Highlights:
* Revenue increase of 16% over the 2002 quarter to $71.0 Million
* Earnings rise to $0.31 per diluted share, an increase of 24% over the
2002 third quarter
* Launched Darvocet A500(TM), the Company's first significant line
extension
WILMINGTON, N.C., Oct. 22 /PRNewswire-FirstCall/ -- aaiPharma Inc.
(Nasdaq: AAII), a science-based pharmaceutical company, today announced
financial results for the third quarter and nine month period ended September
30, 2003.
Total revenues for the third quarter ended September 30, 2003 increased
16% to $71.0 million as compared to $61.2 million recorded in the comparable
2002 period. Net income for the 2003 third quarter rose 26% to $8.9 million,
or $0.31 per diluted share, versus $7.1 million, or $0.25 per diluted share,
for the 2002 third quarter. For the first nine months of 2003, total revenues
increased 22% over the year-ago period to $205.8 million compared with total
revenues of $168.3 million in the first nine months of 2002. Net income for
the 2003 nine-month period was $24.1 million, or $0.84 per diluted share, more
than double net income for the 2002 nine-month period of $10.0 million, or
$0.35 per diluted share.
The Company reported cash and cash equivalents of $11.1 million at
September 30, 2003 as compared to $8.1 million at June 30, 2003, after the
repayment of an additional $12.5 million of debt during the third quarter of
2003. For the nine months ended September 30, 2003, the Company has repaid a
total of $29.5 million of debt. In the third quarter, net cash provided by
operating activities was $19.6 million and capital expenditures were $3.4
million.
Earlier today, aaiPharma announced an agreement to acquire a portfolio of
pain products from Elan Corporation, plc. Upon expected completion of this
transaction in the fourth quarter of 2003, Roxicodone(R), Oramorph(R) SR, and
Roxanol(TM), will mark aaiPharma's first entry into the moderate to severe
category of pain management products. These Schedule II products, plus the
unscheduled injectable pain treatment Duraclon(R), complement the Company's
strategy to focus its efforts more specifically in the pain management
category and offer a broad array of prescription products for the treatment of
pain as identified in the World Health Organization's Pain Ladder.
"We are pleased with our third quarter financial results reflecting
another period of strong and consistent year-over-year growth," commented Dr.
Philip S. Tabbiner, President and CEO of aaiPharma. "The recent approval and
national launch of Darvocet A500(TM) is a significant milestone for our
business. Darvocet A500(TM) marks the first major pharmaceutical launch
undertaken by aaiPharma, and we are very pleased with the initial feedback we
are receiving from physicians about the need for this lower acetaminophen
alternative to the current Darvocet(TM) offering. Darvocet A500(TM), coupled
with our planned acquisition of the pain portfolio from Elan, underscores our
strategy to focus our efforts on the pain management category and will provide
us with a complementary portfolio of products that we can leverage with our
growing sales and marketing organization."
Outlook:
Based on current trends, the Company continues to expect diluted earnings
per share for 2003 to be between $1.11 and $1.17, and the net revenue range to
be between $280 million and $290 million.
In conjunction with this release, aaiPharma management will conduct a
conference call to discuss the financial results for the third quarter and
first nine months of 2003 at 8:00 a.m. Eastern Time on Thursday, October 23,
2003. A simultaneous web cast of the conference call will be available for
all interested parties on the Company's web site at http://www.aaipharma.com. A
replay of the web cast will be available on this website beginning October 23,
2003 at 1:00 p.m. until November 7, 2003 at 5:00 p.m. Eastern Time.
About aaiPharma
aaiPharma Inc. is a science-based specialty pharmaceutical company with
more than 23 years of drug development experience. Focusing on targeted
therapeutic areas, the Company markets a growing portfolio of established
branded products and applies innovative technologies to increase the
commercial potential of these products. At the same time, aaiPharma's research
and development organization is developing a pipeline of products to position
the Company for near-term and long-term growth in its targeted therapeutic
areas. In addition to developing and marketing its own line of proprietary
pharmaceutical products, aaiPharma continues to be a leader in providing
contract pharmaceutical development services through its AAI Development
Services division. For more information on the Company, please visit us on
the web at http://www.aaipharma.com.
Forward-Looking Statements
Information in this press release contains certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities and Exchange Act of 1934, including the
statements by Dr. Tabbiner and those pertaining to the Company's plans and
expectations as to earnings and revenues outlooks for the Company and its
businesses, the Darvon(R)/Darvocet(TM) brand family, including Darvocet
A500(TM), and the Elan pain products to be acquired by aaiPharma; the
commercial and medical value of Darvocet A500(TM) and the acquired Elan pain
management products; and the development, commercialization, commercial
potential and growth of products and line extensions in the Company's pipeline
and its product portfolio. The "forward-looking statements" herein involve
risks and uncertainties that could cause actual results to differ materially,
including, without limitation, risks and uncertainties pertaining to the
Company's ability to timely and successfully find, acquire, finance, develop,
improve, enhance, obtain timely regulatory approval for, maximize the value
of, extend product life cycles of, conduct successful research on, renew
marketing of, and sell, on a commercially profitable basis, pharmaceutical
products (including Darvocet A500(TM) and the Elan products under acquisition
contract); the effect of possible future acquisitions, dispositions and other
strategic transactions involving the Company; and the commercial success of
the Company's contemplated products and services. Additional factors that may
cause the actual results to differ materially are discussed in aaiPharma's
recent filings with the Securities and Exchange Commission, including, but not
limited to, its Annual Report on Form 10-K filed on March 28, 2003, including
its Exhibit 99.1 and other exhibits; its Forms 10-Q filed on May 15, 2003 and
August 14, 2003 (including its Exhibit 99.1); its Form 8-Ks; and its other
periodic filings.
Darvocet A500(TM) and Darvocet(TM) are trademarks, and Darvon(R) and
Darvocet-N(R) are registered trademarks, of aaiPharma Inc.
Roxanol(TM) is a trademark, and Roxicodone(R), Oramorph(R) SR and Duraclon(R)
are registered trademarks, of Elan Pharma International Limited.
aaiPharma Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Product sales $45,643 $35,925 $131,403 $90,775
Product development (royalties &
fees) 3,524 5,663 11,231 14,267
Development services 21,845 19,621 63,159 63,234
Total revenues 71,012 61,209 205,793 168,276
Operating costs and expenses:
Direct costs (excluding
depreciation):
Product sales 10,333 8,155 32,410 24,295
Development services 12,304 11,620 36,685 37,921
Total direct costs 22,637 19,775 69,095 62,216
Selling, general and
administrative expenses 18,866 16,389 56,119 45,292
Research and development 5,367 5,511 15,441 15,375
Depreciation and amortization 2,676 2,493 8,038 6,965
Royalty expense 2,362 -- 3,437 --
51,908 44,168 152,130 129,848
Income from operations 19,104 17,041 53,663 38,428
Other income (expense):
Interest, net (5,140) (5,506) (15,621) (13,882)
Loss from extinguishment of debt -- -- -- (8,053)
Other, net (122) (77) 21 126
(5,262) (5,583) (15,600) (21,809)
Income before income taxes 13,842 11,458 38,063 16,619
Provision for income taxes 4,914 4,354 13,991 6,661
Net income $8,928 $7,104 $24,072 $9,958
Basic earnings per share $0.32 $0.26 $0.87 $0.36
Weighted average shares outstanding 27,810 27,417 27,664 27,297
Diluted earnings per share $0.31 $0.25 $0.84 $0.35
Weighted average shares outstanding 29,072 28,062 28,633 28,421
aaiPharma Inc.
Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $11,110 $6,532
Accounts receivable, net 37,122 29,467
Work-in-progress 15,520 10,515
Inventories 11,858 17,004
Prepaid and other current assets 9,723 7,633
Total current assets 85,333 71,151
Property and equipment, net 57,267 53,125
Goodwill, net 211,904 210,792
Intangibles, net 89,221 89,078
Other assets 15,326 16,179
Total assets $459,051 $440,325
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
debt $6,567 $5,921
Accounts payable 16,912 17,671
Customer advances 19,487 15,051
Accrued wages and benefits 8,416 6,718
Interest payable 9,798 5,232
Other accrued liabilities 9,839 5,201
Total current liabilities 71,019 55,794
Long-term debt, less current portion 243,092 277,899
Other liabilities 16,618 7,182
Stockholders' equity:
Common stock 28 27
Paid-in capital 81,867 79,049
Retained earnings 44,664 20,592
Accumulated other comprehensive
income (loss) 1,763 (218)
Total stockholders' equity 128,322 99,450
Total liabilities and
stockholders' equity $459,051 $440,325
aaiPharma Inc.
Consolidated Statements of Cash Flows
(In thousands)
Nine Months Ended
September 30,
2003 2002
Cash flows from operating activities:
Net Income $24,072 $9,958
Adjustments to reconcile net income
to
net cash provided by operating
activities:
Depreciation and amortization 8,038 6,965
Write-off of deferred financing
and other costs -- 5,339
Other 138 476
Changes in operating assets and
liabilities:
Accounts receivable, net (7,378) (6,958)
Work-in-progress (4,520) 156
Inventories 5,220 (4,610)
Prepaid and other assets (3,077) (11,922)
Accounts payable (952) (667)
Customer advances 4,158 1,646
Interest payable 4,566 10,766
Accrued wages and benefits and
other accrued liabilities 10,074 8,444
Net cash provided by operating
activities 40,339 19,593
Cash flows from investing activities:
Purchases of property and equipment (9,867) (6,659)
Purchase of property and equipment
previously leased -- (14,145)
Proceeds from sales of property and
equipment 508 13
Acquisitions (2,450) (211,997)
Other (334) (529)
Net cash used in investing activities (12,143) (233,317)
Cash flows from financing activities:
Proceeds from long-term borrowings -- 244,450
Payments on long-term borrowings (29,500) (39,400)
Proceeds from interest rate swap,
net 2,191 10,848
Issuance of common stock 2,819 3,193
Other 805 (2,839)
Net cash (used in) provided by
financing activities (23,685) 216,252
Net increase in cash and cash
equivalents 4,511 2,528
Effect of exchange rate changes on
cash 67 95
Cash and cash equivalents, beginning
of period 6,532 6,371
Cash and cash equivalents, end of
period $11,110 $8,994
SOURCE aaiPharma Inc.
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Related links:
http://www.aaipharma.com
CONTACT:
James B. Sloan, Jr., Senior Vice President,
Corporate Finance of aaiPharma Inc., +1-910-254-7690
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