December 22, 1997: Fourth Quarter And Year End Financial Results
Mr. Robert C. Tedford, Chief Executive Officer of Patheon Inc. announces its results for the
fourth quarter and the year ended October 31,1997.
Revenues for the year ended October 31, 1997 increased by 32% to $50,697,000 from
$38,511,000 a year ago. Earnings before taxes for the year increased by 35% to $3,763,000.
However, the write down of the Company's investment in Mimetix Inc. of $3,218,000 reduced
earnings to a loss of $820,000 (2 cents per share) compared to net earnings of $2,176,000 (10
cents per share) a year ago. The prior year's results included the favourable impact on net
earnings of $425,000 (2 cents per share), recorded in the third quarter, due to a tax benefit
resulting from the settlement of litigation involving a previously-owned business, which was
sold in 1989.
The fourth quarter revenues and operating results were the best in the Company's history.
Revenues increased by 45% to $14,688,000 from $10,161,000 a year ago. Excluding the
investment writedown, earnings before taxes rose by 65%, and net earnings increased by 51% to
$707,000 compared to $467,000 a year earlier.
Operating income was 22% higher for the year and 36% higher for the quarter, reflecting higher
volumes at all plants. Margins were slightly lower as a result of higher marketing, selling and
administrative expenses incurred to position the Company for greater revenue growth, and lower
overall operating margins at Global Pharm related to the start-up of a new contract for consumer
(OTC) products.
The write down of the investment in Mimetix Inc. was approved by the Board on the basis of the
deteriorating financial condition of this entity and its uncertain prospects. Patheon has focused its
core business competencies on providing contract manufacturing and related drug development
services to the pharmaceutical industry. This strategy does not contemplate further investments in
the equity of entities in this sector. The company's only remaining drug technology company
investment is in RTP Pharma Inc. of Montreal.
The outlook for 1998 is positive based on the success the company has had in securing new
higher margin contracts for both commercial production and pharmaceutical development
services. We estimate that new contracts secured through the end of the fourth quarter should
generate annualized revenues in future years in the $23 million range, of which $18 million is
scheduled to be delivered by the Syntex Court facility.
Orders at October 31, 1997, for delivery in subsequent months, amounted to $21 million or 32%
higher than a year ago.
Patheon Inc. is one of North America's leading independent providers of manufacturing and
drug development services in the rapidly growing pharmaceutical outsourcing sector. The
Company and its 48% owned Global Pharm affiliate operate five cGMP facilities in Canada.
Patheon serves nine of the world's ten largest pharmaceutical companies and a growing number
of pharmaceutical biotech companies.
CONSOLIDATED STATEMENT OF EARNINGS
FOR THE PERIOD ENDED OCTOBER 31, 1997
Three Months Ended Year Ended
October 31 October 31
1997 1996 % 1997 1996 %
Change Change
(in thousands, except earnings per share)
NET REVENUES 14,688 10,161 +45% 50,697 38,511 +32%
OPERATING INCOME BEFORE DEPRECIATION AND
INTEREST 1,697 1,245 +36% 5,899 4,838 +22%
AND
UNUSUAL ITEM
(% to Revenues) (11.6%) (12.3%) (11.6%) (12.6%)
Depreciation 324 309 +5% 1,337 1,116 +20%
Interest 258 260 -1% 799 944 -15%
EARNINGS BEFORE INCOME
TAXES AND UNUSUAL ITEM 1,115 676 +65% 3,763 2,778 +35%
Income taxes before the tax impact of
litigation settlement 408 209 +95% 1,365 1,027 +33%
NET
EARNINGS BEFORE THE
FOLLOWING 707 467 +51% 2,398 1,751 +37%
Earnings
per share -
basic and fully diluted 2 cents 2 cents 7 cents 8 cents
Reduction in income taxes
due to litigation settlement - - -
425
Write down of investment 3,218 - 3,218 -
NET EARNINGS(LOSS) FOR
THE PERIOD (2,511) 467 (820) 2,176
EARNINGS(LOSS) PER SHARE Basic and fully
diluted (7 cents) 2 cents (2 cents) 10 cents
Average number of shares outstanding
during period 34,266 22,660 +51% 34,266 22,660 +51%
As at October 31
Consolidated Balance Sheet Data: 1997 1996 (in thousands)
Total current assets $16,361 $12,217
Capital assets 33,483 15,171
Investments and other assets 1,260 4,156
Total assets 51,104 31,544
Total current liabilities 13,158 10,207
Long-term debt 13,750 9,739
Total liabilities 28,488 21,119
Shareholders' equity 22,616 10,425
liabilities and
shareholders' equity $51,104 $31,544
Year Ended Three Months Ended
October 31 October 31
Consolidated Statement of
Cash Flow Data: 1997 1996 1997 1996 (in
thousands)
Cash provided by operating
activities $ 2,604 $45 $1,222 $1,264
Cash used
in investing
activities (19,971) (3,447) (1,766) (1,373)
Cash
provided by (used in)
in financing Activities $17,151 $1,060 $892 ($221)
TEL: (905) 812-6760 Mr. Robert C. Tedford, CEO FAX: (905) 812-6705 |
