Exhibit 99.1
[QLT LOGO] 887 Great Northern Way t 604.707.7000
Vancouver, BC Canada V5T 4T5 f 604.707.7001
www.qltinc.com
news release
QLT ANNOUNCES Q2 RESULTS FOR 2005 AND REVISES GUIDANCE
FOR IMMEDIATE RELEASE JULY 28, 2005
VANCOUVER, CANADA--QLT Inc. (NASDAQ: QLTI; TSX: QLT) today reported financial
results for the second quarter ended June 30, 2005. Unless specified otherwise,
all amounts are in U.S. dollars and in accordance with U.S. GAAP.
2005 Q2 RESULTS
SALES
Visudyne(R) worldwide sales for the second quarter were $129.0 million, an
increase of 18.0% over the second quarter of 2004. Visudyne sales in the U.S.
for the quarter were $50.1 million, down 3.8% over the same period last year.
Visudyne sales in the rest of the world were $78.9 million, an increase of 37.9%
over the same period last year.
Eligard(R) worldwide sales for the second quarter were $24.4 million, up 10.3%
from the second quarter of 2004. Eligard sales in the U.S. for the quarter were
$15.5 million, down $2.1 million or 11.9% over the same period last year.
Eligard sales in the rest of the world were $8.9 million, almost double sales of
$4.5 million in the same period last year.
Sales of dermatology products from our Sandoz alliance for the second quarter
were $3.5 million, compared to $2.4 million in the same period last year.
Total product sales were $157.7 million, up 17.5% over total product sales in
the second quarter of 2004.
"We are pleased with the growth of our total product line in the second quarter,
particularly the strong growth for Visudyne, and remain on track to achieve our
annual guidance for both Visudyne and earnings per share," said Paul Hastings,
President and Chief Executive Officer of QLT Inc. "We expect Visudyne to
continue to play a significant role in the treatment of AMD, as a single agent
or in combination with other approaches to treating this disease."
DILUTED EARNINGS PER SHARE (EPS)
Non-GAAP EPS, which excludes the restructuring charge and amortization of
acquired intangible assets, was $0.19 in the second quarter, while GAAP EPS was
$0.17. A reconciliation between non-GAAP EPS and GAAP EPS for the second quarter
of 2005 is provided in Exhibit 1 of this press release.
Page 1 of 11
Prior year GAAP results reflect operations before our merger in the fourth
quarter last year. Therefore, we have provided non-GAAP (adjusted pro forma)
results, which reflect ongoing results as if the merger had occurred just prior
to January 1, 2004. A reconciliation between non-GAAP results and GAAP results
for the second quarter of 2004 is provided in Exhibit 3. For the second quarter
of 2004, non-GAAP EPS, excluding the charge for amortization of intangibles, was
$0.14, while GAAP EPS was $0.20.
Growth in non-GAAP EPS from $0.14 in the second quarter of 2004 to $0.19 in 2005
was primarily attributable to growth in Visudyne revenue.
QLT REVENUES
The Company's revenues were $63.4 million in the second quarter, up 43% from
revenues in the same period last year, and up 4% compared to pro forma
(non-GAAP) revenues in the same period last year.
Revenue from Visudyne was $48.8 million in the second quarter, up 13% from the
second quarter last year. QLT's share of profit from Visudyne sales increased to
30.8% in the second quarter, up from 30.3% in the same period last year.
RESEARCH AND DEVELOPMENT (R&D) EXPENSE
R&D expense in the second quarter was $20.1 million, up $8.8 million from R&D
expense in the second quarter last year primarily due to our merger. R&D expense
was up $1.4 million from non-GAAP R&D expense of $18.6 million last year as
spending was higher on our lemuteporfin BPH and octreotide programs.
SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSE
For the second quarter of 2005, SG&A expense was $4.3 million, up $0.7 million
from prior year second quarter expense, but down $1.4 million from 2004 non-GAAP
SG&A expense. The year-over-year decrease from non-GAAP expense occurred
primarily due to lower compensation costs, in part related to synergies from the
merger.
CASH AND SHORT-TERM INVESTMENTS
The company's cash and short-term investments increased from $408 million to
$415 million during the second quarter of 2005.
2005 REVISED ANNUAL GUIDANCE
Based on recent events and current trends in Eligard sales, QLT is revising its
Eligard sales range from $140-$160 million to a new range of $90-$115 million,
which represents top-line growth for Eligard of 7% to 37% over 2004. In total,
2005 sales from all QLT products, including dermatology, are now forecast at
$600 to $650 million, compared to the previous guidance of $650 to $700 million,
assuming foreign currency exchange rates remain approximately the same.
Based on the revised sales guidance for Eligard, QLT is revising its revenue
range from $255-$280 million to a new range of $245-$265 million, which
represents growth of 32% to 42% over 2004 revenue.
Page 2 of 11
ABOUT QLT
QLT Inc. is a global biopharmaceutical company specializing in developing
treatments for cancer, eye diseases, dermatological and urological conditions.
We have combined our expertise in the discovery, development, commercialization
and manufacture of innovative drug therapies with our unique technology
platforms to create highly successful products such as Visudyne and Eligard. For
more information, visit our web site at www.qltinc.com.
Page 3 of 11
QLT INC.--FINANCIAL HIGHLIGHTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In accordance with United States generally accepted accounting principles)
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
(In thousands of United States dollars, JUNE 30, JUNE 30,
except per share information) 2005 2004 2005 2004
- -----------------------------------------------------------------------------------------------------------------
(Unaudited)
REVENUES
Net product revenue $ 52,382 $43,136 $109,528 $ 83,655
Net royalties 5,648 - 9,356 -
Contract research and development 5,180 1,263 8,216 2,055
Licensing and milestones 188 - 313 -
- -----------------------------------------------------------------------------------------------------------------
63,398 44,399 127,413 85,710
- -----------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of sales 11,480 7,450 25,970 14,372
Research and development 20,085 11,257 36,521 20,667
Selling, general and administrative 4,344 3,607 9,733 8,388
Depreciation 1,994 916 3,728 1,725
Amortization of intangibles 1,911 - 3,782 -
Restructuring 873 - 3,388 -
- -----------------------------------------------------------------------------------------------------------------
40,687 23,230 83,122 45,152
- -----------------------------------------------------------------------------------------------------------------
OPERATING INCOME 22,711 21,169 44,291 40,558
INVESTMENT AND OTHER INCOME
Net foreign exchange gains 2,603 338 3,187 614
Interest income 2,999 2,268 5,548 4,750
Interest expense (1,562) (1,548) (3,160) (3,076)
- -----------------------------------------------------------------------------------------------------------------
4,040 1,058 5,575 2,288
- -----------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 26,751 22,227 49,866 42,846
PROVISION FOR INCOME TAXES (9,925) (7,543) (17,784) (14,533)
- -----------------------------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY GAIN 16,826 14,684 32,082 28,313
- -----------------------------------------------------------------------------------------------------------------
EXTRAORDINARY GAIN - - - 10,393
=================================================================================================================
NET INCOME $ 16,826 $14,684 $ 32,082 $ 38,706
=================================================================================================================
BASIC NET INCOME PER COMMON SHARE
Income before extraordinary gain $ 0.18 $ 0.21 $ 0.34 $ 0.41
Extraordinary gain - - - 0.15
- -----------------------------------------------------------------------------------------------------------------
Net income $ 0.18 $ 0.21 $ 0.34 $ 0.56
DILUTED NET INCOME PER COMMON SHARE
Income before extraordinary gain $ 0.17 $ 0.20 $ 0.34 $ 0.40
Extraordinary gain - - - 0.13
- -----------------------------------------------------------------------------------------------------------------
Net income $ 0.17 $ 0.20 $ 0.34 $ 0.53
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (IN THOUSANDS)
Basic 92,975 69,574 93,150 69,425
Diluted 103,243 80,045 103,741 79,794
- -----------------------------------------------------------------------------------------------------------------
</Table>
Page 4 of 11
QLT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In accordance with United States generally accepted accounting principles)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
(In thousands of United States dollars) 2005 2004
- -------------------------------------------------------------------------------------------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 106,363 $ 277,087
Short-term investment securities 308,581 102,765
Accounts receivable 57,771 56,600
Inventories 42,843 45,899
Current portion of deferred income tax assets 4,366 4,753
Other 19,462 13,521
- -------------------------------------------------------------------------------------------------
539,386 500,625
- -------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT 79,255 81,674
DEFERRED INCOME TAX ASSETS 5,458 6,926
INTANGIBLES, NET 120,083 119,600
GOODWILL 402,518 402,518
OTHER LONG-TERM ASSETS 3,971 4,906
- -------------------------------------------------------------------------------------------------
$1,150,671 $1,116,249
=================================================================================================
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 11,223 $ 12,993
Income taxes payable 11,953 -
Accrued restructuring charge 816 -
Other accrued liabilities 14,628 19,528
Current portion of deferred revenue 5,315 2,278
- -------------------------------------------------------------------------------------------------
43,935 34,799
DEFERRED INCOME TAX LIABILITIES 50,874 52,171
DEFERRED REVENUE 3,393 -
LONG-TERM DEBT 172,500 172,500
- -------------------------------------------------------------------------------------------------
270,702 259,470
- -------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
COMMON SHARES 873,236 848,498
ADDITIONAL PAID IN CAPITAL 65,396 92,193
ACCUMULATED DEFICIT (144,154) (173,794)
ACCUMULATED OTHER COMPREHENSIVE INCOME 85,491 89,882
- -------------------------------------------------------------------------------------------------
879,969 856,779
- -------------------------------------------------------------------------------------------------
$1,150,671 $1,116,249
=================================================================================================
</Table>
As at June 30, 2005, there were 92,580,362 issued and outstanding common shares
and 11,143,643 outstanding stock options.
Page 5 of 11
QLT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In accordance with United States generally accepted accounting principles)
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
(In thousands of United States dollars) JUNE 30, JUNE 30,
2005 2004 2005 2004
- ---------------------------------------------------------------------------------------------------------------------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 16,826 $ 14,684 $ 32,082 $ 38,706
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of intangibles 1,911 - 3,782 -
Depreciation 1,994 916 3,728 1,725
Amortization of deferred financial expenses 277 264 558 503
Unrealized foreign exchange losses 2,095 5,863 3,638 7,951
Extraordinary gain - - - (10,393)
Deferred income taxes (4,807) 5,835 499 12,825
Changes in non-cash operating assets and liabilities
Accounts receivable 5,159 (4,211) (2,032) (8,081)
Inventories (1,909) 4,210 2,448 2,564
Other assets (4,679) (2,904) (5,670) 2,739
Accounts payable (3,141) (2,405) (2,647) (3,316)
Income taxes payable 11,771 1,708 11,771 1,708
Accrued restructuring charge 391 - 809 -
Other accrued liabilities (4,135) 5,021 (7,974) (3,872)
Deferred revenue 66 (188) 6,464 (1,916)
- ---------------------------------------------------------------------------------------------------------------------------
21,819 28,793 47,456 41,143
- ---------------------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES
Short-term investment securities (93,166) (85,537) (203,774) (94,757)
Purchase of property, plant and equipment (1,098) (3,736) (3,173) (6,905)
Purchase costs related to Atrix Laboratories, Inc. 326 (718) (884) (718)
Purchase of Kinetek Pharmaceuticals Inc.,
net of cash acquired - - - (2,316)
- ---------------------------------------------------------------------------------------------------------------------------
(93,938) (89,991) (207,831) (104,696)
- ---------------------------------------------------------------------------------------------------------------------------
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
Common shares repurchased (15,537) - (15,537) -
Long-term debt (net) - (34) - (105)
Issuance of common shares 4,024 2,076 11,041 13,772
- ---------------------------------------------------------------------------------------------------------------------------
(11,513) 2,042 (4,496) 13,667
- ---------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (2,169) (5,402) (5,853) (7,582)
- ---------------------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (85,801) (64,558) (170,724) (57,468)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 192,164 269,498 277,087 262,408
- ---------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $106,363 $204,940 $ 106,363 $ 204,940
===========================================================================================================================
</Table>
Page 6 of 11
QLT INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
2005 SECOND QUARTER RECONCILIATION OF GAAP EARNINGS TO EXHIBIT 1
NON-GAAP EARNINGS
- --------------------------------------------------------------------------------
(In millions of United States dollars, except per share data) (Unaudited)
<Table>
<Caption>
Three months
Three months ended ended June 30,
June 30, 2005 2005 Adjusted
GAAP Adjustments Non-GAAP(1)
- ----------------------------------------------------------------------------------------------------------
REVENUES
Net product revenue $ 52.4 $ - $ 52.4
Net royalties 5.6 - 5.6
Contract research and development 5.2 - 5.2
Licensing and milestones 0.2 - 0.2
- --------------------------------------------------------------------------------------------------------
63.4 - 63.4
- --------------------------------------------------------------------------------------------------------
COST AND EXPENSES
Cost of sales (11.5) - (11.5)
Research and development (20.1) - (20.1)
Selling, general and administrative (4.3) - (4.3)
Depreciation (2.0) - (2.0)
Amortization of intangibles (1.9) 1.9 (a) -
Restructuring (0.9) 0.9 (b) -
- --------------------------------------------------------------------------------------------------------
(40.7) 2.8 (37.9)
- --------------------------------------------------------------------------------------------------------
OPERATING INCOME 22.7 2.8 25.5
INVESTMENT AND OTHER INCOME
Net foreign exchange gains 2.6 - 2.6
Interest income 3.0 - 3.0
Interest expense (1.6) - (1.6)
- --------------------------------------------------------------------------------------------------------
4.0 - 4.0
- --------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 26.7 2.8 29.5
Provision for income taxes (9.9) (1.0) (c) (10.9)
- --------------------------------------------------------------------------------------------------------
NET INCOME $ 16.8 $ 1.8 $ 18.6
========================================================================================================
INCOME PER COMMON SHARE:
Basic $ 0.18 $ 0.20
Diluted $ 0.17 $ 0.19
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (IN MILLIONS)
Basic 93.0 93.0
Diluted 103.2 103.2
</Table>
Adjustments:
(a) Remove amortization of acquired intangibles resulting from our
merger with Atrix in November, 2004.
(b) Remove restructuring costs related to integration activities that
followed our merger with Atrix.
(c) Remove the income tax impact of (a) and (b).
Note 1
The adjusted non-GAAP financial measures have no standardized meaning
under GAAP and are not comparable between companies. Management believes
that the adjusted non-GAAP financial measures are useful because they
exclude those non-operational activities or transactions that are not
necessarily relevant to understanding the trends of the Company or the
prospects of future performance.
Page 7 of 11
QLT INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2005
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS EXHIBIT 2
- --------------------------------------------------------------------------------
(In millions of United States dollars, except per share data) (Unaudited)
<Table>
<Caption>
Six months ended
Six months ended June 30, 2005
June 30, 2005 Adjusted
GAAP Adjustments Non-GAAP(1)
- ----------------------------------------------------------------------------------------------------
REVENUES
Net product revenue $ 109.5 $ - $109.5
Net royalties 9.4 - 9.4
Contract research and development 8.2 - 8.2
Licensing and milestones 0.3 - 0.3
- ----------------------------------------------------------------------------------------------------
127.4 - 127.4
- ----------------------------------------------------------------------------------------------------
COST AND EXPENSES
Cost of sales (26.0) - (26.0)
Research and development (36.5) - (36.5)
Selling, general and administrative (9.7) - (9.7)
Depreciation (3.7) - (3.7)
Amortization of intangibles (3.8) 3.8 (a) -
Restructuring (3.4) 3.4 (b) -
- ----------------------------------------------------------------------------------------------------
(83.1) 7.2 (75.9)
- ----------------------------------------------------------------------------------------------------
OPERATING INCOME 44.3 7.2 51.5
INVESTMENT AND OTHER INCOME (EXPENSE)
Net foreign exchange gains 3.2 - 3.2
Interest income 5.5 - 5.5
Interest expense (3.2) - (3.2)
- ----------------------------------------------------------------------------------------------------
5.6 - 5.6
- ----------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 49.9 7.2 57.1
Provision for income taxes (17.8) (2.6) (c) (20.4)
- ----------------------------------------------------------------------------------------------------
NET INCOME $ 32.1 $ 4.6 $ 36.7
====================================================================================================
INCOME PER COMMON SHARE:
Basic $ 0.34 $ 0.39
Diluted $ 0.34 $ 0.38
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (IN MILLIONS)
Basic 93.2 93.2
Diluted 103.7 103.7
</Table>
Adjustments:
(a) Remove amortization of acquired intangibles resulting from our
merger with Atrix in November, 2004.
(b) Remove restructuring costs related to integration activities that
followed our merger with Atrix.
(c) Remove the income tax impact of (a) and (b).
Note 1
The adjusted non-GAAP financial measures have no standardized meaning
under GAAP and are not comparable between companies. Management believes
that the adjusted non-GAAP financial measures are useful because they
exclude those non-operational activities or transactions that are not
necessarily relevant to understanding the trends of the Company or the
prospects of future performance.
Page 8 of 11
QLT INC. EXHIBIT 3
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
2004 SECOND QUARTER RECONCILIATION OF GAAP EARNINGS TO
NON-GAAP EARNINGS (PRO FORMA)
- --------------------------------------------------------------------------------
(In millions of United States dollars, except per share data) (Unaudited)
<Table>
<Caption>
Atrix Three months
pre-merger ended
Three months operations June 30, 2004
ended (April 1, 2004 Adjusted Pro
June 30, 2004 -- Forma
GAAP June 30, 2004) Adjustments Non-GAAP(1)
- ---------------------------------------------------------------------------------------------------------------------
REVENUES
Net product revenue $ 43.1 $ 7.3 $ - $ 50.5
Net royalties - 4.6 - 4.6
Contract research and development 1.3 4.8 - 6.0
Licensing and milestones - 2.1 (2.1) (a) 0.1
- ---------------------------------------------------------------------------------------------------------------------
44.4 18.9 (2.1) 61.2
- ---------------------------------------------------------------------------------------------------------------------
COST AND EXPENSES
Cost of sales (7.5) (6.6) (0.4) (b) (14.4)
Research and development (11.3) (7.4) - (18.6)
Selling, general and administrative (3.6) (3.4) 1.2 (c) (5.8)
Depreciation (0.9) (0.6) (0.2) (d) (1.8)
Amortization of intangibles - - (1.9) (e) (1.9)
- ---------------------------------------------------------------------------------------------------------------------
(23.2) (18.0) (1.3) (42.5)
- ---------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 21.2 0.9 (3.3) 18.7
INVESTMENT AND OTHER INCOME (EXPENSE)
Net foreign exchange gains 0.3 - - 0.3
Interest income 2.3 0.7 (1.9) (f) 1.0
Interest expense (1.5) - - (1.5)
Other (losses) gains - (0.4) 0.3 (g) (0.0)
- ---------------------------------------------------------------------------------------------------------------------
1.1 0.3 (1.6) (0.2)
- ---------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 22.2 1.1 (4.9) 18.5
Provision for income taxes (7.5) - 1.5 (h) (6.0)
- ---------------------------------------------------------------------------------------------------------------------
NET INCOME 14.7 1.1 (3.4) 12.4
=====================================================================================================================
NET INCOME PER COMMON SHARE:
Basic $ 0.21 $ 0.14
Diluted
Net income $ 0.18 $ 0.12
Convertible senior notes - interest expense 0.01 0.01
- ---------------------------------------------------------------------------------------------------------------------
Diluted net income 0.20 0.13
- ---------------------------------------------------------------------------------------------------------------------
Add back amortization of acquired intangibles net of related tax 0.01
-------
DILUTED INCOME PER COMMON SHARE LESS EFFECT OF ACQUIRED INTANGIBLES(1) $ 0.14
-------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (MILLIONS)
Basic 69.6 91.9
Diluted 80.0 106.6
</Table>
Adjustments
(a) Remove licensing fees and milestone revenue related to deferred revenue
recorded at fair value upon merger.
(b) Increase cost of sales as a result of recording inventory at fair value
upon merger.
(c) Adjust for patent maintenance expenses and merger-related expenses.
(d) Increase depreciation as a result of recording property, plant and
equipment at fair value.
(e) Record additional amortization of acquired intangibles.
(f) Remove foregone interest income from cash consumed in the merger and
harmonization of treasury investment policies.
(g) Remove loss on sale of investments that would have been liquidated.
(h) Remove tax impact of adjustments (b), (d), (e), and (f)
Note 1:
The adjusted pro forma non-GAAP financial measures presented above are utilized
by QLT's management to gain an understanding of the performance of the Company
as a result of the merger. The adjusted pro forma non-GAAP financial measures
have no standardized meaning under GAAP and are not comparable between
companies. The Company believes that the adjusted pro forma non-GAAP financial
measures are useful because they provide information that may be relevant to
obtaining an understanding of the trends of the Company or the prospects of
future performance.
Page 9 of 11
QLT INC. EXHIBIT 4
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2004
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (PRO FORMA)
- --------------------------------------------------------------------------------
(In millions of United States dollars, except per share data) (Unaudited)
<Table>
<Caption>
Six months Atrix pre-merger Six months ended
ended operations June 30, 2004
June 30, 2004 (January 1, 2004 Adjusted Pro Forma
GAAP -- June 30, 2004) Adjustments Non-GAAP(1)
- -------------------------------------------------------------------------------------------------------------------------------
REVENUES
Net product revenue $ 83.7 $ 11.9 $ - $ 95.5
Net royalties - 8.2 - 8.2
Contract research and development 2.1 9.8 - 11.9
Licensing and milestones - 4.2 (4.2) (a) 0.1
- -------------------------------------------------------------------------------------------------------------------------------
85.7 34.1 (4.2) 115.7
- -------------------------------------------------------------------------------------------------------------------------------
COST AND EXPENSES
Cost of sales (14.4) (9.8) (1.7) (b) (25.8)
Research and development (20.7) (15.5) - (36.2)
Selling, general and administrative (8.4) (5.7) 1.0 (c) (13.0)
Depreciation (1.7) (1.3) (0.4) (d) (3.4)
Amortization of intangibles - - (3.8) (e) (3.8)
- -------------------------------------------------------------------------------------------------------------------------------
(45.2) (32.2) (4.8) (82.2)
- -------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 40.6 1.9 (9.0) 33.5
INVESTMENT AND OTHER INCOME (EXPENSE)
Net foreign exchange gains 0.6 0.3 - 1.0
Interest income 4.8 1.3 (4.2) (f) 1.9
Interest expense (3.1) - - (3.1)
Other gains - 0.5 (0.5) (g) (0.0)
- -------------------------------------------------------------------------------------------------------------------------------
2.3 2.1 (4.7) (0.3)
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 42.8 4.0 (13.7) 33.2
Provision for income taxes (14.5) - 3.5 (h) (11.1)
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY GAIN 28.3 4.0 (10.2) 22.1
- -------------------------------------------------------------------------------------------------------------------------------
Extraordinary gain 10.4 - (10.4) (i) -
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME 38.7 4.0 (20.6) 22.1
===============================================================================================================================
BASIC NET INCOME PER COMMON SHARE:
Income before extraordinary gain $ 0.41 $ 0.24
Extraordinary gain 0.15 -
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.56 $ 0.24
- -------------------------------------------------------------------------------------------------------------------------------
DILUTED NET INCOME PER COMMON SHARE:
Income before extraordinary gain $ 0.36 $ 0.21
Extraordinary gain 0.13 -
Convertible senior notes - interest expense 0.04 0.03
- -------------------------------------------------------------------------------------------------------------------------------
Diluted net income 0.53 0.24
- -------------------------------------------------------------------------------------------------------------------------------
Add back amortization of acquired intangibles net of related tax 0.02
-------
DILUTED INCOME PER COMMON SHARE LESS EFFECT OF ACQUIRED INTANGIBLES(1) $ 0.26
-------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (MILLIONS)
Basic 69.4 91.7
Diluted 79.8 106.2
</Table>
Adjustments
(a) Remove licensing fees and milestone revenue related to deferred revenue
recorded at fair value upon merger.
(b) Increase cost of sales as a result of recording inventory at fair value
upon merger.
(c) Adjust for patent maintenance expenses and merger-related expenses.
(d) Increase depreciation as a result of recording property, plant and
equipment at fair value.
(e) Record additional amortization of acquired intangibles.
(f) Remove foregone interest income from cash consumed in the merger and
harmonization of treasury investment policies.
(g) Remove gain on sale of investments that would have been liquidated.
(h) Remove tax impact of adjustments (b), (d), (e), and (f)
(i) Remove extraordinary gain related to Kinetek acquisition as a non-recurring
item.
Note 1: The adjusted pro forma non-GAAP financial measures presented above are
utilized by QLT's management to gain an understanding of the performance of the
Company as a result of the merger. The adjusted pro forma non-GAAP financial
measures have no standardized meaning under GAAP and are not comparable between
companies. The Company believes that the adjusted pro forma non-GAAP financial
measures are useful because they provide information that may be relevant to
obtaining an understanding of the trends of the Company or the prospects of
future performance.
Page 10 of 11
QLT Inc. will hold an investor conference call to discuss the second quarter
results on Thursday, July 28 at 8:30 a.m. ET (5:30 a.m. PT). The call will be
broadcast live via the Internet at www.qltinc.com. To participate on the call,
please dial 1-800-525-6384 (North America) or 780-409-1668 (International)
before 8:30 a.m. ET. A replay of the call will be available via the Internet and
also via telephone at 1-800-677-1564 (North America) or 402-220-1442
(International), access code 7700249.
-30-
QLT INC.:
Vancouver, Canada
Tamara Hicks
Telephone: 604-707-7000 or 1-800-663-5486
Fax: 604-707-7001
Visudyne is a registered trademark of Novartis AG.
Eligard is a registered trademark of Sanofi-aventis.
QLT Inc. is listed on the Nasdaq Stock Market under the trading symbol "QLTI"
and on The Toronto Stock Exchange under the trading symbol "QLT."
A full explanation of how the Company determines and recognizes revenue from
Visudyne and Eligard sales is contained in the financial statements contained in
the Company's annual and periodic reports. Visudyne sales are product sales by
Novartis under its alliance with QLT. Eligard sales are product sales by third
parties pursuant to contractual agreements with the Company.
The second quarter financial results for QLT in this press release are
preliminary and unaudited and are not a complete disclosure of our quarterly
financial results. Certain statements in this press release constitute
"forward-looking statements" of QLT within the meaning of the Private Securities
Litigation Reform Act of 1995, which involve known and unknown risks,
uncertainties and other factors that may cause our actual results to be
materially different from any future results, performance or achievements
expressed or implied by such statements. Forward-looking statements include, but
are not limited to, the statements as to the Company's projections of 2005
Visudyne sales, 2005 EPS, 2005 sales for Eligard, 2005 sales for all QLT
products and 2005 revenues for QLT, as well as statements pertaining to the
Company's expectations about the future role of Visudyne in the treatment of
age-related macular degeneration (AMD). These statements are only predictions
and there are a number of risks, uncertainties and other factors which could
cause actual events or results to differ materially, including but not limited
to: the risk that future sales of Visudyne, Eligard and our other products may
be less than expected due to increased competition or for other reasons, our
future operating results are uncertain and likely to fluctuate, currency
fluctuations in our primary markets may impact our financial results,
uncertainty of and timing of pricing and reimbursement may limit the future
sales of our products, clinical development programs may not be successful, the
outcome of the pending patent and securities litigation against us may be
unfavorable and have an adverse impact on our financial results, we are
dependent on third-parties to commercialise Visudyne, Eligard and our other
products and other factors described in detail in QLT's Annual Information Form
and Annual Report on Form 10-K, quarterly reports on Form 10-Q and other filings
with the U.S. Securities and Exchange Commission and Canadian securities
regulatory authorities. Forward-looking statements are based on our current
expectations and QLT assumes no obligation to update such information to reflect
later events or developments, except as required by law.
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