Patheon Reports Preliminary Unaudited First Quarter Fiscal 2014 Results

Patheon Reports Preliminary Unaudited First Quarter Fiscal 2014 Results 
TORONTO, March 6, 2014 /CNW/ - Patheon Inc. (TSX: PTI), a leading provider of 
contract development and manufacturing services to the global pharmaceutical 
industry, with recently acquired proprietary products, announced today 
preliminary unaudited fiscal 2014 first-quarter results. Based on its current 
expectations, Patheon anticipates the following results for its first-quarter 
ended January 31, 2014: 


        --  Revenues of approximately $266.7 million versus $213.5 million
            in the prior year.
        --  Adjusted EBITDA of approximately $36.4 million versus $19.8
            million in the prior year.
        --  Loss from continuing operations of approximately $0.1 million
            versus a loss of $51.4 million in the prior year.

Because Patheon's results of operations for the first quarter of fiscal 2014 
have not yet been finalized, the preliminary results included in this press 
release are subject to change as a result of the period-end closing process 
and review of Patheon's financial statements by its independent registered 
public accounting firm. See "Caution Concerning Forward Looking Statements and 
Preliminary Financial Results." All currency is expressed in U.S. dollars.

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 of Banner Pharmacaps - a market leader in soft gelatin capsule 
technology - Patheon now also includes a proprietary products and technology 
business. Patheon provides the highest quality products and services to 
approximately 300 of the world's leading pharmaceutical and biotechnology 
companies. Patheon's integrated network consists of 15 locations, including 12 
commercial contract manufacturing facilities and 9 product development centers 
across North America and Europe. Patheon enables customer products to be 
launched with confidence anywhere in the world. For more information visit 
www.patheon.com.

Use of Non-GAAP Measures
This press release includes the financial measure Adjusted EBITDA that has not 
been prepared in accordance with accounting principles generally accepted in 
the United States ("GAAP").

"Adjusted EBITDA" is defined as 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 Patheon's operational 
initiatives, purchase accounting adjustments, acquisition-related litigation 
expenses and other income and expenses. Readers are cautioned that Adjusted 
EBITDA should not be construed as an alternative to loss from continuing 
operations determined in accordance with U.S. GAAP as an indicator of 
performance. Adjusted EBITDA is used by management as an internal measure of 
profitability. Patheon has included Adjusted EBITDA because it believes that 
this measure is used by certain investors to assess its financial performance 
before non-cash charges and certain costs that it does not believe are 
reflective of its underlying business.

Since non-GAAP measures do not have a standardized meaning, they may not be 
comparable to similar measures presented by other issuers. Readers are 
cautioned that these non-GAAP measures are not based on any comprehensive set 
of accounting rules or principles and that they should be considered only in 
conjunction with, and not as a substitute for, or superior to, loss from 
continuing operations determined in accordance with GAAP as indicators of 
performance and not as a substitute for, or superior to, operating cash flow 
as an indicator of liquidity, as applicable. These non-GAAP measures are 
subject to inherent limitations because (i) they do not reflect all of the 
expenses and cash flow associated with loss from continuing operations and 
operating cash flow, respectively, determined in accordance with GAAP and (ii) 
the composition of these non-GAAP measures involved the exercise of judgment 
by management. A reconciliation of these non-GAAP measures to their closest 
U.S. GAAP measures is included in this press release.

Caution Concerning Forward-Looking Statements and Preliminary Financial Results

This press release contains forward-looking statements which reflect Patheon's 
expectations regarding its 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 Patheon's current assumptions based upon information currently 
available to it and based upon what Patheon believes to be reasonable 
assumptions, Patheon cannot be certain that actual results will be consistent 
with its expectations and other forward-looking statements. Forward-looking 
statements are provided in order to assist stakeholders in understanding 
management's expectations as of the date of this press release, and may not be 
suitable for other purposes. Patheon's current material assumptions include 
assumptions related to its operational excellence initiatives and 
transformation activities, 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 Patheon's 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 Patheon's services; regulatory matters affecting manufacturing and 
pharmaceutical development services; impacts of acquisitions, divestitures, 
restructurings and other strategic transactions (including Patheon's 
acquisition by JLL/Delta Patheon Holdings, L.P.) and Patheon's ability to 
achieve its intended objectives with respect to such transactions and to 
integrate businesses that it may acquire or combine with; implementation of 
Patheon's operational excellence initiatives and transformation activities; 
Patheon's ability to effectively transfer business between facilities; the 
global economic environment; Patheon's exposure to complex production issues; 
Patheon's 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 Patheon has a majority 
shareholder that can exercise significant influence over it; supply 
arrangements; pension plans; derivative financial instruments; and Patheon's 
dependence upon key management, scientific and technical personnel. For 
additional information regarding risks and uncertainties that could affect 
Patheon's business, please see Item 1A "Risk Factors" of Patheon's Annual 
Report on Form 10-K/A (Amendment No. 1) for the fiscal year ended October 31, 
2013 as further amended by Amendment No. 2 on Form 10-K/A, and its subsequent 
filings with the U.S. Securities and Exchange Commission ("SEC") and the 
Canadian securities regulators. Although Patheon has 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. 
Accordingly, readers should not place undue reliance on forward-looking 
statements. These forward-looking statements are made as of the date of this 
press release and, except as required by law, Patheon assumes no obligation to 
update or revise them to reflect new events or circumstances.

In addition, Patheon is currently undergoing its quarter-end closing and 
review process. Because Patheon's results of operations for the quarter ended 
January 31, 2014 have not yet been finalized, the preliminary results included 
in this press release are subject to change as a result of the period-end 
closing process and the review of Patheon's financial statements by its 
independent registered public accounting firm, Ernst & Young LLP. These 
changes may be material. The preliminary financial results included in this 
press release have been prepared by, and are the responsibility of, Patheon's 
management. Ernst & Young LLP has not completed its review of Patheon's first 
quarter 2014 financial statements, and accordingly, Ernst & Young LLP does not 
express an opinion or any form of assurance with respect to these preliminary 
financial results. These preliminary financial results are not necessarily 
indicative of results of future operations. Accordingly, readers should not 
place undue reliance on Patheon's preliminary financial results. These 
preliminary financial results should be read in conjunction with Patheon's 
previously disclosed consolidated historical financial statements (and related 
notes).

Additional Information

On November 18, 2013, Patheon entered into an Arrangement Agreement (the 
"Arrangement Agreement") with JLL/Delta Patheon Holdings, L.P., ("Newco") 
under which Patheon would be taken private pursuant to a court-approved plan 
of arrangement under the Canada Business Corporations Act. This press release 
may be deemed to be proxy solicitation material in respect of this proposed 
transaction. Copies of the Arrangement Agreement, the proxy statement and 
management information circular for the Special Meeting (which includes the 
valuation and the fairness opinions obtained by Patheon in connection with the 
transaction) and certain related documents have been filed with Canadian and 
U.S. securities regulators and are available on the Canadian SEDAR profile of 
Patheon at www.sedar.com and the SEC's website (EDGAR) at www.sec.gov. In 
addition, investors and securityholders may obtain free copies of the 
documents Patheon files with the SEC and with Canadian securities regulators 
by directing a written request to Patheon Inc., 2100 Syntex Court, 
Mississauga, Ontario, Canada L5N 7K9, Attention: Corporate Secretary. Copies 
of Patheon's filings with the SEC and with Canadian securities regulators may 
also be obtained at the "Investor Relations" section of Patheon's website at 
www.patheon.com.

As noted above, Patheon has filed with the SEC, and on SEDAR, and furnished to 
its shareholders a proxy statement and management information circular in 
connection with the proposed transaction with Newco. Investors and 
securityholders of Patheon are urged to read the proxy statement and 
management information circular and the other relevant materials because such 
materials contain important information about Patheon, Newco and the proposed 
transaction.

Patheon and its directors and executive officers may be deemed to be 
participants in the solicitation of proxies from the securityholders of 
Patheon in connection with the proposed transaction. Information about Patheon 
and its directors and executive officers, including their ownership of Patheon 
securities, is set forth in the Annual Report (Form 10-K) which was filed with 
the SEC and on SEDAR on January 10, 2014, as amended by Amendment No. 1 on 
Form 10-K/A which was filed with the SEC and on SEDAR on January 13, 2014,  
and as further amended by Amendment No. 2 on Form 10-K/A, which was filed with 
the SEC and on SEDAR on February 21, 2014, and as supplemented by other 
Patheon filings with the SEC and Canadian securities regulators. Investors and 
securityholders may obtain additional information regarding the direct and 
indirect interests of Patheon and its directors and executive officers in the 
proposed transaction by reading the proxy statement and management information 
circular and other public filings referred to above.
                                            Patheon Inc.
                                    CONSOLIDATED BALANCE SHEETS
                                    (preliminary and unaudited)
                                                          
                                                          
                                     As of January 31,   As of October 31,
                                           2014                2013
    (in millions of U.S. dollars)                $                   $
                                                                          
    Assets                                                                
    Current                                                               
      Cash and cash equivalents                   45.8                61.6
      Accounts receivable, net                   180.9               191.3
      Inventories                                143.5               137.8
      Income taxes receivable                      4.0                 3.6
      Prepaid expenses and other                  12.1                15.3
      Deferred tax assets -                        6.1                 6.1
      short-term 
    Total current assets                         392.4               415.7
                                                                          
    Capital assets                               484.4               496.7
    Intangible assets                             67.5                69.2
    Deferred financing costs                      19.3                20.2
    Deferred tax assets                            0.1                 0.1
    Goodwill                                      48.2                48.5
    Investments                                    9.4                 8.4
    Other long-term assets                        22.7                19.0
    Total assets                               1,044.0             1,077.8
                                                                          
    Liabilities and shareholders'                                         
    equity
    Current                                                               
      Short-term borrowings                        0.7                 3.0
      Accounts payable and accrued               204.7               221.9
      liabilities
      Income taxes payable                         2.3                 0.1
      Deferred revenues -                         16.3                15.0
      short-term
      Deferred tax liability -                     0.1                 0.1
      short-term
      Current portion of long-term                 6.8                 6.8
      debt 
    Total current liabilities                    230.9               246.9
                                                                          
    Long-term debt                               603.0               599.2
    Deferred revenues                             19.4                20.1
    Deferred tax liabilities                      43.4                43.4
    Other long-term liabilities                   38.0                41.8
    Total liabilities                            934.7               951.4
                                                                          
    Shareholders' equity                                                  
      Restricted voting shares                   610.6               610.6
      Contributed surplus                         17.5                16.7
      Accumulated deficit                      (514.6)             (514.5)
      Accumulated other                          (4.2)                13.6
      comprehensive income
    Total shareholders' equity                   109.3               126.4
    Total liabilities and                      1,044.0             1,077.8
    shareholders' equity
                                         Patheon Inc.
                             CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (preliminary and unaudited)
                                                                           
                                                                           
                                             Three months ended January 31,
                                                   2014                2013
    (in millions of U.S. dollars, except              $                   $
    loss per share)                                      
                                                                           
    Revenues                                      266.7               213.5
    Cost of goods sold                            197.8               171.1
    Gross profit                                   68.9                42.4
    Selling, general and administrative            46.3                35.2
    expenses                                             
    Research and development                        2.8                 1.3
    Repositioning expenses                          0.7                 4.0
    Acquisition and integration costs               4.9                 4.4
    Impairment charge                                 -                10.1
    Gain on sale of fixed assets                  (0.4)               (0.3)
    Operating income (loss)                        14.6              (12.3)
    Interest expense, net                          12.8                 9.8
    Foreign exchange loss, net                      1.2                 0.8
    Refinancing expenses                              -                29.1
    Other income, net                             (1.3)               (0.4)
    Income (Loss) from continuing operations        1.9              (51.6)
    before income taxes                                  
    Provision for (benefit from) income             2.0               (0.2)
    taxes                                                
    Loss from continuing operations               (0.1)              (51.4)
    Net loss attributable to restricted           (0.1)              (51.4)
    voting shareholders                                  
                                                                           
    Basic and diluted loss per share                                       
      From continuing operations               ($0.001)            ($0.384)
                                                                           
    Weighted-average number of shares
    outstanding during period -               
    basic and diluted (in thousands)            140,936             133,849
                                         Patheon Inc.
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (preliminary and unaudited)
                                                                           
                                                                           
                                             Three months ended January 31,
                                                                           
                                               2014                    2013
    (in millions of U.S. dollars)                 $                       $
                                                                           
    Operating activities                                                   
    Loss from continuing operations           (0.1)                  (51.4)
      Add (deduct) charges to operations not
      requiring a current cash payment                                     
        Depreciation and amortization          12.4                    11.0
        Impairment charge                         -                    10.1
        Other non-cash interest                 1.5                     4.9
        Change in other long-term assets and
        liabilities                           (5.5)                   (1.6)
        Deferred income taxes                     -                   (1.0)
        Amortization of deferred revenues     (5.1)                   (4.2)
        Gain on sale of capital assets        (0.4)                   (0.3)
        Stock-based compensation expense        0.8                     0.8
        Other                                 (1.4)                     0.1
                                                2.2                  (31.6)
      Net change in non-cash working capital
      balances related to continuing
      operations                             (17.3)                    19.7
      Increase in deferred revenues             6.5                     5.6
                                              
    Cash used in operating activities         (8.6)                   (6.3)
                                                                           
    Investing activities                                                   
      Additions to capital assets            (11.4)                   (8.4)
      Proceeds on sale of capital assets        4.4                     0.4
      Acquisitions, net of cash acquired          -                 (258.9)
                                              
    Cash used in investing activities         (7.0)                 (266.9)
                                                                           
    Financing activities                                                   
      Proceeds from long-term borrowings       13.0                   592.1
      Increase in deferred financing costs        -                  (21.7)
      Repayment of debt, net of penalty
      payment                                (12.2)                 (315.8)
      Share issue cost                            -                   (0.9)
      Proceeds on issuance of restricted
      voting shares                               -                    32.9
                                              
    Cash provided by financing activities       0.8                   286.6
                                                                           
    Effect of exchange rate changes on cash
    and cash equivalents                      (1.0)                     2.6
                                                                           
    Net (decrease) increase in cash and cash
    equivalents during the period            (15.8)                    16.0
    Cash and cash equivalents, beginning of
    period                                     61.6                    39.4
                                                       
    Cash and cash equivalents, end of period   45.8                    55.4
                                                       
                                     ADJUSTED EBITDA BRIDGE
                                  (Preliminary and Unaudited)
                                                                        
                                                                        
                                          Three months ended January 31,
                                          2014                 2013
    (in millions of U.S. dollars)            $                   $
    Loss from continuing operations       (0.1)                   (51.4)
    Add (deduct):                                                       
      Provision for (benefit from)       
      income taxes                          2.0                    (0.2)
      Gain on sale of capital assets      (0.4)                    (0.3)
      Acquisition and integration costs     4.9                      4.4
      Refinancing expenses                    -                     29.1
      Interest expense, net                12.8                      9.8
      Repositioning expenses                0.7                      4.0
      Depreciation and amortization        12.4                     11.0
      Impairment charge                       -                     10.1
      Operational initiatives related    
      consulting costs                      1.4                      0.1
      Acquisition-related litigation     
      expenses                              3.1                        -
      Stock-based compensation expense      0.8                      0.8
      Purchase accounting adjustments         -                      2.9
      Other                               (1.2)                    (0.5)
    Adjusted EBITDA                        36.4                     19.8
                                                                          



SOURCE  Patheon Inc. 
Contact: Patheon Inc. Tel: (919) 226-3200 Email:investorrelations@patheon.com 
To view this news release in HTML formatting, please use the following URL: 
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CO: Patheon Inc.
ST: Ontario
NI: MTC ERN  
-0- Mar/06/2014 12:30 GMT
 
 
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