<PAGE> FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(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, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-9934
ICN BIOMEDICALS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-0004340
------------------------------ ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification)
3300 Hyland Avenue
Costa Mesa, California 92626
----------------------------------------
(Address of principal executive offices)
714 545-0100
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(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 [ ]
The number of outstanding shares of the Company's Common Stock, $.01 Par
value, as of May 8, 1994 was 9,033,623.
<PAGE>
<PAGE> ICN BIOMEDICALS, INC.
INDEX
PART I -- FINANCIAL INFORMATION
Page
Number
------
Financial Information (unaudited):
Consolidated Condensed Balance Sheets -
March 31, 1994 and December 31, 1993 3
Consolidated Condensed Statements of Operations -
For the three months ended March 31, 1994 and 1993 4
Consolidated Condensed Statements of Cash Flows -
For the three months ended March 31, 1994 and 1993 5
Management's Statement Regarding Unaudited Consolidated
Condensed Financial Statements 6
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES OF REGISTRANT 12
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<PAGE>
ICN BIOMEDICALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited - 000's omitted except for per share amounts)
<TABLE>
<CAPTION> ASSETS
<S> <C> <C>
March 31, December 31,
1994 1993
------------ ------------
Current assets:
Cash and cash equivalents $ 134 $ 509
Restricted cash 256 256
Receivables, net 14,027 11,574
Inventories, net 15,180 15,601
Prepaid expenses and other current assets 3,097 3,241
------------ ------------
Total current assets 32,694 31,181
Property, plant and equipment, net 15,631 15,728
Other assets and deferred charges 2,197 2,342
Excess of cost over net assets
of purchased businesses, net 2,492 2,580
------------ ------------
Total Assets $ 53,014 $ 51,831
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,913 $ 1,926
Current maturities of capital lease
obligations and long-term debt 1,333 1,379
Accounts payable and accrued liabilities 16,813 17,120
------------ -----------
Total current liabilities 20,059 20,425
Long-term debt and capital lease obligations 10,263 10,567
Deferred income taxes and other liabilities 2,348 2,266
Payable to ICN 8,282 5,932
Stockholders' equity:
Preferred stock, $.01 par value:
1,000,000 shares authorized; issued:
Series A, 300,000 shares ($30,000,000
involuntary liquidation preference) 3 3
Series B, 390,000 shares ($39,000,000
involuntary liquidation preference) 4 4
Common Stock, $.01 par value:
30,000,000 shares authorized;
9,033,623 shares issued and outstanding at
March 31, 1994 and December 31, 1993,
respectively. 90 90
Additional capital: Preferred 61,928 61,928
Additional capital: Common 43,072 43,072
Deficit (89,411) (89,540)
Foreign currency translation adjustments (3,624) (2,916)
------------ ------------
Total stockholders' equity 12,062 12,641
------------ ------------
$ 53,014 $ 51,831
============ ============
The accompanying notes are an integral part of these consolidated
condensed financial statements.
</TABLE>
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<PAGE>
ICN BIOMEDICALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the three months ended March 31, 1994 and 1993
(Unaudited - 000's omitted except for per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, March 31,
1994 1993
----------- -----------
Net sales $ 15,487 $ 15,809
Cost of sales 6,840 7,376
----------- -----------
Gross profit 8,647 8,433
Selling, general and
administrative expenses 6,902 6,532
Interest income (4) (6)
Interest expense 490 740
Foreign Currency Transaction losses (gains) 413 (222)
Other expenses, net 345 338
----------- -----------
Income before provision for income taxes 501 1,051
Provision (benefit) for income taxes (13) 35
----------- -----------
Net income $ 514 $ 1,016
=========== ===========
Per share information:
Net income $ .06 $ .05
========= =========
Shares used in computing per
share information 9,196 22,419
========== ==========
Dividends per common share $ -- $ .0425
========== ==========
The accompanying notes are an integral part of these consolidated
condensed financial statements.
</TABLE>
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<PAGE>
ICN BIOMEDICALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1994 and 1993
(Unaudited - 000's omitted except for per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, March 31,
1994 1993
----------- -----------
Cash flows from operating activities:
Net income $ 514 $ 1,016
Adjustments to net income:
Depreciation and amortization 846 897
Change in assets and liabilities, net (3,178) (3,515)
----------- -----------
Net cash used in operations (1,818) (1,602)
----------- -----------
Cash flows from investing activities:
Capital expenditures (185) (440)
Other, net -- 26
----------- -----------
Net cash used in investing activities (185) (414)
----------- -----------
Cash flows from financing activities:
Repayments of long-term debt, net (350) (651)
(Repayments) borrowings of
short-term debt, net (13) 237
Cash dividends paid (118) (117)
Cash received from ICN, net 2,083 1,002
----------- -----------
Net cash provided by
financing activities 1,602 471
----------- -----------
Effect of exchange rate changes on cash 26 121
----------- -----------
Decrease in cash and equivalents (375) (1,424)
Cash and equivalents at beginning of quarter 509 2,204
----------- -----------
Cash and equivalents at end of quarter $ 134 $ 780
=========== ===========
The accompanying notes are an integral part of these consolidated
condensed financial statements.
</TABLE>
<PAGE>
<PAGE> ICN BIOMEDICALS, INC.
MANAGEMENT'S STATEMENT REGARDING
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed financial statements included herein have been
prepared by the Company, 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 omitted pursuant to
such rules and regulations. The results of operations presented herein are
not necessarily indicative of the results to be expected for a full year.
Although the Company believes that all adjustments necessary (consisting only
of normal recurring adjustments) for a fair presentation of the interim
periods presented are included and that the disclosures are adequate to make
the information presented not misleading, it is suggested that these
consolidated condensed financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K and Form 10-K/A Amendment Number 1 for the year
ended December 31, 1993.
ICN BIOMEDICALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Relationship with ICN Pharmaceuticals, Inc., SPI Pharmaceuticals, Inc.
and Viratek, Inc.
ICN Biomedicals, Inc. (the "Company") was incorporated in September, 1983
as a wholly-owned subsidiary of ICN Pharmaceuticals, Inc. ("ICN"). As of
March 31, 1994, the Company was a 69%-owned subsidiary of ICN. SPI
Pharmaceuticals, Inc. ("SPI") and Viratek, Inc. ("Viratek") were 39% and
63%-owned by ICN, respectively.
2. Inventories
Inventories are carried at the lower of cost or market using the first in
first out (FIFO) method and are comprised of the following: (000's omitted)
<TABLE>
<CAPTION> March 31, December 31,
1994 1993
------------ -------------
<S> <C> <C>
Raw materials and supplies $ 3,390 $ 3,422
Work-in-process 640 610
Finished goods, net 11,150 11,569
------------ ------------
Inventories, net $ 15,180 $ 15,601
============ ============
</TABLE>
<PAGE>
<PAGE>
ICN BIOMEDICALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
(Unaudited)
3. Related Party Transactions
General
The Company has obtained a written agreement from ICN that ICN is prepared,
if needed, to provide financial support to the Company in order to meet its
financial obligations through April 15, 1995.
Investment Policy
ICN and its affiliates, including the Company, have adopted a policy
covering intercompany advances, interest rates and the types of investments
to be made by the Company and ICN. As a result of this policy, excess cash
of the Company is transferred to and invested by ICN. The Company is
credited with interest income based on prime less 1/2% and is charged
interest at the prime rate plus 1/2% on the amounts invested or advanced.
Interest expense, net related to this balance was $76,000 and $163,000 for
the three months ended March 31, 1994 and 1993, respectively.
Cost Allocations
The Company subleases space on a year-to-year basis in Costa Mesa,
California, from ICN. The cost of common services used by the Company,
SPI, Viratek and ICN are allocated by SPI based upon various formulas.
Effective January 1, 1993, ICN reimburses the Company for those allocations
which are in excess of the amounts determined by management using
competitive data, as approved by the Oversight Committee, that would have
been incurred by the Company if it operated in a facility suited solely to
its requirements. Rent and common services charges, net for the three
months ended March 31, 1994 and 1993 were $213,000 and $231,000,
respectively.
4. Long-term Debt
As of March 31, 1994, the accompanying consolidated condensed financial
statements include total outstanding Swiss Franc convertible debt of SFr.
11,410,000 ($8,080,000) which represents the present value of the Company's
obligation to pay the Zero Coupon Guaranteed Bonds. As of March 31, 1994,
SFr. 39,615,000 principal of the Company's 5 1/2% Exchangeable Certificates
were outstanding which, if exchanged for common stock, would result in the
issuance of 2,608,241 shares of common stock, a reduction of long-term debt
of SFr. 10,123,000 ($7,169,000) a reduction of SFR 1,286,000 ($911,000) of
current maturities of long-term debt, and an increase in marketable securi-
ties of SFr. 20,204,000 ($14,308,000) from the release by Bio Capital of
the Danish Bonds to the Company. The Company does not hedge the exchange
risk associated to the Swiss Franc convertible debt. Consequently, the
Company incurred approximately $393,000 of exchange losses related to the
Swiss Franc convertible debt during the three months ended March 31, 1994,
as compared to a gain of $198,000 for the same period in 1993.
<PAGE>
<PAGE>
ICN BIOMEDICALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
(Unaudited)
5. Common Stock
As of March 31, 1994, there were 2,608,241 shares of common stock issuable
upon conversion of the Company's 5 1/2% Exchangeable Certificates, and
2,059,485 shares of common stock issuable upon the exercise of stock
options, of which 1,356,025 options are exercisable at March 31, 1994 at
prices ranging from $.83 to $10.50 per share.
6. Supplemental Cash Flow Disclosures
Supplemental disclosures required by Statement of Financial Accounting
Standards No. 95, "Statement of Cash Flows" are as follows: (000's omitted)
<TABLE>
<CAPTION>
Three months ended
--------------------------
March 31, March 31,
1994 1993
----------- -----------
<S> <C> <C>
Interest paid $ 874 $ 1,070
Taxes paid $ 186 $ 142
</TABLE>
7. Other expenses, net
Other expenses, net was $345,000 in 1994 and $338,000 in 1993. Included in
other expenses, net is the amortization of goodwill of $126,000 in 1994 and
$129,000 in 1993. Additionally, 1994 includes approximately $250,000 of
severance and termination costs, offset by $300,000 related to the
reevaluation of certain foreign reserves, primarily related to accounts
receivable.
<PAGE>
<PAGE>
ICN BIOMEDICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Working Capital. Working capital was $12,635,000 at March 31, 1994, an
increase of $1,879,000 from December 31, 1993. The increase is primarily
due to an increase in accounts receivable resulting from higher sales in
the first quarter of 1994 as compared to the fourth quarter of 1993, and a
reduction in accounts payable and accrued liabilities, partially offset by
reductions in inventory and other current assets.
Management believes that cash generated from operations, reductions in
working capital, and, if needed, additional borrowings from ICN will
provide sufficient cash to meet its normal operating requirements.
The Company has obtained a written agreement from ICN that ICN is prepared,
if needed, to provide financial support to the Company in order to meet its
financial obligations through April 15, 1995.
The Company may issue additional shares of its Common Stock, refinance its
current obligations or re-negotiate certain terms of existing indebtedness,
depending on market conditions.
Debt. Total debt (Current Maturities, Notes Payable and Long-term debt)
during the three month period ending March 31, 1994 decreased to
$13,509,000 from $13,872,000 on December 31, 1993, primarily as a result of
principal payments of short-term debt.
Product Liability Insurance. The Company and certain of its subsidiaries
do not maintain product liability insurance. While the Company has never
experienced a material adverse claim for personal injury resulting from
allegedly defective products, a successful claim could have a material
adverse effect on the Company's liquidity and financial performance.
Results of Operations
Net Sales. Net sales were $15,487,000 and $15,809,000 for the three months
ended March 31, 1994 and 1993, respectively. Sales were 2% lower in 1994
than in 1993. The Company continues to actively work on the introduction
of new products primarily related to its Diagnostic product line, and on
the expansion of the Dosimetry product line into foreign markets. These
two actions, combined with the launch of the Company's 1994 catalog which
began distribution during January and February 1994 should help to
contribute to increased sales in the remaining quarters of the year.
Cost of Sales. Product cost as a percentage of sales decreased to 44% in
1994 from 47% in 1993. The Company continues to focus on the elimination
of high cost products and on improving purchasing and manufacturing
processes.
<PAGE>
<PAGE>
ICN BIOMEDICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Gross Profit. Gross profit as a percentage of sales was 56% and 53% for
the three months ended March 31, 1994 and 1993, respectively. The impact
of the actions taken in regards to sales and product costs, specifically
the discontinuance of low gross profit margin products and the introduction
of new products with high margins, have been reflected by an improvement in
gross profit margins.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $6,902,000 or 45% of sales in 1994 and
$6,532,000 or 41% of sales in 1993. The increase in expenses in 1994
reflects primarily the impact of catalog amortization costs. Management is
continuing its efforts to reduce selling, general and administrative
expenses both in dollar value and as a percentage of sales through
consolidation of operations and cost controls.
Interest, Net. Net interest expense was $486,000 and $734,000 for the
three months ended March 31, 1994, and 1993, respectively. The net
decrease resulted primarily from the reduction in short and long term debt
of the Company.
Foreign Currency Transaction Losses (Gains). Foreign currency transaction
losses (gains) were $413,000 and $(222,000) for the three months ended
March 31, 1994 and 1993, respectively. The Company has a SFr. liability of
SFr. 11,410,000 ($8,080,000), which is not hedged and subject to foreign
exchange gains or losses during the year.
Other Expense, Net. Other expense, net was $345,000 in 1994 and $338,000
in 1993. Included in other expense, net is the amortization of goodwill of
$126,000 in 1994 and $129,000 in 1993. Additionally, 1994 includes
approximately $250,000 of severance and termination costs, offset by
$300,000 related to the reevaluation of certain foreign reserves, primarily
related to accounts receivable.
<PAGE>
<PAGE>
ICN BIOMEDICALS, INC.
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
a. Exhibits
--------
(11) Statement re: Computation of Per Share Earnings.
b. Reports on Form 8-K
-------------------
No report on Form 8-K was filed by the Company during the quarter
ended March 31, 1994.
<PAGE>
<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.
ICN BIOMEDICALS, INC.
(Registrant)
Date: May 13, 1994 /s/ Bill A. MacDonald
--------------------------------
President
Date: May 13, 1994 /s/ John E. Giordani
---------------------------------
Senior Vice President and Chief
Financial Officer
Exhibit 11. STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
The computation of net income per share for the three months ended March
31, 1994 and 1993 is as follows: (000's omitted except per share amounts)
<TABLE>
<CAPTION> Three months ended
----------------------------
<S> <C> <C>
March 31, March 31,
1994 1993
----------- -----------
Primary:
Net income $ 514 $ 1,016
=========== ===========
Average common shares outstanding 9,034 22,397
Dilutive common equivalent shares
issuable upon the exercise of options
currently outstanding to purchase
common shares 162 22
----------- -----------
9,196 22,419
=========== ===========
Net income per share $ .06 $ .05
=========== ===========
Fully diluted:
Net income $ 514 $ 1,016
Add back: Interest expense, net of tax,
applicable to convertible debt 168 168
Accretion, net of tax, on Danish bonds
acquired if debt converted 139 130
----------- -----------
$ 821 $ 1,314
=========== ===========
Average common shares outstanding 9,034 22,397
Dilutive common equivalent shares
issuable upon the exercise of options
currently outstanding to purchase
common shares 162 22
Shares issuable upon
conversion of debt 2,608 2,608
----------- -----------
11,804 25,027
=========== ===========
Net income per share $ .07 $ .05
=========== ===========
</TABLE>
