-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G8svPCdu96MB9TCxaJZzVHoxxxrcuxhBWN8MfkvfRCh2UKWURkZ7BgSKpvCXnt2e iJBhGKH/cvk3U1ophmWAHg== 0000038074-96-000014.txt : 19960816 0000038074-96-000014.hdr.sgml : 19960816 ACCESSION NUMBER: 0000038074-96-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOREST LABORATORIES INC CENTRAL INDEX KEY: 0000038074 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 111798614 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05438 FILM NUMBER: 96615049 BUSINESS ADDRESS: STREET 1: 909 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2124217850 MAIL ADDRESS: STREET 1: 909 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 10-Q 1 August 14, 1996 Securities and Exchange Commission 450 Fifth Street Washington, D.C. 20549 RE: FOREST LABORATORIES, INC. QUARTERLY - -- ----------------------------------- REPORT ON FORM 10-Q FOR THE QUARTER ----------------------------------- ENDED JUNE 30, 1996 ------------------- COMMISSION FILE NO. 1-5438 -------------------------- EXHIBIT 27 ARTICLE 5 OF REGULATION S-X -------------------------------------- Gentlemen: I have submitted via EDGAR for filing on behalf of the above-captioned registrant, one (1) complete copy of its Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 and Exhibit 27, Article 5 of Regulation S-X. Very truly yours, /s/KENNETH E. GOODMAN - --------------------- Kenneth E. Goodman KEG/kc enclosure FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________ (Mark One) --- / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE --- SECURITIES EXCHANGE ACT OF 1934 For the Period Ended June 30, 1996 --- / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE --- SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ________________________ Commission File No. 1-5438 FOREST LABORATORIES, INC. - ------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 11-1798614 - ------------------------------- ----------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 909 Third Avenue - ---------------- New York, New York 10022-4731 - -------------------- ------------ (address of principal (Zip Code) executive office) Registrant's telephone number, including area code 212-421-7850 ------------- 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 ------ ------ Number of shares outstanding of Registrant's Common Stock as of August 14, 1996: 44,387,240. PART I - FINANCIAL INFORMATION - ------------------------------ FOREST LABORATORIES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets June 30, 1996 (In thousands) (Unaudited) March 31, 1996 -------------- ------------- ASSETS - ------ Current assets: Cash (including cash equivalent investments of $228,293 in June and $78,818 in March) $236,380 $ 83,543 Marketable securities 21,359 40,164 Accounts receivable, less allowance for possible losses of $5,400 in June and $5,309 in March 140,542 254,708 Inventories 81,123 58,949 Deferred income taxes 22,319 20,411 Other current assets 10,929 12,837 -------- -------- Total current assets 512,652 470,612 Marketable securities 35,480 22,170 -------- -------- Property, plant and equipment 109,553 106,164 Less accumulated depreciation 28,725 26,807 -------- -------- 80,828 79,357 -------- -------- Other assets: Investment in unconsolidated affiliate 75,902 Excess of cost of investment in subsidiaries over net assets acquired, less accumulated amortization of $7,022 in June and $6,866 in March 17,937 18,093 License agreements, product rights and other intangible assets, less accumulated amortization of $52,124 in June and $51,025 in March 213,125 216,078 Deferred income taxes 6,908 7,398 Other 10,416 9,751 -------- -------- Total other assets 248,386 327,222 -------- -------- TOTAL ASSETS $877,346 $899,361 ======== ========
See notes to condensed consolidated financial statements. -2- FOREST LABORATORIES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets June 30, 1996 (In thousands, except for par values) (Unaudited) March 31, 1996 -------------- -------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 27,881 $ 13,994 Accrued expenses 35,280 50,332 Income taxes payable 29,650 25,245 -------- -------- Total current liabilities 92,811 89,571 -------- -------- Deferred income taxes 277 273 -------- -------- Commitments and contingencies Shareholders' equity: Series A junior participating preferred stock, $1.00 par; shares authorized 1,000; no shares issued or outstanding Common stock, $.10 par; shares authorized 250,000; issued 48,205 shares in June and 48,133 shares in March 4,820 4,813 Capital in excess of par 308,711 306,635 Retained earnings 563,871 542,005 Other ( 2,251) ( 2,985) -------- -------- 875,151 850,468 Less common stock in treasury, at cost (3,845 shares in June and 2,650 shares in March) 90,893 40,951 -------- -------- Total shareholders' equity 784,258 809,517 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $877,346 $899,361 ======== ========
See notes to condensed consolidated financial statements -3- FOREST LABORATORIES, INC. AND SUBSIDIARIES, Condensed Consolidated Statements of Income (Unaudited) Three Months Ended (In thousands, except per share amounts) June 30, ------------------------- 1996 1995 --------- -------- Net sales $ 90,316 $106,943 Non-recurring income, net (Note 2) 19,149 Other income 4,405 3,757 -------- -------- 113,870 110,700 -------- -------- Costs and expenses: Cost of sales 19,805 20,898 Selling, general and administrative 55,270 39,900 Research and development 7,246 8,539 -------- -------- 82,321 69,337 -------- -------- Income before income taxes 31,549 41,363 Income taxes 9,683 14,808 -------- -------- Net income $ 21,866 $ 26,555 ======== ======== Earnings per common and common equivalent share: Primary $.47 $.57 ==== ==== Fully diluted $.47 $.57 ==== ==== Weighted average number of common and common equivalent shares outstanding: Primary 46,656 46,926 ====== ====== Fully diluted 46,656 46,926 ====== ====== Dividends per share $-0- $-0- ==== ====
See notes to condensed consolidated financial statements. -4- FOREST LABORATORIES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended (In thousands) June 30, ----------------------- 1996 1995 -------- --------- Cash flows from operating activities: Net income $ 21,866 $ 26,555 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,374 1,150 Amortization 3,139 2,811 Gain on sale of investment in unconsolidated affiliate ( 26,399) Deferred income tax (credit) expense ( 1,414) 396 Foreign currency transaction loss 64 73 Net change in operating assets and liabilities: Decrease (increase) in: Accounts receivable, net 114,166 7,049 Inventories ( 22,174) ( 1,533) Other current assets 1,908 ( 274) Increase (decrease) in: Accounts payable 13,887 1,430 Accrued expenses ( 15,052) 6,608 Income taxes payable 4,405 12,106 Increase (decrease) in other assets 665 ( 764) -------- -------- Net cash provided by operating activities 96,435 55,607 -------- -------- Cash flows from investing activities: Purchase of property, plant and equipment, net ( 2,565) ( 2,787) Proceeds from sale of investment in unconsolidated affiliate 102,301 Purchase of marketable securities Available-for-sale ( 27,785) ( 33,389) Redemption of marketable securities Available-for-sale 33,279 45,111 -------- -------- Net cash provided by investing activities 105,230 8,935 -------- -------- - Continued -
-5- FOREST LABORATORIES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) - Continued - Three Months Ended (In thousands) June 30, 1996 1995 --------- --------- Cash flows from financing activities: Net proceeds from common stock options exercised by employees under stock option plans $ 2,083 $ 2,112 Purchase of treasury stock, net ( 49,942) -------- -------- Net cash provided by (used in) financing activities ( 47,859) 2,112 -------- -------- Effect of exchange rate changes on cash ( 969) ( 206) -------- -------- Increase in cash and cash equivalents 152,837 66,448 Cash and cash equivalents, beginning of period 83,543 107,611 -------- -------- Cash and cash equivalents, end of period $236,380 $174,059 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Income taxes $6,067 $2,306 See notes to condensed consolidated financial statements.
-6- FOREST LABORATORIES, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Basis of Presentation --------------------- The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form-10Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending March 31, 1997. For further information refer to the consolidated financial statements and footnotes thereto incorporated by reference in the Company's Annual Report on Form 10-K for the year ended March 31, 1996. 2. Non-recurring Income, net ------------------------- The quarter's results include a net non-recurring gain of $19,149,000 or $12,687,000 ($.27 per share) after taxes. The gain results from the sale of Company's approximate 21% equity holding in Biovail Corporation International which resulted in a gain of $26,399,000 or $17,019,000 ($.36 per share) after taxes partially offset by non-recurring charges of $7,250,000 or $4,332,000 ($.09 per share) after tax for expenses relating to the closing of certain of the Company's facilities and for a reserve for the estimated cost of settlement of certain litigations. -7- FOREST LABORATORIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION AND LIQUIDITY Net current assets increased by $38,800,000 - --------------------------------- from March 31, 1996. The increase resulted principally from the Company selling its investment in Biovail Corporation International ("BCI") for $102,301,000 (net of commissions and expenses). The balance in accounts receivable declined approximately $114,000,000 from the balance at March 31, 1996 due to collections of trade accounts resulted which were previously granted with extended dating terms. The collections in an improvement in the accounts receivable days sales outstanding from 208 days at March 31, 1996 to 142 days at June 30, 1996. The cash generated from these activities was invested in cash equivalent investments and is also being used to repurchase from time to time in the open market, up to 4,500,000 shares (approximately 10%) of the ompany's outstanding common stock. At June 30, 1996, the Company had purchased 1,191,800 shares at a cost of $49,796,000. Inventories increased $22,174,000 in connection with the Company's recent launch of Tiazac-R- and from higher than normal inventory balances of the Company's Lorcet product line as a result of generic competition. Management believes that current cash levels, coupled with funds to be generated by on-going operations, will continue to provide adequate liquidity to facilitate potential acquisitions of products or companies, capital investments and the share repurchase. RESULTS OF OPERATIONS Net sales for the current quarter decreased $16,627,000 - --------------------- as compared with the same period last year due principally to generic competition for Lorcet. Net volume declines of the Company's principal promoted products amounted to $15,392,000, of which $12,631,000 was attributed to Lorcet. The Company is experiencing aggressive pricing competition for its generic product lines. As a result, sales of the Company's generic product lines decreased by $3,757,000 of which $629,000 was the result of volume declines and $3,128,000 was attributed to price decreases. In addition, $3,400,000 of the sales decrease resulted from lower average selling prices on increased sales of the Company's principal promoted products to certain managed care customers. Sales increases of certain of the Company's older unpromoted product lines amoutned to $2,439,000 and sales of Tiazac were $3,483,000. Non-recurring income, net is comprised of a non-recurring gain of $26,399,000 on the sale of the Company's approximate 21% equity holding in BCI, offset by non-recurring charges of $7,250,000 for expenses relating to the closing of certain of the Company's facilities and for a reserve for the estimated cost of settlement of certain litigations. Cost of sales as a percentage of sales increased to 22% during the first quarter of fiscal 1997 from 20% in the similar fiscal period of 1996 due to lower prices received on certain products. The increase in selling, general and administrative expense of $15,370,000 during the current quarter as compared with the prior year is principally due to the cost of an expanding the Company's salesforce by 200 representatives and for costs incurred in conjunction with the launch of Tiazac. -8- FOREST LABORATORIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Research and development expenses decreased $1,293,000 during the current quarter over the same period last year as work is concluding on the phase III clinical trials on Synapton-TM-, the Company's acetylcholinesterase inhibitor being developed for the treatment of Alzheimer's Disease. Income taxes as a percentage of income before taxes was 31% for the current quarter versus 36% in the similar period last year due principally to a decrese in the proportion of the Company's operating profit derived from fully taxable operations as compared to tax exempt operations and tax free interest income. Inflation has not had a material effect on the Company's operations for the periods presented. -9- Part II - Other Information - --------------------------- Item 1. Legal Proceedings ----------------- Reference is made to the Company's Annual Report on Form 10-K for the year ended March 31, 1996, for a description of certain legal proceedings. Item 6. (b) Reports on Form 8-K - None -10- PAGE 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. Date: August 14, 1996 Forest Laboratories, Inc. (Registrant) /s/ Howard Solomon --------------------------- Howard Solomon President and Chief Executive Officer /s/ Kenneth E. Goodman ---------------------------- Kenneth E. Goodman Vice President - Finance -11- EX-27 2
5 0000038074 JAMES A. BRAJA 3-MOS MAR-31-1997 JUN-30-1996 236,380 56,839 145,942 5,400 81,123 512,652 109,553 28,725 877,346 92,811 0 0 0 4,820 779,438 877,346 90,316 113,870 19,805 75,075 7,246 105 0 31,549 9,683 21,866 0 0 0 21,866 .47 .47
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