SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended DECEMBER 31, 2001
Commission file number 0-4217
ACETO CORPORATION
(Exact name of registrant as specified in its charter)
New York 11-1720520
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
One Hollow Lane, Lake Success, NY 11042
--------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 627-6000
--------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
--------------------------------------
(Title of Class)
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
----- -----
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the close of the period covered by this report.
Shares of common stock - 6,521,945
Page 1 of 29
ACETO CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2001
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
--------
Consolidated Balance Sheets - December 31, 2001
and June 30, 2001..................................... 3-4
Consolidated Statements of Income - Six Months
Ended December 31, 2001 and 2000...................... 5
Consolidated Statements of Income - Three Months
Ended December 31, 2001 and 2000...................... 6
Consolidated Statements of Cash Flows - Six Months
Ended December 31, 2001 and 2000...................... 7
Notes to Consolidated Financial Statements............ 8-15
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 16-26
Item 3. Quantitative and Qualitative Disclosures about
Market Risk........................................... 26
PART II. OTHER INFORMATION
Item 4. Matters Submitted to a Vote of Securities Holders..... 27
Item 6. Exhibits and Reports on Form 8-K...................... 28
Signatures............................................ 29
Page 2 of 29
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ACETO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Dec. 31, June 30,
2001 2001
---- ----
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 12,109 $ 7,310
Short-term investments 914 988
Receivables:
Trade, less allowance for doubtful accounts:
(Dec., $509; June, $316) 38,286 38,285
Other 3,658 3,215
-------- --------
41,944 41,500
Inventory 36,309 37,818
Prepaid expenses 717 686
Deferred income tax benefit, net 1,773 1,773
Property held for sale 483 483
-------- --------
Total current assets 94,249 90,558
Long-term investments 369 369
Long-term notes receivable 749 794
Property and equipment:
Machinery and equipment 971 953
Leasehold improvements 1,136 1,093
Computer equipment 1,482 1,378
Furniture and fixtures 577 983
Automobiles 297 264
-------- --------
4,463 4,671
Less accumulated depreciation and amortization 1,971 2,132
-------- --------
2,492 2,539
Goodwill, less accumulated amortization
(Dec., $831; June, $544) 10,702 10,367
Other assets 537 546
-------- --------
Total assets $109,098 $105,173
======== ========
See accompanying notes to consolidated financial statements.
Page 3 of 29
ACETO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
Dec. 31, June 30,
2001 2001
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Drafts and acceptances payable $ 2,981 $ 1,533
Short-term bank loans 8,106 8,864
Notes payable - acquisition -- 2,313
Current installments on
long-term liabilities 397 397
Accounts payable 7,783 10,529
Accrued merchandise purchases 3,337 1,626
Accrued compensation 2,938 2,913
Accrued environmental remediation 1,284 1,292
Accrued income taxes 1,366 519
Other accrued expenses 10,501 5,313
--------- ---------
Total current liabilities 38,693 35,299
Long-term liabilities, excluding
current installments 176 671
Shareholders' equity:
Common stock,$.01 par value;
Authorized 20,000,000 shares;
Issued 9,001,290 shares;
Outstanding: Dec., 6,521,945 shares;
June, 6,503,707 shares 90 90
Capital in excess of par value 56,483 56,416
Retained earnings 38,742 38,006
Treasury stock, at cost:
Dec., 2,479,345 shares
June, 2,497,583 shares (24,366) (24,545)
Accumulated other comprehensive loss (720) (764)
--------- ---------
Total shareholders' equity 70,229 69,203
--------- ---------
Commitments and Contingencies
Total Liabilities and Shareholders' Equity $ 109,098 $ 105,173
========= =========
See accompanying notes to consolidated financial statements.
Page 4 of 29
ACETO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Six Months Ended
Dec. 31,
--------
2001 2000
---- ----
Net sales $ 103,006 $ 78,800
Cost of sales 86,294 66,608
--------- ---------
Gross profit 16,712 12,192
Selling, general and administrative
expenses 14,129 9,473
--------- ---------
Operating profit 2,583 2,719
Other income (expense):
Interest expense (209) (1)
Interest and other income 339 607
--------- ---------
130 606
--------- ---------
Income before income taxes 2,713 3,325
Provision for income taxes 935 1,255
--------- ---------
Net income $ 1,778 $ 2,070
========= =========
Net income per common share:
Basic $ 0.27 $ 0.34
========= =========
Diluted 0.27 0.34
========= =========
Weighted average shares outstanding:
Basic 6,511 6,004
========= =========
Diluted 6,538 6,041
========= =========
See accompanying notes to consolidated financial statements.
Page 5 of 29
ACETO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
Dec. 31,
--------
2001 2000
---- ----
Net sales $ 55,365 $ 37,750
Cost of sales 45,899 31,427
-------- --------
Gross profit 9,466 6,323
Selling, general and administrative
expenses 7,808 4,844
-------- --------
Operating profit 1,658 1,479
Other income (expense):
Interest expense (93) (1)
Interest and other income 311 306
-------- --------
218 305
-------- --------
Income before income taxes 1,876 1,784
Provision for income taxes 633 643
-------- --------
Net income $ 1,243 $ 1,141
======== ========
Net income per common share:
Basic $ 0.19 $ 0.19
======== ========
Diluted 0.19 0.19
======== ========
Weighted average shares outstanding:
Basic 6,513 5,971
======== ========
Diluted 6,540 5,991
======== ========
See accompanying notes to consolidated financial statements.
Page 6 of 29
ACETO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
December 31,
2001 2000
---- ----
Operating activities:
Net income $ 1,778 $ 2,070
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 712 440
Provision (recovery) for doubtful accounts 207 (35)
Foreign currency translation adjustment 44 --
Income tax benefit on exercise of stock options 12 9
Deferred tax benefit -- (67)
Changes in assets and liabilities:
Investments - trading securities 74 (91)
Trade accounts receivable (208) (552)
Other receivables (469) 1,027
Inventory (175) 2,758
Prepaid expenses (31) 43
Other assets (72) 63
Drafts and acceptances payable 1,448 (87)
Accounts payable (2,746) 340
Accrued merchandise purchases 1,711 (4,881)
Accrued compensation 25 (88)
Accrued environmental remediation (8) (11)
Accrued income taxes 847 (113)
Other accrued expenses and long
term liabilities 3,991 (88)
-------- --------
Net cash provided by operating activities 7,140 737
-------- --------
Investing activities:
Purchases of investments - held-to-maturity -- (13)
Proceeds from investments - held-to-maturity -- 3,158
Payments received on notes receivable 71 45
Purchases of property and equipment (297) (540)
Acquisition of business, net of cash acquired (213) --
Proceeds from settlement of certain acquired
accounts receivable balances recorded in goodwill 1,571 --
-------- --------
Net cash provided by investing activities 1,132 2,650
-------- --------
Financing activities:
Payments of long-term liabilities (636) (166)
Proceeds from exercise of stock options 238 181
Payments for purchases of treasury stock (84) (1,332)
Issuance of treasury stock to employees 80 60
Payments of bank loans (758) --
Payments of notes payable - acquisition (2,313) --
-------- --------
Net cash used in financing activities (3,473) (1,257)
-------- --------
Net increase in cash and cash equivalents 4,799 2,130
Cash and cash equivalents at beginning of period 7,310 2,811
-------- --------
Cash and cash equivalents at end of period $ 12,109 $ 4,941
======== ========
See accompanying notes to consolidated financial statements.
Page 7 of 29
ACETO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
The consolidated financial statements of Aceto Corporation and its subsidiaries
included herein have been prepared by the Company and reflect all adjustments
(consisting solely of normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows for all periods
presented. Interim results are not necessarily indicative of results which may
be achieved for the full year.
These consolidated financial statements do not include all disclosures
associated with consolidated financial statements prepared in accordance with
accounting principles generally accepted in the United States of America.
Accordingly, these statements should be read in conjunction with the Company's
consolidated financial statements and notes thereto contained in the Company's
Form 10-K for the year ended June 30, 2001.
NOTE 2: BUSINESS ACQUISITIONS
On March 26, 2001, the Company acquired (i)the distribution business of the
Schweizerhall Pharma division of Schweizerhall Holding AG, a Switzerland
corporation and (ii) certain assets relating to the Pharmaceutical Ingredients
business of Schweizerhall, Inc., a New Jersey corporation, and a wholly owned
subsidiary of Schweizerhall Holding AG (collectively, "Schweizerhall Pharma").
Schweizerhall Pharma's distribution business is an international pharmaceutical
distribution business with offices located in: Hamburg, Germany; Wormerveer, The
Netherlands (a suburb of Amsterdam); Paris, France; Piscataway, New Jersey;
Singapore; Mumbai, India; and Hong Kong. Its principal activities are the supply
of Active Pharmaceutical Ingredients and Advanced Intermediates.
The total purchase price for the Schweizerhall Pharma acquisition was $23,331.
This amount consisted of 600 restricted shares of the Company's Common Stock,
the assumption of $8,966 of Schweizerhall Holding AG debt, $3,324 in cash, the
issuance of notes of $4,626 and acquisition costs of $1,240. The quoted market
price of the Company's common stock on March 26, 2001, of $8.625 per share, was
used to approximate the fair value of the 600 shares issued, which amounted to
$5,175. The shares may not be sold unless registered or unless an exemption from
registration is available. In connection with the closing of the acquisition the
Company assumed certain debt of Schweizerhall Holding AG in excess of the amount
of the purchase price. As a result, at closing Schweizerhall Holding AG paid
$7,162 to the Company. Subsequent to March 31, 2001 the Company paid
Schweizerhall Holding AG $8,987 and was released from a portion of the debt
assumed at closing.
The notes payable of $4,626 issued at closing bear interest at 3%. Principal and
interest are payable monthly. Monthly principal payments are determined by the
lesser of the outstanding principal balance or the book value of certain
inventory (as defined in the note agreement) sold in the preceding month. Any
unpaid amounts are due in full on March 31, 2002. Amounts outstanding under the
notes were $2,313 as of June 30, 2001. These notes were paid in full during the
quarter ended September 30, 2001.
Page 8 of 29
The acquisition was accounted for as a purchase and, accordingly, the cost of
the acquisition was allocated to the assets acquired, based upon their fair
values at the date of acquisition. During the quarter ended September 30, 2001,
the Company received $1,571 from the previous owners of Schweizerhall Pharma in
settlement of certain accounts receivable balances.
The excess of cost over the fair value of assets acquired (goodwill)
preliminarily amounted to $7,147. The goodwill is being amortized on a
straight-line basis over a period of twenty years. Amortization of goodwill
amounted to $170 for the six months ended December 31, 2001. The non-competition
agreements are valued at $300 and are being amortized over three years, the term
of the non-competition agreements.
The purchase agreement provides for two additional payments pertaining to
inventory and tax savings. Any additional payments made in connection with
inventory will be allocated to the additional inventory purchased or goodwill,
as appropriate, at the time the additional payment is made. Any payments made in
connection with the tax savings adjustment will be recorded as additional
goodwill.
Pro forma results of operations for the quarter and six months ended December
31, 2000 were not provided as the information needed to prepare such pro forma
information was not available.
In connection with the March 26, 2001 Schweizerhall Pharma acquisition, the
Company recorded liabilities (included in "other accrued expenses") for employee
severance and for operating lease payments as a result of exit plans formulated
as of the acquisition date. The severance accrual relates to involuntary
termination of administration and middle management personnel from the acquired
operations. During fiscal 2002, the Company refined its estimation of severance
to include certain additional administrative and middle management employees.
The Company does not anticipate that additional provisions will be required, as
the Company has finalized its exit plans. The operating lease payment relates to
equipment and facilities leases assumed by the Company. Amounts accrued
represent management's estimate of the cost to exit the equipment and facilities
leases, including lease payments and termination costs, net of recoverable
amounts.
The changes in exit plan liabilities during the six months ended December 31,
2001 are as follows:
Severance Lease
Liability Liability Total
--------- --------- -----
Balance July 1, 2001 $ 106 $ 39 $ 145
Reserve established in fiscal 2002 413 5 418
Utilized in fiscal 2002 (paid) (169) (44) (213)
----- ----- -----
Balance December 31, 2001 $ 350 $ -0- $ 350
===== ===== =====
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NOTE 3: SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and income taxes during the six months ended December 31,
2001 and 2000 was as follows:
2001 2000
---- ----
Interest paid $516 $ 1
Income taxes paid 357 1,425
During the six months ended December 31, 2001 the Company recorded additional
exit plan liabilities of $418, which have been reflected as a component of other
accrued expenses and goodwill on the accompanying consolidated balance sheet.
NOTE 4: SEGMENT INFORMATION
The Company has six reportable segments which are organized by products: (1)
Agrochemicals, whose products include herbicides, fungicides and insecticides,
as well as a sprout inhibitor for potatoes, (2) Industrial Chemicals, whose
products include a variety of specialty chemicals used in adhesives, coatings,
food, fragrance, cosmetics and many other areas, (3) Organic Intermediates and
Colorants, whose products include dye and pigment intermediates used in the
color-producing industries like textiles, inks, paper and coatings, as well as
intermediates used in production of agrochemicals, (4) Pharmaceuticals,
Biochemicals & Nutritionals products, which include the active ingredients for
generic pharmaceuticals, vitamins and nutritional supplements, (5)
Pharmaceutical Intermediates and Custom Manufacturing products, used in
preparation of pharmaceuticals, primarily by major ethical drug companies and
(6) Institutional Sanitary Supplies and Other, whose products include cleaning
solutions, fragrances and deodorants used by commercial and industrial
establishments. The Company does not allocate assets by segments. The Company's
chief decision maker evaluates performance of the segments based on gross
profit. Summarized financial information for each of the segments for the six
and three months ended December 31, 2001 and 2000 follows:
Page 10 of 29
Six Months Ended December 31, 2001 and 2000
Organic Pharmaceuticals, Pharmaceutical Institutional Consolidated
Agro- Industrial Intermediates Biochemicals & Intermediates & Sanitary Supplies & Totals
Chemicals Chemicals & Colorants Nutritionals Custom Mfg. Other
2001
Net sales $ 6,382 22,088 18,093 43,376 10,622 2,445 $103,006
Gross profit $ 1,799 3,491 2,401 8,068 1,699 1,067 18,525
Unallocated cost
of sales (1) 1,813
--------
Net gross profit $ 16,712
========
2000
Net sales $ 5,423 24,579 23,138 17,846 5,249 2,565 $ 78,800
Gross profit $ 2,301 4,656 3,064 3,443 557 775 $ 14,796
Unallocated cost
of sales (1) 2,604
--------
Net gross profit $ 12,192
========
Three Months Ended December 31, 2001 and 2000
Organic Pharmaceuticals, Pharmaceutical Institutional Consolidated
Agro- Industrial Intermediates Biochemicals & Intermediates & Sanitary Supplies & Totals
Chemicals Chemicals & Colorants Nutritionals Custom Mfg. Other
2001
Net sales $ 5,187 10,648 8,244 24,820 5,253 1,213 $ 55,365
Gross profit $ 1,496 1,801 1,060 5,074 679 320 10,430
Unallocated cost
of sales (1) 964
--------
Net gross profit $ 9,466
========
2000
Net sales $ 3,589 12,233 10,994 8,209 1,499 1,226 $ 37,750
Gross profit $ 1,726 2,447 1,503 1,602 275 119 $ 7,672
Unallocated cost
of sales (1) 1,349
--------
Net gross profit $ 6,323
========
(1) Represents freight and storage costs that are not allocated to a segment.
Page 11 of 29
Foreign segment disclosures that became applicable as a result of the recent
acquisition of Schweizerhall Pharma are presented below.
Net Sales Gross Profit
--------- ------------
Six Months Ended Six Months Ended
December 31, December 31,
2001 2000 2001 2000
---- ---- ---- ----
United States $ 71,634 $ 78,800 $ 11,531 $ 12,192
Germany 13,368 -- 2,642 --
The Netherlands 2,895 -- 560 --
France 6,339 -- 660 --
Asia-Pacific 8,770 -- 1,319 --
-------- -------- -------- --------
Total $ 103,006 $ 78,800 $ 16,712 $ 12,192
======== ======== ======== ========
Long-lived Assets, net
----------------------
December 31, June 30,
2001 2001
---- ----
United States $1,891 $1,986
Germany 332 318
The Netherlands 139 126
France 94 71
Asia-Pacific 36 38
------ ------
Total $2,492 $2,539
====== ======
NOTE 5: INVENTORY
Inventory consists of the following:
Dec. 31, June 30,
2001 2001
-------- --------
Finished goods $ 35,852 $ 37,287
Work in process 168 180
Raw materials 289 351
-------- --------
Total $ 36,309 $ 37,818
======== ========
Page 12 of 29
NOTE 6: NET INCOME PER COMMON SHARE
A reconciliation between the numerators and denominators of the basic and
diluted income per share computation for net income follows:
Six Months Ended Three Months Ended
Dec. 31, Dec. 31,
2001 2000 2001 2000
---- ---- ---- ----
Net income available for common
shareholders $ 1,778 $ 2,070 $ 1,243 $ 1,141
====== ====== ====== ======
Weighted average common shares
(basic) 6,511 6,004 6,513 5,971
Effect of dilutive securities:
Stock options 27 37 27 20
------ ------ ------ ------
Weighted average common and
potential common shares
outstanding (diluted) 6,538 6,041 6,540 5,991
====== ====== ====== ======
Basic income per share $ 0.27 $ 0.34 $ 0.19 $ 0.19
Diluted income per share 0.27 0.34 0.19 0.19
For the three months ended December 31, 2001, September 30, 2001, December 31,
2000 and September 30, 2000, employee stock options of 312, 247, 287 and 233
shares, respectively, were not included in the diluted net income per share
calculation because their effect would have been anti-dilutive.
NOTE 7: COMPREHENSIVE INCOME
The components of comprehensive income were as follows:
Six Months Ended Three Months Ended
Dec. 31, Dec. 31,
2001 2000 2001 2000
---- ---- ---- ----
Comprehensive income:
Net income $1,778 $2,070 $1,243 $1,141
Foreign currency
translation adjustment 44 - (279) -
----- ----- ----- -----
Total $1,822 $2,070 $ 964 $1,141
===== ===== ===== =====
NOTE 8: RECLASSIFICATIONS
Certain reclassifications have been made to the prior consolidated financial
statements to conform to the current presentation.
In fiscal 2001, the Company adopted the provisions of the Financial Accounting
Standards Board's Emerging Issue Task Force (EITF) Issue No. 00-10, "Accounting
for Shipping and Handling Fees and Costs," which requires the Company to report
all amounts billed to a customer related to shipping and handling as revenue.
The Company includes all costs incurred for shipping and handling as cost of
sales. The Company has reclassified such billed amounts,
Page 13 of 29
which were previously netted in cost of sales, to net sales. As a result of
this reclassification, net sales and cost of goods sold were increased by $125
and $240, respectively for the quarter and six months ended December 31, 2000.
NOTE 9: IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
(a) In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations", and SFAS 142, "Goodwill and Other Intangible Assets". SFAS 141
requires that the purchase method of accounting be used for all future business
combinations and specifies criteria intangible assets acquired in a business
combination must meet to be recognized and reported apart from goodwill. SFAS
142 requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment at least annually in
accordance with the provisions of SFAS 142. Amortization expense relating to
goodwill was $287 and $180 for the six months ended December 31, 2001 and 2000,
respectively. SFAS 142 will also require that intangible assets with estimable
useful lives be amortized over their respective estimated useful lives, and
reviewed for impairment in accordance with SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".
The Company has decided not to early adopt the provisions of SFAS 141 and SFAS
142 as of July 1, 2001.
Upon adoption the Company will evaluate its existing intangible assets and
goodwill that were acquired in prior purchase business combinations, and make
any necessary reclassifications in order to conform with the new criteria in
SFAS 141 for recognition apart from goodwill. The Company will be required to
reassess the useful lives and residual values of all intangible assets acquired,
and make any necessary amortization period adjustments. In addition, the Company
will be required to test goodwill and, to the extent an intangible asset is
identified as having an indefinite useful life, the intangible asset for
impairment in accordance with SFAS 142. Any impairment loss will be measured as
of the date of adoption and recognized as the cumulative effect of a change in
accounting principle. As of December 31, 2001 the Company had unamortized
goodwill in the amount of $10,702 and unamortized identifiable intangible assets
in the amount of $341.
Because of the extensive effort needed to comply with adopting SFAS 141 and 142,
it is not practicable to reasonably estimate the impact of adopting these
statements on the Company's consolidated financial statements as of the date of
this report, including whether it will be required to recognize any transitional
impairment losses as the cumulative effect of a change in accounting principle.
(b) In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"). SFAS 143 is effective for fiscal years beginning
after June 15, 2002, and establishes an accounting standard requiring the
recording of the fair value of liabilities associated with the retirement of
long-lived assets in the period in which they are incurred. The Company does not
expect the adoption of SFAS 143 to have a significant effect on its results of
operations or its financial position.
Page 14 of 29
(c) In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment of Long-Lived Assets", which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. This statement
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of", while retaining the fundamental
recognition and measurement provisions of that statement. SFAS No. 144 requires
that a long-lived asset to be abandoned, exchanged for a similar productive
asset or distributed to owners in a spinoff to be considered held and used until
it is disposed of. However, SFAS No. 144 requires that management consider
revising the depreciable life of such long-lived asset. With respect to
long-lived assets to be disposed of by sale, SFAS No. 144 retains the provisions
of SFAS No. 121 and, therefore, requires that discontinued operations no longer
be measured on a net realizable value basis and that future operating losses
associated with such discontinued operations no longer be recognized before they
occur. SFAS No. 144 is effective for all fiscal quarters of fiscal years
beginning after December 15, 2001, and will thus be adopted by the Company on
July 1, 2002. The Company has not determined the effect, if any, that the
adoption of SFAS No. 144 will have on the Company's consolidated financial
statements.
Page 15 of 29
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(in thousands, except per share amounts)
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
THIS QUARTERLY REPORT ON FORM 10-Q AND THE INFORMATION INCORPORATED BY REFERENCE
MAY INCLUDE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF
THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. THE COMPANY INTENDS THE
FORWARD-LOOKING STATEMENTS TO BE COVERED BY THE SAFE HARBOR PROVISIONS FOR
FORWARD-LOOKING STATEMENTS. ALL STATEMENTS REGARDING THE COMPANY'S EXPECTED
FINANCIAL POSITION AND OPERATING RESULTS, ITS BUSINESS STRATEGY, ITS FINANCING
PLANS AND THE OUTCOME OF ANY CONTINGENCIES ARE FORWARD-LOOKING STATEMENTS. THE
FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT ESTIMATES AND PROJECTIONS ABOUT
OUR INDUSTRY AND OUR BUSINESS. WORDS SUCH AS "ANTICIPATES," "EXPECTS,"
"INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES," OR VARIATIONS OF SUCH
WORDS AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING
STATEMENTS. THE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
SET FORTH OR IMPLIED BY ANY FORWARD LOOKING STATEMENTS. FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS INCLUDE,
BUT ARE NOT LIMITED TO: THE INABILITY TO MANAGE OUR RECENT RAPID GROWTH,
UNFORESEEN ENVIRONMENTAL LIABILITIES AND THE UNCERTAIN MILITARY, POLITICAL AND
ECONOMIC CONDITIONS IN THE WORLD. THE COMPANY ASSUMES NO OBLIGATION TO UPDATE
PUBLICLY THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, WHETHER AS A RESULT OF
NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS MAY BE REQUIRED BY LAW.
Page 16 of 29
RESULTS OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 2001 COMPARED TO SIX MONTHS ENDED
DECEMBER 31, 2000
Net Sales By Segment
Six Months Ended December 31
Segment 2001 2000
---- ----
% of % of
$ thousand total $ thousand total
---------- ----- ----------- -----
Agrochemicals $ 6,382 6.2% $ 5,423 6.9%
Industrial Chemicals 22,088 21.4 24,579 31.2
Organic Intermediates &
Colorants 18,093 17.6 23,138 29.4
Pharmaceuticals,
Biochemicals & Nutritionals 43,376 42.1 17,846 22.6
Pharmaceutical
Intermediates & Custom Mfg 10,622 10.3 5,249 6.7
Institutional Sanitary
Supplies & Other 2,445 2.4 2,565 3.2
---------- ----- -------- -----
TOTAL NET SALES
$ 103,006 100.0% $ 78,800 100.0%
========== ===== ======== =====
Page 17 of 29
Gross Profit By Segment
Six Months Ended December 31
Segment 2001 2000
---- ----
% of % of
$ thousand total $ thousand total
---------- ----- ---------- -----
Agrochemicals $ 1,799 9.7% $ 2,301 15.5%
Industrial Chemicals 3,491 18.8 4,656 31.5
Organic Intermediates &
Colorants 2,401 13.0 3,064 20.7
Pharmaceuticals,
Biochemicals & Nutritionals 8,068 43.6 3,443 23.3
Pharmaceutical
Intermediates & Custom Mfg 1,699 9.2 557 3.8
Institutional Sanitary
Supplies & Other 1,067 5.7 775 5.2
--------- ------- --------- ---------
TOTAL GROSS PROFIT BEFORE
FREIGHT AND STORAGE COSTS $ 18,525 100.0% $ 14,796 100.0%
======= =========
Unallocated Cost of Sales 1,813 2,604
--------- ---------
NET GROSS PROFIT $ 16,712 $ 12,192
========= =========
SALES AND GROSS PROFIT:
In the six months ended December 31, 2001 compared with 2000, net sales
increased $24,206 to $103,006, an increase of 31%. Sales attributed to the
acquisition of Schweizerhall Pharma, which closed March 26, 2001, were $31,719,
accounting for more than the entire increase in sales.
Sales in the Pharmaceuticals, Biochemicals and Nutritionals segment, showed the
largest increase, from $17,846 in 2000 to $43,376 in 2001, a percentage increase
of 143%. The vast majority of sales from the Schweizerhall Pharma acquisition,
$23,916, were in this segment.
Page 18 of 29
Excluding these sales, the segment showed an increase of $1,614. Significant
sales of one generic drug helped the generic drug portion of this segment report
an increase in sales, but this was mostly offset by continuing weakness in the
pricing of nutritional supplements.
The balance of the sales resulting from the acquisition fell in the
Pharmaceutical Intermediates and Custom Manufacturing segment and were $7,803
for the six month period ended December 31, 2001. This gave the segment an
overall increase of 102%, from $5,249 to $10,622. Excluding these sales, the
segment's sales decreased $2,430, attributable to lost sales from this segment's
former primary supplier. This supplier terminated a supply arrangement in
October 2000.
Agrochemical sales increased 18%, from $5,423 to $6,382. A restructuring of the
Company's arrangement with a third party resulted in additional sales of $1,816.
Excluding this, sales fell $857, reflecting a general decrease in demand.
Sales in the Industrial Chemicals and Organic Intermediates & Colorants segments
decreased 10% and 22%, to $22,088 and $18,093, respectively. The recession in
the U.S. economy, especially in the chemical industry, was the main reason for
the decreases.
Sales of the remaining segment, Institutional Sanitary Supplies and Other, were
5% lower, attributable to lower volume due to economic conditions and the after
effects of the September 11th terrorist attack given that a substantial amount
of the segment's sales are made in the metropolitan New York area.
Gross profit by segment before unallocated cost of sales (primarily storage and
certain freight costs) increased 25%, from $14,796 to $18,525. The inclusion of
Schweizerhall Pharma in 2001, again primarily in the Pharmaceuticals,
Biochemicals and Nutritionals segment and, to a lesser extent, the
Pharmaceutical Intermediates and Custom Manufacturing segment, accounted for
$5,013. While the gross margin percentage for the six month period ended
December 31, 2001 stayed relatively constant at 19.0% this year compared to
18.8% last year, gross profits on our continuing domestic business decreased by
$1,284, due to the overall decrease in domestic sales of $7,513.
The gross margin resulting from the Schweizerhall Pharma business amounted to
$3,638 or 15.2% versus $4,430 or 22.8% for our traditional business in the
Pharmaceuticals, Biochemicals and Nutritionals segment for the six months ended
December 31, 2001. The gross margins realized from the Schweizerhall Pharma
business are lower than the margins earned on our traditional business due to a
different product mix.
The reverse is true in the Pharmaceutical Intermediates and Custom Manufacturing
segment. The gross margin attributable to the Schweizerhall Pharma business
amounted to $1,375 and is at substantially higher gross margins than our
traditional business, causing the much greater percentage increase in gross
margins than sales.
Page 19 of 29
The Agrochemicals segment showed a decline in gross margin of 22%, despite an
increase of 18% of sales. The restructuring of the Company's arrangement with a
third party led to an increase in sales, but the same gross profit. This is the
primary cause of the discrepancy between sales and gross profit percentage
changes for the period.
The Industrial Chemicals segment's gross profit decreased 25%, significantly
greater than the 10% decrease in sales. Continuing erosion of margins in most
product areas, especially food and flavor chemicals, polymer additives and
textile chemicals caused the higher percentage decrease in margins than sales.
The Institutional Sanitary Supplies and Other segment had a significantly higher
gross margin increase than the increase in sales. This occurred because of a
shift towards higher margin products.
Unallocated domestic cost of sales declined significantly, from $2,604 to
$1,813, primarily because of generally lower business levels domestically and a
corporate initiative to reduce these costs, achieved by lower amounts of
inventory in warehouses and a general reduction in storage rates paid.
Selling, general and administrative expenses as a percentage of sales were 13.7%
in the first six months of fiscal 2002 versus 12.0% for the comparable period in
fiscal 2001. Administration costs increased due primarily to the acquisition of
the distribution business of Schweizerhall Pharma in March 2001. In addition,
office rental costs were higher due to additional space taken, a higher bad debt
provision was required and overall personnel costs were higher due to some new
positions and overall wage increases.
For the six months ended December 31, 2001 the operating profit was $2,583
compared to $2,719 in the comparable period last year. The decrease was
primarily due to lower net sales and margins in the domestic U.S. business in
addition to higher SG&A expenses. These were offset in a positive way by the six
months of operating profit generated by the distribution business acquired from
Schweizerhall Pharma in March 2001.
Interest and other income decreased to $339 for the six months ended December
31, 2001 from $607 for the same period last year. The reduction in income of
$268 was attributable to a loss on marketable securities of $74 this year versus
a gain on marketable securities of $88 recorded during the same period last
year. Interest on investments decreased by $101 due to the holding of long-term
investments during last year's period of over $6,000 which were subsequently
sold in the second half of fiscal 2001.
Interest expense for the six months ended December 31, 2001 was $209 versus $1
in the prior year. This was fully attributable to the short-term bank loans and
acquisition related debt arising as a result of the
Page 20 of 29
Schweizerhall Pharma acquisition. The total balance of this debt was reduced
from $11,177 at June 30, 2001 to $8,106 at December 31, 2001 through debt
payments totaling $3,071.
The effective tax rate for the six months ended December 31, 2001 was 34.5%
compared to last year's 37.7%. The decrease in the effective tax rate is
primarily a reflection of earnings in lower tax jurisdiction due to the
Schweizerhall Pharma acquisition.
THREE MONTHS ENDED DECEMBER 31, 2001 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 2000
Net Sales By Segment
Three Months Ended December 31
Segment 2001 2000
---- ----
% of % of
$ thousand total $ thousand total
---------- ----- ---------- -----
Agrochemicals $ 5,187 9.4% $ 3,589 9.5%
Industrial Chemicals
10,648 19.2 12,233 32.4
Organic Intermediates &
Colorants
8,244 14.9 10,994 29.1
Pharmaceuticals,
Biochemicals & Nutritionals
24,820 44.8 8,209 21.7
Pharmaceutical
Intermediates & Custom Mfg
5,253 9.5 1,499 4.0
Institutional Sanitary
Supplies & Other
1,213 2.2 1,226 3.3
--------- ----- -------- -----
TOTAL NET SALES
$ 55,365 100.0% $ 37,750 100.0%
========= ===== ======== =====
Page 21 of 29
Gross Profit By Segment
Three Months Ended December 31
Segment 2001 2000
---- ----
% of % of
$ thousand total $ thousand total
---------- ----- ----------- -----
Agrochemicals $ 1,496 14.3% $ 1,726 22.5%
Industrial Chemicals 1,801 17.3 2,447 31.9
Organic Intermediates &
Colorants 1,060 10.2 1,503 19.6
Pharmaceuticals,Biochemicals
& Nutritionals 5,074 48.6 1,602 20.9
Pharmaceutical
Intermediates & Custom Mfg 679 6.5 275 3.6
Institutional Sanitary
Supplies & Other 320 3.1 119 1.5
--------- -------- ------- -------
TOTAL GROSS PROFIT BEFORE
FREIGHT AND STORAGE COSTS $ 10,430 100.0% $ 7,672 100.0%
======== =======
Unallocated Cost of Sales 964 1,349
------- -------
NET GROSS PROFIT $ 9,466 $ 6,323
========= =======
Sales for the three months ended December 31, 2001 increased 47% to $55,365 from
$37,750 for the comparable period in 2000. As noted in the six months analysis,
the inclusion of business from the Schweizerhall Pharma acquisition was the
primary cause of the increase. Sales attributable to the acquisition amounted to
$16,519 and gross profits were $2,768.
Generally, the individual segments showed comparable results for the three
months as from the six months, though there were some differences due to the
timing of certain events.
Page 22 of 29
The Pharmaceuticals, Biochemicals and Nutritionals segment showed greater
percentage increases in both sales (202%) and gross profits (217%) for the three
month period ended December 31, 2001 than the six months primarily because all
the sales of the generic drug referred to earlier occurred during the second
fiscal quarter. For the quarter, sales and gross profit attributable to the
Schweizerhall Pharma acquisition were $12,348 and $2,224, respectively.
The Pharmaceutical Intermediates and Custom Manufacturing segment showed greater
percentage increases in the second fiscal quarter as well, (250% for sales and
147% for gross profit) primarily because the impact of the terminated supply
agreement (which occurred in October 2000) was more pronounced for the prior
year's three month period. The absence of those sales for the majority of the
prior year's quarter magnified the impact of the inclusion of sales ($4,171) and
gross profits ($544) resulting from the Schweizerhall Pharma acquisition.
The same holds true for the Agrochemicals segment. A restructuring of the
Company's arrangement with a third party occurred during the second fiscal
quarter, causing sales in that quarter to have a greater comparative percentage
increase (45%) than the six months. Gross margins decreased 13%, somewhat less
than the decrease from six months. The mix of products sold during the second
quarter was weighted more heavily towards higher margin products than the six
months.
Both the Industrial Chemicals and the Organic Intermediates & Colorants
segments' results were down slightly for the three months compared to the
comparable period last year. Both segments are heavily dependent on the domestic
economy and the recession and effects of the September 11th terrorist attacks
impacted the results for the second quarter.
Selling, general and administrative expenses as a percentage of sales were 14.1%
for the three months ended December 31, 2001, up from 12.8% in the second
quarter of fiscal 2001. The second quarter of fiscal 2002 included the added
operating costs of the Schweizerhall Pharma distribution business acquired on
March 26, 2001. The current period also had increased personnel costs, higher
rent costs due to an office expansion, a higher bad debt provision and
additional professional fees related to our global restructuring and tax
strategy projects.
The operating profit for the three months ended December 31, 2001 was $1,658,
compared to $1,479 in the quarter ended December 31, 2000. The higher profit
level was primarily due to the profit generated by the Schweizerhall Pharma
business acquired in March 2001, which offset an overall increase in the SG&A
and amortization expense due to the acquisition.
Interest and other income was basically flat at $311 for the three months ended
December 31, 2001 versus $306 in the comparable quarter last year.
Page 23 of 29
Interest expense for the quarter ended December 31, 2001 was $93 versus $1 in
the prior year. This was fully attributable to the short-term bank loans arising
as a result of the Schweizerhall Pharma acquisition.
The effective tax rate for the three months ended December 31, 2001 was 33.7%
compared to last year's 36.0%. The decrease in the effective tax rate is
primarily a reflection of earnings in lower tax jurisdictions due to the
Schweizerhall Pharma acquisition.
LIQUIDITY AND CAPITAL RESOURCES:
At December 31, 2001, the Company had $12,109 in cash, $914 in short term
investments and $8,106 of short term bank loans. Working capital was $55,556 at
December 31, 2001 versus $55,259 at June 30, 2001.
The Company's cash position at December 31, 2001 increased $4,799 from the June
30, 2001 level. Operating activities provided cash of $7,140, primarily from
increases in other accrued expenses and long term liabilities, drafts and
acceptances payable and accrued merchandise purchases totaling $7,150, partially
offset by a decrease in accounts payable of $2,746. Investing activities
provided cash of $1,132, primarily from the settlement of certain acquired
accounts receivable balances of $1,571, partially offset by additional
acquisition costs related to the Schweizerhall Pharma acquisition of $213 and
capital expenditures of $297. Financing activities used cash of $3,473,
primarily a result of payments of long-term liabilities, bank loans and notes
payable related to the Schweizerhall Pharma acquisition totaling $3,707.
On March 26, 2001 the Company invested $23,331, which included 600 shares of
restricted common stock from treasury valued at $5,175, $4,626 in notes, $3,324
in cash, the assumption of debt for $8,966 and acquisition costs of $1,240 to
acquire the distribution business of the Schweizerhall Pharma division of
Schweizerhall Holding AG. In connection with this acquisition the Company
liquidated certain of its investments. The acquired companies had existing
credit facilities with European financial institutions. These facilities provide
the Company with a line of credit of 14,500 Euros (approximately $12,800) of
which $8,106 was utilized as of December 31, 2001. Additionally, the Company
maintains a credit facility with a domestic institution of $3,000, none of which
was outstanding at December 31, 2001. The Company has $7,694 of available credit
under all its financing arrangements as of December 31, 2001. There are no
borrowing requirements or expiration dates on any of the credit facilities
referred to above.
The Company has no material commitments other than those under operating lease
agreements. The Company continually evaluates possible acquisitions of or
investments in businesses that are complementary to those of the Company, which
transactions may require the use of cash. The Company believes that its cash,
other liquid assets, operating cash flows, access to equity capital markets,
taken together, provide adequate resources to fund ongoing operating
expenditures. Further, the Company may obtain additional credit facilities to
enhance its liquidity.
Page 24 of 29
RECENT ACCOUNTING PRONOUNCEMENTS
(a) In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations", and SFAS 142, "Goodwill and Other Intangible Assets". SFAS 141
requires that the purchase method of accounting be used for all future business
combinations and specifies criteria intangible assets acquired in a business
combination must meet to be recognized and reported apart from goodwill. SFAS
142 requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment at least annually in
accordance with the provisions of SFAS 142. Amortization expense relating to
goodwill was $287 and $180 for the six months ended December 31, 2001 and 2000,
respectively. SFAS 142 will also require that intangible assets with estimable
useful lives be amortized over their respective estimated useful lives, and
reviewed for impairment in accordance with SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".
The Company has decided not to early adopt the provisions of SFAS 141 and SFAS
142 as of July 1, 2001.
Upon adoption the Company will evaluate its existing intangible assets and
goodwill that were acquired in prior purchase business combinations, and make
any necessary reclassifications in order to conform with the new criteria in
SFAS 141 for recognition apart from goodwill. The Company will be required to
reassess the useful lives and residual values of all intangible assets acquired,
and make any necessary amortization period adjustments. In addition, the Company
will be required to test goodwill and, to the extent an intangible asset is
identified as having an indefinite useful life, the intangible asset for
impairment in accordance with SFAS 142. Any impairment loss will be measured as
of the date of adoption and recognized as the cumulative effect of a change in
accounting principle. As of December 31, 2001 the Company had unamortized
goodwill in the amount of $10,702 and unamortized identifiable intangible assets
in the amount of $341.
Because of the extensive effort needed to comply with adopting SFAS 141 and 142,
it is not practicable to reasonably estimate the impact of adopting these
statements on the Company's consolidated financial statements as of the date of
this report, including whether it will be required to recognize any transitional
impairment losses as the cumulative effect of a change in accounting principle.
(b) In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"). SFAS 143 is effective for fiscal years beginning
after June 15, 2002, and establishes an accounting standard requiring the
recording of the fair value of liabilities associated with the retirement of
long-lived assets in the period in which they are incurred. The Company does not
expect the adoption of SFAS 143 to have a significant effect on its results of
operations or its financial position.
Page 25 of 29
(c) In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment of Long-Lived Assets", which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. This statement
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of", while retaining the fundamental
recognition and measurement provisions of that statement. SFAS No. 144 requires
that a long-lived asset to be abandoned, exchanged for a similar productive
asset or distributed to owners in a spinoff to be considered held and used until
it is disposed of. However, SFAS No. 144 requires that management consider
revising the depreciable life of such long-lived asset. With respect to
long-lived assets to be disposed of by sale, SFAS No. 144 retains the provisions
of SFAS No. 121 and, therefore, requires that discontinued operations no longer
be measured on a net realizable value basis and that future operating losses
associated with such discontinued operations no longer be recognized before they
occur. SFAS No. 144 is effective for all fiscal quarters of fiscal years
beginning after December 15, 2001, and will thus be adopted by the Company on
July 1, 2002. The Company has not determined the effect, if any, that the
adoption of SFAS No. 144 will have on the Company's consolidated financial
statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
The majority of the Company's U.S. transactions are denominated in U.S. Dollars.
The Company's foreign subsidiaries operate in their local currencies. The
Company does, from time to time, purchase short-term forward exchange contracts
to manage its exposure to variability in exchange rates. The Company uses
certain derivatives and financial instruments in managing certain risks. The
Company does not enter into derivatives or other financial instruments for
trading or speculative purposes. Managed risk includes the risk associated with
changes in fair value of transactions denominated in currencies other than the
Company's various local currencies. At December 31, 2001, the Company had
forward currency exchange agreements that remained outstanding. The difference
between the fair market value of the forward currency exchange agreements at
inception and the fair market value of the agreements at December 31, 2001 was
not material.
Interest Rate Risk
The Company is subject to market risk from exposure to changes in interest rates
based upon its financing, investing and cash management activities. The Company
utilizes a balanced mix of debt maturities along with both fixed-rate and
variable-rate debt to manage its exposure to changes in interest rates. The
Company does not expect changes in interest rates to have a material adverse
effect on its income or its cash flows in fiscal 2002. However, there can be no
assurances that interest rates will not significantly affect its results of
operations.
Page 26 of 29
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
(1) The Company held an annual meeting of its shareholders on December
6, 2001 (the "Annual Meeting")
(2) The Annual Meeting involved the election of directors. The
directors elected at the meeting were Leonard S. Schwartz, Samuel I.
Hendler, Robert A. Wiesen, Stanley H. Fischer, Albert L. Eilender,
John H. Schlesinger and Hans-Peter Schaer.
(3) Three matters were voted on at the Annual Meeting, as follows:
(a) The election of nominees Leonard S. Schwartz, Samuel I.
Hendler, Robert A. Wiesen, Stanley H. Fischer, Albert L.
Eilender, John H. Schlesinger and Hans-Peter Schaer, as
Directors of the Company until the next annual meeting.
The votes were cast for this matter as follows:
BROKER
FOR AGAINST ABSTAIN WITHHELD NON-VOTES
Leonard S. Schwartz 3,902,882 1,800,149
Samuel I. Hendler 4,294,007 1,409,024
Robert A. Wiesen 4,355,524 1,347,507
Stanley H. Fischer 4,432,287 1,270,744
Albert L. Eilender 4,905,020 798,011
John H. Schlesinger 4,900,922 802,109
Hans-Peter Schaer 4,905,720 797,311
Each nominee was elected a Director of the Company.
(b) Approval of the Company's 1998 Omnibus Equity Award Plan to
increase the number of awards authorized to be granted
thereunder from 500,000 to 1,000,000 and to permit the grant
of incentive stock options thereunder:
The votes were cast for this matter as follows:
BROKER
FOR AGAINST ABSTAIN WITHHELD NON-VOTES
2,517,957 1,792,971 180,674 1,211,429
This matter did not pass
(c) Ratification of the selection of KPMG LLP as the Company's
independent auditors for the current fiscal year.
The votes cast for this matter as follows:
BROKER
FOR AGAINST ABSTAIN WITHHELD NON-VOTES
5,063,983 617,278 21,770 - -
Page 27 of 29
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The exhibits filed as part of this report are listed below.
No exhibits are filed as part of this report.
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during the quarter
ended December 31, 2001.
Page 28 of 29
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.
ACETO CORPORATION
DATE February 13, 2002 BY (signed) / by Douglas Roth
------------------------- ----------------------------------------
Douglas Roth, Chief Financial
Officer
DATE February 13, 2002 BY (signed) / by Leonard S. Schwartz
------------------------- ----------------------------------------
Leonard S. Schwartz, Chief Executive
Officer
Page 29 of 29