<PAGE>
Commission File Number 1-10827
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10--Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 1995
PHARMACEUTICAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-3122182
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE RAM RIDGE ROAD, SPRING VALLEY, NEW YORK 10977
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 425-7100
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 twelve 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
--- ---
18,171,841
Number of shares of Common Stock outstanding as of August 4, 1995
This is page 1 of 15 pages. The exhibit index is on page 13.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHARMACEUTICAL RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
July 1, October 1,
ASSETS 1995 1994
------ -------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $18,405 $ 3,130
Accounts receivable, net of allowances of
$1,601,000 and $2,768,000 8,832 9,347
Inventories 16,915 16,352
Prepaid expenses and other current assets 2,284 1,696
Current deferred tax benefit 3,243 3,090
------- -------
Total current assets 49,679 33,615
Property, plant and equipment, at cost less
accumulated depreciation and amortization 24,124 23,004
Deferred charges and other assets 1,150 1,086
Investment in non-marketable securities 5,610 1,000
Long-term deferred tax benefit 11,530 10,497
------- -------
Total assets $92,093 $69,202
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long-term debt $ 1,374 $ 1,870
Accounts payable 5,665 5,340
Salaries and employee benefits 3,328 2,908
Accrued expenses and other current liabilities 257 921
Estimated current liabilities of discontinued operations 2,834 2,844
------- -------
Total current liabilities 13,458 13,883
Long-term debt, less current portion 4,525 5,490
Pension 553 553
Commitments, contingencies and other matters -- --
Shareholders' equity:
Preferred stock, par value $.0001 per share; authorized 6,000,000 shares;
issued and outstanding--969,514 and 1,058,400 shares of Series A Convert-
ible Preferred Stock (aggregate liquidation preference-$4,848,000 and
$5,292,000) 1 1
Common Stock, par value $.01 per share; authorized 60,000,000 shares;
issued and outstanding--17,072,527 and 14,482,632 shares 170 145
Additional capital 65,522 43,066
Retained earnings 7,964 6,164
Additional minimum liability related to defined benefit pension plan (100) (100)
------- -------
Total shareholders' equity 73,557 49,276
------- -------
Total liabilities and shareholders' equity $92,093 $69,202
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
--2--
<PAGE>
PHARMACEUTICAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
-------------------- -------------------
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
-------- ---------- -------- --------
<S> <C> <C> <C> <C>
Net sales $49,013 $ 51,377 $15,830 $17,071
Other revenues 338 277 189 16
------- -------- ------- -------
Total revenues 49,351 51,654 16,019 17,087
Costs and expenses:
Cost of goods sold 32,833 34,211 11,623 11,276
Research and development 3,385 2,720 1,408 733
Selling, general and administrative 11,944 9,786 3,956 3,374
Interest 808 321 562 106
Settlement (2,029) - - -
------- -------- ------- -------
46,941 47,038 17,549 15,489
Income (loss) before provision for income taxes 2,410 4,616 (1,530) 1,598
Provision (credit) for income taxes 618 1,562 (787) 547
------- -------- ------- -------
Income (loss) from continuing operations 1,792 3,054 (743) 1,051
Income from discontinued operations - 466 - -
------- -------- ------- -------
Income (loss) before change in accounting principle 1,792 3,520 (743) 1,051
Cumulative effect of change in accounting principle - 14,128 - -
------- -------- ------- -------
NET INCOME (LOSS) 1,792 17,648 (743) 1,051
Dividend on preferred stock 8/b/ (325) 299/c/ 25/b/
Retained earnings (deficit), beginning of period 6,164 (12,351) 8,408 3,896
------- -------- ------- -------
Retained earnings, end of period $ 7,964 $ 4,972 $ 7,964 $ 4,972
======= ======== ======= =======
Income (loss) per share of common stock:
Continuing operations $0.11 $0.19/a/ $(.04) $.07
Discontinued operations - .03 - -
Cumulative effect of change in accounting principle - .87/a/ - -
------- -------- ------- -------
NET INCOME (LOSS) $0.11 $1.09/A/ $(.04) $.07
======= ======== ======= =======
Weighted average number of common and
common equivalent shares outstanding 16,784 16,251/a/ 17,382 15,892/a/
======= ======== ======= =======
</TABLE>
/a/ Revised to correct weighted average number of shares outstanding and, where
applicable, corresponding earnings per share calculations.
/b/ Reversal of dividend previously recorded due to preferred stock
conversions.
/c/ Reversal of dividend previously recorded due to the mandatory conversion of
preferred shares on July 31, 1995.
The accompanying notes are an integral part of these statements.
--3--
<PAGE>
PHARMACEUTICAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------
July 1, July 2,
1995 1994
------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,792 $ 17,648
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Income from discontinued operations - (466)
Provision for income tax expense 618 1,562
Payment of tax audit settlement (995) -
Cumulative effect of accounting change - (14,128)
Common stock for research and development expense 150 -
Depreciation and amortization 1,904 1,805
Accounts receivable allowances (1,167) (150)
Write-off of inventories 1,571 833
Other - 301
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,682 (1,684)
(Increase) in inventories (2,134) (4,750)
(Increase) decrease in prepaid expenses and other assets (622) 344
Increase (decrease) in accounts payable 325 (984)
Increase (decrease) in accrued expenses and other liabilities 73 (628)
(Decrease) in settlements (3) (6,500)
------- --------
Net cash provided (used) by operating activities 3,194 (6,797)
Cash flows from financing activities:
Proceeds from issuance of capital stock 21,524 1,386
Proceeds from issuance of long-term and other debt 1,000 3,522
Principal payments under long-term debt and other borrowings (2,461) (3,566)
Preferred dividends paid (310) -
------- --------
Net cash provided by financing activities 19,753 1,342
Cash flows from investing activities:
Capital expenditures (3,048) (5,232)
Cash (used) by discontinued operations (10) (252)
(Increase) in other investments (4,610) -
(Increase) decrease in temporary investments (4) 1,006
------- --------
Net cash (used) by investing activities (7,672) (4,478)
Net increase (decrease) in cash and cash equivalents 15,275 (9,933)
Cash and cash equivalents at beginning of period 3,130 12,134
------- --------
Cash and cash equivalents at end of period $18,405 $ 2,201
======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
--4--
<PAGE>
PHARMACEUTICAL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 1, 1995
(UNAUDITED)
Pharmaceutical Resources, Inc. ("PRI") operates in one business segment, the
manufacture and distribution of generic pharmaceuticals. Marketed products are
principally sold in oral solid (tablet, caplet and capsule) form.
BASIS OF PREPARATION:
The accompanying financial statements at July 1, 1995 and for the nine month and
three month periods ended July 1, 1995 and July 2, 1994 are unaudited; however,
in the opinion of management of PRI, such statements include all adjustments
(consisting of normal recurring accruals) necessary to a fair statement of the
information presented therein. The balance sheet at October 1, 1994 was derived
from the audited financial statements at such date and has been restated to
conform to the current year's presentation.
Pursuant to accounting requirements of the Securities and Exchange Commission
applicable to quarterly reports on Form 10-Q, the accompanying financial
statements and these notes do not include all disclosures required by generally
accepted accounting principles for audited financial statements. Accordingly,
these statements should be read in conjunction with PRI's most recent annual
financial statements.
Results of operations for interim periods are not necessarily indicative of
those to be achieved for full fiscal years.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation:
The consolidated financial statements include the accounts of PRI and its
wholly-owned subsidiaries, Par Pharmaceutical, Inc. ("Par") and numerous others,
the activities of which are insignificant. The investment in a corporate joint
venture with Clal Pharmaceutical Industries Ltd. ("Clal") in which PRI has 49%
ownership is accounted for by the equity method. References herein to the
"Company" refer to PRI and its subsidiaries.
DISCONTINUED OPERATIONS:
The remaining liabilities of Quad Pharmaceuticals, Inc., a wholly-owned
subsidiary of Par whose operations were discontinued in a prior year, have been
classified on the balance sheet as such to separately identify them. Estimated
current liabilities of discontinued operations at July 1, 1995 consist of notes
payable of $813,000, amounts due to customers of $1,657,000, and accrued
expenses and accounts payable of $364,000.
SETTLEMENT:
The Company has received $2,029,000 in settlement claims against former
management members for recovery of, among other things, salaries and monies paid
for indemnification.
<TABLE>
<CAPTION>
ACCOUNTS RECEIVABLE:
July 1, October 1,
1995 1994
-------- ----------
(In Thousands)
<S> <C> <C>
Accounts receivable $10,433 $12,115
Allowances:
Doubtful accounts 95 124
Returns and allowances 383 349
Price adjustments 1,123 2,295
------- -------
1,601 2,768
------- -------
Accounts receivable,
net of allowances $ 8,832 $ 9,347
======= =======
</TABLE>
--5--
<PAGE>
PHARMACEUTICAL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS----CONTINUED
JULY 1, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
INVENTORIES:
July 1, October 1,
1995 1994
------- ----------
(In Thousands)
<S> <C> <C>
Raw materials and supplies $ 7,168 $ 7,407
Work in process and finished goods 9,747 8,945
------- -------
$16,915 $16,352
======= =======
</TABLE>
INVESTMENT IN NON-MARKETABLE SECURITIES:
As part of a strategic alliance in May 1995, the Company and Clal formed Clal
Pharmaceutical Resources Limited Partnership, a limited partnership formed under
the laws of the State of Israel (the "Limited Partnership"), to develop,
manufacture and distribute generic pharmaceutical products worldwide. The
Company and Clal funded the Limited Partnership in the amount of $1,960,000 and
$2,040,000, respectively. The Limited Partnership is owned 49% by the Company
and 51% by Clal and is located primarily in Israel. The Company has committed
to invest an additional $5,390,000 in the Limited Partnership during the next
two years. The investment is accounted for by the equity method.
In addition to the Clal alliance, the Company increased its investment in Sano
Corporation ("Sano"). Sano, organized in 1992, develops novel transdermal
delivery systems for existing drugs. Under an agreement with Sano, the Company
purchased $2,500,000 in convertible preferred stock in addition to its previous
investment of $1,000,000, increasing its equity holding in Sano to approximately
8%.
INCOME TAXES:
The Company finalized its settlement with the Internal Revenue Service with
respect to research and development tax credits and paid approximately
$1,000,000 previously provided for and recorded an additional state tax benefit
of $200,000.
SHAREHOLDERS' EQUITY :
As part of the strategic alliance formed with Clal, the Company sold 2,027,272
shares of PRI common stock ("Common Stock") to Clal for $20,000,000, and issued
to Clal a three year warrant to purchase 936,282 shares of Common Stock at
prices between $10 and $11 per share. Subject to shareholder approval, the
Company will issue a second three year warrant entitling Clal to purchase up to
approximately 1,070,000 additional shares of Common Stock at prices between $11
and $12 per share.
SUBSEQUENT EVENTS:
Effective on July 31, 1995 (the "Effective Date"), the Company exercised its
option to convert the Series A Convertible Preferred Stock ("Preferred Stock")
(960,568 shares outstanding) into shares of Common Stock. As of the Effective
Date, each share of Preferred Stock has been converted into 1.1 shares of Common
Stock. No dividends were accrued and payable on the Preferred Stock at the
Effective Date.
The Company was in default as of July 1, 1995 under a financial covenant
contained in its loan agreement dated November 30, 1994 with Midlantic Bank N.A.
relating to a provision that requires the Company to have reported profits for
the prior six-month period. The Company has received a waiver of such default
from its bank.
--6--
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NET SALES
Net sales for the nine months ended July 1, 1995 decreased $2,364,000, or 5%, to
$49,013,000 from the corresponding period of the prior fiscal year. Sales of
manufactured products increased $2,310,000, or 5%, due to a higher volume of
products sold and generally higher pricing. The decrease in distributed product
sales of $4,674,000, or 54%, is related to decreased demand for distributed
products sold by the Company and price erosion resulting from increased
competition from both generic and brand name pharmaceutical companies.
For the three months ended July 1, 1995, net sales declined from the prior year
with respect to both manufactured and distributed products. Manufactured
product sales declined $692,000 or 5% principally due to declines in demand for
certain products as a result of the introduction of competitive products by
other drug manufacturers and declines in product orders from certain of the
Company's distributors servicing governmental and independent drug store end
users. Distributed product sales declined $549,000 or 28%, principally due to
continued declines in demand and price erosion resulting from increased
competition as discussed above.
The Company expects a continued decline in sales of its currently distributed
products which, if not offset by increased sales of currently manufactured
products or sales of new distributed or manufactured products, would result in
declines in net sales, gross margins and, accordingly, in profitability.
Sales for manufacturing and distribution activities were derived as follows
(dollars in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
July 1, 1995 July 2, 1994
------------ ------------
Amount % of Total Amount % of Total
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Manufacturing $45,022 92% $42,712 83%
Distribution $ 3,991 8% $ 8,665 17%
Three Months Ended
------------------
July 1, 1995 July 2, 1994
------------ ------------
Amount % of Total Amount % of Total
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Manufacturing $14,401 91% $15,093 88%
Distribution $ 1,429 9% $ 1,978 12%
</TABLE>
Increases in sales are dependent upon, among other things, (i) approval of
Abbreviated New Drug Applications ("ANDAs") and introduction of new manufactured
products, (ii) continued introduction of new distributed products, (iii)
increased market penetration for the existing product line, (iv) reintroduction
of previously manufactured products and (v) the level of customer service.
GROSS MARGIN
The Company's gross margin of $16,180,000 for the nine months ended July 1, 1995
and $17,166,000 for the comparable period of fiscal 1994 are both 33% of their
respective net sales. The gross margin for manufactured products decreased
$213,000 with a 3% decline in margin percentage to 34%, principally due to
increased inventory write-offs as discussed below and a shift in product mix
reflecting a reduction in sales of higher margin products with an increase in
sales of lower margin products. Distributed products gross margins for the
current nine month period decreased by $773,000 to 18% of net sales from 20% in
the prior period primarily due to price erosion and a decline in sales due to
the factors discussed above. The total gross margin percentages for the
comparable nine month periods remain the same due to the greater proportion of
sales of manufactured products which generally have higher gross margin
percentages than distributed products.
--7--
<PAGE>
For the quarter ended July 1, 1995, the gross margin was $4,207,000 (27% of net
sales) compared to $5,795,000 (34% of net sales) achieved in the same quarter of
fiscal year 1994. The gross margin for manufactured products decreased by
$1,463,000 with a decline in margins from 37% to 28% principally due to
increased inventory write-offs as discussed below and a continuing shift in
product mix reflecting a reduction in sales of higher margin products with an
increase in sales of lower margin products. Distributed products gross margins
for the same period decreased by $125,000 to 11% of net sales from 14% due
primarily to a decline in sales due to the factors discussed above.
Inventory write-offs amounted to $1,571,000 and $833,000 for the nine months
ended July 1, 1995 and July 2, 1994, respectively, and $766,000 and $300,000 for
the third quarters of fiscal years 1995 and 1994, respectively. The inventory
write-offs are related to the disposal of (i) products due to short self life;
(ii) inventory not meeting the Company's standards; and (iii) aged raw and
packaging materials.
OPERATING EXPENSES
Research and Development
Research and development costs for the nine months and three months ended July
1, 1995 were $3,385,000 (7% of net sales) and $1,408,000 (9% of net sales),
respectively, versus $2,720,000 (5% of net sales) and $733,000 (4% of net sales)
for the nine months and three months ended July 2, 1994, respectively. The
increase in both periods relates to expenditures incurred under various programs
for the internal development and co-development of new products and reflects the
continued commitment of management to invest in research and development
efforts.
To further expand its product line, the Company continues to pursue alternatives
to internal research and development, including joint ventures, licensing
agreements and distribution agreements. In May 1995, the Company formed an
alliance with Clal Pharmaceutical Industries Ltd. ("Clal") to develop,
manufacture and distribute generic pharmaceuticals worldwide (see "Notes to
Financial Statements--Investment in Non-marketable Securities", "Shareholders'
Equity" and "--Financial Condition--Liquidity and Capital Resources"). A
research and development joint venture, Clal Pharmaceutical Resources Limited
Partnership (the "Limited Partnership"), owned 49% by the Company and 51% by
Clal, has been formed in Israel with an initial combined investment of
$4,000,000. It is anticipated that up to an additional $11,000,000 will be
invested by the Company and Clal in the joint venture over the next two years.
In addition to the Clal alliance, the Company invested an additional $2,500,000
in convertible preferred stock of Sano Corporation ("Sano") (see "Notes to
Financial Statements--Investment in Non-marketable Securities" and "--Financial
Condition--Liquidity and Capital Resources"), as part of its strategic plan to
broaden its product line and advance into international markets. Sano has
submitted one ANDA to the U.S. Food and Drug Administration ("FDA") and
anticipates submitting additional ANDAs by year end. The Company has the right
of first refusal for marketing and distribution rights for the United States and
certain foreign countries with respect to any generic transdermal products
developed by Sano.
It is anticipated that the Company will continue to invest in internal research
and development efforts in addition to pursuing other outside alternatives
during future periods.
Selling, General and Administrative
Selling, general and administrative costs were $11,944,000 (24% of net sales)
for the nine month period ended July 1, 1995 versus $9,786,000 (19% of net
sales) for the corresponding period in the prior fiscal year. The increase in
the period is primarily attributable to certain nonrecurring charges, including
legal and accounting expenses related to merger and acquisition or other
strategic alliance negotiations, expenses incurred in connection with the
Company's response to FDA inquiries with respect to current Good Manufacturing
Practices, and costs associated with the termination of the broker network used
by the Company to sell its products. In addition, the Company has incurred
higher personnel and other costs related to the hiring of its own regional sales
force, the creation of a managed care division, and the implementation of new
information systems. The managed health care division will service customers
who will provide comprehensive health care needs to large groups of individuals
in a cost controlled environment, which among other things, includes centralized
purchasing of pharmaceuticals.
--8--
<PAGE>
Selling, general and administrative costs were $3,956,000 (25% of net sales) for
the three month period ended July 1, 1995 compared to $3,374,000 (20% of net
sales) for the corresponding period in the prior fiscal year. Increased
selling, general and administrative costs are principally attributable to
continued additions of management and personnel as described above.
Interest
Interest expense for the quarter and nine months ended July 1, 1995 increased
significantly over the corresponding periods of the prior fiscal year due to
interest expense relating to a settlement with the Internal Revenue Service for
the disallowance of the Company's tax credit for prior periods with respect to
research and development activities.
Settlement
During the nine month period of the current year the Company collected
$2,029,000 in settlement claims against former management members for recovery
of , among other things, salaries and monies paid for indemnification.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Working capital of $36,221,000 represents an increase of $16,489,000 from the
last fiscal year end principally due to the receipt of cash from the sale of the
Company's common stock to Clal (see "Notes to Financial Statements--
Shareholders' Equity" and "Results of Operations --Operating Expenses-- Research
and Development"). The working capital ratio of 3.7x improved from 2.4x at
fiscal year end.
The alliance formed with Clal (see "Notes to Financial Statements--Investment in
Non-marketable Securities", "Shareholders' Equity" and " --Results of Operations
--Operating Expenses-- Research and Development") includes the sale of 2,027,272
shares of Common Stock by the Company to Clal for $20,000,000 ($9.87 per share).
Clal also received a three year warrant to purchase up to 936,282 shares of
Common Stock at prices between $10 and $11 per share. Subject to shareholder
approval, the Company will issue a second three year warrant entitling Clal to
purchase approximately 1,070,000 additional shares of Common Stock at prices
between $11 and $12 per share. The shares and the warrant issued at closing,
together with the additional warrant, will allow Clal to purchase up to 19.9%
of the Company's Common Stock. As part of the alliance, the Company has
invested $1,960,000 in the Limited Partnership. The Company is committed to
invest an additional $5,390,000 in the Limited Partnership during the next two
years.
In addition to the $2,500,000 invested in Sano convertible preferred stock (see
"Notes to Financial Statements--Investment in Non-marketable Securities" and "--
Operating Expenses-Research and Development") during the current quarter, the
Company plans on incurring further significant expenditures in subsequent
periods in the development of Sano's transdermal pharmaceutical products. The
Company estimates that it could spend up to $2,000,000, subject to certain
contingent events, in further research and development expenses with Sano over
the next twelve months.
Should the Company exercise its option, which expires September 1, 1995, under
an agreement with Bio-Pharma, Inc. and CT Holding S.A. for ownership,
development, marketing and distribution rights of a compound for the treatment
of herpes viral lesions, it will pay $3,000,000 and incur significant additional
expenses for the necessary clinical trials and biostudies in order to file a New
Drug Application with the FDA.
If the Company incurs additional funding obligations under the option agreement
described above and existing, or new, distribution and product development
agreements, the Company expects to fund such obligations with its working
capital, including cash provided by operations, and if necessary by borrowings
against its line of credit (see"--Financing"). The Company also intends to fund
future possible acquisitions to expand its product line out of working capital
or borrowings.
--9--
<PAGE>
FINANCING
At July 1, 1995, the Company's debt of $5,899,000 is on a long-term basis to be
repaid in monthly installments through February 1999. The Company maintains a
$7,000,000 revolving credit facility with a bank which expires March 1996. No
borrowings were outstanding under the revolving credit facility at July 1, 1995.
The outstanding loans are secured by the assets of the Company. The Company, as
of July 1, 1995, was in default under the long-term bank loan for which it has
received a waiver from its bank (see "Notes to Financial Statements--Subsequent
Events").
The Company maintains a $350,000 line of credit at a second bank which is used
to acquire equipment. On July 1, 1995, the $213,000 outstanding under this line
is also secured by certain assets of the Company.
--10--
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
------ -----------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
------ --------------------------------
(a) Exhibits:
11 - Computation of per share data.
27 - Financial Data Schedule.
(b) Reports on Form 8-K:
(1) Report on Form 8-K (Item 5--Other Events) filed by the Registrant
on April 7, 1995.
(2) Report on Form 8-K (Item 5--Other Events) filed by the Registrant
on May 12, 1995.
--11--
<PAGE>
SIGNATURE
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.
PHARMACEUTICAL RESOURCES, INC.
------------------------------
(Registrant)
August 11, 1995 /s/ Kenneth I. Sawyer
---------------------
Kenneth I. Sawyer
President and Chief Executive Officer
(Principal Executive Officer)
August 11, 1995 /s/ Robert I. Edinger
---------------------
Robert I. Edinger
Executive Vice President - Chief Financial Officer and
Secretary
(Principal Financial Officer)
--12--
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Number Description Page Number
-------------- ----------- -----------
11 Computation of per share data 14
27 Financial Data Schedule 15
--13--
<PAGE>
Exhibit 11
COMPUTATION OF PER SHARE DATA
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
---------------------------- -----------------------
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Income (loss) from continuing operations $ 1,792,000 $ 3,054,000 $ (743,000) $1,051,000
Income from discontinued operations - 466,000 - -
Cumulative change in accounting principle - 14,128,000 - -
----------- ----------- ----------- ----------
NET INCOME (LOSS) $ 1,792,000 $17,648,000 $ (743,000) $1,051,000
=========== =========== =========== ==========
Primary:
Weighted average number of common shares outstanding 15,219,969 14,292,915/a/ 16,315,999 14,357,481/a/
Shares issuable upon conversion of Series A
Convertible Preferred Stock 1,066,465/c/ 1,104,887 1,066,465/c/ 1,104,887
Shares issuable upon exercise of dilutive stock
options and warrants - net of shares assumed to
be repurchased (at the average market price for
the period) from exercise proceeds 497,968 853,672/a/ 430,004/a/
----------- ----------- ----------- ----------
Shares used for computation 16,784,402 16,251,474/a/ 17,382,464 15,892,372/a/
=========== =========== =========== ==========
Income (loss) per share of common stock (primary):
Continuing operations $ .11 $ .19/a/ $ (.04) $ .07
Discontinued operations - .03 - -
Change in accounting principle - .87/a/ - -
----------- ----------- ----------- ----------
NET INCOME (LOSS) $ .11 $ 1.09/a/ $ (.04) $ .07
=========== =========== =========== ==========
Assuming full dilution:
Weighted average number of common shares
outstanding 15,219,969 14,292,915/a/ 16,315,999 14,357,481/a/
Shares issuable upon conversion of Series A
Convertible Preferred Stock 1,066,465/c/ 1,104,887 1,066,465/c/ 1,104,887
Shares issuable upon exercise of dilutive stock
options and warrants - net of shares assumed to be
repurchased (at the higher of period-end market
price or the average market price for the period)
from exercise proceeds 563,580 853,672/a/ 430,004/a/
----------- ----------- ----------- ---------
Shares used for computation 16,850,014 16,251,474/a/ 17,382,464 15,892,372/a/
=========== =========== =========== ==========
Income (loss) per share of common stock
(assuming full dilution): /b/
Continuing operations $ .11 $ .19/a/ $ (.04) $ .07
Discontinued operations - .03 - -
Change in accounting principle - .87/a/ - -
----------- ----------- ----------- ---------
NET INCOME (LOSS) $ .11 $ 1.09/a/ $ (.04) $ .07
=========== =========== =========== =========
</TABLE>
/a/ Revised to correct weighted average number of shares outstanding and, where
applicable, corresponding earnings per share calculations.
/b/ Not presented because dilution is less than 3 percent from primary amounts.
/c/ Assumes mandatory conversion of preferred shares on July 31, 1995 to 1.1
share of common stock.
--14--
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS INCLUDED IN THE QUARTERLY REPORT ON FORM 10-Q FOR THE NINE MONTHS
ENDED JULY 1, 1995 AND IS QUALIFIED IN ITS ENTIRELY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-1-1994
<PERIOD-END> JUL-1-1995
<CASH> 18,405
<SECURITIES> 0
<RECEIVABLES> 10,433
<ALLOWANCES> (1,601)
<INVENTORY> 16,915
<CURRENT-ASSETS> 49,679
<PP&E> 41,978
<DEPRECIATION> (17,854)
<TOTAL-ASSETS> 92,093
<CURRENT-LIABILITIES> 13,458
<BONDS> 4,525
<COMMON> 170
0
1
<OTHER-SE> 73,386
<TOTAL-LIABILITY-AND-EQUITY> 92,093
<SALES> 49,013
<TOTAL-REVENUES> 49,351
<CGS> 32,833
<TOTAL-COSTS> 15,336
<OTHER-EXPENSES> (2,029)
<LOSS-PROVISION> (7)
<INTEREST-EXPENSE> 808
<INCOME-PRETAX> 2,410
<INCOME-TAX> 618
<INCOME-CONTINUING> 1,792
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,792
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
