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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR QUARTER ENDED MARCH 31, 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 Identification No.)
incorporation or organization)
20001 PRAIRIE STREET, CHATSWORTH, CALIFORNIA 91311
(Address of principal executive offices) (Zip Code)
(818) 886-7400
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
___ ___
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date. As of June 30, 1996, 10,119,826 shares of $.05 par
value common stock were outstanding.
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SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
INDEX
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PAGE
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Part I. Financial Information
Item 1. Consolidated Condensed Financial Statements
Balance Sheets as of
June 30, 1996 and December 31, 1995 . . . . . . . . . . . . . 2
Statements of Income for three months
ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . 3
Statements of Income for six months
ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows for six months
ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition . . . 7
Part II. Other Information . . . . . . . . . . . . . . . . . . . . . . . . 9
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except per share data)
June 30, December 31,
1996 1995
___________ ____________
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 24,195 $ 23,022
Short-term investments 1,924 2,296
Accounts receivable, net 53,084 50,857
Inventory 5,366 5,159
Prepaids and other current assets 4, 185 2,306
_________ _________
Total current assets 88,754 83,640
Marketable investment securities 1,241 1,241
Property and equipment, net 24,570 23,006
Excess of purchase price over net assets
acquired, net 14,205 14,414
Other assets 12,470 11,379
_________ _________
$141,240 $133,680
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 33,790 $ 33,286
Accrued liabilities 2,894 2,395
Accrued wages and related costs 11,703 10,060
Federal and state taxes payable 2,599 755
Current maturities of long-term debt 2,293 2,224
_________ _________
Total current liabilities 53,279 48,720
Long-term debt, net of current maturities 6,648 5,200
Deferred compensation 864 864
Minority interest 890 634
Stockholders' equity:
Common stock, $.05 par value 533 533
Additional paid-in capital 47,245 47,169
Unrealized loss on investments (26) (24)
Employee stock ownership loan guarantee (2,286) (2,998)
Foreign currency translation adjustment (78) (105)
Retained earnings 39,608 35,598
Treasury stock, at cost; 552 shares at June 30,
1996 and 250 shares at December 31, 1995 (5,437) (1,911)
_________ _________
Net stockholders' equity 79,559 78,262
_________ _________
$141,240 $133,680
========= =========
See notes to consolidated condensed financial statements.<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended June 30,
___________________________
1996 1995
___________ __________
(Unaudited)
Net sales $93,667 $83,299
Cost of sales 71,915 64,688
Gross profit 21,752 18,611
Operating, selling and administrative expenses 18,202 16,624
________ ________
Operating income 3,550 1,987
Other income, net 289 141
________ ________
Income before taxes 3,839 2,128
Provision for income taxes 1,535 851
________ ________
Net income $ 2,304 $ 1,277
======== ========
Net income per share - Primary $ .22 $ .12
======== ========
Weighted average shares outstanding - Primary 10,637 10,503
======== ========
Net income per share - Fully Diluted $ .21 $ .12
======== ========
Weighted average shares outstanding - Fully Diluted 10,796 10,702
======== ========
See notes to consolidated condensed financial statements.<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share data)
Six Months Ended June 30,
_________________________
1996 1995
________ ________
(Unaudited)
Net sales $185,984 $166,300
Cost of sales 144,018 129,852
_________ _________
Gross profit 41,966 36,448
Operating, selling and administrative expenses 36,303 32,837
_________ _________
Operating income 5,663 3,611
Other income, net 1,020 217
_________ _________
Income before taxes 6,683 3,828
Provision for income taxes 2,673 1,531
_________ _________
Net income $ 4,010 $ 2,297
========= =========
Net income per share - Primary $ .38 $ .22
========= =========
Weighted average shares outstanding - Primary 10,495 10,452
========= =========
Net income per share - Fully Diluted $ .37 $ .21
========= =========
Weighted average shares outstanding - Fully Diluted 10,849 10,693
========= =========
See notes to consolidated condensed financial statements.<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(in thousands)
Six Months Ended June 30,
_________________________
1996 1995
________ ________
(Unaudited)
Cash flows from operating activities:
Net income $ 4,010 $2,297
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,477 5,394
Amortization of ESSOP loan guarantee 712 506
Decrease (increase) in:
Accounts receivables, net (2,227) (199)
Inventory (207) 1,005
Other current assets (1,879) (261)
Increase (decrease) in:
Accounts payable 504 (6,614)
Accrued liabilities 499 199
Accrued wages and related costs 1,643 4,038
Federal and state taxes payable 1,844 687
Foreign currency translation adjustment 27 (9)
Minority interest 256 113
________ ________
Net cash provided by operating activities 10,659 7,156
________ ________
Cash flows from investing and financing activities:
Purchase of property and equipment, net (5,776) (1,683)
(Decrease) increase in short-term investments 372 (1,281)
(Increase) in other long-term assets (2,147) (636)
New proceeds from (repayment of) short-term debt 69 (43)
New proceeds from (repayment of) long-term debt 1,448 1,429
Issuance of common stock 76 603
Increase in ESSOP loan guarantee - (2,235)
Reacquisition of common stock for treasury (3,526) 351
Unrealized gain on investments (2) 12
________ ________
Net cash used in investing and financing
activities (9,486) (3,483)
________ ________
Net increase in cash and cash equivalents 1,173 3, 673
Cash and cash equivalents at beginning of period 23,022 17,761
________ ________
Cash and cash equivalents at end of period $24,195 $21,434
======== ========
See notes to consolidated condensed financial statements.<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. GENERAL. The accompanying unaudited consolidated condensed
financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to form 10-Q.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring
accruals) considered necessary for a fair presentation have been
included. The results of the six months ended June 30, 1996,
are not necessarily indicative of the results to be expected for
the full year. For further information, refer to the
consolidated financial statements and footnotes thereto included
in the Company's Annual Report and Form 10-K for the period
ended December 31, 1995.
2. ADOPTION OF FINANCIAL ACCOUNTING STANDARDS No. 123 "ACCOUNTING
FOR STOCK-BASED COMPENSATION." In October 1995, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standard No. 123, "Accounting for Stock-Based
Compensation" (Statement 123). Statement 123 established a fair
value based method of accounting for stock-based compensation as
compared to the intrinsic value based method prescribed under
APB Opinion No. 25. Companies have the option of either
adopting the fair value method of Statement 123 or continuing to
use the intrinsic value based method of APB No. 25 and including
pro forma net income and earnings per share amounts in the
footnotes as if the fair value method had been adopted. The
disclosure provisions of Statement 123, including the pro forma
information, are effective for fiscal years beginning after
December 15, 1995. The Company will continue to use the
intrinsic value of APB Opinion No. 25 and implement the
disclosure provisions of Statement 123 in fiscal 1996.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
NET SALES
Consolidated net sales for the second quarter of 1996 increased 12.4
percent or $10.4 million to $93.7 million versus $83.3 million for the
second quarter of 1995. For the six months ended June 30, 1996, net
sales increased 11.8 percent or $19.7 million to $186.0 million
compared to $166.3 million for the same period in 1995.
The Company continues to achieve sales growth as a result of price
increases on technetium based products. These price increases of
approximately two percent to three percent, were in response to price
increases from the Company's suppliers. Sales growth, during the
quarter and six month period ended June 30, 1996, was also positively
influenced by the opening or acquisitions of radiopharmacies during
1995. Finally, the Company continues to experience strong growth in
volume across all product lines, especially cardiology. Sales from
cardiology products accounted for approximately 63 percent of the
Company's net sales during the second quarter of 1996.
GROSS PROFIT
Gross profit for the second quarter of 1996 increased $3.1 million to
$21.8 million, or 23.2 percent of net sales compared to $18.6 million
or 22.3 percent of net sales for the comparable quarter in 1995. For
the six months ended June 30, 1996, gross profit increased $5.5
million to $42.0 million, or 22.6 percent of net sales, compared to
$36.4 million or 21.9 percent of net sales for the same period in
1995.
Positive contributors affecting the increase in gross margin for the
second quarter and first six months of 1996 include: the Company's
ability to successfully implement price increases, managing price
erosion and the continued success in converting customers from
thallium, a generic product, to Cardiolite(R), a proprietary higher
margin product. In addition, the Company continues its on-going
success in converting customers to its full service unit dose
compounding services, rather than supplying those same customers with
the raw materials which allow them to perform their own compounding
services.
OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
Operating, selling and administrative expenses rose 9.5 percent for
the second quarter of 1996 or $1.6 million to $18.2 million, however,
as a percentage of sales declined to 19.4 percent from 20.0 percent
for the same period in 1995. For the six month period ended June 30,
1996, these expenses increased 10.6 percent or $3.5 million to $36.3
million, however, as a percentage of sales decreased to 19.5 percent
from 19.7 percent.
The Company is making significant investments in new business
opportunities which are aimed at increasing its long-term
competitiveness. These opportunities include, continued domestic and
international expansion, the re-engineering of critical business
practices and associated information systems and the entry into the
positron emission tomography (PET) business. The increased operating,
selling and administrative expenses for the second quarter and first
six months of 1996 reflects the investments required for these
opportunities. The Company expects to continue the increased level
of expenditures in the operating, selling and administrative category
for the next two to three years, as it accelerates its spending in
PET, re-engineering opportunities and expansion. As a consequence,
overall Company earnings may be reduced over the same period.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash, cash equivalents and short-term investments of
$27.4 million at June 30, 1996, compared with $26.6 million at
December 31, 1995. The Company's total debt position of $9.7 million
at June 30, 1996, was $2.3 million higher than the debt position at
December 31, 1995. The increase in debt is the direct result of the
positron emission tomography (PET) joint venture formed on June 1,
1996. Working capital increased by $.6 million to $35.5 million at
June 30, 1996, compared<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
to $34.9 million at December 31, 1995. Days sales outstanding on
receivable decreased to 51 days at June 30, 1996, compared to 55 days
at December 31, 1995.
The Company believes sufficient internal and external sources exist
to fund operations and future expansion programs. At June 30, 1996,
the Company had unused lines of credit of $17.9 million to fund short-
term needs.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
STOCK REPURCHASE PROGRAM
Between May 13, 1996 and May 31, 1996, the Company purchased 301,600
shares of its common stock in the open market at an average price of
$11.69 per share. The shares are classified as "Treasury Stock" on
the Company's balance sheet.
At the June 26, 1996 Board of Directors Meeting, the Board approved
the repurchase of up to an additional 500,000 shares of common stock
from time to time, in the open market.
RESULTS FROM STOCKHOLDERS' MEETING
At the Company's Annual Meeting of Stockholders held on June 26,
1996, two members of the Board of Directors were re-elected for a
three year term: Monty Fu and Henry N. Wagner, Jr., M.D.<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
SYNCOR INTERNATIONAL CORPORATION
(Registrant)
August 9, 1996 By: /s/ Michael E. Mikity
----------------------
Michael E. Mikity
Senior Vice President and
Chief Financial Officer
(Principal Financial /
Accounting Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PERIOD-START> 04/01/96
<PERIOD-END> 06/30/96
<CASH> 26,119
<SECURITIES> 1,241
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[TOTAL-LIABILITIES-AND-EQUITY] 141,240
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