<PAGE>
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________________________________________________
FORM 10-K/A
[X] Amendment 1 to Annual Report Filed March 31, 1998 Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the year ended December 31, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File Number: 0-13976
AKORN, INC.
(Name of small business issuer as specified in its charter)
LOUISIANA 72-0717400
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
100 Tri-State International, Suite 100, Lincolnshire, Illinois 60069
(Address of principal executive offices and zip code)
Issuer's telephone number: (847) 236-3800
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
None
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
Common Stock, No Par Value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained in this form, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates (affiliates
being, for these purposes only, directors, executive officers and holders of
more than 5% of the Issuer's common stock) of the Issuer as of March 5, 1998 was
approximately $61,187,000.
The number of shares of the Issuer's common stock, no par value per share,
outstanding as of March 5, 1998 was 17,701,421.
1
<PAGE>
This amendment corrects typographical errors in selected data elements in Item
6. Selected Consolidated Financial Data and Item 8. Financial Statements and
Supplemental Data.
<PAGE>
Item 6. Selected Consolidated Financial Data
In October 1996, the Board of Directors of the Company voted to change the
Company's fiscal year from the year ending June 30 to a calendar year. The
following table sets forth selected consolidated financial information for the
Company for the year ended December 31, 1997, the six month transition period
ended December 31, 1996 and for the four years ended June 30, 1996:
<TABLE>
<CAPTION>
Six Months
Year Ended Ended Years Ended June 30,
December 31, December 31, -------------------------------------------
1997 1996 1996 1995 1994 1993(2)
------------ ------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE
Equity $ 1.20 $ 0.98 $ 0.97 $ 0.93 $ 0.76 $ 0.47
Net Income:
Basic $ 0.11 $ 0.00 $ 0.05 $ 0.15 $ 0.14 $ 0.12
Diluted $ 0.11 $ 0.00 $ 0.05 $ 0.15 $ 0.14 $ 0.12
Price: High $ 4.50 $ 3.50 $ 3.50 $ 4.00 $ 3.88 $ 3.13
Low $ 1.84 $ 1.63 $ 2.06 $ 2.25 $ 1.88 $ 1.50
P/E: High 41x NM 70x 27x 28x 26x
Low 17x NM 41x 15x 13x 13x
INCOME DATA (000)
Net sales $42,323 $16,519 $33,925 $37,505 $31,266 $23,612
Gross profit 18,776 5,758 11,953 15,177 13,218 9,699
Operating income 3,165 130 1,089 3,910 2,654 1,712
Interest expense (497) (243) (441) (25) (181) (288)
Pretax income 2,844 70 977 3,738 2,573 1,518
Income taxes (benefit) 1,052 26 189 1,232 158 (263)
Net income $ 1,792 $ 44 $ 788 $ 2,506 $ 2,415 $ 1,781
Weighted average shares outstanding:
Basic 16,614 16,580 16,383 16,236 16,185 14,159
Diluted 16,925 16,763 16,788 16,799 16,711 14,955
BALANCE SHEET (000)
Current assets $19,633 $13,840 $17,001 $15,474 $15,044 $ 9,209
Net fixed assets 12,395 12,833 11,524 11,060 6,346 5,325
Total assets 38,715 28,013 29,567 27,491 22,190 15,008
Current liabilities 8,612 5,636 9,351 7,016 7,106 3,764
Long-term obligations 9,852 6,003 3,915 4,890 2,380 4,328
Shareholders' equity $20,251 $16,374 $16,301 $15,585 $12,704 $ 6,916
FUNDS FLOW DATA (000)
From operations $ 64 $ 2,553 $ 10 $ 712 $ 2,212 $ (479)
Dividends paid (1) -- -- (583) -- -- --
From investing (6,387) (2,028) (873) (4,943) (3,745) (531)
From financing 7,356 (36) 979 3,112 2,313 (26)
Change in cash & equivalents $ 1,033 $ 489 $ 116 $(1,119) $ 780 $(1,036)
</TABLE>
All of the information shown in the table above for the four year period ended
June 30, 1996 has been restated to reflect the combined operations of Akorn and
Pasadena Research Laboratories, Inc. (PRL).
(1) Dividends paid pertain to Subchapter S distributions made to former PRL
shareholders for pre-acquisition earnings.
(2) Includes the reversal of a provision for a litigation judgment ($0.7
million), the reduction of estimated costs of reorganizing manufacturing
operations ($0.4 million) and income tax benefits ($0.3 million).
7
<PAGE>
AKORN, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in Thousands, Except per Share Data)
<TABLE>
<CAPTION>
Six Months
Year Ended Ended Years Ended June 30,
December 31, December 31,
1997 1996 1996 1995
------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
Net sales $42,323 $16,529 $33,925 $37,505
Cost of goods sold 23,547 10,761 21,972 22,328
---------- ----------- --------- ---------
GROSS PROFIT 18,776 5,758 11,953 15,177
Selling, general and
administrative expenses 12,287 4,819 8,974 10,376
Research and development 1,873 809 1,213 891
Relocation costs 1,451 -- -- --
Acquisition and severance costs -- -- 677 --
---------- ----------- --------- ---------
15,611 5,628 10,864 11,267
---------- ----------- --------- ---------
OPERATING INCOME 3,165 130 1,089 3,910
Interest and other income (expense):
Interest income 41 33 113 106
Interest expense (497) (243) (441) (25)
Gain (loss) on marketable equity securities -- -- 80 (308)
Other income, net 135 150 136 55
---------- ----------- --------- ---------
(321) (60) (112) (172)
---------- ----------- --------- ---------
INCOME BEFORE INCOME TAXES 2,844 70 977 3,738
Income taxes 1,052 26 189 1,232
---------- ----------- --------- ---------
NET INCOME $ 1,792 $ 44 $ 788 $ 2,506
---------- ----------- --------- ---------
NET INCOME PER SHARE:
BASIC $ 0.11 $ -- $ 0.05 $ 0.15
---------- ----------- --------- ---------
DILUTED $ 0.11 $ -- $ 0.05 $ 0.15
---------- ----------- --------- ---------
Weighted average shares outstanding:
Basic 16,614 16,580 16,383 16,236
---------- ----------- --------- ---------
Diluted 16,925 16,763 16,788 16,799
---------- ----------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
15
<PAGE>
AKORN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months
Year Ended Ended Years Ended
December 31, December 31, June 30,
1997 1996 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES $ 1,792 $ 44 $ 788 $ 2,506
Net income
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,515 720 984 980
(Gain) loss on marketable equity securities -- -- (80) 308
Provision for losses on accounts receivable and inventory 1,188 303 825 160
Deferred income taxes 34 651 (578) 2
Write down of building and equipment 400 -- -- --
Other 43 26 -- (1)
Changes in operating assets and liabilities:
Accounts receivable (4,170) 267 424 (350)
Inventory, prepaid expenses and other assets (2,235) (132) (3,129) (1,420)
Trade accounts payable and accrued expenses 1,721 1,438 1,229 (1,514)
Income taxes payable 461 (625) (155) 70
Pre-funded development costs (685) (139) (298) (29)
-------- -------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 64 2,553 10 712
INVESTING ACTIVITIES
Purchases of property, plant and equipment (1,154) (1,986) (1,360) (4,818)
Product licensing costs (68) (28) (172) (421)
Purchases of investments -- (576) (1,173) (2,023)
Sales of investments 480 902 1.832 2,319
Purchase of product intangibles (5,645) (340) -- --
-------- -------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (6,387) (2,028) (873) (4,943)
FINANCING ACTIVITIES
Proceeds from sale of stock 2,085 29 599 256
Repayments of long-term debt (33) (447) (442) (944)
Proceeds from issuance of long-term debt 3,955 1,500 400 3,900
Pre-funded development costs -- -- 150 --
Principal payments under capital lease obligations (151) (74) (151) (58)
Short-term borrowings, net 1,500 (1,044) 1,006 128
Dividends paid -- -- (583) --
Debt acquisition costs -- -- -- (170)
-------- -------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 7.356 (36) 979 3,112
-------- -------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,033 489 116 (1,119)
Cash and cash equivalents at beginning of year 1,380 891 775 1,894
-------- -------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 2,413 $ 1,380 $ 891 $ 775
-------- -------- -------- --------
See notes to consolidated financial statements.
</TABLE>
17
