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U.S. SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: March 31, 2005
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______________ to ______________
 

Commission File Number 1-11352

ABLE LABORATORIES, INC.
 
(Exact name of registrant as specified in its charter)
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

DELAWARE
  
04-3029787
(State or other jurisdiction of incorporation or organization)
  
(IRS Employer
Identification No.)

1 Able Drive
Cranbury, NJ 08512
(Address of principal executive offices)

(609) 495-2800
(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o
 
Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes x  No o
 
As of April 15, 2005 there were 18,516,801 outstanding shares of common stock, $.01 par value per share.
 

 
 
ABLE LABORATORIES, INC.
 
FORM 10-Q
 
QUARTERLY REPORT
 
MARCH 31, 2005
 
TABLE OF CONTENTS
 
Facing Page
  
1
Table of Contents
2
     
PART I.
FINANCIAL INFORMATION(*)
  
     
Item 1.
Financial Statements:
  
 
Condensed Balance Sheets
3
 
Condensed Statements of Income
4
 
Condensed Statements of Changes in Stockholders’ Equity
5
 
Condensed Statements of Cash Flows
6
 
Notes to Unaudited Condensed Financial Statements
7
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of
 
 
Operations
10
     
Item 4.
Controls and Procedures
14
     
PART II.
OTHER INFORMATION
  
     
Item 1.
Legal Proceedings
15
Item 5.
Other Information
15
Item 6.
Exhibits
16
     
SIGNATURES
  
17


(*) The financial information at December 31, 2004 has been derived from the audited financial statements at that date and should be read in conjunction therewith. All other financial statements are unaudited.
 

-2-


PART I. FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
ABLE LABORATORIES, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
 
ASSETS
 
   
March 31,
2005
  
December 31,
2004
  
Current assets:
          
Cash and cash equivalents
  
$
16,793,938
  
$
11,650,886
  
Accounts receivable, net of allowances of $41,377,390 and $38,272,886
    
17,589,167
    
17,878,380
  
Inventory
    
20,548,064
    
18,105,275
  
Deferred income tax asset
    
7,500,000
    
7,500,000
  
Prepaid expenses and other current assets
    
1,394,846
    
1,843,882
  
Total current assets
    
63,826,015
    
56,978,423
  
 
Property and equipment, net
    
42,780,583
    
40,228,942
  
               
Other assets:
              
Deferred income tax asset
    
954,000
    
2,743,000
  
Goodwill
    
3,922,655
    
3,922,655
  
Deposits and other assets
    
424,258
    
418,082
  
Total other assets
    
5,300,913
    
7,083,737
  
   
$
111,907,511
  
$
104,291,102
  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
          
Accounts payable
 
$
5,026,607
  
$
2,742,823
  
Accrued expenses
    
4,340,073
    
2,268,763
  
Total current liabilities
    
9,366,680
    
5,011,586
  
Long-term debt
    
—
    
3,000,000
  
Total liabilities
    
9,366,680
    
8,011,586
  
               
Stockholders’ equity:
              
Preferred stock, $.01 par value, 10,000,000 shares authorized, none outstanding
    
—
    
—
  
Common stock, $.01 par value, 25,000,000 shares authorized, 18,515,468 and 18,353,281 shares issued and outstanding
    
185,155
    
183,532
  
Additional paid-in capital
    
122,393,723
    
120,804,537
  
Accumulated deficit
    
(19,985,686
)
  
(24,644,108
)
Unearned stock-based compensation
    
(52,361
)
  
(64,445
)
Total stockholders’ equity
    
102,540,831
    
96,279,516
  
   
$
111,907,511
  
$
104,291,102
  

 

 
See accompanying notes to unaudited condensed financial statements.

 
-3-


ABLE LABORATORIES, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
 
   
Three Months Ended
  
   
March 31, 2005
  
March 31, 2004
  
           
Sales, net
  
$
30,707,953
  
$
21,452,436
  
Cost of sales
    
14,005,209
    
11,919,012
  
Gross profit
    
16,702,744
    
9,533,424
  
               
Operating expenses:
              
Selling, general and administrative
    
4,474,589
    
2,998,416
  
Research and development
    
4,721,274
    
3,546,388
  
Total operating expenses
    
9,195,863
    
6,544,804
  
               
Operating income
   
7,506,881
    
2,988,620
  
               
Other income (expense):
              
Interest and financing expense
    
(35,906
)
  
(57,966
)
Miscellaneous income (expense), net
    
60,447
    
77,630
  
Other income (expense), net
    
24,541
    
19,664
  
               
Income before income taxes
    
7,531,422
    
3,008,284
  
Provision for income taxes
    
2,873,000
    
1,155,000
  
Net income
    
4,658,422
    
1,853,284
  
               
Dividends on preferred stock
    
—
    
31,120
  
Net income applicable to common stockholders
  
$
4,658,422
  
$
1,822,164
  
               
Net income per share:
              
Basic
  
$
0.25
  
$
0.11
  
Diluted
  
$
0.24
  
$
0.10
  
               
Weighted average shares outstanding:
              
Basic
    
18,434,173
    
16,846,693
  
Diluted
    
19,630,209
    
19,306,144
  

 

 
See accompanying notes to unaudited condensed financial statements.

 
-4-


ABLE LABORATORIES, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Three Months Ended March 31, 2005 and 2004
(Unaudited)
 
   
Preferred