SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
October 26, 1996
Date of Report (Date of earliest event reported)
AKORN, INC.
(Exact name of Registrant as specified in its charter)
LOUISIANA 0-13976 72-0717400
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
100 Akorn Drive
Abita Springs, Louisiana 70420
(Address of principal executive offices) (Zip Code)
(504) 893-9300
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On October 29, 1996 Akorn, Inc. (the "Company") issued the press
release filed herewith as Exhibit 99.1 discussing the Company's revenues
for the quarter ended September 30, 1996 and the change of the Company's
fiscal year described in Item 8 below.
Item 7. Financial Statements and Exhibits.
(a) No financial statements are filed with this report.
(b) Exhibits.
99.1 Press release issued the Company on October 29,
1996 concerning the Company's financial results
for the quarter September 30, 1996 and the change
of fiscal year described in Item 8 below.
Item 8. Change in Fiscal Year.
On October 26, 1996, the Company's Board of Directors
determined to change the Company's fiscal year from the year
ending June 30 to the year ending December 31. The six-month
transition period beginning July 1, 1996 and ending December
31, 1996 will be reported on a Form 10-K that will be filed
on or before March 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
By: /s/ Eric M. Wingerter
__________________________
Eric M. Wingerter
Vice President - Finance
and Administration
and Chief Financial Officer
Dated: November 4, 1996
AT AKORN: AT FRB:
Eric Wingerter Jenifer Estabrook Kathy Brunson
VP-Finance & Administration General Information Analyst Contact
(504) 893-9300 (312) 640-6787 (312) 640-6696
FOR IMMEDIATE RELEASE
TUESDAY, OCTOBER 29, 1996
AKORN REPORTS BREAK-EVEN FIRST QUARTER ON SLIGHTLY LOWER
REVENUES; CHANGES YEAR END TO DECEMBER 31; COMMENTS ON
POSITIVE OUTLOOK
ABITA SPRINGS, LA, OCTOBER 29, 1996-Akorn, Inc. (Nasdaq: AKRN)
announced today break-even operating results on $8.1 million in
revenues for the quarter ended September 30, 1996. In the
comparable prior-year period, the company reported net income
of $499,000, or 3 cents per share, on $8.7 million in revenues,
after restatement for the recent acquisition of Pasadena
Research Laboratories, Inc. (PRL), under pooling-of-interests
accounting treatment. The company also confirmed that it will
be changing its fiscal year end to December 31.
The company said current quarter sales and profits were
lower primarily due to weakness in its contract manufacturing
segment and the ongoing effect of Akorn's decision in June to
discontinue its Ophthalmic Division's practice of giving
discounts to wholesalers at the end of every quarter. John
Kapoor, chairman and CEO, explained, "We are confident that the
discontinuation of this discounting practice will have a
positive effect on margins going forward. While sales for the
Ophthalmic Division declined compared with the prior year, our
core business remains solid, and we are currently working to
build our top line in both divisions through new product
offerings that will come from both our research and development
and business development activities."
REVIEW OF RESULTS
Net sales for the quarter ended September 30, 1996, were
$8.1 million, down 7 percent from last year's $8.7 million.
Gross profit declined 10 percent to $3.0 million from $3.3
million. Gross margins were relatively constant, as a
significant decline in contract manufacturing margins,
associated with low plant throughput, offset increases in
margins for distributed products, primarily in the injectable
area.
Selling, general and administrative expenses remained
relatively stable at $2.4 million for the current quarter,
compared with $2.3 million for the prior year. Research and
development expenditures increased significantly to $515,000
from $249,000 in the prior-year quarter. According to the
company, this increase reflects accelerated efforts to bring
products to market quickly through the company's own internal
R&D and through strategic alliances. These alliances were
continued from the PRL acquisition. The increase in R&D also
reflects a lower percentage of site transfer products for which
costs had previously been accrued.
Net interest and other income remained relatively stable
as increases in interest expense were offset by an increase in
other income.
OUTLOOK POSITIVE
Commenting on operations, Kapoor noted that, "the company
continues to implement its new strategic plan for the
Injectable Division and its search for a senior executive to
head up the Ophthalmic Division. While Akorn is experiencing
some short-term operating issues associated with plant volume
and a temporary lull in product introductions, we are confident
these issues will be resolved in the near term."
Kapoor also said, "Our analysis of each ophthalmic
business unit is progressing and we see significant
opportunities to capitalize on Akorn's value image. We hope to
fill the senior executive's position by the end of the year
which will allow us to accelerate the implementation of our
strategies for each business unit."
Floyd Benjamin, president of the Injectable Division
added, "While low plant volume has negatively affected our
manufacturing operations, distribution continues to perform
well with sales of several high-margin, niche products posting
stronger numbers than expected. R&D is also demonstrating
solid progress. We expect to launch several new grandfathered
products as early as the first quarter of calendar 1997.
Additionally, we are presently bringing in-house the
manufacture of a number of grandfathered products that we
currently distribute. By producing these products ourselves,
we will help solve our plant volume issues as well as increase
our distribution profits."
The company is in the process of restructuring its bank
credit facilities to lower its short-term debt service
requirements and to allow the flexibility for additional
financing for currently needed capital improvements and product
acquisitions.
According to the company, management continues to believe
Akorn will operate at or near break-even for the next one to
two quarters, until the impact of the above noted measures
begin to be recognized. "We are confident that Akorn will
return to sustainable profitability once these strategies are
fully implemented," Kapoor noted. "In addition, the decision
to change our fiscal year end will align Akorn more closely
with its peer group."
To the extent any statements made in this release deal
with information that is not historical, these statements are
necessarily forward-looking. As such, they are subject to the
occurrence of many events outside of Akorn's control and are
subject to various risk factors that could cause Akorn's
results to differ materially from those expressed in any
forward-looking statement. The risk factors are described in
Akorn's report on Form 10-K as filed with the SEC and include,
without limitation, the inherent risk of product development
failure, regulatory risks and risks related to market
acceptance and competition.
Akorn, Inc. manufactures, sterile ophthalmic and
injectable pharmaceuticals, and markets and distributes an
extensive line of ophthalmic products.
Financial Tables Follow . . .
For additional information about Akorn, Inc. free of charge via
fax,
dial 1-800-PRO-INFO and enter "AKRN."
-more-
CONSOLIDATED BALANCE SHEETS
(in thousands)
Sept. 30, June 30,
1996 1996
_____________ _____________
Assets
Cash and investments $1,082 $1,793
Accounts receivable, net 4,847 4,916
Inventory, net 9,481 8,860
Other current assets 1,708 1,682
_____________ _____________
Total current assets 17,118 17,251
Property, plant and equipment, net 12,883 11,524
Other assets 1,323 1,042
_____________ ______________
Total assets $31,324 $29,817
============ ==============
Liabilities and shareholders' equity
Short-term borrowings $400 $1,294
Current portion of long-term debt and 1,160 858
Trade accounts payable 1,782 2,680
Income taxes payable 641 626
Accrued compensation 996 1,106
Other accrued expenses 5,293 3,037
______________ ______________
Total current liabilities 10,272 9,601
Long-term debt and capital leases 4,502 3,544
Other long-term liabilities 197 371
Shareholders' equity 16,353 16,301
_____________ _____________
Total liabilities and shareholders' $31,324 $29,817
============ =============
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
In thousands, except per share amounts
Three months ended September 30,
1996 1995 %Chg
______________ ____________ ____________
Net sales:
Ophthalmic $4,854 $5,616 -13.6%
Injectable 3,247 3,123 4.0%
______________ _____________
Total sales 8,101 8,739 -7.3%
Cost of sales 5,132 5,434 -5.6%
______________ _____________
Gross profit 2,969 3,305 -10.2%
Selling, general and
administrative 2,433 2,305 5.6%
Research and development 515 249 106.8%
______________ _____________
Operating income 21 751 -97.2%
Interest & other income
(expense), net 36 19 89.5%
______________ _____________
Pretax income 57 770 -92.6%
Income taxes 22 271 -91.9%
______________ _____________
Net income $35 $499 -93.0%
============== =============
Per share:
Net income $ 0.00 $0.03 -100.0%
============== =============
Weighted average shares 16,780 16,660 0.7%
============== =============
