Voluntary Reorganization Under Chapter 11 (Tables)

6 Months Ended

Jun. 30, 2020

Reorganizations [Abstract]

Schedule Of Liabilities Subject To Compromise

The following table summarizes the components of liabilities subject to compromise included in the Company's condensed consolidated balance sheets as of June 30, 2020, (in thousands):

	June 30, 2020
Debt subject to compromise:
Trade accounts payable	$	(7,893)
Accrued royalties	(8,169)
Accrued compensation	(45)
Current portion of accrued legal fees and contingencies	(6,051)
Current portion of lease liability - Operating leases	(2,349)
Accrued expenses and other liabilities	(366)
Long-term lease liability - Operating leases	(20,483)
Long-term portion of accrued legal fees and contingencies	(31,160)
Liabilities subject to compromise	$	(76,516)

Schedule Of Reorganization Items

The following table summarizes the components of Reorganization items included in the Company’s statement of operations (in thousands):

	Six Months Ended June 30, 2020
Professional fees	$	3,859
DIP Credit Agreement financing fees	1,950
Reorganization items	$	5,809

Condensed Balance Sheet

The condensed combined financial statements of the debtors-in-possession are set forth below. These condensed combined financial statements exclude the financial statements of certain non-debtors-in-possession entities.

Transactions and balances of receivables and payables between debtors-in-possession are eliminated in consolidation. However, the debtors-in-possession’s condensed combined balance sheets includes receivables from related non-debtors-in-possession and payables to related non-debtors-in-possession.

AKORN, INC.

(Debtor-in-possession)

CONDENSED COMBINED BALANCE SHEETS

(In Thousands, Except Share Data)

	June 30, 2020 (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	78,631
Trade accounts receivable, net	130,921
Inventories, net	172,246
Income taxes receivable	50,204
Prepaid expenses and other current assets	30,676
TOTAL CURRENT ASSETS	462,678
PROPERTY, PLANT AND EQUIPMENT, NET	$	217,261
OTHER LONG-TERM ASSETS
Intangible assets, net	$	203,107
Right-of-use assets, net - Operating leases	21,003
Long-term investments	73,913
Other non-current assets	10,440
TOTAL OTHER LONG-TERM ASSETS	308,463
TOTAL ASSETS	$	988,402
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade accounts payable	$	30,956
Accrued royalties	1,968
Accrued compensation	16,998
Current portion of long-term debt (net of deferred financing costs)	855,246
Debtor-in-possession financing	30,000
Accrued administrative fees	23,612
Current portion of accrued legal fees and contingencies	4,364
Accrued expenses and other liabilities	21,566
TOTAL CURRENT LIABILITIES	$	984,710
LIABILITIES SUBJECT TO COMPROMISE	76,516
LONG-TERM LIABILITIES
Uncertain tax liabilities	2,741
TOTAL LONG-TERM LIABILITIES	$	2,741
TOTAL LIABILITIES	$	1,063,967
TOTAL SHAREHOLDERS’ (DEFICIT) EQUITY	$	(75,565)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	988,402

Condensed Income Statement

AKORN, INC.

(Debtor-in-possession)

CONDENSED COMBINED STATEMENTS OF COMPREHENSIVE (LOSS)

(In Thousands, Except Per Share Data)

(Unaudited) 

	Three Months Ended June 30,		Six Months Ended June 30,
	2020		2020
Revenues, net	$	119,713	$	322,793
Cost of sales (exclusive of amortization of intangibles, included within operating expenses below)	83,764		190,291
GROSS PROFIT	35,949		132,502
Selling, general and administrative expenses	55,990		120,254
Research and development expenses	9,500		19,344
Amortization of intangibles	6,152		12,294
Impairment of goodwill	—		267,923
Impairment of intangible assets	400		400
Litigation rulings, settlements and contingencies	—		(7,470)
TOTAL OPERATING EXPENSES	$	72,042	$	412,745
OPERATING (LOSS)	(36,093)		(280,243)
Amortization of deferred financing costs	—		(8,629)
Interest expense, net	(33,473)		(58,422)
Reorganization items, net	(5,809)		(5,809)
Other non-operating (expense), net	(323)		(668)
(LOSS) BEFORE INCOME TAXES	(75,698)		(353,771)
Income tax (benefit)	(25,735)		(49,180)
NET (LOSS)	$	(49,963)	$	(304,591)
COMPREHENSIVE (LOSS):
Net (loss)	$	(49,963)	$	(304,591)
Unrealized holding gain on available-for-sale securities, net of tax of $(1) for the three month period ended June 30, 2020, and $(1) for the six month period ended June 30, 2020.	4		3
COMPREHENSIVE (LOSS)	$	(49,959)	$	(304,588)

Condensed Cash Flow Statement

AKORN, INC.

(Debtor-in-possession)

CONDENSED COMBINED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

	Six Months Ended June 30,
	2020
OPERATING ACTIVITIES:
Net (loss)	$	(304,591)
Adjustments to reconcile combined net (loss) to net cash (used in) operating activities:
Depreciation and amortization	25,988
Amortization of debt financing costs	8,629
Debtor-in-possession financing costs	1,950
Impairment of intangible assets	400
Goodwill impairment	267,923
Non-cash stock compensation expense	7,778
Non-cash interest expense	3,289
Deferred income taxes, net	(225)
Other	37
Changes in operating assets and liabilities:
Other non-current assets	(7,317)
Trade accounts receivable	1,849
Inventories, net	(12,411)
Prepaid expenses and other current assets	(1,403)
Income taxes receivable	(48,993)
Trade accounts payable	4,875
Accrued legal fees and contingencies	(10,734)
Uncertain tax liabilities	108
Accrued expenses and other liabilities	4,635
NET CASH (USED IN) OPERATING ACTIVITIES	$	(58,213)
INVESTING ACTIVITIES:
Proceeds from disposal of assets	8
Purchases of property, plant and equipment	(9,996)
NET CASH (USED IN) INVESTING ACTIVITIES	$	(9,988)
FINANCING ACTIVITIES:
Proceeds from Debtor-in-possession financing	30,000
Inter-company funding	(19,726)
Debtor-in-possession financing costs	(1,950)
Stock compensation plan withholdings for employee taxes	(98)
NET CASH PROVIDED BY FINANCING ACTIVITIES	$	8,226
Effect of exchange rate changes on cash and cash equivalents	—
(DECREASE) IN CASH AND CASH EQUIVALENTS	$	(59,975)
Cash, cash equivalents, and restricted cash at beginning of period	138,606
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	78,631