- Strong European and Rest of the World Sales
- Proprietary Product Sales Increase, Portfolio Expanded
- Company Provides Updated Adjusted Calendar 2008 EPS Guidance of $2.75 -
$3.05
MONTVALE, N.J., May 8 /PRNewswire-FirstCall/ -- Barr Pharmaceuticals,
Inc. (NYSE: BRL) today reported net earnings of $23 million, or $0.21 per
share, on revenues of $608 million for the quarter ended March 31, 2008.
The current quarter results compare with prior year net earnings of $12
million, or $0.11 per share, on revenues of $597 million. On a non-GAAP
basis, adjusted earnings per share were $0.57 for the first quarter of
2008, as compared to $0.73 for the prior year period. A reconciliation of
GAAP-based earnings per share to adjusted earnings per share is presented
in the table at the end of this press release.
"While our results for the first quarter did not meet our expectations,
we believe that these results will improve in the second half of the year
and demonstrate the value of expanding our operations and markets outside
the U.S.," said Bruce L. Downey, Barr's Chairman and CEO. "Strong sales
growth in Europe and the Rest of the World (ROW) was driven by growth in
the key markets of Germany, Russia and Poland. As expected, sales of our
U.S. generic contraceptive portfolio decreased but are expected to grow
from this level with the anticipated launch of generic Yasmin(R). During
the quarter, we expanded our other generic U.S. product portfolio with the
launch of generic versions of Fosamax(R) and Kytril(R) and continued to
record strong year-over- year sales growth of our Fentanyl Citrate product.
Proprietary sales increased year-over-year, driven by our Plan B(R) and
SEASONIQUE(R) contraceptive products. We expanded the proprietary product
portfolio with the launch of the AmniScreen(TM) product, the first and only
FDA-approved, prescription, at-home screening test for amniotic fluid
leakage during pregnancy. We also launched SEASONALE(R) in Canada with our
marketing partner, Paladin."
Revenues
Generic Product Sales
The Company's generic product sales were $469 million for the quarter
ended March 31, 2008, compared to $471 million in the prior year period.
U.S. Generic Sales
Sales of U.S. generic products totaled $261 million for the first quarter
of 2008, compared to $307 million in the prior year period. The $46
million decrease in sales is primarily related to lower sales of several
of the Company's products including Ondansetron ODT, Cyclosporine Capsules
and Desmopressin. These decreases were partially offset by increases in
sales of Fentanyl Citrate and the launch of the Company's Alendronate
product.
Sales of generic oral contraceptives, the Company's largest single
category of generic products, were lower in the quarter, as expected,
decreasing to $93 million in the first quarter of 2008 from $113 million
in the prior year period. The decrease primarily reflects lower volume on
several products due to lower market share.
Europe and Rest of the World ("ROW") Generic Sales
Sales of European and ROW generic products were $208 million in the first
quarter of 2008, compared to $164 million in the prior year period. This
$44 million increase is primarily related to the positive impact of
foreign currency exchange during the quarter and higher sales in the
Company's key markets of Germany, Russia and Poland.
Proprietary Product Sales
The Company's proprietary product sales were $96 million for the first
quarter of 2008, up from $89 million in the prior year period. The increase
in proprietary sales was primarily attributable to increased sales of
SEASONIQUE extended cycle oral contraceptive, Plan B Over-the-Counter/Rx
and the ParaGard(R) IUC, which more than offset the expected decrease in
sales of our SEASONALE extended-cycle oral contraceptive, which has faced
generic competition since September 2006, and decreased sales of
Adderall(R) IR.
Alliance and Development Revenue
During the first quarter of 2008, the Company reported alliance and
development revenue of $32 million, up from $25 million in the prior year
period. The increase reflects higher royalties earned from the Company's
agreement with Teva Pharmaceuticals on fexofenadine hydrochloride tablets,
the generic version of Allegra(R) tablets, and higher reimbursements under
its Shire development agreement, which more than offset lower
reimbursements under its Adenovirus agreement with the Department of
Defense, as the Company completed Phase III clinical trial for Adenovirus
during the quarter.
Other Revenue
Other revenue primarily includes revenue from the Company's non-core
operations, including the agrochemicals business and the diagnostic,
disinfectants, dialysis and infusions (DDD&I) business. Other revenue
totaled $11 million for the first quarter of 2008, compared to $12 million
in the prior year period.
Margins
Generic: Margins in the generic segment were 50% for the first quarter
of 2008, up from 44% in the prior year period. Last year's margins were
negatively impacted by a charge of approximately $32 million related to the
step-up of inventory acquired from PLIVA and sold in the period.
Proprietary: Margins in the proprietary segment were 68% for the first
quarter of 2008, up from 66% in the prior year period.
Update on R&D Activities
Research and development expenses totaled $64 million for the first
quarter of 2008, compared to $62 million in the prior year period.
Generic Products
At March 31, 2008, the Company had approximately 70 Abbreviated New
Drug Applications, including tentatively approved applications, pending at
the U.S. Food and Drug Administration (FDA) targeting branded
pharmaceutical products with an estimated $30 billion in sales. The Company
also had approximately 300 product registrations, representing 79
molecules, pending with regulatory bodies in Europe and ROW.
During the first quarter of 2008, the Company received three generic
product approvals in the U.S. from the FDA, and approximately 35 approvals,
representing 24 molecules, from regulatory bodies in Europe and ROW.
Proprietary Products
The Company currently has an extensive proprietary clinical development
program that includes three products in Phase III studies and four New Drug
Applications pending at the FDA.
Selling, General and Administrative
The Company's SG&A expenses totaled $194 million during the first
quarter of 2008, up from $179 million in the prior year period. The year
over year increase in SG&A was primarily related to increased sales and
marketing costs related to the promotion of the Company's branded generic
products in Europe and ROW.
Interest Expense/Income and Other (Expense) Income
During the first quarter of 2008, the Company recorded $32 million of
interest expense, almost all of which is related to interest on the debt
incurred in connection with the Company's acquisition of PLIVA in October
2006. In addition, during the first quarter of 2008, the Company recorded
interest income of $5 million and other expense of $8 million.
Tax Rate
The Company's tax rate for first quarter of 2008 was 42%, compared to
42% for the prior year period. The effective tax rate for adjusted earnings
for the first quarter of 2008 was 33%.
Balance Sheet
The Company's cash, cash equivalents and short-term marketable
securities totaled approximately $505 million at March 31, 2008. In
addition, the Company had $52 million of long-term marketable securities at
March 31, 2008.
EBITDA
Earnings before interest, taxes, depreciation and amortization (EBITDA)
for the first quarter of 2008 totaled $153 million, compared to $158
million in the prior year period. Please see the EBITDA reconciliation
table at the end of this press release.
Sanctura(R) Payment from Allergan, Inc.
On May 5, 2008, the Company entered into an agreement with a subsidiary
of Allergan, Inc. related to Allergan's Sanctura(R) product that PLIVA
divested in 2005 to Esprit Pharma, which has since been acquired by
Allergan. Under the terms of this agreement, Allergan paid Barr $53
million, extinguishing any future payment obligations related to
Sanctura(R). Barr will record the $53 million in the Company's second
quarter 2008 earnings.
Revised 2008 Financial Outlook
The Company is revising its adjusted earnings per fully diluted share
guidance for 2008 to be in the range of approximately $2.75 - $3.05, down
from the $3.05 -$3.35 range that the Company provided in February 2008. The
decrease in the range is the result of several factors, including the
Company's results for the first quarter of 2008, which were lower than it
expected, lower than anticipated U.S. generic revenues due to timing of new
product launches, lower than anticipated Plan B revenues, lower gross
profit margins due to a shift in product mix, and increased investment in
R&D. The impact of these factors will not be fully offset by contributions
from the Company's expected launch of generic Yasmin (drospirenone and
ethinyl estradiol) in mid-2008. The Company's adjusted earnings guidance
excludes the $53 million one-time payment from Allergan related to the
Sanctura product.
Based on the factors listed above, the Company expects total revenues
for 2008 to be in the range of $2.7 - $2.8 billion, including total product
sales in the range of $2.5 - $2.6 billion. Revenue and product sales
estimates include the anticipated contribution of sales of generic Yasmin.
On the expense side for 2008, the Company expects R&D investment of
approximately $275 - $285 million, and SG&A expenses to be approximately
$810 - $830 million.
The Company's adjusted earnings guidance for 2008 excludes the impact
of amortization costs associated with acquired products, contributions
and/or losses from the DDD&I operations that the Company plans to divest,
and incremental depreciation related to purchase accounting. The Company's
adjusted earnings guidance also excludes the impact of any unscheduled
launches resulting from patent challenges, other business development
activities, and refinancing activities that may be completed after the date
hereof and on or before December 31, 2008.
Conference Call/Webcast
The Company will host a Conference Call at 8:30 AM Eastern time on
Thursday, May 8, 2008 to discuss earnings results for the quarter ended
March 31, 2008. The number to call from within the United States is (800)
553-5275 and (612) 332-0345 Internationally. A replay of the conference
call will be available from 10:30 AM Eastern time on May 8, 2008 through
11:59 PM Eastern time May 22, 2008 and can be accessed by dialing (800)
475-6701 in the United States or (320) 365-3844 Internationally and using
the access code 918406.
The Conference Call will also be Webcast live on the Internet.
Investors and other interested parties may access the live webcast through
the Investors section, under Calendar of Events, on Barr's website at
http://www.barrlabs.com.
Log on at least 15 minutes before the call begins to register and
download or install any necessary audio software.
About Barr Pharmaceuticals, Inc.
Barr Pharmaceuticals, Inc. is a global specialty pharmaceutical company
that operates in more than 30 countries worldwide and is engaged in the
development, manufacture and marketing of generic and proprietary
pharmaceuticals, biopharmaceuticals and active pharmaceutical ingredients.
A holding company, Barr operates through its principal subsidiaries: Barr
Laboratories, Inc., Duramed Pharmaceuticals, Inc. and PLIVA d.d. and its
subsidiaries. The Barr Group of companies markets more than 120 generic and
26 proprietary products in the U.S. and approximately 1,025 products
globally outside of the U.S. For more information, visit http://www.barrlabs.com.
Forward-Looking Statements
Except for the historical information contained herein, the statements
made in this press release constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements can be
identified by their use of words such as "expects," "plans," "projects,"
"will," "may," "anticipates," "believes," "should," "intends," "estimates"
and other words of similar meaning. Because such statements inherently
involve risks and uncertainties that cannot be predicted or quantified,
actual results may differ materially from those expressed or implied by
such forward-looking statements depending upon a number of factors
affecting the Company's business. These factors include, among others: the
difficulty in predicting the timing and outcome of legal proceedings,
including patent-related matters such as patent challenge settlements and
patent infringement cases; the outcome of litigation arising from
challenging the validity or non- infringement of patents covering our
products; the difficulty of predicting the timing of FDA approvals; court
and FDA decisions on exclusivity periods; the ability of competitors to
extend exclusivity periods for their products; our ability to complete
product development activities in the timeframes and for the costs we
expect; market and customer acceptance and demand for our pharmaceutical
products; our dependence on revenues from significant customers;
reimbursement policies of third party payors; our dependence on revenues
from significant products; the use of estimates in the preparation of our
financial statements and our forecasts; the impact of competitive products
and pricing on products, including the launch of authorized generics; the
ability to launch new products in the timeframes we expect; the
availability of raw materials; the availability of any product we purchase
and sell as a distributor; the regulatory environment in the markets where
we operate; our exposure to product liability and other lawsuits and
contingencies; the increasing cost of insurance and the availability of
product liability insurance coverage; our timely and successful completion
of strategic initiatives, including integrating companies (such as PLIVA
d.d.) and products we acquire and implementing our new SAP enterprise
resource planning system; fluctuations in operating results, including the
effects on such results from spending for research and development, sales
and marketing activities and patent challenge activities; the inherent
uncertainty associated with financial projections; our expansion into
international markets through our PLIVA acquisition, and the resulting
currency, governmental, regulatory and other risks involved with
international operations; our ability to service our significantly
increased debt obligations as a result of the PLIVA acquisition; changes in
generally accepted accounting principles; and other risks detailed in our
SEC filings, including in our Annual Report on Form 10-K for the year ended
December 31, 2007.
The forward-looking statements contained in this press release speak
only as of the date the statement was made. The Company undertakes no
obligation (nor does it intend) to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except to the extent required under applicable law.
Barr Pharmaceuticals, Inc. Selected Financial Data
(in millions, except per share amounts)
Three Months Three Months
Ended Ended
March 31, March 31,
2008 2007
Revenues:
Product sales $565 $560
Alliance and development revenue 32 25
Other revenue 11 12
Total revenues 608 597
Costs and expenses:
Cost of sales 275 300
Selling, general and administrative 194 179
Research and development 64 62
Write-off of acquired IPR&D - 2
Earnings from operations 75 54
Interest income 5 11
Interest expense 32 42
Other (expense) income (8) 1
Earnings before income taxes and
minority interest 40 24
Income tax expense 17 10
Minority interest - (1)
Net earnings from continuing
operations 23 13
Net loss from discontinued
operations, net of tax - (1)
Net earnings $23 $12
Earnings per common share - diluted:
Earnings per common share -
continuing operations $0.21 $0.12
Earnings per common share -
discontinued operations - (0.01)
Net earnings per common share -
diluted $0.21 $0.11
Weighted average shares - assuming
dilution 109 108
Stock-based compensation expense:
Cost of sales $3 $2
Selling, general and administrative 3 4
Research and development 1 1
Total stock-based compensation
expense $7 $7
$ in millions As of As of
March 31, December 31,
2008 2007
Cash & cash equivalents $484 $246
Marketable securities - current 21 288
Accounts receivable 462 497
Other receivables 88 86
Inventories 481 454
Marketable securities - long-term 52 17
Accounts payable & accrued
liabilities 423 443
Working capital 909 923
Total assets 4,886 4,762
Total debt 2,042 2,080
Shareholders' equity 2,053 1,866
Reconciliation of Adjusted Earnings to GAAP Earnings; EBITDA
To supplement its consolidated financial statements presented in
accordance with accounting principles generally accepted in the United
States of America ("GAAP"), the Company is providing the supplemental
financial information contained below to reflect (1) the adjusted earnings
per share effect of certain unusual or infrequent charges or benefits that
were taken or received in the quarter ended March 31, 2008, and (2) the
calculation of EBITDA for each period presented.
Adjusted earnings per share and EBITDA are non-GAAP financial measures.
The Company is providing this information, however, because it believes
that such information is useful to both management and investors in that it
facilitates analysis by both management and investors in evaluating the
Company's performance and trends. The presentation of this additional
information is not meant to be considered in isolation of, or as a
substitute for, results prepared in accordance with GAAP.
Barr Pharmaceuticals, Inc. Selected Adjusted Financial Data
(in millions, except per share amounts)
Three Months Ended March 31, 2008
Adjusted
GAAP Adjustments Earnings
Revenues:
Product sales $565 - $565
Alliance and
development revenue 32 - 32
Other revenue 11 (5) (b) 6
Total revenues 608 (5) 603
Costs and expenses:
Cost of sales 275 (55) (b),(c),(d),(f) 220
Selling, general and
administrative 194 (3) (b),(d),(g) 191
Research and development 64 - 64
Write-off of acquired IPR&D - - -
Earnings from operations 75 53 128
Interest income 5 - 5
Interest expense 32 - 32
Other (expense) income, net (8) - (8)
Earnings before income taxes
and minority interest 40 53 93
Income tax expense 17 14 (h) 31
Minority interest loss - (0) (0)
Net earnings from continuing
operations 23 39 62
Net loss from discontinued
operations, net of taxes - - -
Net earnings $23 $39 $62
Diluted
Earnings per common share -
continuing operations $0.21 $0.57
Earnings per common share -
discontinued operations $- $-
Net earnings per common share
- diluted $0.21 $0.57
Weighted average shares
- diluted 109 109
Three Months Ended March 31, 2007
Adjusted
GAAP Adjustments Earnings
Revenues:
Product sales $560 - $560
Alliance and
development revenue 25 - 25
Other revenue 12 (5) (b) 7
Total revenues 597 (5) 592
Costs and expenses
Cost of sales 300 (80) (b),(c),(d),(f) 220
Selling, general and
administrative 179 (9) (b),(d),(g) 170
Research and
development 62 - 62
Write-off of acquired
IPR&D 2 (2) (e) -
Earnings from operations 54 86 140
Interest income 11 - 11
Interest expense 42 - 42
Other (expense) income, net 1 - 1
Earnings before income
taxes and minority interest 24 86 110
Income tax expense 10 20 (h) 30
Minority interest loss (1) - (1)
Net earnings from continuing
operations 13 66 79
Net loss from discontinued
operations, net of taxes (1) 1 (a) -
Net earnings $12 $67 $79
Diluted
Earnings per common share -
continuing operations $0.12 $0.73
Earnings per common share -
discontinued operations $(0.01) $-
Net earnings per common
share - diluted $0.11 $0.73
Weighted average shares
- diluted 108 108
Summary of Adjustment Items:
Three Months Ended March 31,
2008 2007
(a) In order to provide investors and
management a basis to evaluate the
performance of the ongoing operations,
adjusted earnings exclude the impact of
discontinued operations Accounted for
as discontinued operations $- $(1)
(b) Net results from operations expected
to be divested, net of minority interest
Other revenue $(5) $(5)
Less:
Cost of sales (5) (4)
Selling, general and administrative (1) (1)
Total $1 $-
To adjust for the results of
operations of our non-core DDD&I
business which is expected to be
divested. The Company believes
adjusting GAAP earnings for this
loss will allow investors to better
assess our ongoing activities.
(c) Amortization and inventory step up
adjustments:
Cost of sales $(44) $(72)
(d) Incremental PLIVA Depreciation
due to purchase accounting write up
of fixed assets:
Cost of sales $(6) $(4)
Selling, general and
administrative (1) (1)
Total $(7) $(5)
(e) Write off of acquired IPR&D
associated with additional PLIVA
shares $- $(2)
(f) Product Royalty contingency $(1) $-
(g) Litigation Reserve $(1) $(7)
(h) Adjustments to tax expense,
including:
Tax impact of adjustments (a) - (g) above. $14 $23
Tax (benefit) from recognition of
acquired NOL - (3)
Total $14 $20
EBITDA (from continuing operations) Calculation:
Three Months Ended March 31,
2008 2007
Earnings from operations $75 $54
Depreciation 34 30
Amortization 44 42
Inventory Step up - 32
EBITDA $153 $158
SOURCE Barr Pharmaceuticals, Inc.
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Related links:
http://www.barrlabs.com
http://www.prnewswire.com/comp/089750.html/
CONTACT:
Carol A. Cox, Barr Pharmaceuticals, Inc.,
+1-201-930-3720, ccox@barrlabs.com
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