001-32360
(Commission File Number)
|
72-0717400
(IRS Employer Identification No.)
|
1925 W. Field Court, Suite 300
Lake Forrest, Illinois
(Address of Principal Executive Offices)
|
60045
(Zip Code)
|
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 9.01.
|
Financial Statements and Exhibits
|
(a)
|
Financial Statements of Business Acquired.
|
(b)
|
Pro Forma Financial Information
|
(d)
|
See Attached Exhibit Index
|
Date: June 27, 2014
|
|||
AKORN, INC.
|
|||
By:
|
/s/ Timothy A. Dick
|
||
Name:
|
Timothy A. Dick
|
||
Title:
|
Chief Financial Officer
|
Exhibit
Number
|
Description
|
|
23.1
|
Consent of EisnerAmper LLP.
|
|
99.1
|
Audited consolidated balance sheets of Hi-Tech as of April 30, 2013 and April 30, 2012 and the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the years ended April 30, 2013, April 30, 2012, and April 30, 2011, the Notes to the Consolidated Financial Statements and the Independent Auditors Report.
|
|
99.2
|
Unaudited condensed consolidated balance sheet of Hi-Tech as of January 31, 2014 and the related condensed consolidated statement of operations, comprehensive income, and cash flows for the nine month periods ended January 31, 2014 and January 31, 2013, and the Notes to the Condensed Consolidated Financial Statements.
|
|
99.3
|
Unaudited pro forma condensed combined balance sheet as of March 31, 2014 and the unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2014 and for the year ended December 31, 2013, giving effect to the Merger, and the Notes to the Unaudited Pro Forma Condensed Combined Financial Statements.
|
|
April 30,
|
|||||||
|
2013
|
2012
|
||||||
ASSETS
|
|
|||||||
CURRENT ASSETS:
|
|
|||||||
Cash and cash equivalents
|
|
$
|
100,610,000
|
|
$
|
87,549,000
|
|
|
Accounts receivable (less allowances for doubtful accounts of $500,000 at April 30, 2013 and 2012)
|
|
63,775,000
|
|
60,106,000
|
|
|||
Inventory
|
|
39,229,000
|
|
39,281,000
|
|
|||
Deferred income taxes
|
|
12,321,000
|
|
5,931,000
|
|
|||
Prepaid income taxes
|
|
—
|
|
5,918,000
|
|
|||
Other current assets
|
|
3,622,000
|
|
3,045,000
|
|
|||
TOTAL CURRENT ASSETS
|
|
$
|
219,557,000
|
|
$
|
201,830,000
|
|
|
Property and equipment, net
|
|
32,168,000
|
|
29,980,000
|
|
|||
Deferred income taxes
|
|
1,956,000
|
|
830,000
|
|
|||
Other assets
|
|
428,000
|
|
419,000
|
|
|||
Intangible assets, net
|
|
40,887,000
|
|
46,058,000
|
|
|||
TOTAL ASSETS
|
|
$
|
294,996,000
|
|
$
|
279,117,000
|
|
|
|
||||||||
LIABILITIES
|
|
|||||||
CURRENT LIABILITIES:
|
|
|||||||
Accounts payable
|
|
$
|
9,768,000
|
|
$
|
16,594,000
|
|
|
Accrued expenses
|
|
13,637,000
|
|
14,441,000
|
|
|||
Accrued legal settlements
|
|
16,200,000
|
|
—
|
|
|||
Current portion of long-term debt
|
|
355,000
|
|
355,000
|
|
|||
Current portion of contingent payment liability
|
|
2,875,000
|
|
2,875,000
|
|
|||
Taxes payable
|
|
1,061,000
|
|
—
|
|
|||
TOTAL CURRENT LIABILITIES
|
|
$
|
43,896,000
|
|
$
|
34,265,000
|
|
|
Contingent payment liability, net of current portion
|
|
4,844,000
|
|
7,228,000
|
|
|||
Long-term debt, net of current portion
|
|
888,000
|
|
1,243,000
|
|
|||
TOTAL LIABILITIES
|
|
$
|
49,628,000
|
|
$
|
42,736,000
|
|
|
|
||||||||
COMMITMENTS AND CONTINGENCIES (Note [K])
|
|
|||||||
STOCKHOLDERS’ EQUITY
|
|
|||||||
Preferred stock, par value $.01 per share; authorized 3,000,000 shares, none issued
|
|
|||||||
Common stock, par value $.01; authorized 50,000,000 shares, 16,067,000 and
15,502,000 shares issued at April 30, 2013 and 2012, respectively
|
|
161,000
|
|
155,000
|
|
|||
Additional paid-in capital
|
|
101,203,000
|
|
86,996,000
|
|
|||
Retained earnings
|
|
168,305,000
|
|
172,230,000
|
|
|||
Treasury stock, 2,491,000 and 2,456,000 shares of common stock, at cost at April 30, 2013 and 2012, respectively
|
|
(24,301,000
|
)
|
(23,000,000
|
)
|
|||
TOTAL STOCKHOLDERS’ EQUITY
|
|
$
|
245,368,000
|
|
$
|
236,381,000
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
294,996,000
|
|
$
|
279,117,000
|
|
|
|
|
Year Ended April 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
NET SALES
|
|
$
|
232,384,000
|
|
$
|
230,003,000
|
|
$
|
190,848,000
|
|
||
Cost of goods sold
|
|
117,304,000
|
|
100,804,000
|
|
83,263,000
|
|
|||||
GROSS PROFIT
|
|
115,080,000
|
|
129,199,000
|
|
107,585,000
|
|
|||||
COST AND EXPENSES:
|
|
|||||||||||
Selling, general and administrative expense
|
|
53,575,000
|
|
44,698,000
|
|
36,717,000
|
|
|||||
Amortization expense
|
|
6,742,000
|
|
5,341,000
|
|
2,387,000
|
|
|||||
Research and product development costs
|
|
17,331,000
|
|
12,256,000
|
|
9,350,000
|
|
|||||
Royalty income
|
|
(1,789,000
|
)
|
(3,000,000
|
)
|
(4,607,000
|
)
|
|||||
Contract research (income)
|
|
(102,000
|
)
|
(428,000
|
)
|
(675,000
|
)
|
|||||
Settlements and loss contingencies
|
|
16,200,000
|
|
—
|
—
|
|||||||
Interest expense
|
|
541,000
|
|
410,000
|
|
45,000
|
|
|||||
Interest (income) and other
|
|
(291,000
|
)
|
(887,000
|
)
|
(433,000
|
)
|
|||||
TOTAL
|
|
$
|
92,207,000
|
|
$
|
58,390,000
|
|
$
|
42,784,000
|
|
||
Income from continuing operations before provision for income taxes
|
|
22,873,000
|
|
70,809,000
|
|
64,801,000
|
|
|||||
Provision for income tax expense
|
|
6,622,000
|
|
22,458,000
|
|
21,082,000
|
|
|||||
Income from continuing operations
|
|
$
|
16,251,000
|
|
$
|
48,351,000
|
|
$
|
43,719,000
|
|
||
Loss from discontinued operations, net of tax
|
|
—
|
|
—
|
(2,265,000
|
)
|
||||||
NET INCOME
|
|
$
|
16,251,000
|
|
$
|
48,351,000
|
|
$
|
41,454,000
|
|
||
BASIC EARNINGS (LOSS) PER SHARE:
|
|
|||||||||||
Continuing operations
|
|
1.22
|
|
3.75
|
|
3.47
|
|
|||||
Discontinued operations
|
|
—
|
—
|
(0.18
|
)
|
|||||||
BASIC EARNINGS (LOSS) PER SHARE
|
|
$
|
1.22
|
|
$
|
3.75
|
|
$
|
3.29
|
|
||
DILUTED EARNINGS (LOSS) PER SHARE:
|
|
|||||||||||
Continuing operations
|
|
1.19
|
|
3.59
|
|
3.36
|
|
|||||
Discontinued operations
|
|
—
|
—
|
(0.17
|
)
|
|||||||
DILUTED EARNINGS (LOSS) PER SHARE
|
|
$
|
1.19
|
|
$
|
3.59
|
|
$
|
3.19
|
|
||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, BASIC
|
|
13,302,000
|
|
12,878,000
|
|
12,615,000
|
|
|||||
EFFECT OF POTENTIAL COMMON SHARES
|
|
345,000
|
|
573,000
|
|
397,000
|
|
|||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, DILUTED
|
|
13,647,000
|
|
13,451,000
|
|
13,012,000
|
|
|||||
|
|
Year Ended April 30,
|
|||||||||||
|
2013
|
|
2012
|
|
2011
|
|||||||
NET INCOME
|
|
$
|
16,251,000
|
|
|
$
|
48,351,000
|
|
|
$
|
41,454,000
|
|
Other comprehensive income, net of tax
|
|
—
|
|
—
|
|
154,000
|
|
|||||
TOTAL COMPREHENSIVE INCOME
|
|
$
|
16,251,000
|
|
|
$
|
48,351,000
|
|
|
$
|
41,608,000
|
|
Common Stock
|
Additional
Paid in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Treasury
Stock at
Cost
|
Total
Stockholders’
Equity
|
|||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||
BALANCE—APRIL 30, 2010
|
15,017,000 | $ | 150,000 | $ | 75,345,000 | $ | 82,425,000 | $ | (154,000 | ) | $ | (23,000,000 | ) | $ | 134,766,000 | |||||||||||||
Net income
|
41,454,000 | 41,454,000 | ||||||||||||||||||||||||||
Exercise of options
|
146,000 | 2,000 | 1,670,000 | 1,672,000 | ||||||||||||||||||||||||
Stock-based compensation expense
|
2,552,000 | 2,552,000 | ||||||||||||||||||||||||||
Tax benefit from exercise of options
|
414,000 | 414,000 | ||||||||||||||||||||||||||
Other comprehensive income (loss),
net of tax
|
154,000 | 154,000 | ||||||||||||||||||||||||||
BALANCE—APRIL 30, 2011
|
15,163,000 | $ | 152,000 | $ | 79,981,000 | $ | 123,879,000 | $ | — | $ | (23,000,000 | ) | $ | 181,012,000 | ||||||||||||||
Net income
|
48,351,000 | 48,351,000 | ||||||||||||||||||||||||||
Exercise of options
|
339,000 | 3,000 | 2,972,000 | 2,975,000 | ||||||||||||||||||||||||
Stock-based compensation expense
|
2,872,000 | 2,872,000 | ||||||||||||||||||||||||||
Tax benefit from exercise of options
|
1,171,000 | 1,171,000 | ||||||||||||||||||||||||||
BALANCE—APRIL 30, 2012
|
15,502,000 | $ | 155,000 | $ | 86,996,000 | $ | 172,230,000 | $ | — | $ | (23,000,000 | ) | $ | 236,381,000 | ||||||||||||||
Net income
|
16,251,000 | 16,251,000 | ||||||||||||||||||||||||||
Exercise of options
|
565,000 | 6,000 | 8,073,000 | 8,079,000 | ||||||||||||||||||||||||
Purchase of treasury stock
|
(1,301,000 | ) | (1,301,000 | ) | ||||||||||||||||||||||||
Stock-based compensation expense
|
4,414,000 | 4,414,000 | ||||||||||||||||||||||||||
Tax benefit from exercise of options
|
1,720,000 | 1,720,000 | ||||||||||||||||||||||||||
Dividends paid
|
(20,176,000 | ) | (20,176,000 | ) | ||||||||||||||||||||||||
BALANCE—APRIL 30, 2013
|
16,067,000 | $ | 161,000 | $ | 101,203,000 | $ | 168,305,000 | $ | — | $ | (24,301,000 | ) | $ | 245,368,000 |
|
Year ended April 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|||||||||||
Net income
|
|
$
|
16,251,000
|
|
$
|
48,351,000
|
|
$
|
41,454,000
|
|
||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|||||||||||
Loss (income) from discontinued operations
|
|
—
|
—
|
2,265,000
|
|
|||||||
Depreciation and amortization
|
|
10,816,000
|
|
8,728,000
|
|
5,099,000
|
|
|||||
Deferred income taxes
|
|
(7,516,000
|
)
|
(131,000
|
)
|
(1,528,000
|
)
|
|||||
Stock based compensation expense
|
|
4,414,000
|
|
2,872,000
|
|
2,552,000
|
|
|||||
Impairment of intangible assets
|
|
—
|
—
|
221,000
|
|
|||||||
Increase in bad debt allowance
|
|
—
|
—
|
100,000
|
|
|||||||
Loss on investment
|
|
—
|
—
|
250,000
|
|
|||||||
Interest accrual on contingent liability
|
|
491,000
|
|
87,000
|
|
—
|
||||||
CHANGES IN OPERATING ASSETS AND LIABILITIES:
|
|
|||||||||||
Accounts receivable
|
|
(3,669,000
|
)
|
(2,224,000
|
)
|
(18,128,000
|
)
|
|||||
Inventory
|
|
52,000
|
|
(15,497,000
|
)
|
(4,180,000
|
)
|
|||||
Prepaid taxes and taxes payable
|
|
6,979,000
|
|
(5,257,000
|
)
|
(1,622,000
|
)
|
|||||
Other current assets
|
|
(577,000
|
)
|
(4,000
|
)
|
(142,000
|
)
|
|||||
Other assets
|
|
(9,000
|
)
|
(119,000
|
)
|
164,000
|
|
|||||
Accounts payable
|
|
(6,826,000
|
)
|
8,788,000
|
|
2,418,000
|
|
|||||
Accrued expenses
|
|
(804,000
|
)
|
926,000
|
|
4,403,000
|
|
|||||
Accrued legal settlements
|
|
16,200,000
|
|
—
|
—
|
|||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS
|
|
$
|
35,802,000
|
|
$
|
46,520,000
|
|
$
|
33,326,000
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|||||||||||
Purchase of property and equipment
|
|
$
|
(6,262,000
|
)
|
$
|
(7,501,000
|
)
|
$
|
(8,266,000
|
)
|
||
Purchase of intangible assets
|
|
(2,350,000
|
)
|
(18,607,000
|
)
|
(215,000
|
)
|
|||||
Proceeds from sale of intangible assets
|
|
779,000
|
|
1,683,000
|
|
156,000
|
|
|||||
Payment of contingent liability
|
|
(2,875,000
|
)
|
(1,438,000
|
)
|
—
|
||||||
Purchase of ECR Pharmaceuticals assets on earn-out
|
|
—
|
(498,000
|
)
|
(1,440,000
|
)
|
||||||
NET CASH (USED IN) INVESTING ACTIVITIES OF CONTINUING OPERATIONS
|
|
$
|
(10,708,000
|
)
|
$
|
(26,361,000
|
)
|
$
|
(9,765,000
|
)
|
||
|
||||||||||||
Issuance of common stock on exercise of options
|
|
$
|
6,778,000
|
|
$
|
2,975,000
|
|
$
|
1,672,000
|
|
||
Tax benefit of stock incentives
|
|
1,720,000
|
|
1,171,000
|
|
414,000
|
|
|||||
Payment of dividend
|
|
(20,176,000
|
)
|
—
|
—
|
|||||||
Payments of long-term debt
|
|
(355,000
|
)
|
(215,000
|
)
|
(193,000
|
)
|
|||||
Proceeds from draw down of equipment loan
|
|
—
|
1,155,000
|
|
621,000
|
|
||||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES OF CONTINUING OPERATIONS
|
|
$
|
(12,033,000
|
)
|
$
|
5,086,000
|
|
$
|
2,514,000
|
|
||
NET INCREASE IN CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS
|
|
13,061,000
|
|
25,245,000
|
|
26,075,000
|
|
|||||
NET INCREASE IN CASH AND CASH EQUIVALENTS OF DISCONTINUED OPERATIONS
|
|
—
|
—
|
211,000
|
|
|||||||
Cash and cash equivalents at beginning of year
|
|
87,549,000
|
|
62,304,000
|
|
36,018,000
|
|
|||||
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
$
|
100,610,000
|
|
$
|
87,549,000
|
|
$
|
62,304,000
|
|
||
Supplemental disclosure of cash flow information
|
|
|||||||||||
Cash paid for: Interest
|
|
$
|
541,000
|
|
$
|
410,000
|
|
$
|
45,000
|
|
||
Income taxes
|
|
5,600,000
|
|
26,664,000
|
|
21,000,000
|
|
|||||
Non-cash investing transactions:
|
|
|||||||||||
Obligation related to purchase of intangible assets included in accrued expenses
|
|
—
|
355,000
|
|
—
|
|||||||
Contingent payment liability related to purchase of intangible assets
|
|
—
|
11,189,000
|
|
—
|
|||||||
Refund receivable related to purchase of intangible assets
|
|
—
|
250,000
|
|
—
|
|||||||
Non-cash financing transaction:
|
|
|||||||||||
Surrender of common stock as exercise price for options
|
|
1,301,000
|
|
—
|
—
|
Revenue
|
|
2013
|
|
2012
|
|
2011
|
||||||
Hi-Tech Generics
|
|
$
|
196,262,000
|
|
|
$
|
197,877,000
|
|
|
$
|
157,361,000
|
|
Health Care Products
|
|
17,700,000
|
|
|
17,234,000
|
|
|
13,872,000
|
|
|||
ECR Pharmaceuticals
|
|
18,422,000
|
|
|
14,892,000
|
|
|
19,615,000
|
|
|||
Total
|
|
$
|
232,384,000
|
|
|
$
|
230,003,000
|
|
|
$
|
190,848,000
|
|
|
April 30,
|
|||||||
|
2013
|
2012
|
||||||
Accounts receivable, gross
|
|
$
|
86,457,000
|
|
$
|
78,641,000
|
|
|
Adjustment for returns and price allowances (a)
|
|
(22,182,000
|
)
|
(18,035,000
|
)
|
|||
Allowance for doubtful accounts
|
|
(500,000
|
)
|
(500,000
|
)
|
|||
Accounts receivable, net
|
|
$
|
63,775,000
|
|
$
|
60,106,000
|
|
(a)
|
directly reduces gross revenue
|
●
|
a change in retail customer mix
|
●
|
a change in negotiated terms with retailers
|
●
|
product sales mix at the wholesaler
|
●
|
retail inventory levels
|
●
|
changes in Wholesale Acquisition Cost (“WAC”)
|
|
Beginning
Balance
May 1
|
|
Current
Provision
|
|
Actual Credits
in Current
Period
|
Ending
Balance
April 30
|
||||||||||
For the year ended April 30, 2013
|
|
|
|
|||||||||||||
Chargebacks
|
|
$
|
10,477,000
|
|
|
$
|
152,668,000
|
|
|
$
|
(149,788,000
|
)
|
$
|
13,357,000
|
|
|
Sales discounts
|
|
1,813,000
|
|
|
9,641,000
|
|
|
(9,504,000
|
)
|
1,950,000
|
|
|||||
Sales allowances & returns
|
|
5,745,000
|
|
|
50,514,000
|
|
|
(49,384,000
|
)
|
6,875,000
|
|
|||||
Total adjustment for returns & price allowances
|
|
$
|
18,035,000
|
|
|
$
|
212,823,000
|
|
|
$
|
(208,676,000
|
)
|
$
|
22,182,000
|
|
|
For the year ended April 30, 2012
|
|
|
|
|||||||||||||
Chargebacks
|
|
$
|
8,588,000
|
|
|
$
|
128,993,000
|
|
|
$
|
(127,104,000
|
)
|
$
|
10,477,000
|
|
|
Sales discounts
|
|
2,353,000
|
|
|
8,907,000
|
|
|
(9,447,000
|
)
|
1,813,000
|
|
|||||
Sales allowances & returns
|
|
6,159,000
|
|
|
42,180,000
|
|
|
(42,594,000
|
)
|
5,745,000
|
|
|||||
Total adjustment for returns & price allowances
|
|
$
|
17,100,000
|
|
|
$
|
180,080,000
|
|
|
$
|
(179,145,000
|
)
|
$
|
18,035,000
|
|
|
For the year ended April 30, 2011
|
|
|
|
|||||||||||||
Chargebacks
|
|
$
|
6,509,000
|
|
|
$
|
113,922,000
|
|
|
$
|
(111,843,000
|
)
|
$
|
8,588,000
|
|
|
Sales discounts
|
|
1,391,000
|
|
|
7,483,000
|
|
|
(6,521,000
|
)
|
2,353,000
|
|
|||||
Sales allowances & returns
|
|
6,470,000
|
|
|
34,995,000
|
|
|
(35,306,000
|
)
|
6,159,000
|
|
|||||
Total adjustment for returns & price allowances
|
|
$
|
14,370,000
|
|
|
$
|
156,400,000
|
|
|
$
|
(153,670,000
|
)
|
$
|
17,100,000
|
|
|
April 30,
|
|||||||
|
2013
|
|
2012
|
|||||
Finished goods
|
|
$
|
14,575,000
|
|
|
$
|
13,015,000
|
|
Work in process
|
|
352,000
|
|
|
440,000
|
|
||
Raw materials
|
|
24,302,000
|
|
|
25,826,000
|
|
||
Total
|
|
$
|
39,229,000
|
|
|
$
|
39,281,000
|
|
|
April 30,
|
||||||||||
|
2013
|
|
2012
|
Useful Lives
|
|||||||
Land and building and improvements
|
|
$
|
21,592,000
|
|
|
$
|
20,392,000
|
|
27.5 Yrs.
|
||
Machinery and equipment
|
|
35,145,000
|
|
|
30,934,000
|
|
7 and 10 Yrs.
|
||||
Transportation equipment
|
|
69,000
|
|
|
55,000
|
|
7 Yrs.
|
||||
Computer equipment and systems
|
|
6,866,000
|
|
|
6,131,000
|
|
3 and 7 Yrs.
|
||||
Furniture and fixtures
|
|
1,313,000
|
|
|
1,237,000
|
|
7 Yrs.
|
||||
|
64,985,000
|
|
|
58,749,000
|
|
||||||
Accumulated depreciation and amortization
|
|
32,817,000
|
|
|
28,769,000
|
|
|||||
Total property and equipment—net
|
|
$
|
32,168,000
|
|
|
$
|
29,980,000
|
|
|
April 30, 2013
|
April 30, 2012
|
|||||||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
Amortization Period
|
||||||||||||
TussiCaps® intangible assets
|
|
$
|
22,126,000
|
|
|
$
|
(4,980,000
|
)
|
$
|
22,126,000
|
|
|
$
|
(1,992,000
|
)
|
5-10 years
|
|||
ECR intangible assets (a)
|
|
7,334,000
|
|
|
(2,554,000
|
)
|
7,334,000
|
|
|
(1,828,000
|
)
|
10 years
|
|||||||
Mag-Ox® intangible assets
|
|
4,100,000
|
|
|
(1,298,000
|
)
|
4,100,000
|
|
|
(888,000
|
)
|
10 years
|
|||||||
Clobetasol intangible asset
|
|
4,000,000
|
|
|
(1,200,000
|
)
|
4,000,000
|
|
|
(800,000
|
)
|
10 years
|
|||||||
Orbivan® and Zolvit® intangible assets
|
|
3,152,000
|
|
|
(1,028,000
|
)
|
3,477,000
|
|
|
(463,000
|
)
|
3-10 years
|
|||||||
Sinus Buster® intangible assets
|
|
2,513,000
|
|
|
(260,000
|
)
|
2,513,000
|
|
|
—
|
10 years
|
||||||||
Zolpimist® intangible assets
|
|
3,000,000
|
|
|
(844,000
|
)
|
3,000,000
|
|
|
(469,000
|
)
|
10 years
|
|||||||
Zostrix® intangible assets
|
|
5,354,000
|
|
|
(3,757,000
|
)
|
5,354,000
|
|
|
(3,179,000
|
)
|
3-11.5 years
|
|||||||
In-licensed ANDA intangible assets
|
|
1,500,000
|
|
|
—
|
|
—
|
|
|
—
|
10 years
|
||||||||
KVK License intangible assets
|
|
1,250,000
|
|
|
—
|
|
1,500,000
|
|
|
—
|
10 years
|
||||||||
Midlothian intangible assets
|
|
1,011,000
|
|
|
(460,000
|
)
|
1,011,000
|
|
|
(342,000
|
)
|
3-10 years
|
|||||||
Partnered ANDA intangible assets
|
|
500,000
|
|
|
—
|
|
—
|
|
|
—
|
10 years
|
||||||||
Vosol® and Vosol® HC intangible assets
|
|
700,000
|
|
|
(368,000
|
)
|
700,000
|
|
|
(298,000
|
)
|
10 years
|
|||||||
Flunisolide intangible assets
|
|
625,000
|
|
|
—
|
|
375,000
|
|
|
—
|
10 years
|
||||||||
Other intangible assets
|
|
1,601,000
|
|
|
(1,130,000
|
)
|
1,705,000
|
|
|
(878,000
|
)
|
5-10 years
|
|||||||
|
$
|
58,766,000
|
|
|
$
|
(17,879,000
|
)
|
$
|
57,195,000
|
|
|
$
|
(11,137,000
|
)
|
(a)
|
Includes $545,000 of goodwill
|
Estimated Amortization Expense
For the year ending April 30,
|
|
|||
2014
|
|
$
|
6,543,000
|
|
2015
|
|
6,702,000
|
|
|
2016
|
|
6,778,000
|
|
|
2017
|
|
5,630,000
|
|
|
2018
|
|
4,700,000
|
|
|
Thereafter
|
|
9,989,000
|
|
|
Total
|
|
$
|
40,342,000
|
|
|
April 30,
|
|||||||||||
|
2013
|
|
2012
|
|
2011
|
|||||||
Net sales
|
|
—
|
|
|
—
|
|
|
$
|
2,136,000
|
|
||
Loss from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
(2,265,000
|
)
|
|||
Diluted loss per common share from discontinued operations
|
|
—
|
|
|
—
|
|
|
$
|
(0.17
|
)
|
|
April 30,
|
|||||||
|
2013
|
|
2012
|
|||||
Accrued rebates and advertising
|
|
$
|
6,546,000
|
|
|
$
|
5,169,000
|
|
Accrued commissions and royalty payments
|
|
533,000
|
|
|
1,726,000
|
|
||
Accrued compensation and benefits
|
|
3,288,000
|
|
|
4,572,000
|
|
||
Accrued professional and legal fees
|
|
661,000
|
|
|
764,000
|
|
||
Accrued contracts payable
|
|
1,407,000
|
|
|
805,000
|
|
||
Other
|
|
1,202,000
|
|
|
1,405,000
|
|
||
|
$
|
13,637,000
|
|
|
$
|
14,441,000
|
|
|
April 30,
2013
|
April 30,
2012
|
||||||
Equipment and software
|
|
$
|
506,000
|
|
$
|
506,000
|
|
|
Less accumulated amortization and depreciation
|
|
(324,000
|
)
|
(252,000
|
)
|
|||
|
$
|
182,000
|
|
$
|
254,000
|
|
|
Year Ended April 30,
|
|||||||||||
|
2013
|
|
2012
|
|
2011
|
|||||||
Cost of sales
|
|
$
|
483,000
|
|
|
$
|
340,000
|
|
|
$
|
318,000
|
|
Selling, general and administrative expenses
|
|
3,139,000
|
|
|
2,071,000
|
|
|
1,930,000
|
|
|||
Research and development expenses
|
|
792,000
|
|
|
461,000
|
|
|
304,000
|
|
|||
Stock-based compensation expense before income tax benefit
|
|
$
|
4,414,000
|
|
|
$
|
2,872,000
|
|
|
$
|
2,552,000
|
|
|
Year Ended April 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Expected volatility
|
|
54
|
%
|
55
|
%
|
58
|
%
|
|||||
Risk-free interest rate
|
|
0.65
|
%
|
0.83
|
%
|
2.60
|
%
|
|||||
Expected term
|
|
4.0
|
|
5.0
|
|
5.0
|
|
|||||
Expected dividend yield
|
|
0.53
|
%
|
None
|
|
None
|
|
|||||
Weighted average fair value per share at grant date
|
|
$
|
13.04
|
|
$
|
15.85
|
|
$
|
11.70
|
|
|
Shares
|
Weighted-Average
Exercise Price
|
|
Weighted-Average
Remaining
Contractual Term
|
|
Aggregate Intrinsic
Value
|
||||||||||
Outstanding at May 1, 2012
|
|
1,664,000
|
|
$
|
16.99
|
|
|
|
||||||||
Grants
|
|
843,000
|
|
32.39
|
|
|
|
|||||||||
Exercised
|
|
(508,000
|
)
|
14.77
|
|
|
|
|||||||||
Forfeitures or expirations
|
|
(12,000
|
)
|
27.36
|
|
|
|
|||||||||
Outstanding at April 30, 2013
|
|
1,987,000
|
|
$
|
24.03
|
|
|
7.1
|
|
|
$
|
18,044,000
|
|
|||
Vested and expected to vest at April 30, 2013
|
|
1,883,000
|
|
$
|
23.71
|
|
|
7.0
|
|
|
$
|
17,689,000
|
|
|||
Exercisable at April 30, 2013
|
|
805,000
|
|
$
|
15.81
|
|
|
4.7
|
|
|
$
|
13,890,000
|
|
|
Shares
|
Weighted-Average
Exercise Price
|
|
Weighted-Average
Remaining
Contractual Term
|
|
Aggregate Intrinsic
Value
|
||||||||||
Outstanding at May 1, 2011
|
|
1,956,000
|
|
$
|
15.40
|
|
|
|
||||||||
Grants
|
|
40,000
|
|
33.54
|
|
|
|
|||||||||
Exercised
|
|
(313,000
|
)
|
9.15
|
|
|
|
|||||||||
Forfeitures or expirations
|
|
(19,000
|
)
|
17.40
|
|
|
|
|||||||||
Outstanding at April 30, 2012
|
|
1,664,000
|
|
$
|
16.99
|
|
|
6.0
|
|
|
$
|
26,002,000
|
|
|||
Vested and expected to vest at April 30, 2012
|
|
1,606,000
|
|
$
|
15.75
|
|
|
6.0
|
|
|
$
|
25,296,000
|
|
|||
Exercisable at April 30, 2012
|
|
1,021,000
|
|
$
|
14.81
|
|
|
4.8
|
|
|
$
|
18,159,000
|
|
|
Shares
|
Weighted-Average
Exercise Price
|
|
Weighted-Average
Remaining
Contractual Term
|
|
Aggregate Intrinsic
Value
|
||||||||||
Outstanding at May 1, 2012
|
|
403,000
|
|
$
|
15.18
|
|
|
|
||||||||
Grants
|
|
100,000
|
|
32.26
|
|
|
|
|||||||||
Exercised
|
|
(57,000
|
)
|
10.19
|
|
|
|
|||||||||
Forfeitures or expirations
|
|
—
|
|
—
|
|
|
|
|||||||||
Outstanding at April 30, 2013
|
|
446,000
|
|
$
|
19.64
|
|
|
5.4
|
|
|
$
|
5,990,000
|
|
|||
Vested and expected to vest at April 30, 2013
|
|
446,000
|
|
$
|
19.64
|
|
|
5.4
|
|
|
$
|
5,990,000
|
|
|||
Exercisable at April 30, 2013
|
|
309,000
|
|
$
|
15.34
|
|
|
3.9
|
|
|
$
|
5,471,000
|
|
|
Shares
|
Weighted-Average
Exercise Price
|
|
Weighted-Average
Remaining
Contractual Term
|
|
Aggregate Intrinsic
Value
|
||||||||||
Outstanding at May 1, 2011
|
|
428,000
|
|
$
|
14.54
|
|
|
|
||||||||
Grants
|
|
—
|
|
—
|
|
|
|
|||||||||
Exercised
|
|
(25,000
|
)
|
4.29
|
|
|
|
|||||||||
Forfeitures or expirations
|
|
—
|
|
—
|
|
|
|
|||||||||
Outstanding at April 30, 2012
|
|
403,000
|
|
$
|
15.18
|
|
|
5.0
|
|
|
$
|
7,023,000
|
|
|||
Vested and expected to vest at April 30, 2012
|
|
403,000
|
|
$
|
15.18
|
|
|
5.0
|
|
|
$
|
7,023,000
|
|
|||
Exercisable at April 30, 2012
|
|
326,000
|
|
$
|
14.45
|
|
|
4.3
|
|
|
$
|
4,709,000
|
|
|
Payments due by April 30,
|
|||||||||||
Lease Commitments
|
|
2014
|
|
2015
|
|
2016
|
||||||
Richmond, Virginia lease
|
|
$
|
88,000
|
|
|
$
|
30,000
|
|
|
—
|
||
Amityville, New York lease
|
|
18,000
|
|
|
19,000
|
|
|
$
|
3,000
|
|
||
Total
|
|
$
|
106,000
|
|
|
$
|
49,000
|
|
|
$
|
3,000
|
|
|
Payments due by April 30,
|
|||||||||||
Inventory Commitments
|
|
2014
|
|
2015
|
|
2016
|
||||||
TussiCaps® manufacturing agreement
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
Dexamethasone inventory commitment
|
|
1,140,000
|
|
|
1,140,000
|
|
|
1,140,000
|
|
|||
Total
|
|
$
|
2,140,000
|
|
|
$
|
2,140,000
|
|
|
$
|
2,140,000
|
|
|
Year Ended April 30,
|
|||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Current:
|
|
|||||||||||
Federal
|
|
$
|
13,974,000
|
|
$
|
22,388,000
|
|
$
|
22,433,000
|
|
||
State
|
|
109,000
|
|
146,000
|
|
122,000
|
|
|||||
Foreign
|
|
55,000
|
|
55,000
|
|
55,000
|
|
|||||
Deferred:
|
|
|||||||||||
Federal
|
|
(7,411,000
|
)
|
(128,000
|
)
|
(1,504,000
|
)
|
|||||
State
|
|
(105,000
|
)
|
(3,000
|
)
|
(24,000
|
)
|
|||||
Total
|
|
$
|
6,622,000
|
|
$
|
22,458,000
|
|
$
|
21,082,000
|
|
|
Year Ended April 30,
|
|||||||||||
|
2013
|
|
2012
|
|
2011
|
|||||||
Statutory rate
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|||
State income tax, net of federal income tax benefit
|
|
0.1
|
%
|
|
0.1
|
%
|
|
0.2
|
%
|
|||
Research and development tax credit
|
|
(1.2
|
)%
|
|
(0.3
|
)%
|
|
(0.5
|
)%
|
|||
IRS Section 199 tax benefit
|
|
(3.8
|
)%
|
|
(2.8
|
)%
|
|
(3.0
|
)%
|
|||
Share-based compensation expense
|
|
(3.0
|
)%
|
|
0.5
|
%
|
|
0.6
|
%
|
|||
Non-deductible expenses
|
|
0.6
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|||
Other
|
|
1.3
|
%
|
|
(0.9
|
)%
|
|
0.1
|
%
|
|||
Effective tax rate
|
|
29.0
|
%
|
|
31.7
|
%
|
|
32.5
|
%
|
|
April 30,
|
|||||||
|
2013
|
2012
|
||||||
Current deferred tax assets:
|
|
|||||||
Allowances and write-offs not currently deductible for accounts receivable and inventory
|
|
$
|
5,744,000
|
|
$
|
4,674,000
|
|
|
Expenses not currently deductible
|
|
6,577,000
|
|
1,257,000
|
|
|||
|
12,321,000
|
|
5,931,000
|
|
||||
Non-current deferred tax assets (liabilities):
|
|
|||||||
Expenses not currently deductible
|
|
2,932,000
|
|
1,766,000
|
|
|||
Tax credits
|
|
2,669,000
|
|
1,711,000
|
|
|||
Depreciation, amortization and unrealized gain on investments
|
|
(976,000
|
)
|
(936,000
|
)
|
|||
Valuation allowance
|
|
(2,669,000
|
)
|
(1,711,000
|
)
|
|||
|
$
|
1,956,000
|
|
$
|
830,000
|
|
|
April 30,
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
Net Sales
|
Gross Accounts
Receivable
|
Net Sales
|
Gross Accounts
Receivable
|
||||||||||||
AmerisourceBergen Corporation
|
|
14
|
%
|
15
|
%
|
11
|
%
|
15
|
%
|
|||||||
Cardinal Health, Inc.
|
|
14
|
%
|
15
|
%
|
12
|
%
|
15
|
%
|
|||||||
McKesson Corporation
|
|
19
|
%
|
22
|
%
|
17
|
%
|
28
|
%
|
|||||||
Walgreens
|
|
15
|
%
|
12
|
%
|
12
|
%
|
9
|
%
|
|||||||
Combined total
|
|
62
|
%
|
64
|
%
|
52
|
%
|
67
|
%
|
●
|
Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
|
●
|
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
|
●
|
Level 3: Significant unobservable inputs.
|
Fair Value Measurements Using Fair Value Hierarchy
|
||||||||
|
Fair Value
|
|
Level 3
|
|||||
Contingent payment liability
|
|
$
|
7,719,000
|
|
|
$
|
7,719,000
|
|
Fair Value Measurements Using Fair Value Hierarchy
|
||||||||
|
Fair Value
|
|
Level 3
|
|||||
Contingent payment liability
|
|
$
|
10,103,000
|
|
|
$
|
10,103,000
|
|
Contingent payment liability – May 1, 2012
|
|
$
|
10,103,000
|
|
Payments on contingent liability
|
|
(2,875,000
|
)
|
|
Interest expense
|
|
491,000
|
|
|
Contingent payment liability – April 30, 2013
|
|
$
|
7,719,000
|
|
|
Hi-Tech Generic
|
|
HCP
|
ECR
|
Corp/Other
|
Total
|
||||||||||||||
For the year ended April 30, 2013
|
|
|
||||||||||||||||||
Net sales
|
|
$
|
196,262,000
|
|
|
$
|
17,700,000
|
|
$
|
18,422,000
|
|
$
|
—
|
$
|
232,384,000
|
|
||||
Cost of goods sold
|
|
106,245,000
|
|
|
6,901,000
|
|
4,158,000
|
|
—
|
|
117,304,000
|
|
||||||||
Gross profit
|
|
$
|
90,017,000
|
|
|
$
|
10,799,000
|
|
$
|
14,264,000
|
|
$
|
—
|
$
|
115,080,000
|
|
||||
Operating income (loss) before income taxes
|
|
$
|
48,945,000
|
|
|
$
|
(2,444,000
|
)
|
$
|
(7,132,000
|
)
|
$
|
(16,496,000
|
)
|
$
|
22,873,000
|
|
|||
For the year ended April 30, 2012
|
|
|
||||||||||||||||||
Net sales
|
|
$
|
197,877,000
|
|
|
$
|
17,234,000
|
|
$
|
14,892,000
|
|
$
|
—
|
$
|
230,003,000
|
|
||||
Cost of goods sold
|
|
87,741,000
|
|
|
7,321,000
|
|
5,742,000
|
|
—
|
|
100,804,000
|
|
||||||||
Gross profit
|
|
$
|
110,136,000
|
|
|
$
|
9,913,000
|
|
$
|
9,150,000
|
|
$
|
—
|
$
|
129,199,000
|
|
||||
Operating income (loss) before income taxes (a)
|
|
$
|
90,394,000
|
|
|
$
|
(823,000
|
)
|
$
|
(6,627,000
|
)
|
$
|
(12,135,000
|
)
|
$
|
70,809,000
|
|
|||
For the year ended April 30, 2011
|
|
|
||||||||||||||||||
Net sales
|
|
$
|
157,361,000
|
|
|
$
|
13,872,000
|
|
$
|
19,615,000
|
|
$
|
—
|
$
|
190,848,000
|
|
||||
Cost of goods sold
|
|
71,797,000
|
|
|
5,806,000
|
|
5,660,000
|
|
—
|
|
83,263,000
|
|
||||||||
Gross profit
|
|
$
|
85,564,000
|
|
|
$
|
8,066,000
|
|
$
|
13,955,000
|
|
$
|
—
|
$
|
107,585,000
|
|
||||
Operating income (loss) before income taxes (a)
|
|
$
|
68,008,000
|
|
|
$
|
2,153,000
|
|
$
|
3,194,000
|
|
$
|
(8,554,000
|
)
|
$
|
64,801,000
|
|
(a)
|
Includes certain reclassifications of amortization expense
|
|
Quarter
|
Year
|
||||||||||||||||||
|
1
|
|
2
|
3
|
4
|
|||||||||||||||
Fiscal 2013
|
|
|
||||||||||||||||||
Net sales
|
|
$
|
52,043,000
|
|
|
$
|
57,537,000
|
|
$
|
64,331,000
|
|
$
|
58,473,000
|
|
$
|
232,384,000
|
|
|||
Gross profit
|
|
$
|
25,321,000
|
|
|
$
|
29,589,000
|
|
$
|
32,879,000
|
|
$
|
27,291,000
|
|
$
|
115,080,000
|
|
|||
Net income (loss)
|
|
$
|
6,004,000
|
|
|
$
|
8,924,000
|
|
$
|
5,940,000
|
|
$
|
(4,617,000
|
)
|
$
|
16,251,000
|
|
|||
Basic earnings (loss) per share
|
|
$
|
0.46
|
|
|
$
|
0.67
|
|
$
|
0.44
|
|
$
|
(0.34
|
)
|
$
|
1.22
|
|
|||
Diluted earnings (loss) per share
|
|
$
|
0.44
|
|
|
$
|
0.66
|
|
$
|
0.43
|
|
$
|
(0.34
|
)
|
$
|
1.19
|
|
|||
Fiscal 2012
|
|
|
||||||||||||||||||
Net sales
|
|
$
|
56,211,000
|
|
|
$
|
56,875,000
|
|
$
|
55,625,000
|
|
$
|
61,292,000
|
|
$
|
230,003,000
|
|
|||
Gross profit
|
|
$
|
33,236,000
|
|
|
$
|
33,396,000
|
|
$
|
30,736,000
|
|
$
|
31,831,000
|
|
$
|
129,199,000
|
|
|||
Net income
|
|
$
|
13,773,000
|
|
|
$
|
13,783,000
|
|
$
|
10,806,000
|
|
$
|
9,989,000
|
|
$
|
48,351,000
|
|
|||
Basic earnings per share
|
|
$
|
1.08
|
|
|
$
|
1.08
|
|
$
|
0.83
|
|
$
|
0.77
|
|
$
|
3.75
|
|
|||
Diluted earnings per share
|
|
$
|
1.05
|
|
|
$
|
1.04
|
|
$
|
0.79
|
|
$
|
0.73
|
|
$
|
3.59
|
|
|||
Fiscal 2011
|
|
|
||||||||||||||||||
Net sales
|
|
$
|
39,309,000
|
|
|
$
|
44,656,000
|
|
$
|
49,700,000
|
|
$
|
57,183,000
|
|
$
|
190,848,000
|
|
|||
Gross profit
|
|
$
|
22,543,000
|
|
|
$
|
25,131,000
|
|
$
|
28,632,000
|
|
$
|
31,279,000
|
|
$
|
107,585,000
|
|
|||
Income from continuing operations
|
|
$
|
8,525,000
|
|
|
$
|
10,423,000
|
|
$
|
10,796,000
|
|
$
|
13,975,000
|
|
$
|
43,719,000
|
|
|||
Income (loss) from discontinued operations, net of tax
|
|
$
|
150,000
|
|
|
$
|
(447,000
|
)
|
$
|
(658,000
|
)
|
$
|
(1,310,000
|
)
|
$
|
(2,265,000
|
)
|
|||
Net income
|
|
$
|
8,675,000
|
|
|
$
|
9,976,000
|
|
$
|
10,138,000
|
|
$
|
12,665,000
|
|
$
|
41,454,000
|
|
|||
Basic earnings (loss) per share:
|
|
|
||||||||||||||||||
Continuing operations
|
|
$
|
0.68
|
|
|
$
|
0.83
|
|
$
|
0.85
|
|
$
|
1.10
|
|
$
|
3.47
|
|
|||
Discontinued operations
|
|
$
|
0.01
|
|
|
$
|
(0.04
|
)
|
$
|
(0.05
|
)
|
$
|
(0.10
|
)
|
$
|
(0.18
|
)
|
|||
Basic earnings per share
|
|
$
|
0.69
|
|
|
$
|
0.79
|
|
$
|
0.80
|
|
$
|
1.00
|
|
$
|
3.29
|
|
|||
Diluted earnings (loss) per share:
|
|
|
||||||||||||||||||
Continuing operations
|
|
$
|
0.66
|
|
|
$
|
0.79
|
|
$
|
0.84
|
|
$
|
1.08
|
|
$
|
3.36
|
|
|||
Discontinued operations
|
|
$
|
0.01
|
|
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
(0.10
|
)
|
$
|
(0.17
|
)
|
|||
Diluted earnings per share
|
|
$
|
0.67
|
|
|
$
|
0.76
|
|
$
|
0.79
|
|
$
|
0.98
|
|
$
|
3.19
|
|
Description
|
|
Balance at
Beginning of
Period
|
|
Charges in
costs and
expenses
|
Deductions
|
Balance at
End of Period
|
||||||||||
Allowance for doubtful accounts
|
|
|
||||||||||||||
Year ended April 30, 2013
|
|
$
|
500,000
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
500,000
|
|
||
Year ended April 30, 2012
|
|
$
|
500,000
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
500,000
|
|
||
Year ended April 30, 2011
|
|
$
|
400,000
|
|
|
$
|
102,000
|
(a)
|
$
|
2,000
|
(b)
|
$
|
500,000
|
|
||
Accumulated depreciation
|
|
|
||||||||||||||
Year ended April 30, 2013
|
|
$
|
28,769,000
|
|
|
$
|
4,074,000
|
|
$
|
26,000
|
(c)
|
$
|
32,817,000
|
|
||
Year ended April 30, 2012
|
|
$
|
25,382,000
|
|
|
$
|
3,387,000
|
|
$
|
—
|
|
$
|
28,769,000
|
|
||
Year ended April 30, 2011
|
|
$
|
22,668,000
|
|
|
$
|
2,722,000
|
|
$
|
8,000
|
(c)
|
$
|
25,382,000
|
|
(a)
|
Change in reserve required
|
(b)
|
Direct write-off of receivable
|
(c)
|
Disposition of equipment or retirements
|
|
January 31,
2014
|
April 30,
2013
|
||||||
|
(unaudited)
|
|||||||
ASSETS
|
|
|||||||
CURRENT ASSETS:
|
|
|||||||
Cash and cash equivalents
|
|
$
|
86,447,000
|
|
$
|
100,610,000
|
|
|
Accounts receivable, less allowances
|
|
70,889,000
|
|
63,775,000
|
|
|||
Inventory
|
|
46,708,000
|
|
39,229,000
|
|
|||
Prepaid income taxes
|
|
6,454,000
|
|
—
|
||||
Deferred income taxes
|
|
9,177,000
|
|
12,321,000
|
|
|||
Other current assets
|
|
3,934,000
|
|
3,622,000
|
|
|||
TOTAL CURRENT ASSETS
|
|
$
|
223,609,000
|
|
$
|
219,557,000
|
|
|
Property and equipment, net
|
|
35,125,000
|
|
32,168,000
|
|
|||
Intangible assets, net
|
|
38,328,000
|
|
40,887,000
|
|
|||
Deferred income taxes
|
|
3,339,000
|
|
1,956,000
|
|
|||
Other assets
|
|
274,000
|
|
428,000
|
|
|||
TOTAL ASSETS
|
|
$
|
300,675,000
|
|
$
|
294,996,000
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|||||||
CURRENT LIABILITIES:
|
|
|||||||
Accounts payable
|
|
$
|
9,635,000
|
|
$
|
9,768,000
|
|
|
Accrued expenses
|
|
13,838,000
|
|
13,637,000
|
|
|||
Accrued legal settlements
|
|
1,237,000
|
|
16,200,000
|
|
|||
Current portion of long-term debt
|
|
—
|
355,000
|
|
||||
Current portion of contingent payment liability
|
|
2,875,000
|
|
2,875,000
|
|
|||
Taxes payable
|
|
—
|
1,061,000
|
|
||||
TOTAL CURRENT LIABILITIES
|
|
$
|
27,585,000
|
|
$
|
43,896,000
|
|
|
Contingent payment liability, net of current portion
|
|
2,921,000
|
|
4,844,000
|
|
|||
Long-term debt, net of current portion
|
|
—
|
888,000
|
|
||||
TOTAL LIABILITIES
|
|
$
|
30,506,000
|
|
$
|
49,628,000
|
|
|
Commitments and Contingencies (Note 14)
|
|
|||||||
STOCKHOLDERS’ EQUITY
|
|
|||||||
Preferred stock, par value $.01 per share; authorized 3,000,000 shares, none issued
|
|
|||||||
Common stock, par value $.01 per share; authorized 50,000,000 shares, issued 16,421,000 at January 31, 2014 and 16,067,000 at April 30, 2013, respectively
|
|
164,000
|
|
161,000
|
|
|||
Additional paid-in capital
|
|
113,037,000
|
|
101,203,000
|
|
|||
Retained earnings
|
|
182,393,000
|
|
168,305,000
|
|
|||
Treasury stock, 2,517,000 and 2,491,000 shares of common stock, at cost on January 31, 2014 and April 30, 2013, respectively
|
|
(25,425,000
|
)
|
(24,301,000
|
)
|
|||
TOTAL STOCKHOLDERS’ EQUITY
|
|
$
|
270,169,000
|
|
$
|
245,368,000
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
300,675,000
|
|
$
|
294,996,000
|
|
|
Three months ended
January 31,
|
Nine months ended
January 31,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
NET SALES
|
|
$
|
59,902,000
|
|
$
|
64,331,000
|
|
$
|
169,004,000
|
|
$
|
173,911,000
|
|
|||
Cost of goods sold
|
|
27,962,000
|
|
31,452,000
|
|
80,329,000
|
|
86,122,000
|
|
|||||||
GROSS PROFIT
|
|
31,940,000
|
|
32,879,000
|
|
88,675,000
|
|
87,789,000
|
|
|||||||
COST AND EXPENSES:
|
|
|||||||||||||||
Selling, general and administrative expenses
|
|
14,212,000
|
|
16,538,000
|
|
40,761,000
|
|
38,875,000
|
|
|||||||
Amortization expense
|
|
1,651,000
|
|
1,618,000
|
|
4,960,000
|
|
5,136,000
|
|
|||||||
Research and product development costs
|
|
4,449,000
|
|
5,964,000
|
|
13,499,000
|
|
13,779,000
|
|
|||||||
Royalty income
|
|
(243,000
|
)
|
(368,000
|
)
|
(813,000
|
)
|
(1,403,000
|
)
|
|||||||
Contract research income
|
|
—
|
—
|
(554,000
|
)
|
(2,000
|
)
|
|||||||||
Settlements and loss contingencies
|
|
—
|
—
|
10,200,000
|
|
—
|
||||||||||
Interest expense
|
|
69,000
|
|
138,000
|
|
245,000
|
|
441,000
|
|
|||||||
Interest income and other
|
|
(509,000
|
)
|
(60,000
|
)
|
(599,000
|
)
|
(183,000
|
)
|
|||||||
TOTAL
|
|
19,629,000
|
|
23,830,000
|
|
67,699,000
|
|
56,643,000
|
|
|||||||
Income before income tax expense
|
|
12,311,000
|
|
9,049,000
|
|
20,976,000
|
|
31,146,000
|
|
|||||||
Income tax expense
|
|
3,960,000
|
|
3,109,000
|
|
6,888,000
|
|
10,278,000
|
|
|||||||
NET INCOME
|
|
$
|
8,351,000
|
|
$
|
5,940,000
|
|
$
|
14,088,000
|
|
$
|
20,868,000
|
|
|||
BASIC INCOME PER SHARE
|
|
$
|
0.60
|
|
$
|
0.44
|
|
$
|
1.03
|
|
$
|
1.58
|
|
|||
DILUTED INCOME PER SHARE
|
|
$
|
0.59
|
|
$
|
0.43
|
|
$
|
1.00
|
|
$
|
1.53
|
|
|||
Weighted average common shares outstanding, basic
|
|
13,863,000
|
|
13,409,000
|
|
13,694,000
|
|
13,216,000
|
|
|||||||
Effect of potential common shares
|
|
357,000
|
|
321,000
|
|
406,000
|
|
387,000
|
|
|||||||
Weighted average common shares outstanding, diluted
|
|
14,220,000
|
|
13,730,000
|
|
14,100,000
|
|
13,603,000
|
|
|
Three months ended
January 31,
|
|
Nine months ended
January 31,
|
|||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|||||||||
NET INCOME
|
|
$
|
8,351,000
|
|
|
$
|
5,940,000
|
|
|
$
|
14,088,000
|
|
|
$
|
20,868,000
|
|
Other comprehensive income, net of tax
|
|
—
|
|
—
|
|
—
|
|
—
|
||||||||
TOTAL COMPREHENSIVE INCOME
|
|
$
|
8,351,000
|
|
|
$
|
5,940,000
|
|
|
$
|
14,088,000
|
|
|
$
|
20,868,000
|
|
|
Nine months ended
January 31,
|
|||||||
|
2014
|
2013
|
||||||
NET CASH FLOWS (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
|
$
|
(9,074,000
|
)
|
$
|
18,674,000
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|||||||
Purchases of property, plant and equipment
|
|
(6,399,000
|
)
|
(4,199,000
|
)
|
|||
Purchase of intangible assets
|
|
(2,475,000
|
)
|
(1,350,000
|
)
|
|||
Proceeds from sale of intangible assets
|
|
74,000
|
|
104,000
|
|
|||
Payment of contingent liability
|
|
(1,923,000
|
)
|
(2,156,000
|
)
|
|||
NET CASH (USED IN) INVESTING ACTIVITIES
|
|
(10,723,000
|
)
|
(7,601,000
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|||||||
Issuance of common stock on exercise of options
|
|
5,486,000
|
|
6,628,000
|
|
|||
Tax benefits of stock incentives
|
|
1,391,000
|
|
2,790,000
|
|
|||
Payment of dividend
|
|
—
|
(20,176,000
|
)
|
||||
Payments of long-term debt
|
|
(1,243,000
|
)
|
(266,000
|
)
|
|||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
5,634,000
|
|
(11,024,000
|
)
|
|||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
|
(14,163,000
|
)
|
49,000
|
|
|||
Cash and cash equivalents at beginning of period
|
|
100,610,000
|
|
87,549,000
|
|
|||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
86,447,000
|
|
$
|
87,598,000
|
|
|
Supplemental disclosures of cash flow information:
|
|
|||||||
Interest paid
|
|
$
|
245,000
|
|
$
|
441,000
|
|
|
Income taxes paid
|
|
$
|
11,230,000
|
|
$
|
3,000,000
|
|
|
Non-cash financing transaction:
|
|
|||||||
Surrender of common stock as exercise price for options
|
|
$
|
1,124,000
|
|
$
|
1,301,000
|
|
●
|
the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), as amended;
|
●
|
certain materiality exceptions, the accuracy of the representations and warranties made by us, Parent and Purchaser, respectively;
|
●
|
compliance in all material respects by us, Parent and Purchaser with each of our respective obligations under the Merger Agreement;
|
●
|
the absence of any change or effect that, individually or in the aggregate, has had a Material Adverse Effect or Purchaser Material Adverse Effect (as such terms are defined in the Merger Agreement); and
|
●
|
the absence of any order, injunction or decree or any statute, rule or regulation that prohibits or makes illegal the consummation of the Merger.
|
|
January 31, 2014
|
April 30, 2013
|
||||||
Accounts receivable, gross
|
|
$
|
101,787,000
|
|
$
|
86,457,000
|
|
|
Adjustment for returns and price allowances (a)
|
|
(30,398,000
|
)
|
(22,182,000
|
)
|
|||
Allowance for doubtful accounts
|
|
(500,000
|
)
|
(500,000
|
)
|
|||
Accounts receivable, net
|
|
$
|
70,889,000
|
|
$
|
63,775,000
|
|
(a)
|
Directly reduces gross revenue
|
●
|
a change in retail customer mix
|
●
|
a change in negotiated terms with retailers
|
●
|
product sales mix at the wholesaler
|
●
|
retail inventory levels
|
●
|
changes in Wholesale Acquisition Cost (“WAC”)
|
For the nine months ended January 31, 2014
|
|
Beginning
Balance
May 1
|
|
Current
Provision
|
|
Actual Credits
in Current
Period
|
Ending
Balance
January 31
|
|||||||||
Chargebacks
|
|
$
|
13,357,000
|
|
|
$
|
137,292,000
|
|
|
$
|
(135,298,000
|
)
|
$
|
15,351,000
|
|
|
Sales discounts
|
|
1,950,000
|
|
|
7,773,000
|
|
|
(7,361,000
|
)
|
2,362,000
|
|
|||||
Sales allowances & returns
|
|
6,875,000
|
|
|
39,645,000
|
|
|
(33,835,000
|
)
|
12,685,000
|
|
|||||
Total adjustment for returns & price allowances
|
|
$
|
22,182,000
|
|
|
$
|
184,710,000
|
|
|
$
|
(176,494,000
|
)
|
$
|
30,398,000
|
|
|
|
|
|
||||||||||||||
For the nine months ended January 31, 2013
|
|
|
|
|||||||||||||
Chargebacks
|
|
$
|
10,477,000
|
|
|
$
|
112,717,000
|
|
|
$
|
(112,420,000
|
)
|
$
|
10,774,000
|
|
|
Sales discounts
|
|
1,813,000
|
|
|
7,251,000
|
|
|
(6,763,000
|
)
|
2,301,000
|
|
|||||
Sales allowances & returns
|
|
5,745,000
|
|
|
40,525,000
|
|
|
(38,984,000
|
)
|
7,286,000
|
|
|||||
Total adjustment for returns & price allowances
|
|
$
|
18,035,000
|
|
|
$
|
160,493,000
|
|
|
$
|
(158,167,000
|
)
|
$
|
20,361,000
|
|
|
January 31, 2014
|
|
April 30, 2013
|
|||||
Finished goods
|
|
$
|
19,734,000
|
|
|
$
|
14,575,000
|
|
Work in process
|
|
473,000
|
|
|
352,000
|
|
||
Raw materials
|
|
26,501,000
|
|
|
24,302,000
|
|
||
Total inventory
|
|
$
|
46,708,000
|
|
|
$
|
39,229,000
|
|
|
January 31, 2014
|
April 30, 2013
|
||||||
Land and building and improvements
|
|
$
|
22,161,000
|
|
$
|
21,592,000
|
|
|
Machinery and equipment
|
|
40,147,000
|
|
35,145,000
|
|
|||
Transportation equipment
|
|
69,000
|
|
69,000
|
|
|||
Computer equipment and systems
|
|
7,650,000
|
|
6,866,000
|
|
|||
Furniture and fixtures
|
|
1,357,000
|
|
1,313,000
|
|
|||
|
$
|
71,384,000
|
|
$
|
64,985,000
|
|
||
Accumulated depreciation and amortization
|
|
(36,259,000
|
)
|
(32,817,000
|
)
|
|||
Total property and equipment
|
|
$
|
35,125,000
|
|
$
|
32,168,000
|
|
|
January 31, 2014
|
April 30, 2013
|
||||||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
Amortization Period
|
|||||||||||
TussiCaps® intangible assets
|
|
$
|
22,126,000
|
|
|
$
|
(7,221,000
|
)
|
$
|
22,126,000
|
|
|
$
|
(4,980,000
|
)
|
5-10 years
|
||
ECR intangible assets (a)
|
|
7,334,000
|
|
|
(3,098,000
|
)
|
7,334,000
|
|
|
(2,554,000
|
)
|
8-10 years
|
||||||
Mag-Ox® intangible assets
|
|
4,100,000
|
|
|
(1,606,000
|
)
|
4,100,000
|
|
|
(1,298,000
|
)
|
10 years
|
||||||
Clobetasol intangible assets
|
|
4,000,000
|
|
|
(1,500,000
|
)
|
4,000,000
|
|
|
(1,200,000
|
)
|
10 years
|
||||||
Orbivan® and Zolvit® intangible assets
|
|
3,078,000
|
|
|
(1,370,000
|
)
|
3,152,000
|
|
|
(1,028,000
|
)
|
3-10 years
|
||||||
Sinus Buster® intangible assets
|
|
2,513,000
|
|
|
(454,000
|
)
|
2,513,000
|
|
|
(260,000
|
)
|
10 years
|
||||||
Zolpimist® intangible assets
|
|
3,000,000
|
|
|
(1,125,000
|
)
|
3,000,000
|
|
|
(844,000
|
)
|
10 years
|
||||||
Zostrix® intangible assets
|
|
5,354,000
|
|
|
(4,065,000
|
)
|
5,354,000
|
|
|
(3,757,000
|
)
|
3-11.5 years
|
||||||
In-licensed ANDA intangible assets
|
|
3,000,000
|
|
|
—
|
1,500,000
|
|
|
—
|
|
10 years
|
|||||||
KVK License intangible assets
|
|
1,250,000
|
|
|
(94,000
|
)
|
1,250,000
|
|
|
—
|
|
10 years
|
||||||
Midlothian intangible assets
|
|
1,011,000
|
|
|
(549,000
|
)
|
1,011,000
|
|
|
(460,000
|
)
|
3-10 years
|
||||||
Partnered ANDA intangible assets
|
|
500,000
|
|
|
—
|
500,000
|
|
|
—
|
|
10 years
|
|||||||
Vosol® and Vosol® HC intangible assets
|
|
700,000
|
|
|
(421,000
|
)
|
700,000
|
|
|
(368,000
|
)
|
10 years
|
||||||
Flunisolide intangible assets
|
|
1,500,000
|
|
|
(113,000
|
)
|
625,000
|
|
|
—
|
|
10 years
|
||||||
Other intangible assets
|
|
1,701,000
|
|
|
(1,223,000
|
)
|
1,601,000
|
|
|
(1,130,000
|
)
|
5-10 years
|
||||||
|
$
|
61,167,000
|
|
|
$
|
(22,839,000
|
)
|
$
|
58,766,000
|
|
|
$
|
(17,879,000
|
)
|
(a)
|
Includes $545,000 of goodwill
|
|
Three months ended January 31,
|
|
Nine months ended January 31,
|
|||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|||||||||
Cost of goods sold
|
|
$
|
113,000
|
|
|
$
|
125,000
|
|
|
$
|
395,000
|
|
|
$
|
342,000
|
|
Selling, general and administrative expenses
|
|
794,000
|
|
|
923,000
|
|
|
2,708,000
|
|
|
2,194,000
|
|
||||
Research and product development costs
|
|
234,000
|
|
|
231,000
|
|
|
733,000
|
|
|
569,000
|
|
||||
Stock-based compensation expense
|
|
$
|
1,141,000
|
|
|
$
|
1,279,000
|
|
|
$
|
3,836,000
|
|
|
$
|
3,105,000
|
|
|
May 22, 2013
|
November 7, 2012
|
August 1, 2012
|
July 16, 2012
|
||||||||||||
Expected volatility
|
|
53
|
%
|
54
|
%
|
54
|
%
|
54
|
%
|
|||||||
Risk-free interest rate
|
|
0.91
|
%
|
0.67
|
%
|
0.60
|
%
|
0.60
|
%
|
|||||||
Expected term
|
|
4.00
|
|
4.00
|
|
4.00
|
|
4.00
|
|
|||||||
Expected dividend yield
|
|
0.00
|
%
|
1.00
|
%
|
0.00
|
%
|
0.00
|
%
|
|||||||
Weighted average fair value per share at grant date
|
|
$
|
13.92
|
|
$
|
12.43
|
|
$
|
13.79
|
|
$
|
13.62
|
|
|
Shares
|
Weighted-Average
Exercise Price
|
|
Weighted-Average
Remaining
Contractual Term
|
|
Aggregate Intrinsic
Value
|
||||||||||
Outstanding at May 1, 2013
|
|
1,987,000
|
|
$
|
24.03
|
|
|
|
||||||||
Grants
|
|
40,000
|
|
33.81
|
|
|
|
|||||||||
Exercised
|
|
(283,000
|
)
|
19.07
|
|
|
|
|||||||||
Forfeitures or expirations
|
|
(22,000
|
)
|
29.52
|
|
|
|
|||||||||
Outstanding at January 31, 2014
|
|
1,722,000
|
|
$
|
25.00
|
|
|
6.8
|
|
|
$
|
31,449,000
|
|
|||
Vested and expected to vest at January 31, 2014
|
|
1,649,000
|
|
$
|
24.73
|
|
|
6.7
|
|
|
$
|
30,560,000
|
|
|||
Exercisable at January 31, 2014
|
|
909,000
|
|
$
|
19.54
|
|
|
5.4
|
|
|
$
|
21,569,000
|
|
|
Shares
|
Weighted-Average
Exercise Price
|
|
Weighted-Average
Remaining
Contractual Term
|
|
Aggregate Intrinsic
Value
|
||||||||||
Outstanding at May 1, 2013
|
|
446,000
|
|
$
|
19.64
|
|
|
|
||||||||
Grants
|
|
—
|
—
|
|
|
|||||||||||
Exercised
|
|
(71,000
|
)
|
16.98
|
|
|
|
|||||||||
Forfeitures or expirations
|
|
—
|
—
|
|
|
|||||||||||
Outstanding at January 31, 2014
|
|
375,000
|
|
$
|
20.15
|
|
|
5.2
|
|
|
$
|
8,672,000
|
|
|||
Vested and expected to vest at January 31, 2014
|
|
375,000
|
|
$
|
20.15
|
|
|
5.2
|
|
|
$
|
8,672,000
|
|
|||
Exercisable at January 31, 2014
|
|
288,000
|
|
$
|
16.90
|
|
|
4.3
|
|
|
$
|
7,585,000
|
|
|
January 31,
|
|||||||||||||||
|
2014
|
2013
|
||||||||||||||
|
Net Sales
|
Gross Accounts
Receivable
|
Net Sales
|
Gross Accounts
Receivable
|
||||||||||||
AmerisourceBergen Corporation
|
|
19
|
%
|
22
|
%
|
15
|
%
|
15
|
%
|
|||||||
Cardinal Health, Inc.
|
|
12
|
%
|
11
|
%
|
13
|
%
|
13
|
%
|
|||||||
McKesson Corporation
|
|
18
|
%
|
26
|
%
|
21
|
%
|
27
|
%
|
|||||||
Walgreens
|
|
17
|
%
|
10
|
%
|
16
|
%
|
14
|
%
|
|||||||
Combined total
|
|
66
|
%
|
69
|
%
|
65
|
%
|
69
|
%
|
•
|
Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
|
•
|
Level 3: Significant unobservable inputs.
|
Fair Value Measurements Using Fair Value Hierarchy
|
||||||||
|
Fair Value
|
|
Level 3
|
|||||
Contingent payment liability
|
|
$
|
5,796,000
|
|
|
$
|
5,796,000
|
|
Fair Value Measurements Using Fair Value Hierarchy
|
||||||||
|
Fair Value
|
|
Level 3
|
|||||
Contingent payment liability
|
|
$
|
7,719,000
|
|
|
$
|
7,719,000
|
|
Contingent payment liability – May 1, 2013
|
|
$
|
7,719,000
|
|
Payments on contingent liability
|
|
(2,156,000
|
)
|
|
Interest expense
|
|
233,000
|
|
|
Contingent payment liability – January 31, 2014
|
|
$
|
5,796,000
|
|
|
Hi-Tech Generic
|
HCP
|
ECR
|
Corp/Other
|
Total
|
|||||||||||||||
For the three months ended January 31, 2014
|
|
|||||||||||||||||||
Net sales
|
|
$
|
47,761,000
|
|
$
|
4,106,000
|
|
$
|
8,035,000
|
|
$
|
—
|
$
|
59,902,000
|
|
|||||
Cost of goods sold
|
|
25,078,000
|
|
1,595,000
|
|
1,289,000
|
|
—
|
27,962,000
|
|
||||||||||
Gross profit
|
|
$
|
22,683,000
|
|
$
|
2,511,000
|
|
$
|
6,746,000
|
|
$
|
—
|
$
|
31,940,000
|
|
|||||
Amortization expense
|
|
(210,000
|
)
|
(270,000
|
)
|
(1,171,000
|
)
|
—
|
(1,651,000
|
)
|
||||||||||
Income (loss) before income taxes
|
|
$
|
16,017,000
|
|
$
|
(518,000
|
)
|
$
|
884,000
|
|
$
|
(4,072,000
|
)
|
$
|
12,311,000
|
|
||||
For the three months ended January 31, 2013
|
|
|||||||||||||||||||
Net sales
|
|
$
|
54,148,000
|
|
$
|
5,104,000
|
|
$
|
5,079,000
|
|
$
|
—
|
$
|
64,331,000
|
|
|||||
Cost of goods sold
|
|
28,592,000
|
|
1,920,000
|
|
940,000
|
|
—
|
31,452,000
|
|
||||||||||
Gross profit
|
|
$
|
25,556,000
|
|
$
|
3,184,000
|
|
$
|
4,139,000
|
|
$
|
—
|
$
|
32,879,000
|
|
|||||
Amortization expense
|
|
(172,000
|
)
|
(270,000
|
)
|
(1,176,000
|
)
|
—
|
(1,618,000
|
)
|
||||||||||
Income (loss) before income taxes
|
|
$
|
17,314,000
|
|
$
|
(1,311,000
|
)
|
$
|
(2,070,000
|
)
|
$
|
(4,884,000
|
)
|
$
|
9,049,000
|
|
||||
|
Hi-Tech Generic
|
HCP
|
ECR
|
Corp/Other
|
Total
|
|||||||||||||||
For the nine months ended January 31, 2014
|
|
|||||||||||||||||||
Net sales
|
|
$
|
139,022,000
|
|
$
|
11,689,000
|
|
$
|
18,293,000
|
|
$
|
—
|
$
|
169,004,000
|
|
|||||
Cost of goods sold
|
|
72,162,000
|
|
4,599,000
|
|
3,568,000
|
|
—
|
80,329,000
|
|
||||||||||
Gross profit
|
|
$
|
66,860,000
|
|
$
|
7,090,000
|
|
$
|
14,725,000
|
|
$
|
—
|
$
|
88,675,000
|
|
|||||
Amortization expense
|
|
(629,000
|
)
|
(810,000
|
)
|
(3,521,000
|
)
|
—
|
(4,960,000
|
)
|
||||||||||
Income (loss) before income taxes
|
|
$
|
46,827,000
|
|
$
|
287,000
|
|
$
|
(1,498,000
|
)
|
$
|
(24,640,000
|
)
|
$
|
20,976,000
|
|
||||
For the nine months ended January 31, 2013
|
|
|||||||||||||||||||
Net sales
|
|
$
|
147,356,000
|
|
$
|
12,788,000
|
|
$
|
13,767,000
|
|
$
|
—
|
$
|
173,911,000
|
|
|||||
Cost of goods sold
|
|
77,750,000
|
|
5,244,000
|
|
3,128,000
|
|
—
|
86,122,000
|
|
||||||||||
Gross profit
|
|
$
|
69,606,000
|
|
$
|
7,544,000
|
|
$
|
10,639,000
|
|
$
|
—
|
$
|
87,789,000
|
|
|||||
Amortization expense
|
|
(763,000
|
)
|
(844,000
|
)
|
(3,529,000
|
)
|
—
|
(5,136,000
|
)
|
||||||||||
Income (loss) before income taxes
|
|
$
|
49,499,000
|
|
$
|
(2,057,000
|
)
|
$
|
(4,001,000
|
)
|
$
|
(12,295,000
|
)
|
$
|
31,146,000
|
|
Akorn
(as of March
31, 2014)
|
Hi-Tech
(as of January
31, 2014)
|
Pro Forma
Adjustments
(Note 3)
|
Pro Forma
Combined
|
|||||||||||||||||
ASSETS:
|
||||||||||||||||||||
CURRENT ASSETS:
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 45,606 | $ | 86,447 | $ | (77,687 | ) |
( a )
|
$ | 54,366 | ||||||||||
Trade accounts receivable, net
|
65,500 | 70,889 | 136,389 | |||||||||||||||||
Inventories, net
|
62,013 | 46,708 | 6,738 |
( b )
|
115,459 | |||||||||||||||
Deferred taxes, current
|
8,038 | 9,177 | 2,162 | ( h ) | 19,377 | |||||||||||||||
Prepaid expenses and other current assets
|
4,559 | 10,388 | 14,947 | |||||||||||||||||
TOTAL CURRENT ASSETS:
|
185,716 | 223,609 | (68,788 | ) | 340,537 | |||||||||||||||
PROPERTY, PLANT AND EQUIPMENT, NET
|
87,675 | 35,125 | 10,936 |
( c )
|
133,736 | |||||||||||||||
OTHER LONG TERM ASSETS:
|
||||||||||||||||||||
Goodwill
|
30,437 | 545 | 170,762 |
( d )
|
201,744 | |||||||||||||||
Product licensing rights, net
|
122,933 | 37,306 | 297,653 |
( e )
|
457,892 | |||||||||||||||
Other intangible assets, net
|
14,283 | 477 | 14,723 |
( e )
|
29,483 | |||||||||||||||
Deferred financing costs
|
3,570 | - | 13,631 |
( f )
|
17,201 | |||||||||||||||
Long-term investments
|
10,012 | - | 10,012 | |||||||||||||||||
Deferred taxes, non-current
|
3,330 | 3,339 |
|
6,669 | ||||||||||||||||
Other
|
3,556 | 274 | 3,830 | |||||||||||||||||
TOTAL OTHER LONG-TERM ASSETS
|
188,121 | 41,941 | 496,770 | 726,831 | ||||||||||||||||
TOTAL ASSETS
|
$ | 461,512 | $ | 300,675 | $ | 438,918 | $ | 1,201,105 | ||||||||||||
LIABILITY AND SHAREHOLDERS’ EQUITY:
|
||||||||||||||||||||
CURRENT LIABILITIES:
|
||||||||||||||||||||
Trade accounts payable
|
$ | 30,632 | $ | 9,635 | $ | $ | 40,267 | |||||||||||||
Contingent consideration, current
|
18,898 | 2,875 | (575 | ) |
( g )
|
21,198 | ||||||||||||||
Accrued compensation
|
4,453 | - | 4,453 | |||||||||||||||||
Accrued royalties
|
6,480 | - | 6,480 | |||||||||||||||||
Deferred Tax Liability, current
|
- | - | 2,493 |
( h )
|
2,493 | |||||||||||||||
Income taxes payable
|
6,559 | - | 6,559 | |||||||||||||||||
Long-term debt, current
|
- | - | 3,000 |
( i )
|
3,000 | |||||||||||||||
Accrued expenses and other liabilities
|
9,039 | 15,075 | 24,114 | |||||||||||||||||
TOTAL CURRENT LIABILITIES
|
76,061 | 27,585 | 4,918 | 108,564 | ||||||||||||||||
LONG-TERM LIABILITIES:
|
||||||||||||||||||||
Long-term debt, net of current portion
|
109,825 | - | 597,000 |
( i )
|
706,825 | |||||||||||||||
Contingent consideration, non-current
|
- | 2,921 | (121 | ) |
( g )
|
2,800 | ||||||||||||||
Long-term portion of deferred tax liabilities
|
- | - | 119,626 |
( h )
|
119,626 | |||||||||||||||
Lease incentive obligations and other long-term liabilities
|
1,577 | - | 1,577 | |||||||||||||||||
TOTAL LONG-TERM LIABILITIES
|
111,402 | 2,921 | 716,505 | 830,828 | ||||||||||||||||
TOTAL LIABILITIES
|
187,463 | 30,506 | 721,423 | 939,392 | ||||||||||||||||
SHAREHOLDERS’ EQUITY:
|
||||||||||||||||||||
Common stock
|
241,571 | 113,037 | (113,037 | ) |
( j )
|
241,571 | ||||||||||||||
Additional paid in capital
|
164 | (164 | ) |
( j )
|
- | |||||||||||||||
Warrants to acquire common stock
|
17,946 | - | - | 17,946 | ||||||||||||||||
Treasury stock
|
- | (25,425 | ) | 25,425 |
( j )
|
- | ||||||||||||||
Retained earnings (accumulated deficit)
|
25,194 | 182,393 | (194,729 | ) |
( j )
|
12,858 |
Accumulated other comprehensive loss
|
(10,662 | ) | - | - | (10,662 | ) | ||||||||||||||
TOTAL SHAREHOLDERS’ EQUITY
|
274,049 | 270,169 | (282,505 | ) | 261,713 | |||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 461,512 | $ | 300,675 | $ | 438,918 | $ | 1,201,105 |
Akorn
Year Ended
12/31/13
|
Hi-Tech
12 months ended
1/31/14 (1)
|
Pro Forma
Adjustments
(Note 3)
|
Pro Forma
Combined
|
|||||||||||||||||
Revenues
|
$ | 317,711 | $ | 227,477 | $ | $ | 545,188 | |||||||||||||
Cost of sales (exclusive of amortization of
intangibles included below)
|
145,807 | 111,511 | 12,708 |
( k )
|
270,026 | |||||||||||||||
GROSS PROFIT
|
171,904 | 115,966 | (12,708 | ) | 275,162 | |||||||||||||||
Selling, general and administrative expenses
|
53,508 | 55,461 | (5,435 | ) |
( l )
|
103,534 | ||||||||||||||
Acquisition-related costs
|
2,912 | - | (2,395 | ) |
( m )
|
517 | ||||||||||||||
Research and development expenses
|
19,858 | 17,051 | 36,909 | |||||||||||||||||
Amortization of intangibles
|
7,422 | 6,566 | 15,664 |
( n )
|
29,652 | |||||||||||||||
TOTAL OPERATING EXPENSES
|
83,700 | 79,078 | 7,834 | 170,612 | ||||||||||||||||
OPERATING INCOME
|
88,204 | 36,888 | (20,542 | ) | 104,550 | |||||||||||||||
Amortization of deferred financing costs
|
(842 | ) | - | (1,924 | ) |
( o )
|
(2,766 | ) | ||||||||||||
Interest expense, net
|
(8,649 | ) | 362 | (26,942 | ) |
( p )
|
(35,229 | ) | ||||||||||||
Equity in earnings of uncombined joint venture
|
80 | - | 80 | |||||||||||||||||
Bargain purchase gain
|
3,707 | - | 3,707 | |||||||||||||||||
Settlements and loss contingencies
|
- | (26,400 | ) | (26,400 | ) | |||||||||||||||
Other non-operating income (expense), net
|
395 | 1,853 | 2,248 | |||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES BEFORE NON-RECURRING
CHARGES DIRECTLY ATTRIBUTABLE TO THE TRANSACTION
|
82,895 | 12,703 | (49,408 | ) | 46,190 | |||||||||||||||
Income tax provision (benefit)
|
30,533 | 3,232 | (16,675 | ) |
( q )
|
17,090 | ||||||||||||||
COMBINED INCOME (LOSS) BEFORE NON-RECURRING CHARGES
DIRECTLY ATTRIBUTABLE TO THE TRANSACTION
|
$ | 52,362 | $ | 9,471 | $ | (32,734 | ) | $ | 29,099 | |||||||||||
COMBINED INCOME (LOSS) BEFORE NON-RECURRING CHARGES
DIRECTLY ATTRIBUTABLE TO THE TRANSACTION PER SHARE:
|
||||||||||||||||||||
BASIC
|
$ | 0.30 | ||||||||||||||||||
DILUTED
|
$ | 0.26 | ||||||||||||||||||
SHARES USED IN COMPUTING COMBINED INCOME (LOSS)
BEFORE NON-RECURRING CHARGES DIRECTLY ATTRIBUTABLE
TO THE TRANSACTION:
|
||||||||||||||||||||
BASIC
|
96,181 | |||||||||||||||||||
DILUTED
|
113,898 |
(1)
|
Hi-Tech's financial information was derived by adding the nine months ended January 31, 2014 to its year ended April 30, 2013, less the nine months ended January 31, 2013.
|
Akorn
3 months
Ended 3/31/14
|
Hi-Tech 3
months ended
1/31/14 (2)
|
Pro Forma
Adjustments
(Note 3)
|
Pro Forma
Combined
|
|||||||||||||||||
Revenues
|
$ | 90,622 | $ | 59,902 | $ | $ | 150,524 | |||||||||||||
Cost of sales (exclusive of amortization of
intangibles included below)
|
40,966 | 27,962 | 1,605 |
( k )
|
70,533 | |||||||||||||||
GROSS PROFIT
|
49,656 | 31,940 | (1,605 | ) | 79,991 | |||||||||||||||
Selling, general and administrative expenses
|
16,586 | 14,212 | (1,047 | ) |
( l )
|
29,751 | ||||||||||||||
Acquisition-related costs
|
454 | - | (372 | ) |
( m )
|
82 | ||||||||||||||
Research and development expenses
|
4,419 | 4,449 | 8,868 | |||||||||||||||||
Amortization of intangibles
|
4,757 | 1,651 | 3,907 |
( n )
|
10,315 | |||||||||||||||
TOTAL OPERATING EXPENSES
|
26,216 | 20,312 | 2,487 | 49,015 | ||||||||||||||||
OPERATING INCOME
|
23,440 | 11,628 | (4,092 | ) | 30,976 | |||||||||||||||
Amortization of deferred financing costs
|
(6,154 | ) | - | (481 | ) |
( o )
|
(6,635 | ) | ||||||||||||
Interest expense, net
|
(2,161 | ) | 440 | (2,933 | ) |
( p )
|
(4,654 | ) | ||||||||||||
Other non-operating income (expense), net
|
567 | 243 | 810 | |||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES BEFORE NON-RECURRING
CHARGES DIRECTLY ATTRIBUTABLE TO THE TRANSACTION
|
15,692 | 12,311 | (7,507 | ) | 20,496 | |||||||||||||||
Income tax provision (benefit)
|
5,864 | 3,960 | (2,240 | ) |
( q )
|
7,584 | ||||||||||||||
COMBINED INCOME (LOSS) BEFORE NON-RECURRING CHARGES
DIRECTLY ATTRIBUTABLE TO THE TRANSACTION
|
$ | 9,828 | $ | 8,351 | $ | (5,266 | ) | $ | 12,913 | |||||||||||
COMBINED INCOME (LOSS) BEFORE NON-RECURRING CHARGES
DIRECTLY ATTRIBUTABLE TO THE TRANSACTION PER SHARE:
|
||||||||||||||||||||
BASIC
|
$ | 0.13 | ||||||||||||||||||
DILUTED
|
$ | 0.11 | ||||||||||||||||||
SHARES USED IN COMPUTING COMBINED INCOME (LOSS)
BEFORE NON-RECURRING CHARGES DIRECTLY ATTRIBUTABLE
TO THE TRANSACTION:
|
||||||||||||||||||||
BASIC
|
96,633 | |||||||||||||||||||
DILUTED
|
116,884 |
(2)
|
The three month period ended January 31, 2014 was also included in the pro forma income statement for the year ended December 31, 2013.
|
(1)
|
Description of Transaction
|
|
On April 17th, 2014, Akorn completed its merger of Hi-Tech in a transaction accounted for under the purchase method of accounting for business combinations. Under the purchase method of accounting, the assets acquired and liabilities assumed of Hi-Tech are recorded as of the acquisition date, at their respective fair values, and combined with those of Akorn. The preliminary reported condensed combined financial condition and results of operations of Akorn after completion of the acquisition will reflect these fair values. Hi-Tech’s results of operations are included in the Company’s consolidated financial statements from the date of acquisition.
|
||
Akorn paid a total purchase price of $649,558 to acquire all of the outstanding Hi-Tech common shares, stock options, and payments for key executives upon change-in-control. Each Hi-Tech stockholder received $43.50 per share; please see Note (2).
|
(2)
|
Consideration and fair value of acquired assets and assumed liabilities
|
|
Total consideration is summarized as follows:
|
Amount of cash paid to Hi-Tech Stockholders
|
$ | 604,949 | ||
Amount of cash paid to vested Hi-Tech option holders
|
40,508 | |||
Amount of cash paid to key executives upon change-in-control
|
4,101 | |||
Total consideration
|
$ | 649,558 |
|
For purposes of this pro forma analysis, the above consideration has been allocated using Hi-Tech's historical balances as of January 31, 2014 based on an estimate of the preliminary fair valuation of acquired assets and assumed liabilities in connection with the acquisition.
|
Cash and cash equivalents
|
$ | 86,447 | ||
Accounts receivable
|
70,889 | |||
Inventory
|
53,446 | |||
Current deferred tax assets
|
9,177 | |||
Other current assets
|
10,388 | |||
Intangible assets (i)
|
340,759 | |||
In-process research and development (IPR&D) (ii)
|
9,400 | |||
Property, plant and equipment
|
46,061 | |||
Non-current deferred tax assets
|
3,339 | |||
Other non-current assets
|
274 | |||
Fair value of assets acquired
|
$ | 630,180 | ||
Current liabilities assumed
|
29,503 | |||
Non-current liabilities assumed
|
122,426 | |||
Fair value of liabilities assumed
|
$ | 151,929 | ||
Goodwill (iii)
|
171,307 | |||
Net fair value of assets acquired
|
$ | 649,558 |
|
(i) |
The preliminary fair value of the acquired identifiable intangible assets consists primarily of developed product rights for the following currently marketed products: Fluticasone, Guiatussin AC, and other commercialized generic and branded products, and was derived using the multi-period excess-earnings method, a form of the income approach, as determined by a valuation from an independent third-party valuation firm. The weighted average amortization period for these assets, in total, is approximately 15.7 years.
|
|
(ii) |
In-process research and development, or IPR&D, represents compounds under development by Hi-Tech at the date of acquisition that had not yet achieved regulatory approval for marketing in certain markets. The $9,400 estimated fair value of these intangible assets was derived using the multi-period excess-earnings method, a form of the income approach, as determined by a valuation from an independent third-party valuation firm.
|
|
(iii) |
The excess of purchase price over fair value amounts assigned to assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition. The amount allocated to goodwill is preliminary and subject to change, depending on the results of the final fair valuation of assets acquired and liabilities assumed in connection with the acquisition. We do not expect any portion of this goodwill to be deductible for tax purposes. The goodwill attributable to the acquisition of Hi-Tech has been recorded on the unaudited condensed combined Balance Sheet and will not be amortized, but is subject to review for impairment in accordance with ASC 350, “Intangibles – Goodwill and Other.”
|
(3)
|
Description of Pro Forma Adjustments, as presented on the March 31, 2014 Balance Sheet
|
|
( a ) |
Cash and cash equivalents - cash acquired and utilized in the acquisition was as follows:
|
Cash received by Akorn through term loan financing, net of fees
|
$ | 586,369 | ||
Amount of cash paid to Hi-Tech stockholders
|
(649,558 | ) | ||
Acquisition-related costs incurred (iv)
|
(14,498 | ) | ||
Total cash and cash equivalents
|
$ | (77,687 | ) |
|
(iv) |
To reflect acquisition-related transaction costs (including advisory, legal and valuation fees) incurred after March 31, 2014. These amounts are expensed as incurred. Because the acquisition-related costs will not have a continuing impact, these costs are not reflected in the unaudited pro forma statement of operations.
|
|
( b ) |
Inventories - acquired inventory from Hi-Tech was increased by $6,738 to reflect its estimated fair value based on a preliminary valuation analysis. The fair value step-up of inventory will result in a decrease in gross margin as the inventory is sold following the merger.
|
|
( c ) |
Property, Plant and Equipment - acquired property, plant and equipment from Hi-Tech was increased by $10,936 to reflect its estimated fair value based on a preliminary valuation analysis.
|
|
( d ) |
Goodwill – adjusted to eliminate goodwill recorded in the historical financial statements of Hi-Tech at January 31, 2014, as follows, and record the preliminary fair value of goodwill resulting from the pro forma fair valuation of acquired assets, net, as if the acquisition had occurred using pro forma balances. Goodwill resulting from the acquisition is not amortized, and will be assessed for impairment at least annually.
|
Goodwill
|
$ | 171,307 | ||
Less: Historic Goodwill
|
545 | |||
Total net pro forma adjustment
|
$ | 170,762 |
|
( e ) |
Product licensing rights and other intangibles - represents the preliminary fair valuation of identifiable intangible assets as compared to the carrying amount of intangible assets on Hi-Tech's balance sheet at January 31, 2014, as follows:
|
Product licensing rights, net
|
$ | 334,959 | ||
Less: Historic product licensing rights, net
|
(37,306 | ) | ||
Total net pro forma adjustment
|
$ | 297,653 |
Other intangibles, net (v)
|
$ | 15,200 | ||
Less: Historic other intangibles, net
|
(477 | ) | ||
Total net pro forma adjustment
|
$ | 14,723 |
|
(v) |
Other intangibles, net is further allocated as follows:
|
Trademarks / trade names
|
$ | 5,500 | ||
In-Process R&D
|
9,400 | |||
Royalties
|
300 | |||
Other intangibles, net
|
$ | 15,200 |
( f )
|
Deferred financing costs - to adjust for the accrual and capitalization of an estimated $13,631 in financing costs related to the debt incurred in connection with the transaction. The newly incurred financing costs will be amortized over the life of the borrowing using the effective interest method.
|
( g )
|
Contingent consideration - assumed contingent consideration from Hi-Tech was increased to reflect its estimated fair value based on a revised valuation analysis. The purchase consideration payable relates to a prior acquisition of Hi-Tech adjusted for fair value.
|
( h )
|
Deferred tax assets and liabilities - to record the deferred tax assets and liabilities related to the book and tax differences between identifiable tangible and intangible assets, based on Akorn’s condensed combined effective income tax rate. The increase in deferred tax liabilities reflects the fact that the step-up in value of the Hi-Tech intangible assets will not result in future tax-deductible expenses to Akorn, while the increase in deferred tax assets reflects the estimated deductability of acquisition related costs incurred.
|
( i )
|
Debt - completion of the Hi-Tech acquisition required cash payments in excess of the sum of the Company’s cash reserves as of January 1, 2013, the acquisition date assumed in the period presented. The Company entered into $600,000 of outstanding debt obligations in the form of a term loan maturing seven (7) years from the date of issuance. Interest will accrue based, at the Company’s election, on an adjusted prime/federal funds rate (“ABR Loan”) or an adjusted LIBOR (“Eurodollar Loan”) rate, plus a margin of 2.50% for ABR Loans, and 3.50% for Eurodollar Loans. Each such margin will decrease by 0.25% in the event Akorn’s senior debt to EBITDA ratio for any quarter falls to 2.25:1.00 or below. During an event of default, as defined in the Term Loan Agreement, any interest rate will be increased by 2.00% per annum. Per the Term Loan Agreement, the interest rate on LIBOR loans cannot fall below 4.50%.
|
( j )
|
Equity - reflects adjustments to eliminate Hi-Tech’s historical shareholders’ equity and to reflect Hi-Tech acquisition related costs incurred by the Company subsequent to March 31, 2014 of $12,336, net of tax. These amounts are expensed as incurred. As the acquisition-related costs will not have a continuing impact, these costs are not reflected in the unaudited pro forma statement of operations.
|
(3)
|
Description of Pro Forma Adjustments, as presented on the December 31, 2013 and March 31, 2014 Statements of Operation
|
(k )
|
Cost of sales - To record the estimated step-up of Hi-Tech's inventory from book value to fair value and to record Hi-Tech freight-out expense within cost of sales consistent with condensed combined operations. The fair value step-up of inventory will result in a $6,738 increase in cost of sales as the inventory is sold following the merger.
|
( l )
|
Selling, General and Administrative expense - To record pro forma depreciation expense of $1,701 and $5,102 in the unaudited pro forma condensed combined statements of operations for the 3 months ended March 31, 2014 and the year ended December 31, 2013, respectively, related to the step-up in fair value of Hi-Tech's tangible fixed assets. Hi-Tech had historic depreciation expense of $1,143 and $4,567 for the three months ended January 31, 2014 and the twelve month periods ended January 31, 2014, respectively and to record Hi-Tech freight-out expense within cost of sales consistent with condensed combined operations.
|
( m)
|
Acquisition related expense - Represents reversal of the acquisition related costs incurred by Akorn and Hi-Tech included in the historic financial statements for the periods presented which are directly attributable to the merger, as these costs would have been incurred prior to the period covered by the unaudited pro-forma condensed combined statements of operations presented herein.
|
( n)
|
Amortization expense - To record pro forma amortization expense of $5,558 and $22,230 in the unaudited pro forma condensed combined statements of operations for the 3 months ended March 31, 2014 and the year ended December 31, 2013, respectively, on the portion of the purchase price allocated to intangible assets. Hi-Tech had historic amortization of intangible assets of $1,651 and $6,566 for the three months ended January 31, 2014 and the twelve month periods ended January 31, 2014, respectively. Pro forma amortization is calculated as follows:
|
Estimated Amortization (vi)
|
||||||||||||||||
Preliminary
Fair Value
|
Estimated
Useful Life
|
For the 3 months
ended March 31, 2014
|
For the 12 months ended
December 31, 2013
|
|||||||||||||
Product licensing rights, net
|
$ | 334,959 | 15.7 | $ | 5,330 | $ | 21,319 | |||||||||
Trademarks / Trade Names
|
5,500 | 9.0 | 153 | 611 | ||||||||||||
IPR&D
|
9,400 |
N/A (vii)
|
- | - | ||||||||||||
Royalties
|
300 | 1.0 | 75 | 300 | ||||||||||||
$ | 350,159 | $ | 5,558 | $ | 22,230 |
|
(vi) |
Amortization expense has been calculated using the straight-line method over the estimated useful life.
|
|
(vii) |
IPR&D is indefinite lived in accordance with ASC 805.
|
( o )
|
Amortization of deferred financing costs - represents costs related to the amortization of capitalized debt financing costs resulting from the transaction using the effective interest method.
|
( p )
|
Interest expense, net - represents the effect of the increased interest expense resulting from the debt obligation, partially offset by ticking fees incurred by Akorn in the twelve months ended December 31, 2013 of $58 and the 3 months ended March 31, 2014 of $3,967, which would not have been incurred had the acquisition occurred as of January 1, 2013, the acquisition date assumed in the attached unaudited pro forma condensed combined statements of income. A 1/8% variance in interest rates would impact net income by approximately $192 for the quarter ended March 31, 2014, and $750 for the year ended December 31, 2013.
|
For the 3 months
ended March 31, 2014
|
For the 12 months ended
December 31, 2013
|
|||||||
Interest expense (Term Loan) (viii)
|
$ | 6,900 | $ | 27,000 |
|
(viii) |
Calculated as the outstanding principal multiplied by the expected interest rate of 4.5% for the three months ended March 31, 2014 and the twelve months ended December 31, 2013.
|
( q )
|
Income tax expense - We have estimated the income tax provision that would have been required by Akorn had the Hi-Tech Acquisition taken place on January 1, 2013 based on the pro forma adjustments made and based on Akorn’s condensed and combined effective income tax rate of 37.0%.
|