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Forest Laboratories, Inc. Reports Fiscal Year Fourth Quarter 2013 Earnings Per Share of $0.17 Including $0.08 Per Share of



  Forest Laboratories, Inc. Reports Fiscal Year Fourth Quarter 2013 Earnings
  Per Share of $0.17 Including $0.08 Per Share of Acquisition Amortization

   Company Provides Fiscal Year 2014 Non-GAAP EPS Guidance in the Range of
                                 $0.80-$1.00

     Including Acquisition Amortization GAAP EPS will be in the Range of
                                 $0.40-$0.60

Business Wire

NEW YORK -- April 23, 2013

Forest Laboratories, Inc. (NYSE: FRX), an international pharmaceutical
manufacturer and marketer, today announced that reported diluted earnings per
share equaled $0.17 in the fourth quarter of fiscal 2013. Reported diluted
earnings per share in the fourth quarter of fiscal 2012 was $0.72. Excluding
acquisition related amortization, non-GAAP EPS in the fourth fiscal quarter of
2013 equaled $0.25 as compared with $0.77 in the fourth quarter of fiscal
2012.

Product Sales Performance

Net sales for the quarter decreased 21.4% to $783.2 million, from $996.9
million in the prior year quarter. The decrease in sales was due to the loss
of patent exclusivity on March 14, 2012 for Lexapro® (escitalopram oxalate),
partially offset by sales of the Company’s next generation products.

Central Nervous System Franchise

  * Namenda® (memantine HCl), an NMDA receptor antagonist for the treatment of
    moderate to severe Alzheimer’s disease, recorded sales of $438.8 million
    during the quarter, an increase of 11.6% from last year’s fourth quarter.
  * Viibryd® (vilazodone HCl), an SSRI and a partial agonist at serotonergic
    5-HT[1A] receptors for the treatment of adults with major depressive
    disorder, recorded sales of $44.6 million during the quarter. Sales of
    Viibryd in last year’s fiscal fourth quarter were $24.9 million. Viibryd
    was launched in August 2011.

Respiratory Franchise

  * Daliresp® (roflumilast), a PDE4 enzyme inhibitor for the treatment to
    reduce the risk of exacerbations in patients with chronic obstructive
    pulmonary disease (COPD), recorded sales of $23.2 million for the quarter.
    Sales of Daliresp in last year’s fiscal fourth quarter were $13.1 million.
    Daliresp was launched in August 2011.
  * Tudorza^TM (aclidinium bromide inhalation powder), an anticholinergic
    indicated for the long-term maintenance treatment of bronchospasm
    associated with COPD, recorded sales of $10.8 million during the quarter.
    Tudorza was launched in December 2012 and recorded initial trade stocking
    of $12.2 million in the fiscal third quarter.

Bystolic®  (nebivolol), a beta-blocker for the treatment of hypertension,
recorded sales of $132.0 million, an increase of 36.2% over the year-ago
period.

Linzess™  (linaclotide), a guanylate cyclase agonist for the treatment of both
irritable bowel syndrome with constipation and chronic idiopathic constipation
in adults recorded sales of $4.5 million during the quarter. Linzess was
launched in December 2012 and recorded initial trade stocking of $19.2 million
in the fiscal third quarter.

Savella®  (milnacipran HCl), a selective serotonin norepinephrine dual
reuptake inhibitor for the management of fibromyalgia, recorded sales of $26.1
million, an increase of 3.2% from last year’s fourth quarter.

Teflaro® (ceftaroline fosamil), a broad-spectrum bactericidal cephalosporin
antibiotic for the treatment of adults with community-acquired bacterial
pneumonia and with acute bacterial skin and skin structure infections,
recorded sales of $13.1 million, an increase of 65.8% over last year’s fourth
quarter. Teflaro was launched in March 2011.

Contract Revenue  was $30.6 million in the current quarter compared to $46.8
million last year. Benicar® (olmesartan medoxomil) co-promotion income totaled
$24.5 million, a decrease of $5.1 million, compared to $29.6 million in last
year’s fourth quarter. Last year’s fourth quarter also included $17.0 million
in royalties from Mylan, Inc. on its sales of generic Lexapro.

Cost of Sales  as a percentage of sales was 22.7% compared with 21.8% in last
year’s fourth quarter.

Selling, General and Administrative expense for the current quarter was $372.7
million as compared to $410.5 million in the year-ago quarter. The current
level of spending reflects the resources and activities required to support
our currently marketed products, particularly our newest products: Linzess,
Tudorza, Viibryd, Daliresp and Teflaro.

Research and Development for the current quarter was $240.3 million compared
with $213.9 million in last year’s fourth quarter. The current quarter and
prior year quarter included $17.0 million and $5.0 million, respectively in
development milestone expenses.

Income Tax benefit for the quarter was $14.6 million, which reflects the
impact of the reinstatement of the Research and Development tax credit.

Reported net income for the quarter ended March 31, 2013 was $45.4 million or
$0.17 per share compared to $192.7 million or $0.72 per share reported for
last year’s fourth quarter.

Diluted Weighted Average Shares Outstanding  at March 31, 2013 were
approximately 267,259,000.

Twelve-month Results

Revenues for the twelve months ended March 31, 2013 decreased 31.8% to $3.1
billion from $4.6 billion in the prior year.

The Company reported a net loss for the twelve months ended March 31, 2013 of
$32.1 million compared to net income of $979.1 million reported in the prior
year. Reported losses per share of $0.12 in the current year’s twelve months
compared to diluted earnings per share of $3.57 in last year’s twelve months.
Excluding acquisition related amortization and certain upfront licensing
payments, non-GAAP EPS for fiscal year 2013 equaled $0.45 as compared with
$3.88 for fiscal year 2012.

Chairman and Chief Executive Officer

Howard Solomon, Chairman and Chief Executive Officer of Forest, said: “Fiscal
year 2013 was an important transition year for our Company following the loss
of patent exclusivity for Lexapro in March 2012. In the last few years we have
had the confluence of two major events – the expiration of our patent on
Lexapro, and the launch of seven new products – the earliest of which was
Bystolic which was launched in 2008, followed by six new product launches
including two this past December. Assuming regulatory approval, two additional
new products will be launched this year.

“Losing Lexapro meant losing half of our sales and a larger portion of our
profits. Launching seven new products meant incurring the large expense of the
launch itself and the intensive detailing to physicians to make them aware of
our new products and with related promotional activities, all of which are
essential for an effective launch. We have not compromised the effort
necessary to achieve effective physician awareness even though we have had to
deal with multiple launches. That confluence ultimately created a trough in
our earnings requiring that we report a loss for the fiscal year, something
that has not happened since fiscal 1997. However, it appears that on an annual
basis, we are beginning to extricate ourselves from that trough. In the last
quarter of fiscal 2013 we had a profit of $45.4 million which we expect will
ultimately grow as our new products and additional ones to be launched
continue to grow. Bystolic had sales in our last quarter of $132.0 million and
appears to be headed for annual sales in excess of five hundred million
dollars. We expect that other of our new products can equal or surpass even
that impressive achievement.

“We are pleased with the performance this quarter of two of our most recent
product launches, Tudorza and Linzess. It is only a few months into the launch
for these products, but they are performing well in-line with our
expectations. Our other new products, Bystolic, Savella, Teflaro, Daliresp and
Viibryd also turned in solid performances during the quarter. Collectively,
these seven next generation products had sales of $254.3 million in the
quarter, representing 51.3% growth in comparison to the comparable prior year
quarter. In addition, in the coming months we expect to launch Namenda XR, a
once-daily extended-release formulation of Namenda, for the treatment of mild
to severe dementia of the Alzheimer’s type.

“We are also pleased with the continued positive progress of our late stage
new product development pipeline. Last week we and our partner Almirall, S.A.
reported positive topline Phase III clinical trial results from the study of
the fixed dose combination of Tudorza and formoterol for the treatment of
patients with moderate to severe COPD. Also during this quarter, topline
results from a second Phase III clinical study of Tudorza and formoterol will
be reported as will topline results from a Phase III clinical trial from the
study of the fixed dose combination of Bystolic and valsartan for the
treatment of hypertension. Assuming the successful completion of these two
clinical development programs we plan to submit New Drug Applications (NDA) to
the FDA in early calendar 2014. We believe the clinical benefit of these new
fixed dose combinations may significantly increase the sales of our novel base
products.

“During the second half of calendar 2013 we expect FDA decisions for two
additional NDA filings – levomilnacipran, a serotonin norepinephrine reuptake
inhibitor for the treatment of major depressive disorder, and cariprazine for
the treatment of schizophrenia and acute mania associated with bipolar 1
disorder. Assuming their respective regulatory approvals in calendar 2013, we
will have achieved nine FDA approvals from seven different divisions of the
FDA in less than six years. Our portfolio of products would cover six major
therapeutic areas - anti-infective, cardiovascular, central nervous system,
gastrointestinal, respiratory and pain providing the Company with a
diversified range of commercial opportunities. To achieve all of this would be
an impressive accomplishment by any measure.

“As I have said before, it will take time for sales of our new products to
increase in volume and we expect that some of these new products will be
especially successful and that together these nine products, with other
products which we may obtain, will enable us to grow beyond our present patent
cliffs with a group of products with patent expiry in the next decade and some
well into that decade. This is a very exciting time for our Company and I am
confident that our corporate strategy is sound and we are in a great position
to succeed well into the future.”

Fiscal 2014 Guidance

Regarding the fiscal year ending March 31, 2014, the Company expects that GAAP
diluted earnings per share will be in a range of $0.40 to $0.60. This includes
acquisition related amortization and planned research and development
milestone payments related to existing pipeline products but does not include
any upfront licensing payments which may be made for additional product
development transactions or acquisitions that may occur during the fiscal
year.

Excluding acquisition related amortization non-GAAP earnings per share will be
in the range of $0.80 to $1.00.

Key assumptions supporting the fiscal year 2014 forecast include the
following:

Product Sales

  * Fiscal year 2014 total product sales of approximately $3.3 billion,
    compared with $2.9 billion reported in fiscal 2013. This includes sales
    for the anticipated launches of Namenda XR and levomilnacipran.
  * Sales of our next generation products total $1.32 billion, representing
    48.2% growth in comparison to fiscal 2013.

Central Nervous System Franchise

  * Namenda sales, including the launch of Namenda XR, of approximately $1.625
    billion compared with $1.5 billion reported in fiscal 2013.
  * Viibryd sales of approximately $220 million versus the $163 million
    reported in fiscal 2013.
  * Levomilnacipran sales of approximately $13 million.

Respiratory Franchise

  * Daliresp sales of approximately $110 million versus the $78 million
    reported in fiscal 2013.
  * Tudorza sales of approximately $90 million versus the $23 million reported
    in fiscal 2013.

Bystolic

  * Sales of approximately $535 million versus the $455 million reported in
    fiscal 2013.

Linzess

  * Sales of approximately $170 million versus the $24 million reported in
    fiscal 2013.

Savella

  * Sales of approximately $106 million compared with the $105 million
    reported in fiscal 2013.

Teflaro

  * Sales of approximately $60 million versus the $44 million reported in
    fiscal 2013.

Benicar earnings will decline approximately 32% from $126 million reported in
fiscal 2013. Per the agreement with Daiichi Sankyo, Forest’s active
co-promotion of Benicar ended in the first quarter of fiscal 2009 and the
residual royalty the Company receives will discontinue at the end of fiscal
2014.

Total Net Revenue

Approximately $3.5 billion, compared with $3.1 billion reported in fiscal 2013
(includes product sales as well as the earnings contribution from Benicar,
interest income and other income).

Selling, General and Administrative

Expense of approximately $1.75 billion. This expense includes funding
continued competitive levels of support behind currently promoted products
including Bystolic, Savella, Teflaro, Daliresp, Viibryd, Tudorza and Linzess.
In addition, the estimate includes spending for the upcoming launches of
Namenda XR and levomilnacipran.

Research and Development

Investment of approximately $835 million in support of the late-stage product
pipeline, including post-approval commitments for certain marketed products.
This projection includes planned milestone payments of approximately $60
million and represents, in total, a decrease of around 6% from the $893
million reported in fiscal year 2013, excluding initial licensing payments.

Income Tax

An effective tax rate for fiscal 2014 of approximately 23.5% which reflects
shifts in the mix of earnings among jurisdictions and the reinstatement of the
U.S. R&D tax credit in January 2013.

Shares Outstanding

Diluted shares outstanding will average approximately 268,000,000 for the
fiscal year ending March 31, 2014 and assumes no shares will be repurchased.

Amortization Arising From Business Combinations and Acquisitions of Product
Rights

Cost of sales - $0.16 per share

Selling, general and administrative - $0.24 per share

Use of Non-GAAP Financial Information

Forest provides non-GAAP income and non-GAAP EPS financial measures as
alternative views of the Company’s performance. These measures exclude certain
items (including costs, expenses, gains/ (losses) and other specified items)
due to their significant and/or unusual individual nature and the impact they
have on the analysis of underlying business performance and trends. Management
reviews these items individually and believes excluding these items provides
information that enhances investors’ understanding of the Company’s financial
performance. The information on non-GAAP income and non-GAAP EPS should be
considered in addition to, but not in lieu of, net income and EPS prepared in
accordance with generally accepted accounting principles in the United States
(GAAP). Non-GAAP Adjusted income and its components are non-GAAP financial
measures that have no standardized meaning prescribed by GAAP and, therefore,
have limits in their usefulness to investors. Because of the non-standardized
definitions, Non-GAAP Adjusted income and its components (unlike GAAP net
income and its components) may not be comparable to the calculation of similar
measures of other companies. Non-GAAP adjusted income and its components are
presented solely to permit investors to more fully understand how management
assesses performance. A reconciliation between GAAP financial measures and
non-GAAP financial measures is as follows:

 
FOREST LABORATORIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
 
Forest Laboratories, Inc.
Specified Items
For the Three and Twelve Months Ended March 31, 2013 and 2012
                                                                     
(In thousands)                Three Months Ended        Twelve Months Ended
                              March 31,                 March 31,
                              2013         2012         2013          2012
                                                                       
Amortization arising
from business
combinations and              $ 10,709     $ 9,366      $ 37,965      $ 23,674
acquisitions of product
rights
Impact of specified
items on Cost of goods          10,709       9,366        37,965        23,674
sold
                                                                       
Amortization arising
from business
combinations and                11,005       5,926        43,900        21,104
acquisitions of product
rights
Impact of specified
items on Selling,               11,005       5,926        43,900        21,104
general and
administrative
                                                                       
Upfront payment to              -            -            65,000        -
Adamas
Licensing payment to            -            -            -             40,000
Blue Ash for azimilide
Other licensing                 -            -            6,000         -
agreement payment
Impact of specified
items on Research and           -            -            71,000        40,000
development
                                                                       
Increase/( decrease) to         21,714       15,292       152,865       84,778
pre-tax income
Income tax impact of            -            -            -             -
specified items
Increase/ (decrease) to       $ 21,714     $ 15,292     $ 152,865     $ 84,778
net earnings
                                                                         

 
Forest Laboratories, Inc.
Reconciliation of GAAP Line Items to Certain Non-GAAP Line Items
For the Three and Twelve Months Ended March 31, 2013 and 2012
                                                              
                   Three Months Ended                  Three Months Ended
                   March 31, 2013                      March 31, 2012
                   GAAP       Specified   Non-GAAP     GAAP       Specified   Non-GAAP
(In thousands)     Reported   Items       Adjusted     Reported   Items       Adjusted
                                                                               
Gross profit       $643,845   $10,709     $ 654,554    $838,139   $9,366      $ 847,505
Selling,
general and        372,728    11,005        361,723    410,549    5,926         404,623
administrative
Research and       240,299    -             240,299    213,889    -             213,889
development
Earnings
before             30,818     21,714        52,532     213,701    15,292        228,993
provision for
taxes
Provision for      (14,625)   -             (14,625)   21,029     -             21,029
taxes
Earnings after
provision for      $45,443    $21,714     $ 67,157     $192,672   $15,292     $ 207,964
taxes
Weighted
average number
of diluted         267,259    -             267,259    268,465    -             268,465
shares
outstanding:
                                                                               

                   Twelve Months Ended                                 Twelve Months Ended
                   March 31, 2013                                      March 31, 2012
                   GAAP              Specified       Non-GAAP          GAAP              Specified       Non-GAAP
(In thousands)     Reported          Items           Adjusted          Reported          Items           Adjusted
                                                                                                          
Gross profit       $ 2,477,042       $ 37,965        $ 2,515,007       $ 3,587,957       $  23,674       $ 3,611,631
Selling,
general and          1,558,306         43,900          1,514,406         1,553,337          21,104         1,532,233
administrative
Research and         963,594           71,000          892,594           796,932            40,000         756,932
development
Earnings
before               (44,858)          152,865         108,007           1,237,688          84,778         1,322,466
provision for
taxes
Provision for        (12,755)          -               (12,755)          258,630            -              258,630
taxes
Earnings after
provision for        ($32,103)       $ 152,865       $ 120,762         $ 979,058         $  84,778       $ 1,063,836
taxes
Weighted
average number
of diluted           266,807           -               266,807           274,016            -              274,016
shares
outstanding:
                                                                                                          

Forest Laboratories, Inc.
Reconciliation of GAAP EPS to Non-GAAP EPS
For the Three and Twelve Months Ended March 31, 2013 and 2012
                                         
(In thousands,
except                     Three Months Ended             Twelve Months Ended
earnings per               March 31,                      March 31,
share)
                           2013           2012            2013              2012
                                                                           
Reported Net               $ 45,443       $ 192,672         ($32,103)       $ 979,058
income (loss):
Specified
items net of
tax:
Amortization
arising from
business
combinations
and
acquisitions
of product
rights
Recorded in                  10,709         9,366           37,965            23,674
Cost of sales
Recorded in
Selling,                     11,005         5,926           43,900            21,104
general and
administrative
                                                                             
Upfront
Licensing
payments                     -              -               71,000            40,000
recorded in
research and
development
                                                                             
Impact of
specified
items on                     -              -               -                 -
provision for
income taxes
                                                                             
Adjusted
Non-GAAP                   $ 67,157       $ 207,964       $ 120,762         $ 1,063,836
earnings:
                                                                             

 
Forest Laboratories, Inc.
Reconciliation of GAAP EPS to Non-GAAP EPS
For the Three and Twelve Months Ended March 31, 2013 and 2012
                                                                     
                                 Three Months Ended     Twelve Months Ended
                                 March 31,              March 31,
                                 2013        2012       2013          2012
                                                                       
Reported Diluted
earnings (losses)                $  0.17     $ 0.72       ($0.12)     $ 3.57
per share:
Specified items
net of tax:
Amortization
arising from
business
combinations and
acquisitions of
product rights
Recorded in Cost                    0.04       0.03       0.14          0.09
of sales
Recorded in
Selling, general                    0.04       0.02       0.16          0.08
and administrative
                                                                       
Upfront Licensing
payments recorded                   -          -          0.27          0.15
in research and
development
                                                                       
Rounding                                       -          -             (0.01)
Adjusted Non-GAAP                $  0.25     $ 0.77     $ 0.45        $ 3.88
earnings per share
                                                                       

Forest will host a conference call at 10:00 AM EST today to discuss the
results. The conference call will be webcast live beginning at 10:00 AM EST on
the Company’s website at www.frx.com and also on the website
www.streetevents.com. Please log on to either website at least fifteen minutes
prior to the conference call as it may be necessary to download software to
access the call. A replay of the conference call will be available until May
23, 2013 at both websites and also by dialing (855) 859-2056 (US or Canada) or
+1 (404) 537-3406 (international), Conference ID: 32019672.

About Forest Laboratories and Its Products

Forest Laboratories' (NYSE: FRX) longstanding global partnerships and track
record developing and marketing pharmaceutical products in the United States
have yielded its well-established central nervous system and cardiovascular
franchises and innovations in anti-infective, respiratory, gastrointestinal
and pain management medicine. Forest’s pipeline, the most robust in its
history, includes product candidates in all stages of development across a
wide range of therapeutic areas. The Company is headquartered in New York, NY.
To learn more, visit www.FRX.com.

Except for the historical information contained herein, this release contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements involve a number of risks and
uncertainties, including the difficulty of predicting FDA approvals, the
acceptance and demand for new pharmaceutical products, the impact of
competitive products and pricing, the timely development and launch of new
products, and the risk factors listed from time to time in Forest
Laboratories’ Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
any subsequent SEC filings. Forest assumes no obligation to update
forward-looking statements contained in this release to reflect new
information or future events or developments.

 
FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
                             THREE MONTHS                          TWELVE MONTHS
                             ENDED                                 ENDED
                             MARCH 31                              MARCH 31
                             (In thousands, except per share amounts)
                             2013              2012                2013                2012
Revenues:
Net sales                    $ 783,186         $ 996,909           $ 2,904,936         $ 4,392,548
Contract                       30,640            46,847              189,066             155,214
revenue
Interest                       4,929             6,360               29,150              20,364
income
Other income                   2,916             5,597               2,973               17,918
Net revenues                 $ 821,671         $ 1,055,713         $ 3,126,125         $ 4,586,044
                                                                                        
Costs and
expenses:
Cost of goods                  177,826           217,574             649,083             998,087
sold
Selling,
general and                    372,728           410,549             1,558,306           1,553,337
administrative
Research and                   240,299           213,889             963,594             796,932
development
                               790,853           842,012             3,170,983           3,348,356
                                                                                        
Income (loss)
before income                  30,818            213,701             ( 44,858)           1,237,688
tax expense
Income tax                     (
expense                        14,625)           21,029              ( 12,755)           258,630
(benefit)
Net income                   $ 45,443          $ 192,672             ($                $ 979,058
(loss)                                                               32,103)
                                                                                        
Net income
(loss) per
share:
Basic                        $ 0.17            $ 0.72                ($0.12)           $ 3.58
Diluted                      $ 0.17            $ 0.72                ($0.12)           $ 3.57
                                                                                        
Weighted
average number
of shares
outstanding:
Basic                          266,322           268,023             266,807             273,561
Diluted                        267,259           268,465             266,807             274,016
                                                                                        

Contact:

Forest Laboratories, Inc.
Frank J. Murdolo, 1-212-224-6714
Vice President - Investor Relations
media.relations@frx.com
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