong Kong B.C.C.**
Syncor Korea, Inc. Republic of Korea**
Syncor Pharmacies Australia Pty Ltd Commonwealth of
Australia**
Syncor Philippines, Inc. Republic of the
Philippines**
Syncor New Zealand Ltd. New Zealand**
Syncor Taiwan, Inc. Taiwan Republic of
China**
23. Consents of Experts and Counsel Consent of KPMG Peat Marwick LLP.***
- --------------------------------
* Management contracts or compensatory plan
** Subsidiaries of Syncor Global Holdings Ltd.
*** Included herewith
13
<PAGE>
EXHIBIT 3.2
RESTATED BY-LAWS OF
SYNCOR INTERNATIONAL CORPORATION
(A DELAWARE CORPORATION)
(RESTATED AS OF JUNE 20, 1995)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation within
the State of Delaware shall be in the City of Wilmington, County of New Castle.
SECTION 2. OTHER OFFICES. The Corporation may also have an office or offices
other than said registered office at such place or places, either within or
without the State of Delaware, as the Board of Directors shall from time to time
determine or the business of the Corporation may require.
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ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders for the election
of directors or for any other purpose shall be held at any such place, either
within or without the State of Delaware, as shall be designated from time to
time by the Board of Directors and stated in the notice of meeting or in a duly
executed waiver thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders, commencing with
the year 1996, shall be held at 2:00 p.m. on the second Wednesday of June, if
not a legal holiday, and if a legal holiday, then on the next succeeding day not
a legal holiday, at 2:00 p.m., or at such other date and time as shall be
designated from time to time by the Board of Directors and stated in the notice
of meeting or in a duly executed waiver thereof. At such annual meeting, the
stockholders shall elect a Board of Directors and transact such other business
as may properly be brought before the meeting.
At an annual meeting of the stockholders, only such business shall be conducted
as shall have been properly brought before the meeting. To be properly brought
before an annual meeting, business must be (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c) otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice must be received at the principal executive offices of the
corporation: (1) not less than 60 days in advance of such meeting if such
meeting is to be held on a day which is within 30 days preceding the anniversary
of the previous year's annual meeting or 90 days in advance of such meeting if
such meeting is to be held on or after the anniversary of the previous year's
annual meeting; and (2) with respect to any other annual meeting of
stockholders, on or before the close of business on the 15th day following the
date (or the first date, if there be more than one) of public disclosure of the
date of such meeting. For the purposes of this Section 2, the date of public
disclosure of a meeting shall include, but not be limited to, the date on which
disclosure of the date of the meeting is made in a press release reported by the
Dow Jones News Services, Associated Press or comparable national news service,
or in a document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Sections 13, 14 or 15(d) (or the rules and
regulations thereunder) of the Securities Exchange Act of 1934, as amended. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name, age and
business and residential
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address, as they appear on the Corporation's records, of the stockholder
proposing such business, (c) the class and number of shares of the Corporation
which are beneficially owned by the stockholder, and (d) any material interest
of the stockholder in such business. Notwithstanding anything in the by-laws to
the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 2. The chairman of the
annual meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting and in accordance with
the provisions of this Section 2 and if the chairman should so determine, the
chairman shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
SECTION 3. SPECIAL MEETINGS. Except as otherwise required by law and subject
to the rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation, special meetings of
the stockholders may be called only by the Chairman of the Board, by the
President or by the Secretary upon the request of the Board of Directors
pursuant to a resolution approved by a majority of the entire Board of
Directors. Business transacted at all special meetings of the stockholders
shall be confined to the purpose or purposes stated in the notice of the special
meeting.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise expressly required by
statute, written notice of each annual and special meeting of stockholders
stating the date, place and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be given
to each stockholder of record entitled to vote thereat not less than ten nor
more than sixty days before the date of the meeting. Notice shall be given
personally or by mail and, if by mail, shall be sent in a postage prepaid
envelope, addressed to the stockholder at such stockholder's address as it
appears on the records of the Corporation. Notice by mail shall be deemed given
at the time when the same shall be deposited in the United States mail, postage
prepaid. Notice of any meeting shall not be required to be given to any person
who attends such meeting, except when such person attends the meeting in person
or by proxy for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened, or who, either before or after the meeting, shall submit a
signed written waiver of notice, in person or by proxy. Neither the business to
be transacted at, nor the purpose of, an annual or special meeting of
stockholders need be specified in any written waiver of notice.
SECTION 5. LIST OF STOCKHOLDERS. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before each
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, showing the address of and the
number of shares registered in the name of each stockholder. Such stock list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city, town or village where
the meeting is to be held, which place
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<PAGE>
shall be specified in the notice of the meeting, or, if not specified, at the
place where the meeting is to be held. The stock list shall be produced and
kept at the time and place of the meeting during the whole time thereof, and may
be inspected by any stockholder who is present. The stock list shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list of stockholders or the books of the Corporation, or to vote in
person or by proxy in any meeting of stockholders.
SECTION 6. QUORUM, ADJOURNMENTS. The holders of shares of stock of the
Corporation representing a majority of the voting power of the issued and
outstanding stock of the Corporation entitled to vote, present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at all meetings of stockholders, except as otherwise provided by statute or by
the Certificate of Incorporation. If, however, such quorum shall not be present
or represented by proxy at any meeting of stockholders, the holders of shares of
stock of the Corporation representing a majority of the voting power of the
issued and outstanding stock, present in person or represented by proxy, shall
have the power to adjourn the meeting from time to time to another time and
place, without notice other than announcement at the meeting of such time and
place, until a quorum shall be present or represented by proxy. At such
adjourned meeting at which a quorum shall be present or represented by proxy,
any business may be transacted which might have been transacted at the meeting
as originally called. If the adjournment is for more than thirty days, or, if
after adjournment a new record date is set, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
Once a quorum has been established, the stockholders present at a duly organized
meeting can conduct the business properly brought before the meeting until
adjournment, notwithstanding the withdrawal of stockholders from the meeting.
SECTION 7. ORGANIZATION. At each meeting of stockholders, the Chairman of the
Board, if one shall have been elected, or, in the Chairman's absence or if one
shall not have been elected, the President, shall act as chairman of the
meeting. The Secretary or, in the Secretary's absence or inability to act, the
person whom the chairman of the meeting shall appoint secretary of the meeting
shall act as secretary of the meeting to keep the minutes thereof.
SECTION 8. ORDER OF BUSINESS. The date and time of the opening and the closing
of the polls for each matter upon which the stockholders will vote at a meeting
shall be announced at such meeting by the person presiding over the meeting. No
ballot, proxies or votes, nor any revocations thereof or changes thereto, shall
be received after the time set for the closing of the polls. The Board of
Directors may adopt by resolution such rules or regulations for the conduct of
meetings of stockholders as it shall deem appropriate. Except to the extent
inconsistent with such rules and regulations as adopted by the Board of
Directors, the chair of any meeting of stockholders shall have the absolute
right and authority to prescribe such rules, regulations and procedures and to
do all such acts as, in the judgment of such chair, are appropriate for the
proper conduct of the meeting, and there shall be no appeal from the ruling of
the chair. Such rules,
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<PAGE>
regulations or procedures, whether adopted by the Board of Directors or
prescribed by the chair of the meeting, may include, without limitation, the
following: (1) the establishment of an agenda or order of business for the
meeting; (2) rules and procedures for maintaining order at the meeting and the
safety of those present; (3) limitations on attendance at or participation in
the meeting to stockholders of record of the Corporation, their duly authorized
and constituted proxies or such other persons as the chair shall permit; (4)
restrictions on entry to the meeting after the time fixed for the commencement
thereof; and (5) limitations on the time allotted to questions or comments by
participants. Unless, and to the extent determined by the Board of Directors or
the chair of the meeting, meetings of stockholders shall not be required to be
held in accordance with rules of parliamentary procedure. A resolution or
motion on business properly brought before a meeting shall be considered for
vote only if proposed by a stockholder or a duly authorized proxy, and seconded
by an individual, who is a stockholder or a duly authorized proxy, other than
the individual who proposed the resolution.
SECTION 9. VOTING, PROXIES. Except as otherwise provided by statute or the
Certificate of Incorporation, each stockholder of the Corporation shall be
entitled at each meeting of stockholders to one vote for each share of capital
stock of the Corporation standing in such stockholder's name on the record of
stockholders of the Corporation.
Each stockholder entitled to vote at any meeting of stockholders may authorize
another person or persons to act for such stockholder by a proxy signed by such
stockholder or such stockholder's attorney-in-fact, but no proxy shall be voted
after three years from its date, unless the proxy provides for a longer period.
Any such proxy shall be delivered at or prior to the time designated in the
order of business for so delivering such proxies. When a quorum is present at
any meeting, the affirmative vote of the holders of a majority of the voting
power of the shares present in person or represented by a proxy at the meeting
entitled to vote on the subject matter shall be the act of the stockholders on
any question brought before such meeting, except (a) for the election of
directors, which shall be decided by a plurality of the voting power of the
shares of the stock of the Corporation entitled to vote in the election of such
directors, present in person or represented by proxy, and (b) where the question
is one upon which by express provision of statute or of the Certificate of
Incorporation or of these By-Laws, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Unless required by statute, or determined by the chairman of the meeting to be
advisable, the vote on any question need not be by ballot. On a vote by ballot,
each ballot shall be signed by the stockholder voting, or by such stockholder's
proxy, if there be such proxy, and shall state the number of votes voted.
A proxy must be in writing and dated and executed by the stockholder or the
stockholder's duly authorized officer, director, employee, attorney or agent.
To the extent permitted by law, a proxy may be transmitted in a telegram,
cablegram or other means of electronic transmission provided that the telegram,
cablegram or electronic transmission either sets forth or is submitted with
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information from which it can be determined that the telegram, cablegram or
other electronic transmission was authorized by the stockholder. A copy,
facsimile transmission or other reliable reproduction of a written or
electronically-transmitted proxy may be substituted for or used in lieu of the
original writing or electronic transmission for any and all purposes for which
the original writing or transmission could be used, provided that such copy,
facsimile transmission or other reproduction shall be a complete reproduction of
the entire original writing or transmission.
SECTION 10. INSPECTORS. The Board of Directors shall, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof and make a written report thereof. If any of the
inspectors so appointed shall fail to appear or act, the chairman of the meeting
shall appoint one or more inspectors to act at the meeting. Each inspector,
before entering upon the discharge of such person's duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of such person's ability. The
inspectors shall determine the number of shares of capital stock of the
Corporation outstanding and the voting power of each such share, the number of
shares represented at the meeting, the existence of a quorum, the validity and
effect of proxies and ballots, receive votes and ballots, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes and ballots and determine the results. The inspectors shall
make and retain for a reasonable period a written report of any challenge,
request or matter determined by them and shall execute a certificate of any fact
found by them. In determining the validity and counting of proxies and ballots
cast at any meeting of stockholders, the inspectors may consider such
information as is permitted by applicable law. No director or candidate for the
office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
SECTION 11. CONFIDENTIAL VOTING. All proxies, ballots and vote tabulations
that identify the particular vote of a stockholder shall be kept confidential,
except that disclosure may be made (1) to allow the inspectors to certify the
results of the vote; (2) as necessary to meet applicable legal requirements,
including the pursuit or defense of judicial actions; or (3) when expressly
requested by such stockholder.
Proxy cards shall be returned in envelopes addressed to the inspectors (in care
of the transfer agent), which shall receive, inspect and tabulate the proxies.
Comments written on proxies, consents or ballots shall be transcribed and
provided to the Secretary with the name and address of the stockholder. The
vote of the stockholder shall not be disclosed at the time any such comment is
provided to the Secretary except where such vote is included in the comment or
disclosure is necessary, in the opinion of the inspector, for an understanding
of the comment.
Nothing in this by-law shall prohibit the inspector from making available to the
Corporation, during the period prior to any annual or special meeting,
information as to which stockholders have not voted and periodic status reports
on the aggregate vote.
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ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors. The Board of
Directors may exercise all such authority and powers of the Corporation and do
all such lawful acts and things as are not by statute or the Certificate of
Incorporation directed or required to be exercised or done by the stockholders.
SECTION 2. NUMBER AND TERMS. Except as otherwise fixed pursuant to the
provisions of the Certificate of Incorporation relating to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation to elect additional Directors under
specified circumstances, the number of the Directors of the Corporation shall be
fixed from time to time by majority vote of the entire Board of Directors. The
Directors, other than those who may be elected by the holders of any class or
series of stock having preference over the Common Stock as to dividends or upon
liquidation, shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible. As determined by the Board of Directors, one class to be originally
elected for a term expiring at the annual meeting of stockholders to be held in
1987, another class to be originally elected for a term expiring at the annual
meeting of stockholders to be held in 1988, and another class to be originally
elected for a term expiring at the annual meeting of stockholders to be held in
1989, with the members of each class to hold office until their successors are
elected and qualified. At each annual meeting of the stockholders of the
Corporation, the successors of the class of Directors whose term expires at that
meeting shall be elected to hold office for a term expiring at the annual
meeting of stockholders held in the third year following the year of their
election.
SECTION 3. NOMINATIONS. Subject to the rights of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation to
elect Directors under specified circumstances, nominations for the election of
Directors may be made by the Board of Directors or a committee appointed by the
Board of Directors or by any stockholder entitled to vote in the election of
Directors generally. However, any stockholder entitled to vote in the election
of Directors generally may nominate one or more persons for election as Director
at a meeting only if timely written notice of such stockholder's intent to make
such nomination or nominations has been given, either by personal delivery or by
United States mail, postage prepaid, to the Secretary of the Corporation. To be
timely, a stockholder's notice must be received at the principal executive
offices of the corporation: (1) not less than 60 days in advance of such
meeting if such meeting is to be held on a day which is within 30 days preceding
the anniversary of the previous year's annual meeting or 90 days in advance of
such meeting if such meeting is to be held on or after the anniversary of the
previous year's annual meeting; and
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(2) with respect to any other annual meeting of stockholders, on or before the
close of business on the 15th day following the date (or the first date, if
there be more than one) of public disclosure of the date of such meeting. For
the purposes of this Section 3, the date of public disclosure of a meeting shall
include, but not be limited to, the date on which disclosure of the date of the
meeting is made in a press release reported by the Dow Jones News Services,
Associated Press or comparable national news service, or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Sections 13, 14 or 15(d) (or the rules and regulations thereunder) of the
Securities Exchange Act of 1934, as amended. Each such notice shall set forth:
(a) the name, age and business and residential address of the stockholder who
intends to make the nomination and of the person or persons to be nominated; (b)
a representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (d) such other information regarding each nominee proposed by
such stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the Board of Directors;
and (e) the written consent of each nominee to serve as a Director of the
Corporation if so elected. The chairman of the meeting shall refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
SECTION 4. PLACE OF MEETINGS. Meetings of the Board of Directors shall be held
at such place or places, within or without the State of Delaware as the Board of
Directors may from time to time determine or as shall be specified in the notice
of any such meeting.
SECTION 5. ANNUAL MEETING. The Board of Directors shall meet for the purpose
of corporate organization, the election of officers and the transaction of other
business, as soon as practicable after each annual meeting of stockholders, on
the same day and at the same place where such annual meeting shall be held.
Notice of such meeting need not be given. In the event such annual meeting is
not so held, the annual meeting of the Board of Directors may be held at such
other time or place (within or without the State of Delaware) as shall be
specified in a notice thereof given as hereinafter provided in Section 8 of this
Article III.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of Directors shall
be held at such time and place as the Board of Directors may fix. If any day
fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting which would otherwise be held on that
day shall be held at the same hour on the next succeeding business day. Notice
of regular meetings of the Board of Directors need not be given except as
otherwise required by statute or these By-Laws.
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SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by the Chairman of the Board, if one shall have been elected, or by a
majority of the Directors of the Corporation or by the President.
SECTION 8. NOTICE OF MEETINGS. Notice of each special meeting of the Board of
Directors (and of each regular meeting for which notice shall be required) shall
be given by the Secretary as hereinafter provided in this Section 8, in which
notice shall be stated the time and place of the meeting. Except as otherwise
required by these By-Laws, such notice need not state the purposes of such
meeting. Notice of each such meeting shall be mailed, postage prepaid, to each
Director, addressed to such Director at such Director's residence or usual place
of business, by mail, at least twenty (20) days before the day on which such
meeting is to be held, or shall be sent addressed to such Director at such place
by telegraph, cable, telex, telecopier or other similar means, or be delivered
to such Director personally at least 48 hours prior to the meeting. Notice of
any such meeting need not be given to any Director who shall, either before or
after the meeting, submit a signed waiver of notice or who shall attend such
meeting, except when such Director shall attend for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Notices are deemed to
have been given: by telephone, at the time of delivery to the recipient; by
telegram or similar means, at the time of transmission; and by mail, when
deposited in the United States mail, postage prepaid.
SECTION 9. QUORUM AND MANNER OF ACTING. A majority of the total number of the
Board of Directors shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors, and, except as otherwise expressly
required by statute or the Certificate of Incorporation or these By-Laws, the
act of a majority of the Directors present at any meeting at which a quorum is
present shall be the act of the Board of Directors. In the absence of a quorum
at any meeting of the Board of Directors, a majority of the Directors present
thereat may adjourn such meeting to another time and place. Notice of the time
and place of any such adjourned meeting shall be given to all of the Directors
unless such time and place were announced at the meeting at which the
adjournment was taken, in which case such notice shall only be given to the
Directors who were not present thereat. At any adjourned meeting at which a
quorum is present, any business may be transacted which might have been
transacted at the meeting as originally called. Except as otherwise provided by
law, the Directors shall act only as a Board and the individual Directors shall
have no power as such.
SECTION 10. ORGANIZATION. At each meeting of the Board of Directors, the
Chairman of the Board, if one shall have been elected, or, in the absence of the
Chairman of the Board or if one shall not have been elected, the President (or,
in the President's absence, another Director chosen by a majority of the
Directors present) shall act as Chairman of the meeting and preside thereat.
The Secretary or, in the Secretary's absence, any person appointed by the
Chairman shall act as Secretary of the meeting and keep the minutes thereof.
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SECTION 11. RESIGNATIONS. Any Director of the Corporation may resign at any
time by giving written notice of such Director's resignation to the President or
the Secretary of the Corporation. Any such resignation shall take effect at the
time specified therein or, if the time when it shall become effective shall not
be specified therein, immediately upon its receipt. Unless specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
SECTION 12. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Except as otherwise
fixed pursuant to the provisions of the Certificate of Incorporation relating to
the rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation to elect additional
Directors under specified circumstances, newly created directorships resulting
from any increase in the number of Directors and any vacancies on the Board of
Directors resulting from death, resignation, disqualification, removal or other
cause shall be filled by the affirmative vote of a majority of the remaining
Directors then in office, even though less than a quorum of the Board of
Directors. Any Director elected in accordance with the preceding sentence shall
hold office for the remainder of the full term of the class of Directors in
which the new directorship was created or the vacancy occurred and until such
Director's successor shall have been elected and qualified. No decrease in the
number of Directors constituting the Board of Directors shall shorten the term
of any incumbent Director.
SECTION 13. REMOVAL OF DIRECTORS. Subject to the rights of any class or series
of stock having preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, any director may
be removed from office, with cause, by the affirmative vote of the holders of
record of a majority of the combined voting power of the outstanding shares of
Stock entitled to vote generally in the election of Directors, voting together
as a single class and without cause, only by the affirmative vote of the holders
of 75% of the combined voting power of the then outstanding shares of stock
entitled to vote generally in the election of Directors, voting together as a
single class.
SECTION 14. COMPENSATION. The Board of Directors shall have authority to fix
the compensation, including fees and reimbursement of expenses, of directors for
services to the Corporation in any capacity.
SECTION 15. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the entire Board of Directors, designate one or more committees,
including an executive committee, each committee to consist of one or more of
the directors of the Corporation. The Board of Directors may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee.
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Except to the extent restricted by statute or the Certificate of Incorporation,
each such committee, to the extent provided in the resolution creating it, shall
have and may exercise all the powers and authority of the Board of Directors
(including the power and authority to declare a dividend, authorize the issuance
of stock, adopt a certificate of ownership and merger pursuant to Section 253 of
the General Corporation Law of the State of Delaware (the "General Corporation
Law") and, to the extent authorized in the resolution or resolutions providing
for the issuance of shares of stock adopted by the Board of Directors as
provided in subsection (a) of Section 151 of the General Corporation Law, fix
the designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series) and
may authorize the seal of the Corporation to be affixed to all papers which
require it. Each such committee shall serve at the pleasure of the Board of
Directors and have such name as may be determined from time to time by
resolution adopted by the Board of Directors. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors.
Each committee of the Board of Directors shall fix its own rules or procedure
consistent with the provisions of applicable law and of any resolutions of the
Board of Directors governing such committee. Each committee shall meet as
provided by such rules or such resolutions of the Board of Directors. Unless
otherwise provided by such rules or by such resolutions, the provisions of these
By-Laws relating to the place of holding meetings and notice required for
meetings of the Board of Directors shall govern the place of meetings and notice
of meetings for committees of the Board of Directors. Except in cases where it
is otherwise provided by the rules of such committee or by the resolution of the
Board of Directors, the vote of a majority of the members present at a duly
constituted meeting at which a quorum is present shall be sufficient to pass any
measure by the committee.
In the event that the Board of Directors shall designate a committee that shall
have the power to recommend changes in the compensation of senior management of
the Corporation, recommended or retain an auditor for the Corporation and/or
recommend nominees for election as directors of the Corporation, the membership
of such committee shall consist solely of such directors who are not employees
of the Corporation or of any subsidiary of the Corporation.
SECTION 16. ACTION BY CONSENT. Unless restricted by the Certificate of
Incorporation, any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board of Directors or such committee, as the case may be, consent thereto
in writing, and the writing or writings are filed with the minutes of the
proceedings of the Board of Directors or such committee, as the case may be.
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SECTION 17. TELEPHONIC MEETING. Unless restricted by the Certificate of
Incorporation, any one or more members of the Board of Directors or any
committee thereof may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other.
Participation by such means shall constitute presence in person at the meeting.
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ARTICLE IV
OFFICERS
SECTION 1. NUMBER AND QUALIFICATIONS. The officers of the Corporation shall be
elected annually by the Board of Directors at the meeting immediately following
the annual meeting of stockholders. The officers of the Corporation shall
include the President, one or more Vice-Presidents, the Secretary and the
Treasurer. If the Board of Directors wishes, it may also elect as an officer of
the Corporation a Chairman of the Board and may elect other officers (including
one or more Assistant Treasurers and one or more Assistant Secretaries) as may
be necessary or desirable for the business of the Corporation. Any two or more
offices may be held by the same person, and no officer except the Chairman of
the Board need be a Director. Each officer shall hold office until such
officer's successor shall have been duly elected and shall have qualified, or
until such officer's death, or until such officer shall have resigned or have
been removed, as hereinafter provided in these By-Laws. In its discretion, the
Board of Directors may leave unfilled for any period it may fix any office to
the extent allowed by law. Any vacancy in any of the above offices may be
filled for the unexpired portion of the term by the Board of Directors at any
regular or special meeting. In the case of the absence or disability of an
officer or for any other reason that is determined to be sufficient to the Board
of Directors, the Board of Directors or any officer designated by it, may, for
the time of the absence or disability, delegate such officer's duties and powers
to any other officer of the Corporation. The Board of Directors also may elect,
appoint or provide for the appointment of such other officers and agents as may
from time to time appear necessary or advisable in the conduct of the affairs of
the Corporation.
SECTION 2. RESIGNATIONS. Any officer of the Corporation may resign at any time
by giving written notice of such officer's resignation to the President or
Secretary of the Corporation. Any such resignation shall take effect at the
time specified therein or, if the time when it shall become effective shall not
be specified therein, immediately upon receipt. Unless otherwise specified
therein, the acceptance of any such resignation shall not be necessary to make
it effective.
SECTION 3. REMOVAL. Any officer of the Corporation may be removed, either with
or without cause, at any time, by the affirmative vote of a majority of the
members of the Board of Directors at any meeting thereof.
SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be
such an officer, shall, if present, preside at all meetings of the stockholders
and the Board of Directors, and exercise and perform such other powers and
duties as established in an employment contract, and as may be from time to time
assigned to the Chairman by the Board of Directors or prescribed by the By-Laws.
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SECTION 5. PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the Chairman of the Board, if there be such
an officer, the President shall be the Chief Executive Officer of the
Corporation if so elected by the Board of Directors and shall, subject to the
control of the Board of Directors, have general supervision, direction and
control of the corporation, its business and its officers. In the absence of
the Chairman of the Board, or if there be none, the President shall preside at
all meetings of the stockholders and the Board of Directors. Subject to the
final sentence of Section 15 of Article III, the President shall be an
EX-OFFICIO member of all the standing committees, including the executive
committee, if any, and shall have the general powers and duties of management
usually vested in the office of President of a corporation, and shall have such
other powers and duties as may be prescribed by the Board of Directors. The
President may sign any deeds, mortgages, bonds, contracts or other instruments
which the Board of Directors has authorized to be executed or which are in the
ordinary course of business of the Corporation. The President may vote, either
in person or by proxy all of the shares of the capital stock of any company
which the Corporation owns or is otherwise entitled to vote at any and all
meetings of the stockholders of such company and shall have the power to accept
or waive notice of such meetings.
SECTION 6. EXECUTIVE VICE PRESIDENT. Each Executive Vice-President shall
perform all such duties as from time to time may be assigned him/her by the
Board of Directors or the President. At the request of the President, in the
absence of the President, or in the event of the President's inability or
refusal to act, the Executive Vice-President, or if there shall be more than
one, the Executive Vice-Presidents, in the order determined by the Board of
Directors (or if there is no such determination, then the Executive
Vice-Presidents in the order of their election), shall perform the duties of the
President and, when so acting, shall have the powers of and be subject to the
restrictions placed upon the President in respect of the performance of such
duties.
SECTION 7. SENIOR VICE-PRESIDENT. Each Senior Vice-President shall perform
all such duties as from time to time may be assigned to such Senior Vice-
President by the Board of Directors, or the President.
SECTION 8. VICE PRESIDENT. Each Vice President shall perform all such duties
as from time to time may be assigned to such Vice-President by the Board of
Directors, or the President.
SECTION 9. TREASURER. The Treasurer shall:
(a) have charge and custody of, and be responsible for, all of the funds and
securities of the Corporation;
(b) keep full and accurate records of receipts and disbursements in books
belonging to the Corporation;
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(c) deposit all moneys and other valuables to the credit of the Corporation in
such depositories as may be designated by the Board of Directors or pursuant to
its direction;
(d) receive, and give receipts for, moneys due and payable to the Corporation
from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the investments of its
funds, taking proper vouchers therefore;
(f) render to the Board of Directors, whenever the Board of Directors may
require, an account of the financial conditions of the Corporation; and
(g) in general, perform all duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to the Treasurer by the Board
of Directors.
SECTION 10. SECRETARY. The Secretary shall:
(a) keep or cause to be kept in one or more books provided for the purpose, the
minutes of all meetings of the Board of Directors, the committees of the Board
of Directors and the stockholders;
(b) see that all notices are duly given in accordance with the provisions of
these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and affix and
attest the seal to all certificates for shares of the Corporation (unless the
seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other documents
and records required by law to be kept and filed are properly kept and filed;
and
(e) in general, perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to the Secretary by the Board
of Directors.
SECTION 11. OFFICERS' BONDS OR OTHER SECURITY. If required by the Board of
Directors, any officer of the Corporation shall give a bond or other security
for the faithful performance of such officer's duties, in such amount and with
such surety as the Board of Directors may require.
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SECTION 12. COMPENSATION. The compensation of the officers of the Corporation
for their services as such officers shall be fixed from time to time by the
Board of Directors. An officer of the Corporation shall not be prevented from
receiving compensation by reason of the fact that the officer is also a director
of the Corporation.
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ARTICLE V
STOCK CERTIFICATES AND THEIR TRANSFER
SECTION 1. STOCK CERTIFICATES. Every holder of stock in the Corporation shall
be entitled to have a certificate, signed by, or in the name of the Corporation
by, the Chairman of the Board or the President or a Vice-President and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the Corporation, certifying the number of shares owned by the holder in the
Corporation. Stock certificates of the Corporation shall be in such form as may
be approved by the Board of Directors. Such stock certificates shall be
numbered and registered, and shall exhibit the holder's name and shares.
SECTION 2. FACSIMILE SIGNATURES. Any or all of the signatures on a certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
SECTION 3. LOST CERTIFICATES. The Corporation may issue a new certificate of
stock or uncertificated shares in place of any certificate therefore issued by
it, alleged to have been lost, stolen or destroyed, and the Corporation may
require the owner of the lost, stolen, or destroyed certificate, or the owner's
legal representative to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate or uncertificated shares. A new certificate may be issued without
requiring any bond when, in the judgment of the Board of Directors, it is proper
to do so.
SECTION 4. TRANSFERS OF STOCK. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its records; provided, however, that the Corporation shall be
entitled to recognize and enforce any lawful restriction on transfer. Whenever
any transfer of stock shall be made for collateral security, and not absolutely,
it shall be so expressed in the entry of transfer if, when the certificates are
presented to the Corporation for transfer, both the transferor and the
transferee request the Corporation to do so.
SECTION 5. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint,
or authorize any officer or officers to appoint, one or more transfer agents and
one or more registrars.
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SECTION 6. REGULATIONS. The Board of Directors may make such additional rules
and regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation.
SECTION 7. FIXING THE RECORD DATE. (a) In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the date next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action.
If no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
SECTION 8. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its records as the owner
of shares of stock to receive dividends and to vote as such owner, shall be
entitled to hold liable for calls and assessments a person registered on its
records as the owner of shares of stock, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares of stock on the
part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of the State of Delaware.
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ARTICLE VI
INDEMNIFICATION OF
DIRECTORS AND OFFICERS
SECTION 1. GENERAL. The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that such person, or a person for whom such person is the legal
representative, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust,
nonprofit entity or other enterprise, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
actually reasonably incurred by such person in connection with the proceeding.
However, the Corporation shall be required to indemnify a person in connection
with a proceeding (or part thereof) initiated by such person only if the
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation.
SECTION 2. INDEMNIFICATION IN CERTAIN CASES. To the extent that a director or
officer of the Corporation has been successful on the merits or otherwise in
defense of any proceeding, or in defense of any claim, issue or matter therein
(or if Section 145(c) of the General Corporation law is amended after February
1, 1994 so as to broaden indemnification rights thereunder, then to the fullest
extent permitted by the General Corporation Law), such person shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.
SECTION 3. PROCEDURE. Any indemnification under Section 1 of this Article VI
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director
or officer is proper in the circumstances because the person has met the
applicable standard of conduct set forth in such Section 1. Such determination
shall be made (a) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (b) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders.
SECTION 4. ADVANCES FOR EXPENSES. The Corporation shall pay the expenses
(including attorneys' fees) incurred by a director or officer of the Corporation
in defending any proceeding in advance of its final disposition, PROVIDED,
HOWEVER, that the payment of expenses incurred by a director or officer in
advance of the final disposition of the proceeding shall be
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made only upon a receipt of an undertaking by the director or officer to repay
all costs advanced if it should be ultimately determined that the director or
officer is not entitled to be indemnified under this Article or otherwise.
Payment of such expenses incurred by other employees and agents of the
Corporation may be made by the Board of Directors in its discretion upon such
terms and conditions, if any, as it deems appropriate.
SECTION 5. RIGHTS NOT EXCLUSIVE. The rights conferred on any person by this
Article VI shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
directors or otherwise. The indemnification and advancement of expenses
provided for by this Article VI shall continue as to a person who has ceased to
be a director or officer and shall inure to the benefit of the heirs, executors
and administrators of such a person.
SECTION 6. INSURANCE. To the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, the Corporation shall have power
to purchase and maintain insurance on behalf of any person who is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
such person and incurred by such person in any other capacity, or arising out of
such person's status as such, whether or not the Corporation would have the
power to indemnify such person against such liability under the provisions of
this Article VI.
SECTION 7. INDEMNITY AGREEMENTS WITH DIRECTORS AND OFFICERS. The Corporation
may enter into indemnity agreements with the Directors and Officers of this
Corporation substantially in the form attached hereto as Appendix A and hereby
incorporated by reference; provided, however, such indemnity agreements shall
exclude indemnity for the Directors' and Officers' knowing fraud, deliberate
dishonesty or willful misconduct.
SECTION 8. CLAIMS. Notwithstanding any other provision of this Article VI, if
a claim for indemnification or advancement of expenses under this Article is not
paid in full within sixty days after a written claim therefor has been received
by the Corporation, the claimant may file suit to recover the unpaid amount of
such claim and, if successful in whole or in part, shall be entitled to be paid
the expense of prosecuting such claim. In any such action the Corporation shall
have the burden of proving that the claimant was not entitled to the requested
indemnification or payment of expenses under applicable law.
SECTION 9. OTHER INDEMNIFICATION. The Corporation's obligation, if any, to
indemnify and advance expenses to any person who was or is serving at its
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, nonprofit entity or other enterprise,
including service with respect to employee benefit plans, shall be
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reduced by any amount such person may collect as indemnification or advancement
of expenses from such other corporation, partnership, joint venture, trust,
nonprofit entity or other enterprise, including service with respect to employee
benefit plans.
SECTION 10. AMENDMENT OR REPEAL. Any repeal or modification of the foregoing
provisions of this Article VI shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
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ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Subject to the provisions of statute and the Certificate
of Incorporation, dividends upon the shares of capital stock of the Corporation
may be declared by the Board of Directors at any regular or special meeting.
Dividends may be paid in cash, in property or in shares of stock of the
Corporation, unless otherwise provided by statute or the Certificate of
Incorporation.
SECTION 2. RESERVES. Before payment of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or sums as
the Board of Directors may, from time to time, in its absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation or
for such other purpose as the Board of Directors may think conducive to the
interests of the Corporation. The Board of Directors may modify or abolish any
such reserve in the manner in which it was created.
SECTION 3. SEAL. The seal of the Corporation shall be in such form as shall be
approved by the Board of Directors. Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise. The
seal may be affixed by any officer of the Corporation to any instrument executed
by authority of the Corporation, and the seal when so affixed may be attested by
the signature of any officer of the Corporation.
SECTION 4. FISCAL YEAR. The fiscal year of the Corporation shall be fixed, and
once fixed, may thereafter be changed, by resolution of the Board of Directors.
SECTION 5. CHECKS, NOTES, DRAFTS, ETC.. All checks, notes, drafts or other
orders for the payment of money of the Corporation shall be signed, endorsed or
accepted in the name of the Corporation by such officer, officers, person or
persons as from time to time may be designated by the Board of Directors or by
an officer or officers authorized by the Board of Directors to make such
designation.
SECTION 6. EXECUTION OF CONTRACTS, DEEDS, ETC. The Board of Directors may
authorize any officer or officers, agent or agents, in the name and on behalf of
the Corporation to enter into or execute and deliver any and all deeds, bonds,
mortgages, contracts and other obligations or instruments, and such authority
may be general or confined to specific instances.
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SECTION 7. FORM OF RECORDS. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books of account,
and minutes books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotography or any other information storage device,
provided that the records so kept can be converted into clearly legible form
within a reasonable time. The Corporation shall convert any records so kept
upon the written request of any person entitled to inspect such records.
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ARTICLE VIII
AMENDMENTS
Except as otherwise provided by these by-laws, the Certificate of Incorporation,
or by operation of law, the by-laws of the Corporation may be made, altered or
repealed by vote of holders of shares of stock representing a majority of the
voting power of the issued and outstanding stock and entitled to vote thereon
present in person or represented by a proxy at any annual or special meeting of
stockholders at which a quorum is present called for that purpose or by the
affirmative vote of a majority of the Directors then in office given at any
regular or special meeting of the Board of Directors.
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APPENDIX A
INDEMNITEE AGREEMENT
This Agreement, made and entered into as of the ____ day of _______________
199_ ("Agreement'), by and between Syncor International Corporation, a
Delaware corporation ("Company"), and __________________ ("Indemnitee"):
WHEREAS, highly competent persons justifiably are reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation; and
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that, in order to attract and retain qualified individuals, the Company will
attempt to maintain on an ongoing basis, at its sole expense, liability
insurance to protect persons serving the Company and its subsidiaries from
certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future only
at higher premiums and with more exclusions. At the same time, directors,
officers, and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself; and
WHEREAS, the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting and retaining
qualified persons; and
WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining qualified persons is detrimental to the best interests
of the Company's stockholders and that the Company should act to assure such
persons that there will be increased certainty of protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take on a
additional service for or on behalf of the Company on the condition that he be
so indemnified;
Appendix A
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NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
SECTION 1. SERVICES BY INDEMNITEE. Indemnitee agrees to serve as an officer of
the Company. Indemnitee may at any time and for any reason resign from such
position (subject to any other contractual obligation or any obligation imposed
by operation of law), in which event the Company shall have no obligation under
this Agreement to continue Indemnitee in any such position. This Agreement
shall not be deemed an employment contract between the Company (or any of its
subsidiaries) and Indemnitee. Indemnitee specifically acknowledges that
Indemnitee's employment with the Company (or any of its subsidiaries), if any,
is at will, and the Indemnitee may be discharged at any time for any reason,
with or without cause, except as may be otherwise provided in any written
employment contract between Indemnitee and the Company (or any of its
subsidiaries), other applicable formal severance policies duly adopted by the
Board, or by the Company's Certificate of Incorporation, By-Laws, and the
General Corporation Law of the State of Delaware. The foregoing notwithstanding,
this Agreement shall continue in force after Indemnitee has ceased to serve as
an officer or director of the Company.
SECTION 2. INDEMNIFICATION - GENERAL. The Company shall indemnify, and advance
expenses (as hereinafter defined) to Indemnitee as provided in this Agreement
and (subject to the provisions of this Agreement) to the fullest extent
permitted by applicable law in effect on the date hereof and to such greater
extent as applicable law may thereafter from time to time permit. The rights of
Indemnitee provided under the preceding sentence shall include, but shall not be
limited to, the rights set forth in the other Sections of this Agreement.
SECTION 3. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE
COMPANY. Indemnitee shall be entitled to the rights of indemnification provided
in this Section 3 if, by reason of his Corporate Status (as hereinafter
defined), he is, or is threatened to be made, a party to or participant in any
threatened, pending, or completed Proceeding (as hereinafter defined), other
than a Proceeding by or in the right of the Company. Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.
SECTION 4. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall be
entitled to the rights of indemnification provided in this Section 4 if, by
reason of his Corporate Status, he is, or is threatened to be made, a party to
or participant in any threatened, pending or completed Proceeding brought by or
in the right of the Company to procure a judgment in its favor. Pursuant to
this Section, Indemnitee shall be indemnified against
Appendix A
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Expenses actually and reasonably incurred by him or on his behalf in connection
with such Proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company.
Notwithstanding the foregoing, no indemnification against such Expenses shall be
made in respect of any claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company if applicable
law prohibits such indemnification; PROVIDED, HOWEVER, that, if applicable law
so permits, indemnification against Expenses shall nevertheless be made by the
Company in such event if and only to the extent that the Court of Chancery of
the State of Delaware, or the Court in which such Proceeding shall have been
brought or is pending, shall determine.
SECTION 5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is successful, on the merits or otherwise, in (i) defending any
Proceeding brought against the Indemnitee by reason of his Corporate Status or
(ii) in prosecuting any Proceeding described in the last sentence of Section 14
hereof, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. If Indemnitee is not
wholly successful in any such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in any
such Proceeding, the Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this Section and
without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
SECTION 6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a witness in any proceeding, he shall be indemnified
against all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith.
SECTION 7. ADVANCEMENT OF EXPENSES. The Company shall advance all reasonable
Expenses incurred by or on behalf of Indemnitee in connection with any
Proceeding within ten days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
expenses.
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SECTION 8. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) To obtain Indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to the
first sentence of Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
in the specific case: (i) if a Change in Control (as hereinafter defined) shall
have occurred, by Independent Counsel (as hereinafter defined) (unless
Indemnitee shall request that such determination be made by a majority vote of
the Disinterested Directors (as hereinafter defined) even though less than a
quorum of the Board or by the stockholders, in which case by the person or
persons or in the manner provided for in clauses (ii) or (iii) of this Section
8(b)) in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by a
majority vote of the Disinterested Directors even though less than a quorum of
the Board, or (B) if there are no such Disinterested Directors or if such
Disinterested Directors so direct, by Independent Counsel in a written opinion
to the Board, a copy of which shall be delivered to Indemnitee or (C) by the
stockholders of the Company; or (iii) as provided in Section 9(b) of this
Agreement; and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee's entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 8(b) hereof, the Independent
Counsel shall be selected as provided in this Section 8(c). If a Change of
Control shall not have occurred, the Independent Counsel shall be selected by
the Board of Directors, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a
Change of Control shall have occurred, the Independent Counsel shall be selected
by Indemnitee (unless
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Indemnitee shall request that such selection be made by the Board of Directors,
in which event the preceding sentence shall apply), and Indemnitee shall give
written consent to the Company advising it of the identity of the Independent
Counsel so selected. In either event, Indemnitee or the Company, as the case may
be, may, within 7 days after such written notice of selection shall have been
given, deliver to the Company or to Indemnitee, as the case may be, a written
objection to such selection. Such objection may be asserted only on the ground
that the Independent Counsel so selected does not meet the requirements of
"Independent Counsel" as defined in Section 17 of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. If such written objection is made, the Independent Counsel so
selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification pursuant to
Section 8(a) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction for
resolution of any objection which shall have been made by the Company or
Indemnitee to the other's selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the Court or by such
other person as the Court shall designate, and the person with respect to whom
an objection is so resolved or the person so appointed shall act as Independent
Counsel under Section 8(b) hereof. The Company shall pay any and all reasonable
fees and expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 8(b) hereof, and the Company shall
pay all reasonable fees and expenses incident to the procedures of this Section
8(c), regardless of the manner in which such Independent Counsel was selected or
appointed. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 10(a)(iii) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).
SECTION 9. PRESUMPTION AND EFFECT OF CERTAIN PROCEEDINGS.
(a) If a Change of Control shall have occurred, in making a determination
with respect to entitlement to indemnification hereunder, the person or persons
or entity making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request for
indemnification in accordance with Section 8(a) of this Agreement, and the
Company shall have the burden of proof to overcome that presumption in
connection with the making by any person, persons or entity of any determination
contrary to that presumption.
(b) If the person, persons or entity empowered or selected under Section 8
of this Agreement to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within 60 days after receipt by the Company
of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and
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Indemnitee shall be entitled to such indemnification, absent (i) a misstatement
by Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law; PROVIDED, HOWEVER, that such 60-day period may be extended for a
reasonable time, not to exceed an additional 30 days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto; and PROVIDED, FURTHER, that
the foregoing provisions of this Section 9(b) shall not apply (i) if the
determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 8(b) of this Agreement and if (A) within 15
days after receipt by the Company of the request for such determination the
Board of Directors has resolved to submit such determination to the stockholders
for their consideration at an annual meeting thereof to be held within 75 days
after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within 15 days after such receipt for the
purpose of making such determination, such meeting is held for such purpose
within 60 days after having been so called and such determination is made
thereat, or (ii) if the determination of entitlement to indemnification is to be
made by Independent Counsel pursuant to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of NOLO
CONTENDERE or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
SECTION 10. REMEDIES OF INDEMNITEE.
(a) In the event that (i) a determination is made pursuant to Section 8 of
this Agreement that Indemnitee is not entitled to indemnification under this
Agreement (ii) advancement of Expenses is not timely made pursuant to Section 7
of this Agreement (iii) the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 8(b) of this Agreement and
such determination shall not have been made and delivered in a written opinion
within 90 days after receipt by the Company of the request for indemnification,
or (iv) payment of indemnification is not made pursuant to Section 5 or Section
6 of this Agreement within ten (10) days after receipt by the Company of a
written request therefor, or (v) payment of indemnification is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 8 or 9 of this Agreement, Indemnitee shall be entitled to an
adjudication in the Court of Chancery of the State of Delaware of his
entitlement to such
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<PAGE>
indemnification or advancement of Expenses. Alternatively, Indemnitee, at his
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association, Indemnitee shall
commence such proceeding seeking an adjudication or an award in arbitration
within 180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 10(a); PROVIDED, HOWEVER, that
the foregoing clause shall not apply in respect of a proceeding brought by
Indemnitee to enforce his rights under Section 5 of this Agreement. The Company
shall not oppose Indemnitee's right to seek any such adjudication or award in
arbitration.
(b) In the event that a determination shall have been made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this Section 10
shall be conducted in all respects as a DE NOVO trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in any judicial
proceeding or arbitration commenced pursuant to this Section 10, the Company
shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been made
pursuant to Section 8 or 9 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 10, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material act necessary to make Indemnitee's statement not materially misleading,
in connection with the request for indemnification, or (ii) a prohibition of
such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 10, seeks a
judicial adjudication of or an award in arbitration to enforce his rights under,
or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 17 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in said judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification
or advancement or expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
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<PAGE>
SECTION 11. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or termination of this Agreement or any provision hereof shall be
effective as to any Indemnitee with respect to any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
termination.
(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise. which such
person serves at the request of the Company, Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies
(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
(e) The Company's obligation to indemnify or advance Expenses
hereunder to Indemnitee who is or was serving at the request of the Company as a
director, officer, employee or agent of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise shall be reduced
by any amount Indemnitee may collect as indemnification or advancement of
expenses from such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
SECTION 12. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (a) 10 years after the date that Indemnitee shall
have ceased to serve as an officer, or (b) the final termination of all pending
Proceedings in respect of which Indemnitee is granted rights of indemnification
or advancement of Expenses hereunder and of
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<PAGE>
any proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement
relating thereto. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of Indemnitee and his
heirs, executors and administrators.
SECTION 13. SEVERABILITY. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including, without limitation, each portion of any Section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby; (b) such provision or provisions
shall be deemed reformed to the extent necessary to conform to applicable law
and to give maximum effect to the intent of the parties hereto; and (c) to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
SECTION 14. EXCEPTION TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF EXPENSES.
Notwithstanding any other provision of this Agreement, Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement with
respect to any Proceeding, or any claim therein, brought or made by him against
the Company unless such shall have been approved in writing in advance of the
filing of such Proceeding, or claim therein, by or at the direction of, the
Board. Notwithstanding the preceding sentence, Indemnitee shall, however, be
entitled to indemnification or advancement of Expenses under this Agreement with
respect to any Proceeding, or any claim therein, brought or made by him against
the Company to recover and receive any amounts or benefits due to him pursuant
to (i) the Company's Certificate of Incorporation or By-laws; (ii) any
agreement; arrangement or understanding between him and the Company, or (iii)
any agreement, arrangement, or understanding between the Company and any third
party for his benefit.
SECTION 15. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence or this Agreement.
SECTION 16. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
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<PAGE>
SECTION 17. DEFINITIONS. For purposes of this Agreement:
(a) "Change in Control" means a change in control of the Company
occurring after the Effective Date of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; PROVIDED HOWEVER, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the Effective Date (i) any "person" (as such term is used in Section 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board in office immediately prior to such person attaining such
percentage interest, (ii) the Company is a party to a merger, consolidation,
sale of assets or other reorganization, or a proxy contest, as a consequence of
which members of the Board in office immediately prior to such transaction or
event constitute less than a majority of the Board thereafter; or (iii) during
any period of two consecutive years, individual who at the beginning of such
period constituted the Board (including for this purpose any new director whose
election or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period) cease for any reason to constitute at
least a majority of the Board.
(b) "Corporate Status" describes the status of a person who is or was
a director, officer; employee; or agent of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company who is
not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
(d) "Effective Date" means _________ , 199 .
(e) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
type customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, being or preparing to be a witness in, or
otherwise participating in a Proceeding.
(f) "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has
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<PAGE>
been, retained to represent: (i) the Company or Indemnitee in any matter
material to either such party, or (ii) any other party to the Proceeding giving
rise to a claim for indemnification hereunder. Notwithstanding the foregoing,
the term "Independent Counsel" shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee in an
action to determine Indemnities rights under this Agreement.
(g) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding whether civil, criminal, administrative or investigative, except one
initiated by an Indemnitee pursuant to Section 10 of this Agreement to enforce
his rights under this Agreement.
SECTION 18. MODIFICATION AND WAIVER. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
SECTION 19. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
SECTION 20. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, to:
(b) If to the Company to: Syncor International Corporation
20001 Prairie Street
Chatsworth, CA 91311
or such other address as may have been furnished to Indemnitee by the Company or
to the Company by Indemnitee, as the case may be.
SECTION 21. CONTRIBUTION. To the fullest extent permissible under applicable
law, If the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason
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whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to
the amount incurred by Indemnitee, whether for judgments, fines, penalties,
excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in
connection with any claim relating to an indemnifiable event under this
Agreement, in such proportion as is deemed fair and reasonable in light of all
of the circumstances of such Proceeding in order to reflect (i) the relative
benefits received by the Company and Indemnitee as a result of the event(s)
and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative
fault of the Company (and its directors, officers, employees and agents) and
Indemnitee in connection with such event(s) and/or transaction(s).
SECTION 22. GOVERNING LAW; SUBMISSION TO JURISDICTION; APPOINTMENT OF AGENT FOR
SERVICE OF PROCESS. This Agreement and the legal relations among the parties
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Delaware, without regard to its conflict of laws rules. Except with
respect to any arbitration commenced by Indemnitee pursuant to Section 10(a) of
this Agreement, each of the Company and Indemnitee hereby irrevocably and
unconditionally (i) agrees that any action or proceeding arising out of or in
connection with this Agreement shall be brought only in the Chancery Court of
the State of Delaware (the "Delaware Court"), and not in any other state or
federal court in the United States of America or any court in any other country,
(ii) consents to submit to the exclusive jurisdiction of the Delaware Court for
purposes of any action or purposes of any action or proceeding arising out of or
in connection with this Agreement, (iii) appoints, to the extent such party is
not a resident of the State of Delaware, irrevocably
____________________________________________________ as its agent in the State
of Delaware as such party's agent for acceptance of legal process in connection
with any such action or proceeding against such party with the same legal force
and validity as if served upon such party personally within the State of
Delaware, (iv) waives any objection to the laying of venue of any such action or
proceeding in the Delaware Court, and (v) waives, and agrees not to plead or to
make, any claim that any such action or proceeding brought in the Delaware Court
has been brought in an improper or otherwise inconvenient forum.
SECTION 23. MISCELLANEOUS. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ATTEST:
SYNCOR INTERNATIONAL CORPORATION
BY:
---------------------------------------
INDEMNITEE:
- -------------------------------------------
Address:
-----------------------------
-----------------------------
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EXHIBIT 10.8
BENEFITS AGREEMENT
This Benefits Agreement is entered into as of the (____________) day of
(____________________), 199__ between SYNCOR INTERNATIONAL CORPORATION
(hereinafter sometimes referred to as "CORPORATION") and ______________________
("EMPLOYEE").
The parties hereto agree as follows:
1. ADDITIONAL BENEFITS. Corporation hereby grants to Employee the
additional benefits, hereinafter set forth in the event of a "change in control"
(defined below) while Employee is in Employee's present position or in an
equivalent or higher position as determined by the Corporation's President, in
order to induce Employee to continue to serve the Corporation.
2. VESTING. Notwithstanding the vesting schedule set forth in
Employee's option grants, and in other documents for the Corporation's incentive
plans, in the event of "change of control", Employee's vesting in all of the (i)
grants to Employee of stock option shares, (ii) contemplated and/or earned
incentives awarded under the Management Incentive Plan in force at that time
and/or any replacement plans, and (iii) contemplated and/or earned incentives
awarded under the Long Term Incentive Plan in force at that time and/or any
replacement plans shall be accelerated and such stock option shares, and all
contemplated and/or earned incentive awards shall be fully vested, and
calculated using the highest multiplier at such level as if all objectives for
the year have been achieved and exceeded as of the date of such "change in
control". A "change in control" shall be defined as both (i) the failure by the
Board of Directors to determine a "Qualified Offer" as that term is defined in
Section 1 (a) of that certain Rights Agreement dated as of September 8, 1989
between Syncor International Corporation and the American Stock Transfer & Trust
Company and (ii) the acquisition of 30% or more of the outstanding common stock
of the Corporation by a person, or group of related persons (as defined by SEC
Rule 13d-3), that is not affiliated with Corporation as of the date hereof.
3. TERMINATION AFTER "CHANGE IN CONTROL". In the event of a "change
in control" as defined in Paragraph 2 above, termination for purposes of this
Agreement shall include (i) termination of Employee's employment by Corporation
within twenty-four (24) months from the date of "change in control" other than
for "good cause" and (ii) termination
1
<PAGE>
of Employee's employment by Employee within twenty-four (24) months from the
date of "change in control" after a material modification in Employee's duties
and responsibilities, a relocation of his office to a less desirable location,
or a change in the support personnel allocated to him. "Good cause" shall be
defined exclusively for purposes of this Agreement to mean one or more of the
following events:
(a) A material breach of this Agreement by Employee provided
such breach is continuing for a period of thirty (30) days after the Corporation
has given notice of breach, and such breach is not cured by Employee during such
period;
(b) Employee shall be adjudicated a bankrupt or be convicted of
a crime punishable by imprisonment; or
(c) Employee shall engage in an activity that constitutes a
conflict of interest with the Corporation and such activity has not been
approved by a disinterested majority of the Board of Directors after full
disclosure thereof.
If Employee terminates following a "change in control" as set forth
above, then in addition to those benefits vesting under Section 2 above,
Employee shall be paid upon the effective date of such termination, one year's
compensation at the compensation rate for the Employee in effect on such date;
any bonus provided by Corporation prorated up to the date of termination or the
full bonus if all objectives for the year during which the termination occurred
shall have been met; full and immediate vesting of all other Corporation
benefits then enjoyed by the Employee; and coverage under current benefit plans
of the Corporation then enjoyed by the Employee for one year from the effective
date of the termination.
4. EMPLOYEE HANDBOOK. Corporation maintains an Employee Handbook
which applies to Corporation's employees, including its officers and managers,
and which contains additional terms and conditions of employment of Employee.
Those terms and conditions, as they may be revised from time to time by
Corporation, are hereby incorporated by reference into this Agreement. In the
event any provision of the Employee Handbook conflicts with a provision of this
Agreement, the terms of this Agreement shall govern.
5. NOTICE. Any notice required or permitted to be given under this
Benefits Agreement shall be sufficient if in writing and sent by certified mail
by Corporation to the residence of Employee, or by Employee to Corporation's
principal office.
6. ASSIGNABILITY. This Agreement and the rights, interests and
benefits hereunder shall not be assignable or in any way alienated by Employee.
Corporation shall have the right of assignment and transfer of its rights
hereunder to any successor to the majority of its assets
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and any such successor shall be bound by the terms hereof.
7. WAIVER OF BREACH. The waiver by Corporation or Employee of a
breach of any provisions of this Agreement by the other shall not operate or be
construed as a waiver of any subsequent breach.
8. ENTIRE AGREEMENT. This instrument contains the entire Agreement
of the parties. It may not be changed orally, but only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
9. ATTORNEY'S FEES. In the event that there shall be any litigation
or court proceeding with respect to this Agreement or the obligations of the
parties hereunder, the prevailing party shall be entitled to recover reasonable
attorneys fees and costs from the other party.
10. GOVERNING LAW. This Benefits Agreement shall be governed by the
laws of California.
IN WITNESS WHEREOF, Corporation has caused this Benefits Agreement to
be executed in its corporate name by its duly authorized corporate officers, and
Employee has executed this Benefits Agreement.
E M P L O Y E E
-----------------------------------
SYNCOR INTERNATIONAL CORPORATION
By:
--------------------------------
Title:
-----------------------------
3
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EXHIBIT 10.13
SYNCOR INTERNATIONAL CORPORATION
MCGREVIN DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED EFFECTIVE OCTOBER 23, 1995
WHEREAS Syncor International Corporation, a Delaware corporation (the
"CORPORATION") desires to retain the services of Gene R. McGrevin ("MCGREVIN")
and recognizes that the loss of the services of his services would result in
substantial loss to the Corporation; and
WHEREAS on or about July 10, 1993 the Corporation adopted a Deferred
Compensation Plan for McGrevin;
WHEREAS the Corporation desires to recognize the services rendered in the past
and to be rendered in the future by him until the date of his termination,
retirement or death and wishes to amend and restate the Plan;
NOW THEREFORE, the Corporation hereby amends and restates the Plan for McGrevin
as hereinafter set forth.
ARTICLE 1 - DEFINITIONS
1.1 BENEFIT: The Corporation shall pay to McGrevin or his Beneficiary a lump
sum cash benefit according to the terms of Article 3 and no less then the
amounts stated therein. At the option of the Corporation as determined by
and at the sole discretion of the Board of Directors, the benefit can be
greater.
1.2 BENEFICIARY: Any person or persons, as designated pursuant to Article 4.1,
to whom any benefits may be payable upon the death of McGrevin pursuant to
Article 3.2.
1.3 CONSTRUCTION: The masculine gender shall be deemed to include the feminine
and neuter genders; the singular to include the plural; and the plural to
include the singular; in each case where appropriate.
1.4 CORPORATION OR EMPLOYER: Syncor International Corporation, any subsidiary
thereof which participates in this Plan and which employs McGrevin, any
predecessor corporation or business, and any corporation or business which
was merged into or consolidated with or substantially all of whose assets
were acquired by the Corporation.
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1.5 DEFERRED AMOUNT: The Corporation shall maintain a bookkeeping account to
record the deferred amounts. On the last day of each Plan Year, the
Corporation shall credit such account according to Section 3.1.
1.6 EFFECTIVE DATE OF PLAN: June 30, 1993
1.7 COMPENSATION COMMITTEE: The Compensation Committee of the Employer's Board
of Directors.
1.8 PLAN: The Plan shall consist of this document and any amendments thereto.
1.9 PLAN YEAR: The first plan year shall be from June 30, 1993 to June 30,
1994. Thereafter, the plan year shall be from June 30 of each year to June
30 of the following year.
ARTICLE 2 - PARTICIPATION
2.1 Eligibility for participation in this Plan shall be restricted to McGrevin.
2.2 McGrevin shall continue to be covered by this Plan until the earlier date
on which any of the following events occur: (a) the Plan is terminated
pursuant to Article 5.1; (b) Termination of employment; or (c) Death.
ARTICLE 3 - BENEFITS
3.1 TERMINATION OR RETIREMENT BENEFIT: If McGrevin's coverage under this Plan
ceases for any reason, he shall be paid a lump sum benefit. Such benefit
will be as set forth below for each Plan Year of participation under the
Plan. McGrevin will be credited with a year of participation if he has
been employed by the Employer on the last day of each Plan Year or the
prorated amount earned up to the last full quarter of employment.
Complete Years Minimum Annual Minimum Cumulative
of Participation Deferred Amount Deferred Amount
1 23,000 23,000
2 32,000 55,000
3 56,000 111,000
4 65,000 176,000
5 74,000 250,000
6 83,000 333,000
7 92,000 425,000
8 98,000 523,000
9 106,000 629,000
10 111,000 740,000
2
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The payment of the cumulative benefit amount shall be made in a lump sum
within thirty (30) days following such termination or retirement provided,
however, in the event McGrevin is terminated without cause or if there is a
change in control of the Corporation as defined in McGrevin's employment
agreement with the Corporation (which is in effect at the time of such
event), then the benefit amount shall be equal to the greater of Seven
Hundred Forty Thousand Dollars ($740,000) or the total cumulative benefits.
3.2 DEATH BENEFITS: If McGrevin should die while under the Plan his
Beneficiary shall be paid a lump sum benefit equal to the cumulative
Deferred Amounts.
This payment shall be made in a lump sum within thirty (30) days following
the date the Corporation receives the claimant's statement form pursuant to
Article 6.5.
3.3 DISABILITY: At the discretion of the Board of Directors the Corporation
may accelerate the payment of benefit equal to the greater of Seven Hundred
Forty Thousand Dollars ($740,000) or the total cumulative benefits (the
"BENEFITS"), to McGrevin in the event the Corporation determines that
McGrevin has become totally disabled in that he is prevented from engaging
in any suitable gainful employment or occupation, based on medical evidence
satisfactory to the Corporation confirming that such disability will be
permanent and continuous for the remainder of his life. Notwithstanding
the foregoing, the discretionary payment shall not be less than the sum of
the vested portion of the Minimum Cumulative Deferred Amount and forty
percent (40%) of the remaining of the Benefits.
Payments to McGrevin in accordance with this Article shall be made within
thirty (30) days following the date the Corporation determines McGrevin is
eligible for such payment and approval of such payment by the Board of
Directors.
ARTICLE 4 - BENEFICIARY
4.1 McGrevin shall designate on a form, satisfactory to the Corporation, a
Beneficiary or Beneficiaries for any benefits which may become payable
hereunder in the event of his death. Any such Beneficiary can be changed by
McGrevin upon giving written notice to the Corporation.
4.2 The Beneficiary will be the person or persons named in the Beneficiary
designation most recently filed with the Corporation at the time of
McGrevin's death.
ARTICLE 5 - AMENDMENT AND TERMINATION
5.1 By a mutual agreement of the parties this Plan can be amended at any time;
provided, however, that no such action shall reduce the amount accrued by
McGrevin or Beneficiary under the Plan prior to the date of amendment or
termination.
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ARTICLE 6 - MISCELLANEOUS
6.1 The Plan shall under no circumstance be deemed to have any effect upon the
terms or conditions of employment of McGrevin by the Corporation. The
establishment and maintenance of this Plan shall not be construed as
creating or modifying any contract between the Corporation and McGrevin,
nor is it in lieu of any other benefits.
6.2 Participation by McGrevin in this Plan shall not give such person the right
to be retained in the employ of the Corporation or any right or interest in
this Plan other than as provided herein.
6.3 Benefits under this Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge or encumbrance
by McGrevin or Beneficiary and any attempt to do so shall be null and void.
Benefits under this Plan shall not be subject to or liable for the debts,
contracts, liabilities, engagements or torts of McGrevin or any
Beneficiary, nor may the same be subject to attachment or seizure by any
creditor of McGrevin or any Beneficiary under any circumstances.
6.4 The Corporation, at its sole discretion, shall have the right to waive any
of its rights under this Plan.
6.5 In the event of McGrevin's termination, retirement or death, he or his
Beneficiary, as the case may be, should notify the Corporation promptly,
and the Corporation will then provide a claimant's statement form for
completion which should be returned to the Corporation, together with an
official death certificate, if applicable. In the event that any claim
hereunder is denied, the Corporation will provide adequate notice, in
writing, to McGrevin or Beneficiary, setting forth the specific reason for
such denial and, in addition, the Corporation will afford reasonable
opportunity for a full and fair review of those reasons.
6.6 For purposes of Title I of ERISA, this Plan is intended to qualify as an
unfunded plan maintained primarily for the purpose of providing deferred
compensation for McGrevin and shall be interpreted accordingly.
No action by the Corporation or its Board of Directors under this Plan
shall be construed as creating a trust, escrow or other secured or
segregated fund or other fiduciary relationship of any kind in favor of
McGrevin, his Beneficiary, or any other persons otherwise entitled to the
Plan benefits. The status of McGrevin and his Beneficiary with respect to
any liabilities assumed by the Corporation hereunder shall be solely those
of unsecured creditors of the Corporation. Any asset acquired or held by
the Corporation in connection with liabilities assumed by it hereunder,
shall not be deemed to be held under any trust, escrow or other secured or
segregated fund or other fiduciary relationship of any kind for the benefit
of McGrevin or his Beneficiary or to be security for the performance of the
obligations of the Corporation, but shall be, and remain a general,
unpledged, unrestricted asset of the Corporation at all times subject to
the claims of general creditors of the Corporation.
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6.7 The Plan shall be administered by the Corporation. The Corporation shall
have the exclusive authority and responsibility for all matters in
connection with the operation and administration of the Plan. The
Corporation's powers and duties shall include, but not be limited to, the
following: (a) responsibility for the compilation and maintenance of all
records necessary in connection with the Plan; (b) authorizing the payment
of all benefits under the Plan and expenses of the Plan; and (c) authority
to engage such legal, accounting and other professional services as it may
deem proper.
The Corporation, from time to time, may allocate to other persons or
organizations any of its rights, powers, and duties with respect to the
operation and administration of the Plan. Any such allocation shall be
reviewed from time to time by the Corporation; shall, unless the
Corporation specifies otherwise, carry such discretionary authority as the
Corporation possesses regarding the matter; and shall be terminable upon
such notice as the Corporation, in its sole discretion, deems reasonable
and prudent under the circumstances.
6.8 Any payment to McGrevin or Beneficiary or the legal representative of
either, in accordance with the terms of this Plan shall to the extent
thereof be in full satisfaction of all claims such person may have against
the Corporation under this Plan. The Corporation may require such payee,
as a condition to such payment, to execute a receipt and release therefore
in such form as shall be determined by the Corporation.
6.9 The Plan shall be construed, administered, and governed in all respects in
accordance with the laws of the State of California to the extent not
preempted by ERISA. If any provision of this Plan shall be held by a court
of competent jurisdiction to be invalid or unenforceable, the remaining
provisions shall continue to be fully effective.
ACKNOWLEDGED:
/s/ HAIG S. BAGERDJIAN
- ---------------------------------- ----------------------------
Syncor International Corporation Date
Haig S. Bagerdjian, Vice President
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EXHIBIT 10.17
SYNCOR INTERNATIONAL CORPORATION
NON-EMPLOYEE DIRECTOR
1995 STOCK INCENTIVE
AWARD AGREEMENT
NAME OF NON-EMPLOYEE
DIRECTOR ("PARTICIPANT") : ARNOLD SPANGLER
ADDRESS OF PARTICIPANT : 1165 PARK AVE., APT. 9B
NEW YORK, NY 10128
SOCIAL SECURITY NUMBER : ###-##-####
NUMBER OF SHARES : 4,200
EXERCISE PRICE PER SHARE : $8.50
AWARD DATE : JANUARY 24, 1995
EXPIRATION DATE : JANUARY 24, 2005
WHEREAS, pursuant to the Corporation's 1995 Non-Employee Director
Stock Incentive Plan (the "Plan"), which is not exempt from the limitation of
Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Participant has been granted a Nonqualified Stock Option (the "Option" or
"Award") to purchase shares of Common Stock of the Corporation upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, the Participant and the Corporation agree as
follows:
1. GRANT OF OPTION. The Corporation has granted to the
Participant as a matter of separate inducement and agreement in connection with
his or her status as a Non-Employee Director, and not in lieu of any salary or
other compensation for his or her services, the right and option to purchase, in
accordance with the Plan and on the terms and conditions of the Plan and those
hereinafter set forth, all or any part of the number of shares of Common Stock
stated above (the "Common Stock") at the price stated above (the "Price"),
exercisable from time to time subject to the provisions of this Award Agreement
prior to the close of business on the Expiration Date stated above.
2. EXERCISABILITY OF OPTION. Except as otherwise provided in the
Plan or this Award Agreement, the Option shall become exercisable from time to
time as follows: (i) 50% of the Common Stock shall become purchasable twelve
months after the Award Date; and (ii) an additional 50% of the Common Stock
shall become purchasable twenty-four months after the Award Date; provided,
however, that the Option may not be exercised as to less than 10 shares at any
one time unless the number of shares purchased is the total number at the time
1
<PAGE>
available for purchase under an installment of the Option. If the Participant
does not, in any given installment period, purchase all of the shares which he
or she is entitled to purchase in such installment period, the Participant's
right to purchase any shares not so purchased shall continue until the
Expiration Date, unless theretofore terminated in accordance with the provisions
hereof and of the Plan. The Option may be exercised only as to whole shares.
3. METHOD OF EXERCISE AND PAYMENT. Each exercise of the Option
shall be by means of written notice of exercise duly delivered to the
Corporation, specifying the number of whole shares with respect to which the
Option is being exercised, together with any written statements required
pursuant to Section 8 below and payment of the Price.
4. EFFECT OF TERMINATION OF DIRECTORSHIP. The Option and all
other rights hereunder, to the extent such rights shall not have been exercised
prior thereto, shall terminate on the date the Participant ceases to serve as a
director of the Corporation; provided, however, that the Participant may, to the
extent the Option shall have become exercisable prior to such date, exercise the
Option at any time within (1) up to twelve months after such termination; or
(2) up to twelve months after the Participant's death, if the Participant dies
while serving as a director of the Corporation or during the period referred to
in clause (1) above. During the period after death, the Option may, to the
extent exercisable on the date of death (or earlier termination), be exercised
by the person or persons to whom the Participant's rights under the Plan and
this Award Agreement shall pass by will or by the applicable laws of descent and
distribution. Unless sooner terminated pursuant to the Plan, the Option shall
expire at the end of the applicable period specified in clauses (1) or (2)
above, to the extent not exercised within that period. In no event may the
Option be exercised by any person after the Expiration Date.
5. NON-ASSIGNABILITY OF OPTION. The Option shall not be subject
to sale, transfer, pledge, assignment or alienation other than by will or the
laws of descent and distribution regardless of any community property or other
interest therein of the Participant's spouse or such spouse's successor in
interest. In the event that the spouse of the Participant shall have acquired a
community property interest in the Option, the Participant, or such transferees,
may exercise it on behalf of the spouse of the Participant or such spouse's
successor in interest.
6. ACCELERATION. Upon the occurrence of an Event, as defined in
Sycor's 1990 Master Stock Incentive Plan ("MSIP"), including a Change of
Control, the Award shall become immediately exercisable to the full extent
theretofore not exercisable unless prior to an Event the Board determines
otherwise; subject, however, to compliance with applicable regulatory
requirements including without limitation Rule 16b-3 promulgated by the Exchange
Act.
7. PARTICIPANT NOT A SHAREHOLDER. Neither the Participant nor
any other person entitled to exercise the Option shall have any of the rights or
privileges of a shareholder of the Corporation as to any shares of Common Stock
for which stock certificates have not been actually issued and delivered to him
or her. No adjustment will be made for dividends or other
2
<PAGE>
rights for which the record date is prior to the date on which such stock
certificate or certificates are issued even if such record date is subsequent to
the date upon which notice of exercise was delivered and the tender of payment
was accepted.
8. APPLICATION OF SECURITIES LAWS.
a. No shares of Common Stock may be purchased pursuant to the
Option unless and until any then applicable requirements of federal and state
securities laws and regulations, and any exchanges upon which the Common Stock
may be listed, shall have been fully satisfied. The Participant represents,
agrees and certifies that:
(a) If the Participant exercises the Option in whole or in
part at a time when there is not in effect under the Securities Act
of 1933, as amended (the "Securities Act"), a registration
statement relating to the Common Stock issuable upon exercise and
available for delivery to him or her a prospectus meeting the
requirements of Section 10 of the Securities Act ("Prospectus"),
the Participant will acquire the Common Stock issuable upon such
exercise for the purpose of investment and not with a view to
resale or distribution and that, as a condition to each such
exercise, he or she will furnish to the Corporation a written
statement to such effect, satisfactory in form and substance to the
Corporation; and
(b) of and when the Participant proposes to publicly offer
or sell the Common Stock issued to him or her upon exercise of the
Option, the Participant will notify the Corporation prior to any
such offering or sale and will abide by the opinion of counsel to
the Corporation as to whether and under what conditions and
circumstances, if any, he or she may offer and sell such shares,
but such procedure need not be followed if a Prospectus was
delivered to the Participant with the shares of Common Stock and
the Common Stock was and is listed on a national securities
exchange or traded as a National Market System security through the
facilities of NASDAQ.
b. The Participant understands that the certificates representing
the Common Stock acquired pursuant to the Option may bear a legend referring to
the foregoing matters and any limitations under the Securities Act and state
securities laws with respect to the transfer of such Common Stock, and the
Corporation may impose stop transfer instructions to implement such limitations,
if applicable. Any person or persons entitled to exercise the Option under the
provisions of Section 4 above shall be bound by and obligated under the
provisions of this Section 9 to the same extent as is the Participant.
c. The Board of Directors of the Corporation may impose such
conditions on an Award or on its exercise or acceleration or on the payment of
any withholding obligation (including without limitation restricting the time of
exercise to specified periods) as may be required to satisfy applicable
regulatory requirements, including, without limitation, Rule 16b-3 (or any
successor rule) promulgated by the Commission pursuant to the Exchange Act.
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<PAGE>
9. NOTICES. Any notice to be given to the Corporation under the
terms of the Award Agreement or pursuant to the Plan shall be in writing and
addressed to the Secretary of the Corporation at its principal office and any
notice to be given to the Participant shall be addressed to him or her at the
address stated above, or at such other address as either party may hereafter
designate in writing to the other party. Any such notice shall be deemed to have
been duly given when enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.
10. TAX WITHHOLDING. The provisions of Section 6.6 of the MSIP
are hereby incorporated and shall govern any withholding that the Corporation is
required to make with respect to an exercise of the Option, as well as the
Corporation's right to condition a transfer of Common Stock upon compliance with
the applicable withholding requirements of federal, state and local authorities.
11. LAW APPLICABLE TO CONSTRUCTION. The interpretation,
performance and enforcement of the Award and this Award Agreement shall be
governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Award Agreement
to be executed on its behalf by a duly authorized officer and the Participant
has hereunto set his or her hand as of the Award Date.
COMPANY: OPTIONEE:
SYNCOR INTERNATIONAL CORPORATION
a Delaware corporation
By: /s/ Gene R. McGrevin
--------------------------- -----------------------------------
GENE R. MCGREVIN ARNOLD SPANGLER
President &
Chief Executive Officer
Date: Date:
------------------------- -------------------------------
CONSENT OF SPOUSE
I join with my spouse, the Participant herein named, in executing
the foregoing Non-Employee Director Stock Option Award Agreement and agree to be
bound by all of the terms and provisions thereof and of the Plan.
------------------------------------
SIGNATURE OF PARTICIPANT'S SPOUSE
4
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EXHIBIT 10.18
-------------
SYNCOR INTERNATIONAL CORPORATION
NON-EMPLOYEE DIRECTOR
1995 STOCK INCENTIVE
AWARD AGREEMENT
NAME OF NON-EMPLOYEE
DIRECTOR ("PARTICIPANT") : GEORGE S. OKI
ADDRESS OF PARTICIPANT : 2382 SHOREWOOD
CARMICHAEL, CA 95608
SOCIAL SECURITY NUMBER : ###-##-####
NUMBER OF SHARES : 4,200
EXERCISE PRICE PER SHARE : $8.50
AWARD DATE : JANUARY 24, 1995
EXPIRATION DATE : JANUARY 24, 2005
WHEREAS, pursuant to the Corporation's 1995 Non-Employee Director
Stock Incentive Plan (the "Plan"), which is not exempt from the limitation of
Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Participant has been granted a Nonqualified Stock Option (the "Option" or
"Award") to purchase shares of Common Stock of the Corporation upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, the Participant and the Corporation agree as
follows:
1. GRANT OF OPTION. The Corporation has granted to the
Participant as a matter of separate inducement and agreement in connection with
his or her status as a Non-Employee Director, and not in lieu of any salary or
other compensation for his or her services, the right and option to purchase, in
accordance with the Plan and on the terms and conditions of the Plan and those
hereinafter set forth, all or any part of the number of shares of Common Stock
stated above (the "Common Stock") at the price stated above (the "Price"),
exercisable from time to time subject to the provisions of this Award Agreement
prior to the close of business on the Expiration Date stated above.
2. EXERCISABILITY OF OPTION. Except as otherwise provided in the
Plan or this Award Agreement, the Option shall become exercisable from time to
time as follows: (i) 50% of the Common Stock shall become purchasable twelve
months after the Award Date; and (ii) an additional 50% of the Common Stock
shall become purchasable twenty-four months after the Award Date; provided,
however, that the Option may not be exercised as to less than 10 shares at any
one time unless the number of shares purchased is the total number at the time
1
<PAGE>
available for purchase under an installment of the Option. If the Participant
does not, in any given installment period, purchase all of the shares which he
or she is entitled to purchase in such installment period, the Participant's
right to purchase any shares not so purchased shall continue until the
Expiration Date, unless theretofore terminated in accordance with the provisions
hereof and of the Plan. The Option may be exercised only as to whole shares.
3. METHOD OF EXERCISE AND PAYMENT. Each exercise of the Option
shall be by means of written notice of exercise duly delivered to the
Corporation, specifying the number of whole shares with respect to which the
Option is being exercised, together with any written statements required
pursuant to Section 8 below and payment of the Price.
4. EFFECT OF TERMINATION OF DIRECTORSHIP. The Option and all
other rights hereunder, to the extent such rights shall not have been
exercised prior thereto, shall terminate on the date the Participant ceases
to serve as a director of the Corporation; provided, however, that the
Participant may, to the extent the Option shall have become exercisable prior
to such date, exercise the Option at any time within (1) up to twelve months
after such termination; or (2) up to twelve months after the Participant's
death, if the Participant dies while serving as a director of the Corporation
or during the period referred to in clause (1) above. During the period
after death, the Option may, to the extent exercisable on the date of death
(or earlier termination), be exercised by the person or persons to whom the
Participant's rights under the Plan and this Award Agreement shall pass by
will or by the applicable laws of descent and distribution. Unless sooner
terminated pursuant to the Plan, the Option shall expire at the end of the
applicable period specified in clauses (1) or (2) above, to the extent not
exercised within that period. In no event may the Option be exercised by any
person after the Expiration Date.
5. NON-ASSIGNABILITY OF OPTION. The Option shall not be subject
to sale, transfer, pledge, assignment or alienation other than by will or the
laws of descent and distribution regardless of any community property or other
interest therein of the Participant's spouse or such spouse's successor in
interest. In the event that the spouse of the Participant shall have acquired a
community property interest in the Option, the Participant, or such transferees,
may exercise it on behalf of the spouse of the Participant or such spouse's
successor in interest.
6. ACCELERATION. Upon the occurrence of an Event, as defined in
Sycor's 1990 Master Stock Incentive Plan ("MSIP"), including a Change of
Control, the Award shall become immediately exercisable to the full extent
theretofore not exercisable unless prior to an Event the Board determines
otherwise; subject, however, to compliance with applicable regulatory
requirements including without limitation Rule 16b-3 promulgated by the Exchange
Act.
7. PARTICIPANT NOT A SHAREHOLDER. Neither the Participant nor any
other person entitled to exercise the Option shall have any of the rights or
privileges of a shareholder of the Corporation as to any shares of Common Stock
for which stock certificates have not been actually issued and delivered to him
or her. No adjustment will be made for dividends or other
2
<PAGE>
rights for which the record date is prior to the date on which such stock
certificate or certificates are issued even if such record date is subsequent to
the date upon which notice of exercise was delivered and the tender of payment
was accepted.
8. APPLICATION OF SECURITIES LAWS.
a. No shares of Common Stock may be purchased pursuant to the
Option unless and until any then applicable requirements of federal and state
securities laws and regulations, and any exchanges upon which the Common Stock
may be listed, shall have been fully satisfied. The Participant represents,
agrees and certifies that:
(a) If the Participant exercises the Option in whole or in
part at a time when there is not in effect under the Securities Act
of 1933, as amended (the "Securities Act"), a registration statement
relating to the Common Stock issuable upon exercise and available
for delivery to him or her a prospectus meeting the requirements of
Section 10 of the Securities Act ("Prospectus"), the Participant
will acquire the Common Stock issuable upon such exercise for the
purpose of investment and not with a view to resale or distribution
and that, as a condition to each such exercise, he or she will
furnish to the Corporation a written statement to such effect,
satisfactory in form and substance to the Corporation; and
(b) If and when the Participant proposes to publicly offer or
sell the Common Stock issued to him or her upon exercise of the
Option, the Participant will notify the Corporation prior to any
such offering or sale and will abide by the opinion of counsel to
the Corporation as to whether and under what conditions and
circumstances, if any, he or she may offer and sell such shares, but
such procedure need not be followed if a Prospectus was delivered to
the Participant with the shares of Common Stock and the Common Stock
was and is listed on a national securities exchange or traded as a
National Market System security through the facilities of NASDAQ.
b. The Participant understands that the certificates representing
the Common Stock acquired pursuant to the Option may bear a legend referring to
the foregoing matters and any limitations under the Securities Act and state
securities laws with respect to the transfer of such Common Stock, and the
Corporation may impose stop transfer instructions to implement such limitations,
if applicable. Any person or persons entitled to exercise the Option under the
provisions of Section 4 above shall be bound by and obligated under the
provisions of this Section 9 to the same extent as is the Participant.
c. The Board of Directors of the Corporation may impose such
conditions on an Award or on its exercise or acceleration or on the payment of
any withholding obligation (including without limitation restricting the time of
exercise to specified periods) as may be required to satisfy applicable
regulatory requirements, including, without limitation, Rule 16b-3 (or any
successor rule) promulgated by the Commission pursuant to the Exchange Act.
3
<PAGE>
9. NOTICES. Any notice to be given to the Corporation under the
terms of the Award Agreement or pursuant to the Plan shall be in writing and
addressed to the Secretary of the Corporation at its principal office and any
notice to be given to the Participant shall be addressed to him or her at the
address stated above, or at such other address as either party may hereafter
designate in writing to the other party. Any such notice shall be deemed to have
been duly given when enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.
10. TAX WITHHOLDING. The provisions of Section 6.6 of the MSIP are
hereby incorporated and shall govern any withholding that the Corporation is
required to make with respect to an exercise of the Option, as well as the
Corporation's right to condition a transfer of Common Stock upon compliance with
the applicable withholding requirements of federal, state and local authorities.
11. LAW APPLICABLE TO CONSTRUCTION. The interpretation,
performance and enforcement of the Award and this Award Agreement shall be
governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Award Agreement
to be executed on its behalf by a duly authorized officer and the Participant
has hereunto set his or her hand as of the Award Date.
COMPANY: OPTIONEE:
SYNCOR INTERNATIONAL CORPORATION
a Delaware corporation
By: /s/ Gene R. Mcgrevin /s/ George S. Oki
-------------------------------- ------------------------------
GENE R. MCGREVIN
President &
Chief Executive Officer
Date: Date:
------------------------------ ------------------------------
CONSENT OF SPOUSE
I join with my spouse, the Participant herein named, in executing
the foregoing Non-Employee Director Stock Option Award Agreement and agree to be
bound by all of the terms and provisions thereof and of the Plan
------------------------------------
SIGNATURE OF PARTICIPANT'S SPOUSE
4
<PAGE>
EXHIBIT 10.19
SYNCOR INTERNATIONAL CORPORATION
NON-EMPLOYEE DIRECTOR
1995 STOCK INCENTIVE
AWARD AGREEMENT
NAME OF NON-EMPLOYEE
DIRECTOR ("PARTICIPANT") : HENRY WAGNER, JR.
ADDRESS OF PARTICIPANT : 5607 WILDWOOD AVE.
BALTIMORE, MD 21209
SOCIAL SECURITY NUMBER : ###-##-####
NUMBER OF SHARES : 16,600
EXERCISE PRICE PER SHARE : $8.50
AWARD DATE : JANUARY 24, 1995
EXPIRATION DATE : JANUARY 24, 2005
WHEREAS, pursuant to the Corporation's 1995 Non-Employee Director
Stock Incentive Plan (the "Plan"), which is not exempt from the limitation of
Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Participant has been granted a Nonqualified Stock Option (the "Option" or
"Award") to purchase shares of Common Stock of the Corporation upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, the Participant and the Corporation agree as follows:
1. GRANT OF OPTION. The Corporation has granted to the
Participant as a matter of separate inducement and agreement in connection with
his or her status as a Non-Employee Director, and not in lieu of any salary or
other compensation for his or her services, the right and option to purchase, in
accordance with the Plan and on the terms and conditions of the Plan and those
hereinafter set forth, all or any part of the number of shares of Common Stock
stated above (the "Common Stock") at the price stated above (the "Price"),
exercisable from time to time subject to the provisions of this Award Agreement
prior to the close of business on the Expiration Date stated above.
2. EXERCISABILITY OF OPTION. Except as otherwise provided in the
Plan or this Award Agreement, the Option shall become exercisable from time to
time as follows: (i) 50% of the Common Stock shall become purchasable twelve
months after the Award Date; and (ii) an additional 50% of the Common Stock
shall become purchasable twenty-four months after the Award Date; provided,
however, that the Option may not be exercised as to less than 10 shares at any
one time unless the number of shares purchased is the total number at the time
1
<PAGE>
available for purchase under an installment of the Option. If the Participant
does not, in any given installment period, purchase all of the shares which he
or she is entitled to purchase in such installment period, the Participant's
right to purchase any shares not so purchased shall continue until the
Expiration Date, unless theretofore terminated in accordance with the provisions
hereof and of the Plan. The Option may be exercised only as to whole shares.
3. METHOD OF EXERCISE AND PAYMENT. Each exercise of the Option shall
be by means of written notice of exercise duly delivered to the Corporation,
specifying the number of whole shares with respect to which the Option is being
exercised, together with any written statements required pursuant to Section 8
below and payment of the Price.
4. EFFECT OF TERMINATION OF DIRECTORSHIP. The Option and all other
rights hereunder, to the extent such rights shall not have been exercised prior
thereto, shall terminate on the date the Participant ceases to serve as a
director of the Corporation; provided, however, that the Participant may, to the
extent the Option shall have become exercisable prior to such date, exercise the
Option at any time within (1) up to twelve months after such termination; or (2)
up to twelve months after the Participant's death, if the Participant dies while
serving as a director of the Corporation or during the period referred to in
clause (1) above. During the period after death, the Option may, to the extent
exercisable on the date of death (or earlier termination), be exercised by the
person or persons to whom the Participant's rights under the Plan and this Award
Agreement shall pass by will or by the applicable laws of descent and
distribution. Unless sooner terminated pursuant to the Plan, the Option shall
expire at the end of the applicable period specified in clauses (1) or (2)
above, to the extent not exercised within that period. In no event may the
Option be exercised by any person after the Expiration Date.
5. NON-ASSIGNABILITY OF OPTION. The Option shall not be subject to
sale, transfer, pledge, assignment or alienation other than by will or the laws
of descent and distribution regardless of any community property or other
interest therein of the Participant's spouse or such spouse's successor in
interest. In the event that the spouse of the Participant shall have acquired a
community property interest in the Option, the Participant, or such transferees,
may exercise it on behalf of the spouse of the Participant or such spouse's
successor in interest.
6. ACCELERATION. Upon the occurrence of an Event, as defined in
Sycor's 1990 Master Stock Incentive Plan ("MSIP"), including a Change of
Control, the Award shall become immediately exercisable to the full extent
theretofore not exercisable unless prior to an Event the Board determines
otherwise; subject, however, to compliance with applicable regulatory
requirements including without limitation Rule 16b-3 promulgated by the
Exchange Act.
7. PARTICIPANT NOT A SHAREHOLDER. Neither the Participant nor any
other person entitled to exercise the Option shall have any of the rights or
privileges of a shareholder of the Corporation as to any shares of Common Stock
for which stock certificates have not been actually issued and delivered to him
or her. No adjustment will be made for dividends or other
2
<PAGE>
rights for which the record date is prior to the date on which such stock
certificate or certificates are issued even if such record date is subsequent to
the date upon which notice of exercise was delivered and the tender of payment
was accepted.
8. APPLICATION OF SECURITIES LAWS.
a. No shares of Common Stock may be purchased pursuant to the Option
unless and until any then applicable requirements of federal and state
securities laws and regulations, and any exchanges upon which the Common Stock
may be listed, shall have been fully satisfied. The Participant represents,
agrees and certifies that:
(a) If the Participant exercises the Option in whole or in part at a
time when there is not in effect under the Securities Act of 1933, as
amended (the "Securities Act"), a registration statement relating to the
Common Stock issuable upon exercise and available for delivery to him or
her a prospectus meeting the requirements of Section 10 of the Securities
Act ("Prospectus"), the Participant will acquire the Common Stock issuable
upon such exercise for the purpose of investment and not with a view to
resale or distribution and that, as a condition to each such exercise, he
or she will furnish to the Corporation a written statement to such effect,
satisfactory in form and substance to the Corporation; and
(b) If and when the Participant proposes to publicly offer or sell
the Common Stock issued to him or her upon exercise of the Option, the
Participant will notify the Corporation prior to any such offering or sale
and will abide by the opinion of counsel to the Corporation as to whether
and under what conditions and circumstances, if any, he or she may offer
and sell such shares, but such procedure need not be followed if a
Prospectus was delivered to the Participant with the shares of Common
Stock and the Common Stock was and is listed on a national securities
exchange or traded as a National Market System security through the
facilities of NASDAQ.
b. The Participant understands that the certificates representing the
Common Stock acquired pursuant to the Option may bear a legend referring to the
foregoing matters and any limitations under the Securities Act and state
securities laws with respect to the transfer of such Common Stock, and the
Corporation may impose stop transfer instructions to implement such limitations,
if applicable. Any person or persons entitled to exercise the Option under the
provisions of Section 4 above shall be bound by and obligated under the
provisions of this Section 9 to the same extent as is the Participant.
c. The Board of Directors of the Corporation may impose such conditions
on an Award or on its exercise or acceleration or on the payment of any
withholding obligation (including without limitation restricting the time of
exercise to specified periods) as may be required to satisfy applicable
regulatory requirements, including, without limitation, Rule 16b-3 (or any
successor rule) promulgated by the Commission pursuant to the Exchange Act.
3
<PAGE>
9. NOTICES. Any notice to be given to the Corporation under the
terms of the Award Agreement or pursuant to the Plan shall be in writing and
addressed to the Secretary of the Corporation at its principal office and any
notice to be given to the Participant shall be addressed to him or her at the
address stated above, or at such other address as either party may hereafter
designate in writing to the other party. Any such notice shall be deemed to
have been duly given when enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification prepaid) in a post office or branch post office regularly
maintained by the United States Government.
10. TAX WITHHOLDING. The provisions of Section 6.6 of the MSIP are
hereby incorporated and shall govern any withholding that the Corporation is
required to make with respect to an exercise of the Option, as well as the
Corporation's right to condition a transfer of Common Stock upon compliance with
the applicable withholding requirements of federal, state and local authorities.
11. LAW APPLICABLE TO CONSTRUCTION. The interpretation, performance
and enforcement of the Award and this Award Agreement shall be governed by the
laws of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Award Agreement to be
executed on its behalf by a duly authorized officer and the Participant has
hereunto set his or her hand as of the Award Date.
COMPANY: OPTIONEE:
SYNCOR INTERNATIONAL CORPORATION
a Delaware corporation
By: /s/ GENE R. MCGREVIN /s/ HENRY WAGNER, JR.
-------------------------------- ----------------------------
GENE R. MCGREVIN
President &
Chief Executive Officer
Date: Date:
------------------------------ -------------------------
CONSENT OF SPOUSE
I join with my spouse, the Participant herein named, in executing the
foregoing Non-Employee Director Stock Option Award Agreement and agree to be
bound by all of the terms and provisions thereof and of the Plan.
--------------------------------
SIGNATURE OF PARTICIPANT'S SPOUSE
4
SYNCOR INTERNATIONAL CORPORATION
1995 Annual Report
Front Cover: Combination Photos of Syncor employees and customers and a
Map of the World.
TABLE OF CONTENTS
_________________
Pharmacy Location Map Inside Front Cover
Financial Highlights 1
Letter to Shareholders 2
Editorial 5
Selected Financial Data 9
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Consolidated Financial Statements 15
Notes to Consolidated Financial Statements 19
Report of Independent Auditors 30
Corporate Information Inside Back Cover
<PAGE>
CORPORATE PROFILE
_________________
Syncor International Corporation operates an expanding network of 118
domestic and eight international nuclear pharmacy service centers and four
Positron Emission Tomography radiopharmacies. The Company compounds and
dispenses patient specific unit dose radiopharmaceutical prescriptions, as
well as distributes bulk radiopharmaceutical products for use in
diagnostic imaging and provides a complete range of advanced pharmacy
services. Syncor services more than 7,000 customers and is the only
national pharmacy network of its kind that provides a combination of
diagnostic and information services to hospitals and alternate site
markets.
SYNCOR'S MISSION
________________
Syncor's Mission is to be the premier provider of prepared time-critical
pharmaceuticals and comprehensive value-added pharmacy services which meet
the needs of the professional health care community and their patients.
FINANCIAL HIGHLIGHTS
____________________
Combination Photos of Syncor demployees and a Map of the World
Reported net sales of $332.5 million Posted net income of $4.7 million,
a significant increase over 1994 Increased cash position by $7.4 million
to $26.6 million Compounded and delivered 5.2 million prescriptions.
FINANCIAL DATE
______________
<TABLE>
<CAPTION>
(In thousands, except per share date) 1995 1994 1993
____________________________________________________________________________
(unaudited)
<S> <C> <C> <C>
Net Sales $332,460 $319,994 $241,289
Net Income $ 4,669 $ 1,213 $ 7,773
Net Income Per Share $ .45 $ .11 $ .72
Cash, Cash Equivalents and Marketable
Securities $ 26,559 $ 19,201 $ 18,700
Cash Flow From Operations $ 15,586 $ 13,333 $ 9,672
____________________________________________________________________________
</TABLE>
<PAGE>
NUMBER OF DOMESTIC RADIOPHARMACIES AS OF DECEMBER 31, 1995
Syncor - 118
Independents - 69
Mallinckrodt - 35
Amersham/Medi+Physics - 26
NUMBER OF RADIOPHARMACIES IN SYNCOR'S DOMESTIC NETWORK
Dec. 31, 1995 118
Dec. 31, 1994 117
Dec. 31, 1993 109
May 31, 1993 100
May 31, 1992 95
May 31, 1991 87
<PAGE>
TO OUR FELLOW SHAREHOLDERS:
___________________________
We are pleased to report that 1995 was a year of dramatic financial
improvement and operational achievement for Syncor. We believe that our
rebound from a very difficult 1994 validates the soundness of the
Company's business strategy and demonstrates its ability to perform
successfully in today's challenging health care environment.
1995 PERFORMANCE
________________
Profit improvement was Syncor's primary objective for 1995. We achieved
net income of $4.7 million, or $.45 per share, a significant increase over
net income of $1.2 million, or $.11 per share, in 1994.
Photo of Monty Fu, Chairman of the Board
Net sales for 1995 increased to $332.5 million, up four percent from
$320.0 million in 1994. This gain is especially significant because it was
achieved despite a January 1995 decision by one of our major suppliers to
discontinue using Syncor's pharmacy network for the distribution of its
products. This achievement's significance can best be measured by noting
that the sales increase from 1994 to 1995 would have been nine percent had
this supplier's products not been included in the 1994 results.
Syncor's balance sheet also continued to improve with cash, cash
equivalents and marketable securities reaching $26.6 million at December
31, an increase of $7.4 million over the prior year. Working capital
totaled $34.3 million, an increase of $7.7 million over 1994, while the
current ratio stood at 1.69 to 1 at year end.
TURNAROUND FACTORS
__________________
Turnaround Factors Syncor's 1995 financial turnaround was achieved as a
result of steps taken in respect to pricing, sales mix and operating
costs.
Pricing: In 1995, strong competition continued to erode prices throughout
our industry. Rather than devalue Syncor's products and services through
pricing concessions, we concentrated on selling the Syncor "Service
Difference(SM)." As a result, Syncor was able to minimize price erosion in
1995 compared with 1994.
Sales Mix: Cardiology products continue to represent the largest and
fastest-growing segment of Syncor's sales mix. Cardiolite(R), a
proprietary compound manufactured by our alliance partner, The DuPont
Merck Pharmaceutical Company ("DuPont Merck"), is replacing thallium as
the nuclear medicine industry's "gold standard" for stress testing. During
1995, sales of Cardiolite(R) increased by 46 percent.
Syncor's continuing efforts to convert customers from buying products in
bulk to more efficient unit dose purchasing have also been successful. In
1995, unit dose products represented 82 percent of Syncor's sales,
compared with 80 percent in 1994.
Operating Costs: As a result of cost savings programs initiated at the end
of 1994, Syncor was able to maintain 1995 general and administrative
expenses as a percent of sales at 20 percent while keeping the Company's
core business infrastructure intact. In April, 1995, Syncor launched a
three-year, $8 million business process reengineering program that will
dramatically improve the Company's information technology and linkages to
customers and suppliers while increasing overall operating efficiency.
OPERATIONAL HIGHLIGHTS
______________________
Syncor achieved a number of operational successes in 1995. Among the
year's highlights:
Rebalancing of DuPont Merck alliance: Early in the year, Syncor completed
a review and modification of our strategic alliance agreement with DuPont
Merck. As anticipated, the modified agreement improved communication and
teamwork between Syncor and DuPont Merck and resulted in enhanced margins
and increased cash flow.
New distribution agreements: Consistent with our mission to be the premier
provider of radiopharmaceuticals, Syncor signed two new distribution
agreements with major suppliers in 1995. Under the first, we are now
distributing Adenoscan(R), a pharmacologic stress agent, which is licensed
from Medco Research and manufactured by Fujisawa USA. Following approval
from the U.S. Food and Drug Administration, Syncor will begin distributing
Neoprobe Corporation's RIGScan(R), a radiopharmaceutical product for
surgical detection of colorectal cancer.
As the FDA approves new radiopharmaceuticals, Syncor will continue to be
proactive in partnering with manufacturers in order to provide the nuclear
medicine community with superior diagnostic and therapeutic products. In
February 1996, we announced the signing of an agreement with Cypros
Pharmaceutical Corporation for the exclusive distribution of unit dose
GLOFIL, a product that provides convenient and accurate measurement of
renal function in patients with kidney disease. In March 1996, we entered
into a distribution agreement with Diatide, Inc. for the countries of Hong
Kong and Taiwan to distribute Techtide P829, a peptide for detecting and
localizing cancerous tumors.
Unit dose business expansion: Syncor's unit dose business is expanding
rapidly through our relationships with major national managed care
providers and group purchasing organizations. In 1995, unit dose business
associated with national contracts increased by 28 percent over the
previous year and now represents nearly 50 percent of our total unit dose
sales.
Information Systems: Syncor helps large customers manage their nuclear
medicine departments through its proprietary Unit Dose Manager(TM)
integrated software and hardware system. At year end, Syncor was
supporting 1,300 systems at customer sites nationwide.
Late in 1995, we launched NucLink(TM), a UDM(TM)-based software program
that provides an electronic link between our local radiopharmacies and
users. Through NucLink(TM), customers can enjoy the convenience and
accuracy of remote order entry. Future enhancements will expand messaging
and electronic-mail capabilities and further simplify the ordering
process.
During 1996, Syncor will be seeking opportunities to continue the
expansion of its health care information systems business through
strategic partnering arrangements with customers and suppliers.
Domestic pharmacy expansion: Syncor is committed to expanding its
nationwide network of radiopharmacies through acquisitions, start-ups, and
joint ventures. In November 1995, Syncor added three pharmacies to its
U.S. network through the acquisition of Pyramid Diagnostic Services, Inc.
There are currently 118 pharmacies in Syncor's domestic network.
Photo of Gene R. McGrevin, Vice Chairman and Chief Executive Officer
International pharmacy expansion: Having successfully pioneered the
concept of centralized radiopharmacies in the United States, Syncor is
also expanding its overseas business. During 1995, we added three foreign
pharmacies, bringing our international network from five to eight
pharmacies. In early 1996, Syncor opened its ninth international pharmacy
in Puerto Rico. By the end of 1998, Syncor plans to have an international
distribution network in 25 markets outside the U.S.
INVESTING IN THE FUTURE
_______________________
Nuclear medicine is uniquely positioned as both the leading diagnostic
modality and the modality most capable of improving diagnostic accuracy
while lowering health care costs. Syncor's goal is to be the partner of
choice for both providers and suppliers in the nuclear medicine industry.
Syncor believes that the timing is right for the Company to make major
investments in order to improve its strategic position, significantly
increase sales and earnings potential, and build shareholder value.
In addition to Syncor's investments in core business redesign and pharmacy
network expansion, we have committed to investing $14 million over the
next three to five years to develop a nationwide network for Positron
Emission Tomography (PET), an emerging diagnostic modality. Syncor
currently operates four PET distribution centers in the U.S. and plans to
expand to 20 centers by the end of 1998. The following section of this
annual report provides a description of PET and what makes it especially
attractive to Syncor in the era of managed care.
Photo of Robert G. Funari, President and Chief Operating Officer
In order to support Syncor's commitments, the responsibilities of our
senior management team have been realigned. In January 1996, Syncor
founder Monty Fu became President and Chief Executive Officer of Syncor
Global Holdings, Ltd., the subsidiary that operates our growing
international pharmacy network. Gene McGrevin, previously President and
Chief Executive Officer of Syncor International, is now the Company's Vice
Chairman and CEO. In this capacity, Gene is focusing on the development of
PET and other opportunities for the diversification and expansion of
Syncor's health care business. Later in the year, Gene will also assume
the position of Chairman of the Board, at which time Monty Fu, our current
Chairman, will become Chairman Emeritus. Robert Funari, previously
Syncor's Executive Vice President and Chief Operating Officer, has been
appointed President and Chief Operating Officer. His primary role is to
strengthen and expand Syncor's core nuclear medicine business in the U.S.
While reporting Board changes, we note with sadness the January 1996
passing of our long-time friend and colleague, Joseph Kleiman. Joe joined
Syncor's Board of Directors in 1985. His sheer brilliance, energy,
objectivity, fairness and marvelous sense of humor are already sorely
missed.
BUILDING SHAREHOLDER VALUE
__________________________
In closing, we want to recognize Syncor's 2,200 valued employees, whose
efforts are directly responsible for the Company's financial and
operational success in 1995. During the year, the Board demonstrated its
commitment to fostering employee ownership by authorizing the Syncor
Employee Savings and Stock Ownership Plan to purchase 250,000 shares of
Syncor's common stock. Through this plan, employees now own approximately
13 percent of the Company a stake that helps keep everyone at Syncor
focused on building shareholder value. For more on how Syncor invests in
its most important resource its people please see page 8.
We would also like to take this opportunity to thank our suppliers,
customers, and you our shareholders for your continued support.
Moreover, as a consequence of the large investments we are making in our
Company's future, we are not expecting earnings to rise substantially over
the next two or three years. Nevertheless, we are confident that the
foundation we are building will ensure the continued growth of Syncor's
core business and result in improved earnings performance over the
long-term.
Sincerely,
/S/ MONTY FU
_______________________________________
Monty Fu
Chairman of the Board
/S/ GENE R. MCGREVIN
_______________________________________
Gene R. McGrevin
Vice Chairman & Chief Executive Officer
/S/ ROBERT G. FUNARI
_______________________________________
Robert G. Funari
President & Chief Operating Officer
<PAGE>
OUR COMMITMENT TO POSITRON EMISSION TOMOGRAPHY
______________________________________________
Positron Emission Tomography (PET) is a proven imaging modality that has
been used primarily as a medical research tool for more than 20 years.
Positron imaging is widely respected for its superior accuracy and the
unique metabolic information it provides. In today's managed care
environment, PET is gaining recognition for its potential to be cost
effective in routine clinical applications, particularly in the diagnosis
and management of certain cancers, heart disease and neurological
disorders.
Combination Photos of Cyclotron, Physicians and technicians preparing patient
for PET scan, and a Map of the World
Syncor has been providing positron radiopharmaceuticals since 1990. In
January 1996, the Syncor Board of Directors approved the commitment of $14
million to fund the expansion of the Company's PET business. This
expansion will include the development, over the next three to five years,
of a nationwide network of PET radiopharmacies. Funds will also be used to
support activities that will document and communicate the value of
positron imaging to the appropriate clinical and managed care audiences.
Syncor is investing in PET because we believe that positron imaging can
play a significant role in improving the quality of care in key patient
populations while lowering health care costs. Among the advantages of PET:
- - PET provides unique metabolic diagnostic information. No other
imaging technology measures and localizes differences in metabolic
activity throughout the body.
- - PET has demonstrated superiority in the diagnosis, staging and
therapeutic monitoring of lung, colorectal and breast cancer, as well as
brain disorders and heart disease.
- - PET is expected to lower the cost of health care by enabling
providers to make more informed decisions regarding the appropriateness of
invasive interventional procedures, whether diagnostic (e.g., biopsies) or
therapeutic (tumor resections, transplants, etc.).
Photo of Physician and Technician preparing patient for PET scan
- - PET has become more affordable. The cost of PET scanners is
declining, while the development of new collimation and coincidence
counting technology is making positron imaging capability less costly for
medical facilities to provide. Moreover, Syncor's demonstrated ability to
compound and distribute PET isotopes is eliminating the need for
institutions to invest in the staff and equipment required to compound
their own positron radiopharmaceuticals.
PET PROVIDES UNIQUE DIAGNOSTIC INFORMATION
__________________________________________
Positron imaging works by measuring and localizing differences in cellular
metabolism. In the PET procedure, a specially compounded form of glucose
incorporating a radioactive agent is injected into the patient and then
tracked through the tissues with a special type of camera.
Because malignant cells extract glucose from the blood more rapidly than
normal cells, oncologists use PET images of above-normal metabolic
activity to locate malignancies. Metabolic activity measurements can also
be used to determine the health of an organ. For example, heart tissue
with near-normal metabolic activity indicates that the organ may be
salvageable through angioplasty or coronary by-pass and, therefore,
transplant surgery may not be required.
With its unique ability to provide highly accurate, real-time imagery of
physiologic functions at the molecular level, PET complements today's most
widely used diagnostic imaging technologies, Computed Tomography (CT) and
Magnetic Resonance Imaging (MRI) - modalities that identify abnormalities
only at the structural level.
PET HAS DEMONSTRATED DIAGNOSTIC SUPERIORITY AND CLINICAL RELEVANCE
__________________________________________________________________
Recent studies in peer review journals are demonstrating that PET is a
clinically effective modality whose superior accuracy can enable health
care providers to make better, more cost-effective patient management
decisions.
Originally used primarily as a research tool in studies of brain function
and to localize certain brain disorders, PET has more recently been
employed in combination with CT and MRI not only in diagnostic imaging
procedures but also to demonstrate early physiological responses to drug
therapies something that the nonmetabolic imaging techniques cannot do.
Cancers that are being evaluated by PET include breast, colorectal, lung,
brain, head and neck, melanoma, lymphoma, ovarian, and prostate. As
mentioned above, PET is employed in cardiology to differentiate viable
from nonviable heart tissue. PET has also demonstrated great usefulness in
neurology where it has played an important role in the evaluation and
management of epilepsy, Alzheimer's disease, dementia, stroke and other
neurological and neuropsychiatric disorders.
PET IS AFFORDABLE - AT LAST
___________________________
Until recently, PET usage has been limited chiefly because positron
imaging has been well beyond the economic reach of most medical
institutions. The PET camera itself is very expensive. Moreover, the
isotopes employed in metabolic imaging have considerably shorter
half-lives than those of most isotopes used in nuclear medicine.
Because of this time sensitivity, most institutions with PET capability
have had to compound their own positron radiopharmaceuticals in on-site
cyclotrons or accelerators -- another major capital outlay and operating
expense.
In 1990, Syncor - originator of the centralized radiopharmacy concept -
began producing PET isotopes at the first of what are now four pilot PET
radiopharmacies. These pharmacies - located at the U.S.C. University
Hospital in Los Angeles; the Northern California PET Imaging Center in
Sacramento; Creighton University in Omaha; and the Good Samaritan Medical
Center in Phoenix - have been used to demonstrate to the health care
community that Syncor, working in conjunction with its efficient
distribution network can satisfy the positron radiopharmaceutical
requirements of entire geographic regions.
Syncor's new funding commitment will assist in the creation of a national
network of 20 PET radiopharmacies in states where the regulatory climate
and health care environment are favorable for our expansion. By providing
a centralized source for positron radiopharmaceuticals and removing the
need for institutions to invest in production, Syncor expects to
significantly enhance the availability and utilization of PET throughout
the nuclear medicine community.
The U.S. Food and Drug Administration's recent approval of a coincidence
counting technology allows PET imaging to be performed on the newest
cameras used for SPECT (Single Photon Emission Computed Tomography, the
core of Syncor's diagnostic nuclear medicine business.) The ability to
add PET capability by upgrading existing equipment, plus the potential
efficiency and flexibility of dual purpose cameras, could add significatly
to the numbr of institutions able to take advantage of this valuable
technology.
PET CAN LOWER HEALTHCARE COSTS
______________________________
As noted above, PET can lower health care costs by enabling physicians to
make better patient-management decisions. According to the Institute for
Clinical PET (ICP), the U.S. health care community could save as much as
$2.5 billion annually by including or substituting PET in the diagnostic
and staging protocols for cancers and in the evaluation of heart disease.
One of the most promising applications of PET is in the diagnosis of lung
cancer, one of the nation's leading causes of death. Each year, 170,000
cases of lung cancer are diagnosed in the U.S., generally through a
combination of diagnostic imaging and surgical modalities. Cost savings of
approximately $300 million have been estimated from the potential
reduction in less accurate diagnostic procedures and the elimination of
exploratory surgeries through the use of PET.
PET BUILDS ON SYNCOR'S CORE COMPETENCIES
________________________________________
Combination Photos of PET Pharmacists, the Map of the World and Physicians
and Technicians preparing patient for PET scan
Syncor has been the leading distributor of radiopharmaceuticals to the
nuclear medicine industry since 1974. Our expansion into the PET
marketplace will build upon the core competencies developed in the
creation of our nuclear pharmacy business. These competencies include:
- - The demonstrated ability to provide radiopharmacy services 24 hours
a day, 365 days a year, to institutions serving 95 percent of the nation's
health care markets.
- - The demonstrated ability to operate cost-effectively within the
regulatory environment of 39 states and eight foreign countries. The
demonstrated ability to form long-term, mutually beneficial relationships
with health care providers and group purchasing organizations.
- - The demonstrated ability to recruit, train and retain high-skilled
employees, including 400 licensed nuclear pharmacists.
- - The demonstrated ability to make a positive difference in the cost
and quality of patient care by providing outstanding service.
With our increased commitment to PET, Syncor is aggressively pursuing a
leadership role in this emerging diagnostic modality. We expect Syncor's
investment in positron imaging to reduce overall Company earnings over the
next two to three year period. However, we believe this investment will
provide a firm foundation for future sales and earnings increases that
will, in turn, build shareholder value.
<PAGE>
INVESTING IN OUR PEOPLE
_______________________
Photo of the Chairman's Award Recipient, Haig Bagerdjian
While the health care environment in which Syncor operates is changing
rapidly, our strong commitment to the training and development of
employees remains constant. We are committed to increasing the depth,
breadth and flexibility of our people's skills because it is only through
their development that we can continue to serve our customers effectively
while achieving Syncor's business objectives.
Photo of the General Manager of the Year, Lou Juliano
Continuing education and career development programs offered by Syncor in
1995 included the following:
Photo of the Sales Manager of the Year, Suzi Mattingly
Syncor's Advanced Management Program (SAM) -- SAM was custom-designed to
increase the skills of senior managers in the areas of marketing,
financial analysis and people management. Facilitated by external experts
in each field, this eight-month program involved the formation of
cross-functional management teams that improved individual and group
abilities to anticipate and satisfy customer needs by researching and
analyzing marketplace challenges and exploring directions for future
growth.
Photo of the Manager of the Year, Paul Gotti
Strategic Selling Program -- All Syncor sales consultants and field
managers were required to take this two-day course in recognizing changing
customer needs and creating "win-win" solutions for the customer and the
Company.
Photo of the Pharmacy Manager of the Year, Dan Littlefield
Photo of the National Accounts Manager of the Year, Kathy Hill
Responsible Management Program -- The basics of being a good Syncor
manager, including how to select quality people and support the continuous
development of their skills, is part of the training required for all new
managerial employees.
Authorized User Program -- Pharmacists and technicians who work at
Syncor's pharmacies are trained in the safe handling and preparation of
radiopharmaceuticals through this Nuclear Regulatory Commission-sanctioned
program.
Safety Training -- All pharmacy personnel receive comprehensive training
in biohazard, radiation and driver safety.
Information Systems Training -- Syncor is in the process of expanding,
networking and integrating its business management, communications, and
training information systems. During 1995, all Syncor managers were
trained on new budgeting software and all pharmacies were upgraded with
state-of-the-art hardware for running this more efficient new program.
Advanced Degree Award Program -- Syncor offers substantial financial
support to employees who are pursuing a graduate degree in a job related
field and who have demonstrated leadership potential. Candidates qualify
for assistance through a rigorous interview and selection process.
Tuition Reimbursement Program -- Through Syncor's tuition reimbursement
program, all employees are encouraged to complete undergraduate and
advanced degrees and take advantage of continuing education opportunities
offered by local colleges, universities and other accredited institutions.
The program provides reimbursement up to $2,000 per year for any courses
that are related to the employee's current job or that prepare the
employee to assume new responsibilities in the future.
Syncor's investment in its people demonstrates our commitment to growing
our business through customer service -- the competitive edge that only
flexible, creative, and well-trained employees can provide.
<PAGE>
SYNCOR'S VALUES
_______________
Syncor's Values reflect our shared beliefs as a Company of people. Our
Values are our codes of conduct in working together, setting priorities
and making decisions. They guide us individually and as a team to make the
best decisions each day for our customers, employees and shareholders.
CUSTOMERS
_________
Our customers are number one. We are dedicated to providing quality
services which exceed their expectations and maintain their trust.
TEAMWORK
________
Teamwork is the result of open communication and the free exchange of
ideas and information in an environment which values and encourages
respect and dignity for every individual.
PROFESSIONALISM
_______________
Our employees are professionals who demonstrate knowledge, skills and
accountability in performing their jobs.
HEALTH AND SAFETY
_________________
The health and safety of our employees, customers and community will never
be compromised.
EMPLOYEE OWNERSHIP
__________________
We support employee ownership to share responsibility in creating future
value for all shareholders.
COMMUNITY SERVICE
_________________
We believe in community service and encourage employee participation in
community activities.
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
Seven
Months
Ended
Twelve Months Ended December Twelve Months Ended
December 31, 31, May 31,
In thousands, except per share date 1995 1994 1993 1993 1993 1992
____________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Net Sales $332,460 $319,994 $241,289 $142,237 $230,949 $195,989
Gross Profit 73,591 66,026 78,926 45,187 77,306 67,451
Income
Continuing operations 4,669 1,213 6,633 1,684 10,191 7,709
Discontinued operations, net - - 120 - (379) (810)
Cumulative effect of accounting change - - 1,020 1,020 - -
Net income $ 4,669 $ 1,213 $ 7,773 $ 2,704 $ 9,812 $ 6,899
____________________________________________________________________________________________________________
Earnings per share:
Continuing operations $.45 $.11 $.62 $.16 $.95 $.70
Discontinued operations, net - - .01 - (.03) (.07)
Cumulative effect of accounting change - - .09 .09 - -
Net income per share $.45 $.11 $.72 $.25 $.92 $.63
============================================================================================================
Cash, cash equivalents and investments $ 26,559 $ 19,201 $ 18,700 $ 18,700 $ 20,937 $ 9,970
Working capital 34,286 26,616 27,121 27,121 27,430 20,279
Total assets 133,680 128,684 114,586 114,586 103,953 90,847
Long-term debt 5,200 5,154 6,837 6,837 4,515 6,008
Stockholders' equity $ 78,262 $ 73,850 $ 71,181 $ 71,181 $ 65,784 $ 52,359
Weighted average shares outstanding 10,481 10,889 10,779 10,762 10,708 10,865
============================================================================================================
Current ratio 1.69 1.54 1.74 1.74 1.82 1.64
Number of domestic radiopharmacies 118 117 109 109 100 95
Days sales outstanding 55 55 52 52 52 59
============================================================================================================
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
CALENDAR YEARS 1995 AND 1994
NET SALES
_________
Consolidated net sales in 1995 totaled $332.5 million, an increase of 3.9
percent or $12.5 million, over 1994. The Company's 1995 sales growth was
influenced by a number of factors. Cardiac imaging continues to be the
driving force behind the sales growth. Sales from cardiac imaging now
account for approximately 63 percent of the Company's sales up from the 56
percent in 1994. These sales continue to be driven by the increasing
market share of Cardiolite(R). Cardiolite(R) experienced a 46 percent
increase in 1995 sales over 1994 sales. In addition to cardiac imaging,
additional sales growth came from several other sources. The Company
continues to see growth in its compounding services as more customers, who
formerly performed these services in-house, switch to using the Company's
services. During 1995, the Company opened two new radiopharmacies, closed
four radiopharmacies due to business reasons, plus acquired a competing
chain of radiopharmacies (see Note 2) in November of 1995. In addition, a
new brain imaging agent, Neurolite(R), was introduced in 1995 and
experienced strong sales. The Company expects these trends to continue in
1996.
NET SALES (in millions)
_______________________
Dec. 31, 1995 $332.5
Dec. 31, 1994 $320.0
Dec. 31, 1993 $241.3
Conversely, sales were negatively affected by conditions which continue to
play a role in health care economics including competition, declining but
still significant price erosion, and competing modalities. In addition,
the Company was unable to market certain products due to a decision by one
of the Company's suppliers to deny access to their proprietary products.
The Company expects these trends to continue, and expects some price
stabilization to occur in the marketplace.
GROSS PROFIT
____________
The Company's gross profit as a percentage of net sales increased to 22.1
percent in 1995 compared to 20.6 percent in 1994. The increase in gross
profit is attributable to a number of factors. In late 1994, the Company
instituted several programs to reduce costs. Some of the areas that were
targeted for cost reductions included material and direct labor costs. In
the materials area, the Company concluded a joint review and modification
of the strategic alliance agreement with The Radiopharmaceutical Division
of The DuPont Merck Pharmaceutical Company (DuPont). The modification of
the agreement provided for the reduction in the acquisition price of
certain products which in turn yielded savings in terms of material costs
in 1995 over comparable costs in 1994. In addition, the Company continues
to enjoy success in converting more of its customers to its compounding
services rather than supplying those same customers with the raw materials
which allows the customer to perform their own compounding services.
These conversions provided the Company with a larger gross margin
percentage on the same corresponding sales. In the area of direct labor,
the Company carefully evaluated its needs in late 1994. It was determined
that savings could be achieved in this area and successful plans were put
in place to achieve these savings in 1995.
On the negative side, the Company was unable to fully arrest the price
decline experienced in 1994. Although the price decline in 1995 was
marginal, it continued to have some effect on the gross margin.
Additionally, the Company continues to experience a product mix shift from
some of its core (non-cardiology) products, to cardiology products due to
changes in certain physician practice patterns. These core products
traditionally provided a higher gross margin than the Company achieves
with the cardiology products. Managed care continues to play a very active
role in the Company's strategic direction. Pricing pressures from this
group of customers continues to pressure margins.
OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
______________________________________________
Operating, selling and administrative expenses increased $2.0 million in
1995 compared to 1994 and as a percent of sales remained constant at 16.8
percent in both 1995 and 1994. The Company instituted several cost savings
programs in 1994 and continued to control expenses in 1995 through a
variety of programs. The primary cause for the absolute increase in 1995
expenses was due to the incentive compensation plans. It is the Company's
philosophy not to pay any incentive compensation unless certain levels of
earnings are achieved. During 1994, these levels were not achieved, and
accordingly, no incentive compensation was paid. However, 1995 earnings
levels improved significantly which allowed managers to achieve certain
levels of incentive compensation.
During 1996, it is the intention of management to aggressively explore new
business opportunities. The expenditures required for these different
opportunities are currently expected to increase the level of expenditures
in the operating, selling, and administrative category over the 1995
levels. While these levels can be supported in our 1996 business plan, if
certain opportunities prove successful, greater expenditures could be
required.
DEPRECIATION AND AMORTIZATION
_____________________________
Depreciation and amortization in 1995 increased to $10.8 million or 1.9
percent from $10.6 million in 1994. The increase is due to the opening or
acquisition of radiopharmacies since December 31, 1994 and an extensive
remodeling and relocation program of the Company's facilities which was
initiated in prior years.
ALLIANCE DEVELOPMENT COSTS
__________________________
On December 3, 1993, the Company entered into a long-term supplier
distribution agreement with its principal supplier of radiopharmaceutical
products, DuPont Merck. The agreement, which became effective February 1,
1994, and subsequently amended as discussed above, replaced an existing
supply agreement between the companies which had been in place since 1988.
Under the terms of the new agreement, DuPont Merck relies upon the Company
as the primary distribution channel for its radiopharmaceutical products
in the United States.
PROVISION FOR INCOME TAXES
__________________________
The provision for income taxes as a percentage of income before taxes
decreased to 40 percent in 1995 from 41.8 percent in 1994. The decrease in
the effective tax rate is a result of the reduction in non-tax deductible
expenses as a percentage of pre-tax income.
RESULTS OF OPERATIONS
CALENDAR YEARS 1994 AND 1993
NET SALES
_________
Consolidated net sales in 1994 totaled $320.0 million, an increase of 32.6
percent, or $78.7 million, over 1993. The Company's net sales growth was
primarily the result of activity associated with the strategic alliance
that the Company entered into with its principal supplier of
radiopharmaceutical products (see Note 6). Sales in the cardiology sector
of the business continued to be the driving force in nuclear medicine and
the Company's sales growth. Cardiology sales represented approximately 56
percent of the Company's net sales. Other favorable factors affecting
sales growth included the addition of significant sales volume due to the
expansion of certain large managed care contracts, plus the opening and
acquisition of eight new pharmacies during 1994. Sales growth was
negatively affected by recent trends in national health care economics,
primarily aggressive price competition, plus the strategic decision made
during the first quarter of 1994 to reduce the price of the Company's
leading cardiology product.
GROSS PROFIT
____________
The Company's gross profit as a percentage of net sales decreased to 20.6
percent in 1994 compared to 32.7 percent in 1993. The decline in gross
profit was the result of a variety of factors. These factors included
general price reductions across most of Syncor's product line including
the cardiology area, in response to competitive market pressures, in
addition to the acquisition of several large managed care contracts that
traditionally have lower profit margins. The Company also experienced a
decline in the volume of some of its core (non-cardiology) products, due
to changes in certain physician practice patterns. Material costs, as a
percentage of net sales, rose due to price increases from suppliers, while
the current governmental focus on cost containment and managed care made
it difficult to recover these material cost increases through price
increases to customers.
OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
______________________________________________
Operating, selling and administrative expenses decreased $1.9 million in
1994 compared to 1993, despite a significant increase in net sales, and
decreased as a percentage of net sales from 23.1 percent to 16.8 percent.
The decline was a direct result of several programs initiated by the
Company in 1994 to reduce losses, reduce certain overhead, and improve
control over radiopharmacy expenditures. The Company continued, as a part
of its business strategy, to invest in developmental business
opportunities. These opportunities required ongoing resources in the area
of operating, selling and administrative expenses.
DEPRECIATION AND AMORTIZATION
_____________________________
Depreciation and amortization in 1994 increased to $10.6 million or 24
percent from $8.5 million in 1993. The increase was due to the opening or
acquiring of eight new radiopharmacies since December 31, 1993, and an
extensive remodeling and relocation program of the Company's facilities
which was initiated in prior years.
ALLIANCE DEVELOPMENT COSTS
__________________________
On December 3, 1993, the Company entered into a long-term supplier
distribution agreement with its principal supplier of radiopharmaceutical
products, DuPont Merck.
In connection with this agreement, the Company established a reserve for
alliance development costs of $4.5 million during the year ended December
31, 1993. These costs, which resulted in cash outlays, included $2.8
million related to launch and implementation of the strategic alliance
program, $1.1 million of employee-related expenses associated with the
consolidation, relocation and reorganization of certain sales and service
operations, and $.6 million for incremental accounting, legal and
regulatory fees. Accrued alliance development costs of $4.1 million at
December 31, 1993, were fully utilized in 1994 as the strategic alliance
with DuPont Merck was implemented.
PROVISION FOR INCOME TAXES
__________________________
The provision for income taxes as a percentage of income before taxes
increased to 41.8 percent in 1994 from 39.7 percent in 1993. The increase
in the effective tax rate was due to an increase in goodwill amortization
and other non-tax deductible expenses as a percentage of pre-tax book
income.
RECENT ACCOUNTING PRONOUNCEMENTS
________________________________
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards 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 intends to implement the disclosure provisions of
Statement 123 in fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
_______________________________
In 1995, total cash and investments, which includes cash and cash
equivalents and short and long-term investments, increased to $26.6
million from $19.2 million at December 31, 1994. The Company's debt
position of $7.4 million was $.1 million higher than the debt position at
December 31, 1994. Working capital increased from $26.6 million in 1994 to
$34.3 million in 1995. This change reflects an aggressiveness on the
Company to focus on asset management, collection of receivables, inventory
turnover and cost control on operating, selling and administrative
expenses. Days sales outstanding on receivables were 55 days at December
31, 1995 and 1994.
CORPORATE CASH AND INVESTMENTS (in millions)
____________________________________________
Dec. 31, 1995 $26.6
Dec. 31, 1994 $19.2
Dec. 31. 1993 $18.7
The nature of the Company's business is not capital intensive and as new
products become available, the capital requirements to accommodate these
products will be minimal. However, in January 1996, the Company announced
that it is making significant investments in its nuclear business both
within the United States and overseas. The Company is committing $14
million to the development of a distribution network to support the future
growth of Positron Emission Tomography (P.E.T.). This investment will be
made over a three to five year period. Also, an $8 million commitment over
the next three years has been made to redesign key business processes and
improve information technology and linkages to customers and suppliers.
The Company believes sufficient internal and external capital sources
exist to fund operations and future expansion programs. At December 31,
1995, the Company had unused lines of credit of approximately $17.6
million to fund short-term needs.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
SYNCOR INTERNATIONAL CORPORATION & SUBSIDIARIES
Seven
Months Twelve
Ended Months
Twelve Months Ended December Ended
December 31, 31, May 31,
In thousands, except per share data 1995 1994 1993 1993 1993
_______________________________________________________________________________________________________
(unaudited)
<S> <C> <C> <C> <C> <C>
Net Sales $332,460 $319,994 $241,289 $142,237 $230,949
Cost of sales 258,869 253,968 162,363 97,050 153,643
_______________________________________________________________________________________________________
Gross profit 73,591 66,026 78,926 45,187 77,306
Operating, selling and admin. expenses 55,780 53,802 55,696 32,949 53,879
Depreciation and amortization 10,826 10,592 8,548 5,248 7,156
Alliance development costs - - 4,500 4,500 -
________________________________________________________________________________________________________
Operating income 6,985 1,632 10,182 2,490 16,271
Other income (expense):
Interest income 1,227 658 804 450 614
Interest expense (743) (747) (528) (311) (613)
Other, net 313 542 546 145 622
________________________________________________________________________________________________________
Other income, net 797 453 822 284 623
Income from continuing operations before
income taxes and cumulative effect of
accounting change 7,782 2,085 11,004 2,774 16,894
Provision for income taxes 3,113 872 4,371 1,090 6,703
________________________________________________________________________________________________________
Income from continuing operations before
cumulative effect of accounting change 4,669 1,213 6,633 1,684 10,191
Discontinued operations:
Discontinued operations, net of taxes - - (162) - (661)
Gain on sale of discontinued
operations, net of taxes - - 282 - 282
Cumulative effect of change in method
of accounting for income taxes - - 1,020 1,020 -
________________________________________________________________________________________________________
Net income $ 4,669 $ 1,213 $ 7,773 $ 2,704 $ 9,812
========================================================================================================
Net income per share:
Income from continuing operations $.45 $.11 $.62 $.16 $.95
Discontinued operations:
Discontinued operations, net
of taxes - - (.02) - (.06)
Gain on sale of discontinued
operations, net of taxes - - .03 - .03
Cumulative effect of change in method
of accounting for income taxes - - .09 .09 -
Net income per share $.45 $.11 $.72 $.25 $.92
=======================================================================================================
Weighted average shares outstanding 10,481 10,889 10,779 10,762 10,708
=======================================================================================================
<FN>
See Accompanying Notes To Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
SYNCOR INTERNATIONAL CORPORATION & SUBSIDIARIES
December 31, December 31,
In thousands, except per share data 1995 1994
______________________________________________________________________________________________________________
Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 23,022 $ 17,761
Short-term investments 2,296 230
Accounts receivable, less allowances for doubtful accounts
of $1,097 and $1,154, respectively 50,857 49,972
Inventory 5,159 5,369
Prepaids and other currents assets 2,306 2,964
______________________________________________________________________________________________________________
Total current assets 83,640 76,296
Marketable investment securities 1,241 1,210
Property and equipment, net 23,006 26,766
Excess of purchase price over net assets acquired, net of accumulated amortization
of $4,270 and $3,810, respectively 14,414 13,874
Other 11,379 10,538
_________ _________
$133,680 $128,684
==============================================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 33,286 $ 39,105
Accrued liabilities 3,029 2,928
Accrued wages and related costs 10,060 5,494
Federal and state taxes payable 755 -
Current maturities of long-term debt 2,224 2,153
______________________________________________________________________________________________________________
Total current liabilities 49,354 49,680
______________________________________________________________________________________________________________
Long-term debt, net of current maturities 5,200 5,154
Deferred compensation 864 -
Stockholders' Equity:
Common stock; $.05 par value; authorized 20,000 shares; issued 10,662 and 10,570
shares at December 31, 1995 and 1994, respectively 533 529
Additional paid-in-capital 47,169 46,508
Unrealized loss on investments (24) (52)
Employee savings and stock ownership loan guarantee (2,998) (1,934)
Foreign currency translation adjustment (105) 133
Retained earnings 35,598 30,929
Treasury stock, at cost; 250 shares at December 31, 1995 and 1994 (1,911) (2,263)
_______________________________________________________________________________________________________________
Total stockholders' equity 78,262 73,850
_______________________________________________________________________________________________________________
$133,680 $128,684
===============================================================================================================
<FN>
See Accompanying Notes To Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SYNCOR INTERNATIONAL CORPORATION & SUBSIDIARIES
Employee Foreign
Un- Savings Currency
Addi- realized & Stock Trans- Total
tional Loss on Owner- lation Stock-
-Common Stock- Paid-in Invest- ship Loan Adjust- Retained Treasury holders'
In thousands Shares Amount Capital ments Guarantee ment Earnings Stock Equity
________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT MAY 31, 1992 9,979 $499 $38,689 - $(4,350) $ 321 $17,200 - $52,359
Issuance of common stock 212 11 1,659 1,670
Tax benefit from the exercise
of stock options 1,205 1,205
Foreign currency translation
adjustment (182) (182)
Amortization of loan guarantee 920 920
Net income 9,812 9,812
________________________________________________________________________________________________________________
BALANCE AT MAY 31, 1993 10,191 510 41,553 - (3,430) 139 27,012 - 65,784
Issuance of common stock 164 8 1,615 1,623
Tax benefit from the exercise
of stock options 618 618
Foreign currency translation
adjustment (8) (8)
Amortization of loan guarantee 460 460
Net income 2,704 2,704
________________________________________________________________________________________________________________
BALANCE AT DECEMBER 31, 1993 10,355 518 43,786 - (2,970) 131 29,716 - 71,181
Issuance of common stock 215 11 1,827 1,838
Tax benefit from the exercise
of stock options 895 895
Unrealized loss on investments (52) (52)
Foreign currency translation
adjustment 2 2
Amortization of loan guarantee 1,036 1,036
Reacquisition of common stock
for treasury (250) (2,263) (2,263)
Net income 1,213 1,213
________________________________________________________________________________________________________________
BALANCE AT DECEMBER 31, 1994 10,320 529 46,508 (52) (1,934) 133 30,929 (2,263) 73,850
Issuance of common stock 92 4 550 554
Issuance of treasury stock 250
Tax benefit from the exercise
of stock options 61 61
Unrealized loss on investments 28 28
Foreign currency translation
adjustment (238) (238)
ESSOP loan guarantee (2,313) (2,313)
Reacquisition of common stock
for treasury (250) (1,911) (1,911)
Amortization of loan guarantee 1,249 1,249
Net income 4,669 4,669
________________________________________________________________________________________________________________
BALANCE AT DECEMBER 31, 1995 10,412 $533 $47,169 $(24) $(2,998) $(105) $35,598 $(1,911) $78,262
================================================================================================================
<FN>
See Accompanying Notes To Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATE STATEMENTS OF CASH FLOWS
SYNCOR INTERNATIONAL CORPORATION & SUBSIDIARIES
Seven
Months Twelve
Twelve Ended Months
Months Ended December Ended
December 31, 31, May 31,
In thousands 1995 1994 1993 1993 1993
_________________________________________________________________________________________________________________
(unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,669 $ 1,213 $ 7,773 $ 2,704 $ 9,812
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 10,827 10,592 8,548 5,248 7,156
Provision for losses on receivables (57) (46) (530) (302) (179)
Amortization of loan guarantee 1,249 1,036 920 460 920
Net gain on sale of assets from
discontinued operations - - (282) - (282)
Loss on discontinued operations - - 162 - 661
Cumulative effect of change in method
of accounting for income taxes - - 1,020 1,020 -
Decrease (increase) in:
Accounts receivable (828) (14,874) (54) (372) 795
Inventory 263 (847) 529 47 (951)
Prepaids and other current assets 658 3,346 (1,088) (1,210) (713)
Other assets (1,485) (1,328) (10,577) (5,885) (1,266)
Increase (decrease) in:
Accounts payable (5,819) 18,288 4,379 959 110
Accrued alliance development costs - (4,066) 4,066 4,066 -
Accrued liabilities 101 (145) (1,898) 418 (253)
Accrued wages and related costs 4,566 162 (116) (3,140) 1,611
Federal and state taxes payable 816 - (1,459) (619) 1,824
Deferred income taxes - - (1,632) (1,373) (375)
Foreign currency translation adjustment (238) 2 (89) (8) (182)
Deferred compensation 864 - - - -
__________________________________________________________________________________________________________________
Net cash provided by (used in) operating
activities 15,586 13,333 9,672 (727) 18,688
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (3,865) (9,209) (7,292) (5,538) (10,646)
Payments for acquisitions (3,150) (336) (1,500) (1,500) (563)
Net decrease (increase) in
short-term investments (2,066) 3,360 691 (1,745) 3,226
Net (increase) in long-term investments (31) (1,210) - - -
Unrealized gain (loss) in investments 28 (52) - - -
Proceeds from sales of discontinued
operations - - 9,100 - 9,100
Disposition of assets from discontinued
operations - - (4,618) - (4,618)
_________________________________________________________________________________________________________________
Net cash used in investing activities (9,084) (7,447) (3,619) (8,784) (3,501)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 554 1,838 3,111 1,623 1,670
Issuance of treasury stock 2,313 - - - -
Reacquisition of common stock (1,911) (2,263) - - -
Increase in ESSOP loan guarantee (2,313) - - - -
Proceeds from (repayment of) short-term debt (3,547) - (1,094) - 1,000
Proceeds from (repayment of) long-term debt 3,663 (2,810) 2,932 3,905 (1,664)
_________________________________________________________________________________________________________________
Net cash provided by (used in) financing activities (1,241) (3,235) 4,949 5,528 (994)
_________________________________________________________________________________________________________________
Net increase (decrease) in cash and cash equivalents 5,261 2,651 11,002 (3,983) 14,193
_________________________________________________________________________________________________________________
Cash and cash equivalents at beginning of period 17,761 15,110 4,108 19,093 4,900
_________________________________________________________________________________________________________________
Cash and cash equivalents at end of period $23,022 $17,761 $15,110 $15,110 $19,093
=================================================================================================================
<FN>
See Accompanying Notes To Consolidated Financial Statements
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SYNCOR INTERNATIONAL CORPORATION & SUBSIDIARIES
(Dollars In Thousands, Except Per Share Data)
NOTE ONE - Summary of Significant Accounting Policies
Principles Of Consolidation: The Company's business is primarily
compounding, dispensing and distributing radiopharmaceuticals to hospitals
and clinics. The consolidated financial statements of Syncor International
Corporation include the assets, liabilities and operations of the Company
and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
General: The unaudited operating results have been prepared on the same
basis as the audited consolidated financial statements and, in the opinion
of management, include all adjustments necessary for a fair presentation
for the periods presented.
Change in Fiscal Year: Beginning with the seven month transition period
ended December 31, 1993, the Company changed its fiscal year-end to
December 31 from May 31.
Cash and Cash Equivalents and Short-Term Investments: The Company
considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. Short-term
investments consist principally of time deposits and tax-exempt municipal
securities and are carried at cost, which approximates market value.
Financial Instruments: The carrying value of financial instruments such as
cash and cash equivalents, trade receivables, payables and floating rate
short and long-term debt, approximate their fair value.
Inventory: Inventories, consisting of purchased products, are stated at
the lower of cost (first-in, first-out) or market.
Property and Equipment: Property and equipment are stated at cost and
depreciated or amortized on a straight-line basis over the estimated
useful lives ranging from two to 15 years.
Self Insurance: The Company is generally self-insured for losses and
liabilities related primarily to vehicle claims, medical claims and
general product liability. Losses are accrued based upon the Company's
estimates of the aggregate liability for claims incurred using certain
actuarial assumptions followed in the insurance industry and based on
Company experience. Depending on the nature of the liability claim, the
Company's maximum self-insured exposure is one-hundred thousand dollars
per claim.
Excess of Purchase Price Over Net Assets Acquired: The cost in excess of
net assets of acquired businesses is being amortized on a straight-line
basis over periods of 15 to 40 years. The Company periodically evaluates
the carrying value of these assets and, accordingly, considers the ability
to generate positive cash flow through projected undiscounted future
operating cash flows of the acquired operation as the key factor in
determining whether the assets have been impaired. The Company's
accounting treatment is consistent with Statement of Financial Accounting
Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of."
Marketable Investment Securities: Marketable investment securities consist
primarily of corporate debt and United States government obligations. In
the first quarter 1994, the Company adopted the provisions of Statement of
Financial Accounting Standard No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" (Statement 115) on a prospective basis.
Under Statement 115, the Company classifies its debt and marketable equity
securities in one of three categories: trading, available-for-sale or
held-to-maturity. Trading securities are bought and held principally for
the purpose of selling them in the near term. Held-to-maturity securities
are those securities that the Company has the ability and intent to hold
until maturity. All other securities not included in trading or
held-to-maturity are classified as available-for-sale.
Held-to-maturity securities are recorded at amortized cost, adjusted for
the amortization or accretion of premiums or discounts. Unrealized holding
gains and losses on trading securities are included in earnings.
Unrealized holding gains and losses, net of the related tax effect, on
available-for-sale securities are excluded from earnings and are reported
as a separate component of stockholders' equity until realized.
Foreign Currency Translation: Assets and liabilities of foreign operations
are translated into U.S. dollars based upon the prevailing exchange rates
in effect at the balance sheet date. Foreign exchange gains and losses
resulting from these translations are included as a separate component of
stockholders' equity. Actual gains or losses incurred on currency
transactions in other than the country's functional currency are included
in net income currently.
Stock Options: In October 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards 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 intends to implement the disclosure provisions of
Statement 123 in fiscal 1996.
Income Taxes: Effective June 1, 1993, the Company adopted the Financial
Accounting Standards Board Statement of Financial Accounting Standards No.
109 "Accounting for Income Taxes" (Statement 109) and has reported the
cumulative effect of that change in the method of accounting for income
taxes in the consolidated statement of income for the seven months ended
December 31, 1993.
Under the asset and liability method of Statement 109, deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109,
the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
Pursuant to the deferred method under APB Opinion 11, which was applied in
the fiscal year ended May 31, 1993, and prior years, deferred income taxes
are recognized for income and expense items that are reported in different
years for financial reporting purposes and income tax purposes using the
tax rate applicable for the year of the calculation. Under the deferred
method, deferred taxes are not adjusted for subsequent changes in tax
rates.
Net Income Per Share: Income per share amounts are based upon the weighted
average number of shares outstanding during each period adjusted for
dilutive common stock equivalents.
Reclassifications: Certain items in the prior years' consolidated
financial statements have been reclassified to conform to the current
year's presentation.
Pre-Opening Costs: Costs, included in "Other" in the consolidated balance
sheets relating to the opening of new radiopharmacies, are deferred and
amortized ratably over a 24 month period commencing at the date of
opening.
NOTE TWO - Acquisitions
In November 1995, the Company acquired all the assets and certain
contracts of Pyramid Diagnostic Services, Inc. (Pyramid), a
radiopharmaceutical chain that competed directly with existing Syncor
sites in the Midwest and Southeast regions of the United States. The
acquisition was pursuant to a Tennessee bankruptcy court decision to
approve the sale of the assets, and the assumption and assignment of
certain contracts to the Company for $3.15 million in cash. The purchase
culminated eight months of legal proceedings involving allegations against
some of Pyramid's business practices, which the Company claimed were
illegal. The Company closed five of the acquired radiopharmacies and
incorporated the remaining three sites into Syncor's nationwide
distribution network.
In 1993, the Company acquired certain net assets of three existing
radiopharmacies in Florida and Nebraska for total consideration of
approximately $4.9 million. The consideration consisted of $1.5 million in
cash and $3.4 million in promissory notes payable over a three-to
five-year period.
These acquisitions have been accounted for as purchases and the purchase
prices were allocated to fixed assets, non-compete and consulting
agreements, customer lists and goodwill. The results of these operations
are included in the Company's consolidated financial statements from the
effective acquisition dates. Pro forma information is not presented since
the acquisitions are not material to the accompanying consolidated
financial statements.
NOTE THREE - Disposition of Business
On May 31, 1993, the Company divested itself of nine home infusion sites
for $9.1 million in cash and closed four remaining sites. Accordingly,
this business segment was classified as a discontinued operation in the
consolidated financial statements. All prior periods have been restated to
conform to this presentation. Net sales for the home infusion business
were $14,116 for the year ended May 31, 1993.
The net loss from discontinued operations for the year ended May 31, 1993,
included losses from operations up to the measurement date, losses during
the phase-out period of $1,212 and expenses associated with the sale and
closure of facilities offset by a net gain on disposal of assets. A tax
benefit of $431 for the year ended May 31, 1993, was recognized as a
result of losses from discontinued operations. Tax expense of $184 was
recognized from the gain on disposal of assets for the year ended May 31,
1993. The remaining net assets are not material.
<PAGE>
NOTE FOUR - Property and Equipment, Net
The major classes of property and equipment are:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
_______________________________________________________________________
<S> <C> <C>
Land and buildings $ 3,089 $ 3,089
Furniture and equipment 44,215 41,674
Leasehold improvements 13,561 13,822
_______________________________________________________________________
60,865 58,585
Less accumulated depreciation and amortization 37,859 31,819
________________________________________________________________________
$23,006 $26,766
========================================================================
</TABLE>
NOTE FIVE - Marketable Securities
Marketable investment securities consist of:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
_______________________________________________________________________
<S> <C> <C>
Available-for-sale, at fair value, net of
tax effect $ 672 $ 645
Held-to-maturity, at amortized cost 569 565
_______________________________________________________________________
$ 1,241 $ 1,210
========================================================================
</TABLE>
The amortized cost, gross unrealized holding gains and losses and fair value
for available-for-sale and held-to-maturity securities by major security type
at December 31, 1995 and 1994 were as follows:
<PAGE>
<TABLE>
<CAPTION>
1995 Unrealized 1994 Unrealized
Amortized Holding Holding Fair Amortized Holding Holding Fair
Cost Gains Losses Value Cost Gains Losses Value
__________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale:
Corporate debt securities $696 $ - $(24) $672 $696 $ - $(52) $645
___________________________________________________________________________________________________________________________
$696 $ - $(24) $672 $696 $ - $(52) $645
===========================================================================================================================
Held-to-maturity:
U.S. Treasury securities 500 - (1) 499 500 - (19) 481
Mortgage-backed securities 69 - (18) 51 65 - (16) 49
___________________________________________________________________________________________________________________________
$569 $ - $(19) $550 $565 $ - $(35) $530
===========================================================================================================================
</TABLE>
The unrealized holding losses on held-to-maturity securities have not been
recognized in the accompanying consolidated financial statements.
<TABLE>
<CAPTION>
1995 1994
Amortized Fair Amortized Fair
Cost Value Cost Value
____________________________________________________________________________________________
<S> <C> <C> <C> <C>
Available-for-sale
Due after one year through five years - - - -
Due after five years through ten years $499 $482 $499 $476
Due after ten years 197 190 197 169
Held-to-maturity:
Due within one year $500 $499 $ - $ -
Due after one year through five years 69 51 565 530
============================================================================================
</TABLE>
NOTE SIX - Accrued Alliance Development Costs
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 (DuPont Merck). The agreement, which became
effective February 1, 1994, replaced an existing supply agreement between
the companies which had been in place since 1988. Under the terms of the
agreement, DuPont Merck relies upon the Company as the primary
distribution channel for its radiopharmaceutical products in the United
States.
In connection with this agreement, the Company established a reserve for
alliance development costs of $4,500 during the year ended December 31,
1993. Included in these charges were $2,800 of costs related to launch and
implementation of the strategic alliance program, $1,100 of
employee-related expenses associated with the consolidation, relocation
and reorganization of certain sales and service operations and $600 for
incremental accounting, legal and regulatory fees. Accrued alliance
development costs of $4,066 at December 31, 1993 were fully utilized in
1994 as the strategic alliance was implemented.
NOTE SEVEN - Line of Credit
At December 31, 1995, the Company had an unsecured line of credit for
short-term borrowings aggregating $20,000, bearing interest at the bank's
reference rate (8.5 percent at December 31, 1995) and expiring on May 1,
1997. The availability of this line of credit at December 31, 1995, has
been reduced by $2,427 as a result of standby letters of credit. To
maintain this line of credit, the Company is required to pay a quarterly
commitment fee of 1/8 of one percent per annum on the unused portion.
There were no amounts outstanding under the line of credit at December 31,
1995.
The line of credit agreement contains covenants that include requirements
to maintain certain financial covenants and ratios (including minimum
quick ratio, cash flow ratio and tangible net worth) and limitations on
payments of dividends, new borrowings and purchases of its stock. At
December 31, 1995, the Company was in compliance with these covenants.
NOTE EIGHT - Long-Term Debt
The Company's long-term debt was as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
____________________________________________________________________________________________________________
<S> <C> <C>
Capital lease obligations, payable in varying installments through 1999, with
interest rates ranging from 10.5% to 12% $1,446 $1,742
Notes payable, unsecured, payable in installments through 1999, with effective
interest rates ranging from 6% to 12.75% 1,529 2,054
Notes payable, unsecured, payable in installments through 1997 with a floating
interest rate of either the lower of prime, LIBOR plus 1.0% (6.63% at
December 31, 1995) 2,998 1,934
Notes payable, secured, payable in installments through 2000 with a
non-interest bearing rate, net of unamortized discount at 6% of $149 and
$222 at December 31, 1995 and 1994, respectively 1,451 1,577
____________________________________________________________________________________________________________
7,424 7,307
Less current maturities of long-term debt 2,224 2,153
____________________________________________________________________________________________________________
Long-term debt, net of current maturities $5,200 $5,154
============================================================================================================
</TABLE>
At December 31, 1995, long-term debt maturing over the next five years is
as follows: 1996, $2,224; 1997, $2,042; 1998, $2,163; 1999 $663; 2000,
$332 and none thereafter.
Interest paid was $666, $694 and $725 for the years ended December 31,
1995, 1994 and 1993 (unaudited), $268 for the seven months ended December
31, 1993, and $601 for the year ended May 31, 1993.
NOTE NINE - Income Taxes
As discussed in Note 1, the Company adopted Statement 109 as of June 1,
1993. The cumulative effect of this change in method of accounting of
$1,020 was determined as of June 1, 1993, and is reported separately in
the consolidated statement of income for the seven month period ended
December 31, 1993. Prior years' financial statements were not restated to
apply the provisions of Statement 109. Total income tax expense for the
years ended December 31, 1995 and 1994 was allocated as follows:
<TABLE>
<CAPTION>
Twelve Months Ended
December 31,
1995 1994
_________________________________________________________________________________________
<S> <C> <C>
Income from continuing operations $3,113 $ 872
Stockholders' equity for compensation expenses for tax purposes
in excess of amounts recognized for financial reporting (61) (895)
_________________________________________________________________________________________
$3,052 $ (23)
=========================================================================================
</TABLE>
Income tax expense (benefit) attributable to income from continuing operations
consisted of:
<TABLE>
<CAPTION>
Seven
Months Twelve
Twelve Ended Months
Months Ended December Ended
December 31, 31, May 31,
1995 1994 1993 1993 1993
_____________________________________________________________________________
(unaudited)
<S> <C> <C> <C> <C> <C>
Current:
Federal $3,700 $1,329 $3,859 $ 717 $6,411
State 724 127 583 48 1,240
_____________________________________________________________________________
4,424 1,456 4,442 765 7,651
Deferred:
Federal (1,207) (505) (156) 241 (800)
State (104) (79) 85 84 (148)
_____________________________________________________________________________
(1,311) (584) (71) 325 (948)
_____________________________________________________________________________
$3,113 $ 872 $4,371 $1,090 $6,703
=============================================================================
</TABLE>
The amounts differed from the amounts computed by applying the federal income
tax rate of 35 percent (34 percent for the periods ending prior to December 31,
1993) to pretax income from continuing operations as a result of the following:
<TABLE>
<CAPTION>
Seven
Months Twelve
Twelve Ended Months
Months Ended December Ended
December 31, 31, May 31,
1995 1994 1993 1993 1993
_________________________________________________________________________________________________________________
(unaudited)
<S> <C> <C> <C> <C> <C>
Federal income taxes at "expected" rate $ 2,724 $ 730 $3,851 $ 971 $5,744
Increase (reduction) in income taxes resulting from:
Tax exempt interest (117) (92) (50) (29) (45)
Amortization of intangible assets 143 143 146 84 139
State taxes, net of Federal benefits 403 31 434 86 721
Utilization of general business credits - - (10) (10) -
Other (40) 60 - (12) 144
_________________________________________________________________________________________________________________
$ 3,113 $ 872 $4,371 $1,090 $6,703
=================================================================================================================
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1995
and 1994, are presented below:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
_______________________________________________________________________________________________________________
<S> <C> <C>
Deferred tax assets:
Compensated absences, principally due to accrual for financial
reporting purposes $1,127 $ 873
Accounts receivable, due to allowance for doubtful accounts 439 420
Accrued liabilities, primarily due to self-insurance accrual for
financial reporting purposes 544 712
Deferred compensation, primarily due to accrual for financial reporting purposes 973 796
Deferred subsidiary start-up expenses 267 178
Other 343 137
_______________________________________________________________________________________________________________
Total gross deferred tax assets 3,693 3,116
Deferred tax liabilities:
Plant and equipment, principally due to difference in depreciation
and lease capitalization 341 653
Other assets, principally due to difference in intangible capitalization and
amortization for income tax and financial reporting purposes 575 1,342
_______________________________________________________________________________________________________________
Total gross deferred tax liabilities 916 1,995
_______________________________________________________________________________________________________________
Net deferred tax asset $2,777 $1,121
===============================================================================================================
</TABLE>
Management has reviewed the recoverability of deferred income tax assets
and has determined that it is more likely than not that the deferred tax
assets will be fully realized through future taxable earnings.
Income tax payments amounted to $3,280, $539 and $6,036, for the years
ended December 31, 1995, 1994 and 1993 (unaudited), $4,056 for the seven
months ended December 31, 1993, and $4,753 for the year ended May 31,
1993.
NOTE TEN - Commitments
The Company leases facilities, vehicles and equipment with terms ranging
from three years to 15 years. The majority of property leases contain
renewal options and some have escalation clauses for increases in property
taxes, Consumer Price Index and other items.
The Company leases a building and certain items of equipment under capital
leases which had an approximate cost of $3,738 at December 31, 1995 and
$3,744 at December 31, 1994 and 1993 and accumulated depreciation of
$2,841, $2,647 and $2,357, respectively. The Company was not utilizing
this building and, accordingly, sublet this building to a third party for
the balance of the lease term.
Future minimum lease payments under capital leases and noncancelable
operating leases with terms greater than one year and related sublease
income were as follows at December 31, 1995:
<TABLE>
<CAPTION>
Capital Operating Sublease
Lease Lease Income
________________________________________________________________________________
<S> <C> <C> <C>
Year ending December 31,
1996 $ 496 $ 5,842 $307
1997 496 4,309 276
1998 496 3,022 194
1999 248 2,090 95
2000 - 1,211 -
Thereafter - 1,967 -
________________________________________________________________________________
$1,736 $18,441 $872
_______________________________________________________ =======================
Less amount representing interest (290)
_______________________________________________________
Present value of net minimum lease payments $1,446
=======================================================
</TABLE>
Rental expense under operating leases was $6,054, $6,575 and $5,470 for
the years ended December 31, 1995, 1994 and 1993 (unaudited), $3,208 for
the seven months ended December 31, 1993, and $4,861 for the year ended
May 31, 1993.
NOTE ELEVEN - Stock Options and Rights
Options to purchase common stock have been granted under various plans to
officers, directors and other key employees at prices equal to the fair
market value at date of grant. At December 31, 1995, 407,054 shares are
reserved for issuance under the various plans.
In July 1994, the Company's Board of Directors authorized Syncor to offer
to its current employees holding stock options under the Syncor 1990
Master Stock Incentive Plan, the opportunity to exchange their options
within a certain price range for a reduced number of option shares at the
price as of the close of market on July 14, 1994.
All option holders who were employees and held unexercised option shares
exercisable at prices of $9.125 or greater were offered exchange options
at the price of $8.50, with the replacement option being for a lesser
number of shares, in accordance with a formula approved by the Board of
Directors. To further enhance the exchange program, the new options are
valid for a period of ten years instead of five years with an accelerated
vesting schedule. The Company canceled 831,240 option shares and reissued
675,752 option shares as a result of this exchange offer.
A summary of employee stock options is as follows:
<TABLE>
<CAPTION>
Number of Shares Price Range Per Share
_____________________________________________________________________________
<S> <C> <C>
Outstanding at June 1, 1992 1,948 $ 3.90 - $26.50
Granted 66 $17.12 - $23.75
Exercised (204) $ 3.90 - $21.75
Cancelled (50) $ 4.15 - $21.75
_____________________________________________________________________________
Outstanding at May 31, 1993 1,760 $ 4.75 - $26.50
Granted 205 $17.12 - $21.00
Exercised (164) $ 5.28 - $21.00
Cancelled (40) $ 9.12 - $21.75
_____________________________________________________________________________
Outstanding at December 31, 1993 1,761 $ 4.75 - $26.50
Granted 973 $ 8.25 - $23.25
Exercised (215) $ 5.10 - $21.75
Cancelled (882) $ 4.80 - $26.50
_____________________________________________________________________________
Outstanding at December 31, 1994 1,637 $ 4.75 - $21.88
Granted 134 $ 7.75 - $10.00
Exercised (92) $ 5.10 - $ 8.50
Cancelled (139) $ 6.58 - $21.00
_____________________________________________________________________________
Outstanding at December 31, 1995 1,540 $ 4.75 - $21.88
=============================================================================
Exercisable at December 31, 1995 925 $ 4.75 - $21.88
=============================================================================
</TABLE>
The Company derives a tax benefit from the options exercised and sold by
employees and the benefit is credited to additional paid-in capital.
In November 1989, the Company made a rights distribution of one common
share purchase right on each outstanding share of common stock. When
exercisable, each right will entitle its holder to buy from the Company
one-fourth of a share of the Company's common stock at a price of $5 per
share subject to adjustments (the "Purchase Price"). The rights expire on
September 30, 1999. With certain exceptions, subject to the approval of
the Board of Directors, the rights will become exercisable if a person has
acquired or makes an offer, the consummation of which will result in
beneficial ownership of 20 percent or more of the Company's general voting
power ("Acquiring Person"). At such time (the "Distribution Date"), the
rights will be evidenced by the certificates representing the common
shares and will be transferred with and only with the common shares.
Except for certain transactions approved by the Board of Directors, in the
event: (i) the Company is acquired in a merger; (ii) 50 percent or more of
its consolidated assets or earning power are sold; or (iii) any person
becomes an Acquiring Person, proper provisions shall be made so that each
holder of the right (other than rights beneficially owned by the Acquiring
Person) receives, upon the exercise thereof at the adjusted exercise price
of the right, which shall be four times the Purchase Price, that number
shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the adjusted exercise
price of the right.
NOTE TWELVE - Employee Benefit Plans
On July 31, 1986, the Company adopted a defined contribution 401(k) plan.
The plan is open to all employees who are at least 21 years of age and
have a minimum of six consecutive months of service. In 1989, the
Company's Board of Directors amended the plan to an Employee Savings and
Stock Ownership Plan (ESSOP) to allow the plan to acquire one million of
the Company's shares through a leveraged employee stock ownership plan
transaction. In June 1995, an additional 250,000 shares which were
purchased during 1994 in the open market were contributed to the plan.
These shares were originally classified as "treasury stock." The
contribution totaled $2,313 and reflected the fair market value at the
time of contribution. In connection with these transactions, the Company
has guaranteed the repayment of the ESSOP loan which had an outstanding
balance of $2,998 at December 31, 1995. Prior to the ESSOP transaction,
participants were able to contribute one percent to ten percent of their
compensation to the plan. The Company made matching contributions to 50
percent of the employees' contributions up to a maximum of four percent of
the employees compensation. Matching contributions were used to purchase
Company stock.
With the adoption of the ESSOP, participants may contribute one percent to
fourteen percent of their compensation to 401(k) investment options and an
additional two percent of their compensation to purchase Company stock.
The Company may make discretionary matching contributions to 50 percent of
the employees' 401(k) investment contributions of up to a maximum of four
percent of the employees compensation and may make discretionary matching
contributions to 100 percent of the employees Company stock purchases up
to two percent of the employees' compensation.
The Company's matching contribution is made in cash and reflects the ESSOP
loan payment. The number of shares of stock available to match employee
contributions is directly related to the amount of principal payments made
on the ESSOP loan. Once the number of available shares is determined, the
Company matches the employees' contributions as described above by
determining the fair market value of the available stock. The remainder of
any shares not allocated after all matching is complete will be allocated
to all eligible employees based on relative compensation.
Participants are fully and immediately vested in their contributions and
vest in employer contributions over a five-year period of continuous
employment. After five years of continuous employment, any further
employer contributions are fully and immediately vested. The Company's
contributions for the years ended December 31, 1995 and 1994, amounted to
$1,433 and $1,165 of which $1,249 and $1,036 were used to pay down
principal on the ESSOP loan and $185 and $129 to pay interest. For the
seven months ended December 31, 1993 and the year ended May 31, 1993,
contributions to the ESSOP amounted to $1,006 and $1,098, respectively,
and were used to satisfy principal and interest obligations in those
years.
NOTE THIRTEEN - Litigation and Contingencies
There are various litigation proceedings in which the Company and its
subsidiaries are involved. Many of the claims asserted against the Company
in these proceedings are covered by insurance. The results of litigation
proceedings cannot be predicted with certainty. However, in the opinion of
the Company's general counsel, such proceedings either are without merit
or do not have a potential liability which would materially affect the
financial condition of the Company and its subsidiaries on a consolidated
basis.
NOTE FOURTEEN - Selected Quarterly Results Of Operations
Unaudited calendar quarterly data is summarized below:
<TABLE>
<CAPTION>
March 31 June 30 Sept. 30 Dec. 31 1995
__________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Net sales $83,001 $83,299 $81,014 $85,146 $332,460
Gross profit $17,837 $18,611 $18,087 $19,056 $ 73,591
Net income $ 1,020 $ 1,277 $ 1,243 $ 1,129 $ 4,669
Net income per share $ 0.10 $ 0.12 $ 0.12 $ 0.11 $ 0.45
Weighted average shares outstanding 10,428 10,503 10,607 10,482 10,481
==================================================================================================
Market price per share:
High $ 9.13 $ 11.31 $ 11.38 $ 10.13 $ 11.38
Low $ 6.75 $ 7.38 $ 8.88 $ 6.38 $ 6.38
==================================================================================================
March 31 June 30 Sept. 30 Dec. 31 1994
__________________________________________________________________________________________________
Net sales $74,800 $81,888 $81,625 $81,671 $319,984
Gross profit $18,421 $17,015 $14,996 $15,594 $ 66,026
Net income (loss) $ 2,090 $ 744 $(1,084) $ (537) $ 1,213
Net income (loss) per share $ 0.19 $ 0.07 $ (0.10) $ (0.05) $ 0.11
Weighted average shares outstanding 10,981 10,830 10,684 10,567 10,889
==================================================================================================
Market price per share:
High $ 24.00 $ 20.50 $ 9.50 $ 8.75 $ 24.00
Low $ 24.00 $ 8.50 $ 6.75 $ 6.75 $ 6.75
==================================================================================================
</TABLE>
<PAGE>
Independent Auditors' Report
THE BOARD OF DIRECTORS AND STOCKHOLDERS
SYNCOR INTERNATIONAL CORPORATION
We have audited the accompanying consolidated balance sheets of Syncor
International Corporation and Subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the years in the two-year period ended
December 31, 1995, the seven-month period ended December 31, 1993, and the
year ended May 31, 1993. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Syncor International Corporation and Subsidiaries as of December 31, 1995
and 1994, and results of their operations and their cash flows for each of
the years in the two-year period ended December 31, 1995, the seven-month
period ended December 31, 1993, and the year ended May 31, 1993, in
conformity with generally accepted accounting principles.
As discussed in Notes 1 and 9 to the consolidated financial statements,
the Company changed its method of accounting for income taxes in the
seven-month period ended December 31, 1993 to adopt the provisions of the
Financial Accounting Standard Board's Statement No. 109, "Accounting for
Income Taxes."
KMPG Peat Marwick, LLP
Los Angeles, California
March 8, 1996
<PAGE>
MANAGEMENT'S REPORT
The Management of Syncor International Corporation is responsible for the
consolidated financial statements and all other information presented in
this report. The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles appropriate in
the circumstances and, therefore, included in the consolidated financial
statements are certain amounts based on management's informed estimates
and judgments. Management is responsible for establishing and maintaining
a system of internal control designed to provide reasonable assurance as
to the integrity and reliability of financial reporting. The concept of
reasonable assurance is based on the recognition that there are inherent
limitations in all systems of internal control, and that the cost of such
systems should not exceed the benefits to be derived therefrom. Other
financial information in this report is consistent with that in the
consolidated financial statements. The consolidated financial statements
have been examined by Syncor International Corporation's independent
certified public accountants and have been reviewed by the Audit Committee
of the Board of Directors.
<PAGE>
CORPORATE INFORMATION
BOARD OF DIRECTORS
__________________
Monty Fu,
Chairman of the Board
Director Since 1985
Gene R. McGrevin,
Vice Chairman and
Chief Executive Officer
Director since 1989
Robert G. Funari,
President and
Chief Operating Officer
Director since 1995
George S. Oki,
Chairman of the Board
Meta Information Services, Inc.
Director since 1985
Arnold E. Spangler,
Managing Director,
Mancuso & Company
Director since 1985
Steven B. Gerber, MD,
Senior Vice President,
Oppenheimer & Co.
Director since 1990
Henry N. Wagner, Jr., MD,
Professor of Medicine and
Director of Nuclear Medicine
The John Hopkins Medical Institutions
Director since 1992
Gail R. Wilensky, PhD,
Senior Fellow, Project HOPE,
former HCFA Administrator and
Deputy Assistant to President Bush
Director since 1993
OFFICERS
________
Monty Fu,
Chairman of the Board
Gene R. McGrevin,
Vice Chairman and Chief Executive Officer
Robert G. Funari,
President and Chief Operating Officer
Michael E. Mikity,
Vice President and Chief Financial Officer
Jack L. Coffey,
Vice President, Eastern Field Operations
Sheila H. Coop,
Vice President, Human Resources
Haig S. Bagerdjian,
Vice President, Secretary and General Counsel
Charles A. Smith,
Vice President, Corporate Development
SHAREHOLDER INFORMATION
_______________________
Inquiries:
Shareholders, interested investors and investment professionals are
invited to contact the Company for further information throughout the
year.
The Company also has available a news-on-demand service whereby
individuals can obtain information via facsimile. Individuals may call
(800) 546-8172 to obtain press releases and other related information via
facsimile.
Annual Meeting:
The Company's Annual Meeting of Shareholders will be held at 1:00 pm,
Tuesday, June 26, 1996 at the Warner Center Marriott Hotel, 21800 Oxnard
Street, Woodland Hills, California 91367. Shareholders of record on April
29, 1996 are invited to attend and vote at that meeting.
Form 10-K:
To receive a copy of the Company's Annual Report or form 10-K filed with
the Securities and Exchange Commission, contact the Corporate
Headquarters, Syncor International Corporation, Attn: Investor Relations
Department, 20001 Prairie Street, Chatsworth, California 91311.
Independent Auditors:
KPMG Peat Marwick LLP, 725 South Figueroa Street, Los Angeles, California
90017.
Stock Data:
The Company's common stock is quoted on the National Association of
Securities Dealers Automated Quotation System (NASDAQ) under the symbol
SCOR.
Transfer Agent and Registrar:
Stockholders wishing to report a change of address may forward details,
including both the old and new addresses to:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10015
(212) 936-5100
Stock Market Information:
Stock price quotations are printed daily in major newspapers, including
the Wall Street Journal As of March 29, 1996, there were 10,412,509 shares
of common stock outstanding. Shareholders of record at that date amounted
to 1,422. The Company has not paid cash dividends on its stock and has no
current intention of paying cash dividends in the foreseeable future.
Back Cover: Photo of President, Chairman, and Vice Chairman with a Map
of the World
<PAGE>
EXHIBIT 23
[KPMG Peat Marwick LLP Letterhead]
725 South Figueroe Street
Los Angeles, CA 90017
INDEPENDENT AUDITORS' REPORT ON SCHEDULES AND CONSENT
The Board of Directors and Stockholders
Syncor International Corporation
The audits referred to in our report dated March 8, 1996, included the related
financial statement schedule as of December 31, 1995, and 1994, and for each of
the years in the two-year period ended December 31, 1995, the seven-month period
ended December 31, 1993, and the year ended May 31, 1993, included in the
registration statement of Syncor International Corporation. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
We consent to incorporation by reference in the registration statements on Form
S-3 (No.33-44395) and Forms S-8 (Nos. 33-7325, 33-39251, 33-43692, 33-57762, 33-
52607) of Syncor International Corporation of our report dated March 8, 1996,
relating to the consolidated balance sheets of Syncor International Corporation
and Subsidiaries as of December 31, 1995 and 1994 and the related consolidated
statements of income, stockholders' equity and cash flows and related schedule
for each of the years in the two-year period ended December 31, 1995, the
seven-month period ended December 31, 1993, and the year ended May 31, 1993
which report appears in the December 31, 1995 annual report on Form 10-K of
Syncor International Corporation. Our report refers to a change in accounting
method to adopt Financial Accounting Standard Board's Statement No. 109.
/s/ KPMG Peat Marwick LLP
March 29, 1996
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