FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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(Mark One)
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/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - ---- SECURITIES EXCHANGE ACT OF 1934
For the Period Ended December 31, 1995
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/ / 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.
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(Exact name of registrant as specified in its charter)
Delaware 11-1798614
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
909 Third Avenue
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New York, New York 10022-4731
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(address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code 212-421-7850
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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
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Number of shares outstanding of Registrant's Common Stock as of
February 14, 1996: 45,425,940.
PAGE
FOREST LABORATORIES, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY The financial condition of the Company
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continues to be strong. The decrease in cash, marketable securities and
long-term marketable securities as well as the increase in intangible assets
and investments in subsidiaries, net was principally the result of the
acquisition of a minority interest in the common stock of Biovail Corporation
International which was done in connection with the acquisition of an
exclusive license for the product Tiazac-TM-, a once daily calcium channel
blocker and the acquisition of certain product rights from Berlex Laboratories
for Climara-R-. The increase in accounts receivable, inventories, accounts
payable and accrued expenses were due to the continued growth of the
Company's principal promoted products and an increase in the Company's
overall level of operations. Company operations have historically provided
a strong positive cash flow and management believes that on going operations,
when combined with the Company's strong cash position, will continue to
provide adequate liquidity to facilitate potential acquisitions of products
or companies and other capital investments.
RESULTS OF OPERATIONS Net sales for the three and nine month periods ended
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December 31, 1995 increased $15,590,000 and $43,888,000 respectively, as
compared with the same periods last year. This was primarily due to the
continued growth of the Company's principal promoted products, the launch of
Cervidil-TM- , the Company's prostaglandin E2 insert used to ripen the cervix in
in induced childbirth and Tiazac. Tiazac is a once-daily formulation of
diltiazem, a calcium channel blocker used in the treatment of hypertension.
Tiazac is marketed as a branded pharmaceutical product and detailed by the
Company's sales representatives. Net volume growth of those products amounted
to $13,516,000 for the quarter and $46,151,000 for the nine months.
Net volume growth of the Company's older unpromoted products amounted to
$1,624,000 for the quarter but declined $4,888,000 for the nine months.
The remainder of the net sales change was primarily due to price and foreign
exchange fluctuations. In November 1993, a patent infringement lawsuit was
commenced by Marion Merrel Dow, Inc. ("MMD") and certain related parties
against Hoechst-Roussel Pharmaceuticals, Inc. a previous licensee of
Biovail Corporation International (BCI") for the Tiazac product. The
complaint alleged that Hoechst-Roussel infringed certain patents relating to
controlled release diltiazem formulations. In March 1995, Hoechst-Roussel's
parent, Hoechst AG, announced its intention to acquire MMD, which acquisition
was subsequently consummated. As a result of agreements entered into in
connection with such acquisition, Hoechst-Roussel returned all rights to
Tiazac to BCI and entered into a settlement and release pursuant to which the
patent litigation was dismissed with prejudice. The Company does not believe
that there is any basis for any similar patent infringement claim which could
be asserted by any third party.
Cost of sales as a percentage of sales increased to 21% during the three month
period and 20% during the nine-month period from 19% for the same periods
last year due mostly to increases in overhead costs related to the Company's
facilities expansion and lower net prices received on certain generic products.
Selling, general and administrative expenses of the current quarter and nine
month periods increased over the same periods last year due primarily to costs
incurred in connection with the launch of Cervidil and Tiazac, which included
a substantial increase in the sales force, and to support co-promotion
agreements previously entered into by the Company. It is anticipated that
such increases will continue into the 1997 fiscal year.
Research and development expense increased during the current quarter and
nine month periods over the same periods last year principally as a result of
the cost of conducting clinical trials in order to obtain approval of new
products and the cost of developing products using the Company's controlled
release technology. During the current quarter and nine month period, there
was particular emphasis on Methoxatone, AF102B and Synapton-TM-. Methoxatone is
being developed for the treatment of brain trauma and AF102B is an M1 agonist
for the treatment of Alzheimer's Disease. Synapton is the Company's
controlled release formulation of physostigmine being tested for the treatment
of Alzheimer's Disease.
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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: April 22, 1996
Forest Laboratories, Inc.
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(Registrant)
/s/ Howard Solomon
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Howard Solomon
President and Chief
Executive Officer
/s/ Kenneth E. Goodman
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Kenneth E. Goodman
Vice President - Finance
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