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Patheon reports fiscal 2013 results

                     Patheon reports fiscal 2013 results

PR Newswire

TORONTO, Jan. 10, 2014

Top-line growth at 36.6 percent

TORONTO, Jan.  10, 2014  /PRNewswire/ -  Patheon Inc.  (TSX: PTI),  a  leading 
provider of contract development and commercial manufacturing services to  the 
global pharmaceutical industry, announced today  full year results for  fiscal 
2013.

Highlights for the year include:

  *Revenues for the year increased to $1,023.1 million from $749.1 million in
    the same period last year, an increase of $274.0 million or 36.6 percent.
    Revenue resulting from the Banner acquisition was $217.3 million.
  *Gross profit for the year increased to $249.1 million from $159.3 million
    in the same period last year, an increase of $89.8 million or 56.4
    percent.
  *Adjusted EBITDA increased in the current fiscal year to $146.2 million
    from $87.4 million in the same period last year, an increase of $58.8
    million.
  *Loss from continuing operations improved to $35.7 million from a loss of
    $106.4 million in the prior year, an improvement of $70.7 million.

In addition, as previously announced, Patheon has entered into an  arrangement 
agreement withJLL/Delta Patheon Holdings,  L.P.,a limited partnership  under 
whichPatheonwill be  taken  private pursuant  to  a court-approved  plan  of 
arrangement under theCanada  Business Corporations Act.The  new company  has 
not been  named and  is being  called NewCo.  NewCowill be  a leading  global 
contract development and  manufacturing organization  with anticipated  fiscal 
2014  sales  of  about$2.0  billion(pro-forma)  and  a  strong  EBITDA   and 
operational cash  flow.  NewCois sponsored  by  an entity  controlled  byJLL 
Partners, Inc.and Koninklijke DSM N.V.

About Patheon

Patheon Inc.(TSX:  PTI) is  a leading  provider of  contract development  and 
commercial manufacturing services to the global pharmaceutical industry for  a 
full array of  solid and sterile  dosage forms. Through  the company's  recent 
acquisition ofBanner Pharmacaps-  a market  leader in  soft gelatin  capsule 
technology -Patheonnow also includes  a proprietary products and  technology 
business.

Patheonprovides the highest  quality products and  services to  approximately 
300 of the  world's leading  pharmaceutical and  biotechnology companies.  The 
company's integrated network consists of 15 locations, including 12 commercial
contract manufacturing  facilities  and  9  development  centers  acrossNorth 
AmericaandEurope.Patheonenables customer  products  to  be  launched  with 
confidence anywhere in the world. For more information, visitwww.patheon.com.

Use of Non-GAAP Financial Measures

Commencing in fiscal  2013, the  Company revised its  calculation of  Adjusted 
EBITDA to exclude stock-based  compensation expense, consulting costs  related 
to  its  operational   initiatives,  purchase   accounting  adjustments,   and 
acquisition-related litigation expenses. The  Company believes that  excluding 
these items from Adjusted EBITDA  better reflects the underlying  performance. 
Based on the revisions to the  definition of Adjusted EBITDA, the Company  has 
recast the presentation of Adjusted EBITDA for the twelve months ended October
31, 2012,  to be  consistent with  the current  period presentation.  Adjusted 
EBITDA is now  income (loss) from  continuing operations before  repositioning 
expenses, interest expense,  foreign exchange losses  reclassified from  other 
comprehensive income (loss), refinancing expenses, acquisition and integration
costs (including certain product returns and inventory write-offs recorded  in 
gross profit), gains and losses on sale of capital assets, income taxes, asset
impairment charges,  depreciation and  amortization, stock-based  compensation 
expense, consulting  costs related  to our  operational initiatives,  purchase 
accounting adjustments,  acquisition-related  litigation  expenses  and  other 
income and expenses. Since Adjusted EBITDA is a non-GAAP measure that does not
have a standardized  meaning, it  may not  be comparable  to similar  measures 
presented by other issuers. Readers are cautioned that Adjusted EBITDA  should 
not be  construed  as  an  alternative to  net  income  (loss)  determined  in 
accordance with U.S. GAAP as an  indicator of performance. Adjusted EBITDA  is 
used by management as  an internal measure of  profitability. The Company  has 
included Adjusted EBITDA  because it  believes that  this measure  is used  by 
certain  investors  to  assess  the  Company's  financial  performance  before 
non-cash charges  and certain  costs that  the Company  does not  believe  are 
reflective of its underlying business. A reconciliation of Adjusted EBITDA  to 
the closest U.S.  GAAP measure is  included with the  financial statements  in 
this press release.

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Caution Concerning Forward-Looking Statements

This press  release  contains  forward-looking statements  which  reflect  our 
expectations regarding our future  growth, results of operations,  performance 
(both operational and financial) and business prospects and opportunities. All
statements, other  than statements  of  historical fact,  are  forward-looking 
statements. Wherever possible, words such as "plans," "expects," or "does  not 
expect," "forecasts,"  "anticipates"  or "does  not  anticipate,"  "believes," 
"intends" and similar expressions or  statements that certain actions,  events 
or results  "may," "could,"  "should," "would,"  "might" or  "will" be  taken, 
occur or  be  achieved  have  been  used  to  identify  these  forward-looking 
statements. Although the  forward-looking statements contained  in this  press 
release reflect  our  current  assumptions based  upon  information  currently 
available to us and based upon  what we believe to be reasonable  assumptions, 
we cannot  be  certain that  actual  results  will be  consistent  with  these 
forward-looking  statements.   Our   current  material   assumptions   include 
assumptions  related  to  customer  volumes,  regulatory  compliance,  foreign 
exchange rates,  employee  severance  costs associated  with  termination  and 
projected   integration   savings   related   to   the   Banner   acquisition. 
Forward-looking statements necessarily involve  significant known and  unknown 
risks, assumptions  and  uncertainties  that may  cause  our  actual  results, 
performance,  prospects  and  opportunities   in  future  periods  to   differ 
materially from those expressed or implied by such forward-looking statements.
These risks and uncertainties  include, among other  things, risks related  to 
international operations and  foreign currency  fluctuations; customer  demand 
for   our   services;   regulatory   matters   affecting   manufacturing   and 
pharmaceutical development  services; impacts  of acquisitions,  divestitures, 
restructurings, and  other  strategic  transactions  (including  our  proposed 
transaction with JLL/Delta Patheon Holdings,  L.P.), including our ability  to 
achieve  our  intended  objectives  with  respect  to  such  transactions  and 
integrate businesses that we  may acquire or  combine with; implementation  of 
our operational  excellence  initiatives and  transformation  activities;  our 
ability to  effectively  transfer  business  between  facilities;  the  global 
economic  environment;  our  exposure   to  complex  production  issues;   our 
substantial financial leverage; interest rate risks; potential  environmental, 
health and safety liabilities; credit and customer concentration; competition;
rapid technological change; product  liability claims; intellectual  property; 
the fact that  we have a  majority shareholder that  can exercise  significant 
influence over us;  supply arrangements; pension  plans; derivative  financial 
instruments; and our dependence upon key management, scientific and  technical 
personnel. For additional information  regarding risks and uncertainties  that 
could affect our  business, please see  Item 1A "Risk  Factors" of our  Annual 
Report on Form 10-K for the fiscal year ended October 31, 2013, and our  other 
filings with  the U.S.  Securities and  Exchange Commission  and the  Canadian 
Securities Administrators. Although  we have attempted  to identify  important 
risks and factors that could cause actual actions, events or results to differ
materially from those  described in forward-looking  statements, there may  be 
other factors and risks  that cause actions,  events or results  not to be  as 
anticipated,  estimated  or   intended.  There  can   be  no  assurance   that 
forward-looking statements will prove  to be accurate,  as actual results  and 
future  events  could  differ  materially  from  those  anticipated  in   such 
statements. These forward-looking statements are made  as of the date of  this 
annual report  on Form  10-K, and  except as  required by  law, we  assume  no 
obligation to update or revise them to reflect new events or circumstances.

                         Patheon Inc.
                 CONSOLIDATED BALANCE SHEETS
                                                             
                                           As of October 31,
                                                         
                                              2013     2012
(in millions of U.S. dollars)                     $        $
                                                         
Assets                                                    
Current                                                   
 Cash and cash equivalents                   61.6     39.4
 Accounts receivable, net                    191.3    161.7
 Inventories                                137.8     82.3
 Income taxes receivable                       3.6      0.4
 Prepaid expenses and other                   15.3     11.9
 Deferred tax assets - short-term             6.1      4.3
Total current assets                          415.7    300.0
                                                         
Capital assets                               496.7    416.4
Intangible assets                             69.2        -
Deferred financing costs                       20.2      4.9
Deferred tax assets                            0.1        -
Goodwill                                       48.5      3.5
Investments                                     8.4      6.3
Other long-term assets                        19.0     11.8
Total assets                                1,077.8    742.9
                                                         
Liabilities and shareholders' equity                      
Current                                                   
 Short-term borrowings                         3.0      2.4
 Accounts payable and accrued liabilities    221.9    186.2
 Income taxes payable                          0.1      5.7
 Deferred revenues - short-term               15.0     13.9
 Deferred tax liability - short-term           0.1        -
 Current portion of long-term debt            6.8        -
Total current liabilities                     246.9    208.2
                                                         
Long-term debt                               599.2    310.7
Deferred revenues                             20.1     28.9
Deferred tax liabilities                      43.4     23.0
Other long-term liabilities                    41.8     47.8
Total liabilities                             951.4    618.6
                                                         
Shareholders' equity                                      
 Restricted voting shares                   610.6    572.5
 Contributed surplus                         16.7     16.5
 Accumulated deficit                       (514.5)  (478.6)
 Accumulated other comprehensive income       13.6     13.9
Total shareholders' equity                    126.4    124.3
Total liabilities and shareholders' equity  1,077.8    742.9



                                 Patheon Inc.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                             
                                              Twelve months ended October 31,
                                                   2013      2012      2011
(in millions of U.S. dollars, except loss per                      
share)                                                 $          $          $
                                                                        
Revenues                                        1,023.1     749.1     700.0
Cost of goods sold                                 774.0     589.8     568.2
Gross profit                                       249.1     159.3     131.8
Selling, general and administrative expenses      163.6     128.6     120.2
Research and development                            10.9         -         -
Repositioning expenses                             15.8       6.1       7.0
Acquisition and integration costs                   13.1       3.2         -
Impairment charge                                  13.1      57.9         -
(Gain) loss on sale of fixed assets                (1.3)       0.4       0.2
Operating income (loss)                             33.9    (36.9)       4.4
Interest expense, net                               47.8      26.5      25.6
Foreign exchange loss (gain)                         0.8       0.5     (1.6)
Refinancing expenses                               29.2         -         -
Other income, net                                  (1.6)     (0.9)     (4.9)
Loss from continuing operations before income                      
taxes                                             (42.3)     (63.0)     (14.7)
Current                                             8.7       9.2       1.6
Future                                           (15.3)      34.2     (0.5)
(Benefit from) provision for income taxes         (6.6)      43.4       1.1
Loss from continuing operations                   (35.7)   (106.4)    (15.8)
Loss from discontinued operations                 (0.2)     (0.3)     (0.6)
Net loss for the period                           (35.9)   (106.7)    (16.4)
Net loss attributable to restricted voting                         
shareholders                                      (35.9)    (106.7)     (16.4)
                                                                        
Basic and diluted loss per share                                         
          From continuing operations           ($0.255)  ($0.821)  ($0.122)
          From discontinued operations         ($0.001)  ($0.002)  ($0.005)
                                               ($0.256)  ($0.823)  ($0.127)
                                                                        
Weighted-average number of shares outstanding
during period -                                                    
basic and diluted (in thousands)                 140,072    129,639    129,639



                                 Patheon Inc.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    Years ended October 31,
                                                                        
                                                      2013     2012    2011
(in millions of U.S. dollars)                             $        $       $
                                                                        
Operating activities                                                     
Loss from continuing operations                      (35.7)  (106.4)  (15.8)
 Add (deduct) charges to operations not requiring                   
  a current cash payment                                                   
        Depreciation and amortization               48.4     40.8    53.2
        Impairment charge                            13.1     57.9       -
        Other non-cash interest                       9.7      1.2     1.1
        Change in other long-term assets and                       
          liabilities                                (14.4)     (2.2)    (4.0)
        Deferred income taxes                      (15.3)     34.2   (0.6)
        Amortization of deferred revenues          (18.3)   (13.1)  (45.0)
        (Gain) loss on sale of capital assets       (1.3)      0.4     0.2
        Stock-based compensation expense              3.2      3.1     3.5
        Excess tax benefit from share-based                        
          payment arrangements                        (1.0)         -        -
        Other                                       (1.3)    (0.9)   (0.1)
                                                    (12.9)     15.0   (7.5)
 Net change in non-cash working capital balances                    
  related to continuing operations                     8.8     (6.8)      1.0
 Increase in deferred revenues                        17.3     25.2    30.4
 Cash provided by operating activities of                           
  continuing operations                                13.2      33.4     23.9
 Cash used in operating activities of discontinued                  
  operations                                         (0.2)     (0.4)    (1.0)
Cash provided by operating activities                  13.0     33.0    22.9
                                                                        
Investing activities                                                     
 Additions to capital assets                        (49.8)   (53.4)  (47.8)
 Proceeds on sale of capital assets                    6.6      0.4     0.4
 Proceeds on sale of business, net                       -      1.0       -
 Acquisitions, net of cash acquired                (256.1)        -       -
 Cash used in investing activities of continuing                    
  operations                                        (299.3)    (52.0)   (47.4)
 Cash provided by investing activities of                           
  discontinued operations                                 -       0.1        -
Cash used in investing activities                   (299.3)   (51.9)  (47.4)
                                                                        
Financing activities                                                     
 (Decrease) increase in short-term borrowings            -    (3.8)     4.2
 Proceeds from long-term borrowings                  647.0     40.9    13.5
 Increase in deferred financing costs               (22.7)        -       -
 Repayment of debt, net of penalty                 (353.5)   (11.1)  (15.0)
 Share issue cost                                   (0.8)        -       -
 Proceeds on issuance of restricted voting shares     35.9      0.3       -
 Excess tax benefit from share-based payment                        
  arrangements                                          1.0         -        -
 Cash provided by financing activities of                           
  continuing operations                               306.9      26.3      2.7
Cash provided by financing activities                 306.9     26.3     2.7
                                                                        
                                                                        
Effect of exchange rate changes on cash and cash                     
equivalents                                             1.6     (1.4)      1.7
                                                                        
Net increase (decrease) in cash and cash                             
equivalents during the period                          22.2       6.0   (20.1)
Cash and cash equivalents, beginning of period         39.4     33.4    53.5
Cash and cash equivalents, end of period               61.6     39.4    33.4
                                                                        
Supplemental cash flow information                                       
Interest paid                                          42.1     25.4    25.0
Income taxes paid (received), net                     13.3      2.2   (1.3)



                                 Patheon Inc.
                        ADJUSTED EBITDA RECONCILIATION

                                             Twelve months ended October 31,
                                                 2013       2012      2011
(in millions of U.S. dollars)                        $          $         $
Loss from continuing operations                 (35.7)    (106.4)    (15.8)
Add (deduct):                                                           
 (Benefit from) provision for income taxes      (6.6)       43.4       1.1
 (Gain) loss on sale of capital assets          (1.3)        0.4       0.2
 Acquisition and integration costs               20.2        3.2       —
 Refinancing expenses                            29.2        —       —
 Interest expense, net                           47.8       26.5      25.6
 Repositioning expenses                          15.8        6.1       7.0
 Depreciation and amortization                   48.4       40.8      53.2
 Impairment charge                               13.1       57.9       —
 Operational initiatives related consulting                      
  costs                                             2.3        13.3        9.0
 Acquisition-related litigation expenses          6.4        —       —
 Stock-based compensation expense                 3.2        3.1       3.5
 Purchase accounting adjustments                  5.0        —       —
 Other                                          (1.6)      (0.9)     (4.9)
Adjusted EBITDA                                  146.2       87.4      78.9



SOURCE Patheon Inc.

Contact:

Contact:
Patheon Inc.
Tel: (919)226-3200
Email:investorrelations@patheon.com
 
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