- Launch of Generic Yasmin(R) Oral Contraceptive Contributes to Higher U.S.
Generic Sales
- Continued Strong European and Rest of the World Sales
- Increased Proprietary Product Sales
- Company Reiterates 2008 Adjusted EPS Guidance of $2.75 - $3.05
MONTVALE, N.J., Aug. 7 /PRNewswire-FirstCall/ -- Barr Pharmaceuticals,
Inc. (NYSE: BRL) today reported net earnings of $57 million, or $0.52 per
share, on revenues of $779 million for the quarter ended June 30, 2008. The
current quarter results compare with prior year net earnings of $45
million, or $0.41 per share, on revenues of $634 million. On a non-GAAP
basis, adjusted earnings per share were $0.64 for the second quarter of
2008, as compared to $0.77 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.
For the six months ended June 30, 2008, net earnings were $80 million,
or $0.73 per share, compared to $57 million, or $0.52 per share, in the
prior year period. Revenues for the first six months of 2008 totaled $1.4
billion, compared to $1.2 billion for the same period last year. Adjusted
earnings per share were $1.22 for the six months ended June 30, 2008,
compared to adjusted earnings per share of $1.52 in the prior year period.
"Our second quarter results reflect higher generic product sales,
driven by the June launch of our generic Yasmin(R) product under the
tradename Ocella(TM), as well as higher sales for our proprietary products
business," said Bruce L. Downey, Barr's Chairman and CEO. "Substitution
rates on Ocella have started off strong and, as a result, we expect to
record strong sales growth in this product in the second half of 2008 while
we remain the only generic available on the U.S. market. Our SEASONIQUE(R)
extended-cycle oral contraceptive and the PARAGARD(R) IUC were the
principal drivers in higher proprietary product sales year-over-year."
"The strength of our generic and proprietary product portfolios, our
commercial strength in important global markets, and our focus on
delivering sound results are among the benefits that make the proposed
acquisition of Barr by Teva, announced on July 18th, so attractive.
Management is committed to continuing to deliver strong performance as the
acquisition process progresses, to ensure that at the close of the
transaction, the capabilities of Barr will significantly complement Teva's
existing business," Downey continued.
Revenues
Generic Product Sales
The Company's generic product sales were $557 million for the second
quarter of 2008, compared to $484 million in the prior year period. For the
first six months of 2008, generic product sales were $1.0 billion, compared
to $956 million for the prior year period. A discussion of the Company's
generic product sales for the second quarter of 2008 compared to the prior
year period is presented below.
North American
Sales of North American generic products totaled $340 million for the
second quarter of 2008, compared to $296 million in the prior year period.
The increase in sales is primarily related to higher sales of generic oral
contraceptives.
Sales of generic oral contraceptives increased 34% to $155 million in the
second quarter of 2008, up from $116 million in the prior year period.
The increase primarily reflects sales of Ocella(TM), the Company's generic
Yasmin(R) oral contraceptive product that was launched at the end of the
second quarter of 2008, which more than offset lower volume and pricing on
several other oral contraceptive products.
Europe and Rest of the World ("ROW") Generic Sales
Sales of European and ROW generic products were $217 million in the second
quarter of 2008, compared to $188 million in the prior year period. This
increase is primarily related to the positive impact of foreign currency
exchange fluctuations compared to the prior year period. Excluding the
impact of foreign currency fluctuations, overall sales were in line with
last year as strong growth in Russia and other Central European markets
offset declines in Croatia and Germany.
Proprietary Product Sales
The Company's proprietary product sales were $118 million for the
second quarter of 2008, compared to $102 million in the prior year period.
For the first six months of 2008, proprietary product sales were $214
million, compared to $191 million in the prior year period. The increase in
proprietary sales for the quarter and the six month period was primarily
attributable to increased sales of several products, including
SEASONIQUE(R) extended-cycle oral contraceptive and the PARAGARD(R) IUC.
Alliance and Development Revenue
During the second quarter of 2008, the Company reported alliance and
development revenue of $93 million, up from $36 million in the prior year
period. For the first six months of 2008, alliance and development revenue
was $125 million, compared to $61 million in the prior year period. The
increase in the quarter and the six month period is primarily related to
the $53 million payment made by Allergan to Barr in May 2008 related to
Allergan's buy-out of all future financial obligations related to the
Sanctura(R) product that PLIVA divested in 2005 to Esprit Pharma, which has
since been acquired by Allergan.
Other Revenue
Other revenue primarily includes revenue from the Company's non-core
operations, including the diagnostic, disinfectants, dialysis and infusions
(DDD&I) business. Other revenue totaled $11 million for the second quarter
of 2008 and $22 million for the first six months of 2008, as compared to
$12 million and $22 million recorded in the prior year periods,
respectively.
Margins
Generic: Margins in the generic segment for the second quarter of 2008
and the first six months of 2008 were 45% and 47%, respectively, compared
to 49% and 47%, respectively, in the prior year periods.
Proprietary: Margins in the proprietary segment for both the second
quarter of 2008 and the first six months of 2008 were 69%, down from 78%
and 72% in the prior year periods, respectively, principally due to higher
product amortization.
Update on R&D Activities
Research and development expenses totaled $81 million for the second
quarter of 2008, compared to $66 million in the prior year period. R&D for
the first six months of 2008 totaled $145 million, compared to $129 million
for the prior year period. The increases reflect greater investment in
generic and bio-generic development activities, both in the U.S. and
Europe, as well as in proprietary development activities in the United
States and the impact of foreign currency exchange.
Generic Products
At June 30, 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 $29 billion in sales. The Company also had
approximately 350 product registrations, representing 89 molecules, pending
with regulatory bodies in Europe and ROW.
During the second quarter of 2008, the Company received two generic
product approvals in the U.S. from the FDA, and approximately 20 approvals,
representing 13 molecules, from regulatory bodies in Europe and ROW.
Proprietary Products
The Company currently has an extensive proprietary clinical development
program that includes four 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 $221 million during the second
quarter of 2008, compared to $188 million in the prior year period. SG&A
for the first six months of 2008 totaled $415 million, compared to $367
million for the prior year period. The increases in SG&A were primarily
related to increases in sales and marketing costs related to the promotion
of the Company's proprietary products in the U.S. and the impact of foreign
currency exchange.
Interest Expense/Income and Other (Expense) Income
During the second quarter of 2008, the Company recorded $27 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 second quarter of 2008, the Company recorded
interest income of $7 million and other income of less than $1 million.
Tax Rate
The Company's tax rate for the second quarter of 2008 was 46.1%,
compared to 35.4% for the prior year period. The rate in 2008 was
negatively impacted by a change of the mix of income in certain U.S. and
foreign taxing jurisdictions and the expiration of the U.S. research and
development tax credit at December 31, 2007, offset partially by a
reduction of the tax rate in Germany. In 2007, the rate was positively
impacted by the reinstatement of the Croatian research and development
incentive and benefits resulting from positive audit settlements in various
tax jurisdictions.
The effective tax rate for adjusted earnings for the second quarter of
2008 was 38.0%.
Balance Sheet
The Company's cash, cash equivalents and short-term marketable
securities totaled approximately $547 million at June 30, 2008. In
addition, the Company had $21 million of long-term marketable securities at
June 30, 2008.
EBITDA
Earnings before interest, taxes, depreciation and amortization (EBITDA)
for the second quarter of 2008 totaled $212 million, compared to $178
million in the prior year period. Please see the EBITDA reconciliation
table at the end of this press release.
2008 Financial Outlook
The Company is reiterating its adjusted earnings per fully diluted
share guidance for 2008 to be in the range of approximately $2.75 - $3.05.
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. On the expense side for 2008, the Company expects investment in
R&D to be approximately $285 - $290 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;
incremental depreciation related to purchase accounting; the impact of any
unscheduled launches resulting from patent challenges; other business
development activities; refinancing activities that may be completed after
the date hereof and on or before December 31, 2008; and, expenses incurred
resulting from the proposed acquisition of Barr by Teva.
Conference Call/Webcast
The Company will host a Conference Call at 8:30 AM Eastern time on
Thursday, August 7, 2008 to discuss earnings results for the quarter ended
June 30, 2008. The number to call from within the United States is (800)
230- 1059 and (612) 332-0107 Internationally. A replay of the conference
call will be available from 10:30 AM Eastern time on August 7, 2008 through
11:59 PM Eastern time August 21, 2008 and can be accessed by dialing (800)
475-6701 in the United States or (320) 365-3844 Internationally and using
the access code 930193.
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
27 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 data)
Three Months Six Months
Ended Ended
June 30, June 30,
2008 2007 2008 2007
Revenues:
Product sales $675 $586 $1,240 $1,147
Alliance and development revenue 93 36 125 61
Other revenue 11 12 22 22
Total revenues 779 634 1,387 1,230
Costs and expenses:
Cost of sales 353 275 628 574
Selling, general and administrative 221 188 415 367
Research and development 81 66 145 129
Write-off of acquired IPR&D - 3 - 4
Earnings from operations 124 102 199 156
Interest income 7 8 12 19
Interest expense 27 42 59 84
Other (expense) income, net - 4 (8) 5
Earnings before income taxes and
minority interest 104 72 144 96
Income tax expense 48 26 65 35
Minority interest income (loss),
net of taxes 1 - 1 (2)
Net earnings from continuing
operations 57 46 80 59
Net loss from discontinued
operations, net of taxes - (1) - (2)
Net earnings $57 $45 $80 $57
Earnings per common share - diluted:
Earnings per common share -
continuing operations $0.52 $0.42 $0.73 $0.54
Loss per common share - discontinued
operations - (0.01) - (0.02)
Net earnings per common share -
diluted $0.52 $0.41 $0.73 $0.52
Weighted average shares - assuming
dilution 109 108 109 108
Stock-based compensation expense:
Cost of sales $3 $2 $5 $4
Selling, general and administrative 5 5 8 8
Research and development 2 1 3 3
Total stock-based compensation
expense $10 $8 $16 $15
$ in millions As of As of
June 30, Dec. 31,
2008 2007
Cash & cash equivalents $513 $246
Marketable securities - current 34 288
Account receivable, net 580 497
Other receivables 98 86
Inventories 471 454
Marketable securities - long-term 21 17
Accounts payable & accrued
liabilities 442 443
Working capital 1,105 923
Total assets 4,970 4,762
Total debt 2,004 2,080
Shareholders' equity 2,158 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 June 30, 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 data)
Three Months Ended June 30, 2008
Adjusted
GAAP Adjustments Earnings
Revenues:
Product sales $675 - $675
Alliance and development revenue 93 (53)(f) 40
Other revenue 11 (6)(b) 5
Total revenues 779 (59) 720
Costs and expenses:
Cost of sales 353 (65)(b),(c),(d) 288
Selling, general and
administrative 221 (2)(b),(d),(g) 219
Research and development 81 - 81
Write-off of acquired IPR&D - - -
Earnings from operations 124 8 132
Interest income 7 - 7
Interest expense 27 - 27
Other (expense) income, net - - -
Earnings before income taxes and
minority interest 104 8 112
Income tax expense 48 (5)(h) 43
Minority interest income (loss),
net of taxes 1 - 1
Net earnings from continuing
operations 57 13 70
Net loss from discontinued
operations, net of taxes - - -
Net earnings $57 $13 $70
Diluted:
Earnings per common share -
continuing operations $0.52 $0.64
Loss per common share -
discontinued operations $- $-
Net earnings per common share -
diluted $0.52 $0.64
Weighted average shares -
diluted 109 109
Three Months Ended June 30, 2007
Adjusted
GAAP Adjustments Earnings
Revenues:
Product sales $586 - $586
Alliance and development revenue 36 - 36
Other revenue 12 (5)(b) 7
Total revenues 634 (5) 629
Costs and expenses:
Cost of sales 275 (47)(b),(c),(d) 228
Selling, general and
administrative 188 (4)(b),(d),(g) 184
Research and development 66 - 66
Write-off of acquired IPR&D 3 (3)(e) -
Earnings from operations 102 49 151
Interest income 8 - 8
Interest expense 42 - 42
Other (expense) income, net 4 - 4
Earnings before income taxes and
minority interest 72 49 121
Income tax expense 26 10(h) 36
Minority interest income (loss),
net of taxes - - -
Net earnings from continuing
operations 46 39 85
Net loss from discontinued
operations, net of taxes (1) 1(a) -
Net earnings $45 $40 $85
Diluted:
Earnings per common share -
continuing operations $0.42 $0.77
Loss per common share -
discontinued operations $(0.01) $-
Net earnings per common share -
diluted $0.41 $0.77
Weighted average shares -
diluted 108 108
Summary of Adjustment Items:
Three Months Ended
June 30,
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 $(6) $(5)
Less:
Cost of sales (6) (4)
Selling, general and administrative (1) (2)
Total $1 $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 $(52) $(38)
(d) Incremental PLIVA Depreciation due to purchase accounting write up of
fixed assets:
Cost of sales $(7) $(5)
Selling, general and administrative (1) -
Total $(8) $(5)
(e) Write off of acquired IPR&D associated with additional PLIVA shares
$- $(3)
(f) Product settlement - Sanctura $(53) $-
(g) Litigation Reserve $- $(2)
(h) Adjustments to tax expense, including:
Tax impact of adjustments (a) - (g)
above $(5) $13
Tax (benefit) from recognition
of acquired NOL - (3)
Total $(5) $10
EBITDA (from continuing operations) Calculation:
Three Months Ended June 30,
2008 2007
Earnings from operations $124 $102
Depreciation 36 33
Amortization 52 43
Inventory Step up - -
EBITDA $212 $178
Barr Pharmaceuticals, Inc. Selected Adjusted Financial Data
(in millions, except per share data)
Six Months Ended June 30, 2008
Adjusted
GAAP Adjustments Earnings
Revenues:
Product sales $1,240 - $1,240
Alliance and development revenue 125 (53)(f) 72
Other revenue 22 (11)(b) 11
Total revenues 1,387 (64) 1,323
Costs and expenses:
Cost of sales 628 (119)(b),(c),(d),(g) 509
Selling, general and
administrative 415 (6)(b),(c),(d),(h) 409
Research and development 145 - 145
Write-off of acquired IPR&D - - -
Earnings from operations 199 61 260
Interest income 12 - 12
Interest expense 59 - 59
Other (expense) income, net (8) - (8)
Earnings before income taxes and
minority interest 144 61 205
Income tax expense 65 8(i) 73
Minority interest income (loss),
net of taxes 1 - 1
Net earnings from continuing
operations 80 53 133
Net loss from discontinued
operations, net of taxes - - -
Net earnings $80 $53 $133
Diluted:
Earnings per common share -
continuing operations $0.73 $1.22
Loss per common share -
discontinued operations $- $-
Net earnings per common share -
diluted $0.73 $1.22
Weighted average shares -
diluted 109 109
Six Months Ended June 30, 2007
Adjusted
GAAP Adjustments Earnings
Revenues:
Product sales $1,147 - $1,147
Alliance and development
revenue 61 - 61
Other revenue 22 (9)(b) 13
Total revenues 1,230 (9) 1,221
Costs and expenses:
Cost of sales 574 (129)(b),(c),(d) 445
Selling, general and
administrative 367 (12)(b),(d),(h) 355
Research and development 129 - 129
Write-off of acquired IPR&D 4 (4)(e) -
Earnings from operations 156 136 292
Interest income 19 - 19
Interest expense 84 - 84
Other (expense) income, net 5 - 5
Earnings before income taxes and
minority interest 96 136 232
Income tax expense 35 30(i) 65
Minority interest income (loss),
net of taxes (2) - (2)
Net earnings from continuing
operations 59 106 165
Net loss from discontinued
operations, net of taxes (2) 2(a) -
Net earnings $57 $108 $165
Diluted:
Earnings per common share -
continuing operations $0.54 $1.52
Loss per common share -
discontinued operations $(0.02) $-
Net earnings per common share -
diluted $0.52 $1.52
Weighted average shares -
diluted 108 108
Summary of Adjustment Items:
Six Months Ended
June 30,
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 $- $(2)
(b) Net results from operations expected to be divested, net of minority
interest
Other revenue $(11) $(9)
Less:
Cost of sales (10) (8)
Selling, general and administrative (3) (3)
Total $2 $2
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 (95) (112)
Selling, general and administrative (1) -
Total $(96) $(112)
(d) Incremental PLIVA Depreciation due to purchase accounting write up
of fixed assets:
Cost of sales $(13) $(9)
Selling, general and administrative (1) (1)
Total $(14) $(10)
(e) Write off of acquired IPR&D associated with additional PLIVA shares
$- $(4)
(f) Product settlement - Sanctura $(53) $-
(g) Product Royalty contingency $(1) $-
(h) Litigation Reserve $(1) $(8)
(i) Adjustments to tax expense, including:
Tax impact of adjustments (a) - (h) above. $8 $36
Tax (benefit) from recognition of acquired
NOL - (5)
Total $8 $30
EBITDA (from continuing operations) Calculation:
Six Months Ended June 30,
2008 2007
Earnings from operations $199 $156
Depreciation 71 59
Amortization 96 81
Inventory Step up - 32
EBITDA $366 $328
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, Carol.Cox@barrlabs.com
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