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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 April 30, 1997
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: 0-13649
COOPER LIFE SCIENCES, INC.
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2563513
- ------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160 Broadway, New York, New York 10038
- --------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 791-5362
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___
As of June 12, 1997, there were 2,141,777 outstanding shares of the
issuer's Common Stock, $.10 par value.
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
INDEX
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
April 30, 1997 and October 31, 1996 3
Consolidated Statements of Operations
For The Three and Six Months Ended
April 30, 1997 and 1996 4
Condensed Statements of Consolidated
Cash Flows For The Six Months Ended
April 30, 1997 and 1996 5
Notes to Consolidated Condensed
Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote
of Security Holders 8
Item 6. Exhibits and Reports on Form 8-K 8
Signature 9
Index of Exhibits
2
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
April 30, October 31,
1997 1996
-------- ----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 8,001 $ 471
Marketable Securities:
The Cooper Companies, Inc. common stock 25,874 30,583
Executone Information Systems, Inc. common stock 2,479 2,989
Note receivable 5,000 --
Prepaid expenses and other 53 95
--------- ----------
$ 41,407 $ 34,138
--------- ----------
--------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 917 961
--------- ----------
917 961
Stockholders' Equity
Preferred stock - $.10 par value:
6,000,000 shares authorized: none issued -- --
Common stock - $.10 par value:
Authorized -- 6,000,000 shares
Issued -- 2,566,095 shares 256 256
Outstanding --
April 30, 1997, 2,141,777 shares
October 31, 1996, 2,172,695 shares
Additional paid-in capital 78,546 78,538
Unrealized gain on marketable securities 21,385 20,230
Accumulated deficit (56,774) (63,369)
Less: Common stock in treasury - at cost;
April 30, 1997, 422,318 shares
October 31, 1996, 393,400 shares (2,407) (1,962)
Minimum pension liability adjustment (516) (516)
------ -------
Total Stockholders' Equity 40,490 33,177
------ -------
$ 41,407 $ 34,138
--------- ----------
--------- ----------
</TABLE>
See Notes to Consolidated Condensed Financial Statements
3
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Figures)
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
April 30, April 30,
------------------- -------------------
1997 1996 1997 1996
----- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Gain on marketable securities $ 4,791 $ -- $ 6,748 $ --
Interest and other income 220 1 290 4
------- ------- ------- -------
5,011 1 7,038 4
------- ------- ------- -------
Expenses
General and administrative 295 222 443 358
Interest -- 40 -- 80
------- ------- ------- ------
Total Expenses 295 262 443 438
------- ------- ------- ------
Income (loss) from operations before
provision for income taxes 4,716 (261) 6,595 (434)
Provision for income taxes -- -- -- --
------- ------- ------- -------
Net income (loss) $ 4,716 $ (261) $ 6,595 $ (434)
------- ------- ------- -------
------- ------- ------- -------
Net income (loss) per share $ 2.11 $ (.12) $ 2.94 $ (.20)
------- ------- ------- -------
------- ------- ------- -------
Average number of shares outstanding 2,234 2,138 2,246 2,125
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See Notes to Consolidated Condensed Financial Statements
4
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
April 30,
----------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 6,595 $ (434)
Adjustments to reconcile net income (loss) to net
cash (used in) operating activities:
Gain on sale of marketable securities (6,748) --
Depreciation and amortization 1 7
Non cash compensation charges
78 32
Changes in assets and liabilities:
Decrease in prepaid expenses and other 41 31
Decrease in accounts payable and
other accrued liabilities (44) (20)
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Net cash used in operating activities (77) (384)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of The Cooper
Companies, Inc. common stock 13,122 --
Note receivable from The Cooper Companies, Inc. (5,000) --
Investment in Unistar Gaming Corp. -- (200)
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Net cash provided by (used in) investing activities 8,122 (200)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Acquisition of treasury stock (518) --
Proceeds from bank borrowing -- 200
Proceeds from exercise of common stock options 3 --
Proceeds from exercise of common stock warrants -- 268
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Net cash (used in) provided by financing activities (515) 468
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Net increase (decrease) in cash and cash equivalents 7,530 (116)
Cash and cash equivalents - Beginning of period 471 341
------- -------
Cash and cash equivalents - End of period $ 8,001 $ 225
------- -------
------- -------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash used to pay interest $ -- $ 80
Cash used to pay taxes $ -- $ --
</TABLE>
See Notes to Consolidated Condensed Financial Statements
5
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
April 30, 1997 and 1996
NOTE 1. - General
Cooper Life Sciences, Inc. (the "Company") is not presently engaged in
any business operations and is currently investigating new business
opportunities.
During interim periods, the Company follows the accounting policies set
forth in its Annual Report on Form 10-K filed with the Securities and Exchange
Commission. Readers are encouraged to refer to the Company's Form 10-K for the
fiscal year ended October 31, 1996 when reviewing this Form 10-Q.
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of normal
recurring adjustments) considered necessary to present fairly the Company's
consolidated financial position as of April 30, 1997 and October 31, 1996 and
the consolidated results of its operations for the three and six month periods
ended April 30, 1997 and 1996, and its consolidated cash flows for the six month
periods ended April 30, 1997 and 1996.
NOTE 2. - Marketable Securities
The Cooper Companies, Inc.
At April 30, 1997 and October 31, 1996, the Company owned 1,447,533
shares and 2,127,533 shares, respectively, of the common stock of The Cooper
Companies, Inc. (the "TCC Common Stock"), a Delaware corporation ("TCC"), the
common stock of which is traded on the New York Stock Exchange. The Company has
been selling shares of TCC Common Stock in open market transactions; and subject
to prevailing market conditions, it is the Company's intention to continue to do
so.
Executone Information Systems, Inc.
On December 19, 1995, as a result of a merger transaction, the Company
exchanged its equity interest in a development stage company named Unistar
Gaming Corp. for Common and Preferred Stock of Executone Information Systems,
Inc. (the "Executone Common Stock" and the "Executone Preferred Stock"), a
Virginia corporation ("Executone"), the common stock of which trades on the
NASDAQ National Market System.
NOTE 3. - Notes Receivable
In April 1997, TCC borrowed a total of $5,000,000 from the Company
pursuant to the terms of a Term Note in the principal amount of $2,320,000 and a
Term Note in the principal amount of $2,680,000, collectively (the "Term
Notes"). The Term Notes bear interest at the prime rate as quoted by The Chase
Manhattan Bank (currently 8.5%) which is payable monthly. The Term Notes,
including principal and accrued and unpaid interest, are due and payable on or
before January 12, 1998.
NOTE 4. - New Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share, which
is effective for financial statements for both interim and annual periods ending
after December 15, 1997. Early adoption of the new standard is not permitted.
The new standard eliminates primary and fully diluted earnings per share and
requires presentation of basic and diluted earnings per share together with
disclosure of how the per share amounts were computed. The pro forma effect on
the Company of adopting the new standard would be basic earnings per share of
$2.19 and $3.06, and diluted earnings per share of $2.11 and $2.94, for the
quarter and six months ended April 30, 1997, respectively.
6
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
References to Notes herein are references to the "Notes to Consolidated
Financial Statements" of the Company located in Item 1 herein.
General. The Company is not presently engaged in any business operations and is
currently investigating new business opportunities. References to the "Company"
herein shall be deemed to refer to the Company and its consolidated subsidiaries
unless the context otherwise requires.
Results of Operations for the Three and Six Months Ended April 30, 1997 Compared
to the Three and Six Months Ended April 30, 1996.
For the three months ended April 30, 1997 net income was $4,716,000, or
$2.11 per share, as compared to a net loss of $261,000, or $.12 per share, for
the three months ended April 30, 1996. For the six months ended April 30, 1997
net income was $6,595,000, or $2.94 per share, as compared to a net loss of
$434,00, or $.20 per share in the year ago period. There is no tax expense in
the three and six month periods ended April 30, 1997 because of the utilization
of the Company's net operating loss carryforward. Remaining net operating and
other tax carryforwards have been fully reserved. The gain on marketable
securities of $4,791,000 and $6,748,000 for the three and six months in 1997,
respectively, represents realized gains on the sales of shares of TCC Common
Stock.
Costs and Expenses. Total expense for the three and six months ended
April 30, 1997 was $295,000 and $443,000, respectively, as compared to $262,000
and $438,000, respectively, for the three and six months ended April 30, 1996.
General and administrative expenses in 1997 increased by $85,000 to $443,000
from $358,000 in the year ago period. The increase is due primarily to the
increase in non-cash compensation expenses related to the exercise of stock
options. Interest expense decreased by $80,000 to $-0- due to the repayment of
all bank loans.
Capital Resources and Liquidity:
The Company anticipates that during fiscal 1997, its principal
financing needs will consist primarily of funding its general and administrative
expenses and the acquisition price of one or more new business activities. It
may be anticipated that any such acquisition may require the use by the Company
of shares of the TCC Common Stock and/or shares of the Executone Common Stock
which are owned by it.
Management believes that cash on hand and internally generated funds
will be sufficient to meet its corporate general and administrative, working
capital and other cash requirements during fiscal 1997. The Company may raise
additional cash, if necessary, by sales of shares of TCC Common Stock and/or
shares of Executone Common Stock which are owned by it, depending upon
prevailing market conditions. The Company may obtain additional cash by sales of
its own debt and/or equity securities, and/or by the utilization of the proceeds
of borrowings.
The Company did not have any material capital commitments at April 30,
1997.
Inflation and Changing Prices:
The Company has not been materially affected by inflation.
7
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on April 9,
1997. At that meeting, the following persons were elected as the members of the
Board of Directors of the Company, each to hold office until the next annual
meeting of stockholders and until his successor has been duly elected and
qualified:
<TABLE>
<CAPTION>
Name Votes "FOR" "WITHHOLD" Vote
-------------------- ---------- ---------------
<S> <C> <C>
William L. Cohen 1,190,463 3,511
Moses Marx 1,190,423 3,551
Steven Rosenberg 1,190,463 3,511
Randolph B. Stockwell 1,190,469 3,505
</TABLE>
At said Annual Meeting of Stockholders the proposal to ratify the
appointment of Grant Thornton LLP as the Corporation's independent certified
public accountants for the fiscal year ending October 31, 1997 was duly approved
by the stockholders of the Company. The number of votes cast with respect to
said matter was as follows:
Number of Votes
---------------
FOR: 1,187,734
AGAINST: 1,679
ABSTAIN: 4,561
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit
Number Description
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27 Financial Data Schedule.
b. There were no reports filed by the Company on Form 8-K during the
quarter for which this report on Form 10-Q is filed.
8
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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.
COOPER LIFE SCIENCES, INC.
-------------------------
(Registrant)
Date: June 13, 1997 By: /s/ Steven Rosenberg
------------- ---------------------
Steven Rosenberg
Vice President and Chief
Financial Officer
9
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EXHIBIT INDEX
Exhibit Sequential
Number Description Page Number
- ------ - ----------- -----------
27 Financial Data Schedule 11
10
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COOPER
LIFE SCIENCES, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED
APRIL 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> APR-30-1997
<CASH> 8,001
<SECURITIES> 28,353
<RECEIVABLES> 5,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 1
<TOTAL-ASSETS> 41,407
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 256
0
0
<OTHER-SE> 40,234
<TOTAL-LIABILITY-AND-EQUITY> 41,407
<SALES> 0
<TOTAL-REVENUES> 7,038
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 443
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,595
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,595
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,595
<EPS-PRIMARY> 2.94
<EPS-DILUTED> 2.94
<FN>
See the financial statements for an unclassified balance sheet.
</TABLE>
