The Company Provides FY'08 Reported EPS Guidance of $3.05 to $3.15
NEW YORK, April 24 /PRNewswire-FirstCall/ -- Forest Laboratories, Inc.
(NYSE: FRX), a U.S.-based pharmaceutical company, today announced that
fully diluted earnings per share (EPS) for the fourth quarter of fiscal
year 2007 was a loss of ($0.75). Reported earnings per share includes a
one-time in- process research and development (IPR&D) charge of
$476,000,000, or $1.49 per share, net of tax, for the acquisition of
Cerexa, Inc. Excluding the IPR&D charge, adjusted earnings per share was
$0.74*. Reported earnings per share in the fourth quarter of fiscal year
2006 were $0.28. Excluding the impact of license and milestone payments,
net of tax, adjusted earnings per share was $0.65* in the fourth quarter of
the last fiscal year 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20001011/FORESTLOGO )
Revenues for the quarter increased 17% to $885,441,000 from
$756,322,000 in the prior fiscal year. Revenues were comprised of net sales
of $815,449,000, an increase of 14% from $712,761,000 in March 2006,
earnings contribution of $45,870,000 from the co-promotion of Benicar(R)
(olmesartan medoxomil) and Benicar HCT(R), antihypertensive therapies,
which increased 49% from $30,721,000 in last year's fourth quarter,
interest income of $23,870,000 which increased 98% from $12,046,000 in the
prior year and other contract and miscellaneous income of $252,000.
Sales of Lexapro(R) (escitalopram oxalate), an SSRI indicated for the
initial and maintenance treatment of major depressive disorder and
generalized anxiety disorder in adults, increased 14% in the quarter to
$530,440,000 from $464,100,000 in the year-ago quarter, while sales of
Celexa(R) (citalopram HBr), an antidepressant, were $6,249,000 and sales of
generic citalopram totaled $343,000. Sales of Namenda(R), an NMDA receptor
antagonist for the treatment of moderate and severe Alzheimer's disease,
totaled $179,746,000 in the quarter, an increase of 24% from sales of
$145,385,000 in last year's fourth quarter.
Selling, general and administrative expenses during the quarter
increased 6% to $274,319,000 from $259,016,000 last year.
Research and development spending was $596,140,000 and included a
one-time IPR&D charge of $476,000,000 related to the acquisition of Cerexa,
Inc. Excluding the one-time charge, research and development expense during
the quarter was $120,140,000. There were no product milestone or license
payments during the quarter. Research and development spending of
$194,377,000 in the fourth quarter of the last fiscal year included total
license and milestone payments of $135,000,000, related to nebivolol and
faropenem.
The reported loss before income tax expense for the quarter was
($174,298,000). Excluding the one-time IPR&D charge of $476,000,000, with
no tax benefit, income before income taxes was $301,702,000. Income tax
expense in the quarter was $63,618,000, yielding an effective tax rate,
excluding the IPR&D charge, of 21%.
Reported net loss in the current quarter was a loss of ($237,916,000)
as compared to net income of $91,890,000 reported in the fourth quarter of
the prior fiscal year. Excluding the one-time IPR&D charge, adjusted net
income in the current quarter was $238,084,000 as compared to adjusted net
income last fiscal year of $224,379,000, which excludes the impact of
license and milestone payments.
*Earnings per share reconciliation Fourth Quarter
Fiscal Year
2007 2006
Reported EPS ($0.75) $0.28
Adjustments, net of tax:
IPR&D - Cerexa 1.49
License & milestone payments 0.37
Adjusted EPS $0.74 $0.65
Excluding the acquisition of Cerexa, fully diluted shares outstanding
for the fourth quarter were 322,177,000, a reduction of 7,792,000 shares
due mainly to the Company's share repurchase program. During the quarter
the Company did not repurchase any shares and has 14,685,000 shares
available for repurchase under the current program, which has no expiration
date.
Twelve-month results
Revenue for the fiscal year ended March 31, 2007 increased 16% to
$3,441,785,000 from $2,962,390,000 in the prior fiscal year. Lexapro sales
crossed the $2 billion threshold and increased 12% to $2,105,990,000 from
$1,873,255,000 last fiscal year, while sales of Celexa including the
generic version increased 49% to $28,401,000 from $19,006,000. Sales of
Namenda increased 30% to $660,295,000 from $508,043,000 while the earnings
contribution from the Benicar co-promotion increased 52% to $174,566,000
from $114,472,000.
Selling, general and administrative expenses increased 1% to
$1,046,336,000 from $1,031,451,000 while research and development spending
increased 129% to $941,003,000 from $410,431,000. Included in research and
development spending is a one-time charge of $476,000,000 for in-process
R&D related to the acquisition of Cerexa, Inc. Excluding the one-time IPR&D
charge, research and development spending increased 13% from the prior
fiscal year.
Reported net income for the fiscal year ended March 31, 2007 decreased
36% to $454,103,000 from net income of $708,514,000 reported in the prior
fiscal year. Reported earnings per share for the fiscal year totaled $1.41
per share as compared to reported earnings per share of $2.08 in fiscal
2006. Excluding the Cerexa IPR&D charge and the license and milestone
payments, as applicable, adjusted earnings and earnings per share were
$992,899,000 and $3.07* per share and $847,399,000 and $2.49* per share in
fiscal years 2007 and 2006, respectively. During fiscal year 2007 the
Company repurchased 10,315,300 shares under its currently authorized
repurchase program. There is authorization to repurchase an additional
14,684,700 shares under this program which has no expiration date.
* Earnings per share reconciliation 12 Month
Fiscal Year
2007 2006
Reported EPS $1.41 $2.08
Adjustments, net of tax:
IPR&D - Cerexa 1.47
Adjusted EPS - Cerexa $2.88 $2.08
License & milestone payments 0.19 0.41
Adjusted EPS - total $3.07 $2.49
Fiscal 2008 Guidance
Regarding the fiscal year ending March 31, 2008, the Company expects
that reported fully diluted earnings per share will be approximately $3.05
to $3.15, including planned milestone payments of approximately $85
million.
Key assumptions supporting the fiscal year forecast include the
following:
The Company anticipates that total revenue in fiscal 2008, which
includes product sales as well as the earnings contribution from Benicar,
interest income and other income, will increase by approximately 8% from
the $3.44 billion reported in fiscal 2007. Net sales are also projected to
increase by approximately 8% during fiscal 2008.
For Lexapro, the Company projects an increase in overall prescription
volume for the underlying SSRI/SNRI antidepressant market as a whole of
approximately 3% and an increase in Lexapro's total prescription market
share of approximately ten basis points. This increase in market growth as
well as market share, along with a price increase, is projected to generate
Lexapro sales growth of between 9-10% from the reported sales of
$2,105,990,000 in fiscal year 2007. We anticipate that Namenda sales should
grow approximately 14-16% from the $660,295,000 reported in fiscal 2007.
Earnings from Benicar in fiscal 2008 are expected to grow nearly 15%
from $174,566,000 reported in fiscal 2007.
The fiscal 2008 projection includes an approximate 9% increase in
selling, general and administrative expenses to approximately $1.15
billion. This expense includes funding continued competitive levels of
support behind currently promoted products and pre-launch and launch
expenses to support nebivolol, which is expected to launch during the
fiscal fourth quarter of 2008 pending FDA approval for an indication of
hypertension. The Company does not plan to make any significant
modifications to the size of its salesforce at this point in time.
Research and development spending is expected to be approximately
$550,000,000 in support of a dramatically increased late-stage product
pipeline. This projection includes planned milestone payments of
approximately $85,000,000, however, the projection does not include any
licensing or milestone payments which may be made for additional product
development transactions or acquisitions that may occur during the fiscal
year. During fiscal 2008, the Company will be investing heavily in five
late stage development projects, including ceftaroline, an injectable
cephalosporin which is being developed for complicated skin and skin
structure infections and community acquired pneumonia, aclidinium
(LAS34273), which is being developed for chronic obstructive pulmonary
disease, milnacipran for the treatment of fibromyalgia, desmoteplase for
the treatment of acute ischemic stroke, and memantine MR for the treatment
of moderate to severe Alzheimer's disease.
The Company is projecting an effective tax rate for fiscal 2008 of 21%,
consistent with the tax rate for fiscal 2007. The Company also forecasts
that fully diluted shares outstanding will increase by approximately 1.9
million shares to an average of approximately 325,000,000.
* Earnings per Share reconciliation
Fiscal Year Guidance
2007 2008
Reported EPS $1.41 $3.05 - 3.15
Adjustments, net of tax:
IPR&D - Cerexa 1.47
Adjusted EPS $2.88 $3.05 - 3.15
Howard Solomon, Chairman and Chief Executive Officer of Forest, said:
"Fiscal 2007 was another strong year for Forest and we continue to be
pleased with the performance of our key marketed products. We also had
another successful year related to business development activities as we
continued to expand our product development pipeline.
"Fiscal 2008 will be an important year for Forest as we expect over the
next two months to receive Phase III clinical data for both milnacipran,
being investigated for fibromyalgia and desmoteplase for treatment of acute
ischemic stroke. We also have two additional significant Phase III clinical
programs underway. One program is for ceftaroline, an injectable
cephalosporin antibiotic and the other for aclidinium (LAS 32471), being
investigated for chronic obstructive pulmonary disorder. We are also
conducting a Phase III study in moderate to severe Alzheimer's disease for
a modified release form of Namenda as well as a Phase III study for Lexapro
in adolescent patients and expect to receive results for both programs
later in the fiscal year. We intend to make a significant investment in our
development pipeline this year as we advance several important product
opportunities. We also expect to launch nebivolol, a next-generation beta
blocker under FDA review for an indication of hypertension later in the
fiscal year pending FDA marketing approval. We believe that the significant
cash flow generated from our marketed products will enable the Company to
invest appropriately behind sales and marketing and increased levels of
research and development activities while also generating earnings per
share growth rates."
* Use of Non-GAAP Financial Information
This press release contains non-GAAP earnings per share information
adjusted to exclude certain costs, expenses and other specified items as
summarized in the tables. This information is intended to enhance an
investor's overall understanding of the Company's past financial
performance and prospects for the future. This information is not intended
to be considered in isolation or as a substitute for fully diluted earnings
per share prepared in accordance with GAAP.
Forest will host a conference call at 10:00 AM EDT today to discuss the
results. The conference call will be webcast live beginning at 10:00 AM EDT
on the Company's website at http://www.frx.com and also on the website
http://www.streetevents.com. Please log on to either website at least fifteen
minutes prior to the conference call as it may be necessary to download
software to access the call. A replay of the conference call will be
available until April 30, 2007 at both websites and also by dialing
1-800-642- 1687 (US investors) or +1-706-645-9291 (international investors)
passcode 5376257.
About Forest Laboratories and Its Products
Forest Laboratories (http://www.frx.com) is a U.S.-based pharmaceutical
company dedicated to identifying, developing and delivering products that
make a positive difference in peoples' lives. Forest Laboratories' growing
product line includes Lexapro(R) (escitalopram oxalate), an SSRI indicated
for adults for the initial and maintenance treatment of major depressive
disorder and generalized anxiety disorder; Namenda(R) (memantine HCl), an
N-methyl D- aspartate (NMDA)-receptor antagonist indicated for the
treatment of moderate to severe Alzheimer's disease; Benicar(R)*
(olmesartan medoxomil), an angiotensin receptor blocker, and Benicar*
HCT(R) (olmesartan medoxomil- hydrochlorothiazide), an angiotensin receptor
blocker and diuretic combination product, each indicated for the treatment
of hypertension; and Campral(R)* (acamprosate calcium), indicated in
combination with psychosocial support for the maintenance of abstinence
from alcohol in patients with alcohol dependence who are abstinent at
treatment initiation.
* Benicar is a registered trademark of Daiichi Sankyo, Inc., and
Campral is a registered trademark of Merck Sante s.a.s., subsidiary of
Merck KGaA, Darmstadt, Germany.
Except for the historical information contained herein, this release
contains "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements involve a number
of risks and uncertainties, including the difficulty of predicting FDA
approvals, the acceptance and demand for new pharmaceutical products, the
impact of competitive products and pricing, the timely development and
launch of new products, and the risk factors listed from time to time in
the Forest Laboratories' SEC reports, including the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 2006 and on Form 10-Q for
the periods ended June 30, 2006, September 30, 2006 and December 31, 2006.
FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31 ENDED MARCH 31
(In thousands, except per share amounts)
2007 2006 2007 2006
Revenues:
Net sales $815,449 $712,761 $3,183,324 $2,793,934
Contract revenue 46,458 31,225 176,943 118,170
Interest income 23,870 12,046 80,200 50,287
Other income (loss) (336) 290 1,318 (1)
Net revenues 885,441 756,322 3,441,785 2,962,390
Costs and expenses:
Cost of goods sold 189,280 167,860 745,602 650,996
Selling, general
and administrative 274,319 259,016 1,046,336 1,031,451
Research and
development 596,140 194,377 941,003 410,431
1,059,739 621,253 2,732,941 2,092,878
Income (loss) before
income tax expense (174,298) 135,069 708,844 869,512
Income tax expense 63,618 43,179 254,741 160,998
Net income (loss) ($237,916) $91,890 $454,103 $708,514
Net income (loss)
per share:
Basic ($0.75) $0.28 $1.43 $2.11
Diluted ($0.75) $0.28 $1.41 $2.08
Weighted average
number of shares
outstanding:
Basic 318,614 325,491 318,539 335,912
Diluted 318,614 329,969 322,781 340,321
SOURCE Forest Laboratories, Inc.
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Related links:
http://www.frx.com
Photo Notes:http://www.newscom.com/cgi-bin/prnh/20001011/FORESTLOGO
CONTACT:
Charles E. Triano, Vice President - Investor
Relations of Forest Laboratories, Inc., +1-212-224-6714, or
Charles.Triano@frx.com
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