Akorn, Inc. Reports Second Quarter 2006 Revenues Of $12.5 Million And 40% Gross Margin.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 $12.5 million for the second quarter 2006, a decrease of 1% vs. second quarter 2005 net sales of $12.6 million. Gross profit of $5.0 million or 39.7% of second quarter 2006 net sales, represents an increase of 2% vs. gross profit of $4.9 million or 38.6% of net sales for the second quarter 2005. Net loss available to common stockholders for the second quarter 2006 was $(2.2) million, or $(0.03) 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 $(1.0) million net loss available to common stockholders for the second quarter 2005, which included an extraordinary gain of $1.2 million, or $(0.04) per diluted share. During the second quarter of 2006, net loss available to common stockholders was adversely impacted by stock option expense of $0.5 million, as compared to zero in the first quarter of 2005. For the six months ended June June: see month. 30, 2006, net sales were $42.2 million vs. $22.8 million in the comparative prior year period, an increase of 85.4%. Gross profit was $16.7 million or 39.5% of net sales, vs. $8.2 million or 36.0% of net sales. Net income available to common shareholders was $0.6 million vs. a net loss of $(4.3) million. For the first half of 2006, net income was adversely impacted by stock option expense of $0.7 million, as compared to zero in the first half of 2005, and a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. non-recurring interest expense of $1.1 million due to the early retirement of convertible debt. Highlights since the beginning of 2006 include: --Four new business development agreements were signed, two with Natco Pharma Limited, one with Fidia Fid´i`a n. 1. (Zool.) A genus of small beetles, of which one species (the grapevine Fidia, F. longipes) is very injurious to vines in America. Farmaceutici, S.p.A., and one with Cipla CIPLA Chemical, Industrial & Pharmaceutical Laboratories , Ltd., which add nine drugs to Akorn's product development pipeline. --Two new contract manufacturing supply agreements were announced, one with X-Gen Pharmaceuticals, Inc. and one with Advanced Vision Research, Inc. We believe that these two agreements will increase Contract Manufacturing sales by approximately 50% on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis beginning in 2007. --Seven 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. : 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. , Inapsine(R), Orphenadrine orphenadrine /or·phen·a·drine/ (or-fen´ah-dren) an analogue of diphenhydramine having anticholinergic, antihistaminic, and antispasmodic actions; its citrate salt is used as a skeletal muscle relaxant. , Sufenta(R), Alfenta(R), Amiodarone amiodarone /ami·o·da·rone/ (ah-me´o-dah-ron?) a potassium channel blocking agent used as the hydrochloride salt in the treatment of ventricular arrhythmias. , and Dilitiazem. Of the seven, one product, Inapsine(R), has already been launched. --Eleven ANDA's have been submitted to the FDA. Seven 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. --$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. --Validation efforts for the 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 are on schedule to be completed in the third quarter 2006. --For the first half of 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 $2.0 million, $19.4 million in new capital was raised, $10.6 million in outstanding debt was retired, and 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 converted to common stock. 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 remain confident and on track to achieve our objectives for 2006. With continued new product introductions scheduled for the second half of the year combined with increased production volumes, we remain on target to increase year-over-year revenues by 50% while achieving a 40% gross margin and positive net income. "Regulatory product filings and new product approvals should achieve our corporate objectives of twenty and ten, respectively. Our first lyophilized ly·oph·i·lize tr.v. ly·oph·i·lized, ly·oph·i·liz·ing, ly·oph·i·liz·es To freeze-dry (blood plasma or other biological substances). [lyophil(ic) + -ize. exhibit batch is scheduled to occur on September 27, 2006 and will represent the completion of our lyophilization validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. efforts. We anticipate continued investment in business development partnerships in the second half of 2006 that will expand Akorn's product development pipeline. In order to begin clinical development of AK-1015, an ophthalmic ophthalmic /oph·thal·mic/ (of-thal´mik) ocular (1). oph·thal·mic adj. Of or relating to the eye; ocular. Ophthalmic Pertaining to the eye. product with an intended indication for ocular ocular /oc·u·lar/ (ok´u-lar) 1. of, pertaining to, or affecting the eye. 2. eyepiece. oc·u·lar adj. 1. Of or relating to the eye or the sense of sight. anesthesia anesthesia (ănĭsthē`zhə) [Gr.,=insensibility], loss of sensation, especially that of pain, induced by drugs, especially as a means of facilitating safe surgical procedures. , we have engaged a contract research organization and expect to file an NDA (Non Disclosure Agreement) An agreement signed between two parties that have to disclose confidential information to each other in order to do business. In general, the NDA states why the information is being divulged and stipulates that it cannot be used for any in 2007. "Lastly, our financial foundation remains strong. As of today, our current cash balance is $20 million, we have access to a $10 million line of credit, and our current asset to current liability ratio is 7:1." 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. Conference Call Akorn will host a conference call on Wednesday July 26, 2006, beginning at 5:00 p.m. Eastern Time to discuss second 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=34645. Please plan to log on at least ten minutes prior to the designated start time so management may begin promptly. 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
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
JUNE 30, DECEMBER 31,
2006 2005
------------- -------------
(UNAUDITED) (AUDITED)
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 17,781 $ 791
Trade accounts receivable (less allowance
for doubtful accounts of $3 and $13,
respectively) 4,987 3,222
Inventories 10,970 10,279
Prepaid expenses and other current assets 1,780 1,402
------------- -------------
TOTAL CURRENT ASSETS 35,518 15,694
PROPERTY, PLANT AND EQUIPMENT, NET 31,515 31,071
OTHER LONG-TERM ASSETS
Intangibles, net 9,509 10,210
Other 105 120
------------- -------------
TOTAL OTHER LONG-TERM ASSETS 9,614 10,330
------------- -------------
TOTAL ASSETS $ 76,647 $ 57,095
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of debt $ 380 $ 7,044
Trade accounts payable 2,732 3,046
Accrued compensation 1,168 1,519
Customer accrued liabilities 332 135
Accrued interest payable - 2,514
Accrued expenses and other liabilities 730 1,202
------------- -------------
TOTAL CURRENT LIABILITIES 5,342 15,460
LONG-TERM LIABILITIES
Long-term debt, less current installments 408 602
Product warranty 1,159 -
------------- -------------
TOTAL LONG-TERM LIABILITIES 1,567 602
------------- -------------
TOTAL LIABILITIES 6,909 16,062
------------- -------------
SHAREHOLDERS' EQUITY
Common stock, no par value -- 150,000,000
shares authorized; 75,285,018 and 27,618,745
shares issued and outstanding at June 30,
2006 and December 31, 2005, respectively 124,907 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, 82,437 outstanding at June 30, 2006
and 106,600 outstanding at December 31, 2005 8,589 10,758
Warrants to acquire common stock 13,631 13,696
Accumulated deficit (77,389) (77,992)
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 69,738 41,033
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 76,647 $ 57,095
============= =============
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
IN THOUSANDS, EXCEPT PER SHARE DATA
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2006 2005 2006 2005
------------ ----------- ----------- -----------
Revenues $ 12,475 $ 12,578 $ 42,205 $ 22,759
Cost of sales 7,520 7,726 25,517 14,564
------------ ----------- ----------- -----------
GROSS PROFIT 4,955 4,852 16,688 8,195
Selling, general
and administrative
expenses 4,669 3,699 9,153 7,067
Amortization and
write-down of
intangibles 350 425 701 804
Research and
development
expenses 2,121 1,423 4,166 2,765
------------ ----------- ----------- -----------
TOTAL OPERATING
EXPENSES 7,140 5,547 14,020 10,636
------------ ----------- ----------- -----------
OPERATING INCOME
(LOSS) (2,185) (695) 2,668 (2,441)
Interest
income/(expense) -
net 234 (584) (1,085) (1,110)
Debt Retirement
Gain/(Expense) - 1,212 (391) 1,212
Other Expense (12) - (29) -
------------ ----------- ----------- -----------
INCOME/(LOSS)
BEFORE INCOME
TAXES (1,963) (67) 1,163 (2,339)
Income tax
provision - - 15
------------ ----------- ----------- -----------
NET INCOME/(LOSS) (1,963) (67) 1,163 (2,354)
Preferred stock
dividends and
adjustments (234) (915) (560) (1,976)
------------ ----------- ----------- -----------
NET INCOME/(LOSS)
AVAILABLE TO
COMMON
STOCKHOLDERS $ (2,197) $ (982) $ 603 $ (4,330)
============ =========== =========== ===========
NET INCOME/(LOSS)
PER SHARE:
BASIC $ (0.03) $ (0.04) $ 0.01 $ (0.17)
============ =========== =========== ===========
DILUTED $ (0.03) $ (0.04) $ 0.01 $ (0.17)
============ =========== =========== ===========
SHARES USED IN COMPUTING NET
INCOME (LOSS) PER SHARE:
BASIC 74,853 25,961 68,321 25,601
============ =========== =========== ===========
DILUTED 74,853 25,961 76,481 25,601
============ =========== =========== ===========
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
(UNAUDITED)
SIX MONTHS
ENDED JUNE 30
---------------------
2006 2005
---------- ----------
OPERATING ACTIVITIES
Net income (loss) $ 1,163 $ (2,354)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 1,645 3,413
Amortization of debt discounts 1,059 553
Advances to Strides Arcolab Limited - (1,500)
Gain on Retirement of Debt - (1,212)
Non-cash stock compensation expense 978 150
Changes in operating assets and liabilities:
Trade accounts receivable (1,765) 849
Inventories (691) (227)
Prepaid expenses and other current assets (363) 365
Trade accounts payable (314) (2,382)
Product warranty 1,159
Accrued customer liability 197 -
Accrued expenses and other liabilities (1,039) 227
---------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 2,029 (2,118)
INVESTING ACTIVITIES
Purchases of property, plant and equipment (1,388) (357)
Purchase of intangible assets - (75)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (1,388) (432)
FINANCING ACTIVITIES
Repayment of long-term debt (2,917) (167)
Repayment of NeoPharm Debt - (2,500)
Net borrowings under lines of credit - 663
Proceeds from common stock and warrant offering 18,078 -
Proceeds from warrants exercised 888 37
Proceeds under stock option and stock purchase
plans 300 444
---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 16,349 (1,523)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 16,990 (4,073)
Cash and cash equivalents at beginning of period 791 4,110
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 17,781 $ 37
========== ==========
Amount paid for interest (net of capitalized
interest) 561 365
Amount paid/(refunded) for income taxes $ 2 $ 72
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