<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________TO ___________
Commission File Number: 0-11647
HYCOR BIOMEDICAL INC.
(Exact name of registrant as specified in its charter)
Delaware 58-1437178
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18800 Von Karman Avenue, Irvine, California 92715-1517
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 440-2000
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.
<TABLE>
<CAPTION>
Class Outstanding at April 30, 1995
----- -----------------------------
<S> <C>
Common Stock, $.01 Par Value 8,283,175
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
HYCOR BIOMEDICAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1995 1994
---------- ------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 1,422,525 1,366,956
Investments 2,202,830 2,475,078
Accounts Receivable, net of allowance for
doubtful accounts of $216,141 and $170,841 4,370,829 4,263,335
Income Tax Receivable 679,770 90,170
Inventories (Note 2) 6,720,658 6,725,565
Deposits and other prepaids 458,888 621,416
Deferred income tax benefit 652,017 610,000
---------- ----------
Total current assets 16,507,517 16,152,520
---------- ----------
PROPERTY AND EQUIPMENT, at cost 11,946,709 12,058,248
Less accumulated depreciation (6,047,141) (5,639,674)
---------- ----------
5,899,568 6,418,574
---------- ----------
GOODWILL AND OTHER INTANGIBLES, net of
amortization of $907,001 and $741,543 5,714,609 5,459,039
DEFERRED INCOME TAX BENEFIT 620,000 620,000
OTHER ASSETS, net 397,336 350,166
---------- ----------
Total assets 29,139,030 29,000,299
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 721,685 1,104,520
Accrued liabilities 1,275,145 1,726,461
---------- ----------
Total current liabilites 1,996,830 2,830,981
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock 82,832 82,269
Paid-in capital 17,162,263 16,971,456
Retained earnings 9,634,263 9,084,739
Foreign currency translation adjustments 331,432 144,138
Unrealized losses on investments, net (68,590) (113,284)
---------- ----------
Total stockholders' equity 27,142,200 26,169,318
---------- ----------
Total liabilities and
stockholders' equity 29,139,030 29,000,299
========== ==========
</TABLE>
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HYCOR BIOMEDICAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1995 1994
---- ----
<S> <C> <C>
NET SALES 6,492,935 6,553,111
COST OF SALES 2,895,013 2,766,117
--------- ---------
Gross profit 3,597,922 3,786,994
--------- ---------
OPERATING EXPENSES
Selling, general and
administrative 2,334,275 2,154,734
Research and development 634,560 496,823
--------- ---------
2,968,835 2,651,557
--------- ---------
OPERATING INCOME 629,087 1,135,437
INTEREST INCOME, net 60,726 124,610
GAIN ON FOREIGN CURRENCY TRANSACTION 231,327 -
--------- ---------
INCOME BEFORE TAXES 921,140 1,260,047
PROVISION FOR INCOME TAXES 371,617 483,500
--------- ---------
NET INCOME 549,523 776,547
========= =========
NET INCOME PER SHARE $.07 $.09
AVERAGE COMMON SHARES OUTSTANDING 8,283,922 8,438,019
</TABLE>
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HYCOR BIOMEDICAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 549,524 776,548
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 568,727 350,618
Deferred income tax benefit 42,017 149
Gain on foreign currency transactions (231,327) -
Change in assets and liabilities, net of effects of acquisitions,
foreign currency adjustments and noncash transactions:
Accounts receivable (57,228) 1,352,263
Inventories 40,688 (353,191)
Prepaid expenses and other assets 133,816 3,777
Accounts payable (385,257) (221,640)
Accrued liabilities (511,087) (461,684)
Accrued income taxes (590,519) 268,372
--------- ---------
Total adjustments (990,170) 938,664
--------- ---------
Net cash provided by (used in) operating activities (440,646) 1,715,212
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments 336,808 2,036,390
Business acquisitions, net of cash acquired - (1,989,487)
Purchases of tangible and intangible assets, net (228,122) (481,316)
Proceeds from collection of notes receivable 6,734 4,819
--------- ---------
Net cash provided by (used) in investing activities 115,420 (429,594)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 191,370 207,799
Purchases of common stock - (1,173,475)
--------- ---------
Net cash provided by (used in) financing activities 191,370 (965,676)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 189,426 30,871
INCREASE IN CASH AND CASH EQUIVALENTS 55,570 350,813
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,366,956 683,573
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD 1,422,526 1,034,386
========= =========
</TABLE>
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HYCOR BIOMEDICAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
1. BASIS OF PRESENTATION
In the opinion of the Company, the accompanying financial
statements contain adjustments necessary to present fairly the financial
position as of March 31, 1995 and December 31, 1994, the results of
operations and the cash flows for the three month periods ended March
31, 1995 and 1994. The results of operations for any interim period are
not necessarily indicative of results for the full year.
These statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission and do not include
all the information and note disclosures required by generally accepted
accounting principles for complete financial statements and may be
subject to year-end adjustments. The financial information contained in
this report reflects all adjustments which, in the opinion of
management, are necessary for a fair statement of the results of the
interim periods. All adjustments are of a normal recurring nature
except for those costs described in the following Item 2. "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
The consolidated financial statements include the accounts of
Hycor Biomedical Inc. and its wholly-owned subsidiaries. All material
intercompany amounts and transactions have been eliminated.
Reference is made to the audited financial statements and
related notes included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
Net income per share is based upon the weighted average number
of shares outstanding during the periods plus common stock equivalents
relating to warrants and options. The number of common stock
equivalents relating to options and warrants is determined using the
treasury stock method. Common stock equivalents are not included when
their effect is antidilutive. Fully diluted net income per share
approximates primary net income per share in each period.
2. INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out
method) or market. Cost includes material, direct labor and
manufacturing overhead. Inventories at March 31, 1995 and December 31,
1994 consist of:
<TABLE>
<CAPTION>
3/31/95 12/31/94
------- --------
<S> <C> <C>
Raw materials $2,193,985 $2,122,387
Work in process 2,853,322 2,836,388
Finished goods 2,456,674 2,536,877
Allowance for short-
dated inventory (783,323) (770,087)
---------- ----------
$6,720,658 $6,725,565
========== ==========
</TABLE>
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3. ACQUISITIONS
On October 3, 1994, the Company completed the acquisition of
Medical Specialties International, Inc. (MSI) of So. Plainfield, New
Jersey. MSI primarily manufactures and sells hematology controls in
domestic markets.
4. FOREIGN CURRENCY
Realized gains or losses from foreign currency transactions are
included in operations as incurred and relate to intercompany balances
amounting to approximately $2,053,000 between Hycor and its German
subsidiary. The Company has not hedged this foreign currency exchange
rate position.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FINANCIAL CONDITION
The Company increased its working capital $1,189,000 as of March
31, 1995, compared to December 31, 1994. This was primarily as a result of
continued profitability. The Company expects to be able to fund operations from
current working capital and profits generated from operations.
Cash and cash equivalents, marketable securities and receivables
fluctuate throughout the year based upon the sales of products through
distributors and the timing of the distributors related payments to the
Company. These fluctuations do not have a significant seasonal component.
Income taxes receivable increased $590,000 as of March 31, 1995,
compared to December 21, 1994, primarily due to recovery of foreign taxes paid
in association with the January 1994 acquisition of Melja Diagnostik GmbH.
The Company's principal capital commitments are for lease
payments under non-cancelable operating leases and leasehold improvements.
Working capital and operating profits are anticipated to be sufficient to
satisfy these commitments.
The Company is continuing to evaluate for acquisition additional
product lines and companies in the medical diagnostics field. The Company
could use sources other than cash from operations, such as issuance of debt or
equity securities, to finance any such acquisition. If such an acquisition
were completed, the Company's operating results and financial condition could
change significantly in future periods.
RESULTS OF OPERATIONS
During the three month period ended March 31, 1995, sales
decreased 1%, compared to the same period last year, primarily due to a general
softness in the health care industry offset by the contribution from MSI
operations. Gross profit for the quarter as a percentage of product sales
decreased from approximately 58% to 55%, primarily due to issues associated
with the manufacture of the new HY.TEC(TM) reagents which generated
unfavorable production variances. We do not expect these variances to
continue.
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Selling, general and administrative expenses for the three month period
ended March 31, 1995 have increased slightly for the quarter due to the
additional expenses from MSI and the marketing and sales support on the
HY.TEC launch.
For the three month period ended March 31, 1995, research and
development costs increased primarily due to continuing development on the
HY.TEC product line.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K: None
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.
HYCOR BIOMEDICAL INC.
Date: May 11, 1995 By: Armando Correa
------------------ -----------------------------------
Armando Correa, Director of Finance
(Mr. Correa is the Principal Accounting
Officer and has been duly authorized to
sign on behalf of the registrant.)
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE QUARTER ENDED
MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1995.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,422,525
<SECURITIES> 2,202,830
<RECEIVABLES> 4,586,970
<ALLOWANCES> 216,141
<INVENTORY> 6,720,658
<CURRENT-ASSETS> 16,507,517
<PP&E> 11,946,709
<DEPRECIATION> 6,047,141
<TOTAL-ASSETS> 29,139,030
<CURRENT-LIABILITIES> 1,996,830
<BONDS> 0
<COMMON> 82,832
0
0
<OTHER-SE> 27,059,368
<TOTAL-LIABILITY-AND-EQUITY> 29,139,030
<SALES> 6,492,935
<TOTAL-REVENUES> 6,492,935
<CGS> 2,895,013
<TOTAL-COSTS> 2,895,013
<OTHER-EXPENSES> 2,968,835
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 921,140
<INCOME-TAX> 371,617
<INCOME-CONTINUING> 549,523
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 549,523
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
