Financial Report: Patheon

Patheon

2Q Revenues: $181 million (-5%)

2Q Loss: $22 million (earnings were $3 million in 2Q2006)

YTD Revenues: $352.7 million (+1%)

YTD Loss: $24 million (loss of $8.5 million YTD2006)

Comments: Rx manufacturing services revenues were down $6.3 million, or 4%, due to volume declines for two major products manufactured at Caguas, PR: Zocor, which lost patent protection in June 2006, and Levothyroxine sodium, which experienced loss of market share. These declines were partially offset by gains in commercial Rx volumes at the company’s operations in Italy and France. OTC manufacturing services declined by $8.8 million, or 32%, primarily due to lower volumes at Whitby and Cincinnati due to clients sending back products to their own manufacturing networks. Revenues from pharmaceutical development services (PDS) increased by $6.2 million, or 28%, due to growth at the Toronto Region, Cincinnati and Swindon PDS operations. In the quarter, repositioning expenses were $4 million and YTD expenses were $7.7 million. The company completed its financial restructuring process in the quarter with the purchase of $150 million shares by JLL Partners, and the refinancing of its North American and UK debt. Earnings in the quarter were impacted by one-time expenses of $13.5 million in connection with these refinancing activities.