<PAGE> 1
UNITED STATES
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 MARCH 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _________
COMMISSION FILE NUMBER 0-20045
--------------------
WATSON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
---------------------
NEVADA 95-3872914
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
311 BONNIE CIRCLE
CORONA, CA 92880
(Address of principal executive offices, including zip code)
(909) 270-1400
(Registrant's telephone number, including area code)
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 [ ]
The number of shares of the Registrant's only class of common stock outstanding
as of April 30, 2000 was approximately 96,554,200.
<PAGE> 2
WATSON PHARMACEUTICALS, INC.
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 2000
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999...................... 1
Consolidated Statements of Income for the
three months ended March 31, 2000 and 1999............................................ 2
Consolidated Statements of Cash Flows for the
three months ended March 31, 2000 and 1999............................................ 3
Notes to Consolidated Financial Statements.................................................. 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................................... 6
Item 3. Quantitative and Qualitative Disclosure about Market Risk............................... 9
PART II. OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings....................................................................... 9
Item 4. Submission of Matters to a Vote of Security Holders..................................... 10
Item 6. Exhibits and Reports on Form 8-K........................................................ 10
Signatures....................................................................................... 11
</TABLE>
<PAGE> 3
WATSON PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................. $ 305,422 $ 102,057
Marketable securities ..................................... 9,670 13,865
Accounts receivable, net .................................. 145,254 180,860
Inventories ............................................... 123,387 108,532
Prepaid expenses and other current assets ................. 12,335 9,582
Deferred tax assets ....................................... 31,440 19,815
---------- ----------
Total current assets .................................... 627,508 434,711
Property and equipment, net ................................... 142,056 138,848
Investments and other assets .................................. 412,970 291,448
Product rights and other intangibles, net ..................... 568,945 573,743
---------- ----------
$1,751,479 $1,438,750
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ..................... $ 55,869 $ 56,487
Income taxes payable ...................................... 89,627 33,550
Current portion of long-term debt ......................... 1,555 1,691
Current liability - acquisitions of products and businesses 7,658 37,458
---------- ----------
Total current liabilities ............................... 154,709 129,186
Long-term debt ................................................ 149,346 149,503
Long-term liability - acquisitions of products and businesses . 13,049 18,049
Deferred tax liabilities and other ............................ 143,601 87,460
---------- ----------
Total liabilities ....................................... 460,705 384,198
---------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock; no par value per share; 2,500,000 shares
authorized; none outstanding .............................. -- --
Common stock; par value of $0.0033 per share, 500,000,000
shares authorized; 96,455,600 and 96,133,200 shares issued 318 317
Additional paid-in capital .................................. 405,369 397,705
Retained earnings ........................................... 693,720 549,000
Accumulated other comprehensive income ...................... 191,367 107,530
---------- ----------
Total stockholders' equity .............................. 1,290,774 1,054,552
---------- ----------
$1,751,479 $1,438,750
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-1-
<PAGE> 4
WATSON PHARMACEUTICALS,INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------------
2000 1999
--------- ---------
<S> <C> <C>
Net revenues ................................ $ 179,632 $ 159,243
Cost of sales ............................... 63,078 49,997
--------- ---------
Gross profit .......................... 116,554 109,246
--------- ---------
Operating expenses:
Research and development ................. 12,025 10,142
Selling, general and administrative ...... 30,457 27,472
Amortization ............................. 8,669 6,690
Merger and related expenses (Note A) ..... -- 20,467
--------- ---------
Total operating expenses .............. 51,151 64,771
--------- ---------
Operating income ............................ 65,403 44,475
--------- ---------
Other income (expense):
Equity in (loss) earnings of joint ventures (2,053) 31
Gain on sales of Andrx securities ......... 166,930 --
Investment and other income ............... 2,933 959
Interest expense .......................... (2,768) (2,818)
--------- ---------
Total other income (expense), net ..... 165,042 (1,828)
--------- ---------
Income before income tax provision .......... 230,445 42,647
Provision for income taxes .................. 85,725 19,676
--------- ---------
Net income .................................. $ 144,720 $ 22,971
========= =========
Basic earnings per share .................... $ 1.50 $ 0.24
========= =========
Diluted earnings per share .................. $ 1.48 $ 0.23
========= =========
Weighted average shares
outstanding, no dilution ................. 96,290 95,520
========= =========
Weighted average shares
outstanding, diluted basis ............... 97,905 98,160
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-2-
<PAGE> 5
WATSON PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................................ $ 144,720 $ 22,971
--------- ---------
Adjustments to reconcile net cash provided by operating activities:
Depreciation ................................................ 3,001 3,271
Amortization ................................................ 8,669 6,690
Deferred income tax provision (benefit) ..................... (2,434) 4,437
Equity in loss of joint ventures ............................ 2,173 75
Tax benefits related to exercise of options ................. 2,222 1,225
Gain on sales of Andrx securities ........................... (166,930) --
Other ....................................................... (900) 3,968
Cash provided (used) by changes in:
Accounts receivable ...................................... 35,606 (26,710)
Inventories .............................................. (14,855) (20,619)
Prepaid expenses and other current assets ................ (2,753) 2,912
Accounts payable and accrued expenses .................... (618) 7,146
Income taxes payable ..................................... 56,077 18,163
--------- ---------
Total adjustments ..................................... (80,742) 558
--------- ---------
Net cash provided by operating activities ............ 63,978 23,529
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ............................... (6,209) (7,556)
Purchases of marketable securities ................................ (3,458) (10,296)
Proceeds from maturities of marketable securities ................. 7,653 23,166
Proceeds from sales of Andrx and other securities ................. 184,144 --
Contingent payment related to acquisition of Rugby ................ (23,407) --
Issuance of note receivable ....................................... (9,000) --
Acquisitions of product rights .................................... (263) (1,107)
Additions to investment in joint ventures ......................... (223) (150)
--------- ---------
Net cash provided by investing activities ............ 149,237 4,057
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt .............................. (293) (426)
Payment on liability for acquisition of product rights ............ (15,000) (30,000)
Proceeds from exercise of stock options and warrants .............. 5,443 9,008
--------- ---------
Net cash used in financing activities ................ (9,850) (21,418)
--------- ---------
Increase in cash and cash equivalents ................ 203,365 6,168
Cash and cash equivalents at beginning of period .................. 102,057 59,663
--------- ---------
Cash and cash equivalents at end of period ........................ $ 305,422 $ 65,831
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-3-
<PAGE> 6
WATSON PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - GENERAL
The accompanying unaudited consolidated financial statements of Watson
Pharmaceuticals, Inc. ("Watson" or the "company") should be read in conjunction
with the company's Annual Report on Form 10-K for the year ended December 31,
1999. In the opinion of management, the accompanying financial statements
contain all adjustments necessary to present fairly Watson's consolidated
financial position and results of operations for the periods presented. Unless
otherwise noted, all such adjustments are of a normal, recurring nature. In
addition, certain comparative prior year amounts in the consolidated financial
statements have been reclassified to conform to the current year presentation.
The results of operations for any interim period are not necessarily indicative
of the results of operations to be expected for the entire year.
In January 1999, the company completed its acquisition of TheraTech, Inc., a
developer, manufacturer and marketer of branded pharmaceutical products. This
acquisition was accounted for as a pooling of interests and, accordingly, the
accompanying consolidated financial statements include the results of TheraTech
for all periods presented. In connection with this acquisition, during the first
quarter of 1999, the company recorded a special charge of $20.5 million for
certain merger-related expenses.
NOTE B - EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the weighted
average common shares actually outstanding during a period. Diluted earnings per
share is computed by dividing net income by the weighted average common shares
that would have been outstanding during the period, assuming, among other
things, that all vested in-the-money stock options had been exercised at the
beginning of the period. The effect of such dilutive stock options was to
increase weighted average common shares outstanding, for diluted earnings per
share purposes, by 1,615,000 and 2,640,000 shares for the three months ended
March 31, 2000 and 1999, respectively.
NOTE C - INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------- --------
<S> <C> <C>
Raw materials ....... $ 37,589 $ 48,832
Work-in-progress .... 18,036 13,472
Finished goods ...... 67,762 46,228
-------- --------
$123,387 $108,532
======== ========
</TABLE>
-4-
<PAGE> 7
NOTE D - INVESTMENTS AND OTHER ASSETS
Long-term investments consisted primarily of the company's investment in Andrx
Corporation, a drug-delivery company utilizing controlled-release technologies
to develop oral pharmaceutical products. Andrx common stock trades on the
Nasdaq Stock Market under the symbol ADRX. During the first quarter of 2000, and
as adjusted to reflect Andrx' April 2000 two-for-one stock split, Watson sold
4.2 million shares of Andrx stock on the open market for $182.2 million,
recording a pretax gain of $166.9 million.
As of March 31, 2000, Watson owned 5.8 million common shares of Andrx, or
approximately 9.1% of the total Andrx common shares outstanding. Andrx
currently has pending with the U.S. Securities and Exchange Commission a
registration statement for a proposed public offering of its common stock in
which Watson would also propose to sell approximately 1.3 million of its Andrx
shares. The company accounts for its Andrx investment at fair value as an
available-for-sale security. The unrealized gain on the company's investment in
Andrx was $191 million and $109 million (net of income taxes of $127 million
and $72 million), at March 31, 2000 and December 31, 1999, respectively. This
unrealized gain was the primary component of accumulated other comprehensive
income in the stockholders' equity section of Watson's consolidated balance
sheets.
NOTE E - COMPREHENSIVE INCOME
Comprehensive income includes all changes in equity during a period except those
resulting from investments by and distributions to our stockholders. The
company's comprehensive income for the three months ended March 31, 2000 and
1999 was as follows:
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------------
(in thousands) 2000 1999
--------- ---------
<S> <C> <C>
Net income ............................ $ 144,720 $ 22,971
--------- ---------
Other comprehensive income, net of tax:
Unrealized holding gains
on securities .................... 188,669 64,810
Reclassification for gains included
in net income .................... (104,832) --
--------- ---------
Other comprehensive income ............ 83,837 64,810
--------- ---------
Comprehensive income .................. $ 228,557 $ 87,781
========= =========
</TABLE>
NOTE F - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------
(in thousands) 2000 1999
---- ----
<S> <C> <C>
Cash paid during the periods for:
Income taxes............................. $30,245 $ 1,230
Interest................................. 50 45
</TABLE>
-5-
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO 1999
Net revenues for the three months ended March 31, 2000 were $179.6 million
compared to $159.2 million for the 1999 period, an increase of $20.4 million or
13%. Our first quarter 2000 revenue growth was attributable to sharply increased
sales of branded products, primarily women's health and dermatology products. In
total, branded product sales accounted for approximately 60% of our net product
sales in the first quarter of 2000, as compared with approximately 50% in the
1999 period. Although we shipped more units of generic products in first quarter
2000 than in 1999, net sales of generic products were lower in the current year
quarter due to increasing price competition in the generic market. In April
2000, we received a favorable court ruling in litigation concerning our nicotine
polacrilex gum, the generic equivalent to SmithKline Beecham's Nicorette(R) Gum,
and began shipping our product shortly thereafter.
Our overall gross profit margin on product sales decreased to 63% in 2000 from
68% in the year ago period primarily due to price competition in the generic
market and a lack of new generic product introductions.
Research and development expenses increased to $12.0 million in the first
quarter of 2000, compared to $10.1 million in the same period of 1999, due to
higher spending on clinical studies on developmental proprietary products.
Selling, general and administrative expenses increased to $30.5 million for the
first quarter of 2000 compared to $27.5 million in the prior year period. This
increase is primarily due to higher advertising and promotional expenses and
increased commission expense resulting from higher first quarter 2000 branded
product sales.
First quarter amortization expense increased to $8.7 million in 2000, compared
to $6.7 million in the 1999 period. This increase was primarily due to
amortization expense recorded on our 1999 product acquisitions and goodwill
amortization expense associated with the Rugby acquisition.
Our $2.1 million loss from joint ventures in the first quarter of 2000 results
primarily from our 50% interest in Somerset Pharmaceuticals, Inc., which
reported a higher net loss in 2000 caused by lower revenues and higher research
and development costs. Currently, Somerset's sole product is an anti-Parkinson's
drug, Eldepryl(R), which lost Orphan Drug exclusivity in 1996, although other
potential indications for this product are under development.
In the first quarter of 2000, we sold approximately 4.2 million shares of Andrx
common stock (adjusted to reflect Andrx' two-for-one stock split distributed in
April 2000). Proceeds from these sales amounted to $182.2 million and we
recorded pre-tax gains in the first quarter of 2000 of $166.9 million. In
addition, Andrx has filed a registration statement for a proposed public
offering of its common stock in which we would also propose to sell
approximately 1.3 million Andrx shares that we acquired upon exercise of a
warrant in June 1999. Andrx' registration statement is pending with the U.S.
Securities and Exchange Commission and has not yet become effective. We did not
sell any Andrx common stock in the first quarter of 1999.
-6-
<PAGE> 9
Investment and other income in the first quarter of 2000 increased to $2.9
million from $1.0 million in 1999 due to higher 2000 cash balances, primarily as
a result of the proceeds received from the Andrx sales discussed above.
Our income tax provision in the first quarter of 2000 reflected a lower
effective tax rate on pre-tax income than in 1999, 37% as compared to 46%. This
decrease is primarily due to that fact that portions of our first quarter 1999
charge related to the TheraTech acquisition were not deductible for income tax
purposes.
LIQUIDITY AND CAPITAL RESOURCES
The company's working capital increased to $472.8 million at March 31, 2000 from
$305.5 million at December 31, 1999, primarily due to first quarter 2000 net
income of approximately $145 million. Significant sources of cash during the
first quarter were the proceeds from the sale of Andrx common stock, the taxes
on which are payable in second quarter 2000, and lower accounts receivable
balances. Significant first quarter 2000 uses of cash included a final,
contingent payment related to the 1997 acquisition of Rugby and a scheduled
payment made pursuant to our purchase of the Dilacor XR(R) product rights. Other
uses of cash included a $9 million loan to Halsey Drug Co., Inc. under a new
$17.5 million commitment, and first quarter 2000 acquisitions of property and
equipment.
In April 1998, we filed a registration statement with the Securities and
Exchange Commission to raise up to $300 million from offerings of senior or
subordinated debt securities, common stock, preferred stock or a combination
thereof. In May 1998, pursuant to this registration statement, we issued $150
million of 7-1/8% senior unsecured notes due May 2008, with interest payable
semi-annually in May and November. Subject to preparation of a current
prospectus, the balance of this registration statement remains available for
issuance at the company's discretion. In addition, we have a bank credit
facility available through January 2001 that provides for unsecured borrowing
commitments totaling $30 million. To date, we have made no borrowings under this
facility.
Our cash and marketable securities totaled approximately $315 million at March
31, 2000. We believe that our cash and marketable securities balance, our cash
flow from operations and the financing sources discussed herein, will be
sufficient to meet our normal operating requirements during the next twelve
months. However, we continue to review opportunities to acquire or invest in
companies, technologies, product rights and other investments that are
compatible with our existing business. We could use cash and financing sources
discussed herein, or financing sources that subsequently become available, to
fund additional acquisitions or investments. If a material acquisition or
investment is completed, our operating results and financial condition could
change materially in future periods.
-7-
<PAGE> 10
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements concerning future events or
performance of Watson. You should not rely excessively on these forward-looking
statements, because they are only predictions based on our current expectations
and assumptions. Forward-looking statements often contain words like "estimate,"
"anticipate," "believe" or "expect." Many known and unknown risks and
uncertainties could cause our actual results to differ materially from those
indicated in these forward-looking statements.
The company's estimated or anticipated future results, product performance or
other non-historical facts are forward-looking and reflect Watson's current
perspective of existing trends and information. These statements involve risks
and uncertainties that cannot be predicted or quantified and, consequently,
actual results may differ materially from those expressed or implied by such
forward-looking statements. Such risks and uncertainties include, among other
things, the success of Watson's product development activities and the
timeliness with which regulatory authorizations and product roll-out may be
achieved, market acceptance of Watson's products and the impact of competitive
products and pricing, the availability on commercially reasonable terms of raw
materials and other third party sourced products, dependence on sole source
suppliers and risks associated with a production interruption or shipment delays
at such suppliers, successful compliance with extensive, costly, complex and
evolving governmental regulations and restrictions, the scope, outcome and
timeliness of any governmental, court or other regulatory action (including,
without limitation, the scope, outcome, or timeliness of any inspection or other
action of the FDA), the ability to timely and cost effectively integrate
acquisitions, exposure to product liability and other lawsuits and
contingencies, the outcome of litigation involving us and related costs and
expenses and possible diversion of management's time and attention arising from
such litigation, and other risks and uncertainties detailed in this report and
from time to time in Watson's other Securities and Exchange Commission ("SEC")
filings.
Therefore, the company wishes to caution each reader of this report to consider
carefully these factors as well as the specific factors that may be discussed
with each forward-looking statement in this report or disclosed in the company's
other filings with the SEC as such factors, in some cases, could affect the
ability of the company to implement its business strategy and may cause actual
results to differ materially from those contemplated by the statements expressed
herein.
-8-
<PAGE> 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
As discussed in Note D to the accompanying Notes to Consolidated Financial
Statements, our investment in Andrx consisted of 5.8 million Andrx common shares
with a fair market value of $332.8 million at March 31, 2000. As a publicly
traded equity security, this investment has exposure to price risk. The market
price of Andrx' common shares has been, and may continue to be, volatile. The
following table sets forth the Andrx high and low market price per share
information, based on published financial sources, for 1999 and through March
31, 2000 (adjusted for Andrx' two-for-one stock split distributed in April
2000):
<TABLE>
<CAPTION>
2000 HIGH LOW
- ---- ------ ------
<S> <C> <C>
First quarter.................. $65.50 $20.13
1999, by quarter
First.......................... $23.13 $11.13
Second......................... 39.00 15.41
Third.......................... 39.00 28.57
Fourth......................... 29.00 19.25
</TABLE>
Substantially all of our cash equivalents and marketable securities are at fixed
interest rates and, as such, changes in market interest rates will affect the
fair value of these instruments. However, all of these investments mature within
one year and we believe that the market risk arising from our holding of these
investments is minimal. We believe that the fair value of our fixed-rate
long-term debt approximates its carrying value of approximately $150 million at
March 31, 2000. While changes in market interest rates may affect the fair value
of our long-term debt, we believe the effect, if any, of reasonably possible
near-term changes in the fair value of such debt on our financial condition,
results of operations or cash flows will not be material. We have no material
foreign exchange or commodity price risks.
PART II - OTHER INFORMATION AND SIGNATURES
ITEM 1. LEGAL PROCEEDINGS
Reference is made to "Part I, Item 3. Legal Proceedings," of our Annual Report
on Form 10-K for the year ended December 31, 1999 for background information on
certain litigation. The following provides updated information regarding certain
previously disclosed Legal Proceedings.
In the matter of SmithKline Beecham Consumer Healthcare LP v. Watson
Pharmaceuticals, et. al., on April 4, 2000, the United States Court of Appeals
for the Second Circuit issued its decision, affirming the District Court's
decision dissolving the injunction. The Court of Appeals also held that
SmithKline Beecham Consumer Healthcare's copyright claim was meritless, and
directed dismissal of its complaint. SmithKline Beecham has 90 days from the
date of the Appellate Court's decision to petition for review by the U.S.
Supreme Court. During April 2000, Watson resumed sales of this product.
In the matter of Watson Laboratories, Inc. v. Rhone-Poulenc Rorer, Inc., et.
al., pending in the United States District Court for the Central District of
California, discovery is ongoing. Trial is scheduled for February 2001.
-9-
<PAGE> 12
In the matter of William Higuchi and Setsuko Higuchi v. Watson Pharmaceuticals,
Inc., pending in the United States District Court for the District of Utah,
discovery is ongoing. Trial is scheduled for April 2001.
In July 1999, the company's subsidiary, Watson Laboratories, Inc. - Ohio, filed
an ANDA application seeking approval from the FDA to market a sustained release
formulation of bupropion hydrochloride, the generic equivalent of Glaxo
Wellcome, Inc.'s Wellbutrin(R) SR. In October 1999, the company notified Glaxo
Wellcome pursuant to the provisions of the Hatch-Waxman Act and, on December 2,
1999, Glaxo Wellcome filed a patent infringement action against the company's
subsidiary (Glaxo Wellcome, Inc. v. Watson Laboratories, Inc. - Ohio) in the
United States District Court for the Southern District of Ohio. Discovery is
ongoing. Trial is scheduled for October 2001.
The company and its affiliates are involved in various other disputes,
governmental and/or regulatory inspections, investigations and proceedings, and
litigation matters that arise from time to time in the ordinary course of
business. The process of resolving matters through litigation or other means is
inherently uncertain and it is possible that the resolution of these matters
will adversely affect the company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At Watson's Annual Meeting of Stockholders held on May 9, 2000, two proposals
were set before the stockholders for their vote.
PROPOSAL ONE: Election of two directors to hold office until the 2003
Annual Meeting:
<TABLE>
<CAPTION>
DIRECTOR - CLASS II VOTES FOR VOTES WITHHELD
------------------- --------- --------------
<S> <C> <C>
Ronald R. Taylor...................... 70,642,513 623,169
Andrew L. Turner...................... 70,620,288 627,394
</TABLE>
PROPOSAL TWO: Ratification of the selection of PricewaterhouseCoopers
LLP as the company's independent accountants for the year ending
December 31, 2000:
<TABLE>
<S> <C>
For.............................. 70,575,020
Against.......................... 77,762
Abstain.......................... 594,900
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K filed during the quarter ended March 31, 2000:
None.
-10-
<PAGE> 13
SIGNATURES
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.
WATSON PHARMACEUTICALS, INC.
(Registrant)
By: /S/ MICHAEL E. BOXER
------------------------------------
Michael E. Boxer
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
By: /S/ R. CHATO ABAD
------------------------------------
R. Chato Abad
Vice President - Finance
(Principal Accounting Officer)
Dated: May 12, 2000
-11-
<PAGE> 14
EXHIBIT INDEX
27 Financial Data Schedule (EDGAR version only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE WATSON
PHARMACEUTICALS, INC. FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 305,422
<SECURITIES> 9,670
<RECEIVABLES> 146,754
<ALLOWANCES> 1,500
<INVENTORY> 123,387
<CURRENT-ASSETS> 627,508
<PP&E> 228,401
<DEPRECIATION> 86,345
<TOTAL-ASSETS> 1,751,479
<CURRENT-LIABILITIES> 154,709
<BONDS> 149,346
0
0
<COMMON> 318
<OTHER-SE> 1,290,456
<TOTAL-LIABILITY-AND-EQUITY> 1,751,479
<SALES> 179,632
<TOTAL-REVENUES> 179,632
<CGS> 63,078
<TOTAL-COSTS> 63,078
<OTHER-EXPENSES> (165,042)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,768
<INCOME-PRETAX> 230,445
<INCOME-TAX> 85,725
<INCOME-CONTINUING> 144,720
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 144,720
<EPS-BASIC> 1.50
<EPS-DILUTED> 1.48
</TABLE>
