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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, 1998
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 8, 1998, there were 2,126,265 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
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
April 30, 1998 and October 31, 1997 3
Consolidated Statements of Operations
For The Three and Six Months Ended
April 30, 1998 and 1997 4
Condensed Statements of Consolidated
Cash Flows For The Six Months Ended
April 30, 1998 and 1997 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 6. Exhibits and Reports on Form 8-K 8
Signature 9
Index of Exhibits
</TABLE>
2
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1998 1997
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 67,008 $ 25,887
Marketable Securities - at market value:
The Cooper Companies, Inc. Common Stock -- 35,515
Executone Information Systems, Inc. Common Stock -- 2,552
Deferred taxes 925 --
Prepaid expenses and other 514 567
-------- --------
$ 68,447 $ 64,521
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 1,106 $ 992
Income taxes payable 1,334 100
Deferred income taxes -- 1,700
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2,440 2,792
Stockholders' Equity
Preferred stock - $.10 par value:
6,000,000 shares authorized: none issued -- --
Common stock - $.10 par value: 6,000,000
Authorized -- 6,000,000 shares
Issued -- 2,566,095 shares
Outstanding --
April 30, 1998, 2,126,265 shares
October 31, 1997, 2,126,265 shares 256 256
Additional paid-in capital 78,546 78,546
Unrealized gain on marketable securities,
net of deferred taxes -- 32,359
Accumulated deficit (10,022) (46,659)
Less: Common stock in treasury - at cost;
April 30, 1998, 439,830 shares
October 31, 1997, 439,830 shares (2,773) (2,773)
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Total Stockholders' Equity 66,007 61,729
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$ 68,447 $ 64,521
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</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,
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Revenues
Gain (loss) on sales of $ (17) $ 4,791 $38,909 $ 6,748
marketable securities
Interest and other income 934 220 1,544 290
------- ------- --------- -------
917 5,011 40,453 7,038
------- ------- --------- -------
Expenses
General and administrative 444 295 586 443
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Total Expenses 444 295 586 443
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Income from operations before
provision (benefit) for income taxes 473 4,716 39,867 6,595
Provision (benefit) for income taxes (90) -- 3,230 --
------- ------- --------- -------
Net income $ 563 $ 4,716 $36,637 $ 6,595
======= ======= ========= =======
Net income per share:
Basic $ .26 $ 2.19 $ 17.23 $ 3.06
======= ======= ========= =======
Diluted $ .25 $ 2.11 $ 16.23 $ 2.94
======= ======= ========= =======
Average number of diluted 2,261 2,234 2,257 2,246
shares outstanding ======= ======= ========= =======
</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,
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1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 36,637 $ 6,595
Adjustments to reconcile net income to net
cash used in operating activities:
Gain on marketable securities (38,909) (6,748)
Non cash compensation charges and other -- 79
(Increase) in deferred taxes (925) --
Changes in assets and liabilities:
Decrease in prepaid expenses and other 53 41
Decrease in accounts payable, other
accrued liabilities and income taxes payable (352) (44)
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Net cash used in operating activities (3,496) (77)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of The Cooper
Companies, Inc. and Executone Information
Systems, Inc. common stock 44,617 13,122
Note receivable from The Cooper Companies, Inc. -- (5,000)
-------- --------
Net cash provided by investing activities 44,617 8,122
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CASH FLOWS FROM FINANCING ACTIVITIES:
Acquisition of treasury stock -- (518)
Proceeds from exercise of common stock options -- 3
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Net cash used in financing activities -- (515)
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Net increase in cash and cash equivalents 41,121 7,530
Cash and cash equivalents - Beginning of period 25,887 471
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Cash and cash equivalents - End of period $ 67,008 $ 8,001
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash used to pay taxes $ 2,858 $ --
</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, 1998 AND 1997
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, 1997 when reviewing this Form 10-Q. Quarterly
results reported herein are not necessarily indicative of results to be expected
for other quarters.
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, 1998 and October 31, 1997 and
the consolidated results of its operations for the three and six month periods
ended April 30, 1998 and 1997, and its consolidated cash flows for the six month
periods ended April 30, 1998 and 1997.
NOTE 2. - MARKETABLE SECURITIES
THE COOPER COMPANIES, INC.
At October 31, 1997, the Company owned 993,433 shares 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 as of January 31, 1998, the Company has sold all of its shares
of TCC Common Stock.
EXECUTONE INFORMATION SYSTEMS, INC.
At October 31, 1997, the Company owned 1,166,520 shares of the common
stock of Executone Information Systems, Inc. (the "Executone Common Stock"), a
Virginia corporation ("Executone"), the common stock of which trades on the
NASDAQ National Market System. The Company has been selling shares of Executone
Common Stock in open market transactions; and as of April 30, 1998, the Company
has sold all of its shares of Executone Common Stock.
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, 1998 COMPARED
TO THE THREE AND SIX MONTHS ENDED APRIL 30, 1997.
Net income was $563,000, or $.25 per diluted share, for the three months
ended April 30, 1998 as compared to net income of $4,716,000, or $2.11 per
diluted share, for the three months ended April 30, 1997. For the six months
ended April 30, 1998 net income was $36,637,000, or $16.23 per diluted share, as
compared to net income of $6,595,00, or $2.94 per diluted 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; for which deferred tax assets had been fully reserved. The income
tax expense for the three and six months ended April 30, 1998 reflects the
utilization of the remaining net operating loss carryforwards and available tax
credits. A deferred tax asset has been established to reflect the reserve, for
book purpose, of the Executone Series A and Series B Preferred Stock.
The gain on marketable securities of $38,909 for the six months ended
April 30, 1998; $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. The increase in interest income in 1998 is due to higher cash balances.
COSTS AND EXPENSES. General and administrative expenses increased by
$149,000 to $444,000 from $295,000 for the three months ended April 30, 1998 and
1997, respectively, and increased by $143,000 to $586,000 from $443,000 for the
six months ended April 30, 1998 and 1997, respectively. The increase in 1998 is
due to legal and professional fees incurred in connection with the Company's
investigation of new business opportunities.
CAPITAL RESOURCES AND LIQUIDITY:
The Company anticipates that during fiscal 1998, its principal financing
needs will consist primarily of funding its general and administrative expenses,
the acquisition price of one or more new business activities and the tax or
dividend described in the following paragraph.
For the fiscal year ending October 31, 1998, the Company is likely to be
deemed a Personal Holding Company (a "PHC"), as defined in the Internal Revenue
Code. As a PHC, the Company will be required to pay an additional income tax or
issue a dividend to its shareholders in an amount based upon the PHC Internal
Revenue Code formulas, which is primarily based upon net income. The Company has
not yet determined whether it will pay the additional income tax or issue a
dividend to its shareholders. The amount of such tax or dividend is expected to
be less than $2.0 million.
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 1998. 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,
1998.
7
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
27 Financial Data Schedule.
</TABLE>
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 11, 1998 By: /s/ Steven Rosenberg
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STEVEN ROSENBERG
VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
9
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
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<S> <C> <C>
27 Financial Data Schedule 11
</TABLE>
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, 1998 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-31-1997
<PERIOD-END> APR-30-1998
<CASH> 67,008
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 68,447
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 256
0
0
<OTHER-SE> 65,751
<TOTAL-LIABILITY-AND-EQUITY> 68,447
<SALES> 0
<TOTAL-REVENUES> 40,453
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 586
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 39,867
<INCOME-TAX> 3,230
<INCOME-CONTINUING> 36,637
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,637
<EPS-PRIMARY> 17.23
<EPS-DILUTED> 16.23
<FN>
See the financial statements for an unclassified balance sheet.
</FN>
</TABLE>
