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Par Pharmaceutical Companies Reports Fourth Quarter and Full-Year Results for 2010
Date:2/24/2011

WOODCLIFF LAKE, N.J., Feb. 24, 2011 /PRNewswire/ -- Par Pharmaceutical Companies, Inc. (NYSE: PRX) today reported results for the fourth quarter and full year ended December 31, 2010.

For the fourth quarter ended December 31, 2010, the Company reported total revenues of $227 million and income from continuing operations of $17.6 million, or $0.48 per diluted share, which includes a net $2.7 million charge related to the settlement of litigation and changes in estimates for loss contingencies.  Excluding these items, adjusted income from continuing operations (non-GAAP measure) was $19.3 million.  On an adjusted cash basis (non-GAAP measure), which excludes amortization expenses, income from continuing operations was $22.3 million, or $0.61 per diluted share for the fourth quarter 2010.  This is compared to reported revenues of $290.3 million and income from continuing operations of $10.8 million, or $0.31 per diluted share for the same period in 2009, which included several one-time items. On an adjusted cash basis, income from continuing operations was $25.8 million, or $0.74 per diluted share for the fourth quarter 2009.  

For the full year ended December 31, 2010, total revenue was $1.0 billion with income from continuing operations of $92.8 million, or $2.60 per diluted share. On an adjusted cash basis (non-GAAP measure), which excludes amortization expenses and certain items as detailed in the attached reconciliation, income from continuing operations was $105.0 million, or $2.95 per diluted share.  This compares to reported revenues of $1.2 billion and income from continuing operations of $77.6 million, or $2.27 per diluted share, for 2009.  On an adjusted cash basis, income from continuing operations for the full year 2009 was $100.2 million, or $2.93 per diluted share.

Fourth Quarter Highlights  Key Product Sales (Net sales comparisons at the product level are to third quarter 2010)

  • Metoprolol:  For the quarter ended December 31, 2010, net sales of metoprolol succinate were $73.0 million, a decrease from the third quarter 2010.  The decrease was driven by a decline in volume and price due to competition on all strengths.  Net sales for the full year 2010 were $473.2 million.  Par Pharmaceutical, the Company's generic drug division, is the authorized generic for all strengths of AstraZeneca's Toprol XL®.

  • Sumatriptan: Net sales of sumatriptan succinate were $19.9 million in the fourth quarter compared to $18.3 million in the prior quarter.  The increase is due to additional volume driven by customer buying patterns.  Net sales for the full year 2010 were $73.0 million. Par Pharmaceutical remained the exclusive supplier of generic Imitrex® 4mg and 6mg starter kits and 4mg prefilled cartridges and had one competitor in the 6mg prefilled cartridges throughout the fourth quarter.

  • Hydrocodone polistirex and chlorpheniramine polistirex: Net sales of hydrocodone and chlorpheniramine ER oral suspension were $17.5 million in the fourth quarter.  Par Pharmaceutical launched the product in October 2010.

  • Omeprazole sodium bicarbonate capsules: Net sales were $4.4 million for the fourth quarter 2010 compared to $13.5 million for the third quarter.  The decrease was due to higher trade inventories for the initial launch phase, which occurred in the third quarter.

  • Clonidine:  Net sales for the fourth quarter were $8.7 million compared to $7.8 million in the third quarter.  The increase was due to additional volume driven by customer buying patterns.  Net sales for the full year were $61.3 million.

  • Meclizine: Net sales for fourth quarter were $5.4 million compared to $6.2 million in the previous quarter.  The decrease was driven by a decline in volume and price due to competition.  Net sales for the full year were $31.2 million.

  • Tramadol ER:  Net sales for the fourth quarter 2010 were $6.1 compared to $5.5 million in the prior quarter.  Net sales for the full year were $22.6 million. Par Pharmaceutical remains one of only two suppliers of tramadol ER since its launch in November 2009.

  • Other generic products:  For the fourth quarter 2010, net sales from all other generic products were $68.2 million. When adjusted for certain events, fourth quarter net sales were $57.2 million. This compares to adjusted third quarter net sales of $62.2 million.  

  • Megace® ES:  Net sales were $14.8 million for the fourth quarter compared to $16.8 million in the third quarter.  The decrease was due to a decrease in volume and an increase in returns.  Net sales for the full year were $60.9 million.

  • Nascobal® B12 Nasal Spray:  Net sales were $4.8 million for the three months ended December 31, 2010 compared to $4.9 million in the third quarter.  Net sales for the full year were $17.7 million.

  • Total net revenues for the three months ended December 31, 2010, were $227.0 million compared to $290.3 million from prior year, principally driven by additional competition in metoprolol, meclizine, and clonidine.

    Gross margin for the fourth quarter 2010 increased compared to the prior year due primarily to the launches of omeprazole, diazepam, and hydrocodone polistirex and chlorpheniramine polistirex, as well as increases in other generic products.  These gains were partially offset by lower metroprolol, clonidine and meclizine sales and the impact of U.S. healthcare reform enacted in 2010.4Q 20104Q 2009$%$%Key Par (Generic) Products (1)$   42.7

    31.6%$   45.2

    21.6%All other Par (Generic)36.2

    53.1%27.0

    48.6%Total Par (Generic)$   78.9

    38.8%$   72.2

    27.3%Strativa (Branded) Products$   16.4

    68.6%$   19.2

    74.6%Total (All Products) $   95.3

    42.0%$   91.4

    31.5%(1) 2010 is comprised of metoprolol, clonidine, sumatriptan, omeprazole, meclizine and tramadol ER.  2009 does not include omeprazole and hydrocodone/chlorpheniramine, which were launched subsequent to 4Q 2009.Research and development expenses were $12.9 million in the fourth quarter of 2010 compared to $19.7 million in the fourth quarter 2009.  The decrease was due primarily to the non-recurrence of an amendment with MonoSol Rx in the fourth quarter 2009.

    Selling, general and administrative expenses for the fourth quarter 2010 increased to $52.1 million compared to $42.8 million in the fourth quarter of 2009.  This increase primarily reflects on-going direct expenditures supporting Strativa sales and marketing, driven primarily by an increase in the field force and other activities related to the 2010 launches of Oravig and Zuplenz, as well as higher legal fees and severance charges.

    Cash and cash equivalents and marketable securities aggregate balance as of December 31, 2010 was $246.5 million and includes significant one-time cash outflows from the repayment of the outstanding balance of the Company's Senior Subordinated Convertible Notes in the amount of $47.0 million and $63.0 million in payments to development partners.

    Product and Pipeline Update Strativa Pharmaceuticals launched Oravig® and Zuplenz (ondansetron) in the second half of 2010 and records revenues on an as-prescribed basis.

    In November 2010, Par Pharmaceutical began shipping 10mg and 20mg strengths of a generic version of AstraZeneca's Accolate® (zafirlukast) tablets. Par is the authorized generic for all strengths of AstraZeneca's Accolate.  According to IMS Health data, annual sales in the U.S. for Accolate are approximately $50 million.

    On January 3, 2011, Par Pharmaceutical successfully launched all strengths of amlodipine besylate and benazepril hydrochloride capsules, the generic version of Novartis' Lotrel®.  Par has been awarded 180 days of marketing exclusivity for the 5/40mg and 10/40mg strengths, commencing at launch, for being the first to file an ANDA containing a paragraph IV certification for the product.  According to IMS Health data, annual sales in the U.S. for these two strengths of Lotrel are approximately $361 million.

    On January 3, 2011, Par Pharmaceutical successfully launched the 225mg, 325mg, and 425mg strengths of propafenone SR capsules, the generic version of GlaxoSmithKline's Rythmol SR®.  Par Pharmaceutical has been awarded 180 days of marketing exclusivity, commencing at launch, for being the first to file an ANDA containing a paragraph IV certification for the product.  According to IMS Health data, annual sales in the U.S. of Rythmol are approximately $121 million.

    Par Pharmaceutical along with third-party partners currently have approximately 29 ANDAs pending with the FDA, 11 of which it believes to be first-to-file opportunities with a brand value of approximately $8.0 billion.

    Conference Call Par Pharmaceutical Companies, Inc has scheduled a conference call for Thursday, February 24 at 9:00 am EST to discuss results for the fourth quarter and full year 2010.  The Company 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 www.parpharm.com.

    Dial-in InformationDomestic:

    866-383-8008International:

    617-597-5341Passcode:

    93413925A replay of the conference call will be available for two weeks approximately one hour after the call.

    Replay InformationDomestic:

    888-286-8010International:

    617-801-6888Passcode:

    37412260Non-GAAP MeasuresPar Pharmaceutical Companies, Inc. ("the Company") believes it prepared its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and pursuant to accounting requirements of the Securities and Exchange Commission.  In an effort to provide investors with additional information regarding the Company's results and to provide a meaningful period-over-period comparison of the Company's financial performance, the Company sometimes uses non-GAAP financial measures as defined by the Securities and Exchange Commission.  The differences between the U.S. GAAP and non-GAAP financial measures are reconciled in an attached schedule.  In presenting comparable results, the Company discloses non-GAAP financial measures when it believes such measures will be useful to investors in evaluating the Company's underlying business performance.  Management uses the non-GAAP financial measures to evaluate the Company's financial performance against internal budgets and targets.  In addition, management internally reviews the Company's results excluding the impact of certain items, as it believes that these non-GAAP financial measures are useful for evaluating the Company's core operating results and facilitating comparison across reporting periods.  Importantly, the Company believes non-GAAP financial measures should be considered in addition to, and not in lieu of, U.S. GAAP financial measures.  The Company's non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.

    About Par Pharmaceutical Companies, Inc.Par Pharmaceutical Companies, Inc. is a US-based specialty pharmaceutical company.  Through its wholly-owned subsidiary's two operating divisions, Par Pharmaceutical and Strativa Pharmaceuticals, it develops, manufactures and markets higher-barrier-to-entry generic drugs and niche, innovative proprietary pharmaceuticals. For press release and other company information, visit www.parpharm.com.

    Safe Harbor StatementCertain 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 most recent Annual Report on Form 10-K, in other of the Company's filings with the SEC from time to time, including Quarterly Reports on Form 10-Q and 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.CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Data)(Unaudited)Three Months EndedTwelve Months EndedDecember 31,December 31,December 31,December 31,2010200920102009Revenues:Net product sales

    $217,483$285,094$980,631$1,176,427Other product related revenues

    9,5455,22728,24316,732Total revenues

    227,028290,3211,008,8741,193,159Cost of goods sold

    131,760198,983635,343859,206Gross margin

    95,26891,338373,531333,953Operating expenses:Research and development

    12,91219,66850,36939,235Selling, general and administrative

    52,10242,752192,504165,135Settlements and loss contingencies, net

    5,4563,5603,762307Restructuring costs

    -(246)-1,006Total operating expenses

    70,47065,734246,635205,683Gain on sale of product rights and other

    25-6,0253,200Operating income

    24,82325,604132,921131,470Gain on bargain purchase

    ---3,021Loss on extinguishment of senior subordinated convertible notes

    -(4,962)-(2,598)(Loss) gain on marketable securities and other investments, net

    (108)-3,459(55)Interest income

    3153301,2572,658Interest expense

    (151)(1,078)(2,905)(8,013)Income from continuing operations before provision
    for income taxes

    24,87919,894134,732126,483Provision for income taxes

    7,2499,05041,98048,883Income from continuing operations

    17,63010,84492,75277,600Discontinued operations:Provision for income taxes

    12614421672Loss from discontinued operations

    (126)(144)(21)(672)Net income

    $17,504$10,700$92,731$76,928Basic earnings (loss) per share of common stock:Income from continuing operations

    $0.50$0.32$2.70$2.30Loss from discontinued operations

    (0.00)(0.00)(0.00)(0.02)Net income

    $0.50$0.32$2.70$2.28Diluted earnings (loss) per share of common stock:Income from continuing operations

    $0.48$0.31$2.60$2.27Loss from discontinued operations

    (0.00)(0.00)(0.00)(0.02)Net income

    $0.48$0.31$2.60$2.25Weighted average number of common shares outstanding:  Basic

    34,87833,77334,30733,679  Diluted

    36,34534,96435,64434,188PAR PHARMACEUTICAL COMPANIES, INC.CONSOLIDATED BALANCE SHEETSDECEMBER 31, 2010 AND 2009(In Thousands, Except Share Data)December 31,December 31,20102009ASSETSCurrent assets:Cash and cash equivalents$218,674$121,668Available for sale marketable debt securities27,86639,525Accounts receivable, net  95,705154,837Inventories72,58080,729Prepaid expenses and other current assets17,66014,051Deferred income tax assets26,03726,356Income taxes receivable18,6059,005Total current assets477,127446,171Property, plant and equipment, net71,98074,696Available for sale marketable debt and equity securities-475Intangible assets, net95,46769,272Goodwill63,72963,729Other assets5,441989Non-current deferred income tax assets, net69,48868,495Total assets$783,232$723,827LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Current portion of long-term debt$ -$46,175Accounts payable23,95622,662Payables due to distribution agreement partners25,31058,552Accrued salaries and employee benefits 16,39716,072Accrued government pricing liabilities32,16924,713Accrued legal fees7,0845,941Accrued expenses and other current liabilities6,6748,962Total current liabilities111,590183,077Long-term debt, less current portion--Other long-term liabilities43,19842,097Commitments and contingencies--Stockholders' equityCommon Stock, par value $0.01 per share, authorized 90,000,000 shares; issued38,872,663 and 37,662,231 shares389377Additional paid-in capital373,764331,667Retained earnings329,129236,398Accumulated other comprehensive gain137357Treasury stock, at cost 2,970,573 and 2,815,879 shares(74,975)(70,146)Total stockholders' equity628,444498,653Total liabilities and stockholders' equity$783,232$723,827Reconciliation Between Reported (GAAP); Adjusted Income from Continuing Operations and "Cash EPS"(In Thousands, Except Per Share Data)

    (Unaudited)Three Months EndedDecember 31,December 31,20102009Income from Continuing Operations$17,630$10,844Litigation settlements and contingencies

    2,7413,500Upfront and development milestone payments

    -10,500(Gain)/loss on extinguishment of debt

    -4,962Non-cash interest expense

    -575Restructuring costs

    -(246)Sum of adjustments, pre-tax

    $2,741$19,291Estimated tax on adjustments

    (1,042)(7,331)Adjusted Income from Continuing Operations (non-GAAP measure)

    $19,329$22,804Amortization Expense

    4,7724,836Estimated tax impact

    (1,813)(1,838)Amortization Expense, net of tax

    2,9592,998Adjusted Cash basis from Continuing Operations (non-GAAP measure)22,28825,802"Cash EPS" from Continuing Operations (non-GAAP measure)$0.61$0.74Diluted weighted average shares outstanding

    36,34534,964Twelve Months EndedDecember 31,December 31,20102009Income from Continuing Operations$92,752$77,600Upfront and development milestone payments

    19,00011,500Non-cash interest expense

    1,5714,399Litigation settlements and contingencies

    86188Abrika earn-out payment

    (3,567)-Sale of product rights

    (5,000)(3,200)(Gain)/loss on extinguishment of debt

    -2,598Gain on bargain purchase

    -(3,021)Restructuring costs

    -1,006Sum of adjustments, pre-tax

    $12,865$13,370Estimated tax on adjustments

    (4,889)(5,081)Resolution of tax contingencies

    (3,657)-Domestic manufacturing tax benefit

    (2,009)-Adjusted Income from Continuing Operations (non-GAAP measure)

    $95,062$85,889Amortization Expense

    16,00523,057Estimated tax impact

    (6,082)(8,762)Amortization Expense, net of tax

    9,92314,295Adjusted Cash basis from Continuing Operations (non-GAAP measure)104,985100,184"Cash EPS" from Continuing Operations (non-GAAP measure)$2.95$2.93Diluted weighted average shares outstanding

    35,64434,188
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    SOURCE Par Pharmaceutical Companies, Inc.
    Copyright©2010 PR Newswire.
    All rights reserved


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