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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 JULY 31, 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 September 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
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
July 31, 1998 and October 31, 1997 3
Consolidated Statements of Operations
For The Three and Nine Months Ended
July 31, 1998 and 1997 4
Condensed Statements of Consolidated
Cash Flows For The Nine Months Ended
July 31, 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 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 9
Signature 10
Index of Exhibits 11
2
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COOPER LIFE SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1998 1997
-------- -------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 66,415 $ 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 489 567
--------- ---------
$ 67,829 $ 64,521
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 1,018 $ 992
Income taxes payable 462 100
Deferred income taxes -- 1,700
--------- ---------
1,480 2,792
Stockholders' Equity
Preferred Stock - $.10 par value: -- --
6,000,000 shares authorized - none issued
Common Stock - $.10 par value:
Authorized - 6,000,000 shares
Issued - 2,566,095 shares
Outstanding
July 31, 1998 - 2,126,265 shares 256 256
October 31, 1997 - 2,126,265 shares
Additional paid-in capital 78,546 78,546
Unrealized gain on marketable securities -- 32,359
net of deferred taxes
Accumulated deficit (9,680) (46,659)
Less: Common stock in treasury - at cost:
July 31, 1998 - 439,830 shares
October 31, 1997 - 439,830 shares (2,773) (2,773)
--------- ---------
Total Stockholders' Equity 66,349 61,729
--- ------ ---------
$ 67,829 $ 64,521
========= =========
</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 NINE MONTHS ENDED
JULY 31, JULY 31,
------------------ -----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Gain on sales of marketable $ -- $ 3,636 $ 38,909 $ 10,384
securities
Interest and other income 913 224 2,457 514
-------- -------- -------- --------
913 3,860 41,366 10,898
-------- -------- -------- --------
Expenses
General and administrative 131 111 717 554
-------- -------- -------- --------
Total expenses 131 111 717 554
-------- -------- -------- --------
Income from operations before 782 3,749 40,649 10,344
provision for income taxes
Provision for income taxes 440 -- 3,670 --
-------- -------- -------- --------
Net income $ 342 $ 3,749 $ 36,979 $ 10,344
======== ======== ======== ========
Net income per share:
Basic $ .16 $ 1.67 $ 17.39 $ 4.61
======== ======== ======== ========
Diluted $ .15 $ 1.68 $ 16.37 $ 4.61
======== ======== ======== ========
Average number of diluted 2,263 2,236 2,259 2,242
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>
Nine Months Ended
July 31,
--------------------------
1998 1997
------ -----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 36,979 $ 10,344
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
(Gain) on sale of marketable securities (38,909) (10,384)
Non cash compensation charge and other -- 80
(Increase) in deferred taxes (925) --
Changes in assets and liabilities:
Decrease in prepaid expenses and other 78 78
Decrease in accounts payable and other
accrued liabilities (1,312) (88)
--------- ---------
Net cash provided by (used in) (4,089) 30
operating activities --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of The Cooper
Companies, Inc. and Executone Information
Systems, Inc. common stock 44,167 19,152
--------- ---------
Net cash provided by investing activities 44,167 19,152
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Acquisition of treasury stock -- (625)
Proceeds from exercise of common stock -- 3
options --------- ---------
Net cash used in financing activities -- (622)
--------- ---------
Net increase in cash and cash equivalents 40,528 18,560
Cash and cash equivalents - beginning 25,887 471
--------- ---------
Cash and cash equivalents - ending $ 66,415 $ 19,031
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash used to pay taxes $ 4,159 $ --
</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
JULY 31, 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.
(See Item 5. Other Information)
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 July 31, 1998 and October 31, 1997 and the
consolidated results of its operations for the three and nine month periods
ended July 31, 1998 and 1997, and its consolidated cash flows for the nine month
periods ended July 31, 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.
However, the Company has applied to become a bank holding company and has
commenced a cash tender offer pursuant to which it would acquire what will
probably constitute a controlling equity interest in a New York State commercial
bank (see Item 5. Other Information). 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 NINE MONTHS ENDED JULY 31, 1998 COMPARED
TO THE THREE AND NINE MONTHS ENDED JULY 31, 1997.
For the three months ended July 31, 1998, the Company had net income of
$342,000, or $.15 per diluted share, as compared to net income of $3,749,000, or
$1.68 per diluted share, for the three months ended July 31, 1997. For the nine
months ended July 31, 1998 net income was $36,979,000, or $16.37 per diluted
share, as compared to a net income of $10,344,000, or $4.61 per diluted share in
the year ago period. There is no tax expense in the three and nine month periods
ended July 31, 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 nine months ended July 31, 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 Information Systems, Inc. Series A and Series
B Preferred Stock owned by the Company.
The gain on marketable securities of $38,909,000 for the nine months ended
July 31, 1998; $3,636,000 and $10,384,000 for the three and nine months in 1997,
respectively, represents realized gains on the sales of shares of TCC Common
Stock.
COSTS AND EXPENSES. Total expense for the three months and nine months
ended July 31, 1998 was $131,000 and $717,000, respectively, as compared to
$111,000 and $ 554,000, respectively, for the three months and nine months ended
July 31, 1997.
CAPITAL RESOURCES AND LIQUIDITY:
The Company anticipates that during the remainder of fiscal 1998, its
principal financing needs will consist primarily of funding its general and
administrative expenses and the tax or dividend described in the following
paragraph. In addition, during fiscal 1998, the Company may purchase shares
pursuant to the tender offer described in Item 5 below, depending upon the date
on which the required banking authority approvals are received.
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.
7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS. - (CONTINUED)
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 the remainder of 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.
As described under Item 5 ("Other Information"), the Company may utilize up
to approximately $24.5 million of its cash on hand to fund a pending cash tender
offer which is being made by it.
The Company has reviewed its financial systems and estimates that the total
cost of the Year 2000 program will not be material. The Company will modify
and/or replace those systems which may be impacted by the arrival of the year
2000.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company has made, and there is currently pending, a cash tender offer
for any and all of the outstanding shares of Common Stock of The Berkshire Bank
(the "Bank") at $10.50 cash per share, net to the seller. The Bank currently has
approximately 2,300,000 shares of Common Stock outstanding. Total funds required
to purchase all of such shares would be approximately $24,500,000, which would
be provided by the Company's cash on hand. The Board of Directors of the Bank
has recommended the offer to its shareholders.
The Bank is a privately-owned New York State banking corporation. The
Bank's main branch is located on Madison Avenue in New York City, and it has a
second branch in Brooklyn, New York. Mr. Moses Marx, who is the controlling
stockholder of the Company and a member of its Board of Directors, is also a
shareholder and a member of the Board of Directors of the Bank. Mr. Marx has
tendered the shares of Common Stock of the Bank which are owned by him.
The Company's obligation to purchase tendered shares pursuant to the tender
offer is subject to customary conditions, including the receipt of all required
approvals from the applicable banking authorities. Upon the purchase by the
Company of the tendered shares of Common Stock of the Bank, the Company would
become a bank holding company under the Federal Bank Holding Company Act.
8
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit
Number Description
--------- --------------
27 Financial Data Schedule.
b. There were no reports filed by the Company on Form 8-K during the
quarter for which this report on Form 10-Q is filed.
9
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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: September 9, 1998 By: /s/ Steven Rosenberg
----------------- ---------------------
STEVEN ROSENBERG
VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
10
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EXHIBIT INDEX
Exhibit Sequential
Number Description Page Number
------- ----------- -----------
27 Financial Data Schedule 12
11
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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 JULY 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JUL-31-1998
<CASH> 66,415
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 67,829
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 256
0
0
<OTHER-SE> 66,093
<TOTAL-LIABILITY-AND-EQUITY> 67,829
<SALES> 0
<TOTAL-REVENUES> 41,366
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 717
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 40,649
<INCOME-TAX> 3,670
<INCOME-CONTINUING> 36,979
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,979
<EPS-PRIMARY> 17.39
<EPS-DILUTED> 16.37
<FN>
See the financial statements for an unclassified balance sheet.
</FN>
</TABLE>
