UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2004

 

OR

 

o	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 001-16217

 

 

SPECIALTY LABORATORIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

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

 

Not Applicable (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 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 November 1, 2004, there were approximately 22,936,028 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

 

 

2

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q, (the “Quarterly Report”) including the information incorporated herein by reference 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 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.  We undertake no obligation to revise or publicly update any forward-looking statement for any reason.  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 elsewhere 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 filings on Form 10-K, Form 10-Q and 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.

 

 

3

 

PART I.  FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS

Specialty Laboratories, Inc.

Consolidated Balance Sheets

(Dollar amounts in thousands)

 

		December 31, 2003			September 30, 2004
					(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	27,563		$	23,709
Short-term investments		9,104			4,008
Accounts receivable, less allowance for doubtful accounts of $2,720 as of December 31, 2003 and $2,927 as of September 30, 2004		22,239			25,735
Receivable from sale of property		—			3,500
Refundable income taxes		126			630
Deferred income taxes		1,155			1,155
Inventory		2,729			2,895
Prepaid expenses and other assets		2,680			2,596
Total current assets		65,596			64,228
Property and equipment, net		61,535			32,800
Long-term investments		—			15,902
Deferred income taxes		5,029			5,029
Goodwill, net		5,655			5,655
Other assets		4,738			5,859
		$	142,553		$	129,473
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable		$	8,834		$	6,915
Accrued liabilities		6,261			4,534
Total current liabilities		15,095			11,449
Long-term debt		5,019			—
Other long-term liabilities		1,939			1,510
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 Issued and outstanding shares—22,570,256 as of December 31, 2003 and 22,882,025 as of September 30, 2004		103,005			104,303
Retained earnings		17,436			12,345
Deferred stock-based compensation		(13		)	—
Accumulated other comprehensive income (loss)		72			(134		)
Total shareholders’ equity		120,500			116,514
		$	142,553		$	129,473

See accompanying notes.

 

 

4

 

Specialty Laboratories, Inc.

Consolidated Statements of Operations

(Unaudited)

(Dollar amounts in thousands except per share data)

 

 

		Three Months Ended September 30,						Nine Months Ended September 30,
		2003			2004			2003			2004
Net revenue		$	29,858		$	34,632		$	89,194		$	99,153
Costs and expenses:
Costs of services		21,342			23,919			64,497			68,775
Selling, general and administrative (exclusive ofstock-based compensation charges)		11,888			13,505			33,440			36,151
Stock-based compensation charges		17			1			52			147
Total costs and expenses		33,247			37,425			97,989			105,073