[GRAPHIC IMPAX
OMITTED] LABORATORIES, INC.
COMPANY CONTACTS: INVESTOR RELATIONS CONTACTS:
IMPAX Laboratories, Inc. Lippert/Heilshorn & Associates, Inc.
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Barry R. Edwards, CEO Kim Sutton Golodetz (kgolodetz@lhai.com)
(215) 933-0323 Ext. 4360 (212) 838-3777
Larry Hsu, Ph.D., President Bruce Voss (bvoss@lhai.com)
(510) 476-2000 Ext. 1111 (310) 691-7100
Cornel C. Spiegler, CFO www.lhai.com
(215) 289-2220 Ext. 1706 ------------
www.impaxlabs.com
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IMPAX REPORTS THIRD QUARTER 2004 FINANCIAL RESULTS; COMPANY TO
RESTATE FIRST AND SECOND QUARTER 2004 RESULTS DUE TO REPORTING
ADJUSTMENTS ON BUPROPION REVENUES BY STRATEGIC PARTNER
HAYWARD, CALIF (NOVEMBER 9, 2004) - IMPAX LABORATORIES, INC. (NASDAQ NM: IPXL)
today reported financial results for the three and nine months ended September
30, 2004. IMPAX also announced that it has determined to restate its financial
results for the first and second quarters of 2004. The restatement 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
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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(R) SR (Bupropion Hydrochloride) 100 mg and 150
mg Controlled Release Tablets, and Declomycin(R) (Demeclocycline Hydrochloride)
150 mg and 300 mg Tablets, which commenced during the first quarter of 2004; and
Zyban(R) (Bupropion Hydrochloride) and Sinemet(R) CR (Carbidopa/Levodopa)
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, 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 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 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 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 that closed during the second quarter of 2004.
RESTATEMENT OF FIRST AND SECOND QUARTER FINANCIAL STATEMENTS
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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 to its customers, including pricing, discounts,
allowances, price adjustments, returns and rebates. The Company is endeavoring
to take steps 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, accrued expenses and deferred revenues, and accumulated deficit line
items in the balance sheets for those periods.
IMPAX intends to file amendments to its Quarterly Reports on Form 10-Q for the
first quarter of 2004 and second quarter of 2004 to reflect the restatement as
soon as practicable. 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 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,
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" statement under the Private Securities Litigation Reform Act 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. 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 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.
(Tables to follow)
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,
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2004 2003 2004 2003
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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
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Total revenues 30,704 16,497 95,813 41,989
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Cost of sales 17,592 12,976 54,679 30,444
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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)
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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
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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)
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Net income (loss) before
provision for income taxes $ 735 $ (3,608) $ 6,272 $ (9,105)
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Provision for income taxes -- -- -- --
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Net income (loss) $ 735 $ (3,608) $ 6,272 $ (9,105)
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Earnings per share
Basic $ 0.01 $ (0.07) $ 0.11 $ (0.18)
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Diluted $ 0.01 $ (0.07) $ 0.10 $ (0.18)
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Weighted average common shares outstanding
Basic 58,469,272 52,610,356 57,855,637 50,382,455
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Diluted 62,137,376 52,610,356 61,352,899 50,382,455
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IMPAX LABORATORIES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
2004 2003
(UNAUDITED) (UNAUDITED)
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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
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Total assets $ 225,487 $ 132,706
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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
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Total liabilities and stockholders' equity $ 225,487 $ 132,706
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(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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