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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 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 .
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Commission File No. 0-15098
JONES PHARMA INCORPORATED
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(Exact name of registrant as specified in its charter)
DELAWARE 43-1229854
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1945 CRAIG ROAD, ST. LOUIS MISSOURI 63146
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(Address of principal executive offices) (Zip Code)
(314) 576-6100
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(Registrant's telephone number, including area code)
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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
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Number of shares outstanding of registrant's Common Stock as of October 15,
1998: 28,748,423.
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The following Form 10-Q/A is being submitted to amend the Form 10-Q for the
quarterly period ended September 30, 1998 which was filed by JONES PHARMA
INCORPORATED ("Registrant") on November 13, 1998.
This Form 10-Q/A incorporates the Registrant's disclosure regarding its
Year 2000 readiness into Item 2 of Part I -- Management's Discussion and
Analysis of Results of Operations and Financial Condition.
PART I
FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
YEAR 2000 UPDATE
The Year 2000 issue exists because many computer systems and applications,
including those embedded in equipment and facilities, use two digit rather than
four digit date fields to designate an applicable year. As a result, the systems
and applications may not properly recognize the year 2000 or process data that
includes it, potentially causing data miscalculations or inaccuracies or
operational malfunctions or failures. The inability to accurately process date
related information would have a material impact on the Company's operations and
financial condition. To mitigate the risks of a Year 2000 failure, a Year 2000
action plan (the "Plan") has been developed and is currently being executed by
the Company. The Plan is directed and monitored by the Company's IS (Information
Systems) Steering Committee and is proceeding within the planned timetable. The
Plan addresses the Year 2000 risk presented by the following IS and non-IS
elements of the Company's operations:
Financial Systems
Over the past fifteen months, the Company has completed the replacement of
its software and systems in the normal course of business. The financial
system has been replaced with an Enterprise Reporting System that the
developer states is Year 2000 compliant.
Other Date-Sensitive Systems and Equipment
Non-financial systems used in the Company's manufacturing facilities are
currently being upgraded or replaced in connection with plant expansions
and/or on-going equipment validation procedures in the ordinary course of
business. The upgrade or replacement of other non-financial systems and
equipment relating to distribution, voice and data telecommunication,
laboratory testing, and security and environmental control is substantially
complete. For the remaining elements, assessment and remediation measures,
if necessary, will be initiated during the second quarter of 1999. Other
date-sensitive equipment is scheduled to be assessed and remediation
measures, if necessary, will be initiated during the second quarter of
1999.
Third Party Relationships
The Company is highly dependent on internal and third party computer
systems to process its daily transactions. The Company has commenced
efforts to determine the extent to which it may be impacted by Year 2000
issues of third parties, including suppliers, customers, and service
providers. Contact with major customers and suppliers has been initiated.
To date, the Company is not aware of any non-Year 2000 compliant third
party customers, suppliers, or service providers that would materially
impact the Company's results of operations, liquidity or capital resources.
However, the Company has no means of ensuring these entities will be Year
2000 ready. Furthermore, the Company has no means of ensuring that the
customers (e.g., hospital buying groups, hospitals, and pharmacies) of its
wholesale distributors will be Year 2000 ready. The inability of third
parties to complete their Year 2000 programs in a timely manner
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could materially impact the Company. The assessment of risk related to
third party relationships is expected to be completed during the second
quarter of 1999.
The Company plans to test and validate identified financial systems, other
date-sensitive systems and equipment, and third party communications for Year
2000 compliance. This testing will be initiated in the second quarter of 1999,
and will be completed by December 31, 1999. Validation procedures will be
performed and managed by internal Company staff.
The costs associated with the Company's Year 2000 Plan have, for the most part,
been planned capital expenditures and budgeted internal staffing expenses. The
total capital expenditures related to these system upgrades and/or replacements
approximate $1.5 million and have been capitalized as incurred over the last
fifteen months. Additional costs to be incurred to complete the Plan are not
expected be significant and will relate to the ongoing capital expenditures and
internal staffing described above.
The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failure could materially and adversely impact the Company's
results of operations, liquidity and financial condition. Although the Company
has not yet developed a comprehensive contingency plan to address situations
that may result if the Company or any of the third parties upon which the
Company is dependent is unable to achieve Year 2000 readiness, a plan will be
completed by the fourth quarter of 1999 to address the most reasonably likely
worst case scenario with respect to potential Year 2000 compliance failures.
Based on the Company's progress to date and timeline to complete the Year 2000
Plan, the Company does not foresee significant financial or operational risks
associated with its compliance at this time. However, these expectations are
subject to uncertainties including, but not limited to, the readiness of third
party customers, suppliers and service providers, failure to identify all
susceptible systems, and the availability and cost of personnel necessary to
address any unforeseen problems.
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.
JONES PHARMA INCORPORATED
Date: January 29, 1999 By: /s/ Dennis M. Jones
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Dennis M. Jones, President
Date: January 29, 1999 By: /s/ Judith A. Jones
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Judith A. Jones, Executive Vice President
and Principal Financial and Accounting
Officer
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