<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
|X| ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED].
For the year ended December 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED].
For the transition period from ________________ to ________________
Commission file number 1-14019
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below: Retirement Plan of Schein Pharmaceutical, Inc. and
Affiliates.
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office: Schein Pharmaceutical, Inc. 100 Campus Dr.
Florham Park, NJ 07932
<PAGE>
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC.
AND AFFILIATES
CONTENTS
INDEPENDENT AUDITOR'S REPORT 3
FINANCIAL STATEMENTS:
Statements of assets available for benefits 4
Statements of changes in assets available
for benefits 5
Notes to financial statements 6-10
SUPPLEMENTAL SCHEDULE:
Form 5500 - Item 27a - Schedule of assets
held for investment purposes 11
SIGNATURES 12
EXHIBITS
Page 2
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Investment Committee
Retirement Plan of Schein Pharmaceutical, Inc. and Affiliates
We have audited the accompanying statements of assets available for benefits of
the Retirement Plan of Schein Pharmaceutical, Inc. and Affiliates ("the Plan")
as of December 31, 1999 and 1998 and the related statements of changes in assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Investment Committee for the Retirement Plan of Schein
Pharmaceutical, Inc. and Affiliates. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Investment Committee, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Retirement Plan
of Schein Pharmaceutical, Inc and Affiliates at December 31, 1999 and 1998, and
the changes in assets available for benefits for the years then ended, in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment is presented for purposes of complying with the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 and is not a required part of the basic
financial statements. The supplemental schedule has been subjected to the
auditing procedures applied to the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ BDO Seidman, LLP
Woodbridge, New Jersey
May 25, 2000
Page 3
<PAGE>
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC.
AND AFFILIATES
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS (NOTE 5)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
DECEMBER 31, 1999 1998
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Mutual funds $94,991,248 $74,854,814
Participant's loans 2,921,132 $97,912,380 2,661,438 $77,516,252
-------------------------------------------------------------------------------------------------------
Receivables:
Employer contributions 1,037,224 3,264,964
Participants' contributions 94,046 1,131,270 117,006 3,381,970
-------------------------------------------------------------------------------------------------------
ASSETS AVAILABLE FOR BENEFITS $99,043,650 $80,898,222
=======================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Page 4
<PAGE>
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC.
AND AFFILIATES
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS (NOTE 4)
<TABLE>
<CAPTION>
=====================================================================================================================
YEAR ENDED DECEMBER 31, 1999 1998
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Interest and dividends $ 2,151,812 $1,624,123
Net appreciation in fair value of
investments 18,690,360 $20,842,172 7,097,985 $8,722,108
--------------------------------------------------------------------------------------------------------------------
Contributions:
Employer 2,814,253 5,144,050
Participants 5,463,824 8,278,077 6,264,658 11,408,708
--------------------------------------------------------------------------------------------------------------------
29,120,249 20,130,816
DEDUCTIONS FROM ASSETS ATTRIBUTED TO:
Benefits paid 10,826,997 7,527,220
Administrative expenses 147,824 145,942
--------------------------------------------------------------------------------------------------------------------
NET INCREASE 18,145,428 12,457,654
ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 80,898,222 68,440,568
--------------------------------------------------------------------------------------------------------------------
ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $99,043,650 $80,898,222
=====================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Page 5
<PAGE>
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC.
AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN The following description of the Retirement Plan
of Schein Pharmaceutical, Inc. and Affiliates
("the Plan") provides only general information,
Participants should refer to the Plan agreement
for a more complete description of the Plan's
provisions.
The Plan is a defined contribution plan subject to
the provisions of the Employee Retirement Income
Security Act of 1974. Eligible employees are those
employees of Schein Pharmaceutical, Inc. and its'
affiliates ("Schein Pharmaceutical" or the "Plan
Sponsor").
Participants' contributions, from 1% to 14% of
salary, and the employers' matching contribution
of 50% of the participants' contributions (up to
6% of the participants' contributions) in 1999 and
25% of the participants' contributions (up to 3%
of the participants' contributions) in 1998, are
fully vested when made. The Plan also provides for
a discretionary employer contribution which
becomes 100% vested upon completion of 5 years of
continuous service and provides for retirement,
termination, death and disability benefits.
The amount of forfeitures arising under this Plan
are first allocated to pay the expenses of the
Plan. The balance, if any, is then allocated to
the accounts of participants entitled to
restoration of their interests in the Plan. The
remaining balance, if any, is then allocated to
the employer contribution account of each
participant.
Upon enrollment in the Plan, a participant may
direct employer and employee contributions in any
of the following investment options. Participants
may change their investment options at any time.
PIMCO TOTAL RETURN FUND - Administrative Class
("PIMCO Fund") - Funds are invested in corporate
bonds, U.S. government bonds and money market
instruments.
VANGUARD GROWTH & INCOME FUND - Funds are invested
in a broadly diversified portfolio of stocks
designed, in total, to be similar to the Standard
& Poor's 500 index in terms of dividend yield,
return on equity, price-earnings ratio and
price-book ratio of large company stocks.
PBHG GROWTH FUND - The fund normally invests at
least 80% of its' assets in the common stocks of
small and medium-sized companies.
Page 6
<PAGE>
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC.
AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
T. ROWE PRICE INTERNATIONAL STOCK FUND - The fund
invests primarily in common stocks or other equity
securities of companies located principally in
Europe and the Far East.
INCOME FUND II - The fund invests primarily in
insurance and bank investment contracts and stable
value contracts.
LIFESTYLE FUNDS - The Conservative, Balanced and
Aggressive Lifestyle Funds are designed to suit
varying risk tolerances by investing in pre-mixed
portfolios of funds described above.
SCHEIN PHARMACEUTICAL STOCK FUND - Effective April
9, 1998, Plan participants could elect to
contribute (up to 10% of the participants'
contributions) to the Schein Pharmaceutical Stock
Fund. This fund invests in common stock of the
Plan Sponsor.
PARTICIPANT LOANS - Participants may borrow from
their accounts pursuant to the rules set forth in
the Plan agreement. The loans are secured by the
balance in the participant's account and bear
interest at local prevailing rates. Principal and
interest are paid ratably through payroll
deductions.
Upon termination of employment, benefits are paid
in the form of a lump-sum amount equal to the
value of the participant's vested interest in his
or her account. Certain participants, pursuant to
the qualifications set forth in the Plan
agreement, may elect to have a portion of their
benefits paid in installments over 5 or 10 years.
The Internal Revenue Service has determined and
informed the Plan Sponsor, by letter dated on June
29,1995, that the Plan and related trust are
designed and operate in accordance with applicable
sections of the Internal Revenue Code. Earnings of
the Plan are therefore exempt from income taxes.
The Plan may be terminated, or contributions may
be discontinued, by the Plan Sponsor at any time.
Upon termination, or discontinuance of
contributions, the amounts credited to
participants shall become fully vested.
Plan investments are maintained by American
Express Trust Company ("American Express") who
also serves as the Plan's trustee.
Page 7
<PAGE>
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC.
AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF BASIS OF PRESENTATION
ACCOUNTING
POLICIES The financial statements are prepared on the
accrual basis of accounting.
INVESTMENTS
Investments are stated at fair value which is
determined using quoted market prices. Gains and
losses on investment transactions are recognized
when realized based on trade dates. Unrealized
gains and losses are based on the difference
between the beginning of year fair value, or
historical cost if purchased during the current
year, and the year-end fair value. Realized and
unrealized gains and losses have been included in
net appreciation in fair value of investments.
Assets held for investment, by Fund, are
separately disclosed in Note 5.
USE OF ESTIMATES
The preparation of financial statements in
conformity with generally accepted accounting
principles requires the Plan Sponsor to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date
of the financial statements and the reported
amounts of revenues and expenses during the
reporting period. Actual results could differ from
those estimates.
3. PLAN EXPENSES Certain administrative expenses are charged to the
Plan Sponsor by American Express (and are
substantially offset by forfeitures from the Plan,
itself). In addition, Schein also incurs certain
personnel and administrative costs in the course
of servicing the Plan and its' participants.
Page 8
<PAGE>
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC.
AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
4. CHANGES IN PLAN Investments in the various programs offered by the Plan are
ASSETS BY FUND directed by the participants. The following table sets forth
the activity for 1999 in each of the investment programs
offered by the Plan.
<TABLE>
<CAPTION>
T ROWE SCHEIN
VANGUARD PBHG PRICE PHARMA-
PIMCO TOTAL GROWTH & GROWTH INTERNATIONAL INCOME CEUTICAL
RETURN FUND INCOME FUND FUND STOCK FUND FUND II STOCK FUND
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS ATTRIBUTED TO:
Interest & dividends $ 218,986 $ 969,243 $ 495,540 $ 256,672 $ -- $ --
Net appreciation
(depreciation) in fair
value of investments (243,902) 3,812,614 6,596,618 1,054,902 407,838 (295,694)
Transfers in from (out to) other
funds, net (866,356) 1,352,830 152,898 (212,494) 253,897 121,796
Participant loan repayments 51,116 225,081 130,898 44,864 99,255 5,308
Contributions:
Employer 136,215 688,981 405,739 175,599 234,743 27,750
Participants 277,061 1,580,497 361,422 215,661 801,142 71,183
------------------------------------------------------------------------------------------------------------------------------------
(426,880) 8,629,246 8,143,115 1,535,204 1,796,875 (69,657)
DEDUCTIONS FROM ASSETS ATTRIBUTED TO:
Participant loan issuances (59,257) (387,076) (183,024) (75,358) (140,956) (29,906)
Benefits paid (646,071) (2,465,266) (995,072) (644,639) (1,195,067) (169,100)
Administrative expenses (6,706) (23,623) (23,991) (8,694) (34,506) --
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) (1,138,914) 5,753,281 6,941,028 806,513 426,346 (268,663)
Assets available for
benefits, beginning of year 4,622,417 17,985,703 8,866,106 4,295,713 6,873,403 1,965,170
------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - END OF YEAR $ 3,483,503 $ 23,738,984 $ 15,807,134 $ 5,102,226 $ 7,299,749 $ 1,696,507
===================================================================================================================================
<CAPTION>
LIFESTYLE FUNDS
--------------------------------------------- PARTICIPANT
CONSERVATIVE BALANCED AGGRESSIVE LOANS TOTAL
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS ATTRIBUTED TO:
Interest & dividends $ -- $ -- $ 678 $ 210,693 $ 2,151,812
Net appreciation
(depreciation) in fair
value of investments 460,944 3,091,502 3,805,538 -- 18,690,360
Transfers in from other
funds, net 5,894 (94,190) (714,275) -- --
Participant loan repayments 99,860 246,409 286,565 (1,189,356) --
Contributions: --
Employer 127,679 441,823 575,724 -- 2,814,253
Participants 322,567 752,888 1,081,403 -- 5,463,824
--------------------------------------------------------------------------------------------------------------------
1,016,944 4,438,432 5,035,633 (978,663) 29,120,249
DEDUCTIONS FROM ASSETS ATTRIBUTED TO:
Participant loan issuances (116,234) (361,574) (239,615) 1,593,000 --
Benefits paid (578,209) (2,156,429) (1,622,501) (354,643) (10,826,997)
Administrative expenses (3,349) (21,291) (25,664) -- (147,824)
--------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) 319,152 1,899,138 3,147,853 259,694 18,145,428
Assets available for
benefits, beginning of year 3,674,347 16,416,376 13,537,549 2,661,438 80,898,222
--------------------------------------------------------------------------------------------------------------------
NET ASSETS - END OF YEAR $ 3,993,499 $ 18,315,514 $ 16,685,402 $ 2,921,132 $ 99,043,650
====================================================================================================================
</TABLE>
Page 9
<PAGE>
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC.
AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
5. ASSETS BY FUND The following table sets forth the assets as of December 31,
1999 in each of the investment programs offered by the Plan.
<TABLE>
<CAPTION>
T ROWE SCHEIN
VANGUARD PBHG PRICE PHARMA-
PIMCO TOTAL GROWTH & GROWTH INTERNATIONAL INCOME CEUTICAL
RETURN FUND INCOME FUND FUND STOCK FUND FUND II STOCK FUND
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mutual funds $ 3,437,352 $23,460,269 $15,607,563 $ 5,021,898 $ 7,219,730 $ 1,685,195
Participant loans
Contributions receivable 46,151 278,715 199,571 80,328 80,019 11,312
---------------------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE $ 3,483,503 $23,738,984 $15,807,134 $ 5,102,226 $ 7,299,749 $ 1,696,507
FOR BENEFITS
===============================================================================================================
<CAPTION>
LIFESTYLE FUNDS
--------------------------------------- PARTICIPANT
CONSERVATIVE BALANCED AGGRESSIVE LOANS TOTAL
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mutual funds $ 3,949,189 $18,159,013 $16,451,039 $ -- $94,991,248
Participant loans -- -- -- 2,921,132 2,921,132
Contributions receivable 44,310 156,501 234,363 -- 1,131,270
---------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE $ 3,993,499 $18,315,514 $16,685,402 $ 2,921,132 $99,043,650
FOR BENEFITS
===================================================================================================
</TABLE>
6. SUBSEQUENT EVENT On May 25, 2000 the Plan Sponsor announced that it
had reached a definitive agreement to be acquired
by Watson Pharmaceutical, Inc. ("Watson") under
which Watson will acquire all the outstanding
stock of Schein Pharmaceutical, Inc through a
two-step transaction comprised of a cash tender
followed by a taxable stock exchange. The tender
offer, which is subject to customary closing
conditions, is expected to close in early July
2000 with the merger expected to close in
September 2000.
If and when the acquisition is consummated, the
Plan Sponsor believes that this Plan will be
terminated and, following the receipt of a
favorable determination letter from the Internal
Revenue Service, Watson shall permit employees to
elect to rollover their respective amounts to a
retirement plan maintained by Watson.
Page 10
<PAGE>
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC.
AND AFFILIATES
FORM 5500 - ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
EIN: 11-2726505 PLAN NO. 001
<TABLE>
<CAPTION>
=========================================================================================================
DECEMBER 31, 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a) (b) (c)
Description of investment,
including maturity date, rate of
interest, collateral, par or
Identity of issuer, borrower or similar party maturity value Fair Value
---------------------------------------------------------------------------------------------------------
INVESTMENTS (1):
PIMCO Total Return Fund 347,207 shares $3,437,352
Vanguard Growth & Income Fund 632,693 shares 23,460,269
PBHG Growth Fund 329,412 shares 15,607,563
T Rowe Price International Stock Fund 263,894 shares 5,021,898
Income Fund II 370,015 shares 7,219,730
Schein Pharmaceutical Stock Fund 226,261 shares 1,685,195
Conservative Lifestyle Fund 312,090 shares 3,949,189
Balanced Lifestyle Fund 1,324,702 shares 18,159,013
Aggressive Lifestyle Fund 1,100,110 shares 16,451,039
---------------------------------------------------------------------------------------------------------
94,991,248
PARTICIPANT LOANS Interest rates range from 5% to
10%, with maturity dates through
2007, participants' account
balances serve as collateral 2,921,132
---------------------------------------------------------------------------------------------------------
$97,912,380
=========================================================================================================
</TABLE>
(1) Represents investments in mutual funds; as such there are no maturity
dates, rates of interest, collateral, par values or maturity values.
Page 11
<PAGE>
SIGNATURES
The Plan
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC. AND AFFILIATES
By: SCHEIN PHARMACEUTICAL, INC. as plan administrator
Date: June 27, 2000 By: /s/ Whitney K. Stearns, Jr.
------------------------------------
Whitney K. Stearns, Jr.
Senior Vice President
and Chief Financial Officer
INDEX TO EXHIBITS
Exhibit Description
Number
23.1 Consent of BDO Seidman, LLP
