BOULDER, Colo., Aug. 4 /PRNewswire-FirstCall/ -- Array BioPharma Inc.
(Nasdaq: ARRY) today announced a change in its accounting of rent expenses for
facilities leased by the Company. In connection with making this change, the
Company has decided to restate certain historical financial statements to
correct the accounting for annual rental rate escalations under its facilities
leases. This correction will result in non-cash expense adjustments which the
Company does not believe are material to any of the restated periods.
The impact on the Company's consolidated statements of operations is
expected to be an approximate increase in net loss of $462,000 and $446,000
for the fiscal years ended June 30, 2004 and 2003, respectively, and of
$228,000 for fiscal 2002 and prior years. This represents an approximate
increase in net loss of 2%, or between $0.01 and $0.02 per share, for each of
fiscal years 2004 and 2003. The restatement will result in an increase in
deferred rent liability on the Company's June 30, 2004 balance sheet of
approximately $1.1 million. This restatement will not have an impact on the
cash provided by operating activities during any of the years restated. The
Company expects the change in accounting to reduce rent expense below the
level that will actually be paid in fiscal years 2006 through 2008 by $300,000
to $500,000 per year.
The Company concluded on August 4, 2005, after discussion with its Audit
Committee, and its current and former independent registered public accounting
firms, that the Company's accounting of rent expense for its leased facilities
was not in compliance with Financial Accounting Standards Board Technical
Bulletin No. 85-3, "Accounting for Operating Leases with Scheduled Rent
Increases." Previously, the Company recognized rent expense in the amount
actually paid, including the 2% to 3% annual rent increases as they occurred.
The Technical Bulletin indicates that scheduled rent increases should be
recognized by the lessee on a straight-line basis over the lease term, which
may include optional lease renewal terms, and deferred rent expense should be
recognized to reflect the difference between the rent paid in the current
period and the calculated straight-line amount. By not accounting for the
future annual increases on a straight line basis, the rent expense and the
liability for deferred rent were understated. Although the Company does not
believe that the impact of this change is material to any prior periods, the
Company is restating its prior financial statements because correcting this
error in a single quarter could have a material effect on the Company's
results of operations for the fourth quarter of fiscal 2005.
The Company's restated financial statements will be reflected in the
Company's annual report on Form 10-K for the 2005 fiscal year to be filed with
the Securities and Exchange Commission.
About Array BioPharma:
Array BioPharma Inc. is a biopharmaceutical company focused on the
discovery, development and commercialization of targeted small molecule drugs
to treat life threatening and debilitating diseases. Our proprietary drug
development pipeline is focused on the treatment of cancer and inflammatory
disease and includes clinical candidates that are designed to regulate
therapeutically important targets. In addition, leading pharmaceutical and
biotechnology companies access Array's drug discovery technologies and
expertise through collaborations to design, create, optimize and evaluate drug
candidates across a broad range of therapeutic areas. For more information on
Array, please go to www.arraybiopharma.com.
Forward-Looking Statement:
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 that involve
significant risks and uncertainties, including those discussed in our annual
report filed on form 10-K for the year ended June 30, 2004, and in other
reports filed by Array with the Securities and Exchange Commission. Because
these statements reflect our current expectations concerning future events,
our actual results could differ materially from those anticipated in these
forward-looking statements as a result of many factors. These factors
include, but are not limited to, our ability to achieve and maintain
profitability, the extent to which the pharmaceutical and biotechnology
industries are willing to in-license drug candidates for their product
pipelines and to collaborate with and fund third parties for their drug
discovery activities, our ability to out-license our proprietary candidates on
favorable terms, our ability to continue to fund and successfully progress
internal research efforts and to create effective, commercially viable drugs,
risks associated with our dependence on our collaborators for the clinical
development and commercialization of our out-licensed drug candidates, the
ability of our collaborators and of Array to meet drug objectives, including
clinical trials, tied to milestones and royalties, and our ability to attract
and retain experienced scientists and management. We are providing this
information as of August 4, 2005. We undertake no duty to update any
forward-looking statements to reflect the occurrence of events or
circumstances after the date of such statements or of anticipated or
unanticipated events that alter any assumptions underlying such statements.
SOURCE Array BioPharma Inc.
08/04/2005
CONTACT: Tricia Haugeto of Array BioPharma Inc., +1-303-386-1193,
thaugeto@arraybiopharma.com
Web site: http://www.arraybiopharma.com
(ARRY)
