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FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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(Mark One)
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/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the Period Ended June 30, 1996
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ________________________
Commission File No. 1-5438
FOREST LABORATORIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 11-1798614
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
909 Third Avenue
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New York, New York 10022-4731
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(address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code 212-421-7850
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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 outstanding of Registrant's Common Stock as of
August 14, 1996: 44,387,240.
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FOREST LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY Net current assets increased by $38,800,000
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from March 31, 1996. The increase resulted principally from the Company
selling its investment in Biovail Corporation International ("BCI") for
$102,301,000 (net of commissions and expenses). The balance in accounts
receivable declined approximately $114,000,000 from the balance at
March 31, 1996 due to collections of trade accounts which were
previously granted extended dating terms. The collections resulted in an
improvement in the accounts receivable days sales outstanding from 208 days at
March 31, 1996 to 142 days at June 30, 1996. The cash generated from these
activities was invested in cash equivalent investments and is also being used to
repurchase from time to time in the open market, up to 4,500,000 shares
(approximately 10%) of the Company's outstanding common stock. At June
30, 1996, the Company had purchased 1,191,800 shares at a cost of $49,796,000.
Inventories increased $22,174,000 in connection with the Company's recent launch
of Tiazac-R- and from higher than normal inventory balances of the Company's
Lorcet product line as a result of generic competition. Management believes
that current cash levels, coupled with funds to be generated by on-going
operations, will continue to provide adequate liquidity to facilitate potential
acquisitions of products or companies, capital investments and the share
repurchase.
RESULTS OF OPERATIONS Net sales for the current quarter decreased $16,627,000
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as compared with the same period last year due principally to generic
competition for Lorcet. Net volume declines of the Company's principal
promoted products amounted to $15,392,000, of which $12,631,000
was attributed to Lorcet. The Company is experiencing aggressive
competition for its generic product lines. As a result, sales of the Company's
generic product lines decreased by $3,757,000 of which $629,000 was the result
of volume declines and $3,128,000 was attributed to price decreases. In
addition, $3,400,000 of the sales decrease resulted from lower average
selling prices on increased sales of the Company's principal promoted
products to certain managed care customers. Sales increases of certain of
the Company's older unpromoted product lines amounted to $2,439,000 and sales
of Tiazac were $3,483,000.
Non-recurring income, net is comprised of a non-recurring gain of $26,399,000 on
the sale of the Company's approximate 21% equity holding in BCI, offset by
non-recurring charges of $7,250,000 for expenses relating to the closing of
certain of the Company's facilities and for a reserve for the estimated cost of
settlement of certain litigations.
Cost of sales as a percentage of sales increased to 22% during the first quarter
of fiscal 1997 from 20% in the similar fiscal period of 1996 due to lower prices
received on certain products.
The increase in selling, general and administrative expense of $15,370,000
during the current quarter as compared with the prior year is principally due to
the cost of expanding the Company's salesforce by 200 representatives and for
costs incurred in conjunction with the launch of Tiazac.
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FOREST LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Research and development expenses decreased $1,293,000 during the current
quarter over the same period last year as work is concluding on the phase III
clinical trials on Synapton-TM-, the Company's acetylcholinesterase inhibitor
being developed for the treatment of Alzheimer's Disease.
Income taxes as a percentage of income before taxes was 31% for the current
quarter versus 36% in the similar period last year due principally to a decrese
in the proportion of the Company's operating profit derived from fully taxable
operations as compared to tax exempt operations and tax free interest income.
Inflation has not had a material effect on the Company's operations for the
periods presented.
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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.
Date: August 15, 1996
Forest Laboratories, Inc.
(Registrant)
/s/ Howard Solomon
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Howard Solomon
President and Chief
Executive Officer
/s/ Kenneth E. Goodman
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Kenneth E. Goodman
Vice President - Finance
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