<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, 1997
[ ] 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 92612-1517
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(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, 1997
- ---------------------------- -----------------------------
<S> <C>
Common Stock, $.01 Par Value 7,113,058
</TABLE>
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 635,423 $ 631,404
Investments 4,174,285 4,732,585
Accounts receivable, net of allowance for
doubtful accounts of $132,079 and $101,191 2,656,572 3,028,689
Income tax receivable 428,698 409,242
Inventories (Note 2) 3,635,711 3,922,543
Prepaid expenses and other current assets 541,739 602,533
Deferred income tax benefit 569,883 491,000
------------ ------------
Total current assets 12,642,311 13,817,996
------------ ------------
PROPERTY AND EQUIPMENT, at cost 11,791,409 11,437,612
Less accumulated depreciation (6,786,841) (6,529,718)
------------ ------------
5,004,568 4,907,894
------------ ------------
GOODWILL AND OTHER INTANGIBLES, net of
amortization of $912,270 and $870,110 4,221,671 4,368,658
DEFERRED INCOME TAX BENEFIT 854,162 854,000
OTHER ASSETS 381,903 329,373
------------ ------------
Total assets $ 23,104,615 $ 24,277,921
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 993,934 $ 1,053,400
Accrued liabilities 552,067 726,474
Accrued payroll expenses 518,143 580,089
------------ ------------
Total current liabilites 2,064,144 2,359,963
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock 71,131 72,181
Paid-in capital 12,203,439 12,605,636
Retained earnings 9,088,748 9,232,541
Accumulated foreign currency translation adjustments (274,212) 31,275
Unrealized losses on investments, net of tax benefit (48,635) (23,675)
------------ ------------
Total stockholders' equity 21,040,471 21,917,958
------------ ------------
Total liabilities and stockholders' equity $ 23,104,615 $ 24,277,921
============ ============
</TABLE>
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HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1997 1996
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<S> <C> <C>
NET SALES $ 4,582,669 $ 5,306,880
COST OF SALES 2,184,742 2,464,355
----------- -----------
Gross profit 2,397,927 2,842,525
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OPERATING EXPENSES
Selling, general and administrative 2,030,502 2,157,897
Research and development 659,382 700,427
----------- -----------
2,689,884 2,858,324
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OPERATING (LOSS) (291,957) (15,799)
INTEREST INCOME, net 73,297 113,375
GAIN ON FOREIGN CURRENCY TRANSACTIONS 2,186 12,679
----------- -----------
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES (216,474) 110,255
PROVISION (BENEFIT) FOR INCOME TAXES (72,681) 42,167
----------- -----------
NET INCOME (LOSS) $ (143,793) $ 68,088
=========== ===========
NET INCOME (LOSS) PER SHARE $ (0.02) $ 0.01
=========== ===========
AVERAGE COMMON SHARES OUTSTANDING 7,269,077 7,936,863
=========== ===========
</TABLE>
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HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (143,793) $ 68,088
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 401,778 496,566
Deferred income tax provision (59,847) (63,744)
Gain on foreign currency transactions (2,186) (12,679)
(Gain) loss on sale of assets 3,545 --
Change in assets and liabilities, net of effects of
foreign currency adjustments
Accounts receivable 402,708 80,414
Income tax receivable (19,922) 55,701
Inventories 284,502 235,841
Prepaid expenses and other current assets (66,485) 76,979
Accounts payable (53,762) (142,577)
Accrued liabilities (165,069) (431,282)
Accrued payroll expenses (58,644) (423,979)
----------- -----------
Total adjustments 666,618 (128,760)
----------- -----------
Net cash provided by (used in) operating activities 522,825 (60,672)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments 499,248 --
Purchases of intangible assets (49,805) --
Purchases of property, plant and equipment (508,510) (430,362)
Proceeds from sale of property and equipment 35,402 --
Proceeds from collection of notes receivable 12,086 6,733
----------- -----------
Net cash provided by (used in) investing activities (11,579) (423,629)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 40,604 74,880
Purchases of Hycor common stock (443,851) (206,145)
----------- -----------
Net cash provided by (used in) financing activities (403,247) (131,265)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (103,980) 35,306
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,019 (580,260)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 631,404 1,033,459
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 635,423 $ 453,199
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year - interest -- --
- income taxes $ 6,402 $ 82,587
</TABLE>
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HYCOR BIOMEDICAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
1. BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited financial
statements include all adjustments necessary to present fairly the financial
position as of March 31, 1997 and December 31, 1996, the results of
operations and the cash flows for the three-month periods ended March 31,
1997 and 1996.
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 consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's 1996 annual report on Form 10-K as filed with the Securities and
Exchange Commission. Certain items in the 1996 consolidated financial
statements have been reclassified to conform with the 1997 presentation.
The results of operations for any interim period are not necessarily
indicative of results to be expected for the full year.
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.
In December 1997, the Company will be required to adopt Statement of
Financial Accounting Standard No. 128, "Earnings per share." The provisions
of this statement will require a change in the method of calculating earnings
per share which will result in an insignificant difference from currently
reported earnings per share.
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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, 1997 and December 31, 1996 consist of:
<TABLE>
<CAPTION>
3/31/97 12/31/96
------- --------
<S> <C> <C>
Raw materials $ 806,857 $ 870,887
Work in process 1,280,387 1,216,066
Finished goods 1,548,467 1,835,590
---------- ----------
$3,635,711 $3,922,543
========== ==========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for historical information contained herein, the matters discussed
in this report are forward-looking statements which involve risk and
uncertainties, including but not limited to economic, competitive, governmental
and technological factors affecting the Company's operations, markets, products,
services and prices and other factors discussed in the Company's filings with
the Securities and Exchange Commission.
The Company decreased its working capital $880,000 as of March 31, 1997,
compared to December 31, 1996. This decrease was primarily a result of the
Company's stock repurchase program ($444,000) in addition to normal operations.
The company expects to be able to fund operations from current working capital
and profits generated from operations.
During the three-month period ended March 31, 1997, sales decreased 14%,
compared to the same period last year and gross profit as a percentage of
product sales for the three-month period decreased from approximately 54% to
52%. Revenue declines were due primarily to the loss of sales resulting from the
1995 Restructuring Plan and the related discontinued product lines. The decrease
in gross profit percentage is due primarily from the reduction in sales and
aggressive pricing in the allergy product line.
Selling, general and administrative expenses for the three-month period
ended March 31, 1997 have decreased approximately 6% over the prior year period.
This decrease is primarily due to reduced expense levels at the Company's German
subsidiary resulting from the completion, in 1996, of certain contractual
obligations arising from the acquisition.
Research and development costs for the three-month period ended March 31,
1997 have decreased approximately 6% over the prior year period. This decrease
is primarily due to the completion of several projects during the period.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8K:
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 12, 1997 By: /s/ 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.)
Page 7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 635,423
<SECURITIES> 4,174,285
<RECEIVABLES> 2,788,651
<ALLOWANCES> 132,079
<INVENTORY> 3,635,711
<CURRENT-ASSETS> 12,642,311
<PP&E> 11,791,409
<DEPRECIATION> 6,786,841
<TOTAL-ASSETS> 23,104,615
<CURRENT-LIABILITIES> 2,064,144
<BONDS> 0
0
0
<COMMON> 71,131
<OTHER-SE> 20,969,340
<TOTAL-LIABILITY-AND-EQUITY> 23,104,615
<SALES> 4,582,669
<TOTAL-REVENUES> 4,582,669
<CGS> 2,184,742
<TOTAL-COSTS> 2,184,742
<OTHER-EXPENSES> 2,689,884
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (216,474)
<INCOME-TAX> (72,681)
<INCOME-CONTINUING> (143,793)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (143,793)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
