Valeant Pharmaceuticals Reports 2006 First Quarter Results; Restructuring Initiative on Track; $20-30 Million in 2006 Cost Savings Targeted.COSTA MESA Costa Mesa (kŏs`tə mā`sə), city (1990 pop. 96,357), Orange co., S Calif., on the Pacific south of Santa Ana; inc. 1953. It is a transportation, residential, and light industrial center. , Calif. -- Valeant Pharmaceuticals International Valeant Pharmaceuticals International is a pharmaceutical company with activities spanning the drug discovery pipeline from target identification through clinical trials and commercialization. (NYSE NYSE See: New York Stock Exchange :VRX VRX Virtual Resources Executive VRX Voice Receive Mode ) today announced 2006 first quarter results. The company also announced that its restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). initiative is on track and is targeting expense reductions in 2006 of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $20-30 million. First Quarter 2006 vs. First Quarter 2005 Highlights: --Revenues increased 10 percent to $198.8 million compared to $181.1 million. --Product sales increased 12 percent to $180.8 million compared to $161.8 million. --Ribavirin royalties Not to be confused with Royal family. Royalties (sometimes, running royalties) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, most typically an intellectual property (IP) right. decreased 6 percent to $18.1 million compared to $19.3 million. --Net loss was $6.4 million, or $0.07 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, including the impact of stock-based compensation expense of $5.7 million, compared to a net loss of $139.3 million, or $1.57 per diluted share. --Adjusted for non-GAAP items, the adjusted loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $0.6 million, or $0.01 per diluted share, compared to adjusted income from continuing operations of $4.3 million, or $0.05 per diluted share. A reconciliation of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). to non-GAAP results is provided in Tables 2-4. Timothy Timothy, epistles in the New Testament Timothy, two letters of the New Testament. With Titus they comprise the Pastoral Epistles, in which St. Paul addresses his coworkers as the guardians and transmitters of his teaching. C. Tyson Ty·son , Michael Gerald Known as "Mike." Born 1966. American prizefighter. In 1986 he became the youngest ever to win the world heavyweight title, which he held until 1990. , president and chief executive officer, said, "Our first quarter results were disappointing and not indicative indicative: see mood. of our expectations for the rest of 2006, although in line with our recently communicated expectations. Revenues in the quarter were higher primarily due to sales in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. of products acquired last year. Excluding such acquisitions, sales declined primarily due to wholesaler buying patterns in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . Costs were impacted by a
temporary plant shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. and other manufacturing variances in the quarter. We have taken aggressive actions to address these manufacturing issues, and we expect that future results will be further improved by our restructuring initiative. Our restructuring will result in significant cost savings for the company, and allow us to achieve our adjusted earnings targets of more than $0.50 per share in 2006, $1.00 per share in 2007 and $1.90 per share in 2008." Revenues: The increase in product sales in the 2006 first quarter was led by sales of acquired products and the growth of Kinerase(R), Cesamet(TM) and Bedoyecta(TM). These factors were offset by a decrease in sales in the period of Efudex(R) and non-promoted products. Excluding acquired products, sales decreased four percent in the 2006 first quarter compared to the same period last year. Infergen Infergen® Interferon alfacon-1 Immunology A recombinant IFN-alpha in clinical use for managing HCV infection Business Wire 7/10/97 (R) was acquired at the end of last year and had sales totaling $13.7 million in the 2006 first quarter. Sales of products acquired in the Xcel transaction totaled $18.3 million in the 2006 first quarter. The 2005 first quarter included sales of Xcel products from the March 1, 2005 acquisition date and totaled $7.3 million. Sales of these products reported by Xcel in the first two months of 2005 were $11.6 million. Sales of promoted products increased 27 percent in the 2006 first quarter. Excluding acquired products, sales of promoted products in the 2006 first quarter were flat compared to the same period last year. Foreign currency translation reduced product In model theory, a branch of mathematical logic, the reduced product is a construction that generalizes both direct product and ultraproduct. sales by $1.6 million in the 2006 first quarter, but increased operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. by $1.0 million in the same period. Regional Sales Performance: North America product sales increased 54 percent in the 2006 first quarter compared to the same period in 2005, primarily due to sales of acquired products, particularly Infergen, Diastat(R) and Migranal Migranal® Dihydroergotamine mesylate Neurology An antimigraine agent. See Migraine. (R). Excluding acquired products, sales in North America increased two percent in the quarter, primarily due to increased sales of Kinerase, Cesamet and Virazole Vir·a·zole A trademark for the drug ribavirin. ribavirin Warning - Hazardous drug! Copegus, Rebetol, Ribasphere, Virazole Pharmacologic class: (R), partially offset by decreased sales of Efudex in the quarter. Sales in Europe declined 15 percent in the 2006 first quarter compared to the same period last year. Foreign currency translation had a negative effect of six percent on European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. product sales. In addition, sales were negatively impacted by wholesaler buying patterns in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). and generic Generic Describes the characteristics and/or experience of the total universe of a coupon of MBS sector type; that is, in contrast to a specific pool or collateral group, as in a specific CMO issue. competition in Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. . Latin America sales increased 12 percent in the first quarter of 2006 compared to the same period last year. Sales in Latin America were led by a 14 percent increase in sales of Bedoyecta(TM) and increased sales of a variety of promoted products. Foreign currency translation had a positive effect on Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of product sales of seven percent in the quarter. Financial Metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. : The company's gross margin on product sales decreased in the 2006 first quarter to 68 percent compared to 70 percent in the same period last year. The decline was primarily due to an increase in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold that resulted from manufacturing variances, particularly adjustments for products manufactured that did not meet specifications and other inventory write-offs, primarily for products that have been discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: or are no longer promoted, along with the impact of a temporary shutdown of the company's Mexico manufacturing facility that lasted longer than anticipated. Adjusted for non-GAAP items, selling expense was 35 percent of product sales in the 2006 first quarter compared to 33 percent a year ago. The increase was significantly impacted by expenses for market development activities associated with Viramidine Viramidine (ICN 3142, also known as taribavirin) is an anti-viral drug in Phase III human trials, but not yet approved for pharmaceutical use. It is a prodrug of ribavirin, active against a number of DNA and RNA viruses. (R) made prior to the announcement of the company's first Phase 3 trial results. Adjusted for non-GAAP items, general and administrative expenses were 14 percent of product sales compared to 15 percent in the same period last year. Research and development costs were 16 percent of product sales in the 2006 first quarter, the same level reported in the first quarter last year. Restructuring Update: On April 3, 2006, the company announced a restructuring initiative to reduce costs and accelerate earnings growth. In connection with the initiative, the company expects to record restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. in 2006 of $90-115 million, of which $26.5 million was recorded in the first quarter. It is expected that between $20-30 million of the restructuring costs in 2006 will be in cash. The company expects to save approximately $20-30 million in 2006 as a result of its restructuring initiative. In 2007 and 2008, cost savings are expected to be approximately $50-70 million each year. Valeant continues to expect to report adjusted earnings per share in 2006 of more than $0.50 per share, excluding restructuring costs, the gain from the settlement of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. with the Serbian Ser·bi·an n. 1. A native or inhabitant of Serbia; a Serb. 2. Serbo-Croatian as spoken in Serbia and adjacent regions, written in a Cyrillic alphabet. adj. government, stock-based compensation expense and the recognition of tax benefits from U.S. net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. . The company continues to expect adjusted earnings per share in 2007 and 2008 of more than $1.00 per share and $1.90 per share, respectively, after taking into account similar adjustments and excluding any benefit or expense associated with further development of Viramidine. The following table summarizes the company's actual metric performance and expectations for 2006 and 2008:
2004A(1) 2005A(1) 1Q06A(1)(2) 2006E(1)(2) 2008E(2)(3)
-------- -------- ----------- ----------- -----------
Gross Margin 67% 69% 68% 69-71% 75-80%
Cost of Goods
Sold 33% 31% 32% 29-31% 20-25%
Selling Expense 32% 31% 35% 29-31% 25-30%
G & A 16% 15% 14% 11-13% 10-12%
R&D 15% 16% 16% 15-17% 7-10%
Effective Tax
Rate 26% 35% 27% 26-28% 32-34%
(1) Includes non-GAAP adjustments which in 2006 includes estimated
restructuring charges of $90-115 million
(2) Excludes impact from the implementation of SFAS 123R
(3) Excludes any benefit or expense of Viramidine development
Conference Call and Webcast Information: Valeant will host a conference call today at 10:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT (7:00 a.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT ) to discuss its 2006 first quarter results. The dial-in number to participate on this call is (877) 295-5743, confirmation code 8056568. International callers should dial (706) 679-0845, confirmation code 8056568. A replay will be available approximately two hours following the conclusion of the conference call through Thursday Thursday: see week. , May 11, 2006 and can be accessed by dialing (800) 642-1687, confirmation code 8056568. The company will also webcast the conference call live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . The webcast may be accessed through the investor relations Investor relations The process by which the corporation communicates with its investors. section of Valeant's corporate Web site at www.valeant.com. About Valeant: Valeant Pharmaceuticals International (NYSE:VRX) is a global, science-based specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. pharmaceutical company that develops, manufactures and markets pharmaceutical products primarily in the areas of neurology neurology (n rŏl`əjē, ny–), study of the morphology, physiology, and pathology of the human nervous system. , infectious disease Infectious diseaseA pathological condition spread among biological species. Infectious diseases, although varied in their effects, are always associated with viruses, bacteria, fungi, protozoa, multicellular parasites and aberrant proteins known as prions. and dermatology dermatology (dûrmətŏl`əjē), branch of medicine concerned with diagnosis and treatment of diseases and disorders of the skin. . More information about Valeant can be found at www.valeant.com. Viramidine, Efudex, Diastat, Migranal, Kinerase, Infergen, Bedoyecta, Virazole and Cesamet are trademarks or registered trademarks of Valeant Pharmaceuticals International or its related companies. All other trademarks are the trademarks or the registered trademarks of their respective owners. FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : This press release contains forward-looking statements, including, but not limited to, statements regarding the company's restructuring initiative and its anticipated effect on the company's expenses, the charges associated with the restructuring initiative, the company's expected margins, expenses, tax rates and earnings, the continuing development of Viramidine, and the possible sale or license of pradefovir, that are based on management's current expectations and involve risks and uncertainties, including, but not limited to, risks and uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc projections of future sales, product development and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approval, the execution and success of the company's restructuring and strategic plans and other risks detailed from time to time in Valeant's SEC filings. Valeant wishes to caution the reader that these factors are among the factors that could cause actual results to differ materially from the expectations described in the forward-looking statements. Valeant also cautions the reader that undue reliance should not be placed on any of the forward-looking statements, which speak only as of the date of this release. The company undertakes no responsibility to update any of these forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this release or to reflect actual outcomes. NON-GAAP INFORMATION: To supplement the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: financial results prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as in-process research and development expenses, special charges and credits, stock compensation expense, and results of discontinued businesses. Management does not consider the excluded items part of day-to-day day-to-day adj. 1. Occurring on a routine or daily basis: the day-to-day movements of the stock market. 2. business or reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of the core operational activities of the company as they result from transactions outside the ordinary course of business. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. Guidance is provided only on a non-GAAP basis due to the inherent difficulty in forecasting such items. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of the company's core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. The company has included adjusted earnings estimates and other forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. financial metrics that have not been prepared in accordance with GAAP. Valeant has not provided a reconciliation of these forward-looking non-GAAP financial measures due to the difficulty in forecasting and quantifying the exact amount of the restructuring charges and the related tax benefits that will be included in the comparable GAAP measures.
Valeant Pharmaceuticals International Table 1
Consolidated Condensed Statement of Income
For the Three Months Ended March 31, 2006 and 2005
Three Months Ended
March 31,
--------------------
(In thousands, except per share data) 2006 2005 % Change
--------- ---------- ---------
Product sales $180,757 $161,803 12%
Ribavirin royalties 18,091 19,335 -6%
--------- ----------
Total revenues 198,848 181,138 10%
--------- ----------
Cost of goods sold (a) 58,580 48,721 20%
Selling expenses (a) 64,270 52,815 22%
General and administrative expenses (a) 28,540 24,577 16%
Research and development costs (a) 29,535 25,724 15%
Acquired in-process research and
development (b) - 126,399
Gain on litigation settlement (c) (34,000) -
Restructuring charges (d) 26,466 1,695
Amortization expense 17,523 13,968 25%
--------- ----------
190,914 293,899 -35%
--------- ----------
Income (loss) from operations 7,934 (112,761)
Interest expense, net (7,780) (6,666)
Other income (expense), net including
translation and exchange 937 (1,791)
--------- ----------
Income (loss) from continuing
operations before provision for income
taxes and minority interest 1,091 (121,218)
Provision for income taxes 7,242 16,367
Minority interest 1 171
--------- ----------
Loss from continuing operations (6,152) (137,756)
Loss from discontinued operations, net (212) (1,503)
--------- ----------
Net loss $(6,364) $(139,259)
========= ==========
Basic and diluted earnings per common
share
Loss from continuing operations $(0.07) $(1.55)
Discontinued operations, net - (0.02)
--------- ----------
Net loss $(0.07) $(1.57)
========= ==========
Shares used in per share
computation 92,770 88,836
========= ==========
(a) In 2006 Valeant adopted a new accounting standard (FAS 123R) which
requires that the estimated value of employee stock options and
stock purchase plans be recorded as an expense. Stock compensation
expense in 2006 totaled $5.7 million consisting of $0.4 million in
cost of sales, $0.8 million in selling expenses, $0.8 million in
research and development and $3.7 million in general and
administrative expenses. In 2005, Valeant recorded $0.5 million of
stock compensation expense, however, that amount did not include a
provision for the value of employee stock options granted at the
market price or the Valeant employee stock purchase plan which
permits employees purchase stock at a discount to market price.
Had the new accounting standard been adopted in 2005, stock
compensation expense would have been increased by $5.1 million.
(b) Expense associated with the write-off of acquired in-process
research and development (IPR&D) expense associated with the Xcel
acquisition.
(c) Gain results from settlement of long-standing dispute with
Republic of Serbia over joint venture. In March 2006 Valeant
collected $28 million of this amount; an additional $6 million to
be paid in 2007.
(d) Charges relate to our restructuring program which includes a
manufacturing rationalization plan, the write off of certain
information system costs and a portion of the severance costs
associated with our restructuring plan.
Valeant Pharmaceuticals International Table 2
Consolidated Condensed Statements of Operations and
Reconciliation of Non-GAAP Adjustments
Three Months Ended
March 31, 2006
------------------------------------
Non-GAAP
GAAP Adjustments Adjusted
--------- ------------- ---------
(In thousands, except per share
data)
Product sales $180,757 $- $180,757
Ribavirin royalties 18,091 - 18,091
--------- ------------ ---------
Total revenues 198,848 - 198,848
--------- ------------ ---------
Cost of goods sold 58,580 (413)(a) 58,167
Selling expenses 64,270 (847)(a) 63,423
General and administrative
expenses 28,540 (3,641)(a) 24,899
Research and development costs 29,535 (780)(a) 28,755
Acquired in-process research and
development - - -
Gain on litigation settlement (34,000) 34,000 (b) -
Restructuring charges 26,466 (26,466)(c) -
Amortization expense 17,523 - 17,523
--------- ------------ ---------
190,914 1,853 192,767
--------- ------------ ---------
Income from operations 7,934 (1,853) 6,081
Interest expense, net (7,780) - (7,780)
Other expense, net including
translation and exchange 937 - 937
--------- ------------ ---------
Income (loss) from continuing
operations before provision for
income taxes and minority
interest 1,091 (1,853) (762)
Provision (benefit) for income
taxes 7,242 (7,448)(d) (206)
Minority interest 1 - 1
--------- ------------ ---------
Loss from continuing
operations (6,152) 5,595 (557)
Loss from discontinued
operations, net (212) - (212)
--------- ------------ ---------
Net loss $(6,364) $5,595 $(769)
========= ============ =========
Basic and diluted earnings per
common share
Loss from continuing
operations $(0.07) $(0.01)
Discontinued operations, net - -
--------- ---------
Net loss $(0.07) $(0.01)
========= =========
Shares used in per share
computation 92,770 92,770
========= =========
(a) Stock based compensation expense totaling $5.7 million. After
income taxes, the effect on non-GAAP adjusted net income is $4
million or $0.04 per share.
(b) Gain results from settlement of long-standing dispute with
Republic of Serbia over joint venture. In March 2006 Valeant
collected $28 million of this amount; an additional $6 million to
be paid in 2007.
(c) Charges include the write off of certain information system costs
and a portion of the severance costs associated with our
restructuring plan.
(d) Tax effect for non-GAAP adjustments, including tax benefits from
U.S. net operating losses not recognized for GAAP purposes.
To supplement the consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles (GAAP), the
company uses non-GAAP financial measures that exclude certain items,
such as in-process research and development expenses, special charges
and credits, stock compensation expense and results of discontinued
businesses. Management does not consider the excluded items part of
day-to-day business or reflective of the core operational activities
of the company as they result from transactions outside the ordinary
course of business. Management uses non-GAAP financial measures
internally for strategic decision making, forecasting future results
and evaluating current performance. Guidance is provided only on a
non-GAAP basis due to the inherent difficulty in forecasting such
items.
By disclosing non-GAAP financial measures, management intends to
provide investors with a more meaningful, consistent comparison of the
company's core operating results and trends for the periods presented.
Non-GAAP financial measures are not prepared in accordance with GAAP;
therefore, the information is not necessarily comparable to other
companies and should be considered as a supplement to, not a
substitute for, or superior to, the corresponding measures calculated
in accordance with GAAP.
Valeant Pharmaceuticals International Table 3
Consolidated Condensed Statements of Operations and
Reconciliation of Non-GAAP Adjustments
Three Months Ended
March 31, 2005
---------------------------------------
Non-GAAP
GAAP Adjustments Adjusted
---------- ------------ ---------
(In thousands, except per
share data)
Product sales $161,803 $- $161,803
Ribavirin royalties 19,335 - 19,335
---------- ------------ ---------
Total revenues 181,138 - 181,138
---------- ------------ ---------
Cost of goods sold 48,721 - 48,721
Selling expenses 52,815 - 52,815
General and administrative
expenses 24,577 - 24,577
Research and development costs 25,724 - 25,724
Acquired in-process research
and development 126,399 (126,399)(a) -
Restructuring charges 1,695 (1,695)(b) -
Amortization expense 13,968 - 13,968
---------- ------------ ---------
293,899 (128,094) 165,805
---------- ------------ ---------
Income (loss) from
operations (112,761) 128,094 15,333
Interest expense, net (6,666) - (6,666)
Other income, net including
translation and exchange (1,791) - (1,791)
---------- ------------ ---------
Income (loss) from continuing
operations before provision
for income taxes and minority
interest (121,218) 128,094 6,876
Provision for income taxes 16,367 (13,961)(c) 2,406
Minority interest 171 - 171
---------- ------------ ---------
Income (loss) from
continuing operations (137,756) 142,055 4,299
Loss from discontinued
operations, net (1,503) - (1,503)
---------- ------------ ---------
Net Income (loss) $(139,259) $142,055 $2,796
========== ============ =========
Basic earnings per common
share
Income (loss) from
continuing operations $(1.55) $0.05
Discontinued operations,
net (0.02) (0.02)
---------- ---------
Net Income (loss) $(1.57) $0.03
========== =========
Shares used in per share
computation 88,836 88,836
========== =========
Diluted earnings per common
share
Income (loss) from
continuing operations $(1.55) $0.05
Discontinued operations,
net (0.02) (0.02)
---------- ---------
Net Income (loss) $(1.57) $0.03
========== =========
Shares used in per share
computation 88,836 91,826 (d)
========== =========
(a) Expense associated with write off of IPR&D related to the Xcel
acquisition.
(b) Impairment of our manufacturing site in China and a gain on the
sale of a manufacturing plant in Argentina.
(c) Tax effect of non-GAAP adjustments. This adjustment reflects
future tax benefits for net operating losses in the US which are
not reflected in the GAAP financial statements offset by the
effect of the IPR&D related to Xcel and the restructuring charge
not being deductible for tax purposes.
(d) Shares used in adjusted diluted EPS include the effect of diluted
shares which are anti-dilutive to GAAP EPS.
See non-GAAP financial measure disclosure on Table 2.
Valeant Pharmaceuticals International Table 4
GAAP reconciliation of basic and diluted earnings per share
For the Three Months Ended March 31, 2006 and 2005
Three Months Ended
March 31,
-------------------
(In thousands, except per share data) 2006 2005
-------- ----------
Loss from continuing operations $(6,152) $(137,756)
Non-GAAP adjustments:
Acquired IPR&D - 126,399
Stock based compensation expense 5,681 -
Gain on litigation settlement (34,000) -
Restructuring charges 26,466 1,695
Tax effect of non-GAAP adjustments 7,448 13,961
-------- ----------
Adjusted income (loss) from continuing
operations before the above charges $(557) $4,299
Adjusted basic EPS from continuing
operations $(0.01) $0.05
======== ==========
Adjusted diluted EPS from continuing
operations $(0.01) $0.05
======== ==========
Shares used in basic per share
calculation 92,770 88,836
======== ==========
Shares used in diluted per share
calculation 92,770 91,826
======== ==========
Reconciliation of consolidated operating income to non-GAAP adjusted
earnings before interest, taxes, depreciation and amortization
("EBITDA")
Three Months Ended
March 31,
-------------------
2006 2005 % Change
-------- ---------- ---------
Consolidated operating income (loss)
(GAAP) $7,934 $(112,761) --
Depreciation and amortization 23,482 21,038 12%
-------- ----------
EBITDA (non-GAAP) (a) 31,416 (91,723) --
Stock based compensation expense (b) 5,681 -
Other Non-GAAP adjustments (b) (7,534) 128,094
-------- ----------
Adjusted EBITDA (non-GAAP) (a) $29,563 $36,371 -19%
======== ==========
(a) We believe that EBITDA is a meaningful non-GAAP financial measure
as an earnings-derived indicator of the cash flow generation
ability of the company. We calculate EBITDA by adding depreciation
and amortization back to consolidated operating income. Adjusted
EBITDA excludes the additional costs set forth in note (b) below.
Adjusted EBITDA, as defined and presented by us, may not be
comparable to similar measures reported by other companies.
(b) See Tables 2 and 3 for explanation of non-GAAP adjustments.
See non-GAAP financial measure disclosure in Table 2.
Valeant Pharmaceuticals International Table 5
Supplemental Sales Information
For the Three Months Ended March 31, 2006 and 2005
(In thousands)
Three Months Ended
March 31, %
------------------- Increase/
2006 2005 (Decrease)
--------- --------- ----------
Dermatology
Efudix/Efudex(R)(P) $15,581 $19,276 (19%)
Kinerase(R)(P) 6,860 4,435 55%
Oxsoralen-Ultra(R)(P) 3,508 2,968 18%
Dermatix(TM)(P) 1,834 1,896 (3%)
Other Dermatology 8,569 8,133 5%
Infectious Disease
Infergen(R)(P) (a) 13,705 - --
Virazole(R)(P) 5,157 4,195 23%
Other Infectious Disease 4,731 5,853 (19%)
Neurology
Diastat(P) (b) 12,022 5,177 132%
Mestinon(R)(P) 9,817 9,860 (0%)
Cesamet(P) 3,303 2,055 61%
Migranal(P) (b) 3,115 774 302%
Librax(P) 2,919 4,080 (28%)
Dalmane/Dalmadorm(P) 2,466 2,642 (7%)
Limbitrol(P) 1,510 1,294 17%
TASMAR(R)(P) 1,185 939 26%
Other Neurology 14,591 10,568 38%
Other Therapeutic Classes
Bedoyecta(TM)(P) 10,580 9,244 14%
Bisocard(P) 3,565 2,655 34%
Solcoseryl(P) 3,377 4,194 (19%)
Calcitonin(P) 1,850 2,585 (28%)
Nyal(P) 1,754 2,474 (29%)
Aclotin(P) 1,372 1,520 (10%)
Espaven(P) 1,302 1,562 (17%)
Other Pharmaceutical Products 46,084 53,424 (14%)
--------- ---------
Total Product Sales $180,757 $161,803 12%
========= =========
Total Promoted Product Sales(P) $106,782 $83,825 27%
========= =========
(a) Infergen was acquired from InterMune on December 30, 2005.
(b) Diastat and Migranal were acquired with the Xcel transaction on
March 1, 2005.
(P) Promoted products represent promoted products with estimated
annualized sales greater than $5 million.
Valeant Pharmaceuticals International Table 6
Consolidated Condensed Statement of Revenue and Operating
Income - Regional
For the Three Months Ended March 31, 2006 and 2005
(In thousands)
Three Months Ended
March 31,
------------------------
Revenues 2006 2005 % Change
--------- ---------- ---------
North America $75,212 $48,943 54%
Latin America 35,788 32,060 12%
Europe 56,257 65,875 -15%
AAA 13,500 14,925 -10%
--------- ----------
Total specialty pharmaceuticals 180,757 161,803 12%
Ribavirin royalty revenues 18,091 19,335 -6%
--------- ----------
Consolidated revenues $198,848 $181,138 10%
========= ==========
Cost of goods sold $58,580 $48,721 20%
========= ==========
Gross profit margin on
pharmaceutical sales 68% 70%
========= ==========
Operating Income (Loss)
North America $22,492 $16,694 35%
Latin America 8,684 9,818 -12%
Europe 4,550 11,734 -61%
AAA 154 790 -81%
--------- ----------
35,880 39,036 -8%
Corporate expenses (a) $(23,190) $(14,367) 61%
--------- ----------
Total specialty pharmaceuticals 12,690 24,669 -49%
Restructuring charges (26,466) (1,695) --
Gain on litigation settlement 34,000 -
R&D (12,290) (9,336) 32%
Acquired IPR&D - (126,399) --
--------- ----------
Total consolidated operating income
(loss) $7,934 $(112,761)
========= ==========
(a) Includes $5.7 million of stock based compensation expense in 2006
and $0.5 million in 2005.
Three Months Ended
Gross Profit March 31, March 31,
2006 % 2005 %
--------- --- ---------- ---------
North America $62,564 83% $40,496 83%
Latin America 23,788 66% 23,592 74%
Europe 29,360 52% 41,462 63%
AAA 6,465 48% 7,532 50%
--------- ----------
Total specialty pharmaceuticals $122,177 68% $113,082 70%
========= ==========
Valeant Pharmaceuticals International Table 7
Consolidated Balance Sheet and Other Data
(In thousands)
March 31, December 31,
Balance Sheet Data 2006 2005
---------- ------------
Cash and cash equivalents $244,362 $224,856
Marketable securities 11,121 10,210
---------- ------------
Total cash and marketable securities $255,483 $235,066
========== ============
Accounts receivable, net $174,433 $187,987
Inventory, net 137,729 136,034
Long-term debt 785,850 788,439
Total equity 434,590 439,251
Other Data Three Months Ended
March 31, March 31,
2006 2005
---------- ------------
Cash flow provided by (used in) continuing
operations
Operating activities $40,038 $8,662
Investing activities (14,056) (83,477)
Financing activities (7,204) 182,453
Effect of exchange rate changes on cash and
cash equivalents 728 (4,782)
---------- ------------
Net increase in cash and cash equivalents 19,506 102,856
Net increase (decrease) in marketable
securities 911 (202,799)
---------- ------------
Net increase (decrease) in cash and marketable
securities $20,417 $(99,943)
========== ============
Valeant Pharmaceuticals International Table 8
Supplemental Non-GAAP Information on Currency Effect
(In thousands)
Three Months Ended
March 31,
--------------------
2006 2005
--------- ----------
Consolidated
Product sales $180,757 $161,803
Currency effect 1,550
Product sales, excluding currency impact $182,307
Operating income (loss) $7,934 $(112,761)
Currency effect (981)
Operating income, excluding currency impact $6,953
Geographic Product Sales
North America pharmaceuticals $75,212 $48,943
Currency effect (489)
North America pharmaceuticals, excluding currency
impact $74,723
Latin America pharmaceuticals $35,788 $32,060
Currency effect (2,097)
Latin America pharmaceuticals, excluding
currency impact $33,691
Europe pharmaceuticals $56,257 $65,875
Currency effect 3,769
Europe pharmaceuticals, excluding currency impact $60,026
AAA pharmaceuticals $13,500 $14,925
Currency effect 367
AAA pharmaceuticals, excluding currency impact $13,867
Note: Currency effect is determined by comparing adjusted 2006
reported amounts, calculated using 2005 monthly average exchange
rates, to the actual 2005 reported amounts. Constant currency sales is
not a GAAP defined measure of revenue growth. Constant currency sales
as defined and presented by us may not be comparable to similar
measures reported by other companies.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion