Page 5 of 22
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant To Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For quarter ended Commission file number 1-8593
September 30, 1995
ALPHARMA INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2095212
(State of Incorporation) (I.R.S. Employer Identification No.)
One Executive Drive, Fort Lee, New Jersey 07024
(Address of principal executive offices) zip code
(201) 947-7774
(Registrant's Telephone Number Including Area Code)
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 requirements
for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock as of November 1, 1995:
Class A Common Stock, $.20 par value -- 13,424,119 shares;
Class B Common Stock, $.20 par value -- 8,226,562 shares.
ALPHARMA INC.
INDEX
______________
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheet as of
September 30, 1995 and December 31, 1994 3
Consolidated Statement of Income for the
Three and Nine Months Ended September 30, 1995
and 1994 4
Consolidated Condensed Statement of Cash
Flows for the Nine Months Ended September 30,
1995 and 1994 5
Notes to Consolidated Condensed Financial
Statements 6-9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 11-18
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 19
Signatures 20
Exhibit 11 - Computation of Earnings
per Common Share 21-22
ALPHARMA INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands of dollars)
September 30,
1995 December 31,
(Unaudited) 1994
ASSETS
Current assets:
Cash and cash equivalents $ 8,673 $ 15,512
Accounts receivable, net 121,364 119,084
Inventories 113,226 106,297
Other 11,193 9,606
Total current assets 254,456 250,499
Property, plant and equipment, net 209,669 202,903
Intangible assets 127,570 128,758
Other assets and deferred charges 11,335 10,158
Total assets $603,030 $592,318
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,593 $ 13,288
Short-term debt 58,264 61,196
Accounts payable and accrued liabilities 73,014 77,804
Accrued and deferred income taxes 7,747 2,362
Total current liabilities 144,618 154,650
Long-term debt 219,638 220,036
Deferred income taxes 28,249 27,528
Other non-current liabilities 9,691 8,816
Stockholders' equity:
Class A Common Stock 2,736 2,724
Class B Common Stock 1,646 1,646
Additional paid-in-capital 119,832 118,833
Foreign currency translation
adjustment 16,635 8,125
Retained earnings 65,690 55,482
Treasury stock, at cost (5,705) (5,522)
Total stockholders' equity 200,834 181,288
Total liabilities and
stockholders' equity $603,030 $592,318
The accompanying notes are an integral part
of the consolidated condensed financial statements.
ALPHARMA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Total revenue $132,375 $117,438 $382,272 $335,776
Cost of sales 80,252 69,177 225,056 196,781
Gross profit 52,123 48,261 157,216 138,995
Selling, general and
administrative expenses 37,061 38,351 118,931 112,182
Operating income 15,062 9,910 38,285 26,813
Interest expense (5,605) (3,739) (16,864) (10,587)
Other income (expense),
net 366 316 (215) 494
Income before provision
for income taxes 9,823 6,487 21,206 16,720
Provision for income taxes 3,654 2,482 8,058 6,357
Net income $ 6,169 $ 4,005 $ 13,148 $ 10,363
Average common shares
outstanding:
Primary 21,640 21,576 21,624 21,562
Fully diluted 22,012 21,633 21,996 21,619
Earnings per common share:
Primary $ .29 $ .19 $ .61 $ .48
Fully diluted $ .28 $ .19 $ .60 $ .48
Dividends per common share $ .045 $ .045 $ .135 $ .135
The accompanying notes are an integral part
of the consolidated condensed financial statements.
ALPHARMA INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
Nine Months Ended
September 30,
1995 1994
Operating Activities:
Net income $ 13,148 $ 10,363
Adjustments to reconcile net
income to net cash provided
by operating activities, principally
depreciation and amortization 24,662 21,137
Changes in assets and liabilities,
net of effects from business
acquisition:
Decrease in accounts receivable 1,891 320
(Increase) in inventory (3,161) (12,885)
Increase/(Decrease) in accounts
payable and accrued expenses (7,781) 6,632
Other 2,546 (346)
Net cash provided by
operating activities 31,305 25,221
Investing Activities:
Capital expenditures, net (17,298) (33,395)
Purchase of business and intangibles,
net of cash acquired (3,000) (7,599)
Unexpended industrial revenue bond proceeds (2,834)
Net cash used in investing
activities (20,298) (43,828)
Financing Activities:
Dividends paid (2,940) (2,916)
Net borrowings under lines of credit (4,951) 22,665
Proceeds from long-term debt 8,700
Reduction of long-term debt (12,247) (16,004)
Cash transfers between A.L. Oslo and
A.L. Industrier 4,991
Other, net 1,696 (1,117)
Net cash used by
financing activities (18,442) 16,319
Exchange Rate Changes:
Effect of exchange rate changes
on cash 1,328 1,238
Income tax effect of exchange rate
changes on intercompany advances
(732) (809)
Net cash flows from exchange
rate changes 596 429
Decrease in Cash (6,839) (1,859)
Cash and cash equivalents at
beginning of year 15,512 11,647
Cash and cash equivalents at
end of period $ 8,673 $ 9,788
The accompanying notes are an integral part of the consolidated condensed
financial statements.
1. General
The accompanying consolidated condensed financial statements include
all adjustments (consisting only of normal recurring accruals) which are,
in the opinion of management, considered necessary for a fair present
ation of the results for the periods presented. These financial
statements should be read in conjunction with the consolidated financial
statements of ALPHARMA INC. and Subsidiaries (formerly A.L. Pharma
Inc.) included in the Company's 1994 Annual Report on Form 10-K. The reported
results for the nine month period ended September 30, 1995 are not
necessarily indicative of the results to be expected for the full year.
2. Acquisition of A.L. Oslo and Restatement
As reported in the Company's 1994 Form 10-K, on October 3,
1994 the Company completed the acquisition of the Related
Norwegian Human Pharmaceutical and Animal Health Businesses
("A.L. Oslo") of its controlling shareholder, A.L. Industrier AS.
The Company was required to account for the acquisition of
A.L. Oslo as a transfer and exchange between companies under
common control. Accordingly, the accounts of A.L. Oslo were
combined with the Company at historical cost in a manner similar
to a pooling-of-interests and the Company's financial statements
for all periods prior to December 31, 1994 were restated to
include A.L. Oslo.
The results of operations as reported in the Company's Form
10-Q for the quarter and nine months ended September 30, 1994
were restated as follows:
Three Months Nine Months
Ended Ended
Total revenue
September 30, 1994 Form 10-Q $101,180 $286,550
A.L. Oslo 19,476 61,170
Eliminations (a) (3,218) (11,944)
Restated September 30, 1994$117,438 $335,776
Net income
September 30, 1994 Form 10-Q $3,241 $8,068
A.L. Oslo 658 2,437
Eliminations (a) 106 (142)
Restated September 30, 1994 $4,005 $10,363
(a)Prior to the combination there were transactions
between the Company and A.L. Oslo such as sales,
commissions and license fees. As a result of the
combination such transactions became intercompany
and have been eliminated.
3. Business and Product Acquisition:
In July 1994, the Company acquired the Wade Jones Company
Inc. ("Wade Jones") headquartered in Lowell, Arkansas. Wade
Jones is a major distributor of poultry animal health products
and also manufactures and blends certain animal health products.
Had the acquisition of Wade Jones occurred as of January 1,
1994 pro forma revenues would have been approximately $348,000
for the nine month period ended September 30, 1994. There would
have been no material effect on net income or earnings per share.
The foregoing pro forma information is presented in response
to applicable accounting rules relating to business acquisitions
and is not necessarily indicative of results of operations that
would have been reported had the acquisition been completed at
the beginning of 1994.
In August 1995, the Company acquired a company whose
principal asset was a New Animal Drug Application for a feed
additive used in the treatment and prevention of respiratory
diseases in swine. The acquisition will be accounted for in
accordance with the purchase method. The cost was $3,000.
4. Post Combination Management Actions 1994 and 1995
In December 1994, the Company announced a number of
management actions which included staff reductions, and certain
product line and facilities rationalizations as a first step
toward realizing combination synergies and maximizing the overall
position of the newly combined Company. As a part of the
December 1994 management actions, the Company committed to
discontinuing research and development related to colonic
delivery of drugs and disposing of the resultant equity position
and certain other rights in the R & D company performing the
research.
In September 1995, the Company announced additional
management actions which continue the process begun in December
1994. The actions announced in September 1995 will span both the
third and fourth quarters of 1995 and include elimination of up
to 130 positions company-wide, further efforts toward
consolidation of operations in the Company's U.S. Pharmaceuticals
Division, the utilization of substantial consulting resources
focused primarily on accelerating the realization of certain
combination benefits in the International Pharmaceuticals
Division and the sale in September of its minority equity
position and certain other rights in the R & D company.
The net effect of the additional management actions for the
three and nine months ended September 30, 1995 was a net
reduction of selling, general and administrative expenses of
$2,829 resulting from the income received on the sale of the
equity position in the R & D company and certain other product
rights ($6,463) net of expenses for the other management actions
($3,634). The expenses of the other management actions were
$2,831 for consulting services and $803 for severance for 67
employees in the IPD and USPD.
5. Inventories
Inventories consist of the following:
September 30, December 31,
1995 1994
Finished product $62,293 $60,443
Work-in-process 17,149 14,075
Raw materials 33,784 31,779
$113,226 $106,297
6. Supplemental Cash Flow Information:
September 30, September 30,
1995 1994
Cash paid for interest $14,965 $6,310
Cash paid for taxes $4,351 $4,949
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - Nine Months Ended September 30, 1995
Total revenue increased $46.5 million (13.8%) in the nine
months ended September 30, 1995 compared to 1994. Operating
income in 1995 was $38.3 million, an increase of $11.5 million,
compared to 1994. Net income was $13.1 million ($.60 per share
fully diluted) compared to $10.4 million ($.48 per share fully
diluted) in 1994. Net income in 1995 includes income of
approximately $1.8 million ($.08 per share) related to post-
combination management actions. (Described in a separate section
of this report.) The Company operates in two business segments,
Human Pharmaceuticals and Animal Health.
The Human Pharmaceuticals Segment ("HPS") accounted for more
than half of the consolidated revenue increase. The
International Pharmaceuticals Division ("IPD") accounted for the
major portion of the HPS revenue increase. IPD revenues
increased due to volume growth in Northern Europe and Indonesia,
the translation of sales in Norwegian Kroner ("NOK") and Danish
Kroner ("DKK") into the U.S. Dollar and, to a lesser extent,
selected price increases where permitted. Current pricing in a
number of European markets continues to be suppressed by
legislation enacted to contain pharmaceutical costs. Sales by the
Fine Chemicals Division ("FCD") of bulk antibiotics were
approximately the same as in 1994 in local currencies but
increased when translated into U.S. Dollars.
Revenues increased in the U.S. Pharmaceuticals Division
("USPD") due to volume increases in the third quarter, some price
increases achieved on certain products and sales of products
introduced in late 1994 including Cimetidine HCL Solution,
Clobetasol Cream and Ointment, Clemastine Fumerate Syrup and
Miconazole Vaginal Suppositories. The revenue increases were
substantially offset by a decline in the volume in the first half
of 1995 of cough and cold products due to an unusually mild flu
season, as well as the discontinuance of products containing
iodinated glycerol in July of 1994.
Animal Health Segment revenues increased primarily due to
the acquisition of the Wade Jones Company, Inc. in July 1994. In
addition, revenue increases were recorded due to sales of
products made pursuant to a poultry products distribution
agreement signed in July 1994 with Merck AgVet. Offsetting the
increases, sales volume of BMDr to the swine market was
negatively impacted by adverse economic conditions experienced by
pork producers. The Aquatic Animal Health Division's sales of
fish vaccines were lower than 1994 due to changes in the timing
of vaccination practices by fish producers and increased
competition in the Norwegian salmon farming market.
On a consolidated basis gross profit increased $18.2 million
and the gross margin percent decreased marginally to 41.1% in
1995 compared to 41.4% in 1994.
Gross profit dollars in the HPS accounted for a substantial
amount of the dollar increase due to increased sales volume
(especially by the IPD), the effect of translation of gross
profits in DKK and NOK into U.S. Dollars for both IPD and to a
lesser extent, FCD, and selected price increases. Gross profit in
dollars for USPD increased primarily due to new products and
selected price increases partially offset by the elimination of
sales of high margin iodinated glycerol products. As a result
gross profit percentages remained approximately the same in
percent. USPD continues to be affected by positive factors
including higher value-added new products and raw material price
stability which are offset by negative factors including
continued high production and operating costs to maintain
compliance with "Current Good Manufacturing Practices" ("CGMP")
and lower than budgeted volume in certain plants in part due to a
mild flu season which results in unabsorbed overhead.
Gross profit dollars in the Animal Health Segment increased
at a rate less than the sales increase. The gross profit percent
declined due to sales increases attributable to the Wade Jones
Company, Inc., a distributor to the poultry market, and sales
made pursuant to a poultry product distribution agreement with
Merck AgVet. The composition of Animal Health Division sales has
changed with the addition of these two distribution businesses
which have lower gross margins. In addition, gross profits were
negatively affected due to lower volume of high gross margin fish
vaccine sales.
Operating expenses on a consolidated basis increased $6.7
million or 6.0% compared to the 13.8% revenue increase.
Operating expenses in 1995 include a $2.8 million benefit
resulting from post-combination management actions announced in
September 1995. (Described in a separate section of this
report.) Without the benefit of the post combination management
actions, operating expenses would have increased by $9.5 million
or 8.5%. Operating expenses increased due to variable selling
expense increases, additional research and development expenses,
the acquisition of the Wade Jones Company, Inc. in July 1994 and
the effect of translating NOK and DKK expenses into U.S. Dollars.
In addition, the first nine months of 1994 included $.5 million
of expenses related to the combination with A.L. Oslo which was
consummated in October 1994.
Operating income increased $11.5 million primarily as a
result of increased sales volume, the positive effect of the post
combination management actions recorded in the third quarter and
net price increases. Operating income as a percentage of sales
increased to 10.0% from 8.0% due to lower operating expenses as a
percent of sales and the positive effect of the post-combination
management actions.
Results of Operations - Three Months Ended September 30, 1995
Total revenue increased $14.9 million (12.7%) in the three
months ended September 30, 1995 compared to 1994. Operating
income in 1995 was $15.1 million, an increase of $5.2 million,
compared to 1994. Net income was $6.2 million ($.28 per share
fully diluted) compared to $4.0 million ($.19 per share fully
diluted) in 1994. Net income in 1995 includes income of
approximately $1.8 million ($.08 per share) related to post-
combination management actions. (Described in a separate section
of this report.)
The HPS accounted for more than half of the consolidated
revenue increase. The IPD and FCD accounted for over fifty
percent of the HPS revenue increase. IPD revenues increased due
to volume growth in Northern Europe and Indonesia. Sales by the
FCD of bulk antibiotics increased due to higher volumes for
Polymyxin and Amphotericin B. Both IPD and FCD sales increased
due to the translation of sales in NOK and DKK into U.S. Dollars.
Revenues in the USPD increased due to an increase in volume
of a number of products including cough and cold products which
in the first half of 1995 were lower than the prior year.
Offsetting the volume increases relative to 1994 was the
elimination of sales of products containing iodinated glycerol
which were discontinued in July 1994. Due to competitive and
industry conditions net prices of certain products were reduced
in the third quarter which offset a portion of the positive
effect of price increases implemented earlier in 1995.
The Animal Health Segment accounted for less than half of
the consolidated revenue increase. The Animal Health Division
Revenue increases were primarily due to increased volume of BMD
sold to the poultry market offset to some degree by lower BMD
sales to the swine market. The Aquatic Animal Health Division's
sales of fish vaccines were higher than in 1994 due to changes in
the timing of vaccination practices by fish producers.
On a consolidated basis gross profit increased $3.9 million
and the gross margin percent declined to 39.4% in 1995 compared
to 41.1% in 1994.
The gross profit percent decline is primarily attributable
to the USPD and the nature of the US generic pharmaceutical
industry. USPD gross profits in dollars and percent declined due
to the elimination of sales of high margin iodinated glycerol
products and the substitution of products which carry lower
margins including certain cough and cold products. Sales of
products introduced in 1994 and 1995 in the third quarter of 1995
were approximately the same as the prior period (which included
the introduction of 1994 new products). Because of the
competitive nature of the generic industry net prices (i.e.
prices less promotional adjustments) trend lower as more
producers enter the market and as more products are sold under
contract. Additionally third quarter operations relative to 1994
were less efficient and generated higher variances and other
costs. Gross profit dollars for the IPD and the FCD increased at
a rate commensurate with sales and margins remained constant.
Gross profit dollars and percentage in the Animal Health
Segment increased relative to 1994. Both periods include
operations related to the Wade Jones Company and the distribution
agreement with Merck AgVet which carry lower margins and have
previous to this quarter resulted in lower aggregate margin
percentages on a comparative basis. Higher BMD sales in 1995
increased the margin on a comparative basis. In addition, gross
profits were positively affected due to increased volume of high
gross margin fish vaccine sales.
Operating expenses on a consolidated basis decreased $1.3
million compared to a 12.7% revenue increase. Operating expenses
in 1995 include a $2.8 million benefit resulting from post-
combination management actions announced in September 1995.
(Described in a separate section of this report.) Without the
benefit of the post combination management actions, operating
expenses would have increased by $1.5 million or 4.0%. Operating
expenses increased due to additional research and development
expenses, the acquisition of the Wade Jones Company, Inc. in July
1994 and the effect of translating NOK and DKK expenses into U.S.
Dollars.
Operating income increased $5.2 million primarily as a
result of the positive effect of the post combination management
actions recorded in the third quarter and increased sales volume.
Operating income as a percentage of sales increased to 11.4% from
8.4% due to lower operating expenses as a percent of sales and
the positive effect of the post-combination management actions.
Interest Expense and Other, Net
Interest expense increased $6.3 million and $1.9 million for
the nine and three month periods ended September 30, 1995,
respectively, due to increased debt levels resulting from the
acquisition of A.L. Oslo in October 1994, increased capital
expenditures in 1994, the acquisition of the Wade Jones Company,
Inc. in July 1994, and increased working capital requirements to
support sales increases. Additionally, interest rates have
generally increased relative to 1994. Comparability is also
affected in that the Company restated the 1994 financials to
reflect the acquisition of A.L. Oslo in a manner similar to a
pooling of interests. The restated nine months and three months
ended September 30, 1994 do not include interest expense on
either the cash consideration or actual transaction costs which
would have been incurred had the acquisition taken place in prior
periods. The Company estimates that interest expense calculated
on a comparable basis in 1994 would have been approximately $1.6
million and $.5 million higher for the nine and three month
periods, respectively.
Other income (expense), net for the nine month period ended
September 30, 1995 includes net foreign exchange transaction
losses of approximately $.8 million resulting from the
translation of non-functional currency receivables net of non-
functional currency payables and forward foreign exchange
contracts. The losses were primarily recorded by the Company's
subsidiaries in Norway and Denmark in the first quarter of 1995
and primarily relate to sales denominated in currencies (i.e.
U.S. Dollar, Swedish Kroner, British Pound and Portuguese Escudo)
which depreciated significantly in the first quarter compared to
the NOK and DKK.
Post Combination Management Actions in 1994 and 1995
In December 1994, the Company announced a number of
management actions which included staff reductions, and certain
product line and facilities rationalizations as a first step
toward realizing combination synergies and maximizing the overall
position of the newly combined Company. As a part of the
December 1994 management actions, the company discontinued
funding research projects relating to the colonic delivery of
drugs and committed to disposing of the resultant equity interest
in the R & D company performing the research.
In September 1995, the Company announced additional
management actions which continue the process begun in December
1994. The actions announced in September 1995 will span both the
third and fourth quarters of 1995 and include elimination of up
to 130 positions company-wide, further efforts toward
consolidation of operations in the Company's U.S. Pharmaceuticals
Division, the utilization of substantial consulting resources
focused primarily on accelerating the realization of certain
combination benefits in the International Pharmaceuticals
Division and the sale in September of its minority equity
position and certain other rights in the R & D company.
The net effect of the additional management actions for the
third quarter and nine months ended September 30, 1995 was a net
benefit to pre-tax income of approximately $ 2.8 million
resulting from the income received on the sale of the equity
position in the R & D Company and certain other product rights
($6.5 million) net of expenses for the other management actions
($3.7 million). The expenses of the other management actions
were $2.9 million for consulting services, and $ .8 million for
severance for 67 employees in the IPD and USPD. The net effect
on net income of the additional management actions was
approximately $1.8 million ($.08 per share fully diluted).
In addition, announced management actions related to the
USPD include a plan to transfer all suppository and cream and
ointment production from two present locations to the Lincolnton,
N.C. location. The transfer of prescription products requires
the Company to obtain the approval of the FDA for each product
transferred. The entire process is expected to take from 18 to
24 months. The process however, may take longer due to the
required FDA approval. The Company cannot predict with certainty
FDA timing or approval. Because of the time necessary to achieve
the transfer the Company has instituted a retention program which
assures each employee a retention payment if the employee remains
employed until terminated by the Company. If the employee leaves
of their own accord no payment is made. The Company will accrue
the estimated retention payment over the period which employees
are expected to be employed. If all affected employees stay
until termination the company estimates the retention payments
will total approximately $2.0 million.
As part of the post-combination management actions in 1994
the Company provided for the exiting of the U.S. tablet business
by the most probable exit plan (i.e. sale). However, if such
exit by sale should fail to be consummated, an adjustment for
additional future costs (including severance for tablet business
employees) could be required.
The December 1994 post-combination management actions
included severing certain employees. As a result of the personnel
actions, the Company believes that approximately $ 3.6 million of
annual payroll and payroll related costs have been eliminated.
In the nine months ended September 30, 1995 the Company estimates
approximately three quarters of the annual cost savings were
achieved.
The additional management actions initiated in the third
quarter of 1995 include consulting expenses and severance of
certain employees. In the fourth quarter of 1995 these actions
will continue and the Company expects to incur additional
consulting and severance costs. The Company believes that by
year-end the net effect of the 1995 management actions will not
be material to the full year results.
The Company is continuing to study other opportunities to
rationalize personnel functions and operations, both selectively
and on a location basis, and accordingly, similar management
actions may be initiated in the future.
Governmental Actions Affecting the Company
The Company's operations in all countries are subject to
comprehensive government regulation which includes inspection of
and controls over manufacturing and quality control practices and
procedures, requires approvals to market products, and can result
in the recall of products and suspension of production. In the
United States the Food and Drug Administration (FDA) has imposed
more stringent regulatory requirements on the pharmaceutical
industry in recent years.
The U.S. manufacturing companies included in the Company's
U.S. Pharmaceuticals Division, Barre National, Inc. ("Barre"),
NMC Laboratories, Inc. ("NMC"), and Able Laboratories, Inc.
("Able"), are affected by the more demanding regulatory
environment in that they are required to comply with the FDA's
interpretation of Current Good Manufacturing Practices ("CGMP").
In this regard, Barre and Able are parties to separate consent
decrees with the FDA which define the specific standards they
must achieve in meeting CGMP.
Regulatory compliance has continued to affect costs
directly, by requiring the addition of personnel, programs and
capital, and indirectly, by adding activities without directly
increasing efficiency. The costs (both direct and indirect) of
actions taken with regard to regulatory compliance (which have
increased in recent years) may continue to increase in the
future.
In July 1994, the Company ceased the manufacture and
marketing of products which contain iodinated glycerol. The
cessation was the result of an industry wide prohibition on the
continued sale of such products by the FDA.
Iodinated glycerol products represented approximately 2% of
the Company's full year 1994 sales and the loss of sales of these
products in 1995 has negatively impacted the Company's
operations.
The Company and its subsidiaries have filed applications to
market products with regulatory agencies both in the U.S. and
internationally. The timing of receipt of approvals of these
applications can significantly increase future revenues and
income. The Company cannot control or predict with accuracy
whether such applications will be approved or the timing of their
approval.
European Operations
The fluctuations of European currencies have and will
continue to impact the Company's European operations which
comprised approximately 35% of revenues in the year ended
December 31, 1994. In addition, many European governments have
enacted or are in the process of enacting mechanisms aimed at
lowering the cost of pharmaceuticals. Currency fluctuations and
governmental actions to reduce or not allow increases of prices
have affected revenue. The Company cannot predict future
currency fluctuations or future governmental pricing actions or
their impact on the Company's results.
Financial Condition
Working capital at September 30, 1995 was $109.8 million
compared to $95.8 million at December 31, 1994. The current
ratio was 1.76 to 1 at September 30, 1995 compared to 1.62 to 1
at year end. Long-term debt to stockholders' equity was 1.09:1
at September 30, 1995 compared to 1.21:1 at December 31, 1994.
All balance sheet captions increased as of September 30,
1995 compared to December 31, 1994 in U.S. Dollars as the
functional currencies of the Company's principal foreign
subsidiaries, the NOK and DKK, appreciated versus the U.S. Dollar
in the nine months of 1995 by approximately 8% and 9%,
respectively. The increases do impact to some degree the above
mentioned ratios. The approximate increase due to currency
translation of selected captions was: accounts receivable $4.1
million, inventories $4.2 million, accounts payable and accrued
expenses $3.0 million, and total stockholders' equity $8.5
million.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Computation of Earnings per Common Share for the
three and nine months ended September 30, 1995 and
1994.
(b) Reports on Form 8-K -- A report on Form 8-K was filed on
October 16, 1995 relating to the listing of warrants for
trading on the New York Stock Exchange.
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.
ALPHARMA INC.
(Registrant)
Date: November 10, 1995 /s/ Jeffrey E. Smith
Jeffrey E. Smith
Vice President, Finance and
Chief Financial Officer
Exhibit 11
ALPHARMA INC.
Computation of Earnings per Common Share
Primary and Fully Diluted
(Dollars in thousands, except for per share data)
Three Months Ended
September 30,
1995 1994
Computation for Statement of Income
Primary earnings per share:
Net income $ 6,169 $ 4,005
========== ==========
Average common shares outstanding 21,640,000 21,576,000
========== ==========
Earnings per common share - Primary $0.29 $0.19
========== ==========
Fully diluted earnings per share:
Net income $ 6,169 $ 4,005
========== ==========
Average common shares outstanding 21,640,000 21,576,000
Additions:
Dilutive effect of outstanding warrants
determined by treasury stock method 213,000
Dilutive effect of outstanding options
determined by treasury stock method 159,315 56,830
22,012,315 21,632,830
========== ==========
Earnings per common share - Fully diluted $0.28 $0.19
========== ==========
Exhibit 11
ALPHARMA INC.
Computation of Earnings per Common Share
Primary and Fully Diluted
(Dollars in thousands, except for per share data)
Nine Months Ended
September 30,
1995 1994
Computation for Statement of Income
Primary earnings per share:
Net income $ 13,148 $ 10,363
========== ==========
Average common shares outstanding 21,624,000 21,562,000
========== ==========
Earnings per common share - Primary $0.61 $0.48
========== ==========
Fully diluted earnings per share:
Net income $ 13,148 $ 10,363
========== ==========
Average common shares outstanding 21,624,000 21,562,000
Additions:
Dilutive effective of outstanding warrants
determined by treasury stock method 213,000
Dilutive effect of outstanding options
determined by treasury stock method 159,315 56,830
21,996,315 21,618,830
========== ==========
Earnings per common share - Fully diluted $0.60 $0.48
========== ==========
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