Albany Molecular Research, Inc. Announces Fourth Quarter 2003 Results.Business Editors/Health/Medical Writers ALBANY Albany, town, Australia Albany (ăl`bənē), town (1996 pop. 14,590), Western Australia, SW Australia. It is a port on Princess Royal Harbour of King George Sound. The town has woolen mills and fish canneries. , N.Y.--(BUSINESS WIRE)--Feb. 10, 2004 Albany Molecular Research, Inc. (Nasdaq:AMRI AMRI Albany Molecular Research (stock symbol) AMRI Advanced Magnetic Research Institute (Mocksville, NC) AMRI Advanced Materials Research Institute AMRI Adult Movie Review Index ) today reported financial results for the quarter and year ending December December: see month. 31, 2003. Fourth Quarter 2003 Results Total revenue for the fourth quarter of 2003 increased by $20.5 million, or 65.1%, to $52.0 million, compared to the fourth quarter of 2002. Total contract revenue for the fourth quarter of 2003 increased by 114.1% to $39.0 million, compared to total contract revenue of $18.2 million during the fourth quarter of 2002. AMRI's financial results for the fourth quarter of 2003, including the increases in total revenue and total contract revenue, reflect its 100% ownership of Organichem Corporation. In February 2003, AMRI completed its purchase of Organichem. During 2002, AMRI only included its proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. share of Organichem's net income in its income statement as equity in income of unconsolidated affiliates. Contract revenue for AMRI, not including its Organichem division, for the fourth quarter of 2003 was $18.0 million, a decrease of 1.3% from $18.2 million during the fourth quarter of 2002, but an increase of 15.0%, or $2.4 million, from the third quarter of 2003. Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for AMRI's contract business, excluding its Organichem division, was 33.6% in the fourth quarter of 2003, compared to 42.1% in the fourth quarter of 2002, and 34.6% in the third quarter of 2003. Contract revenue at AMRI's Organichem division in the fourth quarter of 2003 was $21.0 million, a decrease of 9.7% compared to contract revenue of $23.3 million during the fourth quarter of 2002, but an increase of $3.7 million, or 21.3%, from the third quarter of 2003. Gross profit margin for Organichem in the fourth quarter of 2003 was 40.1%, compared to 23.8% in the fourth quarter of 2002, and 32.1% in the third quarter of 2003. Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. royalties for the fourth quarter of 2003 were $13.0 million, a 2.2% decrease from recurring royalties of $13.3 million in the fourth quarter of 2002. AMRI earns royalties from worldwide sales of the non-sedating antihistamine antihistamine (ăn'tĭhĭs`təmēn), any one of a group of compounds having various chemical structures and characterized by the ability to antagonize the effects of histamine. Allegra Al·leg·ra A trademark for the drug fexofenadine hydrochloride. fexofenadine hydrochloride Allegra, Telfast (UK) Pharmacologic class: Peripherally selective piperidine, selective histamine (R) (Telfast(R) outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ) for patents relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the active ingredient An active ingredient, also active pharmaceutical ingredient (or API), is the substance in a drug that is pharmaceutically active. Some medications may contain more than one active ingredient. in Allegra. Net income in the fourth quarter of 2003 decreased by $0.5 million, or 4.9%, to $10.5 million, or $0.33 per share on a 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. basis, as compared to net income in the fourth quarter of 2002 of $11.0 million, or $0.33 per share on a diluted basis. AMRI Chairman, Chief Executive Officer and President Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs E. D'Ambra, Ph.D. said, "AMRI finished 2003 in strong fashion, after a soft and challenging first part of the year. Demand for contract services reflected an improving climate for our customers, an overall strengthening of drug discovery and development initiatives, and an end of the year customer budget surplus, leading to greater than anticipated demand. We continue to remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that 2004 will bring a return to growth. At the same time, it is clear that our customers are under continued pressure to control costs. The amount of foreign competition and their substantially reduced business costs means that AMRI finds itself in an increasingly competitive environment for many of our services. We recognize the need to be creative and continue to innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. , and are evaluating several initiatives for 2004. At the same time, AMRI's technology investments and strategy of seeking higher value-added capabilities has positioned the company well for the future. As we look forward and confront the challenges of the future, it should be noted that AMRI has come through a difficult period in good shape, with a strong balance sheet, and in a position to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the opportunities before us." Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Total revenue for the twelve-month period ending December 31, 2003 increased to $196.3 million, an increase of $73.5 million, or 59.9%, compared to total revenue of $122.8 million during the same period in 2002. Total contract revenue for the full year 2003 increased 101.8% to $144.7 million, compared to contract revenue of $71.7 million for the comparable period in 2002. AMRI's financial results for the full year 2003, including the increases in total revenue and total contract revenue, reflect its 100% ownership of Organichem. In February 2003, AMRI completed its purchase of Organichem. During 2002, AMRI only included its proportionate share of Organichem's net income in its income statement as equity in income of unconsolidated affiliates. Contract revenue for AMRI, excluding its Organichem division, for the twelve-month period ending December 31, 2003 was $65.6 million, a decrease of 8.5% compared to contract revenue of $71.7 million during the same period in 2002. Gross profit margin for AMRI's contract business, excluding its Organichem division, was 34.5% in the twelve-month period ended December 31, 2003, compared to 42.4% for the comparable period in 2002. Contract revenue at AMRI's Organichem division for the twelve-month period ending December 31, 2003 was $79.1 million, a decrease of 8.3% compared to contract revenue of $86.2 million during the same period in 2002. Gross profit margin for Organichem for the twelve-month period ending December 31, 2003 was 25.6%, compared to 24.0% for the comparable period in 2002. In 2003, Organichem's gross profit margin was negatively impacted by $1.0 million in purchase accounting expenses related to an increase in the value of inventories acquired in the Organichem purchase. Recurring royalty revenue for the full year 2003 increased by 1.1% to $51.7 million, compared to recurring royalty revenue of $51.1 million during 2002. Net income for the twelve-month period ending December 31, 2003 was $31.2 million, or $0.96 per share on a diluted basis, representing a 23.1% decrease compared to net income during 2002. Net income for the comparable period in 2002 was $40.6 million, or $1.22 per share on a diluted basis. Included in net income for the full year 2003 is a $0.02 negative impact of the $1.0 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern purchase accounting expense related to the company's acquisition of Organichem, and an additional $0.03 negative impact of a $1.4 million pretax charge related to the termination of the company's lease in Iowa. The total number of employees at AMRI (including Organichem) at the end of the fourth quarter of 2003 was 839. At December 31, 2003, AMRI had cash, cash equivalents and investments of $124.6 million, compared to $129.0 million at September 30, 2003. The net decrease of $4.4 million in cash, cash equivalents and investments in the fourth quarter of 2003 was due primarily to cash generated from operations of $13.2 million, offset by the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of AMRI stock at a cost of $2.2 million, $8.5 million in purchases of property plant and equipment and $6.2 million in debt repayments. Total debt at December 31, 2003 was $57.6 million, compared to $63.8 million at September 30, 2003. Total common shares outstanding at December 31, 2003 were 31,617,349. Earnings Guidance AMRI Chief Financial Officer David P. Waldek updated previous financial guidance for both the first quarter of 2004 and for the full year 2004. Mr. Waldek said, "On February 5, 2004, Aventis provided their 2004 sales forecast Sales forecast A key input to a firm's financial planning process. External sales forecasts are based on historical experience, statistical analysis, and consideration of various macroeconomic factors. guidance for Allegra which was generally consistent with the projection incorporated into our previous financial guidance. Aventis projected a mid single-digit decline in worldwide Allegra sales, consisting of a high single-digit decline in the U.S. offset by growth in the international market. Based upon the 2004 Allegra sales forecast provided by Aventis, we have incorporated slightly more tolerance in our financial guidance to include up to a 10% decline in royalties from Allegra." Mr. Waldek continued, "As we described in previous earnings statements and SEC filings, we have been under a deadline in our 2002 agreement with Bristol-Myers Squibb Bristol-Myers Squibb (NYSE: BMY), colloquially referred to as BMS, is a pharmaceutical corporation, formed by a 1989 merger between pharmaceutical companies Bristol-Myers Company, founded in 1887 by William McLaren Bristol and John Ripley Myers in Clinton, NY (both were whereby BMS BMS abbr. Bachelor of Marine Science transferred intellectual property to AMRI, providing AMRI with ownership of one of BMS's pre-clinical drug candidates, along with patent applications covering attention deficit hyperactivity disorder attention deficit hyperactivity disorder (ADHD), formerly called hyperkinesis or minimal brain dysfunction, a chronic, neurologically based syndrome characterized by any or all of three types of behavior: hyperactivity, distractibility, and impulsivity. (ADHD Attention-Deficit/Hyperactivity Disorder (ADHD) Definition Attention-deficit/hyperactivity disorder (ADHD) is a developmental disorder characterized by distractibility, hyperactivity, impulsive behaviors, and the inability to remain focused on tasks or ) and central nervous system indications. In connection with the agreement, by March 31, 2004, AMRI must issue additional warrants to BMS or return the technology and all improvements made to date. It has been our desire to seek a licensing deal in which upfront licensing payments would offset all or a portion of the expense related to issuing the warrants. Given the upcoming deadline with the BMS agreement, AMRI anticipates issuing warrants in the first quarter of 2004 to BMS to purchase approximately 525,000 shares of AMRI common stock and to record an expense of approximately $3.0 million related to the issuance of the warrants. AMRI initially issued 53,053 warrants for the purchase of AMRI common stock to BMS in early 2002 as part of the signing of the agreement. The exercise prices of the initial 53,053 warrants range from $40 to $45 per share. The exercise prices of the remaining 525,000 warrants will range from $15 to $20 per share above AMRI's stock price at the time the warrants are issued. This second warrant issue will satisfy all equity-related obligations to BMS under our agreement." Mr. Waldek continued, "Including the estimated warrant issuance expense of $3.0 million, or $.06 per share, we are projecting full year 2004 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 to range from $0.87 to $0.95 per share. We project corporate contract revenue for the full year 2004 to range from $143.0 to $148.0 million, representing level to low single-digit growth compared to corporate contract revenue of $144.0 million in 2003." Mr. Waldek continued, "Diluted earnings per share for AMRI for the first quarter of 2004, including the $3.0 million, or $0.06 per share, expense related to the issuance of the warrants to BMS, is projected to range from $0.10 to $0.11 per share. We project corporate contract revenue for the first quarter of 2004 to range from $34.0 to $35.5 million, compared to $33.8 million in the first quarter of 2003. As discussed, royalties from sales of Allegra in the first quarter of 2004 are assumed to decline by as much as 10%." Recent Highlights During the fourth quarter, Arthur J. Roth was elected to the company's board of directors. He brings over 35 years of cumulative experience in business and government, along with a strong background in public accounting and financial management. Roth, 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. , was formerly commissioner of the New York State Department of Taxation and Finance The New York State Department of Taxation and Finance (NYSDTF) is a core agency of the New York State in the United States of America. The agency is responsible for handling all tax forms and publications. and a senior consulting director with Coopers and Lybrand. He was also founder and managing director of Roth Nobis & Company, an accounting firm serving the manufacturing and service industries. In addition, early in 2004, AMRI reached a new three-year contract with the International Chemical Workers Union local 61-C (ICWU ICWU International Chemical Workers Union ), which represents 105 employees, including chemical operators and maintenance technicians, at AMRI's Organichem subsidiary in Rensselaer, New York Rensselaer is a city in Rensselaer County, New York, U.S., located on the Hudson River, directly opposite Albany. As of the 2000 census, the city population was 7,761; in 1920, it was 10,832. . The new contract runs through January 10, 2007. Full-Year 2003 Highlights During 2003, AMRI made a number of noteworthy announcements, including the following: -- The acquisition of Organichem Corporation, a full service, cGMP cGMP 3'5' cyclic guanosine monophosphate; essential in regulation of sodium channels of the retina. Decrease in cGMP concentration leads to hyperpolarization of the retinal membrane. custom manufacturer specializing in process development and commercial scale synthesis, as well as high potency potency /po·ten·cy/ (po´ten-se) 1. the ability of the male to perform coitus. 2. the relationship between the therapeutic effect of a drug and the dose necessary to achieve that effect. 3. , low temperature and controlled substance controlled substance n. a drug which has been declared by federal or state law to be illegal for sale or use, but may be dispensed under a physician's prescription. manufacturing. -- A 3 1/2 year natural products drug discovery research collaboration Working together on a project. See collaborative software. with Eli Lilly and Company Eli Lilly and Company (NYSE: LLY) is a global pharmaceutical company and one of the world's largest corporations. Eli Lilly's global headquarters is located in Indianapolis, Indiana, in the United States. . AMRI took ownership of Eli Lilly's broad natural products collection, advanced technology natural product library, and related databases. In addition, AMRI is building an expanded biological screening group at its Bothell Research Center and will screen samples from the Lilly collection, as well as its own natural product libraries. -- The receipt of two milestone payments totaling $170,000 from different customers for contributions to projects by AMRI scientists. The payments recognize work done by scientists on AMRI's computer-aided drug design team based at the company's Bothell Research Center, as well as scientists in AMRI's Albany, New York-area chemical development department. -- The repurchase of 959,032 shares of AMRI common stock in 2003 at a total cost of $13.5 million, completing the $15 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: by the board of directors in 2002. In addition, AMRI was again recognized by two respected national business publications. The company was named to Fortune magazine's list of the 100 Fastest-Growing Companies in America, marking the second consecutive year that AMRI has appeared on the list. AMRI also ranked 67th on the Forbes list of the 200 Best Small Companies, marking the fourth consecutive year that AMRI has made that list. Fourth Quarter Conference Call The company will hold a conference call at 10:00 a.m. Eastern Time on February 10, 2004 to discuss its quarterly results and business highlights and prospects. During the conference call, the company may discuss information not previously disclosed to the public. Individuals interested in listening to the conference call should dial 888-273-9887 (for domestic calls) or 612-332-0820 (for international calls) at 9:45 a.m. and reference the AMRI Fourth Quarter 2003 Earnings Release conference call. Replays of the call will be available for seven days following the call beginning at 3:15 p.m. on February 10, 2004. To access the replay by telephone, please call 800-475-6701 (for domestic calls) or 320-365-3844 (for international calls) and use access code #717379. In addition, replays of the call will be available for twelve months on the company's website at www.albmolecular.com/investor/. About Albany Molecular Research, Inc. Albany Molecular Research, Inc. is a leading research, drug discovery, development and manufacturing company built on a chemistry platform of comprehensive and integrated technologies, resources and capabilities. The company conducts research and development with many leading pharmaceutical and biotechnology companies Top 100 Biotechnology Companies The following is a list of the top 100 biotechnology companies ranked by revenue. The first nine companies qualify for the list of the top 50 pharmaceutical companies. and for its own internal discovery programs, and provides cGMP manufacturing of active pharmaceutical ingredients through its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Organichem Corporation. This press release includes 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 that involve risks and uncertainties. These statements include, but are not limited to, statements regarding the company's estimates of earnings for the first quarter of 2004 and for the full year 2004, trends in pharmaceutical and biotech bi·o·tech n. Informal Biotechnology. biotech Noun short for biotechnology Noun 1. outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. and the positioning of the company's contract business for 2004, the expected level of 2004 contract revenues for AMRI and Organichem, expected future sales of Allegra, and the acquisition and expected performance of Organichem Corporation, including the expected reduction of operating costs operating costs npl → gastos mpl operacionales relating to the integration of operations. Readers should not place undue reliance on our forward-looking statements. The company's actual results may differ materially from such forward-looking statements as a result of numerous factors, some of which the company may not be able to predict and may not be within the company's control. Factors that could cause such differences include, but are not limited to, the company's ability to attract and retain experienced scientists, trends in pharmaceutical and biotechnology companies outsourcing chemical research and development, including continued softness in these markets, sales of Allegra (including any deviations in estimates provided by Aventis) and the company's receipt of significant royalties from the Allegra license agreement, the risk that Allegra may be approved for over-the-counter use, and Claritin's approval for over-the-counter use, the integration and operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. associated with the company's acquisition of Organichem, the company's ability to enforce its intellectual property and technology, the company's ability to successfully develop novel compounds and lead candidates in its collaborative arrangements, the company's ability to take advantage of proprietary technology and expand the scientific tools available to it, the ability of the company's strategic investments and acquisitions to perform as expected and any goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. related to such investments and acquisitions, the company's ability to successfully complete its ongoing expansion projects on schedule and integrate acquired companies, and the company's ability to effectively manage its growth, as well as those discussed in the company's 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, 2002 as filed with the Securities and Exchange Commission on March 31, 2003. Earnings guidance offered by senior management today represents a point-in-time estimate and is based on information as of the date of this press release. Senior management has made numerous assumptions in providing this guidance which, while believed to be reasonable, may not prove to be accurate. Numerous factors, including those noted above, may cause actual results to differ materially from the guidance provided. The company expressly disclaims any current intention or obligation to update the guidance provided or any other forward-looking statement in this press release to reflect future events or changes in facts assumed for purposes of providing this guidance or otherwise affecting the forward-looking statements contained in this press release.
Albany Molecular Research, Inc.
Consolidated Statements of Income
(unaudited)
(Dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Contract revenue $39,046 $18,237 $144,667 $71,688
Recurring royalties 12,982 13,278 51,682 51,139
------------ ------------ ------------ ------------
Total revenue 52,028 31,515 196,349 122,827
Cost of contract
revenue 24,559 10,567 101,754 41,313
Technology
incentive award 1,300 1,327 5,183 5,107
Research and development 5,866 1,488 22,465 7,096
Selling, general
and administrative 4,840 3,220 20,318 12,897
------------ ------------ ------------ ------------
Total costs and
expenses 36,565 16,602 149,720 66,413
------------ ------------ ------------ ------------
Income from
operations 15,463 14,913 46,629 56,414
Equity in (loss)
income of
unconsolidated
affiliates (161) 1,266 (372) 2,795
Other income, net 485 809 1,645 4,028
------------ ------------ ------------ ------------
Income before income
tax expense 15,787 16,988 47,902 63,237
Income tax expense 5,313 5,976 16,714 22,686
------------ ------------ ------------ ------------
Net income $10,474 $11,012 $31,188 $40,551
============ ============ ============ ============
Basic earnings
per share $0.33 $0.34 $0.98 $1.24
============ ============ ============ ============
Diluted earnings
per share $0.33 $0.33 $0.96 $1.22
============ ============ ============ ============
Albany Molecular Research, Inc.
Selected Consolidated Balance Sheet Data
(Unaudited)
In thousands
December 31, December 31,
2003 2002
Cash, cash equivalents and investments $124,628 $129,537
Accounts receivable, net 18,261 13,572
Inventory 34,292 13,402
Royalty receivable 12,970 13,251
Total current assets 195,524 173,093
Net property, plant and equipment 146,613 72,518
Goodwill and Intangible Assets 46,920 21,985
Total assets 392,606 302,736
Current liabilities 19,403 9,960
Long term debt 53,129 5,281
Stockholders' equity 302,284 282,367
Total liabilities and stockholders'
equity $392,606 $302,736
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