WOODCLIFF LAKE, N.J., Aug. 7 /PRNewswire-FirstCall/ -- Par Pharmaceutical
Companies, Inc. (NYSE: PRX) today announced results for the second quarter
ended June 28, 2008.
Second Quarter and Six Month Results
For the second quarter ended June 28, 2008, Par reported total revenues of
$112.9 million and a net loss of $20.1 million, or $0.60 per diluted share.
This is compared with reported revenues of $167.6 and net income of $2.8
million, or $0.08 per diluted share, for the same period in 2007. For the six
months ended June 28, 2008, Par reported total revenues of $267.9 million and
a net loss of $17.5 million, or $0.53 per diluted share. This is compared
with reported revenues of $401.9 million and net income of $44.3 million, or
$1.27 per diluted share, for 2007.
Patrick G. LePore, chairman, president and chief executive officer of Par
said, "Contributing to the Company's disappointing financial results in the
second quarter was the lack of new product launches, which is the life-line of
the U.S. generics industry. However, I am still confident in our strategy and
the outlook for the remainder of 2008 and beyond." Mr. LePore continued, "Our
third quarter launches of dronabinol and meclizine, potential additional
launches later in the year, strong pipeline of first-to-file products, and
progress made in building Strativa's portfolio of innovative branded products
positions the Company for long term success."
Second Quarter Financial Review
For the second quarter ended June 28, 2008, total revenues decreased 32.6%
compared with the same period a year earlier as a result of increased
competition on the Company's generic products, decreased net sales of
Megace(R) ES, and lower royalty income.
Revenues for the generic products division during the three month period
decreased 36.4% to $92.9 million compared with the same period in 2007 due to
competitive pressure, including for fluticasone, ranitidine HCl syrup,
cabergoline, and a decline in many of the Company's other products due to
pricing pressures as well as lower royalties driven from ondansetron ODT.
Partially offsetting the decreases were increased sales of metoprolol
resulting from the launch of additional strengths in the third quarter of 2007
and various amoxicillin products. Second quarter 2008 revenue for Strativa
decreased to $20.0 million from $21.6 million in the prior year due to
decreased net sales of Megace(R) ES.
Par's second quarter gross margin was 22.2% of sales, compared with 33.7%
in 2007. This decrease is primarily attributed to increased sales of lower
margin metoprolol, lower royalty income, lower sales of higher margin products
such as propranolol, and a decline in many of the Company's other generic
products due to pricing pressures, tempered by higher relative sales of
Megace(R) ES. The gross margin rate for Strativa was 79.3% in the second
quarter of 2008 compared with 72.5% in the same period in 2007.
Research and development (R&D) expense increased $1.7 million or 11.8% to
$16.0 million in the second quarter of 2008, driven primarily by an increase
in on-going development costs associated with the expansion of Par's generic
portfolio and includes Strativa's research costs related to the development of
Zensana(TM) and an initial payment related to the in-licensing agreement with
MonoSol Rx.
Second quarter selling, general and administrative (SG&A) expense
increased 7.9% to $36.7 million compared with the second quarter of 2007. The
increase was driven by legal fees related to ongoing litigation, including
Paragraph IV litigation costs. This increase was tempered by the non-
recurrence of severance costs incurred in the second quarter of 2007, lower
expenses related to the sales and marketing of Megace(R) ES and lower bonus
and stock-based compensation.
2008 Financial Guidance
Par has adjusted its previously announced guidance for full-year 2008
earnings per diluted share from continuing operations of $0.65-$0.85 to
($0.06)-$0.38 reflecting the pricing pressure on the Company's generic
business experienced in the second quarter, a challenging reimbursement
environment for Megace(R) ES and higher legal costs. The Company's projections
are based on its results for the first six months of 2008 and the impact of
recent new product launches, as well as management's estimates regarding the
impact of product competition on existing products and anticipated legal
costs. This EPS range excludes anticipated pre-launch spending and milestone
payments in support of Strativa's business strategy and includes the estimated
impact of three potential new generic product launches (i.e., sumatriptan
kits, clonidine, and certain strengths of risperidone ODT) with an expected
fully diluted EPS impact of $0.24-$0.39. These estimates are, of course,
subject to future developments, not all of which may be anticipated at this
time.
Conference Call
Par has scheduled a conference call for Friday, August 8 at 9:00 am ET to
discuss results for the second quarter of 2008. Par invites investors and the
general public to listen to a webcast of the conference call. Access to the
live webcast can be made via the Company's website at http://www.parpharm.com.
The dial-in numbers for the conference call will be 888-713-4213 for domestic
callers and 617-213-4865 for international callers. The passcode is 56885024.
A replay of the conference call will be available for two weeks approximately
one hour after the call. The dial-in numbers for the replay are 888-286-8010
for domestic callers and 617-801-6888 for international callers. When
prompted, the passcode is 11977886.
For a copy of Par's Form 10-Q for the second quarter ended June 28, 2008,
visit Investors/SEC Filings on the Par web site at www.parpharm.com.
About Par
Par Pharmaceutical Companies, Inc. develops, manufactures and markets
generic drugs and innovative branded pharmaceuticals for specialty markets.
For press release and other company information, visit www.parpharm.com.
Safe Harbor Statement
Certain statements in this news release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. To the extent any statements made in this news release contain
information that is not historical, these statements are essentially forward-
looking and, as such, are subject to known and unknown risks, uncertainties
and contingencies, many of which are beyond the control of the Company, which
could cause actual results and outcomes to differ materially from those
expressed herein. Risk factors that might affect such forward-looking
statements include those set forth in Item 1A of the Company's Annual Report
on Form 10-K for the year ended December 31, 2007, in Item 1A of the Company's
subsequent Quarterly Reports on Form 10-Q, in other of the Company's filings
with the SEC from time to time, including Current Reports on Form 8-K, and on
general industry and economic conditions. Any forward-looking statements
included in this news release are made as of the date hereof only, based on
information available to the Company as of the date hereof, and, subject to
any applicable law to the contrary, the Company assumes no obligation to
update any forward-looking statements.
PAR PHARMACEUTICAL COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
(Unaudited)
June 28, December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $177,656 $200,132
Available for sale debt and marketable
equity securities 115,306 85,375
Accounts receivable, net 61,284 64,182
Inventories 51,774 84,887
Prepaid expenses and other current assets 15,684 14,294
Deferred income tax assets 54,868 56,921
Income taxes receivable 21,715 17,516
Total current assets 498,287 523,307
Property, plant and equipment, at cost less
accumulated depreciation and amortization 84,771 82,650
Available for sale debt and marketable
equity securities 5,156 6,690
Investment in joint venture - 6,314
Other investments 2,500 2,500
Intangible assets, net 55,350 36,059
Goodwill 63,729 63,729
Deferred financing costs and other assets 2,085 2,544
Non-current deferred income tax assets, net 59,252 57,730
Total assets $771,130 $781,523
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $200,000 $200,000
Accounts payable 27,850 32,200
Payables due to distribution agreement
partners 44,885 36,479
Accrued salaries and employee benefits 8,807 16,596
Accrued expenses and other current liabilities 31,196 27,518
Total current liabilities 312,738 312,793
Long-term debt, less current portion - -
Other long-term liabilities 32,108 30,975
Commitments and contingencies - -
Stockholders' equity
Preferred Stock, par value $0.0001 per share,
authorized 6,000,000 shares; none issued and
outstanding - -
Common Stock, par value $0.01 per share,
authorized 90,000,000 shares; issued
37,187,155 and 36,460,461 shares 372 364
Additional paid-in capital 282,033 274,963
Retained earnings 212,718 230,195
Accumulated other comprehensive loss (1,235) (1,362)
Treasury stock, at cost 2,666,226 and
2,604,977 shares (67,604) (66,405)
Total stockholders' equity 426,284 437,755
Total liabilities and stockholders' equity $771,130 $781,523
PAR PHARMACEUTICAL COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
Revenues:
Net product sales $108,289 $160,014 $259,526 $382,603
Other product related
revenues 4,648 7,626 8,339 19,247
Total revenues 112,937 167,640 267,865 401,850
Cost of goods sold 87,829 111,085 193,236 257,606
Gross margin 25,108 56,555 74,629 144,244
Operating expenses:
Research and development 15,955 14,277 33,113 28,316
Selling, general and
administrative 36,690 33,999 68,037 66,556
Settlements, net - - - (578)
Total operating expenses 52,645 48,276 101,150 94,294
Gain on sale of product
rights and other (500) - (2,125) (20,000)
Operating (loss) income (27,037) 8,279 (24,396) 69,950
Other (expense) income, net - (30) - (49)
Equity in loss of joint
venture (310) (80) (330) (228)
Loss on marketable
securities and other
investments, net (433) (6,040) (433) (4,643)
Interest income 2,129 3,901 5,143 6,585
Interest expense (1,667) (1,727) (3,334) (3,445)
(Loss) income from
continuing operations
before provision for
income taxes (27,318) 4,303 (23,350) 68,170
(Benefit) provision for
income taxes (7,523) 1,505 (6,081) 23,858
(Loss) income from
continuing operations (19,795) 2,798 (17,269) 44,312
Discontinued operations:
Gain from discontinued
operations - - 505 -
Provision for income taxes 268 - 713 -
Loss from discontinued
operations 268 - 208 -
Net (loss) income ($20,063) $2,798 ($17,477) $44,312
Basic (loss) earnings
per share of common
stock:
(Loss) income from
continuing operations ($0.59) $0.08 ($0.52) $1.28
Loss from discontinued
operations (0.01) - ($0.01) -
Net (loss) income ($0.60) $0.08 ($0.53) $1.28
Diluted (loss) earnings
per share of common stock:
(Loss) income from
continuing operations ($0.59) $0.08 ($0.52) $1.27
Loss from discontinued
operations (0.01) - (0.01) -
Net (loss) income ($0.60) $0.08 ($0.53) $1.27
Weighted average number of
common shares outstanding:
Basic 33,304 34,676 33,262 34,647
Diluted 33,304 34,943 33,262 34,970
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