- - -------------------------------------------------------------------------------
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 September 30, 1998
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 November 6, 1998
--------------------- ----------------
$.50 par value 128,621,728
MYLAN LABORATORIES INC. AND SUBSIDIARIES
INDEX
Page
Number
--------
PART I. FINANCIAL INFORMATION
ITEM 1: Financial Statements
Consolidated Balance Sheets - September 30, 1998
and March 31, 1998 2A - 2B
Consolidated Statements of Earnings - Three and Six
Months Ended September 30, 1998 and 1997 3
Consolidated Statements of Cash Flows - Six
Months Ended September 30, 1998 and 1997 4
Notes to Consolidated Financial Statements -
Six Month Period Ended September 30, 1998 5 - 7
ITEM 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 11
PART II. OTHER INFORMATION
ITEM 1: Legal Proceedings 12
ITEM 4: Submission of Matters to a Vote of
Security Holders 12
ITEM 6: Exhibits and Reports on Form 8-K 12
MYLAN LABORATORIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, March 31,
1998 1998
Unaudited Audited
Current Assets:
Cash and cash equivalents $138,223,000 $103,756,000
Marketable securities 15,956,000 20,967,000
Accounts receivable - net 157,618,000 136,864,000
Inventories:
Raw materials 67,743,000 63,308,000
Work in process 20,095,000 27,858,000
Finished goods 63,190,000 54,875,000
------------ ------------
151,028,000 146,041,000
Deferred income tax benefit 13,600,000 7,845,000
Prepaid and refundable income tax 2,132,000 7,946,000
Other current assets 8,355,000 6,679,000
------------ ------------
Total Current Assets 486,912,000 430,098,000
Property, Plant and Equipment - at cost 234,423,000 226,319,000
Less accumulated depreciation 82,119,000 74,907,000
------------ ------------
152,304,000 151,412,000
Marketable Securities, non-current 20,989,000 20,974,000
Investment in and Advances to Somerset 33,628,000 29,721,000
Intangible Assets-net of accumulated amortization 138,860,000 128,745,000
Other Assets 91,735,000 86,803,000
------------ ------------
Total Assets $924,428,000 $847,753,000
============ ============
See Notes to Consolidated Financial Statements
-2A-
LIABILITIES AND SHAREH0LDERS' EQUITY
September 30, March 31,
1998 1998
Unaudited Audited
Current Liabilities:
Trade accounts payable $ 13,331,000 $ 15,957,000
Current portion of long-term obligations 18,414,000 8,477,000
Income taxes payable 3,495,000 5,377,000
Other current liabilities 45,582,000 36,635,000
Cash dividends payable 4,912,000 4,900,000
------------ ------------
Total Current Liabilities 85,734,000 71,346,000
Long-Term Obligations 25,717,000 26,218,000
Deferred Income Tax Liability 5,665,000 5,724,000
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
123,275,067 shares at September 30,
1998 and 123,050,172 shares at
March 31, 1998 61,638,000 61,525,000
Additional paid-in capital 95,469,000 92,405,000
Retained earnings 656,309,000 594,847,000
Accumulated other comprehensive
(expense)income (470,000) 1,570,000
------------
812,946,000 750,347,000
Less Treasury stock - at cost, 812,828
shares at September 30, 1998 and
849,858 shares at March 31, 1998 5,634,000 5,882,000
------------ ------------
Net Worth 807,312,000 744,465,000
------------ ------------
Total Liabilities and Shareholders' Equity $924,428,000 $847,753,000
============ ============
See Notes to Consolidated Financial Statements
-2B-
MYLAN LABORATORIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
UNAUDITED
Three Months Ended September 30, Six Months Ended September 30,
-------------------------------- ------------------------------
1998 1997 1998 1997
---- ---- ---- ----
REVENUES:
Net Sales $ 177,592,000 $ 127,133,000 $ 344,310,000 $ 236,321,000
Other Revenues - 26,822,000 - 26,822,000
------------- ------------- ------------- -------------
177,592,000 153,955,000 344,310,000 263,143,000
COST AND EXPENSES:
Cost of Sales 85,548,000 71,201,000 167,112,000 132,580,000
Research and Development 13,382,000 12,124,000 27,466,000 23,815,000
Selling and Administrative 28,435,000 31,482,000 53,444,000 51,221,000
------------- ------------- ------------- -------------
114,808,000 93,556,000 207,617,000 181,117,000
127,365,000 114,807,000 248,022,000 207,616,000
EQUITY IN EARNINGS OF SOMERSET 2,142,000 2,456,000 4,492,000 6,592,000
OTHER INCOME 4,078,000 4,437,000 8,112,000 6,263,000
------------- ------------- ------------- -------------
EARNINGS BEFORE INCOME TAXES 56,447,000 46,041,000 108,892,000 68,382,000
INCOME TAX RATE 34% 34% 34% 31%
INCOME TAXES 19,232,000 15,650,000 37,495,000 21,393,000
------------- ------------- ------------- -------------
NET EARNINGS $ 37,215,000 $ 30,391,000 $ 71,397,000 $ 46,989,000
============= ============= ============= =============
EARNINGS PER SHARE:
Basic $ .30 $ .25 $ .58 $ .39
============= ============= ============= =============
Diluted $ .30 $ .25 $ .58 $ .38
============= ============= ============= =============
WEIGHTED AVERAGE COMMON SHARES:
Basic 122,408,000 122,029,000 122,352,000 122,047,000
============= ============= ============= =============
Diluted 123,809,000 123,102,000 123,943,000 123,071,000
============= ============= ============= =============
The Company has paid regular quarterly cash dividends of
$.04 per share since October 1995.
See Notes to Consolidated Financial Statements
-3-
MYLAN LABORATORIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
UNAUDITED
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings $ 71,397,000 $ 46,989,000
Adjustments to reconcile net earnings to net
cash provided from(used in)operating activities:
Depreciation and amortization 11,154,000 10,529,000
Deferred income taxes (4,716,000) (1,108,000)
Equity in earnings of Somerset (4,492,000) (6,592,000)
Cash received from Somerset 585,000 4,989,000
Allowances on accounts receivable 8,287,000 5,500,000
Other non-cash items 323,000 866,000
Changes in operating assets and liabilities:
Accounts receivable (29,041,000) (7,982,000)
Inventories (5,181,000) (31,555,000)
Trade accounts payable (2,626,000) (817,000)
Income taxes payable 3,932,000 (5,115,000)
Other operating assets and liabilities 7,271,000 (22,682,000)
------------ -------------
Net cash provided from(used in)operating activities 56,893,000 (6,978,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (8,104,000) (11,196,000)
Increase in intangible and other assets (3,084,000) (4,465,000)
Proceeds from investment securities 13,853,000 7,706,000
Purchase of investment securities (11,995,000) (6,776,000)
------------- ------------
Net cash used in investing activities (9,330,000) (14,731,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term obligations (6,139,000) (1,416,000)
Cash dividends paid (9,781,000) (9,764,000)
Repurchase of Common Stock - (1,507,000)
Proceeds from exercise of stock options 2,824,000 1,302,000
------------ ------------
Net cash used in financing activities (13,096,000) (11,385,000)
------------ ------------
Net Increase(Decrease)in Cash and Cash Equivalents 34,467,000 (33,094,000)
Cash and Cash Equivalents - Beginning of Period 126,156,000 176,980,000
------------- ------------
Cash and Cash Equivalents - Beginning of Period 103,756,000 126,156,000
------------ ------------
Cash and Cash Equivalents - End of Period $138,223,000 $ 93,062,000
============ ============
CASH PAID DURING THE PERIOD FOR:
Interest $ 275,000 $ 350,000
Income Taxes $ 38,329,000 $ 27,640,000
See Notes to Consolidated Financial Statements
-4-
MYLAN LABORATORIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTH PERIOD ENDED
SEPTEMBER 30, 1998
Unaudited
A. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position of
the Company as of September 30, 1998 and March 31, 1998 together with the
results of operations and cash flows for the interim periods ended
September 30, 1998 and 1997. The consolidated results of operations for
the three and six months ended September 30, 1998 and 1997 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 1998
Annual Report and Report on Form 10-K.
C. Diluted earnings per share is computed by dividing net earnings available
to common shareholders by the weighted average common shares outstanding
adjusted for the dilutive effect of options granted under the Company's
stock option plans. The effect of dilutive stock options on the weighted
average shares outstanding was 1,401,000 and 1,073,000 for the three
months ending September 30, 1998 and 1997 and 1,591,000 and 1,024,000 for
the six months ending September 30, 1998 and 1997.
D. Total comprehensive income for the three and six months ended September
30, 1998 and 1997 are as follows: (in thousands)
Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
Net earnings $37,215 $30,391 $71,397 $46,989
Unrealized (loss)gain on
marketable securities, net of tax (548) 1,625 (2,040) 2,716
------- ------- ------- -------
Comprehensive Income $36,667 $32,016 $69,357 $49,705
======= ======= ======= =======
Accumulated other comprehensive (expense)income, as reflected on the
balance sheet, was comprised solely of the unrealized (loss) or gain on
marketable securities net of income tax.
-5-
MYLAN LABORATORIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTH PERIOD ENDED
SEPTEMBER 30, 1998
Unaudited
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
six month periods ended September 30, 1998 and 1997 are as follows: (in
thousands)
Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
Net Sales $12,998 $15,110 $25,628 $32,383
Costs and Expenses 5,997 8,007 10,899 13,254
Income Taxes 2,904 2,485 6,079 6,640
------- ------- ------- -------
Net Earnings $ 4,097 $ 4,618 $ 8,650 $12,489
======= ======= ======= =======
The above information represents 100% of Somerset's operations of which
the Company has a 50% interest.
F. On October 2, 1998 the Company acquired all the outstanding shares of
Penederm Inc. through the issuance of approximately 5,900,000 shares of
the Company's common stock. Penederm primarily develops and markets
patented topical prescription products. Penederm maintains administrative
and research and development facilities in Foster City, California. The
total purchase price of approximately $205,000,000 included the value of
the Company's common stock as well as the value assigned to the Company's
options issued in the exchange for all the outstanding Penederm options.
The Company plans on recording a one-time charge estimated for the cost of
acquired in-process research and development of $150,000,000 in the third
quarter. The remaining assets acquired, consisting principally of
intangibles are to be amortized over a period not to exceed 25 years. The
amounts recorded will be based on a final independent valuation of the net
assets acquired.
-6-
MYLAN LABORATORIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTH PERIOD ENDED
SEPTEMBER 30, 1998
Unaudited
G. Under the terms of the Company's supply and distribution agreement with
Genpharm Inc. ("Genpharm") relating to sales of ranitidine HCL tablets
("ranitidine") the Company is to share in any benefit that Genpharm
receives from its agreement with Novopharm Limited ("Novopharm"). The
Company recognized revenue of $26,822,000 in the quarter ended September
30, 1997 in connection with the Genpharm Novopharm arrangement. However,
as a result of a dispute between Genpharm and Novopharm relating to
contract interpretation, the Company has not recognized any additional
revenue related to their agreement. Based upon an independent audit,
Genpharm initiated suit against Novopharm to resolve and collect any
additional funds due. In response to Genpharm's suit, Novopharm filed
counterclaims against both Genpharm and the Company. The Company believes
the counterclaims against Genpharm and the Company are without merit and
will vigorously defend its position.
H. As a result of price increases in the generic industry the Company
received notification from the Federal Trade Commission ("FTC") that it is
investigating whether the Company and others have engaged in activities
restricting competition in the manufacture or sale of pharmaceutical
ingredients or products. The Company is cooperating fully with the
inquiry and is providing the information requested by the FTC. The FTC
has completed the initial investigative stage of the inquiry. As with all
governmental inquiries the duration and outcome is inherently uncertain.
However, management believes that the Company has acted properly and in
full compliance with the Federal Trade Commission Act and all other laws
and regulations governing trade and competition in the marketplace, and
that the ultimate resolution of this matter will not have a material
adverse effect on the Company's financial position or results of
operations.
I. In August 1997, Key Pharmaceuticals ("Key") filed suit in the United
States District Court for the Western District of Pennsylvania against the
Company and certain subsidiaries alleging patent infringement relating to
the marketing of its nitroglycerin transdermal system. The Company
received FDA approval for its nitroglycerin transdermal system in
September 1996 and immediately began marketing the product. The relief
sought includes a preliminary and permanent injunction, treble damages
along with interest and attorney's fees and expenses. On September 25,
1998 Key's request for a preliminary injunction was denied and the suit is
currently in the trial stage. The Company continues to believe the suit
is without merit and is vigorously defending its position.
-7-
PART 1 - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net earnings for the three months ended September 30, 1998 were
$37,215,000, representing a 22% increase over the same quarter a year ago. Net
earnings for the six months then ended were $71,397,000, representing a 52%
increase over the same period a year ago. Net sales increased 40% from last year
to $177,592,000 for the current quarter and gross profit (net sales less cost of
goods sold) as a percentage of net sales increased from 44% last year to 52%
this year. For the six month period ended September 30, 1998, net sales
increased 46% from the same period last year to $344,310,000 and gross profit as
a percentage of net sales increased from 44% last year to 51% this year.
Improved operating results were realized in all of the Company's operating
divisions including a 29% increase in net sales at Bertek Pharmaceuticals Inc.,
the Company's branded division, due to the addition of five new products and a
similar increase in unit dose sales through the UDL Laboratories division. The
most significant improvements came from Mylan Pharmaceuticals, Inc., the
Company's generic division, primarily as a result of the favorable impact
of selective price increases on 14 products, seven of which were implemented in
the last half of fiscal 1998 and seven more which were implemented in the
quarter ended June 30, 1998. In addition, overall shipment volumes increased to
3.9 billion units for this six month period versus 3.5 billion units for the six
month period last year and nine product line additions were made since September
30, 1997.
The decision to increase prices was made in light of continued price
deterioration and increased costs involved in bringing new products to market,
primarily resulting from legal challenges under the Hatch-Waxman Act. The
products selected for increases and the amount of the increases were based on
numerous factors, including product line contribution, market size, competition,
raw material suppliers and manufacturing capacity. The Company has chosen to
increase prices in order to ensure the Company's full line of low-cost,
effective, quality generic alternatives continues to be available to the
American public.
While these price increases have favorably impacted earnings in the
current periods, the extent if any in future periods depends upon several
factors, some of which are beyond the Company's control. During the
quarter ended June 30, 1998, the Company received notice that the FTC, in light
of the price increases in the generic market, was investigating whether the
Company and others had engaged in activities restricting competition in the
manufacture or sale of pharmaceutical ingredients or products (see note H).
-8-
The Company is cooperating fully with this investigation and is supplying
the documents requested. Management believes that the Company has acted properly
and in full compliance with the Federal Trade Commission Act and all other laws
and regulations governing trade and competition in the marketplace. The Company
fully intends to (1) assert its positions vigorously with the FTC, (2) fulfill
its contractual obligations under existing supply agreements for pharmaceutical
ingredients, (3) maintain where possible its current pricing levels for products
for which prices have recently been increased, and (4) continue to examine other
products to determine if price increases are appropriate. The Company believes
the ultimate resolution of this matter will not have a material adverse effect
on the Company's financial position or results of operations.
Net earnings were favorably impacted in the three month period ended
September 30, 1997 with the recording of $26,822,000 of "Other Revenue" relating
to an agreement the Company has with Genpharm for the sale of ranitidine. This
income represents the Company's portion of the revenue received by
Genpharm from Novopharm under a separate agreement between the two companies for
the sale of ranitidine (see note G).
Research and development expenses of $13,382,000 for the current quarter
are 10% higher than the same quarter last year and year to date expenses of
$27,466,000 are 15% higher than last year. The Company is committed to funding
research projects for branded, generic and transdermal products in order to grow
its various product lines.
The Company is currently in litigation with respect to its equity and
funding investments in VivoRx, Inc. and VivoRx Diabetes, Inc.(collectively
"VivoRx"), certain VivoRx directors and certain of their affiliated companies.
The Company initiated this litigation based upon improprieties which became
apparent during the quarter ended June 30, 1998. The litigation is in the early
stages of discovery. The Company is continuing to evaluate its options regarding
its investments and the future funding of diabetes research pursuant to its
Exclusive License Agreement with VivoRx.
Selling and administrative expenses for the six months ended September 30,
1998 were $53,444,000, which represents a 4% increase over the same period last
year. The increase is primarily due to legal expenditures related to patent
challenges under the Hatch-Waxman Act and higher payroll and related expenses.
These increases were partially off-set by a decrease in advertising and
promotional programs which were unusually high in the six month period ended
September 30, 1997 due to the launch of ranitidine and other generic products.
The decrease in advertising and promotional programs also contributed to the 10%
decrease in selling and administrative expenses to $28,435,000 for the three
month period ended September 30, 1998, in spite of a significant increase in
legal expenses.
Other income increased 30% to $8,112,000 for the six month period ended
September 30, 1998. The improvement is due to the increase in cash and the
earnings related to investments, primarily pooled asset funds.
-9-
The change in the effective tax rate to 34% for the six month period ended
September 30, 1998 from 31% over the same period last year is primarily
attributable to the increase in domestic earnings versus Puerto Rican earnings
which are subject to a federal tax credit.
Liquidity and Capital Resources and Financial Condition
Working capital increased from $358,752,000 at March 31, 1998 to
$401,178,000 at September 30, 1998. The ratio of current assets to current
liabilities was 5.7 to 1 at September 30, 1998 compared to 6.0 to 1 at March 31,
1998.
Net cash provided from operating activities was $56,893,000 for the six
months ended September 30, 1998 compared to net cash used in operating
activities of $6,978,000 for the six months ended September 30, 1997. This
improvement resulted primarily from increased net earnings for the six-month
period ended September 30, 1998 compared to the six-month period ended September
30, 1997 as well as the collection of funds associated with a receivable from
Genpharm recorded in "Other current assets" in the prior year.
Year 2000
The Company has completed an initial review of its critical information
technology ("IT") and non-IT operating systems for Year 2000 ("Y2K") compliance.
On the basis of this review, management has concluded that the costs of
remediation and potential losses related to issues are unlikely to have a
material effect on the Company's financial position, results of operation or
cash flows.
In assessing potential issues, the Company has taken the following steps to
address its IT and non-IT operating systems:
- Formed a project team across functional departments to complete a review
and identify nonconforming systems.
- Communicated to employees throughout the Company to increase awareness
of issues and activate the identification process.
- Identified critical IT and non-IT nonconforming operating systems and
developed a plan to bring these systems into compliance.
- Corresponded with customers, vendors, service suppliers and financial
institutions to verify their readiness.
- Established a testing program to ensure that such systems are
compliant.
- Developed contingency plans where practical in the event of system
failures.
-10-
Because of the continued growth of the Company over the last several years
and prior to the formation of the project team, the Company initiated major
system conversions to accommodate the physical expansion and increased
transaction volume associated with this growth. Many factors were considered
during the selection process. While Y2K compliance was one of the factors
considered, other factors were equally and significantly more important. Any new
systems selected were expected to be Y2K compliant. Due to the recent
independent upgrades and replacements of its computer systems to accommodate its
growth, the Company has not been required to spend nor does it anticipate
spending significant incremental funds to become Y2K compliant. The funds for
system conversions will be financed through operating revenue of the Company.
Such conversions are currently on schedule and are expected to meet the testing
schedule established by the project team. The Company has neither delayed nor
anticipates delaying any significant information system projects prior to the
year 2000.
Management believes that the Company has acted with appropriate diligence
to address potential Y2K issues and that such issues will not materially affect
its business or operations. The Company is, however dependent on third parties,
such as its customers, vendors, service suppliers and financial institutions, to
make their own systems Y2K compliant. If these entities fail to remedy their Y2K
issues, the Company could potentially suffer interruptions in its business
operations. These interruptions could potentially delay the Company in its
manufacturing or distribution of its products. Furthermore, no assurance can be
given that the efforts of the project team will successfully remedy every
non-compliant system or foresee the consequences of all Y2K issues.
Forward Looking Statements
The statements set forth in this Item 2 under "Results of Operations"
concerning the manner in which the Company intends to respond to the FTC
investigation and to conduct its operations in the face of this investigation
are forward-looking statements. The Company may be unable to realize the plans
and objectives described therein due to various important factors, including,
but not limited to, the factors described under "Forward Looking Statements" in
Item 7 of the Company's Annual Report on Form 10-K for the year ended March 31,
1998, or if the FTC concludes, on the basis of its investigation, that the
Company has acted improperly.
In addition, the statements under "Liquidity and Capital Resources and
Financial Condition-Year 2000" which express the Company's belief that Y2K
issues will not have a material adverse effect on the Company may also be
forward-looking statements. Factors which could cause the Company to be unable
to avoid any material Y2K issues include the failure of its Y2K project team to
identify latent or other non-compliant codes or technologies, the failure of any
of the customers, vendors, service suppliers or financial institutions with
which the Company transacts business to address their own Y2K issues or the
ineffectiveness of any contingent plans implemented by the Company to mitigate
the effects of interruptions in its business due to Y2K issues.
-11-
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments to the information previously
disclosed in the Company's periodic filings regarding litigation except for the
Key Pharmaceutical ("Key") suit. On September 25, 1998, Key's request for a
preliminary injunction was denied and the case is currently in the trial stage.
The Company continues to believe that this suit is without merit and is
vigorously defending its position at trial.
Item 4. Submission of Matters to a Vote of Security Holders
On July 30, 1998 the shareholders overwhelmingly elected the seven
directors nominated and the independent auditors of the Company as described in
the Company's 1998 Proxy Statement.
Item 6. Exhibits and Reports on Form 8-K
(a) 27.1 Financial Data Schedule.
(b) Reports on Form 8-K - On August 26, 1998 the Company filed
reports on Forms 8-K and 8-K/A under Item 5 announcing the filing
of the Form S-4 registration statement for the shares required
for the acquisition of Penederm Inc.
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
Milan Puskar
Chairman of the Board, Chief
Executive Officer and President
(Principal executive officer)
DATE
Donald C. Schilling
Vice President of Finance
(Principal financial officer)
-12-