<PAGE>
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, 1998
OR
[ ] 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 0-17822
SYNETIC, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2975182
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
River Drive Center 2
669 River Drive
Elmwood Park, New Jersey 07407
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (201) 703-3400
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, 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.
Class Outstanding at May 13,1998
- ------------------------ --------------------------
Common Stock 17,732,366 shares
par value $.01 per share
<PAGE>
SYNETIC, INC. AND SUBSIDIARIES
Index
-----
Page
----
Part I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets --
March 31, 1998 and June 30, 1997 3
Consolidated Statements of Income --
Nine Months Ended March 31, 1998 and 1997 5
Consolidated Statements of Cash Flows --
Nine Months Ended March 31, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and
Analysis of Results of Operations and
Financial Condition 9
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of
Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 15
--------------------------------------------------
This report contains certain forward-looking statements and information
relating to Synetic, Inc. (the "Company" or "Synetic") that are based on the
beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. When used in this
report, the words "anticipate", "believe", "estimate", "expect" and similar
expressions, as they relate to the Company or the Company's management, are
intended to identify forward-looking statements. Such statements reflect the
current view of the Company's management with respect to future events and the
Company's future performance and are subject to certain risks, uncertainties and
assumptions. Should management's current view of the future or underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated or expected. The Company
does not intend to update these forward-looking statements.
<PAGE>
SYNETIC, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
----------- ---------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............. $ 82,921 $ 77,303
Marketable securities................. 3,206 11,765
Accounts receivable, net of
allowances for doubtful accounts
and sales returns of $783 and $739
at March 31, 1998 and June 30,
1997, respectively.................. 10,534 9,094
Inventories........................... 5,915 5,505
Other current assets.................. 11,263 9,233
-------- --------
Total current assets................ 113,839 112,900
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements................. 1,603 1,613
Building and improvements............. 10,659 9,911
Machinery and equipment............... 26,492 23,444
Furniture and fixtures................ 3,616 3,283
Construction in progress.............. 4,667 2,516
-------- --------
47,037 40,767
Less: Accumulated depreciation....... (21,019) (18,681)
-------- --------
Property, plant and equipment, net.. 26,018 22,086
-------- --------
OTHER ASSETS:
Marketable securities................. 227,044 226,760
Other................................. 20,276 20,357
-------- --------
Total other assets 247,320 247,117
-------- --------
$387,177 $382,103
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
-3-
<PAGE>
SYNETIC, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
---------- ---------
<S> <C> <C>
(unaudited)
CURRENT LIABILITIES:
Accounts payable............................... $ 2,101 $ 2,344
Accrued liabilities............................ 15,533 14,203
Income taxes payable........................... 2,597 3,044
-------- --------
Total current liabilities..................... 20,231 19,591
-------- --------
LONG-TERM DEBT, LESS CURRENT PORTION............ 159,500 165,000
DEFERRED TAXES AND OTHER LIABILITIES............ 5,692 8,776
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
10,000,000 shares authorized; none
issued........................................ - -
Common stock $.01 par value; 100,000,000
and 50,000,000 shares authorized; 22,968,657
and 22,865,149 shared issued; 17,700,194 and
17,564,980 shares issued and outstanding
at March 31, 1998 and June 30, 1997,
respectively.................................. 230 229
Paid-in capital................................ 201,893 196,212
Treasury stock, at cost; 5,268,463 and
5,300,169 shares at March 31, 1998 and
June 30, 1997, respectively................... (38,287) (39,462)
Retained earnings.............................. 37,918 31,757
-------- --------
Total stockholders' equity.................... 201,754 188,736
-------- --------
$387,177 $382,103
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
-4-
<PAGE>
SYNETIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Quarters and Nine Months Ended March 31, 1998 and 1997
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Quarters Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Net sales.............................. $16,437 $ 14,243 $ 46,710 $ 37,327
Cost of sales........................ 8,615 7,852 24,986 20,326
Selling, general and administrative.. 6,983 6,653 20,735 14,211
Interest and other income............ (5,128) (3,260) (15,732) (7,795)
Interest expense..................... 2,118 929 6,496 934
Other expense........................ - 3,585 - 32,185
------- -------- -------- --------
12,588 15,759 36,485 59,861
------- -------- -------- --------
Income (loss) before provision
for income taxes..................... 3,849 (1,516) 10,225 (22,534)
Provision for income taxes............. 1,473 904 4,064 3,431
------- -------- -------- --------
Net income (loss)...................... $ 2,376 $( 2,420) $ 6,161 $(25,965)
======= ======== ======== ========
Net income per share-basic:
Net income (loss) per share.......... $ .13 $ (.14) $ .35 $ (1.52)
======= ======== ======== ========
Weighted average shares outstanding.. 17,678 17,491 17,652 17,058
======= ======== ======== ========
Net income per share-diluted:
Net income (loss) per share.......... $ .12 $ (.14) $ .32 $ (1.52)
======= ======== ======== ========
Weighted average shares outstanding.. 19,894 17,491 19,558 17,058
======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
-5-
<PAGE>
SYNETIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, 1998 and 1997
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
1998 1997
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................. $ 6,161 $ (25,965)
Adjustments to reconcile net income to
net cash provided by operating activities:
Write-off of purchased research and
development costs........................... - 32,185
Depreciation, amortization and other......... 2,612 1,962
Changes in operating assets and liabilities:
Accounts receivable, net..................... (1,440) (334)
Inventories.................................. (410) (497)
Other assets................................. (2,979) (1,845)
Accounts payable............................. (243) 352
Accrued liabilities.......................... 897 753
Income taxes payable......................... 4,226 4,013
Other liabilities............................ (3,084) -
-------- ---------
Net cash provided by
operating activities...................... 5,740 10,624
-------- ---------
Cash flows from investing activities:
Sales of marketable securities.................... 99,542 345,171
Purchase of marketable securities................. (91,267) (443,027)
Capital expenditures.............................. (6,270) (3,174)
Acquisition of businesses, net of cash acquired... - (10,744)
-------- ---------
Net cash provided by (used for)
investing activities...................... 2,005 (111,774)
-------- ---------
Cash flows from financing activities:
Payments for treasury stock....................... - (1,712)
Payments for extinguishment of debt............... (4,842) -
Proceeds from exercises of stock options and
401(k) purchases................................ 2,715 2,494
Proceeds from issuance of convertible debentures
net of underwriting discount.................... - 160,890
-------- ---------
Net cash (used for) provided by
financing activities...................... (2,127) 161,672
-------- ---------
Net increase in cash and cash equivalents.......... 5,618 60,522
Cash and cash equivalents, beginning of period..... 77,303 22,210
-------- ---------
Cash and cash equivalents, end of period........... $ 82,921 $ 82,732
======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
-6-
<PAGE>
SYNETIC, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Financial statement presentation:
In the opinion of management, the accompanying consolidated financial
statements contain all normal and recurring adjustments necessary to present
fairly the financial position of Synetic, Inc. and subsidiaries (the "Company")
as of March 31, 1998 (unaudited) and June 30, 1997 (audited), the results of
their operations for the nine months ended March 31, 1998 and 1997 (unaudited)
and the results of their operations and their cash flows for the nine months
ended March 31, 1998 and 1997 (unaudited).
Principles of Consolidation--
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned operating subsidiaries, Porex Corporation and
subsidiaries ("Porex"), Avicenna Systems Corp. ("Avicenna") and CareAgents,
Inc.("CareAgents"), after elimination of all material intercompany accounts and
transactions.
The accounting policies followed by the Company are set forth in the Notes
to Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1997 (the "1997 10-K"), which
notes are incorporated herein by reference.
The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full fiscal year.
Certain reclassifications have been made to prior year amounts to conform
to the current year presentation.
(2) Inventories:
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
--------- --------
(unaudited)
<S> <C> <C>
Raw materials and supplies.. $2,952 $2,672
Work-in-process............. 671 347
Finished goods.............. 2,292 2,486
------ ------
$5,915 $5,505
====== ======
</TABLE>
(3) Marketable securities:
At March 31, 1998 and June 30, 1997, marketable securities consisted
primarily of U.S. Treasury Notes and Federal Agency Notes.
(4) Computation of net income (loss) per share:
Effective with the quarter ended December 31, 1997, the Company adopted
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
No. 128"). The new standard simplifies the computation of net income per share
and increases comparability to international standards. Under SFAS No. 128,
basic net income per share is computed by dividing net income by the weighted
average number of common shares outstanding for the period. Diluted
-7-
<PAGE>
net income per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock. Dilutive securities consist of common stock which may be
issuable upon exercise of outstanding stock options as calculated using the
treasury stock method. The Company's 5% Convertible Subordinated Debentures due
2007 (the "Convertible Debentures"), were not included in the computation of
diluted net income per share because their conversion price was greater than the
average market price of the Company's common stock during the periods presented
and, if included, would have had an anti-dilutive effect on net income per share
for the periods presented. All prior periods have been restated in compliance
with SFAS 128.
(5) Supplemental cash flow information (in thousands):
For the nine months ended March 31, 1998 and 1997, the Company recognized
tax benefits related to the exercise of stock options as increases to additional
paid-in capital and decreases to income taxes payable of $4,673,000 and
$5,216,000, respectively.
<TABLE>
<CAPTION>
March 31,
Cash paid during the periods for: 1998 1997
------ ------
<S> <C> <C>
Interest...................... $8,233 $ -
Income taxes.................. 696 1,276
</TABLE>
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The historical operations of the Company are primarily related to its
plastics and filtration technologies business. All revenues and a significant
majority of operating expenses were derived from these operations. As discussed
below, the consolidated financial statements for the three and nine month
periods ended March 31, 1998 include certain costs associated with the Company's
activities in developing its healthcare communications business.
Consolidated Results of Operations:
- ----------------------------------
Net sales for the quarter and nine months ended March 31, 1998 increased
15.4% and 25.1% to $16,437,000 and $46,710,000, respectively, from $14,243,000
and $37,327,000 in the comparable prior year periods. The increases in sales
for the periods was principally due to internal growth and to a lesser extent,
the February 9, 1997 acquisition of Interflo Technologies Inc. ("Interflo").
Internal growth was driven by sales of writing instrument components, sales to
medical original equipment manufacturers of porous components used in diagnostic
products, and sales of laboratory disposable products.
Cost of sales for the quarter and nine months ended March 31, 1998
increased by $763,000, or 9.7%, and $4,660,000, or 22.9%, respectively, over the
comparable prior year periods due to the increased sales volume noted above and
to the operations of Interflo being included for the full quarter. As a percent
of net sales, cost of sales for the quarter ended March 31, 1998 decreased to
52.4% from 55.1% in the comparable prior year period principally due to
increased leverage of certain fixed costs and labor efficiencies. As a percent
of net sales, cost of sales for the nine months ended March 31, 1998 did not
vary materially from the comparable prior year period.
Selling, general and administrative expenses for the quarter ended March
31, 1998 increased by $330,000 or 5% over the comparable prior year period due
primarily to the inclusion of Interflo's operation for the full quarter as well
as increased sales and marketing expenses relating to the Company's plastics and
filtration technologies business. As a percent of net sales, selling, general
and administrative expenses for the quarter ended March 31, 1998 decreased to
42.5% from 46.7% in the prior year quarter due principally to an increase in
sales which was not proportionately offset by expenses, since a portion of these
expenses is fixed and does not vary directly with sales. For the nine months
ended March 31, 1998, selling, general and administrative expenses increased by
$6,524,000 or 45.9% due primarily to the inclusion of $4,689,000 in expenses
associated with the Company's healthcare communications business for the first
six months of the fiscal year for which there was no comparable amount in the
prior year period. Excluding these costs, as a percent of net sales, selling,
general and administrative expenses for the nine months ended March 31, 1998
decreased to 34.4% from 38.1% in the prior year period due principally to an
increase in sales which was not proportionally offset by expenses, since a
portion of these expenses is fixed and does not vary directly with sales.
Interest and other income net of interest expense for the quarter ended
March 31, 1998 increased by $679,000 or 29.1% over the comparable prior year
quarter due primarily to the increase in funds available for investment
generated by the proceeds of the Company's Convertible Debentures issued in
February 1997, partially offset by the interest expense associated with the
Convertible Debentures. For the nine months ended March 31, 1998, interest and
other income, net of interest expense, increased by $2,375,000 or 34.6%
-9-
<PAGE>
principally due to an increase in funds available for investment generated by
the proceeds of the Company's Convertible Debentures issued in February 1997,
which was partially offset by the interest expense associated with the
Convertible Debentures, and as a result of the Company recording a $600,000 gain
from the repurchase of Convertible Debentures in the December quarter.
During the quarter ended March 31, 1997, the Company recorded a charge to
income of $3,585,000 for purchased research and development costs relating to
the acquisition of CareAgents.
Excluding the purchased research and development charge in the prior year
periods for which no tax benefit was recognized, the effective tax rate
for the quarter ended March 31, 1998 decreased to 38.3% from 43.7% in the prior
year quarter principally due to recognition of certain research and development
credits in the current period, a portion of which was offset by the loss of
state tax benefits for the expenses associated with the Company's healthcare
communications business. For the nine months ended March 31, 1998, the
effective tax rate increased to 39.7% from 35.5% as the Company currently
receives no state tax benefit for the expenses associated with its healthcare
communications business partially offset by research and development credits in
the current quarter for which there is no comparable amounts in the prior year.
Capital Resources and Liquidity:
- -------------------------------
Cash, cash equivalents and marketable securities decreased by $2,657,000 to
$313,171,000 during the nine months ended March 31, 1998 principally due to the
Company's repurchase of $5,500,000 face amount of Convertible Debentures and the
interest payment related to the Convertible Debentures which was partially
offset by cash provided by operations.
As a result of the continuing efforts in developing its healthcare
communications business, the Company expects to incur significant research and
development expenditures in connection with this new area of business until the
products and services are successfully developed and marketed. During the nine
months ended March 31, 1998, the Company incurred expenditures of approximately
$8,672,000 related to the development of its healthcare communications business.
The Company believes that its cash flow from operations and the income earned on
its investments are sufficient to meet the anticipated working capital
requirements of its business, including the research and development
expenditures noted above.
On March 9, 1998 the Company announced a merger agreement for the
acquisition of Point Plastics, Inc., a manufacturing company located in
Petaluma, California. Point Plastics sells high volume disposable plastic
products, such as pipette tips, micro-centrifuge tubes and PCR tubes to the
research and clinical life sciences markets worldwide. The purchase price for
all of the outstanding capital stock of Point Plastics is $86 million, subject
to adjustment under certain circumstances, payable 60% in shares of Synetic
Common Stock and 40% in cash. The closing is subject to satisfaction of certain
conditions.
The Company continues to pursue an acquisition program pursuant to which it
seeks to effect one or more acquisitions or other similar business combinations
with businesses it believes have significant growth potential. Financing for
such acquisitions may come from several sources, including, without limitation,
(a) the Company's cash, cash equivalents and marketable securities and (b)
proceeds from the incurrence of additional indebtedness or the issuance of
common stock, preferred stock, convertible debt or other securities. There can
be no assurance that the Company's acquisition program will be successful. See
"Item 1. Business--Acquisition Program" in the 1997 Form 10-K.
-10-
<PAGE>
SYNETIC INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company previously announced that in July 1994 the Division of
Enforcement of the Securities and Exchange Commission (the "SEC") began an
investigation regarding certain trading in securities of the Company. On March
11, 1998, the SEC filed a civil action against Roger Licht, an outside director
of the Company. The complaint alleges that Mr. Licht provided non-public
information to friends in connection with transactions involving the Company and
its former parent, Medco Containment Services, Inc.("Medco"), and traded on the
basis of non-public information in connection with an unrelated company. The
SEC's complaint relates to the acquisition of Medco by Merck & Co., Inc. in July
1993 and Medco's subsequent sale of its majority interest in the Company in May
1994. The SEC's action seeks disgorgement of the alleged trading profits and an
injunction against Mr. Licht. The SEC's action does not involve or seek any
recovery from the Company or allege any wrongdoing by the Company. Accordingly,
the Company believes that such action will not have a material adverse effect on
its financial position or results of operation.
-11-
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The following matters were voted upon at an Annual Meeting of Stockholders held
on March 25, 1998 and received the number of votes set forth below:
1. Each of the following persons nominated was elected to serve as a director
for a three year term and received the number of votes set opposite his
name:
FOR WITHHELD
--- --------
Ray E. Hannah 16,645,517 23,053
Roger H. Licht 16,644,517 24,053
Bernard A. Marden 16,646,417 22,153
Herman Sarkowsky 16,646,417 22,153
2. The approval and adoption of an amendment to the Certificate of
Incorporation of the Company (the "Charter") to eliminate the Company's
classified Board of Directors and to provide for the annual election of all
directors commencing at the next Annual Meeting of Stockholders of the
Company.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
13,457,365 30,479 12,424 3,168,302
Since the amendment to the Charter referred to in Paragraph 1 above has
been approved, all directors, including those referred to above will have
terms which expire at the next Annual Meeting of Stockholders of the
Company.
3. The approval and adoption of an amendment to the Charter to eliminate the
requirement that provisions of the Charter relating to the classification
of the Board of Directors and the election of one-third of the Board of
Directors at each annual meeting may only be amended with the affirmative
vote of the holders of two-thirds of the shares entitled to vote in the
election of directors.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- ---------
13,449,760 34,984 15,524 3,168,302
4. The approval and adoption of an amendment to the Charter to eliminate
cumulative voting in the election of directors.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- ---------
12,976,672 511,722 11,874 3,168,302
5. The approval and adoption of an amendment to the Charter to delete the
requirement that provisions of the Charter relating to cumulative voting
may only be amended with the affirmative vote of the holders of two-thirds
of the shares entitled to vote in the election of directors.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
13,458,756 29,558 11,954 3,168,302
-12-
<PAGE>
6. The approval and adoption of an amendment to the Charter to provide that
any director may be removed, either with or without cause, at any time, by
the affirmative vote of a majority of the outstanding shares entitled to
vote in the election of directors.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
13,458,363 29,459 12,446 3,168,302
7. The approval and adoption of an amendment to the Charter to delete the
requirement that provisions of the Charter relating to the power to remove
directors or to fill vacancies on the Board of Directors may only be
amended with the affirmative vote of the holders of two-thirds of the
shares entitled to vote in the election of directors.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
13,437,365 45,832 17,071 3,168,302
8. The approval and adoption of an amendment to the Charter to delete the
requirement that the provision of the By-Laws of the Company setting the
maximum number of directors may only be amended with the affirmative vote
of the holders of two-thirds of the shares entitled to vote in the election
of directors.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
13,445,330 39,549 15,389 3,168,302
9. The approval and adoption of an amendment to the Charter to increase the
number of authorized shares of Common Stock from 50 million to 100 million.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
16,398,466 239,568 30,536 --
10. Ratification of the Company's Amended and Restated 1989 Class A Stock
Option Plan.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
11,374,743 1,997,429 128,096 3,168,302
11. Ratification of the Company's Amended and Restated 1989 Class B Stock
Option Plan.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
11,373,270 1,998,492 128,106 3,168,702
12. Ratification of the Company's Amended and Restated 1991 Special
Nonqualified Stock Option Plan.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
11,490,911 1,986,953 59,180 3,131,526
-13-
<PAGE>
13. Approval of a grant to an officer of the Company of a nonqualified option
to purchase 250,000 shares of Common Stock.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
12,541,287 935,037 61,320 3,130,926
14. Ratification of the appointment of Arthur Andersen LLP as independent
public auditors of the Company for the fiscal year ending June 30, 1998.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
16,624,783 13,850 29,937 --
-14-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit No. Description
----------- -----------
11 Computation of Earnings Per Share
27 Financial Data Schedule
(b) On March 11, 1998, the Company filed a report on Form 8-K disclosing
that it had entered into a merger agreement for the acquisition of
Point Plastics, Inc.
-15-
<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 hereunto duly authorized.
SYNETIC, INC.
----------------------------
Anthony Vuolo
Executive Vice President -
Finance and Administration
and Chief Financial Officer
Dated: May 15, 1998
-16-
<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 hereunto duly authorized.
SYNETIC, INC.
/s/ Anthony Vuolo
---------------------------------
Anthony Vuolo
Executive Vice President -
Finance and Administration
and Chief Financial Officer
Dated: May 15, 1998
-17-
<PAGE>
EXHIBIT INDEX
Number Description
------ -----------
11 Computation of Earnings Per Share
27 Financial Data Schedule
<PAGE>
Exhibit 11
----------
SYNETIC, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
QUARTERS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
----------------- ------------------
1998 1997 1998 1997
------- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
Basic earnings(loss)
from operations.................... (A) $ 2,376 $(2,420) $ 6,161 $(25,965)
Assumed conversion of convertible
debentures(1)...................... - - - -
------- ------- ------- --------
Diluted earnings from operations..... (B) $ 2,376 $(2,420) $ 6,161 $(25,965)
======= ======= ======= ========
Weighted average shares
outstanding - basic................ (C) 17,678 17,491 17,652 17,058
Common stock equivalents for
dilutive earnings per
share using the treasury
stock method....................... 2,216 - 1,906 -
------- ------- ------- --------
Additional equivalent shares upon
assumed conversion of convertible
debentures(1)...................... - - - -
------- ------- ------- --------
Weighted average shares and common
equivalent shares outstanding
for diluted earnings per share..... (D) 19,894 17,491 19,558 17,058
EARNINGS PER SHARE
Basic................................ (A)/(C) $ .13 $ (.14) $ .35 $ (1.52)
Diluted.............................. (B)/(D) $ .12 $ (.14) $ .32 $ (1.52)
- ---------------------------
</TABLE>
(1) The Convertible Debenture conversion is not included in the computation of
earnings per share as it is anti-dilutive for all periods presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SYNETIC,
INC'S 3/31/98 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 82,921
<SECURITIES> 3,206
<RECEIVABLES> 11,317
<ALLOWANCES> 783
<INVENTORY> 5,915
<CURRENT-ASSETS> 113,839
<PP&E> 47,037
<DEPRECIATION> 21,019
<TOTAL-ASSETS> 387,177
<CURRENT-LIABILITIES> 20,231
<BONDS> 159,500
0
0
<COMMON> 230
<OTHER-SE> 201,524
<TOTAL-LIABILITY-AND-EQUITY> 387,177
<SALES> 46,710
<TOTAL-REVENUES> 46,710
<CGS> 24,986
<TOTAL-COSTS> 24,986
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,496
<INCOME-PRETAX> 10,225
<INCOME-TAX> 4,064
<INCOME-CONTINUING> 6,161
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,161
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.32
</TABLE>
