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Exhibit 99.0
400 Chestnut Ridge Road N E W S R E L E A S E
Woodcliff Lake, NJ 07677
201-930-3300
CONTACT: Carol A. Cox, 201-930-3720 EMAIL: ccox@barrlabs.com
Barr's Second Quarter Fiscal 2004 GAAP Earnings of $0.49 Per Share Driven by 79%
Increase in Revenues
Excluding Write-off of Acquired In-Process R&D, Second Quarter Earnings Were
$0.81 Per Share
Woodcliff Lake, NJ - February 5, 2004... Barr Pharmaceuticals, Inc. (NYSE-BRL)
today reported that revenues increased 79% to $374.1 million for the second
quarter of fiscal 2004, ended December 31, 2003, compared to $209.0 million for
the same period last year. Net earnings for the quarter were $35.1 million, or
$0.49 per share on a fully diluted basis, compared to $42.7 million, or $0.62
per fully diluted share for the same period last year. The quarter results
include an after-tax charge of $0.32 per fully diluted share related to a $35.6
million write-off of acquired in-process research and development representing
the purchase price of the assets of Endeavor Pharmaceuticals, Inc. Excluding
this item, adjusted earnings for the quarter would have been $0.81 per fully
diluted share.
For the first six months, revenues increased 59% to $684.8 million, compared to
$429.5 million in the prior year period. Net earnings were $73.6 million, or
$1.04 per share on a fully diluted basis, compared to net earnings of $84.6
million, or $1.24 per share on a fully diluted basis in the prior year period.
In the first six months, the Company's results included the charge of $0.32 per
fully diluted share related to the write-off acquired of in-process research
and development costs discussed above and a charge of $0.14 per fully diluted
share taken in the first quarter of fiscal 2004 related to the establishment of
a $15.7 million reserve against loans and accrued interest owed to Barr by
Natural Biologics, LLC. Excluding these items, adjusted earnings per fully
diluted share for the first six months would have been $1.50.
A reconciliation of GAAP-based earnings per fully diluted share to adjusted
non-GAAP earnings per share is presented in a table at the end of this press
release.
"Continued strong sales of our distributed Ciprofloxacin product, sales from new
product launches, including our Mirtazapine Orally Disintegrating Tablet and
Tri-Sprintec(R) oral contraceptive products, and higher sales of our expanding
oral contraceptive franchise, which now totals 18 products, drove an outstanding
quarter," said Bruce L. Downey, Barr's Chairman and CEO. "Our strong revenue
growth more than offset our significant investment in R&D and our increased
sales and marketing costs associated with the mid-November launch of our
SEASONALE(R) extended-cycle oral contraceptive."
"We are very pleased that our launch of SEASONALE(R) has been well received by
the medical community and has generated excitement among consumers," continued
Downey. "The early prescription data for SEASONALE is promising and we remain
committed to an extensive educational and promotional campaign to healthcare
providers and consumers that we believe will complement the already high
awareness of the product."
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Revenues
Product Sales
Total product sales for the quarter increased 78% to $369.9 million, compared to
$207.7 million in the prior year period. For the first six months, total product
sales increased 59% to $678.6 million, compared to $426.4 million for the prior
year period. Sales of the Company's distributed Ciprofloxacin product, an
antibiotic that the Company launched on June 9, 2003, contributed $145.4 million
to product sales during the quarter.
Sales of the Company's generic oral contraceptive product portfolio increased
39% to $98.5 million for the quarter, compared to $71.0 million for the prior
year period. Contributing to this increase were higher sales of the Company's
in-line generic oral contraceptive franchise and sales from the Company's
Tri-Sprintec(R) oral contraceptive that was launched during the quarter.
Sales of Cenestin(R) (Synthetic Conjugated Estrogens, A), Barr's estrogen-only
conjugated estrogen product, were $14.2 million for the quarter, as compared to
$12.6 million in the prior year period.
Development and Other Revenue
The Company reported development and other revenue of $4.3 million for the
quarter, compared to $1.4 million in the prior year quarter. For the first six
months, development and other revenue totaled $6.2 million, compared to $3.1
million in the prior year period. Development revenues in the quarter rose
compared to the prior year primarily due to higher reimbursable R&D costs for
products currently in development, including the Company's Adenovirus vaccine
product.
Margins
Margins on product sales for the quarter were 43.8%, compared to 54.3% in the
prior year period. Contributing to the decline was a higher percentage of sales
from the Company's distributed Ciprofloxacin product and a pre-tax charge of
approximately $4.0 million related to a write-down of fixed assets in the
Company's Pomona, New York and Cincinnati, Ohio manufacturing facilities
primarily related to renovations to these facilities and to changes in the
estimated useful lives of certain building improvements. Ciprofloxacin, as both
a distributed product and a product subject to a profit split with a partner,
carries a lower margin than the Company's other products, which continued to
contribute margins in the mid-60% range during the quarter, up slightly as
compared to the same period last year.
Research and Development
R&D expenses were $63.1 million for the quarter, compared to $22.4 million for
the same period last year. For the first six months, R&D expenses totaled $86.6
million, compared to $43.6 million for the prior year period. The increase in
R&D expenses for the quarter were primarily driven by a $35.6 million write-off
of acquired in-process research and development costs arising from the
acquisition of the assets of Endeavor in November 2003. R&D costs for the
quarter also included a pre-tax charge of $2.2 million related to a write-down
of certain fixed assets in our Pomona, New York research center.
Proprietary Drug Research and Development
The Company currently has three applications for proprietary products pending at
the U.S. Food and Drug Administration (FDA): a supplemental New Drug Application
(sNDA) for Cenestin (Synthetic Conjugated Estrogens, A) 0.45 mg tablets, a New
Drug Application
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(NDA) for Enjuvia(TM) (Synthetic Conjugated Estrogens) 0.3 mg and 0.45 mg
tablets and a NDA for Enjuvia (Synthetic Conjugated Estrogens) 0.625 mg and 1.25
mg tablets. In addition, the Company has six products in clinical development,
four of which are in Phase III studies.
Generic Drug Research and Development
The Company currently has 28 Abbreviated New Drug Applications (ANDAs) pending
at the FDA. During the quarter, the Company received five product approvals and
launched four products including generic versions of Organon, Inc.'s Remeron(R)
Soltab(TM) and Ortho-McNeil Pharmaceutical's Ortho Tri-Cyclen(R).
Patent Challenges
In October 2003, the Company announced the initiation of a patent challenge
related to Ortho-McNeil Pharmaceutical's Ortho Tri-Cyclen(R) Lo oral
contraceptive that is indicated for the prevention of pregnancy in women who
elect to use this product as a method of contraception.
In December 2003, the Company announced the initiation of a patent challenge for
King Pharmaceutical's Prefest(R) hormone therapy. Prefest is indicated in women
with an intact uterus for the treatment of moderate to severe menopausal
symptoms.
Selling, General and Administrative
SG&A expenses increased to $54.0 million for the quarter, compared to $33.1
million for the same period last year. For the first six months, SG&A expenses
totaled $119.5 million, compared to $64.4 million for the prior year period. The
increase in SG&A costs reflect the Company's continued and increasing commitment
to the sales and marketing of its expanding line of proprietary products
primarily related to higher sales force costs associated with the March 2003
expansion of the Company's Women's Healthcare Sales Force from 132 to 250 sales
representatives and launch costs for SEASONALE(R). The remainder of the increase
relates to higher costs associated with business development activities and
higher legal costs, and higher workforce costs to support the Company's growth.
Tax Rate
The Company's effective tax rate for the quarter decreased to 28.7%, as compared
to 37.3% in the prior year period. The tax rate for the quarter was favorably
impacted by a tax benefit of $3.9 million related to the completion of certain
state tax audits, and IRS approval of a change in the Company's method of
computing certain tax credits. The Company indicated that this change in method
is expected to slightly lower its effective tax rate in future periods.
Excluding the tax benefit, the Company's tax effective tax rate for the quarter
was 36.7%.
Balance Sheet
The Company's cash and marketable securities totaled $504.9 million at December
31, 2003. Cash flows from operations totaled $78.5 million for the quarter.
During the quarter, the Company used $35.6 million of cash to purchase the
assets of Endeavor and also funded capital investments of $7.4 million to
support the on-going growth of its business.
Business Development Highlights
Endeavor Pharmaceuticals, Inc.
During the quarter, Barr completed the asset purchase of Endeavor
Pharmaceuticals, Inc. In the transaction, Barr acquired the New Drug Application
(NDA) and intellectual property related to Endeavor's Enjuvia(TM) synthetic
conjugated estrogens product, and two early stage
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development female healthcare products. The cost of the transaction was
approximately $35.6 million.
Financial Outlook
The Company reiterates its guidance of 20%-25% earnings growth, after
adjustments, for the full fiscal year ending June 30, 2004 from the adjusted
earnings of $2.62 per fully diluted share reported for fiscal 2003. The Company
intends to provide detailed earnings guidance for the second half of fiscal 2004
at its Third Annual Analyst Briefing to be held on March 10, 2004 at The Pierre
Hotel located in New York City at East 61st Street and Fifth Avenue. The
Company's presentations at its Analyst Briefing will begin at 8:30 AM Eastern
Time and will be video cast live on the Internet. The Company will issue a press
release in advance of the briefing reminding investors and other interested
parties of the meeting and providing additional details for accessing the video
cast.
Conference Call/Webcast
Barr will host a Conference Call at 8:30 AM Eastern time on Thursday, February
5th to discuss earnings results for the quarter and six months, ended December
31, 2003. The number to call from within the United States is: (877) 777-1973
and (651) 291-0561 Internationally. A replay of the conference call will be
available from 12 Noon Eastern time on February 5th through 11:59 PM Eastern
time on February 7th, and can be accessed by dialing (800) 475-6701 in the
United States or (320) 365-3844 Internationally and using the access code
719030.
The conference call will also be Webcast live on the Internet. Investors and
other interested parties may access the live webcast through the Investor
Relations section, under Calendar of Events, on Barr's website at
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. and its subsidiaries are engaged in the development,
manufacture and marketing of generic and proprietary pharmaceuticals.
Forward-Looking Statements
The following press release contains a number of forward-looking statements. To
the extent that any statements made in this press release contain information
that is not historical, these statements are essentially forward-looking.
Forward-looking statements can be identified by their use of words such as
"expects," "plans," "will," "may," "anticipates," "believes," "should,"
"intends," "estimates" and other words of similar meaning. These statements are
subject to risks and uncertainties that cannot be predicted or quantified and,
consequently, actual results may differ materially from those expressed or
implied by such forward-looking statements. Such risks and uncertainties
include: 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 difficulty of predicting the
timing of U.S. Food and Drug Administration, or FDA, approvals; court and FDA
decisions on exclusivity periods; the ability of competitors to extend
exclusivity periods for their products; the success of our product development
activities; 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
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competitive products and pricing; the ability to develop and launch new products
on a timely basis; the availability of raw materials; the availability of any
product we purchase and sell as a distributor; our mix of product sales between
manufactured products, which typically have higher margins, and distributed
products, which typically have lower margins, during any given period; 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 new enterprise resource planning systems; fluctuations in operating
results, including the effects on such results from spending for research and
development, sales and marketing activities and patent challenge activities; and
other risks detailed from time to time in our filings with the Securities and
Exchange Commission.
[EDITOR'S ADVISORY: News releases for Barr Pharmaceuticals, Inc. and its
subsidiaries are available free of charge through PR Newswire's News On-Call
site at http://www.prnewswire.com/corp/089750.html. Barr news releases and
corporate information are also available on Barr's website (www.barrlabs.com).
For complete indications, warnings and contraindications, contact Barr
Laboratories' Product Information Department at 1-800-Barr Lab. Barr
Laboratories, Inc. is the exclusive licensee of SEASONALE(R), a registered
trademark. Cenestin(R)is a registered trademark of Duramed Pharmaceuticals, Inc.
Enjuvia(TM)and Tri-Sprintec(R)are trademarks of Barr Laboratories, Inc. All
other trademarks referenced are the property of their respective owners.]
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Barr Pharmaceuticals, Inc. Selected Financial Data
(in thousands, except per share amounts) (unaudited)
Three Months Ended, December 31 Six Months Ended, December 31
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues:
Product sales $ 369,862 $ 207,667 $ 678,622 $ 426,383
Development and other revenue 4,262 1,368 6,213 3,080
--------- --------- --------- ---------
Total revenues 374,124 209,035 684,835 429,463
Costs and expenses:
Cost of sales 207,722 94,872 368,623 205,791
Selling, general and administrative 53,961 33,089 119,502 64,401
Research and development 63,093 22,445 86,559 43,583
--------- --------- --------- ---------
Earnings from operations 49,348 58,629 110,151 115,688
Proceeds from patent challenge settlement -- 8,562 -- 17,125
Interest income 1,381 1,684 2,641 3,181
Interest expense 661 473 1,500 921
Other income (expense) (889) (280) (947) (246)
--------- --------- --------- ---------
Earnings before income taxes 49,179 68,122 110,345 134,827
Income tax expense 14,110 25,375 36,741 50,223
--------- --------- --------- ---------
Net earnings $ 35,069 $ 42,747 $ 73,604 $ 84,604
========= ========= ========= =========
Earnings per common share - diluted:
Net earnings $ 0.49 $ 0.62(a) $ 1.04 $ 1.24(a)
Weighted average shares - assuming dilution 71,040 68,544(a) 70,771 68,418(a)
(a) All earnings per share and weighted average share information for the three
and six months ended December 31, 2002 reflect a three-for-two stock split
effected in the form of a 50% stock dividend distributed on March 17, 2003 to
shareholders of record at the close of business on February 28, 2003.
As of December 31, As of June 30,
2003 2003
---------- ----------
Cash & cash equivalents $ 452,838 $ 367,142
Marketable securities
52,078 46,737
Accounts receivable
201,347 221,652
Other receivables
7,131 31,136
Inventory
152,135 163,926
Accounts payable
97,636 188,852
Working capital
692,994 574,999
Total assets 1,213,318 1,180,937
Total debt 35,866 42,537
Shareholders' equity 970,888 867,995
Six Months Ended, December 31
2003 2002
---------- ----------
Cash flow provided by operations $ 143,518 $ 117,636
Capital expenditures 20,844 35,930
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Exhibit 99.0
Barr Pharmaceuticals, Inc.
Reconciliation of GAAP-Based EPS to Adjusted Non-GAAP EPS For the three and six
months ended December 31, 2003 and 2002 (unaudited)
Three Months Ended
December 31,
2003 2002
-------- --------
Earnings per common share - assuming dilution $ 0.49 $ 0.62
After tax effect of:
Write-off of in-process research and development 0.32 --
-------- ----
Earnings per common share - assuming dilution, net of write-off of in-process $ 0.81 0.62
research and development ======== ====
Six Months Ended
December 31,
2003 2002
-------- --------
Earnings per common share - assuming dilution $ 1.04 $ 1.24
After tax effect of:
Write-off of in-process research and development 0.32 --
Provision for losses on loans to Natural Biologics 0.14
-------- ----
Earnings per common share - assuming dilution, net of write-off in-process $ 1.50 1.24
research and development and provisions for losses on loans to Natural Biologics ======== ====
Use of Adjusted Non-GAAP Financial Information
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 this summary to reflect the earnings per
share effect of the following items:
o the write-off of acquired in-process research and development
associated with the purchase of certain assets and liabilities of
Endeavor Pharmaceuticals, Inc. in November 2003, and
o the provision for losses on the Company's loans to Natural Biologics.
When disclosing financial information, Barr provides all information required in
accordance with GAAP, but believes that evaluating its results may be difficult
if limited to reviewing only GAAP financial measures. Barr's management does not
itself, nor does it suggest that investors should, consider such non-GAAP
financial measures in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. Barr presents such non-GAAP
financial measures in reporting its financial results to provide investors with
an additional tool to evaluate Barr's results. Barr's management believes it is
useful for itself and investors to review both GAAP information that includes
the charges mentioned above and the non-GAAP measure of earnings per share that
excludes such charges to have a better understanding of the overall performance
of Barr's business and its ability to perform in subsequent periods.
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