Andrx Corporation (Nasdaq:ADRX) (Andrx or the Company) today
announced its financial results for the three and nine months ended
September 30, 2005 (the 2005 Quarter and the 2005 Period,
respectively), which are discussed more extensively in Andrx's Form
10-Q being filed today with the U.S. Securities and Exchange
Commission (SEC). Andrx's Form 10-Q is available on the Company's
website at http://www.andrx.com (Investor Relations/SEC filings).
-0- *T (in thousands, except per share amounts) Three Months Ended
September 30, Change ------------------- ----------------- 2005
2004 $ % --------- --------- --------- ------- Total revenues
$256,950 $272,286 $(15,336) (5.6%) Income before income taxes
$16,799 $19,034 $(2,235) (11.7%) Net income $10,870 $11,801 $(931)
(7.9%) Earnings per share Basic $0.15 $0.16 $(0.01) (6.3%) Diluted
$0.15 $0.16 $(0.01) (6.3%) Nine Months Ended September 30, Change
------------------- ----------------- 2005 2004 $ % ---------
--------- --------- ------- Total revenues $796,156 $855,045
$(58,889) (6.9%) Income before income taxes $7,692 $72,430
$(64,738) (89.4%) Net income $54,205 $44,907 $9,298 20.7% Earnings
per share Basic $0.74 $0.62 $0.12 19.4% Diluted $0.74 $0.61 $0.13
21.3% *T Andrx Chief Executive Officer, Thomas P. Rice, said: "We
are now realizing the increasing benefit from the disposition of
our brand business, which occurred earlier this year. Our
distribution business experienced a solid operating quarter within
a very competitive generic environment, which included the launch
of generic Allegra(R). We believe future financial results from our
distribution operations will benefit from new generic launches of
significant brand products losing patent protection in 2006 and
2007. However, this growth may be tempered by continuing price
erosion within the industry." "During the 2005 third quarter, the
FDA placed us in Official Action Indicated status relating to the
FDA's inspection of our Davie, Florida manufacturing facility and
the FDA's issuance of a Form 483 List of Inspectional Observations.
The effect of this designation is that while the FDA reviews our
responses to the inspectional observations and considers whether or
not to take any enforcement action against us, approvals of our
submitted ANDAs are being withheld. However, the Company continues
to submit new ANDAs and the FDA continues to review our
applications. We believe we have provided complete responses to the
May 2005 inspectional observations and anticipate a meeting with
the FDA in November to discuss our responses." "We have expanded
our facilities, upgraded our senior management team in science and
technology, quality assurance, manufacturing operations, and
business development, and improved our manufacturing and quality
systems. The benefit of improving our manufacturing processes is
evidenced by, among other things, the year-over-year decrease in
our production-related write-offs." Mr. Rice added: "With respect
to Biaxin(R) XL, in September a hearing took place regarding Abbott
Laboratories, Inc.'s motion for preliminary injunction. We are
awaiting the court's decision." "We continue to invest in business
development efforts to expand our generic pipeline, and expect to
continue to realize the synergies between our distribution and
generic businesses for both our internally developed products and
generic business development opportunities. We are in advanced
discussions, and anticipate closing before the end of the year,
transactions to access up to 25 ANDAs from international companies
and domestic companies with off-shore affiliations. This quarter we
also established Andrx Therapeutics, our contract services segment
to be led by Steve Glover, Senior Vice President, which is pursuing
the development and manufacturing of pharmaceutical products for
other pharmaceutical companies, including combination products and
controlled-release formulations utilizing our patented technologies
and formulation capabilities." Highlights for Third Quarter 2005 In
the 2005 Quarter, distributed products revenues increased by 3.5%
to $163.6 million from the three months ended September 30, 2004
(2004 Quarter), due to new generic product introductions since the
2004 Quarter, partially offset by the overall price declines common
to generic products. Distributed products revenues in the 2005
Quarter included the reversal of a $2.0 million reserve related to
Able Laboratories, Inc.'s recall of its products, as our return
experience since the recall indicates our exposure is less than
originally anticipated. On a quarterly sequential basis, revenue
from distributed products decreased by 3.1% from $168.8 million for
the 2005 second quarter. Affecting the comparison to the 2005
second quarter, among other things, is our previously announced
discontinuation of the distribution of certain brand products,
which generated $0.9 million in sales in the 2005 Quarter and $6.1
million in the 2005 second quarter. In the 2005 Quarter, gross
margin on distributed products was 20.3% compared to a gross margin
of 17.9% for the 2004 Quarter. The improvement in the gross margin
was primarily attributable to the impact of higher margins related
to a new product introduction, as well as the reversal of the
reserve related to Able's recall. After the disposition of our
brand business in March 2005 through a sales and licensing
transaction with First Horizon, Andrx products revenues exclude
revenues from Altoprev(R) and Fortamet(R). Our participation in the
performance of these brand products is now included in licensing,
royalties and other revenues. Sales of these products were $16.1
million in the 2004 Quarter. Andrx product sales for the 2005
Quarter include sales of controlled-release, immediate-release and
niche generic products, and other products, which include our Entex
and Anexsia product lines previously reflected in Andrx brand
product revenues. Excluding net sales of Altoprev and Fortamet for
the 2004 Quarter, Andrx products revenues decreased by $18.5
million to $71.5 million, compared to $90.0 million in the 2004
Quarter. The decrease is primarily due to decreases from our
generic versions of Glucotrol XL(R), supplied by Pfizer, OTC
Claritin-D(R) 24, K-Dur(R) and Glucophage(R). Andrx did not launch
any products during the 2005 Quarter. On a quarterly sequential
basis, reported revenues from Andrx products decreased by 8.8% from
$78.3 million primarily due to decreases from our generic versions
of Glucotrol XL, supplied by Pfizer, Glucophage, OTC Claritin-D 24
and other products previously reflected as Andrx brand product
revenues. Excluding net sales of Altoprev and Fortamet, Andrx
products generated $23.9 million of gross profit with a gross
margin of 33.4% in the 2005 Quarter, compared to $34.1 million of
gross profit with a gross margin of 37.9% in the 2004 Quarter. The
$10.2 million decrease in gross profit resulted primarily from
reductions in revenues, partially offset by a $2.4 million
reduction in cost of goods sold as a result of Pfizer's failure to
deliver generic Glucotrol XL 2.5mg in accordance with our supply
agreement. In the 2005 Quarter, we recorded charges directly to
cost of goods sold of $4.1 million in write-offs of pre-launch
inventories, mainly due to $3.4 million in write-offs of our
generic version of Biaxin XL in connection with validation and the
commencement of commercial production activities. In the 2005
Quarter, licensing, royalties and other revenues increased to $21.9
million, compared to $8.1 million in the 2004 Quarter primarily due
to revenues from First Horizon related to Andrx's former brand
products, which commenced in April 2005. In the 2005 Quarter, based
on the results of an external review, we recorded $3.9 million of
revenues on the reversal of sales allowances previously recorded
related to our agreements for generic versions of Wellbutrin SR(R)
150mg and Zyban(R). In addition, licensing, royalties and other
revenues in the 2005 Quarter include contract R&D services
revenue rendered to Takeda Chemical Industries, Ltd. of $1.3
million. Licensing, royalties and other revenues in the 2004
Quarter primarily consisted of royalties on Teva's sale of Impax's
generic versions of Wellbutrin SR 150mg and Zyban, and KUDCo's sale
of generic Prilosec(R). On a quarterly sequential basis, licensing,
royalties and other revenues increased by $8.2 million from $13.7
million. Selling, general and administrative expenses (SG&A)
were $46.2 million for the 2005 Quarter, or 18.0% of total
revenues, compared to $54.2 million, or 19.9% of total revenues for
the 2004 Quarter. Excluding the brand business segment, SG&A
expenses were $44.7 million for the 2005 Quarter, compared to $32.5
million for the 2004 Quarter. SG&A for the 2005 Quarter
includes $9.3 million in charges associated with the separation
agreement with our former Executive Vice President, General Counsel
and Secretary, $7.0 million of which was a non-cash charge related
to his 2001 employment agreement which, upon his termination,
modified the exercise period of his previously issued stock
options. This non-cash charge of $7.0 million was based on the
exercise price of stock options issued prior to the 2001 agreement,
compared to the price of Andrx stock of $64.92 as of the date of
the modification (date of employment agreement). On a quarterly
sequential basis, SG&A expenses excluding the brand business
segment increased by $8.6 million from $36.1 million. Research and
development expenses (R&D) were $10.3 million in the 2005
Quarter, compared to $10.0 million in the 2004 Quarter. On a
quarterly sequential basis, R&D decreased from $11.7 million.
On September 23, 2005, we gave notice that we were terminating our
2002 credit facility, which cost approximately $1.4 million in
annual fees to maintain. The termination was effective October 19,
2005. Accordingly, in the 2005 Quarter, we wrote-off unamortized
debt issuance costs of $1.2 million as a non-cash charge. For the
2005 Quarter, we recorded a provision for income taxes of 35%. The
2005 Quarter included the benefit of the resolution of uncertain
tax positions. We continue to expect our effective tax rate
generally to be 38% for the remainder of 2005 excluding any
adjustments made to our tax liabilities as a result of the
completion of the IRS' audits of our 1999 through 2002 tax returns.
As of September 30, 2005, we had $401 million in cash, cash
equivalents and investments available for sale, and $486 million of
working capital. Deferred revenues were $102 million, primarily due
to cash received from our transactions with Takeda and First
Horizon. Capital expenditures were $8.5 million in the 2005 Quarter
and $21.6 million in the 2005 Period, compared to $73.2 million for
the 2004 Period. Webcast Investors will have the opportunity to
listen to management's discussion of this release in a conference
call to be held on November 8, 2005, at 8:00 am Eastern Time. This
call is being webcast and can be accessed at Andrx's website
http://www.andrx.com. The webcast will be available for replay.
About Andrx Corporation We are a pharmaceutical company that: --
develops, manufactures and commercializes generic versions of
controlled-release, niche and immediate-release pharmaceutical
products, including oral contraceptives; -- distributes
pharmaceutical products, primarily generics, which have been
commercialized by others, as well as our own, primarily to
independent pharmacies, pharmacy chains and physicians' offices;
and -- develops and manufactures pharmaceutical products for other
pharmaceutical companies, including combination products and
controlled-release formulations utilizing our patented technologies
and formulation capabilities. Forward-looking statements
(statements which are not historical facts) in this report are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. For this purpose, any statements
contained herein or which are otherwise made by or on behalf of
Andrx that are not statements of historical fact may be deemed to
be forward-looking statements. Without limiting the generality of
the foregoing, words such as "may," "will," "to," "plan," "expect,"
"believe," "anticipate," "intend," "could," "should," "would,"
"estimate," or "continue" or the negative or other variations
thereof or comparable terminology are intended to identify
forward-looking statements. Investors are cautioned that all
forward-looking statements involve risk and uncertainties,
including but not limited to, what sanctions, if any, FDA may seek
following its decision to place us in OAI status, including without
limitation sanctions relating to any failure to comply with cGMP
requirements and if and when the "hold" on our ANDA approvals will
be lifted; business interruption due to hurricanes or other events
outside of our control; our dependence on a relatively small number
of products; licensing revenues; the timing and scope of patents
issued to our competitors; the timing and outcome of patent,
antitrust and other litigation and future product launches; whether
we will be awarded any marketing exclusivity period and, if so, the
precise dates thereof; whether additional pre-launch inventory
write-offs will be required; government regulation generally;
competition; manufacturing capacities, safety issues, output and
quality processes; our ability to develop and successfully
commercialize new products; the loss of revenues from existing
products; development and marketing expenses that may not result in
commercially successful products; our inability to obtain, or the
high cost of obtaining, licenses for third party technologies; our
ability to meet the supply and manufacturing requirements of the
First Horizon agreement; the consolidation or loss of customers;
our relationship with our suppliers; the success of our joint
ventures; difficulties in integrating, and potentially significant
charges associated with, acquisitions of technologies, products and
businesses; our inability to obtain sufficient supplies and/or
active pharmaceuticals from key suppliers; the impact of sales
allowances; product liability claims; rising costs and limited
availability of product liability and other insurance; recent
management changes and the potential loss of senior management and
other key personnel; failure to comply with environmental laws; the
absence of certainty regarding the receipt of required regulatory
approvals or the timing or terms of such approvals; our ability to
commercialize all of our pre-launch inventory. Actual results may
differ materially from those projected in a forward-looking
statement. We are also subject to other risks detailed herein or
detailed from time to time in our 2004 10-K or in our other SEC
filings. Subsequent written and oral forward-looking statements
attributable to us or to persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements set forth
in our 2004 10-K and in our other SEC filings. Readers are
cautioned not to place reliance on these forward-looking
statements, which are valid only as of the date they were made. We
undertake no obligation to update or revise any forward-looking
statements to reflect new information or the occurrence of
unanticipated events or otherwise, except as required by law. This
release and additional information about Andrx Corporation is also
available on the Internet at: http://www.andrx.com. -0- *T Andrx
Corporation and Subsidiaries Unaudited Condensed Consolidated
Statements of Income (in thousands, except per share amounts) Three
Months Ended Nine Months Ended September 30, September 30,
------------------- ------------------- 2005 2004 2005 2004
--------- --------- --------- --------- Revenues: Distributed
products $163,615 $158,123 $512,161 $494,945 Andrx products 71,476
106,050 242,225 319,293 Licensing, royalties and other 21,859 8,113
41,770 40,807 --------- --------- --------- --------- Total
revenues 256,950 272,286 796,156 855,045 --------- ---------
--------- --------- Operating expenses: Cost of goods sold 185,929
190,912 586,723 590,820 Selling, general and administrative 46,223
54,177 148,063 155,841 Research and development 10,324 9,995 34,117
32,498 Other - - 26,316 7,800 --------- --------- ---------
--------- Total operating expenses 242,476 255,084 795,219 786,959
--------- --------- --------- --------- Income from operations
14,474 17,202 937 68,086 Other income (expense): Equity in earnings
of joint ventures 885 1,286 2,624 3,553 Interest income 3,265 1,221
7,226 2,658 Interest expense (665) (675) (1,935) (1,867) Write-off
of unamortized issuance costs upon termination of credit facility
(1,160) - (1,160) - --------- --------- --------- --------- Income
before income taxes 16,799 19,034 7,692 72,430 Provision (benefit)
for income taxes 5,929 7,233 (46,513) 27,523 --------- ---------
--------- --------- Net income $10,870 $11,801 $54,205 $44,907
========= ========= ========= ========= Earnings per share: Basic
$0.15 $0.16 $0.74 $0.62 ========= ========= ========= =========
Diluted $0.15 $0.16 $0.74 $0.61 ========= ========= =========
========= Weighted average shares of common stock outstanding:
Basic 73,343 72,809 73,195 72,690 ========= ========= =========
========= Diluted 73,648 73,487 73,632 73,581 ========= =========
========= ========= *T -0- *T Andrx Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (in thousands, except per
share amounts) Sept. 30, Dec. 31, 2005 2004 ----------- ---------
ASSETS (Unaudited) Current assets: Cash and cash equivalents
$73,931 $42,290 Short-term investments available-for-sale, at
market value 217,211 44,815 Accounts receivable, net of allowance
for doubtful accounts of $5,690 and $4,703 at September 30, 2005
and December 31, 2004, respectively 162,362 144,025 Inventories
182,387 197,304 Deferred income tax assets 74,440 57,883 Assets
held for sale - 49,120 Prepaid and other current assets 19,327
23,502 ----------- --------- Total current assets 729,658 558,939
Long-term investments available-for-sale, at market value 110,290
122,962 Property, plant and equipment, net 283,958 284,105 Goodwill
7,665 7,665 Other intangible assets, net 6,233 7,106 Other assets
10,325 8,936 ----------- --------- Total assets $1,148,129 $989,713
=========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $137,846 $105,715 Accrued expenses
and other liabilities 105,915 136,169 Liabilities held for sale -
3,489 ----------- --------- Total current liabilities 243,761
245,373 Deferred income tax liabilities 35,708 34,605 Deferred
revenue 101,645 10,974 ----------- --------- Total liabilities
381,114 290,952 ----------- --------- Commitments and contingencies
Stockholders' equity: Convertible preferred stock; $0.001 par
value, 1,000 shares authorized; none issued and outstanding - -
Common stock; $0.001 par value, 200,000 shares authorized; 73,389
and 72,924 shares issued and outstanding at September 30, 2005 and
December 31, 2004, respectively 73 73 Additional paid-in capital
531,139 507,934 Restricted stock units, net (15,074) (6,471)
Retained earnings 252,079 197,874 Accumulated other comprehensive
loss, net of income tax benefit (1,202) (649) ----------- ---------
Total stockholders' equity 767,015 698,761 ----------- ---------
Total liabilities and stockholders' equity $1,148,129 $989,713
=========== ========= *T -0- *T Andrx Corporation and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows (in
thousands) Nine Months Ended September 30, ------------------- 2005
2004 --------- --------- Cash flows from operating activities: Net
income $54,205 $44,907 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 26,495 25,296 Provision for (recoveries of) doubtful
accounts 2,454 (552) Non-cash impairment charges 28,195 18,035
Write-off of unamortized issuance costs upon termination of credit
facility 1,160 - Non-cash compensation expense related to stock
options 7,048 - Amortization of restricted stock units, net 2,339
1,087 Amortization of deferred revenue (4,329) (79) Equity in
earnings of joint ventures (2,624) (3,553) Deferred income tax
(benefit) provision (13,887) 7,249 Change in liabilities for
uncertain tax positions (32,793) 20,274 Income tax benefit on
exercises of stock options and restricted stock units 1,490 1,949
Changes in operating assets and liabilities: Accounts receivable
(20,791) 5,892 Inventories 29,498 (34,885) Prepaid and other assets
(3,052) 8,900 Income tax (payments) refunds (5,979) 639 Current
liabilities 36,505 7,326 Deferred revenue 10,000 - ---------
--------- Net cash provided by operating activities 115,934 102,485
--------- --------- Cash flows from investing activities: Purchases
of investments available-for-sale (592,786) (384,445) Maturities
and sales of investments available- for-sale 432,184 321,459
Purchases of property, plant and equipment, net (21,593) (73,187)
Proceeds from the sale and licensing of certain assets and rights
85,000 - Distributions from joint ventures 4,212 4,279 Refund of
deposit for product rights 10,000 - Payment for product rights
(4,500) (5,000) --------- --------- Net cash used in investing
activities (87,483) (136,894) --------- --------- Cash flows from
financing activities: Proceeds from issuances of common stock in
connection with exercises of stock options 3,882 5,048 Proceeds
from issuances of common stock in connection with the employee
stock purchase plan 838 1,140 Principal payments on capital lease
obligations (1,530) (672) --------- --------- Net cash provided by
financing activities 3,190 5,516 --------- --------- Net increase
(decrease) in cash and cash equivalents 31,641 (28,893) Cash and
cash equivalents, beginning of period 42,290 67,498 ---------
--------- Cash and cash equivalents, end of period $73,931 $38,605
========= ========= *T
Andrx (NASDAQ:ADRX)
Historical Stock Chart
From May 2024 to Jun 2024
Andrx (NASDAQ:ADRX)
Historical Stock Chart
From Jun 2023 to Jun 2024