-- Strong Generic Product Sales
-- Strong Generic Oral Contraceptive Sales
-- PLIVA Integration Remains on Track
-- Company Reiterates Adjusted Calendar 2007 EPS Guidance of $3.00 - $3.30
WOODCLIFF LAKE, N.J., May 9 /PRNewswire-FirstCall/ -- Barr
Pharmaceuticals, Inc. (NYSE: BRL) today reported net earnings of $11.6
million, or $0.11 per share, on revenues of $599 million for the first
quarter ended March 31, 2007. The current quarter results compare with
prior year net earnings of $76.1 million, or $0.70 per share, on total
revenues of $327 million. The current quarter results include a full
quarter of contribution from PLIVA d.d., Barr's Croatian subsidiary, which
it acquired on October 24, 2006, and reflects two businesses acquired in
the PLIVA transaction, which have been accounted for as discontinued
operations.
Adjusted earnings per share were $0.78 for the first quarter of 2007,
compared to adjusted earnings per share of $0.84 in the prior year period.
A reconciliation of GAAP-based earnings per fully diluted share to adjusted
earnings per fully diluted share is presented in the table at the end of
this press release.
"The contribution of PLIVA's U.S. products, market acceptance of our
generic ACTIQ(R), and continued growth in the number and sales of our
generic oral contraceptives contributed to sound top-line growth in the
quarter," said Bruce L. Downey, Barr's Chairman and CEO. "While performance
in our proprietary business was down, we had anticipated that the generic
competition for SEASONALE(R) would impact sales, particularly as we ramp up
promotion of SEASONIQUE(R), our second generation extended-cycle oral
contraceptive. This decrease somewhat offset the contribution of Plan B(R)
OTC/Rx, as well as the contributions of Adderall(R) IR, which were added to
the proprietary portfolio in the December 2006 quarter. It is also
important to recognize that our significant R&D investment for the quarter
reflects the value of our combination with PLIVA, as well as our robust
development activities on traditional products, and our investment in and
commitment to the future of biogeneric products."
Revenues
Generic Product Sales
The Company's generic product sales increased to $475 million for the
first quarter of 2007, compared to $200 million in the prior year period.
U.S. Generic Sales
Sales of U.S. generic products totaled $304 million for the first
quarter of 2007, compared to $200 million in the prior year period. The
increase in sales is primarily related to the inclusion of sales from
PLIVA's U.S. product line. These products are now being sold under the
Barr label. The increase is also related to strong sales of Fentanyl
Citrate, a generic version of ACTIQ that we launched in late September
2006, and higher generic oral contraceptive sales.
Sales of generic oral contraceptives, the Company's largest single
category of generic products, were $113 million for the first quarter of
2007, compared to $101 million in the prior year period. This strong
growth is primarily related to increased sales of Kariva(R), and sales
of Jolessa(TM), which we launched in September 2006.
Europe and Rest of the World ("ROW") Generic Sales
Sales of European and ROW generic products, which result from sales of
PLIVA products in these geographical regions, were $171 million in the
first quarter of 2007.
Proprietary Product Sales
The Company's proprietary product sales were $89 million for the first
quarter of 2007, compared to $93 million in the prior year period. The
decrease in proprietary sales was primarily attributable to decreased sales
of our SEASONALE extended-cycle oral contraceptive, which faced generic
competition in September 2006 following the expiration of three years of
market exclusivity. This decrease was partially offset by higher sales of
Plan B Over-the-Counter/Rx and Adderall IR, both of which were launched in
the quarter ended December 31, 2006.
Alliance and Development Revenue
During the first quarter of 2007, the Company reported alliance and
development revenue of $25 million, compared to $33 million in the prior
year period. The decrease reflects lower royalties earned from the
Company's agreement with Teva Pharmaceuticals on fexofenadine hydrochloride
tablets, the generic version of Allegra(R) tablets, which was somewhat
offset by higher reimbursements under the Adenovirus and Shire development
agreements.
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 business. The animal health business,
previously included in Other revenue, has been excluded from the results
because it is now treated as a discontinued operation, as discussed below.
Other revenue totaled $10 million for the first quarter of 2007.
Discontinued Operations
Following its acquisition of PLIVA, the Company has been evaluating
PLIVA's operations and has decided to divest or exit certain non-core
operations. The Company has decided to divest or exit its operations in
Spain and its animal health business. As a result, as of March 31, 2007,
the assets and liabilities relating to these businesses met the "held for
sale" criteria of FAS 144, Accounting for the Impairment or Disposal of
Long Lived Assets. The Company expects to sell these businesses by December
31, 2007. Following the divestiture, the cash flows and operations of the
divested operations will be eliminated from the Company's ongoing
operations, and the Company will cease to have continuing involvement with
these operations.
Margins
Reported margins in the Company's generic and proprietary segments for
the first quarter of 2007 were 44% and 66%, respectively, compared to 65%
and 70% for the prior year period. Margins for the first quarter of 2007
were negatively impacted by amortization costs arising from the PLIVA
acquisition. Margins on generic products were also impacted by a charge of
$32 million related to the step-up of inventory acquired from PLIVA and
sold in the period.
Update on R&D Activities
Research and development expenses totaled $61 million for the first
quarter of 2007, compared to $38 million in the prior year period. The
increase in R&D expenses reflects higher costs associated with the
Company's generic and bio-generic costs both in the U.S. and in Europe and
increased proprietary development activities.
Generic Products
At March 31, 2007, the Company had approximately 60 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 230 product registrations, representing 79
molecules, pending with regulatory bodies in Europe and ROW.
During the first quarter of 2007, the Company received three generic
product approvals in the U.S. from the FDA, including tentative approvals,
and approximately 30 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 six products in Phase III studies and several New
Drug Applications pending at the FDA, two of which gained FDA approval
following the first quarter of 2007.
Selling, General and Administrative
The Company's SG&A expenses totaled $182 million during the first
quarter of 2007, compared to $78 million in the prior year period. The
substantial increase in SG&A is primarily attributable to the addition of
PLIVA's sales and marketing activities, including, but not limited to, the
costs associated with approximately 1,400 sales representatives that PLIVA
utilizes to promote branded generic products to physicians and pharmacists
in many countries, and other general and administrative expenses associated
with our worldwide operations. SG&A includes approximately $11 million
related to costs incurred by the Company to meet expanded financial
reporting, Sarbanes-Oxley compliance and other compliance-related
activities. SG&A also includes a one-time pre-tax charge of $6.5 million,
or $0.04 per share, related to a litigation reserve established by the
Company during the quarter.
In addition, SG&A for both periods was positively impacted by the
Company's decision to reclassify acquired product amortization from SG&A to
cost of sales, as previously discussed.
Interest Expense
During the first quarter of 2007, the Company recorded $40 million of
interest expense, almost all of which is related to interest on the $2.6
billion of debt the Company has incurred in connection with the PLIVA
acquisition. The Company recorded $0.1 million of interest in the prior
year period.
Interest Income
During the first quarter of 2007, interest income increased by $6.4
million over the prior year period. This increase was primarily related to
higher available balances invested during the first quarter of 2007 as
compared to the prior year period, in addition to rising interest rates.
Stock-Based Compensation
During the first quarter of 2007, the Company recorded stock-based
compensation expenses of $7.3 million, or $0.05 per share, the impact of
which is allocated to cost of sales, SG&A and R&D and is reflected in the
accompanying selected adjusted financial data chart.
Tax Rate
The Company's tax rate for first quarter of 2007 was 42.0%, compared to
35.3% for the prior year period. The significant increase in the reported
effective tax rate is primarily due to the impact of purchase accounting
adjustments related to the PLIVA acquisition, losses incurred in certain
legal entities without a tax benefit and additional U.S. taxes related to
the PLIVA acquisition.
The adjusted tax rate for the first quarter of 2007 was 27.4%.
Balance Sheet and Cash Flows
The Company's cash, cash equivalents and marketable securities totaled
approximately $854 million at March 31, 2007. Cash flows provided by
operations totaled $132 million for the first quarter of 2007. Capital
spending totaled $23 million during the quarter.
EBITDA
Earnings before interest, taxes, depreciation and amortization
(EBITDA), including amortization of inventory step-up charges, for the
first quarter of 2007 totaled $156 million, compared to $138 million in the
prior year period. Please see the EBITDA reconciliation table at the end of
this press release for a reconciliation of GAAP net earnings to EBITDA.
2007 Financial Outlook
The Company is reiterating that it expects adjusted earnings per fully
diluted share for the year ending December 31, 2007 to be in the range of
approximately $3.00 - $3.30. The adjustments are discussed in the paragraph
immediately below. The Company currently expects total revenues for 2007 to
be in the range of $2.4 - $2.5 billion, including total product sales in
the range of $2.3 - $2.4 billion. On the expense side, the Company expects
R&D investment to be approximately $240 - $250 million and SG&A expenses to
be approximately $740 - $760 million.
The Company's adjusted guidance for 2007 excludes amortization costs
associated with acquired products, charges related to the step-up of
inventory acquired from PLIVA, contributions from operations that the
Company anticipates divesting during 2007, incremental depreciation related
the step up of PLIVA's assets, tax impact related to PLIVA's U.S. net
operating losses (NOLs) and stock-based compensation costs. The Company's
adjusted guidance for 2007 also excludes the impact of potential patent
challenge outcomes or other business development activities that may be
completed by December 31, 2007.
Conference Call/Webcast
The Company will host a Conference Call at 8:30 AM Eastern time on
Wednesday, May 9th to discuss earnings results for the quarter ended March
31, 2007. The number to call from within the United States is: (800)
230-1085 and (612) 338-1040 Internationally. A replay of the conference
call will be available from 12 Noon Eastern time on May 9th through 11:59
PM Eastern time May 16th, and can be accessed by dialing (800) 475-6701 in
the United States or (320) 365-3844 Internationally and using the access
code 870116.
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. The Barr
group of companies markets more than 115 generic and 25 proprietary
products in the U.S. and more than 1,200 products globally outside of the
U.S.
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; 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 Transition Report on Form 10-K/T for the six
months ended December 31, 2006.
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 thousands, except per share amounts)
Three Months Ended
March 31,
2007 2006
(unaudited) (unaudited)
Revenues:
Product sales $563,818 $293,521
Alliance and development revenue 25,121 33,320
Other revenue 10,439 -
Total revenues 599,378 326,841
Costs and expenses:
Cost of sales 302,535 98,507
Selling, general and administrative 182,359 78,214
Research and development 61,224 37,705
Write-off of acquired IPR&D 1,549 -
Earnings from operations 51,711 112,415
Interest income 10,622 4,213
Interest expense 40,275 110
Other income, net 1,096 1,071
Earnings before income taxes and
minority interest 23,154 117,589
Income tax expense 9,725 41,493
Minority interest (1,535) -
Net earnings from continuing operations 11,894 76,096
Loss from discontinued operations, net of taxes (322) -
Net earnings $11,572 $76,096
Earnings per common share - diluted:
Earnings per common share -
continuing operations $0.11 $0.70
Earnings per common share -
discontinued operations - -
Net earnings per common share - diluted $0.11 $0.70
Weighted average shares - diluted 108,044 108,547
Stock-based compensation expense:
Cost of sales $2,193 $2,012
Selling, general and administrative 3,814 3,498
Research and Development 1,292 1,423
Total stock-based compensation expense $7,299 $6,933
Barr Pharmaceuticals, Inc. Selected Adjusted Financial Data
(in thousands, except per share amounts)
Three Months Ended March 31, 2007
Adjusted
GAAP Adjustments Earnings
Revenues:
Product sales $563,818 - $563,818
Alliance and development
revenue 25,121 - 25,121
Other revenue 10,439 - 10,439
Total revenues 599,378 - 599,378
Costs and expenses:
Cost of sales 302,535 (78,586) (b),(c),(d) 223,949
Selling, general and
administrative 182,359 (11,107) (c),(d),(f) 171,252
Research and development 61,224 (1,452) (c),(d) 59,772
Write-off of acquired IPR&D 1,549 (1,549) (e) -
Earnings from operations 51,711 92,694 144,405
Interest income 10,622 - 10,622
Interest expense 40,275 - 40,275
Other income, net 1,096 - 1,096
Earnings before income
taxes and minority interest 23,154 92,694 1,768 117,616
Income tax expense 9,725 22,459 (g) 32,184
Minority interest (1,535) (98) (46) (1,679)
Net earnings from
continuing operations 11,894 70,137 1,722 (a) 83,753
Loss from discontinued
operations, net of taxes (322) 322 (h) -
Net earnings $11,572 $70,459 $1,722 $83,753
Basic
Earnings per common share -
continuing operations $0.11 $0.66 $0.02 $0.78
Earnings per common share -
discontinued operations $(0.00) $0.00 $- $-
Net earnings per common
share - basic $0.11 $0.66 $0.02 $0.78
Weighted average shares -
basic 106,715 106,715
Diluted
Earnings per common share -
continuing operations $0.11 $0.65 $0.02 $0.78
Earnings per common share -
discontinued operations $(0.00) $0.00 $- $-
Net earnings per common
share - diluted $0.11 $0.65 $0.02 $0.78
Weighted average shares -
diluted 108,044 108,044
Three Months Ended March 31, 2006
Adjusted
GAAP Adjustments Earnings
Revenues:
Product sales $293,521 $- $293,521
Alliance and development revenue 33,320 - 33,320
Other revenue - - -
Total revenues 326,841 - 326,841
Costs and expenses:
Cost of sales 98,507 (18,671) (b),(d) 79,836
Selling, general and administrative 78,214 (3,498) (d) 74,716
Research and development 37,705 (1,423) (d) 36,282
Write-off of acquired IPR&D - - -
Earnings from operations 112,415 23,592 136,007
Interest income 4,213 - 4,213
Interest expense 110 - 110
Other income, net 1,071 - 1,071
Earnings before income taxes and
minority interest 117,589 23,592 141,181
Income tax expense 41,493 8,564 (g) 50,057
Minority interest - - -
Net earnings from continuing operations 76,096 15,028 91,124
Loss from discontinued operations, net
of taxes - - -
Net earnings $76,096 $15,028 $91,124
Basic
Earnings per common share - continuing
operations $0.72 $0.14 $0.86
Earnings per common share - discontinued
operations $- $- $-
Net earnings per common share - basic $0.72 $0.14 $0.86
Weighted average shares - basic 105,924 105,924
Diluted
Earnings per common share - continuing
operations $0.70 $0.14 $0.84
Earnings per common share - discontinued
operations $- $- $-
Net earnings per common share -
diluted $0.70 $0.14 $0.84
Weighted average shares - diluted 108,547 108,547
Summary Of Adjustment Items:
Three Months Ended Mar 31,
2007 2006
(a) Net loss from operations expected
to be divested (1,722) -
These businesses are expected to be divested during CY2007. The Company
believes adjusting GAAP earnings for these losses will allow investors to
better assess our on-going activities.
(b) Amortization and Inventory step up adjustments to cost of sales:
Inventory Step Up - PLIVA (32,310) -
Inventory Step Up - FEI - (7,794)
PLIVA-related Amortization (28,196) -
Barr Product Amortization (11,699) (8,865)
Total (72,205) (16,659)
(c) Incremental PLIVA Depreciation due to Purchase accounting write up
of Fixed Assets
Cost of sales (4,188) -
Selling, general and administrative (793) -
Research and development (160) -
Total (5,141) -
(d) Stock Option Expense
Cost of sales (2,193) (2,012)
Selling, general and administrative (3,814) (3,498)
Research and development (1,292) (1,423)
Total (7,299) (6,933)
(e) Write off of acquired IPR&D associated with additional purchase
of PLIVA Equity
(1,549) -
(f) Litigation Reserve (6,500) -
(g) Adjustments to tax expense, including:
Tax impact of adjustments (A) - (E) above. 24,984 8,564
Tax (benefit) from recognition of
acquired NOL (2,525) -
Total 22,459 8,564
(h) 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 (322) -
Undisclosed, included in continuing operations - -
Total (322) -
EBITDA Calculation:
Three Months Ended Mar 31,
2007 2006
Earnings from operations 51,711 112,415
Depreciation 30,009 9,089
Amortization 42,218 8,925
Inventory Step Up 32,310 7,794
EBITDA 156,248 138,223
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 of Barr Pharmaceuticals, Inc.,
+1-201-930-3720, ccox@barrlabs.com
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