Akorn Inc. manufactures and markets diagnostic and therapeutic pharmaceuticals in specialty areas such as ophthalmology rheumatology anesthesia and antidotes among others. They also market ophthalmic surgical instruments and related products. Customers include physicians optometrists wholesalers group purchasing organizations and otherpharmaceutical companies. They also provide contract manufacturingservices. Akorn Inc. has a market cap of $78.41 million; its shares were traded at around $0.87 with and P/S ratio of 0.84. Highlight of Business Operations: Vaccine sales increased by $8,881,000 primarily due to an increase in sales of our Td vaccine products as we increased our market share for Td vaccines. Ophthalmic segment revenues decreased 14.7%, or $873,000, primarily due to a $469,000 floor stock price adjustment for AktenTM and generally lower market demand. Hospital drugs and injectables segment revenues decreased 10.9% or $554,000 for the year, reflecting the decreased sales of anesthesia and antidote products. Contract services revenues increased by 7.9%, or $127,000, mainly due to increased order volumes on ophthalmic contract products.
Consolidated gross profit was $5,362,000 or 24.3% for the first quarter of 2009 as compared to a gross profit of $3,747,000 or 25.9% in the same period a year ago mainly due to the sales volume variation matters for each segment discussed above. We continue to seek margin enhancement opportunities through our product offerings as well as through efficiencies and cost reductions at our operating facilities.
On January 7, 2009, we entered into a Credit Agreement (Credit Agreement) with General Electric Capital Corporation (GE Capital) as agent for several financial institutions (the Lenders) to replace our previous credit agreement with Bank of America which expired on January 1, 2009. Pursuant to the Credit Agreement, the Lenders agreed, among other things, to extend loans to us under a revolving credit facility (including a letter of credit subfacility) up to an aggregate principal amount of $25,000,000 (the Credit Facility). At our election, borrowings under the Credit Facility bore interest at a rate equal to either: (i) the Base Rate (defined as the highest of the Wall Street Journal prime rate, the federal funds rate plus 0.5% or LIBOR plus 1.0%), plus a margin equal to (x) 4% for the period commencing on the closing date through April 14, 2009, or (y) a percentage that ranged between 3.75% and 4.25% for the period after April 14, 2009, or (ii) LIBOR (or 2.75%, if LIBOR is less than 2.75%), plus a margin equal to (x) 5% for the period commencing on the closing date through April 14, 2009, or (y) a percentage that ranged between 4.75% and 5.25% for the period after April 14, 2009. Upon the occurrence of any event of default, we were to pay interest equal to an additional 2.0% per year. The Credit Agreement contained affirmative, negative and financial covenants customary for financings of this type. The negative covenants included restrictions on liens, indebtedness, payments of dividends, disposition of assets, fundamental changes, loans and investments, transactions with affiliates and negative pledges. The financial covenants included fixed charge coverage ratio, minimum-EBITDA, minimum liquidity and a maximum level of capital expenditures. In addition, our obligations under the Credit Agreement could have been accelerated upon the occurrence of an event of default under the Credit Agreement, which included customary events of default such as payment defaults, defaults in the performance of affirmative and negative covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults, defaults relating to judgments, defaults relating to certain governmental enforcement actions, and a change of control default. The Credit Facility would have terminated, and all amounts outstanding thereunder would have been due and payable, on January 7, 2013, or on an earlier date as specified in the Credit Agreement.
In July 2008, we amended our Exclusive Distribution Agreement with MBL dated as of March 22, 2007 (the MBL Distribution Agreement) to: (i) allow us to destroy our remaining inventory of Tetanus Diphtheria vaccine, 15 dose/vial, in exchange for receiving an equivalent number of doses of preservative-free Tetanus Diphtheria vaccine, 1 dose/vial (the Single-dose Product) at no additional cost other than destruction and documentation expenses; (ii) reduce the purchase price of the Single-dose Product during the first year of the MBL Distribution Agreement by approximately 14.4%; (iii) reduce our purchase commitment for the second year by approximately 34.7%; and (iv) reduce our purchase commitment for the third year by approximately 39.5%.
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