<PAGE>
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number: 1-10432
March 31, 1997
ROBERTS PHARMACEUTICAL CORPORATION
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2429994
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
MERIDIAN CENTER II
4 INDUSTRIAL WAY WEST
EATONTOWN, NEW JERSEY 07724
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(908) 389-1182
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
--- ---
Class Outstanding Shares at
February 28, 1998
Common Stock 30,516,188
<PAGE>
ROBERTS PHARMACEUTICAL CORPORATION
INDEX
Page
Part I
Item 1 - Financial Statements 2
Item 2 - Management's Discussion and Analysis 8
Signatures 11
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<TABLE>
ROBERTS PHARMACEUTICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 86,766 $ 87,125
Marketable securities 7,326 7,793
Accounts receivable, net 24,377 30,791
Inventory 18,931 16,665
Notes receivable, current 245 1,620
Deferred tax assets 9,040 9,040
Net assets held for sale 500 500
Other current assets 1,787 2,124
------- -------
Total current assets 148,972 155,658
Fixed assets, net 14,873 14,945
Intangible assets 180,227 183,756
Notes receivable 6,652 6,574
Deferred non-current tax asset 11,216 11,217
Other assets 74 74
------- -------
Total assets $362,014 $372,224
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
ROBERTS PHARMACEUTICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of
long-term debt $ 5,496 $ 6,376
Accounts payable 12,494 15,848
Income taxes payable 7,422 7,020
Dividends payable 310 679
Other current liabilities 18,728 21,559
------- -------
Total current liabilities 44,450 51,482
Long-term debt, excluding
current installments 7,077 10,639
Other liabilities 320 345
Shareholders' equity:
Class B preferred stock,
$.10 par 10,000,000 shares
authorized, 1,004,622 and
2,721,030 outstanding 100 272
Common stock, $.01 par,
100,000,000 shares authorized,
27,234,370 and 22,961,707
outstanding 272 223
Additional paid-in capital 365,571 365,160
Cumulative translation adjustments (541) (301)
Retained earnings (deficit) (54,998) (55,359)
Treasury stock, 387,594 shares
of common stock, at cost (237) (237)
-------- --------
Total shareholders' equity 310,167 309,758
-------- --------
Total liabilities and
shareholders' equity $362,014 $372,224
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
ROBERTS PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
<CAPTION>
For the three months
ended March 31,
1997 1996
---- ----
<S> <C> <C>
Sales and Revenue:
Sales $ 26,330 $ 17,216
Other revenue 0 12
--------- ---------
Total sales and revenue 26,330 17,228
--------- ---------
Operating costs and expenses:
Cost of sales 11,652 8,748
Research & development 1,834 1,149
Marketing & administration 12,421 12,849
--------- ---------
Total operating costs & expenses 25,907 22,746
--------- ---------
Operating income (loss) 423 (5,518)
--------- ---------
Other income (expense):
Interest income 1,168 438
Interest expense (254) (651)
Foreign currency gain (loss) (13) (140)
Other income(expense), net --- 25
--------- ---------
Total other income (expense) 901 (328)
--------- ---------
Income (loss) from continuing
operations before income taxes 1,324 (5,846)
Provision (benefit) from income taxes 414 (1,634)
--------- ---------
Net income (loss) $ 910 $ (4,212)
========= =========
Net income (loss) per share of common
stock, primary and fully diluted $ 0.02 $ (0.22)
========= =========
Weighted average number of
common shares outstanding: 27,421,143 18,722,259
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
ROBERTS PHARMACEUTICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
For the three months
ended March 31,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities: $ 3,164 $ 11,781
-------- ---------
Cash flows from investing activities:
Redemption of marketable securities 467 7,527
Purchases of intangible assets --- (40)
Purchases of fixed assets (92) (78)
Collection of notes receiveable 1,424 ---
Impact of discontinued operations 0 2
-------- ---------
Net cash provided by (used in)
investing activities 1,799 7,411
-------- --------
Cash flows from financing activities:
Payments on notes payable and
long term debt (4,655) (8,280)
Net proceeds from issuance of
common stock 288 (217)
5% Preferred stock dividends paid (920) ---
Impact of discontinued operations 0 355
------- -------
Net cash used in
financing activities (5,287) (8,142)
------- -------
Exchange rate changes on cash and
cash equivalents (35) (8)
------- -------
Change in cash and cash equivalents (359) 11,042
Beginning cash and cash equivalents 87,125 16,357
------- -------
Ending cash and cash equivalents $86,766 $27,399
======= =======
Supplemental cash flow information:
Interest paid $862 $62
Income taxes paid 7 ---
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
1. Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
- ---------------------
In the opinion of management, the accompanying consolidated
financial statements include all necessary adjustments, consisting
of normal adjustments, necessary for a fair presentation of results
for the period reported. All dollar amounts are presented in
thousands, except per share data.
Foreign Currency Translation
- ----------------------------
Effective January 1, 1997, the functional currency of the United
Kingdom subsidiary, Monmouth Pharmaceutical, Ltd., was changed from
the U.S. Dollar to the British Pound. Monmouths' translation gains
and losses will now be accumulated as a separate component of
Shareholders' Equity.
New Accounting Pronouncements
- -----------------------------
In February 1997, the FASB issued SFAS No. 128, "Earnings Per
Share." SFAS 128 specifies a new standard designed to improve the
earnings per share ("EPS") information provided in financial
statements by simplifying the existing computational guidelines,
revising the disclosure requirements, and increasing the
comparability of EPS data on an international basis. Some of the
changes made to simplify the EPS computations include: (a)
eliminating the presentation of primary EPS and replacing it with
basic EPS, with the principal difference being that common stock
equivalents are not considered in computing basic EPS, (b)
eliminating the modified treasury stock method and the three
percent materiality provision, and (c) revising the contingent
share provisions and the supplemental EPS data requirements. SFAS
128 also makes a number of changes to existing disclosure
requirements. SFAS 128 is effective for financial statements
issued for periods ending after December 15, 1997, including
interim periods. The Company has not yet determined the impact of
the implementation of SFAS 128 and therefore this calculation has
not been reflected in these financial statements.
2. Inventory
---------
Inventory at March 31, 1997 consists of:
Raw Materials $ 2,709
Finished Goods 16,222
-------
Total $18,931
=======
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<PAGE>
3. Net Income Per Common Share
---------------------------
Net income per common share was determined by dividing net income,
as adjusted below, by applicable shares outstanding.
<TABLE>
<CAPTION>
March 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Net income as reported $ 910 $ (4,212)
EPS Adjustment for
Preferred dividends (309) ---
---------- ---------
Per share net income
for EPS calculation $ 601 $ (4,212)
========== ==========
</TABLE>
5. Contingency
-----------
A shareholder class action suit was instituted March 24, 1995, in
the United States District Court for the District of New Jersey
against Roberts Pharmaceutical Corporation and certain of its
officers and a former officer for alleged violations of certain
federal securities laws. The Company is not able to predict the
outcome of this proceeding at this time, and management is not able
to determine the amount of the potential liability, if any.
Roberts Pharmaceutical believes that it has complied with all of
its obligations under the federal securities laws. Roberts
Pharmaceutical intends to defend vigorously against the plaintiff's
allegations and considers such allegations to be without merit.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Results of Operations
Three months ended March 31, 1997 and 1996
Corporate Revenues
- ------------------
Total revenue for the three months ended March 31, 1997 increased
$9.1 million as compared with the first three months of 1996. This
increase was due to an increase in revenues from product sales.
Product Sales
- -------------
For the three months ended March 31, 1997, product sales increased
$9.1 million from $17.2 million to $26.3 million primarily as a
result of the launch of AGRYLIN and an increase in sales by the
United Kingdom subsidiary.
U.S. product sales increased $6.3 million from $11.5 million to
$17.8 million. AGRYLIN provided $4.0 million of this increase, and
COLACE, NITRODISC, and PERI-COLACE also posted significant
increases of $0.9 million, $0.9 million, and $0.5 million,
respectively. Sales of the Company's United Kingdom subsidiary,
Monmouth Pharmaceuticals, Ltd., increased $2.5 million from $2.8
million to $5.3 million, primarily due to sales of LODINE which was
launched in fourth quarter 1996. Sales of the Company's Canadian
subsidiary increased slightly by $0.3 million from $2.9 million to
$3.2 million.
Cost of Sales
- -------------
For the three months ended March 31, 1997, cost of sales amounted
to 44.3% of product sales, a 6.6 percentage point decrease as
compared to the prior year's comparable period. This decrease in
cost of sales and corresponding increase in gross profit percentage
is primarily the result of the addition of AGRYLIN to the product
mix. AGRYLIN has higher gross profit percentage as it is a product
that was developed through Roberts own research and development.
Additionally contributing to the increased gross profit is a $1.0
million decrease in sales of NOROXIN, which has a very high cost of
sales. Also included in cost of sales is a $1.8 million charge for
minimum royalties due to Ortho Pharmaceutical Corporation for
SUPPRELIN sales.
Research and Development
- ------------------------
Research and Development expenses increased $0.7 million to $1.8
million during the three months ended March 31, 1997 as compared to
the comparable prior year period. This increase is due to a
reduced level of expenditure required to support the Company's
development program for AGRYLIN which was recently approved, offset
by an increase due to start-up of the Phase IV midodrine trials and
the cost of purchased research and development for Sampatrilat.
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<PAGE>
Marketing and Administrative Expenses
- -------------------------------------
For the three months ended March 31, 1997, Marketing and
Administrative expenses decreased $0.4 million from $12.8 million
to $12.4 million. Marketing expenses decreased $0.8 million as a
result of a decrease of $0.9 million in consulting costs and a
decrease of $0.4 million in salaries and benefits, offset by an
increase of $0.5 million of NOROXIN sample costs.
Administrative expense increased $0.4 million from $5.1 million to
$5.5 million. This increase was due to a number of factors
including a $0.2 million increase in insurance expense and an
increase of $0.3 million related to salaries and benefits.
Interest Income and Expense
- ---------------------------
Interest income increased $0.7 million as a result of an increase
in invested marketable securities arising from the common and
preferred stock offerings in the third quarter of 1996. Interest
expense decreased by $0.4 million as a result of a decrease in
long-term debt related to product acquisitions.
Income Taxes
- ------------
For the three months ended March 31, 1997 and 1996, income tax
expense was calculated using a normal statutory rate for continuing
operations, except for certain taxes related to foreign operations.
The Company has recorded net deferred tax assets of approximately
$20.3 million. Realization is dependent upon generating sufficient
taxable income to utilize such items. Although realization is not
assured, management believes it is more likely than not that all of
the deferred tax assets will be realized; however, these assets
could be reduced at any time if estimates of future taxable income
are reduced.
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<PAGE>
Liquidity and Capital Resources
- -------------------------------
Operating activities provided $3.2 million in cash. The primary
components of cash provided by operating activities were a $6.4
million decrease in accounts receivable and the net income of $0.9
million, which includes $1.8 million of non-cash charges, and
increased working capital requirements of $5.9 million.
Investing activities provided $1.8 million, comprised primarily of
$0.4 million in marketable securities redemptions and $1.4 million
in collections of notes receivable.
Financing activities used $5.3 million, including $4.6 million of
payments on notes payable and payment of $0.9 million of preferred
stock dividends paid partially offset by proceeds from the issuance
of Common Stock.
The Company will use its existing cash and securities balances and
cash generated from operations to fund its operating activities and
its near-term and long-term debt obligations from previous product
acquisitions as well as future acquisitions of new products and the
purchase of a manufacturing facility and for the development of
existing pipeline products.
Foreign Currency Fluctuations
- -----------------------------
Roberts has subsidiary operations outside the United States. As a
result, Roberts is subject to fluctuations in revenues and costs
reported in United States dollars as a consequence of changing
currency exchange rates, especially rates for the British pound and
Canadian dollar. Such fluctuations were not material for the first
quarter 1997.
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<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: 3/5/97 /s/ Peter M. Rogalin
---------------------- ---------------------------
Peter M. Rogalin
Vice President and Treasurer
Date: 3/5/97 /s/ Peter M. Rogalin
---------------------- ---------------------------
Peter M. Rogalin
Chief Accounting Officer
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 86,766
<SECURITIES> 7,326
<RECEIVABLES> 24,377
<ALLOWANCES> 0
<INVENTORY> 18,931<F1>
<CURRENT-ASSETS> 148,972
<PP&E> 14,873
<DEPRECIATION> 0
<TOTAL-ASSETS> 362,014
<CURRENT-LIABILITIES> 44,450
<BONDS> 0
0
100
<COMMON> 272
<OTHER-SE> 310,167
<TOTAL-LIABILITY-AND-EQUITY> 362,014
<SALES> 26,330
<TOTAL-REVENUES> 26,330
<CGS> 11,652
<TOTAL-COSTS> 11,652
<OTHER-EXPENSES> 1,834
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 254
<INCOME-PRETAX> 1,324
<INCOME-TAX> 414
<INCOME-CONTINUING> 910
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 910
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
<FN>
<F1>Includes raw material inventory of $2,709.
</FN>
</TABLE>
