PHARMACEUTICAL FORMULATIONS, INC. AND SUBSIDIARIES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark one)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended: JANUARY 1, 2000
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 0-11274
-------
PHARMACEUTICAL FORMULATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2367644
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
460 PLAINFIELD AVENUE, EDISON, NJ 08818
(Address of principal executive offices) (Zip code)
(Registrant's telephone number, including area code) (732) 985-7100
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.
|x| Yes No
The number of shares outstanding of common stock, $.08 par value, as of January
31, 2000 was 30,253,320.
<PAGE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS January 1, 2000 July 3,
(Unaudited) 1999
------------------------- ------------------
CURRENT ASSETS
<S> <C> <C>
Cash $ 127,000 $ 122,000
Accounts receivable - net of allowance for doubtful accounts of $317,000
and $255,000 16,115,000 16,600,000
Inventories 18,672,000 17,916,000
Prepaid expenses and other current assets 1,126,000 1,268,000
Income taxes recoverable 947,000 947,000
Deferred tax asset 1,150,000 1,150,000
------------------------- ------------------
Total current assets 38,137,000 38,003,000
PROPERTY, PLANT AND EQUIPMENT
Net of accumulated depreciation and amortization of $21,254,000 and
$19,663,000 17,163,000 18,636,000
OTHER ASSETS
Deferred tax asset 2,356,000 2,606,000
Other assets 691,000 711,000
------------------------- ------------------
$ 58,347,000 $ 59,956,000
========================= ==================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Current portion of long-term debt $ 2,385,000 $ 2,135,000
Current portion of capital lease obligations 2,685,000 2,879,000
Accounts payable 20,049,000 20,800,000
Income taxes payable 210,000 210,000
Accrued expenses 2,968,000 3,498,000
------------------------- ------------------
Total current liabilities 28,297,000 29,522,000
------------------------- ------------------
LONG-TERM DEBT 27,350,000 26,934,000
------------------------- ------------------
LONG-TERM CAPITAL LEASE OBLIGATIONS 5,377,000 6,614,000
------------------------- ------------------
DEFERRED GAIN ON SALE/LEASE BACK 349,000 396,000
------------------------- ------------------
STOCKHOLDERS' DEFICIENCY
Preferred stock - par value $1.00 per share; 10,000,000 shares authorized;
2,500,000 shares issued and outstanding 2,500,000 2,500,000
Common stock - par value $.08 per share; authorized - 40,000,000 shares;
issued and outstanding - 30,253,320 shares 2,421,000 2,421,000
Capital in excess of par value 37,493,000 37,493,000
Accumulated deficit (45,440,000) (45,924,000)
------------------------- ------------------
Total stockholders' deficiency (3,026,000) (3,510,000)
------------------------- ------------------
$ 58,347,000 $ 59,956,000
========================= ==================
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
------------------ --- ------------------ ------------------ -- --------------------
January 1, December 31, January 1, December 31,
2000 1998 2000 1998
------------------ ------------------ ------------------ --------------------
REVENUES
<S> <C> <C> <C> <C>
Gross Sales $47,041,000 $43,956,000 $24,965,000 $24,516.000
Less: Sales discounts and
allowances 3,003,000 4,402,000 1,906,000 2,387,000
------------------ ------------------ ------------------ --------------------
NET SALES 44,038,000 39,554,000 23,059,000 22,129,000
------------------ ------------------ ------------------ --------------------
COST AND EXPENSES
Cost of goods sold 33,788,000 36,201,000 17,539,000 19,955,000
Selling, general and
administrative 6,741,000 7,542,000 3,687,000 3,888,000
Research and development 278,000 382,000 127,000 148,000
------------------ ------------------ ------------------ --------------------
40,807,000 44,125,000 21,353,000 23,991,000
------------------ ------------------ ------------------ --------------------
INCOME (LOSS) FROM
OPERATIONS 3,231,000 (4,571,000) 1,706,000 (1,862,000)
------------------ ------------------ ------------------ --------------------
OTHER INCOME (EXPENSE)
Interest expense (2,544,000) (2,174,000) (1,300,000) (1,045,000)
Lawsuit settlement - (1,179,000) - (1,179,000)
Other 47,000 23,000 24,000 20,000
------------------ ------------------ ------------------ --------------------
(2,497,000) (3,330,000) (1,276,000) (2,204,000)
------------------ ------------------ ------------------ --------------------
INCOME (LOSS) BEFORE
INCOME TAXES 734,000 (7,901,000) 430,000 (4,066,000)
INCOME TAXES (BENEFIT) 250,000 (2,569,000) 146,000 (1,322,000)
------------------ ------------------ ------------------ --------------------
NET INCOME (LOSS) 484,000 (5,332,000) 284,000 (2,744,000)
Preferred stock dividend
requirement 100,000 100,000 50,000 50,000
------------------ ------------------ ------------------ --------------------
NET INCOME (LOSS)
ATTRIBUTABLE TO COMMON
STOCKHOLDERS $ 384,000 $(5,432,000) $ 234,000 $ (2,794,000)
================== ================== ================== ====================
EARNINGS (LOSS) PER SHARE
BASIC AND DILUTED $ .01 $ (.18) $ .01 $ (.09)
================== ================== ================== ====================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 30,253,000 30,253,000 30,253,000 30,253,000
================== ================== ================== ====================
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
---------------------------------------------
December 31,
January 1, 2000 1998
---------------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 484,000 $ (5,332,000)
Adjustments to reconcile net income (loss) to net cash (used in) provided by
operating activities:
Depreciation and amortization of property, plant and equipment 1,591,000 1,374,000
Amortization of bond discount and deferred financing costs 141,000 99,000
Amortization of deferred gain on sale/leaseback (47,000) (26,000)
Deferred income taxes 250,000 (2,369,000)
Changes in current assets and liabilities:
Decrease in accounts receivable 485,000 62,000
(Increase) in inventories (756,000) (1,380,000)
Decrease in other current assets 142,000 194,000
Increase (decrease) in accounts payable, accrued expenses and income
taxes payable (1,281,000) 387,000
---------------------- ----------------------
1,009,000 (6,991,000)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
---------------------- ----------------------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in other assets 20,000 (183,000)
Acquisition of property, plant and equipment, net (118,000) (269,000)
---------------------- ----------------------
(98,000) (452,000)
NET CASH USED IN INVESTING ACTIVITIES
---------------------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in borrowings under line of credit 914,000 6,553,000
Principal repayments of capital lease obligations (1,266,000) (1,350,000)
Principal repayments of long term debt (554,000) (304,000)
Lease refinancing - 2,000,000
---------------------- ----------------------
(906,000) 6,899,000
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
---------------------- ----------------------
NET INCREASE (DECREASE) IN CASH 5,000 (544,000)
CASH, BEGINNING OF PERIOD 122,000 608,000
---------------------- ----------------------
CASH, END OF PERIOD $ 127,000 $ 64,000
====================== ======================
</TABLE>
<PAGE>
PHARMACEUTICAL FORMULATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: INTERIM FINANCIAL REPORTING:
The consolidated balance sheet as of July 3, 1999 has been derived
from the audited consolidated balance sheet for the fiscal year then
ended and is presented for comparative purposes. Certain amounts have
been reclassified to conform with the current period presentation.
The accompanying financial statements presume that users have read the
audited financial statements for the preceding fiscal year.
Accordingly, footnotes which would substantially duplicate such
disclosure have been omitted.
The interim financial statements reflect all adjustments which are, in
the opinion of management, necessary for a fair statement of the
results for the interim periods presented. Such adjustments consist of
normal recurring accruals plus, for the six months ended December 31,
1998, major costs incurred as a result of the installation of a new
integrated computer system.
Effective in the fourth quarter of fiscal 1999, the Company changed
its fiscal year end from June 30 to the 52 or 53-week period which
ends on the Saturday closest to June 30. Accordingly, quarterly
periods will generally be comprised of 13 weeks and end on Saturday.
The impact on the current periods was not significant.
The results of operations for the three months and six months ended
January 1, 2000 are not necessarily indicative of the results to be
expected for a full year.
Note 2: CONTINGENCIES:
Other than as described below, no material proceedings to which the
Company is a party, or to which any of its properties are subject, are
pending or are known to be contemplated, and the Company knows of no
material legal proceedings, pending or threatened, or judgments
entered against any director or officer of the Company in his capacity
as such.
In July 1997, the Company received an arbitration demand from the
estate of Dr. Max Tesler, a former President of the Company who died
in December 1996. For alleged breaches of employment and other
agreements between the Company and Dr. Tesler, the Estate claimed an
award of not less that $5,500,000 in compensatory damages, $10,000,000
in punitive damages and such number of shares of common stock of the
Company as would equal 10% of the total number of shares outstanding
(approximately 4,000,000 shares, which had a value as of the alleged
"change of control" date of approximately $3.5 million). Dr. Tesler's
estate subsequently increased its claim for shares from 4,000,000
shares (10% of the outstanding stock) to approximately 15,594,000
shares (including shares for claimed interest through September 30,
1999, which would be approximately 34% of the post- issuance
outstanding shares) due to reductions in the value of such shares from
the time when the estate alleges they should have been issued. For
claimed tortuous conduct, the Estate claimed $20,000,000 for
intentional infliction of emotional distress and $10,000,000 for prima
facie tort(but see below). The Estate is also seeking attorney's fees.
The claimed breaches of contract include failure to pay (a) salary
through December 1998 and (b) change of control payments on the
assumption that there was a change of control, as defined, at the 1996
annual meeting.
With respect to the claim for continuing salary, the Company has
advised the Estate of counterclaims that the Company has, which exceed
the amount of such payments. The Company maintains that as a result of
the termination of Dr. Tesler's employment in December 1995, the
Company ceased to have any liability under the change of control
provisions of the various agreements with Dr. Tesler, as well as
having other defenses to such claims.
As a result of various motions or agreements by the Estate and the
Company, the Estate's claims for intentional infliction of emotional
distress and prima facie tort have been dismissed and are no longer
part of the arbitration. Also, all the Estate's claims for the
issuance of stock due to an alleged "change of control" were
dismissed.
The Estate's remaining claims are for approximately $572,000 plus
interest in salary due as a result of the claimed breaches of contract
and approximately $4.1 million plus interest in monetary damages as a
result of the claimed change of control. The Estate is also seeking
reimbursement of attorneys' fees estimated to be $325,000. The
arbitration of these Estate claims as well as all of the Company's
counterclaims is currently taking place.
The children and a former spouse of Dr. Tesler had also raised certain
claims arising out of the death of Dr. Tesler. The Company settled
these claims in December 1998. Accordingly, the Company recorded a
lawsuit expense of $1,179,000 which included legal and other costs
related to the settlement in the quarter ended December 31, 1998.
Payments were advanced by ICC Industries, Inc. ("ICC") on behalf of
the Company.
In December 1995, the Company accrued the continuing salary claimed to
be due to Dr. Tesler for the period through December 1998. It has not
made provision for any of the other amounts claimed, nor has it
accrued any amounts due from the Estate. As noted above, the Company
believes that the claims are without merit and that it has valid
offsetting claims. The Company is vigorously defending against the
arbitration claim and is prosecuting its claims against the Estate.
Management believes the final outcome of the above will not have a
material effect upon the Company's financial position, liquidity or
operating results.
The Company is a party to various other legal proceedings arising in
the normal conduct of business. Management believes that the final
outcome of these proceedings will not have a material adverse effect
upon the Company's financial position or results of operations.
In May 1998, the Company brought an action against one of its former
outside corporate counsels seeking damages for conflict of interest,
breaches of fiduciary duty and loyalty, negligence and malpractice
during its representation of the Company.
Note 3: INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
JANUARY 1, 2000 JULY 3, 1999
--------------- ------------
<S> <C> <C>
Raw materials $ 8,149,000 $ 6,253,000
Work in progress 862,000 862,000
Finished goods 9,661,000 10,801,000
--------- -----------
$18,672,000 $17,916,000
========== ===========
</TABLE>
Note 4: DIVIDENDS:
No dividends were declared during any period presented on common or
preferred stock. Preferred stock dividends in arrears total $750,000
at January 1, 2000.
Note 5: RELATED PARTY TRANSACTIONS:
The following transactions with ICC, an affiliated company, are
reflected in the consolidated financial statements as of or for the
six months ended January 1, 2000 and December 31, 1998:
<TABLE>
<CAPTION>
January 1, December 31,
2000 1998
------ ------
<S> <C> <C>
Inventory purchases from ICC $1,439,000 $1,951,000
Interest charges from ICC 294,000 123,000
Accounts payable to ICC 2,150,000 1,703,000
Note payable to ICC 3,000,000 -
Advances from ICC 1,524,000 -
* In connection with the credit line and term loans from a
financial institution, ICC has guaranteed $1,100,000 as of
January 1, 2000.
</TABLE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Gross sales for the six months ended January 1, 2000 were $47,041,000 as
compared to $43,956,000 in the comparable period in the prior fiscal year. The
increase in sales of $3,085,000 or 7% is mainly due to an increase in the
private label (store brand) sector of the business. The private label sales were
$42,600,000 for the six months ended January 1, 2000 versus $40,691,000 in the
prior year period. The increase of $1,909,000 or 5% is primarily a result of new
customers, new products, and increased sales to current customers. The
bulk/contract sector of the business had sales of $4,441,000 for the six months
ended January 1, 2000 as compared to $3,265,000 in the prior year period. Sales
to two customers, Walgreen Company and Costco Wholesale, were $15,792,000 or 34%
of sales for the six months ended January 1, 2000 as compared to $17,642,000 or
40% of sales in the comparable period in the prior fiscal year.
Gross sales for the three months ended January 1, 2000 were $24,965,000 as
compared to $24,516,000 in the comparable period in the prior fiscal year. The
increase of $449,000 or 2% is mainly a result of the items discussed above.
Net sales for the six months ended January 1, 2000 were $44,038,000 as compared
to $39,554,000 in the comparable period in the prior year. Net sales for the
three months ended January 1, 2000 were $23,059,000 as compared to $22,129,000
in the comparable period in the prior year. The increase was due to the increase
in gross sales net of a decrease in sales discounts and allowances.
Cost of sales as a percentage of net sales was 77% for the six months ended
January 1, 2000 as compared to 92% in the comparable period in the prior fiscal
year. Cost of sales as a percentage of net sales was 76% for the three months
ended January 1, 2000 as compared to 90% in the comparable period in the prior
fiscal year. During fiscal 1999, the Company converted to a new computer system
which resulted in disruptions in shipping, inventory control, production, and
planning leading to a reduction in sales and increased cost of sales. Also,
fiscal 1999 was impacted by the increased cost of packaging due to the new
equipment installed in 1998 which caused production inefficiencies and higher
waste due to the beginning trials of the equipment in 1999.
Selling, general and administrative expenses were $6,741,000 or 15% of net sales
for the six months ended January 1, 2000 as compared to $7,542,000 or 19% of net
sales for the comparable period in the prior fiscal year. The decrease of
$801,000 is a result of decreased distribution and legal expenses. The decreased
distribution costs are primarily related to shipping problems that occurred in
the prior fiscal year, due to the new computer system mentioned above. The
decreased legal costs related to the settlement of litigation in fiscal 1999 and
related legal matters. Also included in the current six month period is $300,000
in connection with the termination of employment of Mr. Charles LaRosa, the past
President of the Company. Selling, general and administrative expenses were
$3,687,000 or 16% of net sales for the three months ended January 1, 2000 as
compared to $3,888,000 or 18% of net sales in the comparable period in the prior
fiscal year. The decrease of $201,000 is due mainly to the reasons stated above.
Research and development costs were $278,000 for the six months ended January 1,
2000 as compared to $382,000 for the comparable period in the prior fiscal year.
Research and development costs were $127,000 for the three months ended January
1, 2000 as compared to $148,000 in the comparable period in the prior fiscal
year.
Interest expense was $2,544,000 for the six months ended January 1, 2000 as
compared to $2,174,000 in the comparable period in the prior fiscal year.
Interest expense was $1,300,000 for the three months ended January 1, 2000 as
compared to $1,045,000 in the comparable period in the prior fiscal year. The
increase in interest expense is primarily a result of increased interest rates
plus increased borrowing to meet working capital needs.
The Company settled claims relating to the children and a former spouse of Dr.
Tesler, the former President of the Company who died in December 1996.
Accordingly, the Company recorded a lawsuit settlement expense of $1,179,000 for
the period ended December 31, 1998.
The Company recorded a tax provision of $250,000, which is related to the net
profit for the six months ended January 1, 2000, as compared to a tax benefit of
$2,569,000 for the six months ended December 31, 1998 due to the loss for the
period. The Company recorded a tax provision of $146,000, which is related to
the net profit for the three months ended January 1, 2000, as compared to a tax
benefit of $1,322,000 for the three months ended December 31, 1998 due to the
loss for the period.
The Company reported net income of $484,000 and $284,000 for the six and three
months ended January 1, 2000, respectively, or $.01 and $.01 per share as
compared to net loss of $5,332,000 and $2,744,000, respectively, or $.18 and
$.09 per share in the prior fiscal year.
The Company continues to take steps aimed at increasing profitability. These
steps include: (a) seeking new customers and products to increase sales volume,
(b) discontinuing marginal products and customers and (c) continuing efforts to
reduce material costs and other costs. There can be no assurance that such
efforts will be successful.
LIQUIDITY AND CAPITAL RESOURCES
At January 1, 2000, the Company had working capital of $9,840,000 as compared to
$8,481,000 at July 3, 1999. Working capital at January 1, 2000 includes
$16,115,000 of accounts receivable as compared to $16,600,000 at July 3, 1999.
The accounts receivable decrease of $485,000 is primarily a result of improved
collections. Working capital also includes $18,672,000 of inventory as compared
to $17,916,000 at July 3, 1999. The increase is related to seasonal demand for
product. Working capital also includes $23,017,000 of accounts payable and
accrued expenses as compared to $24,298,000 at July 3, 1999. The decrease of
$1,281,000 in payables is primarily due to payment of accrued expenses.
The Company produced $1,009,000 in cash from operations for the six months ended
January 1, 2000, as a result of the above.
Capital expenditures for the six months ended January 1, 2000 were $118,000.
Such expenditures related primarily to the continuing upgrade of the Company's
manufacturing equipment and plant facilities.
On August 7, 1998, the Company modified its line of credit and equipment term
loan with its financial institution. The maximum amount available under the line
of credit and term loan is $25,000,000. At January 1, 2000, the Company had
outstanding borrowings under this facility of $21,610,000. Borrowings under the
modified agreement, which expires August 7, 2001, bear interest at the prime
rate of interest less 3/4%. Such borrowing rate was increased by 2% effective
April 1, 1999. In addition, the Company has convertible subordinated debentures
outstanding and capitalized lease obligations which have a substantial impact on
the working capital requirements in terms of required principal and interest
payments.
The Company has outstanding 2,500,000 shares of Series A cumulative redeemable
(at the Company's option) convertible preferred stock sold to ICC. Dividends
from the date of issue (April 8, 1996) through January 1, 2000 totaling $750,000
have accumulated and are in arrears. There is no obligation or intention to pay
dividends currently on the preferred stock. Dividends will continue to accrue at
the rate of $200,000 per year until declared and paid. In addition, in April
1999 the Company entered into a loan agreement with ICC for $3,000,000 with
interest at 1% above the prime rate. Also, the Company has, from time to time,
received advances from ICC. As of January 1, 2000, the outstanding advances
amounted to $1,524,000.
The Company has a deferred tax asset of $4,170,000, before the valuation
allowance at January 1, 2000, which consists of future tax benefits of net
operating loss carry forwards and various other temporary differences. The
benefits of net operating loss carry forwards and other temporary differences
that are estimated to take more than a few years to realize can not be
reasonably determined at this time due to the inconsistent operating results in
the past. Accordingly, a valuation allowance of $664,000 was recorded at January
1, 2000 to provide for this uncertainty. The realization of this asset in future
periods will improve the liquidity of the Company.
The Company continues to take steps aimed at increasing sales and reducing costs
to increase profitability. The Company intends to spend an estimated $500,000 to
$1,000,000 for capital improvements in the fiscal year ending July 1, 2000 to
increase manufacturing capacity and reduce costs. It is anticipated that these
capital expenditures will be funded through equipment lease financing and
working capital. While the Company has in the past had no difficulty in
obtaining such financing or meeting working capital needs, there can be no
assurance that it will obtain the financing or meet working capital needs in the
future.
YEAR 2000 COMPLIANCE
The Company did not experience any material difficulties on or in connection
with the onset of the year 2000.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
See Note 2 to Notes to Consolidated Financial Statements.
Item 2: Changes in Securities
None.
Item 3: Defaults upon Senior Securities
None.
Item 4: Submission of Matters to a Vote of Securities Holders
The Company's Annual Meeting of Stockholders was held on December 7,
1999. Each of the candidates for the position of director, Messrs. Ray Cheesman,
Charles LaRosa and John Oram, was elected. The matters voted upon at the meeting
and the number of votes cast for, against or withheld (including abstentions and
broker non-votes) as to each matter, including nominees for office, are as
follows:
1. Director election:
Mr. Cheesman
For: 28,811,326
Withhold Authority: 100,990
Mr. LaRosa
For: 28,744,863
Withhold Authority: 167,453
Mr. Oram
For: 28,812,513
Withhold Authority: 99,803
2. Ratification of the appointment of BDO Seidman LLP as Independent
Auditors for the Fiscal Year Ending July 1, 2000:
For: 28,784,088
Against: 59,388
Abstain: 68,840
Item 5: Other Information
When used in the Form 10-Q and in future filings by the Company with
the Securities and Exchange Commission, in the Company's press
releases and in oral statements made with the approval of an
authorized executive officer, the words or phrases "will likely
result," "are expected to,", "will continue," "is anticipated",
"estimate," "project," "expect," "believe," "hope," or similar
expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from historical
earnings and those presently anticipated or projected. The Company
wishes to caution readers not to place undue reliance on such
forward-looking statements, which speak only as of the date made.
Item 6: Exhibits and Reports on Form 8-K
(a). Exhibits
27. Financial Data Schedule
(b). Reports on Form 8-K - The Registrant filed the following
reports on Form 8-K during and since the quarter ended
January 1, 2000:
DATE OF REPORT ITEM NUMBER (SUMMARY)
December 21, 1999 5 (regarding delay in payment of
interest on debentures)
January 13, 2000 5 (regarding payment of interest
on debentures)
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.
PHARMACEUTICAL FORMULATIONS, INC.
(REGISTRANT)
Date: February 15, 2000 By: /S/ CLIFFORD H. STRAUB, JR.
------------------ ---------------------------
Clifford H. Straub, Jr.
Chief Financial Officer and Treasurer
(Authorized Officer and Principal
Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-01-2000
<PERIOD-START> JUL-04-1999
<PERIOD-END> JAN-01-2000
<CASH> 127,000
<SECURITIES> 0
<RECEIVABLES> 16,432,000
<ALLOWANCES> 317,000
<INVENTORY> 18,672,000
<CURRENT-ASSETS> 38,137,000
<PP&E> 38,417,000
<DEPRECIATION> 21,254,000
<TOTAL-ASSETS> 58,347,000
<CURRENT-LIABILITIES> 28,287,000
<BONDS> 4,574,000
0
2,500,000
<COMMON> 2,421,000
<OTHER-SE> 37,493,000
<TOTAL-LIABILITY-AND-EQUITY> 58,347,000
<SALES> 47,041,000
<TOTAL-REVENUES> 44,038,000
<CGS> 33,788,000
<TOTAL-COSTS> 40,807,000
<OTHER-EXPENSES> (47,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,544,000
<INCOME-PRETAX> 734,000
<INCOME-TAX> 250,000
<INCOME-CONTINUING> 484,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 484,000
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
