Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

 

 

Registrant’s Telephone Number, Including Area Code: (310) 828-6543

 

 

 

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 ý  No o

 

As of April 30, 2004, there were approximately 22,737,125 shares of Common Stock outstanding, no par value.

 

 

SPECIALTY LABORATORIES, INC.

FORM 10-Q QUARTERLY REPORT

 

TABLE OF CONTENTS

 

PART I.	FINANCIAL INFORMATION
ITEM 1.		FINANCIAL STATEMENTS
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 4.		CONTROLS AND PROCEDURES
PART II.	OTHER INFORMATION
ITEM 1.		LEGAL PROCEEDINGS
ITEM 2.		CHANGES IN SECURITIES AND USE OF PROCEEDS
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES
ITEM 4.		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5.		OTHER INFORMATION
ITEM 6.		EXHIBITS AND REPORTS ON FORM 8-K

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (the “Quarterly Report”) includes information incorporated herein by reference and contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to expectations concerning matters that are not historical facts. Words such as “projects,” “believes,” “anticipates,” “will,” “estimate,” “plans,” “expects,” “intends,” and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are based on the current expectations, assumptions, estimates and projections about Specialty Laboratories, Inc. and the esoteric clinical laboratory industry.  Although we believe that such forward-looking statements are reasonable, we cannot assure you that such expectations will prove to be correct.  These forward-looking statements involve risks and uncertainties.  Our actual results could differ materially from those discussed in these forward-looking statements as a result of certain factors, including those described in this Quarterly Report.  All forward-looking statements attributable to Specialty Laboratories, Inc. are expressly qualified in their entirety by the cautionary statements of this Quarterly Report and by the discussion of “Risk Factors” included in this Quarterly Report, and in other filings with the Securities and Exchange Commission (“SEC”) made from time to time by Specialty Laboratories, Inc., including our periodic reports on Form 10-K and Form 10-Q and our current reports on Form 8-K.  If any of these risks actually occur, our business, financial condition, results of operations and future growth prospects could be materially adversely affected. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial also may impair our business. Any adverse effect on our business, financial condition or results of operations could result in a decline in the trading price of our common stock and the loss of all or part of your investment.

 

2

 

PART I.  FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

Specialty Laboratories, Inc.

Condensed Consolidated Balance Sheets

(Dollar amounts in thousands)

 

		December 31, 2003			March 31, 2004
					(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	27,563		$	40,572
Short-term investments		9,104			9,067
Accounts receivable, less allowance for doubtful accounts of $2,720 as of December 31, 2003 and $2,566 as of March 31, 2004		22,239			23,846
Receivable from sale of property		—			16,241
Refundable income taxes		126			128
Deferred income taxes		1,155			1,155
Inventory		2,729			3,009
Prepaid expenses and other assets		2,680			2,102
Total current assets		65,596			96,120
Property and equipment, net		61,535			21,183
Long-term investments		—			3,000
Deferred income taxes		5,029			5,029
Goodwill, net		5,655			5,655
Other assets		4,738			6,112
		$	142,553		$	137,099
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable		$	8,834		$	7,334
Accrued liabilities		6,261			4,559
Total current liabilities		15,095			11,893
Long-term debt		5,019			5,082
Other long-term liabilities		1,939			1,812
Commitments and contingencies
Shareholders’ equity:
Preferred stock, no par value:
Authorized shares—10,000,000
Issued and outstanding shares—none		—			—
Common stock, no par value:
Authorized shares—100,000,000 shares
Issued and outstanding shares—22,570,256 as of December 31, 2003 and 22,732,502 as of March 31, 2004		103,005			103,385
Retained earnings		17,436			14,901
Deferred stock-based compensation		(13		)	(5		)
Accumulated other comprehensive income		72			31
Total shareholders’ equity		120,500			118,312
		$	142,553		$	137,099

 

See accompanying notes.

 

1

 

Specialty Laboratories, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollar amounts in thousands except per share data)

 

		Three Months Ended March 31,
		2003			2004
Net revenue		$	30,300		$	31,304
Costs and expenses:
Costs of services		21,785			22,582
Selling, general and administrative (exclusive of stock-based compensation charges)		10,914			11,178
Stock-based compensation charges		24			142
Total costs and expenses		32,723			33,902
Operating loss		(2,423		)	(2,598		)
Interest income		(211		)	(63		)
Interest expense		34			—
Loss before income tax benefit		(2,246		)	(2,535		)
Income tax benefit		(764		)	—
Net loss		$	(1,482	)	$	(2,535	)