DRAXIS Health Reports First Quarter Results.Business Editors/Health/Medical Writers MISSISSAUGA Mississauga (mĭsĭsaw`gə), city (1991 pop. 463,388), S Ont., Canada, 12 mi (20 km) W of Toronto on Lake Ontario. A residential suburb of Toronto and a growing transportation and industrial center, it is one of Canada's fastest-growing , Ontario--(BUSINESS WIRE)--May 21, 2003 Net income of $0.02 per share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the DRAXIS Health Inc. (Nasdaq:DRAX Drax could refer to:
TSX Transfer from Stack Pointer to Index TSX True Space Extension :DAX) reported financial results for the first quarter of 2003 ended March 31, 2003. All amounts are expressed in US dollars. Revenues from continuing operations for the quarter were $10.1 million, compared to $10.2 million for the first quarter last year. Net income from continuing operations was $806,000 ($0.02 per share) versus $978,000 ($0.03 per share) for the same quarter in 2002. Net income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $4.2 million was due almost entirely to the after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain from the $6.5 million payment received on the sale of rights for non-approved products back to Elan (Emulated LAN) A virtual LAN in the ATM world. See LANE and virtual LAN. Elan - ["Top-down Programming with Elan", C.H.A. Koster, Ellis Horwood 1987]. . First quarter EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (pre R&D) of $2.3 million was relatively unchanged from the prior year first quarter. Revenues and earnings for the quarter include $1.4 million of previously deferred revenue related to the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of agreements with the Company's former U.S. licensee licensee n. a person given a license by government or under private agreement. (See: license, licensor) LICENSEE. One to whom a license has been given. 1 M. Q. & S. 699 n. for BrachySeed(R).
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FINANCIAL HIGHLIGHTS
(thousands of U.S. dollars except per share amounts and in accordance
with U.S. GAAP)
(unaudited)
-----------------------------------------
2003 2002
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Q1 Q4 Q3 Q2 Q1
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From Continuing Operations(1)
-----------------------------
Revenues $10,078 $9,836 $8,872 $9,730 $10,202
------- ------ ------ ------ -------
EBITDA(2) (pre-R&D) 2,300 1,893 1,818 1,570 2,414
R&D (294) (324) (805) (405) (463)
----- ----- ----- ----- -----
EBITDA(2) 2,006 1,569 1,013 1,165 1,951
----- ----- ----- ----- -----
Net Income (Loss)
-----------------
From Continuing Operations 806 975 535 531 978
From Discontinued
Operations 4,204 (266) (143) (229) (195)
----- ----- ----- ----- -----
$5,010 $709 $392 $302 $783
------ ---- ---- ---- ----
Basic Income (Loss) Per Share
-----------------------------
From Continuing Operations $0.022 $0.026 $0.014 $0.014 $0.026
From Discontinued
Operations 0.113 (0.007) (0.004) (0.006) (0.005)
----- ------- ------- ------- -------
0.135 $0.019 $0.010 $0.008 $0.021
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(1) Commencing with the quarter ended December 31, 2001, the results
of operations of DRAXIS Pharmaceutica have been reported as
discontinued operations. Commencing in the second quarter of 2002
discontinued operations no longer include revenues and expenses
directly attributable to Alertec(R). Information for prior
periods has been reclassified to reflect this change.
(2) Income from continuing operations before interest, income taxes,
minority interest and depreciation and amortization. This
earnings measure does not have a standardized meaning prescribed
by U.S. GAAP and therefore may not be comparable to similar
measures used by other companies. DRAXIS uses such terms as
measures to assess the operating performance of its on-going
businesses and believes that most shareholders and investors
prefer such measures, since they are consistent with industry
practice for analyzing operating performance. Such measures
should not be construed as the equivalent of net cash flows from
operating activities.
"While we were able to report substantial earnings in this first quarter, much of which is due to favourable one-time-events, our ongoing operating performance was essentially flat compared to the same period last year," said Dr. Martin Barkin, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of DRAXIS. "However, it is important to recall that the first quarter of last year was particularly strong, with record revenues and earnings. A number of positive developments during the first quarter of 2003 have successfully laid the groundwork for improving results going forward. In late March we began regular shipments of Hectorol Hectorol™ Endocrinology An agent for managing 2º hyperparathyroidism linked to ESRD, which may used in predialysis Pts Injection for Bone Care International Inc. At the beginning of April, we launched our unique Sodium Iodide Noun 1. sodium iodide - a crystalline salt used like potassium iodide iodide - a salt or ester of hydriodic acid I-131 radiotherapy radiotherapy /ra·dio·ther·a·py/ (-ther´ah-pe) treatment of disease by means of ionizing radiation; tissue may be exposed to a beam of radiation, or a radioactive element may be contained in devices (e.g. kit product into the U.S. under a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. distribution agreement with Cardinal Health <includeonly></includeonly> Cardinal Health (NYSE: CAH) is a premier, global healthcare company dedicated to making healthcare safer and more productive. Overview Headquartered in Dublin, Ohio, Cardinal Health, Inc. . International 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. approvals for the products being manufactured under the GlaxoSmithKline GlaxoSmithKline plc (LSE: GSK NYSE: GSK) is a British based pharmaceutical, biological, and healthcare company. GSK is a research-based company with a wide portfolio of pharmaceutical products covering anti-infectives, central nervous system (CNS), respiratory, (GSK GSK GlaxoSmithKline plc (pharmaceutical company) GSK Glycogen Synthase Kinase GSK Gruppentraining Sozialer Kompetenzen (Germany) GSK Greenland Shark (FAO fish species code) ) contract are allowing us to begin ramping up shipments according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. schedule and we will continue to do so throughout 2003 and into 2004 when we expect to be in full production for GSK. Despite disruptions and reduced product In model theory, a branch of mathematical logic, the reduced product is a construction that generalizes both direct product and ultraproduct. sales in the brachytherapy brachytherapy /brachy·ther·a·py/ (-ther´ah-pe) treatment with ionizing radiation whose source is applied to the surface of the body or within the body a short distance from the area being treated. market at the beginning of 2003, we have successfully realigned our sales and marketing strategy for BrachySeed(R) implants in the U.S. Initial results appear favourable and the impact of our direct marketing initiatives will be much clearer in the second half of 2003." DRAXIS Pharmaceutica During the quarter DRAXIS completed the first step in its strategy to 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. its Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. pharmaceutical sales and marketing business, DRAXIS Pharmaceutica, which is accounted for as discontinued operations. Product rights for several non-marketed products were returned to Elan Corporation, plc for $6.5 million. DRAXIS is now in advanced negotiations to complete the 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 substantially all remaining assets of DRAXIS Pharmaceutica and there is a strong commitment by all parties to complete a transaction as soon as practicable practicable adj. when something can be done or performed. . The contemplated transaction currently anticipates an upfront cash payment plus product-specific milestones and royalties Not to be confused with Royal family. Royalties (sometimes, running royalties) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, most typically an intellectual property (IP) right. . In 2002, the discontinued operations of DRAXIS reported revenues of $6.8 million. Highlights from Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Operations -- Revenues from continuing operations were $10.1 million for the quarter including $1.4 million of previously deferred revenue related to the termination of agreements with the Company's former U.S. licensee for BrachySeed(R), as compared to $10.2 million for the first quarter of 2002. -- Net income from continuing operations was $806,000 ($0.022 per share) for the first quarter. This compared to $978,000 ($0.026 per share) for the same period in 2002, which included minimum royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. payments from Pfizer Pfizer Incorporated (NYSE: PFE) is a major research-based pharmaceutical company, which ranks number two in sales The company is based in New York City. It produces the number-one selling drug Lipitor (atorvastatin, used to lower blood cholesterol); the oral antifungal and significant revenues from the fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. of order backlogs for diagnostic imaging products. Net income in the first quarter of 2003 included a $261,000 foreign exchange translation loss related to the strengthening of the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents . -- Earnings before interest, income taxes, minority interest, depreciation and amortization, and research and development ("EBITDARD") from continuing operations was $2.3 million, including the $1.4 million of previously deferred revenue, versus $2.4 million in the first quarter of 2002. -- Completion of the first step in the strategy to divest DRAXIS Pharmaceutica through the return of product rights to Elan Corporation, plc for $6.5 million. Financial results from discontinued operations recorded an after tax gain of $4.3 million in the first quarter of 2003 associated with this transaction. -- Approval of a share buy-back program to 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. for cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. up to a maximum of 1,854,934 common shares. To May 16, 2003, 50,300 shares have been purchased at a weighted average cost of $1.30 per share. Radiopharmaceuticals -- Revenues of $4.3 million for the first quarter represent an increase of $1.2 million over the first quarter of 2002. -- EBITDARD of $2.2 million represent an increase of $0.9 million over 2002. -- Inclusion in revenues and EBITDARD of $1.4 million of previously deferred revenue related to the termination of agreements with the Company's former U.S. licensee for BrachySeed(R). -- U.S. regulatory approval for a new radiotherapeutic ra·di·o·ther·a·peu·tic adj. Relating to radiotherapy or to radiotherapeutics. kit product for the treatment of thyroid cancer Thyroid Cancer Definition Thyroid cancer is a disease in which the cells of the thyroid gland become abnormal, grow uncontrollably, and form a mass of cells called a tumor. and hyperthyroidism hyperthyroidism: see thyroid gland. followed by the launch of the product into the U.S. under a long-term distribution agreement with Cardinal cardinal, in zoology cardinal or redbird, common name for a North American songbird of the family Fringillidae (New World finch family). Health. -- Initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. of a Phase I clinical trial Noun 1. phase I clinical trial - a clinical trial on a few persons to determine the safety of a new drug or invasive medical device; for drugs, dosage or toxicity limits should be obtained phase I for INFECTON(TM), the Company's technetium-99m-based radiopharmaceutical radiopharmaceutical /ra·dio·phar·ma·ceu·ti·cal/ (-fahr?mah-soo´ti-k'l) a radioactive pharmaceutical, nuclide, or other chemical used for diagnostic or therapeutic purposes. for imaging infection and completion in February February: see month. 2003. A Phase II study is expected to commence later in 2003. -- Subsequent to March 31, 2003 DRAXIMAGE expanded its agreements with Isogenic isogenic /iso·gen·ic/ (-jen´ik) syngeneic. isogenic (ī´sōjen´ik), adj originating from a common source; possessing the same genetic composition. Sciences Limited to gain global rights to proprietary technology related to brachytherapy implants for nominal Trifling, token, or slight; not real or substantial; in name only. Nominal capital, for example, refers to extremely small or negligible funds, the use of which in a particular business is incidental. NOMINAL. Relating to a name. up-front up-front or up·front Informal adj. 1. Straightforward; frank. 2. Paid or due in advance: up-front cash. adv. consideration and also established a marketing and distribution agreement with Netherlands-based IDB (ITS Data Bus) An interface between devices in an automobile endorsed by the Society of Automotive Engineers (SAE). Designed to fulfill the goal of Intelligent Transportation Systems (ITS), the ITS Data Bus enables engine diagnostic equipment, GPS navigation systems, Benelux Be·ne·lux An economic union of Belgium, the Netherlands, and Luxembourg, originally established as a customs union in 1948. Noun 1. covering DRAXIMAGE products for the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Benelux countries. Manufacturing -- Revenues of $4.4 million for the quarter represent a decrease of $0.7 million over the first quarter of 2002. -- EBITDA loss for the quarter was $0.7 million as compared to $0.1 million of income in 2002. -- Results were negatively affected by production disruptions early in the quarter in 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. operations due to equipment and related problems. -- During the quarter U.K. regulators approved the manufacture of multiple sterile and non-sterile products at DPI (Dots Per Inch) The measurement of the resolution of display and printing systems. A typical CRT screen provides 96 dpi, which provides 9,216 dots per square inch (96x96). Flat panel displays from 110 to 200 dpi have also been developed. , including products being transferred to DPI under the 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. contract between DPI and GlaxoSmithKline. -- 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. acceptance of DPI as an additional manufacturing site for Hectorol Injection for Bone Care International, Inc., and the start of commercial shipments. -- Finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of DPI's plans for the installation of the second lyophilizer unit. This installation is scheduled to begin in the third quarter of 2003 and the unit is expected to become operational approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. one year after installation. -- Negotiation of a new collective agreement is scheduled to commence in the second quarter of 2003. The previous agreement expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. in April 2003. -- Subsequent to March 31, 2003 DRAXIS announced the appointment of Mr. John E. M. Durham Durham, town and district, England Durham, town (1991 pop. 38,105) and district, county seat of Durham, NE England, on the sides of a hill nearly encircled by the Wear River. The town's small factories produce organs and carpets. as President of DPI, effective June June: see month. 2, 2003. Mr. Durham has more than 20 years of progressive experience in pharmaceutical production including recent senior managerial experience in international pharmaceutical contract manufacturing. Interim Financial Report This release includes by reference the first quarter interim financial report incorporating the full Management Discussion & Analysis (MD&A) as well as financial statements under both U.S. and Canadian GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . The interim report, including the MD&A and financial statements, has been filed with applicable Canadian and U.S. regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities , is accessible on the Company's website at www.draxis.com in the Investor Relations Investor relations The process by which the corporation communicates with its investors. section under Financial Reports, through SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review and EDGAR Edgar or Eadgar (both: ĕd`gər), 943?–975, king of the English (959–75), son of Edmund, king of Wessex. In 957 the Mercians and Northumbrians rebelled against Edgar's brother Edwy and chose Edgar as their king. databases and is available upon request by contacting DRAXIS Investor Relations at 1-877-441-1984. Conference Call DRAXIS has scheduled a conference call to discuss first quarter 2003 financial results at 2:00 p.m. (ET) on May 21, 2003. This call can be accessed by dialing 1-800-440-1782 (no access code required) and will also be webcast live with access through the Company's website at www.draxis.com. The conference call will also be available in archived format on the website for 90 days following the conference call. About DRAXIS Health Inc. DRAXIS Health Inc. is a specialty pharmaceutical company focused on the development, production, marketing and distribution of radiopharmaceuticals (DRAXIMAGE) and the provision of pharmaceutical contract manufacturing services, specializing in liquid and freeze-dried freeze-dry tr.v. freeze-dried, freeze-dry·ing, freeze-dries To preserve (food, for example) by rapid freezing and drying in a high vacuum. Adj. 1. injectables and other sterile products (DRAXIS Pharma Pharma may be an abbreviation for:
Except for historical information, this news release contains certain 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. that involve risk and uncertainties, which may cause actual results to differ materially from the statements made. Such factors include, but are not limited to, changing market conditions, clinical trial results, the establishment of new corporate alliances, the impact of competitive products and pricing, the timely development, regulatory approval and market acceptance of the Company's products, and other risks detailed from time-to-time in the Company's filings with the U.S. Securities and Exchange Commission and Canadian securities authorities.
DRAXIS HEALTH INC.
Consolidated Statements of Operations
In Accordance with U.S. GAAP
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(in thousands of U.S. dollars except share related data)
(unaudited)
For the Three Month Period
Ended March 31,
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2003 2002
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REVENUES
Product sales $ 6,955 $ 8,100
Royalty and licensing 3,123 2,102
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10,078 10,202
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EXPENSES
Cost of goods sold 5,800 5,884
Selling, general and administration 1,978 1,904
Research and development 294 463
Depreciation and amortization 742 672
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8,814 8,923
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Operating income 1,264 1,279
Financial expense, net (594) (51)
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Income before undernoted 670 1,228
Income taxes 145 300
Minority interest 281 50
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Income from continuing operations 806 978
Income (loss) from discontinued
operations, net of tax 4,204 (195)
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Net income $ 5,010 $ 783
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Basic income (loss) per share
from continuing operations $ 0.022 $ 0.026
from discontinued operations 0.113 (0.005)
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$ 0.135 $ 0.021
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Diluted income (loss) per share
from continuing operations $ 0.022 $ 0.026
from discontinued operations 0.113 (0.005)
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$ 0.135 $ 0.021
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Weighted-average number of shares outstanding
- basic 37,098,690 36,729,775
- diluted 37,098,690 37,249,490
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See the accompanying notes to the Consolidated Financial Statements.
These interim financial statements should be read in conjunction with
the annual Consolidated Financial Statements.
DRAXIS HEALTH INC.
Consolidated Balance Sheets
In Accordance with U.S. GAAP
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(in thousands of U.S. dollars)
(unaudited)
For the Three Month Period
Ended March 31,
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2003 2002
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ASSETS
CURRENT
Cash and cash equivalents $ 5,907 $ 4,899
Accounts receivable 6,177 7,934
Inventories 7,252 6,134
Prepaid expenses 507 415
Deferred income taxes, net 972 990
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20,815 20,372
Property, plant and equipment, net 27,777 26,054
Goodwill, net 596 556
Intangible assets, net 7,762 7,724
Other assets 564 627
Deferred income taxes, net 11,656 12,618
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$ 69,170 $ 67,951
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LIABILITIES
CURRENT
Bank loan $ 534 $ 884
Accounts payable and accrued liabilities 7,549 9,189
Current portion of deferred revenues 5,157 5,142
Current portion of long-term debt 1,678 2,158
Customer deposits 2,124 2,314
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17,042 19,687
Deferred revenues 11,284 13,852
Long-term debt 9,338 10,568
Minority interest 3,967 3,617
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$ 41,631 $ 47,724
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SHAREHOLDERS' EQUITY
Common stock, without par value of unlimited
shares authorized $ 60,652 $ 60,652
Additional paid in capital 15,550 15,550
Employee participation shares;
2,000,000 shares authorized 140 140
Less: loans receivable (140) (140)
Deficit (43,673) (48,683)
Accumulated other comprehensive loss (4,990) (7,292)
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27,539 20,227
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$ 69,170 $ 67,951
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See the accompanying notes to the Consolidated Financial Statements.
These interim financial statements should be read in conjunction with
the annual Consolidated Financial Statements.
DRAXIS HEALTH INC.
Consolidated Statements of Shareholders' Equity
In Accordance with U.S. GAAP
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(in thousands of U.S. dollars except share related data)
(unaudited)
For the Three Month Period
Ended March 31,
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2003 2002
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Common Stock (Number of Shares)
Balance, beginning of period 37,098,690 36,613,434
Exercise of options -- 322,000
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Balance, end of period 37,098,690 36,935,434
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Common Stock
Balance, beginning of period $ 60,652 $ 59,781
Exercise of options -- 524
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Balance, end of period $ 60,652 $ 60,305
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Additional Paid In Capital
Balance, beginning of period $ 15,550 $ 15,476
Stock compensation -- 156
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Balance, end of period $ 15,550 $ 15,632
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Employee Participation Shares
Balance, beginning of period $ 140 $ 166
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Balance, end of period $ 140 $ 166
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Employee Participation Shares-Loans Receivable
Balance, beginning of period $ (140) $ (166)
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Balance, end of period $ (140) $ (166)
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Warrants
Balance, beginning of period $ -- $ 74
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Balance, end of period $ -- $ 74
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Deficit
Balance, beginning of period $ (48,683) $ (50,869)
Net income 5,010 783
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Balance, end of period $ (43,673) $ (50,086)
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Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period $ (7,292) $ (7,584)
Other comprehensive income (loss) 2,302 (90)
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Balance, end of period (4,990) (7,674)
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Total shareholders' equity $ 27,539 $ 18,251
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Comprehensive Income (Loss)
Foreign currency translation adjustments $ 2,302 $ (90)
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Other comprehensive income (loss) 2,302 (90)
Net income 5,010 783
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Total comprehensive income $ 7,312 $ 693
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See the accompanying notes to the Consolidated Financial Statements.
These interim financial statements should be read in conjunction with
the annual Consolidated Financial Statements.
DRAXIS HEALTH INC.
Consolidated Statements of Cash Flows
In Accordance with U.S. GAAP
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(in thousands of U.S. dollars)
(unaudited)
For the Three Month Period
Ended March 31,
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2003 2002
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CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES
Net income from continuing operations $ 806 $ 978
Adjustments to reconcile net income from continuing
operations to net cash (used in) from
operating activities
Amortization of deferred revenues (2,741) (1,556)
Depreciation and other amortization 742 672
Stock compensation -- 156
Deferred income taxes (85) 11
Minority interest (281) (50)
Other 54 131
Changes in operating assets and operating liabilities
Accounts receivable 2,263 (1,851)
Inventories (646) 65
Income taxes 137 (1,298)
Prepaid expenses (60) (247)
Accounts payable and accrued liabilities (2,375) (964)
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(2,186) (3,953)
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CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment (342) (1,286)
Increase in intangible assets -- (60)
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(342) (1,346)
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CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES
Proceeds from bank loan -- 314
Repayment of bank loan (402) --
Proceeds from long-term debt -- 1,872
Repayment of long-term debt (2,580) (172)
Proceeds from customer deposits -- 67
Repayment of customer deposits (347) --
Exercise of warrants and options -- 524
Issue of common shares by subsidiary to
minority interest 365 267
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(2,964) 2,872
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Effect of foreign exchange rate changes on cash
and cash equivalents (116) (79)
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Net cash used in continuing operations (5,608) (2,506)
Net cash (used in) from discontinued operations 6,616 (54)
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Net increase (decrease) in cash and
cash equivalents 1,008 (2,560)
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Cash and cash equivalents, beginning of period 4,899 5,602
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Cash and cash equivalents, end of period $ 5,907 $ 3,042
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Additional Information
Interest paid $ 198 $ 78
Income taxes paid $ 13 $ 1,695
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See the accompanying notes to the Consolidated Financial Statements.
These interim financial statements should be read in conjunction with
the annual Consolidated Financial Statements.
DRAXIS HEALTH INC.
Notes to the Consolidated Financial Statements
In Accordance with Canadian GAAP
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(in thousands of U.S. dollars except share related data)
(unaudited)
1. Significant Accounting Policies These consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge have been prepared 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 U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP"). The functional currency of the Company is the Canadian dollar however its reporting currency Reporting Currency The currency used in published reports and financial documents. Notes: All annual and quarterly reports state the currency in which their results are listed. is the U.S. dollar. For the current and prior periods, the financial statements of the Company's operations whose reporting currency is other than the U.S. dollar are translated from such reporting currency to U.S. dollars using the current rate method. Under the current rate method, assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Revenues and expenses, including gains and losses on foreign exchange transactions, are translated at average rates for the period. Where the current rate method is used, the unrealized translation gains and losses on the Company's net investment in these operations, including long-term intercompany advances, are accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. in a separate component of shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. , described in the consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. as accumulated other comprehensive loss. The disclosures contained in these unaudited interim consolidated financial statements do not include all requirements of GAAP for annual financial statements. The unaudited interim consolidated financial statements should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the audited consolidated financial statements for the year ended December December: see month. 31, 2002. The unaudited interim consolidated financial statements are based upon accounting principles consistent with those used and described in the audited consolidated financial statements for the year ended December 31, 2002, other than as noted herein. The unaudited interim consolidated financial statements reflect all adjustments, consisting only of normal 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. accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. , which are, in the opinion of management, necessary to present fairly the financial position of the Company as of March 31, 2003 and the results of operations and cash flows for the quarter ended March 31, 2003 and 2002. 2. Accounting Change Effective January January: see month. 1, 2002, the Company adopted the new recommendations of the Statement of Financial Accounting Standards ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ") with respect to Statement No. 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ". Under the new accounting standard, which can only be applied prospectively, goodwill and other intangible assets with indefinite INDEFINITE. That which is undefined; uncertain. INDEFINITE, NUMBER. A number which may be increased or diminished at pleasure. 2. When a corporation is composed of an indefinite number of persons, any number of them consisting of a majority of those lives are no longer amortized, but are tested for 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. upon adoption of the new standard and at least annually thereafter. The Company has assessed its goodwill by applying the prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). method of comparing the fair value of its reporting unit to its carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. and determined that there has been no goodwill impairment. The Company does not have any intangible assets with indefinite lives. 3. Discontinued Operations In January 2002, the Company announced that it had entered into a binding letter of intent (subject to satisfaction of various conditions) to sell DRAXIS Pharmaceutica to Elan. On June 4, 2002, the Company announced that it had modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. the terms of the proposed sales, primarily by the exclusion exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. of the product rights to Alertec(R). DRAXIS received several non-binding offers related to the possible acquisition of DRAXIS Pharmaceutica following the August 2002 announcement that Elan had decided not to proceed with its planned acquisition of this division. On March 31, 2003, the Company amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. its License, Distribution and Supply Agreement with Elan to return the Canadian rights for several of Elan's neurology neurology (n  rŏl`əjē, ny–), study of the morphology, physiology, and pathology of the human nervous system. products in exchange for a cash payment of $6.5
million and realized an after tax gain of $4,286 on this transaction.The Company is currently engaged in advanced negotiations regarding a possible transaction which would complete the divestiture of DRAXIS Pharmaceutica. As options regarding potential divestiture are explored, the Company will continue to manage and operate this division to enhance shareholder value consistent with the Company's strategic focus on its core radiopharmaceutical and specialty pharmaceutical contract manufacturing businesses. Pursuant to APB Opinion APB opinion A determination by the former Accounting Principles Board regarding the way a certain financial transaction is to be treated for reporting purposes. No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently in·fre·quent adj. 1. Not occurring regularly; occasional or rare: an infrequent guest. 2. Occurring Events and Transactions" ("APB APB See Accounting Principles Board (APB). 30"), the results of operations of DRAXIS Pharmaceutica have been reported as discontinued operations and the consolidated financial statements and notes 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. for the quarter ended March 31, 2003 and all comparative periods presented have been restated. In the second quarter of 2002, the Company resolved to retain ownership of the Canadian rights to Alertec(R) and continue to market and sell Alertec(R) in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of itself. Accordingly, discontinued operations no longer include revenues and expenses directly attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to Alertec(R) and information for prior periods has been reclassified to reflect this change. Interest expense directly attributable to license obligations included in the transaction has been allocated to the discontinued operations. The results of discontinued operations, presented in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. Consolidated Statements of Operations, were as follows:
For the Three Month Period
Ended March 31,
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2003 2002
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Revenues $ 1,584 $ 1,365
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Operating loss from discontinued
operations - net of tax (82) (195)
Net gain on disposal of product rights - net of tax 4,286 -
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Net income (loss) from discontinued
operations - net of tax $ 4,204 $ (195)
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4. Deferred Revenue In January 2003, DRAXIMAGE's agreements with its BrachySeed(R) licensee in the U.S was effectively terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: with no further transactions taking place on under the agreement. A formal agreement was subsequently reached with its licensee for terminating both the License and Distribution Agreement and Product Manufacturing and Supply Agreement for BrachySeed(R) implants in the U.S. Under the terms of the original agreement, non-refundable milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. payments received from the licensee were deferred and amortized into income over the contractual period of the agreement to December 31, 2010. As a result of the termination of the agreements in January, the unamortized portion of the non-refundable milestone payments of $1,436 was included in income for the three month period ended March 31, 2003 as royalty and licensing revenue. 5. Shareholders' Equity (a) Stock Option Plan The following is a summary of common shares issuable pursuant to outstanding stock options:
For the Three Month Period
Ended March 31,
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2003 2002
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Balance, beginning of period 3,314,109 3,358,444
Increase (decrease) resulting from:
Granted 280,000 335,000
Exercised - (322,000)
Cancelled (5,000) -
Expired (80,000) -
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Balance, end of period 3,509,109 3,371,444
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(b) Stock-based Compensation Costs
The following outlines the impact and assumptions used if the
compensation cost for the Company's stock options was determined
under the fair value based method of accounting.
For the Three Month Period
Ended March 31,
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2003 2002
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Net income, as reported $ 5,010 $ 783
Pro forma impact (196) (164)
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Pro forma net income $ 4,814 $ 619
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Basic net income per share, as reported $ 0.135 $ 0.021
Pro forma impact per share (0.005) (0.004)
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Pro forma net income per share (Basic) $ 0.130 $ 0.017
Pro forma net income per share (Diluted) $ 0.130 $ 0.017
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Dividend yield 0.0% 0.0%
Expected volatility 60%-62% 63%-64%
Risk-free interest rate 4.0%-4.1% 4.5%-4.7%
Expected option life 5yrs 5yrs
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6. Segmented Information
Industry Segmentation
For purposes of operating decision-making and assessing performance,
management considers that it operates in three segments:
Radiopharmaceuticals, Manufacturing, and Corporate and Other.
For the Three Month Period
Ended March 31,
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2003 2002
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PRODUCT SALES REVENUES
Radiopharmaceuticals $ 2,745 $ 2,992
Manufacturing 4,407 5,075
Corporate and Other (197) 33
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$ 6,955 $ 8,100
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ROYALTY AND LICENSING REVENUES
Radiopharmaceuticals $ 1,521 $ 84
Manufacturing -- --
Corporate and Other 1,602 2,018
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$ 3,123 $ 2,102
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TOTAL REVENUES
Radiopharmaceuticals $ 4,266 $ 3,076
Manufacturing 4,407 5,075
Corporate and Other 1,405 2,051
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$ 10,078 $ 10,202
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SEGMENT INCOME (LOSS)(1)
Radiopharmaceuticals $ 1,907 $ 887
Manufacturing (683) 134
Corporate and Other 782 930
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$ 2,006 $ 1,951
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DEPRECIATION AND AMORTIZATION
Radiopharmaceuticals $ 189 $ 168
Manufacturing 313 276
Corporate and Other 240 228
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$ 742 $ 672
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OPERATING INCOME (LOSS)(2)
Radiopharmaceuticals $ 1,718 $ 719
Manufacturing (996) (142)
Corporate and Other 542 702
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$ 1,264 $ 1,279
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March 31, December 31,
2003 2002
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IDENTIFIABLE ASSETS
Radiopharmaceuticals $ 10,618 $ 10,823
Manufacturing 32,536 30,701
Corporate and Other 26,016 26,427
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$ 69,170 $ 67,951
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(1) Segment income (loss) from continuing operations before
depreciation and amortization, interest, income taxes and
minority interest.
(2) Segment income (loss) from continuing operations before interest,
income taxes and minority interest.
Geographic Segmentation
For the Three Month Period
Ended March 31,
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2003 2002
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REVENUES(1)
Canada $ 4,780 $ 5,964
United States 5,234 4,182
Other 64 56
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$ 10,078 $ 10,202
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March 31, December 31,
2003 2002
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LONG-LIVED ASSETS(2)
Canada $ 36,135 $ 34,334
United States -- --
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$ 36,135 $ 34,334
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(1) Revenues are attributable to countries based upon the location of
the customer.
(2) Represents property, plant and equipment, goodwill and intangible
assets that are identified with each geographic region.
7. Comparative Information The Company has reclassified certain prior period's information to conform with the current presentation format. |
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