HAYWARD, Calif.--(BUSINESS WIRE)--Nov. 9, 2004--
Company to Restate First and Second Quarter 2004 Results Due to
Reporting Adjustments on Bupropion Revenues by Strategic Partner
IMPAX Laboratories, Inc. (NASDAQ:IPXL) today reported financial
results for the three and nine months ended September 30, 2004. IMPAX
also announced that it has determined to restate its financial results
for the first and second quarters of 2004. The restatement is required
as the result of an adjustment due to recently reported customer
credits granted by our strategic partner on sales of the Company's
bupropion products made by our strategic partner during March 2004.
Third Quarter and Nine Months Results
Total revenues for the third quarter of 2004 were $30.7 million,
or approximately 86% higher than the total revenues of $16.5 million
in the prior year's third quarter. The year-over-year increase was
primarily due to shipments of generic versions of Wellbutrin(R) SR
(Bupropion Hydrochloride) 100 mg and 150 mg Controlled Release
Tablets, and Declomycin(R) (Demeclocycline Hydrochloride) 150 mg and
300 mg Tablets, which commenced during the first quarter of 2004; and
Zyban(R) (Bupropion Hydrochloride) and Sinemet(R) CR
(Carbidopa/Levodopa) Extended Release Tablets, which commenced during
the second quarter of 2004. During the 2004 third quarter, IMPAX's
revenues from product shipments through our strategic alliance
agreements with Teva and Andrx were approximately $10.8 million
compared with $8.3 million in the 2004 second quarter.
Net income for the 2004 third quarter was $735,000 or $0.01 per
share, compared with a net loss of $3,608,000 or $(0.07) per share, in
the prior year's third quarter.
Gross margin for the 2004 third quarter was $13.1 million, or
approximately 43% of total revenues, compared with gross margin of
$3.5 million, or approximately 21% of total revenues, in the prior
year's third quarter. The year-over-year increase in the gross margin
percentage was primarily due to the introduction of new products since
last year with higher margins, such as Bupropion Hydrochloride,
Demeclocycline Hydrochloride, Flavoxate, and Carbidopa/Levodopa.
Research and development expense for the 2004 third quarter of $4.9
million was approximately $1.6 million higher than the 2003 third
quarter due primarily to higher personnel costs, biostudies, clinical
studies, and new product introduction costs. The patent litigation
expenses for the 2004 third quarter of $3.3 million were approximately
$2.5 million higher than the 2003 third quarter due to the increase in
the activity level of patent litigation.
For the nine months ended September 30, 2004, the Company reported
total revenues of $95.8 million, or approximately 128% higher than
total revenues of $42.0 million in the comparable period of the
previous year. Net income for the first nine months of 2004 was $6.3
million, or $0.10 per fully diluted share, compared with a net loss of
$9.1 million, or $(0.18) per share, for the first nine months of 2003.
Unrestricted cash, cash equivalents and short-term investments
were $89.6 million at September 30, 2004, compared to $15.5 million at
December 31, 2003. The increase in cash balance was primarily due to a
private placement of $95 million aggregate principal amount of 1.250%
convertible senior subordinated debentures that closed during the
second quarter of 2004.
Restatement of First and Second Quarter Financial Statements
The Company is restating its financial statements for the first
and second quarters of 2004 as the result of customer credits granted
by our strategic partner on sales of the Company's bupropion products
made by our strategic partner during March 2004. The strategic partner
notified the Company of the adjustment when reporting sales of the
Company's products for the quarter ended September 30, 2004. Under the
terms of the Strategic Alliance Agreement, the Company's strategic
partner has sole and exclusive right to determine all terms and
conditions of sale to its customers, including pricing, discounts,
allowances, price adjustments, returns and rebates. The Company is
endeavoring to take steps under the Strategic Alliance Agreement to
ensure that all such adjustments granted by its strategic partner in
the future are reported to the Company on a timely basis.
The restatement will include an adjustment to the Company's
reported total revenues for the first quarter of 2004, reducing them
by $4,308,000, from $38,853,000 to $34,545,000. As a result of the
restatement, the Company's reported net income for the first quarter
of 2004 is expected to decrease by $3,832,000, from $9,048,000 to
$5,216,000, and the Company's reported earnings per share for the
first quarter of 2004 is expected to decrease by $0.07 per share
($0.07 per share on a fully diluted basis) from $0.16 per share to
$0.09 per share ($0.08 per share on a fully diluted basis).
The restatement will include an adjustment to the Company's
reported total revenues for the second quarter of 2004, reducing them
by $281,000 from $30,845,000 to $30,564,000. As a result of the
restatement, the Company's reported net income for the second quarter
of 2004 is expected to decrease by $251,000, from $572,000 to
$321,000. The Company's reported earnings per share for the second
quarter of 2004 will remain $0.01 per share ($0.01 per share on a
fully diluted basis).
The restatement will also result in corresponding changes to
accounts receivable, accrued expenses and deferred revenues, and
accumulated deficit line items in the balance sheets for those
periods.
IMPAX intends to file amendments to its Quarterly Reports on Form
10-Q for the first quarter of 2004 and second quarter of 2004 to
reflect the restatement as soon as practicable. The Company will be
filing a Form 12b-25 to extend the deadline for the filing of its Form
10-Q for the quarter ended September 30, 2004.
IMPAX Laboratories, Inc. is a technology based specialty
pharmaceutical company applying its formulation expertise and drug
delivery technology to the development of controlled-release and
specialty generics in addition to the development of branded products.
IMPAX markets its generic products through its Global Pharmaceuticals
division and intends to market its branded products through the IMPAX
Pharmaceuticals division. Additionally, where strategically
appropriate, IMPAX has developed marketing partnerships to fully
leverage its technology platform. IMPAX Laboratories is headquartered
in Hayward, California, and has a full range of capabilities in its
Hayward and Philadelphia facilities. For more information, please
visit the Company's Web site at: www.impaxlabs.com.
"Safe Harbor" statement under the Private Securities Litigation
Reform Act of 1995:
To the extent any statements made in this news release contain
information that is not historical, these statements are
forward-looking in nature and express the beliefs and expectations of
management. Such statements are based on current expectations and
involve a number of known and unknown risks and uncertainties that
could cause IMPAX's future results, performance or achievements to
differ significantly from the results, performance or achievements
expressed or implied by such forward-looking statements. Such risks
and uncertainties include, but are not limited to, IMPAX's ability to
obtain sufficient capital to fund its operations, the difficulty of
predicting FDA filings and approvals, consumer acceptance and demand
for new pharmaceutical products, the impact of competitive products
and pricing, IMPAX's ability to successfully develop and commercialize
pharmaceutical products, IMPAX's reliance on key strategic alliances,
the uncertainty of patent litigation, the availability of raw
materials, the regulatory environment, dependence on patent and other
protection for innovative products, exposure to product liability
claims, fluctuations in operating results and other risks detailed
from time to time in IMPAX's filings with the Securities and Exchange
Commission. Forward-looking statements speak only as to the date on
which they are made, and IMPAX undertakes no obligation to update
publicly or revise any forward-looking statement, regardless of
whether new information becomes available, future developments occur
or otherwise.
IMPAX LABORATORIES, INC.
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ---------------------
2004 2003 2004 2003
----------- ---------- ---------- ----------
Net sales $30,261 $15,908 $91,798 40,434
Revenue from reversal of
refundable deposit from
Teva -- -- 2,500 --
Other revenues 443 589 1,515 1,555
----------- ---------- ---------- ----------
Total revenues 30,704 16,497 95,813 41,989
----------- ---------- ---------- ----------
Cost of sales 17,592 12,976 54,679 30,444
----------- ---------- ---------- ----------
Gross margin 13,112 3,521 41,134 11,545
Research and development 4,942 3,358 15,266 10,463
Reimbursements from Teva (217) (93) (306) (247)
----------- ---------- ---------- ----------
Research and development,
net 4,725 3,265 14,960 10,216
Patent litigation expenses 3,299 845 7,146 1,842
Selling expenses 908 546 2,345 1,552
General and administrative
expenses 3,289 2,321 9,757 6,526
Other operating income
(expense), net 4 4 15 25
----------- ---------- ---------- ----------
Net Income (loss) from
operations 895 (3,452) 6,941 (8,566)
Interest income 387 87 714 199
Interest expense (547) (243) (1,383) (738)
----------- ---------- ---------- ----------
Net income (loss) before
provision for income
taxes $735 ($3,608) $6,272 $(9,105)
=========== ========== ========== ==========
Provision for income taxes -- -- -- --
----------- ---------- ---------- ----------
Net income (loss) $735 $(3,608) $6,272 $(9,105)
=========== ========== ========== ==========
Earnings per share
Basic $0.01 $(0.07) $0.11 $(0.18)
=========== ========== ========== ==========
Diluted $0.01 $(0.07) $0.10 $(0.18)
=========== ========== ========== ==========
Weighted average common
shares outstanding
Basic 58,469,272 52,610,356 57,855,637 50,382,455
=========== ========== ========== ==========
Diluted 62,137,376 52,610,356 61,352,899 50,382,455
=========== ========== ========== ==========
IMPAX LABORATORIES, INC.
CONDENSED BALANCE SHEETS
(in thousands)
September December
30, 2004 31, 2003
(unaudited) (unaudited)
------------- -----------
ASSETS
Cash, cash equivalents and short-term
investments $89,603 $15,505
Restricted cash (a) -- 10,000
Accounts receivable, net 19,730 9,885
Inventory 38,232 28,479
Property, plant and equipment, net 43,849 38,132
Goodwill and intangibles, net 27,665 27,953
Other assets 6,408 2,752
------------- -----------
Total assets $225,487 $132,706
------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $33,889 $42,365
Long-term debt, net of current portion 7,284 8,854
Refundable deposit from Teva -- 5,000
Convertible debentures 95,000 --
Deferred revenues and other liabilities 2,978 2,879
Mandatorily redeemable convertible preferred
stock -- 7,500
Stockholders' equity 86,336 66,108
-------------------------
Total liabilities and stockholders' equity $225,487 $132,706
-------------------------
(a) Represents cash held as collateral for the $25 million revolving
credit facility and term loan with Wachovia Bank N.A. The
restriction was removed by Wachovia Bank N.A. in the 2004 second
quarter.
CONTACT: IMPAX Laboratories, Inc.
Barry R. Edwards, CEO, 215-933-0323 Ext. 4360
Larry Hsu, Ph.D., President, 510-476-2000 Ext. 1111
Cornel C. Spiegler, CFO, 215-289-2220 Ext. 1706
www.impaxlabs.com
or
Lippert/Heilshorn & Associates, Inc. (Investor Relations)
Kim Sutton Golodetz, 212-838-3777
[email protected]
Bruce Voss, 310-691-7100
[email protected]
www.lhai.com
SOURCE: IMPAX Laboratories, Inc.