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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 14, 2005
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ENZON PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-12957 22-2372868
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(State or other jurisdiction (Commission (IRS Identification No.)
of incorporation) File No.)
685 Route 202/206, Bridgewater, New Jersey 08807
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 541-8600
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b)
[ ] Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On August 16, 2005, Enzon Pharmaceuticals, Inc. ("Enzon" or the "Company")
issued a press release announcing that it has postponed its earnings release to
report its financial results for the quarter ended June 30, 2005, the fourth
quarter of Enzon's fiscal year 2005, and conference call, which was scheduled to
take place on Wednesday August 17, 2005. A copy of the press release is attached
as Exhibit 99.1 to this Current Report and is incorporated herein by reference.
The reason for the postponement is that Enzon is in the process of preparing a
restatement of its consolidated financial statements and other financial
information for the quarter and fiscal year to date periods ended December 31,
2003, March 31, 2004, June 30, 2004, September 30, 2004, December 31, 2004 and
March 31, 2005. The Company intends to file an amended annual report on Form
10-K/A and amended quarterly reports on Form 10-Q/A with the U.S. Securities and
Exchange Commission ("SEC") as soon as practicable. Item 4.02 contains
additional information about revisions to our financial results, and is
incorporated herein by reference.
Item 4.02(a) Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
Restatement and Non-Reliance
On August 14, 2005, the Board of Directors and management of Enzon concluded
that we would need to amend and restate our previously issued financial
statements and other financial information for the quarter and fiscal year to
date periods ended December 31, 2003, March 31, 2004, June 30, 2004, September
30, 2004, December 31, 2004 and March 31, 2005, with respect to our accounting
for a derivative hedging instrument. In light of the restatements, the
previously issued financial statements and other financial information contained
in our Form 10-Qs for such quarters and our Form 10-K/A for the fiscal year
ended June 30, 2004 should no longer be relied upon.
While our continuing review is not yet complete, it has progressed sufficiently
to allow us now to announce that we expect to restate our financial statements
for the above periods. The restatements reported in this Form 8-K have no effect
on our past, current or future revenues, operating income (loss), cash position
or cash flows. For the fiscal year ended June 30, 2004, we currently believe
that the aggregate impact of the expected restated items is a decrease of other
comprehensive income, which is included in the consolidated statement of
stockholders' equity, and a corresponding increase to other non-operating
income, which is included in the consolidated statement of operations. For the
nine months ended March 31, 2005, we currently believe that the aggregate impact
of the expected restated items is an increase of other comprehensive income and
a corresponding decrease in other non-operating income. For each of the periods
being restated the adjustment to other comprehensive income is equal to the
adjustment to other non-operating income, therefore, our total stockholders'
equity will not change as a result of these restatements, exclusive of the
impact of deferred taxes, which we are still evaluating.
Background
During the course of the audit of our financial statements for the year ended
June 30, 2005, we reevaluated our use of hedge accounting for a Zero Cost
Protective Collar arrangement under Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended (SFAS 133). We have now determined that certain amounts classified as
other comprehensive income and included in our consolidated statement of
stockholders' equity should have been included as other non-operating income and
included in our consolidated statement of operations.
This arrangement was entered into in August 2003 with a financial institution to
reduce our exposure associated with 1.5 million shares of NPS Pharmaceuticals,
Inc. common stock, which we received as part of a merger termination agreement
with NPS. We concluded, after consultation with KPMG LLP, our independent
registered public accounting firm, that as a result of a sale of NPS stock in
October 2003 at a price per share that exceeded the upper limits of the collar,
the hedge was no longer "effective" under SFAS 133, and hedge accounting was no
longer applicable. However, we continued to apply hedge accounting and as such
certain gains and losses on our derivative hedging instrument were recorded as
other comprehensive income (loss) (consolidated statement of stockholders'
equity) as opposed to being recorded as other income (consolidated statement of
operations) once the hedge was no longer "effective". These misallocations
between other income (loss) and other comprehensive income did not have any
impact on total stockholders' equity. On August 22, 2005, this financial
instrument will expire, which will result in the sale of our remaining shares of
NPS and the receipt of cash proceeds of at least $7.5 million.
The Audit Committee of the Board has discussed the restatements discussed in
this Form 8-K with KPMG.
Currently, we intend to file our annual report on Form 10-K for the fiscal year
ended June 30, 2005 on or before the due date of September 13, 2005. However, in
light of the continuing effort in finalizing and filing the amended financial
statements discussed above, we may be unable to do so.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description
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99.1 Press Release of Enzon Pharmaceuticals, Inc. dated August 16,
2005.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 16, 2005
By: /s/ Craig A. Tooman
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Craig A. Tooman
Executive Vice President, Finance and
Chief Financial Officer
Exhibit 99.1
Enzon Postpones Reporting Its Fourth Quarter and Fiscal Year 2005
Financial Results
BRIDGEWATER, N.J.--(BUSINESS WIRE)--Aug. 16, 2005--Enzon
Pharmaceuticals, Inc. (Nasdaq:ENZN) today announced that it has
postponed its earnings release to report its financial results for the
quarter ended June 30, 2005, the fourth quarter of Enzon's fiscal year
(FY) 2005, and conference call, which was scheduled to take place on
Wednesday August 17, 2005. Management currently expects to release
preliminary results, for the fourth quarter of FY 2005, and host a
conference call to discuss those results as soon as practicable.
This postponement was caused by the Company's reevaluation of its
accounting for a derivative hedging instrument during the course of
the audit of its financial statements for the year ended June 30,
2005. Enzon has now determined that certain amounts classified as
other comprehensive income and included in the consolidated statement
of stockholders' equity should have been included as other
non-operating income and included in the consolidated statement of
operations.
This instrument was formed in 2003 to reduce the Company's
investment risk associated with 1.5 million shares of NPS
Pharmaceuticals Inc. (Nasdaq: NPSP) common stock received under a June
2003 merger termination agreement with NPS. To date, Enzon has
received cash proceeds of $22.5 million related to the financial
instrument and the sale of NPS common stock. The fourth and final
portion of the financial instrument related to 375,000 shares of NPS
common stock will expire this month and will result in additional cash
proceeds of at least $7.5 million.
Enzon will issue restated financial statements for the quarter and
fiscal year to date periods ended December 31, 2003, March 31, 2004,
June 30, 2004, September 30, 2004, December 31, 2004 and March 31,
2005; therefore, the previously issued financial statements and other
financial information contained in such quarterly reports and annual
report should no longer be relied upon. The Company expects to file
the amended quarterly reports on Form 10-Q/A and amended annual report
on Form 10-K/A as soon as practicable.
The restatements referred to in this press release have no effect
on Enzon's past, current or future operating results, revenues, cash
position or cash flows. Additionally, Enzon's total stockholders'
equity for each of the periods being restated will not change as a
result of these restatements exclusive of the impact of deferred
taxes, which the Company is still evaluating. For further details,
please refer to the Form 8-K, which Enzon filed today with the United
States Securities and Exchange Commission.
Currently, Enzon intends to file its annual report on Form 10-K
for the fiscal year ended June 30, 2005 on or before the due date of
September 13, 2005. However, in light of the continuing effort in
finalizing and filing the amended financial statements discussed
above, the Company may be unable to do so.
About Enzon
Enzon Pharmaceuticals, Inc. is a biopharmaceutical company
dedicated to the development and commercialization of therapeutics to
treat life-threatening diseases. The Company has developed or acquired
a number of marketed products, including PEG-INTRON(R), marketed by
Schering-Plough, and ABELCET(R), ONCASPAR(R), ADAGEN(R), and
DEPOCYT(R), marketed in North America by Enzon's specialized sales
force. Enzon's science-driven strategy includes an extensive drug
development program that leverages the Company's macromolecular
engineering technology platforms, including PEG modification and
single-chain antibody (SCA(R)) technologies. Internal research and
development efforts are complemented by strategic transactions that
provide access to additional marketed products and promising clinical
compounds. Further information about Enzon and this press release can
be found on the Company's Web site at www.enzon.com.
The Company is undergoing an audit of its FY 2005 financial
results, and an audit of its internal controls over financial
reporting as required by Section 404 of the Sarbanes-Oxley Act of
2002. These audit procedures are not yet complete as of the date of
this press release. There can be no assurance that the information as
disclosed in this press release will not change following the
completion of the audits. Further, there are forward-looking
statements contained herein that are not based on historical fact,
including without limitation statements containing the words
"believes," "may," "plans," "will," "estimate," "continue,"
"anticipates," "intends," "expects," and similar expressions. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, events
or developments to be materially different from the future results,
events or developments discussed above. Such factors include, but are
not limited to: the possibility that the Company may be unable to meet
its future reporting requirements, which could result in delisting, as
well as those described in Enzon's Form 10-K/A and Forms 10-Q on file
with the SEC. These factors should be considered carefully and readers
are cautioned not to place undue reliance on such forward-looking
statements. All information in this press release is as of August 16,
2005 and the Company undertakes no duty to update this information.
CONTACT: Enzon Pharmaceuticals, Inc.
Craig Tooman, 908-541-8759
or
Susan M. Mesco, 908-541-8777