PHARMACEUTICAL FORMULATIONS, INC. AND
SUBSIDIARIES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark one)
| |x| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the Quarterly Period Ended: | September 28, 2002 |
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 0-11274
PHARMACEUTICAL FORMULATIONS, INC.
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) 460 Plainfield Avenue, Edison, NJ (Address of principal executive offices) (Registrant's telephone number, including area code) |
22-2367644 (IRS Employer Identification No.) 08818 (Zip code) (732) 985-7100 |
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 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.
|x| Yes No |_|
The number of shares outstanding of common stock, $.08 par value, as of November 6, 2002 was 85,317,612.
PHARMACEUTICAL FORMULATIONS, INC. AND
SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
September 28,
2002 June 29,
ASSETS (Unaudited) 2002
----------------------- -----------------------
CURRENT ASSETS
Cash $ 84,000 $ 108,000
Accounts receivable - net of allowance for doubtful
accounts of $604,000 and $770,000 9,226,000 7,521,000
Inventories 13,004,000 12,905,000
Prepaid expenses and other current assets 1,395,000 1,349,000
----------------------- -----------------------
----------------------- -----------------------
Total current assets 23,709,000 21,883,000
PROPERTY, PLANT AND EQUIPMENT
Net of accumulated depreciation and amortization
of $28,881,000 and $28,215,000 13,973,000 14,294,000
OTHER ASSETS
Other assets 133,000 100,000
----------------------- -----------------------
----------------------- -----------------------
$37,815,000 $36,277,000
======================= =======================
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)
CURRENT LIABILITIES
Current portion of long-term debt $ 3,783,000 $ 3,353,000
Current portion of capital lease obligations 2,400,000 2,340,000
Due to ICC Industries Inc. 6,474,000 4,845,000
Accounts payable 9,655,000 9,692,000
Accrued expenses 1,371,000 1,280,000
----------------------- -----------------------
Total current liabilities 23,683,000 21,510,000
----------------------- -----------------------
LONG-TERM DEBT DUE ICC INDUSTRIES INC. 17,017,000 17,467,000
----------------------- -----------------------
----------------------- -----------------------
LONG-TERM DEBT 11,144,000 10,774,000
----------------------- -----------------------
----------------------- -----------------------
LONG-TERM CAPITAL LEASE OBLIGATIONS 3,764,000 4,380,000
----------------------- -----------------------
----------------------- -----------------------
COMMITMENTS AND CONTINGENCIES (Note 2)
STOCKHOLDERS' (DEFICIENCY)
Common stock, par value $.08 per share; 200,000,000 shares
authorized; 85,267,612 shares issued and outstanding 6,822,000 6,822,000
Capital in excess of par value 51,796,000 51,796,000
Accumulated deficit (76,411,000) (76,472,000)
----------------------- -----------------------
----------------------- -----------------------
Total stockholders' (deficiency) (17,793,000) (17,854,000)
----------------------- -----------------------
----------------------- -----------------------
$37,815,000 $36,277,000
======================= =======================
See accompanying notes to consolidated financial statements
PHARMACEUTICAL FORMULATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
------------------------------------------------
September 28, September 29,
2002 2001
--------------------- ----------------------
REVENUES
Gross sales $16,142,000 $13,413,000
Less: Sales discounts and allowances 198,000 139,000
--------------------- ----------------------
NET SALES 15,944,000 13,274,000
--------------------- ----------------------
COST AND EXPENSES
Cost of goods sold 13,063,000 11,615,000
Selling, general and administrative 2,217,000 2,432,000
Research and development 83,000 88,000
--------------------- ----------------------
--------------------- ----------------------
15,363,000 14,135,000
--------------------- ----------------------
--------------------- ----------------------
INCOME (LOSS) FROM OPERATIONS 581,000 (861,000)
--------------------- ----------------------
OTHER INCOME (EXPENSE)
Interest expense (947,000) (1,292,000)
Other 125,000 84,000
--------------------- ----------------------
--------------------- ----------------------
(822,000) (1,208,000)
--------------------- ----------------------
--------------------- ----------------------
(LOSS) BEFORE INCOME TAXES (BENEFIT) (241,000) (2,069,000)
INCOME TAX BENEFIT (302,000) -
--------------------- ----------------------
NET INCOME (LOSS) 61,000 (2,069,000)
Preferred stock dividend requirement - 50,000
--------------------- ----------------------
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 61,000 $ (2,119,000)
===================== ======================
EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED $ 0.00 $ (0.07)
===================== ======================
85,268,000 30,330,000
BASIC AND DILUTED AVERAGE COMMON SHARES OUTSTANDING ===================== ======================
See accompanying notes to consolidated financial statements
PHARMACEUTICAL FORMULATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
-----------------------------------------------
September 28, September 29,
2002 2001
--------------------- ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 61,000 $(2,069,000)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Income tax benefit
(302,000) -
Depreciation and amortization of property, plant and equipment 666,000 715,000
Amortization of bond discount and deferred financing costs 119,000 235,000
Amortization of deferred gain on sale/leaseback (13,000) (24,000)
Changes in current assets and liabilities:
(Increase) in accounts receivable (1,705,000) (293,000)
(Increase) decrease in inventories (99,000) 173,000
(Increase) in other current assets (143,000) (358,000)
Increase in due to ICC Industries Inc. 406,000 1,053,000
Increase in accounts payable and accrued expenses 67,000 1,087,000
--------------------- ---------------------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (943,000) 519,000
--------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in other assets (55,000) 4,000
(Increase) in property, plant and equipment, net (345,000) (177,000)
--------------------- ---------------------
--------------------- ---------------------
(400,000) (173,000)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
--------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in due to ICC Industries Inc. 1,075,000 1,000,000
(Repayments) of capital lease obligations (556,000) (481,000)
Borrowings (repayments) of long term debt 800,000 (670,000)
--------------------- ---------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,319,000 (151,000)
--------------------- ---------------------
NET INCREASE (DECREASE) IN CASH (24,000) 195,000
CASH, BEGINNING OF PERIOD 108,000 83,000
--------------------- ---------------------
--------------------- ---------------------
CASH, END OF PERIOD $ 84,000 $ 278,000
===================== =====================
See accompanying notes to consolidated financial statements
PHARMACEUTICAL FORMULATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| Note 1 | Interim Financial Reporting and Change in Fiscal Year The consolidated balance sheet as of June 29, 2002 has been derived from the audited consolidated balance sheet for the fiscal year then ended and is presented for comparative purposes. Certain amounts have been reclassified to conform to the current period presentation. The accompanying financial statements presume that users have read the audited financial statements for the fiscal year ended June 29, 2002. Accordingly, footnotes that would substantially duplicate such disclosure have been omitted. The interim financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Such adjustments consist of normal recurring accruals. The results of operations for the three months ended September 28, 2002 are not necessarily indicative of the results to be expected for a full year. Effective in December 2002, PFI will change its fiscal year-end from the 52 or 53-week period which ends on the Saturday closest to June 30 to the 52 or 53-week period which ends on the Saturday closest to December 31. |
| Note 2 | Commitments and Contingencies In March 2002, action was brought against PFI in the United States District Court for the Southern District of New York seeking $20 million in damages and $40 million in punitive damages related to the sales of allegedly defective product. We believe the lawsuit is without merit and are vigorously defending against it. In March 2002, an action was brought against us and others seeking unspecified damages and alleging that product sold with the label “Made in U.S.A.” was substantially made outside the United States. We had previously entered into an agreement with the Federal Trade Commission regarding discontinuation of this wording and were in full compliance with that agreement. Therefore, we believe this lawsuit is without merit and are vigorously defending against it. In May 1998, the Company brought an action against one of its former outside corporate counsels seeking damages for conflict of interest, breaches of fiduciary duty and loyalty, negligence and malpractice during its representation of the Company. The action is still pending. In July 2000, an action was instituted in the Circuit Court of Cook County, Illinois against the Company by Apotex Corporation (“Apotex”) and Torpharm, Inc. seeking an unspecified amount in damages and specific performance in the nature of purchasing a certain product from Apotex. The complaint alleges that the Company would purchase a certain product exclusively from Apotex. The counts specified in the complaint include breach of contract, negligent misrepresentation, breach of implied covenant of good faith and fair dealing, breach of implied covenant to use best efforts, specific performance, breach of fiduciary duty, reformation and a Uniform Commercial Code action for the price of 3 million tablets. We believe the lawsuit is without merit and are vigorously defending against it. The Company is a party to various other legal proceedings arising in the normal conduct of business. We believe that the final outcome of all current legal matters will not have a material adverse effect upon the Company’s financial position or results of operations. |
| Note 3 | Inventories Inventories consist of the following: |
September 28, 2002 June 29, 2002
------------------ -------------
Raw materials $ 4,135,000 $ 3,426,000
Work in progress 1,251,000 890,000
Finished goods 7,618,000 8,589,000
------------ -------------------------
$13,004,000 $12,905,000
============ =========================
| Note 4 | Related Party Transactions ICC Industries Inc. (“ICC”), a major international manufacturer and marketer of chemical, plastic and pharmaceutical products, is an affiliated company. The following transactions with ICC are reflected in the consolidated financial statements as of or for the three months ended September 28, 2002 and September 29, 2001: |
2002 2001
--------------- -----------------
Inventory purchases from ICC $ 643,000 $ 175,000
Interest charges from ICC 328,000 428,000
Accounts payable to ICC 6,257,000 4,204,000
Note payable to ICC 18,322,000 16,404,000
Advances from ICC 1,879,000 4,382,000
| Note 5 | Capital Stock In May 2002, we began a rights offering to all shareholders other than ICC. The offering was made to PFI’s stockholders of record as of the close of business on May 7, 2002. The offering was also made to employees who held options on the Company’s common stock. PFI is undertaking this rights offering for two reasons: firstly, to enable its stockholders, other than ICC, to be able to purchase additional shares of its common stock at the same price as was used to effectuate conversions of debt and preferred stock by ICC in December 2001 and January 2002; and secondly, to raise additional capital. Each person who was a holder of PFI common stock at the close of business on May 7, 2002, other than ICC, received 2.8 subscription rights for each share of common stock they held. Each employee of PFI who was a holder of an option to purchase common stock received 2.8 rights for each share of common stock covered by the option agreement. The ratio of 2.8 rights for each share of common stock will enable non-ICC stockholders to restore their percentage interests in the Company substantially to the level that existed prior to the ICC conversions. This was the objective used in the determination of the number of rights per share. Rights holders will be entitled to purchase one share of common stock for each right held at a price of $.34 per share. An aggregate of 34,467,741 shares of common stock will be sold if all rights are exercised. The rights are transferable, and shareholders who exercise their rights will be able to subscribe for additional shares not taken up by other rights holders. ICC has waived any rights it may have to participate in this rights offering by virtue of its holding of common stock or any other rights. The offering is currently scheduled to expire on December 20, 2002. As of November 6, 2002, no rights have been exercised. |
| ITEM 2 | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
RESULTS OF OPERATIONS
| Gross sales for the three months ended September 28, 2002 were $16,142,000 as compared to $13,413,000 in the comparable period in the prior fiscal year, an increase of $2,729,000 or 20.3%. In July 2002, PFI began shipments to a major national retailer. This new relationship contributed approximately $2 million of net sales in the current quarter. |
| Net sales for the three months ended September 28, 2002 were $15,944,000 as compared to $13,274,000 in the comparable period in the prior fiscal year, an increase of $2,670,000 or 20.1% due to higher gross sales. |
| Cost of sales as a percentage of net sales was 81.9% for the three months ended September 28, 2002 as compared to 87.5% in the prior year period. This decrease resulted primarily from a shift in product mix to higher margin products due to contract manufacturing, lower material costs and the efficiencies gained from the increased levels of production. |
| Selling, general and administrative expenses were $2,217,000 for the three months ended September 28, 2002 as compared to $2,432,000 in the prior year period. The decrease of $215,000 is primarily the result of reductions in distribution expenses and sales and marketing expenses. |
| Interest expense was $947,000 for the three months ended September 28, 2002 as compared to $1,292,000 for the prior year period. The decrease is primarily a result of ICC’s conversion of debt into equity and lower interest rates. |
| As a result of the increase in ICC’s ownership of PFI, PFI will file a consolidated tax return with ICC. In accordance with a tax sharing agreement between the two companies, PFI will be reimbursed for the tax savings generated by ICC, from the use of PFI’s losses. In addition, the agreement provides for an allocation of the group’s tax liability, based upon the ratio that each member’s contribution of taxable income bears to the consolidated taxable income of the group. In connection with this tax sharing agreement, the Company has recorded a tax benefit of $302,000 for the three months ended 9/28/02. The tax benefit recorded is disproportionate due to a reduction in the Company’s deferred tax asset valuation reserve. |
| As of September 28, 2002, the Company had available net operating losses of approximately $29,576,000 for U.S. tax purposes, which expire through 2022 . The utilization of losses that were generated prior to September 1991, which approximate $1,494,000, is limited to $166,000 per year for U.S. tax purposes due to the change in ownership resulting from ICC’s investment. State income tax net operating loss carry forwards of approximately $36,972,000, which expire through 2008, are available to the Company. |
| The Company reported a net income of $61,000 or $.00 per share for the three months ended September 28, 2002 as compared to a net loss of $2,069,000 or $(.07) per share in the prior year period. |
LIQUIDITY AND CAPITAL RESOURCES
| Total cash used during the three months ended September 28, 2002 was $24,000. |
| Total funds used in operating activities were $943,000 for the three months ended September 28, 2002. This was primarily attributable to an increase in accounts receivable of $1,705,000, offset by non-cash charges of $772,000 from depreciation and amortization. |
| Net cash used in investing activities for the three months ended September 28, 2002 was $400,000, principally attributable to expenditures for capital equipment for additional capacity. |
| Net cash provided by financing activities for the three months ended September 28, 2002 was $1,319,000, primarily from loans provided by ICC. ICC has supported PFI by providing loans, replacing loans from its asset-based lenders and providing us with working capital. |
| Current assets at September 28, 2002 include $9,226,000 of accounts receivable as compared to $7,521,000 at June 29, 2002. The accounts receivable increase of $1,705,000 is a result of the higher gross sales compared with the preceding quarter. Working capital also includes $13,004,000 of inventory as compared to $12,905,000 at June 29, 2002. The increase is primarily related to purchases of materials to meet anticipated sales orders. Current liabilities also includes $11,026,000 of accounts payable and accrued expenses as compared to $10,972,000 at June 29, 2002. The increase is primarily due to increased purchases. There were no significant backorders at September 28, 2002. |
| We have convertible subordinated debentures and capitalized lease obligations, which together with the line of credit borrowings have a substantial impact on the cash requirements in terms of principal and interest payments. The Company’s line of credit agreement was extended through December 31, 2003. |
| We have a deferred tax asset of approximately $14,068,000 before the valuation allowance at September 28, 2002, which consists of future tax benefits of net operating loss carry forwards and various other temporary differences. |
| Based on the assessment of all available evidence, our inconsistent operating results in prior years, the current status of our business and the uncertainty with respect to generating taxable income in future years, management has recorded a valuation allowance on the total of the deferred tax asset. Reductions in the valuation allowance, which could benefit results of operations in the future, will be recorded when, in the opinion of management, PFI’s ability to generate taxable income is considered more likely than not. Any realization of this asset in future periods would improve our liquidity. |
| We intend to spend an estimated $1,000,000 to $1,500,000 for capital improvements during the twelve-month period ending June 28, 2003 to increase manufacturing capacity and reduce costs. We anticipate that these capital expenditures will be funded through equipment lease financing and working capital. While we have in the past had no difficulty in obtaining such financing, there can be no assurance that we will obtain the lease financing in the future. |
| We believe that cash flow from our revolving credit and equipment and term loan financing, plus continued financial support from ICC, will be sufficient to fund our currently anticipated working capital, capital spending and debt service requirements (including approximately $2.1 million of indebtedness scheduled to be repaid in June 2003) through calendar 2003. We have extended our working capital facility through December 31, 2003. We expect the aforementioned working capital needs will require us to obtain new revolving credit facilities by December 31, 2003, when the credit facility matures, whether by extending, renewing, replacing or otherwise refinancing the facility. While no assurance can be given that any such extension, renewal, replacement or refinancing can be successfully accomplished, ICC has committed to provide us with the necessary financing to continue our operations through calendar 2003. ICC has supported us in the past by providing loans, replacing loans from our asset-based lenders and providing us with working capital. |
| ITEM 3 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK Not applicable |
| ITEM 4 | CONTROLS AND PROCEDURES |
| The Company maintains a system of internal controls and procedures designed to provide reasonable assurance that information required to be disclosed in its filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Company’s principal executive and financial officers have evaluated the disclosure controls and procedures within 90 days prior to the filing of this Quarterly Report on Form 10-Q and have determined that such disclosure controls and procedures are effective. |
| There have been no significant changes in the Company’s internal controls or in other factors which could significantly affect internal controls subsequent to the completion of the evaluation. |
PART II. OTHER INFORMATION
| ITEM 1 | LEGAL PROCEEDINGS See Note 2 to Notes to Consolidated Financial Statements. |
| ITEM 2 | CHANGES IN SECURITIES AND USE OF PROCEEDS None. |
| ITEM 3 | DEFAULTS UPON SENIOR SECURITIES None. |
| ITEM 4 | SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS None. |
| ITEM 5 | OTHER INFORMATION When used in the Form 10-Q and in future filings by the Company with the Securities and Exchange Commission, in the Company’s press releases and in oral statements made with the approval of an authorized executive officer, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated”, “estimate,” “project,” “expect,” “believe,” “hope,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on such forward-looking statements, which speak only as of the date made. |
| ITEM 6 | EXHIBITS AND REPORTS ON FORM 8-K |
(a) Exhibits
None
(b) Reports on Form 8-K - The Registrant filed the following reports on Form 8-K during
the first quarter of the fiscal year ending June 28, 2003:
Date of Report Item Number (Summary)
-------------- ---------------------
July 16, 2002 5 (regarding payment of interest on debentures
August 9, 2002 9 (regarding extension of rights offering)
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.
PHARMACEUTICAL FORMULATIONS, INC.
(REGISTRANT)
Date: November 11, 2002 By: /s/James Ingram
---------------
James Ingram
Chief Operating Officer and President
(Principal Executive Officer)
Date: November 11, 2002 By: /s/Walter Kreil
---------------
Walter Kreil
Chief Financial Officer
(Principal Accounting Officer)
CERTIFICATIONS UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, John L. Oram Chief Executive Officer of Pharmaceutical Formulations, Inc., certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Pharmaceutical Formulations, Inc. (the "registrant") |
| 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: |
| a) | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within these entities, particularly during the period in which this quarterly report is being prepared; |
| b) | evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and |
| c) | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
| a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and |
| 6. | The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
Dated: November 11, 2002
/s/ John L. Oram
John L. Oram, Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Walter Kreil, Chief Financial Officer of Pharmaceutical Formulations, Inc., certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Pharmaceutical Formulations, Inc. (the "registrant"); |
| 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: |
| a) | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within these entities, particularly during the period in which this quarterly report is being prepared; |
| b) | evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and |
| c) | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
| a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and |
| 6. | The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
Dated: November 11, 2002
/s/ /s/ Walter Kreil
Walter Kreil, Chief Financial Officer
CERTIFICATIONS UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
The undersigned, the Chief Executive Officer of Pharmaceutical Formulations, Inc. hereby certifies that Pharmaceutical Formulations, Inc.‘s Form 10-Q for the Quarter Ended September 28, 2002 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78 (o)(d)) and that the information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operation of Pharmaceutical Formulations, Inc.
Dated: November 11, 2002
/s/ John L. Oram
CERTIFICATION OF CHIEF FINANCIAL OFFICER
The undersigned, the Chief Financial Officer of Pharmaceutical Formulations, Inc. hereby certifies that Pharmaceutical Formulations, Inc.‘s Form 10-Q for the Quarter Ended September 28, 2002 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78 (o)(d)) and that the information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operation of Pharmaceutical Formulations, Inc.
Dated: November 11, 2002
/s/ /s/ Walter Kreil
Walter Kreil, Chief Financial Officer