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Cornerstone Therapeutics Reports Fourth Quarter And Full Year 2009 Financial Results

Zyflo CR®, Zyflo®, AlleRx® and HyoMAX® are trademarks of Cornerstone Therapeutics Inc. All other trademarks are the property of their respective owners.

FINANCIAL TABLES FOLLOW

    
    
    
                                 CORNERSTONE THERAPEUTICS INC.
    
                               CONSOLIDATED STATEMENTS OF INCOME
                        (In thousands, except share and per share data)
    
                              Three Months Ended              Year Ended
                                  December 31,                December 31,
                               2009         2008          2009           2008
                               ----         ----          ----           ----
                                  (Unaudited)
    Net revenues            $30,788      $20,764      $109,564        $64,867
    Costs and expenses:
      Cost of product
       sales (exclusive 
       of amortization
       of product rights)     9,212        2,849        19,457          5,951
      Sales and marketing     7,460        5,684        27,605         16,993
      Royalties               2,240        4,545        18,775         16,193
      General and
       administrative         3,544        4,784        17,422          9,930
      Research and
       development            1,271        2,665         4,312          3,838
      Amortization of 
       product rights         3,587          377         6,115          1,334
                              -----          ---         -----          -----
        Total costs
         and expenses        27,314       20,904        93,686         54,239
                             ------       ------        ------         ------
    Income (loss) from
     operations               3,474         (140)       15,878         10,628
                              -----         ----        ------         ------
    Other expenses:
      Interest expense,
       net                      (15)        (156)         (128)        (1,211)
      Loss on marketable
       security                   -           (8)            -             (8)
      Other expenses              -           (2)            -             (2)
                                ---          ---           ---            ---
        Total other
         expenses               (15)        (166)         (128)        (1,221)
                                ---         ----          ----         ------
    Income (loss) before  
     income taxes             3,459         (306)       15,750          9,407
    (Provision for)
     benefit from income
     taxes                     (771)       3,168        (5,547)          (414)
    
                               ----        -----        ------           ----
    Net income               $2,688       $2,862       $10,203         $8,993
                             ======       ======       =======         ======
    Net income per share,
     basic                    $0.11        $0.29         $0.58          $1.29
                              =====        =====         =====          =====
    Net income per share,
     diluted                  $0.10        $0.26         $0.54          $1.14
                              =====        =====         =====          =====
    Weighted-average
     common shares,
     basic               24,972,954    9,970,920    17,651,668      6,951,896
                         ==========    =========    ==========      =========
    Weighted-average
     common shares,
     diluted             25,751,756   10,809,831    18,776,588      7,861,119
                         ==========   ==========    ==========      =========
    
    
    
                         CORNERSTONE THERAPEUTICS INC.
    
                          CONSOLIDATED BALANCE SHEETS
                (In thousands, except share and per share data)
    
                                                December 31,      December 31,
                                                     2009              2008
                                                     ----              ----
    Assets
    Current assets:
      Cash and cash equivalents                   $18,853            $9,286
      Marketable securities                             -               300
      Accounts receivable, net                     16,548            12,987
      Inventories, net                             18,106            11,222
      Prepaid and other current assets              4,808             1,754
      Deferred income tax asset                     3,507             2,428
                                                    -----             -----
        Total current assets                       61,822            37,977
                                                   ------            ------
    Property and equipment, net                     1,312               895
    Product rights, net                           126,806            17,702
    Goodwill                                       13,231            13,231
    Amounts due from related parties                   38                38
    Other assets                                      113                46
                                                      ---               ---
        Total assets                             $203,322           $69,889
                                                 ========           =======
    Liabilities and Stockholders' Equity
    Current liabilities:
      Accounts payable                             $7,172           $10,288
      Accrued expenses                             23,703            19,052
      Current portion of license
       agreement liability                          1,019             2,543
      Current portion of capital lease                 10                 -
      Income taxes payable                          1,606             2,937
                                                    -----             -----
        Total current liabilities                  33,510            34,820
                                                   ------            ------
    License agreement liability, less
     current portion                                1,341             2,313
    Capital lease, less current
     portion                                           39                 -
    Deferred income tax liability                   4,564             3,330
                                                    -----             -----
        Total liabilities                          39,454            40,463
                                                   ------            ------
    Commitments and contingencies, Note 11
    Stockholders' equity
      Preferred stock - $0.001 par
       value, 5,000,000 shares
       authorized; no shares issued and
       outstanding                                      -                 -
      Common stock - $0.001 par value,
       90,000,000 shares authorized;
       25,022,644 and 24,727,427 shares
       issued and outstanding as of
       December 31, 2009 and December
       31, 2008, respectively                          25                12
      Additional paid-in capital                  157,745            33,519
      Retained earnings (accumulated
       deficit)                                     6,098            (4,105)
                                                    -----            ------
        Total stockholders' equity                163,868            29,426
                                                  -------            ------
        Total liabilities and
         stockholders' equity                    $203,322           $69,889
                                                 ========           =======
    
    
    
                           CORNERSTONE THERAPEUTICS INC.
    
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In thousands)
    
                                                     Year Ended December 31,
                                                     -----------------------
                                                       2009             2008
                                                       ----             ----
    Cash flows from operating activities
    Net income                                      $10,203           $8,993
    Adjustments to reconcile net income to net cash
     provided by operating activities:
      Amortization and depreciation                   6,392            1,425
      Provision for prompt payment
       discounts                                      3,157            1,887
      Provision for inventory
       obsolescence                                   1,474              599
      Stock-based compensation                        3,291              749
      Loss on marketable security                         -                8
      Write-off of acquired in-
       process research and
       development                                        -            1,900
      Impairment of property and
       equipment                                          -               56
      Benefit from deferred income
       taxes                                         (3,632)          (3,310)
    Changes in operating assets and liabilities:
      Accounts receivable                            (6,718)          (9,067)
      Amounts due from related parties                    -                -
      Inventories                                    (8,202)          (2,523)
      Prepaid and other assets                       (3,121)           1,749
      Accounts payable                               (3,116)           2,573
      Accrued expenses                                2,053            4,505
      Income taxes payable                           (1,331)           3,085
                                                     ------            -----
      Net cash provided by operating
       activities                                       450           12,629
                                                        ---           ------
    Cash flows from investing activities
    Advances to related parties                           -              (19)
    Proceeds from collection of
     advances to related parties                          -              657
    Proceeds from sale of marketable
     securities                                         300                -
    Purchase of property and
     equipment                                         (635)            (638)
    Purchase of product rights                       (5,169)          (2,450)
    Collection of deposits                                -              223
    Payment of deposits                                   -             (237)
    Cash acquired in connection with
     the Merger, net of costs paid                        -            2,118
                                                        ---            -----
      Net cash used in investing
       activities                                    (5,504)            (346)
                                                     ------             ----
    Cash flows from financing activities
    Proceeds from issuance of shares
     of common stock                                 15,465                -
    Proceeds from exercise of common
     stock options and warrants                         437               52
    Payments for cancellation of
     warrants                                           (41)               -
    Excess tax benefit from stock-
     based compensation                               1,269                -
    Principal payments on license
     agreement liability                             (2,500)            (576)
    Principal payments on capital
     lease obligation                                    (9)               -
    Principal payments on notes
     payable                                              -             (460)
    Proceeds from line of credit                          -            7,250
    Principal payments on line of
     credit                                               -           (9,000)
    Payment of stock issuance costs
     in connection with the Merger                        -             (504)
                                                        ---             ----
      Net cash provided by (used in)
       financing activities                          14,621           (3,238)
                                                     ------           ------
      Net increase in cash and cash
       equivalents                                    9,567            9,045
    Cash and cash equivalents as of
     beginning of year                                9,286              241
                                                      -----              ---
    Cash and cash equivalents as of
     end of year                                    $18,853           $9,286
                                                    =======           ======
    Supplemental disclosure of cash flow
     information
    Cash paid during the year for
     interest                                          $531           $2,734
                                                       ====           ======
    Cash paid during the year for
     income taxes                                    $9,260             $644
                                                     ======             ====
    Supplemental schedule of non-cash investing
     and financing activities
    Product rights acquired through
     issuance of a license agreement                     $-               $-
                                                        ===              ===
    Related party note payable
     converted to common stock in
     connection with the Merger                          $-           $8,952
                                                        ===           ======
    Common stock issued in
     connection with the Merger                          $-          $23,479
                                                        ===          =======
    Acquisition of product rights
     through equity issued and
     liabilities assumed                           $110,050               $-
                                                   ========              ===
    

Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures (Unaudited)

To supplement the consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, the Company uses non-GAAP measures of certain components of financial performance.  These non-GAAP measures include non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share.  The tables below provide a reconciliation of each non-GAAP financial measure used in this earnings release and related conference call to the most directly comparable GAAP financial measure.

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