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
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INDEX
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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
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