Able Laboratories Reports Record Sales of $52.9 million for 2002.Business Editors SOUTH PLAINFIELD South Plainfield, borough (1990 pop. 20,489), Middlesex co., NE N.J.; inc. 1926. It is the seat of several research and consulting firms and has plants that make chemicals, plastics, spices and flavorings, cosmetics, rubber products, pigments, electrical machinery, , N.J.--(BUSINESS WIRE)--March 5, 2003 Able Laboratories, Inc. (Nasdaq:ABRX)(BSE See Bombay Stock Exchange. BSE See Boston Stock Exchange (BSE). :AAB AAB ABN Amro Bank AAB Association of Applied Biologists (UK) AAB American Association of Bioanalysts AAB Army Air Base AaB Aalborg Boldspilklub (Danish Soccer Club) AAB All-to-All Broadcast ): -- Operating Income Increases to Record $10.9 Million From Prior Year Loss -- Net income increases to $23 Million Due To One-Time Tax Benefit From Net Operating Loss Carryforward Able Laboratories, Inc. (Nasdaq:ABRX)(BSE:AAB), today announced financial results for the three months ended December December: see month. 31, 2002, and for the year ended December 31, 2002. For the year ended December 31, 2002, the Company reported diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $1.44, which includes the one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. , non-recurring net tax benefit from a net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carryforward carryforward 1. A business operating loss that, for tax purposes, may be claimed a certain number of years in the future, often up to 15 years. . Adjusted for this one-time net tax benefit and other non-recurring items, the Company earned $0.63 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for 2002. Fourth Quarter 2002 Financial Results The Company reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $16,101,638 for the quarter ended December 31, 2002, a slight increase over net sales reported for the third quarter of 2002 of $15,024,914 and a 127.9% increase from sales of $7,066,599 for the quarter ended December 31, 2001. Gross margins were $7,999,806, or 49.7% of net sales, versus $7,348,151, or 48.9% of net sales, for the third quarter of 2002 and $3,010,248, or 42.6% of net sales, for the fourth quarter of 2001. The Company achieved higher gross margins through manufacturing operating efficiencies and economies of scale, partially offset by a charge of approximately $300,000 to cost of sales relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a December 2002 product recall. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the quarter was $3,347,419, or 20.8% of net sales, versus $3,377,255, or 22.5% of net sales, for third quarter 2002 and operating income of $546,932, or 7.7% of net sales, for the fourth quarter of 2001. This slight decrease from third quarter to fourth quarter was due to increased selling, general and administrative (SG&A) expenses, as well as the product recall charge of $300,000. SG&A increased to $2,650,274 from $1,755,912 for third quarter 2002 and $1,646,920 for the fourth quarter of 2001. SG&A accounted for 16.5% of net sales for the fourth quarter of 2002, compared with 11.7% of net sales for the third quarter of 2002 and 23.3% of net sales for the fourth quarter of 2001. The increase was primarily due to the Company's recording a provision for bad debt expense of $491,000. In addition, approximately $403,000 of the increase represents higher administrative expenses incurred to support Company growth. Research and development ("R&D") expenses decreased marginally to $2,002,113 from $2,214,984 for the third quarter of 2002 and increased 145.2%, as compared with $816,396 for the fourth quarter of 2001. The increase over the prior year primarily resulted from additional research and coinciding co·in·cide intr.v. co·in·cid·ed, co·in·cid·ing, co·in·cides 1. To occupy the same relative position or the same area in space. 2. To happen at the same time or during the same period. 3. bio-studies conducted to further develop the Company's product pipeline. R&D expenses accounted for 12.4% of net sales for the fourth quarter versus 14.7% of net sales for the third quarter of 2002 and 11.6% of net sales for the fourth quarter of 2001. The Company received 4 Abbreviated New Drug Application abbreviated new drug application Pharmacology An application made in the US by a pharmaceutical company requesting authority to market a 'new' drug for which both its therapeutic indications and formulation were previously approved by the FDA in another similar (ANDA ANDA abbr. abbreviated new drug application ) approvals during the fourth quarter of 2002 and currently has 16 ANDAs pending approval by the U.S. Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ). Net income applicable to common stockholders, which included a $15.1 million one-time net tax benefit partially offset by a $2.0 million write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of a note receivable note receivable A debt due from borrowers and evidenced by a written promise of payment. Note receivable, an entry on the asset side of many corporate balance sheets, indicates the dollar amount of loans due to be repaid by borrowers. , was $16,274,453, or $0.98 per diluted share, a substantial improvement over the fourth quarter of 2001 net loss of ($2,573,868), or ($0.26) per diluted share, and the third quarter of 2002 net income applicable to common stockholders of $2,885,018, or $0.19 per diluted share. Excluding the one-time net tax benefit and the write-off, the Company earned $3,251,523, or $0.19 per diluted share, for the fourth quarter of 2002. Fiscal 2002 Financial Results For the year ended December 31, 2002, the Company reported net sales of $52,930,121, a 170.1% increase from net sales reported for 2001 of $19,594,231. After adjusting for net sales of $3,067,567 from our former distribution subsidiary, which was sold in February February: see month. 2001, net sales at the Able facility increased 220.3%. Gross margins were $25,568,511, or 48.3% of net sales for 2002, versus $7,060,791, or 36.0% of net sales, for 2001. The Company achieved higher gross margins from manufacturing efficiencies and economies of scale, which were partially offset by the $300,000 product recall charge to cost of sales noted above. Excluding the January January: see month. and February 2001 operations of our former distribution subsidiary, gross margins for 2001 were 41.2% of net sales. Operating income was $10,869,406, or 20.5% of net sales for 2002, versus a reported loss of ($1,201,120) for 2001 and an adjusted loss for 2001, excluding the operations of our former distribution subsidiary, of ($874,669). The increase in operating income resulted from the Company achieving increased net sales and gross margins, which exceeded the greater selling, general and administrative expenses incurred to support continued Company growth. SG&A expenses increased to $7,754,153, or 14.6% of net sales, versus $5,909,245, or 30.2% of net sales, for 2001. The increase is primarily due to certain non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) , additional depreciation and amortization expense and an increase in sales and administrative personnel to support the Company's growth. The reduced percentage is achieved by increased operating efficiencies. Excluding the operations of our former distribution subsidiary, SG&A, as a percentage of net sales for 2001, was 32.2%. R&D expenses increased to $6,944,952, or 13.1% of net sales for 2002, versus $2,352,666, or 12.0% of net sales, for 2001. The increase for the year is primarily due to additional research and coinciding bio-studies conducted to further develop the Company's product pipeline. During 2002, the Company received 10 ANDA approvals. For the year ended December 31, 2002, the Company reported net income applicable to common stockholders of $22,964,797, or $1.44 per diluted share, as compared with a net loss of ($13,532,931), or ($1.57) per diluted share, for 2001. Net income for 2002 included a one-time net tax benefit, in the amount of $15,130,000, related to the recognition of a deferred federal tax asset for the carryforward of net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. , as well as an approximately $2 million non-recurring charge relating to the writedown writedown A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. in value of a note receivable. Excluding these items, the Company earned $10,309,343, or $0.63 per diluted share, for 2002. The Company had cash and cash equivalents of $1,801,127 and working capital of $12,075,725 as of December 31, 2002, as compared with cash and cash equivalents of $1,155,266 and working capital of $6,148,610 as of December 31, 2001. One-Time, Non-Recurring Items As noted above, net income for fourth quarter and year ended December 31, 2002, includes two material, one-time, non-recurring items: -- Income Tax Benefit -- As of December 31, 2002, the Company has a net operating loss carry-forward See Loss Carry-Back. for federal income tax purposes. During the fourth quarter 2002, management determined that it was more likely than not that these benefits will be realized in future periods prior to expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of the carry-forward period. Therefore, Able has recognized the related deferred tax asset, which resulted in a one-time federal tax benefit that increased net income by $15,130,000, or $0.93 per diluted share, for 2002. Because it recognized these tax benefits during the fourth quarter of 2002, in future profitable periods the Company expects to report its net income as if it were fully taxed. The Company does not, however, expect to pay federal income taxes until it fully utilizes its net operating loss carry- forward. -- Other expenses -- Based upon the financial information currently available, management has increased its reserve for the RxBazaar note receivable to cover the full carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the note. The result is a $1,993,403 charge to income for 2002, or a $0.12 reduction to diluted earnings per share. The Company has presented certain of its operating results above excluding the effect of these non-recurring items. While recognizing these items comports with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , they each depend in part on factors other than the Company's operations for the quarter and fiscal year ended December 31, 2002. Therefore, management believes that excluding them for comparison purposes produces a meaningful basis for comparing operating results to those that the Company achieved for periods in which such non-recurring items did not occur. Furthermore, the Company has presented certain of its operating results above by excluding the operating results of its former distribution subsidiary, which was sold in February 2001. Management believes that presenting its operating results in this manner, while different from the results achieved by applying generally accepted accounting principles, may provide investors a meaningful alternative basis for comparing results from the Company's ongoing operations among periods. "We are pleased with Able's financial progress, as we continued to increase net sales and earnings while executing on our strategy during the fourth quarter 2002," commented Jay Wadekar, President and Chief Executive Officer. "Our 2002 results were driven primarily by our ANDA approvals and market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" into certain key accounts. Our fundamentals and pipeline are strong as we are awaiting approvals on several promising ANDAs. Additionally, we have an aggressive R&D program and we believe 2003 will be an overall up year for the Company. Our continued growth, especially on a quarter-to-quarter basis, will also depend upon the timing of pending ANDA approvals some of which could be first-to-market opportunities. We continue to focus on managing our growth and controlling our costs and look forward to an exciting 2003." Fourth Quarter 2002 -- Corporate Highlights -- In October October: see month. 2002, the Company announced that the FDA approved two ANDAs for three formulations of Hydrocodone Bitartrate hy·dro·co·done bitartrate n. A narcotic drug related to codeine, used as an analgesic and antitussive. hydrocodone bitartrate Warning - High-alert drug! and Acetaminophen acetaminophen (əsēt'əmĭn`əfĭn), an analgesic and fever-reducing medicine similar in effect to aspirin. It is an active ingredient in many over-the-counter medicines, including Tylenol and Midol. Tablets USP USP - unique sales point , 7.5mg/325mg, 10mg/325mg and 10mg/650mg. Also, the Company announced that it expanded its Hydrocodone Bitartrate and Acetaminophen hydrocodone bitartrate and acetaminophen Warning - High-alert drug! Anexsia, Ceta-Plus, Co-Gesic, Hydrocet, Lorcet-HD, Lortab, Vicodin, Vicodin HP Pharmacologic class: Tablet See digitizer tablet and tablet computer. TABLET - A query language. ["Human Factor Comparison of a Procedural and a Non-procedural Query Language", C. Welty et al, ACM Trans Database Sys 6(4):626-649 (Dec 1981)]. product line by receiving FDA approval for Hydrocodone Bitartrate and Acetaminophen Tablets, USP, 7.5mg/750mg. -- In October 2002, the Company announced completion of a $4.0 million equipment financing credit facility with Citizens Bank of Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. , an indirect subsidiary of The Royal Bank ofScotland Scotland, political division of Great Britain (1991 pop. 4,957,000), 30,414 sq mi (78,772 sq km), comprising the northern portion of the island of Great Britain and many surrounding islands. . Subsequently, in February 2003, the Company completed an increase in this facility by adding $1.7 million to the equipment financing line and closing on a new $4.0 million working capital revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. -- In November November: see month. 2002, the Company continued to expand its Hydrocodone Bitartrate and Acetaminophen Tablet product line with FDA approval of two additional Company ANDAs for Hydrocodone Bitartrate and Acetaminophen Tablets USP 5mg/500mg and 10mg/500mg. -- In November 2002, the Company's Listing Application for Nasdaq SmallCap market was approved and the Company began trading its Common Stock on the exchange. Subsequently, in February 2003, the Company's Listing Application for Nasdaq National Market was approved and the Company began trading its Common Stock on the exchange. -- In December 2002, the Company announced the appointment of Jerry Jer·ry n. pl. Jer·ries Chiefly British Slang A German, especially a German soldier. [Alteration of German. Treppel to its Board of Directors. Mr. Treppel spent 15 years on Wall Street as an equity analyst focusing on the specialty pharmaceuticals and generic drugs generic drug, a drug sold or prescribed under the nonproprietary name of its active ingredients or under a generally descriptive name rather than under a brand or trade name. sectors. -- In December 2002, the Company announced the appointment of Robert Weinstein as Vice President and Chief Financial Officer. Mr. Weinstein has over 20 years of experience as a Certified Public Accountant Certified Public Accountant (CPA) An accountant who has met certain standards, including experience, age, and licensing, and passed exams in a particular state. , investment banker Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. , financial consultant and operating officer. Additional 2002 Highlights The Company increased its number of full time employees to 285 at December 31, 2002, from 146 at December 31, 2001, or an increase of 95%. This increase is directly attributable to the need to support increasing net sales, manufacturing, research and development, quality and all other supporting activities. The Company increased its total facilities square footage to approximately 110,000 square feet, in four principal locations in South Plainfield, New Jersey South Plainfield is a Borough in Middlesex County, New Jersey, United States. As of the United States 2000 Census, the borough population was 21,810. South Plainfield was incorporated by an Act of the New Jersey Legislature on March 10, 1926, from portions of Piscataway , from its original single 46,000 square foot facility. To equip e·quip tr.v. e·quipped, e·quip·ping, e·quips 1. a. To supply with necessities such as tools or provisions. b. these facilities, the Company incurred approximately $6.4 million of capital expenditures to increase its production capacity by building additional infrastructure and purchasing additional equipment. These capital expenditures should allow the Company adequate manufacturing capacity for the next 12 to 18 months. Conference Call Information Able Laboratories has scheduled a conference call and web cast regarding this announcement to be held today, beginning at 10:30 a.m. Eastern Standard Time (7:30 a.m. Pacific Time). To participate in the live call via telephone, please call (888) 803-8276 or (706) 634-8102 internationally. A telephone replay will be available for 48 hours following the call by dialing (800) 642-1687 or (706) 645-9291 internationally and entering reservation number 8820427. Individuals interested in listening to the conference call via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the may do so by visiting our web site, www.ablelabs.com. A replay will be available on the web site for 90 days. Able Laboratories is a developer and manufacturer of generic pharmaceuticals. Since March 2001, Able has received 24 ANDA approvals. Further information on Able may be found on the Company's web site, www.ablelabs.com. Except for historical facts, the statements in this news release, as well as oral statements or other written statements made or to be made by Able Laboratories, Inc., are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and involve risks and uncertainties. For example, statements about the Company's operations and growth, the current or expected market size for the Company's products, the adequacy of the Company's manufacturing capacity, the availability of sufficient capital, the success of current or future product offerings, research and development efforts and the Company's ability to file for and obtain U.S. Food and Drug Administration approvals for future products, are forward-looking statements. Forward-looking statements are merely the Company's current predictions of future events. The statements are inherently uncertain, and actual results could differ materially from the statements made herein. There is no assurance that the Company will continue to achieve the sales levels necessary to make its operations profitable or that ANDA filings and approvals will be completed and obtained as anticipated. For a description of additional risks, and uncertainties, please refer to the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2001, and its Form 10-Q Form 10-Q See 10-Q. for the nine months ended September 30, 2002. The Company assumes no obligation to update its forward-looking statements to reflect new information and developments.
ABLE LABORATORIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Year Ended
------------------------- --------------------------
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------ ------------ ------------ -------------
Sales, net $16,101,638 $7,066,599 $52,930,121 $19,594,231
Cost of sales 8,101,832 4,056,351 27,361,610 12,533,440
------------ ------------ ------------ -------------
Gross profit 7,999,806 3,010,248 25,568,511 7,060,791
------------ ------------ ------------ -------------
Operating
expenses:
Selling, general
and
administrative 2,650,274 1,646,920 7,754,153 5,909,245
Research and
development 2,002,113 816,396 6,944,952 2,352,666
------------ ------------ ------------ -------------
Total operating
expenses 4,652,387 2,463,316 14,699,105 8,261,911
------------ ------------ ------------ -------------
Operating income
(loss) 3,347,419 546,932 10,869,406 (1,201,120)
------------ ------------ ------------ -------------
Other income
(expense):
Interest and
financing
expense (148,403) (169,823) (517,723) (1,077,100)
Loss on
investment
securities (1,993,403) (2,680,000) (1,993,403) (2,730,000)
Miscellaneous
income
(expense) 52,507 (50,877) (42,340) 535,313
------------ ------------ ------------ -------------
Other income
(expense), net (2,089,299) (2,900,700) (2,553,466) (3,271,787)
------------ ------------ ------------ -------------
Income (loss)
before income
taxes 1,258,120 (2,353,768) 8,315,940 (4,472,907)
Income tax
benefit 15,130,000 -- 15,130,000 --
------------ ------------ ------------ -------------
Net income (loss) 16,388,120 (2,353,768) 23,445,940 (4,472,907)
Less returns to
preferred
stockholders:
Beneficial
conversion
features -- 23,810 -- 8,536,886
Dividends paid
and accrued 113,667 196,290 481,143 523,138
------------ ------------ ------------ -------------
Net income (loss)
applicable to
common
stockholders $16,274,453 $(2,573,868) $22,964,797 $(13,532,931)
============ ============ ============ =============
Net income (loss)
per share:
Basic $1.37 $(0.26) $1.98 $(1.57)
============ ============ ============ =============
Diluted $0.98 $(0.26) $1.44 $(1.57)
============ ============ ============ =============
Weighted average
shares
outstanding:
Basic 11,838,429 9,767,422 11,587,905 8,629,371
============ ============ ============ =============
Diluted 16,727,876 9,767,422 16,322,234 8,629,371
============ ============ ============ =============
ABLE LABORATORIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
December 31, December 31,
2002 2001
------------ ------------
Current assets:
Cash and cash equivalents $1,801,127 $1,155,266
Accounts receivable, net of allowances of
$13,054,246 and $8,116,822 7,873,526 4,646,203
Inventory 12,903,939 4,718,909
Prepaid expenses and other current assets 123,104 783,482
------------ ------------
Total current assets 22,701,696 11,303,860
------------ ------------
Property and equipment, net 9,932,523 4,495,511
------------ ------------
Other assets:
Investment in RxBazaar securities -- 1,040,000
Debt financing costs, net of accumulated
amortization 168,206 182,606
Cash deposits with bond trustee 517,262 505,095
Deferred income tax asset 17,640,000 --
Deposits and other assets 168,414 110,617
------------ ------------
Total other assets 18,493,882 1,838,318
------------ ------------
$51,128,101 $17,637,689
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-
term debt $890,000 $586,807
Accounts payable and accrued expenses 9,735,971 4,568,443
------------ ------------
Total current liabilities 10,625,971 5,155,250
Long-term debt, less current portion 5,810,355 2,290,500
Deferred gain on sale of subsidiary -- 1,296,597
------------ ------------
Total liabilities 16,436,326 8,742,347
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000
shares authorized, 53,150 shares of Series Q
in 2002 and 67,910 shares of Series L and Q
in 2001 (liquidation value $5,315,000 and
$6,791,000) 532 679
Common stock, $.01 par value, 25,000,000
shares authorized, 12,554,206 and 11,301,976
shares issued and outstanding 125,542 113,020
Additional paid-in capital 82,423,790 80,011,072
Accumulated deficit (47,783,489) (71,229,429)
Unearned stock-based compensation (74,600) --
------------ ------------
Total stockholders' equity 34,691,775 8,895,342
------------ ------------
$51,128,101 $17,637,689
============ ============
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