[ARTICLE]          ARS

outside front cover:
Nuclear Medicine Image of a Human Heart

SYNCOR INTERNATIONAL CORPORATION 1997 ANNUAL REPORT

A RAPIDLY EXPANDING RADIOPHARMACY
AND MEDICAL IMAGING SERVICES COMPANY

inside front cover:

CORPORATE PROFILE
      Syncor International Corporation is the leading provider of
radiopharmaceuticals and comprehensive value-added specialized pharmacy
services. In addition, Syncor has recently diversified to become one of the
nation's leading providers of outpatient medical imaging services.
      Through its core specialized pharmacy services business, Syncor
compounds and dispenses radiopharmaceuticals - in patient-specific unit-dose
and multi-dose form - for diagnostic and therapeutic use by nuclear medicine
departments in hospitals and put-patient clinics. Syncor distributes these
time-critical products through an integrated network of strategically located
nuclear pharmacies: 119 domestic and 13 international. This network also 
provides information management services and currently serves more than 7,000
customers. Syncor pioneered the outsourcing of radiopharmacy services in 1974
and has the potential to serve more than 80 percent of the domestic nuclear 
medicine market.
      In 1997 Syncor entered the $60 billion medical imaging services market
through a joint venture to establish 10 "open" MRI (magnetic resonance
imaging) centers in selected U.S. cities. In addition, as a result of
transactions completed in early 1998, Syncor will own or manage an additional
39 medical imaging centers in 11 states and Puerto Rico.
      Last year Syncor also became a specialized radiopharmaceutical
manufacturer through the acquisition of a business that produces Iodine-123
capsules used in the diagnosis of thyroid disorders.

[Photos of 10 scanned images of a human heart]

[A bar graph containing Syncor's projected sales growth:]

375 | Syncor in 1997
350 | A $381 million single-business enterprise
325 |
300 |
275 |
250 |
225 |
200 |
175 |
150 |
125 |
100 |
 75 |
 50 |
 25 |

SYNCOR'S COMMITMENT TO STOCKHOLDERS
      Management is committed to enhancing Syncor's stockholder value by
doubling earnings per share over the next four years. Our objective is to
profitably grow Syncor from a $381 million single-business enterprise to a
$600 million multi-business corporation.
<PAGE>
Syncor in 2001
A $600 million multi-business corporation with two-thirds of sales generated
by radiopharmacy services and one-third by new businesses such as medical
imaging services.

Projected Business Composition

[Photos of a human heart and a human brain]
Radiopharmaceutical
(two-thirds)
[A photo of an MRI scanned image]
Medical Imaging and Manufacturing
(one-third)
<PAGE>
SYNCOR'S MISSION
      Syncor will be the undisputed worldwide leader in providing
comprehensive imaging, specialized pharmacy and management services to the
healthcare community.

[4 photos of scanned images of human brain]

TABLE OF CONTENTS
-----------------------
Financial Highlights  3
Letter to Stockholders  4
Core Business Strategy  6
New Business Strategy  8
International Business Strategy  10
Financial Information  12
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>

                                                       Year Ended   Year Ended    Year Ended
                                                      December 31  December 31   December 31
(In thousands, except per share data)                        1997         1996          1995
_____________________________________________________________________________________________
<C>                                                      <S>          <S>           <S>       
Net sales                                                $380,563     $366,447      $331,435

Net income - continuing operations                         10,032        6,900         4,984

Net income per basic share - continuing operations           1.00         0.66          0.48

Net income per diluted share - continuing operations         0.98         0.65          0.48

Cash, cash equivalents and marketable securities        $  29,301    $  27,711     $  26,559

Cash generated by operations                            $  22,529    $  16,070     $  16,607

</TABLE>

There are (3) tables drawn as follows:
______________________________________
Net Sales
In Millions of Dollars
_________________________
Syncor has started from 320 in 1994 and gone up to 381 by 1997

Net Income - Continuing Operations
In thousands of Dollars
___________________________________
Syncor has started from 1,800 in 1994 and gone up to over 10,032 by 1997

Earnings Per Diluted Share Continuing Operations
In Dollars
_________________________________________________
Syncor has started from $.16 in 1994 and gone up to $.98 by 1997
<PAGE>
MANAGEMENT'S COMMITMENT TO PERFORMANCE

TO OUR STOCKHOLDERS
      Since 1996, Syncor has been pursuing two growth objectives. The first
objective calls for the continued strengthening of our position as the
industry's leading provider of radiopharmacy services. The second objective
involves expanding syncor's role in healthcare services, including specialized
pharmacy services and medical imaging.
      We are delighted to report substantial progress on both objectives
during 1997. Due to many profit improvement programs instituted in both 1996
and 1997, we improved our operating results. Our efforts were rewarded as
profitability from the radiopharmacy operations continued to improve
substantially. Earnings from continuing operations (composed primarily of
radiopharmacy operations), increased 45 percent to $10 million. Net income
increased by 139 percent to $11.1 million, or $1.08 per diluted share,
compared to $4.6 million, or $.44 per diluted share, in 1996. Syncor's gross
margin as a percent of sales rose to 23.7 percent in 1997 from 21.9 percent in
1996. As for new business, Syncor entered the medical imaging services market
and has already become, through a series of recent acquisitions, one of the
leaders in this field.
      We are expanding into medical imaging because this is a rapidly changing
area in which we can leverage Syncor's existing strengths, competencies, and
experience to considerable advantage. By investing in new businesses such as
medical imaging, as well as strengthening and expanding the core radiopharmacy
services business, we intend to build Syncor into a $600 million company and
double earnings per share within the next four years.

Our Alignment with Stockholder Interests
      Employees are also committed to Syncor's growth and stockholder value-
building objectives. Through an ESSOP plan introduced in 1989, approximately
75 percent of our 2,300-employee work force owns shares of Syncor stock.
Additionally, a significant portion of the compensation for the
management team and key employees is linked to Syncor's financial performance.

Preserving Our Values
      As a company in the process of transition from a single-business
enterprise to a corporation with multiple business interests, Syncor is
clearly undergoing change. At the same time, there are two fundamental values
we are committed to preserving.
      The first of these values is our dedication to customer service. We are
a health-care service organization that has achieved a leadership position
through our demonstrated ability to partner with customers in meeting the
needs of physicians and the patients they serve.

      CORPORATE STRENGTHS: 

*     Syncor is the nation's
      leading distributor of
      radiopharmaceuticals.

*     Syncor is a customer-focused
      enterprise with a tradition of
      operational excellence and
      innovation.

*     Syncor is a financially strong
      company with ample resources
      for aggressive expansion and
      diversification.

*     Syncor is well-positioned for
      growth
<PAGE>
      The other fundamental value is our commitment to innovation. Syncor
revolutionized nuclear medicine when it introduced the concept for nuclear
medicine departments to outsource
the compounding and distribution of radiopharmaceuticals in the early 1970s.
Since that time, Syncor has maintained its leadership position not only by
enlarging its distribution network and the range of products and services
offered but also by continuing to innovate. Since 1995, Syncor has been
setting new industry standards for radiopharmaceutical management information
and materials handling systems. We also recognize the importance of
anticipating and adapting to the changing needs of our customers. As the pace
of consolidation in the healthcare environment accelerates, Syncor will be
seeking ways to deliver greater value to our customers through more creative
partnering arrangements.
      We are committed to the achievement of our financial goals and to
maintaining the strength of Syncor's balance sheet, while at the same time
preserving Syncor's values and the excellent relationships the Company has
established with customers, suppliers, employees and stockholders.
      We thank you for your continued support. We look forward to updating you
on our progress toward our strategic growth objectives and the stockholder
value-building goals we aim to attain by 2001.

[There are 2 individual photos of Monty Fu and Robert Funari next to their
signatures in this page.]


/s/ Monty Fu
_________________________
Monty Fu
Chairman of the Board


/s/ Robert G. Funari
__________________________
Robert G. Funari
President and Chief Executive Officer
<PAGE>
CORE BUSINESS STRATEGY:

ACHIEVING UNDISPUTED LEADERSHIP
      Achieving undisputed leadership in radiopharmacy services is the first
of Syncor's two strategies for growth. Our approach to meeting this objective
is to build on our existing relationships with major customers, enlarge our
role in nuclear medicine, differentiate ourselves through new products and
innovative services, upgrade our information technology capabilities, and
expand our operations geographically.
      Syncor is well positioned to meet the needs of large national health
systems and provider groups. Contracts with national healthcare groups
represent approximately 51 percent of Syncor's net sales.
      As healthcare organizations redesign the way they provide care and
place increasing emphasis on outsourcing, Syncor intends to enlarge its role
in nuclear medicine by offering a wider range of products and services. Though
nuclear medicine today is primarily a diagnostic imaging modality, Syncor
believes that the potential for additional therapeutic applications is large
and we are aggressively seeking opportunities to distribute new therapeutic
radiopharmaceutical products. For example, as a result of a 1997 distribution
agreement, Syncor is now distributing Quadramet(R), a radiopharmaceutical used
to relieve
bone pain in cancer patients and one of three new oncology products that
Syncor began offering in 1997. Syncor is the nation's premier provider of
oncology nuclear medicine products and has been the industry's leading
provider of radiopharmaceuticals used in cardiology since 1974.
      Syncor also differentiates itself through innovative services. In 1995,
the Company introduced the SECURE(TM) Safety Insert System, a unique product
delivery system that eliminates the biohazards associated with the handling of
radiopharmaceutical injection devices. In June 1997, Syncor introduced a
family of proprietary radiopharmaceutical delivery systems, that sets new
standards for the safe transport and handling of radioactive substances.
These "Pigs" (Piglet(TM), Piglet2(TM) and PETPig(TM)) are tungsten
containers that weigh considerably less than current lead containers while
providing enhanced radiation shielding for our pharmacy personnel and
customers.
      Syncor is also an innovator in the area of nuclear medicine department
management information systems. More than 1,300 U.S. hospitals and clinics
utilize the Company's proprietary, Unit Dose Manager(TM) or
Windows-based SYNtrac(TM) systems for monitoring and managing departmental
functions. During 1997, Syncor also invested substantially in software to
streamline internal administrative tasks and enable the Company to meet both
current and future customer needs for fast and reliable service.
      The focus of Syncor's geographic expansion in the radiopharmacy services
market is international. Please see page 10 for an overview of the Company's
activities overseas.


      STRENGTHS FOR CORE 
      BUSINESS GROWTH:

*     Excellent relationships with the
      NATION'S LEADING MANAGED-CARE AND
      GROUP PURCHASING ORGANIZATIONS

*     EXCELLENT SUPPLIER RELATIONSHIPS,
      GIVING SYNCOR ONE OF THE INDUS-
      TRY'S BROADEST ARRAYS OF RADIO-
      PHARMACEUTICAL PRODUCTS

*     SINGULAR STATUS AS THE ORIGINATOR
      AND MOST SUCCESSFUL OPERATOR OF 
      STAND-ALONE RADIOPHARMACIES.

*     TRACK RECORD AS AN INNOVATOR AND
      STANDARD-SETTER IN THE INDUSTRY'S
      MOST HEAVILY REGULATED ENVIRONMENT.
<PAGE>

PHOTO TO COME


[There is a photo of two of Syncor's products - Piglet and Piglet2 - on this
page.]

Piglet(TM) series tungsten containers for delivery of iodine
radiopharmaceuticals.
<PAGE>
On this page, there is a photo of one of Syncor's pharmacies showing employees
preparing doses to be delivered.

U.S. Radiopharmacy Locations.
[This is shown by a map marked with dots.]

Syncor's nuclear pharmacist fills prescriptions for time-critical radiopharma-
ceuticals around the clock.
<PAGE>
NEW BUSINESS STRATEGY:

EXPANDING OUR ROLE IN HEALTHCARE SERVICES
      Expansion of Syncor's role in healthcare services is the second
component of the Company's two-part strategy for growth. Syncor's objective is
to have new businesses - that is, businesses outside the realm of
radiopharmacy services - generating at least one-third of corporate revenue by
the year 2001.
      Syncor's initial step toward this objective was taken early in 1997 with
the formation of Syncor Diagnostics, LLC, a joint venture with National
Diagnostic Services, Inc. (NDS), to establish a network of 10 magnetic
resonance imaging (MRI) centers across the U.S. The first of these outpatient
centers, which feature a new, less-confining and less costly "open" MRI
technology, began operating in September in Laguna Hills, California. Syncor
expects to have all 10 centers open by the end of the third quarter of 1998.
      Based on the experience Syncor gained in the Syncor Diagnostics, LLC
venture, we determined that the medical imaging field holds tremendous
opportunities for new business growth through leveraging and building on the
Company's existing strengths and unique competencies. In 1997, more than $60
billion was spent in the U.S. on medical imaging services. As the demand for
medical imaging continues to grow, health plans, managed care companies,
health maintenance organizations and hospitals are seeking external providers
who can offer a comprehensive set of medical imaging modalities much as
Syncor's radiopharmacies offer a full complement of nuclear medicine products
and services.
      In January 1998, we accelerated Syncor's expansion into the medical
imaging field with three acquisitions. Upon closing of these transactions,
Syncor will own or manage an additional 39 medical imaging centers in 11
states and Puerto Rico and will be one of the nation's leading providers of
medical imaging services.
      The expansion of Syncor's role in medical imaging will also build on the
Company's existing strengths and relationships. These strengths include
Syncor's track record in operating a nationwide network of radiopharmacies,
its reputation for quality customer service, and its considerable financial,
managerial, and information technology resources. Syncor's relationships
include contracts with the nation's leading managed-care and group purchasing
organizations as well as its day-to-day interactions with radiology
departments from coast to coast.

      UNIQUE COMPETENCIES:

*     Unequalled time-critical product
      distribution skills.

*     Unmatched experience in providing
      consistent, reliable ancillary
      services to medical institutions
      on a national basis.

*     Unsurpassed ability to improve
      quality and consistency of ser-
      vice while reducing costs by
      eliminating duplication and
      waste.

*     Unparalleled record of meeting
      and surpassing regulatory
      requirements for the handling
      of biohazardous materials.
<PAGE>
[On this page, there's a photo of one of Syncor's products.]

The PETPig(TM) unit-dose syringe shield for positron emission tomography (PET)
radiopharmaceutical.
<PAGE>
[On this page, there's a photo of one of Syncor's Medical Imaging Locations,
showing a patient being scanned.]

U.S. Medical Imaging Locations.
[There's a map marked with dots for locations.]

Syncor's medical imaging centers feature "open" magnetic resonance imaging
technology.  Open MRI systems are non-confining, assuring patient comfort
during diagnostic imaging procedures.<PAGE>
INTERNATIONAL BUSINESS STRATEGY:

LAYING THE FOUNDATION FOR FUTURE GROWTH
      The preceding pages focused on the steps Syncor is taking in order to
become a $600 million company by 2001. This section highlights what Syncor is
doing to ensure that this initial wave of rapid growth will be followed by
another wave of equal - if not greater - scope and significance.
      Because more than half of the world's nuclear medicine market lies
outside the U.S., and is, for the most part, currently underserved, Syncor's
greatest growth after 2001 is expected to come from international operations.
The percentage of Syncor's business that will be international in the first
decade of the 21st century will depend largely on the Company's success in
converting overseas customers from buying radiopharmaceuticals in multi-dose
form to adopting our more accurate, convenient, cost-effective - and higher
margin - unit-dose approach.
      Syncor is currently building foundations for the establishment of
businesses in relatively underdeveloped international healthcare services
markets. Led by Syncor founder and chairman Monty Fu, this effort is analogous
to what the Company did in the U.S. in the 1970s when it introduced the
advantages of purchasing prepared radiopharmaceuticals from a centralized
external supplier to domestic hospitals, clinics and national healthcare
systems.
      At December 31, 1997, Syncor's international radiopharmacy network was
comprised of 13 pharmacy service centers, four of which were established
during the year. Syncor's pharmacy service centers are located in Puerto Rico,
South Africa, Mexico and six Pacific Rim countries, with the highest
concentration in Asia. We believe that the radiopharmacy model Syncor
introduced in these countries has applicability to other parts of the world.
Through strategic partnering arrangements, we plan to expand into Europe and
further into Asia and Latin America during 1998. By the end of the year,
Syncor intends to have a total of 20 international pharmacy service centers on
six continents.
      The pace of the Company's overseas development is dictated by the
relative maturity of the targeted markets and the strength of our business
connections in those regions. In Taiwan, which has one of Asia's most advanced
health-care communities, Syncor is now profitably operating three
radiopharmacies and has begun to expand into other types of medical services.
For example, we are currently managing an in-house nuclear medicine department
on behalf of a major hospital. Starting in 1999, Syncor will also be operating
a cyclotron facility owned by another large Taiwanese hospital. This facility
will be used to produce isotopes employed in positron emission tomography
(PET), a highly accurate diagnostic imaging technology. 
      In addition to this expansion of Syncor's management service
capabilities, we are also exploring avenues for promoting the Company's new
medical imaging services business outside of the U.S. Among the more promising
of these activities is selling non-nuclear medical imaging devices as well as
cyclotrons and nuclear medicine cameras in selected overseas markets. The new
roles that Syncor is playing abroad are not only laying a foundation for
future international business but also providing valuable insight into ways in
which we might best broaden the range of services the Company offers to
customers at home.

[There's a photo of one of Syncor's products.]

Tungsten Dispensing System for positron emission tomography (PET)
pharmaceuticals.
<PAGE>
[On this page, there's a photo of a driver delivering radiopharmaceutical
product in China.]

International Pharmacy Service Centers.

[There's a world map marked with dots for Syncor's International Locations
around the world.]

With rapid, reliable radiopharmacy services, Syncor intends to revolutionize
nuclear medicine overseas.  The People's Republic of China is among the nine
foreign countries served by Syncor in 1997.

<PAGE>
<TABLE>
<CAPTION>

SELECTED FINANCIAL DATA


                                                                Twelve months ended December 31
(In thousands except per share data)                 1997       1996       1995       1994       1993
                                          _______________________________________________________
<S>                                              <C>        <C>        <C>        <C>        <C>
Net Sales                                        $380,563   $366,447   $331,435   $319,193   $241,289

Gross profit                                       90,165     80,193     73,626     66,186     78,926

Income (loss):    
      Continuing operations                       10,032      6,900      4,984      1,390      6,633

      Discontinued operations, net of taxes        1,063     (2,264)      (315)      (177)       120

      Cumulative effect of accounting change           -          -          -          -      1,020

      Net income                                  11,095      4,636      4,669      1,213      7,773
                                          =======================================================
Earnings (loss) per basic share:
      Continuing operations                         1.00        .66        .48        .13        .65

      Discontinued operations, net of taxes          .11       (.22)      (.03)      (.02)       .01

      Cumulative effect of Accounting change           -          -          -          -        .10

      Net income                                  $ 1.11      $ .44      $ .45      $ .11      $ .76
                                          =======================================================

Earnings (loss) per diluted share:
      Continuing operations                          .98       0.65       0.48       0.13       0.62

      Discontinued operations, net of taxes         0.10      (0.21)     (0.03)     (0.02)      0.01

      Cumulative effect of accounting change           -          -          -          -       0.10

      Net income                                    1.08       0.44       0.45       0.11       0.73
                                          =======================================================

Cash, cash equivalents and marketable securities   29,301     27,711     26,559     19,201     18,700

Working capital                                    34,685     35,515     34,286     26,616     27,121

Total assets                                      164,563    145,563    133,680    128,684    114,586

Long-term debt                                     17,332      7,595      5,200      5,154      6,837

Stockholders' equity                               87,367     78,532     78,262     73,850     71,181

Weighted average shares outstanding:
      Basic                                        9,998     10,424     10,341     10,507     10,169
      Diluted                                     10,282     10,629     10,481     10,507     10,697

Current ratio                                        1.60       1.62       1.69       1.54       1.74
                                          =======================================================

Number of domestic radiopharmacies                    119        121        118        117        109

Days sales outstanding                                 51         50         55         55         52
                                          =======================================================
/TABLE
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations

RESULTS OF OPERATIONS
CALENDAR YEARS 1997 AND 1996

NET SALES
      Consolidated net sales in 1997 totaled $380.6 million, an increase of
3.9 percent or $14.2 million over the 1996 results. Syncor International
Corporation's 1997 net sales were affected by a number of conflicting factors.
The primary driving force behind the sales growth is the expansion of the
cardiology-imaging market. This market is currently estimated to be expanding
at an annual rate
of approximately 14 percent. The principal cardiology-imaging agent continues
to be DuPont Merck's cardiology product, Cardiolite(R), for which Syncor has
exclusive distribution rights. A competing radiopharmaceutical
manufacturer/distributor is currently marketing a rival product to
Cardiolite(R). This new product was introduced in 1996 and continues to gain
some market share, currently estimated at 12 percent of the total perfusion
market. During the current year, another generic cardiology product (also
distributed by the Company and available through a variety of sources)
experienced sharp declines as customers switched to a newer generic agent.
Pricing for all cardiology agents, with the exception of the one generic
product that experienced a significant decline, has been steady. When all of
the above factors are combined, the Company recorded an annual gain in overall
cardiology sales of approximately 8.2 percent. Cardiology sales currently
constitute approximately 65 percent of the Company's annual net sales. Syncor
expects the trends discussed above to continue. Sales on non-cardiology
products continue to be relatively flat.
      In 1997, Syncor announced the loss, through the process of competitive
bidding, of a contract to supply products to a large hospital buying group.
The annual revenues associated with this buying group were estimated to be in
the range of $60 million to $65 million. The Company initiated certain steps
to minimize the impact of this contract loss. During 1997, Syncor was
successful in minimizing the potential sales loss associated with the contract
to less than $8 million, with estimated lost pre-tax profits of $1.6
million. Potential lost sales in 1998 from this contract are estimated to be
$15 million, with a range of lost pre-tax profits of $2.5 million to $3.5
million. The Company continues to implement steps to minimize the long-term
impact on revenues and profits from the lost contract. 
      The outlook for 1998 remains positive, as Syncor expects to post net
revenue gains from its radiopharmaceutical business.

GROSS PROFIT
      Syncor's gross profit increased in 1997 to $90.2 million, an increase of
12.4 percent when compared to 1996. As a percentage of net sales, gross profit
increased to 23.7 percent, compared to 21.9 percent in 1996. The increase in
gross profit was mainly the result of a reduction in certain material
acquisition costs. In 1997, the Company announced the re-negotiation of a
contract for materials acquisition from one of its principal suppliers. The
contract contained certain volume commitments plus an increased period of time
in which the Company would continue to utilize the supplier as a primary source
basis. In exchange for these commitments, the Company received favorable
pricing on some of the products distributed by the supplier. Many of
these provisions expired in December 1997; however, marketplace economics have
dictated that these pricing levels remain in effect in 1998. 
      Partially offsetting the reduction in materials acquisition costs were
higher-than-expected labor costs in the core business. Increased labor costs
were being driven by shortages in key positions and market economics that were
not fully offset by sales price increases. In addition, Syncor instituted a
pilot program which provided for incentive bonuses if certain key business
goals were reached. The Company believes that the program was successful and
will be expanding it beyond the original pilot group in 1998. Labor costs<PAGE>
in 1998 have been targeted for increased focus in order to ensure optimal
utilization of resources. The goal will be to contain labor costs at the 1997
level in the core business.

OPERATING, SELLING AND ADMINISTRATIVE COSTS
      Operating, selling and administrative expenses increased $6.1 million in
1997 as compared to 1996, and as a percentage of 1997 net sales to 17.7
percent compared to 16.7 percent in 1996. Operating expenses increased due to
a number of reasons, including the acquisition of a manufacturing facility,
the start-up and operation of the medical imaging business, the expansion of
the international radiopharmacy business, and severance costs associated with
the reorganization of certain aspects of the core business. Other expense
increases were due to the conversion of the Company's financial systems,
expansion of the information technology infrastructure, continued investment
in re-engineering certain critical business practices, and spending on
programs that focus on the long-term competitiveness of the Company.
      Syncor expects the increased level of expenditures in these areas to
continue as the diagnostic imaging business is expanded, new systems are
implemented as a result of our re-engineering efforts, field systems are
upgraded, and expansion continues in the international marketplace.

DEPRECIATION AND AMORTIZATION
      Depreciation and amortization in 1997 decreased to $9.9 million from
$10.4 million in 1996. The decrease is due to capitalized start-up costs,
and consulting and non-compete agreements originating prior to 1997, and
becoming fully amortized during the year.

PROVISION FOR INCOME TAXES
      The provision for income taxes as a percentage of income from continuing
operations before taxes increased to 41 percent in 1997 from 39 percent in
1996. The increase in the effective tax rate is due to an increase in non-tax
deductible expenses as a percentage of pre-tax income.

DISCONTINUED OPERATIONS
      On May 6, 1997, the Company completed the sale of its interest in
P.E.T.Net(TM) Pharmaceutical Services(TM), LLC ("P.E.T.Net") to PETNet
Partners, LLC, an affiliate of the Company's former joint venture partner CTI,
Inc. Consideration received included a secured note of $2.25 million and
royalties of up to $1.5 million based on P.E.T.Net's future sales.
Additionally, Syncor is the preferred distributor of positron emission
tomography isotopes for all existing and future P.E.T.Net sites and has
exclusive distribution rights for cyclotrons, manufactured by CTI, Inc., in
Taiwan for two years. All costs associated with the Company's operation and
disposal of its interest in P.E.T.Net from December 31, 1996 to the March 18,
1997 the date the sale agreement was entered into, were included in the
results of operations for 1996. The Company recorded a gain on sale of the
discontinued operations of approximately $1.1 million, net of taxes of $0.7
million, during 1997.

RESULTS OF OPERATIONS
CALENDAR YEARS 1996 AND 1995

NET SALES
      Consolidated net sales in 1996 totaled $366.4 million, an increase of
10.6 percent or $35.0 million, over 1995. Continued growth in the cardiology
market was the primary reason for the Company's overall growth in sales. This
growth came from several sources, including same store growth, the opening of
new facilities, sub-licensing of cardiology products to other distributors,
and the Company's success in achieving price increases on technetium-based
cardiology products. In addition, the Company enjoyed price stability through
1996. At the same time, the Company began to experience some erosion of its
market share in the cardiology market through the introduction of a competing
cardiology product that was manufactured and distributed by a competing
<PAGE>
radiopharmaceutical distributor. While the Company expected this erosion to
continue, it also expected the overall growth in the cardiology market to more
than offset the erosion of its share. Sales from cardiology products accounted
for approximately 62 percent and 64 percent of the Company's sales for 1996
and 1995, respectively.

GROSS PROFIT
      The Company's gross profit in 1996 increased to $80.2 million, an
increase of 8.9 percent when compared to 1995. As a percentage of net sales
however gross profit declined slightly to 21.9 percent in 1996 compared to
22.2 percent in 1995. This decline was primarily attributable to a number of
factors including flatter sales in the second half of the year which reduced
material utilization, some increases in material acquisition costs from our
suppliers and to a smaller extent below average performance of an acquired
pharmacy chain. In addition, the Company also experienced an increase in core
business labor costs. The total of these cost increases were unable to be
absorbed through price increases to our customers. The Company took steps to
reduce material acquisition costs, and reviewed its operating procedures to
ensure optimal business practices in all its pharmacy operations.

OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
      Operating, selling and administrative expenses increased $5.8 million in
1996 compared to 1995 and as a percent of net sales remained constant at 16.7
percent for both 1996 and 1995. The dollar increase resulted from a number of
sources including costs associated with the resignation of the Company's
former Vice Chairman and Chief Executive Officer in July 1996, relocation
costs for the corporate headquarters, new radiopharmacy start-up costs and
expenses associated with the Company's core business improvement program.
      The Company made significant investments in new business opportunities
which are aimed at increasing its long-term competitiveness. These
opportunities included continued domestic and international expansion, the re-
engineering of critical business practices and associated information systems,
backwards integration into the manufacturing of certain radiopharmaceuticals,
and investment in new imaging businesses. The increased operating, selling and
administrative expenses reflect the investments required for these
opportunities. The Company expects to continue the increased level of
expenditures in the operating, selling and administrative expense categories
for the next two years in the areas of re-engineering opportunities, backward
integration into manufacturing, and expansion.

DEPRECIATION AND AMORTIZATION
      Depreciation and amortization in 1996 decreased to $10.4 million from
$10.7 million in 1995. The decrease was due to capitalized start-up costs,
and consulting and non-compete agreements originating prior to 1996,
becoming fully amortized during the year.

PROVISION FOR INCOME TAXES
      The provision for income taxes as a percentage of income from continuing
operations before taxes decreased to 39 percent in 1996 from 40 percent in
1995. The decrease in the effective tax rate was due to a reduction in non-tax
deductible expenses as a percentage of pre-tax income.

DISCONTINUED OPERATIONS
      The Company entered into an agreement on March 18, 1997 with PETNet
Partners, LLC, an affiliate of the Company's former joint venture partner CTI,
Inc. which provided for the sale of the Company's interest in P.E.T.Net(TM)
Pharmaceutical Services(TM), LLC ("P.E.T.Net"). PETNet Partners, LLC purchased
the Company's interest and assumed all liabilities of the venture for a
secured note of $2.25 million and royalties of up to $1.5 million based on
P.E.T.Net's future sales. Additionally, as a part of this agreement Syncor
became the preferred distributor of positron emission tomography isotopes for
all existing and future P.E.T.Net sites and has exclusive distribution rights
for cyclotrons, manufactured by CTI, Inc., in Taiwan
<PAGE>
for two years. All costs associated with the Company's operation and disposal
of its interest in P.E.T.Net from December 31, 1996 to March 18, 1997 have been
included in the results of operations for 1996.

LIQUIDITY AND CAPITAL RESOURCES
      In 1997, total cash and investments, which includes cash and cash
equivalents and short and long-term investments, increased to $29.3 million
from $27.7 million at December 31, 1996. The Company's total debt position of
$21.3 million was $11.4 million higher than the total debt position at
December 31, 1996. The increase in debt is the result of a term loan in the
amount of $6.5 million to finance the acquisition of Golden Pharmaceuticals,
$3.4 million for MRI imaging equipment associated with its Syncor Diagnostics,
LLC joint venture and a $3.6 million ESSOP loan. Working capital decreased by
$0.8 million to $34.7 million at December 31, 1997, compared to $35.5 million
at December 31, 1996. Days sales outstanding on accounts receivable increased
to 51 days at December 31, 1997, compared to 50 days at December 31, 1996.
      The Company's core business is not capital intensive and as new products
become available, the capital requirements to accommodate these products will
be minimal. However, the Company is making a significant investment in its
nuclear pharmacy business both within the United States and internationally.
Additionally, in early 1998, the Company acquired new businesses in the field
of medical diagnostic imaging (See Note 14 in the Notes to Consolidated
Financial Statements).  The field of medical imaging is more capital intensive
than the Company's core radiopharmacy business and an increase in capital
expenditures is anticipated as a result of this new business opportunity.
      The Company believes sufficient internal and external capital sources
exist to fund operations and expansion. At December 31, 1997, the Company had
unused lines of credit of approximately $18.1 million to fund short-term
needs. On January 5, 1998, a new credit line facility became effective in the
amount of $75 million. This new credit line will be used to fund working
capital and acquisitions.

YEAR 2000
      The Company has developed a plan to address issues related to the impact
on its computer systems of the year 2000. Financial and operational systems
have been assessed and plans have been developed to address systems
modification requirements which are expected to be completed in 1999.
The financial impact of making the required systems
changes is not expected to be material to the Company's consolidated financial
position, results of operation or cash flows.

NEW ACCOUNTING STANDARDS
      In June 1997, SFAS No. 130, "Reporting Comprehensive Income" and SFAS
No. 131 - "Disclosures about Segments of an Enterprise and Related
Information" were issued and are effective for periods beginning after
December 15, 1997. SFAS No. 130 establishes standards for reporting
comprehensive income and its components. SFAS No. 131 establishes standards
for reporting financial and descriptive information regarding an enterprise's
operating segments. These standards increase disclosure in the financial
statements, and will have no impact on the Company's financial position or
results of operations.

SAFE HARBOR STATEMENT
Statements which are not historical facts, including statements about our
confidence, strategies and expectations, opportunities, industry and market
growth, demand and acceptance of new and existing products, and return on
investments are forward looking statements that involve risks and
uncertainties, including without limitation, the effect of general economic
and market conditions, supply and demand for our products, competitor pricing,
maintenance of our current market position and other factors. Given these
uncertainties, undue reliance should not be placed on such forward looking
statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS

                                                     December 31     December 31
(In thousands except per share data)                        1997            1996
_________________________________________________________________________________
ASSETS
<S>                                                   <C>             <C>
Current Assets:
      Cash and cash equivalents                       $  25,538       $  25,214
      Short-term investments                              2,583           1,258
      Accounts receivable, less allowances for
            doubtful accounts of $1,040 and $911,
            respectively                                 54,972          51,964
      Inventory                                           5,574           7,827
      Net assets of discontinued operations                   -           1,198
      Prepaids and other current assets                   3,913           5,519
                                                     ___________________________
            Total current assets                         92,580          92,980

Marketable investment securities                           1,180           1,239
Property and equipment, net                               28,870          21,532
Excess of purchase price over net assets acquired,
      net of accumulated amortization of
      $5,354 and $4,783, respectively                    14,319          14,207
Other                                                     27,614          15,605
                                                     ___________________________
                                                        $164,563        $145,563
                                                     ===========================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
      Accounts payable                                $  34,755       $  38,851
      Accrued liabilities                                 4,353           3,249
      Accrued wages and related costs                    13,680          10,757
      Federal and state taxes payable                     1,129           2,284
      Current maturities of long-term debt                3,978           2,324
                                                     ___________________________
            Total current liabilities                    57,895          57,465
                                                     ___________________________

Long-term debt, net of current maturities                 17,332          7,595
Deferred compensation                                      1,969          1,971

Stockholders' Equity:
      Common stock $.05 par value; authorized
      20,000 shares; issued 11,435 and 11,341 shares
      at December 31, 1997 and 1996, respectively           572             567
      Additional paid-in capital                         55,061          53,072
      Unrealized loss on investments                        (17)            (27)
      Employee savings and stock ownership loan
            guarantee                                    (6,741)         (4,544)
      Foreign currency translation adjustment              (313)           (157)
      Retained earnings                                  51,329          40,234
      Treasury stock, at cost, 1,356 shares and
            1,126 shares at December 31, 1997 and
            1996, respectively                          (12,524)        (10,613)
                                                     ___________________________
                  Total stockholders' equity          $  87,367       $  78,532
                                                     ___________________________
                                                      $ 164,563       $ 145,563
                                                     ===========================

See accompanying Notes to Consolidated Financial Statements
/TABLE
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME


                                                       Year Ended    Year Ended 
  Year Ended
                                                      December 31   December 31 
 December 31
(In thousands except per share data)                         1997          1996 
        1995
______________________________________________________________________________
________________
<S>                                                      <C>           <C>     
     <C>
Net sales                                                $380,563      $366,447 
    $331,435
Cost of sales                                             290,398       286,254 
     257,809
                                               
______________________________________________
      Gross profit                                         90,165        80,193 
      73,626
Operating, selling and administrative expenses             67,214        61,151 
      55,370
Depreciation and amortization                               9,939        10,385 
      10,746
                                               
______________________________________________
      Operating income                                     13,012         8,657 
       7,510

Other income (expense):
      Interest income                                       1,324         1,703 
       1,227
      Interest expense                                     (1,207)         (845) 
       (743)
      Other, net                                            3,826         1,796 
         313
                                               
______________________________________________
Other income, net                                           3,943         2,654 
         797

Income from continuing operations before income taxes      16,955        11,311 
       8,307
Provision for income taxes                                  6,923         4,411 
       3,323
                                               
______________________________________________

Income from continuing operations                          10,032         6,900 
       4,984

Discontinued operations, net of taxes                       1,063        (2,264) 
       (315)
                                               
______________________________________________
Net income                                                 11,095         4,636 
       4,669
                                               
==============================================

Net income per share - basic
      Income from continuing operations                   $  1.00      $    .66 
    $    .48
      Discontinued operations, net of taxes                   .11         (.22) 
       (.03)
                                               
______________________________________________
      Net income                                          $  1.11      $    .44 
    $    .45
                                               
==============================================

      Weighted average shares outstanding                   9,998        10,424 
      10,341
                                               
==============================================

Net income per share - diluted:
      Income from continuing operations                   $   .98      $    .65 
    $    .48
      Discontinued operations, net of tax benefit             .10         (.21) 
       (.03)
                                               
______________________________________________
      Net income                                          $  1.08      $    .44 
    $    .45
                                               
==============================================

      Weighted average shares outstanding                  10,282        10,629 
      10,481
                                               
==============================================

See accompanying Notes to Consolidated Financial Statements
/TABLE
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


                                                                       Employee
                                                                      Savings &
                                                                          Stock      Foreign                
                                              Additional  Unrealized  Ownership     currency                          Total
                               COMMON STOCK      Paid-In     loss on       Loan  Translation Retained Treasury Stockholders'
In thousands                  Shares   Amount    Capital Investments  Guarantee   Adjustment  Earnings   Stock       Equity
________________________________________________________________________________________________________________________
_________
<S>                           <C>        <C>     <C>          <C>      <C>            <C>      <C>       <C>          <C>
Balance at December 31, 1994  10,320     $529    $46,508      $ (52)   $(1,934)       $  133   $30,929  $(2,263)   $73,850
Issuance of common stock          92        4        550                                                               554
Issuance of treasury stock       250                  50                                                  2,263      2,313
Tax benefit from the exercise
      of stock options                               61                                                                 61
Unrealized gain on investments                                   28                                                     28
Foreign currency translation
      adjustment                                                                       (238)                         (238)
ESSOP loan guarantee                                                    (2,313)                                     (2,313)
Reacquisition of common stock
      for treasury             (250)                                                                     (1,911)    (1,911)
Amortization of loan guarantee                                           1,249                                       1,249
Net income                                                                                       4,669               4,669
________________________________________________________________________________________________________________________
______
Balance at December 31, 1995  10,412      533     47,169        (24)    (2,998)         (105)   35,598    (1,911)   78,262
Issuance of common stock         679       34      4,268                                                             4,302
Issuance of treasury stock       250                 (72)                                                  2,854     2,782
Tax benefit from the exercise
      of stock options                            1,707                                                              1,707
Unrealized loss on investments                                   (3)                                                   (3)
Foreign currency translation
      adjustment                                                                        (52)                 (52)
ESSOP loan guarantee                                                    (2,781)                                    (2,781)
Reacquisition of common stock
      for treasury           (1,126)                                                                    (11,556)  (11,556)
Amortization of loan guarantee                         1,235                                                        1,235
Net income                                                                                       4,636              4,636
________________________________________________________________________________________________________________________
______
Balance at December 31, 1996  10,215     $567        $53,072   $(27)   $(4,544)        $(157)  $40,234  $(10,613) $78,532
Issuance of common stock          94        5          1,754                                                        1,759
Issuance of treasury stock       250                                                                       2,599    2,599
Tax benefit from the exercise
      of stock options                                  235                                                           235
Unrealized gain on investments                                   10                                                    10
Foreign currency translation
      adjustment                                                                       (156)                         (156)
ESSOP loan guarantee                                                    (3,563)                                    (3,563)
Reacquisition of common stock
      for treasury             (480)                                                                     (4,510)   (4,510)
Amortization of loan guarantee                                           1,366                                       1,366
Net income                                                                                      11,095              11,095
________________________________________________________________________________________________________________________
______
Balance at December 31, 1997  10,079     $572        $55,061   $(17)   $(6,741)        $(313)  $51,329  $(12,524)  $87,367
========================================================================================================================
======

See accompanying Notes to Consolidated Financial Statements
/TABLE
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                             Year Ended    Year Ended    Year Ended
                                                            December 31   December 31   December 31
(In thousands)                                                     1997          1996          1995
____________________________________________________________________________________________________
<S>                                                             <C>           <C>           <C>
Cash flows from operating activities
Net income                                                     $11,095       $ 4,636       $ 4,669
Adjustments to reconcile net income to net cash provided by
      operating activities:
            Depreciation and amortization                        9,939        10,385        10,746
            Provision for losses on receivables                    129          (186)          (57)
            Amortization of loan guarantee                       1,366         1,235         1,249
            Decrease (increase) in:
                  Accounts receivable                          (3,127)         (923)         (838)
                  Inventory                                     2,336        (2,674)          260
                  Prepaids and other current assets             1,699        (3,220)          650
                  Net assets of discontinued operations         1,198        (1,198)            -
                  Other assets                                 (8,368)       (4,833)       (1,504)
            Increase (decrease) in:
                  Accounts payable                             (4,012)        5,553        (5,892)
                  Accrued liabilities                             998           220           100
                  Accrued wages and related costs               2,927           695         4,509
                  Federal and state taxes payable                (931)        3,236           816
                  Deferred compensation                            (2)        1,107           864
                                                      _____________________________________________
            Net cash provided by operating activities           15,137        14,033        15,572

Cash flows from investing activities:
            Purchase of property and equipment, net            (10,889)       (8,107)       (3,784)
            Payments for acquisitions                           (6,550)            -        (3,150)
            Net decrease (increase) in short-term investments   (1,323)        1,038        (2,066)
            Net decrease (increase) in long-term investments        59             2           (31)
            Unrealized gain (loss) in investments                   10            (3)           28
                                                      _____________________________________________
            Net cash used in investing activities:             (18,693)       (7,070)       (9,003)

Cash flows from financing activities:
            Issuance of common stock                             1,759         4,302           554
            Issuance of treasury stock                           2,599         2,782         2,313
            Reacquisition of common stock                       (4,510)      (11,556)       (1,911)
            Increase in ESSOP loan guarantee                    (3,563)       (2,781)       (2,313)
            Proceeds from long-term debt                        10,634         4,930         3,663
            Repayment of long-term debt                         (2,807)       (2,435)       (3,547)
                                                      _____________________________________________
            Net cash provided by (used in) financing activities  4,112        (4,758)       (1,241)
                                                      _____________________________________________

Net decrease in cash and cash equivalents                          (324)        2,205         5,328

Effect of exchange rate on cash                                       -           (13)          (67)

Cash and cash equivalents at beginning of period                 25,214        23,022        17,761
                                                      ______________________________________________

Cash and cash equivalents at end of period                      $25,538       $25,214       $23,022
                                                      ==============================================

During 1997, the Company financed capital expenditures totaling $3,414, through issuance of capital leases
and issued a $150 promissory note in conjunction with an acquisition.

See accompanying Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION: The Company's business is primarily compounding,
dispensing and distributing radiopharmaceuticals to hospitals and clinics. The
consolidated financial statements of Syncor International Corporation include
the assets, liabilities and operations of the Company and its subsidiaries.
All significant intercompany accounts and transactions have been eliminated in
consolidation.

GENERAL: The unaudited quarterly operating results in Note 13 have been
prepared on the same basis as the audited consolidated financial statements
and, in the opinion of management, include all adjustments necessary for a
fair presentation for the periods presented.

CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS: The Company considers
all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents. Short-term investments consist
principally of time deposits and tax-exempt municipal securities and are
carried at cost, which approximates market value.

FINANCIAL INSTRUMENTS: The carrying value of financial instruments such as
cash and cash equivalents, trade receivables, payables and floating rate short
and long-term debt, approximate their fair value.

INVENTORY: Inventories, consisting of purchased products, are stated at the
lower of cost (first-in, first-out) or market.

PROPERTY AND EQUIPMENT: Property and equipment are stated at cost and
depreciated or amortized on a straight-line basis over estimated useful lives
ranging from two to fifteen years.

SELF INSURANCE: The Company historically has purchased insurance in excess of
self-insured retentions or deductibles for losses and liabilities related to
vehicle claims, medical claims and general product liability claims. 
Effective June 1, 1997, the Company eliminated the $100,000 deductible for its
automobile insurance and reduced the general/product liability self-insured
retention from $100,000 to $50,000 per occurrence.  Losses accrued under self-
insured and deductible plans are based upon the Company's estimates of
aggregated liability claims incurred using certain actuarial assumptions
followed in the insurance industry and the Company's own experience.

EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED: The cost in excess of net
assets of acquired businesses is being amortized on a straight-line basis over
periods of 15 to 40 years. The Company periodically evaluates the carrying
value of these assets and, accordingly, considers the ability to generate
positive cash flow through projected undiscounted future operating cash flows
from the related operation as the key factor in determining whether the assets
have been impaired. The Company's accounting treatment is consistent with
Statement of Financial Accounting Standard (SFAS) No.121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."

MARKETABLE INVESTMENT SECURITIES: Marketable investment securities consist
primarily of corporate debt and United States government obligations. The
Company classifies its debt and marketable equity securities in one of three
categories: trading, available-for-sale or held-to-maturity. Trading
securities are bought and held principally for the purpose of selling them in
the near term. Held-to-maturity securities are those securities that the
Company has the ability and intent to hold until maturity. All other
securities not included in trading or held-to-maturity are classified as
available-for-sale.
      Held-to-maturity securities are recorded at amortized cost, adjusted for
the amortization or accretion of premiums or discounts. Unrealized holding
gains and losses on trading securities are included 

<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

in earnings. Unrealized holding gains and losses, net of the related tax
effect, on available-for-sale securities are excluded from earnings and are
reported as a separate component of stockholders' equity until realized.

FOREIGN CURRENCY TRANSLATION: Assets and liabilities of foreign operations are
translated into U.S. dollars based upon the prevailing exchange rates in
effect at the balance sheet date. Foreign exchange gains and losses resulting
from these translations are included as a separate component of stockholders'
equity. Actual gains or losses incurred on currency transactions in other than
the country's functional currency are included in net income currently.

STOCK OPTIONS: The Company measures stock-based compensation using the
intrinsic value method which assumes that options granted at market price at
the date of grant have no intrinsic value. In accordance with SFAS No. 123,
"Accounting for Stock-Based Compensation," proforma net income and earnings
per share are presented in Note 9 as if the fair value method had been
applied.

INCOME TAXES: Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.

USE OF ESTIMATES: Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities, the reporting
of sales and expenses and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates.

New Accounting Standards: In June 1997, SFAS No. 130 - "Reporting
Comprehensive Income" and SFAS No. 131 - "Disclosures about Segments of an
Enterprise and Related Information" were issued and are effective for periods
beginning after December 15, 1997. SFAS No. 130 establishes standards for
reporting comprehensive income and its components. SFAS No. 131 establishes
standards for reporting financial and descriptive information regarding an
enterprise's operating segments.  These standards increase disclosure in the
financial statements, and will have no impact on the Company's financial
position or results of operations.

RECLASSIFICATIONS: Certain items in the prior years' consolidated financial
statements have been reclassified to conform to the current year's
presentation.

PRE-OPENING COSTS: Costs, included in "Other" in the consolidated balance
sheets relating to the opening of new radiopharmacies, are deferred and
amortized ratably over a 24-month period commencing at the date of opening. S
draft Statement of Position, "Reporting on the cost of start-up activities,"
has been issued which will require the costs of start-up activities be
expensed as incurred for fiscal years beginning after December 15, 1998.

2. ACQUISITIONS AND DISCONTINUED OPERATIONS

      In November 1995, the Company acquired all the assets and certain
contracts of Pyramid Diagnostic Services, Inc. (Pyramid), a
radiopharmaceutical chain that competed directly with existing Syncor sites in
the Midwest and Southeast regions of the United States. The acquisition was
pursuant to a Tennessee
<PAGE>
bankruptcy court decision to approve the sale of the assets, and the
assumption and assignment of certain contracts to the Company for $3.15
million in cash. The purchase culminated eight months of legal proceedings
involving allegations against some of Pyramid's business practices, which the
Company claimed were illegal. The Company closed five of the acquired
radiopharmacies and incorporated the remaining three sites into Syncor's
nationwide distribution network. This transaction has been accounted for as a
purchase and the purchase price was allocated to fixed assets, non-compete and
consulting agreements, customer lists and goodwill. In conjunction with the
bankruptcy settlement, the Company received from Pyramid $.3 million in 1996
and $2.8 million in the first two quarters of 1997. These amounts have been
recorded in "Other Income" in the Consolidated Statements of Income.
      In March 1997, the Company acquired certain assets of Golden
Pharmaceuticals, Inc. relating to Iodine-123, including the building and
equipment used to manufacturer Iodine-123 and the approved New Drug
Application for Iodine-123 capsules, for $6.5 million in cash and a promissory
note for $150,000. This transaction has been accounted for as a purchase.
      The results of operations related to the above transactions are included
in the Company's consolidated financial statements from the effective
acquisition dates. Pro forma information is not presented since the
acquisitions were not material to the accompanying consolidated financial
statements.
      On May 6, 1997, the Company completed the sale of its interest in
P.E.T.Net(TM) Pharmaceutical Services(TM), LLC ("P.E.T.Net") to PETNet
Partners, LLC, an affiliate of the Company's former joint venture partner CTI,
Inc. Consideration received included a secured note of $2.25 million and
royalties of up to $1.5 million based on P.E.T.Net's future sales.
Additionally, Syncor is the preferred distributor of positron emission
tomography isotopes for all existing and future P.E.T.Net sites and has
exclusive distribution rights for cyclotrons, manufactured by CTI, Inc., in
Taiwan for two years. All costs associated with the Company's operation and
disposal of its interest in P.E.T.Net from December 31, 1996 to March 18,
1997, the date the sale agreement was entered into were included in the
results of operations for 1996. The Company recorded a
gain on sale of the discontinued operations of approximately $1.1 million, net
of taxes of $0.7 million, during 1997.

<TABLE>
<CAPTION>
3. PROPERTY AND EQUIPMENT, NET

      The major classes of property are:

                                                   December 31   December 31
(In thousands)                                            1997          1996
______________________________________________________________________________
<S>                                                   <C>           <C>
Land and Buildings                                    $  4,312      $  3,708
Furniture and equipment                                 50,254        41,042
Leasehold improvements                                  12,654        10,108
______________________________________________________________________________
                                                        67,220        54,858
Less accumulated depreciation and amortization          38,350        33,326
______________________________________________________________________________
                                                       $28,870       $21,532
==============================================================================
</TABLE>
<TABLE>
<CAPTION>
4. MARKETABLE INVESTMENT SECURITIES

      Marketable investment securities consist of:

                                                      December 31  December 31
(In thousands)                                               1997         1996
______________________________________________________________________________

<S>                                                       <C>          <C>
Available-for-sale, at fair value, net of tax effect      $   680      $   670
Held-to-maturity, at amortized cost                           500          569
______________________________________________________________________________
                                                          $ 1,180      $ 1,239
______________________________________________________________________________
</TABLE>
The amortized cost, gross unrealized holding gains and losses and fair value
for available-for-sale and held-to-maturity securities by major security type
at December 31, 1997 and 1996 were as follows:
<PAGE>
<TABLE>
<CAPTION>
4. MARKETABLE INVESTMENT SECURITIES (CONTINUED)

                                               1997 Unrealized
                              AMORTIZED      HOLDING      HOLDING      FAIR
(In thousands)                     COST        GAINS       LOSSES     VALUE
_____________________________________________________________________________
<S>                                <C>         <C>         <C>         <C>
Available-for-sale:     
Corporate debt securities          $697        $  30       $ (47)      $680
_____________________________________________________________________________
                                   $697        $  30       $ (47)      $680
=============================================================================
Held-to-maturity:                   
U.S. Treasury securities            500            -          (1)       499
_____________________________________________________________________________
                                   $500       $    -       $  (1)      $499
=============================================================================

                                               1996 Unrealized
                              AMORTIZED      HOLDING      HOLDING      FAIR
(In thousands)                     COST        GAINS       LOSSES     VALUE
_____________________________________________________________________________
Available-for-sale:
Corporate debt securities          $697       $    -       $ (27)      $670
_____________________________________________________________________________
                                   $697       $    -       $ (27)      $670
=============================================================================
Held-to-maturity:                   
U.S. Treasury securities            500            1           -        501
Mortgage-backed securities           69            -         (16)        53
_____________________________________________________________________________
                                   $569       $    1       $ (16)      $554
=============================================================================
</TABLE>
     The unrealized holding losses on held-to-maturity securities have not
been recognized in the accompanying consolidated financial statements.
      Maturities of investment securities classified as available-for-sale and
held-to-maturity were as follows at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
                                               1997                 1996
                                      AMORTIZED     FAIR   AMORTIZED     FAIR
(In thousands)                             COST    VALUE        COST    VALUE
______________________________________________________________________________
<S>                                        <C>      <C>         <C>      <C>
Available-for-sale:
Due after one year through five years      $  -     $  -        $  -     $  -
Due after five years through ten years     $499     $484        $499     $482
Due after ten years                        $198      196         198      188

Held-to-maturity:
Due within one year                        $500     $499        $500     $501
Due after one year through five years      $  -     $  -        $ 69     $ 53
==============================================================================
</TABLE>
5. LINE OF CREDIT

      At December 31, 1997, the Company had an unsecured line of credit for
short-term borrowings aggregating $20,000,000, bearing interest at the bank's
reference rate (8.5 percent at December 31, 1997) and expiring on September 1,
1999. The availability of this line of credit at December 31, 1997, was
reduced by $1,923,000 as a result of standby letters of credit. To maintain
this line of credit, the Company was required to pay a quarterly commitment
fee of 1/8 of one percent per annum on the unused portion. There were no other
amounts outstanding under the line of credit at December 31, 1997.
      The line of credit agreement contained covenants that include
requirements to maintain certain financial covenants and ratios (including
minimum quick ratio, cash flow ratio and tangible net worth) and limitations
on payments of dividends, new borrowings and purchases of its stock. At
December 31, 1997, the Company was in compliance with all debt covenants under
the line of credit.
<PAGE>
      The $20,000,000 line of credit agreement was replaced effective January
5, 1998 with a $75,000,000 revolving credit agreement. Terms of this new
revolving line of credit agreement include two variable interest rate
borrowing options; the Eurodollar rate plus an applicable margin or the prime
rate. The Company also pays a quarterly commitment fee of 1/8 of one percent
per annum on the unused portion, plus an annual administrative fee.

<TABLE>
<CAPTION>
6. LONG TERM DEBT

The Company's long-term debt was as follows:

                                                                       December 31    December 31 
(In thousands)                                                                1997           1996
__________________________________________________________________________________________________
<S>                                                                      <C>            <C>
Capital lease obligations, payable in varying installments        
      through 2003, with interest rates ranging from 10%to 12%           $  4,094       $  1,112
Notes payable, unsecured, payable in installments through 2012,
      with effective interest rates ranging from 6% to 12.75%               1,160            886
Notes payable, unsecured, payable in installments through 2001,
      with a floating interest rate of either the lower of prime,
      LIBOR plus .75%, 6.66% and 6.57% at December 31, 1997 and 1996        6,741          4,544
Notes payable, secured, payable in installments through 2003,
      with a non-interest bearing rate, net of unamortized discount
      at 6% to 10% of $384 and $600 at December 31, 1997
      and 1996, respectively                                                2,815          3,377
Note payable, unsecured, payable in installments through 2002,
      with a floating interest rate of LIBOR plus .95%, 6.80%
      at December 31, 1997                                               $  6,500        $     -
___________________________________________________________________________________________________
Total debt                                                                  21,310          9,919
Less current maturities of long term debt                                    3,978          2,324
___________________________________________________________________________________________________
Long term debt, net of current maturities                                  $17,332        $ 7,595
===================================================================================================
<TABLE/>
At December 31, 1997, long-term debt maturing over the next five years is as
follows: 1998, $3,978; 1999, $3,667; 2000, $3,753; 2001, $3,481; 2002, $5,719
and $712 thereafter.
      Interest paid was $1,205, $834 and $666 for the years ended December 31,
1997, 1996 and 1995.


</TABLE>
<TABLE>
<CAPTION>
7. INCOME TAXES

      Total income tax expense for the years ended December 31, 1997 and 1996
was allocated as follows:

                                                                  YEAR ENDED     YEAR ENDED
                                                                 December 31    December 31
(In thousands)                                                          1997           1996
____________________________________________________________________________________________
<S>                                                                   <C>            <C>
Income from continuing operations                                     $6,923         $4,411
Stockholders' equity for compensation expense for tax purposes
      in excess of amounts recognized for financial reporting          (235)        (1,707)
____________________________________________________________________________________________
                                                                      $6,688         $2,704
============================================================================================
/TABLE
<PAGE>
<TABLE>
<CAPTION>
     Income tax expense (benefit) attributable to income from continuing
operations consisted of:

                         YEAR ENDED     YEAR ENDED      YEAR ENDED
                        December 31    December 31     December 31
(In thousands)                 1997           1996            1995
____________________________________________________________________
<S>                         <C>            <C>             <C>
Current:
      Federal               $6,839         $5,758          $3,884 
      State                  1,262            883             724
____________________________________________________________________
                              8,101          6,641           4,608      

Deferred:
      Federal                 (916)        (2,101)         (1,181)
      State                   (262)          (129)           (104)
____________________________________________________________________
                             (1,178)        (2,230)         (1,285)
____________________________________________________________________
                             $6,923         $4,411          $3,323
====================================================================
</TABLE>
The amounts differed from the amounts computed by applying the federal income
tax rate of 35 percent to pretax income from continuing operations as a result
of the following:
<TABLE>
<CAPTION>
                                                                YEAR ENDED     YEAR ENDED     YEAR ENDED
                                                               December 31    December 31    December 31
(In thousands)                                                        1997           1996           1995
_________________________________________________________________________________________________________
<S>                                                                 <C>            <C>            <C>
Federal income taxes at "expected" rate                            $5,935         $3,959         $2,907
      Increase (reduction) in income taxes resulting from:
            Meals and entertainment                                   213            188            161
            Tax exempt interest                                      (109)          (106)          (117)
            Amortization of intangible assets                         143            143            143
State taxes, net of Federal benefit                                   650            490            403
Utilization of general business credits                              (235)          (228)          (201)
Other                                                                 326            (35)            27
__________________________________________________________________________________________________________
                                                                   $6,923         $4,411         $3,323
==========================================================================================================
</TABLE>

The tax effect of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1997
and 1996, are presented below:

<TABLE>
<CAPTION>
                                                                     December 31   December 31 
(In thousands)                                                              1997          1996
_______________________________________________________________________________________________
<S>                                                                      <C>           <C>
Deferred tax assets:
Compensated absences, principally due to accrual
      for financial reporting purposes                                    $1,492        $1,330
Accounts receivable, due to allowance for doubtful accounts                  400           355
Accrued liabilities, primarily due to self-insurance accrual for
      financial reporting purposes                                         1,052           941
Deferred compensation, due to accrual for financial reporting purposes     2,507         1,338
Covenant not to compete due to difference in amortization                    522           397
Plant and equipment, due to difference in depreciation                     1,008           467
Deferred start-up expenses                                                   389           428
Other                                                                        244           641
Total gross deferred tax asset                                             7,614         5,897

Deferred tax liabilities:
Long-term lease due to capitalization for financial reporting purposes       625           487
Goodwill due to difference in amortization                                    74            57
Other                                                                        384             0
Total gross deferred tax liabilities                                       1,083           544
      Net deferred tax asset                                              $6,531        $5,353
</TABLE>

     Management has reviewed the recoverability of deferred income tax assets
and has determined that it is more likely than not that the deferred tax assets
will be fully realized through future taxable earnings.
      Income tax payments amounted to $7,622, $5,222 and $3,280 for the years
ended December 31, 1997, 1996 and 1995, respectively.
<PAGE>
8. COMMITMENTS

      The Company leases facilities, vehicles and equipment with terms ranging
from three years to fifteen years. The majority of property leases contain
renewal options and some have escalation clauses for increases in property
taxes, Consumer Price Index and other items.
      The Company leases a building and certain items of equipment under
capital leases which had an approximate cost of $6,891, $2,598, and $3,738, at
December 31, 1997, 1996 and 1995 and accumulated depreciation of $2,181,
$1,942, and $2,841, respectively. The Company was not utilizing this building
and, accordingly, sublet it to a third party for the balance of the lease
term. The cost increase over the prior year was due to the acquisition of
"open" MRI equipment for Syncor Diagnostics, LLC.
      Future minimum lease payments under capital leases and noncancelable
operating leases with terms greater than one year and related sublease income
were as follows at December 31, 1997:
<TABLE>
<CAPTION>
                                            CAPITAL    OPERATING    SUBLEASE
(In thousands)                               LEASES       LEASES      INCOME
_____________________________________________________________________________
<S>                                        <C>         <C>           <C>
Year ending December 31,
      1998                                 $ 1,206     $  6,326      $  466
      1999                                   1,148        5,366         376
      2000                                     836        3,825         143
      2001                                     836        2,945           7
      2002                                     834        2,621           -
      Thereafter                               180        7,799           -
_____________________________________________________________________________
                                              5,040       28,882         992
=============================================================================
Less amount representing interest              (946)
_____________________________________________________
Present value of net minimum lease payments   $4,094
=====================================================
</TABLE>
      Rental expense under operating leases was $7,528, $6,579 and $6,054 for
the years ended December 31, 1997, 1996 and 1995, respectively.

9. STOCK OPTIONS AND RIGHTS

      Options to purchase common stock have been granted under various plans
to officers, directors and other key employees at prices equal to the fair
market value at date of grant. An aggregate of 1,926,600 shares of stock have
been authorized for issuance under the various plans as of December 31, 1997.
Options are generally exercisable at a rate of 25 percent per year beginning
one year from the date of grant and expire ten years after the date of grant.
At December 31, 1997, 515,922 shares are reserved for issuance under the
various plans.
      The per share weighted-average fair value of stock options granted
during 1997, 1996 and 1995 was $5.74, $6.96 and $5.27, respectively, on the
date of grant using the Black Scholes option-pricing model with the following
weighted-average assumptions: 1997 - expected dividend yield of 0%; risk-free
interest rate of 5.71%; expected volatility of 61.1% and an expected life of
5.26 years; 1996 - expected dividend yield of 0%; risk-free interest rate of
6.21%; expected volatility of 60.1% and an expected life of 5.10 years; 1995 -
expected dividend yield of 0%; risk-free interest rate of 5.37%; expected
volatility of 60.1% and an expected life of 5 years.
      The Company applies APB Opinion No. 25 in accounting for its plans and,
accordingly, no compensation cost has been recognized for its stock options in
the financial statements. Had the Company determined compensation cost based
on the fair value at the grant date for its stock options under SFAS 
No. 123, the Company's net income would have been reduced to the pro forma
amounts indicated in the following table:<PAGE>
<TABLE>
<CAPTION>
                                       December 31   December 31   December 31
(In thousands, except per share data)         1997          1996          1995
______________________________________________________________________________
<S>                                       <C>          <C>           <C>
Net income
      As reported                         $11,095      $  4,636      $  4,669
      Pro forma                           $10,802      $  4,355      $  4,624

Earnings per share

Basic:
      As reported                         $  1.11      $    .44      $    .45
      Pro forma                           $  1.08      $    .42      $    .45
Diluted:
      As reported                         $  1.08      $    .44      $    .45
      Pro forma                           $  1.05      $    .41      $    .44
</TABLE>

      Pro forma net income reflects only options granted in 1997, 1996 and
1995. Therefore, the full impact of calculating compensation cost for stock
options under SFAS No. 123 is not reflected in the pro forma net income
amounts presented because compensation cost is reflected over the
options' vesting period of four years and compensation cost for options
granted prior to January 1, 1995 is not considered.

A summary of employee stock options is as follows:
<TABLE>
<CAPTION>
                                        NUMBER OF        WEIGHTED AVERAGE 
(In thousands, except share PRICE)         SHARES          EXERCISE PRICE
__________________________________________________________________________
<S>                                         <C>                 <C>
Outstanding at December 31, 1994            1,637               $    7.65
Granted                                       134               $    9.31
Exercised                                     (92)              $    6.02
Cancelled                                    (139)              $   11.72
__________________________________________________________________________
Outstanding at December 31, 1995            1,540               $    7.53
Granted                                       373               $   12.05
Exercised                                    (676)              $    6.32
Cancelled                                     (91)              $    9.61
__________________________________________________________________________
Outstanding at December 31, 1996            1,146               $   10.03
Granted                                       401               $    9.80
Exercised                                     (94)              $    8.47
Cancelled                                     (42)              $   10.68
__________________________________________________________________________
Outstanding at December 31, 1997            1,411               $   10.22
</TABLE>

      At December 31, 1997, the range of exercise prices and weighted average
remaining contractual life of outstanding options was $6.18 to $21.88 and
seven years, respectively.
      At December 31, 1997, 1996 and 1995, the number of options exercisable
was approximately 590,000, 437,000 and 925,000, respectively, and the weighted
average price of those options was $10.12, $10.03 and $7.53, respectively.
      The Company derives a tax benefit from the options exercised and sold by
employees and the benefit is credited to additional paid-in capital.
      In November 1989, the Company made a rights distribution of one common
share purchase right on each outstanding share of common stock. When
exercisable, each right will entitle its holder to buy from the Company one-
fourth of a share of the Company's common stock at a price of $5 per share
subject to adjustments (the "Purchase Price"). The rights expire on September
30, 1999. With certain exceptions, subject to the approval of the Board of
Directors, the rights will become exercisable if a person
<PAGE>
("Acquiring Person") has acquired or makes an offer, the consummation of which
will result in beneficial ownership of 20 percent or more of the Company's
general voting power. At such time (the "Distribution Date"), the rights will
be evidenced by the certificates representing the common shares and will be
transferred with and only with the common shares. Except for certain
transactions approved by the Board of Directors, in the event: (i) the Company
is acquired in a merger; (ii) 50 percent or more of its consolidated assets or
earning power is sold; or (iii) any person becomes an Acquiring Person, proper
provisions shall be made so that each holder of the right (other than rights
beneficially owned by the Acquiring Person) receives, upon the exercise
thereof at the adjusted exercise price of the right, which shall be four times
the Purchase Price, that number shares of common stock of the acquiring
company which at the time of such transaction will have a market value of two
times the adjusted exercise price of the right.

10. EMPLOYEE BENEFIT PLANS

      On July 31, 1986, the Company adopted a defined contribution 401(k)
plan. The plan is open to all employees who are at least 21 years of age and
have a minimum of twelve consecutive months of service. In 1989, the Company's
Board of Directors amended the plan to an Employees Savings and Stock
Ownership Plan (ESSOP) to allow the plan to acquire one million of the
Company's shares through a leveraged employee stock ownership plan
transaction. In June 1995, September 1996, and August 1997, an additional
750,000 shares, in total, which were purchased in the open market were
contributed to the plan. These shares were originally classified as "treasury
stock." The contributions totaled $8,657 and reflected the fair market value
at the time of contribution. In connection with these transactions, the
Company has made a loan to the ESSOP. The ESSOP loan had an outstanding
balance of $6,741, at December 31, 1997.
      Under the ESSOP, participants may contribute one percent to fourteen
percent of their compensation to 401(k) investment options and an additional
two percent of their compensation to purchase Company stock. The Company makes
matching contributions to 50 percent of the employees' 401(k) investment
contributions of up to a maximum of four percent of the employees'
compensation and may make matching contributions to 100 percent of the
employees' Company stock purchases up to two percent of the employees'
compensation. The Company's matching contribution is made in cash and reflects
the ESSOP loan payment. The number of shares of stock available to match
employee contributions is directly related to the amount of principal payments
made on the ESSOP loan. Once the number of available shares is determined, the
Company matches the employees' contributions as described above by determining
the fair market value of the available stock. The remainder of any shares not
allocated after all matching is complete will be allocated to all eligible
employees based on relative compensation.
      Participants are fully and immediately vested in their contributions and
vest in employer contributions over a five-year period of continuous
employment. After five years of continuous employment, any further employer
contributions are fully and immediately vested. The Company's contributions
for the years ended December 31, 1997, 1996 and 1995 amounted to $1,625,
$1,444 and $1,433 of which $1,366, $1,235 and $1,249 were used to pay down
principal on the ESSOP loan and $259, $209, and $184, to pay interest.

11. NET INCOME PER SHARE

      In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share" (EPS). SFAS No. 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share excludes
any dilutive effect of options. Diluted earnings per share is very similar to
the previously reported primary earnings per share. All earnings per share
amounts for all periods have been restated to conform to SFAS No. 128
requirements.
<PAGE>
      The reconciliations of the numerators and denominators of the basic and
diluted earnings per share computations are as follows:
<TABLE>
<CAPTION>
                           FOR THE YEAR ENDED                 FOR THE YEAR ENDED                FOR THE YEAR ENDED
                            DECEMBER 31, 1997                  DECEMBER 31, 1996                 DECEMBER 31, 1995
______________________________________________________________________________________________________________________________
                                                     PER                                PER                                PER 
                            INCOME        SHARES   SHARE       INCOME        SHARES   SHARE       INCOME        SHARES   SHARE
                       (NUMERATOR) (DENOMINATOR)  AMOUNT  (NUMERATOR) (DENOMINATOR)  AMOUNT  (NUMERATOR) (DENOMINATOR)  AMOUNT
______________________________________________________________________________________________________________________________
<S>                        <C>           <C>       <C>         <C>          <C>       <C>         <C>          <C>       <C>
Income from continuing
      operations           $10,032                             $6,900                             $4,984
Basic EPS                  $10,032        9,998    $1.00       $6,900       10,424    $0.66       $4,984       10,341    $0.48
                                                   =====                              =====                              =====
Effect of Dilutive
      Stock Options                        284                                205                                140
                                           ___                                ___                                ___
Diluted EPS                $10,032       10,282    $0.98       $6,900       10,629    $0.65       $4,984       10,481    $0.48
                                                   =====                              =====                              =====
</TABLE>
Options to purchase 45,000 shares of common stock at prices ranging from
$18.25 to $21.88 were outstanding during 1997, but were not included in the
computation of diluted EPS at December 31, 1997 because the option's exercise
prices were greater than the average market price of the common shares.

12. LITIGATION AND CONTINGENCIES

      There are various litigation proceedings in which the Company and its
subsidiaries are involved. Many of the claims asserted against the Company in
these proceedings are covered by insurance. The results of litigation
proceedings cannot be predicted with certainty. However, in the opinion of the
Company's general counsel, such proceedings either are without merit or do not
have a potential liability which would materially affect the financial
condition of the Company and its subsidiaries on a consolidated basis.
<TABLE>
<CAPTION>

13. SELECTED QUARTERLY RESULTS OF OPERATIONS

      Unaudited calendar quarterly information is summarized below:

(IN THOUSANDS, EXCEPT PER SHARE DATA)             MARCH 31    JUNE 30  SEPTEMBER 30  DECEMBER 31    1997
___________________________________________________________________________________________________________
<S>                                                <C>        <C>         <C>          <C>        <C>
Net sales                                          $93,084    $98,187     $94,493      $94,799    $380,563
Gross Profit                                       $20,116    $23,854     $22,260      $23,935    $ 90,165
Net income from continuing operations              $ 3,346    $ 3,237     $ 1,754      $ 1,695    $ 10,032
Net income per share from continuing operations:
      Basic                                       $  0.33    $  0.33     $  0.18      $  0.17    $   1.00
      Diluted                                     $  0.32    $  0.33     $  0.17      $  0.16    $   0.98
Net income                                        $ 3,346    $ 4,300     $ 1,754      $ 1,695    $ 11,095
Net income per share:
      Basic                                       $  0.33    $  0.44     $  0.18      $  0.17    $   1.11
      Diluted                                     $  0.32    $  0.44     $  0.17      $  0.16    $   1.08
Weighted average shares outstanding:
      Basic                                        10,168      9,829       9,920       10,074       9,998
      Diluted                                      10,359      9,870      10,323       10,574      10,282
============================================================================================================
Market price per share
      High                                        $ 13.63    $ 10.88     $ 17.25      $ 17.44    $  17.44
      Low                                         $  8.63    $  7.50     $ 10.13      $ 14.88    $   7.50
============================================================================================================

(IN THOUSANDS, EXCEPT PER SHARE DATA)             MARCH 31    JUNE 30  SEPTEMBER 30  DECEMBER 31    1996
___________________________________________________________________________________________________________
Net sales                                         $92,021    $93,296     $90,254      $90,876    $366,447
Gross Profit                                      $20,220    $21,749     $18,653      $19,571    $ 80,193
Net income from continuing operations             $ 1,826    $ 2,647     $ 1,390      $ 1,037    $  6,900
Net income per share from continuing operations:
      Basic                                       $  0.18    $  0.26     $  0.13      $  0.10    $   1.66
      Diluted                                     $  0.17    $  0.25     $  0.13      $  0.10    $   0.65
Net income                                        $ 1,706    $ 2,304     $   472      $   154    $  4,636
Net income per share:
      Basic                                       $  0.16    $  0.22     $  0.04      $  0.01    $   0.44
      Diluted                                     $  0.16    $  0.22     $  0.04      $  0.01    $   0.44
Weighted average shares outstanding:
      Basic                                        10,413     10,282      10,677       10,325      10,424
      Diluted                                      10,468     10,636      10,944       10,468      10,629
============================================================================================================
Market price per share
      High                                        $  7.13    $ 16.63     $ 15.13      $ 13.38    $  16.63
      Low                                         $  6.25    $  6.69     $ 10.38      $  8.31    $   6.25
============================================================================================================
</TABLE>

14. SUBSEQUENT EVENTS

      In January 1998, Syncor acquired a medical imaging business from
National Diagnostic Services, Inc. and an affiliate ("NDS"). The purchase
price for the acquisition was $12 million including the assumption of $4.8
million in debt.  The acquired business included nine medical imaging centers
owned or managed by NDS. This transaction will be accounted for as a purchase.
      Also in January 1998, a subsidiary of Syncor merged with and into TME,
Inc., a company based in Houston, Texas, pursuant to which TME, Inc. became a
wholly-owned subsidiary of Syncor. TME owns, operates and/or manages free-
standing medical imaging centers through joint ventures and partnerships. It
has 20 facilities in its network, with five additional facilities in
development. As consideration for the merger, Syncor paid $14.5 million in
cash to TME's stockholders. This transaction will be accounted for as a
purchase.
      In January 1998, Syncor announced the proposed acquisition of the
medical imaging business of International Magnetic Imaging, Inc., a subsidiary
of Consolidated Technology Group Ltd. The business to be acquired includes ten
outpatient medical imaging centers and an imaging referral network operating
in 35 states. The purchase price for the acquisition is expected to be $20.5
million, plus the assumption of approximately $21 million in liabilities and
trade payables. The acquisition is expected to close in the second quarter
1998 and will be accounted for as a purchase.<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Syncor International Corporation

      We have audited the accompanying consolidated balance sheets of Syncor
International Corporation and subsidiaries as of December 31, 1997 and 1996,
and the related consolidated statements of income, stockholders' equity and
cash flows for each of the years in the three-year period ended December 31,
1997.  These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
      We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
      In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Syncor
International Corporation and subsidiaries as of December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1997, in conformity with generally
accepted accounting principles.

/s/ KPMG Peat Marwick LLP
___________________________
KPMG Peat Marwick LLP
Los Angeles, California,
February 25, 1998
<PAGE>
MANAGEMENT'S REPORT

      The Management of Syncor International Corporation is responsible for
the consolidated financial statements and all other information presented in
this report. The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles appropriate in the
circumstances and, therefore, included in the consolidated financial
statements are certain amounts based on management's informed estimates and
judgments. Management is responsible for establishing and maintaining a system
of internal control designed to provide reasonable assurance as to the
integrity and reliability of financial reporting. The concept of reasonable
assurance is based on the recognition that there are inherent limitations in
all systems of internal control, and that the cost of such systems should not
exceed the benefits to be derived therefrom. Other financial information in
this report is consistent with that in the consolidated financial statements.
The consolidated financial statements have been examined by Syncor
International Corporation's independent certified public accountants and have
been reviewed by the Audit Committee of the Board of Directors.

[There is a group photo of Syncor's Board of Directors on this page.]

Syncor's Board of Directors:
(from left to right) George S. Oki, Gail R. Wilensky, PhD., Steven B. Gerber,
Arnold E. Spangler, Henry N. Wagner, Jr., MD, Monty Fu, and Robert G. Funari.
<PAGE>
CORPORATE INFORMATION


BOARD OF DIRECTORS

Monty Fu
Chairman of the Board 
Director since 1985

Robert G. Funari
President and
Chief Executive Officer
Director since 1995

George S. Oki
Chairman of the Board,
Meta Information Services, Inc.
Director since 1985

Arnold E. Spangler
Managing Director,
Mancuso & Company
Director since 1985

Steven B. Gerber, MD
Managing Director,
CIBC Oppenheimer Corp.
Director since 1990

Henry N. Wagner, Jr., MD
Professor of Medicine and
Director of Nuclear Medicine
the Johns Hopkins Medical
Institutions 
Director since 1992

Gail R. Wilensky, PhD
Senior Fellow, Project HOPE,
former HCFA Administrator and
Deputy Assistant to President Bush
Director Since 1993


OFFICERS

Monty Fu
Chairman of the Board 

Robert G. Funari
President and
Chief Executive Officer

Brad Nutter
Executive Vice President and
Chief Operating Officer

Michael E. Mikity
Senior Vice President and 
Chief Financial Officer

Haig S. Bagerdjian
Senior Vice President,
Business Development,
Secretary and
General Counsel

Jack L. Coffey
Corporate Vice President,
Quality and Regulatory

Sheila H. Coop
Corporate Vice President,
Human Resources

Charles A. Smith
Corporate Vice President,
Business Development

STOCKHOLDER INFORMATION

INQUIRIES
Stockholders, interested investors and investment professionals are invited to
contact the Company for further information throughout the year.
The Company also has available a news-on-demand service whereby individuals
can obtain information via facsimile. Individuals may call (800) 546-8172 to
obtain press releases and other related information via facsimile.

WEB SITE
www.syncor.com

ANNUAL MEETING
The Company's Annual Meeting of Stockholders will be held at 1:00, Tuesday,
June 16, 1998, at the Warner Center Hilton Hotel, 6360 Canoga Avenue, Woodland
Hills, California 91367. Stockholders of record on April 21, 1998, are invited
to attend and vote at that meeting.

FORM 10-K
To receive a copy of The Company's Annual Report on form 10-K filed with the
Securities and Exchange Commission, contact the Corporate Headquarters, Syncor
International Corporation, Attn: Investor Relations department, 6464 Canoga
Avenue, Woodland Hills, California 91367.

INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, 725 South Figueroa Street, Los Angeles, California
90017

STOCK DATA
The Company's common stock is quoted on the National Association of Securities
Dealers Automated Quotation System (NASDAQ) under the symbol SCOR.

TRANSFER AGENT AND REGISTRAR
Stockholders wishing to report a change of address may forward details,
including both the old and new addresses to:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10015 
(212) 936-5100

STOCK MARKET INFORMATION
Stock price quotations are printed daily in major newspapers, including the
Wall Street Journal. As of March 30, 1998, there were 10,099,141 shares of
common stock outstanding. Stockholders of record at that date amounted to
1,196. The Company has not paid cash dividends on its stock and has no current
intention of paying cash dividends in the foreseeable future.