k-v pharmaceutical: modefinance credit report

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modeFinanceTM HeadquarterBuilding A - AREA Science ParkPadriciano 99 - 34149 Trieste - ItalyPh.: +39 040 375 5337Fax: +39 040 375 [email protected]

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K - V PHARMACEUTICALCOMPANYMonday, 13 August 2012

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D C CC CCC B BB BBB A AA AAA

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D C CC CCC B BB BBB A AA AAAnot

available

non return extremlypathological

pathological highdanger

weak sufficient adequate good very

strongextremely

strong

Company name K - V PHARMACEUTICAL COMPANY

Identification number US430618919

Country United States of America

ZIP code and city 63146 - ST. LOUIS

Address 2280, SCHUETZ ROAD

+1 314 645 6600

www.kvpharma.com

[email protected]

Legal form Not available

Account Consolidated

Incorporation date 1971

NACE 2 Sector 2120 - Manufacture of pharmaceutical preparations

Listed

Status Active

MORE Credit limit Not assessable on the base of the available informations

31/03/2012 31/03/2011 31/03/2010

Turnover (th e) 17,370 19,216 6,751

Rating C CC C

Probability of default 57.00% 42.00% 57.00%

Confidence Level 100% 100% 100%

Solvency ratios

Leverage ratio -1.53 -2.49 -3.58

Total asset/Total liabilities 0.35 0.60 0.72

Liquidity ratios

Current Ratio 0.61 1.32 0.53

Quick Ratio 0.60 1.32 0.52

Profitability and economic equili-

brium ratios

Return on investement ROI (%) -19.26 -41.15 -83.52

Return on equity ROE (%) -21.28 -71.92 -203.73

Asset turnover 0.09 0.05 0.03

Interest paid weight -0.80 -0.07 -0.03

Gross Profit/Operating revenue 1.90 1.41 2.89

Interest Coverage ratios

EBIT interest coverage ratio -3.60 -5.99 -36.29

Analysis and trend of financial

strength


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modeFinance TM srlVAT number [email protected]

Area Science Park,Padriciano 99. 34149 Trieste, ItalyTel. +39 040 3755337Fax +39 040 3756741

Sector Analysis

Company Healthy Balanced Vulnerable Risky

Solvency ratios

Leverage ratio -1.53 0.43 1.28 2.26 -1.98

Total asset/Total liabilities 0.35 3.31 1.78 1.34 0.76

Liquidity ratios

Current Ratio 0.61 2.83 1.78 1.58 0.78

Quick Ratio 0.60 2.16 1.24 1.20 0.76

Profitability and economic equilibrium ratios

Return on investement ROI (%) -19.26 12.09 5.78 -3.33 -25.88

Return on equity ROE (%) -21.28 12.46 7.17 -19.68 -102.80

Asset turnover 0.09 0.78 0.76 0.58 0.71

Interest paid weight -0.80 0.01 0.21 -0.02 -0.12

Gross Profit/Operating revenue 1.90 0.56 0.41 0.33 0.38

Interest Coverage ratios

EBIT interest coverage ratio -3.60 66.72 3.55 -3.55 -4.37

Cash Conversion Cycle (days)

Days Sales Of Inventory (DIO) 27 54 61 66 60

Days Sales Outstanding (DSO) 88 85 76 60 44

Days Payable Outstanding (DPO) 143 24 34 54 40

Cash Conversion Cycle (DIO + DSO - DPO) -28 109 99 70 56

Numer of analyzed companies - 277 312 96 28

(Average) Rating C A BBB B CC

The sector has been chosen according to:

international companies in the sector NACE 2 2120with financial data of year 2012.


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Sector Analysis - Graphs


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Balance Sheet

BALANCE SHEET (th e) 31/03/2012 31/03/2011 31/03/2010

Accounting practice Local GAAP Local GAAP Local GAAP

Exchange rate USD - EUR 0.74873 0.70388 0.7419

Total assets 189,727 397,480 266,044

Fixed assets 111,635 152,601 198,012

Intangible fixed assets 97,784 106,074 27,821

Tangible fixed assets 1,722 4,364 58,165

Other fixed assets 12,129 42,162 112,026

Current assets 78,092 244,879 68,032

Stocks 1,273 704 890

Debtors 4,193 23,510 742

Other current assets 72,627 220,666 66,400

Cash & cash equivalent 37,960 137,116 45,033

Shareholders funds -359,913 -265,925 -103,272

Capital 449 422 371

Other shareholders funds -360,362 -266,348 -103,643

Total liabilities 549,641 663,405 369,315

Non current liabilities 420,860 478,285 241,116

Long term debt 314,241 294,432 173,010

Other non-current liabilities 106,619 183,853 68,106

Current liabilities 128,781 185,120 128,199

Loans 22,911 60,111 47,407

Creditors 6,813 18,090 28,934

Other current liabilities 99,057 106,919 51,858

Total shareh. funds & liab. 189,727 397,480 266,044

NET DEBT (th e) 31/03/2012 31/03/2011 31/03/2010

Short term debts 22,911 60,111 47,407

Long term debt 314,241 294,432 173,010

Cash & cash equivalent 37,960 137,116 45,033

Net debt 299,191 217,428 175,384

31/03/2012 31/03/2011 31/03/2010

Working capital -1,348 6,124 -27,302

Net Current Assets -50,689 59,759 -60,168

31/03/2012 31/03/2011 31/03/2010

Days Sales Of Inventory (DIO) 27 13 48

Days Sales Outstanding (DSO) 88 447 40

Days Payable Outstanding (DPO) 143 344 1,564

Cash Conversion Cycle (DIO + DSO - DPO) -28 116 -1,476


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Income Statement

INCOME STATEMENT (th e) 31/03/2012 31/03/2011 31/03/2010

Accounting practice Local GAAP Local GAAP Local GAAP

Exchange rate USD - EUR 0.74873 0.70388 0.7419

Sales 17,370 19,216 6,751

Revenues growth (%) -10 185 -

Other revenues +/- variation in inventories and contract in progress + Fixed assets

own construction capitalized0 0 0

Operating revenue / turnover 17,370 19,216 6,751

Total operating costs 123,016 85,451 222,123

Costs growth (%) 44 -62 -

Service costs - - -

Material costs - - -

Costs of employees - - -

EBITDA -64,615 -57,507 -135,396

Depreciation 41,030 8,728 79,976

EBIT -105,645 -66,235 -215,372

Financial P/L 39,757 -108,397 -12,761

Financial revenue - - -

Financial expenses -39,757 108,397 12,761

Interest paid 29,350 11,051 5,935

P/L before tax -65,888 -174,632 -228,133

Extr. and other P/L -3,220 -11,121 0

Extr. and other revenue - - -

Extr. and other expenses - - -

P/L before tax + Extr. and other P/L -69,108 -185,754 -228,133

Taxation 7,487 5,490 -17,731

P/L for period -76,595 -191,244 -210,401

31/03/2012 31/03/2011 31/03/2010

Costs of Good Sold -15,648 -7,883 -12,761

Gross Profit 33,019 27,099 19,512

Other Operating Expenses 138,664 93,334 234,884

31/03/2012 31/03/2011 31/03/2010

Cash flow -35,565 -182,516 -130,425

Added value - - -

31/03/2012 31/03/2011 31/03/2010

Number of employees 214 200 237


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Evolutions and trends


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Qualitative information

Full overview The company is a fully integrated specialty pharmaceutical firm that develops, acquires, manufactures and markets

technologically distinguished branded and generic/non - branded prescription pharmaceutical products. It was

incorporated in the year 1971 and has its registered office address in St. Louis, Missouri. The company is a

leading specialty pharmaceutical company that develops, manufactures and markets innovative branded, quality

generic/non - branded and unique specialty ingredient products, utilizing proprietary drug delivery technologies.

In addition to its comprehensive research & development and manufacturing processes, the company has broad

marketing and sales capabilities through its three wholly owned subsidiaries, Ther - Rx Corporation, marketing

branded products; ETHEX Corporation; marketing generic/non - branded products; and Particle Dynamics, Inc.,

participating in the value - added specialty ingredient marketplace. The company has a range of dosage from

capabilities, including tablets, capsules, creams, liquids and ointments.

History Not available.

Primary business line A fully integrated specialty pharmaceutical firm that develops, acquires, manufactures and markets technologically

distinguished branded and generic/non - branded prescription pharmaceutical products.

Secondary business line Not available.

Main activity Manufacturing; Wholesale.

Secondary activity Not available.

Main products and services Tablets, capsules, creams, liquids and ointments.

Size estimate A leading specialty pharmaceutical company that develops, manufactures and markets innovative branded, quality

generic/non - branded and unique specialty ingredient products, utilizing proprietary drug delivery technologies.

Strategy, organization and policy Not available.

Strategic alliances Not available.

Membership of a network Not available.

Main brand names Not available.

Main domestic country United States of America.

Main foreign countries or regions Not available.

Main production sites United States of America.

Main distribution sites Not available.

Main sales representation sites Not available.

Main customers Not available.


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Auditor/Advisor/Bank

name type address

BDO USA, LLP Auditor -

UMB Bank Transfer Agent -

Board

name date of birth nationality function

Mr. Robert E Baldini - - Independent Director

Mr. Gregory Smith Bentley 05/08/1949 - Director

Mr. Mark A Dow - - Independent Director

Mr. David S Hermelin - - Director

Mr. Joseph D Lehrer - - Lead Independent Director

Mr. David Sidransky - - Independent Director

Miss Ana I Stancic - - Independent Director

Sharehoders (the first twenty shareholders ordered by Direct %))

ORBIMED ADVISORS LLC via its funds Rating:

Country ISO code US Operating Revenue (MIL $) -

NACE Rev. 2, Core code - Total Assets (MIL $) -

Direct % - Number of Employees -

Total % 9.03 Information date 2012/03

Address : Not available

BLACKROCK, INC. via its funds Rating: BB

Country ISO code US Operating Revenue (MIL $) 9081

NACE Rev. 2, Core code - Total Assets (MIL $) 179896

Direct % - Number of Employees 10100



KINGDON CAPITAL MANAGEMENT, L.L.C. via its funds Rating:

Country ISO code US Operating Revenue (MIL $) 13.7






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PARKSIDE FINANCIAL BANK AND TRUST via its funds Rating:


NACE Rev. 2, Core code - Total Assets (MIL $) 219.55




VANGUARD GROUP, INC. THE via its funds Rating:






TSP CAPITAL MANAGEMENT GROUP via its funds Rating:






DIMENSIONAL FUND ADVISORS LP via its funds Rating: A






BROADFIN CAPITAL LLC via its funds Rating:






D. E. SHAW & CO., L.P. via its funds Rating:






STATE STREET CORPORATION via its funds Rating:







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NORTHERN TRUST CORPORATION via its funds Rating:






AQR CAPITAL MANAGEMENT LLC via its funds Rating:






BALYASNY ASSET MANAGEMENT, LLC via its funds Rating:






FMR LLC via its funds Rating:






KENNEDY CAPITAL MANAGEMENT, INC. via its funds Rating: BB






UBS EUCALYPTUS MANAGEMENT LLC via its funds Rating:






BANK OF NEW YORK MELLON CORPORATION via its funds Rating:







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GEODE CAPITAL MANAGEMENT, LLC via its funds Rating:






AMERICAN CAPITAL MANAGEMENT INC via its funds Rating:






PARTNER FUND MANAGEMENT, L.P. via its funds Rating:






Subsidiaries (the first twenty subsidiaries ordered by Direct %)

DRUGTECH CORP Rating:



Direct % MO Number of Employees -

Total % - Information date 2012/04

ETHEX CORPORATION Rating:



Direct % MO Number of Employees 39


THER - RX CORPORATION Rating:



Direct % MO Number of Employees 40



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ASKMORE rating guide

General vision A credit rating is an opinion of the general creditworthiness of an obligor (issuer rating), or the creditworthiness of

an obligor in respect of a specific debt security, or other financial obligation (issue rating), based on relevant risk

factors.

The Multi Objective Rating Evaluation (MORE) model is essentially used to assess the level of distress of industrial

companies by using data included in financial statements.

The basic idea of the model is to analyze a set of financial and economic ratios in a predictive corporate bankruptcy

model with the purpose of creating a fundamental credit rating model for each industrial sector. Results of the

model are obtained by applying newly developed numerical methodologies, drawing together financial theory,

data mining and engineering design methodologies. The heart of MORE is a multi dimensional and multi objective

algorithm that produces a classification of each company, by taking into account any attributes (such as sector and

country) characterizing a firm.

The model gives the opportunity to assign a rating to a company even without considering a complete data analysis

and allows to process quality information. It induces a better understanding of a company’s strength and weakness

thanks to sophisticated data mining tools and taking into account the analyst knowledge.

The MORE rating vision is to look at the fundamental economics of the company. The main idea is to evaluate the

rating observing every aspect of the economical and financial behavior of the company: better is the equilibrium

between the different aspects, better will be the final rating.

This is done studying, evaluating and aggregating the most important sections of the financial and economic

behavior of a company such as: profitability, liquidity, solvency, interest coverage and efficiency.


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Rating scale

Rating class Rating macro class Assessment

AAA

Healthy

The company’s capacity to meet its financial commitments is extremely strong. The company shows an excellent

economic and financial flow and fund equilibrium.

AAThe company has very strong creditworthiness. It also has a good capital structure and economic and financial

equilibrium. Difference from AAA is slight.

AThe company has a high solvency. The company is however more susceptible to the adverse effects of changes in

circumstances and economic conditions than companies in higher rated categories.

BBB

Balanced

Capital structure and economic equilibrium are considered adequate. The company’s capacity to meet its financial

commitments could be affected by serious unfavourable events.

BBA company rated BB is more vulnerable than companies rated BBB. Furthermore the company faces major ongoing

uncertainties or exposure to adverse business, financial, or economic conditions.

B

Vulnerable

The company presents vulnerable signals with regards to its fundamentals. Adverse business, financial, or economic

conditions will be likely to impair the company’s capacity or willingness to meet its financial commitments.

CCC

A company rated CCC has a dangerous disequilibrium on the capital structure and on its economic and financial

fundamentals. Adverse market events and an inadequate management could affect with high probability the

company’s solvency.

CC

Risky

The company shows signals of high vulnerability. In the event of adverse market and economic conditions, the

company’s strong disequilibrium could increase.

CThe company shows considerable pathological situations. The company’s capacity to meet its financial

commitments is very low.

D The company has not any longer the capacity to meet its financial commitments.


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Fundamental Credit Rating Ratios

Analysis area Ratio Assessment

Solvency ratios

Leverage ratioThis measures the level of total liabilities of the company in comparison

with equity.

Assets to debtThis indicates company’s solvency. The company shows a level of deficit

when the value of this ratio is under one unit.

Financial ratios Fixed Assets coverage ratioThis is calculated only for holdings. It measures the capital structure i.e.

whether a company covers the fixed assets with long term capital.

Liquidity ratios

Current ratioThis measures whether a company has sufficient short-term assets to cover

its short-term liabilities.

Quick ratioThis compares current liabilities only to those assets that can be readily

turned into cash.

Profitability and economic ratios

Return on Investement(ROI)This measures the profitability of company investments without regard to

the way the investment is financed.

Return on Equity(ROE) This measures the profitability of the equity.

Asset turnover

This indicates the investments turnover with regards to sales. The level

assumed from the ratio depends on the sector in which the company

operates.

Profit margin This indicates the profitability of sales.

Interest coverage ratio Interest Paid coverage

This indicate the ability of the company to cover interest expenses through

the economic margins (Gross profit and EBIT) and through the cash flow

from operating activities.


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MORE Credit Limit, Probability of default and Confidence Level

MORE Credit Limit MORE Credit limit is the estimation of the amount of maximum credit that is possible to assign on a commercial

relationship with the analyzed company with an outlook of one year.

modeFinance used the following values associated with the company analyzed while computing the credit limit:

• Size;

• Years in Business;

• Average number of suppliers;

• Liquidity of the company and the comparison with its sector;

• The funds dedicated to be paid to suppliers;

• The likelihood that a company may pay its debts in the next 12 months (MORE Ratings).

The credit limit in this report is merely a suggested value of commercial credit limit calculated on the basis of annual

public data. This value should be reviewed by paying attention to the Confidence Level value and by using other

information such as other business information, news... etc; and private information such as the relationship with

client, history of payments, guarantees and the knowledge of the sector.

Probability of default e Confidence

Level

In addition to the MORE Rating, modeFinance also estimates the probability of default and provides a level of

confidence. The probability of default is the degree of certainty (in quantitative terms) that the company will go

into default.

As the probability of default is strongly affected by the economic climate that the company is operating in,

companies in the same MORE class will not necessarily have the same probability of default.

The MORE model can produce a MORE rating even if there is missing data by using an associated confidence level:

Confidence =

∑Available Information∑

Total Information

The level of confidence does not indicate financial confidence in the company. It is a reflection of the variations in

availability of financial data across Europe due to filing regulations and suggests the degree of financial detail the

MORE rating is able to take into account for each company.

For companies with fully populated records a confidence level of 100% would be applied: companies where no

financial data is provided, 0%. This puts the MORE rating in a context for the user and aids interpretation.


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Notes and disclaimer

NOTES modeFinance has based the present analysis on the company available financial statements, coming from one or

more of the following sources: local providers, Commercial Register (Companies House), websites, modeFinance’s

database etc.

DISCLAIMER All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any

form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of

the publisher modeFinance. The facts of this report are believed to be correct at the time of publication but cannot

be guaranteed. Please note that the findings, conclusions and recommendations that modeFinance delivers will

be based on information gathered in good faith from both primary and secondary sources, whose accuracy we

are not always in a position to guarantee. As such modeFinance can accept no liability whatever for actions taken

based on any information that may subsequently prove to be incorrect.

Contacts

Company modeFinance

Products MORE rating

Where AREA Science Park

34149 Trieste, via Padriciano 99 - ITALY

Info [email protected]

web www.modefinance.com

Phone +39 040 3755337

k-v pharmaceutical: modefinance credit report

Documents

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levelof credit risk

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v pharmaceuticalcompanymonday

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