UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
____________________
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): October 15, 2012
K-V PHARMACEUTICAL COMPANY
(Exact name of registrant as specified in its charter)
____________________
Delaware |
1-9601 |
43-0618919 | ||
(State or other jurisdiction of incorporation) |
(CommissionFile Number) |
(I.R.S. Employer Identification No.) | ||
2280 Schuetz Road |
||||
St. Louis, MO |
63146 | |||
(Address of principal executive offices) |
(Zip Code) | |||
(314) 645-6600 |
||||
(Registrant's telephone number, including area code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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☐ |
Written communications pursuant to Rule 425 under the Securities Act. |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act. |
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. |
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. |
Item 7.01 Regulation FD Disclosure.
As previously disclosed in its Current Report on Form 8-K filed August 4, 2012, K-V Pharmaceutical Company (the Company) and certain of its wholly-owned domestic subsidiaries (collectively, the Debtors) filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court).
September Monthly Operating Report
On October 15, 2012, the Debtors filed with the Bankruptcy Court their Monthly Operating Report for the period from September 1, 2012 to September 30, 2012 (the MOR-September 2012), which included certain Makena® performance metrics. A copy of the MOR-September 2012 is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Authorization to Use Cash Collateral
As previously reported in the Company's Current Report on Form 8-K filed August 13, 2012, the Bankruptcy Court entered an Agreed Interim Order on August 10, 2012, which, among other things, authorized the Debtors' use of their cash collateral.
On September 14, 2012, the Bankruptcy Court entered an Order (the Final Cash Collateral Order), which, among other things, authorized the Debtors to use their cash collateral through and including October 18, 2012.
On October 16, 2012, the Bankruptcy Court So Ordered a stipulation extending the Debtors' authorization to use their cash collateral through and including November 21, 2012, unless such authority is terminated in accordance with the terms and conditions set forth in the Final Cash Collateral Order.
Regulation FD Disclosure
This Current Report on Form 8-K (including Exhibit 99.1 hereto and any information contained therein) shall not be deemed to be an admission as to the materiality of any information required to be disclosed solely by reason of Regulation FD. The information in this Item 7.01, including Exhibit 99.1, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Cautionary Statement Regarding Financial and Operating Data
The Company cautions investors and potential investors not to place undue reliance upon the information contained in the MOR-September 2012, which was not prepared for the purpose of providing the basis for an investment decision relating to any of the securities of the Company. The Company cannot predict what the ultimate value of any of its securities may be and it remains too early to determine whether holders of any such securities will receive any distribution in the Debtors' reorganization. In particular, in most cases under Chapter 11 of the Bankruptcy Code, holders of equity securities receive little or no recovery of value from their investment. The MOR-September 2012 is limited in scope, covers a limited time period and has been prepared solely for the purpose of complying with the monthly reporting requirements of the Office of the United States Trustee of the Southern District of New York and the Bankruptcy Court. The MOR-September 2012 was not audited or reviewed by independent accountants, is in a format prescribed by applicable bankruptcy laws and regulations and is subject to future adjustment and reconciliation. The MOR-September 2012 does not include all of the information and footnotes required by GAAP. Therefore, the MOR-September 2012 does not necessarily contain all information required in filings pursuant to the Exchange Act, or may present such information differently from such requirements. There can be no assurance that, from the perspective of an investor or potential investor in the Company's securities, the MOR-September 2012 is complete. The MOR-September 2012 also contains information for periods which are shorter or otherwise different from those required in the Company's reports pursuant to the Exchange Act, and such information might not be indicative of the Company's financial condition or operating results for the period that would be reflected in the Company's financial statements or in its reports pursuant to the Exchange Act. Results set forth in the MOR-September 2012 should not be viewed as indicative of future results.
Item 9.01 Financial Statements and Exhibits.
(d) The following exhibits are furnished as part of this report:
Exhibit Number |
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Description |
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|
|
99.1 |
Monthly Operating Report for the Period from September 1, 2012 to September 30, 2012 |
The Company will post this Form 8-K on its Internet website at www.kvpharmaceutical.com. References to the Company's website address are included in this Form 8-K only as inactive textual references and the Company does not intend them to be active links to the website. Information contained on the website do not constitute part of this Form 8-K.
* * *
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 hereunto duly authorized.
Dated: October 19, 2012
K-V PHARMACEUTICAL COMPANY |
|||
By: | /s/ Patrick J. Christmas | ||
Patrick J. Christmas | |||
Vice President, General Counsel and Secretary |
|||
Exhibit 99.1
United States Bankruptcy Court |
|
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Southern District of New York |
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|
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X |
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In re: |
: |
Chapter 11 |
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: |
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K-V Discovery Solutions, Inc. et al.: |
: |
Case No. 12-13346 (ALG) |
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: |
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Debtors. |
X |
Jointly Administered |
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Monthly Operating Report for the Period
September 1, 2012 to September 30, 2012
Debtors' Address: |
2280 Schuetz Road | |
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St. Louis, Missouri 63146 | |
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Telephone: (314) 645-6000 | |
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Debtors' Attorneys: |
Willkie Farr & Gallagher LLP | |
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787 Seventh Avenue | |
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New York, New York 10019 | |
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Telephone: (212) 728-8000 | |
This Monthly Operating Report ("MOR") has been prepared solely for the purposes of complying with the monthly reporting requirements applicable in these Chapter 11 cases and is in a format that the Debtors believe is acceptable to the United States Trustee. The financial information contained herein is limited in scope and covers a limited time period. Moreover, such information is preliminary and unaudited, and is not prepared in accordance with accounting principles generally accepted in the United States.
I declare under penalty of perjury that this report and the attached documents are true and correct to the best of my knowledge and belief.
/s/ Thomas S. McHugh |
|
October 15, 2012 |
Thomas S. McHugh |
| |
Chief Financial Officer |
| |
K-V Pharmaceutical Company |
In re |
K-V DISCOVERY SOLUTIONS, INC., et al. |
|
Case No. |
12-13346 |
Debtors. |
|
Reporting Period: |
9/1/12 - 9/30/12 | |
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Federal Tax I.D.# |
13-1587982 |
CORPORATE MONTHLY OPERATING REPORT
File with the Court and submit a copy to the United States Trustee within 20 days after the end of the month and submit a copy of the report to any official committee appointed in the case.
(Reports for Rochester and Buffalo Divisions of Western District of New York are due 15 days after the end of the month, as are the reports for Southern District of New York.)
REQUIRED DOCUMENTS |
Form No. |
Document Attached |
Explanation Attached |
Schedule of Cash Receipts and Disbursements |
MOR-1 |
x |
|
Bank Reconciliation (or copies of debtor's bank reconciliations) |
MOR-1 |
x |
|
Copies of bank statements |
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|
x |
Cash disbursements journals |
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|
x |
Statement of Operations |
MOR-2 |
x |
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Balance Sheet |
MOR-3 |
x |
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Status of Post-petition Taxes |
MOR-4 |
x |
x |
Copies of IRS Form 6123 or payment receipt (See Notes to MOR 4) |
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|
x |
Copies of tax returns filed during reporting period (See Notes to MOR 4) |
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|
x |
Summary of Unpaid Post-petition Debts (See Notes to MOR 4) |
MOR-4 |
|
x |
Listing of Aged Accounts Payable (See MOR 7) |
|
x |
|
Accounts Receivable Reconciliation and Aging |
MOR-5 |
x |
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Taxes Reconciliation and Aging (See MOR 7) |
MOR-5 |
|
x |
Payments to Insiders and Professionals |
MOR-6 |
x |
|
Post Petition Status of Secured Notes, Leases Payable |
MOR-6 |
x |
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Debtor Questionnaire |
MOR-7 |
x |
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Makena® Performance Metrics |
|
x |
NOTES TO MONTHLY OPERATING REPORT
This MOR includes activity from the following Debtors:
Debtor |
Case Number | |
K-V Discovery Solutions, Inc. |
12-13346 | |
K-V Pharmaceutical Company |
12-13347 | |
Ther-Rx Corporation |
12-13348 | |
K-V Generic Pharmaceuticals, Inc. |
12-13349 | |
Zeratech Technologies USA, Inc. |
12-13350 | |
Drug Tech Corporation |
12-13351 | |
K-V Solutions USA, Inc. |
12-13352 | |
FP1096, Inc. |
12-13353 |
General Notes:
The financial statements and supplemental information contained herein are preliminary, unaudited, and may not comply in all material respects with accounting principles generally accepted in the United States ("GAAP"). In addition, the financial statements and supplemental information contained herein represent consolidated information.
The unaudited consolidated financial statements have been derived from the books and records of the Debtors and exclude activity for their non-debtor subsidiaries. This information has not been subject to certain procedures that would typically be applied to financial information in accordance with GAAP, and upon application of such procedures the financial information could be subject to changes, and these changes could be material.
The financial information contained herein is presented on a preliminary and unaudited basis and remains subject to future adjustment. The Debtors are reviewing their books and records and other information on an ongoing basis to determine whether the financial statements should be supplemented or otherwise amended. The Debtors reserve the right to file, at any time, such supplements or amendments to the financial statements that form a part of this MOR. The financial statements should not be considered an admission regarding any of the Debtors' income, expenditures or general financial condition, but rather, a current compilation of the Debtors' books and records. The Debtors do not make, and specifically disclaim, any representation or warranty as to the completeness or accuracy of the information set forth herein.
The unaudited consolidated financial statements contained herein have been prepared on a going concern basis and do not reflect or provide all of the possible consequences of the ongoing chapter 11 cases. Specifically, the unaudited consolidated financial statements do not present the amount which will ultimately be paid to settle liabilities and contingencies which may be required in these cases. As a result of the chapter 11 proceedings, the Debtors may take, or may be required to take, actions which may cause assets to be realized, or liabilities to be liquidated, for amounts other than those reflected in the unaudited consolidated financial statements.
Certain footnote disclosures normally included in unaudited consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. The results of operations contained herein are not necessarily indicative of results which may be expected for any other period or for the full year and may not necessarily reflect the consolidated results of operations and financial position of the Debtors in the future.
MOR-1:
SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS 1
(Dollars in thousands)
Debtor Case Number Cash Receipts Ther-Rx Corporation K-V Pharmaceutical Company DrugTech Corporation K-V Discovery Solutions, Inc K-V Generic Pharmaceuticals, Inc Zeratech Technologies USA, Inc K-V Solutions USA Inc FP1096, Inc Total Cash Receipts Debtor Case Number Cash 2 Disbursements K-V Pharmaceutical Company Ther-Rx Corporation K-V Discovery Solutions, Inc K-V Generic Pharmaceuticals, Inc Zeratech Technologies USA, Inc DrugTech Corporation K-V Solutions USA Inc FP1096, Inc Total Cash Disbursements
12-13348
$
4,857
12-13347
22
12-13351
8
12-13346
0
12-13349
0
12-13350
0
12-13352
0
12-13353
0
$
4,887
12-13347
$
(3,171
)
12-13348
(1,195
)
12-13346
0
12-13349
0
12-13350
0
12-13351
0
12-13352
0
12-13353
0
$
(4,366
)
Notes
1 Cash is received and disbursed by the Debtors as described in the Debtors' motion to approve continued use of their cash management system (which motion was granted on an interim basis pursuant to an order entered by the Bankruptcy Court on August 7, 2012 and on a second interim basis pursuant to an order entered by the Bankruptcy Court on September 28, 2012) and is consistent with the Debtors' historical cash management practices. All amounts listed are the balances reported by the bank as of the end of the reporting period. Copies of bank statements will be provided upon reasonable request in writing to counsel for the Debtors.
2 Cash disbursements include $181 of outstanding checks.
MOR-1 (CON'T):
BANK RECONCILIATIONS 1, 2, 3, 4, 5, 6
(Dollars in thousands)
Debtor Case Number Bank and Account Description Bank Account No. Ending In Bank Balance K-V Pharmaceutical Company Fifth Third Money Market / Investment Account K-V Pharmaceutical Company Fifth Third Bank / Operating Account K-V Pharmaceutical Company Fifth Third Bank / Nesher Escrow Account K-V Pharmaceutical Company Fifth Third Bank / PDI Escrow Account K-V Pharmaceutical Company Commerce Bank / Deposit Account K-V Pharmaceutical Company AMEX Centurion Bank / Certificate of Deposit K-V Pharmaceutical Company Bank of America / Payroll Account K-V Pharmaceutical Company Fifth Third Bank / Utility Deposit Drug Tech Corporation US Bank / DrugTech Custody Account Drug Tech Corporation Wells Fargo Bank/ DrugTech Operating Acct
12-13347
1225
$
21,687
12-13347
9158
8,050
12-13347
0383
7,513
12-13347
1876
5
1,819
12-13347
2433
150
12-13347
8420
75
12-13347
6170
29
12-13347
0479
6
2
12-13351
3256
12
12-13351
6823
1
$
39,338
Notes
1 The Debtors have not included copies of their bank statements or cash disbursement journals due to the voluminous nature of these reports. Copies of the Debtors' bank statements and cash disbursement journals will be provided upon reasonable request in writing to counsel for the Debtors.
2 The Debtors reconcile their bank accounts on a monthly basis.
3 The Debtors have excluded accounts with no balance as of the end of the reporting period.
4 The Debtors' bank balances exclude $181 of outstanding checks.
5 This account was inadvertently identified in the Debtors' motion to approve continued use of their cash management system as ending in 4187.
6 The Debtors opened this bank account post-petition on August 28, 2012 in accordance with the order of the Bankruptcy Court, entered on August 23, 2012, that, among other things, established procedures for providing deposits to the Debtors' utility service providers that request adequate assurance of payment and deemed such utility service providers to have adequate assurance of payment.
MOR-2:
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited; Dollars in thousands)
For the Month Ended September Net revenues Cost of sales Gross profit Research and development Selling and administrative Operating expenses Operating loss Interest, net and other Reorganization items, net Total other expense, net Loss from continuing operations before income taxes Income tax provision Net loss from continuing operations
30, 2012 1
$
3,989
(9
)
3,998
914
7,079
7,993
(3,995
)
0
2,439
2,439
(6,434
)
985
$
(7,419
)
Notes
1 - The Debtors prepare their income statement on an accrual basis. Accordingly, the Debtors' Statement of Operations, as set forth in this MOR, reflects the results of the Debtors' operations for the month of September.
MOR-3:
CONSOLIDATED BALANCE SHEET
(Unaudited; Dollars in thousands)
As of September 30, 2012 ASSETS Current Assets: Cash and cash equivalents Restricted cash Receivables, net Inventories, net Other current assets Income taxes receivable Total Current Assets Property and equipment, less accumulated depreciation Intangible assets, net Other assets Total Assets LIABILITIES LIABILITIES NOT SUBJECT TO COMPROMISE: Current Liabilities: Accounts payable Accrued expenses Other current liabilities Total Current liabilities Total Liabilities not subject to compromise Total liabilities subject to compromise Total Liabilities SHAREHOLDERS' DEFICIT Preferred Stock Class A Common Stock Class B Common Stock Additional paid-in capital Accumulated deficit Less: Treasury stock Total Shareholders' Deficit Total Liabilities and Shareholders' Deficit
$
29,599
9,557
8,176
4,538
4,180
460
56,510
1,935
121,318
15,639
$
195,402
$
2,447
19,424
9,331
31,202
31,202
673,247
704,449
0
643
112
205,729
(658,122
)
(57,409
)
(509,047
)
$
195,402
MOR-4:
STATUS OF POST-PETITION TAXES 1, 2
(Dollars in thousands)
Federal Beginning Tax Amount Withheld and/or Accrued Amount Paid Ending Tax Withholding FICA-Employee FICA-Employer Total Federal Taxes State and Local Withholding Sales Tax Real Property Personal Property Franchise Tax Total State and Local Total Taxes
$
0
$
262
$
(262
)
$
0
0
66
(66
)
0
0
86
(86
)
0
$
0
$
414
$
(414
)
$
0
$
0
$
70
$
(70
)
$
0
9
0
0
9
4
1
0
5
52
0
0
52
(36
)
20
(1
)
(17
)
$
29
$
91
$
(71
)
$
49
$
29
$
505
$
(485
)
$
49
Notes
1 - The Debtors have not annexed copies of tax returns filed with various taxing authorities during the current reporting period to this MOR, nor have they included the Debtors' IRS Form 6123 with this MOR. Copies of such tax returns and IRS Form 6123 will be provided upon reasonable request in writing to counsel for the Debtors.
2 - The Debtors believe they are paying all undisputed taxes and preparing and filing all tax returns when due or obtaining extensions where necessary.
MOR-4 (CON'T):
SUMMARY OF UNPAID POST-PETITION DEBTS 1
(Dollars in thousands)
Description Amount 0 - 30 days old 31+ days old Total Vendor Accounts Payable Post-petition
$
2,440
7
$
2,447
Notes
1 - The Debtors believe they are paying all undisputed post-petition obligations according to terms.
MOR-5:
ACCOUNTS RECEIVABLE RECONCILIATION AND AGING
(Dollars in thousands)
Description Amount 0 - 30 days old 31 - 60 days old 61 - 90 days old 90+ days old Total Customer Accounts Receivable Customer Allowances Total Accounts Receivable
$
7,823
132
13
909
$
9,066
(890
)
$
8,176
MOR-6:
PAYMENTS TO INSIDERS AND PROFESSIONALS
(Dollars in thousands)
INSIDERS |
Name |
Type of Payment1 |
Current Month Amount Paid |
Total Paid Since August 4, 2012 |
||||||
Christmas, Patrick |
Salary/Expenses |
$ | 22 | $ | 41 | ||||
Divis, Gregory |
Salary/Expenses |
31 | 58 | ||||||
McHugh, Thomas |
Salary/Expenses |
25 | 45 | ||||||
Total |
$ | 78 | $ | 144 |
Notes
1 Additional detail concerning payments to the Debtors' insiders will be provided upon reasonable request in writing to counsel for the Debtors.
PROFESSIONALS Name Current Month Amount Paid Total Paid Since August 4, 2012 Houlihan & Lokey Capital, Inc. Total
$
199
$
472
$
199
$
472
MOR-6 (CON'T):
POST-PETITION STATUS OF SECURED NOTES, LEASES PAYABLE
AND ADEQUATE PROTECTION PAYMENTS1
(Dollars in thousands)
Name of Creditor Scheduled Monthly Payment Due Amount Paid During Month Building lease payable Total Payments
$
42
$
42
$
42
Notes
1 - The Debtors' schedule of lease payments, as set forth in the MOR, only reflects payments made pursuant to the Debtors' real property lease. Immaterial leases of personal property are not included in this MOR-6.
MOR-7:
DEBTOR QUESTIONNAIRE
Must be completed each month. If the answer to any of the questions is "Yes", provide a detailed explanation of each item. Attach additional sheets if necessary. |
Yes |
No | ||
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1 |
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Have any assets been sold or transferred outside the normal course of business this reporting period? |
X | |
2 |
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Have any funds been disbursed from any account other than a debtor in possession account this reporting period? |
|
X |
3 |
|
Is the Debtor delinquent in the timely filing of any post-petition tax returns? |
|
X |
4 |
|
Are workers compensation, general liability or other necessary insurance coverages expired or cancelled, or has the debtor received notice of expiration or cancellation of such policies? |
|
X |
5 |
|
Is the Debtor delinquent in paying any insurance premium payment? |
|
X |
6 |
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Have any payments been made on pre-petition liabilities this reporting period? |
X |
|
7 |
|
Are any post-petition receivables (accounts, notes or loans) due from related parties? |
|
X |
8 |
|
Are any post-petition payroll taxes past due? |
|
X |
9 |
|
Are any post-petition State or Federal income taxes past due? |
|
X |
10 |
|
Are any post-petition real estate taxes past due? |
|
X |
11 |
|
Are any other post-petition taxes past due? |
|
X |
12 |
|
Have any pre-petition taxes been paid during this reporting period? |
X | |
13 |
|
Are any amounts owed to post-petition creditors delinquent? |
|
X |
14 |
|
Are any wages payments past due? |
|
X |
15 |
|
Have any post-petition loans been received by the Debtor from any party? |
|
X |
16 |
|
Is the Debtor delinquent in paying any US Trustee fees? |
|
X |
17 |
|
Is the Debtor delinquent with any court ordered payments to attorneys or other professionals? |
|
X |
18 |
|
Have the owners or shareholders received any compensation outside of the normal course of business? |
|
X |
Explanations |
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| ||
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|
|
| |
6 |
|
Pursuant to various orders entered by the Bankruptcy Court, the Debtors were authorized to pay certain pre-petition employee salary and benefit obligations, as well as certain pre-petition vendor, warehousemen and common carrier obligations. The Bankruptcy Court also approved the Debtors' motion to honor certain prepetition obligations to their customers. | ||
13 |
The Debtors believe that all undisputed post-petition accounts payable have been and are being paid according to agreed-upon terms specific to each vendor and/or service provider. Any aged amounts represent items subject to valid disputes and certain items which have been paid subsequent to the end of this reporting period. | |||
|
|
MAKENA® PERFORMANCE METRICS
Makena® (hydroxyprogesterone caproate injection) is the Debtors' single-most valuable product. The information below addresses certain key performance metrics related to Makena®. The amounts shown are based on estimates and are subject to change. Gross revenues are preliminary and unaudited, and are not prepared in accordance with GAAP.
Three Months Ended |
Gross Revenues ($ in thousands)(1) |
Total Prescriptions (2) |
Vials Shipped to Customers (3) | |||
9/30/2011 |
$1,318 |
1,255 |
382 |
|||
12/31/2011 |
$1,670 |
1,687 |
484 |
|||
3/31/2012 |
$6,396 |
2,240 |
1,854 |
|||
6/30/2012 |
$13,393 |
2,577 |
3,882 |
|||
9/30/2012 |
$13,006 |
3,046 |
3,770 |
Notes: |
|||
(1) Amounts shown are estimated based on the number of vials shipped and list price/vial. | |||
(2) Represents total prescriptions reported to the Debtors and does not include cancellations. | |||
(3) Represents paid vials shipped to the Debtors' customers, which include specialty pharmacies and distributors. | |||
-14- |