Akorn, Inc. Reports First Quarter 2006 Revenues of $30 million, 40% Gross Margin and Diluted Earnings per Share of $0.04.BUFFALO GROVE Buffalo Grove A village of northeast Illinois, a suburb of Chicago. Population: 43,300. , Ill. -- Akorn, Inc. (AMEX AMEX See: American Stock Exchange :AKN AKN King Salmon Airport (Alaska) AKN Altona-Kaltenkirchen-Neumünster (public transportation system in the north of Hamburg, Germany) AKN Net Cargo Ship (Auxiliary, Cargo, Net) ) today 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 $29.7 million for the first quarter 2006, an increase of 192% vs. first quarter 2005 net sales of $10.2 million. Gross profit of $11.7 million or 39.5% of first quarter 2006 net sales, represents an increase of 251% vs. gross profit of $3.3 million or 32.8% of net sales for the first quarter 2005. Net income for the first quarter 2006 was $3.1 million, or $0.04 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 vs. a $2.3 million net loss for the first quarter 2005 or $(0.13) per diluted share. Net income was adversely impacted by non-recurring interest expense of $1.1 million, due to the early retirement of convertible debt. Highlights since the beginning of 2006 include: --$21.4 million in net sales were recognized from an order with the Department of Health and Human Services Noun 1. Department of Health and Human Services - the United States federal department that administers all federal programs dealing with health and welfare; created in 1979 Health and Human Services, HHS for Ca-DTPA and Zn-DTPA, two countermeasures That form of military science that, by the employment of devices and/or techniques, has as its objective the impairment of the operational effectiveness of enemy activity. See also electronic warfare. for a radiological radiological pertaining to radiology. radiological diagnosis see radiological diagnosis. mobile radiological apparatus x-ray machines that can be moved but are not portable because of their weight. or nuclear incident. --Three new definitive agreements were signed, two with Natco Pharma Pharma may be an abbreviation for:
--Two new drug product approvals were received from the 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. for Brimonidine brimonidine /bri·mo·ni·dine/ (bri-mo´ni-den) an a agonist used as the tartrate salt in the treatment of open-angle glaucoma and ocular hypertension. and Inapsine(R). --Six ANDA's have been submitted. Three of these ANDA's are from Akorn-Strides, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , Akorn's joint venture with Strides Arcolab  This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . Limited. --$19.4 million in new capital was raised. Proceeds are intended for investment in manufacturing upgrades at our Decatur Decatur. 1 City (1990 pop. 48,761), seat of Morgan co., N Ala., on the Tennessee River; inc. 1826. It has shipyards, port traffic, and diverse industries, including steel manufacturing. , IL manufacturing facility and for clinical product development efforts. --For the first quarter 2006, cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $8.8 million. --The Series A 6.0% Participating Convertible Preferred Stock Participating convertible preferred stock Preferred stock that can be converted into common stock at the option of the holder. In contrast, to the usual preferred stock, the value of the preferred stock is refunded to the holder. That is, one gets conversion plus the value of the stock. was retired and converted to 36,796,755 shares of common stock. --$10.6 million in outstanding debt was retired. Akorn Reiterates its Outlook for 2006: --50% Revenue growth generated from new product introductions, increased contract manufacturing business, and our exclusive license for Ca-DTPA and Zn-DTPA. --40% Gross Margin. --Positive Net Income. --Significant Improvement in Cash Flow from Operations. --Debt-free Balance Sheet. --Lyophilization Manufacturing Facility Fully Operational. Arthur Arthur, king of Britain: see Arthurian legend. Arthur king and hero of Scotland, Wales, and England. [Arthurian Legend: Parrinder, 28] See : Heroism S. Przybyl, President and Chief Executive Officer stated, "We executed on all fronts, revenues, margins, earnings and cash flow. Our Business Development activities continue to expand our development pipeline. At the Decatur, IL manufacturing facility, product approvals have begun and we continue to progress operational qualification efforts for our lyophilization lyophilization /ly·oph·i·li·za·tion/ (li-of?i-li-za´shun) the creation of a stable preparation of a biological substance by rapid freezing and dehydration of the frozen product under high vacuum. facility. Company-wide anticipated regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. filings are on schedule for 2006. "Days on-hand inventory levels at wholesalers have been reduced by 37% from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2005 and wholesaler throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. sales have increased by 20%. This bodes well for our future revenues and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . Our cash on hand is $24.6 million and we have effectively retired all of our outstanding debt." Conference Call Akorn will host a conference call on Monday Monday: see week. , May 1, 2006, beginning at 5:00 p.m. Eastern Time to discuss first quarter 2006 operating results. Analysts, investors and other interested parties are invited to participate by visiting the Company's website, www.akorn.com, and clicking on the live webcast icon located on the home page, or http://www.videonewswire.com/event.asp?id=33476. Please plan to or log on at least ten minutes prior to the designated start time so management may begin promptly prompt adj. prompt·er, prompt·est 1. Being on time; punctual. 2. Carried out or performed without delay: a prompt reply. tr.v. . About Akorn, Inc. Akorn, Inc. manufactures and markets sterile sterile /ster·ile/ (ster´il) 1. unable to produce offspring. 2. aseptic. ster·ile adj. 1. Not producing or incapable of producing offspring. 2. specialty pharmaceuticals. Akorn has manufacturing facilities located in Decatur, Illinois
oph·thal·mic adj. Of or relating to the eye; ocular. Ophthalmic Pertaining to the eye. pharmaceuticals. Additional information is available at the Company's website at www.akorn.com. Materials in this press release may contain information that includes or is based upon 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 Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995. Forward-looking statements give our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future steps we may take, prospective products, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. such as legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. , and financial results. Any or all of our forward-looking statements here or in other publications may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining our actual future results. Consequently, no forward-looking statement can be guaranteed. Our actual results may vary materially, and there are not guarantees about the performance of our stock. Any forward-looking statements represent our expectations or forecasts only as of the date they were made and should not be relied upon as representing our expectations or forecasts as of any subsequent date. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise, even if our expectations or forecasts change. You are advised, however, to consult any further disclosures we make on related subjects in our reports filed with the SEC. In particular, you should read the discussion in the section entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Cautionary Statement Regarding Forward-Looking Statements" in our most recent 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. , as it may be updated in subsequent reports filed with the SEC. That discussion covers certain risks, uncertainties and possibly inaccurate assumptions that could cause our actual results to differ materially from expected and historical results. Other factors besides those listed there could also adversely affect our results.
AKORN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
IN THOUSANDS
(UNAUDITED)
MARCH 31, DECEMBER 31,
2006 2005
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $24,558 $791
Trade accounts receivable (less allowance
for doubtful accounts of $3 and $13
respectively) 2,031 3,222
Inventories 10,966 10,279
Prepaid expenses and other current assets 1,593 1,402
------------ ------------
TOTAL CURRENT ASSETS 39,148 15,694
PROPERTY, PLANT AND EQUIPMENT, NET 31,322 31,071
OTHER LONG-TERM ASSETS
Intangibles, net 9,859 10,210
Other 113 120
------------ ------------
TOTAL OTHER LONG-TERM ASSETS 9,972 10,330
------------ ------------
TOTAL ASSETS $80,442 $57,095
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of debt $373 $7,044
Trade accounts payable 2,745 3,046
Accrued compensation 1,063 1,519
Customer accrued liabilities 3,115 135
Accrued Interest Payable -- 2,514
Accrued expenses and other liabilities 1,180 1,202
------------ ------------
TOTAL CURRENT LIABILITIES 8,476 15,460
LONG-TERM LIABILITIES
Long-term debt, less current installments 506 602
Product Warranty 1,159 --
------------ ------------
TOTAL LONG-TERM LIABILITIES 1,665 602
------------ ------------
TOTAL LIABILITIES 10,141 16,062
------------ ------------
SHAREHOLDERS' EQUITY
Common stock, no par value -- 150,000,000
shares authorized; 74,281,973 and
27,618,745 shares issued and outstanding
at March 31, 2006 and December 31, 2005,
respectively 122,312 67,339
Series A Preferred Stock, $1.00 par value,
257,172 shares authorized and issued,
241,122 shares outstanding at December
31, 2005 -- 27,232
Series B Preferred Stock, $1.00 par value,
170,000 shares authorized, 141,000 shares
issued, 85,400 outstanding at March 31,
2006 and 106,600 outstanding at December
31, 2005 8,757 10,758
Warrants to acquire common stock 14,424 13,696
Accumulated deficit (75,192) (77,992)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 70,301 41,033
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $80,442 $57,095
============ ============
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
IN THOUSANDS, EXCEPT PER SHARE DATA
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
2006 2005
------------ ------------
Revenues $29,730 $10,181
Cost of sales 17,997 6,838
------------ ------------
GROSS PROFIT 11,733 3,343
Selling, general and administrative expenses 4,484 3,368
Amortization and write-down of intangibles 351 379
Research and development expenses 2,045 1,342
------------ ------------
TOTAL OPERATING EXPENSES 6,880 5,089
------------ ------------
OPERATING INCOME (LOSS) 4,853 (1,746)
Interest expense (1,319) (526)
Debt Retirement Expense (391) --
Other Income (Expense) (17) --
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 3,126 (2,272)
Income tax provision (benefit) -- 15
------------ ------------
NET INCOME (LOSS) 3,126 (2,287)
Preferred stock dividends and adjustments (326) (1,061)
------------ ------------
NET INCOME (LOSS) AVAILABLE TO COMMON
STOCKHOLDERS $2,800 $(3,348)
============ ============
NET INCOME (LOSS) PER SHARE:
BASIC $0.05 $(0.13)
============ ============
DILUTED $0.04 $(0.13)
============ ============
SHARES USED IN COMPUTING
NET INCOME (LOSS) PER SHARE:
BASIC 61,715 25,237
============ ============
DILUTED 74,980 25,237
============ ============
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
2006 2005
------------ ------------
OPERATING ACTIVITIES
Net income (loss) $3,126 $(2,287)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 818 1,751
Amortization of debt discounts 1,059 253
Advances to Strides Arcolab Limited -- (1,500)
Non-cash stock compensation expense 333 --
Changes in operating assets and
liabilities:
Trade accounts receivable 1,191 3,228
Inventories (687) (272)
Prepaid expenses and other current
assets (184) 272
Trade accounts payable (301) (2,625)
Product warranty 1,159 --
Accrued Customer Liability 2,980 --
Accrued expenses and other liabilities (694) 105
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 8,800 (1,075)
INVESTING ACTIVITIES
Purchases of property, plant and equipment (718) (83)
Purchase of intangible assets -- (75)
------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (718) (158)
FINANCING ACTIVITIES (see Note 1 below)
Repayment of long-term debt (2,826) (83)
Proceeds from common stock & warrants
offering 18,078 --
Proceeds from warrants exercised 95 37
Proceeds under stock option and stock
purchase plans 338 388
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 15,685 342
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 23,767 (891)
Cash and cash equivalents at beginning of
period 791 4,110
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $24,558 $3,219
============ ============
Amount paid for interest (net of capitalized
interest) $542 $25
Amount paid/(refunded) for income taxes 2 72
Note 1: $7,298 in principal and interest related to convertible
subordinated notes was retired in March 2006 by conversion to
the common stock of Akorn, Inc.
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