-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KpTZZJu7H4ALhx2rPKGDtXBqZEUS82ijnI+cAhCa13c1yPabqhLZGMFyYlOnZ5qb 7KgYFvMkLo5UAMp3vNfsXw== 0000018000-95-000002.txt : 19950515 0000018000-95-000002.hdr.sgml : 19950515 ACCESSION NUMBER: 0000018000-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950209 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARTER WALLACE INC /DE/ CENTRAL INDEX KEY: 0000018000 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 134986583 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05910 FILM NUMBER: 95507296 BUSINESS ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2123395000 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended December 31, 1994 ( ) Transition Report Pursuant to Section 13 or 15 (d) of the Securities Act of 1934 For the transition period from to Commission File Number 1-5910 CARTER-WALLACE, INC. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (Exact name of registrant as specified in its charter) Delaware 13-4986583 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1345 Avenue of the Americas New York, New York 10105 (Address of principal executive offices) Registrant's telephone number, including area code: 212-339-5000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares of the registrant's Common Stock and Class B common stock outstanding at December 31, 1994 were 33,621,000 and 12,557,900, respectively. CARTER-WALLACE, INC. AND SUBSIDIARIES INDEX TO FORM 10-Q DECEMBER 31, 1994 PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Condensed Consolidated Statements of Earnings for the three months and nine months ended December 31, 1994 and 1993 1 Condensed Consolidated Balance Sheets at December 31, 1994 and March 31, 1994 3 Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 1994 and 1993 4 Notes to Condensed Consolidated Financial Statements 5 Report by KPMG Peat Marwick LLP on their Limited Review 13 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 15 PART II - OTHER INFORMATION Item 1 - Legal Proceedings 24 Item 6 - Exhibits and Reports on Form 8-K 24 Signatures 25 CARTER-WALLACE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended Nine Months Ended December 31, December 31, 1994 1993 1994 1993 * Revenues: Net sales $156,680,000 $176,459,000 $508,095,000 $489,475,000 Other revenues 1,463,000 1,125,000 4,291,000 3,697,000 158,143,000 177,584,000 512,386,000 493,172,000 Cost and expenses: Cost of goods sold 54,038,000 57,098,000 180,031,000 168,020,000 Advertising, marketing & other selling expenses 60,959,000 66,261,000 191,866,000 196,946,000 Research & develop- ment expenses 6,536,000 14,405,000 32,261,000 39,079,000 General, administra- tive & other expenses 22,835,000 20,624,000 67,168,000 59,638,000 Provision for restructuring 20,500,000 - 69,500,000 - Provision for loss on Felbatol - - 36,640,000 - Provision for loss on discontinuance of the Organidin (iodinated glycerol) product line - - 17,500,000 - Interest expense 917,000 516,000 1,785,000 1,535,000 165,785,000 158,904,000 596,751,000 465,218,000 Earnings (loss) before taxes on income (7,642,000) 18,680,000 (84,365,000) 27,954,000 Provision (benefit) for taxes on income (2,980,000) 5,791,000 (32,902,000) 7,851,000 Net earnings (loss) before cumulative effect of accounting changes (4,662,000) 12,889,000 (51,463,000) 20,103,000 Cumulative effect of accounting changes, net of tax - - - (46,639,000) Net earnings (loss) $ (4,662,000) $ 12,889,000 $(51,463,000) $(26,536,000)
(Continued) PART I - FINANCIAL INFORMATION CARTER-WALLACE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (Continued)
Three Months Ended Nine Months Ended December 31, December 31, 1994 1993 1994 1993 * Net earnings (loss) per average share of common stock outstanding: Before cumulative effect of accounting changes $ (.10) $ .28 $(1.12) $ .44 Cumulative effect of accounting changes - - - (1.02) Net earnings (loss) $ (.10) $ .28 $(1.12) $ (.58) Cash dividends per share $ .0833 $ .0833 $ .2499 $ .2499 Average shares of common stock outstanding 46,119,000 45,959,000 46,086,000 45,850,000
[FN] * Restated to reflect change in accounting for postemployment benefits. CARTER-WALLACE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31, 1994 1994 Assets (Unaudited) Current Assets: Cash and cash equivalents $ 50,661,000 $ 23,311,000 Short-term investments 17,609,000 32,883,000 Accounts and other receivables less allowances of $7,660,000 at December 31, 1994 and $5,955,000 at March 31, 1994 120,245,000 117,070,000 Inventories: Finished goods 44,078,000 60,515,000 Work in process 20,409,000 22,121,000 Raw materials and supplies 45,831,000 39,553,000 110,318,000 122,189,000 Prepaid expenses, deferred taxes and other current assets 31,932,000 19,973,000 Total Current Assets 330,765,000 315,426,000 Property, plant and equipment, at cost 251,928,000 279,040,000 Less: accumulated depreciation and amortization 111,696,000 121,981,000 140,232,000 157,059,000 Intangible assets 130,742,000 110,213,000 Other assets 61,276,000 45,864,000 Total Assets $663,015,000 $628,562,000 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 28,799,000 $ 27,844,000 Accrued expenses 145,201,000 96,714,000 Notes payable 12,108,000 5,709,000 Total Current Liabilities 186,108,000 130,267,000 Long-Term Liabilities: Long-term debt 23,550,000 9,309,000 Deferred compensation 9,863,000 7,661,000 Accrued postretirement benefit obligation 67,218,000 71,804,000 Other long-term liabilities 42,049,000 16,013,000 Total Long-Term Liabilities 142,680,000 104,787,000 Stockholders' Equity: Common stock 34,647,000 34,432,000 Class B common stock 12,558,000 12,773,000 Capital in excess of par value 2,184,000 1,972,000 Retained earnings 317,059,000 380,047,000 Less: Foreign currency translation adjustment 18,513,000 20,404,000 Treasury stock, at cost 13,708,000 15,312,000 Total Stockholders' Equity 334,227,000 393,508,000 Total Liabilities and Stockholders' Equity $663,015,000 $628,562,000
CARTER-WALLACE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED DECEMBER 31, 1994 AND 1993 (Unaudited)
1994 1993 * Net (loss) $(51,463,000) $(26,536,000) Provision for restructuring 69,500,000 - Provision for loss on Felbatol 36,640,000 - Provision for loss on discontinuance of the Organidin (iodinated glycerol) product line 17,500,000 - Cumulative effect of accounting changes - 46,639,000 Changes in assets and liabilities (34,382,000) (10,284,000) Other changes 21,463,000 20,303,000 Cash flows from operations 59,258,000 30,122,000 Cash flows used in investing activities: Additions to property, plant and equipment (15,369,000) (17,651,000) Payments for international acquisitions, net of cash received: The Sante Beaute line in France (19,876,000) - Technogenetics in Italy (4,928,000) - The Curash line in Australia (3,660,000) - Decrease (increase) in short-term investments 16,041,000 (3,155,000) Other investing activities (356,000) 247,000 (28,148,000) (20,559,000) Cash flows used in financing activities: Dividends paid (11,525,000) (11,455,000) Increase in borrowings 13,018,000 10,109,000 Payments of debt (3,529,000) (771,000) Purchase of treasury stock (859,000) (278,000) (2,895,000) (2,395,000) Effect of exchange rate changes on cash and cash equivalents (865,000) (398,000) Increase in cash and cash equivalents $ 27,350,000 $ 6,770,000
[FN] * Restated to reflect change in accounting for postemployment benefits. CARTER-WALLACE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 Note 1: Interim Reports The results of the interim periods are not necessarily indicative of results expected for a full year's operations. In the opinion of management, all adjustments necessary for a fair statement of results of these interim periods have been reflected in these financial statements and, except as separately disclosed herein, are of a normal recurring nature. Note 2: Review of Independent Auditors The financial information included in this report has been reviewed by KPMG Peat Marwick LLP, independent auditors, in accordance with standards and procedures established by the American Institute of Certified Public Accountants. All adjustments or additional disclosures proposed by KPMG Peat Marwick LLP have been reflected in the data presented and a copy of their report on this limited review is included in this Form. Note 3: Acquisitions In August, 1994, the Company acquired the Sante Beaute line of products in France for approximately $21,200,000. This business consists of the Email Diamant oral hygiene products, Lineance body care products and other skin and bath products. In August, 1994, the Company acquired Technogenetics S.r.l., a subsidiary of Recordati S.p.A. for approximately $5,900,000 in Italy. Technogenetics manufactures and sells diagnostic test kits used by clinical laboratories for the diagnosis of human diseases. In July, 1994, the Company acquired for approximately $3,700,000 the Curash line of baby care and other consumer products in Australia. These acquisitions are being accounted for by the purchase method and, accordingly, the results of operations for these lines are included in the Company's results of operations from the acquisition date. Pro forma results of operations are not presented since the effect would not be material. (Continued) CARTER-WALLACE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 (Continued) Note 4: Restructuring of Operations and Facilities Prompted by the discontinuance of its line of iodinated glycerol formulation of Organidin products (see note 6) and by the significant adverse effect on existing and potential sales of Felbatol (felbamate) due to use restrictions required by the Federal Food and Drug Administration ("FDA") (see note 5) the Company is engaged in a restructuring program which is intended to reduce costs and increase efficiencies. As part of the restructuring program, the Company has substantially reduced its pharmaceutical sales force and marketing support staff and virtually eliminated its Wallace Laboratories Division internal research and development capability. However, the Company will continue its research and development of Astelin (azelastine) for rhinitis and asthma, and taurolidine, an antitoxin for the treatment of sepsis, and to the extent such work exceeds the Company's remaining internal research and development resources, such work will be done through independent research facilities. The consolidation of its manufacturing operations in the U.S. and Puerto Rico, when completed, will result in the closure of certain of the Company's plants and significantly reduced production at one plant. In connection with the restructuring described above, the Company incurred a one-time pre-tax charge in the quarter ended September 30, 1994 of $49,000,000 consisting primarily of plant closing costs including equipment write-offs ($24,500,000) and employee termination costs ($20,600,000). As part of its restructuring program, the Company further reduced its workforce subsequent to December 31, 1994 and is in the process of relocating one of its divisions to its Cranbury, New Jersey facility. In this regard, the Company incurred a one-time pre-tax restructuring charge of $20,500,000 in the quarter ended December 31, 1994, consisting primarily of estimated costs associated with the planned subleasing of office space on which the Company holds a long-term lease ($19,400,000). An additional one-time pre-tax charge of approximately $6,500,000 relating to employee termination costs will be incurred in the fourth quarter ending March 31, 1995 and a $1,800,000 charge related to the office relocation is expected to be incurred in the fiscal year ending March 31, 1996. Recently announced accounting pronouncements do not permit these severance and relocation costs to be recorded in the December, 1994 period. The total reduction in the number of employees is approximately 790 including 85 vacancies that will not be filled and represents 41% of the Company's pharmaceutical sales force and 27% of its total domestic workforce. In connection with the restructuring, the Company has virtually eliminated its Wallace Laboratories Division internal research and development capability. The Company is continuing to review its operations and may take other steps to reduce costs and increase efficiencies in the future which may result in additional one-time charges. (Continued) CARTER-WALLACE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 (Continued) Note 5: Felbatol (felbamate) On August 1, 1994, the Company disclosed that it had sent a letter to approximately 240,000 physicians recommending, in conjunction with the FDA, the immediate withdrawal of patients from treatment with Felbatol (felbamate), unless, in the physician's judgment, an abrupt withdrawal would be deemed to pose a more serious risk to the patient. Carter-Wallace's recommendation was prompted by reports of ten cases of aplastic anemia in association with the use of Felbatol. No such cases were observed during the premarketing, clinical testing and development of Felbatol. On September 21, 1994, after discussions with the FDA, the Company mailed a letter alerting physicians to the risk of acute liver failure in association with the use of Felbatol and the need to monitor liver function in all patients who are still taking the drug. On September 27, 1994, the FDA's Peripheral and Central Nervous System Drugs Advisory Committee met to discuss the continued availability of Felbatol. The Committee recommended that the drug remain available only for patients with severe epilepsy for whom the benefits outweigh the risks, and that changes be made to the product's labeling to reflect the risk of acute liver failure. Carter-Wallace introduced Felbatol in September, 1993 for the treatment of partial seizures with and without secondary generalization in adults and for Lennox-Gastaut Syndrome, a serious form of childhood epilepsy. Due to substantial introductory spending levels and continued research and development, the Company incurred losses with respect to Felbatol since introduction and for the three months and nine months ended December 31, 1994. As a result of the Felbatol matters discussed above, the Company incurred in the quarter ended September 30, 1994 a one-time pre-tax charge of $36,640,000 primarily related to inventory write-offs ($15,500,000), purchase and other commitments ($9,400,000) and anticipated product returns including trade announcements ($4,900,000). At the present time Felbatol continues to be available on the market. If, as a result of the matters discussed above, the product at some future date is no longer available in the market, the Company will incur an additional one-time charge that would have a material adverse effect on the Company's results of operations and possibly on its financial condition. Should the product no longer be available, the Company currently estimates that the additional one-time charge consisting primarily of inventory write-offs and anticipated returns of product currently in the market, will be in the range of $30,000,000 to $35,000,000 on a pre-tax basis. (Continued) CARTER-WALLACE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 (Continued) Note 5: Felbatol (felbamate) (Continued) As previously reported, the Company entered into a licensing agreement with Schering-Plough Corporation, granting Schering-Plough exclusive marketing rights in all markets except the United States and its territories and possessions, Canada and Mexico, to Felbatol. Separately, Schering-Plough and Carter-Wallace agreed that, under certain circumstances, they will put into effect a co-promotional arrangement with respect to a Schering-Plough pharmaceutical product to be determined in the future. The matters discussed above will likely result in a significant adverse effect on the amount of royalties and fees, if any, to be received from Schering-Plough in the future under these agreements. Note 6: Discontinuance of the Organidin (Iodinated Glycerol) Product Line In June, 1994, the Company and the FDA reached an agreement to discontinue the manufacture and shipment of the Organidin (iodinated glycerol) line of products. The agreement between the Company and the FDA permits the continued shipping, prescribing and dispensing of existing stocks of Organidin (iodinated glycerol) product currently in channels of distribution. As previously disclosed by the Company, in April, 1993 the Company received a letter from the FDA requesting that it discontinue marketing Organidin (iodinated glycerol) products. Subsequent meetings between the Company and FDA resulted in this agreement. As a result of the agreement noted above, the Company incurred in the quarter ended June 30, 1994 a one-time charge to pre-tax earnings of $17,500,000 primarily related to a provision for any product returns ($9,400,000) and for inventory write-offs ($3,600,000). Sales and pre-tax operating profits of the Organidin (iodinated glycerol) line included in the nine months ended December 31, 1994 were $20,800,000 and $11,400,000, respectively, compared to sales and pre-tax operating profits included in the nine months ended December 31, 1993 of $53,300,000 and $22,100,000, respectively. Sales and pre-tax operating profits of the Organidin (iodinated glycerol) line of products were $59,900,000 and $22,200,000 for the fiscal year ended March 31, 1992, $43,400,000 and $7,600,000 for the fiscal year ended March 31, 1993 and $74,400,000 and $31,600,000 for the fiscal year ended March 31, 1994. Organidin operating profits were computed on a basis consistent with that used to report operating profits for the Health Care business segment in the Company's Annual Report. (Continued) CARTER-WALLACE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 (Continued) Note 7: Litigation Two federal securities class action suits have been filed by stockholders against the Company and certain of its present and former officers in the United States District Court, Southern District of New York. The first action, filed in August, 1994, purports to be on behalf of all persons who purchased the Company stock in the period from June 6, 1994 through July 31, 1994. The plaintiff filed an amended complaint on November 4, 1994, purportedly on behalf of all persons who purchased the Company stock in the period from January 20, 1994 through July 31, 1994. The second action, filed in October, 1994, seeks to represent a class of persons who purchased the Company stock from August 24, 1993 through August 1, 1994. Both complaints allege that certain statements made by the Company with respect to future sales and marketing prospects for Felbatol were false and fraudulent, and that the Company omitted to state material facts necessary to make the statements made not misleading. Both complaints seek damages in an unspecified amount. In both actions, the complaints allege that a major stockholder and a former officer of the Company sold Company stock while in possession of material non-public information and seek disgorgement of the unspecified profits made from such sales. In December, 1994, an alleged shareholder of the Company instituted an action in the Supreme Court of the State and County of New York which purports to be brought derivatively on behalf and for the benefit of the Company against the directors of the Company for breach of fiduciary duty, gross mismanagement and waste of corporate assets in connection with the development and marketing of Felbatol. The complaint seeks unspecified compensatory and punitive damages. A product liability class action was filed against the Company in August, 1994, in the United States District Court, Northern District of California. The complaint, which was amended in September, 1994, purports to be on behalf of all persons who suffered or may suffer an injury as a result of using Felbatol. The complaint alleges that the Company is liable for strict product liability, negligence, breach of express and implied warranty and negligent misrepresentation related to side effects of Felbatol. The complaint seeks unspecified compensatory and punitive damages and injunctive relief. A product liability class action was filed against the Company in October, 1994 in the United States District Court for the Eastern District of Pennsylvania. The complaint purports to be on behalf of the plaintiff and all others similarly situated who it is alleged suffered an injury as a result of using Felbatol. The complaint alleges that the Company is liable for strict liability, negligence, breach of express and implied warranty, negligent infliction of emotional distress and violation of state consumer protection laws. The complaint seeks unspecified compensatory and punitive damages and establishment of a medical monitoring program. (Continued) CARTER-WALLACE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 (Continued) Note 7: Litigation (Continued) In addition to the above, three individual product liability suits related to Felbatol have been filed against the Company in state courts in Michigan, Texas and West Virginia seeking unspecified compensatory and in two of the cases unspecified punitive damages. The Company along with numerous other drug manufacturers, wholesalers, purchasers and suppliers, was named in a consolidated and amended class action suit filed in August, 1994 in the California Superior Court, San Francisco County, brought on behalf of all California community retail pharmacists who have purchased any brand name prescription drugs since August, 1989. The complaint alleged that the defendants, including the Company, entered into a conspiracy to fix prices for brand-name prescription drugs and gave lower prices to certain favored purchasers while the alleged favored prices were denied to the plaintiffs. Upon defendants' motion, the plaintiffs' class claims of price discrimination were stricken from the complaint and a Second Consolidated and Amended Complaint ("Second Amended Complaint") filed in December, 1994 repeating these price discrimination counts as individual claims. The Second Amended Complaint contains the same substantive class price fixing claims and, like its predecessor, seeks injunctive relief and unspecified trebled compensatory damages, restitution of amounts by which defendants were unjustly enriched and litigation costs. The Company along with numerous other drug manufacturers has been named in a class action suit filed July, 1994 in California Superior Court, County of San Francisco, brought on behalf of a class of California consumers who purchased drugs from independent retail pharmacies alleging that certain drug manufacturers and wholesalers, purchasers and suppliers, including the Company, conspired to fix prices for brand-name prescription drugs that were sold to California independent retail pharmacists. The complaint seeks unspecified trebled compensatory damages relating to overcharges, restitution of amounts by which defendants were unjustly enriched and litigation costs. The Company, along with numerous other drug manufacturers, an Alabama drug wholesaler and a national mail-order pharmacy, had initially been named in a class action suit filed May, 1994 in the Alabama Circuit Court, Greene County, brought on behalf of a class of independent drug stores and pharmacies and alleging that the named, and certain unnamed, defendants discriminated against the plaintiffs in according more favorable prices to mail-order pharmacies and large health care providers pursuant to an alleged conspiracy to regulate or fix the price, or limit the quantity, of prescription drugs sold in the State of Alabama in violation of Alabama law. By a First Amended Complaint dated January 17, 1995, the three named plaintiffs retracted all class claims, restated each of the aforementioned allegations as individual claims against each of the previously-named defendants, and added the following two additional state common-law counts: (Continued) CARTER-WALLACE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 (Continued) Note 7: Litigation (Continued) (i) fraudulent suppression (alleging that the defendants had fraudulently suppressed the fact that they had charged less to mail-order pharmacies, wholesale distributors and/or large health care providers); and (ii) civil conspiracy (claiming that the defendants had conspired to restrain or monopolize trade and essentially repeating the state statutory conspiracy claim). The First Amended Complaint, like its predecessor, seeks unspecified compensatory and punitive damages and litigation costs, as well as injunctive and declaratory relief. In June, 1993, a suit was filed by Becton Dickinson & Co., in the United States District Court, Eastern District of North Carolina, against several companies, including the Company, alleging patent infringement by certain of the Company's diagnostic products. The complaint seeks injunctive relief, unspecified compensatory damages and litigation costs. In October, 1992, a suit was filed by Unilever against the Company's subsidiary in the United Kingdom alleging patent infringement by certain of the Company's diagnostic products. The complaint seeks injunctive relief and unspecified compensatory damages. The Company believes, based on opinion of counsel, it has good defenses to each of the above-described legal actions and should prevail. Additional product liability claims related to Felbatol use have been threatened against the Company. At this point, the Company cannot evaluate the merits of such claims and does not know whether or to what extent legal actions will arise from such claims and, therefore, is unable to predict the financial impact they may have. Note 8: Cash Equivalents and Short-Term Investments The Company has adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities". At December 31, 1994, all such investments were intended to be held to maturity as defined in SFAS No. 115 and have contractual maturities of less than one year. The amortized cost approximated fair value. The amortized cost at December 31, 1994, of U.S. Treasury securities was $10,190,000 and was classified in the balance sheet in "Cash and Cash Equivalents". The amortized cost of certificates of deposit and securities issued by the Canadian government were $9,000,000 and $8,609,000, respectively, and are classified in "Short-Term Investments". (Continued) CARTER-WALLACE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 (Continued) Note 9: Accounting Changes The Company provides certain health care and life insurance benefits for retired employees. Effective April 1, 1993, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions". SFAS No. 106 requires companies to accrue postretirement benefits during the years the employees render service until they attain full eligibility for those benefits. Previously, these costs were recognized as expense as the premiums were paid. The postretirement benefit plans are unfunded. The cumulative effect of adopting SFAS No. 106 as of April 1, 1993, resulted in a charge of $69,554,000 before taxes or $43,819,000 after taxes ($.96 per share). This non-cash charge represents the accumulated benefit obligation which the Company has elected to recognize immediately. The initial postretirement benefit obligation was subsequently reduced as a result of plan modifications made effective July 1, 1993. In accordance with SFAS No. 106, this reduction in the obligation is being amortized as a component of the net periodic postretirement expense in current and future years. During the quarter ended March 31, 1994, the Company adopted SFAS No. 112 "Employers' Accounting for Postemployment Benefits" effective April 1, 1993. SFAS No. 112 requires accrual accounting for benefits provided to former or inactive employees after employment but before retirement. Accordingly, results of operations in the three months ended June 30, 1993 and the nine months ended December 31, 1993 have been restated to reflect the cumulative effect of adopting SFAS No. 112 of $4,700,000 before taxes or $2,820,000 after taxes ($.06 per share). Annual ongoing costs for these benefits related to the adoption of this statement are not material. INDEPENDENT AUDITORS' REPORT The Board of Directors Carter-Wallace, Inc.: We have reviewed the condensed consolidated balance sheet of Carter-Wallace, Inc. and subsidiaries as of December 31, 1994, and the related condensed consolidated statements of earnings for the three-month and nine-month periods ended December 31, 1994 and 1993 and the condensed consolidated statements of cash flows for the nine-month periods ended December 31, 1994 and 1993 in accordance with standards established by the American Institute of Certified Public Accountants. These condensed consolidated financial statements are the responsibility of the Company's management. A review of interim financial information consists principally of applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Carter-Wallace, Inc. and subsidiaries as of March 31, 1994, and the related consolidated statements of earnings and retained earnings, and cash flows for the year then ended (not presented herein); and in our report dated June 6, 1994, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 1994 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. As discussed in note 9 to the condensed consolidated financial statements, the Company adopted the provisions of the Financial Accounting Standards Board's Statements No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" and No. 112 "Employers' Accounting for Postemployment Benefits" in 1994. (Continued) INDEPENDENT AUDITORS' REPORT (Continued) As discussed in note 5 to the condensed consolidated financial statements, on September 27, 1994, the Federal Food and Drug Administration (FDA) Peripheral and Central Nervous System Drugs Advisory Committee met to discuss the continued availability of Felbatol due to reports of aplastic anemia and the risk of acute liver failure associated with the use of Felbatol. The FDA recommended that the drug remain available only for patients with severe epilepsy for whom the benefits outweigh the risks and that changes be made to the product's labeling to reflect the risk of acute liver failure. As a result of the matters discussed above, the Company incurred in the quarter ended September 30, 1994 a one-time pre-tax charge of $36,640,000 primarily related to inventory write-offs, purchase and other commitments and anticipated product returns including trade announcements. If, as a result of the matters discussed above, the product at some future date is no longer available in the market, the Company will incur an additional one-time charge that would have a material adverse effect on the Company's results of operations and possibly on its financial condition. The Company currently estimates that the additional one-time charge consisting primarily of inventory write-offs and anticipated returns of product currently in the market, will be in the range of $30,000,000 to $35,000,000 on a pre-tax basis. The ultimate outcome of this matter cannot presently be determined. Accordingly, no provision for any liability related to this additional one-time charge has been recognized in the accompanying financial statements. As discussed in note 7 to the condensed consolidated financial statements, the Company is a defendant in several lawsuits including two product liability class action suits, two federal securities class action suits and three individual product liability suits related to Felbatol, three class action suits involving alleged price fixing within the pharmaceutical industry and two patent infringement suits involving the Company's diagnostic products. In addition, an alleged shareholder of the Company instituted an action which purports to be brought derivatively on behalf and for the benefit of the Company against the directors of the Company for breach of fiduciary duty, gross mismanagement and waste of corporate assets in connection with the development and marketing of Felbatol. The Company believes, based on opinion of counsel, it has good defenses to each of the above-described legal actions and should prevail. In addition, product liability claims related to Felbatol use have been threatened against the Company. At this point, the Company cannot evaluate the merits of such claims and does not know whether or to what extent legal actions will arise from such claims, and therefore, is unable to predict the financial impact they may have. The ultimate outcome of all of these matters cannot presently be determined. Accordingly, no provision for any liability has been recognized in the accompanying financial statements. KPMG Peat Marwick LLP February 9, 1995 New York, New York CARTER-WALLACE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - Three months ended December 31, 1994 compared to three months ended December 31, 1993 Consolidated earnings after taxes in the three months ended December 31, 1994 ("fiscal 1995 period") before the one-time restructuring charge were approximately $7,800,000 or $.17 per share as compared to net earnings of approximately $12,900,000 or $.28 per share in the three months ended December 31, 1993 ("fiscal 1994 period"). The one-time charge for restructuring resulted in a pre-tax charge of $20,500,000 ($12,400,000 after tax or $.27 per share) in the three months ended December 31, 1994. (See detailed comments below related to the restructuring charge). Net sales decreased $19,779,000 (11.2%) in the fiscal 1995 period as compared to net sales in the fiscal 1994 period. The lower sales level was attributable to reduced unit volume in the Health Care segment as a result of the absence of sales of Organidin (iodinated glycerol). Sales of this formula of Organidin were discontinued in June, 1994. In the prior year period sales of Organidin (iodinated glycerol), which benefitted from a decline in sales of competitive products, accounted for 19% of consolidated sales. Sales of Felbatol were also lower than the prior year period. (See "Discontinuance of the Organidin (Iodinated Glycerol) Product Line" and "Felbatol (felbamate)" in Management's Discussion and Analysis of Financial Condition and Results of Operations). The timing and amount of future price increases in the Health Care segment may be negatively influenced by competitive pressures and the possibility of government regulation. Sales of pharmaceutical products in the Health Care segment continue to be adversely impacted by generic erosion. Sales were higher in the Consumer Products segment predominately due to unit volume gains, including sales from the recently acquired international businesses in France and Australia, and selling price increases. Higher foreign exchange rates in comparison with the prior year had the effect of increasing sales in the fiscal 1995 period by $700,000. The effect of changes in foreign exchange rates on results of operations in the fiscal 1995 period compared to the prior year period was not significant. Other revenues increased $338,000 or 30.0% in the fiscal 1995 period as compared to the fiscal 1994 period. Cost of goods sold as a percentage of net sales increased from 32.4% in the fiscal 1994 period to 34.5% in the 1995 period primarily due to changes in product mix. (Continued) CARTER-WALLACE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Advertising, marketing and other selling expenses decreased by $5,302,000 or 8.0% due to a reduced level of spending in the Health Care segment. This decrease was primarily related to lower spending for Organidin (iodinated glycerol) and Felbatol. Advertising, marketing and other selling expenses increased in support of products in the Consumer Products segment. Research and development expenses decreased by $7,869,000 or 54.6%. The Company announced that in October, 1994 it virtually eliminated its Wallace Laboratories Division internal research and development capability. See "Restructuring of Operations and Facilities" in Management's Discussion and Analysis of Financial Condition and Results of Operations. General, administrative and other expenses increased $2,211,000 or 10.7% in the fiscal 1995 period as compared to the fiscal 1994 period. This increase primarily relates to employee benefits, a trade receivable reserve as a result of the bankruptcy of a pharmaceutical wholesaler and other administrative costs. Interest expense increased $401,000 (77.7%) in the fiscal 1995 period as compared to the fiscal 1994 period due to increased borrowing to finance international acquisitions. In the fiscal 1995 period, the Company had a 39% annual effective net tax benefit on its reported consolidated loss. The tax benefit of 39% is higher than the prior year's tax provision on operations of 31% because most of the one-time charges are U.S. related and will be deductible for federal and state income tax purposes. If further one-time charges to operations are required as a result of the Felbatol issues and/or the ongoing review of operations and facilities noted below, the annual effective tax rate in subsequent quarters and for the fiscal 1995 period could vary from the 39% tax benefit applied in the period ended December 31, 1994. Tax rates in the current and future years are and will be adversely affected by lower tax savings resulting from substantially reduced Puerto Rican operations and the absence of research and development tax credits. (Continued) CARTER-WALLACE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - Nine months ended December 31, 1994 compared to nine months ended December 31, 1993 Consolidated earnings after taxes in the nine months ended December 31, 1994 ("fiscal 1995 period") before the provision for the loss on the discontinuance of the Organidin (iodinated glycerol) product line, the one- time restructuring charges and the provision for loss on Felbatol (felbamate), an antiepileptic drug for the treatment of certain seizure disorders, were approximately $23,500,000 or $.51 per share as compared to net earnings before the cumulative effect of the accounting changes of approximately $20,100,000 or $.44 per share in the nine months ended December 31, 1993 ("fiscal 1994 period"). The one-time charges noted above resulted in a pre-tax charge to income of $123,640,000 ($75,000,000 after tax or $1.63 per share) in the nine months ended December 31, 1994. (See detailed comments below related to the discontinuance of Organidin (iodinated glycerol) sales, restructuring charges and the Felbatol developments). Net sales increased $18,620,000 (3.8%) in the fiscal 1995 period as compared to net sales in the fiscal 1994 period. The higher sales level was attributable to increased sales in the Consumer Products segment due to both unit volume gains and selling price increases. The Health Care segment recorded lower sales due to unit volume decreases partially offset by selling price increases. Health Care sales were negatively impacted by the discontinuance of Organidin (iodinated glycerol) sales in June, 1994. Sales in both the Consumer Products and Health Care segments were positively affected by the recently acquired international businesses in France, Italy and Australia. The timing and amount of future price increases in the Health Care segment may be negatively influenced by competitive pressures and the possibility of government regulation. Sales of other pharmaceutical products in the Health Care segment continue to be adversely impacted by generic erosion. Lower foreign exchange rates in comparison with the prior year had the effect of decreasing sales in the fiscal 1995 period by $900,000. The effect of changes in foreign exchange rates on results of operations in the fiscal 1995 period compared to the prior year period was not significant. Other revenues increased $594,000 or 16.1% in the fiscal 1995 period as compared to the fiscal 1994 period. Cost of goods sold as a percentage of net sales increased from 34.3% in the fiscal 1994 period to 35.4% in the 1995 period primarily due to changes in product mix. (Continued) CARTER-WALLACE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Advertising, marketing and other selling expenses decreased by $5,080,000 due to lower spending in the Health Care segment. This decrease was primarily related to lower spending for Organidin (iodinated glycerol) and Felbatol. Advertising, marketing and other selling expenses increased in support of products in the Consumer Products segment. Research and development expenses decreased by $6,818,000 or 17.4%. The Company announced that in October, 1994 it virtually eliminated its Wallace Laboratories Division internal research and development capability. See "Restructuring of Operations and Facilities" in Management's Discussion and Analysis of Financial Condition and Results of Operations. General, administrative and other expenses increased $7,530,000 or 12.6% in the fiscal 1995 period as compared to the fiscal 1994 period. This increase was primarily due to provisions for a foreign patent claim and a trade receivable reserve related to the bankruptcies of two pharmaceutical wholesalers, as well as increased employee benefits and other administrative costs. Interest expense increased $250,000 (16.3%) in the fiscal 1995 period as compared to the fiscal 1994 period due to increased borrowings to finance international acquisitions. In the fiscal 1995 period, the Company had a 39% annual effective net tax benefit on its reported consolidated loss. The tax benefit of 39% is higher than the prior year's tax provision on operations of 31% because most of the one-time charges are U.S. related and will be deductible for federal and state income tax purposes. If further one-time charges to operations are required as a result of the Felbatol issues and/or the ongoing review of operations and facilities noted below, the annual effective tax rate in subsequent quarters and for the fiscal 1995 period could vary from the 39% tax benefit applied in the period ended December 31, 1994. Tax rates in the current and future years are and will be adversely affected by lower tax savings resulting from substantially reduced Puerto Rican operations and the absence of research and development tax credits. During the nine months ended December 31, 1993, the Company adjusted its net deferred tax asset to reflect a change in federal corporate income tax rates. As a result, the provision for income taxes in the fiscal 1994 period includes a one-time credit of $815,000 or $.02 per share as required by Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes". The effect of the tax law change on the provision for income taxes in the fiscal 1994 period was not significant. (Continued) CARTER-WALLACE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Restructuring of Operations and Facilities Prompted by the discontinuance of its line of iodinated glycerol formulation of Organidin products and by the significant adverse effect on existing and potential sales of Felbatol (felbamate) due to use restrictions required by the Federal Food and Drug Administration ("FDA") the Company is engaged in a restructuring program which is intended to reduce costs and increase efficiencies. As part of the restructuring program, the Company has substantially reduced its pharmaceutical sales force and marketing support staff and virtually eliminated its Wallace Laboratories Division internal research and development capability. However, the Company will continue its research and development of Astelin (azelastine) for rhinitis and asthma, and taurolidine, an antitoxin for the treatment of sepsis, and to the extent such work exceeds the Company's remaining internal research and development resources, such work will be done through independent research facilities. The consolidation of its manufacturing operations in the U.S. and Puerto Rico, when completed, will result in the closure of certain of the Company's plants and significantly reduced production at one plant. In connection with the restructuring described above, the Company incurred a one-time pre-tax charge in the quarter ended September 30, 1994 of $49,000,000 consisting primarily of plant closing costs including equipment write-offs ($24,500,000) and employee termination costs ($20,600,000). As part of its restructuring program, the Company further reduced its workforce subsequent to December 31, 1994 and is in the process of relocating one of its divisions to its Cranbury, New Jersey facility. In this regard, the Company incurred a one-time pre-tax restructuring charge of $20,500,000 in the quarter ended December 31, 1994, consisting primarily of estimated costs associated with the planned subleasing of office space on which the Company holds a long-term lease ($19,400,000). An additional one-time pre-tax charge of approximately $6,500,000 relating to employee termination costs will be incurred in the fourth quarter ending March 31, 1995 and a $1,800,000 charge related to the office relocation is expected to be incurred in the fiscal year ending March 31, 1996. Recently announced accounting pronouncements do not permit these severance and relocation costs to be recorded in the December, 1994 period. The total reduction in the number of employees is approximately 790 including 85 vacancies that will not be filled and represents 41% of the Company's pharmaceutical sales force and 27% of its total domestic workforce. In connection with the restructuring, the Company has virtually eliminated its Wallace Laboratories Division internal research and development capability. The Company is continuing to review its operations and may take other steps to reduce costs and increase efficiencies in the future which may result in additional one-time charges. (Continued) CARTER-WALLACE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Felbatol (felbamate) On August 1, 1994, the Company disclosed that it had sent a letter to approximately 240,000 physicians recommending, in conjunction with the FDA, the immediate withdrawal of patients from treatment with Felbatol (felbamate), unless, in the physician's judgment, an abrupt withdrawal would be deemed to pose a more serious risk to the patient. Carter-Wallace's recommendation was prompted by reports of ten cases of aplastic anemia in association with the use of Felbatol. No such cases were observed during the premarketing, clinical testing and development of Felbatol. On September 21, 1994, after discussions with the FDA, the Company mailed a letter alerting physicians to the risk of acute liver failure in association with the use of Felbatol and the need to monitor liver function in all patients who are still taking the drug. On September 27, 1994, the FDA's Peripheral and Central Nervous System Drugs Advisory Committee met to discuss the continued availability of Felbatol. The Committee recommended that the drug remain available only for patients with severe epilepsy for whom the benefits outweigh the risks, and that changes be made to the product's labeling to reflect the risk of acute liver failure. Carter-Wallace introduced Felbatol in September, 1993 for the treatment of partial seizures with and without secondary generalization in adults and for Lennox-Gastaut Syndrome, a serious form of childhood epilepsy. Due to substantial introductory spending levels and continued research and development, the Company incurred losses with respect to Felbatol since introduction and for the three months and nine months ended December 31, 1994. As a result of the Felbatol matters discussed above, the Company incurred in the quarter ended September 30, 1994 a one-time pre-tax charge of $36,640,000 primarily related to inventory write-offs ($15,500,000), purchase and other commitments ($9,400,000) and anticipated product returns including trade announcements ($4,900,000). At the present time Felbatol continues to be available on the market. If, as a result of the matters discussed above, the product at some future date is no longer available in the market, the Company will incur an additional one-time charge that would have a material adverse effect on the Company's results of operations and possibly on its financial condition. Should the product no longer be available, the Company currently estimates that the additional one-time charge consisting primarily of inventory write-offs and anticipated returns of product currently in the market, will be in the range of $30,000,000 to $35,000,000 on a pre-tax basis. See the discussion above of the Company's income tax rate. (Continued) CARTER-WALLACE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Felbatol (felbamate) (Continued) As previously reported, the Company entered into a licensing agreement with Schering-Plough Corporation, granting Schering-Plough exclusive marketing rights in all markets except the United States and its territories and possessions, Canada and Mexico, to Felbatol. Separately, Schering-Plough and Carter-Wallace agreed that, under certain circumstances, they will put into effect a co-promotional arrangement with respect to a Schering-Plough pharmaceutical product to be determined in the future. The matters discussed above will likely result in a significant adverse effect on the amount of royalties and fees, if any, to be received from Schering-Plough in the future under these agreements. Discontinuance of the Organidin (Iodinated Glycerol) Product Line In June, 1994, the Company and the FDA reached an agreement to discontinue the manufacture and shipment of the Organidin (iodinated glycerol) line of products. The agreement between the Company and the FDA permits the continued shipping, prescribing and dispensing of existing stocks of Organidin (iodinated glycerol) product currently in channels of distribution. As previously disclosed by the Company, in April, 1993 the Company received a letter from the FDA requesting that it discontinue marketing Organidin (iodinated glycerol) products. Subsequent meetings between the Company and FDA resulted in this agreement. As a result of the agreement noted above, the Company incurred in the quarter ended June 30, 1994 a one-time charge to pre-tax earnings of $17,500,000 primarily related to a provision for any product returns ($9,400,000) and for inventory write-offs ($3,600,000). Sales and pre-tax operating profits of the Organidin (iodinated glycerol) line included in the nine months ended December 31, 1994 were $20,800,000 and $11,400,000, respectively, compared to sales and pre-tax operating profits included in the nine months ended December 31, 1993 of $53,300,000 and $22,100,000, respectively. Sales and pre-tax operating profits of the Organidin (iodinated glycerol) line of products were $59,900,000 and $22,200,000 for the fiscal year ended March 31, 1992, $43,400,000 and $7,600,000 for the fiscal year ended March 31, 1993 and $74,400,000 and $31,600,000 for the fiscal year ended March 31, 1994. Organidin operating profits were computed on a basis consistent with that used to report operating profits for the Health Care business segment in the Company's Annual Report. (Continued) CARTER-WALLACE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Astelin In July, 1994 the Company received a "non-approval" letter from the FDA for the Astelin tablet New Drug Application (NDA) for rhinitis. The scientific issues raised in this letter as well as those raised in the "non-approval" letters previously received with respect to Astelin nasal spray for rhinitis and Astelin tablets for asthma were discussed with the FDA in meetings in July and August. Responses to all outstanding issues raised by the FDA are being prepared by the Company. The Company is currently analyzing two additional asthma efficacy studies. As a result of the meetings with the FDA, the Company is unable at this time to determine when Astelin will be reviewed by the appropriate FDA advisory panel and when and if the NDAs will be approved. Accounting Changes During the fiscal 1994 period the Company adopted Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" and elected to immediately recognize the transition obligation of $69,554,000 before taxes or $43,819,000 after taxes ($.96 per share). Effective July 1, 1993, the Company amended its postretirement benefit plan which reduced the annual ongoing costs of these benefits. During the quarter ended March 31, 1994, the Company adopted Statement of Financial Accounting Standards No. 112 "Employers' Accounting for Postemployment Benefits" effective April 1, 1993. Accordingly, results of operations in the three months ended June 30, 1993 and the nine months ended December 31, 1993 have been restated to reflect a one-time pre-tax charge to earnings of $4,700,000 or $2,820,000 after taxes ($.06 per share). Liquidity and Capital Resources Funds provided from operations are used for capital expenditures, acquisitions, the purchase of treasury stock, the payment of dividends and working capital requirements. The cash dividend payable on March 4, 1995 to shareholders of record on February 10, 1995 will be at the rate of $.04 per share. Quarterly dividends paid for each of the first three quarters of the current fiscal year were at the rate of $.0833 per share. External borrowings are incurred as needed to satisfy cash requirements relating to seasonal business fluctuations, to finance major facility expansion programs and to finance major acquisitions. (Continued) CARTER-WALLACE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources (Continued) The Company is a party to a $75,000,000 revolving credit facility with a group of banks. During November, 1994 the Company and the banks amended the credit agreement to exclude from the material adverse change provisions the one-time charges for Organidin and the restructuring program, as well as the current and any further one-time charges for Felbatol should the product no longer be available. Consequently, the Company is now able to access its revolving credit line. The total cash requirements for the one-time charges recorded through the nine months ended December 31, 1994 are estimated to be $82,500,000, of which approximately $39,000,000 is expected to be incurred in the fiscal year ending March 31, 1995 and $25,500,000 in the fiscal year ended March 31, 1996. The anticipated cash benefit from income taxes related to these one-time charges is estimated to be $48,600,000 which will be received over a period of years. The net cash outlay for the one-time charges after consideration of the tax benefits is approximately $33,900,000. PART II - OTHER INFORMATION Item 1 - Legal Proceedings Please refer to Note 7 "Litigation" of Notes to Condensed Consolidated Financial Statements for information regarding legal proceedings. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits - None (b) Reports on Form 8-K - No reports on Form 8-K have been filed during the quarter ended December 31, 1994 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Carter-Wallace, Inc. (Registrant) Date: February 9, 1995 s/Daniel J. Black Daniel J. Black President & Chief Operating Officer Date: February 9, 1995 s/Paul A. Veteri Paul A. Veteri Vice President, Finance & Chief Financial Officer EX-27 2
5 The Schedule Contains Summary Financial Information Extracted from the Condensed Consolidated Statements of Earnings and Condensed Consolidated Balance Sheets And Is Qualified In Its Entirety By Reference to Such Financial Statements. 1 9-MOS MAR-31-1995 DEC-31-1994 50,661,000 17,609,000 127,905,000 7,660,000 110,318,000 330,765,000 251,928,000 111,696,000 663,015,000 186,108,000 35,658,000 47,205,000 0 0 287,022,000 663,015,000 508,095,000 512,386,000 180,031,000 596,751,000 0 0 1,785,000 (84,365,000) (32,902,000) (51,463,000) 0 0 0 (51,463,000) (1.12) (1.12)
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