-----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, HuBI6YCpe84f+nwXr2pubj9Ir+KkMQqxytJzPEokR/3UV3DCpRRKEF/Y6CIboJTN yN45hiNP50X9FzaM4MBw6Q== 0000950130-97-003299.txt : 19970728 0000950130-97-003299.hdr.sgml : 19970728 ACCESSION NUMBER: 0000950130-97-003299 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970725 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROBERTS PHARMACEUTICAL CORP CENTRAL INDEX KEY: 0000853022 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 222429994 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10432 FILM NUMBER: 97645501 BUSINESS ADDRESS: STREET 1: MERIDIAN CENTRE II STREET 2: 4 INDUSTRIAL WAY W CITY: EATONTOWN STATE: NJ ZIP: 07724 BUSINESS PHONE: 9083891182 MAIL ADDRESS: STREET 1: MERIDIAN CTR II STREET 2: 4 INDUSTRIAL WAY WEST CITY: EATONTOWN STATE: NJ ZIP: 07724 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended Commission File Number: 1-10432 June 30, 1997 ROBERTS PHARMACEUTICAL CORPORATION (Exact name of registrant as specified in its charter) NEW JERSEY 22-2429994 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) MERIDIAN CENTER II 4 INDUSTRIAL WAY WEST EATONTOWN, NEW JERSEY 07724 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (908) 389-1182 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 --- --- Class Outstanding Shares at July 22, 1997 Common Stock 27, 908,663 ROBERTS PHARMACEUTICAL CORPORATION INDEX Page Part I Item 1 - Financial Statements 2 Item 2 - Management's Discussion and Analysis 8 Part II Item 1 - Legal Proceedings 12 Item 6 - Exhibits and Reports on Form 8-K 13 Signatures ROBERTS PHARMACEUTICAL CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited) June 30, 1997 December 31, 1996 ------------- ----------------- ASSETS: Current assets: Cash and cash equivalents $ 82,086 $ 87,125 Marketable securities 9,329 7,793 Accounts receivable, net 30,463 30,791 Inventory 17,895 16,665 Notes receivable, current 206 1,620 Deferred tax assets 9,040 9,040 Net assets held for sale 500 500 Other current assets 3,868 2,124 -------- -------- Total current assets 153,387 155,658 Fixed assets, net 14,996 14,945 Intangible assets 179,678 183,756 Notes receivable 6,703 6,574 Deferred non-current tax asset 11,217 11,217 Other assets 70 74 -------- -------- Total assets $366,051 $372,224 ======== ======== The accompanying notes are an integral part of these financial statements. - 2 - ROBERTS PHARMACEUTICAL CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited) June 30, 1997 December 31, 1996 ------------- ----------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of long-term debt $ 4,547 $ 6,376 Accounts payable 14,300 15,848 Income taxes payable 8,674 7,020 Dividends payable 252 679 Other current liabilities 17,436 21,559 -------- -------- Total current liabilities 45,209 51,482 Long-term debt, excluding current installments 7,077 10,639 Other liabilities 294 345 Shareholders' equity: Class B preferred stock, $.10 par 10,000,000 shares authorized, 808,822 and 2,721,030 outstanding 81 272 Common stock, $.01 par, 100,000,000 shares authorized, 27,883,309 and 22,961,707 outstanding 284 223 Additional paid-in capital 367,119 365,160 Cumulative translation adjustments (474) (301) Retained earnings (deficit) (53,302) (55,359) Treasury stock, 387,594 shares of common stock, at cost (237) (237) -------- -------- Total shareholders' equity 313,471 309,758 -------- -------- Total liabilities and shareholders' equity $366,051 $372,224 ======== ======== The accompanying notes are an integral part of these financial statements. - 3 - ROBERTS PHARMACEUTICAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
For the six months For the three months ended June 30, ended June 30, 1997 1996 1997 1996 --------- --------- ---------- ---------- Sales and Revenue: Sales $56,616 $44,007 $30,286 $26,791 Other revenue 0 24 0 12 ------- ------- ------- ------- Total sales and revenue 56,616 44,031 30,286 26,803 ------- ------- ------- ------- Operating costs and expenses: Cost of sales 24,633 22,393 12,981 13,466 Research & development 2,657 1,996 1,823 847 Marketing & administration 27,062 27,636 14,641 14,966 ------- ------- ------- ------- Total operating costs & expenses 54,352 52,025 29,445 29,279 ------- ------- ------- ------- Operating income (loss) 2,264 (7,994) 841 (2,476) ------- ------- ------- ------- Other income (expense): Interest income 2,709 806 1,541 368 Interest expense (432) (1,171) (178) (520) Foreign currency gain (loss) (64) (13) (51) 127 Other income(expense), net (48) (1) (48) (26) ------- ------- ------- ------- Total other income (expense) 2,165 (379) 1,264 (51) ------- ------- ------- ------- Income (loss) from continuing operations before income taxes 4,429 (8,373) 2,105 (2,527) Provision (benefit) for income taxes 1,571 (2,407) 817 (773) ------- ------- ------- ------- Income (loss) from operations 2,858 (5,966) 1,288 (1,754) Estimated income on disposal of discontinued division, net of tax benefit of $2,045 - 3,969 - 3,969 ------- ------- ------- ------- Net income (loss) $ 2,858 $(1,997) $ 1,288 $ 2,215 ======= ======= ======= ======= Per share of common stock, primary and fully diluted: Income (loss) from continuing operations $ 0.08 $ (0.32) $ 0.04 $ (0.09) Income from discontinued operations - 0.21 - 0.21 ------- ------- ------- ------- Net income (loss) $ 0.08 $ (0.11) $ 0.04 $ 0.12 ======== ======== ======== ======== Weighted average number of common shares outstanding, primary and fully diluted: 28,885,89 218,695,868 28,616,319 18,658,601
The accompanying notes are an integral part of these financial statements. - 4 - ROBERTS PHARMACEUTICAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) For the six months ended June 30, 1997 1996 ------------- --------------- Cash flows provided by operating activities: $ 3,479 $11,781 ------- ------- Cash flows from investing activities: (Purchase) redemption of marketable securities (1,536) 7,527 Purchases of intangible assets (1,990) (40) Purchases of fixed assets (382) (78) Collection of notes receivable 610 0 Impact of discontinued operations 0 2 ------- ------- Net cash provided by (used in) investing activities (3,298) 7,411 ------- ------- Cash flows from financing activities: Payments on notes payable and long term debt (5,795) (8,280) Net proceeds from issuance of common stock 828 (217) Net proceeds from issuance of 5% Preferred stock 1,000 0 5% Preferred stock dividends paid (1,229) 0 Impact of discontinued operations 0 355 ------- ------- Net cash used in financing activities (5,196) (8,142) ------- ------- Exchange rate changes on cash and cash equivalents (24) (8) ------- ------- Change in cash and cash equivalents (5,039) 11,042 Beginning cash and cash equivalents 87,125 16,357 ------- ------- Ending cash and cash equivalents $82,086 $27,399 ======= ======= Supplemental cash flow information: Interest paid $ 934 $ 438 Income taxes paid $ 8 $ 62 The accompanying notes are an integral part of these financial statements. - 5 - 1. Summary of Significant Accounting Policies ------------------------------------------ Basis of Presentation - --------------------- In the opinion of management, the accompanying consolidated financial statements include all necessary adjustments, consisting of normal adjustments, necessary for a fair presentation of results for the period reported. All dollar amounts are presented in thousands, except per share data. Foreign Currency Translation - ---------------------------- Effective January 1, 1997, the functional currency of the United Kingdom subsidiary, Monmouth Pharmaceutical, Ltd., was changed from the U.S. Dollar to the British Pound as a result of change in circumstance. Monmouths' translation gains and losses will now be accumulated as a separate component of Shareholders' Equity. New Accounting Pronouncements - ----------------------------- In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share." SFAS 128 specifies a new standard designed to improve the earnings per share ("EPS") information provided in financial statements by simplifying the existing computational guidelines, revising the disclosure requirements, and increasing the comparability of EPS data on an international basis. Some of the changes made to simplify the EPS computations include: (a) eliminating the presentation of primary EPS and replacing it with basic EPS, with the principal difference being that common stock equivalents are not considered in computing basic EPS, (b) eliminating the modified treasury stock method and the three percent materiality provision, and (c) revising the contingent share provisions and the supplemental EPS data requirements. SFAS 128 also makes a number of changes to existing disclosure requirements. SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997, including interim periods. The Company has not yet determined the impact of the implementation of SFAS 128 and therefore this calculation has not been reflected in these financial statements. 2. Inventory --------- Inventory at June 30, 1997 consists of: Raw Materials $ 2,936 Finished Goods 14,959 ------- Total $17,895 ======= -6- 3. Change in Accounting Estimate ----------------------------- In second quarter 1997, management made several changes in accounting estimates. The aggregate amount of these changes is $1.3 million. 4. Contingency ----------- A shareholder class action suit was instituted March 24, 1995, in the United States District Court for the District of New Jersey against Roberts Pharmaceutical Corporation and certain of its officers and a former officer for alleged violations of certain federal securities laws. The Company is not able to predict the outcome of this proceeding at this time, and management is not able to determine the amount of the potential liability, if any. Roberts Pharmaceutical believes that it has complied with all of its obligations under the federal securities laws. Roberts Pharmaceutical is defending vigorously against the plaintiff's allegations and considers such allegations to be without merit. 5. Subsequent Event ---------------- The Company completed the purchase of a pharmaceutical manufacturing and packaging facility from Searle Canada, a unit of Monsanto Company, on July 7, 1997. - 7 - Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations Results of Operations Six months ended June 30, 1997 and 1996 Corporate Revenues - ------------------ Total revenue for the six months and quarter ended June 30, 1997 increased $12.6 million and $3.5 million respectively as compared with the first six months of 1996. This increase was due to an increase in revenues from product sales. Product Sales - ------------- For the six months ended June 30, 1997, product sales increased $12.6 million from $44.0 million to $56.6 million primarily as a result of the launch of AGRYLIN and an increase in sales by the United Kingdom subsidiary. U.S. product sales increased $8.4 million from $33.0 million to $41.4 million. AGRYLIN and PROAMATINE provided $5.1 and $1.8 million, respectively, of this increase, and COLACE, SALUTENSIN, and PERI-COLACE also posted significant increases of $1.5 million, $0.8 million, and $0.8 million, respectively. These increases were offset by a decrease in NOROXIN sales of $0.6 million and by the divestiture of the non-core product lines which occurred in third quarter 1996. Sales of the Company's United Kingdom subsidiary, Monmouth Pharmaceuticals, Ltd., increased $3.7 million from $5.2 million to $8.9 million. $2.7 million of this increase is due to sales of LODINE which was launched in fourth quarter 1996 and $0.5 million is due to an increase in the sales of EMINASE. Sales of the Company's Canadian subsidiary increased slightly by $0.5 million from $5.8 million to $6.3 million. Product sales in the second quarter increased $3.5 million from $26.8 million in 1996 to $30.3 million in 1997. Second quarter product sales in the U.S. increased $2.0 million from $21.5 million in 1996 to $23.5 million in 1997. Sales in the U.K. increased $1.2 million to $3.6 million in second quarter 1997 from $2.4 million in 1996. Canada's second quarter sales increased to $3.1 million in 1997, a $0.3 million increase from 1996 second quarter sales of $2.8 million. Cost of Sales - ------------- For the six months ended June 30, 1997, cost of sales amounted to 43.5% of product sales, a 7.4 percentage point decrease as compared to the prior year's comparable period. This decrease in cost of sales and corresponding increase in gross profit percentage is primarily the result of the addition of AGRYLIN to the product mix. AGRYLIN has a higher gross profit percentage as it is a product the development of which was completed internally. Included in cost of sales is a $1.8 million charge for minimum royalties due to Ortho Pharmaceutical Corporation for SUPPRELIN sales. Included in these changes is the impact of a change in accounting estimate. - 8 - Research and Development - ------------------------ Research and Development expenses increased $0.7 million to $2.7 million and $1.0 million to $1.8 million during the six and three month periods, respectively, ended June 30, 1997 as compared to the comparable prior year periods. This increase is due to $0.5 million for new programs related to the compounds purchased in 1996 and a $0.4 million increase in registration and user fees. Marketing and Administrative Expenses - ------------------------------------- For the six months ended June 30, 1997, Marketing and Administrative expenses decreased $0.6 million from $27.6 million to $27.0 million. Marketing expenses decreased $0.8 million. Contributing factors were a decrease in salaries and benefits of $0.4 million, a decrease in advertising of $0.7 million, and a decrease in consulting costs of $1.3 million, offset by increases in samples of $0.5 million, market research and coupons of $0.7 million, and AGRYLIN launch expenses of $0.3 million. Administrative expense increased $0.2 million from $10.9 million to $11.1 million. This increase was due to a number of factors including an increase of $0.4 million related to salaries and benefits, and a $0.2 million increase related to outside services offset by a decrease of $0.4 million in legal and accounting expenses. For the quarter ended June 30, 1997, Marketing expenses remained constant at $9.0 million. Administrative expenses decreased $0.3 million from the second quarter 1996 to $5.6 million in second quarter 1997. Included in the quarter and year to date changes are the impact of changes in accounting estimate. Interest Income and Expense - --------------------------- Interest income for the six months ended June 30, 1997, increased $1.9 million as a result of an increase in invested marketable securities arising from the common and preferred stock offerings in the third quarter of 1996. Interest expense for the same period decreased by $0.7 million as a result of a decrease in long-term debt related to product acquisitions. Income Taxes - ------------ For the six months ended June 30, 1997 and 1996, income tax expense was calculated using a normal statutory rate for continuing operations, except for certain taxes related to foreign operations. The Company has recorded net deferred tax assets of approximately $20.3 million. Realization is dependent upon generating sufficient taxable income to utilize such items. Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized; however, these assets could be reduced at any time if estimates of future taxable income are reduced. - 9 - Liquidity and Capital Resources - ------------------------------- Operating activities provided $3.5 million in cash. The primary components of cash provided by operating activities were a $0.3 million increase in accounts receivable, net income of $2.9 million, which includes $3.6 million of non-cash charges, and increased working capital requirements of $2.7 million. Investing activities used $3.3 million, comprised primarily of $1.5 million in marketable securities purchases and $1.4 million in collections of notes receivable offset by asset purchases of $2.0 million. Financing activities used $5.2 million, including $5.8 million of payments on notes payable and payment of $1.2 million of preferred stock dividends paid offset by proceeds from the issuance of Common and Preferred Stock of $1.8 million. The Company will use its existing cash and securities balances and cash generated from operations to fund its operating activities and its near-term and long-term debt obligations from previous product acquisitions. These balances will also be used to fund future acquisitions of new products and the development of existing pipeline products as well as the July 1997 purchase of the manufacturing plant and capital improvements scheduled for that facility. Foreign Currency Fluctuations - ----------------------------- Roberts has subsidiary operations outside the United States. As a result, Roberts is subject to fluctuations in revenues and costs reported in United States dollars as a consequence of changing currency exchange rates, especially rates for the British pound and Canadian dollar. Such fluctuations were not material for the second quarter 1997. Other - ----- The Company has been pursuing a number of initiatives over the past year which have contributed to the increase in earnings. Some of these initiatives have already resulted in increased sales and decreased expenses, while others are still in the early phases. Several of these key initiatives are outlined below. PROAMATINE is undergoing Phase IV FDA clinical trials to eliminate certain labeling restrictions on the drug. These trials are aimed at establishing the clear clinical benefits of PROAMATINE, which, if demonstrated, should result in increased sales. Additional trials of ProAmatine for other indications, including urinary stress incontinence, are planned. Roberts expects AGRYLIN to receive approval for sale in Canada in the third or fourth quarter of 1997 and European approval is expected in mid-1998. The European market is expected to exceed that of the North American market for this drug. - 10 - Several changes have been made in the sales force and overall marketing plan to improve its efficiency. Sales territories have been realigned and the sales force has been automated, both with the aim of covering high prescribing physicians with fewer salespeople. This realignment resulted in lower sales force expenses, as evidenced by the fact that marketing expenses decreased in the six months ended June 30, 1997 over the six months ended June 30, 1996 despite the expenses incurred for the two new drug launches. The Company also changed the strategic direction of EMINASE. Formerly, Roberts maintained a separate sales force for certain products including EMINASE. That sales force has been merged into the regular sales force and all sales reps have received Eminase sales training. This change is expected to increase the number of sales calls and decrease the effect of turnover within the sales force. In another strategic change, recognizing that managed health care has become a dominant force in the marketplace, the Company has taken steps to penetrate this portion of the market and is pursuing managed care contracts and is working to increase the number of formularies on which its drugs are listed. The Company intends to use television advertising as part of its promotional efforts for its COLACE line of products. Such efforts seem to have been successful previously as sales of COLACE for the six months ended June 30, 1997 increased by $2.3 million over the comparable 1996 period. The purchase of the manufacturing and packaging facility, completed in early July 1997, is expected to improve the Company's profitability as production costs should decrease by producing in house. It is also projected that the recurring problems of stock-outs and overstocks will be minimized by controlling the production cycle. OTC sales may also be improved by controlling the production cycle due to the opportunity to process special packaging runs, such as bonus packs of COLACE and PERI-COLACE. It has not been feasible to produce such special packaging utilizing outside production companies. - 11 - Item 1. Legal Proceedings The Company previously reported in its Current Reports on Form 8K dated April 10, 1995 and June 26, 1995, respectively, and its Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, that two shareholder class action suits had been instituted against it and certain of its officers in the United States District Court for the District of New Jersey. The second suit filed by Dieter Zander has been voluntarily dismissed by the plaintiff. The first complaint, as amended, was filed by Grace Cowit on behalf of all persons who purchased shares of the Company's Common Stock between November 7, 1994 and May 31, 1995. - 12 - Item 6 Exhibits and Reports on Form 8K Reports on Form 8K Date of Report April 21, 1997 Roberts Pharmaceutical Corporation reported first quarter 1997 results with significant year-to-year improvements recorded in revenues, gross profits, and net earnings. May 22, 1997 Roberts Pharmaceutical Corporation announced today that Mr. Joseph N. Noonburg and the Honorable Marilyn Lloyd have joined its Board of Directors. Mr. Noonburg, a self-employed consultant, has a 38 year background in the pharmaceutical industry including serving as Senior Vice President of Sales for the pharmaceutical firm of Reed & Carnick. Mr. Noonburg has also been actively involved in several pharmaceutical industry associations. Ms. Lloyd, a former Congresswoman from Tennessee's Third Congressional District, is a consultant for Lockheed Martin Corporation and the Spectrum Group, and serves on a number of boards including Secretary Pena's Energy Advisory Board. During her tenure as Congresswoman she championed many initiatives promoting health care awareness for women and chaired the Housing and Consumer Committee of the Committee on Aging. Mr. Noonburg and Ms. Lloyd now fill the two seats on the Board of Directors previously held by Yamanouchi Group Holding, Roberts largest shareholder. Under the term of a stock purchase agreement, Yamanouchi is now entitled to designate only one member of the board for election. Yamanouchi has noted it continued interest in Roberts future and, while not designating a nominee to Roberts Board at this time, retains the right to do so at a future date. May 22, 1997 Roberts Pharmaceutical Corporation announced that effective May 22, 1997, the Company's common stock will begin trading on the American Stock Exchange (AMEX). Roberts common stock will trade on the AMEX under the symbol RPC. The Company commented that the move from the dealer oriented OTC market to the public auction market of AMEX is expected to provide a trading environment for their common stock which will be beneficial to their shareholders. Among the benefits expected - 13 - from a public auction market are a narrowing in the spread between bid and ask prices; reduced volatility; enhanced liquidity; and greater visibility. July 9, 1997 Roberts Pharmaceutical announced that it has completed the purchase of a pharmaceutical manufacturing facility from Searle Canada, a unit of Monsanto Company. In addition to existing manufacturing and packaging operation, the 100,852 square foot facility includes warehouse, administrative, and QC/QA laboratory space. The facility, located in Oakville Ontario, is approved by both the U.S. Food and Drug Administration and the Health Protection Branch of Canada. Roberts has historically outsourced all its manufacturing and packaging functions. Plans have been initiated to effect transfer of production of certain over-the-counter products from third party manufacturers to Oakville in the second half of 1997. This will be followed by a phase-in of the Company's Canadian, U.K and U.S. prescription products. Also, Searle has agreed to lease back space from Roberts for a time and has agreed in principle for Roberts to fulfill certain of Searle's packaging and clinical supply requirements. July 9, 1997 Roberts Pharmaceutical Corporation announced today that it has submitted a Manufacturing Authorization Application (MAA) for European approval of its new drug Agrylin (TM). The application has been filed with the European Medicines Evaluation Agency (EMEA) in accordance with the centralized procedure for approval of new drugs within the 15-country European Union (EU). The EU regulatory authorities have accepted Agrylin (TM) as a "List B" product, a category given to products considered to represent new drug treatments or important therapeutic advances. Under European centralized procedure, a successful MAA grants product approval through the EU, a market potential for Agrylin (TM) that could significantly exceeds that of North America. - 14 - Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. Date: 7/25/97 /s/ Peter M. Rogalin ------------------- ---------------------------- Peter M. Rogalin Vice President and Treasurer Date: 7/25/97 /s/ Peter M. Rogalin ------------------- ---------------------------- Peter M. Rogalin Chief Accounting Officer - 15 - EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 82,086 9,329 30,463 0 17,895 153,387 14,996 0 366,051 45,209 7,077 0 81 284 313,106 366,051 56,616 56,616 24,633 24,633 2,657 0 432 4,429 1,571 2,858 0 0 0 2,858 .08 .08 Includes Raw Material Inventory of $2,936.
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