VANCOUVER, March 13 /PRNewswire-FirstCall/ -- Angiotech
Pharmaceuticals, Inc. (NASDAQ:ANPINASDAQ:TSX:NASDAQ:ANP), a global
specialty pharmaceutical and medical device company, today
announced the filing of its audited consolidated financial
statements and Management's Discussion and Analysis for the year
ended December 31, 2007 and the restatement of its audited
consolidated financial statements for the year ended December 31,
2006. For the year ended December 31, 2007, the Company's net loss
according to GAAP was $65.9 million, as compared to $59.4 million
reported in the preliminary results announced on February 14, 2008.
Of the $6.5 million difference, $5.2 million relates to the
finalization of the income tax provision for 2007 and $1.9 million
relates to the reversal of an unadjusted difference related to the
income tax provision for 2006 that was originally recorded in 2007,
but because of the restatement of the 2006 results described below,
is now being recorded in 2006. These two adjustments are partly
offset by a $0.5 million decrease in the 2007 net loss as compared
to the preliminarily reported amount, resulting from the reversal
of several immaterial non-tax unadjusted differences from 2006
which were originally recorded in 2007 and are now being reflected
in 2006 as a result of the restatement. The restatement of the
audited consolidated financial statements for the year ended
December 31, 2006 favourably affects net earnings by $6.1 million,
or $0.07 per share, and is primarily the result of errors in the
Company's income tax provision. These errors arose from using
incorrect tax rates in determining certain deferred tax balances,
incorrect calculation of certain tax credits and incorrect
adjustment of changes in estimates between the 2005 income tax
provision and the 2005 income tax returns. These errors decreased
the income tax provision by $7.3 million, net deferred income tax
liability by $1.9 million and current taxes payable by $5.4
million. The Company also recorded certain other adjustments
related to 2006 unadjusted differences that were considered not to
be material at the time the 2006 consolidated financial statements
were originally prepared, but because of the restatement are now
being recorded in the 2006 results. These adjustments decreased net
income for 2006 by $1.2 million (net of an income tax recovery of
$0.9 million). Several of these immaterial adjustments were
corrected in 2007, but because of the restatement of the 2006
results, are now being reversed in the 2007 results. Years prior to
2006 were not affected by these errors. As a result of the
restatement of the 2006 results, the Company has determined that a
material weakness in its internal control over financial reporting
as it relates to its income tax provision existed as at December
31, 2007, because the Company did not maintain effective controls
over the accounting for income taxes, including the determination
and reporting of current income taxes payable, deferred tax assets
and the related income tax provisions. Specifically, the Company
did not have sufficient personnel to enable it to properly consider
and apply generally accepted accounting principles for income
taxes, review and monitor the accuracy and completeness of certain
components of the income tax provision calculations and the related
deferred taxes and current income taxes payable and ensure that the
rationale for certain tax positions was appropriate. As a result of
this material weakness, the Company has concluded that as of
December 31, 2007, the Company's internal control over financial
reporting was not effective. In addition, until remediated, this
material weakness could result in a future misstatement in
tax-related accounts that would result in a material misstatement
to the Company's financial statements that would not be prevented
or detected. The Company plans to remediate the material weakness
in internal control described above to provide reasonable assurance
that errors and control deficiencies of this type will not recur.
Specifically, the Company has elected to outsource the preparation
of its tax provision to a large independent public accounting firm,
commencing with the preparation of the provision for the first
quarter of 2008. This accounting firm, together with the Company,
will also review and redesign tax accounting processes and
controls, including increasing the level of review and discussion
of significant tax issues and improving the level of supporting
documentation concerning such issues. The Company will monitor the
effectiveness of these procedures and will make any changes that
are deemed appropriate. Financial Information ---------------------
This press release contains condensed financial information derived
from the audited consolidated financial statements for the years
ended December 31, 2007 and 2006, which together with Management's
Discussion and Analysis for these same periods, will be filed with
the relevant regulatory agencies, as well as posted on our website
at http://www.angiotech.com/. The following table presents a
reconciliation of the differences in items reported in the
preliminary 2007 unaudited financial results announced on February
14, 2008 as compared to the audited consolidated statement of
operations for the year ended December 31, 2007. In addition, this
table presents a reconciliation of the differences in items
restated in the consolidated statement of operations for the year
ended December 31, 2006 as compared to results originally reported.
Additional information regarding the restatement, including a
summary balance sheet, can be found in note 1(b) to the December
31, 2007 audited consolidated financial statements. Amounts, unless
specified otherwise, are expressed in U.S. dollars. Financial
results are reported under U.S. generally accepted accounting
principles. All per share amounts are stated on a diluted basis
unless otherwise noted. ANGIOTECH PHARMACEUTICALS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands of
U.S.$, except per share data) December 31, 2007 December 31, 2006
As Reported As Pre- (Prelim- Adjust- viously Restate- As inary)
ments Revised Reported ments Restated
-------------------------------------------------------------------------
Statement of ------------ Operations ---------- License and royalty
fees 18,652 - 18,652 25,605 381 a. 25,986 Cost of products sold
95,529 (580) b. 94,949 68,067 1,476 b. 69,543 Selling, general and
administra- tive 99,713 (398) c. 99,315 78,732 201 c. 78,933
Operating (loss) income (21,717) 978 (20,739) 60,222 (2,058) 58,164
Income (loss) from continuing operations before income taxes and
cumulative effect of change in accounting (71,570) 978 (70,592)
22,173 (2,058) 20,115 Income tax expense (recovery) (23,608) 9,063
d. (14,545) 10,279 (8,187) d. 2,092 Net loss from discontinued
operations, net of taxes (11,395) 1,502 e. (9,893) (7,708) -
(7,708) Net (loss) income for the period (59,357) (6,583) (65,940)
4,585 6,129 10,714 Basic net (loss) income per common share from
continuing operations (0.56) (0.10) (0.66) 0.14 0.07 0.21 Diluted
net (loss) income per common share from continuing operations
(0.56) (0.10) (0.66) 0.14 0.07 0.21 December 31, December 31, 2007
2006 --------------------------- a.) Royalty expense adjustments:
Reclassification of royalty expense from selling, general and
administrative - 577 Reclassification of royalty expense to cost of
products sold - (196) ------------- ------------- - 381
------------- ------------- b.) Cost of products sold adjustments:
Overvaluation of inventory in 2006 and its reversal in 2007 (580)
580 Reclassification of royalty expense to cost of products sold
(note a) - 196 Net impact of fair value change of inventory on
acquisition - 700 ------------- ------------- (580) 1,476
------------- ------------- c.) Selling, general and administrative
adjustments: Stock-based compensation in 2006 and its reversal in
2007 282 (282) Reverse travel costs related to acquisitions
previously capitalized as goodwill - 380 Reclassify royalties that
had been expensed in general and administrative (note a) - (577)
Litigation expenses related to 2006 and its reversal in 2007 (680)
680 --------------------------- (398) 201
--------------------------- d.) Income tax expense from continuing
operations adjustments: Tax adjustment related to finalization of
the 2007 income tax provision 5,184 - Correction of income tax
error in 2006 and its reversal in 2007 1,900 (7,298) Reclassify
income tax expense from discontinued operations 1,502 - Tax effect
on the adjustments of a. through c. in 2006 and its reversal in
2007 477 (889) ------------- ------------- 9,063 (8,187)
------------- ------------- e.) Net loss from discontinued
operations adjustment: Reclassify income tax expense to continuing
operations (note d) 1,502 - ------------- -------------
------------- ------------- Forward Looking Statements
-------------------------- Statements contained in this press
release that are not based on historical fact, including without
limitation statements containing the words "believes," "may,"
"plans," "will," "estimate," "continue," "anticipates," "intends,"
"expects" and similar expressions, constitute "forward-looking
statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995 and constitute "forward-looking
information" within the meaning of applicable Canadian securities
laws. All such statements are made pursuant to the "safe harbor"
provisions of applicable securities legislation. Forward-looking
statements may involve, but are not limited to, comments with
respect to our strategies or future actions, our targets,
expectations for our financial condition and the results of, or
outlook for, our operations, research development and product and
drug development. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the
actual results, events or developments to be materially different
from any future results, events or developments expressed or
implied by such forward-looking statements. Many such risks,
uncertainties and other factors are taken into account as part of
our assumptions underlying these forward-looking statements and
include, among others, the following: general economic and business
conditions, both nationally and in the regions in which we operate;
market demand; technological changes that could impact our existing
products or our ability to develop and commercialize future
products; competition; existing governmental regulations and
changes in, or the failure to comply with, governmental
regulations; adverse results or unexpected delays in drug discovery
and clinical development processes; decisions, and the timing of
decisions, made by health regulatory agencies regarding approval of
our technology and products; the requirement for substantial
funding to conduct research and development and to expand
commercialization activities or consummate acquisitions; the
accuracy of our estimations of the size of the market, and the
potential market, for our products in specific disease areas; sales
numbers and future guidance publicly provided by Boston Scientific
Corporation regarding sales of their paclitaxel-eluting coronary
stent products; and any other factors that may affect performance.
In addition, our business is subject to certain operating risks
that may cause the actual results expressed or implied by the
forward-looking statements in this report to differ materially from
our actual results. These operating risks include: our ability to
attract and retain qualified personnel; our ability to successfully
complete preclinical and clinical development of our products;
changes in business strategy or development plans; our failure to
obtain patent protection for discoveries; loss of patent protection
resulting from third party challenges to our patents;
commercialization limitations imposed by patents owned or
controlled by third parties; our ability to obtain rights to
technology from licensors; liability for patent claims and other
claims asserted against us; our ability to obtain and enforce
timely patent and other intellectual property protection for our
technology and products; the ability to enter into, and to
maintain, corporate alliances relating to the development and
commercialization of our technology and products; market acceptance
of our technology and products; our ability to successfully
manufacture, market and sell our products; the ability of Boston
Scientific Corporation to successfully manufacture, market and sell
their paclitaxel-eluting coronary stent products; the continued
availability of capital to finance our activities; our ability to
achieve the financial benefits expected as a result of the
acquisition of American Medical Instruments Holdings, Inc. ("AMI");
and any other factors referenced in our annual information form and
other filings with the applicable Canadian securities regulatory
authorities or the SEC. Given these uncertainties, assumptions and
risk factors, readers are cautioned not to place undue reliance on
such forward-looking statements. We disclaim any obligation to
update any such factors or to publicly announce the result of any
revisions to any of the forward-looking statements contained in
this press release to reflect future results, events or
developments. About Angiotech Pharmaceuticals Angiotech
Pharmaceuticals, Inc. is a global specialty pharmaceutical and
medical device company with over 1,500 dedicated employees.
Angiotech discovers, develops and markets innovative treatment
solutions for diseases or complications associated with medical
device implants, surgical interventions and acute injury. To find
out more about Angiotech (NASDAQ:ANPINASDAQ:TSXNASDAQ:ANP) please
visit our website at http://www.angiotech.com/. CONTACT: Deirdre
Neary, Manager, Investor Relations and Corporate Communications,
Angiotech Pharmaceuticals, Inc., (604) 222-7056, DATASOURCE:
Angiotech Pharmaceuticals, Inc. CONTACT: Deirdre Neary, Manager,
Investor Relations and Corporate Communications, Angiotech
Pharmaceuticals, Inc., (604) 222-7056,
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