UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 For the quarterly period ended June 30, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 Commission file number 1-9771
MEDCO RESEARCH, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3318451
- ------------------------------- -------------------------
(State or other Jurisdiction of (I.R.S. Identification No.)
Employer incorporation or
organization)
7001 Weston Parkway, Suite 300,
Cary, North Carolina 27513
---------------------------- --------------
(Address of principal executive offices) (Zip Code)
(919) 653-7001
--------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b)of the Act:
Common Stock together with associated
Common Stock Purchase Rights New York Stock Exchange
- -------------------------------------- --------------------------
(Title of Class) (Name of each exchange on which
registered)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (b) 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 common stock, as of the
latest practical date 10,338,145 as of July 21, 1999.
Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule
240.03 (b), the pages of this document have been numbered sequentially. The
total pages contained herein are 15.
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<TABLE>
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Medco Research, Inc.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
JUNE 30, December 31,
1999 1998*
----------------------------------------------------
(in thousands except share data) (UNAUDITED)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,434 $ 4,742
Investments held to maturity 18,555 21,434
Accounts and notes receivable:
Royalties 9,436 8,349
Other 71 85
Accrued interest income 730 578
Prepaid expenses and other 519 243
Deferred tax asset - current portion 458 458
----------------------------------------------------
Total current assets 33,203 35,889
Investments held to maturity 31,054 25,074
Property and equipment, at cost, net of accumulated depreciation and
amortization 654 465
Patent, trademark and distribution rights, at cost, net of accumulated
amortization 1,322 1,629
Deferred tax asset 1,228 1,228
----------------------------------------------------
Total assets $67,461 $64,285
====================================================
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable and accrued expenses $3,575 $ 3,401
Accrued royalties 2,521 2,166
Accrued compensation 283 509
----------------------------------------------------
Total current liabilities 6,379 6,076
Other long-term liabilities 50 150
----------------------------------------------------
Total liabilities 6,429 6,226
Stockholders' equity
Common stock, no par value, authorized 40,000,000 shares; shares issued of
11,412,445 and 11,298,732 at June 30, 1999 and December 31, 1998,
respectively; shares outstanding of 10,338,145 and 10,409,332 at June 30,
1999 and December 31, 1998, respectively
55,131 53,806
Retained earnings 21,165 15,061
Cost of stock held in treasury, 1,074,300 and 889,400 shares at June
30, 1999 and December 31, 1998, respectively (15,264)
(10,808)
----------------------------------------------------
Total stockholders' equity 61,032 58,059
----------------------------------------------------
Commitments and contingencies
====================================================
Total liabilities and stockholders' equity $67,461 $64,285
====================================================
</TABLE>
See accompanying notes to consolidated financial statements.
*Abstracted from audited year-end financial statements.
2
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Medco Research, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------------------------------------------
JUNE 30, June 30, JUNE 30, June 30,
(in thousands, except per share data) 1999 1998 1999 1998
-------------------------------------------------------------------
<S> <C>
Royalty revenue $8,936 $6,387 $16,502 $12,766
Royalty expense 1,579 919 2,908 2,183
-------------------------------------------------------------------
Gross margin 7,357 5,468 13,594 10,583
-------------------------------------------------------------------
Operating expenses:
Research & development costs 2,344 3,836 4,352 5,564
General and administrative expenses 803 572 1,531 1,197
-------------------------------------------------------------------
3,147 4,408 5,883 6,761
-------------------------------------------------------------------
Operating income 4,210 1,060 7,711 3,822
Other income:
Interest income 746 659 1,471 1,273
Other income - 4,000 - 4,000
-------------------------------------------------------------------
Income before taxes 4,956 5,719 9,182 9,095
Provision for income taxes 1,663 497 3,078 702
-------------------------------------------------------------------
Net income $ 3,293 $ 5,222 $ 6,104 $ 8,393
===================================================================
Basic earnings per share $ 0.32 $ 0.49 $ 0.59 $ 0.80
===================================================================
Diluted earnings per share $ 0.31 $ 0.48 $ 0.57 $ 0.77
===================================================================
Weighted average shares outstanding 10,332 10,558 10,346 10,538
===================================================================
Net effect of dilutive stock options based on treasury stock
method using average market price 389 407 403 324
===================================================================
Weighted average shares outstanding
Assuming dilution 10,721 10,965 10,749 10,862
===================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
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Medco Research, Inc.
Consolidated Statements of Stockholders' Equity
(Unaudited)
SIX Months Ended JUNE 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Common Stock
------------------------------------
Cost of
Number of Retained stock held
shares Amount Earnings in treasury Total
-----------------------------------------------------------------------------------------------
<S> <C>
Balance at
December 31, 1998 10,409 $53,806 $15,061 $(10,808) $58,059
Stock options
exercised 74 785 - - 785
Stock warrants
exercised 40 540 - - 540
Purchase of stock
held in treasury (185) - - (4,456) (4,456)
Net income - - 6,104 - 6,104
-----------------------------------------------------------------------------------------------
BALANCE AT
JUNE 30, 1999 10,338 $55,131 $21,165 $(15,264) $61,032
===============================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
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Medco Research, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------------------------
JUNE 30, June 30,
1999 1998
--------------------------------------------
(in thousands)
<S> <C>
OPERATING ACTIVITIES:
Net income $6,104 $8,393
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation of property and equipment 86 48
Amortization of patent, trademark and distribution
rights 307 298
Net amortization of investment discount (101) (199)
Changes in operating assets and liabilities:
Accounts receivable (1,073) (259)
Prepaid expenses (276) (175)
Accounts payable and accrued expenses (152) (464)
Accrued royalty expense 355 412
Accrued interest income (152) 90
Deferred tax asset - 321
Deferred royalty payments - (730)
---------------------------------------------
Net cash provided by operating activities $5,098 $7,735
---------------------------------------------
</TABLE>
(Continued)
5
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Medco Research, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------------------------
JUNE 30, June 30,
1999 1998
-------------------------------------------
<S> <C>
(in thousands)
INVESTING ACTIVITIES:
Purchase of investments held to maturity (16,000) (15,939)
Maturity of investments held to maturity 13,000 13,422
Purchases of property and equipment (275) -
Purchases of patents - (713)
-------------------------------------------
Net cash provided by (used in) investing activities
(3,275) (3,230)
-------------------------------------------
FINANCING ACTIVITIES:
Proceeds from exercise of options 785 635
Proceeds from exercise of warrants 540 -
Purchase of stock held in treasury (4,456) -
-------------------------------------------
Net cash (used in) financing activities
(3,131) 635
-------------------------------------------
Increase (decrease) in cash and cash equivalents (1,308) 5,140
Cash and cash equivalents at beginning of period
4,742 2,726
-------------------------------------------
Cash and cash equivalents at end of period
$3,434 $7,866
===========================================
</TABLE>
See accompanying notes to consolidated financial statements.
6
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Medco Research, Inc.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
GENERAL
The accompanying interim financial statements have been prepared by Medco
Research, Inc. (the "Company") in accordance with generally accepted accounting
principles. Certain disclosures and information normally included in financial
statements have been condensed or omitted. In the opinion of the management of
the Company, these financial statements contain all adjustments (all of a
recurring nature) necessary for a fair presentation for the interim periods.
These statements should be read in conjunction with the financial statements and
notes included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" ("SFAS No. 130") for its fiscal year ending
December 31, 1998. SFAS No. 130 requires the Company to display an amount
representing the total comprehensive income for the period in a financial
statement which is displayed with the same prominence as other financial
statements. The Company has no items of other comprehensive income in any period
presented and therefore is not required to report comprehensive income.
The Company will adopt Statement of Financial Accounting Standards No. 133
"Accounting for Derivative Investments and Hedging Activities" ("SFAS No. 133")
for its fiscal year ending December 31, 2000. SFAS No. 133 establishes a new
model for accounting for derivatives and hedging activities and supersedes and
amends a number of existing standards. The adoption of this pronouncement is
expected to have no impact on the Company's results of operations or financial
condition.
CONTRACTS
In May 1999, the Company terminated a Clinical Study Agreement with ClinTrials
Research, Inc. The parties are in the process of negotiating the amount of the
final payment due to ClinTrials Research under the agreement. The Company has
accrued its best estimate of the amount of such final payment at June 30, 1999
and does not believe that any payment required will have a material adverse
affect on its financial condition or results of operations.
CONTINGENCY
There are no legal proceedings pending against the Company. However, on October
3, 1997, Richard A. Wilson, Debra A. Angello, and Paul S. Angello ("Plaintiffs")
filed a complaint against Fujisawa, USA, Inc. ("Fujisawa") in the United States
7
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District Court, District of Oregon, alleging that Fujisawa's sale of Adenoscan
in the United States induces, or contributes to, the infringement of plaintiffs'
U.S. Patent No. 4,824,660 ("the `660 patent"), entitled "Method of Determining
the Viability of Tissue in an Organism" which the Patent Office issued on April
25, 1989. According to plaintiffs, the `660 patent claims a specific technique
for more reliably locating viable or nonviable regions of heart tissue, namely
using an adenosine triphosphate repleting agent such as ribose or adenosine as
an adjunct to radioactive isotope (e.g., thallium-201) myocardial perfusion
scintigraphy, where regions of heart tissue in which the scan images show no
radioactivity indicate the presence of nonviable heart tissue. In its Answer and
Counterclaim, Fujisawa denied that it infringed any of the claims of the `660
patent and alleged that the `660 patent was invalid. Fujisawa further alleged
that plaintiffs' claims of patent infringement were barred by the doctrines of
laches and estoppel. In its Counterclaim, Fujisawa requested a declaratory
judgment that it did not infringe the claims of the `660 patent and that such
patent is invalid.
An agreement in principle has been reached to end this litigation, which
agreement is subject to the approval of the Boards of Directors of Fujisawa and
the Company. Under the agreement in principle, the plaintiffs agreed to grant
Fujisawa a license under the `660 patent. The Company does not believe that
payment of its share of the fixed license fees payable over the remaining life
of the `660 patent by Fujisawa to the plaintiffs will have any material affect
on the Company's financial condition or results of operations. The license would
be royalty-free.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
- ---------------------
Second Quarter and Six Months of 1999 Compared to Second Quarter and Six Months
of 1998
Net Revenues. The Company's second quarter and first six months of 1999 royalty
revenues increased to $8.936 million and $16.502 million from $6.387 million and
$12.766 million, an increase of 40% and 29% respectively, due to continued
year-over-year increases in unit sales of Adenoscan by Fujisawa, the Company's
North American licensee. Substantially all of the royalty revenue of the Company
is generated by Fujisawa Healthcare, Inc. ("Fujisawa") from its sales of
Adenoscan and Adenocard in the United States and Canada.
Gross Margin. The Company's second quarter and first six months of 1999 gross
margin from adenosine revenues increased to $7.357 million and $13.594 million
from $5.468 million and $10.583 million, an increase of 35% and 28%
respectively, due to an increase in the Company's second quarter and first six
months of 1999 royalty revenues of 40% and 29% respectively. Royalty expense for
the second quarter and first six months from adenosine sales increased to $1.579
million and $2.908 million from $.919 million and $2.183 million, an increase of
72% and 33% respectively, primarily due to a 116% increase in second quarter
1999 net sales of Adenocard, a drug for which the Company pays a royalty of
12.5% of net sales to the University of Virginia Alumni Patents Foundation.
8
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Operating Expenses. The Company's second quarter and first six months of 1999
total operating expenses decreased to $3.147 million and $5.883 million from
$4.408 million and $6.761 million, a decrease of 29% and 13% respectively.
Research and development ("R&D") expenditures decreased to $2.344 million and
$4.352 million from $3.836 million and $5.564 million in 1998, a decrease of 39%
and 22%, due to a one-time charge of $2.361 million to R&D in the second quarter
of 1998 for the purchase of Fujisawa's commercialization rights and related
intellectual properties for the cardioprotection application of intravenous
adenosine offset by increased expenditures in 1999 related to the initiation of
AMISTAD II, a phase III study to further investigate the safety and efficacy of
PallacorTM, as well as, the initiation and completion of a phase I study of
MRE0470, a selective coronary vasodilator during myocardial perfusion imaging
procedures to diagnose coronary artery disease. General and administrative
expenditures for second quarter and the first six months of 1999 increased to
$.803 million and $1.531 million from $.572 million and $1.197 million, an
increase of 40% and 28%, due to a one-time North Carolina franchise tax benefit
included in second quarter 1998 of $100,000 and an increase in expenses in
second quarter 1999 related to the completion of a compensation study, increased
investor relations expenses and expenses related to the Company's move to new
office space.
Other Income. Interest income for the second quarter and first six months of
1999 increased 13% and 16% over the comparable periods in 1998 primarily due to
higher investment balances. Other income for second quarter, as well as the
first six months of 1999 decreased $4 million as a result of the Company's
receipt of a $4 million payment in second quarter 1998 from Fujisawa for the
assistance provided by the Company to Fujisawa in connection with the contract
manufacturing of Adenoscan and Adenocard by a third party and the transfer of
the Adenoscan and Adenocard NDAs to Fujisawa.
Provision For Income Taxes. The Company recognized tax expense at a rate of 34%
during the second quarter and first six months of 1999 versus 9% and 8% in the
second quarter and first six months of 1998 as a result of the Company fully
utilizing its income tax net operating loss carryforward in the fourth quarter
of 1998.
Earnings Per Share. In the second quarter and first six months of 1999, the
Company had net income of $3.293 million and $6.104 million or $0.31 and $0.57
diluted earnings per share compared to $5.222 million and $8.393 million or
$0.48 and $0.77 diluted earnings per share for the year earlier period. Weighted
average common shares and common share equivalents outstanding for second
quarter and the first six months of 1999 were 10.721 million and 10.749 million,
respectively, versus 10.965 million and 10.862 million for the comparable
periods of the prior year. This apparent decline in earnings is due to the
non-recurring increase in income in the second quarter of 1998 of $1.639 million
and the Company recognizing tax expense at a rate of 34% during the second
quarter and first six months of 1999 versus 9% and 8% in the second quarter and
first six months of 1998 as a result of the Company fully utilizing its income
tax net operating loss carryforward in the fourth quarter of 1998. On a pro
forma basis, excluding the non-recurring increase in income and assuming that
the Company had fully utilized its net operating loss carryforward prior to the
first quarter of 1998, diluted earnings per share for the second quarter and
first six months of 1998 would have been $0.25 and $0.46 respectively. Second
quarter and first six months earnings per share increased 24% compared to the
second quarter and first six months of 1998 on a pro forma basis.
9
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LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of June 30, 1999, the Company had total cash and investments of $53.043
million comprised of $3.434 million of cash and cash equivalents and $49.609
million of investments in U.S. Treasury Notes, debt securities of various
federal governmental agencies, and high quality corporate debt securities. The
Company's working capital as of June 30, 1999 was $26.824 million, compared to
$29.813 million as of December 31, 1998.
The Company will not generate revenues from its other products unless and until
it or its licensees receive marketing clearance from the FDA and appropriate
governmental agencies in other countries. The Company cannot predict the timing
of any potential marketing clearance nor can assurances be given that the FDA or
such agencies will approve any of the Company's products. For the near term the
Company expects to receive substantially all of its royalty revenues from sales
of its products in the U.S. by Fujisawa Healthcare, Inc.
IMPACT OF INFLATION
- -------------------
Although it is difficult to predict the impact of inflation on costs and
revenues of the Company in connection with the Company's products, the Company
does not anticipate that inflation will materially impact its costs of operation
or the profitability of its products when marketed.
IMPACT OF YEAR 2000
Readiness
- ---------
The Year 2000 ("Y2K") issue results from programmers using only two digits to
indicate the century, decade and year in date fields. This generally affects
older software and embedded systems of the Company and third parties with which
it does business, thereby threatening operations and the existence and validity
of data. The team that the Company assembled to address the Y2K issue brings to
bear knowledge from all areas of the Company and helps minimize the potential
impact to the Company.
The Company has categorized the Y2K issue into three parts: internal business
systems software; internal non-business software/embedded systems; and external
vendors. The Company's reliance on an outsourcing philosophy, which encourages
the use of partnering agreements with third parties to accomplish many business
functions, eases the Y2K issue as the Company does not have a large number of
internal business systems applications or embedded systems. However, given that
the Company receives substantially all of its royalty revenues from Fujisawa
Healthcare, Inc., the Y2K issue is still a threat and is being given full
attention by the Company, especially in assessing the Company's third party
relationships.
10
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Internal Business Systems
- -------------------------
The Company does not rely on custom developed solutions for its business
systems. The software that it uses is mass-produced and has been inventoried.
The providers have advised the Company that it has been made Y2K compliant
through normal manufacturer upgrades and updates to the software. Accordingly,
all software and hardware is either Y2K compliant or has been replaced in the
normal course of business.
Internal Non-Business Software/Embedded Systems
- -----------------------------------------------
All internal non-business software and embedded systems have been inventoried.
The providers have been queried regarding Y2K compliance. At this time all
software and systems are either Y2K compliant or have been replaced in the
normal course of business.
External Vendors
- ----------------
A database has been established to track progress the Company's vendors are
making in becoming Y2K compliant. The Company has closely monitored the progress
and potential impact of vendors that may fail to become Y2K compliant by
year-end 1999. The Company has submitted questionnaires to its licensees and
material vendors, including Fujisawa, relative to their Y2K compliance. To date,
Fujisawa represents that it has completed replacement of non-compliant web
server equipment and operating systems and installation of a compliant system
for trading with outside customers. Fujisawa has completed replacement of its
servers and upgrade of its operating systems including business system hardware
and software. Fujisawa expects to complete upgrade of its telephone switch by
October 31, 1999 and expects to continue testing its systems and developing
contingency plans in the upcoming months. The Company has completed
substantially all of its assessment of Y2K risks relative to its outside
vendors. Planning for contingencies relating to third party relationships has
been completed; however, depending on factors beyond the Company's control that
may affect the Y2K readiness of its vendors, additional planning may be
necessary.
Costs
- -----
The costs of addressing the Y2K issue are not expected to be material to the
operation of the Company. The costs of software and hardware inventories are
currently being absorbed in the normal course of business. The Company
anticipates incurring less than $2,000 for mailing and reviewing Y2K status
reports for external vendors. The costs anticipated by the Company to replace or
upgrade software or hardware are not being accelerated due to Y2K compliance.
These costs totaled approximately $26,000 at June 30, 1999.
Risks
- -----
At this stage of its assessment, the Company does not anticipate that Y2K issues
will materially impact any of its operations, including research and
development, manufacturing, supply and distribution and financial control. All
internal systems are expected to be operational at the Century Date Change
(CDC). However, due to the large number of the Company's vendors (including
utility companies and governmental bodies) and their reliance, in turn, on other
vendors (including hospitals and distributors), it is impossible for the impact
of the CDC to be fully known. The Company is unable to determine at this time
whether it will be materially impacted by unknown factors beyond the Company's
control affecting third parties or their vendors including royalties the Company
receives from Fujisawa Healthcare, Inc. The Company's Y2K plan is expected to
significantly reduce the Company's level of uncertainty about Y2K issues and, in
11
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particular, about Y2K compliance and readiness of its material vendors. The
Company believes that, with the completion of the plan as scheduled, the
possibility of significant interruptions of normal operations should be reduced.
Contingency Plans
- -----------------
Contingency plans have been put in place relative to the Company's material
vendors, banking operations and governmental bodies. Such plans may be updated
based on information received from vendors on their Y2K readiness. Other
contingency plans may be developed on a vendor-by-vendor basis if deemed
necessary following the Company's further assessment of (1) Y2K readiness of
other vendors and (2) the risk of business interruption to the Company. The
Company's contingency planning takes into account the fact that the Company's
agreements obligate Fujisawa to maintain six months of finished product and six
months of work-in-process inventories of Adenocard and Adenoscan based on orders
received. In addition, in the event Fujisawa cannot fulfill orders for such
drugs on a timely basis consistent with U.S. industry practice for any period in
excess of 30 calendar days, Fujisawa is obligated to pay royalties to the
Company during such "outage" periods based on the average daily net sales of the
drug during the prior twelve months, except if such outage results from force
majeure events.
Disclaimer
- ----------
The discussion of the Company's efforts and management's expectations relating
to the Year 2000 are forward-looking statements. The Company's ability to
achieve Y2K compliance, to verify external vendors' Y2K compliance, and the
costs associated with those activities are subject to change as the Company's
Y2K plan is implemented. Completion of the plan is dependent on the Company's
ability to discover and correct the potential Y2K sensitive problems which could
have a serious impact on operations and the ability of third party vendors to
bring their systems into Y2K compliance.
CAUTIONARY STATEMENT
- --------------------
The Company operates in a highly competitive environment that involves a number
of risks, some of which are beyond the Company's control. The following
statement highlights some of these risks.
Statements contained in Management's Discussion and Analysis of Financial
Conditions and Results of Operations which are not historical facts are or may
constitute forward looking statements under the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Although the Company believes
the expectations reflected in such forward looking statements are based on
reasonable assumptions, it can give no assurance that its expectations will be
attained. Forward looking statements involve known and unknown risks that could
cause the Company's actual results to differ materially from expected results.
Factors that could cause actual results to differ materially from the Company's
expectations include, among others, the high cost and uncertainty of the
research, clinical trials and other development activities involving
pharmaceutical products; the Company's ability to fund its activities internally
or through additional financing, if necessary; the unpredictability of the
duration and results of regulatory review of New Drug Applications and
Investigational New Drug Applications; the possible impairment of, or inability
12
<PAGE>
to obtain, intellectual property rights and the cost of obtaining such rights
from third parties; intense competition; the uncertainty of obtaining, and the
Company's dependence on, third parties to manufacture and sell its products;
results of pending or future litigation and other risk factors detailed from
time to time in the Company's Securities and Exchange Commission filings. The
Company does not undertake any obligation to release publicly any revisions to
these statements to reflect later events or circumstances or to reflect the
occurrence of unanticipated events.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
Incorporated herein by reference is the contingency described in the Notes to
the Financial Statements set forth in Item 1 of Part I of this Report, set forth
on pages 7 and 8 hereof.
Item 4. Submission of Matters to a Vote of Security Holders
a) May 26, 1999 Annual Meeting
b) Directors Elected - William M. Bartlett
Roger D. Blevins, Pharm.D.
Jay N. Cohn, M.D.
Mark B. Hirsch
Eugene L. Step
Richard C. Williams
c) Proposals voted upon:
(i) Election of Directors:
William M. Bartlett
For: 9,590,370
Abstain: 20,883
Roger D. Blevins, Pharm.D.
For: 9,590,370
Abstain: 20,883
Jay N. Cohn, M.D.
For: 9,590,370
Abstain: 20,883
13
<PAGE>
Mark B. Hirsch
For: 9,590,370
Abstain: 20,883
Eugene L. Step
For: 9,590,370
Abstain: 20,883
Richard C. Williams
For: 9,590,370
Abstain: 20,883
(ii) Ratification of PriceWaterhouseCoopers LLP as independent
accountants:
For: 9,584,603
Against: 7,452
Abstain: 19,198
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
None.
b. Reports on Form 8-K:
None.
14
<PAGE>
SIGNATURES
Pursuant to 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.
MEDCO RESEARCH, INC.
Date: August 13, 1999 By: /s/ Glenn C. Andrews
- --------------------- --------------------
Glenn C. Andrews
Executive Vice President
Finance and Administration
Chief Financial Officer and Treasurer
Date: August 13, 1999 By: /s/ Adam C. Derbyshire
- --------------------- ----------------------
Adam C. Derbyshire
Corporate Controller and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,434
<SECURITIES> 18,555
<RECEIVABLES> 11,214
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33,203
<PP&E> 1,207
<DEPRECIATION> 553
<TOTAL-ASSETS> 67,461
<CURRENT-LIABILITIES> 6,379
<BONDS> 0
0
0
<COMMON> 55,131
<OTHER-SE> 5,901
<TOTAL-LIABILITY-AND-EQUITY> 67,461
<SALES> 0
<TOTAL-REVENUES> 17,973
<CGS> 0
<TOTAL-COSTS> 8,791
<OTHER-EXPENSES> 8,791
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,182
<INCOME-TAX> 3,078
<INCOME-CONTINUING> 6,104
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 6,104
<EPS-BASIC> 0.59
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</TABLE>
