<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 1996
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 9,
1996: 23,464,503 shares of common stock, par value $.01.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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,
-------------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
Net sales $145,297 $148,378
Cost of sales 96,488 93,684
Selling and administrative expenses 17,076 18,511
Research and development expenses, net 4,662 6,000
-------------- --------------
Operating income 27,071 30,183
Interest expense 2,972 3,380
Interest earned and other (349) (620)
-------------- --------------
Income before income taxes and minority interests 24,448 27,423
Income taxes 7,215 8,762
Minority interests 3,640 4,966
-------------- --------------
Net income $13,593 $13,695
-------------- --------------
-------------- --------------
Per Common and Common Equivalent Share:
Net income $0.56 $0.56
-------------- --------------
-------------- --------------
Average number of common and common
equivalent shares 24,473 24,659
</TABLE>
The accompanying notes are an integral part of this statement.
2
<PAGE>
R.P. SCHERER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(IN THOUSANDS)
JUNE 30, MARCH 31,
1996 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 25,602 $ 21,007
Short-term investments 4,032 4,880
Receivables, less reserves of:
June 30, 1996 - $4.5 million;
March 31, 1996 - $4.8 million 138,973 129,472
Inventories 65,204 59,718
Other current assets 8,962 6,659
------------ ------------
242,773 221,736
------------ ------------
PROPERTY:
Property, plant and equipment, at cost 413,004 411,396
Accumulated depreciation and reserves (128,974) (124,676)
------------ ------------
284,030 286,720
------------ ------------
OTHER ASSETS:
Goodwill and intangibles, net of amortization 174,933 175,622
Other assets 21,868 23,303
------------ ------------
196,801 198,925
------------ ------------
$723,604 $707,381
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 5,846 $ 5,834
Accounts payable 58,761 57,985
Accrued liabilities 36,504 41,839
Accrued income taxes 10,346 9,632
------------ ------------
111,457 115,290
------------ ------------
LONG-TERM LIABILITIES AND OTHER:
Long-term debt 174,672 164,652
Other long-term liabilities 56,741 57,329
Deferred income taxes 33,202 32,482
Minority interests in subsidiaries 39,293 37,268
------------ ------------
303,908 291,731
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 6)
SHAREHOLDERS' EQUITY:
Preferred stock, 500,000 shares authorized, none issued - -
Common stock, $.01 par value, 50,000,000 shares
authorized; shares issued: June 30, 1996 - 23,464,503
shares; March 31, 1996 - 23,460,453 shares 235 235
Additional paid-in capital 239,728 239,705
Retained earnings 79,298 65,705
Currency translation adjustment (11,022) (5,285)
------------ ------------
308,239 300,360
------------ ------------
$723,604 $707,381
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
R.P. SCHERER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE THREE MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $13,593 $13,695
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 6,859 6,087
Amortization of intangible assets and debt discount 1,648 1,643
Minority interests in net income 3,640 4,966
Deferred tax provision and other 295 (209)
Increase in receivables (10,502) (2,987)
Increase in inventories and other current assets (6,634) (3,164)
Decrease in accounts payable and accrued expenses (2,365) (15,194)
----------- -----------
Net cash provided by operating activities 6,534 4,837
----------- -----------
INVESTING ACTIVITIES:
Purchases of plant and equipment (10,955) (13,013)
Other (144) (1,081)
----------- -----------
Net cash used by investing activities (11,099) (14,094)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 17,740 14,183
Long-term debt retirements and payments (7,691) (8,658)
Short-term borrowings, net (570) 1,764
Cash dividends paid to minority shareholders of subsidiaries - (5,181)
----------- -----------
Net cash provided by financing activities 9,479 2,108
----------- -----------
Effect of currency translation on cash and cash equivalents (319) (25)
----------- -----------
Net increase (decrease) in cash and cash equivalents 4,595 (7,174)
Cash and cash equivalents, beginning of period 21,007 33,715
----------- -----------
Cash and cash equivalents, end of period $25,602 $26,541
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
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, 1996, as filed with the Securities and Exchange Commission.
2. SUBSEQUENT EVENT
On July 30, 1996, the Company's Board of Directors approved a stock repurchase
program whereby the Company is authorized to repurchase up to 5% of its
outstanding common stock. At June 30, 1996, the Company had 23.5 million common
shares outstanding. At recent market prices ranging from $40.00 to $45.00 per
share, the aggregate size and value of the program would approximate 1.2 million
shares and $45 to $55 million, respectively. Under the program, the Company
will from time to time opportunistically acquire shares on the open market. The
rate and timing of such purchases will be primarily dependent upon stock market
conditions and the Company's financial position. The Company anticipates
funding the stock repurchase program using existing cash and cash equivalent
balances and cash provided by operations.
3. RESTRUCTURING
In the fourth quarter of fiscal 1996, the Company announced a restructuring plan
designed to enhance the Company's long-term profitability by reducing and
rationalizing manufacturing and overhead structures which were primarily
servicing non-pharmaceutical markets (the "Restructuring"). The Restructuring
included the closure of two softgel manufacturing plants, as well as the
consolidation and elimination of certain marketing, administrative, and
development staff in several other locations. The Restructuring is expected to
be completed in fiscal 1997. As a result of the Restructuring and other special
charges, the Company recorded a special provision totaling $33.8 million before
income tax effects in the fourth quarter of fiscal 1996. Further information
with regard to the Restructuring is included in the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1996, as filed with the Securities
and Exchange Commission.
A summary of the restructuring reserve activity for the three months ended June
30, 1996 follows:
(IN THOUSANDS) UTILIZED IN THE
BALANCE AT QUARTER ENDED BALANCE AT
MARCH 31, 1996 JUNE 30, 1996 JUNE 30, 1996
-------------- --------------- -------------
Severance and other employee
termination costs $ 8,399 $4,140 $ 4,259
Fixed asset recovery reserves 13,100 - 13,100
Other current assets 299 - 299
Contractual obligations 3,281 988 2,293
-------------- --------------- -------------
$ 25,079 $5,128 $ 19,951
-------------- --------------- -------------
-------------- --------------- -------------
5
<PAGE>
3. RESTRUCTURING (CONTINUED)
Of the restructuring reserve remaining at June 30, 1996, $5.9 million was
included in accrued liabilities, $0.7 million was included in other long-term
liabilities, $0.3 million was classified in current asset reserves and $13.1
million was reported as a reduction of property, plant and equipment.
4. INCOME TAXES
The effective income tax rates in the current and prior year quarters were lower
than the U.S. Federal income tax rate due primarily to the mix of taxable income
between jurisdictions as well as the anticipated utilization of carryforward
foreign and other tax credits.
5. INVENTORIES
The components of inventories are as follows:
(IN THOUSANDS) JUNE 30, MARCH 31,
1996 1996
----------- -----------
Raw materials and supplies $36,492 $30,892
Work in process 10,242 10,593
Finished goods 18,470 18,233
----------- -----------
$65,204 $59,718
----------- -----------
----------- -----------
6. 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
Pharmaceutical Services, Inc. ("Paco"), certain of its subsidiaries, the Company
and R.P. Scherer International Corporation (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 sought $75
million in actual damages and $100 million in punitive damages, as well as
OCAP's attorney fees and other litigation expenses, costs and disbursements
incurred in bringing this action. The Company and R.P. Scherer International
Corporation asserted a counterclaim against OCAP for breach of contract and
breach of the covenant of good faith and fair dealing arising out of the
termination of the Purchase Agreement. In April 1996, the court rendered a
verdict in the Company's favor on all claims in the Amended Complaint and also
dismissed the Company's counterclaim against OCAP. OCAP has filed a notice of
appeal for the dismissal of its claims. The Company has filed a notice of cross
appeal for the dismissal of its counter claim. In the opinion of management,
the ultimate outcome of any potential appeals related to this decision will not
have a material adverse effect on the Company's business or financial condition.
6
<PAGE>
6. CONTINGENCIES (CONTINUED)
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 conducted 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 position.
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.
7
<PAGE>
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, 1996 and 1995. A majority of the
Company's sales, income and cash flows are 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 the foreign currency
exchange rates in effect at 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, 1996 AND 1995
First quarter sales of $145.3 million were down slightly from the $148.4 million
reported in the first three months of the prior year. Measured in constant
foreign exchange rates, first quarter sales increased 2%. This sales change
reflects gains in health and nutritional softgel sales, primarily in the United
States. Lower sales of pharmaceutical products partially offset these gains due
to reduced demand for nifedipine in the United States and elsewhere, as well as
lower European demand for over-the-counter pharmaceutical products, primarily in
Germany. Revenues of Scherer's fast dissolving ZYDIS-Registered Trademark-
technology increased 15%, lower than previously anticipated due to significant
development and pre-approval inspection demands on the manufacturing operations
during the quarter.
Operating income for the quarter ended June 30, 1996 was $27.1 million as
compared to $30.2 million earned in the prior year, a 10% decline. On a
constant exchange rate basis, first quarter operating income decreased 6%.
Operating income comparisons reflect a higher proportion of health and
nutritional product in the sales mix, including a large increase in sales of
Vitamin E softgels. Lower gross profit margins were partially offset by the
benefit of cost reduction efforts undertaken in fiscal 1996, as evidenced by a
decline in first quarter selling, general and administrative ("SG&A") expense as
a percent of sales to 11.8% versus 12.5% in the prior year period.
The improvement in the SG&A ratio was largely attributable to cost savings
resulting from the previously announced closing of softgel facilities in Neuvic,
France and Windsor, Canada and from the elimination of certain administrative,
marketing and development staff positions at other locations. Research and
development expense declined 22% in the first quarter, primarily as a result of
the timing of certain expenditures related to clinical studies of ATP products
and a 31% increase in customer reimbursement of pharmaceutical softgel
development expenses.
8
<PAGE>
The Company generated net income of $13.6 million, or $0.56 per share, in the
quarter ended June 30, 1996, as compared to the $13.7 million, or $0.56 per
share, earned in last year's first quarter. The strengthening of the U.S.
dollar had the effect of reducing first quarter net income by $0.02 per share as
compared to the first quarter last year. The effective tax rate in the current
year period was 30% as opposed to 32% in the prior year period. The first
quarter decline in the effective tax rate reflects primarily a geographic shift
in the mix of income and improved utilization of foreign and other tax credits.
RESULTS BY GEOGRAPHIC SEGMENT
The following sets forth operating results for each of the Company's geographic
segments for the quarters ended June 30, 1996 and 1995:
(IN THOUSANDS) SALES OPERATING INCOME OPERATING MARGIN
------------------ ------------------ ----------------
1996 1995 1996 1995 1996 1995
-------- -------- -------- -------- ------ -------
United States $ 42,159 $ 33,516 $ 9,305 $ 9,072 22.1% 27.1%
Europe 77,106 87,195 14,886 19,393 19.3 22.2
Other International 26,032 27,667 6,318 5,762 24.3 20.8
Unallocated (1) - - (3,438) (4,044) - -
-------- -------- -------- -------- ------ -------
$145,297 $148,378 $27,071 $30,183 18.6% 20.3%
-------- -------- -------- -------- ------ -------
-------- -------- -------- -------- ------ -------
(1) Includes general Corporate expenses and expenses associated with the
ATP Group.
The Company's United States operations generated a 26% sales gain for the
quarter ended June 30,1996. The increase resulted from strong sales of
nutritional softgels, increased sales of OTC pharmaceuticals and increased
U.S. production of softgels for the Canadian market as a result of the
closing of the Windsor, Canada softgel facility. U.S. sales of both natural
and synthetic Vitamin E were particularly strong, primarily as a result of
more favorable media attention to the purported health benefits of Vitamin E
and other anti-oxidant products. First quarter prescription pharmaceutical
sales were 49% below year ago levels due primarily to reduced sales of
nifedipine, partially offset by a 19% increase in over-the-counter ("OTC")
pharmaceutical softgel sales. Operating income grew by 3%, or $0.2 million,
yielding a 22.1% operating margin as compared with 27.1% in the prior year
quarter, primarily as a result of the shift in product mix toward lower
margin Vitamin E softgels.
Sales in Europe decreased 12% for the June 30, 1996 quarter, as compared to
the same quarter last year. The first quarter sales change resulted
primarily from the strength of the U.S. dollar, weak demand for
pharmaceutical OTC products in Germany and declines in non-pharmaceutical
softgel sales in certain other European countries, partially offset by
stronger U.K. health and nutritional sales. On a constant exchange rate
basis and excluding Germany, European sales increased 1%. As a result of
weak sales, the strong dollar and a higher proportion of lower margin U.K.
health and nutritional sales in the mix, operating income decreased 23%
between the two quarters.
Sales in the Company's Other International segment decreased 6% for the quarter
ended June 30, 1996, due primarily to the transfer of Canadian softgel
production to the United States and the weakness of the Japanese yen versus the
U.S. dollar. Excluding Canada softels, Other International sales on a constant
dollar basis increased 5% due primarily to the strengthening of Vitamin E and
health and nutritional softgel markets in Australia and Japan and strong demand
for the Company's hardshell capsules. For the same period, operating margin
increased significantly due to the closing of the less profitable Canadian
softgel facility and improved profitability in Australia, Japan and in the
hardshell business.
CASH FLOWS
9
<PAGE>
Cash and cash equivalents increased by $4.6 million for the quarter ended June
30, 1996, as compared with a decrease of $7.2 million in the same period in
1995. Operating activities provided cash of $6.5 million and $4.8 million in
the current and prior year periods, respectively. Cash provided by earnings was
largely offset by increases in working capital of $19.5 million and $21.3
million in the first quarters of fiscal 1997 and fiscal 1996, respectively. In
the fiscal 1997 period, the increase in working capital resulted primarily from
an increase in trade receivables and an increase in raw material inventory due
to increased production of Vitamin E and other nutritional products. In the
prior year period, such working capital increase was generated primarily by
seasonal reductions in current liabilities related to the timing of foreign tax
payments, payments of prior year incentive compensation and other accrued
liability reductions, as well as by increases in receivables and other current
assets.
Capital expenditures for the current year quarter totaled $11.0 million as
compared to $13.0 million in the prior year period. The decrease in first
quarter capital expenditures resulted primarily from the timing and level of
completion of certain projects. Fiscal 1997 capital expenditures are currently
expected to approximate $70 to $80 million versus fiscal 1996 expenditures of
$56.2 million. First quarter capital expenditures consisted primarily of costs
related to the expansion and upgrade of softgel production facilities in France,
the United States and Japan. In the prior year, first quarter capital spending
consisted primarily of expenditures in the United Kingdom related to the
continuing expansion of the ZYDIS-Registered Trademark- production facility, in
Australia for the completion of a new manufacturing facility and general
facility and equipment additions and improvements.
Financing activities for the quarter ended June 30, 1996 include proceeds of
$17.7 million, primarily from borrowings under the Company's bank credit
facility to fund capital and research expenditures in the U.K. In the
prior year period, financing activities 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.
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, to fund research and development, to
service and reduce indebtedness, to fund Restructuring-related cash outlays
during 1997 and, depending on market conditions, to repurchase up to 5% of the
Company's outstanding common stock. The Company believes that future cash flow
from operations, together with cash and short-term investments aggregating $28.6
million at June 30, 1996 and amounts available under existing bank credit
facilities, will be adequate to meet anticipated capital investment, operating,
restructuring, stock repurchase and debt service requirements. As of June 30,
1996, the Company does not have plans to declare or pay cash dividends.
Capital expenditures are anticipated to approximate $70 to $80 million for
fiscal 1997 and are expected to decline to a lower level per year thereafter.
Such expenditures will be used primarily to continue the upgrade and expansion
of dedicated pharmaceutical softgel production capacity to meet anticipated
customer demand, as well as to ensure continuing compliance with pharmaceutical
Good Manufacturing Practices (GMP) standards. In addition, such expenditures
will include further major expansions of production facilities for ZYDIS-
Registered Trademark-. As of June 30, 1996, the Company had approximately $8.2
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,
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 $9 million in fiscal 1997. No significant revenues from ATP product
sales and royalties are expected until after fiscal 1997, assuming the
development and commercialization of such products is successful.
10
<PAGE>
The Company periodically reviews drug delivery technologies and other businesses
for potential investment, consistent with its strategic objectives. Such
investments will not necessarily involve significant initial funding or funding
commitments by 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.
On July 30, 1996, the Company's Board of Directors approved a stock repurchase
program whereby the Company is authorized to repurchase up to 5% of its
outstanding common stock. At June 30, 1996, the Company had 23.5 million common
shares outstanding. At recent market prices ranging from $40.00 to $45.00 per
share, the aggregate size and value of the program would approximate 1.2 million
shares and $45 to $55 million, respectively. Under the program, the Company
will from time to time opportunistically acquire shares on the open market. The
rate and timing of such purchases will be primarily dependent upon stock market
conditions and the Company's financial position. The Company anticipates
funding the stock repurchase program using existing cash and cash equivalent
balances and cash provided by operations.
At June 30, 1996, the Company's outstanding indebtedness consisted of $99.4
million of 6 3/4% senior notes (net of a $0.6 million discount), $63.2 million
of borrowings under the Company's bank credit facilities, $6.3 million of
industrial development revenue bonds and approximately $11.6 million of other
indebtedness.
INFLATION
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.
FORWARD LOOKING INFORMATION
Except for the historical information contained herein, the matters discussed in
this Report Form 10-Q are forward looking statements that involve risks and
uncertainties. Certain important factors could cause the Company's actual
results to differ materially from expected and historical results, including,
but not limited to, the following: volatility of key nutritional products
markets; generic competition to key customer pharmaceutical products; timing of
completion of the Company's restructuring program; successful formulation,
scale-up, development, and commercialization of customer and company products;
global economic factors; regulatory matters related to product testing and
approvals for the Company and its customers; competitive products and pricing;
and product and drug delivery system development and other technological issues.
These forward looking statements, as further described in the Company's Annual
Report and on Form 10-K, as filed with the Securities and Exchange Commission,
represent R.P. Scherer's judgment as of the date the information was
prepared.
11
<PAGE>
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:
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
27 Financial Data Schedule. Filed herewith.
(b) REPORTS ON FORM 8-K: None.
12
<PAGE>
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, 1996 By: /s/ Nicole S. Williams
-----------------------------------
Nicole S. Williams
Executive Vice President, Finance,
Chief Financial Officer and
Secretary
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from R.P. Scherer
Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996,
and is qualified in its entirety by reference to such Form 10-Q filing.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 25,602
<SECURITIES> 4,032
<RECEIVABLES> 143,473
<ALLOWANCES> 4,500
<INVENTORY> 65,204
<CURRENT-ASSETS> 242,773
<PP&E> 413,004
<DEPRECIATION> 128,974
<TOTAL-ASSETS> 723,604
<CURRENT-LIABILITIES> 111,457
<BONDS> 174,672
0
0
<COMMON> 235
<OTHER-SE> 308,004
<TOTAL-LIABILITY-AND-EQUITY> 723,604
<SALES> 145,297
<TOTAL-REVENUES> 145,297
<CGS> 96,488
<TOTAL-COSTS> 118,226
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,972
<INCOME-PRETAX> 24,448
<INCOME-TAX> 7,215
<INCOME-CONTINUING> 13,593
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,593
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.56
</TABLE>
