0000069499-95-000043.txt : 19950802 0000069499-95-000043.hdr.sgml : 19950802 ACCESSION NUMBER: 0000069499-95-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950801 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: 95557796 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 LIVE 10Q QUARTER 1 1996 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 June 30, 1995 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 July 24, 1995 ------------------------------ --------------------- $.50 par value 79,539,594 MYLAN LABORATORIES INC. AND SUBSIDIARIES ---------------------------------------------------------------------- INDEX ----- Page Number ------ PART I. FINANCIAL INFORMATION ITEM 1: Financial Statements Consolidated Balance Sheets - June 30, 1995 and March 31, 1995 2A and 2B Consolidated Statements of Earnings - Three Months Ended June 30, 1995 and 1994 3 Consolidated Statements of Cash Flows - Three Months Ended June 30, 1995 and 1994 4 Notes to Consolidated Financial Statements - Three Months Ended June 30, 1995 5 ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 6 and 7 PART II. OTHER INFORMATION 8 MYLAN LABORATORIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS June 30, March 31, 1995 1995 Unaudited Audited Current Assets Cash and cash equivalents $141,792,000 $127,280,000 Short-term investments 50,514,000 52,575,000 Accounts receivable 65,720,000 58,343,000 Inventories: Raw materials 31,220,000 29,795,000 Work in process 14,322,000 17,539,000 Finished goods 31,045,000 30,871,000 ------------- ------------- 76,587,000 78,205,000 Deferred tax benefit Other current assets 9,157,000 10,545,000 -------------- ------------- 4,236,000 4,435,000 Total Current Assets 348,006,000 331,383,000 Property, Plant and Equipment - at cost Less accumulated depreciation 137,771,000 132,599,000 ------------- ------------- 42,507,000 40,300,000 95,264,000 92,299,000 Deferred Income Tax Benefit, non-current 1,459,000 1,043,000 Marketable Securities, non-current 25,897,000 21,958,000 Investment in and Advances to Somerset 22,493,000 22,055,000 Intangible Assets net of accumulated amortization 27,297,000 28,518,000 Other Assets 51,090,000 48,945,000 -------------- ------------- Total Assets $571,506,000 $546,201,000 ============== ============== See Notes to Consolidated Financial Statements -2A- LIABILITIES AND SHAREH0LDERS' EQUITY June 30, March 31, 1995 1995 Unaudited Audited Current Liabilities Trade accounts payable $ 4,087,000 $ 10,466,000 Income taxes payable 25,945,000 24,019,000 Other current liabilities 17,231,000 17,890,000 Cash dividend payable 3,978,000 3,976,000 -------------- ------------ Total Current Liabilities 51,241,000 56,351,000 Long-Term Obligations 7,807,000 7,122,000 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 80,002,992 shares at June 30, 1995 79,972,248 shares at March 31, 1995 40,001,000 39,986,000 Additional paid in capital 57,900,000 57,577,000 Retained earnings 415,402,000 386,212,000 Unrealized gain on investment 1,576,000 1,374,000 ------------- ------------ 514,879,000 485,149,000 Less Treasury stock - at cost, 476,523 shares at June 30, 1995 and March 31, 1995 Net Worth 2,421,000 2,421,000 ------------- ------------- 512,458,000 482,728,000 ------------- ------------- Total Liabilities and Shareholders' Equity $571,506,000 $546,201,000 ============= ============= The above financial statements do not reflect the three-for-two stock split effective August 15, 1995 (See Note C). See Notes to Consolidated Financial Statements -2B- MYLAN LABORATORIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1994 UNAUDITED 1995 1994 NET SALES $109,192,000 $85,146,000 COST AND EXPENSES: Cost of Sales 50,628,000 32,996,000 Research and Development 8,174,000 6,344,000 Selling and Administrative 14,003,000 14,412,000 72,805,000 53,752,000 EQUITY IN EARNINGS OF SOMERSET 5,571,000 5,348,000 OTHER INCOME 3,963,000 939,000 EARNINGS BEFORE INCOME TAX 45,921,000 37,681,000 INCOME TAX RATE 28% 28% INCOME TAXES 12,754,000 10,551,000 NET EARNINGS $ 33,167,000 $ 27,130,000 EARNINGS PER SHARE $ .42 $ .34 WEIGHTED AVERAGE COMMON SHARES 79,510,000 79,218,000 The Company paid regular quarterly cash dividends of $.04 per share from October 1993 to July 1994 and $.05 per share since October 1994. In addition, the Company paid a special one-time dividend of $.10 per share on January 13, 1995. The above financial information does not reflect the three-for-two stock split effective August 15, 1995. After the stock split earnings per share for the quarter ended June 30, 1995 and 1994 will be $.28 and $.23 respectively. See Notes to Consolidated Financial Statements -3- MYLAN LABORATORIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1994 UNAUDITED 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES Net Earnings $ 33,167,000 $ 27,130,000 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation and amortization 3,455,000 3,026,000 Deferred income taxes 868,000 43,000 Equity in the earnings of Somerset (5,571,000) (5,348,000) Cash received from Somerset 5,133,000 2,667,000 Other non-cash items (1,592,000) 13,518,000 Changes in operating assets and liabilities: Accounts receivable (5,985,000) (31,121,000) Inventories 1,745,000 (9,735,000) Trade accounts payable 6,379,000 4,898,000 Income taxes 1,926,000 11,301,000 Other operating assets and liabilities (460,000) 3,394,000 ------------- ------------- Net cash provided from operating activities 26,307,000 19,773,000 --------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (5,172,000) (2,356,000) Increase in intangible and other assets (1,408,000) (6,109,000) Proceeds from investment securities 5,041,000 2,803,000 Purchase of investment securities (6,613,000) (3,395,000) -------------- -------------- Net cash used in investing activities (8,152,000) (9,057,000) CASH FLOWS FROM FINANCING ACTIVITIES Cash dividend paid (3,974,000) (3,170,000) Payments on long-term obligations (7,000) (7,000) Proceeds from exercise of stock options 338,000 266,000 Net cash used in financing activities (3,643,000) (2,911,000) Net Increase in Cash and Cash Equivalents 14,512,000 7,805,000 Cash and Cash Equivalents - Beginning of Period 127,280,000 75,526,000 Cash and Cash Equivalents - End of Period $141,792,000 $ 83,331,000 CASH PAID DURING THE PERIOD FOR: Interest $ 6,000 $ 7,000 Income Taxes $ 9,959,000 $ 463,000
See Notes to Consolidated Financial Statements -4- MYLAN LABORATORIES INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTH PERIOD ENDED JUNE 30, 1995 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 June 30, 1995 and March 31, 1995 together with the results of operations and cash flows for the interim periods ended June 30, 1995 and 1994. The consolidated results of operations for the three months ended June 30, 1995 and 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 1995 Annual Report and Report on Form 10-K. C. On June 28, 1995 the Company announced a three-for-two stock split of the Company's common stock effective August 15, 1995 for shareholders of record at the close of business on July 31, 1995. The weighted average shares outstanding and the earnings and dividends per share reflected in these financial statements do not give effect of the stock split. D. 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 month periods ended June 30, 1995 and 1994 are as follows: (in thousands) June 30, June 30, 1995 1994 --------- -------- Net Sales $ 22,997 $ 25,021 Costs and Expenses (8,853) (12,240) Income Taxes (4,437) (3,692) --------- --------- Net Earnings $ 9,707 $ 9,089 ========= ========= The above information represents 100% of Somerset's operations of which the Company has a 50% interest. -5- PART 1 - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales of $109,192,000 and net earnings of $.42 per share for the quarter ended June 30, 1995 represent the strongest first quarter results in the Company's history. Volume increases in all areas of the Company's business along with the addition of acebutolol to the generic product line, helped to offset the normal pricing pressures on generic products introduced during fiscal 1995. Gross margin as a percent of sales for the quarter ended June 30, 1995 dropped slightly from the fourth quarter of fiscal 1995 to 54%. The 61% rate for the same 1994 quarter resulted from the launch of three significant generic products, cimetidine, glipizide and flurbiprofen during that quarter. Due to the competitive nature of the generic pharmaceutical industry the sales and gross margin recognized in the quarter ended June 30, 1995 are not necessarily indicative of the results to be expected in future quarters. Research and development expenditures increased 29% from $6,344,000 for the quarter ended June 30, 1994 to $8,174,000 for the current quarter. These increases are indicative of the Company's commitment to new and increased product development throughout the Company. Selling and administrative expenses were 13% of net sales for the current quarter as compared to 17% for the quarter ended June 30, 1994. 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 month period was $.06 in 1995 and 1994. -6- Liquidity and Capital Resources and Financial Condition Working capital increased from $275,032,000 at March 31, 1995 to $296,765,000 at June 30, 1995 as a result of continued strong operations. The ratio of current assets to current liabilities was 6.8 to 1 at June 30, 1995 and 5.9 to 1 at March 31, 1995. Net cash provided from operating activities was $26,307,000 for the three months ended June 30, 1995 compared to $19,773,000 for the same period last year. The change is due to higher net earnings and the timing of tax payments and collection of accounts receivable. Additions to property, plant and equipment amounted to $5,172,000 for the three months ended June 30, 1995 compared to $2,356,000 for the same period a year ago. Current year capital expenditures are principally related to construction of a 150,000 square foot research and development facility in Morgantown. -7- 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 three months ended June 30, 1995. 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 /s/ Milan Puskar ____________________ ________________________________________ Milan Puskar Chairman of the Board, Chief Executive Officer and President DATE /s/ Frank A DeGeorge ____________________ _______________________________________ Frank A. DeGeorge Director of Corporate Finance -8- EX-27 2
5 3-MOS MAR-31-1996 JUN-30-1995 141,792,000 50,514,000 65,720,000 13,385,000 76,587,000 348,006,000 137,771,000 42,507,000 571,506,000 51,241,000 0 0 0 40,001,000 472,457,000 571,506,000 109,192,000 109,192,000 50,628,000 50,628,000 22,177,000 0 6,000 45,921,000 12,754,000 33,167,000 0 0 0 33,167,000 .42 .42