CAMBRIDGE, Mass. & HEIDELBERG, Germany--(BUSINESS WIRE)--Oct. 21, 2002--LION bioscience AG (Neuer Markt: LIO, WKN 504 350, Nasdaq: LEON) today revised its outlook for the year-end revenue and earnings forecast based on preliminary results due to a continued slowdown in life science industry spending, longer-than-expected sales cycles, discontinuation of the company's in-house drug discovery unit, and non-cash write-offs.
In June 2002, LION expected moderate revenue growth for the full fiscal year 2003 ending March 31, 2003, compared with fiscal year 2002 based on its transition to a comprehensive solutions-based business model from a product-based one. The company now expects a decrease in revenues for the full fiscal year 2003 by as much as 25 percent compared with revenues for fiscal year 2002 of EURO 40.4 million.
Friedrich von Bohlen, LION's CEO commented on the revised outlook, "The climate for spending within the life science industries has been generally unfavorable. Coupled with our transition from a product to a solutions-based model, this has resulted in longer-than-anticipated sales cycles. In addition, the decision to divest our in-house drug discovery activities by the year-end led to the shortfall of some revenues that were unforeseeable in the middle of the year. Despite the current environment," Dr. von Bohlen continued, "We are investing in our future based on our validated assessment of industry needs. We remain confident that LION is offering and developing the right comprehensive solutions for solving the complex challenges of the life sciences industries for improving R&D productivity and performance."
As previously announced, LION will take an impairment of goodwill and intangible assets resulting from the acquisitions of Trega Biosciences and NetGenics. U.S.-GAAP accounting rules require a company to perform this review in the event its share price declines significantly for a sustained period and its market capitalization is lower than its net book value. As a result, LION expects to write off impaired goodwill and intangible assets totaling EURO 62.1 million in the second quarter as a non-cash amortization expense.
Additionally, LION will conduct a review of its strategic investments in privately held companies. The company expects to adjust its current book value of affiliates totaling EURO 10.6 million by as much as EURO 8.5 million, also a non-cash charge, due to the general decline in the biotechnology market and individual valuations.
LION continues to execute on its plan to reach break-even in the fourth quarter of fiscal year 2004. Achieving this target will depend on increased revenue and the successful implementation of the previously announced cost reduction measures.
Detailed second-quarter results for the current fiscal year will be released on November 6, 2002, at 7.30 a.m. CET. |
