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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 September 30, 1999 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.
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(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)
914-362-1100
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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
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Number of shares of common stock, par value $.01, outstanding as of September
30, 1999: 22,836,828
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BARR LABORATORIES, INC.
<TABLE>
<CAPTION>
INDEX PAGE
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 1999 and June 30, 1999 3
Consolidated Statements of Earnings
for the three months ended
September 30, 1999 and 1998 4
Consolidated Statements of Cash Flows
for the three months ended
September 30, 1999 and 1998 5
Notes to Consolidated Financial
Statements 6-10
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 11-15
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 15
PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 16
</TABLE>
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BARR LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1999 1999
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<S> <C> <C>
ASSETS
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Current assets:
Cash and cash equivalents $ 80,284 $ 94,867
Marketable securities 8,358 8,127
Accounts receivable, less allowances of $3,211 and $2,670, respectively 63,986 50,227
Supply agreement receivable 15,750 15,750
Inventories 115,877 77,613
Prepaid expenses 1,574 1,556
---------------- ----------------
Total current assets 285,829 248,140
Property, plant and equipment, net 94,947 93,764
Other assets 6,657 5,986
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Total assets $ 387,433 $ 347,890
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 110,956 $ 88,982
Accrued liabilities 7,197 9,118
Deferred income taxes 833 833
Current portion of long-term debt 2,154 2,165
Income taxes payable 7,035 179
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Total current liabilities 128,175 101,277
Long-term debt 29,885 30,008
Other liabilities 190 127
Deferred income taxes 2,903 2,771
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 22,954,783 and 22,923,583, respectively 230 229
Additional paid-in capital 77,783 76,903
Retained earnings 149,339 137,846
Accumulated other comprehensive loss (1,059) (1,258)
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226,293 213,720
Treasury stock at cost: 117,955 shares (13) (13)
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Total shareholders' equity 226,280 213,707
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Total liabilities and shareholders' equity $ 387,433 $ 347,890
================ ================
</TABLE>
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)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
1999 1998
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Revenues:
Product sales $ 92,103 $ 89,149
Proceeds from supply agreements 6,750 8,000
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Total revenues 98,853 97,149
Costs and expenses:
Cost of sales 61,973 63,908
Selling, general and administrative 10,410 9,943
Research and development 9,067 5,370
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Earnings from operations 17,403 17,928
Interest income 1,180 972
Interest expense (634) (659)
Other income (expense) 466 (14)
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Earnings before income taxes 18,415 18,227
Income tax expense 6,922 7,023
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Net earnings $ 11,493 $ 11,204
============ ============
Earnings per common share $ 0.50 $ 0.50
Earnings per common share - assuming dilution $ 0.49 $ 0.48
============ ============
Weighted average shares 22,823 22,335
============ ============
Weighted average shares - assuming dilution 23,650 23,458
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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BARR LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net earnings $ 11,493 $ 11,204
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization 2,590 2,062
(Gain) loss on sale of assets (493) 11
Other, net 21 7
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable and supply agreement receivable, net (13,759) (5,935)
Inventories (38,264) (18,610)
Prepaid expenses (18) 203
Other assets (36) (478)
Increase (decrease) in:
Accounts payable, accrued liabilities and other 20,231 1,261
Income taxes payable 6,856 4,480
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Net cash used in operating activities (11,379) (5,795)
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CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchases of property, plant and equipment (3,852) (2,390)
Purchases of strategic investments - (2,250)
Other, net (99) (446)
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Net cash used in investing activities (3,951) (5,086)
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CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Principal payments on long-term debt (134) (135)
Net borrowings under line of credit - (2,500)
Proceeds from exercise of stock options and employee stock purchases 881 845
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Net cash provided by (used in) financing activities 747 (1,790)
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Decrease in cash and cash equivalents (14,583) (12,671)
Cash and cash equivalents at beginning of period 94,867 72,956
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Cash and cash equivalents at end of period $ 80,284 $ 60,285
=========== ===========
SUPPLEMENTAL CASH FLOW DATA:
Cash paid during the period
Interest, net of portion capitalized $ 112 $ 126
=========== ===========
Income taxes $ - $ 2,543
=========== ===========
Non-cash transactions
Write-off of equipment & leasehold improvements related to closed factility $ 115 $ -
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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BARR LABORATORIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, 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").
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, 1999.
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 49 days) which are readily convertible into cash at
par value (cost).
As of September 30, 1999 and June 30, 1999, approximately $20,950 and
$28,283, 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 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 a rate
multiplied by the average unsecured monthly Tamoxifen payable balance, as
defined in the December 1995 Alternative Collateral Agreement.
3. PROCEEDS FROM SUPPLY AGREEMENTS
Also included in Proceeds from supply agreements for the quarter ended
September 30, 1998, is the final $1,500 earned under a separate
contingent supply agreement related to the ciprofloxacin litigation.
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4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
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Raw materials and supplies $ 16,247 $ 15,790
Work-in-process 6,467 7,957
Finished goods 93,163 53,866
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$ 115,877 $ 77,613
=================== ==================
</TABLE>
Tamoxifen Citrate, purchased as a finished product, accounted for
approximately $81,270 and $43,040 of finished goods as of September 30,
1999 and June 30, 1999, respectively.
5. OTHER ASSETS
In April 1999, the Company sold its rights to several pharmaceutical
products to Halsey Drug Co., Inc. ("Halsey") in exchange for 500 warrants
exercisable for 500 shares of Halsey's common stock at $1.06 per share.
The warrants expire in April 2004. In connection with this sale, the
Company recorded an Investment in Warrants (included as part of Other
assets in the Consolidated Balance Sheets) and a gain of $343. The
Company has valued the warrants at their fair value in accordance with
Emerging Issues Task Force Issue No. 96-11, "Accounting for Forward
Contracts and Purchased Options to Acquire Securities Covered by SFAS No.
115". The fair value of the warrants was estimated using the
Black-Scholes option-pricing model.
6. EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominators used
to calculate Earnings per common share on the Consolidated Statements of
Earnings:
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<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
1999 1998
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<S> <C> <C>
EARNINGS PER COMMON SHARE:
Net earnings (numerator) $11,493 $11,204
Weighted average shares (denominator) 22,823 22,335
Net earnings $ 0.50 $ 0.50
======= =======
EARNINGS PER COMMON SHARE - ASSUMING DILUTION:
Net earnings (numerator) $11,493 $11,204
Weighted average shares 22,823 22,335
Effect of dilutive options 827 1,123
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Weighted average shares - assuming dilution (denominator) 23,650 23,458
Net earnings $ 0.49 $ 0.48
========== ==========
</TABLE>
During the three months ended September 30, 1999 and 1998, there were 613
and 518, respectively, of outstanding options that 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.
7. 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 months
ended September 30, 1999 and 1998 was $11,692 and $10,633, respectively.
8. NEW ACCOUNTING PRONOUNCEMENT
On June 15, 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which becomes effective for financial statements beginning
after June 15, 2000. SFAS No. 133 requires that companies recognize all
derivatives as either assets or liabilities on the balance sheet and
measure those instruments at fair value. The Company is currently
evaluating this statement and its impact on the Company's existing
accounting policies and financial reporting disclosures.
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9. STRATEGIC COLLABORATIONS
The Company, from time to time, enters into development or supply
collaborations or makes investments in third parties to support the
Company's business strategies. These collaborations include, but are not
limited to, agreements with suppliers for raw materials, licensing
technologies for generic or proprietary products and making equity or
debt investments in third parties. Financial terms may include cash
payments upon execution of an agreement or upon achieving certain
milestones or upon successful launch and commercialization of the
developed product. Such payments are either capitalized as other assets
and amortized or expensed as research and development, depending upon the
nature of the payment. Many of these arrangements include termination
provisions that allow the Company to withdraw from a project if it is
deemed no longer appropriate by the Company.
10. FACILITY OPTIMIZATION CHARGE
During the quarter ended September 30, 1999, the Company recorded a $540
restructuring charge, which is included in Selling, general and
administrative expenses in the Consolidated Statements of Earnings. This
charge is for severance related costs in conjunction with the
optimization of the New York and New Jersey manufacturing operations. As
of September 30, 1999, none of the charge has been utilized and it is
anticipated that the liability will be expended during the quarter ended
December 31, 1999.
11. COMMITMENTS AND CONTINGENCIES
Invamed, Inc./Apothecon, Inc. Lawsuit
In February 1998 and May 1999, Invamed, Inc. ("Invamed") and Apothecon,
Inc. ("Apothecon"), respectively, named the Company and several others as
defendants in a lawsuit 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
Company believes that the suit is without merit and intends to defend its
position vigorously. These actions are currently in discovery stage. It
is anticipated that this matter will 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 September 30, 1999, the Company was involved in 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
Federal antitrust authorities have undertaken a review of certain trade
practices within the pharmaceutical industry, specifically patent
challenge settlements, unfair trade practices by brand drug companies and
exclusive supply arrangements. The Company has voluntarily discussed with
the Federal Trade Commission ("FTC") its arrangements with the supplier
of the raw material for its Warfarin Sodium. The Company has voluntarily
responded to requests from the Department of Justice by providing
documents relating to the settlement of its Tamoxifen patent challenge.
On June 30, 1999, the Company received a subpoena and civil investigative
demand from the FTC relating to its March 1997 patent litigation
settlement regarding
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ciprofloxacin hydrochloride. The Company believes that it has complied
with all applicable laws and regulations governing trade and competition
in the marketplace in connection with its arrangements with its raw
material suppliers and its two patent challenge settlements.
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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 September 30, 1999
to the Quarter Ended September 30, 1998 - (thousands of dollars)
Total revenues increased approximately 2% as a result of increased Product sales
partially offset by a decrease in Proceeds from supply agreements.
Tamoxifen sales of $55,270 were consistent with the prior year, as expected.
Tamoxifen is a patent protected product manufactured for the Company by the
Innovator. Currently, Tamoxifen only competes against the Innovator's product,
which is sold under the brand name.
Other product sales increased from $33,895 to $36,833. The increase was led by
higher sales of Warfarin Sodium, Naltrexone, Medroxyprogesterone, Danazol,
Cefadroxil and Hydroxyurea. These increases were driven mainly by increases in
market share which more than offset price declines and lower sales of other
products such as Cephalexin and Minocycline. The Company stopped selling
Cephalexin and Minocycline in fiscal 1999 because of deteriorating market
conditions.
Proceeds from supply agreements declined $1,250, as expected, since proceeds
earned in the prior year under a separate contingent supply agreement related to
the ciprofloxacin litigation ceased (See Note 3 to the Consolidated Financial
Statements).
Cost of sales decreased from $63,908 or 72% of product sales to $61,973 or 67%
of product sales. The decrease in both dollars and percent of product sales was
the result of a more favorable mix of products including a lower percentage of
Tamoxifen sales to total product sales. Tamoxifen is distributed by the Company
and has lower margins than most of Barr's other products.
Selling, general and administrative expenses increased from $9,943 to $10,410.
The increase was primarily due to increased legal and government affairs costs,
as well as a restructuring charge, partially offset by a decrease in advertising
and promotions. Legal expenses during the quarter were primarily related to the
Company's federal anti-trust suit against DuPont Pharmaceuticals Company and the
development of additional patent challenges. Legal expenses also reflect the
impact of a modified fee arrangement the Company negotiated with one of its
outside law firms. This arrangement is in place for one year and may be extended
by the parties. Government affairs expenses were primarily related to
legislative issues in Florida, Illinois and Texas. The Company recorded a $540
restructuring charge during the quarter, related to its continued optimization
of its New York and New Jersey manufacturing operations. During the quarter Barr
closed a leased warehouse facility in New Jersey and eliminated nearly two dozen
positions in its NY/NJ manufacturing workforce. Lower advertising and
promotional costs were the result of a reduction in the costs supporting
Warfarin Sodium.
Total research and development expenses in the quarter increased from $5,370 to
$9,067. This increase results from increased bio-study and clinical trial costs
and higher personnel costs, each supporting an increased number of products in
development. Research and development spending in support of the Company's
proprietary drug development efforts increased approximately $1.2 million to
$1.4 million in the quarter. Research and development expenses in the quarter
also include a $200 fee paid to a third party product development group for the
right to acquire a generic product which could be submitted to FDA during
calendar 2000.
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Interest income increased by $208 primarily due to an increase in the average
cash and cash equivalents balance, partially offset by a slight decrease in the
market rates on the Company's short-term investments. The decrease in the market
rates was primarily the result of the Company investing in tax-free investments
which generally have lower rates than taxable investments, but lower the
effective tax rate of the Company.
Interest expense decreased $25 due to a decrease in the Company's debt balance,
partially offset by a decrease in capitalized interest over the corresponding
quarter of the prior fiscal year.
Other income increased $480 primarily due to the gain recognized on the warrants
received from Halsey Drug Co., Inc. (See Note 5 to the Consolidated Financial
Statements).
The effective income tax rate decreased from 38.5% for the three months ended
September 30, 1998 to 37.6% for the same period in the current fiscal year. This
decrease was primarily attributable to the Company investing in tax-free
investments during the quarter, which lower overall tax rates paid by the
Company.
Liquidity and Capital Resources
The Company's cash and cash equivalents decreased from $94,867 at June 30, 1999
to $80,284 at September 30, 1999. During the three months ended September 30,
1999, the Company decreased the cash held in its interest bearing escrow account
from $28,283 at June 30, 1999 to $20,950.
Cash used in operating activities totaled $11,379 for the three months ended
September 30, 1999 as working capital increases more than offset net earnings.
The working capital increase was led by increases in inventory and accounts
receivable which were partially offset by increases in accounts payable and
income taxes payable. Accounts receivable at September 30, 1999 were $63,986 or
$13,759 higher than those at June 30, 1999. This increase was attributable in
part to a shift in the timing of sales within each quarter and to a shift in the
product sales mix. Tamoxifen sales made up a lower percentage of sales in the
first quarter and generally carry shorter payment terms than Barr's other
products. The significant increase in inventory and accounts payable was almost
entirely related to an increase in Tamoxifen inventory. That increase was due to
higher purchases in anticipation of increased usage due to Tamoxifen's recent
approval for the reduction in the incidence of breast cancer in women at high
risk for developing the disease. Income taxes payable increased due to the
timing of estimated tax payments.
During the first three months of fiscal 2000, the Company invested approximately
$4 million in capital expenditures primarily on construction of its new 48,000
square foot warehouse and 13,500 square foot laboratory facility at its Pomona,
New York campus. The Company expects to invest an additional $8 to $11 million
in capital assets in fiscal 2000.
To expand its growth opportunities, the Company has and will continue to
evaluate and enter into various strategic collaborations (See Note 9 to the
Consolidated Financial Statements). 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 September 30, 1999,
it could spend between $3 and $5 million by June 2000 to enter these
collaborations. The $3 to $5 million excludes any cash needed to fund strategic
acquisitions the Company may consider in the future.
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The Company believes that its current cash balances, cash flows from operations
and existing borrowing capacity under its Revolving Credit Facility will be
adequate to meet its 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.
Outlook
Revenues are expected to increase in the second quarter driven by expected
increases in the sales of Tamoxifen. Historically, Tamoxifen sales have
fluctuated significantly among the Company's quarters. These fluctuations are
based on buying patterns of several large customers. The buying patterns have
been influenced by the anticipated timing of price increases. The Company
believes that such quarterly fluctuations in Tamoxifen sales could occur in
fiscal 2000 and believes that overall Tamoxifen usage will increase compared to
last year due to Tamoxifen's recent approval for the reduction in the incidence
of breast cancer in women at high risk for developing the disease.
Cost of sales as a percentage of sales is expected to be somewhat higher than
the first quarter in part due to lower margins expected to be earned on
Tamoxifen. Tamoxifen margins in the first quarter were aided by the sales price
increase instituted in the fourth quarter of the prior fiscal year. Higher
Tamoxifen inventory costs in the second quarter will offset the previous price
increases and likely lower second quarter margins. However, overall margins are
impacted by several other factors that are more difficult to predict including
product pricing, product sales mix and manufacturing efficiency.
In September, the Company publicly disclosed that it expected its investments in
research and development to be between $40 and $45 million during fiscal 2000.
The Company continues to believe that its research and development spending will
achieve these levels. The Company also continues to evaluate strategies to fund
a portion of its research and development spending, though there can be no
assurance that such funding will occur.
Interest income is expected to decline in the second quarter as working capital
investments reduce excess cash balances. While the Company seeks to earn the
highest return it can on excess cash, interest rates in the market are very
difficult to predict and can impact interest earned. The Company will continue
to seek tax-advantaged securities, which may continue to keep effective tax
rates below prior year rates.
Year 2000
As disclosed in the 1999 Annual Report on Form 10-K, during 1998, the Company
established a project team to assess the impact of the Year 2000 issue on the
Company's operations. The project team developed a multi-phase approach to
assessing and resolving any Year 2000 issues. These phases included:
1. Company-wide awareness of Year 2000 implications;
2. Assessment of the Company's information technology ("IT") and
non-IT systems, as well as, evaluation of third parties with which
the Company has a material relationship;
3. Implementation of compliant IT and non-IT systems including
contingency plans related to third parties with which the Company
has a material relationship;
4. Testing/Validation of new and/or updated systems.
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The Company believes it has completed these four phases for its critical and
non-critical systems, including the financial, manufacturing and laboratory
information systems. Testing of the critical and non-critical systems is
believed to be complete. The Company will continue to monitor the Year 2000
status of its key hardware and software vendors, as well as third parties with
which it has a material relationship. The Company may incur costs that include
internal resources, external consulting, software and certain equipment upgrades
through the balance of calendar 1999 to resolve any new issues that may be
identified. All costs associated with the Year 2000 project to date have been
expensed as incurred. To date the Company has spent less than $100 in
remediation efforts and believes that the cost to gain company-wide compliance
will not be material.
The Company's Year 2000 readiness program identified several third parties with
which it has a material relationship. These third parties include certain raw
material suppliers, software providers and customers. The Company's Year 2000
project identified these third parties and determined, based on obtaining
written verification, reviewing publicly available financial statement
disclosures and other means, that such third parties are either in compliance or
expect to be in compliance prior to January 1, 2000.
The Company believes that the most likely worst-case Year 2000 scenarios would
relate to problems with the systems of third parties rather than with the
Company's internal systems or its products. Although the Company is making every
effort to assure third party compliance, the Company has less control over
assessing and remediating the Year 2000 problems of third parties. Further, the
Company believes the risks are greatest with infrastructure (e.g., electricity
supply and water and sewer service), telecommunications and transportation
supply chains.
The Company's operations are conducted in four domestic facilities. Each
location relies on local, private and governmental suppliers for electricity,
water, sewer and other needed supplies. Failure of an electricity grid or an
uneven supply of power, for example, would be a worst-case scenario that would
shut down the affected facilities. The Company can not and does not generate its
own electrical or water supply in place of that supplied by utilities.
Because the Company's Year 2000 compliance is dependent upon key third parties
also being Year 2000 compliant on a timely basis, there can be no guarantee that
the Company's efforts will prevent a material adverse impact on its results of
operations, financial condition or cash flows. To the extent that key third
parties are not compliant, this could result in delays in the distribution of
finished goods or receipt of raw material, errors in the receipts of customer
orders, disruption of clinical activities or delays in product development.
These consequences could have a material adverse impact on our results of
operations, financial condition and cash flows if the Company is unable to
substantially conduct business in the ordinary course.
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.
Such risks and uncertainties include the timing and outcome of legal
proceedings, impact of competition on sales and profitability of key products,
fluctuations in operating results, capital spending, obtaining funding for
certain R&D projects, the ability of the Company to obtain additional capital,
the impact of Year 2000 issues on the business 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," "believes," "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
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from those anticipated. The Company undertakes no obligation to publicly update
any forward-looking statements.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As discussed in the 1999 Annual Report on Form 10-K, the Company's exposure to
market risk from changes in interest rates, in general, is not material.
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BARR LABORATORIES, INC.
PART II. OTHER INFORMATION
<TABLE>
<S> <C>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Number Exhibit
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27.0 Financial data schedule
(b) There were no reports filed on Form 8-K in the quarter ended September 30, 1999.
</TABLE>
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: October 28, 1999 /s/ William T. McKee
--------------------
William T. McKee
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 80,284
<SECURITIES> 8,358
<RECEIVABLES> 79,736<F1>
<ALLOWANCES> 0
<INVENTORY> 115,877
<CURRENT-ASSETS> 285,829
<PP&E> 94,947<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 387,433
<CURRENT-LIABILITIES> 128,175
<BONDS> 29,885
0
0
<COMMON> 230
<OTHER-SE> 226,050
<TOTAL-LIABILITY-AND-EQUITY> 387,433
<SALES> 92,103
<TOTAL-REVENUES> 98,853
<CGS> 61,973
<TOTAL-COSTS> 61,973
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 634
<INCOME-PRETAX> 18,415
<INCOME-TAX> 6,922
<INCOME-CONTINUING> 11,493
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,493
<EPS-BASIC> 0.50
<EPS-DILUTED> 0.49
<FN>
<F1> Accounts Receivable and PP&E are net
</FN>
</TABLE>
