Teva Reports Fourth Quarter and Full Year 2012 Results
Teva Reports Fourth Quarter and Full Year 2012 Results
* Fourth Quarter 2012 Net Revenues of $5.2 Billion and Full Year Net
Revenues of $20.3 Billion
* Fourth Quarter 2012 Non-GAAP Diluted EPS of $1.32, GAAP Diluted EPS of
$0.37; Full Year Non-GAAP Diluted EPS of $5.35, GAAP Diluted EPS of $2.25
* 15% Increase in Quarterly Dividend
* Share Repurchases of $0.5 Billion and $1.2 Billion in Fourth Quarter and
Full Year 2012, Respectively
* Cash Flow from Operations of $1.6 Billion and $4.6 Billion in Fourth
Quarter and Full Year 2012, Respectively
Business Wire
JERUSALEM -- February 7, 2013
Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) today reported results for
the quarter and year ended December 31, 2012.
“Our efforts over the past year clearly demonstrate Teva's ability and
commitment to transform the Company. Based on this, we will enter 2013 with a
strong and disciplined business focus," stated Dr. Jeremy Levin, Teva’s
President and Chief Executive Officer. "Our generic franchise remains the core
of our business. We launched 23 generic products in the U.S. in 2012, and
anticipate a similar number of launches in 2013. Our specialty medicines
business continues to drive value with strong fundamentals in multiple
sclerosis, central nervous system, respiratory, oncology and women’s
health. Copaxone^® continues to lead the multiple sclerosis market in sales
and market share. In March 2013, we plan to submit to the FDA a sNDA for
marketing approval of a '3 times a week' dose of Copaxone®. Our new R&D
organization is showing great progress. Our New Therapeutic Entities pipeline
is advancing as expected. At the same time, we are beginning to add external
opportunities through our 'Constellation' business development program. We
have launched our 'Reshape' program and are committed to managing our costs
while we invest in Teva’s future."
Dr. Levin added, "I am particularly pleased with the Board's decision to
increase Teva's dividend. Together with Teva's new strategy backed by our
ongoing share repurchase plan, this decision reflects the Board's and
management's optimism and confidence. We believe the course we have set for
Teva is the right one and will yield real value for patients, customers and
shareholders while ensuring the long-term growth of our company."
Revenues by Geography for the Fourth Quarter 2012^1
Net revenues in the United States in the fourth quarter were $2.6 billion (50%
of total revenues), a decrease of 14% compared to the fourth quarter of 2011.
Provigil^® sales declined substantially due to generic competition that began
in the second quarter of 2012, while the other factor affecting the comparison
is the unusually high generic revenues during the fourth quarter of 2011 due
to extraordinary contributions from our launch of generic Zyprexa^® and from
our agreement with Ranbaxy relating to its launch of generic Lipitor^®. The
absence of these contributions in the fourth quarter of 2012 was partially
offset by strong revenues from generic launches throughout 2012, as well as an
increase in Copaxone^® sales
Net revenues in Europe in the fourth quarter were $1.5 billion (29% of total
revenues), an increase of 2% compared to the fourth quarter of 2011, or 5% in
local currency terms. Revenues in Europe this quarter benefited from stronger
revenues from some of our specialty medicines, primarily Copaxone^®, following
the take-back of marketing and distribution rights, as well as increased sales
from our OTC business. We are continuing to manage our commercial model in
Europe in line with our strategy of sustainable and profitable growth.
Net revenues in the Rest of the World in the fourth quarter totaled $1.1
billion (21% of total revenues), a decrease of 3% compared to the fourth
quarter of 2011. In local currency terms, ROW revenues declined by 2%. The
slight decline in revenues resulted from the sale of certain businesses of
Mepha AG, which closed in the first quarter of 2012, as well as weaker
performance in Canada, due primarily to government-imposed price reforms. This
decrease was partially offset by growth in Latin America.
Three Months Percentage Percentage
Ended Change Change
December 31, 2012 from 2012 from
2012 2011 % of % of 2011 2011
2012 2011
U.S. $ in in local
millions currencies
United
States:
Generic 1,034 1,242 20 % 22 % (17 %) (17 %)
Specialty 1,527 1,770 29 % 31 % (14 %) (14 %)
Others 60 33 1 % 1 % 82 % 82 %
Total
United 2,621 3,045 50 % 54 % (14 %) (14 %)
States
Europe*:
Generic 930 982 18 % 17 % (5 %) (3 %)
Specialty 420 329 8 % 6 % 28 % 32 %
Others 177 183 3 % 3 % (3 %) (4 %)
Total 1,527 1,494 29 % 26 % 2 % 5 %
Europe
Rest of the
World:
Generic 698 758 13 % 13 % (8 %) (7 %)
Specialty 159 155 3 % 3 % 3 % 4 %
Others 244 224 5 % 4 % 9 % 11 %
Total Rest
of the 1,101 1,137 21 % 20 % (3 %) (2 %)
World
Total 5,249 5,676 100 % 100 % (8 %) (7 %)
Revenues
*All members of the European Union as well as
Switzerland and Norway.
^1 For quarterly revenues by geography and by product line, beginning with the
fourth quarter of 2010, please visit our website at www.ir.tevapharm.com.
Revenues by Product Line for the Fourth Quarter 2012
Generic medicines net revenues in the fourth quarter were $2.7 billion
(including API sales of $202 million), a decrease of 11% compared to $3.0
billion in the fourth quarter of 2011. Generic revenues comprised 51% of total
revenues in the quarter, compared to 52% in the fourth quarter of 2011.
Generic revenues consisted of:
* U.S. revenues of $1.0 billion, a decrease of 17% compared to the fourth
quarter of 2011. The decline primarily reflects the significant launches
in the comparable quarter (including the generic version of Zyprexa^® and
our agreement with Ranbaxy relating to its launch of generic Lipitor^®,
which did not contribute to revenues in the fourth quarter of 2012). The
decrease was partially offset by continued revenues from launches earlier
in 2012 and in the fourth quarter (including the generic version of
TriCor^®).
* European revenues of $930 million, a decrease of 5%, or 3% in local
currency terms, compared to the fourth quarter of 2011. We saw declines in
revenues in Italy and Spain that were partially offset by increases in
Germany, the U.K., France, and Poland. During the quarter we continued to
manage the generic business in the region for sustainable profitability,
and had several launches, including generic versions of Seroquel XL^® and
Detrol LA^® in the U.K.
* ROW revenues of $698 million, a decrease of 8%, or 7% in local currency
terms, compared to the fourth quarter of 2011. The decrease was primarily
due to the sale of certain businesses of Mepha AG and lower sales in
Canada, due primarily to government-imposed price reforms, partially
offset by growth in Latin America and Russia.
Three Months Ended Percentage
Change
December 31, 2012 from
2012 2011 % of 2012 % of 2011 2011
U.S. $ in millions
Generic Medicines $ 2,662 $ 2,982 51 % 52 % (11 %)
API 202 197 4 % 3 % 3 %
Specialty medicines net revenues in the fourth quarter were $2.1 billion, a
decrease of 7% compared to $2.3 billion in the fourth quarter of 2011.
Specialty revenues consisted of:
* U.S. revenues of $1.5 billion, a decrease of 14% compared to the fourth
quarter of 2011.
* European revenues of $420 million, an increase of 28%, or 32% in local
currency terms, compared to the fourth quarter of 2011.
* ROW revenues of $159 million, an increase of 3%, or 4% in local currency
terms, compared to the fourth quarter of 2011.
Specialty revenues comprised 40% of total revenues in the quarter, unchanged
compared to the fourth quarter of 2011.
The decrease in specialty medicines revenues from the fourth quarter of 2011
was primarily due to the decline in Provigil^® as a result of the introduction
of generic competition during the year, which was partially offset by strong
sales of Copaxone^® and certain other specialty medicines.
Global revenues recorded by Teva for Copaxone^®, the leading multiple
sclerosis therapy in the U.S. and globally, increased 14%, or 15% in local
currency terms, to $1.1 billion compared to $927 million in the fourth quarter
of 2011. The increase primarily resulted from the take-back of marketing and
distribution rights in Europe and continued market share leadership. In the
U.S., sales increased 12% to $0.8 billion, as a result of price increases
throughout the year. Sales outside the U.S. were $237 million, an increase of
23%, or 27% in local currency terms, compared to the fourth quarter of 2011,
primarily because of the take-back of marketing and distribution rights in
Europe, partially offset by lower revenues in Russia due to the timing of
tenders.
Azilect^® revenues recorded by Teva increased 4% to $86 million, while global
in-market revenues increased 4% to $113 million, primarily due to increased
demand in the U.S. and Europe and a price increase.
Three Months Ended Percentage
Change
December 31, 2012 from
2012 2011 % of 2012 % of 2011 2011
U.S. $ in millions
Specialty Medicines 2,106 2,254 40 % 40 % (7 %)
CNS 1,340 1,562 26 % 28 % (14 %)
Copaxone® 1,059 927 20 % 16 % 14 %
Provigil® 25 350 § 6 % (93 %)
Nuvigil® 78 86 1 % 2 % (9 %)
Azilect® 86 83 2 % 1 % 4 %
Oncology 233 190 4 % 3 % 23 %
Treanda® 161 131 3 % 2 % 23 %
Respiratory 256 275 5 % 5 % (7 %)
ProAir® 120 145 2 % 3 % (17 %)
QVAR® 92 93 2 % 2 % (1 %)
Women's Health 132 93 2 % 2 % 42 %
Other Specialty 145 134 3 % 2 % 8 %
§ Less than 0.5%
OTC Total sales of PGT Healthcare, our joint venture with The Procter & Gamble
Company, in the fourth quarter of 2012 were $377 million, an increase of 11%,
or 12% in local currency terms, compared to the fourth quarter of 2011. Teva
net revenues in the quarter were $269 million, an increase of 24%, or 25% in
local currency terms, compared to $217 million in the fourth quarter of 2011,
primarily due to strong revenues and share growth in key markets including
Europe, specifically related to the ratiopharm brand, Russia and Israel, as
well as to sales of OTC products in the U.S. to Procter & Gamble, pursuant to
a manufacturing agreement, which commenced in November 2011.
Other net revenues in the quarter were $212 million, mostly from the
distribution of third-party products in Israel and Hungary, compared to $223
million in the fourth quarter of 2011.
Three Months Ended Percentage
Change
December 31, 2012 from
2012 2011 % of 2012 % of 2011 2011
U.S. $ in millions
All Others 481 440 9 % 8 % 9 %
OTC 269 217 5 % 4 % 24 %
Other Revenues 212 223 4 % 4 % (5 %)
Revenues by Geography for the Full Year 2012
Net revenues in the United States were $10.4 billion (51% of total revenues),
an increase of 19% compared to 2011, reflecting the inclusion of Cephalon
commencing in the fourth quarter of 2011 as well as strong revenues from both
specialty and generic medicines.
Net revenues in Europe were $5.7 billion (28% of total revenues), in line with
2011, or an increase of 8% in local currency terms. Revenues in Europe this
year benefited from the inclusion of Cephalon medicines as well as stronger
revenues from some of our specialty medicines, primarily Copaxone^®, following
the take-back of marketing and distribution rights, as well as continued
growth in our OTC business. This growth was offset by the negative foreign
currency effects (primarily the euro, Hungarian forint and the Polish zloty),
as well as lower generic sales due to ongoing macro-economic conditions and
healthcare reforms in key European markets, which increased generic
penetration while lowering prices of generic medicines. In addition, our
revenues were negatively impacted by the effect of our renegotiations with
some of the wholesalers in the region, which resulted in reduced stock levels.
Despite these conditions, the majority of the markets maintained or increased
profitability in local currency terms, as a result of our strategy to focus on
a profitable commercial model in Europe.
Net revenues in the Rest of the World totaled $4.2 billion (21% of total
revenues), an increase of 9% compared to 2011. In local currency terms, ROW
revenues grew by 13%. The increase during the year was primarily due to the
consolidation of a full year of our acquisitions in Japan, higher revenues in
Russia and other Eastern European markets, as well as strong growth in Latin
America. In addition we saw growth of our OTC business in many of these
countries. This growth was partially offset by weaker performance in Canada,
due primarily to government-imposed price reforms. Revenues in our mature
generic markets (Canada and Israel) totaled $1.3 billion in 2012, a decrease
of 9% compared to 2011. Revenues in our emerging generic markets (Japan,
Russia, LATAM and other ROW countries) totaled $2.9 billion, an increase of
19% from the comparable year.
Year Ended Percentage Percentage
December 31, Change Change
2012 2011 % of % of 2012 from 2012 from
2012 2011 2011 2011
U.S. $ in millions in local
currencies
United
States:
Generic 4,381 3,957 21 % 22 % 11 % 11 %
Specialty 5,857 4,804 29 % 26 % 22 % 22 %
Others 200 39 1 % § 413 % 413 %
Total
United 10,438 8,800 51 % 48 % 19 % 19 %
States
Europe*:
Generic 3,387 3,810 17 % 21 % (11 %) (3 %)
Specialty 1,563 1,101 7 % 6 % 42 % 53 %
Others 723 749 4 % 4 % (3 %) §
Total 5,673 5,660 28 % 31 % § 8 %
Europe
Rest of
the World:
Generic 2,617 2,429 13 % 13 % 8 % 10 %
Specialty 730 588 4 % 3 % 24 % 31 %
Others 859 835 4 % 5 % 3 % 8 %
Total Rest
of the 4,206 3,852 21 % 21 % 9 % 13 %
World
Total 20,317 18,312 100 % 100 % 11 % 14 %
Revenues
*All members of the European Union as well as Switzerland and Norway.
§ Less than 0.5%.
Revenues by Product Line for the Full Year 2012
Generic medicines net revenues were $10.4 billion (including API sales of $796
million), an increase of 2% compared to $10.2 billion in 2011. Generic
revenues comprised 51% of total revenues for the year, compared to 56% in
2011. Generic revenues consisted of:
* U.S. revenues of $4.4 billion, an increase of 11% compared to 2011. The
U.S. generics business benefited from the launch of 23 new medicines
throughout the year, including generic versions of ACTOS^® and ACTOplus
met^®, as well as several medicines that were either exclusive,
semi-exclusive or in limited competition markets such as the generic
versions of Lexapro^® Provigil^® and TriCor^®.
* European revenues of $3.4 billion, a decrease of 11%, or 3% in local
currency terms, compared to 2011. This decrease was caused primarily by
ongoing macro-economic conditions and healthcare reforms in key European
markets. To address these conditions, we are continuing to adjust our
strategy in Europe to focus more on profitable and sustainable growth
rather than market share. The decrease this year also reflects the fact
that revenues last year were high as a result of the launch of a generic
version of Lipitor^® in the U.K. during 2011.
* ROW revenues of $2.6 billion, an increase of 8%, or 10% in local currency
terms, compared to 2011. We had strong performances in Latin America and
Russia, and also benefited from the consolidation of a full year of our
acquisitions in Japan, which were partially offset by a decrease in
generics sales in Canada, due primarily to government-imposed price
reforms.
Year Ended December 31, Percentage
Change
2012 2011 % of 2012 % of 2011 2012 from
2011
U.S. $ in millions
Generic $ 10,385 $ 10,196 51 % 56 % 2 %
Medicines
API 796 747 4 % 4 % 7 %
Specialty medicines net revenues were $8.2 billion, an increase of 26%
compared to $6.5 billion in 2011. Specialty revenues consisted of:
* U.S. revenues of $5.9 billion, an increase of 22% compared to 2011.
* European revenues of $1.6 billion, an increase of 42%, or 53% in local
currency terms compared to 2011.
* ROW revenues of $730 million, an increase of 24%, or 31% in local currency
terms compared to 2011.
Specialty revenues comprised 40% of total revenues for the year, compared to
35% in 2011.
The increase in specialty medicines revenues from 2011 was primarily due to
the full year inclusion of Cephalon’s medicines (mainly Treanda^® with $608
million, Provigil^® with $417 million, and Nuvigil^® with $347 million) and
strong sales of Teva legacy medicines, primarily Copaxone^® and Azilect^®.
Global revenues recorded by Teva for Copaxone^®, the leading multiple
sclerosis therapy in the U.S. and globally, increased 12%, or 14% in local
currency terms, to $4.0 billion compared to $3.6 billion in 2011. The increase
primarily resulted from the successful take-back of marketing and distribution
rights in Europe and increased sales in ROW markets. In the U.S., sales
increased 4% to $2.9 billion, as a result of price increases taken throughout
the year. Sales outside the U.S. were $1.1 billion, an increase of 39%, or 49%
in local currency terms, compared to 2011, mainly as a result of the take back
in Europe and strong sales in Russia.
Azilect^® revenues recorded by Teva increased 14% to $330 million, while
global in-market revenues increased 7% to $420 million, primarily due to
increased demand in the U.S. and Europe and a price increase.
In addition, during the year we successfully launched several specialty
medicines including QNASL^®, Synribo^® and ProAir^® Dose Counter.
Year Ended December 31, Percentage
Change
2012 2011 % of % of 2012 from
2012 2011 2011
U.S. $ in millions
Specialty 8,150 6,493 40 % 35 % 26 %
Medicines
CNS 5,464 4,412 27 % 24 % 24 %
Copaxone® 3,996 3,570 20 % 19 % 12 %
Provigil® 417 350 2 % 2 % 19 %
Nuvigil® 347 86 2 % § 303 %
Azilect® 330 290 2 % 2 % 14 %
Oncology 860 268 4 % 1 % 221 %
Treanda® 608 131 3 % 1 % 364 %
Respiratory 856 878 4 % 5 % (3 %)
ProAir® 406 436 2 % 2 % (7 %)
Qvar® 297 305 1 % 2 % (3 %)
Women's Health 448 438 2 % 2 % 2 %
Other Specialty 522 497 3 % 3 % 5 %
§ Less than 0.5%.
OTC net revenues for the year were $936 million, an increase of 22%, or 28% in
local currency terms, compared to $765 million in 2011, primarily due to
growth in sales in Latin America and Europe, as well as sales of OTC products
in the U.S. to The Procter & Gamble Company, pursuant to a manufacturing
agreement, which commenced in November 2011. During the year, our joint
venture, PGT Healthcare, successfully launched the Vicks^® product line in
Hungary, Russia, Poland and the Czech Republic.
Other net revenues for the year were $846 million, mostly from the
distribution of third-party products in Israel and Hungary, compared to $858
million in 2011.
Year Ended December Percentage
31, Change
2012 2011 % of % of 2012 from 2011
2012 2011
U.S. $ in millions
All Others 1,782 1,623 9 % 9 % 10 %
OTC 936 765 5 % 4 % 22 %
Other 846 858 4 % 5 % (1 %)
Revenues
Key Metrics for the Fourth Quarter 2012
Exchange rate differences between this quarter and the fourth quarter of 2011
reduced our revenues by approximately $50 million, while having a minor
positive impact on operating income. The impact on revenues resulted primarily
from the weakening of certain currencies (primarily the euro, Japanese yen,
and Israeli shekel) relative to the U.S. dollar.
Non-GAAP Information This quarter, we had net non-GAAP charges of $822
million, consisting primarily of impairments of $495 million and amortization
of purchased intangible assets of $284 million. Accordingly, the non-GAAP
figures below are adjusted to exclude these and certain other items, as
follows:
* Impairments of $495 million, primarily related to the termination of the
agreements with CureTech, as part of the on-going review of our R&D
portfolio, impairments to manufacturing facilities, mostly in the U.S. and
particularly in Irvine, and impairment of Gabitril®, due to the
introduction of generic competition;
* Amortization of purchased intangible assets totaling $284 million, of
which $271 million are included in cost of goods sold and the remaining
$13 million in selling and marketing expenses;
* Restructuring and acquisition expenses of $136 million, mostly related to
the integration of Cephalon and Theramex;
* Purchase of in-process R&D of $68 million, primarily related to the
Neurosearch and Xenon agreements;
* Financial expenses of $32 million related to debt refinancing;
* Costs of $25 million related to regulatory actions in our injectable and
animal health plants;
* $8 million in legal settlement expenses; and
* Related tax benefits and minority interest benefits in CureTech of $226
million.
Teva believes that excluding such items facilitates investors' understanding
of the Company's business. See the attached tables for a reconciliation of
U.S. GAAP results to the adjusted non-GAAP figures.
Quarterly non-GAAP operating income of $1.3 billion, down 22% compared to the
fourth quarter of 2011. Quarterly GAAP operating income was $330 million
compared to $610 million in the fourth quarter of 2011.
Non-GAAP net income and diluted EPS of $1.1 billion and $1.32 in the quarter
compared to $1.4 billion and $1.59 in the fourth quarter of 2011. GAAP net
income and GAAP EPS of $320 million and $0.37 in the quarter compared to $506
million and $0.57 in the fourth quarter of 2011.
Non-GAAP gross profit margin was 58.7% in the quarter, compared to 60.7% in
the fourth quarter of 2011. The decrease is primarily the result of the
commencement of generic competition for Provigil^®, coupled with lower
revenues from new generic launches in the United States in the fourth quarter
of 2012, and was partially offset by higher sales of Copaxone^®. GAAP gross
profit margin was 53.1% in the quarter, compared to 50.8% in the fourth
quarter of 2011, which was impacted by inventory step-up charges in the fourth
quarter of 2011.
Q4 2012 FY 2012
Product Line Non-GAAP Gross Profit Margin Non-GAAP Gross Profit
Margin
(% of total net revenues for (% of total net revenues
the line) for the line)
Generic (incl API) 43.4% 43.5%
Specialty (excl MS) 84.5% 86.8%
MS 87.5% 89.2%
Net Research & Development (R&D) expenditures in the quarter (excluding
purchase of in-process R&D) totaled $374 million, or 7.1% of revenues,
compared to $371 million, or 6.5% of revenues in the fourth quarter of 2011.
The increase in R&D spending primarily reflects the progress in development
activities by our new integrated R&D organization. Gross R&D, before
reimbursement from third parties for certain R&D expenses and including
in-process R&D, totaled approximately $472 million, or 9.0% of revenues.
Q4 2012 FY 2012
Product Line Non-GAAP R&D Expenses Non-GAAP R&D Expenses
(% of total net revenues for (% of total net revenues
the line) for the line)
Generic (incl API) 5.3% 4.7%
Specialty (excl MS) 19.8% 17.1%
MS 2.3% 2.1%
Selling and Marketing expenditures (excluding amortization of purchased
intangible assets) totaled $1,043 million, or 19.9% of revenues, in the
quarter, compared to $1,025 million, or 18.1% of revenues in the fourth
quarter of 2011. The increase was primarily due to higher expenses on
specialty medicines as well as to the take-back of Copaxone^® in Europe,
partially offset by exchange rate differences and lower royalty payments made
on generic medicines in the U.S.
Q4 2012 FY 2012
Product Line Non-GAAP S&M Expenses Non-GAAP S&M Expenses
(% of total net revenues for (% of total net revenues
the line) for the line)
Generic (incl API) 19.0% 19.0%
Specialty (excl MS) 31.8% 28.4%
MS 15.6% 12.6%
General and Administrative (G&A) expenditures totaled $318 million in the
quarter, or 6.1% of revenues, compared with $315 million, or 5.5% of revenues,
for the fourth quarter of 2011.
Non-GAAP financial expenses totaled $114 million in the quarter (excluding
one-time notes' repayment expense of $32 million), compared with $68 million
in the fourth quarter of 2011. The increase is mainly due to higher interest
expenses resulting from the additional debt incurred in connection with the
acquisition of Cephalon as well as expenses related to debt refinancing during
the year and certain foreign exchange differences incurred this quarter.
The provision for non-GAAP tax for the quarter amounted to $80 million on
pre-tax non-GAAP income of $1.2 billion. The provision for tax in the fourth
quarter of 2011 was $239 million on pre-tax income of $1.7 billion. The annual
tax rate for 2012 compared to the annual tax rate in 2011 is slightly higher
primarily as a result of the change in geographic and product mix following
the Cephalon acquisition. On a GAAP basis, we recorded a tax benefit of $110
million this quarter as a result of a reduction in deferred tax liabilities,
which resulted from impairments and amortization relating to assets that had a
tax rate higher than our average tax rate.
Cash flow from operations during the quarter was approximately $1.6 billion,
compared to $1.4 billion in the fourth quarter of 2011, an increase of 10%.
Free cash flow, excluding net capital expenditures and dividends, was $1.0
billion, an 8% increase compared to $958 million in the fourth quarter of
2011. The increase in cash flow mainly reflects a decrease in the level of
receivables during the quarter. Cash and marketable securities on December 31,
2012 amounted to $3.1 billion (before the redemption, in January 2013, of $1
billion of 1.7% senior notes due 2014).
During the quarter, share repurchases totaled approximately 12.7 million
shares for an aggregate cost of approximately $0.5 billion. Since the
beginning of 2012, Teva has repurchased 28.1 million shares for approximately
$1.2 billion as part of $3.0 billion share repurchase plan authorized in
December 2011. As a result of the repurchases, the weighted average fully
diluted share count at December 31, 2012 was reduced by approximately
12 million shares from December 31, 2011.
For the fourth quarter of 2012, the weighted average share count for the fully
diluted earnings per share calculation was 868 million on a GAAP and non-GAAP
basis. At December 31, 2012, the share count for calculating Teva's market
capitalization was approximately 857 million.
Total equity at December 31, 2012, was $22.9 billion, a decrease of $0.2
billion, compared to $23.1 billion at September 30, 2012. The decrease in
total equity is primarily a result of share repurchases and dividends
declared, partially offset by the GAAP net income of $320 million and positive
currency translation impact.
Dividend
The Board of Directors, at its meeting on February 5, 2013, declared a cash
dividend for the fourth quarter of 2012 of NIS 1.15 (approximately 31 cents
according to the rate of exchange on February 6, 2013) per share.
The record date will be February 21, 2013, and the payment date will be March
7, 2013. Tax will be withheld at a rate of 15%.
Conference Call
Teva will host a conference call to discuss its fourth quarter and full year
2012 results on Thursday, February 7, 2013, at 8:00 a.m. ET. The call will be
webcast and can be accessed through the Company's website at
www.tevapharm.com, or by dialing in to 1.888.771.4371 (U.S. and Canada) or
1.847.585.4405 (International). The conference ID is 34121499. Following the
conclusion of the call, a replay of the webcast will be available within 24
hours at the Company's website at www.tevapharm.com. A replay of the call will
also be available until February 14, 2013, at 11:59 p.m. ET, by calling
1.888.843.7419 (U.S. and Canada) or 1.630.652.3042 (International). The
Conference ID is 34121499#.
About Teva
Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) is a leading global
pharmaceutical company, committed to increasing access to high-quality
healthcare by developing, producing and marketing affordable generic drugs as
well as innovative and specialty pharmaceuticals and active pharmaceutical
ingredients. Headquartered in Israel, Teva is the world's leading generic drug
maker, with a global product portfolio of more than 1,000 molecules and a
direct presence in about 60 countries. Teva's branded businesses focus on CNS,
oncology, pain, respiratory and women's health therapeutic areas as well as
biologics. Teva currently employs approximately 46,000 people around the world
and reached $20.3 billion in net revenues in 2012.
Teva's Safe Harbor Statement under the U. S. Private Securities Litigation
Reform Act of 1995:
This release contains forward-looking statements, which express the current
beliefs and expectations of management. Such statements are based on
management’s current beliefs and expectations and involve a number of known
and unknown risks and uncertainties that could cause our future results,
performance or achievements to differ significantly from the results,
performance or achievements expressed or implied by such forward-looking
statements. Important factors that could cause or contribute to such
differences include risks relating to: our ability to develop and
commercialize additional pharmaceutical products, competition for our
innovative products, especially Copaxone^® (including competition from
innovative orally-administered alternatives, as well as from potential
purported generic equivalents), competition for our generic products
(including from other pharmaceutical companies and as a result of increased
governmental pricing pressures), competition for our specialty pharmaceutical
businesses, our ability to achieve expected results through our innovative R&D
efforts, the effectiveness of our patents and other protections for innovative
products, decreasing opportunities to obtain U.S. market exclusivity for
significant new generic products, our ability to identify, consummate and
successfully integrate acquisitions, the effects of increased leverage as a
result of the acquisition of Cephalon, the extent to which any manufacturing
or quality control problems damage our reputation for high quality production
and require costly remediation, our potential exposure to product liability
claims to the extent not covered by insurance, increased government scrutiny
in both the U.S. and Europe of our agreements with brand companies, potential
liability for sales of generic products prior to a final resolution of
outstanding patent litigation, including that relating to the generic version
of Protonix^®, our exposure to currency fluctuations and restrictions as well
as credit risks, the effects of reforms in healthcare regulation and
pharmaceutical pricing and reimbursement, any failures to comply with complex
Medicare and Medicaid reporting and payment obligations, governmental
investigations into sales and marketing practices (particularly for our
specialty pharmaceutical products), uncertainties surrounding the legislative
and regulatory pathway for the registration and approval of
biotechnology-based products, adverse effects of political or economical
instability, major hostilities or acts of terrorism on our significant
worldwide operations, interruptions in our supply chain or problems with our
information technology systems that adversely affect our complex manufacturing
processes, any failure to retain key personnel or to attract additional
executive and managerial talent, the impact of continuing consolidation of our
distributors and customers, variations in patent laws that may adversely
affect our ability to manufacture our products in the most efficient manner,
potentially significant impairments of intangible assets and goodwill,
potential increases in tax liabilities, the termination or expiration of
governmental programs or tax benefits, environmental risks and other factors
that are discussed in our Annual Report on Form 20-F for the year ended
December 31, 2011 and in our other filings with the U.S. Securities and
Exchange Commission. Forward-looking statements speak only as of the date on
which they are made and the Company undertakes no obligation to update or
revise any forward-looking statement, whether as a result of new information,
future events or otherwise.
Teva is providing herein certain product line revenue and profit
information. The Company believes that such information, including comparisons
to forecasts, can be useful to investors. The additional information provided
is not a replacement for or a subset of the Company’s current segment
information. The Company is in the process of evaluating its reporting
structure as part of a review of its organization and business, and plans to
provide, if appropriate, entity-wide disclosure and segment information
reflecting the new structure of the organization and business accordingly. No
inference regarding the Company’s segment reporting in 2013 should be drawn
from the information included herein.
Consolidated Statements of Income
(U.S. dollars in millions, except share and per share
data)
Three months ended Year ended
December 31, December 31,
2012 2011 2012 2011
Unaudited Unaudited Audited Audited
Net revenues 5,249 5,676 20,317 18,312
Cost of sales 2,464 2,795 9,665 8,797
Gross profit 2,785 2,881 10,652 9,515
Research and
development 442 371 1,356 1,095
expenses – net
Selling and 1,056 1,036 3,879 3,478
marketing expenses
General and
administrative 318 315 1,238 932
expenses
Impairments, loss
contingencies, 639 549 1,974 901
restructuring and
others – net
Operating income 330 610 2,205 3,109
Financial expenses 146 68 386 153
– net
Income before 184 542 1,819 2,956
income taxes
Provision for (110 ) 18 (137 ) 127
income tax
Share in losses of
associated 14 19 46 61
companies – net
Net income 280 505 1,910 2,768
Net income (loss)
attributable to (40 ) (1 ) (53 ) 9
non-controlling
interests
Net income
attributable to 320 506 1,963 2,759
Teva
Earnings per share Basic
attributable to ($) 0.37 0.57 2.25 3.10
Teva:
Diluted 0.37 0.57 2.25 3.09
($)
Weighted average
number of shares Basic 867 885 872 890
(in millions):
Diluted 868 886 873 893
Non-GAAP net
income 1,142 1,407 4,671 4,438
attributable to
Teva:*
Non-GAAP earnings
per share Basic 1.32 1.59 5.36 4.98
attributable to ($)
Teva:
Diluted 1.32 1.59 5.35 4.97
($)
Weighted average
number of shares Basic 867 885 872 890
(in millions):
Diluted 868 886 873 893
* See
reconciliation
attached.
Condensed Balance Sheets
(U.S. dollars in millions)
December 31, December 31,
2012 2011
ASSETS Audited Audited
Current assets:
Cash and cash equivalents 2,879 1,096
Accounts receivable 5,572 6,213
Inventories 5,502 5,012
Deferred taxes 1,142 966
Other current assets 1,260 1,166
Total current assets 16,355 14,453
Goodwill 18,856 18,293
Identifiable intangible assets, net 7,745 10,316
Property, plant and equipment, net 6,315 5,947
Other non-current assets 1,338 1,133
Total assets 50,609 50,142
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities of 3,006 4,280
long term liabilities
Sales reserves and allowances 4,934 4,428
Accounts payable and accruals 3,376 3,572
Other current liabilities 1,572 1,396
Total current liabilities 12,888 13,676
Long-term liabilities:
Deferred income taxes 1,849 2,610
Other taxes and long term payables 1,293 1,277
Senior notes and loans 11,712 10,236
Total long term liabilities 14,854 14,123
Equity:
Teva shareholders’ equity 22,768 22,195
Non-controlling interests 99 148
Total equity 22,867 22,343
Total liabilities and equity 50,609 50,142
Condensed Cash Flow
(U.S. Dollars in millions)
Three months ended Year ended
December 31, December 31,
2012 2011 2012 2011
Unaudited Unaudited Audited Audited
Operating activities:
Net income 280 505 1,910 2,768
Net change in operating assets 448 611 414 594
and liabilities
Items not involving cash flow 849 312 2,248 772
Net cash provided by operating 1,577 1,428 4,572 4,134
activities
Net cash used in investing (409) (5,491) (1,134) (7,601)
activities
Net cash provided by (used in) 266 4,092 (1,678) 3,336
financing activities
Translation adjustment on cash 13 (18) 23 (21)
and cash equivalents
Net change in cash and cash 1,447 11 1,783 (152)
equivalents
Balance of cash and cash
equivalents at the beginning 1,432 1,085 1,096 1,248
of period
Balance of cash and cash
equivalents at the end of 2,879 1,096 2,879 1,096
period
Revenues by Product line
(Unaudited)
Three Months Ended Percentage
Change
December 31,
2012 2011 % of % of 2011 2012 from
2012 2011
U.S. $ in millions
Generic Medicines $ 2,662 $ 2,982 51 % 52 % (11 %)
API 202 197 4 % 3 % 3 %
Specialty Medicines 2,106 2,254 40 % 40 % (7 %)
CNS 1,340 1,562 26 % 28 % (14 %)
Copaxone® 1,059 927 20 % 16 % 14 %
Provigil® 25 350 § 6 % (93 %)
Nuvigil® 78 86 1 % 2 % (9 %)
Azilect® 86 83 2 % 1 % 4 %
Oncology 233 190 4 % 3 % 23 %
Treanda® 161 131 3 % 2 % 23 %
Respiratory 256 275 5 % 5 % (7 %)
ProAir® 120 145 2 % 3 % (17 %)
Qvar® 92 93 2 % 2 % (1 %)
Women's Health 132 93 2 % 2 % 42 %
Other Specialty 145 134 3 % 2 % 8 %
All Others 481 440 9 % 8 % 9 %
OTC 269 217 5 % 4 % 24 %
Other Revenues 212 223 4 % 4 % (5 %)
Total $ 5,249 $ 5,676 100 % 100 % (8 %)
§ Less than 0.5%
Revenues by Product line
(Audited)
Year Ended December 31, Percentage
Change
2012 2011 % of % of 2012 from
2012 2011 2011
U.S. $ in millions
Generic $ 10,385 $ 10,196 51 % 56 % 2 %
Medicines
API 796 747 4 % 4 % 7 %
Specialty 8,150 6,493 40 % 35 % 26 %
Medicines
CNS 5,464 4,412 27 % 24 % 24 %
Copaxone® 3,996 3,570 20 % 19 % 12 %
Provigil® 417 350 2 % 2 % 19 %
Nuvigil® 347 86 2 % § 303 %
Azilect® 330 290 2 % 2 % 14 %
Oncology 860 268 4 % 1 % 221 %
Treanda® 608 131 3 % 1 % 364 %
Respiratory 856 878 4 % 5 % (3 %)
ProAir® 406 436 2 % 2 % (7 %)
Qvar® 297 305 1 % 2 % (3 %)
Women's Health 448 438 2 % 2 % 2 %
Other Specialty 522 497 3 % 3 % 5 %
All Others 1,782 1,623 9 % 9 % 10 %
OTC 936 765 5 % 4 % 22 %
Other Revenues 846 858 4 % 5 % (1 %)
Total $ 20,317 $ 18,312 100 % 100 % 11 %
§ Less than
0.5%.
Non GAAP reconciliation items
(U.S. Dollars in millions)
Three months ended Year ended
December 31, December 31,
2012 2011 2012 2011
Unaudited Unaudited Audited Audited
Impairment of long-lived assets 495 171 1,071 201
Amortization of purchased
intangible assets - under cost 271 214 1,228 668
of sales
Related tax effect (190) (221) (798) (465)
Restructuring, acquisition and 136 123 188 229
other expenses
Purchase of research and 68 - 73 15
development in process
Minority interest changes
related to impairments of (36) - (36) -
co-owned assets
Financial expenses related to
early repayment of senior notes 32 - 32 -
and other
Costs related to regulatory
actions taken in facilities - 25 40 128 170
under cost of sales
Amortization of purchased
intangible assets - under 13 11 44 38
selling and marketing expenses
Expense in connection with 8 255 45 441
legal settlements and reserves
Inventory step-up - under cost - 308 63 352
of sales
Provision for loss contingency - - 670 30
Reconciliation between reported Net Income attributable to Teva and Earnings per share as reported under US
GAAP to Non-GAAP Net Income attributable to Teva and Earnings per share
Year ended December 31, 2012 Year ended December 31, 2011
Audited, U.S. dollars and shares in millions (except per share amounts)
GAAP Non-GAAP Non- % of Net GAAP Non-GAAP Non- % of Net
Adjustments GAAP Revenues Adjustments GAAP Revenues
Gross profit 10,652 1,419 12,071 59% 9,515 1,190 10,705 58%
(1)
Operating 2,205 3,510 5,715 28% 3,109 2,144 5,253 29%
income (1)(2)
Net income
attributable 1,963 2,708 4,671 23% 2,759 1,679 4,438 24%
to Teva
(1)(2)(3)
Earnings per
share
attributable 2.25 3.10 5.35 3.09 1.88 4.97
to Teva -
diluted (4)
Amortization
(1) of purchased 1,228 668
intangible
assets
Costs related
to regulatory 128 170
actions taken
in facilities
Inventory 63 352
step-up
Gross profit 1,419 1,190
adjustments
Impairment of
(2) long-lived 1,071 201
assets
Provision for
loss 670 30
contingency
Restructuring,
acquisition 261 244
and other
expenses
Expense in
connection
with legal 45 441
settlements
and reserves
Amortization
of purchased 44 38
intangible
assets
2,091 954
Operating
income 3,510 2,144
adjustments
(3) Tax effect and (802) (465)
other items
Net income 2,708 1,679
adjustments
The weighted average number of shares was 873 and 893 million for the years ended December 31, 2012 and
(4) 2011, respectively.
Non-GAAP earnings per share can be reconciled with GAAP earnings per share by dividing each of the
amounts included in
footnotes 1-3 above by the applicable weighted average share number.
Reconciliation between reported Net Income attributable to Teva and Earnings per share as reported under
US GAAP to Non-GAAP Net Income attributable to Teva and Earnings per share
Three months ended December 31, 2012 Three months ended December 31, 2011
Unaudited, U.S. dollars and shares in millions (except per share amounts)
GAAP Non-GAAP Non- % of Net GAAP Non-GAAP Non- % of Net
Adjustments GAAP Revenues Adjustments GAAP Revenues
Gross profit 2,785 296 3,081 59 % 2,881 562 3,443 61 %
(1)
Operating 330 1,016 1,346 26 % 610 1,122 1,732 31 %
Profit (1)(2)
Net income
attributable 320 822 1,142 22 % 506 901 1,407 25 %
to Teva
(1)(2)(3)
Earnings per
share
attributable 0.37 0.95 1.32 0.57 1.02 1.59
to Teva -
Diluted (4)
Amortization
(1) of purchased 271 214
intangible
assets
Costs related
to regulatory 25 40
actions taken
in facilities
Inventory - 308
step-up
Gross profit 296 562
adjustments
Impairment of
(2) long-lived 495 171
assets
Restructuring,
acquisition 204 123
and other
expenses
Amortization
of purchased 13 11
intangible
assets
Expense
(income) in
connection 8 255
with legal
settlements
and reserves
720 560
Operating
profit 1,016 1122
adjustments
(3) Tax effect and (194 ) (221 )
other items
Net income 822 901
adjustments
The weighted average number of shares was 868 and 886 million for the three months ended December
31, 2012 and 2011, respectively.
(4) Non-GAAP earnings per share can be reconciled with GAAP earnings per share by dividing each of the
amounts included in footnotes 1-3
above by the applicable weighted average share number.
Revenues by Geographic Area
(Unaudited)
Three Months
Ended Percentage Percentage
Change Change
December 31,
2012 2011 % of % of 2012 from 2012 from
2012 2011 2011 2011
U.S. $ in in local
millions currencies
United
States:
Generic 1,034 1,242 20 % 22 % (17 %) (17 %)
Specialty 1,527 1,770 29 % 31 % (14 %) (14 %)
Others 60 33 1 % 1 % 82 % 82 %
Total
United 2,621 3,045 50 % 54 % (14 %) (14 %)
States
Europe*:
Generic 930 982 18 % 17 % (5 %) (3 %)
Specialty 420 329 8 % 6 % 28 % 32 %
Others 177 183 3 % 3 % (3 %) (4 %)
Total 1,527 1,494 29 % 26 % 2 % 5 %
Europe
Rest of
the World:
Generic 698 758 13 % 13 % (8 %) (7 %)
Specialty 159 155 3 % 3 % 3 % 4 %
Others 244 224 5 % 4 % 9 % 11 %
Total Rest
of the 1,101 1,137 21 % 20 % (3 %) (2 %)
World
Total 5,249 5,676 100 % 100 % (8 %) (7 %)
Revenues
*All members of the European Union as well as
Switzerland and Norway.
Revenues by Geographic Area
(Audited)
Year Ended Percentage Percentage
December 31, Change Change
2012 2011 % of % of 2012 from 2012 from
2012 2011 2011 2011
U.S. $ in millions in local
currencies
United
States:
Generic 4,381 3,957 21% 22% 11% 11%
Specialty 5,857 4,804 29% 26% 22% 22%
Others 200 39 1% § 413% 413%
Total
United 10,438 8,800 51% 48% 19% 19%
States
Europe*:
Generic 3,387 3,810 17% 21% (11%) (3%)
Specialty 1,563 1,101 7% 6% 42% 53%
Others 723 749 4% 4% (3%) §
Total 5,673 5,660 28% 31% § 8%
Europe
Rest of the
World:
Generic 2,617 2,429 13% 13% 8% 10%
Specialty 730 588 4% 3% 24% 31%
Others 859 835 4% 5% 3% 8%
Total Rest
of the 4,206 3,852 21% 21% 9% 13%
World
Total 20,317 18,312 100% 100% 11% 14%
Revenues
*All members of the European Union as well as Switzerland and Norway.
§ Less than 0.5%.
Contact:
Teva Pharmaceutical Industries Ltd.
IR:
Kevin C. Mannix, (215) 591-8912
United States
or
Kristen Frank, (215) 591-8908
United States
or
Tomer Amitai, 972 (3) 926-7656
Israel
or
PR
Hadar Vismunski-Weinberg, 972 (3) 926-7687
Israel
or
Denise Bradley, (215) 591-8974
United States
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