<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 33-30999
R.P. SCHERER CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3523163
(State of Incorporation) (I.R.S. Employer Identification Number)
2075 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084
(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (810) 649-0900
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 / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares outstanding of the registrant's common stock as of August 11,
1995: 23,328,570 shares of common stock, par value $.01.
<PAGE> 2
PART I
ITEM 1 FINANCIAL STATEMENTS
R.P. SCHERER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
(In thousands, except per share data)
-------------------------------------
For the three months ended June 30,
-------------------------------------
1995 1994
---- ----
<S> <C> <C>
Net sales $148,378 $132,938
Cost of sales 93,684 83,756
Selling and administrative expenses 18,511 17,528
Research and development expenses, net 6,000 4,391
-------- --------
Operating income 30,183 27,263
Interest expense 3,380 3,546
Interest earned and other (620) (409)
-------- --------
Income before income taxes and minority interests 27,423 24,126
Income taxes 8,762 8,540
Minority interests 4,966 4,161
-------- --------
Net income $13,695 $11,425
======== ========
Per Common and Common Equivalent Share:
Net income $0.56 $0.47
======== ========
Average number of common and common
equivalent shares 24,659 24,312
</TABLE>
The accompanying notes are an integral part of this statement.
2
<PAGE> 3
R.P. SCHERER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(In thousands)
June 30, March 31,
1995 1995
-------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 26,541 $ 33,715
Short-term investments 5,119 5,060
Receivables, less reserves of:
June 30, 1995 - $4.4 million;
March 31, 1995 - $3.9 million 120,632 118,772
Inventories 65,639 66,610
Other current assets 7,353 6,404
---------- ----------
225,284 230,561
---------- ----------
PROPERTY:
Property, plant and equipment, at cost 382,129 372,237
Accumulated depreciation (98,531) (92,734)
---------- ----------
283,598 279,503
---------- ----------
OTHER ASSETS:
Goodwill, net of amortization 182,419 183,662
Deferred financing fees, net of amortization 1,644 1,797
Other assets 16,838 15,850
---------- ----------
200,901 201,309
---------- ----------
$709,783 $711,373
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 6,144 $ 4,635
Accounts payable 66,123 70,549
Accrued liabilities 33,887 38,976
Accrued income taxes 3,904 5,287
---------- ----------
110,058 119,447
---------- ----------
LONG-TERM LIABILITIES AND OTHER:
Long-term debt 188,447 182,868
Other long-term liabilities 56,240 56,900
Deferred income taxes 35,108 35,806
Minority interests in subsidiaries 33,794 42,706
---------- ----------
313,589 318,280
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 4)
SHAREHOLDERS' EQUITY:
Preferred stock, 500,000 shares authorized, none - -
issued
Common stock, $.01 par value, 50,000,000 shares
authorized; shares issued: June 30, 1995 -
23,328,570 shares; March 31, 1995 - 23,316,674 shares 233 233
Additional paid-in capital 235,383 235,383
Retained earnings 48,697 35,002
Currency translation adjustment 1,823 3,028
---------- ----------
286,136 273,646
---------- ----------
$709,783 $711,373
========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE> 4
R.P. SCHERER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands)
For the three months ended
June 30,
--------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $13,695 $11,425
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 6,087 5,002
Amortization of intangible assets 1,539 1,536
Amortization of deferred financing costs and debt discount 104 147
Minority interests in net income 4,966 4,161
Deferred tax provision and other (209) 367
(Increase) decrease in receivables (2,987) 2,552
Increase in inventories and other current assets (3,164) (2,743)
Decrease in accounts payable and accrued expenses (15,194) (11,608)
------- -------
Net cash provided by operating activities 4,837 10,839
------- -------
INVESTING ACTIVITIES:
Purchases of plant and equipment (13,013) (7,647)
Proceeds from sales of plant and equipment 340 509
Other (1,421) (205)
------- -------
Net cash used by investing activities (14,094) (7,343)
------- -------
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 14,183 33,390
Long-term debt retirements and payments (8,658) (27,929)
Short-term borrowings, net 1,764 325
Cash dividends paid to minority shareholders of subsidiaries (5,181) (3,653)
------- -------
Net cash provided by financing activities 2,108 2,133
------- -------
Effect of currency translation on cash and cash equivalents (25) 826
------- -------
Net increase (decrease) in cash and cash equivalents (7,174) 6,455
Cash and cash equivalents, beginning of period 33,715 16,576
------- -------
Cash and cash equivalents, end of period $26,541 $23,031
======= =======
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE> 5
R.P. SCHERER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of R.P. Scherer Corporation (the "Company"), a Delaware corporation,
and its subsidiaries, some of which are less than wholly-owned. In the opinion
of management, the accompanying unaudited consolidated financial statements
include all adjustments (consisting only of normal recurring items) necessary
for the fair presentation of financial position and results of operations.
These consolidated financial statements and related notes have been prepared
pursuant to the Rules and Regulations set forth by the Securities and Exchange
Commission and should be read in conjunction with the financial statements and
notes included in the Company's Annual Report on Form 10-K for the year ended
March 31, 1995, as filed with the Securities and Exchange Commission.
Prior to February 28, 1995, a wholly-owned subsidiary of the Company, R.P.
Scherer International Corporation ("Scherer International"), directly owned all
operations of the Company, and the Company's only asset was its investment in
Scherer International. For administrative reasons, on February 28, 1995, the
Company merged Scherer International into the Company, through which the assets
and liabilities of Scherer International were assumed by the Company. Such
merger did not have any impact on the Company's results of operations or
financial position.
Certain items in the prior years' consolidated financial statements and notes
thereto have been reclassified to conform with the current year presentation.
2. INCOME TAXES
The effective income tax rate in 1995 is lower than the U.S. Federal income tax
rate due primarily to the anticipated utilization of carryforward foreign and
other tax credits as well as shifts in the mix of taxable income between
jurisdictions. In 1994, the effective tax rate was higher than the U.S.
Federal income tax rate due primarily to limitations on the use of foreign and
other tax credits, as well as the concentration of taxable income in higher
tax rate jurisdictions.
3. INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
(In thousands) June 30, March 31,
1995 1995
-------- ---------
<S> <C> <C>
Raw materials and supplies $32,254 $32,312
Work in process 10,693 10,235
Finished goods 22,692 24,063
------- -------
$65,639 $66,610
======= =======
</TABLE>
5
<PAGE> 6
R.P. SCHERER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
4. CONTINGENCIES
On March 30, 1992, OCAP Acquisition Corp. ("OCAP") commenced an action in the
Supreme Court of the State of New York, County of New York, against Paco,
certain of its subsidiaries, the Company and Scherer International
(collectively, the "defendants"), arising out of the termination of an Asset
Purchase Agreement dated February 21, 1992 (the "Purchase Agreement") between
OCAP and the defendants providing for the purchase of substantially all the
assets of Paco. On May 15, 1992, OCAP served an amended verified complaint (the
"Amended Complaint"), asserting causes of action for breach of contract and
breach of the implied covenant of good faith and fair dealing, arising out of
defendants' March 25, 1992 termination of the Purchase Agreement, as well as
two additional causes of action that were subsequently dismissed by order of
the court. The Amended Complaint seeks $75 million in actual damages, $100
million in punitive damages, as well as OCAP's attorney fees and other
litigation expenses, costs and disbursements incurred in bringing this action.
Pre-trial discovery with respect to the action is presently under way. Based
upon the investigation conducted by the Company and its counsel to date, the
Company believes that this action lacks merit and intends to defend against it
vigorously. In addition, based upon the information learned during the
discovery process, the Company recently filed a counterclaim seeking damages
as a result of the termination of the Purchase Agreement. In the opinion of
management, the ultimate outcome of this litigation will not have a material
adverse effect on the Company's business or financial condition.
The Company was informed in August 1992 that soil at a manufacturing
facility in North Carolina owned and operated by the Company from 1975 to 1985
contained levels of tetrachlorethene and other substances which exceeded
environmental standards. The Company voluntarily completed a remedial
investigation, and remedial and removal actions by the Company and the current
owner of the facility are ongoing. The Company will continue to perform
additional studies and remediation of the area, including testing and removal
of groundwater, which may indicate the necessity for additional remedial and
removal actions in the future. On the basis of the results of investigations
performed to date, the Company does not believe that potential future costs
associated with either the investigation or any potential remedial or removal
action will ultimately have a materially adverse impact on the Company's
business or financial condition.
The Company is a party to various other legal proceedings arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on the Company's financial position, results of operations,
liquidity or capital resources.
6
<PAGE> 7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
The following discussion and analysis of financial results and condition covers
the three month periods ended June 30, 1995 and 1994. A majority of the
Company's sales, income and cash flows is derived from its international
operations. With the exception of operations in highly inflationary economies,
which are measured in U.S. dollars, the financial position and the results of
operations of the Company's foreign operations are measured using the local
currencies of the countries in which they operate, and are translated into U.S.
dollars. Although the effects of foreign currency fluctuations are mitigated
by the fact that expenses of foreign subsidiaries are generally incurred in the
same currencies in which sales are generated, the reported results of
operations of the Company's foreign subsidiaries are affected by changes in
foreign currency exchange rates, and as compared to prior periods will be
higher or lower depending upon a weakening or strengthening of the U.S. dollar.
In addition, a substantial portion of the Company's net assets are based in its
foreign operations, and are translated into U.S. dollars at foreign currency
exchange rates in effect as of the end of each period. Accordingly, the
Company's consolidated shareholders' equity will fluctuate depending upon the
strengthening or weakening of the U.S. dollar.
RESULTS OF OPERATIONS
Quarters Ended June 30, 1995 and 1994
Sales of $148.4 million for the three months ended June 30,1995
established a new first quarter sales record, and represent a 12% increase from
sales of $132.9 million achieved in the same period of 1994. Such increase
reflects sales growth in continental Europe, offset by overall nutritional
softgel sales declines in the United Kingdom and Australia and by a Vitamin E
softgel sales decline in the United States. The effects of a weaker U.S. dollar
relative to most foreign currencies had the effect of increasing reported sales
growth. On a constant exchange rate basis, sales increased 3% in the quarter
ended June 30, 1995 compared to the same quarter of the prior year.
Operating income was a quarterly record $30.2 million for the June 30, 1995
quarter, an 11% gain (2% measured at constant exchange rates) from the
$27.3 million earned in the same period of the prior year. The current year
quarter's results reflect improvements from a shift in sales mix toward
pharmaceutical products (as discussed further below), offset by planned
increases in research and development costs primarily related to the Company's
Advanced Therapeutic Products Group ("ATP") initiative. Excluding research and
development expenses, operating income increase by 14% over the prior year
quarter, resulting in an operating margin of 24.4% for the June 30, 1995
quarter, compared with 23.8% for the same quarter a year ago.
Net research and development costs were $6.0 million for the quarter
ended June 30, 1995, representing a 37% increase from the $4.4 million incurred
during last year's first quarter. Gross research and development costs
increased by 42%, but were offset by an 83% increase in customer
reimbursements, which were $1.0 million in the current year quarter.
Approximately $2.2 million of the June 30, 1995 quarter's research and
development spending relates to ATP, representing a significant increase from
ATP expenses of $0.8 million in the same quarter a year ago. ATP was formed
late in fiscal year 1994 to engage in the development of off-patent or soon to
become off-patent drug compounds reformulated utilizing the Company's advanced
drug delivery systems, including Zydis(R), Pulsincap(R) and RP Scherersol(R).
As discussed further below, the Company expects that spending for ATP
activities will continue to increase significantly for the foreseeable future.
Net income reached an all-time quarterly record of $13.7 million, or $0.56 per
share, for the quarter ended June 30, 1995, compared to $11.4 million, or $0.47
per share, for the same quarter last year. The
7
<PAGE> 8
19% earnings growth in the June 30, 1995 quarter was achieved despite
the increase in ATP expenses. The investment in ATP represented a per share
cost of $0.06 in the June 30, 1995 quarter, compared to only $0.02 per share in
last year's first quarter. Excluding the increased in ATP spending, earnings
per share would have increased 28% in the current year's quarter. Also
partially offsetting the growth in operating income was a $0.8 million increase
in minority interests in income of subsidiaries as a result of a continuing
growth in earnings of the Company's 51%-owned German operation. The
consolidated effective income tax rate declined to 32.0% from 35.4% between the
June 30, 1995 and 1994 quarters. Such decline primarily resulted from
geographic shifts in the mix of income and anticipated increases in the
utilization of foreign and other tax credits in the current year.
Results by Geographic Segment
The following sets forth operating results for each of the Company's geographic
segments for the quarters ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
(In thousands) Sales Operating Income Operating Margin
----------------------- ----------------------- --------------------
1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
United States $ 33,516 $ 32,993 $ 9,072 $ 7,511 27.1% 22.8%
Europe 87,195 74,226 19,393 17,151 22.2 23.1
Other International 27,667 25,719 5,762 5,417 20.8 21.1
Unallocated (1) -- -- (4,044) (2,816) -- --
-------- -------- ------- ------- ----- -----
$148,378 $132,938 $30,183 $27,263 20.3% 20.5%
======== ======== ======= ======= ===== =====
</TABLE>
(1) Includes general Corporate expenses and expenses associated with the
ATP Group.
The Company's United States operations generated a 2% sales gain for the
quarter ended June 30,1995. Sales of prescription pharmaceutical softgels were
particularly strong as a result of sales of Abbot Laboratories' recently
introduced Hytrin (terazosin HCI), used for the treatment of hypertension and
benign prostate enlargement. Sales of over-the-counter ("OTC") pharmaceutical
softgels declined slightly, as a result of the timing of new product launches by
the Company's customers in the prior year period. Combined, pharmaceutical
sales increased by 3%. The weak demand in the Vitamin E market, which arose in
fiscal 1995 as a result of media attention to studies questioning the purported
health benefits of Vitamin E and other anti-oxidant products, continued in the
current fiscal quarter. However, total nutritional softgel sales declined only
6% between the current and prior year periods, as moderate growth in sales of
other nutritional products offset much a 35% decline in lower margin Vitamin
E sales. Operating income grew by 21%, or $1.6 million, yielding a 27.1%
operating margin as compared with 22.8% in the prior year quarter, aided
significantly by these strong pharmaceutical sales and an overall 15% gain in
gross margin from nutritional products primarily resulting from the shift in
product mix away from Vitamin E.
Sales in Europe increased 17% for the June 30, 1995 quarter, as compared to
the same quarter last year. On a constant exchange rate basis, this
sales increase amounted to 3%. Strong sales gains throughout continental Europe
were partially offset by soft demand for nutritional softgels in the United
Kingdom. The Company's German operations realized continued growth of sales to
Sandoz of Sandimmune and Neoral (cyclosporin A) softgels, which continue to
perform well in the expanding immuno-suppressant drug market. In addition,
Neoral was also recently approved for use in the United States for the
prevention of organ rejection in kidney, liver, and heart transplants. As a
result of the sales increases, operating income increased 13% between the two
quarters. Operating margin decreased to 22.2% for the current year quarter
compared to 23.1% a year ago, largely due to the softness of the United Kingdom
nutritionals market and, to a lesser extent, increases in research and
development expenses for softgel, Zydis(R) and Pulsincap(R) operations.
The Company's Other International segment contributed a $1.9 million, or 8%,
increase in sales for the quarter ended June 30, 1995, as a result of increased
reported sales in Japan, Korea and South America. The softness
8
<PAGE> 9
of the Australian nutritionals market and the presence of the first
Australia-based competitor resulted in a decline in sales and margin levels at
the Company's Australian operation. A relatively modest 6% increase in
operating income for the segment was achieved, as income from the reported
sales gains in Japan, Korea and South America was partially offset by reduced
margins in Australia.
OUTLOOK
The Company was recently notified by two important U.S. softgel customers, one
pharmaceutical and one cosmetic, that orders previously scheduled for shipment
during the next several months were being significantly deferred and reduced.
This, combined with the continued weakness of the nutritionals markets in the
United Kingdom and Australia (as discussed above), as well as planned increased
expenditures for ATP, will likely result in the Company achieving net income
levels for its second fiscal quarter below those of the second quarter in the
prior year. Based upon currently available information, the Company expects
that net income for the quarter ended September 30, 1995, could be 10-20%
below that of the same quarter in the prior year. The Company is putting in
place measures to reduce spending to offset as much as possible the
anticipated earnings shortfall. The Company currently expects that the third
and fourth quarters' net income will exceed that of the same quarters of the
prior year.
CASH FLOWS
Cash and cash equivalents decreased by $7.2 million for the quarter ended June
30, 1995, as compared with an increase of $6.5 million in the same period in
1994. Operating activities provided cash of $4.8 million and $10.8 million
for the current and prior year periods, respectively. For the period ended
June 30, 1995, cash generated from continued strong earnings was partially
offset by a $21.3 million increase in net working capital. Such working
capital increase was generated primarily by seasonal reductions in current
liabilities related to the timing of foreign tax payments, dividends to
minority shareholders, and payments of prior year incentive compensation,
furthered by increases in receivables and other current assets. For the prior
year period, cash generated from earnings was partially offset by a $11.8
million increase in net working capital. Such increase was related primarily
to the timing of payments for interest, income taxes and dividends to minority
shareholders.
Furthered Capital expenditures for the current year quarter amounted to
$13.0 million, compared to the prior year period's capital expenditures of $7.6
million. Current quarter capital spending consisted primarily of expenditures
in the United Kingdom related to the continuing expansion of the Zydis(R)
production facility, in Australia for the completion of a new manufacturing
facility, and general facility and equipment additions and improvements. In
the prior year, capital expenditures were related primarily to the construction
of a new satellite softgel production facility in North America, expansion of
the Zydis(R) production facility in the United Kingdom, and in Australia for
the construction of a replacement manufacturing facility, as well as other
general facility and equipment additions and improvements.
Financing activities for the quarter ended June 30, 1995, principally
reflect a net $4.9 million of borrowings under the Company's bank credit
facility used to fund capital and research expenditures in the United Kingdom,
and the payment of $5.2 million of dividends to minority shareholders. In the
prior year period, financing activities include a net $5.1 million of
borrowings under the bank credit facility for funding of capital expenditures.
Other significant financing uses in the prior year period include $3.7 million
of dividends paid to minority shareholders of subsidiaries.
LIQUIDITY AND FINANCIAL CONDITION
During the next several years, a significant portion of the Company's cash flow
will be used to fund capital expenditures, increased investments in research
and development, and to service and reduce indebtedness. Capital expenditures
are anticipated to approximate $75 to $85 million for the fiscal year ended
March 31, 1996, and are expected to
9
<PAGE> 10
decline to a lower level per year thereafter. Such expenditures will be used
to continue the expansion of softgel production capacity to meet anticipated
customer demand, as well as to ensure continuing compliance with pharmaceutical
Good Manufacturing Practices (GMP) standards for the Company's facilities. In
addition, such expenditures will include further major expansions of production
facilities for Zydis(R). As of June 30, 1995, the Company had approximately $6
million of commitments for future capital expenditures.
The Company will also continue to invest a significant portion of its cash flow
in research and development activities for its advanced drug delivery systems,
including the RP Scherersol(R), Zydis(R) and Pulsincap(R) technologies, as well
as to develop new drug delivery technologies and to fund the Company's ATP
initiative. The Company believes that changes currently affecting worldwide
pharmaceutical markets will enhance the commercial value of products which can
demonstrate therapeutic and cost benefits over existing therapies, and through
ATP intends to capitalize upon these trends by creating new products which
reformulate existing compounds utilizing the Company's proprietary drug
delivery technologies. The Company expects that expenses associated with ATP
will approximate $30-40 million in aggregate over the next three to four years.
Revenues from ATP product sales and royalties are expected to begin no earlier
than fiscal 1997, assuming the development and commercialization of such
products is successful.
The Company actively reviews drug delivery systems businesses and technologies
for potential investment, consistent with its strategic objectives. Generally,
such investments are not expected to involve significant initial funding or
financial commitments on the part of the Company. Management intends that any
acquisition which would require significant funding would be financed largely
through the issuance of common stock, depending upon market conditions, so as
not to materially increase the Company's debt to equity ratio.
At June 30, 1995, the Company's outstanding long-term indebtedness consisted of
approximately $99.4 million of 6 3/4% senior notes (net of a $0.6 million
discount), $70.5 million of borrowings under the Company's bank credit
facility, $6.4 million of industrial development revenue bonds, and
approximately $14.3 million of other indebtedness.
The Company's senior notes bear interest at 6 3/4% of face value, payable
semi-annually, and mature in full in February 2004. The 6 3/4% senior notes
are noncallable and unsecured, ranking pari passu with all other unsecured and
senior indebtedness of the Company. Annual interest expense on the senior
notes is approximately $6.8 million (excluding amortization of the original
issue discount and deferred financing fees), payable semi-annually. The
indenture under which the senior notes were issued restricts the Company's
ability to incur additional liens, enter into sale-leaseback transactions,
engage in certain transactions with affiliates, and consummate certain business
combinations.
In March 1994, the Company entered into a bank credit facility which
allows for revolving credit borrowings up to an aggregate of $175.0 million in
various currencies, and expires April 1, 1999. Interest is payable quarterly
at LIBOR plus .575%, with a further reduction in the interest rate spread to
LIBOR plus .475% anticipated later during the term of the facility based on
certain financial performance criteria, or at the bank's prime rate. Unused
borrowing availability is subject to annual commitment fees of 1/4%.
Borrowings under this agreement are unsecured, and rank pari passu with all
other unsecured and senior indebtedness of the Company and certain of its
subsidiaries. The bank credit facility requires the Company to satisfy various
annual and quarterly financial tests, including maintenance on a consolidated
basis of specified levels of tangible net worth and cash flow coverage,
leverage, and fixed charge ratios. The agreement also restricts the Company's
ability to incur additional indebtedness or liens, make investments and loans,
dispose of assets, or consummate a business combination, and limits the ability
of the Company to pay dividends. As of June 30, 1995, the Company does not
currently have plans to declare or pay any cash dividends.
Pursuant to other revolving credit arrangements, the Company and certain of its
subsidiaries may borrow up to approximately $25.0 million. As of June 30,
1995, the Company had outstanding approximately $4.0 million under these
revolving credit arrangements.
10
<PAGE> 11
The Company believes that its future cash flows from operations, together with
cash and short-term investments aggregating $31.7 million at June 30, 1995 and
amounts available under bank credit facilities will be adequate to meet
anticipated capital investment, operating, and debt service requirements.
Inflation and Accounting Policies
In the view of management, the effects of inflation and changing prices on the
Company's net results of operations and financial condition were not
significant.
11
<PAGE> 12
PART II
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
27-Financial Data Schedule, filed herewith.
(b) REPORTS ON FORM 8-K: None.
12
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
R.P. SCHERER CORPORATION
Date: August 14, 1995 By: /s/ Nicole S. Williams
--------------- --------------------------------
Nicole S. Williams
Executive Vice President, Finance
and Chief Financial Officer,
Treasurer, and Secretary
13
<PAGE> 14
EXHIBIT INDEX
Exhibit
No. Description Page
------- ----------- ----
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1995
<CASH> 26,541
<SECURITIES> 5,119
<RECEIVABLES> 125,032
<ALLOWANCES> 4,400
<INVENTORY> 65,639
<CURRENT-ASSETS> 225,284
<PP&E> 382,129
<DEPRECIATION> 98,531
<TOTAL-ASSETS> 709,783
<CURRENT-LIABILITIES> 110,058
<BONDS> 188,447
<COMMON> 233
0
0
<OTHER-SE> 285,903
<TOTAL-LIABILITY-AND-EQUITY> 709,783
<SALES> 148,378
<TOTAL-REVENUES> 148,378
<CGS> 93,684
<TOTAL-COSTS> 118,195
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,380
<INCOME-PRETAX> 27,423
<INCOME-TAX> 8,762
<INCOME-CONTINUING> 13,695
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,695
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.56
</TABLE>
