HAYWARD, Calif.--(BUSINESS WIRE)--Aug. 3, 2005--IMPAX
Laboratories, Inc. (NASDAQ:IPXLE) today provided additional
information concerning its progress in filing its annual report on
Form 10-K for the year ended December 31, 2004 and its quarterly
reports on Form 10-Q for the three months ended March 31, 2005 and the
three and six months ended June 30, 2005 and estimated results for
these periods. IMPAX previously disclosed that the uncertainty with
respect to its financial statements for these periods relates
exclusively to the determination of the appropriate periods in which
to recognize revenues from sales of products covered by its strategic
alliance agreement with a subsidiary of Teva Pharmaceutical Industries
Ltd., and that the Company has sought the advice of the Office of the
Chief Accountant of the Securities and Exchange Commission ("OCA") in
the expectation that OCA's response will enable the Company to
complete its financial statements and file the two delayed reports and
its second quarter report for 2005.
In March 2005, IMPAX and Teva agreed upon the net sales and margin
amounts allocable to IMPAX from Teva's 2004 sales under the agreement
and further agreed not to make any adjustments to those amounts. The
Company's request to OCA includes discussion of a proposed new
revenue-recognition policy with respect to these revenues and several
alternatives that the Company has considered. The Company's
independent auditors have advised the Company that they have not yet
concluded whether they agree with the proposed policy, and it is
possible that advice received from OCA or the Company's auditors will
result in adoption of a revenue-recognition policy different from
those the Company has considered to date. Whatever policy is
ultimately adopted, however, will have no effect upon the Company's
liquidity or cash position.
If the Company were to make no change in its revenue-recognition
policy it would expect to report revenues and net income of
approximately $124.7 million and $0.8 million, respectively, for the
year ended December 31, 2004, revenues and net income of approximately
$39.6 million and $6.1 million, respectively, for the three months
ended March 31, 2005, and revenues of $38.5 million and $76.8 million
and net income of $3.9 million and $10.0 million for the three and six
months ended June 30, 2005, respectively. Net income for the three-
and six-month periods ended June 30, 2005 includes the write-off of
approximately $3.8 million of previously deferred financing costs
associated with the Company's $95 million 1.25% Convertible Senior
Subordinated Debentures due 2024, which were repaid on June 27, 2005.
Attached to this release are: (1) a table summarizing the
estimated revenues, gross profits and net income for the periods
indicated if the Company were to make no change in its
revenue-recognition policy and; (2) a table showing the percentage
contributions of the principal sales channels to those estimated
revenues.
If the Company changes to the revenue-recognition policy proposed
in its request to OCA, the expected year-end results will change to
revenues and net income of approximately $138.6 million and $0.8
million, respectively, the expected first-quarter results will change
to revenues and net income of approximately $35.6 million and $6.1
million, respectively, and the expected second-quarter results will
change to revenues and net income of approximately $35.6 million and
$3.9 million, respectively. One of the alternative policies the
Company considered and rejected would defer recognition of all 2004
revenues relating to products subject to the Teva agreement to the
first quarter of 2005. If the Company were to adopt this alternative
it would expect to report revenues of approximately $83.2 million and
net loss of $23.3 million, respectively, for the year ended December
31, 2004 and revenues and net income of approximately $81.1 million
and $30.3 million, respectively, for the three months ended March 31,
2005.
Adoption of any of the new revenue-recognition policies proposed
or considered would require restatement of IMPAX's previously reported
results for the first three quarters of 2004. The following table
presents IMPAX's revenues and net income for each of those quarters as
most recently reported, together with the restated results IMPAX
expects to report (1) if it adopts the policy proposed in its request
to OCA and (2) if it adopts the alternative deferring all revenue to
the first quarter of 2005.
Policy Used
Throughout Proposed Deferral
2004 Policy Policy
(in thousands)
2004 Q1:
Revenues $34,500 $40,500 $15,000
Net Income (loss) 5,200 5,200 (8,000)
2004 Q2:
Revenues 30,600 35,800 22,800
Net Income (loss) 300 300 (4,100)
2004 Q3:
Revenues 30,700 36,200 19,800
Net Income (loss) 700 700 (6,300)
2004 Q4:
Revenues 28,900 26,100 25,600
Net Income (loss) (5,400) (5,400) (4,900)
2005 Q1:
Revenues 39,600 35,600 81,100
Net Income (loss) 6,100 6,100 30,300
2005 Q2:
Revenues 38,500 35,600 35,600
Net Income (loss) 3,900 3,900 3,900
Through the first half of 2005 R & D expenses were approximately
$3 million for the Company's branded products and $9 million for its
generic products. The Company expects to continue to invest in
research and development and expects to spend an additional $7-$8
million for branded products and $15-$16 million for its generic
products in the second half of 2005.
Additionally, through the first half of 2005, the Company invested
$7.1 million in capital projects and expects to spend an additional
$12-$14 million during the second half of 2005, primarily on plant
capacity and research laboratory expansion.
The Company also reported that its available cash and investments
at June 30, 2005 was approximately $50 million after repayment of the
$95 million of debentures described above and approximately $7 million
in borrowings under its senior bank facilities.
Common shares outstanding totaled 58,959,328 at June 30, 2005 and
there were approximately 62.2 million average shares outstanding on a
fully diluted basis for the three months ended June 30, 2005.
The foregoing estimates and the information included in the
attached tables have not been audited or reviewed by the Company's
auditors and are subject to change based upon advice received from OCA
and the Company's auditors as to the appropriate accounting policy to
be used and the results of the auditors' reviews and audit. The
estimates also do not reflect other accounting changes that could
result from such advice, review and audit.
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 generic products through its Global Pharmaceuticals
division and intends to market its 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 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, the possibility
that the Company will adopt a revenue-recognition policy different
from those presented to OCA or that the Company's expected results
will change as a result of the audit of its 2004 year-end financial
statements, possible adverse effects resulting from Impax's delay in
filing its 2004 Form 10-K and first-quarter 2005 Form 10-Q, possible
delisting from the NASDAQ National Market, 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.
(in thousands)
Estimated Revenues, Gross Profit and Income
For the Four Quarters Ended June 30, 2005
(Unaudited) Three Months Ended
-------------------------------------
Sep-04 Dec-04 Mar-05 Jun-05
Total revenues 30,700 28,900 39,600 38,500
Gross profit 13,100 9,200 20,300 20,600
Net income 700 (5,400) 6,100 3,900
The foregoing amounts are estimates and subject to change. They have
been compiled based on the accounting method in place for 2004.
Estimated Revenues by Market Channel
For the Four Quarters Ended June 30, 2005
(Unaudited) Three Months Ended
-------------------------------------
Sep-04 Dec-04 Mar-05 Jun-05
Global 48% 76% 52% 69%
Rx partners 35% 12% 38% 27%
OTC 16% 10% 8% 2%
-------------------------------------
Net sales 99% 97% 98% 99%
Other revenue 1% 3% 2% 1%
-------------------------------------
Total revenues 100% 100% 100% 100%
CONTACT: IMPAX Laboratories, Inc.
Barry R. Edwards (CEO), 215-933-0323 Ext. 4360
Arthur A. Koch, Jr. (CFO), 215-933-0351
Larry Hsu, Ph.D. (President), 510-476-2000 Ext. 1111
www.impaxlabs.com
or
Investor Relations Contacts:
Lippert/Heilshorn & Associates, Inc.
Kim Sutton Golodetz, 212-838-3777
[email protected]
or
Bruce Voss, 310-691-7100
[email protected]
www.lhai.com
SOURCE: IMPAX Laboratories, Inc.