Andrx Corporation Reports 2003 Second Quarter Results.Business Editors/Health/Medical Writers FORT LAUDERDALE Fort Lauderdale (lô`dərdāl), residential, commercial, and resort city (1990 pop. 149,377), seat of Broward co., SE Fla., on the Atlantic coast; settled around a fort built (c.1837) in the Seminole War, inc. 1911. , Fla.--(BUSINESS WIRE)--July 30, 2003 Andrx Corporation (Nasdaq:ADRX ADRX Andrx Corporation (stock symbol) ) ("Andrx" or the "Company") today announced its financial results for the three and six months ended June 30, 2003, summarized as follows (in thousands, except per share amounts):
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Total revenues $272,370 $180,542 $509,555 $363,861
Income (loss) before income
taxes $23,569 $(60,241) $33,820 $(52,415)
Net income (loss) $14,477 $(31,334) $20,833 $(26,821)
Net income (loss) allocated to
Andrx (1) $14,477 $(29,798) $20,833 $(21,403)
Andrx diluted earnings (loss)
per share (1) $0.20 $(0.42) $0.29 $(0.30)
Net loss allocated to Cybear
(1) $(1,536) $(5,418)
Cybear diluted loss per share
(1) $(0.23) $(0.80)
(1) See Note 1 in the accompanying Unaudited Condensed Consolidated
Statements of Income.
The 2003 second quarter income before income taxes of $23.6 million includes, among other things, a charge of $8.2 million related primarily 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. of certain assets at the Company's Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. aerosol aerosol (âr`əsōl,–sŏl): see colloid. aerosol System of tiny liquid or solid particles evenly distributed in a finely divided state through a gas, usually air. manufacturing facility that the Company previously announced it was seeking to possibly divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. , and a $7.5 million charge relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc various previously disclosed legal claims and obligations. The 2002 second quarter loss before income taxes of $60.2 million includes, among other things, a 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. settlements charge of $60 million related to the Company's Cardizem Car·di·zem A trademark for the drug diltiazem hydrochloride. diltiazem hydrochloride Adizem (UK), Angitil (UK), Apo-Diltiaz (CA), Apo-Diltiazem (CA), Calcicard (UK), Cardizem, Cardizem CD, Cardizem LA, Cartia XT, (R) CD antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. litigation. Andrx's Chief Executive Officer, Richard J. Lane, said: "In our generic business, our over-the-counter version of Claritin Clar·i·tin A trademark for the drug loratadine. loratadine Alavert, Claritin, Claritin RediTabs, Clarityn (UK) Pharmacologic class: Histamine1-receptor antagonist (second-generation) (R) D-24 and Taztia XT(TM), our bioequivalent bi·o·e·quiv·a·lent n. A value indicating the rate at which a substance enters the bloodstream and becomes available to the body. version of Tiazac Tiazac® Diltiazem, see there (R), were successfully launched this quarter. These launches combined with our licensing revenues from KUDCo on its sales of its generic Prilosec Pri·lo·sec A trademark for the drug omeprazole. omeprazole Losec (CA) (UK), Heartburn Relief (UK), Prilosec, Prilosec OTC, Zegerid, Zanprol (UK) Pharmacologic class: Proton pump inhibitor (R), contributed significantly to our top and bottom lines. We are also continuing to work on our Wellbutrin Well·bu·trin A trademark for the drug bupropion hydrochloride, used to treat depression. bupropion hydrochloride Budeprion SR, Budeprion XL, Wellbutrin, Wellbutrin SR, Wellbutrin XL, Zyban SR(R) and Zyban Zy·ban A trademark for the drug bupropion dipropionate, used to treat nicotine dependence. bupropion hydrochloride Budeprion SR, Budeprion XL, Wellbutrin, Wellbutrin SR, Wellbutrin XL, Zyban (R) products, and remain confident that we will be able to commercialize the value of our ANDAs and make generic versions of these significant products available to consumers. We also made considerable headway head·way n. 1. Forward movement or the rate of forward movement, especially of a ship. 2. Progress toward a goal. 3. The clear vertical space beneath a ceiling or archway; clearance. 4. in improving our operations, particularly in manufacturing. This quarter's results also reflect the continued strength of our distribution operation which generated an all time high in net revenues." Mr. Lane continued, "In our branded operations, we recently added a new leader for our commercial efforts, and launched the $AVE(SM) program, which provides Altocor Al·to·cor A trademark for the drug lovastatin. (TM), our cholesterol-lowering medication, to consumers for a fixed monthly payment, without regard to age or income. Altocor was also added to Medi-Cal, California's state Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. drug list. We also filed a Marketing Authorization The right or permission to use a system resource; the process of granting access. See access control. Application in the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community for Fortamet(TM) (metformin metformin /met·for·min/ (met-for´min) an antihyperglycemic agent that potentiates the action of insulin, used in the treatment of type 2 diabetes mellitus. met·for·min n. XT) and had our valproate valproate /val·pro·ate/ (val-pro´at) a salt of valproic acid; the sodium salt has the same uses as the acid. val·pro·ate n. 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 product accepted for filing by 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. ," concluded Mr. Lane.
Revenues and Cost of Goods Sold
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) (in thousands)
------------------- -------------------
2003 2002 2003 2002
--------- --------- -------------------
Distributed Products
Revenues $161,506 $121,502 $316,123 $248,547
Cost of goods sold 132,539 98,573 257,566 202,328
Gross profit 28,967 22,929 58,557 46,219
Gross margin 17.9% 18.9% 18.5% 18.6%
Andrx Products - Bioequivalent
Revenues $66,178 $48,341 $106,681 $97,329
Cost of goods sold 27,849 21,275 56,602 38,943
Gross profit 38,329 27,066 50,079 58,386
Gross margin 57.9% 56.0% 46.9% 60.0%
Andrx Products - Brand
Revenues $10,501 $7,429 $18,430 $12,977
Cost of goods sold 1,654 3,648 4,170 6,189
Gross profit 8,847 3,781 14,260 6,788
Gross margin 84.2% 50.9% 77.4% 52.3%
Andrx Products - Total
Revenues $76,679 $55,770 $125,111 $110,306
Cost of goods sold 29,503 24,923 60,772 45,132
Gross profit 47,176 30,847 64,339 65,174
Gross margin 61.5% 55.3% 51.4% 59.1%
TOTAL PRODUCT SALES
Revenues $238,185 $177,272 $441,234 $358,853
Cost of goods sold 162,042 123,496 318,338 247,460
Gross profit 76,143 53,776 122,896 111,393
Gross margin 32.0% 30.3% 27.9% 31.0%
LICENSING AND ROYALTIES
Revenues $33,054 $102 $64,192 $216
Gross margin 100.0% 100.0% 100.0% 100.0%
OTHER
Revenues $1,131 $3,168 $4,129 $4,792
Cost of goods sold 9,651 6,392 12,388 8,945
Gross profit (loss) (8,520) (3,224) (8,259) (4,153)
Gross margin (loss) (753.3%) (101.8%) (200.0%) (86.7%)
TOTAL REVENUES
Revenues $272,370 $180,542 $509,555 $363,861
Cost of goods sold 171,693 129,888 330,726 256,405
Gross profit 100,677 50,654 178,829 107,456
Gross margin 37.0% 28.1% 35.1% 29.5%
In the second quarter of 2003, distributed products generated an all time high in net revenues of $161.5 million with gross profit of $29.0 million or gross margin of 17.9%. These results include the Company's participation in the distribution of a high sales volume, low gross margin cross-licensed version of Ciprofloxacin ciprofloxacin /cip·ro·flox·a·cin/ (sip?ro-flok´sah-sin) a synthetic antibacterial effective against many gram-positive and gram-negative bacteria; used as the hydrochloride salt. cip·ro·flox·a·cin n. . For the 2003 second quarter, revenues of Andrx's bioequivalent products increased by 36.9% to $66.2 million, compared to $48.3 million for the 2002 second quarter. Taztia XT, Andrx's bioequivalent version of Tiazac, was launched in April 2003 and generated net revenues of $14.3 million. Andrx's bioequivalent over-the-counter version of Claritin D-24 ("OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). D-24")was launched by Perrigo in June 2003 and provided Andrx with net revenues of $4.0 million. Both of these launches included initial stocking. Gross margin for bioequivalent products was 57.9% in the 2003 second quarter, as compared to 56.0% for the 2002 second quarter. The 2003 second quarter bioequivalent products gross profit includes charges of $1.1 million directly to cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold relating to Andrx's manufacturing facilities, including the Company's Weston, Florida Weston is a city located in Broward County, Florida, USA. Established as a city in 1996, much of the community was developed by Arvida/JMB Partners and is located near the western developmental boundary of Broward County. As of 2006, the city had a total population of 65,793. manufacturing facility which is in the start-up phase, its Morrisville, North Carolina Morrisville is a town in Wake County, North Carolina, USA. The population was 5,208 at the 2000 census. A Special Census was conducted by the United States Census Bureau in March 2004, when the population was enumerated at 11,915. manufacturing facility, which the Company is planning to renovate, and under utilization and inefficiencies at the Company's Davie, Florida Davie is a town in Broward County, Florida, United States. In 2006, the U.S. Census Bureau estimated the city's population at 84,350.[3] It is part of the South Florida metropolitan area, which is home to 5,463,857 people. manufacturing facilities. Although not eliminated, under utilization and inefficiencies at the Company's Davie, Florida facilities improved significantly during the quarter. Revenues from Andrx's brand products in the 2003 second quarter increased to $10.5 million, from $7.4 million in the 2002 second quarter, primarily from 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 Altocor of $6.9 million, partially offset by decreases in revenues from Andrx's brand cough cough, sudden, forceful expiration of air from the lungs caused by an involuntary contraction of the muscles controlling the process of breathing. The cough is a response to some irritating condition such as inflammation or the presence of mucus (sputum) in the and cold product lines, its Embrex(R) prenatal prenatal /pre·na·tal/ (-na´tal) preceding birth. pre·na·tal adj. Preceding birth. Also called antenatal. prenatal preceding birth. vitamin and its Anexsia(R) pain product line. Gross margin for the 2003 quarter was 84% compared to 51% for the 2002 quarter. Licensing and royalties revenues for the 2003 second quarter of $33.1 million consisted almost entirely of estimated licensing revenues related to KUDCo's 2003 second quarter net profits, as defined, from KUDCo's sale of its generic version of Prilosec. On June 9, 2003, the licensing rate earned by Andrx from its agreement with KUDCo decreased from 15% to 9%. Other revenues consist of $1.1 million associated with the Company's arrangement with Aventis relating to Andrx's Physicians' Online ("POL") web portal See portal. , as well as from contract manufacturing activities at Andrx's Massachusetts aerosol manufacturing facility. The 2003 second quarter cost of goods sold related to other revenues includes a charge of $8.2 million for the writedown of certain of the assets at the Company's Massachusetts aerosol facility, primarily related to inventories and property, plant and equipment. As previously disclosed, the Company is pursuing possible divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of both its POL physician Internet web portal and its Massachusetts aerosol manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. . Selling, General and Administrative ("SG&A") Expenses SG&A expenses of $58.2 million in the 2003 second quarter increased from $46.5 million from the 2002 second quarter, primarily as a result of an increase in brand sales force expenses. As of June 30, 2003, the Company had approximately 400 sales representatives, as compared to approximately 280 as of June 30, 2002. The increase in SG&A also includes the effect of the growth in total revenues and a change in product mix. Research and Development ("R&D") Expenses R&D expenses were $12.5 million in the 2003 second quarter, as compared to $11.4 million for the 2002 quarter. During the second quarter of 2003, Andrx submitted two ANDAs to the FDA and a Marketing Authorization Application in the European Union for Fortamet (metformin XT). Litigation Settlements and Other Charges Litigation settlements and other charges were $7.5 million for the 2003 second quarter, as compared to $60.0 million for the 2002 second quarter. The 2003 second quarter charge relates to various previously disclosed legal claims and obligations. Balance Sheet and Cash Flows As of June 30, 2003, the Company had approximately $158 million in cash, cash equivalents and investments available-for-sale, $297 million of working capital and $103 million available under the Company's $185 million secured credit facility, which had no borrowings outstanding. 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 for the 2003 second quarter includes approximately $49 million in cash received from an income tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. and $43 million received from KUDCo for licensing revenues earned by the Company from January through April 2003. For the three months ended June 30, 2003, the Company invested approximately $11 million in the purchase of property, plant and equipment and incurred approximately $7 million of depreciation and amortization expense. Outlook Growth in distribution revenues will continue to be primarily a function of the Company's participation in the distribution of new generic products launched by other generic manufacturers, offset by the net price declines typically associated with the distribution of existing generic products. Growth in revenues of bioequivalent products is primarily generated from the launch of new products. Taztia XT, Andrx's bioequivalent version of Tiazac, was launched in April 2003 and is currently competing with one other generic product. Andrx's bioequivalent OTC D-24 was launched by Perrigo in June 2003, and is in its 180 day market exclusivity period. For the quarter ended June 30, 2003, revenues for Taztia XT were $14.3 million for a three-month period and revenues for OTC D-24 were $4.0 million for a one-month period. Final approval and Perrigo's launch of the Company's bioequivalent over-the-counter versions of Claritin-D(R)12 and Claritin Reditabs(R) are awaiting, among other things, the 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 exclusivity rights of other generic manufacturers in the third quarter of 2003. In the second half of 2003, the Company may also launch one or more oral contraceptive oral contraceptive n. A pill, typically containing estrogen or progesterone, that prevents conception or pregnancy. Also called birth control pill. products. Andrx's bioequivalent version of Cardizem CD continues to generate significant net sales and gross profit for the Company. Additional competitors to generic versions of Cardizem CD and Tiazac may surface by mid 2004, which may significantly adversely affect net sales and gross profit of Andrx's bioequivalent versions of Cardizem CD or Tiazac and their significant contribution to Andrx's results of operations. Sales of Andrx's current bioequivalent products may also decrease as a result of other factors as well. The Company is continuing to work on resolving the FDA and USP USP - unique sales point issues that affect its ANDAs for bioequivalent versions of Wellbutrin SR/Zyban. Though Andrx cannot at this time predict or advise whether or when such issues, and the related patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. litigation, will be satisfactorily resolved, and when these products will be introduced, the Company expects that it will be able to commercialize the value of its ANDAs and that generic versions of these significant products will become available to consumers. Such commercialization may be achieved through the Company's exclusivity rights with respect to such ANDAs. Net sales of Altocor continued to grow to $6.9 million for the 2003 second quarter ($11.0 million for the first half of 2003). With, among other things, the $AVE program which Andrx rolled out in June, the Company now estimates that net sales of Altocor for 2003 could range from $30 million to $35 million. The Company continues to see Altocor as a significant opportunity and is exploring options for increasing the sales trend. In the second half of 2003, the Company is planning to consolidate its Mississippi brand sales administration office into its Weston, Florida offices, thereby incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. SG&A charges estimated at approximately $1.3 million. Andrx expects to continue to generate significant licensing revenues from its agreement with KUDCo even though the licensing rate due to Andrx declined from 15% to 9% on June 9, 2003, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the terms of the related agreement. The Company believes that KUDCo licensing revenues will be significantly lower in the third quarter of 2003 as compared to the second quarter of 2003. The amount of licensing revenue derived by Andrx from KUDCo is dependent on a number of factors, including, among others, the applicable licensing rate, KUDCo's profits derived from its sale of its generic Prilosec, which are dependant on Adj. 1. dependant on - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, contingent upon, dependant upon, dependent on, dependent upon, depending on, contingent the number of units KUDCo produces and sells and its per unit selling price, the outcome of the various appeals involving generic Prilosec, and other factors outside of Andrx's control. The Andrx licensing rate on KUDCo's profits further reduces from 9% to 6.25% on the earlier of June 2004 or an appellate court A court having jurisdiction to review decisions of a trial-level or other lower court. An unsuccessful party in a lawsuit must file an appeal with an appellate court in order to have the decision reviewed. decision, as provided in the agreement. Andrx plans to begin the renovation of its manufacturing facility in Morrisville, North Carolina later in 2003 so that certain operations can commence at that facility in 2005. Andrx's Weston, Florida manufacturing facility is expected to become fully operational in 2004. The Company is also pursuing the divestiture of its Massachusetts aerosol manufacturing facilities and further renovations of, or ceasing certain manufacturing operations at, its Davie, Florida manufacturing facilities in order to continue to improve its manufacturing operations and increase its manufacturing efficiencies and capacities. Andrx is also continuing to improve its manufacturing and quality processes as well as the training and utilization of its personnel related thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. . Until all of these efforts come to fruition fru·i·tion n. 1. Realization of something desired or worked for; accomplishment: labor finally coming to fruition. 2. Enjoyment derived from use or possession. 3. , Andrx will continue to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. charges directly to cost of goods sold related to its Weston, Florida and North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. facilities, under utilization and inefficiencies at its Davie, Florida facilities and excess capacities at its Massachusetts aerosol manufacturing facilities. The Company may also incur additional charges directly to cost of goods sold in the manufacture of its currently marketed products and product commercialization activities. Andrx currently estimates that R&D expenses for 2003 will be approximately $55 million. R&D expenses will continue to be periodically evaluated throughout 2003 taking into consideration, among other things, the Company's level of profitability. During 2003, the Company expects to file at least 10 ANDAs, five of which have been submitted through June 30, 2003. The Company's plan for the second half of the year includes continuing to pursue business development opportunities, primarily focused on leveraging Andrx's current brand sales force. Andrx's operating results for the second half of 2003 will not include the initial stocking related to the launch of Taztia XT, and the higher licensing rate for KUDCo's sales of its generic Prilosec experienced in the second quarter of 2003. Major factors affecting the Company's operating results include KUDCo licensing revenues and net sales of its generic versions of Cardizem CD, and, to a lesser extent, Tiazac, OTC D-24, Dilacor XR(R) and Glucophage(R) and its brand Altocor product. Future operating results will also be affected by future product introductions, the value and timing of which are dependent on a number of factors including successful scale-up, final FDA marketing approval, satisfactory resolution of patent and antitrust litigation, manufacturing capabilities and capacities, competition and the other factors described in Andrx's SEC filings. Webcast Investors will have the opportunity to listen to management's discussion of this release in a conference call to be held on July 30, 2003 at 8:00 AM Eastern Time. This call is being webcast and can be accessed at Andrx's website http://www.andrx.com. The webcast will be available for replay. About Andrx Corporation Andrx Corporation develops and commercializes: bioequivalent versions of controlled-release brand name pharmaceuticals using its proprietary drug delivery technologies; bioequivalent versions of specialty, niche and immediate-release pharmaceutical products, including oral contraceptives Oral Contraceptives Definition Oral contraceptives are medicines taken by mouth to help prevent pregnancy. They are also known as the Pill, OCs, or birth control pills. ; and brand name or proprietary controlled-release formulations of existing immediate-release or controlled-release drugs where it believes the application of Andrx's drug delivery technologies may improve the efficacy or other characteristics of those products. Andrx's distribution operations purchase primarily generic pharmaceuticals manufactured by third parties and sells them primarily to independent pharmacies An independent pharmacy is a retail pharmacy that is not directly affiliated with any chain pharmacy, such as CVS/pharmacy, Walgreens or Eckerd. However, owners of independent pharmacies will often form alliances with other independents and use their power in numbers to bargain for , pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. chains which do not maintain their own central warehousing facilities, pharmacy buying groups and, to a lesser extent, physicians' offices. 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. (statements which are not historical facts) in this release are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions 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. For this purpose, any statements contained herein or which are otherwise made by or on behalf of the Company that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality gen·er·al·i·ty n. pl. gen·er·al·i·ties 1. The state or quality of being general. 2. An observation or principle having general application; a generalization. 3. of the foregoing, words such as "may," "will," "to," "plan," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," or "continue" or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements. Investors are cautioned that all forward-looking statements involve risk and uncertainties, including but not limited to, the Company's dependence on a relatively small number of products; licensing revenues; the timing and outcome of patent and antitrust litigation and future product launches; whether the Company will be awarded any marketing exclusivity period and, if so, the precise dates thereof; government regulation generally; competition; manufacturing capacities and output; the Company's ability to develop and successfully commercialize new products; the loss of revenues from existing products; development and marketing expenses that may not result in commercially successful products; Andrx's inability to obtain, or the high cost of obtaining, licenses for third party technologies; commercial obstacles to the successful introduction of brand products generally; exclusion of Andrx's brand products from formularies; the consolidation or loss of customers; Andrx's relationship to our suppliers; the success of Andrx's joint ventures; difficulties in integrating, and potentially significant charges associated with, acquisitions of technologies, products and businesses; the inability to obtain sufficient supplies from key suppliers; the impact of returns, allowances and chargebacks; product liability claims; rising costs and limited availability When customers of the PSTN make telephone calls, they commonly make use of a telecommunications network called a switched-circuit network. In a switched-circuit network, devices known as switches are used to connect the caller to the callee. of product liability and other insurance; the loss of key personnel; failure to comply with environmental laws and the absence of certainty regarding the receipt of required regulatory approvals or the timing or terms of such approvals. Andrx Corporation is also subject to other risks detailed herein or detailed from time to time in its filings with the U.S. Securities and Exchange Commission, including, but not limited to, 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 and Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2003. This release and additional information about Andrx Corporation is also available on the Internet at: http://www.andrx.com.
ANDRX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2003 2002 (2) 2003 2002 (2)
----------- ----------- ----------- -----------
Revenues
Distributed products $161,506 $121,502 $316,123 $248,547
Andrx products 76,679 55,770 125,111 110,306
Licensing and royalties 33,054 102 64,192 216
Other 1,131 3,168 4,129 4,792
----------- ----------- ----------- -----------
Total revenues 272,370 180,542 509,555 363,861
----------- ----------- ----------- -----------
Operating expenses
Cost of goods sold 171,693 129,888 330,726 256,405
Selling, general and
administrative 58,212 46,459 113,692 87,744
Research and
development 12,484 11,420 25,824 21,342
Litigation
settlements and
other charges 7,500 60,000 7,500 60,000
----------- ----------- ----------- -----------
Total operating
expenses 249,889 247,767 477,742 425,491
----------- ----------- ----------- -----------
Income (loss) from
operations 22,481 (67,225) 31,813 (61,630)
Other income, net 1,088 6,984 2,007 9,215
----------- ----------- ----------- -----------
Income (loss) before
income taxes 23,569 (60,241) 33,820 (52,415)
Income tax provision
(benefit) 9,092 (28,907) 12,987 (25,594)
----------- ----------- ----------- -----------
Net income (loss) $14,477 $(31,334) $20,833 $(26,821)
=========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE
ANDRX COMMON STOCK (1):
Net income (loss)
allocated to Andrx
(includes Cybear
subsequent to the May
17, 2002 Conversion) $14,477 $(29,272) $20,833 $(20,877)
Premium on conversion
of Cybear common stock - (526) - (526)
=========== =========== =========== ===========
Total net income (loss)
allocated to Andrx $14,477 $(29,798) $20,833 $(21,403)
=========== =========== =========== ===========
Net income (loss) per
share of Andrx common
stock:
Basic $0.20 $(0.42) $0.29 $(0.30)
=========== =========== =========== ===========
Diluted $0.20 $(0.42) $0.29 $(0.30)
=========== =========== =========== ===========
Weighted average shares
of Andrx common stock
outstanding:
Basic 71,879,000 70,699,000 71,739,000 70,625,000
=========== =========== =========== ===========
Diluted 72,617,000 70,699,000 72,375,000 70,625,000
=========== =========== =========== ===========
CYBEAR COMMON STOCK (1):
Net loss allocated to
Cybear Group (through
the May 17, 2002
conversion) $(2,062) $(5,944)
Premium on conversion
of Cybear common stock 526 526
----------- -----------
Total net loss
allocated to Cybear $(1,536) $(5,418)
=========== ===========
Basic and diluted net
loss per share of
Cybear common stock $(0.23) $(0.80)
=========== ===========
Basic and diluted
weighted average
shares of
Cybear common stock
outstanding 6,743,000 6,743,000
=========== ===========
(1) Effective May 17, 2002, all outstanding shares of Cybear common
stock were converted into Andrx common stock. For periods
subsequent to the conversion, Andrx Corporation will only report per
share results for Andrx common stock which includes all of the former
Cybear's operating results from the effective date of the conversion
and will no longer report separate per share results for the former
Cybear common stock.
(2) Certain prior period amounts have been reclassified to conform to
the current period presentation.
ANDRX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2003 2002
--------- ---------
Assets
Cash, cash equivalents and investments
available-for-sale $158,140 $ 97,394
Accounts receivable, net 135,741 130,044
Inventories, net 174,443 147,967
Income taxes receivable - 33,710
Deferred income tax assets, net 50,212 68,148
Other current assets 20,185 12,371
-------- --------
Total current assets 538,721 489,634
Property, plant and equipment, net 241,815 233,828
Goodwill, intangibles and other assets, net
67,021 66,017
-------- --------
Total assets $847,557 $789,479
======== ========
Liabilities and Stockholders' Equity
Current liabilities $241,702 $208,058
Non-current liabilities 15,906 15,714
-------- --------
Total liabilities 257,608 223,772
Commitments and contingencies
Total stockholders' equity 589,949 565,707
-------- --------
Total liabilities and
stockholders' equity $847,557 $789,479
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