-----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, FmXfZ6SaiZIMVXIUHNylG47IXkYiCdniecBGKyAmL8Lb4Z9LOHh23yg3tj/btKze LQ/M8ebQqP6AnLD48E8bRw== 0000069499-95-000003.txt : 19950214 0000069499-95-000003.hdr.sgml : 19950214 ACCESSION NUMBER: 0000069499-95-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950213 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MYLAN LABORATORIES INC CENTRAL INDEX KEY: 0000069499 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 251211621 STATE OF INCORPORATION: PA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09114 FILM NUMBER: 95509142 BUSINESS ADDRESS: STREET 1: 130 SEVENTH ST STREET 2: 1030 CENTURY BLDG CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122320100 MAIL ADDRESS: STREET 1: 1030 CENTURY BUILDING STREET 2: 130 SEVENTH STREET CITY: PITTSBURGH STATE: PA ZIP: 15222 FORMER COMPANY: FORMER CONFORMED NAME: FRM CORP DATE OF NAME CHANGE: 19711003 10-Q 1 10Q QUARTER 3 1995 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 quarterly period ended December 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OR THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________to________ Commission file number 1-9114 MYLAN LABORATORIES INC. (Exact Name of registrant as specified in its charter) Pennsylvania 25-1211621 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 130 Seventh Street 1030 Century Building Pittsburgh, Pennsylvania 15222 (Address of principal executive offices) (Zip Code) 412-232-0100 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 ------ ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date Outstanding at Class of Common Stock January 31, 1995 --------------------- ----------------- $.50 par value 79,363,349 MYLAN LABORATORIES INC. AND SUBSIDIARIES ---------------------------------------- INDEX ----- Page Number ------ PART I. FINANCIAL INFORMATION ITEM 1: Financial Statements Consolidated Balance Sheets - December 31, 1994 and March 31, 1994 2A and 2B Consolidated Statements of Earnings - Three and Nine Months Ended December 31, 1994 and 1993 3 Consolidated Statements of Cash Flows - Nine Months Ended December 31, 1994 and 1993 4 Notes to Consolidated Financial Statements - Three and Nine Months Ended December 31, 1994 5 and 6 ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 7 and 8 PART II. OTHER INFORMATION 9 MYLAN LABORATORIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ------------------------------------------- ASSETS ------ December 31, March 31, 1994 1994 Unaudited Audited --------- ------- Current Assets Cash and cash equivalents $150,601,000 $ 75,526,000 Short-term investments 889,000 12,925,000 Accounts receivable 55,253,000 55,430,000 Inventories: Raw materials 26,001,000 26,138,000 Work in process 15,636,000 14,978,000 Finished goods 29,243,000 16,880,000 ------------ ------------ 70,880,000 57,996,000 Prepaid income taxes - 1,265,000 Deferred tax benefit 2,887,000 2,082,000 Other current assets 5,297,000 4,349,000 ------------ ------------ Total Current Assets 285,807,000 209,573,000 Property, Plant and Equipment - at cost 127,162,000 115,114,000 Less accumulated depreciation 38,076,000 32,600,000 ------------ ----------- 89,086,000 82,514,000 Investment in and Advances to Somerset 22,075,000 17,763,000 Intangible Assets net of accumulated amortization 29,726,000 33,228,000 Other Assets 81,533,000 60,247,000 ------------ ------------ Total Assets $508,227,000 $403,325,000 ============ ============
See Notes to Consolidated Financial Statements -2A- LIABILITIES AND SHAREH0LDERS' EQUITY ------------------------------------ December 31, March 31, 1994 1994 Unaudited Audited ------------ -------- Current Liabilities Trade accounts payable $ 9,419,000 $ 6,699,000 Income taxes payable 8,935,000 - Other current liabilities 21,583,000 8,056,000 Cash dividend payable 11,904,000 3,171,000 ------------ ------------- Total Current Liabilities 51,841,000 17,926,000 Long-Term Obligations 4,742,000 4,609,000 Deferred Income Taxes 1,531,000 821,000 Shareholders' Equity: Preferred stock, par value $.50 per share, authorized 5,000,000 shares, issued and outstanding - none - - Common stock, par value $.50 per share, authorized 300,000,000 shares, issued 79,829,999 shares at December 31, 1994 79,697,295 shares at March 31, 1994 39,915,000 39,849,000 Additional paid in capital 55,673,000 54,272,000 Retained earnings 356,946,000 288,357,000 ------------ ------------ 452,534,000 382,478,000 Less Treasury stock - at cost, 476,523 shares at December 31, 1994 and 495,864 shares at March 31, 1994 Net Worth 2,421,000 2,509,000 ------------ ------------ 450,113,000 379,969,000 ------------ ------------ Total Liabilities and Shareholders' Equity $508,227,000 $403,325,000 ============ ============
See Notes to Consolidated Financial Statements -2B- MYLAN LABORATORIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS UNAUDITED --------- Three Months Ended December 31, Nine Months Ended December 31, ------------------------------- ----------------------------- 1994 1993 1994 1993 ---- ---- ---- ---- NET SALES $104,271,000 $ 66,436,000 $285,430,000 $182,699,000 COST AND EXPENSES: Cost of Sales 46,702,000 32,165,000 119,920,000 90,628,000 Research and Development 7,927,000 5,499,000 21,134,000 16,453,000 Selling and Administrative 14,982,000 14,292,000 44,323,000 36,768,000 ------------ ------------ ------------ ------------- 69,611,000 51,956,000 185,377,000 143,849,000 EQUITY IN EARNINGS OF SOMERSET 8,330,000 6,841,000 19,819,000 18,250,000 OTHER INCOME 2,494,000 4,634,000 5,013,000 7,481,000 ------------ ------------ ------------ ------------- EARNINGS BEFORE INCOME TAXES 45,484,000 25,955,000 124,885,000 64,581,000 INCOME TAX RATE 30% 15% 30% 14% INCOME TAXES 13,645,000 3,832,000 37,258,000 8,908,000 ------------ ------------ ------------- ------------- NET EARNINGS $ 31,839,000 $ 22,123,000 $ 87,627,000 $ 55,673,000 ============ ============ ============= ============= EARNINGS PER SHARE $ .40 $ .28 $ 1.10 $ .71 ============ ============ ============= ============= WEIGHTED AVERAGE COMMON SHARES 79,336,000 79,091,000 79,275,000 78,876,000 ============ ============ ============= ============= The Company paid regular quarterly cash dividends of $.03 per share from October 1992 to July 1993, $.04 per share from October 1993 to July 1994 and $.05 per share on October 14, 1994 and January 13, 1995. In addition, the Company paid a special one-time dividend of $.10 per share on January 13, 1995.
See Notes to Consolidated Financial Statements -3- MYLAN LABORATORIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 1994 AND 1993 ---------------------------------------------------- UNAUDITED --------- 1994 1993 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net Earnings $ 87,627,000 $55,673,000 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation and amortization 9,228,000 8,232,000 Deferred income taxes (95,000) (434,000) Equity in the earnings of Somerset (19,819,000)(18,250,000) Cash received from Somerset 15,506,000 15,267,000 Other non-cash items 13,345,000 8,113,000 Changes in operating assets and liabilities: Accounts receivable (11,259,000)(21,064,000) Inventories (13,213,000)( 8,737,000) Trade accounts payable 2,720,000 (806,000) Income taxes payable 10,200,000 (8,869,000) Other operating assets and liabilities 12,363,000 (3,869,000) ----------- ------------ Net cash provided from operating activities 106,603,000 25,256,000 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (12,048,000)(21,064,000) Increase in intangible and other assets (5,853,000) (1,214,000) Proceeds from investment securities 16,252,000 - Purchase of investment securities (20,622,000) - ------------- ----------- Net cash used in investing activities (22,271,000)(12,424,000) CASH FLOWS FROM FINANCING ACTIVITIES Cash dividend paid (10,306,000) (7,861,000) Payments on long-term obligations (22,000) (14,000) Payments on acquisition obligations - (977,000) Proceeds from exercise of stock options 1,071,000 795,000 ------------ ------------ Net cash used in financing activities (9,257,000) (8,057,000) ------------ ------------ Net Increase in Cash and Cash Equivalents 75,075,000 4,775,000 Cash and Cash Equivalents - Beginning of Period 75,526,000 98,246,000 ------------- ----------- Cash and Cash Equivalents - End of Period $150,601,000 $103,021,000 ============ ============ CASH PAID DURING THE PERIOD FOR: Interest $ 21,000 $ 23,000 Income Taxes $ 27,153,000 $ 11,417,000
See Notes to Consolidated Financial Statements -4- MYLAN LABORATORIES INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTH PERIOD ENDED December 31, 1994 ----------------- Unaudited --------- A. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of December 31, 1994 and March 31, 1994 together with the results of operations and cash flows for the interim periods ended December 31, 1994 and 1993. The consolidated results of operations for the three and nine months ended December 31, 1994 are not necessarily indicative of the results to be expected for the full year. B. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company's 1994 Annual Report and Report on Form 10-K. C. On October 10, 1994 the Company entered into a distribution agreement with STC Pharmaceuticals, Inc. (STC), a wholly owned subsidiary of Eli Lilly and Company (Lilly). Under the terms of the agreement the Company is distributing a generic form of Lilly's oral antibiotic Ceclor on behalf of STC. The Company is being paid a fixed monthly fee for performing certain services related to the distribution of the product. Upon certain events, as defined in the agreement, the fixed monthly fee will convert to a variable amount predicated upon STC's net sales of the product. Under the terms of the agreement, STC prepaid a portion of the first year's fixed fee. The portion of the prepayment relating to services rendered in the current quarter has been recognized as revenue and included in the Net Sales line of the Income Statement. The portion of the prepayment which relates to future periods is included as deferred revenue in the Other Accrued Liabilities line of the Balance Sheet. Revenues and gross profit resulting from this agreement did not have a material impact on the current quarter or year to date results of operations. -5- MYLAN LABORATORIES INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTH PERIOD ENDED December 31, 1994 ----------------- Unaudited --------- D. On December 21, 1994 the Company paid $7,992,000 to acquire the 50% interest in a captive insurance company that it did not previously own. The final purchase price will be adjusted to reflect 50% of the audited net book value of the insurance company as of December 31, 1994. This transaction will not have a material impact on the Company's financial statements. E. Equity in Earnings of Somerset includes the Company's 50% portion of the net earnings of Somerset Pharmaceuticals Inc. (Somerset), certain management fees and amortization of intangible assets resulting from the acquisition of Somerset. Such intangible assets are being amortized over a 15 year period using the straight line method. Condensed unaudited financial information of Somerset for the three and nine month periods ended December 31, 1994 and 1993 are as follows: (in thousands) Three Months Ended Nine Months Ended December 31, December 31, ------------------ ----------------- 1994 1993 1994 1993 ---- ---- ---- ---- Net Sales $44,208 $36,422 $100,703 $88,107 Costs and Expenses (21,744) (19,470) (49,881) (40,789) Income Taxes ( 8,017) ( 5,070) (16,573) (15,220) -------- -------- --------- -------- Net Earnings $14,447 $11,882 $ 34,249 $32,098 ======== ======== ========= ======== The above information represents 100% of Somerset's operations of which the Company has a 50% interest.
-6- PART 1 - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------------ Results of Operations - --------------------- Net sales for the three and nine months ended December 31, 1994 were a record high $104,271,000 and $285,430,000 representing increases over the prior year comparable periods of 57% and 56% respectively. These improvements are primarily attributable to the launch of new generic products, in particular cimetidine, flurbiprofen and glipizide, which the Company began shipping during the quarter ended June 30, 1994. Gross margin as a percent of net sales increased from 52% for the quarter ended December 31, 1993 to 55% this year and from 50% for the nine months ended December 31, 1993 to 58% this year. The rates for the current periods reflect the higher margins generally realized on new generic products in the short term after introduction. Due to the competitive nature of the generic pharmaceutical industry the sales and gross margin recognized for the three and nine months ended December 31, 1994 are not necessarily indicative of the results to be expected in future quarters. Research and development expenditures for the three and nine month periods ended December 31, 1994 increased 44% to $7,927,000 and 28% to $21,134,000 over the prior year comparable periods. These increases are indicative of the Company's commitment to new and increased product development throughout the Company. Selling and administrative expenses were 14% and 16% of net sales for the three and nine months ended December 31, 1994 as compared to 22% and 20% for the three and nine months ended December 31, 1993. Factors contributing to the overall rise in selling and administrative expenses include advertising, promotion and legal expenses associated with new products and payroll and related costs. Equity in earnings of Somerset continues to provide a solid return for the Company. Somerset's contribution to net earnings per share for the three and nine month periods was $.09 and $.22 in 1994 and $.08 and $.21 in 1993. -7- Liquidity and Capital Resources and Financial Condition - ------------------------------------------------------- Working capital increased from $191,647,000 at March 31, 1994 to $233,966,000 at December 31, 1994 as a result of continued strong operations. The ratio of current assets to current liabilities was 5.5 to 1 at December 31, 1994 and 11.7 to 1 at March 31, 1994. The decrease in the current ratio is primarily attributable to the special one-time dividend of $.10 per share that was paid on January 15, 1995 and increases in income taxes payable, deferred revenue and accrued payroll and related costs. Net cash provided from operating activities was $106,603,000 for the nine months ended December 31, 1994 compared to $25,256,000 for the same period last year. The change is primarily due to higher net earnings, the timing of tax payments and the increases in other current liabilities mentioned above. Other non-cash items includes allowances for potential credits and rebates which generally escalate with new product launches. Additions to property, plant and equipment amounted to $12,048,000 for the nine months ended December 31, 1994. The Company completed a new warehouse at its distribution center in Greensboro, North Carolina along with other capital improvement projects at its other facilities. In December the Company began construction on a new 152,000 square foot research and development facility in Morgantown, West Virginia. Funding is to be provided from operations. -8- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ----------------------------------------- (a) Exhibit 27 required by Item 601(c) of Regulation S-X filed herewith. (b) Reports on Form 8-K - there were no reports on Form 8-K filed during the nine months 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. Mylan Laboratories Inc. (Registrant) DATE February 9, 1995 /s/ Milan Puskar ------------------ --------------------------------------- Milan Puskar Chairman of the Board, Chief Executive Officer and President DATE February 7, 1995 /s/ Frank A. DeGeorge ------------------ ---------------------------------------- Frank A. DeGeorge Director of Accounting and Taxation -9- EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS MAR-31-1995 DEC-31-1994 150,601,000 889,000 55,253,000 0 70,880,000 285,807,000 127,162,000 38,076,000 508,227,000 51,841,000 0 39,915,000 0 0 410,198,000 508,227,000 285,430,000 285,430,000 119,920,000 119,920,000 65,457,000 0 21,000 124,885,000 37,258,000 87,627,000 0 0 0 87,627,000 1.10 1.10
-----END PRIVACY-ENHANCED MESSAGE-----