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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 1998
Watson Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
Nevada 0-20045 95-3872914
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
311 Bonnie Circle
Corona, CA 91720 91720
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (909) 270-1400
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Former name or former address, if changed since last report
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ITEM 5. Other Events.
On April 30, 1998, Watson Pharmaceuticals, Inc. issued a press release, a copy
of which is attached hereto as Exhibit 99.1, announcing financial results for
its first quarter ended March 31, 1998.
ITEM 7. Exhibits.
Exhibit
Number Description
- ------- -----------
99.1 Press Release of Watson Pharmaceuticals, Inc. dated April 30, 1998.
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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.
Dated: April 30, 1998 WATSON PHARMACEUTICALS, INC.
(Registrant)
By: /s/ ALLEN CHAO
-----------------------------------
Name: Allen Chao, Ph.D
Title: Chairman, Chief Executive
Officer and President
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WATSON PHARMACEUTICALS, INC.
EXHIBIT INDEX
FORM 8-K
Exhibit
Number Description Page
- ------- ----------- ----
99.1 Press Release of Watson Pharmaceuticals, Inc. dated April
30, 1998.
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FOR: WATSON PHARMACEUTICALS, INC.
APPROVED BY: Allen Chao, Ph.D.
Chairman, Chief Executive Officer and
President
Watson Pharmaceuticals, Inc.
(909) 270-1400
CONTACTS: Morgen-Walke Associates, Inc.
Carolyn Bass, Jim Byers, Doug Sherk
(415) 296-7383
FOR IMMEDIATE RELEASE Sandra Badurina, Deborah Szajngarten
(212) 850-5600
WATSON PHARMACEUTICALS POSTS RECORD FIRST QUARTER RESULTS
SALES UP 108%, EARNINGS INCREASE 42%
STRONG QUARTERLY PERFORMANCE AND COMPLETION OF RUGBY ACQUISITION
HIGHLIGHT FIRST PERIOD
CORONA, CA - April 30, 1998 - Watson Pharmaceuticals, Inc. (NYSE: WPI) today
reported record results, exclusive of special acquisition-related charges, for
the first quarter ended March 31, 1998. This represents Watson's 21st
consecutive quarter of record results since its initial public offering in
February 1993.
Product sales in the first quarter of 1998 were $121.9 million, up 108%
from the same period last year. The 1998 period included sales generated from
the branded products acquired in the second half of 1997. Exclusive of special
charges in both the 1998 and 1997 periods, net income was $30.6 million and
diluted earnings per share were $0.34 in the first quarter of 1998, compared to
net income of $21.4 million and diluted earnings per share of $0.24 in the 1997
period. On this basis, diluted earnings per share rose 42% in the first quarter
of 1998, as compared with the first quarter of last year. The 1998 results
exclude a special charge of $18.8 million for the write-off of in-process
research and development associated with the acquisition of The Rugby Group,
Inc. ("Rugby") and its wholly owned subsidiary, Chelsea Laboratories, Inc.,
which was completed on February 27, 1998. A special charge was also recorded in
[continued]
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the 1997 period of $8.9 million, related to the February 1997 merger with
Oclassen Pharmaceuticals, Inc. With these special charges included in both
periods, reported diluted earnings per share were $0.13 per share in the first
quarter of 1998, compared to $0.16 per share in the same period of 1997.
The following table presents the Company's unaudited statements of
income for the three months ended March 31, 1998 and 1997. These results exclude
the special acquisition and merger-related charges and have been adjusted for
the two-for-one stock split in October 1997 (in thousands, except earnings per
share).
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
------------ ------------
<S> <C> <C>
Product sales $ 121,872 $ 58,699
Cost of sales 45,100 25,688
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Gross profit 76,772 33,011
Royalty income 7,041
Operating expenses 31,022 15,043
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Operating income 45,750 25,009
Equity in earnings of joint ventures 1,610 4,135
Investment and other income 1,005 3,515
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Pre-tax income 48,365 32,659
Income tax provision 17,750 11,272
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Net income $ 30,615 $ 21,387
========== ==========
Basic earnings per share $ 0.35 $ 0.25
========== ==========
Diluted earnings per share $ 0.34 $ 0.24
========== ==========
</TABLE>
[continued]
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"During the first quarter, Watson enjoyed strong brand sales from our
Primary Care, Women's Health and Dermatology units. Our sales of off-patent
products also increased with the addition of Rugby's product portfolio, as well
as increased sales of a number of our existing off-patent products", commented
Dr. Allen Chao, Chairman, Chief Executive Officer and President.
Dr. Chao continued, "The business and product acquisitions completed
thus far provide Watson with a balanced portfolio of brand and off-patent
products. Our diversified revenue base and increased sales and marketing
capabilities have strengthened the Company for future growth."
The Securities and Exchange Commission (SEC) encourages companies to
disclose forward-looking information so that investors can better understand a
company's future prospects and make informed investment decisions. Due to
changing market conditions, product competition, the nature of product
development and regulatory approval processes, the achievement of
forward-looking statements contained in this press release are subject to risks
and uncertainties. For further details and a discussion of these risks and
uncertainties, see Watson's SEC filings, including its 1997 annual report on
Form 10-K and all Form 8-K filings in 1997 and 1998.
Watson Pharmaceuticals, Inc., headquartered in Corona, CA, is engaged in
the development, manufacture and sale of off-patent and proprietary
pharmaceutical products.
This and past press releases of Watson Pharmaceuticals, Inc. are
available at Watson's web site at www.watsonpharm.com. In addition, press
releases are available through PR Newswire's Company News On-Call fax service at
(800) 758-5804, extension 112856, and at www.prnewswire.com.
# # #
(Tables to follow)
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WATSON PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1998 1997
----------------------
<S> <C> <C>
Product sales $ 121,872 $ 58,699
Cost of sales 45,100 25,688
-----------------------
Gross profit 76,772 33,011
-----------------------
Royalty income 7,041
-------------
Operating expenses:
Research & development 5,648 4,619
Selling, general & administrative 20,757 10,424
Amortization of product rights 4,617
Charge for acquired in-process
research and development (1) 18,790
Merger expenses (1) 8,897
-----------------------
Total operating expenses 49,812 23,940
-----------------------
Operating income 26,960 16,112
Other income:
Equity in earnings of joint ventures 1,610 4,135
Interest and other income 1,005 3,515
-----------------------
Total other income 2,615 7,650
-----------------------
Income before income tax provision 29,575 23,762
Provision for income taxes 17,750 9,711
-----------------------
Net income $ 11,825 $ 14,051
=======================
BASIC EARNINGS PER SHARE $ 0.13 $ 0.16
=======================
DILUTED EARNINGS PER SHARE $ 0.13 $ 0.16
=======================
Weighted average shares
outstanding, no dilution 88,301 86,279
=======================
Weighted average shares
outstanding, diluted basis 90,588 88,377
=======================
</TABLE>
(1) - Special, non-recurring charges related to acquisitions in 1998 and 1997.
All share and per share amounts adjusted for the two-for-one stock split
in October 1997.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
MAR. 31, DEC. 31,
ASSETS 1998 1997
--------- ---------
<S> <C> <C>
Current assets $ 203,509 $ 246,789
Property & equipment, net 93,113 88,004
Investments and other assets 116,461 131,083
Product rights and other intangibles 362,575 289,129
-----------------------
$ 775,658 $ 755,005
=======================
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities $ 130,196 $ 99,840
Long-term liabilities 50,001 90,131
Stockholders' equity 595,461 565,034
-----------------------
$ 775,658 $ 755,005
=======================
</TABLE>
