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Akorn Provides Financial Guidance For 2013

Stocks in this article: AKRX

Adjusted net income, as defined by the Company, is calculated as follows:

Net income, plus:

  • Intangible asset amortization, net of tax
  • Non-cash expenses, such as non-cash interest, share-based compensation expense, changes in the fair value of warrants, and deferred financing cost amortization, all net of tax
  • Other adjustments, such as equity in earnings of unconsolidated joint venture related to the sale of the joint venture's assets, amortization of the fair value adjustment to inventory acquired through business acquisitions, and Kilitch Drugs (India) Limited acquisition related expense, all net of tax

Adjusted net income per diluted share is equal to Adjusted net income divided by the actual or anticipated diluted share count for the applicable period.

The Company believes that Adjusted net income and Adjusted net income per diluted shares are meaningful financial indicators, to both Company management and investors, in that they exclude non-cash income and expense items that have no impact on current or future cash flows, as well as other income and expense items that are not expected to recur and therefore are not reflective of continuing operating performance. Adjusted net income and Adjusted net income per diluted share provide the Company and investors with income figures that would be expected to be more aligned with cash flows than GAAP net income, which includes a host of non-cash income and expense items.

While the Company uses Adjusted EBITDA, Adjusted net income and Adjusted net income per diluted share in managing and analyzing its business and financial condition and believes these non-GAAP financial measures to be useful to investors in evaluating the Company’s performance, each of these financial measures has certain shortcomings. Core business revenue does not provide a full picture of the Company’s historical revenues. Adjusted EBITDA does not take into account the impact of capital expenditures on either the liquidity or the GAAP financial performance of the Company and likewise omits share-based compensation expenses, which may vary over time and may represent a material portion of overall compensation expense. Adjusted net income does not take into account non-cash expenses that reflect the amortization of past expenditures, or include stock-based compensation, which is an important and material element of the Company’s compensation package for its directors, officers and other key employees. Due to the inherent limitations of each of these non-GAAP financial measures, the Company’s management utilizes comparable GAAP financial measures to evaluate the business in conjunction with Adjusted EBITDA, Adjusted net income and Adjusted net income per diluted share and encourages investors to do likewise.

   
AKORN, INC.
2013 FINANCIAL GUIDANCE
   

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED NET INCOME:

 
 
GAAP NET INCOME $53 - 57 million
 
ADD:
Intangible asset amortization expense 7 million
Share-based compensation expense 7 million
Non-cash interest expense 5 million
Amortization of deferred financing costs 1 million
 
SUBTRACT:
Tax effect of adjustments (8 ) million
 
ADJUSTED NET INCOME $65 - 69   million
 
ADJUSTED NET INCOME PER DILUTED SHARE $0.57 - 0.61  
 
SHARES USED IN COMPUTING ADJUSTED NET
INCOME PER DILUTED SHARE 114 million
 
 

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA:

 
GAAP NET INCOME $53 - 57 million
 
ADJUSTMENTS TO ARRIVE AT EBITDA:
Depreciation and amortization expense 13 million
Interest expense, net (cash and non-cash) 9 million
Income tax provision $31 - 34   million
EBITDA $106 - 113 million
 
ADJUSTMENTS TO ARRIVE AT ADJUSTED EBITDA:
Share-based compensation expense 7 million
Amortization of deferred financing costs 1   million
ADJUSTED EBITDA $114 - 121   million




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