VANCOUVER, Nov. 9 /PRNewswire-FirstCall/ -- Angiotech
Pharmaceuticals, Inc. (NASDAQ:ANPINASDAQ:TSX:NASDAQ:ANP) today
announced its financial results for the third quarter ended
September 30, 2009. "We were pleased to observe continued strong
sales growth in our Proprietary Medical Products business during
the quarter, driven primarily by increasing market adoption of our
Quill(TM) SRS product line," said Dr. William Hunter, President and
CEO of Angiotech. "In addition, our solid early results from our
recent commercial launch of the Option(TM) Inferior Vena Cava
Filter and our preparations for a potential 2010 launch of our 5-FU
anti-infective product candidates leave us increasingly optimistic
about the opportunity to further accelerate growth in our
Proprietary Medical Products business in 2010 and beyond." Third
Quarter Financial Highlights - Total revenue was $63.2 million. -
Net product sales were $48.7 million. Sales of our Proprietary
Medical Products were $14.7 million, or 30% of total product sales.
Sales of our Base Medical Products were $34.0 million, or 70% of
total product sales. - Royalty revenue was $14.5 million. -
Research and development expenses were $4.6 million. - Selling,
general and administrative expenses were $17.9 million. - Net loss
and net loss per share for the quarter were $7.8 million and $0.09,
respectively. - As of September 30, 2009, cash and short-term
investments were $53.8 million and net debt was $521.2 million.
Selected Non-GAAP Financial Measures - Certain financial measures
in this press release are prepared according to United States
Generally Accepted Accounting Principles ("GAAP"). In addition,
certain financial measures presented below and in the appendix of
this press release are non-GAAP, or adjusted, financial measures
that exclude certain items. Management uses certain non-GAAP, or
adjusted, financial measures to establish operational goals, and
believes that these measures may assist investors in evaluating the
results of our business and analyzing the underlying trends in our
business over time. Investors should consider these non- GAAP
adjusted financial measures in addition to, and not as a substitute
for, or as superior to, financial measures prepared in accordance
with GAAP. A reconciliation of the Company's non-GAAP adjusted
financial measures to the corresponding GAAP financial measures,
and an explanation of the Company's use of these non-GAAP adjusted
financial measures and of the excluded items, is included in the
Appendix of this press release. - Adjusted EBITDA (earnings before
interest, taxes, depreciation and amortization, adjusted to exclude
certain non-cash and non-recurring items) was $15.3 million; -
Adjusted research and development expenses were $4.1 million; -
Adjusted selling, general and administrative expenses were $17.1
million; and - Adjusted net income and adjusted net income per
share for the quarter were $0.1 million and $0.00, respectively.
Third Quarter Highlights Proprietary Medical Products. Certain of
our product lines, which we refer to as our Proprietary Medical
Products, are marketed and sold by our two direct sales groups. We
believe certain of these product lines may contain technology
advantages and thereby may provide for more substantial revenue
growth potential as compared to our overall product portfolio. Our
significant currently marketed Proprietary Medical Products include
(i) our Quill(TM) SRS wound closure product line, which is marketed
and sold by our Surgical Products Sales Group, and (ii) our
Option(TM) Inferior Vena Cava ("IVC") Filter, HemoStream(TM)
chronic dialysis catheter, Skater(TM) line of drainage catheters,
BioPince(TM) full core biopsy device, EnSnare(TM) retrieval device
and V+Pad(TM) hemostatic pad, which are marketed and sold by our
Interventional Products Sales Group. Our Proprietary Medical
Products continued to demonstrate higher revenue growth as compared
to our overall product portfolio in the third quarter, consistent
with recent prior quarters. Revenue for these products in the third
quarter of 2009 increased by 33% as compared to the third quarter
of 2008 and by 9% as compared to the second quarter of 2009.
Excluding the impact of foreign currency changes between the
respective periods, the revenue growth figures indicated above
would have been 36% and 8%, respectively. Base Medical Products.
Certain of our product lines, which we refer to as our Base Medical
Products, represent more mature finished goods product lines in the
ophthalmology, biopsy and general surgery areas, or medical device
components manufactured by us and sold to other third-party medical
device manufacturers who assemble those components into finished
medical devices. Sales of our Base Medical Products are supported
by a small group of direct sales personnel, as well as a network of
independent sales representatives and medical product distributors.
Revenue from our Base Medical Products tends to exhibit greater
volatility or slower relative growth, particularly our sales of
components to third party medical device manufacturers, which may
be impacted by customer concentration and business issues that
certain of our large customers may face, as well as to a more
limited extent by economic and credit market conditions. Revenue
from our Base Medical Products declined by 4% in the third quarter
of 2009 as compared to the third quarter of 2008, and increased by
1% as compared to the second quarter of 2009. Excluding the impact
of foreign currency changes, revenue would have declined by 3% as
compared to the third quarter of 2008 and would have been flat as
compared to the second quarter of 2009. The decline in our Base
Medical Products sales as compared to the third quarter of 2008 is
due primarily to lower sales of medical device components to other
third party medical device manufacturers, generally relating to
certain customers that have postponed or cancelled orders, or
implemented inventory reduction programs in response to changing
economic and credit market conditions, and more particularly
relating to cancelled orders for surgical needles by one of our
largest customers. Manufacturing of surgical needles, as of
November 2008, was fully transferred to our facility in Aguadilla,
Puerto Rico from our facility in Syracuse, New York. We believe
that the closure of our Syracuse production facility in November
and the finalization of our move of surgical needle production to
Aguadilla, combined with the difficult economic and credit market
environment, may have continued to negatively impact our Base
Medical Product sales during the third quarter of 2009 as compared
to the third quarter of 2008. We currently expect that certain of
our customers may increase their order levels later in 2009 or in
2010, however, there can be no assurance that we will record sales
of surgical needles to these customers at levels observed in prior
periods. Royalty Revenue. We derive additional revenue from
royalties paid to us by partners that develop, market and sell
products incorporating certain of our proprietary technologies.
Currently, the substantial majority of our royalty revenues are
derived from sales by Boston Scientific Corporation ("BSC") of
TAXUS(R) coronary stent systems incorporating the drug paclitaxel.
TAXUS stents have been evaluated by the industry's most extensive
randomized, controlled clinical trial program, with patient
follow-up out to five years in some cases. BSC's controlled
clinical trial results have been supplemented by data on more than
35,000 patients enrolled in post-approval registries. To date, over
4.6 million TAXUS stents have been implanted globally. Royalty
revenue derived from sales of TAXUS stent systems by BSC for the
third quarter of 2009 decreased by 29% as compared to the third
quarter of 2008, and decreased by 14% as compared to the second
quarter of 2009. The decrease in royalty revenues received from BSC
is primarily due to the entry of new competitors into the
drug-eluting coronary stent market during the second half of 2008
and the resulting shifts in market share among these competitors
over the past four consecutive quarters. Royalty revenue for the
third quarter of 2009 was based on BSC's net sales for the period
April 1, 2009 to June 30, 2009 of $226 million, of which $96
million was in the United States, compared to BSC net sales of $298
million, of which $144 million was in the United States, for the
same period in 2008, and compared to BSC net sales of $252 million,
of which $119 million was in the United States, for the period
January 1, 2009 to March 30, 2009 from which our second quarter
royalty revenue was derived. The average gross royalty rate earned
in the third quarter of 2009 on BSC's net sales was 6.2% for sales
in the United States and 6.1% for sales in other countries. Option
Inferior Vena Cava Filter. In June 2009, we announced that the
United States Food and Drug Administration ("FDA") had granted
510(k) clearance for the Option IVC Filter, for use in both
permanent and retrievable indications. In August 2009, we announced
the commercial launch of the Option IVC Filter in the United
States. The Option IVC Filter was licensed in March 2008 from our
partner Rex Medical L.P. IVC filters are implanted in patients that
are at high risk for developing pulmonary embolism, which can be a
life threatening condition. IVC filters are implanted in the
inferior vena cava and are designed to catch clot material to
prevent it from reaching the lungs, while allowing blood to
continue to flow normally. In 2008, there were approximately
220,000 IVC filters implanted in the United States. We believe the
Option IVC Filter may have a number of potential competitive
benefits, which include a unique filter design that may reduce the
potential for filter migration after implantation, thereby making
the product safer for patients, insertion potential through either
the femoral or jugular route, which may make the product easier for
a physician to use, and the use of non-thrombogenic material, which
may reduce the risk of blood clots occurring in the filter. We also
believe the unique design of the Option IVC Filter may allow
physicians to remove or retrieve the device from patients more
easily, or after longer periods of time have passed, as compared to
existing competitive IVC filters. The Option IVC Filter was
approved based upon the results of a United States multi-center
prospective clinical trial. The purpose of the clinical trial was
to evaluate the device's safety and efficacy in preventing
pulmonary emboli, and to assess the ability to retrieve the device
from the body up to 175 days following implantation. The results,
representing a total of 100 patients, were presented at the 2009
Society of Interventional Radiology in San Diego, CA on March 9,
2009. Successful filter implantation was achieved in 100% of the
subjects and the retrieval success rate in the study was 92.3%.
Clinical success, which was achieved in 88% of subjects, was
defined as placement of the filter without subsequent pulmonary
embolism, significant filter migration or embolization, symptomatic
caval thrombosis or other complications requiring filter removal or
invasive intervention. Quill SRS. In August 2009, we announced the
launch of a new series of our proprietary Quill SRS products
specifically designed for laparoscopic, or minimally invasive,
gynecology procedures, including hysterectomies and myomectomies.
In 2008, there were approximately 750,000 hysterectomies performed
in the United States, of which approximately 130,000 were performed
laparoscopically. In addition, there were approximately 72,000
myomectomies performed in the United States to remove uterine
fibroid tumors. Angiotech's proprietary Quill SRS technology may
offer significant advantages in wound closure in certain
laparoscopic surgical procedures, whether performed manually or
through robotic assistance. We believe the primary potential
advantage of Quill SRS in certain laparoscopic procedures is the
ability to use Quill SRS to close a wound without having to tie
knots. The exercise of tying knots can be particularly challenging
and time-consuming when surgeons operate in a smaller surgical
field, as is the case for most laparoscopic surgical procedures. A
second potential advantage for Quill SRS in these procedures is
minimizing or eliminating the need for a third hand to maintain
tension on the suture, as may be required with a traditional
suturing technique in order to deal with tissue recoil. A third
potential advantage of Quill SRS in these procedures is the ability
of Quill SRS to maintain the tension along the length of the wound,
which may provide hemostatic benefits and thereby eliminate or
minimize the need for standard hemostatic sutures. Patients may
also benefit as a result of these potential advantages through
reduced surgical times, and therefore reduced time under
anesthesia, and health care facilities and payors may also benefit
from the potential to reduce operating room time needed, or the
total cost of material needed, to complete such surgical
procedures. Our new Quill SRS product codes for laparoscopic
gynecology procedures are available in our polydioxanone (PDO)
suture material in size -0- with 7 cm by 7 cm and 14 cm by 14 cm
lengths, and include our newly designed 36 mm needles. The use of
Quill SRS in laparoscopic gynecological surgery was first reported
by James Greenberg, MD, and Jon Einarsson, MD, MPH, of the Centre
for Women's Surgery at Brigham & Women's/Faulkner Hospitals and
Harvard Medical School Boston, Massachusetts in the Journal of
Minimally Invasive Gynecology, in November 2008. The results of
this small feasibility study looked at the application of Quill SRS
in myomectomy and total laparoscopic hysterectomy vaginal cuff
closures. This publication was then followed by up by a podium
presentation at the American Association of Gynecologic
Laparoscopists (AAGL) annual meeting in the fall of 2008 confirming
that there were no post operative issues or complications from the
use of Quill SRS in a patient series that had grown to 150 patients
as of that date. ZILVER(R) PTX(R) - CE Mark Approval. In August
2009, we announced that our partner Cook Medical Inc. ("Cook"), had
reported CE Mark approval and commercial launch of the ZILVER PTX
paclitaxel-eluting peripheral vascular stent in Europe. The ZILVER
PTX stent, which is under evaluation in clinical trials being
conducted by Cook, is a specialized stent product incorporating our
proprietary paclitaxel technology and is designed for placement in
diseased arteries in the limbs to restore blood flow. Cook licenses
the rights to use paclitaxel with peripheral stents and certain
other non-coronary medical devices from us. Subject to the terms of
our license agreement with Cook, we are entitled to receive royalty
payments upon the commercial sale of paclitaxel-eluting peripheral
vascular stent products, including the ZILVER PTX stent. Financial
Information --------------------- This press release contains
financial data derived from the unaudited consolidated interim
financial statements for the three and nine month periods ended
September 30, 2009, and 2008. Full unaudited consolidated interim
financial statements and Management's Discussion and Analysis for
the three and nine month periods ended September 30, 2009 and 2008
will be filed with the relevant regulatory agencies, as well as
posted on our website at http://www.angiotech.com/. Amounts, unless
specified otherwise, are expressed in U.S. dollars. Financial
results are reported under U.S. GAAP unless otherwise noted. All
per share amounts are stated on a diluted basis unless otherwise
noted. Conference Call Information --------------------------- A
conference call to discuss these financial results will be held
today, Monday, November 9, 2009 at 8:00 AM PT (11:00 AM ET).
Dial-in information: North America (toll-free): (800) 599-9829
International: (617) 847-8703 Enter Passcode: 64385781 An archived
replay of the call will be available until November 16, 2009. North
America (toll-free): (888) 286-8010 International: (617) 801-6888
Enter Passcode: 36157253 A live webcast will be available to all
interested parties through the Investors section of Angiotech's
website: http://www.angiotech.com/investors ANGIOTECH
PHARMACEUTICALS INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three Months Ended Nine Months Ended September 30
September 30
-------------------------------------------------------------------------
2009 2008 2009 2008 [restated] [restated]
------------------------------------------- REVENUE Royalty revenue
$ 14,531 $ 21,405 $ 48,638 $ 75,871 Product sales, net 48,660
46,502 141,976 144,761 License fees 53 453 25,503 558
-------------------------------------------------------------------------
63,244 68,360 216,117 221,190
-------------------------------------------------------------------------
EXPENSES License and royalty fees 2,463 3,452 7,937 11,484 Cost of
products sold 25,958 24,772 75,606 77,430 Research and development
4,596 10,658 17,526 45,468 Selling, general and administration
17,924 23,370 59,102 77,100 Depreciation and amortization 8,285
8,560 24,845 25,577 In-process research and development - - - 2,500
Write-down of goodwill - 599,400 - 599,400
-------------------------------------------------------------------------
59,226 670,212 185,016 838,959
-------------------------------------------------------------------------
Operating income (loss) 4,018 (601,852) 31,101 (617,769)
-------------------------------------------------------------------------
Other income (expenses): Foreign exchange (loss) gain (518) 1,009
(1,227) 1,569 Investment and other income (expense) 46 187 74 1,630
Interest expense on long-term debt (9,286) (10,790) (28,971)
(33,851) Write-down / loss on investments - (1,901) - (12,561)
Write-down and other deferred financing charges - (13,544) (643)
(13,544)
-------------------------------------------------------------------------
Total other expenses (9,758) (25,039) (30,767) (56,757)
-------------------------------------------------------------------------
(Loss) / income before income taxes (5,740) (626,891) 334 (674,526)
Income tax expense (recovery) 2,062 (4,513) 7,569 (10,314)
-------------------------------------------------------------------------
Net loss $ (7,802) $(622,378) $ (7,235) $(664,212)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted net loss per common share $ (0.09) $ (7.31) $
(0.08) $ (7.80)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted weighted average number of common shares
outstanding (in thousands) 85,136 85,122 85,125 85,117
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ANGIOTECH PHARMACEUTICALS INC. CONSOLIDATED BALANCE SHEETS
(Unaudited) September 30, December 31, 2009 2008
-------------------------------------------------------------------------
ASSETS Current assets Cash and cash equivalents $ 51,458 $ 38,952
Short-term investments 2,298 848 Accounts receivable 28,874 25,524
Inventories 37,954 38,594 Deferred income taxes, current portion
3,090 3,820 Prepaid expenses and other current assets 4,072 5,234
-------------------------------------------------------------------------
Total current assets 127,746 112,972
-------------------------------------------------------------------------
Long-term investments 1,561 1,561 Assets held for sale 8,391 8,422
Property, plant and equipment 46,903 49,108 Intangible assets
176,447 195,477 Deferred financing costs 11,993 11,363 Deferred
income taxes 1,835 - Other assets 2,257 6,294
-------------------------------------------------------------------------
Total assets $ 377,133 $ 385,197
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts
payable and accrued liabilities $ 38,932 $ 46,620 Income taxes
payable 7,261 8,071 Interest payable on long-term debt 10,797 6,514
Deferred revenue, current portion 210 210
-------------------------------------------------------------------------
Total current liabilities 57,200 61,415
-------------------------------------------------------------------------
Deferred revenue 842 999 Deferred leasehold inducement 2,968 2,780
Deferred income taxes 40,587 40,577 Other tax liabilities 3,145
3,145 Long-term debt 575,000 575,000 Other liabilities 686 1,154
-------------------------------------------------------------------------
Total non-current liabilities 623,228 623,655
-------------------------------------------------------------------------
Stockholders' deficit Share capital Authorized: 200,000,000 Common
shares, without par value 50,000,000 Class I Preference shares,
without par value Common shares issued and outstanding: September
30, 2009 - 85,136,725 December 31, 2008 - 85,121,983 472,742
472,739 Additional paid-in capital 33,278 32,107 Accumulated
deficit (850,908) (843,673) Accumulated other comprehensive income
41,593 38,954
-------------------------------------------------------------------------
Total stockholders' deficit (303,295) (299,873)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total liabilities and stockholders' deficit $ 377,133 $ 385,197
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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," "estimates," "continues,"
"anticipates," "intends," "expects" and similar expressions,
constitute "forward-looking statements" within the meaning of the
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 objectives and priorities for the
remainder of 2009 and beyond, our strategies or future actions, our
targets, expectations for our financial condition and the results
of, or outlook for, our operations, research and 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 known 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 in the United
States, Canada and the other 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; availability of financial reimbursement coverage from
governmental and third-party payers for products and related
treatments; adverse results or unexpected delays in pre-clinical
and clinical product development processes; adverse findings
related to the safety and/or efficacy of our products or products
sold by our partners; 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, to expand manufacturing and
commercialization activities; and any other factors that may affect
our performance. In addition, our business is subject to certain
operating risks that may cause any results expressed or implied by
the forward-looking statements in this press release to differ
materially from our actual results. These operating risks include:
our ability to attract and retain qualified personnel; our ability
to successfully complete pre-clinical and clinical development of
our products; changes in our 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 availability of
capital to finance our activities; our ability to restructure and
to service our debt obligations; and any other factors referenced
in our other filings with the applicable Canadian securities
regulatory authorities or the Securities and Exchange Commission
("SEC"). For a more thorough discussion of the risks associated
with our business, see the "Risk Factors" section in our annual
report for the year ended December 31, 2008 filed with the SEC on
Form 10-K, as amended, and our quarterly reports for the first and
second quarters of 2009 filed with the SEC on Form 10-Q. Given
these uncertainties, assumptions and risk factors, investors are
cautioned not to place undue reliance on such forward-looking
statements. Except as required by law, 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. (C)2009 Angiotech Pharmaceuticals, Inc. All Rights
Reserved. About Angiotech Pharmaceuticals Angiotech
Pharmaceuticals, Inc. is a global specialty pharmaceutical and
medical device company. 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:TSX:NASDAQ:ANP), please visit our website at
http://www.angiotech.com/. Appendix: Presentation of Certain
Non-GAAP Financial Information and Reconciliations to Corresponding
GAAP Financial Measures The financial results presented in this
press release include the following non-GAAP, or adjusted,
financial measures, which we believe provide important supplemental
information to management and investors about the Company's
financial condition and results of operations: (1) adjusted
earnings before interest expense, taxes, depreciation and
amortization ("Adjusted EBITDA"), (2) adjusted net income (loss),
(3) adjusted net income (loss) per share, (4) adjusted revenue, (5)
adjusted research and development expense ("Adjusted R&D
expense"), and (6) adjusted selling, general and administrative
expense ("Adjusted SG&A expense"). Economic Substance of
Non-GAAP Financial Measures
------------------------------------------------- Our non-GAAP
adjusted financial measures exclude certain non-cash, non-recurring
and non-operating items, which may be unpredictable, volatile and
not directly correlated to our operating performance. We believe
exclusion of these items from our GAAP financial measures may
provide the following advantages: (i) improved understanding of
trends underlying our business and performance; (ii) improved
consistency across periods when measuring and assessing our
operating performance; (iii) improved understanding of the cash
flow and cash earnings generated by our business in a given period
and as compared to prior periods; and (iv) improved comparability
of our operating results to those of similar companies in our
industry. Examples of these certain non-cash, non-recurring and
non-operating items include: financing charges, asset write-downs,
impairment charges, foreign exchange fluctuations, stock-based
compensation expense, acquisition related amortization charges,
integration and restructuring expenses, in-process research and
development acquisition costs, retrospective adjustments driven by
accounting policy changes, and certain extraordinary litigation
expenses. A detailed discussion of the excluded items is provided
below (see "Description of Adjustments" below). Investors are
cautioned that Adjusted EBITDA, adjusted net income (loss),
adjusted net income (loss) per share, adjusted revenue, Adjusted
R&D expense and Adjusted SG&A expense do not have any
standardized meaning prescribed by GAAP and may not be comparable
to similar measures presented by other issuers. Our non-GAAP
financial measures are supplemental metrics and should not be
viewed as a substitute for, or superior to, financial reporting
measures prepared in accordance with GAAP. We have prepared a
reconciliation of our non-GAAP adjusted financial measures to the
comparable GAAP-based financial measures in the tables included in
this Appendix. Management compensates for certain material
limitations that may be relevant to our use of certain non-GAAP
financial measures by reviewing our operating performance in
accordance with GAAP concurrent with our review of our operating
performance relative to certain adjusted financial measures during
each relevant disclosure period. Use of Non-GAAP Financial Measures
---------------------------------- Management uses Adjusted EBITDA,
adjusted net income (loss), adjusted net income (loss) per share,
Adjusted R&D expense and Adjusted SG&A expense when setting
corporate and operational goals, and evaluating operating
performance in connection with: - presenting, comparing and
assessing the financial results and forecasts reported to the
Company's Board of Directors; - evaluating, managing and
benchmarking the operating performance of the Company; - analyzing
underlying trends in the Company's business; - evaluating market
position and performance relative to our competitors, many of which
use the same or similar performance measures; - establishing
internal operating budgets; - determining compensation under bonus
or other incentive programs; - enhancing comparability from period
to period; - assessing compliance with credit facility covenants; -
providing vital information in assessing cash flows to service our
significant debt obligations; - comparing performance with internal
forecasts and targeted business models; and - evaluating and
valuing potential acquisition candidates. The adjustments used to
compute our non-GAAP financial measures are consistent with those
excluded from segmented operating results used by the Company's
chief operating decision makers to make operating decisions and
assess performance. We have provided this information to enable
investors to analyze our operating results in the same way that
management uses this information to assess our business relative to
other periods, our business objectives and similar companies in our
industry. In addition, our creditors frequently use financial
measures such as Adjusted EBITDA as a critical metric to measure
the Company's ability to generate cash, service debt obligations
and comply with financial covenants specified in our lending
agreements. As at September 30, 2009 there were no significant
differences between the definition of adjusted EBITDA as defined in
our credit facility with Wells Fargo and the definition of Adjusted
EBITDA used herein, except for certain litigation related charges,
which may not be adjusted for in certain circumstances when
reporting under our credit facility. Refer to our 8-K filed on
March 5, 2009 for more details on the adjustments incorporated into
the definition of adjusted EBITDA under our credit facility.
ANGIOTECH PHARMACEUTICALS, INC. RECONCILIATION OF GAAP FINANCIAL
MEASURES TO CORRESPONDING NON-GAAP FINANCIAL MEASURES (Unaudited)
(in thousands of U.S.$, except share Three Months Ended and per
share data) September 30, 2009
-------------------------------------------------------------------------
Reported Adjustments Adjusted REVENUE Royalty revenue $ 14,531 $ -
$ 14,531 Product sales, net 48,660 - 48,660 License fees 53 (53) a
-
-------------------------------------------------------------------------
63,244 (53) 63,191
-------------------------------------------------------------------------
EXPENSES License and royalty fees 2,463 - 2,463 Cost of products
sold 25,958 (765) b 25,193 Research and development 4,596 (103) d
4,066 (427) c Selling, general and administrative 17,924 (260) d
17,126 (167) b (371) g Depreciation and amortization 8,285 (7,510)
e 775 Write-down of goodwill - - -
-------------------------------------------------------------------------
59,226 (9,603) 49,623
-------------------------------------------------------------------------
Operating income (loss) 4,018 9,550 13,568
-------------------------------------------------------------------------
Other income (expenses): Foreign exchange (loss) gain (518) 518 h -
Investment and other income (loss) 46 39 i 85 Interest expense on
long-term debt (9,286) 708 f (8,578) Write-down / loss on
investments - - - Write-down and other deferred financing charges -
- -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(9,758) 1,265 (8,493)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Loss) income before income taxes (5,740) 10,815 5,075 Income tax
expense (recovery) 2,062 2,941 j 5,003
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net (loss) income for the period $ (7,802) $ 7,874 $ 72
-------------------------------------------------------------------------
Basic and diluted net (loss) income per common share $ (0.09) $
0.09 $ 0.00
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average shares outstanding (000's) - basic & diluted
85,136 85,136
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(in thousands of U.S.$, except share Three Months Ended and per
share data) September 30, 2008
-------------------------------------------------------------------------
Reported Adjustments Adjusted [Restated] REVENUE Royalty revenue $
21,405 $ - $ 21,405 Product sales, net 46,502 - 46,502 License fees
453 (453) a -
-------------------------------------------------------------------------
68,360 (453) 67,907
-------------------------------------------------------------------------
EXPENSES License and royalty fees 3,452 - 3,452 Cost of products
sold 24,772 (94) b 24,678 Research and development 10,658 (169) d
8,832 (1,657) c Selling, general and administrative 23,370 (384) d
20,549 (2,232) b (205) g Depreciation and amortization 8,560
(7,581) e 979 Write-down of goodwill 599,400 (599,400) i -
-------------------------------------------------------------------------
670,212 (611,722) 58,490
-------------------------------------------------------------------------
Operating income (loss) (601,852) 611,269 9,417
-------------------------------------------------------------------------
Other income (expenses): Foreign exchange (loss) gain 1,009 (1,009)
h - Investment and other income (loss) 187 174 i 361 Interest
expense on long-term debt (10,790) 559 f (10,231) Write-down / loss
on investments (1,901) 1,901 i - Write-down and other deferred
financing charges (13,544) 13,544 f -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(25,039) 15,169 (9,870)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Loss) income before income taxes (626,891) 626,438 (453) Income
tax expense (recovery) (4,513) 8,328 j 3,815
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net (loss) income for the period $ (622,378) $ 618,110 $ (4,268)
-------------------------------------------------------------------------
Basic and diluted net (loss) income per common share $ (7.31) $
7.26 $ (0.05)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average shares outstanding (000's) - basic & diluted
85,122 85,122
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For an explanation of the adjustments used to derive our non-GAAP
financial measures, please refer to the corresponding discussion in
the "Description of Adjustments" section below. ANGIOTECH
PHARMACEUTICALS, INC. RECONCILIATION OF GAAP FINANCIAL MEASURES TO
CORRESPONDING NON-GAAP FINANCIAL MEASURES (Unaudited) (in thousands
of U.S.$, except share Nine Months Ended and per share data)
September 30, 2009
-------------------------------------------------------------------------
Reported Adjustments Adjusted REVENUE Royalty revenue $ 48,638 $ -
$ 48,638 Product sales, net 141,976 - 141,976 License fees 25,503
(25,503) a -
-------------------------------------------------------------------------
216,117 (25,503) 190,614
-------------------------------------------------------------------------
EXPENSES License and royalty fees 7,937 - 7,937 Cost of products
sold 75,606 (1,661) b 73,945 Research and development 17,526 (318)
d 15,843 (1,365) c - - Selling, general and administrative 59,102
(852) d 53,173 (1,433) b (2,612) g (1,032) b Depreciation and
amortization 24,845 (22,344) e 2,501 In-process research and
development - - - Write-down of goodwill - - -
-------------------------------------------------------------------------
185,016 (31,617) 153,399
-------------------------------------------------------------------------
Operating income (loss) 31,101 6,114 37,215
-------------------------------------------------------------------------
Other income (expenses): Foreign exchange (loss) gain (1,227) 1,227
h - Investment and other income (loss) 74 715 i 146 Interest
expense on long-term debt (28,971) 2,076 f (26,895) Write-down /
loss on investments - - - Write-down and other deferred financing
charges (643) 643 f -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(30,767) 4,661 (26,749)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Income (loss) before income taxes 334 10,775 10,466 Income tax
expense (recovery) 7,569 3,706 i 11,275
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net loss for the period $ (7,235) $ 7,069 $ (809)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted net loss per common share $ (0.08) $ 0.07 $
(0.01)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average shares outstanding (000's) - basic and diluted
85,125 85,125
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(in thousands of U.S.$, except share Nine Months Ended and per
share data) September 30, 2008
-------------------------------------------------------------------------
Reported Adjustments Adjusted [Restated] REVENUE Royalty revenue $
75,871 $ - $ 75,871 Product sales, net 144,761 - 144,761 License
fees 558 (558) a -
-------------------------------------------------------------------------
221,190 (558) 220,632
-------------------------------------------------------------------------
EXPENSES License and royalty fees 11,484 - 11,484 Cost of products
sold 77,430 (122) b 77,308 Research and development 45,468 (670) d
40,709 (2,964) b (500) b (625) c Selling, general and
administrative 77,100 (1,308) d 67,560 (5,739) b (2,493) g -
Depreciation and amortization 25,577 (22,759) e 2,818 In-process
research and development 2,500 (2,500) c - Write-down of goodwill
599,400 (599,400) g -
-------------------------------------------------------------------------
838,959 (639,080) 199,879
-------------------------------------------------------------------------
Operating income (loss) (617,769) 638,522 20,753
-------------------------------------------------------------------------
Other income (expenses): Foreign exchange (loss) gain 1,569 (1,569)
h - Investment and other income (loss) 1,630 190 i 1,820 Interest
expense on long-term debt (33,851) 1,678 f (32,173) Write-down /
loss on investments (12,561) 12,561 i - Write-down and other
deferred financing charges (13,544) 13,544 f -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(56,757) 26,404 (30,353)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Income (loss) before income taxes (674,526) 664,926 (9,600) Income
tax expense (recovery) (10,314) 16,290 j 5,976
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net loss for the period $ (664,212) $ 648,636 $ (15,576)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted net loss per common share $ (7.80) $ 7.62 $
(0.18)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average shares outstanding (000's) - basic and diluted
85,117 85,117
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For an explanation of the adjustments used to derive our non-GAAP
financial measures, please refer to the corresponding discussion in
the "Description of Adjustments" section below. We also report
certain product sales revenue growth rate figures excluding the
impact of foreign exchange rate fluctuations on current period
revenues. Significant foreign exchange rate fluctuations can
distort revenue growth favorably or unfavorably, depending upon the
strength of the U.S. dollar relative to the foreign currencies in
which we generate revenues. We generate significant revenues in
several foreign jurisdictions in multiple foreign currencies
including Euros, British pounds, Swiss francs, Danish krone,
Norwegian krone and Swedish krone. We believe this measure provides
useful information to measure the success of our international
sales offices in increasing product sales in their local currencies
without regard to exchange rate fluctuations over which we have no
control. The tables below provide additional information on the
reported product sales figure including a reconciliation of the
estimated impact of foreign currency on net sales. ANGIOTECH
PHARMACEUTICALS, INC. WORLDWIDE SALES (Unaudited) Change
---------------------- Three Months Ended As Constant
---------------------- Reported Currency (in thousands of U.S.$)
30-Sep-09 30-Sep-08 Basis Basis
-------------------------------------------------------------------------
Proprietary Medical Products 14,646 10,992 33% 36% Base Medical
Products 34,025 35,470 -4% -3%
-------------------------------------------- Total Medical Products
48,671 46,462 5% 6% --------------------------------------------
-------------------------------------------- Change
--------------------- Three Months Ended As Constant
---------------------- Reported Currency (in thousands of U.S.$)
30-Sep-09 30-Jun-09 Basis Basis
-------------------------------------------------------------------------
Proprietary Medical Products 14,646 13,406 9% 8% Base Medical
Products 34,025 33,773 1% 0%
-------------------------------------------- Total Medical Products
48,671 47,179 3% 2% --------------------------------------------
-------------------------------------------- ANGIOTECH
PHARMACEUTICALS, INC. NON-GAAP CONSTANT CURRENCY NET SALES
RECONCILIATIONS (Unaudited) Q3 2009 Net Sales as compared to Q3
2008 ----------------------------------------- Change
---------------------------- Estimated As Reported Constant Impact
of Currency Currency Foreign (in thousands of U.S.$) Basis Basis
Currency
-------------------------------------------------------------------------
Proprietary Medical Products 3,655 3,805 (150) Base Medical
Products (1,445) (1,115) (330)
----------------------------------------- Total Medical Products
2,210 2,690 (480) -----------------------------------------
----------------------------------------- Q3 2009 Net Sales as
compared to Q2 2009 -----------------------------------------
Change ---------------------------- Estimated As Reported Constant
Impact of Currency Currency Foreign (in thousands of U.S.$) Basis
Basis Currency
-------------------------------------------------------------------------
Proprietary Medical Products 1,240 1,064 176 Base Medical Products
252 69 183 ----------------------------------------- Total Medical
Products 1,492 1,133 359 -----------------------------------------
----------------------------------------- ANGIOTECH
PHARMACEUTICALS, INC. CALCULATION OF ADJUSTED EBITDA AND
RECONCILIATION TO GAAP NET LOSS (unaudited) Three months ended Nine
months ended September 30, September 30, (in thousands of U.S.$)
2009 2008 2009 2008
-------------------------------------------------------------------------
Net loss on a GAAP basis $ (7,802) (622,378) $ (7,235) $(664,212)
Interest expense on long-term debt 9,286 10,790 28,971 33,851
Income tax expense (recovery) 2,062 (4,513) 7,569 (10,314)
Depreciation and Amortization 9,198 9,673 27,566 28,846
-------------------------------------------------------------------------
EBITDA 12,744 (606,428) 56,871 (611,829) Adjustments: Non-recurring
revenue, net of license fees (53) (453) (25,503) (558)
Restructuring related charges 932 3,984 3,094 8,824 In-process and
non-recurring research and development charges 427 - 1,365 3,625
Stock-based compensation 363 556 1,170 1,981 Litigation expenses
371 204 2,612 2,493 Foreign exchange loss (gain) 518 (1,009) 1,227
(1,569) Investment and other income (46) (187) (74) (1,630)
Write-downs of investments and other long-lived assets - 1,901 -
12,561 Write-down of goodwill - 599,400 - 599,400 Non-recurring
deferred financing costs - 13,544 1,675 13,544
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Adjusted EBITDA $ 15,256 11,512 $ 42,437 $ 26,842
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Description of Adjustments -------------------------- The following
is an explanation of each of the items that management has adjusted
to derive its non-GAAP financial measures for the three and nine
months ended September 30, 2009 and 2008. (a) Non-Recurring Revenue
We may report adjusted revenue in a given period that excludes
certain items from our reported GAAP revenue that are non-recurring
or are not related to the day-to-day operating activities of our
business, and are not reasonably expected to recur in the future.
The adjusted revenue metric for the three and nine months ended
September 30, 2009 reflects the elimination of certain one-time
non-operating license revenue. The 2009 nine month adjusted revenue
metric specifically reflects the subtraction of a $25.0 million
one-time payment from Baxter Healthcare Corporation from our
reported GAAP revenue figure, as this revenue is non-recurring in
nature and was received in lieu of future royalty payments on
licensed technology and non-recurring non-operating license
revenue. (b) Restructuring-Related Charges We may report adjusted
net income (loss) and adjusted net income (loss) per share in a
given period that excludes certain expense amounts related to
restructuring or corporate reorganization activities that we are
pursuing, or have completed in prior periods. These amounts, which
are typically expense amounts that we add back to our GAAP net
income (loss) and net income (loss) per share in order to calculate
the corresponding adjusted measures, primarily represent severance
costs, asset write-offs, and other expenses associated with plant
closures, transfers of production lines from one facility to
another and plant head-count optimization initiatives that are not
reasonably expected to recur in the future. The specific expenses
excluded from our adjusted measures for the three and nine months
ended September 30, 2009 of $0.9 million and $2.7 million
respectively reflect costs associated with the closure of our
manufacturing facility in Syracuse, New York and certain headcount
reduction and other initiatives completed during the third quarter
of 2008. (c) Technology Acquisition-Related Charges We may report
adjusted net income (loss), adjusted net income (loss) per share
and Adjusted R&D expense in a given period that exclude certain
non-recurring, and in some instances also non-cash, expense amounts
incurred related to the purchase of research stage technology that
we have completed, or that we completed in a prior period. These
amounts, which are typically expense amounts that we add back to
our GAAP net income (loss), net income (loss) per share and
research and development expense in order to calculate the
corresponding adjusted measures, primarily represent the costs
incurred to complete an acquisition of technology for which we are
unable to reasonably determine the specific commercial use. Such
purchases of early stage technology occur very infrequently, are
highly variable and non-comparable in amount and are not part of
our day-to-day operations. The 2009 nine month adjustment
specifically includes $0.9 million of non-recurring costs related
to our termination of collaboration agreements with Lipose
Corporation and Spartan Medical Products LLC, as well as $0.4
million of amortization expense related to prepayments made to
Haemacure Corporation for future services. (d) Stock Based
Compensation Expense We report adjusted net income (loss), adjusted
net income (loss) per share, Adjusted R&D expense and Adjusted
SG&A expense that exclude amounts recorded for stock based
compensation expense. These amounts, which are non-cash expenses
that we add back to our GAAP net income (loss), net income (loss)
per share, research and development expense and selling, general
and administrative expense in order to calculate the corresponding
adjusted measures, primarily represent estimated additional costs
we are required to record in accordance with GAAP to issue stock
options to management and employees as part of their compensation.
Such compensation expense is a non-cash expense calculated in our
case using a Black-Scholes model to derive the expected fair value
of employee stock options. Fair value calculations are highly
subjective, given that they are dictated by the specific
assumptions and inputs used in the model, and opinions may
significantly vary as to which inputs to said model are the most
appropriate. Key assumptions and inputs may include our actual
stock price on the day the calculation is completed, a measure of
the historical volatility of our stock price, an estimate or
measure of the risk free rate of return offered by the market and
other factors, which are not directly correlated to our day-to-day
operating performance and are difficult to predict or forecast. In
these respects and others (including the methodology that may be
used to calculate such expense), methods and data that may be used
to complete the calculation of stock based compensation expense may
vary widely from period to period or from company to company,
making it difficult to compare our performance to that of similar
companies in our industry, to compare our operating performance to
established operating goals or to our performance in prior periods
or to assess the cash flow generation of our operations. In
addition, the impact of potential dilution related to employee
stock options as of any given reporting date is also reflected in
our reported fully diluted share count and thereby is already
reflected in the related calculation of our GAAP and our adjusted
net income (loss) per share, irrespective of such additional
operating expense required to be incurred according to GAAP. The
2009 three month adjustments exclude $0.1 million and $0.3 million
of stock based compensation expenses from our GAAP derived research
and development and selling, general and administrative costs
respectively, and the 2009 nine month adjustments exclude $0.4
million and $0.9 million of stock based compensation expenses from
our GAAP derived research and development and selling, general and
administrative costs respectively. (e) Intangible Asset
Amortization Expense We report adjusted net income (loss) and
adjusted net income (loss) per share that may exclude amounts
recorded for certain intangible asset amortization expenses. These
amounts, which are non-cash expenses that we add back to our GAAP
net income (loss) and net income (loss) per share in order to
calculate the corresponding adjusted measures, primarily represent
expense incurred during a period to reduce the carrying value of
acquired technology or intellectual property, based on the useful
life of such assets as estimated and recorded by us at the time of
an acquisition. The allocation of excess acquisition purchase price
amounts over book value among intangible assets, goodwill and
purchased research and development technology can be a highly
subjective process that may vary significantly from company to
company or between acquisition transactions, thereby making
comparison of our operating results to those of similar companies
or to our results from prior periods difficult. In addition, we
believe the economic impact of any such acquisitions is reflected
in the cash cost or dilution we incur with respect to such
transactions, and therefore is reflected in our adjusted measures
through the impact on interest expense or income, our reported
fully diluted shares outstanding and amounts of revenue generated
and other operating expenses incurred during the period. The 2009
three month and nine month adjustments exclude $7.5 million and
$22.3 million of intangible asset amortization expenses from our
GAAP derived net income (loss) and net income (loss) per share
respectively. (f) Non-Cash Deferred Financing Charges We report
adjusted net income (loss) and adjusted net income (loss) per share
that may exclude amounts recorded for certain non-cash deferred
financing charges. These amounts, which are non-cash expenses that
we add back to our GAAP net income (loss) and net income (loss) per
share in order to calculate the corresponding adjusted measures,
primarily represent expense incurred related to the amortization of
debt financing fees, incurred in connection with our debt financing
activities, over the expected life of the debt instrument; as well
as write-downs of deferred financing charges which are estimated by
us to have no future benefit. As these non-cash expenses are not
directly correlated to our day-to-day operating performance, and
are due to capital structure or financing decisions made by us that
are specific to our situation at that time, inclusion of these
charges in our financial results makes it more difficult to compare
our performance to that of prior periods or to the performance of
similar companies in our industry, or to assess the cash flow
generation of our operations. The 2008 nine month adjustment
exclude the write down of $13.5 million of non-cash deferred
financing charges that are associated with exploration of certain
proposed financing and strategic alternatives from our GAAP derived
net income (loss) and net income (loss) per share respectively. (g)
Litigation Related Charges We may report Adjusted SG&A expense,
adjusted net income (loss) and adjusted net income (loss) per share
that may exclude amounts recorded for certain litigation related
charges. These amounts, which are expenses that we add back to our
GAAP selling, general and administrative expense, net income (loss)
and net income (loss) per share in order to calculate the
corresponding adjusted measures, primarily represent expense
incurred related to certain extraordinary litigation matters which
are inherently unpredictable, highly variable from period to
period, are reasonably expected not to recur in similar amounts in
future periods or are not related to the day to day operational
activities of our business. The 2009 three month and nine month
adjustments exclude $0.4 million and $2.6 million of litigation
related charges from our GAAP derived selling, general and
administrative expense, net income (loss) and net income (loss) per
share respectively. (h) Foreign Exchange Gains and Losses We may
report adjusted net income (loss) and adjusted net income (loss)
per share that may exclude amounts recorded for certain foreign
exchange gains and losses. These amounts, which are expenses that
we add back to our GAAP net income (loss) and net income (loss) per
share in order to calculate the corresponding adjusted measures,
primarily represent expense incurred related to translation
differences that arise from translating assets held by us in
foreign territories and denominated in foreign currencies, into our
reporting currency. These foreign currency assets fund our research
and development activities in Canada, and are unique to our current
operational structure. As they have no bearing on our day-to-day
operations, operating decisions or our ability to fund or manage
our operations or research and development programs, we exclude
them from our non-GAAP financial measures. The 2009 three month and
nine month adjustments exclude $0.5 million and $1.2 million of net
foreign exchange losses from our GAAP derived net income (loss) and
net income (loss) per share respectively. (i) Goodwill and Other
Long-Lived Asset Impairment Charges We have reported adjusted net
income (loss) and adjusted net income (loss) per share that
excludes amounts recorded for goodwill and other long-lived asset
impairment charges. These amounts, which are expenses that we add
back to our GAAP net income (loss) and net income (loss) Per Share
in order to calculate the corresponding adjusted measures,
primarily represent expenses incurred related to a non-cash
write-down of the Company's goodwill in the amount of $599.4
million during the three and nine months ended September 30, 2008.
Goodwill is derived from the allocation of excess purchase price
over book value to account for certain corporate acquisitions
completed by the Company, and is recorded at the time of the
completion of the acquisition. The assessment of goodwill
impairment is based upon a number of factors, most prominently the
Company's public share price, which may or may not reflect the
actual or expected operating performance of our business as a
whole, or the operating performance of the business that was
acquired that created the original goodwill entry, and is subject
to external market dynamics and other unpredictable factors.
Management excludes these charges from the Company's operating
goals, forecasts, budgets and non-GAAP financial measures because
goodwill impairment charges are non-cash, one-time GAAP accounting
items which are not expected to recur in the absence of future
acquisitions. In addition, they are unpredictable, cannot be
controlled and are usually company and situation specific, thus
making comparisons of our operating performance in the period the
impairment expense is incurred to our operating performance in
other periods or to similar companies in our industry. Other asset
impairment charges include various asset write-downs pertaining to
investments and other long-lived assets, for which the carrying
values are impaired and irrecoverable. Management also may exclude
these charges from the Company's operating goals, forecasts,
budgets and non-GAAP financial measures because these amounts are
typically non-recurring, non operating and non-cash expense items,
thus making comparisons of our operating performance in the period
the impairment expense is incurred to our operating performance in
other periods or to similar companies in our industry. (j) Income
Tax Expense (Benefit) Related to the Above Adjustments Income tax
expense is adjusted by the amount of additional tax expense or
benefit that would arise if the Company used our adjusted non-GAAP
financial measures to calculate its tax provision, based on the
relevant statutory rates applicable to the jurisdictions in which
the above non-GAAP adjustments reside. Material Limitations
-------------------- While we believe our measures of Adjusted
EBITDA, adjusted net income (loss), adjusted net income (loss) per
share, adjusted revenue, Adjusted R&D expense and Adjusted
SG&A expense are useful for the reasons noted above, we believe
there may be certain inherent limitations in these measures,
including but not limited to: - Exclusion of amortization and
depreciation expense from our adjusted financial measures does not
take into account the need for future capital spending, whether
this is to support growth or to replace assets which are subject to
wear and tear. - Exclusion of write-downs, amortization and
depreciation from our adjusted financial measures does not take
into consideration the potential tax impacts or obligations which
can materialize into actual future cash flows. - As we use our own
approach for calculating our adjusted financial measures, other
companies may not make the same adjustments or disclose their
financial data in a manner that would allow comparison of their
results to our adjusted results, thus decreasing comparability of
our adjusted financial measures as comparative analytical tools. -
Non-GAAP based adjustments may not take into account the full
economic cost of running our business. For example, financing costs
are required to raise capital, which is used to fund operations.
Adjusted financial measures do not necessarily reflect these
considerations. As noted above, our adjusted financial measures are
not substitutes for our GAAP-derived financial measures and
statements. These adjusted measures are used by management to
supplement our GAAP disclosures and help investors and lenders gain
a better understanding of the Company's operating performance and
to offer investors and lenders an opportunity to access the same
data management and our Board of Directors may use to assess the
Company's operating performance. Management compensates for the
foregoing limitations by ensuring that our GAAP disclosures are
transparent and sufficient to provide readers with the information
required to reconcile financial results and form unbiased
conclusions. DATASOURCE: Angiotech Pharmaceuticals, Inc. CONTACT:
Sharrifah Al-Salem, Investor Relations and Corporate
Communications, Angiotech Pharmaceuticals, Inc., (415) 293-4414,
Copyright