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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarterly period ended March 31, 2001 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-9860
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BARR LABORATORIES, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 22-1927534
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(State or Other Jurisdiction of (I.R.S. - Employer
Incorporation or Organization) Identification No.)
TWO QUAKER ROAD, P. O. BOX 2900, POMONA, NEW YORK 10970-0519
-------------------------------------------------------------
(Address of principal executive offices)
845-362-1100
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(Registrant's telephone number)
(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 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
---- -----
Number of shares of common stock, par value $.01, outstanding as of March 31,
2001: 35,363,593
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BARR LABORATORIES, INC.
INDEX PAGE
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 2001 and June 30, 2000 3
Consolidated Statements of Earnings
for the three and nine months ended
March 31, 2001 and 2000 4
Consolidated Statements of Cash Flows
for the nine months ended
March 31, 2001 and 2000 5
Notes to Consolidated Financial
Statements 6-11
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 12-21
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 21
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings 21
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 22
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BARR LABORATORIES, INC.
Consolidated Balance Sheets
(in thousands, except share amounts)
RESTATED
MARCH 31, JUNE 30,
2001 2000
(unaudited)
--------- ---------
Assets
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Current assets:
Cash and cash equivalents $ 223,606 $ 155,922
Marketable securities - 96
Accounts receivable, less allowances of $6,514 and $4,140, respectively 55,758 54,669
Other receivables 18,807 23,811
Inventories 111,032 79,482
Prepaid expenses 2,829 1,428
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Total current assets 412,032 315,408
Property, plant and equipment, net of accumulated depreciation of $56,095
and $50,826, respectively 98,200 95,296
Other assets 4,196 13,149
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Total assets $ 514,428 $ 423,853
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 117,757 $ 94,529
Accrued liabilities 13,132 11,079
Deferred income taxes 1,036 1,036
Current portion of long-term debt 1,924 1,924
Income taxes payable 18,983 3,948
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Total current liabilities 152,832 112,516
Long-term debt 26,285 28,084
Other liabilities 1,241 519
Deferred income taxes - 566
Commitments & Contingencies
Shareholders' equity:
Preferred stock $1 par value per share; authorized 2,000,000; none issued
Common stock $.01 par value per share; authorized 100,000,000;
issued 35,540,525 and 35,004,869, respectively 355 350
Additional paid-in capital 91,410 83,463
Additional paid-in capital - warrants 16,418 16,418
Warrant subscription receivable - (1,835)
Retained earnings 225,906 181,869
Accumulated other comprehensive (loss) income (6) 1,916
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334,083 282,181
Treasury stock at cost: 176,932 shares (13) (13)
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Total shareholders' equity 334,070 282,168
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Total liabilities and shareholders' equity $ 514,428 $ 423,853
========= =========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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BARR LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
RESTATED RESTATED
2001 2000 2001 2000
--------- --------- --------- ---------
Revenues:
Product sales $ 134,067 $ 121,522 $ 355,503 $ 327,612
Development and other revenue 3,270 119 13,288 547
--------- --------- --------- ---------
Total revenues 137,337 121,641 368,791 328,159
Costs and expenses:
Cost of sales 94,510 93,002 251,741 236,494
Selling, general and administrative 12,356 12,885 36,056 33,917
Research and development 14,168 9,829 40,062 28,492
--------- --------- --------- ---------
Earnings from operations 16,303 5,925 40,932 29,256
Proceeds from patent challenge settlement 7,000 7,000 21,000 20,583
Interest income 2,521 1,107 7,289 3,276
Interest expense 462 603 1,467 1,892
Other income 2,045 16 3,819 467
--------- --------- --------- ---------
Earnings before income taxes 27,407 13,445 71,573 51,690
Income tax expense 10,281 1,597 27,536 15,955
--------- --------- --------- ---------
Net earnings $ 17,126 $ 11,848 $ 44,037 $ 35,735
========= ========= ========= =========
Earnings per common share $ 0.48 $ 0.34 $ 1.25 $ 1.04
========= ========= ========= =========
Earnings per common share - assuming dilution $ 0.45 $ 0.33 $ 1.17 $ 1.00
========= ========= ========= =========
Weighted average shares 35,352 34,468 35,231 34,338
========= ========= ========= =========
Weighted average shares - assuming dilution 37,696 35,799 37,687 35,559
========= ========= ========= =========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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BARR LABORATORIES, INC.
Consolidated Statements of Cash Flows
For the Nine Months Ended March 31, 2001 and 2000
(in thousands of dollars)
(unaudited)
RESTATED
2001 2000
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CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net earnings $ 44,037 $ 35,735
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 8,118 7,809
Deferred income tax benefit (43) (6,156)
Loss (gain) on sale of assets 101 (498)
(Gain) loss on sale of marketable securities (6,671) 25
Write-off of investments 2,750 -
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable and other receivables, net 3,915 (30,790)
Inventories (31,550) (69)
Prepaid expenses (1,401) (202)
Other assets (410) (1,303)
Increase (decrease) in:
Accounts payable, accrued liabilities and other liabilities 25,456 (9,266)
Income taxes payable 15,035 7,547
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Net cash provided by operating activities 59,337 2,832
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CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchases of property, plant and equipment (10,442) (9,543)
Proceeds from sale of property, plant and equipment 27 263
Proceeds (purchases) of marketable securities, net 10,839 (20)
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Net cash provided by (used in) investing activities 424 (9,300)
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CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Principal payments on long-term debt and capital leases (1,864) (2,041)
Earnings under DuPont agreements applied to warrant receivable 1,835 7,238
Proceeds from exercise of stock options and employee stock purchases 7,952 3,850
----------- -----------
Net cash provided by financing activities 7,923 9,047
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Increase in cash and cash equivalents 67,684 2,579
Cash and cash equivalents at beginning of period 155,922 94,867
----------- -----------
Cash and cash equivalents at end of period $ 223,606 $ 97,446
=========== ===========
SUPPLEMENTAL CASH FLOW DATA:
Cash paid during the period:
Interest, net of portion capitalized $ 1,042 $ 1,433
=========== ===========
Income taxes $ 13,044 $ 13,719
=========== ===========
Non-cash transactions:
Write-off of equipment & leasehold improvements related to closed facility $ - $ 115
=========== ===========
Equipment under capital lease $ 612 $ -
=========== ===========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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BARR LABORATORIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Barr
Laboratories, Inc. and its wholly-owned subsidiaries (the "Company" or
"Barr").
As disclosed in the Company's Annual Report on Form 10-K/A for the year
ended June 30, 2000, the Company has restated its consolidated financial
statements as of March 31, 2000 and for the three and nine months then
ended. This restatement resulted from a revision in the Company's method
of accounting for the warrants issued to DuPont Pharmaceuticals Company
in connection with the strategic alliance executed in March 2000 (see
Note 5). The total effect of the restatement was to increase previously
reported net earnings for the three and nine months ended March 31, 2000
by $9,181 and increase previously reported earnings per share for the
three and nine months ended March 31, 2000 by $0.26 and $0.25 per share
assuming dilution, respectively. In addition, the Company reclassified
proceeds from supply agreements from revenues to proceeds from patent
challenge settlement. The reclassification had no effect on the
previously reported net earnings. A summary of the effects of the
restatement and reclassification is as follows:
Three Months Ended Nine Months Ended
March 31, 2000 March 31, 2000
------------------------------------- -----------------------------------
As Previously As Revised As Previously As Revised
Reported Reported
------------------ --------------- ------------------ ---------------
Total revenues $ 135,760 $ 121,641 $ 355,433 $ 328,159
Earnings from operations 3,744 5,925 40,658 29,256
Net earnings 2,667 11,848 26,554 35,735
Earnings per common share - assuming dilution $ 0.07 $ 0.33 $ 0.75 $ 1.00
In the opinion of the Management of the Company, the interim consolidated
financial statements include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position, results of operations and cash flows for the interim periods.
Interim results are not necessarily indicative of the results that may be
expected for a full year. These financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K/A for the year
ended June 30, 2000 and quarterly reports on Form 10-Q/A for the periods
ended September 30, 2000 and December 31, 2000.
Certain amounts in the prior year's financial statements have been
reclassified to conform with the current year presentation.
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2. CASH AND CASH EQUIVALENTS
Cash equivalents consist of short-term, highly liquid investments,
including market auction securities with interest rates that are re-set
in intervals of 7 to 49 days, which are readily convertible into cash at
par value, which approximates cost.
As of March 31, 2001 and June 30, 2000, approximately $104,669 and
$74,011, respectively, of the Company's cash was held in an interest
bearing escrow account. Such amounts represent the portion of the
Company's payable balance with AstraZeneca Pharmaceuticals LP
("AstraZeneca"), which the Company has decided to secure in connection
with its cash management policy. The Company pays AstraZeneca a monthly
fee based on a rate multiplied by the average unsecured monthly Tamoxifen
payable balance.
3. OTHER RECEIVABLES
Other receivables consist primarily of patent challenge settlement
receivables and receivables related to development and other revenue (See
Note 5).
4. INVENTORIES
Inventories consisted of the following:
March 31, June 30,
2001 2000
--------- --------
Raw materials and supplies $ 17,758 $ 16,884
Work-in-process 7,028 5,102
Finished goods 86,246 57,496
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$ 111,032 $ 79,482
========= ========
Tamoxifen citrate, purchased as a finished product, accounted for
approximately $68,959 and $42,730 of finished goods as of March 31, 2001
and June 30, 2000, respectively.
5. DEVELOPMENT AND OTHER REVENUE/WARRANT SUBSCRIPTION RECEIVABLE
As discussed in Note 1 and in the Company's Annual Report on Form 10-K/A,
in March 2000, the Company entered into various agreements with DuPont
Pharmaceuticals Company ("DuPont"). For the three and nine months ended
March 31, 2001 the Company earned approximately $3,100 and $14,742
related to these agreements, of which $1,835 was recorded as an offset to
warrant subscription receivable in the nine month period, with the
balance recorded as development and other revenue.
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6. OTHER INCOME
The Company recorded a gain of $2,370 and $6,659 in the three and nine
months ended March 31, 2001, respectively, on the sale of the remainder
of its investment in Galen Holdings plc., formerly Warner Chilcott plc.
In September 1998, the Company made an investment in Gynetics, Inc.
("Gynetics"), a privately owned company. The Company's investment
represented approximately 7% of Gynetics' outstanding voting shares. Barr
does not have the ability to exercise significant influence on Gynetics'
operations and therefore, the Company accounted for this investment using
the cost method of accounting.
In the quarter ended September 30, 2000, the Company reviewed the
valuation of its investment in Gynetics in light of numerous negative
events that occurred in the quarter including product development delays
and threatened litigation. Due to these events as well as continued
operating difficulties at Gynetics that included extensive losses and
negative operating cash flow, Barr concluded as of September 30, 2000,
that its investment in Gynetics was other than temporarily impaired and
that as of September 30, 2000, its investment in Gynetics should be
written down to $0, the current realizable value. Other income in the
consolidated financial statements includes approximately $2.5 million
related to this write-off.
The prior year included a $343 gain resulting from the receipt of 500,000
warrants from Halsey Drug Company, Inc. in exchange for rights to several
pharmaceutical products.
7. EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominators used
to calculate earnings per common share ("EPS") on the Consolidated
Statements of Earnings:
Three Months Ended Nine Months Ended
March 31, March 31,
As Revised As Revised
2001 2000 2001 2000
------- ------- ------- -------
EARNINGS PER COMMON SHARE:
Net earnings (numerator) $17,126 $11,848 $44,037 $35,735
Weighted average shares (denominator) 35,352 34,468 35,231 34,338
Net earnings $ 0.48 $ 0.34 $ 1.25 $ 1.04
======= ======= ======= =======
EARNINGS PER COMMON SHARE - ASSUMING DILUTION:
Net earnings (numerator) $17,126 $11,848 $44,037 $35,735
Weighted average shares 35,352 34,468 35,231 34,338
Effect of dilutive options 2,344 1,331 2,456 1,221
------- ------- ------- -------
Weighted average shares - assuming
dilution (denominator) 37,696 35,799 37,687 35,559
Net earnings $ 0.45 $ 0.33 $ 1.17 $ 1.00
======= ======= ======= =======
Share, amounts in thousands
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During the three and nine months ended March 31, 2001 and 2000, there
were 111,400, 111,400, 1,559,250 and 1,559,250, respectively, of
outstanding options and warrants that were not included in the
computation of diluted EPS, because the securities' exercise prices were
greater than the average market price of the common stock for the period.
8. COMPREHENSIVE INCOME
Comprehensive income is defined as the total change in shareholders'
equity during the period other than from transactions with shareholders.
For the Company, comprehensive income is comprised of net income and the
net changes in unrealized gains and losses on securities classified for
Statement of Financial Accounting Standards ("SFAS") No. 115 purposes as
"available for sale". Total comprehensive income for the three and nine
months ended March 31, 2001 and 2000 was $15,662, $42,115, $12,987 and
$37,139, respectively.
9. NEW ACCOUNTING PRONOUNCEMENTS
Derivative Instruments
On June 15, 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133, as amended by SFAS No. 138 (collectively, SFAS
No. 133), provides accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective for all
fiscal quarters for all fiscal years beginning after June 15, 2000. The
Company implemented SFAS No. 133 on July 1, 2000 and its adoption did not
have a material impact on the Company's consolidated financial
statements.
Revenue Recognition
In December 1999, the Securities and Exchange Commission ("SEC") staff
issued Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in
Financial Statements" which summarizes certain of the SEC staff's views
in applying generally accepted accounting principles to revenue
recognition in financial statements. The effective date of this bulletin
is the Company's fourth fiscal quarter ending June 30, 2001. The Company
implemented SAB 101 on January 1, 2001 and its adoption did not have a
material impact on the Company's consolidated financial statements.
10. FACILITY OPTIMIZATION CHARGES
Included in selling, general and administrative expenses for the nine
months ended March 31, 2001 is a $740 charge related to the ongoing
rationalization of its New York and New Jersey manufacturing operations
as well as a reduction of several salaried positions. This charge was
recorded during the quarter ended September 30, 2000. The Company
recorded a similar charge of $540 in the prior year. These charges are
included in selling, general and administrative expenses in the
Consolidated Statements of Earnings. The rationalization plan was
completed by September 30, 2000.
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11. COMMITMENTS AND CONTINGENCIES
Class Action Lawsuits
The Company has been named as a defendant in 34 putative class action
complaints alleging violation of federal antitrust laws and/or state
antitrust and consumer protection laws on the grounds that the 1997
Bayer-Barr settlement agreement was allegedly anti-competitive. The
Company has filed responses in the state actions. All federal cases have
been consolidated in the Eastern District of New York. Pending resolution
of preliminary matters, the Company has not yet filed responses in any of
the federal actions.
As of May 11, 2001 18 private antitrust class action complaints have been
filed against Zeneca, Inc., AstraZeneca Pharmaceuticals LP and the
Company, including eight suits filed by the Prescription Access
Litigation Project, one in federal court and seven in state courts. The
complaints allege that the 1993 settlement of patent litigation between
Zeneca, Inc. and the Company insulates Zeneca, Inc. and the Company from
generic competition and enables Zeneca, Inc. and Barr to charge
artificially inflated prices for Tamoxifen citrate.
The Company believes that each of its agreements with Bayer Corporation
and Zeneca, Inc., respectively, is a valid settlement to a patent suit
and cannot form the basis of an antitrust claim. Although it is not
possible to forecast the outcome of these matters, the Company intends to
vigorously defend itself. It is anticipated that these matters may take
several years to be resolved but an adverse judgement could have a
material adverse impact on the Company's consolidated financial
statements.
Invamed, Inc./Apothecon, Inc. Lawsuit
In February 1998 and May 1999, Invamed, Inc., which has since been
acquired by Geneva Pharmaceuticals, Inc. a subsidiary of Novartis AG, and
Apothecon, Inc., a subsidiary of Bristol-Meyers Squibb, Inc.,
respectively, named the Company and several others as defendants in
lawsuits filed in the United States District Court for the Southern
District of New York, charging that the Company unlawfully blocked access
to the raw material source for Warfarin Sodium. The two actions have been
consolidated. The Company believes that these suits are without merit and
intends to vigorously defend its position. These actions are currently in
the discovery stage. It is anticipated that this matter may take several
years to be resolved but an adverse judgement could have a material
impact on the Company's consolidated financial statements.
Other Litigation
As of March 31, 2001, the Company was involved with other lawsuits
incidental to its business, including patent infringement actions.
Management of the Company, based on the advice of legal counsel, believes
that the ultimate disposition of such other lawsuits will not have any
significant adverse effect on the Company's consolidated financial
statements.
Administrative Matters
In 1998 and 1999, the Company was contacted by the Department of Justice
("DOJ") regarding the March 1993 resolution of the Tamoxifen patent
litigation. Barr continues to cooperate with the DOJ in this examination,
and believes that the DOJ will ultimately determine that the
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settlement was appropriate and a benefit to consumers. The DOJ has not
contacted the Company about this matter since June 1999.
On June 30, 1999, Barr received a civil investigative demand and a
subpoena from the Federal Trade Commission ("FTC"), that, although not
alleging any wrongdoing, sought documents and data relating to the
January 1997 agreements resolving patent litigation involving
Ciprofloxacin hydrochloride, which had been pending in the U.S. District
Court for the Southern District of New York. The FTC is investigating
whether the Company, through settlement and supply agreements, has
engaged or are engaging in activities in violation of the antitrust laws.
The Company continues to cooperate with the FTC in this investigation.
Recently, the FTC issued special orders to approximately 100
pharmaceutical companies related to an inquiry into alleged
anti-competitive practices in the entire pharmaceutical industry,
including practices relating to patent challenge settlements. Barr
received its special order on April 30, 2001. Barr intends to cooperate
with all of the FTC's inquiries.
The Company believes that the patent challenge process under the
Hatch-Waxman Act represents a pro-consumer and pro-competitive
alternative to bringing generic products to market more rapidly than
might otherwise be possible. Barr believes that once all the facts are
considered, and the benefits to consumers are assessed, that these DOJ
and FTC investigations will be satisfactorily resolved. However,
consideration of these matters could take considerable time, and while
unlikely, any adverse judgement in either matter could have a material
adverse effect on the Company's consolidated financial statements.
Fluoxetine Hydrochloride Patent Challenge
As disclosed in the Company's previous public filings, the U.S. Court of
Appeals, Federal Circuit in Washington D.C., ruled in favor of Barr's
challenge to Eli Lilly Company's ("Lilly") patent protecting Prozac(R).
On October 6, 2000, Lilly filed a petition asking the full panel of the
Court of Appeals to rehear the case. The Court of Appeals has not yet
ruled on Lilly's petition, and Lilly is expected to seek review by the
U.S. Supreme Court if the Court of Appeals does not reverse the present
ruling. If the litigation is successfully resolved, the Company and its
partners will share in a success fee, payable to its attorneys, currently
estimated to be approximately $5.5 million. The Company's share of the
success fee is estimated to be between $2 and $2.5 million.
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
Comparison of the Three Months Ended March 31, 2001 to the Three Months Ended
March 31, 2000 - (thousands of dollars)
Total revenues increased approximately 13% as a result of increased product
sales and development and other revenue.
Tamoxifen sales decreased 2% from $91,361 to $89,651. The decrease was primarily
due to a decrease in units sold, partially offset by higher unit prices. The
decline in Tamoxifen units is primarily related to a change in buying patterns
by the Company's trade customers due to a price increase which occurred
approximately three months earlier than the prior year price increase. The prior
year sales included accelerated buying by certain customers in anticipation of
the annual price increase for Barr's Tamoxifen, which occurred in May 2000. In
the current quarter, the price increase occurred in February 2001, which was
sooner than anticipated by certain customers, therefore limiting the practice of
accelerated buying. The Company noted that its prescription market share on
Tamoxifen remained at over 80%, while total prescriptions continue to increase
by approximately 10% year over year. Tamoxifen is a patent protected product
manufactured for the Company by AstraZeneca.
Other product sales increased approximately 47% from $30,161 to $44,416. The
increase was primarily due to increased sales of Warfarin Sodium and to the
launch of Fluvoxamine. The increase was also due to the sale of ViaSpan(R),
which Barr began distributing on August 1, 2000. These revenues more than offset
price declines and higher discounts on certain existing products.
Development and other revenue consists primarily of amounts received from DuPont
Pharmaceuticals Company ("DuPont") for various development and co-marketing
agreements entered into in March 2000. As the Company incurs research and other
development activity costs, Barr records such expenses as research and
development and invoices and records the related revenue from DuPont as
development and other revenue (See Note 5 to the Consolidated Financial
Statements). The Company also records royalty income earned under licensing
agreements in development and other revenue.
Cost of sales increased to $94,510 from $93,002, due to increased product sales,
but decreased as a percentage of product sales from 76.5% to 70.5%. The decrease
in cost of sales as a percentage of product sales was due primarily to a
decreased percentage of Tamoxifen sales to total product sales, higher margins
earned on Tamoxifen sales due to the timing of the current year price increase
and higher margins earned on other products including Fluvoxamine which was
launched in the current quarter. Tamoxifen is distributed by the Company and has
lower margins than most of Barr's other products. Offsetting the decrease in
cost of sales as a percentage of sales is the Company's inclusion of royalties
in the cost of sales line item. In previous periods these amounts were included
in selling, general and administrative expenses. Based on the nature of the
payments, the Company believes it is more appropriate to include these items in
cost of sales and has made the appropriate reclassifications in the current and
prior years.
Selling, general and administrative expenses decreased from $12,885 to $12,356
primarily due to decreased legal spending partially offset by increased
personnel costs and costs associated with the distribution of ViaSpan which the
Company began distributing on August 1, 2000. The decreased legal spending is
primarily due to the prior year including approximately $2.5 million in a
one-time
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success fee paid to the Company's outside legal counsel associated with
finalizing the various development and co-marketing agreements with DuPont,
partially offset by an increase in spending in the current period related to
on-going patent challenges, legal research and preparation related to several
additional patent challenges, the Invamed, Inc./Apothecon, Inc. litigation and
antitrust litigation.
Research and development expenses increased from $9,829 to $14,168.
Approximately 60% of the increase is attributable to increased raw material
purchases and internal development costs. The balance of the increase is
attributable to increased contract packaging costs, increased payments to
clinical research organizations for clinical and bio-study services and payments
for raw material development agreements.
Interest income increased by $1,414 primarily due to an increase in the average
cash and cash equivalents balance.
Interest expense decreased $141 primarily due to lower fees paid on the average
unsecured Tamoxifen payable balance (See Note 2 to the Consolidated Financial
Statements), as well as a decrease in the Company's debt balances.
Other income increased by $2,029 primarily due to the gain realized on the sale
of the balance of the Company's investment in Galen Holdings plc ("Galen") (See
Note 6 to the Consolidated Financial Statements).
Results of Operations:
Comparison of the Nine Months Ended March 31, 2001 to the Nine Months Ended
March 31, 2000 - (thousands of dollars)
Total revenues increased approximately 12% as a result of increased product
sales and development and other revenue.
Tamoxifen sales increased 6% from $221,832 to $234,812. The increase was due to
higher prices and an expansion in the use of Tamoxifen. In October 1998,
Tamoxifen was approved to reduce the incidence in breast cancer in women at high
risk of developing the disease.
Other product sales increased approximately 14% from $105,780 to $120,691. The
increase was due to sales of ViaSpan, which Barr began distributing on August 1,
2000, increased sales of Warfarin Sodium and new product introductions including
Fluvoxamine which more than offset price declines and higher discounts on
certain existing products.
Development and other revenue consists primarily of amounts received from DuPont
Pharmaceuticals Company ("DuPont") for various development and co-marketing
agreements entered into in March 2000. As the Company incurs research and other
development activity costs, Barr records such expenses as research and
development and invoices and records the related revenue from DuPont as
development and other revenue (See Note 5 to the Consolidated Financial
Statements). The Company also records royalty income earned under licensing
agreements in development and other revenue.
Cost of sales increased to $251,741 from $236,494, yet declined as a percentage
of product sales from 72% to 71%. The increase in dollars is the result of
increased product sales. The decrease in cost of sales as a percentage of
product sales was due mainly to a decreased percentage of Tamoxifen sales to
total product sales, higher margins earned on Tamoxifen sales due to the timing
of the current year
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price increase and higher margins earned on other products including ViaSpan,
which the Company began distributing on August 1, 2000 and Fluvoxamine which was
launched in the current quarter. Tamoxifen is distributed by the Company and has
lower margins than most of Barr's other products. Offsetting the decrease in
cost of sales as a percentage of sales is the Company's inclusion of product
royalties, primarily related to ViaSpan, in the cost of sales line item. In the
previous periods these amounts were included in selling, general and
administrative expenses. Based on the nature of the payments, the Company
believes it is more appropriate to include these items in cost of sales and has
made the appropriate reclassifications in the current and prior years.
Selling, general and administrative expenses increased from $33,917 to $36,056.
The increase was primarily due to increased legal spending, increased personnel
costs and the costs associated with the distribution of ViaSpan which the
Company began distributing August 1, 2000. The prior year amount includes
approximately $2.5 million in one-time legal charges associated with the
finalizing of the various development and co-marketing agreements with DuPont.
The increase in legal spending is primarily due to an increase in spending
related to on-going patent challenges, legal research and preparation related to
several additional patent challenges, the Invamed, Inc./Apothecon, Inc.
litigation and antitrust litigation. Offsetting these increases is a decrease in
government affairs spending associated with fewer state legislation activities
related to the restriction of generic substitution. Selling, general and
administrative expenses for the nine months ended March 31, 2001 also includes a
$740 charge related to the Company's on-going rationalization of its New York
and New Jersey manufacturing operations, as well as a reduction of several
salary positions. The Company recorded a similar charge of $540 in the prior
year (See Note 10 to the Consolidated Financial Statements).
Research and development expenses increased from $28,492 to $40,062. The
increase was primarily due to increased payments to clinical research
organizations for clinical and bio-study services associated with the Company's
proprietary development activities, increased raw material purchases, increased
internal development costs and payments for strategic collaborations and raw
material development agreements.
Interest income increased by $4,013 primarily due to an increase in the average
cash and cash equivalents balance, as well as an increase in the market rates on
the Company's short-term investments.
Interest expense decreased $425 primarily due to lower fees paid on the average
unsecured Tamoxifen payable balance (See Note 2 to the Consolidated Financial
Statements) as well as a decrease in the Company's debt balances.
Other income increased by $3,352 primarily due to the gain realized on the sale
of the Company's investment in Galen, partially offset by the charge related to
the write-off of the Company's investment in Gynetics, Inc. The prior year
amount reflects the gain recognized on the warrants received from Halsey Drug
Company, Inc. (See Note 6 to the Consolidated Financial Statements).
Liquidity and Capital Resources
The Company's cash and cash equivalents increased from $155,922 at June 30, 2000
to $223,606 at March 31, 2001. During the nine months ended March 31, 2001, the
Company increased the cash held in its interest-bearing escrow account from
$74,011 at June 30, 2000 to $104,669 (See Note 2 to the Consolidated Financial
Statements).
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Cash provided by operating activities totaled $59,337 for the nine months ended
March 31, 2001 driven by net earnings of $44,037 and non-cash charges such as
depreciation and an investment write-off, as well as a decrease in working
capital. The working capital decrease was led by increases in accounts payable
and income taxes payable as well as a decrease in other receivables partially
offset by an increase in inventories. The increase in inventory and accounts
payable was almost entirely related to an increase in Tamoxifen inventory. The
Tamoxifen increases were based on management's decision to increase its
Tamoxifen purchases and was consistent with past trends. Other receivables at
March 31, 2001 were $18,807 or $5,004 lower than those at June 30, 2000
primarily attributable to lower receivable amounts associated with the DuPont
agreements. Income taxes payable increased as a result of increased taxable
earnings and the timing of estimated tax payments. The Company expects a use of
operating cash in its fiscal fourth quarter as a result of the timing of
payments for income taxes and inventory purchases.
Approximately $7 million of the Company's quarterly cash flow from operating
activities relates to payments from its contingent supply agreement with Bayer
Corporation ("Bayer") related to its 1997 Cipro(R) patent challenge. Under
that agreement, Bayer has, at its option, the right to allow Barr and its
partner (collectively Barr) to purchase Cipro at a predetermined discount or to
provide Barr quarterly cash payments. This contingent supply agreement expires
in December 2003. If Bayer does not elect to supply Barr with product, Barr
would receive approximately $28 to $31 million per year. However, there is no
guarantee that Bayer will continue to make such payments. If Bayer elected to
supply product to Barr for resale, the earnings and related cash flows, if any,
Barr could earn from the sale of Cipro would be entirely dependent upon market
conditions.
During the first nine months of fiscal 2001, the Company invested approximately
$10 million in capital assets primarily related to upgrades and new equipment
for its facilities. The Company believes it may invest an additional $5 to $7
million in capital assets in fiscal 2001 primarily on manufacturing and
packaging equipment to support higher expected production volumes. The Company
currently leases approximately 48,000 square feet of office space for its
selling and administration functions, which expires May 2003. In fiscal 2002,
the Company expects to increase its capital spending compared to fiscal 2001
through increased investments in management information systems and expansion in
its distribution, research and development, manufacturing and packaging
capabilities. In addition, the Company is currently evaluating an expansion of
its Pomona, NY facility to accommodate the administrative functions currently
located in its leased facility. As a result, the company could spend $20 to $30
million in capital projects in fiscal 2002. Over the past two years, capital
projects have been funded from cash flows. Given the extent and the long-term
nature of some of the planned expenditures, the Company may consider financing a
portion of the expansion and believes it has the capital structure and cash flow
to take on additional debt.
The Company realized approximately $12.8 million in proceeds on the sale of its
investment in Galen. The Company completed the sales of its investment in Galen
in March and, therefore, further gains and cash flows will not be realized.
Debt balances declined slightly during the quarter due to scheduled repayments
on the Company's debt. Scheduled principal repayments on the Company's existing
debt will be $124 during the quarter ending June 30, 2001. The Company did not
use any funds available to it under its $20 million Revolving Credit Facility
during the current quarter.
A portion of the Company's spending on proprietary product development is being
reimbursed by DuPont Pharmaceuticals Company in accordance with two development
agreements entered into in March 2000. During the quarter ended March 31, 2001,
the Company earned approximately $3.1 million under the terms of the two
agreements. Payments of $2 million per quarter over four quarters,
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related to the Trexall Development and Marketing Agreement, ended on December
31, 2000. The Company's final $1 million payment under that agreement was
received in March for gaining FDA approval on Trexall prior to March 31, 2001.
Payments under the Proprietary Product Development Agreement are reimbursements
of Barr's spending up to an aggregate of $45 million on three of its proprietary
products. This agreement provides for reimbursement of up to $4 to $5 million
per quarter through December 2003. As of March 31, 2001 the Company had received
approximately $17.2 million of the $45 million maximum.
To expand its growth opportunities, the Company has and will continue to
evaluate and enter into various strategic collaborations. The timing and amount
of cash required to enter into these collaborations is difficult to predict
because it is dependent on several factors, many of which are outside of the
Company's control. However, the Company believes, that based on arrangements in
place at March 31, 2001, it could spend between $500 and $1,000 over the next
twelve months for these collaborations. The $500 to $1,000 excludes any cash
needed to fund strategic acquisitions the Company may consider in the future.
The Company filed a registration statement in September 2000 for the sale of 3.5
million shares of Common Stock. Of these shares, 3 million will be offered by
Dr. Bernard Sherman, Barr's single largest shareholder. The Company has decided
not to sell any shares in the offering at current share price levels though it
retains the right to do so should market conditions become more favorable prior
to closing.
The Company believes that its current cash balances, cash flows from operations
and borrowing capacity, including unused amounts under its existing $20 million
Revolving Credit Facility, will be adequate to meet the operations described
above and to take advantage of strategic opportunities as they occur. To the
extent that additional capital resources are required, such capital may be
raised by additional bank borrowings, equity offerings or other means.
Outlook
The following section contains a number of forward-looking statements, all of
which are based on current expectations. Actual results may differ materially.
The generic pharmaceutical industry is characterized by relatively short product
lives and declining prices and margins as competitors launch competing products.
The Company's strategy has been to develop generic products with some barrier to
entry to limit competition and extend product lives and margins. The Company's
expanded efforts in developing and launching proprietary products is also driven
by the desire to market products that will have limited competition and longer
product lives. The Company's future operating results are dependent upon several
factors that impact its stated strategies. These factors include the ability to
introduce new products, patient acceptance of new products and new indications
of existing products, customer purchasing practices, pricing practices of
competitors, spending levels including research and development and patent
activities as well as risk factors contained in the Company's Registration
Statement on form S-3 as filed with the Securities and Exchange Commission. In
addition, the ability to receive sufficient quantities of raw materials to
maintain its production is critical. While the Company has not experienced any
interruption in sales due to lack of raw materials, the Company is continually
identifying alternate raw material suppliers for many of its key products in the
event that raw material shortages were to occur. The Company's operating results
are expected to be significantly impacted by a favorable final decision
regarding its challenge of the Prozac(R) patent. The timing and impact of the
launch of Prozac in fiscal 2002 is dependent on several factors outside the
Company's control including decisions on the period of market exclusivity that
Barr may be entitled to
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receive. The Company has not provided earnings guidance on the impact of its
launch of the generic form of the 20mg Prozac capsule on its consolidated
financial statements.
Quarter Ending June 30, 2001
Product sales are expected to increase in the quarter ending June 30, 2001
compared to same period in the prior year. The year over year increase is
expected to be driven primarily by higher Tamoxifen sales and increases in sales
of other products. The Company believes that Tamoxifen sales will not repeat the
declines experienced in prior fiscal fourth quarters but rather, should increase
to be in the low to mid $90 million range in the quarter ended June 30, 2001.
This increase over the prior year is related to the timing of the price increase
described earlier. Other product sales are expected to increase compared to the
prior year primarily due to contributions from products launched in fiscal 2001
including ViaSpan and continued expected growth of Warfarin Sodium.
Development and other revenues are expected to be approximately $2 to $4 million
in the fiscal fourth quarter and are dependent upon the Company's spending on
products covered by the Proprietary Drug Development Agreement.
Proceeds from patent challenge settlement represents amounts earned under the
terms of the supply agreement entered into as part of the settlement of the
Company's patent challenge on Bayer's CIPRO antibiotic. Under the terms of the
supply agreement, Bayer can elect to supply Barr and its partner product at a
predetermined discount or if Bayer does not make such election, is entitled to
receive cash payments ranging from $28 to $31 million per year. If Bayer does
not elect to provide product to Barr for resale, the Company expects to record
proceeds of approximately $7.3 million, up slightly from prior year and from the
prior quarter.
Barr's product margins represent the amount of gross profit it expects to earn
on product sales expressed as a percentage of product sales. Barr's overall
margins on product sales in the fourth quarter are expected to increase slightly
compared to prior year and prior quarter. Tamoxifen margins are expected to be
higher in the quarter ended June 30, 2001 versus the prior year due to the price
increase instituted last quarter. Margins on other product sales are expected to
be in line or down slightly compared to the prior year primarily due to the
reclassification of ViaSpan royalties to cost of sales from selling, general and
administrative expenses.
Selling, general and administrative expenses are expected to increase in the
quarter ended June 30, 2001 compared to the prior quarter to a range of $12.5
and $13.5 million. Such increase is expected to be driven primarily by higher
sales and marketing costs associated with the launch of the Company's Trexall
proprietary product.
Research and development costs are anticipated to increase to approximately
$14.5 to $16 million in the quarter ended June 30, 2001. A portion of this
increase is related to expected spending on the third product in the DuPont
proprietary drug development agreement. Spending on proprietary products not
covered by the DuPont agreement are also expected to increase slightly in the
quarter ended June 30, 2001 compared to the prior quarter. Barr has also
increased its efforts for product acquisitions and licensing opportunities for
both proprietary and generic products. The exact amount of money spent and
additional expense reflected from these activities cannot be determined at this
time. If such opportunities are pursued and finalized, the Company's research
and development spending in the fourth quarter of fiscal 2001 could be higher
than the forecasted amount. Management believes such activities create valuable
potential opportunities for its shareholders and therefore has and will continue
to pursue such opportunities.
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Interest income is expected to remain consistent with prior quarter's total as
lower rates on investments slightly offset higher average cash in the quarter
ended June 30, 2001 versus the prior quarters levels.
Barr expects its effective tax rate in the fiscal fourth quarter to be
approximately 37.5%, which is consistent with the prior quarter.
Diluted shares outstanding are based on shares outstanding and the dilutive
effect of warrants and options that are outstanding. The dilutive effect of
outstanding warrants and options is based on the strike price of such warrants
and options and Barr's average stock price during the quarter. Shares
outstanding during the quarter could be impacted by shares issued in connection
with option exercises and from any shares the Company may decide to include in
the stock offering discussed earlier. Barr expects diluted shares outstanding to
be consistent with the third quarter totals.
Fiscal Year Ending June 30, 2002
Product sales in fiscal 2002, excluding sales of fluoxetine, are expected to
increase to approximately $600 million. Tamoxifen is expected to continue to
make up the majority of product sales and is expected to contribute
approximately $350 million. This growth primarily reflects an expected annual
price increase the timing and extent of which is controlled by AstraZeneca.
Other product sales are also expected to increase compared to fiscal 2001
primarily from sales of new generic products, sales of Trexall and full year
sales of generic products launched in fiscal 2001 that will more than offset
expected declines in existing generic product sales.
Development revenues depend on the Company's spending on the products covered by
the proprietary drug development agreement with DuPont. Such amounts are limited
to a maximum of $5 million per quarter for fiscal year 2002. The Company expects
that total development and other revenue will grow by less than 10% versus the
current year's estimated total. This assumes that spending on the products
covered by the agreement will increase by approximately $5 to 6 million from
fiscal 2001 as the Company begins to incur costs on the third product covered by
the agreement. That increase is expected to more than offset the reduction in
development revenues from the Trexall Development and Marketing Agreement, which
ended in March 2001.
Proceeds from patent challenges represent amounts earned under the terms of the
supply agreement entered into as part of the settlement of the Company's patent
challenge on Bayer's CIPRO antibiotic. Under the terms of the supply agreement,
Bayer can elect to supply Barr and its partner product at a predetermined
discount or if Bayer does not make such election, Barr is entitled to receive
cash payments ranging from $28 to $31 million per year. In accordance with the
supply agreement, if Bayer does not elect to provide product to Barr for resale,
Barr should record proceeds of approximately $31 million up from approximately
$28 million in fiscal 2001. Once Bayer elects to allow Barr to purchase product
for resale, the amount Barr could earn cannot be determined at this time since
such amount would be dependent upon market conditions.
Barr's product margins represent the amount of gross profit it expects to earn
on product sales expressed as a percentage of product sales. Barr's overall
margins on product sales are dramatically effected by Tamoxifen sales. As a
distributor of Tamoxifen, Barr earns margins that historically have been
approximately 14.5% to 15.0% per year. Because Tamoxifen sales comprise
approximately 60% of product sales, Barr's overall product margin is somewhat
lower than many of its competitors. In addition, the Company's overall product
margins can fluctuate quarterly based on Tamoxifen's relative contribution to
sales in a given quarter. Barr expects its margins on Tamoxifen to remain at
approximately 15% for fiscal 2002 and expects that margin to range from
approximately 14% to 17%
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among the fiscal quarters with higher margins occurring in those quarters
immediately following price increases. These higher margins should decline
toward the lower end of the range once Barr has sold its inventory at the time
of the price increase. Margins on other product sales were in the mid 50% range
for the nine months ended March 31, 2001. They are expected to increase in
fiscal 2002 as new product launches more than offset stable or declining margins
on the rest of the Company's product line.
Selling, general and administrative expenses are expected to increase nearly 20%
to approximately $57 to $59 million. Such increase is driven primarily by higher
sales and marketing costs associated with supporting the Company's Trexall
proprietary product including sales royalties expected to be earned by DuPont
Pharmaceuticals for providing the sales force used to promote the product
directly to physicians. Other selling, general and administrative expense
increases include higher distribution costs due to higher expected sales volumes
and higher expected legal costs due to an increase in patent challenge
activities and higher costs associated with defending the Company against
numerous class action suites relating to the Company's patent challenge
settlements.
Research and development costs are anticipated to increase approximately $15 to
$16 million to $70 to $72 million. A portion of this increase is related to
expected spending on the third product in the DuPont proprietary drug
development agreement. As previously discussed, all spending under that
agreement is expected to be reimbursed by DuPont up to the specific limits
discussed.
Spending on proprietary products not covered by the DuPont agreement are also
expected to increase. Barr has increased its efforts in seeking product
acquisitions and licensing opportunities for both proprietary and generic
products. The exact amount of money spent and additional expense reflected from
these activities cannot be determined at this time. If such opportunities are
pursued and finalized, the Company's research and development spending in fiscal
2002 could be substantially higher than the forecasted amount. Management
believes such activities create valuable potential opportunities for its
shareholders and therefore has and will continue to pursue such opportunities.
Interest income is expected to remain flat with the prior year as lower market
interest rates should be somewhat offset by higher levels of cash expected to be
generated during the year.
Interest expense is expected to decline compared to prior year due to planned
repayment of debt balances. Interest expense levels are also impacted by the
Company's decisions regarding balances in its Tamoxifen escrow account. During
all of fiscal 2001, the Company fully funded its escrow account yielding nominal
interest charges for the nine months ended March 31, 2001. At this time, the
Company anticipates a similar strategy. However, the Company may decide to use
its cash for other purposes which may cause such interest charges to increase.
The Company pays AstraZeneca a small fee for the difference between the
Company's payable balance arising from the purchase of Tamoxifen and the amount
the Company decides to invest in the related escrow account. The average payable
balance during the nine months ended March 31, 2001 was $94 million.
Based on these and other factors, the Company believes it can earn between $75
and $80 million for the fiscal year ending June 30, 2002.
The Company's weighted average shares outstanding depends on several factors
including the number of employee and director stock options granted by the
Company during the year, the Company's stock price during the year in relation
to the strike prices of its options and warrants outstanding and whether the
Company would issue shares if it decides to pursue any strategic acquisitions.
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Fluoxetine
Fluoxetine is the generic equivalent of Eli Lilly Company's antidepressant
Prozac. The Company filed its ANDA for the 20mg capsule version of fluoxetine in
February 1996, and was sued for patent infringement by Lilly, initiating the
patent challenge process. The 20mg capsule product had annual sales of
approximately $2.2 billion for the twelve months ended January 31, 2001.
On August 9, 2000, the U.S. Court of Appeals for the Federal Circuit, located in
Washington, D.C. ruled in favor of our challenge to a Lilly patent protecting
Prozac. On October 6, 2000, Lilly filed a petition asking the full panel of the
Court of Appeals to rehear the case. The Court of Appeals has not yet ruled on
Lilly's petition, and Lilly is expected to seek review by the U.S. Supreme Court
if the Court of Appeals does not reverse the present ruling. If the August 9,
2000 ruling is not reversed, Barr and its partner, Apotex Inc., expect to
introduce a more affordable generic 20mg capsule Prozac product in August 2001,
after the expiration of the additional six months of exclusivity Lilly was
granted by the FDA for pediatric use. This pediatric exclusivity follows the
February 2001 expiration of an earlier patent covering Prozac.
As the first to file an application for the 20mg Prozac capsule challenging
Lilly's patent, Barr believes it is entitled to the 180 day generic exclusivity
granted under the Hatch-Waxman Act. However, the Company can give no assurance
that its position on the implementation of the FDA's exclusivity rules will
prevail. If Barr loses some or all of its exclusivity, the value of the
favorable ruling could be substantially diminished.
The Company has not previously provided estimates of the earnings the Company
could realize in fiscal 2002 from selling its generic version of the 20mg Prozac
capsule. Such earnings are dependent upon several factors, some of which are not
controlled by Barr and include:
- The estimated length of Barr's market exclusivity;
- The estimated rate of substitution and related market share
Barr and its partner could achieve during the exclusivity
period and beyond;
- The estimated pricing Barr sets for its product during the
exclusivity period;
- The estimated extent of price declines in Barr's selling price
following Barr's period of market exclusivity when numerous
other generic companies are expected to launch competing
fluoxetine products.
Due to the number of factors affecting the impact of Barr's expected launch of
its 20mg fluoxetine capsule and the uncertainty surrounding many of these
factors, there is a wide range in the estimated earnings Barr may earn from the
product. For example, among the research analysts from the firms managing the
underwriting of Barr's secondary stock offering, the earnings impact from the
sale of generic Prozac ranges from $2 to $3 per share for the fiscal year ending
June 30, 2002.
The Company believes that an earnings contribution from generic Prozac in that
range for the year ending June 30, 2002 could be achieved.
Forward-Looking Statements
Except for the historical information contained herein, this Form 10-Q contains
forward-looking statements, all of which are subject to risks and uncertainties
that cannot be predicted or quantified and, consequently, actual results may
differ materially from those expressed or implied by such forward-looking
statements. Such risks and uncertainties include: the timing and outcome of
legal proceedings; the difficulty in predicting the timing of FDA approvals; the
difficulty in predicting the timing and outcome of court decisions on patent
challenges; the court and FDA decisions on
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exclusivity periods; market and customer acceptance and demand for new
pharmaceutical products; the ability to market proprietary products; the impact
of competitive products and pricing; timing and success of product development
and launch; availability of raw materials; the regulatory environment;
fluctuations in operating results; and, other risks detailed from time-to-time
in the Company's filings with the Securities and Exchange Commission.
Forward-looking statements can be identified by their use of words such as
"expects," "plans," "will," "should," "believes," "may," "estimates," "intends"
and other words of similar meaning. Should known or unknown risks or
uncertainties materialize, or should our assumptions prove inaccurate, actual
results could vary materially from those anticipated.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As discussed in the 2000 Annual Report on Form 10-K/A, the Company's exposure to
market risk from changes in interest rates, in general, is not material.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Class Action Lawsuits
Ciprofloxacin (Cipro) Class Action Suits
The Company has been named as a defendant in several actions related
to its settlement of the Cipro patent challenge. The following
complaints represent indirect purchaser class-action complaints
alleging violation of federal antitrust laws and/or state antitrust
and consumer protection laws on the grounds that the 1997 Bayer-Barr
settlement agreement was allegedly anti-competitive. Plaintiffs seek
to recover overcharges paid as a result of the allegedly
anti-competitive activities and, where appropriate, treble damages.
The following plaintiff has filed, on the date indicated, a
class-action complaint against Bayer and Barr in state court:
Deborah Patane filed in California Superior Court, San Francisco
County (1/30/01). The following action has been filed in the U.S.
District Court: Board of Trustees of the United Food & Commercial
Workers of Arizona Health & Welfare Trust (D. Arizona 1/11/01).
Tamoxifen Citrate Class Action Suits
The following complaint represents a putative consumer class action
complaint, brought under state anti-trust statutes, arising out of
Zeneca's and Barr's 1993 settlement of a patent infringement action.
The complaint alleges that the 1993 settlement insulates Zeneca and
the Company from generic competition and enables Zeneca and Barr to
charge artificially inflated prices for Tamoxifen citrate. Plaintiff
seeks to recover both Barr's and Zeneca's profits and treble damages
for the alleged anti-trust violations. The following plaintiff has
filed action in state court: Blonstein filed in Fla. State Ct.
(3/27/01).
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Number Exhibit
None
(b) There were no reports filed on Form 8-K in the quarter ended
March 31, 2001.
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.
BARR LABORATORIES, INC.
Dated: May 15, 2001 /s/ William T. McKee
--------------------
William T. McKee
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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