Forest Laboratories, Inc. Reports Fiscal Year First Quarter 2014 Diluted Earnings Per Share of $0.09 Including Effect of $0.09

  Forest Laboratories, Inc. Reports Fiscal Year First Quarter 2014 Diluted
  Earnings Per Share of $0.09 Including Effect of $0.09 Per Share of
  Acquisition Amortization

    Sales of Next Generation Products Reach $294.1 million in the Quarter,
               Representing 47.8% Growth vs Prior Year Quarter

Business Wire

NEW YORK -- July 23, 2013

Forest Laboratories, Inc. (NYSE: FRX), an international pharmaceutical
manufacturer and marketer, today announced that reported diluted earnings per
share equaled $0.09 in the first quarter of fiscal 2014. Reported diluted
earnings per share in the first quarter of fiscal 2013 were $0.21. Excluding
acquisition related amortization and specified items, non-GAAP EPS in the
first fiscal quarter of 2014 and 2013 was $0.28 for both periods. First
quarter 2014 earnings were higher than anticipated primarily due to timing of
spending for research and development expenses.

Product Sales Performance

Net sales for the quarter increased 6.0% to $796.9 million, from $751.8
million in the prior year quarter. The increase in sales was driven by sales
of the Company’s next generation products which totaled $294.1 million, an
increase of 47.8% compared with the first quarter of fiscal 2013, partially
offset by a decline in sales of Lexapro.

Central Nervous System Franchise

  *Sales of Namenda® (memantine HCl), an NMDA receptor antagonist for the
    treatment of moderate to severe Alzheimer’s disease, recorded sales of
    $397.5 million during the quarter, an increase of 7.9% from last year’s
    first quarter. Namenda XR™ (once-daily memantine HCl), was launched in
    June 2013 and recorded initial trade stocking of $14.0 million during the
    quarter.
  *Viibryd® (vilazodone HCl), a selective serotonin reuptake inhibitor (SSRI)
    and a partial agonist at serotonergic 5-HT[1A] receptors for the treatment
    of adults with major depressive disorder, recorded sales of $46.1 million
    during the quarter, an increase of 23.4% from last year’s first quarter.
  *Lexapro® (escitalopram oxalate), an SSRI for the initial and maintenance
    treatment of MDD in adults and adolescents and generalized anxiety
    disorder in adults were $28.2 million compared with $110.0 million in the
    year-ago period. The Lexapro patent expired on March 14, 2012.

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 $24.0 million for the quarter,
    an increase of 35.2% from last year’s first quarter.
  *Tudorza® (aclidinium bromide inhalation powder), an anticholinergic
    indicated for the long-term maintenance treatment of bronchospasm
    associated with COPD, recorded sales of $15.9 million during the quarter.
    Tudorza was launched in December 2012 and recorded initial trade stocking
    of $12.2 million in the fiscal 2013 third quarter and sales of $10.8
    million during the fiscal 2013 fourth quarter.

Bystolic®  (nebivolol), a beta-blocker for the treatment of hypertension,
recorded sales of $126.0 million, an increase of 16.8% 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 $28.8 million during the quarter. Linzess was
launched in December 2012 and recorded initial trade stocking of $19.2 million
in the fiscal 2013 third quarter and sales of $4.5 million during the fiscal
2013 fourth quarter.

Savella®  (milnacipran HCl), a selective serotonin norepinephrine dual
reuptake inhibitor for the management of fibromyalgia, recorded sales of $25.0
million, a decrease of 6.0% from last year’s first 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 $14.2 million, an increase of 51.8% over last year’s first
quarter.

Contract Revenue was $31.9 million in the current quarter compared to $65.8
million in the prior year first quarter. Benicar® (olmesartan medoxomil)
co-promotion income totaled $28.1 million, a decrease of $7.3 million,
compared to $35.4 million in last year’s first quarter. Per the agreement with
Daichi Sankyo, Forest’s active co-promotion of Benicar ended in the first
quarter of fiscal 2009 and the Company receives a residual royalty until the
end of March 2014. Last year’s first quarter also included $29.4 million in
royalties from Mylan, Inc. on its sales of generic Lexapro.

Cost of Sales  as a percentage of sales was 20.8% compared with 22.4% in last
year’s first quarter.

Selling, General and Administrative expense for the current quarter was $443.9
million as compared to $382.3 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: Namenda XR,
Linzess, Tudorza, Viibryd, Daliresp and Teflaro. Spending for the quarter also
included a one-time charge of $26.2 million for the write-off of a loan to
Nabriva Therapeutics related to a business development agreement for Nabriva’s
novel antibiotic BC-3781. The Company had the exclusive right to acquire
Nabriva and did not exercise its right based on development and commercial
considerations.

Research and Development for the current quarter was $185.4 million compared
with $195.2 million in last year’s first quarter. The current quarter included
$18.0 million in development milestone expenses. There were no development
milestone payments in the prior year quarter.

Income Tax Expense for the quarter was $15.0 million, reflecting a quarterly
effective tax rate of 39.2%.

Reported Net Income for the quarter ended June 30, 2013 was $23.3 million or
$0.09 per diluted share compared to $55.3 million or $0.21 per diluted share
reported for last year’s first quarter.

Diluted Weighted Average Shares Outstanding  at June 30, 2013 were
approximately 268,420,000.

Chairman and Chief Executive Officer

Howard Solomon, Chairman and Chief Executive Officer of Forest, said: “We are
very pleased with the financial results for the quarter and particularly with
the significant percentage increases in the sales of almost all of our new
products and with the initial response to Linzess and Tudorza which were both
launched this past December. Collectively, our next generation products had
sales of $294.1 million in the quarter, representing 47.8% growth in
comparison to the comparable prior year quarter.

“We are also pleased with the continued positive progress of our late stage
new product development pipeline. During the quarter we and our partner
Almirall, S.A. reported positive topline Phase III clinical trial results from
two studies of the fixed dose combination of Tudorza and formoterol for the
treatment of patients with moderate to severe COPD. Also during this quarter,
we reported positive 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. Following the successful completion of these two
clinical development programs we are now in the process of preparing the
submissions of New Drug Applications (NDA) to the FDA by the end of calendar
2013 for the Tudorza and formoterol combination, and in early calendar 2014
for the Bystolic-valsartan combination. We believe the clinical benefit of
these new fixed dose combinations may significantly increase the sales of our
novel base products.

“In the next few days we expect a decision from the FDA on our NDA filing for
levomilnacipran, a serotonin norepinephrine reuptake inhibitor for the
treatment of major depressive disorder, and later in this calendar year we
expect a decision from the FDA on our filing for cariprazine for the treatment
of schizophrenia and acute mania associated with bipolar 1 disorder.

“During the quarter we were pleased to announce that we entered into a
collaborative licensing option agreement with Trevena, Inc. for the
development of TRV027, a novel beta-arrestin biased ligand of the angiotensin
II type 1 receptor (AT1R) for the treatment of acute decompensated heart
failure (ADHF). TRV027 has the potential to be a significant new advance in
the treatment of ADHF because it addresses the underlying pathophysiology of
the disease which has been demonstrated in pre-clinical and early clinical
work by Trevena.

“As is evident from the expansive portfolio of next generation product
launches and continued advancements of our late-stage development pipeline we
believe that we will continue to generate significant levels of sales and
earnings to secure long-term growth for our Company.”

Use of Non-GAAP Financial Information

Forest provides non-GAAP 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.
Non-GAAP financial measures should be considered in addition to, but not in
lieu of, net income and EPS prepared in accordance with accounting principles
generally accepted in the United States (GAAP). Non-GAAP financial measures
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 Months Ended June 30, 2013 and 2012
                                                               
                                                           Three Months Ended
                                                           June 30,
                                                                      
(In thousands)                                           2013       2012
                                                                        
Amortization arising from business combinations          $ 12,046   $ 8,858
and acquisitions of product rights
Impact of specified items on Cost of goods sold            12,046       8,858
                                                                        
Amortization arising from business combinations            14,024       10,939
and acquisitions of product rights
Write-off of Nabriva note receivable                      26,182    -
Impact of specified items on Selling, general              40,206       10,939
and administrative
                                                                        
Increase to pre-tax income                                52,252    19,797
                                                                        
Income tax impact of specified items                       -            -
                                                                   
Increase to net earnings                                 $ 52,252   $ 19,797
                                                                        
                                                                        



Forest Laboratories, Inc.
Reconciliation of Certain GAAP Line Items to Non-GAAP Line Items
For the Three Months Ended June 30, 2013 and 2012
                                                            
                                           Three Months Ended
                                           June 30, 2013
                                                                     
(In thousands)                           GAAP        Specified   Non-GAAP
                                         Reported      Items         Adjusted
                                                                       
Gross profit                             $ 667,568     $  12,046     $ 679,614
Selling, general and                       443,863        40,206       403,657
administrative
Research and development                   185,424        -            185,424
Earnings before provision for              38,281         52,252       90,533
taxes
Provision for taxes                        15,003         -            15,003
Earnings after provision for             $ 23,278      $  52,252     $ 75,530
taxes
Weighted average number of                 268,420        -            268,420
shares outstanding:
                                           
                                           Three Months Ended
                                           June 30, 2012
                                                                     
(In thousands)                           GAAP        Specified   Non-GAAP
                                         Reported      Items         Adjusted
                                                                       
Gross profit                             $ 652,904     $  8,858      $ 661,762
Selling, general and                       382,309        10,939       371,370
administrative
Research and development                   195,166        -            195,166
Earnings before provision for              75,429         19,797       95,226
taxes
Provision for taxes                        20,144         -            20,144
Earnings after provision for             $ 55,285      $  19,797     $ 75,082
taxes
Weighted average number of                 268,972        -            268,972
shares outstanding:
                                                                       
                                                                       

                                                               
                                                                        
Forest Laboratories, Inc.
Reconciliation of GAAP EPS to Non-GAAP EPS
For the Three Months Ended June 30, 2013 and 2012
                                                                        
                                                         Three Months Ended
                                                         June 30,
                                                                      
                                                         2013       2012
                                                                        
Reported Net income (loss):                              $ 23,278     $ 55,285
Specified items net of tax:
Amortization arising from business combinations
and acquisitions of product rights
Recorded in Cost of sales                                  12,046       8,858
Recorded in Selling, general and administrative            14,024       10,939
                                                                        
Write-off of Nabriva note receivable                       26,182       -
                                                                        
Impact of specified items on provision for                 -            -
income taxes
                                                                   
Adjusted Non-GAAP earnings:                              $ 75,530   $ 75,082
                                                                        
                                                                        
                                                                        
Reported Diluted earnings per share:                     $ 0.09      $ 0.21
Specified items net of tax:
Amortization arising from business combinations
and acquisitions of product rights
Recorded in Cost of sales                                  0.04        0.03
Recorded in Selling, general and administrative            0.05        0.04
                                                                        
Write-off of Nabriva note receivable                       0.10        -
                                                                        
Impact of specified items on provision for                 -           -
income taxes
                                                                   
Adjusted Non-GAAP earnings per share                     $ 0.28     $ 0.28
                                                                        
                                                                        

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
August 23, 2013 at both websites and also by dialing (855) 859-2056 (US or
Canada) or +1 (404) 537-3406 (international), Conference ID: 13783632.

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
                                                       ENDED JUNE 30,
(In thousands, except per share amounts)
                                                       2013        2012
Revenues:
Net sales                                              $ 796,853     $ 751,766
Contract revenue                                         31,918        65,835
Interest income and other                               4,164        3,526
Net revenues                                           $ 832,935     $ 821,127
                                                                     
Costs and expenses:
Cost of goods sold                                       165,367       168,223
Selling, general and administrative                      443,863       382,309
Research and development                                185,424      195,166
                                                        794,654      745,698
                                                                     
Income before income tax expense                         38,281        75,429
Income tax expense                                      15,003       20,144
Net income                                             $ 23,278      $ 55,285
                                                                     
Net income per share:
Basic                                                  $ 0.09        $ 0.21
Diluted                                                $ 0.09        $ 0.21
                                                                     
Weighted average number of shares outstanding:
Basic                                                    267,115       268,389
Diluted                                                  268,420       268,972
                                                                       
                                                                       

Contact:

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