IMPAX Reports Third Quarter 2004 Financial Results.HAYWARD Hayward, city (1990 pop. 111,498), Alameda co., W Calif.; settled 1851, inc. 1876. It is an important commercial and distribution center for farm products. Manufactures include wire, plastics, metal and paper products, textiles, machinery, and motor vehicles. , Calif. -- Company to Restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state First and Second Quarter 2004 Results Due to Reporting Adjustments on Bupropion bupropion /bu·pro·pi·on/ (bu-pro´pe-on) a monocyclic compound structurally similar to amphetamine, used as the hydrochloride salt as an antidepressant and as an aid in smoking cessation. Revenues by Strategic Partner IMPAX Laboratories, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :IPXL) today reported financial results for the three and nine months ended September September: see month. 30, 2004. IMPAX also announced that it has determined to restate its financial results for the first and second quarters of 2004. The restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. is required as the result of an adjustment due to recently reported customer credits granted by our strategic partner on sales of the Company's bupropion products made by our strategic partner during March 2004. Third Quarter and Nine Months Results Total revenues for the third quarter of 2004 were $30.7 million, or approximately 86% higher than the total revenues of $16.5 million in the prior year's third quarter. The year-over-year increase was primarily due to shipments of generic versions of 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 (R) SR (Bupropion Hydrochloride bu·pro·pi·on hydrochloride n. A drug used to treat depression and nicotine dependence. bupropion hydrochloride Budeprion SR, Budeprion XL, Wellbutrin, Wellbutrin SR, Wellbutrin XL, Zyban ) 100 mg and 150 mg Controlled Release Tablets, and Declomycin Noun 1. Declomycin - tetracycline antibacterial (trade name Declomycin) effective in the treatment of some bacterial and rickettsial and other infections demeclocycline hydrochloride (R) (Demeclocycline Hydrochloride Noun 1. demeclocycline hydrochloride - tetracycline antibacterial (trade name Declomycin) effective in the treatment of some bacterial and rickettsial and other infections Declomycin ) 150 mg and 300 mg Tablets, which commenced during the first quarter of 2004; 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) (Bupropion Hydrochloride) and Sinemet Sin·e·met A trademark for the drug combination of carbidopa and L-dopa. carbidopa-levodopa Co-carledopa (UK), Half Sinemet (UK), Sinemet, Sinemet CR, Tilolec (UK) Pharmacologic class: (R) CR (Carbidopa/Levodopa The combination of carbidopa and levodopa is used to treat Parkinson's disease and Dopa-Responsive Dystonia (DRD). This combination is sold under several brand names, including Sinemet®, Parcopa®, and Atamet®. ) Extended Release Tablets, which commenced during the second quarter of 2004. During the 2004 third quarter, IMPAX's revenues from product shipments through our strategic alliance agreements with Teva and Andrx were approximately $10.8 million compared with $8.3 million in the 2004 second quarter. Net income for the 2004 third quarter was $735,000 or $0.01 per share, compared with a net loss of $3,608,000 or $(0.07) per share, in the prior year's third quarter. Gross margin for the 2004 third quarter was $13.1 million, or approximately 43% of total revenues, compared with gross margin of $3.5 million, or approximately 21% of total revenues, in the prior year's third quarter. The year-over-year increase in the gross margin percentage was primarily due to the introduction of new products since last year with higher margins, such as Bupropion Hydrochloride, Demeclocycline Hydrochloride, Flavoxate flavoxate /fla·vox·ate/ (fla-voks´at) a smooth muscle relaxant; the hydrochloride salt is used in treatment of spasms of the urinary tract. , and Carbidopa/Levodopa. Research and development expense for the 2004 third quarter of $4.9 million was approximately $1.6 million higher than the 2003 third quarter due primarily to higher personnel costs, biostudies, clinical studies, and new product introduction costs. The patent 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. expenses for the 2004 third quarter of $3.3 million were approximately $2.5 million higher than the 2003 third quarter due to the increase in the activity level of patent litigation. For the nine months ended September 30, 2004, the Company reported total revenues of $95.8 million, or approximately 128% higher than total revenues of $42.0 million in the comparable period of the previous year. Net income for the first nine months of 2004 was $6.3 million, or $0.10 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with a net loss of $9.1 million, or $(0.18) per share, for the first nine months of 2003. Unrestricted cash, cash equivalents and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments were $89.6 million at September 30, 2004, compared to $15.5 million at December 31, 2003. The increase in cash balance was primarily due to a private placement of $95 million aggregate principal amount of 1.250% convertible senior subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before that closed during the second quarter of 2004. Restatement of First and Second Quarter Financial Statements The Company is restating its financial statements for the first and second quarters of 2004 as the result of customer credits granted by our strategic partner on sales of the Company's bupropion products made by our strategic partner during March 2004. The strategic partner notified the Company of the adjustment when reporting sales of the Company's products for the quarter ended September 30, 2004. Under the terms of the Strategic Alliance Agreement, the Company's strategic partner has sole and exclusive right to determine all terms and conditions of sale CONDITIONS OF SALE, contracts. The terms upon which the vendor of property by auction pro poses to sell it; the instrument containing these terms, when reduced to writing or printing, is also called the conditions of sale. 2. to its customers, including pricing, discounts, allowances, price adjustments, returns and rebates. The Company is endeavoring to take steps to take action; to move in a matter. See also: Step under the Strategic Alliance Agreement to ensure that all such adjustments granted by its strategic partner in the future are reported to the Company on a timely basis. The restatement will include an adjustment to the Company's reported total revenues for the first quarter of 2004, reducing them by $4,308,000, from $38,853,000 to $34,545,000. As a result of the restatement, the Company's reported net income for the first quarter of 2004 is expected to decrease by $3,832,000, from $9,048,000 to $5,216,000, and the Company's reported earnings per share for the first quarter of 2004 is expected to decrease by $0.07 per share ($0.07 per share on a fully diluted basis) from $0.16 per share to $0.09 per share ($0.08 per share on a fully diluted basis). The restatement will include an adjustment to the Company's reported total revenues for the second quarter of 2004, reducing them by $281,000 from $30,845,000 to $30,564,000. As a result of the restatement, the Company's reported net income for the second quarter of 2004 is expected to decrease by $251,000, from $572,000 to $321,000. The Company's reported earnings per share for the second quarter of 2004 will remain $0.01 per share ($0.01 per share on a fully diluted basis). The restatement will also result in corresponding changes to accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying , accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. and deferred revenues, and 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. deficit line items in the balance sheets for those periods. IMPAX intends to file amendments to its Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. for the first quarter of 2004 and second quarter of 2004 to reflect the restatement as soon as practicable practicable adj. when something can be done or performed. . The Company will be filing a Form 12b-25 to extend the deadline for the filing of its Form 10-Q for the quarter ended September 30, 2004. IMPAX Laboratories, Inc. is a technology based specialty pharmaceutical company applying its formulation formulation /for·mu·la·tion/ (for?mu-la´shun) the act or product of formulating. American Law Institute Formulation expertise and drug delivery technology to the development of controlled-release and specialty generics in addition to the development of branded products. IMPAX markets its generic products through its Global Pharmaceuticals division and intends to market its branded products through the IMPAX Pharmaceuticals division. Additionally, where strategically appropriate, IMPAX has developed marketing partnerships to fully leverage its technology platform. IMPAX Laboratories is headquartered in Hayward, California Hayward is a city located in the East Bay in Alameda County. The sixth largest city in the San Francisco Bay Area, it is one of the larger suburbs of Oakland. As of the 2000 census, the city population was 140,030. The estimated population in 2007 is 155,312. , and has a full range of capabilities in its Hayward and Philadelphia facilities. For more information, please visit the Company's Web site at: www.impaxlabs.com. "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. " statement under 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: To the extent any statements made in this news release contain information that is not historical, these statements are forward-looking in nature and express the beliefs and expectations of management. Such statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause IMPAX's future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such 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. . Such risks and uncertainties include, but are not limited to, IMPAX's ability to obtain sufficient capital to fund its operations, the difficulty of predicting 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. filings and approvals, consumer acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, IMPAX's ability to successfully develop and commercialize pharmaceutical products, IMPAX's reliance on key strategic alliances, the uncertainty of patent litigation, the availability of raw materials, the regulatory environment, dependence on patent and other protection for innovative products, exposure to product liability claims, fluctuations in operating results and other risks detailed from time to time in IMPAX's filings with the Securities and Exchange Commission. Forward-looking statements speak only as to the date on which they are made, and IMPAX undertakes no obligation to update publicly or revise any forward-looking statement, regardless of whether new information becomes available, future developments occur or otherwise.
IMPAX LABORATORIES, INC.
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ---------------------
2004 2003 2004 2003
----------- ---------- ---------- ----------
Net sales $30,261 $15,908 $91,798 40,434
Revenue from reversal of
refundable deposit from
Teva -- -- 2,500 --
Other revenues 443 589 1,515 1,555
----------- ---------- ---------- ----------
Total revenues 30,704 16,497 95,813 41,989
----------- ---------- ---------- ----------
Cost of sales 17,592 12,976 54,679 30,444
----------- ---------- ---------- ----------
Gross margin 13,112 3,521 41,134 11,545
Research and development 4,942 3,358 15,266 10,463
Reimbursements from Teva (217) (93) (306) (247)
----------- ---------- ---------- ----------
Research and development,
net 4,725 3,265 14,960 10,216
Patent litigation expenses 3,299 845 7,146 1,842
Selling expenses 908 546 2,345 1,552
General and administrative
expenses 3,289 2,321 9,757 6,526
Other operating income
(expense), net 4 4 15 25
----------- ---------- ---------- ----------
Net Income (loss) from
operations 895 (3,452) 6,941 (8,566)
Interest income 387 87 714 199
Interest expense (547) (243) (1,383) (738)
----------- ---------- ---------- ----------
Net income (loss) before
provision for income
taxes $735 ($3,608) $6,272 $(9,105)
=========== ========== ========== ==========
Provision for income taxes -- -- -- --
----------- ---------- ---------- ----------
Net income (loss) $735 $(3,608) $6,272 $(9,105)
=========== ========== ========== ==========
Earnings per share
Basic $0.01 $(0.07) $0.11 $(0.18)
=========== ========== ========== ==========
Diluted $0.01 $(0.07) $0.10 $(0.18)
=========== ========== ========== ==========
Weighted average common
shares outstanding
Basic 58,469,272 52,610,356 57,855,637 50,382,455
=========== ========== ========== ==========
Diluted 62,137,376 52,610,356 61,352,899 50,382,455
=========== ========== ========== ==========
IMPAX LABORATORIES, INC.
CONDENSED BALANCE SHEETS
(in thousands)
September December
30, 2004 31, 2003
(unaudited) (unaudited)
------------- -----------
ASSETS
Cash, cash equivalents and short-term
investments $89,603 $15,505
Restricted cash (a) -- 10,000
Accounts receivable, net 19,730 9,885
Inventory 38,232 28,479
Property, plant and equipment, net 43,849 38,132
Goodwill and intangibles, net 27,665 27,953
Other assets 6,408 2,752
------------- -----------
Total assets $225,487 $132,706
------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $33,889 $42,365
Long-term debt, net of current portion 7,284 8,854
Refundable deposit from Teva -- 5,000
Convertible debentures 95,000 --
Deferred revenues and other liabilities 2,978 2,879
Mandatorily redeemable convertible preferred
stock -- 7,500
Stockholders' equity 86,336 66,108
-------------------------
Total liabilities and stockholders' equity $225,487 $132,706
-------------------------
(a) Represents cash held as collateral for the $25 million revolving
credit facility and term loan with Wachovia Bank N.A. The
restriction was removed by Wachovia Bank N.A. in the 2004 second
quarter.
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