Adjusted Earnings Were $3.23 and $0.84 Per Share, Respectively
WOODCLIFF LAKE, N.J., Aug. 15 /PRNewswire-FirstCall/ -- Barr
Pharmaceuticals, Inc. (NYSE: BRL) today reported net earnings of $336.5
million, or $3.12 per fully diluted share, on revenues of $1.3 billion for
the fiscal year ended June 30, 2006. The current year results compare with
prior year net earnings of $215.0 million, or $2.03 per fully diluted
share, on total revenues of $1.05 billion. Adjusted earnings for fiscal
2006 were $347.9 million, or $3.23 per fully diluted share, compared to
adjusted earnings of $254.3 million, or $2.40 per fully diluted share, for
the prior year period, in each case excluding unusual or infrequent charges
or benefits, as discussed under "Reconciliation of Adjusted Earnings to
GAAP Earnings" at the end of this release.
For the fourth quarter ended June 30, 2006, the Company recorded net
earnings of $82.3 million, or $0.76 per fully diluted share, on revenues of
$351.7 million. The current year results compare with net earnings of $42.1
million, or $0.40 per fully diluted share, on revenues of $280.5 million in
the fourth quarter of fiscal 2005. Adjusted earnings for the fourth quarter
ended June 30, 2006 were $91.1 million, or $0.84 per fully diluted share,
compared to adjusted earnings of $81.4 million, or $0.77 per fully diluted
share, for the prior year period, in each case excluding unusual or
infrequent charges or benefits, as discussed under "Reconciliation of
Adjusted Earnings to GAAP Earnings" at the end of this release.
"Double-digit percentage increases in sales for our generic and
proprietary businesses, as well as $146 million of alliance, development
and other revenue from our arrangements with Teva and Kos, resulted in an
extremely successful Fiscal 2006," said Bruce L. Downey, Barr's Chairman
and CEO. "Increased generic sales were driven by Desmopressin and
Didanosine, and continued strength in our oral contraceptive portfolio.
Proprietary sales were driven by our ParaGard(R) IUD and Mircette(R) oral
contraceptive products that were acquired during the fiscal year, and
increased sales of SEASONALE(R) extended-cycle oral contraceptive. Among
the other highlights for fiscal 2006 were the launch of our ENJUVIA(TM)
hormone therapy, approval for our SEASONIQUE(TM) extended-cycle oral
contraceptive and the implementation of our SAP enterprise resource system.
It was an extraordinary year across the Company."
Revenues
Generic Product Sales
The Company's generic product sales for fiscal 2006 increased 12% to
$839 million, compared to $751 million for fiscal 2005. For the fourth
quarter, generic product sales increased 17% to $222 million, compared to
$190 million in the prior year period. A discussion of generic product
sales is presented below.
Oral Contraceptives
Sales of generic oral contraceptives were up slightly to $399 million for
fiscal 2006, compared to $397 million in the prior year. For the fourth
quarter of fiscal 2006, generic oral contraceptive sales increased 6% to
$107 million, compared to $101 million in the prior year period. The
increase in sales for the full year and the quarter ended June 30, 2006
was primarily related to increased sales of Kariva(R) and Tri-Sprintec(R).
Other Generic Products
Sales of other generic products increased 24% to $439 million in fiscal
2006, compared to $355 million in fiscal 2005. For the fourth quarter of
fiscal 2006, sales of other generic products increased 29% to $115
million, compared to $89 million in the prior year period. The increase
for the full year and the quarter ended June 30, 2006 was primarily
attributable to sales of Desmopressin, which was launched in July 2005,
and to increased sales of the Company's Dextro Combo and Didanosine
products, which more than offset lower sales of certain existing products,
including Mirtazapine, Claravis(TM) and Warfarin Sodium.
Proprietary Product Sales
Sales of the Company's proprietary products increased 18% to $330
million for fiscal 2006, compared to $279 million for the prior year. For
the fourth quarter of fiscal 2006, proprietary product sales increased 21%
to $97 million, compared to $80 million in the prior year period.
Sales of our ParaGard(R) IUD and Mircette(R) oral contraceptive, each
acquired in the second quarter of fiscal 2006, together with increased
sales of our SEASONALE(R) extended-cycle oral contraceptive, drove
proprietary sales growth for the full year and quarter ended June 30, 2006.
Sales of SEASONALE(R) increased to $100 million for fiscal 2006, compared
to $87 million in the prior year period, despite decreasing to $21 million
for the fourth quarter of fiscal 2006, compared to $26 million in the prior
year period.
Alliance, Development and Other Revenue
The Company reported alliance, development and other revenue of $146
million for fiscal 2006, a significant increase over $17 million in the
prior year period. For the quarter ended June 30, 2006, alliance,
development and other revenue totaled $32 million, compared to $10 million
in the prior year period. The substantial increase for both the full year
and fourth quarter reflects the Company's share of the profits earned from
its agreement with Teva Pharmaceuticals on fexofenadine hydrochloride
tablets, the generic version of Allegra(R) tablets, as well as royalties
and fees earned under its April 2005 agreements with Kos Pharmaceuticals
relating to the Niaspan(R) and Advicor(R) cholesterol lowering agents.
Other Income
During the quarter ended June 30, 2006, the Company recorded two
unusual or infrequent items in "other income" on its income statement.
First, in connection with its proposed acquisition of PLIVA d.d., the
Croatian generic pharmaceutical company, the Company purchased a foreign
currency option agreement in June 2006. Due to changes in exchange rates
between the date of the option and the balance sheet date, the fair value
of the option increased, resulting in a pre-tax benefit of $10.3 million,
or $0.06 per fully diluted share. Second, the Company recorded a pre-tax
gain of $6.7 million, or $0.04 per fully diluted share, representing its
share of the net income recorded by two venture funds in which the Company
is a limited partner. Such net income was driven principally by unrealized
gains.
Stock-Based Compensation
Effective July 1, 2005, the Company began recording stock-based
compensation as an expense on its income statement under SFAS 123 (R)
"Accounting for Stock-Based Compensation." Accordingly, results for fiscal
2006 include stock-based compensation expense of $27 million, or $0.16 per
fully diluted share, the impact of which is allocated to cost of sales,
SG&A and R&D. Results for the fourth quarter of fiscal 2006 include
stock-based compensation expense of $6 million, or $0.04 per fully diluted
share. This new accounting guidance did not impact the Company's financial
statements in fiscal 2005.
Margins
Gross profit margins earned on product sales for fiscal 2006 were 70%,
the same as in the prior fiscal year. Margins for the full year were
positively impacted by an improved mix of product sales, including an
increasing percentage of sales from higher-margin proprietary products, but
were negatively impacted by two items: a total charge of approximately $21
million related to the inventory write-up associated with the acquisition
of the ParaGard(R) inventory from FEI Women's Health; and stock-based
compensation expense recorded in cost of sales that was not present in the
prior fiscal year.
For the quarter ended June 30, 2006, margins were 69%, down from 71% in
the prior year period. Margins for the fourth quarter fiscal 2006 were
negatively impacted by a charge of approximately $8 million in the quarter
related to the inventory write-up discussed above and stock-based
compensation expense recorded in cost of sales that was not present in the
prior year period.
Update on R&D Activities
Investment in research and development totaled $140 million in fiscal
2006, compared to $128 million in the prior year period. For the fourth
quarter of fiscal 2006, R&D expenses totaled $36 million, compared to $33
million in the prior year period. The increases for the full year and
fourth quarter ended June 30, 2006 primarily reflect increased costs
associated with both clinical studies and raw materials over the prior year
periods, along with stock-based compensation expense allocated to R&D.
Generic Products
The Company has approximately 40 ANDAs, including tentatively approved
applications, currently pending at the U.S. Food and Drug Administration
(FDA) targeting branded pharmaceutical products with an estimated $11
billion in sales.
Proprietary Products
The Company currently has several New Drug Applications pending at the
FDA and several proprietary products in clinical development, two of which
are in Phase III studies.
Selling, General and Administrative
SG&A expenses were $335 million for fiscal 2006, compared to $299
million for the prior year. For the quarter ended June 30, 2006, SG&A
expenses were $113 million, compared to $117 million for the prior year
period. SG&A for the fiscal year ended June 30, 2006 includes a one-time
charge, taken in the fourth quarter, of $22.5 million related to the
settlement of litigation with Sandoz, a subsidiary of Novartis AG,
regarding the raw material source for Warfarin Sodium, and a net benefit of
$8.4 million relating to the acquisition of Mircette(R) and the settlement
of related litigation. SG&A for the fourth quarter and fiscal year ended
June 30, 2005 included a $63 million charge related to the acquisition of
Mircette(R) and the settlement of related litigation with Organon.
The increases for the full year and fourth quarter ended June 30, 2006,
excluding one time charges or benefits, were primarily due to: (1) higher
sales and marketing costs related to the expansion of the Company's sales
force and higher marketing investment for the Company's proprietary product
portfolio; (2) stock-based compensation expense allocated to SG&A; (3)
amortization costs associated with the acquisition of Mircette(R) and
ParaGard(R); and (4) higher IT consulting costs related to the
implementation of our SAP enterprise resource system.
Tax Rate
The Company's tax rate for fiscal 2006 was 35.7%, compared to 34.8% for
the prior year. For the fourth quarter ended June 30, 2006, the Company's
tax rate was 34.6% compared to 29.6% in the prior year period.
Balance Sheet
The Company's cash, cash equivalents and total marketable securities
totaled $620 million at June 30, 2006 compared to $697 million at the end
of last fiscal year. Cash flows from operations totaled $68 million for the
fourth quarter of fiscal 2006 and $327 million for fiscal 2006. Capital
spending totaled $11 million during the quarter and $61 million for the
fiscal year.
Pending PLIVA Acquisition
On August 10, 2006 the Company announced that the Croatian Financial
Services Supervisory Agency (HANFA) had approved for publication the tender
offer by a Barr subsidiary for the purchase of 100% of the shares of PLIVA
d.d. (LSE: PLVD; ZSE: PLVA-R-A), based in Zagreb, Croatia. Under the terms
of the formal $2.3 billion cash tender offer, PLIVA shareholders who tender
their shares will receive HRK 743 per share. In addition, shareholders that
are registered as shareholders at the Central Depository Agency as of
August 22, 2006 will receive the dividend of HRK 12 per share, for a total
cash consideration of HRK 755 per share. Prior to receiving HANFA approval,
in June PLIVA's Supervisory Board endorsed a proposal for the Company's
tender offer for 100% of the outstanding shares. If the Company is
successful in acquiring more than 50% of the outstanding PLIVA shares
through the tender offer, it expects the acquisition to close in October
2006.
Financial Outlook
The Company intends to change its fiscal year-end from June 30th to
December 31st, effective for the period beginning January 1, 2007, to be
more consistent with industry standards. As a result, the Company believes
that providing annual guidance for the fiscal year ending June 30, 2007 may
be confusing to investors. However, the Company is today providing guidance
for the three-month period ending September 30, 2006 and will provide
guidance for the three-month period ending December 31, 2006 when it
reports its financial results for the three-month period ending September
30, 2006 in November 2006. In addition, the Company intends to provide
guidance for the calendar year ending December 31, 2007, when it reports
its financial results for the six months ending December 31, 2006.
The Company estimates diluted earnings per share will be approximately
$0.73 - $0.76 for the three months ending September 30, 2006. This guidance
does not include any impact associated with transaction or financing costs
related to the proposed PLIVA acquisition or any additional business
development activities or potential litigation settlements that may occur
by September 30, 2006, or any impact from share repurchases under the
Company's share repurchase program that is authorized through December 31,
2006.
Conference Call/Webcast
Barr will host a conference call at 8:30 AM Eastern time on Tuesday,
August 15th to discuss the results for the quarter and fiscal year ended
June 30, 2006. The number to call from within the United States is (800)
230-1059, and (651) 291-5254 Internationally. A replay of the conference
call will be available from 12 Noon Eastern time on August 15th through
11:59 PM Eastern time August 17th, and can be accessed by dialing (800)
475-6701 in the United States or (320) 365-3844 Internationally and using
the access code 837996.
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.
Barr Pharmaceuticals, Inc. is a holding company, whose principal
subsidiaries, Barr Laboratories, Inc. and Duramed Pharmaceuticals, Inc.,
develop, manufacture and market generic and proprietary pharmaceuticals.
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; 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 and products we acquire and implementing our new 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; changes in generally
accepted accounting principles; and other risks detailed from time-to-time
in our filings with the Securities and Exchange Commission, including in
our Annual Report on Form 10-K for the fiscal year ended June 30, 2005.
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)
(unaudited)
Three Months Ended Twelve Months Ended
June 30, June 30,
2006 2005 2006 2005
Revenues:
Product sales $319,342 $270,124 $1,168,678 $1,030,174
Alliance, development and
other revenue 32,326 10,391 145,787 17,225
Total revenues 351,668 280,515 1,314,465 1,047,399
Costs and expenses:
Cost of sales 98,682 78,730 352,118 304,080
Selling, general and
administrative 113,006 117,069 334,771 298,908
Research and development 36,447 33,245 140,158 128,384
Earnings from operations 103,533 51,471 487,418 316,027
Interest income 5,734 4,230 18,851 11,449
Interest expense 232 112 489 1,463
Other income (expense) 16,690 4,272 17,168 3,863
Earnings before income taxes 125,725 59,861 522,948 329,876
Income tax expense 43,471 17,740 186,471 114,888
Net earnings $82,254 $42,121 $336,477 $214,988
Earnings per common share -
diluted:
Net earnings $0.76 $0.40 $3.12 $2.03
Weighted average shares -
assuming dilution 108,084 106,347 107,798 106,052
Stock-based compensation
expense:
Cost of sales $1,745 $- $8,088 $-
Selling, general and
administrative 3,230 - 13,355 -
Research and development 1,290 - 5,649 -
Total stock-based
compensation expense $6,265 $- $27,092 $-
As of As of
6/30/06 6/30/05
Cash & cash equivalents $24,422 $115,793
Marketable securities -
Current and long-term 595,614 581,255
Accounts receivable 226,026 160,059
Other receivables 50,235 21,411
Inventory 134,266 137,638
Accounts payable & accrued
liabilities 169,167 201,631
Working capital 921,663 780,386
Total assets 1,921,419 1,490,306
Total debt 16,247 20,939
Shareholders' equity 1,690,956 1,233,970
Twelve Months Ended
June 30,
2006 2005
Cash flow provided by
operations $327,339 $363,035
Capital expenditures 61,000 55,157
Barr Pharmaceuticals, Inc.
Reconciliation of EPS to Adjusted EPS
For the three and twelve months ended June 30, 2006 and
2005
(unaudited)
Three Months Ended
June 30,
2006 2005
Earnings per common share - assuming
dilution $0.76 $0.40
After tax effect of:
Mircette settlement charge - 0.37
Step-up charge for inventory 0.05 -
Settlement charge for Invamed 0.13 -
Unrealized gain on venture fund (0.04) -
Foreign currency hedge appreciation (0.06) -
Earnings per common share - assuming
dilution, net of charges $0.84 $0.77
Twelve Months Ended
June 30,
2006 2005
Earnings per common share - assuming
dilution $3.12 $2.03
After tax effect of:
Mircette settlement charge (0.05) 0.37
Step-up charge for inventory 0.13 -
Settlement charge for Invamed 0.13 -
Unrealized gain on venture fund (0.04) -
Foreign currency hedge appreciation (0.06) -
Earnings per common share - assuming
dilution, net of charges $3.23 $2.40
Reconciliation of Adjusted Earnings to GAAP Earnings
To supplement its consolidated financial statements presented in
accordance with GAAP, the Company is providing this summary to reflect the
adjusted earnings per share effect of certain unusual or infrequent charges
or benefits that were taken or received in the quarters and fiscal years
ended June 30, 2006 and 2005. The Company believes that the adjusted
earnings per share information presented above provides useful information
to both management and investors concerning the approximate impact of the
above items. The Company also believes that including the effect of these
items in earnings per share allows management and investors to better
compare the Company's financial performance from period-to-period, and to
better compare the Company's financial performance with that of its
competitors. 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.
Fiscal 2006
For the fiscal year ended June 30, 2006, these excluded charges and/or
benefits consist of the following:
Selling, General & Administrative
-- A $22.5 million charge, or $0.13 per fully diluted share, related to a
settlement of litigation with Sandoz regarding the raw material source
for Warfarin Sodium.
-- A net benefit of $8.4 million, or $0.05 per fully diluted share, taken
in the quarter ended December 31, 2005, primarily related to a partial
reimbursement of the $63.2 million charge the Company recorded in the
fourth quarter of fiscal 2005 (see below) when it announced the
agreement to acquire the Mircette(R) oral contraceptive product and
settle related litigation.
Margins
-- Non-cash charges relating to the write-up of inventory acquired from
FEI Health, LLC in November 2005 of (1) $8.3 million, or $0.05 per
fully diluted share, taken in the fourth quarter of fiscal 2006; (2)
$7.8 million, or $0.05 per fully diluted share, taken in the third
quarter of fiscal 2006; and (3) $4.7 million, or $0.03 per fully
diluted share, taken in the second quarter of fiscal 2006.
Other Income
-- A benefit of $10.3 million, or $0.06 per fully diluted share, related
to a gain on the Company's foreign currency hedge entered into in
connection with its proposed acquisition of PLIVA, d.d.
-- A gain of $6.7 million, or $0.04 per fully diluted share, representing
the Company's share of the net income recorded by two venture funds in
which the Company is a limited partner. Such net income was driven
principally by unrealized gains.
Fiscal 2005
For the fiscal year ended June 30, 2005, there is one excluded charge:
Selling, General & Administrative
-- A $63 million charge, or $0.37 per fully diluted share, related to the
settlement of litigation with Organon and the acquisition of the
Mircette(R) oral contraceptive product.
SOURCE Barr Pharmaceuticals, Inc.
 back to top
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
|
