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Emergent BioSolutions Reports Financial Results For Second Quarter And First Six Months Of 2013

There are a number of important factors that could cause the company’s actual results to differ materially from those indicated by such forward-looking statements, including appropriations for BioThrax® procurement; our ability to successfully integrate the HPPD business and realize the benefits of the transaction; our ability to obtain new BioThrax sales contracts or modifications to existing contracts; our plans to pursue label expansions and improvements for BioThrax; availability of funding for our U.S. government grants and contracts; our ability to obtain regulatory approval for large-scale manufacturing of BioThrax in Building 55; our ability to identify and acquire companies, products or late-stage product candidates that satisfy our selection criteria; whether anticipated synergies and benefits from an acquisition or in-license are realized within expected time periods or at all; our ability to enter into selective collaboration arrangements; our ability to expand our manufacturing facilities and capabilities; the rate and degree of market acceptance and clinical utility of our products; the success of our ongoing and planned development programs; the timing of and our ability to obtain and maintain regulatory approvals for our products and product candidates; and our commercialization, marketing and manufacturing capabilities and strategy. The foregoing sets forth many, but not all, of the factors that could cause actual results to differ from our expectations in any forward-looking statement. Investors should consider this cautionary statement, as well as the risk factors identified in our periodic reports filed with the SEC, when evaluating our forward-looking statements.

Financial Statements Follow

       
Emergent BioSolutions Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
 
 
June 30, December 31,
2013     2012
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 156,243 $ 141,666
Accounts receivable 54,369 96,043
Inventories 18,582 15,161
Deferred tax assets, net 1,264 1,264
Income tax receivable, net 6,502 -
Prepaid expenses and other current assets   11,199         9,213  
Total current assets   248,159         263,347  
 
Property, plant and equipment, net 248,504 241,764
In-process research and development 41,800 41,800
Goodwill 5,502 5,502
Deferred tax assets, net 11,087 11,087
Other assets   562         730  
 
Total assets $ 555,614       $ 564,230  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 25,711 $ 31,297
Accrued expenses and other current liabilities 1,067 1,603
Accrued compensation 15,481 22,726
Long-term indebtedness, current portion 4,470 4,470
Deferred revenue   2,049         1,811  
Total current liabilities 48,778 61,907
 
Long-term indebtedness, net of current portion 56,069 58,304
Other liabilities   1,685         1,891  
Total liabilities 106,532 122,102
 
Commitments and contingencies
 
Stockholders’ equity:
Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively - -
Common stock, $0.001 par value; 100,000,000 shares authorized, 36,589,921 shares issued and 36,186,763 shares outstanding at June 30, 2013; 36,272,550 shares issued and 35,869,392 shares outstanding at December 31, 2012 36 36
Treasury stock, at cost, 403,158 common shares at June 30, 2013 and December 31, 2012 (5,906 ) (5,906 )
Additional paid-in capital 236,099 230,964
Accumulated other comprehensive loss (3,513 ) (4,129 )
Retained earnings   222,814         220,393  
Total Emergent BioSolutions Inc. stockholders' equity   449,530         441,358  
Noncontrolling interest in subsidiaries   (448 )       770  
Total stockholders’ equity   449,082         442,128  
Total liabilities and stockholders’ equity $ 555,614       $ 564,230  
 
 
Emergent BioSolutions Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share data)
 
       
Three Months Ended June 30,
2013     2012
(Unaudited)
Revenues:
Product sales $ 65,596 $ 53,161
Contracts and grants   16,840         17,218
Total revenues 82,436 70,379
 
Operating expense:
Cost of product sales 16,945 13,186
Research and development 30,278 30,645
Selling, general and administrative   20,501         17,895
Income from operations 14,712 8,653
 
Other income (expense):
Interest income 10 29
Interest expense (3 ) -
Other income (expense), net   18         907
Total other income (expense) 25 936
 
Income before provision for income taxes 14,737 9,589
Provision for income taxes   4,381         4,043
Net income   10,356         5,546
Net loss attributable to noncontrolling interest   128         2,086
Net income attributable to Emergent BioSolutions Inc. $ 10,484       $ 7,632
 
Income per share - basic $ 0.29 $ 0.21
Income per share - diluted $ 0.29 $ 0.21
 
Weighted-average number of shares - basic 36,144,063 36,182,826
Weighted-average number of shares - diluted 36,527,014 36,556,697
 
 
Emergent BioSolutions Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share data)
 
       
Six Months Ended June 30,
2013     2012
(Unaudited)
Revenues:
Product sales $ 95,955 $ 87,518
Contracts and grants   29,581         33,172  
Total revenues 125,536 120,690
 
Operating expense:
Cost of product sales 22,643 20,697
Research and development 61,002 56,891
Selling, general and administrative 40,529 37,387
Impairment of in-process research and development   -         9,600  
Income (loss) from operations 1,362 (3,885 )
 
Other income (expense):
Interest income 33 54
Interest expense (14 ) (6 )
Other income (expense), net   35         1,761  
Total other income (expense) 54 1,809
 
Income (loss) before provision for (benefit from) income taxes 1,416 (2,076 )
Provision for (benefit from) income taxes   (135 )       403  
Net income (loss)   1,551         (2,479 )
Net loss attributable to noncontrolling interest   871         3,279  
Net income attributable to Emergent BioSolutions Inc. $ 2,422       $ 800  
 
Income per share - basic $ 0.07 $ 0.02
Income per share - diluted $ 0.07 $ 0.02
 
Weighted-average number of shares - basic 36,056,297 36,114,400
Weighted-average number of shares - diluted 36,247,773 36,301,335
 
 
Emergent BioSolutions Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
 
       
Six Months Ended June 30,
2013     2012
Cash flows from operating activities: (Unaudited)
 
Net income (loss) $ 1,551 $ (2,479 )
Adjustments to reconcile to net cash provided by (used in) operating activities:
Stock-based compensation expense 5,718 5,425
Depreciation and amortization 8,372 4,909
Current and deferred income taxes (135 ) 4,080
Non-cash development expenses from joint venture (347 ) 3,632
Change in fair value of contingent value rights - (3,005 )
Impairment of in-process research and development - 9,600
Excess tax benefits from stock-based compensation (1,757 ) (1,307 )
Other (10 ) (55 )
Changes in operating assets and liabilities:
Accounts receivable 41,674 27,338
Inventories (3,421 ) (1,347 )
Income taxes (7,999 ) (2,163 )
Prepaid expenses and other assets (1,734 ) 888
Accounts payable (6,199 ) (7,068 )
Accrued expenses and other liabilities (619 ) 488
Accrued compensation (7,130 ) (6,900 )
Deferred revenue   238         142  
Net cash provided by operating activities   28,202         32,178  
Cash flows from investing activities:
Purchases of property, plant and equipment (14,123 ) (30,921 )
Proceeds from sale of assets - 11,765
Proceeds from maturity of investments   -         1,966  
Net cash used in investing activities   (14,123 )       (17,190 )
Cash flows from financing activities:
Proceeds from borrowings on long-term indebtedness - 11,413
Issuance of common stock subject to employee equity plans 933 401
Excess tax benefits from stock-based compensation 1,757 1,307
Principal payments on long-term indebtedness (2,235 ) (8,670 )
Contingent value right payment - (1,748 )
Restricted cash   -         220  
Net cash provided by financing activities   455         2,923  
               
Effect of exchange rate changes on cash and cash equivalents   43         31  
 
Net increase (decrease) in cash and cash equivalents 14,577 17,942
Cash and cash equivalents at beginning of period   141,666         143,901  
Cash and cash equivalents at end of period $ 156,243       $ 161,843  
 




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