1
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 December 31, 1997 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
-------- ----------
(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)
914-362-1100
------------
(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 December 31,
1997: 21,692,454.
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BARR LABORATORIES, INC.
INDEX PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
December 31, 1997 and June 30, 1997 3
Consolidated Statements of Earnings
for the three and six months ended
December 31, 1997 and 1996 4
Consolidated Statements of Cash Flows
for the six months ended
December 31, 1997 and 1996 5
Notes to Consolidated Financial
Statements 6-8
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 9-13
PART II. OTHER INFORMATION
Item 2. Changes in Securities 14
Item 4. Submission of Matters to a Vote of Security
Holders 14
Item 6. Exhibits and Reports on Form 8-K 14-15
SIGNATURES 15
2
3
Barr Laboratories, Inc.
Consolidated Balance Sheets
(thousands of dollars, except share amounts)
(unaudited)
December 31, June 30,
1997 1997
------------ --------
Assets
Current assets:
Cash and cash equivalents $ 34,085 $ 31,923
Accounts receivable, less allowances
of $2,002 and $1,620, respectively 64,800 35,232
Inventories 41,810 56,216
Deferred income taxes 3,471 3,160
Prepaid expenses 860 568
--------- ---------
Total current assets 145,026 127,099
Property, plant and equipment, net 86,505 75,928
Other assets 3,759 775
--------- ---------
Total assets $ 235,290 $ 203,802
========= =========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 66,784 $ 72,685
Accrued liabilities 7,164 5,117
Deferred income taxes 3,698 957
Current portion of long-term debt 1,964 4,139
Income taxes payable 1,412 2,394
--------- ---------
Total current liabilities 81,022 85,292
Long-term debt 32,443 14,941
Other liabilities 207 201
Deferred income taxes 532 1,230
Commitments & Contingencies
Shareholders' equity
Common stock $.01 par value per share; authorized
100,000,000 and 30,000,000, respectively; issued
21,810,409 and 21,446,053, respectively 218 214
Additional paid-in capital 48,883 46,061
Retained earnings 72,598 55,876
Unrealized loss on investment (600) --
--------- ---------
121,099 102,151
Treasury stock at cost: 117,955 shares (13) (13)
--------- ---------
Total shareholders' equity 121,086 102,138
--------- ---------
Total liabilities and shareholders' equity $ 235,290 $ 203,802
========= =========
See accompanying notes to the consolidated financial statements.
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4
Barr Laboratories, Inc.
Consolidated Statements of Earnings
(thousands of dollars, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
-------- -------- --------- ---------
Revenues:
Net product sales $ 85,911 $ 67,335 $ 175,012 $ 131,566
Proceeds from supply agreement 6,417 -- 13,583 --
-------- -------- --------- ---------
Total revenues 92,328 67,335 188,595 131,566
Costs and expenses:
Cost of sales 68,769 57,685 133,995 111,161
Selling, general and administrative 8,474 3,386 17,607 8,599
Research and development 3,617 3,106 8,815 5,947
-------- -------- --------- ---------
Earnings from operations 11,468 3,158 28,178 5,859
Interest income 321 685 697 1,164
Interest expense (198) (291) (435) (639)
Other income 18 2 35 7
-------- -------- --------- ---------
Earnings before income taxes and extraordinary loss 11,609 3,554 28,475 6,391
Income tax expense 4,494 1,326 10,963 2,396
-------- -------- --------- ---------
Earnings before extraordinary loss 7,115 2,228 17,512 3,995
Extraordinary loss on early extinguishment
of debt, net of taxes (790) -- (790) --
-------- -------- --------- ---------
Net earnings $ 6,325 $ 2,228 $ 16,722 $ 3,995
======== ======== ========= =========
Earnings per common share:
Earnings before extraordinary loss $ 0.33 $ 0.11 $ 0.82 $ 0.19
Net earnings $ 0.29 $ 0.11 $ 0.78 $ 0.19
======== ======== ========= =========
Earnings per common share-assuming dilution:
Earnings before extraordinary loss $ 0.31 $ 0.10 $ 0.76 $ 0.18
Net earnings $ 0.27 $ 0.10 $ 0.72 $ 0.18
======== ======== ========= =========
Weighted average shares 21,633 21,081 21,550 21,074
======== ======== ========= =========
Weighted average shares-assuming dilution 23,209 22,205 23,132 22,222
======== ======== ========= =========
See accompanying notes to the consolidated financial statements.
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Barr Laboratories, Inc.
Consolidated Statements of Cash Flows
For the Six Months Ended December 31, 1997 and 1996
(thousands of dollars)
(unaudited)
1997 1996
-------- --------
Cash flows from (used in) operating activities:
Net earnings $ 16,722 $ 3,995
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,565 2,443
Deferred income tax expense (benefit) 1,732 (89)
Write-off of deferred financing fees associated with
early extinguishment of debt 195 --
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable, net (29,568) (1,871)
Inventories 14,406 3,052
Prepaid expenses (292) (251)
Other assets 233 (150)
Increase (decrease) in:
Accounts payable and accrued liabilities (3,848) 1,728
Income taxes payable (982) 1,264
-------- --------
Net cash provided by operating activities 1,163 10,121
Cash flows from (used in) investing activities:
Purchases of property, plant and equipment (13,150) (11,032)
Proceeds from sale of property, plant and equipment 65 --
Investment in marketable securities (4,069) --
-------- --------
Net cash used in investing activities (17,154) (11,032)
Cash flows from (used in) financing activities:
Principal payments on long-term debt (14,673) (22)
Proceeds from loans 30,000 1,387
Proceeds from revolving line of credit 6,600 --
Payments on revolving line of credit (6,600) --
Proceeds from exercise of stock options and employee
stock purchases 2,826 289
-------- --------
Net cash provided by financing activities 18,153 1,654
-------- --------
Increase in cash and cash equivalents 2,162 743
Cash and cash equivalents at beginning of period 31,923 44,893
-------- --------
Cash and cash equivalents at end of period $ 34,085 $ 45,636
======== ========
Supplemental cash flow data - Cash paid during the period
Interest, net of portion capitalized $ 187 $ 507
======== ========
Income taxes $ 9,838 $ 1,221
======== ========
See accompanying notes to the consolidated financial statements
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BARR LABORATORIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and 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").
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 for the year
ended June 30, 1997 and quarterly report on Form 10-Q for the period ended
September 30, 1997.
Certain amounts in prior years' financial statements have been
reclassified to conform with the current year presentation.
2. Cash and Cash Equivalents
Cash equivalents consist of short-term, highly liquid investments
(primarily market auction securities with interest rates that are re-set
in intervals of 7 to 71 days) which are readily convertible into cash at
par value (cost).
As of December 31, 1997 and June 30, 1997, approximately $12,072 and
$11,239, respectively, of the Company's cash was held in an escrow
account. Such amounts represent the portion of the Company's payable
balance with the Innovator of Tamoxifen, which the Company has decided to
secure in connection with its cash management policy. The Company pays the
Innovator a monthly fee based on the average unsecured monthly Tamoxifen
payable balance, as defined in the December 1995 Alternative Collateral
Agreement.
3. Accounts Receivable
Accounts receivable includes amounts due under the contingent,
non-exclusive Supply Agreement between Bayer AG and Bayer Corporation and
the Company related to ciprofloxacin hydrochloride. As of December 31,
1997, such receivable totaled $16,083.
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BARR LABORATORIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)
(unaudited)
4. Inventories
Inventories consisted of the following (in thousands of dollars):
December 31, June 30,
1997 1997
------------ --------
Raw materials and supplies $ 20,062 $ 21,403
Work-in-process 7,035 3,340
Finished goods 14,713 31,473
-------- --------
$ 41,810 $ 56,216
======== ========
Tamoxifen Citrate, purchased as a finished product, accounted for
approximately $6,447 and $23,155 of finished goods as of December 31, 1997
and June 30, 1997, respectively.
5. Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share". SFAS No. 128 specifies the computation, presentation and
disclosure requirements for earnings per share ("EPS") and became
effective for both interim and annual periods ending after December 15,
1997. All prior period EPS data has been restated to conform with the
provisions of SFAS No. 128. The following is a reconciliation of the
numerators and denominators used to calculate Earnings per share before
extraordinary loss in the Consolidated Statements of Earnings:
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
------- ------- -------- -------
Earnings per common share:
Earnings before extraordinary loss (numerator) $ 7,115 $ 2,228 $ 17,512 $ 3,995
Weighted average shares (denominator) 21,633 21,081 21,550 21,074
Earnings before extraordinary loss $ 0.33 $ 0.11 $ 0.82 $ 0.19
======= ======= ======== =======
Earnings per common share - assuming dilution:
Earnings before extraordinary loss (numerator) $ 7,115 $ 2,228 $ 17,512 $ 3,995
Weighted average shares 21,633 21,081 21,550 21,074
Effect of Dilutive Options 1,576 1,124 1,582 1,148
------- ------- -------- -------
Weighted averages shares -
assuming dilution (denominator) 23,209 22,205 23,132 22,222
Earnings before extraordinary loss $ 0.31 $ 0.10 $ 0.76 $ 0.18
======= ======= ======== =======
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BARR LABORATORIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)
(unaudited)
5. Earnings Per Share (cont.)
During the three months ended December 31, 1997 and 1996 and the six
months ended December 31, 1996 there were 193, 297 and 291
respectively, of outstanding options which were not included in the
computation of diluted EPS because the options' exercise prices were
greater than the average market price of the common stock for the period.
6. Extraordinary Item
In the quarter ended December 31, 1997, the Company completed the
prepayment of its 10.15% Senior Secured Notes. The cash payment of $16,055
included the outstanding principal of $14,400, a prepayment penalty of
$1,087 and accrued interest through November 18, 1997 of $568. The
prepayment penalty of $1,087 and the related write-off of approximately
$195 in previously deferred financing costs resulted in an extraordinary
loss for the three and six months ended December 31, 1997. This
extraordinary loss from early extinguishment of debt, net of taxes of
$492, was $790 or $0.04 per share.
7. Debt
In November 1997, the Company refinanced its $14,400, 10.15% Senior
Secured Notes due June 28, 2001 with $30,000 of Senior Unsecured Notes
with an average interest rate of 6.88% per year. The new Senior Unsecured
Notes include a $20,000, 7.01% Note due November 18, 2007 and $10,000,
6.61% Notes due November 18, 2004. Annual principal payments under the
Notes total $1,429 through November 2002, $5,429 in 2003 and 2004 and
$4,000 in 2005 through 2007.
In November 1997, the Company replaced its $10,000 Secured Revolving
Credit facility with a $20,000 Unsecured Revolving Credit facility. There
were no borrowings outstanding under the Revolving Credit Facility at
December 31, 1997.
8. Commitments and Contingencies
Litigation
The Company, at December 31, 1997, was involved in lawsuits incidental to
its business, including patent infringement actions. Management, based on
the advice of legal counsel, believes that the ultimate disposition of
these lawsuits will not have any significant adverse effect on the
Company's consolidated financial statements.
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Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations:
Comparison of the Quarter Ended December 31, 1997
to the Quarter Ended December 31, 1996 - (thousands of dollars)
Three Months Ended
December 31,
1997 1996 Change
------- ------- -------
Revenues:
Net product sales:
Distributed $64,147 $50,796 $13,351
Manufactured 21,764 16,539 5,225
------- ------- -------
Total net product sales 85,911 67,335 18,576
Proceeds from supply agreement 6,417 -- 6,417
------- ------- -------
Total revenues $92,328 $67,335 $24,993
Total revenues increased approximately 37% as a result of increased net product
sales and proceeds from supply agreement.
The increase in net product sales is attributable to sales of Warfarin Sodium,
which was launched in July 1997, as well as an increased demand for Tamoxifen.
The 26% increase in distributed product sales, which primarily represents sales
of Tamoxifen, is the result of accelerated buying by customers, during the
period, which the Company believes was the result of customers anticipating a
price increase for Barr's Tamoxifen, that did not occur. Also contributing to
the increase was increased demand for the 20 mg strength of Tamoxifen, which the
Company began distributing in December 1996. Tamoxifen is a patent protected
product manufactured for the Company by the Innovator, and is distributed by the
Company under a non-exclusive license agreement with the Innovator. Currently
Tamoxifen only competes against the Innovator's products, which are sold under
the brand name.
Net sales of manufactured products increased 32% primarily attributable to sales
of Warfarin Sodium, which the Company launched in July 1997. Manufactured net
sales include revenues from three new products in fiscal 1998 compared to four
new products in fiscal 1997. These products represented approximately 26% and
12% of total manufactured sales in fiscal 1998 and 1997, respectively. Revenue
from these products more than offset price declines and higher discounts on
certain existing products.
Proceeds from supply agreement are earned in accordance with a contingent,
non-exclusive Supply Agreement ("Supply Agreement") between Bayer AG and Bayer
Corporation ("Bayer") and the Company, which ends with the patent expiry in
December 2003. During the term of the Supply Agreement, Bayer has the option of
supplying Barr and an unrelated third party with ciprofloxacin hydrochloride to
market and distribute pursuant to a license from Bayer or making quarterly cash
payments to Barr and such third party beginning in March 1998. If Bayer does not
supply Barr with product, the Company expects its 1998 earnings related to the
Supply Agreement to approximate the
9
10
$24.6 million initial payment received by Barr in January 1997. If Bayer elects
to provide Barr with product, the amount Barr could earn would be dependent on
market conditions.
Cost of sales increased to $68,769 from $57,685, but decreased as a percentage
of net product sales from 86% to 80%. The decrease in cost of sales as a
percentage of net product sales is primarily attributable to the increase in
manufactured product sales. This positively impacts margins because the profit
margin the Company earns on manufactured products is generally greater than the
margins it earns on distributed products.
Selling, general and administrative expenses increased to $8,474 from $3,386.
The largest components of the increase related to legal and government affairs
activities as well as higher expenses in promotions and advertising associated
with Warfarin Sodium and other new products. The increased legal fees resulted
primarily from lower reimbursements received from patent challenge partners; the
prior year expense reflected approximately $3,500 in reimbursement of legal
fees. Government affairs expenses were higher in the current year due to the
Company's activities directed at countering DuPont-Merck's continuing efforts to
restrict substitution of Warfarin Sodium.
Total research and development expenses in the quarter increased 16% to $3,617.
The increase is primarily the result of increased personnel costs to support the
number of products in development and higher raw material costs including costs
associated with the Company's proprietary drug program which was not in place in
the prior year. These increases were partially offset by reimbursements from a
proprietary drug collaborator for certain development costs.
Interest income declined by $364 primarily due to a decrease in the average cash
and cash equivalents balance.
Interest expense decreased $93 due to an increase in capitalized interest
associated with increased capital improvements over the corresponding quarter of
the prior fiscal year. The increase in capitalized interest was partially offset
by higher fees paid on the unsecured Tamoxifen balance (See Note 2).
In the quarter ended December 31, 1997, the Company incurred an extraordinary
loss of $790 on the early extinguishment of debt. See Note 7 to the Consolidated
Financial Statements.
Results of Operations:
Comparison of the Six Months Ended December 31, 1997
to the Six Months Ended December 31, 1996 - (thousands of dollars)
Six Months Ended
December 31,
1997 1996 Change
-------- -------- -------
Revenues:
Net product sales:
Distributed $124,591 $ 99,684 $24,907
Manufactured 50,421 31,882 18,539
-------- -------- -------
Total net product sales 175,012 131,566 43,446
Proceeds from supply agreement 13,583 -- 13,583
-------- -------- -------
Total revenues $188,595 $131,566 $57,029
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Total revenues increased approximately 43% as a result of increased net product
sales and proceeds from supply agreement.
The increase in net product sales is attributable to sales of Warfarin Sodium,
which was launched in July 1997, as well as an increased demand for Tamoxifen.
The 25% increase in distributed product sales, which primarily represents sales
of Tamoxifen, is the result of accelerated buying by customers, during the
period, which the Company believes was the result of customers anticipating a
price increase for Barr's Tamoxifen that did not occur. Also contributing to the
increase was increased demand for the 20 mg strength of Tamoxifen, which the
Company began distributing in December 1996.
Net sales of manufactured products increased 58% primarily attributable to sales
of Warfarin Sodium, which the Company launched in July 1997. Manufactured net
sales include revenues from three new products in fiscal 1998 compared to four
new products in fiscal 1997. These products represented approximately 38% and
10% of total manufactured sales in fiscal 1998 and 1997, respectively. Revenue
from these products more than offset price declines and higher discounts on
certain existing products.
Cost of sales increased to $133,995 from $111,161, but decreased as a percentage
of net product sales from 84% to 77%. The decrease in cost of sales as a
percentage of net product sales is primarily attributable to the increase in
manufactured product sales. This positively impacts margins because the profit
margin the Company earns on manufactured products is generally greater than the
margins it earns on distributed products.
Selling, general and administrative expenses increased to $17,607 from $8,599.
The largest components of the increase related to legal and government affairs
activities as well as higher expenses in promotions and advertising associated
with Warfarin Sodium and other new products. The increased legal fees resulted
primarily from lower reimbursements received from patent challenge partners; the
prior year expense reflected approximately $4,400 in reimbursement of legal
fees. Government affairs expenses were higher in the current year due to the
Company's activities directed at countering DuPont-Merck's continuing efforts to
restrict substitution of Warfarin Sodium.
Total research and development expenses increased to $8,815 from $5,947. The
increase is the result of increased personnel costs to support the number of
products in development; higher raw material costs including costs associated
with the Company's proprietary drug program which was not in place in the prior
year; and a strategic investment of more than $600, which was allocated to
in-process research and development, for six Abbreviated New Drug Applications
and related technologies. These increases were partially offset by
reimbursements from a proprietary drug collaborator for certain development
costs.
Interest income declined by $467 primarily due to a decrease in the average cash
and cash equivalents balance.
Interest expense decreased $204 due to an increase in capitalized interest
associated with increased capital improvements over the corresponding fiscal
year. The increase in capitalized interest was partially offset by higher fees
paid on the unsecured Tamoxifen balance (See Note 2).
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In the quarter ended December 31, 1997, the Company incurred an extraordinary
loss of $790 on the early extinguishment of debt. See Note 7 to the Consolidated
Financial Statements.
Liquidity and Capital Resources
The Company's cash and cash equivalents increased to $34,085 as of December 31,
1997 from $31,923 as of June 30, 1997. During the six months ended December 31,
1997, the Company increased the cash held in its cash collateral account from
$11,239 at June 30, 1997 to $12,072. The Company expects to allocate more of its
cash to this account during the next 3 months to reduce the fees it pays to the
Innovator of Tamoxifen (see Note 2 to the Consolidated Financial Statements).
Cash provided by operating activities totaled $1,163 for the six months ended
December 31, 1997 as increases in accounts receivable were offset by net income
of $16,722, inventory declines and higher accounts payable. The increase in
accounts receivable and decrease in inventory were driven by a 33% increase in
net product sales. Accounts receivable also increased due to the continuing
accrual of revenue earned under the contingent, non-exclusive Supply Agreement
("Supply Agreement") entered into by the Company as part of its settlement with
Bayer AG and Bayer Corporation. Quarterly payments due under the Supply
Agreement are expected to begin by March 31, 1998.
During the first six months of fiscal 1998, the Company invested approximately
$13.1 million in capital expenditures primarily on its Virginia manufacturing
and distribution facilities. Certain areas of the facility including the
warehouse and distribution area became operational in January 1998. As a result,
the Company expects its capital spending will be lower in the second half of
fiscal 1998 than compared to the first half.
In August 1997, Barr made a strategic investment of $4,069 in Warner Chilcott
plc. by acquiring 250,000 Ordinary Shares, represented by American Depository
Shares ("ADSs") in an initial public offering and received warrants to purchase
an additional 250,000 shares in the form of ADSs at an exercise price per share
equal to $16.25. Beginning on the first anniversary of Warner Chilcott plc.'s
initial public offering and annually thereafter for the next three years, one
fourth of the warrants will be exercisable by Barr. If Barr does not exercise in
full the portion of the warrant exercisable during any one year, such portion of
the warrant will terminate. Exercising its warrant at the stated price
represents a potential use of cash of $1,000 per year over the next four years.
In November 1997, the Company refinanced its $14,400, 10.15% Senior Secured
Notes due June 28, 2001 with $30,000 of Senior Unsecured Notes with an average
interest rate of 6.88% per year. The new Senior Unsecured Notes include a
$20,000, 7.01% Note due November 18, 2007 and a $10,000, 6.61% Note due November
18, 2004. The refinancing reduces the Company's principal payments by
approximately $2,200 per year over the next four years.
In addition, the Company replaced its $10,000 Secured Revolving Credit facility
with a $20,000 Unsecured Revolving Credit facility, and the Company opted not to
renew its $18,750 Equipment leasing facility. There were no borrowings
outstanding under the Revolving Credit Facility at December 31, 1997.
The Company also continues to evaluate other growth opportunities including
additional strategic investments, acquisitions and joint ventures, which could
require significant capital resources.
12
13
The Company believes that cash flow from operations and existing borrowing
capacity under its Revolving Credit Facility will be adequate to meet its
operating needs 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.
Other Matters
New Accounting Pronouncement
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share". This Statement
requires companies to replace the presentation of primary earnings per share
("EPS") with a presentation of basic EPS. It also requires dual presentation of
basic and diluted EPS on the face of the Statements of Earnings and a
reconciliation of the basic EPS computation to the diluted EPS computation. All
prior period EPS data has been restated to conform with the provisions of SFAS
No. 128. See Note 5 to the Consolidated Financial Statements for the
reconciliation.
Year 2000
Over the past several years the Company has installed new computer systems which
are Year 2000 compliant. Currently, the Company is reviewing its other internal
systems to determine the impact, if any, of the Year 2000. The Company believes
it will achieve Year 2000 compliance in advance of the year 2000, and does not
anticipate any material disruption in its operations as the result of any
failure by the Company to be in compliance. The Company is currently developing
a plan to evaluate the Year 2000 compliance status of its suppliers and
customers.
Forward Looking Statements
Except for the historical information contained herein, Management's Discussion
and Analysis contains forward looking statements that involve a number of risks
and uncertainties, the regulatory environment, fluctuations in operating
results, capital spending, Year 2000 issues and other risks detailed from
time-to-time in the Company's filings with the Securities and Exchange
Commission.
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BARR LABORATORIES, INC.
PART II. OTHER INFORMATION
Item 2. Changes in Securities
Under the terms of the Note Purchase Agreements dated November 18, 1997 the
Company is restricted from declaring or paying dividends over certain amounts,
either in cash or property, without prior approval from its noteholders.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of Barr Laboratories, Inc. was held on
December 3, 1997, at the Sheraton Crossroads, Mahwah, New Jersey. Of the
21,572,473 shares entitled to vote, 18,073,033 shares were represented at the
meeting by proxy or present in person. The meeting was held for the following
purposes:
1. To elect a Board of Directors.
All eight nominees were elected based on the following votes
cast:
For Shares
Robert J. Bolger 17,934,817
Edwin A. Cohen 17,933,870
Bruce L. Downey 17,935,494
Michael F. Florence 17,934,979
Wilson L. Harrell* 17,934,171
Jacob M. Kay 17,935,294
Bernard C. Sherman 17,933,794
George P. Stephan 17,935,479
* Subsequent to the Annual Meeting, Mr. Harrell died and at this
time has not been replaced.
2. To consider approval of an Amendment to the Corporation's
Certificate of Incorporation. The number of votes cast for,
against and abstained were 17,262,866, 799,777 and 10,390,
respectively.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Number Exhibit
3.1 Restated Certificate of Incorporation
3.2 Amended and Restated By-Laws
4.2 Amendment dated November 1997 to Loan and Security
Agreement dated July 31, 1996 (**)
4.3 Note Purchase Agreements dated November 18, 1997
27.0 Financial data schedule
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15
** The Registrant agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of any instrument defining the
rights of the holders of its long-term debt wherein the total amount
of securities authorized thereunder does not exceed 10% of the total
assets of the Registrant and its subsidiaries on a consolidated
basis.
(b) There were no reports filed on Form 8-K in the quarter ended December 31,
1997.
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: January 26, 1998 /s/ William T. McKee
-----------------------------------
William T. McKee
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
3.1 Restated Certificate of Incorporation
3.2 Amended and Restated By-Laws
4.2 Amendment dated November 1997 to Loan and Security
Agreement dated July 31, 1996 (**)
4.3 Note Purchase Agreements dated November 18, 1997
27.0 Financial data schedule
** The Registrant agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of any instrument defining the
rights of the holders of its long-term debt wherein the total amount
of securities authorized thereunder does not exceed 10% of the total
assets of the Registrant and its subsidiaries on a consolidated
basis.