SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarter Ended: March 31, 1995 Commission File Number: 0-15340
PSICOR, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1228645
(State or other jurisdiction of (IRS Employer ID#)
incorporation or organization)
16818 Via del Campo Court, San Diego, CA 92127
(Address of principal executive offices, including zip code)
619-485-5599
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12 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 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: Common stock, no par value:
4,323,412 shares outstanding as of March 31, 1995.
<PAGE>
PART I. FINANCIAL INFORMATION
PSICOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months For the Six Months
Ended March 31 Ended March 31
1995 1994 1995 1994
(Unaudited) (Unaudited)
Revenue $24,370,000 $19,718,000 $48,237,000 $39,329,000
Cost of Sales and Services 19,768,000 15,694,000 38,902,000 31,214,000
---------- ---------- ---------- ---------
Gross Profit 4,602,000 4,024,000 9,335,000 8,115,000
General and Administrative 3,016,000 2,427,000 5,742,000 4,637,000
--------- --------- --------- ---------
Operating Profit 1,586,000 1,597,000 3,593,000 3,478,000
Interest Expense 26,000 --- 42,000 ---
Other Income, net 57,000 76,000 136,000 121,000
--------- --------- --------- ---------
Income Before Taxes 1,617,000 1,673,000 3,687,000 3,599,000
Provision for Income Taxes 690,000 625,000 1,547,000 1,449,000
--------- --------- ---------- ---------
Net Income $ 927,000 $ 1,048,000 $ 2,140,000 $ 2,150,000
======= ========= ========= =========
Earnings Per Share $ 0.21 $ 0.24 $ 0.49 $ 0.49
======= ======= ======= =======
Number of Shares Used
in Computation 4,442,000 4,404,000 4,410,000 4,401,000
<PAGE>
PSICOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1995 September 30, 1994
ASSETS (unaudited)
Current Assets:
Cash and equivalents $ 371,000 $ 1,473,000
Accounts receivable 15,129,000 11,973,000
Inventories 13,013,000 11,246,000
Prepaid expenses and other 1,726,000 1,601,000
Deferred income taxes 637,000 637,000
---------- ----------
Total Current Assets 30,876,000 26,930,000
Land, Building and Equipment -
net 12,657,000 13,910,000
Intangibles and other 8,679,000 9,174,000
---------- ----------
Total Assets $52,212,000 $50,014,000
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 7,160,000 $ 6,563,000
Salaries and other compen-
sation payable 1,908,000 1,258,000
Employee benefit plans
payable --- 750,000
Other accrued liabilities 1,631,000 2,198,000
Current portion of long-term
liabilities 212,000 262,000
--------- ---------
Total Current Liabilities 10,911,000 11,031,000
---------- ----------
Long-Term Liabilities:
Long-Term Debt 194,000 ---
Other Long-Term Liabilities 705,000 818,000
------- -------
Total Long-Term Liabilities 899,000 818,000
------- -------
Commitments and Contingencies
Shareholders' Equity:
Common stock--no par value;
authorized 10,000,000 shares;
issued and outstanding
4,323,000 shares at March 31,
1995 and 4,310,000 shares at
September 30, 1994 11,185,000 11,088,000
Retained earnings 29,217,000 27,077,000
---------- ----------
Total Shareholders' Equity 40,402,000 38,165,000
---------- ----------
Total Liabilities and Share-
holders' Equity $52,212,000 $50,014,000
========== ==========
<PAGE>
PSICOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months For the Six Months
Ended March 31, Ended March 31,
1995 1994 1995 1994
(Unaudited) (Unaudited)
Cash Flows from Operating
Activities:
Net income $927,000 $1,048,000 $2,140,000 $2,150,000
------- --------- --------- ---------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amorti-
zation 1,382,000 1,287,000 2,775,000 2,630,000
Deferred income tax benefit --- (3,000) --- (3,000)
Gain on sale of property
and equipment (22,000) (18,000) (55,000) (11,000)
Increase (decrease) from
changes in:
Accounts receivable (1,628,000) 40,000 (3,305,000) (498,000)
Inventories (1,229,000) (470,000 (1,767,000) (1,079,000)
Prepaid expenses and other (843,000) (489,000) (125,000) (249,000)
Accounts payable 660,000 1,342,000 597,000 1,495,000
Salaries and other
compensation payable 728,000 651,000 650,000 (845,000)
Employee benefit plans
payable, net (250,000) 153,000 (750,000) (600,000)
Other accrued liabilities (744,000) (1,458,000) (404,000) (861,000)
----------- ----------- ----------- ----------
Total adjustments (1,946,000) 1,035,000 (2,384,000) (21,000)
----------- ----------- ----------- ----------
<PAGE>
PSICOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont.)
Net cash provided (used) by
operating activities (1,019,000) 2,083,000 (244,000) 2,129,000
----------- ----------- ----------- ----------
Cash Flows from Investing
Activities:
Purchase of property and
equipment (602,000) (1,578,000) (1,327,000) (3,696,000)
Proceeds from sales
of property and equipment 38,000 25,000 139,000 33,000
(Increase) decrease in
intangibles and other, net 413,000 (60,000) 202,000 (151,000)
------- ---------- ---------- ----------
Net cash used in investing
activities (151,000) (1,613,000) (986,000) (3,814,000)
--------- ----------- --------- -----------
Cash Flows from Financing
Activities:
Proceeds from issuance of
common stock 92,000 21,000 97,000 174,000
Payments for treasury stock --- (69,000) --- (314,000)
Borrowings of long-term debt 1,754,000 --- 1,754,000 ---
Payments of long-term debt (1,560,000) --- (1,560,000) ---
Reduction of other long-term
liabilities (130,000) (43,000) (163,000) (88,000)
----------- -------- ---------- ---------
Net cash provided (used) by
financing activities 156,000 (91,000) 128,000 (228,000)
----------- -------- ---------- ---------
Net increase (decrease) in
cash (1,014,000) 379,000 (1,102,000) (1,913,000)
Cash and equivalents at
beginning of period 1,385,000 4,008,000 1,473,000 6,300,000
---------- --------- --------- ---------
Cash and equivalents at
end of period $ 371,000 $4,387,000 $ 371,000 $4,387,000
========== ========= ========= =========
<PAGE>
PSICOR, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
(1) The condensed consolidated financial statements include the accounts of
PSICOR, Inc. and its subsidiaries (the "Company") and have been prepared,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. Although the Company believes that the disclosures are
adequate to make the information presented not misleading, it is suggested
that these financial statements be read in connection with the financial
statements and the notes thereto included in the Company's annual report on
Form 10-K for the fiscal year ended September 30, 1994.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to present
fairly the financial position at March 31, 1995 and September 30, 1994, and
the results of operations and cash flows for the three months and six months
ended March 31, 1995 and 1994.
(2) The Company paid interest of $26,000 and $42,000 for the three and six
months ended March 31, 1995. Interest was not paid for the periods ended
March 31, 1994. The Company paid income taxes of $1,712,000 and $1,864,000
for the three months and six months ended March 31, 1995 compared to
$1,655,000 and $1,658,000 for the three and six months ended March 31, 1994.
(3) Earnings per share is computed based on the weighted average number of
common shares outstanding adjusted for the number of shares issuable upon
assumed exercise of stock options, after the assumed repurchase of shares with
the related proceeds.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's revenues for the three-month and six-month periods ended
March 31, 1995 increased 23.6% and 22.6%, respectively, as compared with
revenues earned during the same periods in 1994. This revenue growth is
primarily attributable to the acquisition in August 1994 of Meditech
Diagnostic Systems, Inc. (now called PSICOR Office Laboratories, Inc.), a
laboratory services company. The Company's perfusion revenues for the three-
month and six-month periods ended March 31, 1995 increased 7.0% and 5.6%,
respectively. This revenue growth is attributable to an increase in the
number of client hospitals served, primarily as a result of the acquisition of
three perfusion companies over the past year and an increase in the number of
open-heart procedures being performed in existing client hospitals. In
addition, due to the current environment in the health care industry, which
has resulted from the uncertain status and content of health care legislation,
and the impact of continuing pressures at the Company's client hospitals to
control health care costs, the fees the Company is able to charge for
professional services have remained relatively flat overall and have declined
in selective accounts.
The Company's cost of sales and services increased 26.0% and 24.6%,
respectively, for the three-month and six-month periods ended March 31, 1995,
primarily as a function of the additional costs associated with the increase
in revenue. The major components of the cost of sales and services are
clinical employee salaries and the cost of disposable supplies. The Company's
gross profit, as a percentage of revenue, decreased from 20.4% to 18.9%, and
from 20.6% to 19.4%, respectively, for the three-month and six-month periods
ended March 31, 1995, as compared to the same periods in 1994. This decrease
is due to pricing pressures and the lack of significant caseload increases
that would result in greater clinical staff efficiency and utilization, as
well as additional expenses associated with the consolidation of physician
office laboratory systems and warehousing functions. The Company continues to
evaluate means to reduce costs associated with PSICOR Office Laboratories.
General and administrative expenses increased by 24.3% and 23.8%,
respectively, for the three-month and six-month periods ended March 31, 1995
as compared with the same periods in the previous year, all of which is
attributable to the added costs related to the PSICOR Office Laboratories
acquisition. As a percentage of revenue, consolidated general and
administrative expenses increased by 0.1% of total revenues for the three-
month and six-month periods ending March 31, 1995 as compared to the same
periods in the previous year. General and administrative expenses attributed
to PSICOR Office Laboratories were approximately 13% of the laboratories'
revenues for the six months ended March 31, 1995.
Other income for the three-month and six-month periods ended March 31,
1995 consisted primarily of the gain on the sale of corporate assets.
Interest expense of $26,000 and $42,000, respectively, resulted from
borrowings during the three-month and six-month periods ended March 31, 1995,
which were used in connection with the acquisition of and the further
investment in the growth of PSICOR Office Laboratories.
Despite the increase in revenues earned during the three-month and six-
month periods ended March 31, 1995 over those in the same periods of the
previous year, because of the foregoing factors, net income declined as a
<PAGE>
percentage of revenue from 5.3% to 3.8% and 5.5% to 4.4%, respectively. In
addition, PSICOR Office Laboratories experienced a small operating loss for
the three months ended March 31, 1995. While the Company expects increased
revenues from the PSICOR Office Laboratories segment and will make continued
efforts to reduce costs and expenses, there can be no assurances that the
Company's consolidated net income will return to historical levels.
LIQUIDITY AND CAPITAL RESOURCES
Internally generated funds and bank borrowings have been the primary
sources used to fund the Company's needs for working capital and capital
expenditures.
The ongoing investment in the operations of PSICOR Office Laboratories
will be funded primarily by internally generated cash balances and limited
bank borrowings.
The Company believes that funds generated through operations and
borrowings available under its remaining credit facilities will be adequate to
meet the Company's foreseeable capital requirements and future acquisition
opportunities.
The Company has a $1,594,000 equity investment in Clarus, Inc., a
medical device development company. The Company's chief executive officer and
another director of the Company serve as members of Clarus' board of
directors. In March 1995, the Company made an additional equity investment of
$35,000 in Clarus, with future investment commitments of approximately $70,000
to be made by the end of the fiscal year. The preferred stock investment in
Clarus is carried at cost and is included in intangibles and other assets on
the accompanying balance sheets. While the Company expects that Clarus, Inc.
will continue as a going concern, there can be no assurances that this will be
the case and Clarus has experienced recent liquidity and capital resource
difficulties.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Company held its Annual Meeting of Shareholders on Monday,
February 6, 1995, at which there was one matter for consideration, the
Election of Four Directors. Each of the nominees for director at the meeting
was an incumbent. The following table sets forth the number of shares voted
for and withheld with respect to each nominee. All nominees were elected.
Nominee Votes For Votes Withheld
Michael W. Dunaway 3,110,385 1,624
Trudy V. Dunaway 3,110,385 1,624
Laverne W. Rees 3,110,385 1,624
Whitney A. McFarlin 3,110,385 1,624
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 Financial Data Schedule (EDGAR filing only).
(b) No reports on Form 8-K were filed by the registrant, and none were
required to be filed during the quarter for which this report is filed.
<PAGE>
SIGNATURES
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.
PSICOR, Inc.
(Registrant)
Date: May 5, 1995 By: /S/ MICHAEL W. DUNAWAY
Michael W. Dunaway
Chairman and Chief Executive Officer
Date: May 5, 1995 And: /S/ JOHN V. CRACCHIOLO
John V. Cracchiolo
Vice President
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule (EDGAR filing only).
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