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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended OCTOBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 number)
160 BROADWAY, NEW YORK, NEW YORK 10038
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 791-5362
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.10 PER SHARE
(Title of Class)
PREFERRED STOCK PURCHASE RIGHTS
(Title of Class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of voting (common) stock held by non-affiliates of the
Registrant as of January 21, 1997: $13,303,993.
Number of shares outstanding of each of the Registrant's classes of Common Stock
as of January 21, 1997: 2,159,695.
DOCUMENTS INCORPORATED BY REFERENCE:
None
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PART I
ITEM 1. BUSINESS
DISCONTINUED OPERATIONS
On November 30, 1994, Cooper Life Sciences, Inc., a Delaware corporation
(the "Company"), sold substantially all of the assets of its mortgage banking
business and as of March 31, 1995 disposed of its remaining interest in the
business (see Note B of Notes to Consolidated Financial Statements). The
Company's mortgage banking operations were considered to be a discontinued
operation as of October 31, 1994. On December 19, 1995, as the 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. (collectively, the "Executone Securities").
(See Note C of Notes to Consolidated Financial Statements.) As a result of these
transactions, the Company is not presently engaged in any business operations.
It is actively investigating new business opportunities.
COMMON STOCK OF THE COOPER COMPANIES, INC.
The Company owns shares of 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. As of January 8, 1997, the
Company owned 1,963,233 shares of TCC Common Stock (see Note D of Notes to
Consolidated Financial Statements.) The Company has from time to time during the
past year sold 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. The proceeds of sale were and are being used by the Company
to fund its operating expenses and to provide it with additional cash which
would be available for use in connection with the acquisition of new business
opportunities.
POSSIBLE INVESTMENT COMPANY STATUS
The Company's principal assets currently consist of shares of the TCC
Common Stock and the Executone Securities. As a result of the percentage of its
assets that is currently comprised of the TCC Common Stock and the Executone
Securities, the Company could be deemed to be an "investment company," as such
term is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"). Although the Company believes that it is not an
investment company, there can be no assurance that the Company will not be
required to register as an investment company. If it is so required to register,
it would become subject to certain restrictions which could prove to be
materially burdensome to the Company. However, even if the Company were deemed
to be an investment company for purposes of the Investment Company Act, such
status would most probably be terminated upon the subsequent acquisition by it
of an operating business.
EMPLOYEES
On October 31, 1996, the Company had one employee.
ITEM 2. PROPERTIES.
The following is the Company's principal facility, which it currently rents on a
month to month basis.
Approximate Approximate
Floor Area Annual
Location Operations (Sq. Ft.) Rent
- --------- ----------- ------------- -----------
New York, NY Executive Offices 1,500 $ 18,000
ITEM 3. LEGAL PROCEEDINGS.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
2
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock trades on the Nasdaq Stock Market (Small Cap)
under the symbol ZAPS.
The following table sets forth, for the periods indicated, the high and
low sales prices for the Company's Common Stock as reported by the National
Association of Securities Dealers, Inc.
High Low
Fiscal Year ended October 31, 1995
November 1, 1994 to January 31, 1995 14 10
February 1, 1995 to April 30, 1995 18 3/4 11
May 1, 1995 to July 31, 1995 12 1/4 8 3/4
August 1, 1995 to October 31, 1995 11 7 1/2
High Low
Fiscal Year ended October 31, 1996
November 1, 1995 to January 31, 1996 9 3/4 7 3/4
February 1, 1996 to April 30, 1996 10 3/4 8 3/4
May 1, 1996 to July 31, 1996 13 3/4 10 3/8
August 1, 1996 to October 31, 1996 12 10 3/4
As of the close of business on January 21, 1997, there were 2,845
holders of record of the Company's Common Stock.
DIVIDENDS
To date, the Company has not paid any dividends on its common stock. The
payment of dividends, if any, in the future is within the discretion of the
Board of Directors and will depend upon the Company's earnings, capital
requirements, financial condition and other relevant factors. The Board does not
intend to declare any dividends in the foreseeable future, but instead intends
to retain all earnings, if any, for working capital and to acquire new
businesses.
3
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ITEM 6. SELECTED FINANCIAL DATA.
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
FIVE YEAR FINANCIAL HIGHLIGHTS
YEAR-END FINANCIAL POSITION
(DOLLARS IN THOUSANDS)
The following is a summary of certain financial information with respect
to the Company's fiscal years ended October 31, 1996, 1995, 1994, 1993, and
1992. This information is derived from and should be read in conjunction with
the Company's financial statements and notes thereto included elsewhere in this
Form 10-K.
<TABLE>
<CAPTION>
October 31,
------------------------------------------------------
1996 1995 1994(1) 1993(2) 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets $34,138 $19,102 $42,582 $145,053 $ 15,124
Long Term Debt -- -- 2,300 3,650 1,250
Total Liabilities 961 2,812 23,163 136,313 3,920
Stockholders' Equity 33,177 16,290 19,419 5,579 11,204
</TABLE>
(1) The financial information for the fiscal year ended October 31, 1994
includes the operations of the Company's majority owned subsidiary, Second
Advantage, as a discontinued operation as of October 31, 1994.
(2) The financial information for the fiscal year ended October 31, 1993
includes the operations of the Company's majority owned subsidiary, Second
Advantage Mortgage Corp. ("Second Advantage"), for the period from September 1,
1993, the effective date of the acquisition by the Company, through October 31,
1993.
4
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
Five Year Financial Highlights
Summary of Consolidated Operations (a)
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
For The Years Ended October 31,
1996 1995 1994 (1) 1993 (2) 1992
------ ------ -------- -------- ----
<S> <C> <C> <C> <C> <C>
Revenues
Dividend income in kind $ -- $ -- $ -- $ 298 $ 2,135
Dividend income -- -- 89 -- --
Realized and unrealized gain
(loss) on marketable securities 772 (376) 9,320 (3,334) (8,528)
Gain on settlement agreement -- -- -- -- 913
Interest and other income - net 22 51 176 163 347
-------- -------- -------- -------- --------
794 (325) 9,585 (2,873) (17,744)
-------- -------- -------- -------- --------
Expenses
General and administrative 809 1,132 979 2,086 3,353
Interest 138 193 283 149 165
-------- -------- -------- -------- --------
Total Expenses 947 1,325 1,262 2,235 3,518
-------- -------- -------- -------- --------
(153) (1,650) 8,323 (5,108) (12,611)
Loss and write-downs on Investments
in Preferred Stock (2,096) -- -- -- (12,611)
-------- -------- -------- -------- --------
Income (loss) from continuing
operations before income taxes (2,249) (1,650) 8,323 (5,108) (21,262)
Provision (benefit) from
income taxes -- -- -- (520) (935)
-------- -------- -------- -------- --------
Income (loss) from continuing
operations (2,249) (1,650) 8,323 (4,588) (20,327)
Gain (loss) from discontinued
operations -- 2,823 (3,084) (35) 103
-------- -------- -------- -------- --------
Income (loss) before cumulative
effect of change in accounting
principle and extraordinary item (2,249) 1,173 5,239 (4,623) (20,224)
Extraordinary item - Utilization of
net operating loss carryforward -- -- -- -- 54
Cumulative effect of change in
accounting principle -- -- 2,009 -- --
-------- -------- -------- -------- --------
Net income (loss) $ (2,249) $ 1,173 $ 7,248 $ (4,623) $(20,170)
======== ======== ======== ======== ========
Net income (loss) per share Fully Diluted:
Continuing operations $ (1.05) $ (.75) $ 4.01 $ (2.17) $ (9.83)
Discontinued operations -- 1.28 (1.49) (.02) .05
-------- -------- -------- -------- --------
(1.05) .53 2.52 (2.19) (9.78)
Extraordinary item -- -- -- -- .03
Cumulative effect of change
in accounting principle -- -- .97 -- --
-------- -------- -------- -------- --------
Net income (loss) per share $ (1.05) $ .53 $ 3.49 $ (2.19) $ (9.75)
======== ======== ======== ======== ========
Cash dividends per common share $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
Weighted average number of
shares outstanding 2,149 2,206 2,076 2,113 2,067
======== ======== ======== ======== ========
</TABLE>
(a) The prior years' amounts have been reclassified to conform to the current
years' treatment.
(1) The financial information for the fiscal year ended October 31, 1994
includes the operations of the Company's majority owned subsidiary, Second
Advantage, as a discontinued operation as of October 31, 1994.
(2) The financial information for the fiscal year ended October 31, 1993
includes the operations of the Company's majority owned subsidiary, Second
Advantage, for the period from September 1, 1993, the effective date of the
acquisition by the Company, through October 31, 1993.
5
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ITEM 7. MANAGEMENTS' 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 8 herein. Reference is also
made to Part I, Item 1 "Business" herein.
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 will require the use by the Company of
shares of TCC 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
Executone Common Stock which are owned by it, depending upon prevailing market
conditions. The Company may also utilize the proceeds of bank borrowings.
The Company did not have any material capital commitments at the end of
fiscal 1996.
In 1996, the Company used cash primarily to fund its general and
administrative expenses and to repay its bank debt. In 1995, the Company used
cash primarily to acquire its interest in Unistar Gaming Corp. ("UGC") (see Note
C). During fiscal 1994, the Company's principal financing needs consisted of
funding its mortgage loans held for sale and the ongoing net cost of mortgage
loan originations.
CASH FLOWS
OPERATING ACTIVITIES In fiscal 1996, the Company's operating activities
used cash primarily to fund its general and administrative expenses. Such cash
was provided by the proceeds of sale of shares of TCC Common Stock.
SALES OF TCC COMMON STOCK Net cash received in fiscal 1996 was $2.4
million as a result of the sale by the Company of shares of TCC Common Stock
owned by it.
FINANCING ACTIVITIES Net cash used in financing activities in fiscal
1996 amounted to $1.2 million due to the repayment of $1.5 million of bank
borrowings offset by the proceeds from the exercise of common stock warrants of
$268,000.
RESULTS OF OPERATIONS
Comparison of each of the years in the three-year period ended October 31, 1996:
1996 VS. 1995
The net loss in fiscal 1996 was $153,000 (excluding a loss of $2,096,000
on the writedown of the Executone Preferred Stock) as compared to a net loss of
$1,650,000 (before a gain of $2,823,000 from discontinued operations) in fiscal
1995.
MARKETABLE SECURITIES. The gain on marketable securities of $772,000 in
1996 represents a realized gain on the sales of shares of TCC Common Stock
during the year. The loss on marketable securities of $376,000 in 1995
represents the realized loss incurred on the utilization of shares of TCC Common
Stock as part of the acquisition price of the Company's interest in UGC (see
Note C).
The loss on Executone Preferred Stock of $2,096,000 in 1996 represents a
valuation allowance in carrying value to reflect the uncertainty that UGC will
earn net income sufficient to pay dividends on the Executone Preferred Stock or
that UGC will meet the revenue and profit parameters necessary to enable the
Company to convert the Executone Preferred Stock into Executone Common Stock
(see Note C).
6
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INTEREST EXPENSE. Interest expense decreased by $55,000 to $138,000 from
$193,000 in 1995 due to reduced borrowings.
1995 VS. 1994
GENERAL.
On October 31, 1994, management of the Company formulated a plan to
discontinue its majority owned mortgage origination and servicing business which
was acquired in August 1993. On November 30, 1994, the Company sold the majority
of such business to the Long Island Savings Bank, FSB, ("LISB") and effective as
of March 31, 1995, the Company sold all of its remaining interest in the
business (see Note B). Accordingly, the entire mortgage banking operations of
Second Advantage and its wholly owned subsidiary, Entrust Financial Corp.
("Entrust") have been considered a discontinued operation as of October 31,
1994.
DISCONTINUED OPERATIONS. The net income of $2,823,000 from discontinued
operations in 1995 includes the Company's share of the gain on the sale of the
majority of the mortgage banking business to LISB in November 1994 offset by the
loss of approximately $819,000 on the disposition by the Company of its
remaining interest in the business effective as of March 31, 1995.
MARKETABLE SECURITIES. The unrealized gains on marketable securities of
$9,820,000 in 1994 were the result of an increase in the market price of the TCC
Common Stock owned by the Company offset by the realized loss of approximately
$500,000 on shares of TCC Common Stock sold during 1994 as the Company began the
orderly process of liquidating its holdings in TCC Common Stock. Through October
31, 1994, the Company accounted for its marketable securities under FASB No. 12,
and recognized unrealized gains and losses through a valuation allowance. On
October 31, 1994, the Company adopted the provisions of FASB No. 115. The effect
of adopting FASB No. 115 was the recording of income relating to the cumulative
effect of a change in accounting principle of $2,009,000 representing the
remaining unrecorded balance in the valuation allowance (see Note D). Change in
the market value of the available for sale securities after October 31, 1994 are
not reflected in the statement of operations, but rather in the unrealized gain
(loss) on marketable securities account, which is a component of stockholders'
equity on the balance sheet.
INTEREST AND OTHER INCOME. Interest and other income decreased by
$214,000 to $51,000 in 1995 from $265,000 in 1994 due to a one time gain in 1994
of $159,000 on the elimination of an estimated liability, and dividend income of
$89,000 in 1994 represents dividends paid on the TCC Series B Preferred Stock
through September 26, 1994, the date on which the TCC Series B Preferred Stock
was converted into TCC Common Stock.
INTEREST EXPENSE. Interest expense decreased by $90,000 to $193,000 in
1995 from $283,000 in 1994 due to reduced borrowings.
INCOME FROM CONTINUING OPERATIONS
MARKETABLE SECURITIES. Unrealized gains on marketable securities
amounted to approximately $9.8 million in 1994 resulting from an increase in the
market price of the TCC Common Stock owned by the Company offset by realized
losses of approximately $500,000 on sales of shares of TCC Common Stock.
INTEREST EXPENSE. Interest expense was $283,000 in 1994 due to other
bank borrowings.
GENERAL AND ADMINISTRATIVE EXPENSE
The Company's G&A decreased by $323,000 to $809,000 in 1996 from
$1,132,000 in 1995. The decrease is due primarily to an accrual of $250,000 for
certain legal matters in 1995 which was not necessary in 1996 and reductions in
other overhead expenses including salaries, insurance costs and professional
fees.
The Company's G&A increased by $153,000 to $1,132,000 in 1995 from
$979,000 in 1994. The increase is due to an accrual of $250,000 for certain
legal matters partially offset by reductions in legal expenses associated with
litigation and
7
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other matters which were resolved during 1994 and reductions in other overhead
expenses including salaries, insurance costs and professional fees.
INFLATION AND CHANGING PRICES
The Company has not been materially affected by inflation.
IMPACT OF NEW ACCOUNTING STANDARDS
Financial Accounting Standard No. 123 "Accounting for Stock Based
Compensation", issued in 1995, introduces a method of accounting for employee
stock-based compensation plans based upon the fair value of the awards on the
date they are granted. Under this fair value based method, public companies
estimate the fair value of stock options using a pricing model, such as the
Black Scholes model, which requires inputs such as the expected volatility of
the stock price and an estimate of the dividend yield over the option's expected
life. The FASB, however, does not require the use of this method. Entities that
continue to account for stock option plans under the existing method (APB No.
25) are required to disclose proforma net income and earnings per share, as if
the fair value method had been used. Certain additional disclosures are also
required. The Company expects to disclose the proforma net income, earnings per
share and other information as of the effective date of this pronouncement for
the year ending October 31, 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
8
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Report of Independent Certified Public Accountants
Board of Directors and Stockholders
Cooper Life Sciences, Inc.
We have audited the accompanying consolidated balance sheets of Cooper Life
Sciences, Inc. and its subsidiaries as of October 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the three years ended October 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Cooper Life
Sciences, Inc. and its subsidiaries as of October 31, 1996 and 1995, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended October 31, 1996 in conformity with
generally accepted accounting principles.
We have also audited the financial statement schedule listed in the accompanying
index at Item 14(a)(ii) for the years ended October 31, 1996, 1995 and 1994. In
our opinion, this financial statement schedule presents fairly, in all material
respects, the information required to be set forth therein.
As discussed in Note D to the consolidated financial statements, the Company
changed its method of accounting for investments on October 31, 1994.
GRANT THORNTON LLP
New York, New York
January 21, 1997
9
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
OCTOBER 31,
----------------------
1996 1995
--------- -------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 471 $ 341
Marketable Securities - at market value:
The Cooper Companies, Inc. Common Stock 30,583 13,645
Executone Information Systems, Inc. Common Stock 2,989 --
Due from Second Advantage Mortgage Corp., net of
allowance for doubtful accounts of $194 in 1996 -- 194
Prepaid expenses and other 95 110
Investment in Unistar Gaming Corp. -- 4,812
-------- --------
$ 34,138 $ 19,102
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank borrowings $ -- $ 1,500
Accounts payable and accrued liabilities 961 1,312
-------- --------
961 2,812
Commitments and contingencies
Stockholders' equity
Preferred stock - $.10 par value: 6,000,000
shares authorized: none issued -- --
Common stock - $.10 par value:
6,000,000 shares authorized:
2,566,095 shares and 2,516,095 shares issued at
October 31, 1996 and 1995 respectively 256 251
Additional paid-in capital 78,538 78,283
Unrealized gain on marketable securities 20,230 1,389
Accumulated deficit (63,369) (61,120)
Less: Common stock in treasury - at cost;
393,400 shares and 404,400 shares at
October 31, 1996 and 1995, respectively (1,962) (2,104)
Minimum pension liability adjustment (516) (409)
-------- --------
Total stockholders' equity 33,177 16,290
-------- --------
$ 34,138 $ 19,102
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
10
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
-------------------------------
1996 1995 1994
----- ----- ----
<S> <C> <C> <C>
Revenues
Realized and unrealized gain (loss)
on marketable securities $ 772 $ (376) $ 9,320
Interest,dividend and other income - net 22 51 265
------- ------- -------
794 (325) 9,585
------- ------- -------
Expenses
General and administrative 809 1,132 979
Interest 138 193 283
------- ------- -------
Total expenses 947 1,325 1,262
------- ------- -------
(153) (1,650) 8,323
Loss and writedown on Executone Information
Systems, Inc. Preferred Stock (2,096) -- --
------- ------- -------
(Loss) income from continuing operations
before income taxes (2,249) (1,650) 8,323
Provision for income taxes -- -- --
------- ------- -------
(Loss) income from continuing operations (2,249) (1,650) 8,323
Gain (loss) from discontinued operations -- 2,823 (3,084)
------- ------- -------
Income (loss) before cumulative effect of
change in accounting principle (2,249) 1,173 5,239
Cumulative effect of change
in accounting principle -- -- 2,009
------- ------- -------
Net (loss) income $(2,249) $ 1,173 $ 7,248
======= ======= =======
Net income (loss) per share Primary:
Continuing operations $ (1.05) $ (.75) $ 4.04
Discontinued operations -- 1.28 (1.50)
------- ------- -------
(1.05) .53 2.54
Cumulative effect of change
in accounting principle -- -- .98
------- ------- -------
Net income (loss) per share $ (1.05) $ .53 $ 3.52
======= ======= =======
Weighted average number of shares outstanding 2,149 2,201 2,058
======= ======= =======
Fully Diluted:
Continuing operations $ (1.05) $ (.75) $ 4.01
Discontinued operations -- 1.28 (1.49)
------- ------- -------
(1.05) .53 2.52
Cumulative effect of change
in accounting principle -- -- .97
------- ------- -------
Net income (loss) per share $ (1.05) $ .53 $ 3.49
======= ======= =======
Weighted average number of shares outstanding 2,149 2,206 2,076
======= ======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994
(Dollars In Thousands)
<TABLE>
<CAPTION>
Minimum
pension
Common stock Addi- Unrealized liabil-
------------- tional gain on Accumu- ity
Par paid-in marketable lated Treasury adjust-
Shares value capital securities deficit stock ment Total
------ ----- ------- ---------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1993 2,391 $ 239 $77,444 $ -- $(69,541) $(2,088) $ (475) $ 5,579
Net income 7,248 7,248
Treasury shares acquired (74) (74)
Exercise of common
stock warrants 125 12 847 859
Treasury shares issued
for pension plan contribution (8) 32 24
Effect of accounting
change due to increase in
market value of marketable
securities 5,783 5,783
----- ----- ------- ---------- -------- ------- ------ --------
Balance at October 31, 1994 2,516 251 78,283 5,783 (62,293) (2,130) (475) 19,419
Net income 1,173 1,173
Treasury shares issued
for pension plan contribution 26 26
Reduction in value of
marketable securities (4,394) (4,394)
Reduction in pension
liability over unrecognized
prior service cost 66 66
----- ----- ------- ---------- -------- ------- ------ --------
Balance at October 31, 1995 2,516 251 78,283 1,389 (61,120) (2,104) (409) 16,290
Net loss (2,249) (2,249)
Treasury shares issued
for pension plan contribution (40) 142 102
Increase in value of
marketable securities 18,841 18,841
Exercise of common
stock warrants 50 5 295 300
Increase in pension
liability over unrecognized
prior service cost (107) (107)
----- ----- ------- ---------- -------- ------- ------ --------
Balance at October 31, 1996 2,566 $ 256 $78,538 $ 20,230 $(63,369) $(1,962) $ (516) $ 33,177
===== ===== ======= ========== ======== ======= ====== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
----------------------------------
1996 1995 1994
-------- -------- ------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (2,249) $ 1,173 $ 7,248
Adjustments to reconcile net (loss) income to net
cash used in operating activities:
Cumulative effect of change in accounting principle -- -- (2,009)
Realized and unrealized (gain) loss on
marketable securities (772) 376 (9,320)
Loss on writedown of Executone Information
Systems, Inc. preferred stock 2,096 -- --
Gain (loss) from discontinued operations -- (2,823) 3,084
Issuance and exercise of common stock warrants -- -- 109
Provision for doubtful accounts 194 -- --
Loss on sale of furniture, fixtures etc. 13 -- --
Non-cash compensation charge 32 -- --
Depreciation and amortization 13 16 17
Changes in assets and liabilities:
Increase in receivables -- (194) --
Decrease (increase) in prepaid expenses and other 28 (27) 296
(Decrease) increase in accounts payable and
accrued liabilities (395) 75 (688)
-------- -------- --------
Net cash used in operating activities (1,040) (1,404) (1,263)
-------- -------- --------
Cash flows from investing activities:
Sale of discontinued operations -- 25,260 --
Investment in Unistar Gaming Corp. (200) (3,625) --
Proceeds from sales of The Cooper
Companies, Inc. common stock 2,602 -- 2,107
Cash of discontinued operations -- -- (1,409)
-------- -------- --------
Net cash provided by investing activities 2,402 21,635 698
-------- -------- --------
Cash flows from financing activities:
Repayment of notes payable - affiliates -- (2,300) (500)
Repayment of bank borrowings (1,500) -- --
Repayment of line of credit borrowings -- (18,034) --
Proceeds from exercise of common stock warrants 268 -- --
Acquisition of treasury stock -- -- (50)
-------- -------- --------
Net cash used in financing activities (1,232) (20,334) (550)
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents 130 (103) (1,115)
Cash and cash equivalents at beginning of year 341 444 1,559
-------- -------- --------
Cash and cash equivalents at end of year $ 471 $ 341 $ 444
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 136 $ 192 $ 283
Income Taxes $ 11 $ 22 $ 35
</TABLE>
13
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(IN THOUSANDS)
Supplemental schedule of non cash investing activities (Notes B, C and F)
In 1995 the Company acquired 27.5% of the common stock of Unistar Gaming
Corp. for $4.8 million. The purchase price was satisfied as follows:
Cash $2,500,000
Forgiveness of indebtedness
for advances to UGC 475,000
Note payable 650,000
Fair value of TCC Common Stock
issued to UGC 1,188,000
----------
$4,813,000
==========
During 1994, a stockholder exercised warrants for the purchase of
125,000 shares of common stock for $750,000. The exercise price was provided by
a reduction in the note payable to the shareholder.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
14
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996, 1995 AND 1994
NOTE A - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
Cooper Life Sciences, Inc. (the "Company"), a Delaware corporation,
owned a majority interest in a company engaged in mortgage banking from August
1993 to October 1994 (Note B). At the present time, the Company is not engaged
in any operating activities.
A summary of the significant accounting policies consistently applied in the
preparation of the accompanying consolidated financial statements follows:
1. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Cooper
Life Sciences, Inc. and its majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
2. MARKETABLE SECURITIES
On October 31, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115 "Accounting for Certain Investments in Debt and
Equity Securities." In accordance with Statement No. 115, Company management
determines the appropriate classification of securities at the time of purchase
and reevaluates such designation as of each balance sheet date.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses, net of tax, reported as a separate component of shareholders'
equity. The cost of securities sold is based on the average cost method. At
October 31, 1996, the Company considers all of its holdings of The Cooper
Companies, Inc. ("TCC") common stock and Executone Information Systems, Inc.
("Executone") common stock to be securities available for sale.
At October 31, 1996, the Company owns approximately 18% of the
outstanding common stock of TCC and approximately 2% of the outstanding common
stock of Executone.
3. INVESTMENT IN UNISTAR GAMING CORP.
In 1995, the Company owned approximately 31% of the outstanding common
stock of Unistar Gaming Corp. ("UGC") (see Note C). The Company sold its
investment in UGC to Executone in December 1995 for shares of Executone common
stock and preferred stock.
4. INCOME TAXES
The Company accounts for income taxes under the provisions of Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 109
("SFAS No. 109") - Accounting for Income Taxes.
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments (principally consisting of
cash, cash equivalents, marketable securities, investment in Unistar Gaming
Corp., investment in Executone Preferred Stock, and accounts receivable)
approximate fair value. The Company determined the fair value of the marketable
securities based upon the quoted market values, and determined the fair value of
the investment in Unistar Gaming Corp. and Executone Preferred Stock based upon
estimated recoverable amounts upon the sale of the securities.
6. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is determined using the weighted average
number of Common shares and dilutive common stock equivalents outstanding during
the respective periods. Common stock equivalents have not been included in the
determination of net loss per share as they are antidilutive or have no material
effect.
15
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996, 1995 AND 1994
NOTE A - (CONTINUED)
7. CASH EQUIVALENTS
The Company considers all highly liquid debt investments purchased with
an original maturity of three months or less to be cash equivalents.
8. USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the period. Actual results could differ from those
estimates.
9. RECLASSIFICATIONS
Certain amounts in the 1995 and 1994 financial statements have been
reclassified to conform to the current year's presentation.
NOTE B - SECOND ADVANTAGE MORTGAGE CORPORATION TRANSACTIONS
DISPOSITION
On October 31, 1994, management of the Company formulated a plan to
discontinue its mortgage banking business. Accordingly the entire mortgage
banking operations of Second Advantage Mortgage Corp. ("Second Advantage"), a
51% owned subsidiary of the Company, and its wholly owned subsidiary, Entrust
Financial Corp. ("Entrust") was considered a discontinued operation as of
October 31, 1994.
On November 30, 1994, pursuant to an Asset Purchase Agreement dated as
of November 23, 1994 by and between The Long Island Savings Bank, FSB ("LISB")
and Entrust (the "Asset Purchase Agreement"), Entrust sold to LISB its entire
origination business, including mortgage loans held for sale and mortgage loans
in process, a substantial portion of its rights to service loans for others, and
a substantial portion of its fixed assets. Pursuant to the Asset Purchase
Agreement, LISB assumed the prospective obligations and duties of Entrust under
certain contracts and leases relating to the assets acquired by it.
The gross purchase price realized by Entrust from the transaction was
approximately $31 million in cash, which, after repayment of indebtedness
related to the business (including repayment of loans to two officers and
directors of Second Advantage of approximately $1.0 million and approximately
$17.8 million to its principal lender to retire its warehouse and credit
facility) resulted in net sale proceeds to Entrust of approximately $11.0
million. The gain on such sale amounted to approximately $2.8 million. As of
October 31, 1995, all of the purchase price proceeds had been received by
Entrust, excluding approximately $375,000 which was retained in escrow (the
"LISB Escrow") as security for the performance or payment of indemnification
obligations of Entrust to LISB, if any, which was expected to be paid to Entrust
in 1996.
Pursuant to a Redemption Agreement dated as of April 19, 1995 (but
effective as of March 31, 1995), by and among Second Advantage and all of its
stockholders, including the Company, Second Advantage purchased all of its
outstanding capital stock held by the Company for a cash purchase price equal to
(a) approximately $3,879,000 plus (b) certain contingent considerations
consisting primarily of 50% of the first $763,800 to be received from the LISB
Escrow in 1995 and 1996. In September 1995, the Company received $187,500 from
the LISB Escrow.
16
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996, 1995 AND 1994
NOTE B - (CONTINUED)
In October 1996, Second Advantage advised the Company of certain claims
made by LISB pursuant to the Asset Purchase Agreement which, if upheld, would
require the use of some or all of the remaining funds in the LISB Escrow.
Accordingly, at October 31, 1996, the Company recorded a reserve for the full
amount which it expected to receive as contingent consideration described above.
The results of the discontinued operations for the year ended October
31, 1994 is summarized as follows:
Year
ended
1994
------
Revenue $ 11,024,000
Net loss (6,017,000)
Loss allocable
to the Company (3,084,000)
Loss per share $ (1.54)
Entrust had a $63 million warehouse bank line of credit (the
"Warehousing Agreement") to fund its mortgage loan activity which was fully paid
and terminated effective November 30, 1994. The weighted average cost of funds
under this line of credit was 4.95% for the fiscal year ended October 31, 1994.
Borrowings under this line were collateralized by mortgage loans held for sale
and were guaranteed by Entrust. These borrowings were repaid when Entrust
received payment from the sale of the underlying mortgage loan collateral.
Entrust also made use of a Servicing Secured Credit Agreement, which was
fully paid and terminated effective November 30, 1994. The weighted average cost
of funds under this line of credit was 8.51% for the fiscal year ended October
31, 1994.
Interest expense and related fees on Entrust's line of credit borrowings
for the fiscal year ended October 31, 1994 was approximately $2.2 million and
are included in the loss from discontinued operations in the accompanying
consolidated statement of income.
NOTE C - UNISTAR GAMING CORP. TRANSACTIONS
On February 28, 1995, Unistar Gaming Corp. ("UGC") acquired Unistar
Entertainment, Inc., a privately held Colorado corporation ("Unistar"). As a
result of the acquisition, approximately 27.5% of the outstanding Common Stock
of UGC was owned by the Company, and approximately 72.5% of the outstanding
Common Stock of UGC was owned by the former stockholders of Unistar. Unistar
holds an exclusive contract with the Coeur d'Alene Indian Tribe in Idaho to
develop and manage what would be the first national lottery in the United
States. The shares of UGC Common Stock which are owned by the Company were
purchased for approximately $5 million comprised primarily of cash, portfolio
securities and a note payable. In December 1995, the Company increased its stake
in UGC to approximately 31.5% by purchasing an additional 400,000 shares of UGC
Common Stock from a UGC stockholder for a cash purchase price of $.50 per share.
On December 19, 1995 (the "Closing Date"), pursuant to an Agreement and
Plan of Merger, Executone Information Systems, Inc., a Virginia corporation
whose common stock trades on the NASDAQ National Market System, ("Executone"),
acquired all of the issued and outstanding shares of UGC Common Stock, including
all of the shares of UGC Common Stock owned by the Company, in exchange for
3,700,000 shares of Executone Common Stock (the "Executone Common Stock"),
250,000 shares of Executone Series A Preferred Stock (the "Executone Series A
Preferred Stock") and 100,000 shares of Executone Series B Preferred Stock (the
"Executone Series B Preferred Stock"), collectively (the "Executone
Securities"). Each share of Executone Series A and Series B Preferred Stock has
voting rights equal to a share of Executone common stock and will earn dividends
equal to its proportionate
17
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996, 1995 AND 1994
NOTE C - (CONTINUED)
share (18.5% for Series A and 31.5% for Series B) of 50% of UGC's net income.
The Executone Series A and Series B Preferred Stock is redeemable at Executone's
option for 4.925 million shares and 8.375 million shares, respectively, of
Executone common stock, and is convertible at the holders' option, if certain
revenue and profit parameters are met by UGC, for up to 4.925 million shares and
8.375 million shares, respectively, of Executone common stock. The Executone
Series B Preferred Stock is subject to the approval of Executone's shareholders
for redemption or conversion into Executone Common Stock. There can be no
assurance, however, that UGC will earn net income sufficient to pay dividends on
the Executone Series A and Series B Preferred Stock or that UGC will meet the
revenue and profit parameters necessary to enable the holders to convert the
Executone Series A and Series B Preferred Stock into Executone Common Stock.
In exchange for its shares of UGC Common Stock, the Company received
approximately 31.5% of the Executone Securities, comprised of a) 1,166,520
shares of Executone Common Stock, b) 78,819 shares of Executone Series A
Preferred Stock, and c) 31,528 shares of Executone Series B Preferred Stock. The
Company has agreed that for a period of six months following the Closing Date
not to sell, transfer, assign, pledge or grant a security interest in its
Executone Securities and thereafter, through the last day of the twelfth full
calendar month following the Closing Date, not to sell in any calendar month a
number of shares of its Executone Securities equal to more than the sum of
16.66% of the Executone Preferred Stock or the Executone Common Stock issued to
the Company on the Closing Date or thereafter and any unused amount from
previous calendar months. On June 30, 1996, Executone filed with the Securities
and Exchange Commission a registration statement covering the resale of all
shares of the Executone Common Stock issued on the Closing Date plus all shares
of Executone Common Stock issuable upon the conversion or redemption of the
Executone Series A or Series B Preferred Stock. The Company has valued its
shares of Executone Series A and Series B Preferred Stock at $ 0 based in part
on a recent offer to purchase the stock, which transaction was not consummated,
and the uncertainties described in the preceeding paragraph.
NOTE D - THE COOPER COMPANIES COMMON STOCK TRANSACTIONS
At October 31, 1996 and 1995, the Company owned 2,127,533 shares and
2,322,533 shares, respectively of the common stock of The Cooper Companies, Inc.
("TCC"), (the "TCC Common Stock").
The following is a summary of available-for-sale securities as of
October 31, 1996 and 1995:
<TABLE>
<CAPTION>
Gross
Unrealized Fair
(in thousands) Cost Gains Value
1996 ---- ---------- -------
----
<S> <C> <C> <C>
The Cooper Companies, Inc.
Common Stock $10,426 $20,157 $30,583
Executone Information
Systems, Inc. Common Stock 2,916 73 2,989
------- ------- -------
$13,342 $20,230 $33,572
======= ======= =======
1995
----
The Cooper Companies, Inc.
Common Stock $12,256 $ 1,389 $13,645
======= ======= =======
</TABLE>
Gross realized gains on sales of available-for-sale securities totaled
$772,000 for the year ended October 31, 1996. Gross realized losses on the
disposition of available-for-sale securities totaled $376,000 for the year ended
October 31, 1995. Gross realized gains on sales of available-for-sale securities
totaled $54,000 for the year ended October 31, 1994. Gross realized losses on
sales of available-for-sale securities totaled $548,000 for the year ended
October 31, 1994. Cost of securities sold was determined by the average cost
method.
18
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996, 1995 AND 1994
NOTE D - (CONTINUED)
Through October 31, 1994, changes in the valuation allowance resulting
from unrealized gains or losses on the TCC Common Stock have been recorded in
the statement of operations prior to the adoption of SFAS No. 115. The effect of
adopting FASB No. 115 was the recording of income relating to the cumulative
effect of the change in accounting totaling $2,009,000. This amount represents
the remaining unrealized valuation allowance at October 31, 1994. Change in the
market value of the available for sale securities after October 31, 1994 are
reflected in the unrealized gain (loss) on marketable securities account, which
is a component of stockholders' equity on the balance sheet.
NOTE E - BANK BORROWINGS
In August 1993, the Company borrowed $1,500,000 from a bank the proceeds
of which were utilized in connection with the acquisition of Second Advantage
(Note B). At October 31, 1996, the $1,500,000 principal amount of the loan has
been repaid in full.
In November 1993 the Company arranged a $500,000 line of credit facility
with the bank. During 1996, the Company utilized $200,000 of the line of credit
facility which was repaid in June 1996. At October 31, 1996, there were no
borrowings against the revolving line of credit facility. The loan and line of
credit facility bear interest at the bank's prime rate (8.25% at October 31,
1996) plus 1.5%. Payment of the loan and revolving line of credit are
collateralized by 500,000 shares of TCC Common Stock owned by the Company.
NOTE F - NOTES PAYABLE - AFFILIATES
In October 1991, the Company borrowed $1,250,000 from a corporation
owned by one of the Company's principal shareholders ("Payee") (the "Promissory
Note"). The Promissory Note was issued pursuant to an Investment Agreement dated
as of October 31, 1991 between the Company and the Payee, pursuant to which the
Company issued to the Payee a warrant to purchase up to 125,000 shares of the
Company's common stock at $8.00 per share, which was subsequently reduced to
$6.875 per share on June 12, 1992 in consideration of certain consulting
services rendered to the Company by the principal stockholder of the payee, (the
"Warrant").
On September 9, 1994, the Company offered the Payee the opportunity to
exercise the Warrant in full at an exercise price of $6.00 per share during the
ten day period from September 9 to September 19, 1994; provided, however, that
the aggregate purchase price, $750,000, must be paid to the Company by the
surrender to the Company, to the extent of $750,000, of the Promissory Note. On
September 12, 1994, the Payee, pursuant to the Warrant and the Company's offer,
simultaneously exercised the Warrant in full and paid the aggregate exercise
price of $750,000 by the partial surrender of the Promissory Note. A charge to
operations of $109,000 was recorded in 1994 reflecting the decrease in the
exercise price. On September 16, 1994, the Company, at its option, paid the
balance of the principal ($500,000) and accrued interest on the Promissory Note.
NOTE G - INCOME TAXES
A reconciliation of the provision for income taxes for the years ended
October 31, 1996, 1995 and 1994 and the amount computed by applying the
statutory Federal income tax rate to (loss) income from continuing operations
follows:
<TABLE>
<CAPTION>
1996 1995 1994
------------ ----------- -------
<S> <C> <C> <C>
Computed expected provision
(benefit) for income taxes $ (140,000) $ (578,000) $ 2,830,000
Changes in valuation
allowance 140,000 578,000 (2,830,000)
----------- ----------- -----------
Actual benefit from
income taxes $ -0- $ -0- $ -0-
=========== =========== =========
</TABLE>
19
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996, 1995 AND 1994
NOTE G - (CONTINUED)
The tax effect of the principal temporary differences at October 31,
1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
----------- --------
<S> <C> <C>
Deferred tax assets
Unrealized (gain) loss on securities $(2,924,000) $ 2,942,000
Net operating loss and credit carryforwards 12,297,000 11,846,000
Accruals not currently deductible for
tax purposes 287,000 374,000
Other -- 530,000
----------- -----------
9,660,000 15,162,000
Less valuation allowance (9,660,000) (15,162,000)
----------- -----------
Net deferred taxes $ -0- $ -0-
=========== =========
</TABLE>
The deferred tax asset and valuation allowance was decreased by
$5,502,000 principally because of an increase in the unrealized gain for tax
purposes on a portion of the TCC Common Stock owned by the Company during 1996,
and was increased by $861,000 during 1995 to reflect the additional capital
losses generated for tax purposes upon the disposition of Second Advantage and
TCC Common Stock.
At October 31, 1996, the Company had net operating loss carryforwards as
follows:
<TABLE>
<CAPTION>
(Dollars in Thousands)
Net
Operating Capital Expiration
Loss Loss Other Date
<S> <C> <C> <C> <C>
$ 40 $ 48 10/31/97
118 10/31/98
$ 1,886 2,379 943 10/31/99
708 1,926 744 10/31/00
211 553 4 10/31/01
7,502 10/31/02
335 10/31/03
6,328 10/31/04
1,922 10/31/05
520 10/31/06
10/31/07
2,109 10/31/08
1,001 10/31/09
1,039 10/31/10
732 10/31/11
-------- ------- ------
$ 23,958 $ 4,898 $2,192
======== ======= ======
</TABLE>
NOTE H - REDUCTION OF ESTIMATED TAX LIABILITIES
The Company is a party to a tax sharing agreement, as amended, with TCC
and Cooper Development Company ("CDC") related to the Cooper Labs, Inc. ("CLI")
liquidation on June 27, 1985. In 1985 the Company received a distribution of
$2,500,000 and recorded it as a liability for potential assessments resulting
from tax examinations (TCC received $5,000,000 and CDC received $2,500,000). The
above companies have agreed that: (i) in the event that the amount of tax
liability, including interest and penalties, shall be ultimately determined to
be greater or less than $10,000,000, then such excess or deficiency shall be
shared 50%, 25%, and 25% by TCC, CDC, and the Company, respectively, and (ii)
they are jointly and severally liable. TCC is coordinating the defenses for
these tax examinations. After reviewing certain documents related to the tax
examinations which were provided by TCC, and after consulting with its tax
advisors, management believes the amount accrued by the Company is adequate and
no adjustment was recorded in fiscal 1996 and 1995.
20
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996, 1995 AND 1994
NOTE I - STOCK PLANS
During October 1991, the Board of Directors of the Company adopted a
Stock Option Plan for Non-Employee Directors (the "Stock Option Plan for
Non-Employee Directors") and a 1991 Stock Incentive Plan (the "1991 Stock
Incentive Plan").
Financial Accounting Standard No. 123 "Accounting for Stock Based
Compensation", issued in 1995, introduces a method of accounting for employee
stock-based compensation plans based upon the fair value of the awards on the
date they are granted. Under this fair value based method, public companies
estimate the fair value of stock options using a pricing model, such as the
Black Scholes model, which requires inputs such as the expected volatility of
the stock price and an estimate of the dividend yield over the option's expected
life. The FASB, however, does not require the use of this method. Entities that
continue to account for stock option plans under the existing method (APB No.
25) are required to disclose proforma net income and earnings per share, as if
the fair value method had been used. Certain additional disclosures are also
required. The Company expects to disclose the proforma net income, earnings per
share and other information as of the effective date of this pronouncement for
the year ended October 31, 1997.
A brief description of each plan is as follows:
1. STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Up to 25,000 shares of common stock may be issued pursuant to the Stock
Option Plan for Non-Employee Directors (subject to appropriate adjustment in the
event of changes in the corporate structure of the Company). The Stock Option
Plan for Non-Employee Directors provides that each director of the Company who
is not an employee of the Company or any subsidiary (and who has not been an
employee for at least one year prior to the date of grant) shall be
automatically granted an option to purchase up to 500 shares of common stock of
the Company on the date of each annual meeting of stockholders at which he or
she is elected as a director of the Company. Only nonqualified options may be
granted under the Stock Option Plan for Non-Employee Directors, and the option
exercise price shall be equal to the fair market value of a share of common
stock of the Company on the date of the grant, and the options granted become
exercisable six months after issuance.
Pursuant to the Stock Option Plan for Non-Employee Directors, on April
8, 1992, the Company granted nonqualified options to two nonemployee directors
of the Company to each purchase 500 shares of the Company's common stock at an
exercise price of $6.75 per share which will expire in April 1997. On October
13, 1994, the Company granted nonqualified options to two nonemployee directors
of the Company to each purchase 500 shares of the Company's common stock at an
exercise price of $9.75 per share which will expire in October 1999. On April
11, 1995, the Company granted nonqualified options to two nonemployee directors
of the Company to each purchase 500 shares of the Company's common stock at an
exercise price of $15.00 per share which will expire in April 2000.
2. 1991 STOCK INCENTIVE PLAN
The 1991 Stock Incentive Plan permits the granting of awards in the form
of nonqualified stock options, incentive stock options, restricted stock,
deferred stock, and other stock-based incentives. Up to 300,000 shares of common
stock of the Company may be issued pursuant to the 1991 Stock Incentive Plan
(subject to appropriate adjustment in the event of changes in the corporate
structure of the Company). Officers and other key employees of the Company or
any subsidiary are eligible to receive awards under the 1991 Stock Incentive
Plan. The option exercise price of all options which are granted under the 1991
Stock Incentive Plan must be at least equal to 100% of the fair market value of
a share of common stock of the Company on the date of grant.
21
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996, 1995 AND 1994
NOTE I - (CONTINUED)
Pursuant to the 1991 Stock Incentive Plan, on October 6, 1991, the
Committee granted nonqualified stock options to the Company's then President to
purchase up to 150,000 shares of common stock at a purchase price of $7.00 per
share, and to the Company's Vice President to purchase up to 15,000 shares of
common stock at a purchase price of $7.00 per share. The option which was
granted to the Company's President terminates on April 8, 2000 and the option
which was granted to the Company's Vice President terminates on April 8, 1997.
On October 13, 1994, the Committee granted additional nonqualified stock options
to the Company's Vice President to purchase up to 15,000 shares of common stock
at a purchase price of $9.75 per share, which terminate on April 13, 2000.
A summary of the activity with respect to these plans is as follows:
<TABLE>
<CAPTION>
Non-
employee Per Per
Directors' Share 1991 Share
Stock Option Stock Option
Option Purchase Incentive Purchase
Plan Price Plan Price
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Balance at October 31, 1992
and October 31, 1993 1,000 $ 6.75 165,000 $ 7.00
Granted 1,000 $ 9.75 15,000 $ 9.75
----- -------
Balance at October 31, 1994 2,000 180,000
Granted 1,000 $15.00
----- -------
Balance at October 31, 1995 3,000 180,000
Cancelled 500 $ 6.75
-----
Balance at October 31, 1996 2,500 180,000
===== =======
Currently exercisable 2,500 180,000
===== =======
</TABLE>
At October 31, 1996, shares available for future grant are 22,500 under
the Non-Employee Stock Option Plan and 120,000 under the 1991 Stock Incentive
Plan.
3. WARRANTS
In 1993, the Company granted two stockholders a five-year warrant (the
"1993 Warrants") to purchase up to 25,000 shares of common stock of the Company
at a purchase price of $6.00 per share and registration rights, at the Company's
expense, with respect to these shares.
In February 1996, to raise cash, the Company induced the exercise of the
1993 Warrants by offering a reduction in the purchase price from $6.00 per share
to $5.375 per share. On April 2, 1996, the 1993 Warrants were exercised to
purchase 50,000 shares of the Company's Common Stock at the reduced purchase
price of $5.375 per share, or $268,750 , in cash. The Company recorded
compensation expense of $31,250 to reflect the difference between the original
and reduced per share price of the 1993 Warrants.
NOTE J - EMPLOYEE BENEFIT PLANS
In April 1985, the Company adopted its Retirement Income Plan (the
"Retirement Plan"), a noncontributory plan covering substantially all full-time,
non-union United States employees of the Company. Benefits were based upon a
combination of employee compensation and years of service. The Company paid the
entire cost of the plan for its employees and funded such costs as they accrued.
The Company's funding policy was to make annual contributions within minimum and
maximum levels required by applicable regulations. The Company's customary
contributions were designed to fund normal cost on a current basis and fund over
30 years the estimated prior service cost of benefit improvements (15 years of
22
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996, 1995 AND 1994
NOTE J - (CONTINUED)
annual gains and losses). The projected unit cost method was used to determine
the annual cost. Plan assets consist principally of equities and equity and
fixed income mutual funds.
Benefit accruals have been frozen as of September 15, 1988, resulting in
a plan curtailment. As a result of such curtailment, the Company will not accrue
benefits for future services; however, the Company will continue to contribute
as necessary for the unfunded liabilities.
The Company has recorded liability for the excess of its accumulated
benefit obligation over plan assets. The amount has been recorded as a
noncurrent liability with an offsetting amount reported as a separate reduction
of stockholders' equity.
Assumptions used in the accounting were:
1996 1995
---- ----
Discount rates - liability 7.50% 8.25%
Long-term rate of return - assets 8.50 8.50
A summary of the components of net periodic pension cost for 1996, 1995
and 1994 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ -----
<S> <C> <C> <C>
Service cost - benefits earned
during the period $ - $ - $ -
Interest cost on projected
benefit obligation 89,319 82,884 81,278
Actual return on plan assets (88,760) (75,242) (4,471)
Net amortization and deferral 21,561 24,144 (52,626)
-------- -------- --------
Net pension cost of defined
benefit plans $ 22,120 $ 31,786 $ 24,181
======== ========= ========
</TABLE>
The following table sets forth the funded status and amounts recognized
in the Company's balance sheet for its defined benefit plan at October 31, 1996
and 1995:
<TABLE>
<CAPTION>
1996 1995
---------- -------
<S> <C> <C>
Actuarial present value of
accumulated benefit obligations,
all of which is vested $ 1,198,707 $ 1,040,710
=========== ===========
Projected benefit obligations $(1,198,707) $(1,040,710)
Fair value of plan assets 1,160,844 981,763
----------- -----------
Excess of projected benefit
obligation over fair value
of plan assets (37,863) (58,947)
Unrecognized net loss 516,326 408,900
Adjustment required to recognize
minimum liability (516,326) (408,900)
----------- -----------
Accrued pension cost $ (37,863) $ (58,947)
=========== ===========
</TABLE>
NOTE K - PREFERRED STOCK PURCHASE RIGHTS
On January 7, 1988, the Board of Directors of the Company declared a
dividend distribution of ten rights (as adjusted for a reverse stock split) for
each outstanding share of the Company's common stock, par value $.10 per share,
to stockholders of record at the close of business on January 21, 1988. Each
right ("Right") entitles the registered holder to initially purchase from the
Company a unit consisting of one one-hundredth of a share (a "Unit") of Series A
Junior Participating Preferred Stock, par value $.10 per share, at a purchase
price of $5.50 per Unit, subject to adjustment. The rights will be exercisable
only if a person or group acquires beneficial ownership of 30% or more of the
Company's common stock (increased to more than 50% on January 6, 1997 - see Note
M) or commences a tender or exchange offer upon consummation of which a person
or group would beneficially own 30% or more of the Company's common stock. Upon
the occurrence of such event, each holder who is not a party to the transaction
23
<PAGE>
<PAGE>
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996, 1995 AND 1994
NOTE K - (CONTINUED)
may be entitled to purchase, under certain circumstances, at the Right's then
current exercise price, shares of the Company's common stock having a value of
twice the Right's then current exercise price. A committee of the Company's
Board of Directors, comprised exclusively of Continuing Directors or Independent
Directors, as defined in the Rights Agreement, pursuant to which the Rights were
issued, is entitled to redeem the Rights if the committee determines that such
event is in the best interest of the Company's stockholders. The Rights expire
on January 7, 1998.
NOTE L - COMMITMENTS AND CONTINGENCIES
1. LEASES AND OTHER COMMITMENTS
The Company has no significant annual rental obligations under
noncancellable operating leases in force at October 31, 1996. Rental expense
amounted to approximately $29,000 for the Company in 1996 and 1995.
2. EMPLOYMENT AGREEMENTS
The Company entered into an employment contract with its Vice President
commencing November 1, 1994. The contract provides for a minimum annual salary
of $90,000 through 1997, plus an annual bonus at the discretion of the Board of
Directors.
NOTE M - SUBSEQUENT EVENTS
AMENDMENT OF PREFERRED STOCK PURCHASE RIGHTS
On January 6, 1997, the Company's Board of Directors authorized an
amendment of the terms of the preferred stock purchase rights (the "Rights")
which accompany each share of the Company's Common Stock. The effect of the
amendment is to increase, from 30 % to more than 50%, the minimum percentage of
shares of the Company's Common Stock then outstanding that when beneficially
owned by a person or group, causes the Rights to become separately transferable
and exercisable.
24
<PAGE>
<PAGE>
SCHEDULE II
COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
ADDITIONS
--------------------------
(1) (2)
CHARGED TO
BALANCE AT CHARGED TO OTHER DEDUC- BALANCE AT
BEGINNING COSTS AND ACCOUNTS - TIONS - END OF
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
----------- ---------- ---------- ---------- -------- ------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts - Due from
Second Advantage Corp.
at October 31, 1996 $ -0- $ 194 $ 194
-------- --------- ---------
Valuation allowance
for marketable
securities at
October 31, 1994 $ 11,822 $ (9,813) $ (2,009)(A) $ -0-
-------- --------- -------- ---------
</TABLE>
(A) Recorded as cumulative effect of change in accounting principle on October
31, 1994 when Statement of Financial Accounting Standards No. 115 was adopted.
25
<PAGE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following are the current directors and executive officers of the Company:
<TABLE>
<CAPTION>
Name Age Position(s)
- ---- --- ---------------------
<S> <C> <C>
William L. Cohen 55 Director
Moses Marx 61 Director
Steven Rosenberg 48 Vice President; Director
Harold L. Schneider 54 Secretary
Randolph B. Stockwell 50 Director
</TABLE>
Mr. Cohen was elected a director in July 1993. Mr. Cohen is President,
Chief Executive Officer and Chairman of the Board of Andover Togs, Inc., an
apparel manufacturing company, positions he has held for more than the past five
years.
Mr. Marx was elected a director in May 1995. Mr. Marx has been a general
partner in United Equities Company (a securities brokerage firm) since 1954 and
a general partner in United Equities Commodities Company (a commodities
brokerage firm) since 1972. He is also President of Momar Corp. (an investment
company). Mr. Marx is a director of Bio Technology general Corp. (a developer
and manufacturer of biotechnology products) and The Cooper Companies, Inc. (a
developer and manufacturer of healthcare products).
Mr. Rosenberg has been Vice President and Chief Financial Officer of the
Company since 1990 and since May 1995, he has also served as acting President.
He also serves as chief administrative officer of the Company. Mr. Rosenberg was
elected a director in May 1995. From September 1987 through April 1990, he
served as President and Director of Scomel Industries, Inc., a company engaged
in international marketing and consulting. Mr. Rosenberg is a director of The
Cooper Companies, Inc.
Mr. Schneider was elected Secretary in April 1990. He has been a partner
in the law firm Tenzer Greenblatt LLP for more than the past five years.
Mr. Stockwell was elected a director in July 1988. He has been private
investor for over ten years and has served in various capacities with the
Community Bank, a commercial bank, from September 1972 to January 1987.
There are no family relationship (whether by blood, marriage or
adoption) among any of the Company's current directors or executive officers.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information as to all cash compensation
paid by the Company to each of its executive officers whose total cash
compensation exceeded $60,000 and to all executive officers of the Company as a
group for services while an executive officer during the fiscal year ended
October 31, 1996.
<TABLE>
<CAPTION>
Name Capacity in Which Served Cash Compensation
- ---- ------------------------ -----------------
<S> <C> <C>
Steven Rosenberg Acting President, Vice $90,000
President and Chief Financial
Officer
All executive officers as a group (one person) $90,000
</TABLE>
26
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
Pursuant to an Employment Agreement between the Company and Steven
Rosenberg dated as of November 1, 1994 (the "1994 Agreement"), Mr. Rosenberg
agreed to continue to serve as the Company's Vice President and Chief Financial
Officer during the three year period ending on October 31, 1997 (previously, he
had been serving in that capacity on an "at will" basis). The 1994 Agreement
provided that during the period of employment Mr. Rosenberg shall devote all of
his business time to the business of the Company and its subsidiaries as is from
time to time appropriate under the circumstances. As compensation for such
services, Mr. Rosenberg is paid a base salary at the rate of $90,000 per annum,
plus such annual bonus payments as the Board of Directors of the Company may in
its discretion determine to be appropriate under the circumstances.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives monthly
fees of $1,000 for serving as a director of the Company and $1,000 for each day
during which he participates in a meeting of the Board and, if on a separate
day, $500 for each day during which he participates in a meeting of a committee
of the Board of which is a member. In addition, see "Stock Option Plan for
Non-Employee Directors" below.
1991 STOCK INCENTIVE PLAN
The 1991 Stock Incentive Plan permits the granting of awards in the
forms of nonqualified stock options, incentive stock options, restricted stock,
deferred stock, and other stock-based incentives. Up to 300,000 shares of common
stock of the Company may be issued pursuant to the 1991 Stock Incentive Plan
(subject to appropriate adjustment in the event of changes in the corporate
structure of the Company). Officers and other key employees of the Company or
any subsidiary are eligible to receive awards under the 1991 Stock Incentive
Plan. The option exercise price of all options which are granted under the 1991
Stock Incentive Plan must be at least equal to 100% of the fair market value of
a share of common stock of the Company on the date of grant.
Pursuant to the 1991 Stock Incentive Plan, on October 6, 1991, the
Committee administering the Plan granted nonqualified stock options to the
Company's then President to purchase up to 150,000 shares of common stock at a
purchase price of $7.00 per share and to the Company's Vice President to
purchase up to 15,000 shares of common stock at a purchase price of $7.00 per
share. The option granted to the Company's President terminates on the eighth
anniversary of its effective date and the option granted to the Company's Vice
President terminates on the fifth anniversary of its effective date.
On October 13, 1994, the Committee granted additional nonqualified stock
options to the Company's Vice President to purchase up to 15,000 shares of
common stock at a purchase price of $9.75 per share which terminates on the
fifth anniversary of its effective date.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Up to 25,000 shares of common stock may be issued pursuant to the Stock
Option Plan for Non-Employee Directors (subject to appropriate adjustment in the
event of changes in the corporate structure of the Company). The Stock Option
Plan for Non-Employee Directors provides that each director of the Company who
is not an employee of the Company or any subsidiary (and who has not been an
employee for at least one year prior to the date of grant) shall be
automatically granted an option to purchase up to 500 shares of common stock of
the Company on the date of each annual meeting of stockholders at which he or
she is elected as a director of the Company. Only nonqualified options may be
granted under the Stock Option Plan for Non-Employee Directors, and the option
exercise price shall be equal to the fair market value of a share of common
stock of the Company on the date of the grant, and the options granted become
exercisable six months after issuance.
27
<PAGE>
<PAGE>
Pursuant to the Stock Option Plan for Non-Employee Directors, on April
8, 1992, the Company granted nonqualified options to two nonemployee directors
of the Company to each purchase 500 shares of the Company's common stock at an
exercise price of $6.75 per share which options will expire in April 1997.
Pursuant to the Plan, on October 13, 1994, the Company granted nonqualified
options to its two current nonemployee directors to each purchase 500 shares of
the Company's common stock at an exercise price of $9.75 per share which options
will expire in October 1999. Pursuant to the Plan, on April 11, 1995, the
Company granted nonqualified options to its two current nonemployee directors to
each purchase 500 shares of the Company's common stock at an exercise price of
$15.00 per share which options will expire in April 2000.
ITEM 12. SECURITIES HELD BY MANAGEMENT
The following table sets forth certain information as of January 15,
1997 with respect to the beneficial ownership of the Company's Common Stock by
(i) each person who is known by the Company to own beneficially more than 5% of
the Company's Common Stock, (ii) each of the Company's directors and executive
officers, and (iii) all executive officers and directors as a group.
<TABLE>
<CAPTION>
Number of Percent
Shares of Class
--------- ---------
<S> <C> <C>
William Cohen 1,000(1) *
Moses Marx 1,155,620 53.5%
160 Broadway, New York, NY 10038
Steven Rosenberg 30,000(2) 1.4%
Randolph B. Stockwell 1,500(3) *
All executive officers and directors
as a group (4 persons) 1,188,120(4) 54.2%
</TABLE>
- ----------------
* Less than 1%.
(1) Issuable upon the exercise of options which have been granted to Mr. Cohen
under the Company's Stock Option Plan for Non-Employee Directors.
(2) Issuable upon the exercise of outstanding options which have been granted
to Mr. Rosenberg.
(3) Issuable upon the exercise of options which have been granted to Mr.
Stockwell under the Company's Stock Option Plan for Non-Employee Directors.
(4) Includes 32,500 shares of Common Stock which are issuable upon the exercise
of outstanding options.
The foregoing information with respect to persons who are known by the
Company to own beneficially more than 5% of the Company's Common Stock is based
upon filings made by said persons with the Securities and Exchange Commission.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
NOT APPLICABLE
28
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) DOCUMENTS FILED AS PART OF THIS REPORT:
(i) Financial Statements
Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of October 31, 1996 and 1995
Consolidated Statements of Operations for the Years Ended October 31,
1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity for the Years Ended
October 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended October 31,
1996, 1995 and 1994
Notes to Consolidated Financial Statements
(ii) Financial Statement Schedules
Schedule
Number Description
-------- -----------
II. Valuation and qualifying accounts
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are not applicable and, therefore, have been omitted.
(iii) Exhibits
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Restated Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 19 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended July 31, 1988).
3.2 Certificate of Amendment of Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3(d) to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1988).
3.3 Certificate of Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock (incorporated by reference to Exhibit
3(b) to the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1987).
3.4 By-laws of the Company (incorporated by reference to Exhibit 3(e) to
the Company's Current Report on Form 8-K dated May 2, 1990).
4.1 Rights Agreement dated as of January 7, 1988, between the Company and
The First National Bank of Boston (incorporated by reference to Exhibit
4.1 to the Company's Current Report on Form 8-K dated January 7, 1988).
4.2 Amendment No. 1 to Rights Agreement effective as of December 20, 1990,
between the Company and The First National Bank of Boston (incorporated
by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K
dated January 17, 1991).
4.3 Amendment No. 2 to Rights Agreement, dated as of April 8, 1992, between
the Company and American Stock Transfer & Trust Company, as Rights
Agent (incorporated by reference to Exhibit 10.19 to the Company's
Current Report on Form 8-K dated April 20, 1992).
4.4 Amendment No. 3 to Rights Agreement, dated as of March 11, 1996,
between the Company and American Stock Transfer & Trust Company, as
Rights Agent (incorporated by reference to Exhibit 4.4 to the Company's
Current Report on Form 8-K dated March 21, 1996).
4.5 Amendment No. 4 to Rights Agreement, dated as of January 6, 1997,
between the Company and American Stock Transfer & Trust Company, as
Rights Agent (incorporated by reference to Exhibit 4.5 to the Company's
Current Report on Form 8-K dated January 10, 1997).
10.1 Assignment, Assumption and Indemnification Agreement dated October 25,
1984 between Cooper Laboratories, Inc. and the Company (incorporated
by reference to Exhibit 10(h) to the Company's Registration Statement
on Form S-1 (Registration No. 2-97498)).
10.2 Tax Sharing Agreement between the Company and Cooper Laboratories,
Inc. dated as of October 25, 1984 (incorporated by reference to
Exhibit 10(j) to the Company's Registration Statement on Form S-1
(Registration No. 2-97498)).
29
<PAGE>
<PAGE>
10.3 Joint Amendment dated as of June 14, 1985, to the Tax Sharing Agreement
between the Company and Cooper Laboratories, Inc. dated as of October
25, 1984 (incorporated by reference to Exhibit No. 10.3 to the
Company's Quarterly Report on Form 10-Q for the Fiscal Quarter Ended
April 30, 1990).
10.4 1991 Stock Incentive Plan of the Company. (incorporated by reference
to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the
Fiscal Year Ended October 31, 1991).
10.5 Stock Incentive Plan for Non-Employee Directors of the Company
(incorporated by reference to Exhibit 10.15 to the Company's Annual
Report on Form 10-K for the Fiscal Year Ended October 31, 1991).
10.6 Registration Rights Agreement, dated as of October 31, 1991, between
the Company and Momar Corp. (incorporated by reference to Exhibit 10.18
to the Company's Annual Report on Form 10-K for the Fiscal Year Ended
October 31, 1991).
10.7 Corporate Assumption of Tax Liability dated December 10, 1985
(incorporated by reference to Exhibit 10.20 to the Company's Current
Report on Form 8-K dated April 20, 1992).
10.8 Registration Rights Agreement, dated as of August 31, 1993, by and
between the Company and Mr. Moses Marx (incorporated by reference to
Exhibit 10.37 to the Company's Quarterly Report on Form 10-Q for the
Fiscal Quarter Ended July 31, 1993).
10.9 Asset Purchase Agreement, dated as of November 23, 1994, by and between
The Long Island Savings Bank, FSB and Entrust Financial Corporation
(incorporated by reference to Exhibit 10.38 to the Company's Current
Report on Form 8-K dated December 13, 1994).
10.10 Employment Agreement, dated as of November 1, 1994, between the Company
and Steven Rosenberg. (incorporated by reference to Exhibit 10.19 to
the Company's Annual Report on Form 10-K for the Fiscal Year Ended
October 31, 1994).
10.11 Redemption Agreement, dated as of April 19, 1995 (effective as of March
31, 1995), by and among Second Advantage Mortgage Corporation, Emanuel
Nadler, Efraim Nadler, Greater American Finance Group, Inc., Albert C.
Kocourek, James W. Raker, H. Franklin Green III and the Company.
(incorporated by reference to Exhibit 10.24 to the Company's Quarterly
Report on Form 10-Q for the Fiscal Quarter Ended April 30, 1995).
21. Subsidiaries of the Company.
27. Financial Data Schedule
(b) REPORTS ON FORM 8-K.
The Company did not file any reports on Form 8-K during the last quarter
of its fiscal year ended October 31, 1996.
30
<PAGE>
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE COMPANY HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
COOPER LIFE SCIENCES, INC.
BY: /s/ Steven Rosenberg
-------------------------------------
STEVEN ROSENBERG
Vice President (Chief Executive Officer)
DATE: January 27, 1997
-------------------------------------
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
COMPANY AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Vice
President (Chief
Executive Officer,
Principal Financial
Officer and Principal
Accounting Officer);
/s/ Steven Rosenberg Director January 27, 1997
- ----------------------------------
STEVEN ROSENBERG
/s/ William Cohen Director January 27, 1997
- ----------------------------------
WILLIAM COHEN
/s/ Moses Marx Director January 27, 1997
- ----------------------------------
MOSES MARX
/s/ Randolph B. Stockwell Director January 27, 1997
- ----------------------------------
RANDOLPH B. STOCKWELL
</TABLE>
31
<PAGE>
<PAGE>
Exhibit 21
SUBSIDIARIES OF REGISTRANT
Jurisdiction of
Name Incorporation
- ---- ---------------
Moore Sports Ltd. Delaware
Greater American Finance Group, Inc. Delaware
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COOPER
LIFE SCIENCES, INC. ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER
31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<CASH> 471
<SECURITIES> 33,572
<RECEIVABLES> 194
<ALLOWANCES> (194)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,138
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 256
0
0
<OTHER-SE> 32,921
<TOTAL-LIABILITY-AND-EQUITY> 34,138
<SALES> 0
<TOTAL-REVENUES> 794
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 809
<LOSS-PROVISION> (2,096)
<INTEREST-EXPENSE> 138
<INCOME-PRETAX> (2,249)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,249)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,249)
<EPS-PRIMARY> (1.05)
<EPS-DILUTED> (1.05)
<FN>
See the financial statements for an unclassified balance sheet.
</TABLE>
