Angiotech Pharmaceuticals Inc. (ANPI, Financial) filed Quarterly Report for the period ended 2012-06-30.
Angiotech Pharmaceuticals, Inc. (usa) has a market cap of $79.17 million; its shares were traded at around $0 .
For the six months ended June 30, 2012, we incurred net losses of $2.9 million compared to the $365.3 million of net income recorded during the same period in 2011. The $368.2 million decline in net income is due to the following factors: (i) $321.1 million of non-recurring reorganization items recorded during 2011 (see Reorganization Items section below for more detailed information); (ii) a $67.3 million non-recurring settlement gain recognized in 2011 upon extinguishment of our $250 million Subordinated Notes, $16 million of related interest obligations and $4.5 million of certain other liabilities; (iii) a $1.3 million decline in TAXUS royalty revenue primarily due to a non-recurring revenue adjustment that was recorded during the three months ended June 30, 2011 in connection with fresh start accounting (see the Licensed Technologies section below for more information); and (iv) a $5.7 million increase in income tax expense relative to the prior year. These unfavorable factors were partially offset by: (i) a decrease to cost of products sold primarily due to a $9.8 million non-cash charge to the cost of products sold during the three months ended June 30, 2011 related to our revaluation of inventory in connection with the implementation of fresh start accounting (see Cost of Products Sold section below for more information); (ii) growth in our medical products sales, and a $3.4 million improvement in gross margin on such increased sales (excluding the impact of the $9.8 million cost of products sold fresh start accounting adjustment noted above); (iii) a net $4.1 million decrease in research and development expenses primarily due to headcount reductions and cutbacks on discretionary spending related to our termination of certain research and development programs; (iv) a net $2.2 million decrease in selling, general and administrative spending primarily related to headcount reductions in our sales force and administrative staff during 2011; (v) a $4.8 million decrease in interest expense related to savings from the elimination of our Subordinated Notes through the Recapitalization Transaction and the elimination of certain deferred financing costs, which were fair value to nil in connection with fresh start accounting; and (vi) a net $2.6 million decrease in amortization and depreciation primarily related to certain of our 2011 restructuring initiatives, which changed in the estimated useful lives of certain of our assets, and the impact of fresh start accounting.
Cost of products sold decreased by $7.9 million to $27.3 million during the three months ended June 30, 2012 compared to $35.2 million for the same period in 2011. The net 22% decrease is primarily due to the following two factors: (i) a $9.8 million non-cash charge to the cost of products during the two months ended June 30, 2011 resulting from the revaluation of inventory from $37.5 million to $60.1 million in connection with our implementation of fresh start accounting on April 30, 2011, partially offset by (ii) a $2.0 million increase in cost of products sold related to sales growth from our various medical device and medical device component product lines. The fresh start accounting adjustment described above is also the primary reason for the low consolidated gross margin of 26% during the three months ended June 30, 2011. Excluding the impact of the fresh start accounting adjustment, cost of products sold for the three months ended June 30, 2011 would have been $25.4 million and our consolidated gross margin would have been 52%.
As at June 30, 2012, we had working capital of $92.5 million, including cash and cash equivalents of $58.0 million, compared to working capital of $62.1 million, which included cash and cash equivalents of $22.2 million as at December 31, 2011. The net $30.4 million increase in working capital is primarily due to the following factors: (i) an overall $35.8 million increase in cash and cash equivalents (see Cash Flow Highlights section below for further discussion), (ii) a $2.2 million increase in accounts receivable related to higher sales; (iii) a $3.9 million increase in inventory levels, in part due to increases in inventory required to facilitate the closure and transfer of production activities related to our Denmark facility, coordinate production requirements to fulfill expected future orders from Ethicon for Quill in accordance with the terms of the MSA and improve customer lead times; (iv) a $4.9 million decline in payables primarily associated with our payment of bonuses and severance packages and (v) a $2.0 million increase in the current portion of our deferred income tax assets primarily due to the receipt of the $20.0 million of consideration received in connection with the Quill Transaction. These increases in working capital were partially offset by the following factors: (i) a $2.6 million decline in our short term investment due to our recent liquidation of a portion of our securities held; (ii) a $5.7 million increase in deferred revenue related to the $0.7 million current portion of the Cook sales milestone fee and the $5.4 million current portion of the $20.0 million of consideration received related to the Quill Transaction; and (iii) a $4.5 million increase in net taxes payable associated with higher U.S. operating income during the quarter and the tax impact on the $20 million of consideration received in connection with the Quill Transaction.
Cash provided by operating activities was $35.2 million for the six months ended June 30, 2012 and consisted of the following: (i) $18.2 million of net income excluding non-cash items (as shown above); (ii) the $20 million of consideration received under the Quill Transaction described above; and (iii) a $3.0 million net increase in cash outflows due to higher working capital requirements. Overall, the largest changes in working capital during the six months ended June 30, 2012 include: (i) $2.4 million of cash outflows associated with an increase in accounts receivable related to sales growth; (ii) $3.9 million of cash outflows associated with higher inventory levels, in part due to increases in inventory required to facilitate the closure and transfer of production activities related to our Denmark facility, coordinate production requirements to fulfill expected future orders from Ethicon for Quill in accordance with the terms of the MSA and improve customer lead times; and (iii) $4.8 million of cash outflows primarily associated with bonus, severance and executive termination payments made during the six months ended June 30, 2012. These cash outflows were offset by: (i) $3.6 million of cash inflows primarily associated with the receipt of the $4.0 million Cook sales milestone fee discussed above, which was recorded as a receivable in other assets as at December 31, 2011; and (ii) $4.6 million of cash inflows associated with the increase in income taxes payable primarily related to higher U.S. operating income during the six months ended June 30, 2012 and the tax impact relating to the $20 million of consideration received in connection with the Quill Transaction.
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Angiotech Pharmaceuticals, Inc. (usa) has a market cap of $79.17 million; its shares were traded at around $0 .
Highlight of Business Operations:
For the three months ended June 30, 2012, we incurred net losses of $2.9 million compared to the $383.3 million of net income recorded during the same period in 2011. The $386.2 million decline in net income is due to the following factors: (i) $329.8 million of non-recurring reorganization items recorded during 2011 (see Reorganization Items section below for more detailed information); (ii) a $67.3 million non-recurring settlement gain recognized in 2011 upon extinguishment of our $250 million Subordinated Notes, $16 million of related interest obligations and $4.5 million of certain other liabilities; (iii) a $1.3 million decline in TAXUS royalty revenue primarily due to a non-recurring revenue adjustment that was recorded during the three months ended June 30, 2011 in connection with fresh start accounting (see the Licensed Technologies section below for more information); and (iv) a $3.7 million increase in income tax expense relative to the prior year. These unfavorable factors were partially offset by: (i) a decrease to cost of products sold primarily due to a $9.8 million non-cash charge to the cost of products sold during the three months ended June 30, 2011 related to our revaluation of inventory in connection with the implementation of fresh start accounting (see Cost of Products Sold section below for more information); (ii) growth in our medical products sales, and a $2.4 million improvement in gross margin on such increased sales (excluding the impact of the $9.8 million cost of products sold fresh start accounting adjustment noted above); (iii) a net $1.6 million decrease in research and development expenses primarily due to headcount reductions and cutbacks on discretionary spending related to our termination of certain research and development programs; (iv) a net $1.2 million decrease in selling, general and administrative spending primarily related to headcount reductions in our sales force and administrative staff during 2011; and (v) a $1.0 million decrease in interest expense related to the acceleration of amortization of certain deferred financing costs during the three months ended June 30, 2011 in connection with our termination of certain credit facilities.For the six months ended June 30, 2012, we incurred net losses of $2.9 million compared to the $365.3 million of net income recorded during the same period in 2011. The $368.2 million decline in net income is due to the following factors: (i) $321.1 million of non-recurring reorganization items recorded during 2011 (see Reorganization Items section below for more detailed information); (ii) a $67.3 million non-recurring settlement gain recognized in 2011 upon extinguishment of our $250 million Subordinated Notes, $16 million of related interest obligations and $4.5 million of certain other liabilities; (iii) a $1.3 million decline in TAXUS royalty revenue primarily due to a non-recurring revenue adjustment that was recorded during the three months ended June 30, 2011 in connection with fresh start accounting (see the Licensed Technologies section below for more information); and (iv) a $5.7 million increase in income tax expense relative to the prior year. These unfavorable factors were partially offset by: (i) a decrease to cost of products sold primarily due to a $9.8 million non-cash charge to the cost of products sold during the three months ended June 30, 2011 related to our revaluation of inventory in connection with the implementation of fresh start accounting (see Cost of Products Sold section below for more information); (ii) growth in our medical products sales, and a $3.4 million improvement in gross margin on such increased sales (excluding the impact of the $9.8 million cost of products sold fresh start accounting adjustment noted above); (iii) a net $4.1 million decrease in research and development expenses primarily due to headcount reductions and cutbacks on discretionary spending related to our termination of certain research and development programs; (iv) a net $2.2 million decrease in selling, general and administrative spending primarily related to headcount reductions in our sales force and administrative staff during 2011; (v) a $4.8 million decrease in interest expense related to savings from the elimination of our Subordinated Notes through the Recapitalization Transaction and the elimination of certain deferred financing costs, which were fair value to nil in connection with fresh start accounting; and (vi) a net $2.6 million decrease in amortization and depreciation primarily related to certain of our 2011 restructuring initiatives, which changed in the estimated useful lives of certain of our assets, and the impact of fresh start accounting.
Cost of products sold decreased by $7.9 million to $27.3 million during the three months ended June 30, 2012 compared to $35.2 million for the same period in 2011. The net 22% decrease is primarily due to the following two factors: (i) a $9.8 million non-cash charge to the cost of products during the two months ended June 30, 2011 resulting from the revaluation of inventory from $37.5 million to $60.1 million in connection with our implementation of fresh start accounting on April 30, 2011, partially offset by (ii) a $2.0 million increase in cost of products sold related to sales growth from our various medical device and medical device component product lines. The fresh start accounting adjustment described above is also the primary reason for the low consolidated gross margin of 26% during the three months ended June 30, 2011. Excluding the impact of the fresh start accounting adjustment, cost of products sold for the three months ended June 30, 2011 would have been $25.4 million and our consolidated gross margin would have been 52%.
As at June 30, 2012, we had working capital of $92.5 million, including cash and cash equivalents of $58.0 million, compared to working capital of $62.1 million, which included cash and cash equivalents of $22.2 million as at December 31, 2011. The net $30.4 million increase in working capital is primarily due to the following factors: (i) an overall $35.8 million increase in cash and cash equivalents (see Cash Flow Highlights section below for further discussion), (ii) a $2.2 million increase in accounts receivable related to higher sales; (iii) a $3.9 million increase in inventory levels, in part due to increases in inventory required to facilitate the closure and transfer of production activities related to our Denmark facility, coordinate production requirements to fulfill expected future orders from Ethicon for Quill in accordance with the terms of the MSA and improve customer lead times; (iv) a $4.9 million decline in payables primarily associated with our payment of bonuses and severance packages and (v) a $2.0 million increase in the current portion of our deferred income tax assets primarily due to the receipt of the $20.0 million of consideration received in connection with the Quill Transaction. These increases in working capital were partially offset by the following factors: (i) a $2.6 million decline in our short term investment due to our recent liquidation of a portion of our securities held; (ii) a $5.7 million increase in deferred revenue related to the $0.7 million current portion of the Cook sales milestone fee and the $5.4 million current portion of the $20.0 million of consideration received related to the Quill Transaction; and (iii) a $4.5 million increase in net taxes payable associated with higher U.S. operating income during the quarter and the tax impact on the $20 million of consideration received in connection with the Quill Transaction.
Cash provided by operating activities was $35.2 million for the six months ended June 30, 2012 and consisted of the following: (i) $18.2 million of net income excluding non-cash items (as shown above); (ii) the $20 million of consideration received under the Quill Transaction described above; and (iii) a $3.0 million net increase in cash outflows due to higher working capital requirements. Overall, the largest changes in working capital during the six months ended June 30, 2012 include: (i) $2.4 million of cash outflows associated with an increase in accounts receivable related to sales growth; (ii) $3.9 million of cash outflows associated with higher inventory levels, in part due to increases in inventory required to facilitate the closure and transfer of production activities related to our Denmark facility, coordinate production requirements to fulfill expected future orders from Ethicon for Quill in accordance with the terms of the MSA and improve customer lead times; and (iii) $4.8 million of cash outflows primarily associated with bonus, severance and executive termination payments made during the six months ended June 30, 2012. These cash outflows were offset by: (i) $3.6 million of cash inflows primarily associated with the receipt of the $4.0 million Cook sales milestone fee discussed above, which was recorded as a receivable in other assets as at December 31, 2011; and (ii) $4.6 million of cash inflows associated with the increase in income taxes payable primarily related to higher U.S. operating income during the six months ended June 30, 2012 and the tax impact relating to the $20 million of consideration received in connection with the Quill Transaction.
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