<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OR THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________
Commission file number 1-9114
MYLAN LABORATORIES INC.
(Exact Name of registrant as specified in its charter)
Pennsylvania 25-1211621
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
130 Seventh Street
1030 Century Building
Pittsburgh, Pennsylvania 15222
(Address of principal executive offices) (Zip Code)
412-232-0100
(Registrant's telephone number, including area code)
Not Applicable
(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 twelve 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
classes of common stock, as of the latest practicable date
Outstanding at
Class of Common Stock July 29, 1994
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$.50 par value 79,268,371
__________________________________________________________________________<PAGE>
<PAGE>
MYLAN LABORATORIES INC. AND SUBSIDIARIES
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INDEX
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Page
Number
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PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets - June 30, 1994
and March 31, 1994 2A and 2B
Consolidated Statements of Earnings - Three
Months Ended June 30, 1994 and 1993 3
Consolidated Statements of Cash Flows - Three
Months Ended June 30, 1994 and 1993 4
Notes to Consolidated Financial Statements -
Three Months Ended June 30, 1994 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6 and 7
PART II. OTHER INFORMATION 8
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<PAGE>
MYLAN LABORATORIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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ASSETS
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<TABLE>
<CAPTION>
June 30, March 31,
1994 1994
Unaudited Audited
--------- -------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 83,331,000 $ 75,526,000
Short-term Investments 10,122,000 12,925,000
Accounts receivable 75,127,000 55,430,000
Inventories:
Raw materials 27,400,000 26,138,000
Work in process 16,322,000 14,978,000
Finished goods 23,776,000 16,880,000
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67,498,000 57,996,000
Prepaid Income Taxes - 1,265,000
Deferred tax benefit 2,039,000 2,082,000
Other current assets 5,683,000 4,349,000
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Total Current Assets 243,800,000 209,573,000
Property, Plant and Equipment - at cost 117,470,000 115,114,000
Less accumulated depreciation 34,375,000 32,600,000
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83,095,000 82,514,000
Investment in and Advances to Somerset 20,444,000 17,763,000
Intangible Assets net of
accumulated amortization 32,005,000 33,228,000
Other Assets 68,177,000 60,247,000
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Total Assets $447,521,000 $403,325,000
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</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE>
LIABILITIES AND SHAREH0LDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
June 30, March 31,
1994 1994
Unaudited Audited
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<S> <C> <C>
Current Liabilities
Trade accounts payable $ 11,597,000 $ 6,699,000
Income taxes payable 10,036,000 -
Other current liabilities 12,784,000 8,056,000
Cash dividend payable 3,171,000 3,171,000
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Total Current Liabilities 37,588,000 17,926,000
Long-Term Obligations 4,917,000 4,609,000
Deferred Income Taxes 821,000 821,000
Shareholders' Equity:
Preferred stock, par value $.50 per
share, authorized 5,000,000 shares,
issued and outstanding - none - -
Common stock, par value $.50 per share,
authorized 300,000,000 shares, issued
79,736,757 shares at June 30, 1994
79,697,295 shares at March 31, 1994 39,868,000 39,849,000
Additional paid in capital 54,519,000 54,272,000
Retained earnings 312,317,000 288,357,000
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406,704,000 382,478,000
Less Treasury stock - at cost, 495,864
shares at June 30, 1994 and March 31,
1994 2,509,000 2,509,000
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Net Worth 404,195,000 379,969,000
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Total Liabilities
and Shareholders' Equity $447,521,000 $403,325,000
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE>
MYLAN LABORATORIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 1994 AND 1993
UNAUDITED
---------
<TABLE>
<CAPTION>
1994 1993
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<S> <C> <C>
NET SALES $ 85,146,000 $ 58,507,000
COST AND EXPENSES:
Cost of Sales 32,996,000 28,555,000
Research and Development 6,344,000 4,722,000
Selling and Administrative 14,405,000 11,073,000
Interest Expense 7,000 8,000
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53,752,000 44,358,000
EQUITY IN EARNINGS OF SOMERSET 5,348,000 5,682,000
OTHER INCOME
939,000 1,273,000
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EARNINGS BEFORE INCOME TAXES 37,681,000 21,104,000
INCOME TAX RATE 28% 24%
INCOME TAXES 10,551,000 4,996,000
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NET EARNINGS $ 27,130,000 $ 16,108,000
============ ============
EARNINGS PER SHARE $ .34 $ .21
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WEIGHTED AVERAGE COMMON SHARES 79,218,000 78,520,000
============ ============
</TABLE>
The Company paid a regular quarterly cash dividend of $.025 per share from July
1990 to July 1992, $.03 per share from October 1992 to July 1993 and $.04 per
share since October of 1993.
See Notes to Consolidated Financial Statements
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<PAGE>
MYLAN LABORATORIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1994 AND 1993
UNAUDITED
---------
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings $ 27,130,000 $ 16,108,000
Adjustments to reconcile net earnings to net
cash provided from operating activities:
Depreciation and amortization 3,026,000 2,723,000
Deferred income taxes 43,000 (529,000)
Equity in the earnings of Somerset (5,348,000) (5,682,000)
Cash received from Somerset 2,667,000 5,173,000
Other non-cash items 13,518,000 (1,518,000)
Changes in operating assets and liabilities:
Accounts receivable (31,121,000) (5,217,000)
Inventories (9,735,000) (1,519,000)
Trade accounts payable 4,898,000 759,000
Income taxes 11,301,000 (413,000)
Other operating assets and liabilities 3,394,000 (855,000)
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Net cash provided from operating activities 19,773,000 9,030,000
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (2,356,000) (4,714,000)
Increase in intangible and other assets (9,504,000) (1,599,000)
Other investment proceeds 2,803,000 -
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Net cash used in investing activities (9,057,000) (6,313,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid (3,170,000) (2,357,000)
Payments on long-term obligations (7,000) (14,000)
Payments on acquisition obligations - (772,000)
Proceeds from exercise of stock options 266,000 88,000
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Net cash used in financing activities (2,911,000) (3,055,000)
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Net Increase (Decrease) in Cash and
Cash Equivalents 7,805,000 (338,000)
Cash and Cash Equivalents - Beginning of Period 75,526,000 98,246,000
------------ ------------
Cash and Cash Equivalents - End of Period $ 83,331,000 $ 97,908,000
============ ============
CASH PAID DURING THE PERIOD FOR:
Interest $ 7,000 $ 8,000
Income Taxes $ 463,000 $ 5,938,000
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE>
MYLAN LABORATORIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED
June 30, 1994
Unaudited
---------
A. In the opinion of management, the accompanying unaudited
financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly
the financial position of the Company as of June 30, 1994 and
March 31, 1994 together with the results of operations and
cash flows for the interim periods ended June 30, 1994 and
1993. The consolidated results of operations for the three
months ended June 30, 1994 and 1993 are not necessarily
indicative of the results to be expected for the full year.
B. These interim financial statements should be read in
conjunction with the consolidated financial statements and
notes thereto in the Company's 1994 Annual Report and Report
on Form 10-K.
C. Equity in Earnings of Somerset includes the Company's 50%
portion of the net earnings of Somerset Pharmaceuticals Inc.
(Somerset), certain management fees and amortization of
intangible assets resulting from the acquisition of Somerset.
Such intangible assets are being amortized over a 15 year
period using the straight line method.
Condensed unaudited financial information of Somerset for the
three month periods ended June 30, 1994 and 1993 are as
follows: (in thousands)
June 30, June 30,
1994 1993
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Net Sales $ 25,021 $ 28,592
Costs and Expenses (12,240) (12,196)
Income Taxes (3,692) (6,460)
Net Earnings $ 9,089 $ 9,936
The above information represents 100% of Somerset's
operations of which the Company has a 50% interest.
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<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
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Net sales for the three months ended June 30, 1994 were a
record high $85,146,000 representing a 46% increase over sales
for the same period a year ago. This improvement is primarily
attributable to the launch of three new generic products,
cimetidine, flurbiprofen and glipizide, which the Company began
shipping during the quarter ended June 30, 1994.
Gross margin as a percent of sales increased to 61% from 51%
for the first quarter last year. The rate for the current
quarter reflects the higher margins generally realized on new
generic products in the short term after introduction. Due to
the competitive nature of the pharmaceutical industry the sales
and gross margin recognized in the quarter ended June 30, 1994
are not necessarily indicative of the results to be expected in
future quarters.
Research and development expenditures increased 34% from
$4,722,000 for the quarter ended June 30, 1993 to $6,344,000 for
the current quarter. This increase is indicative of the
Company's commitment to new and increased product development
throughout the Company.
Selling and administrative expenses were 17% of net sales for
the current quarter as compared to 19% for the quarter ended
June 30, 1993. Factors contributing to the overall rise in
selling and administrative expenses include advertising,
promotion and legal expenses associated with new products and
payroll and related costs.
Equity in earnings of Somerset continues to provide a solid
return for the Company. Somerset's contribution to net earnings
was $.06 per share for the quarters ended June 30, 1994 and 1993.
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<PAGE>
Liquidity and Capital Resources and Financial Condition
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Working capital increased from $191,647,000 at March 31, 1994
to $206,212,000 at June 30, 1994 as a result of continued strong
operations. The ratio of current assets to current liabilities
was 6.5 to 1 at June 30, 1994 and 11.7 to 1 at March 31, 1994.
Net cash provided from operating activities was $19,773,000
for the three months ended June 30, 1994 compared to $9,030,000
for the same period last year. The change is due to higher net
earnings and the timing of tax payments and cash receipts from
Somerset. Other non-cash items includes allowances for potential
credits and rebates generally associated with new product
launches.
Additions to property, plant and equipment amounted to
$2,356,000 for the three months ended June 30, 1994 as the
Company continues to upgrade and modernize its facilities.
Increase in intangible and other assets is due to the
shifting from short-term to long-term investment.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K - there were no reports on Form 8-K
filed during the three months ended June 30, 1994.
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.
Mylan Laboratories Inc.
(Registrant)
DATE 08/03/94 /S/ MILAN PUSKAR
_________________ ______________________________________
Milan Puskar
Chairman of the Board, Chief
Executive Officer and President
DATE 08/03/94 /S/ FRANK A. DE GEORGE
__________________ ______________________________________
Frank A. DeGeorge
Director of Accounting and Taxation
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