FRX Forest Road Acquisition Corp

Forest Laboratories Reports Fiscal Fourth Quarter 2005 Results and Provides Earnings Per Share Guidance for Fiscal 2006 NEW YORK, April 19 /PRNewswire-FirstCall/ -- Forest Laboratories, Inc. (NYSE:FRX), an international pharmaceutical manufacturer and marketer, today reported revenues and earnings for its fiscal fourth quarter and twelve months ended March 31, 2005. (Logo: http://www.newscom.com/cgi-bin/prnh/20001011/FORESTLOGO ) Fourth Quarter Results Net sales for the quarter decreased 15% to $618,285,000 from $725,080,000 in the prior year's fourth quarter as a result of the launch of generic equivalents of the Company's antidepressant Celexa(R) (citalopram HBr). Sales in the current quarter included $406,432,000 for Forest's antidepressant franchise which was comprised of $399,381,000 of Lexapro(R) (escitalopram oxalate), $6,197,000 of Celexa, and $854,000 of generic citalopram, all selective serotonin reuptake inhibitors (SSRIs). Antidepressant sales in last year's fourth quarter were $597,493,000 consisting of $351,838,000 of Lexapro and $245,655,000 of Celexa. Sales of Namenda(R), a NMDA receptor antagonist for the treatment of moderate to severe Alzheimer's disease, were $93,945,000 compared to $34,295,000 in the year ago quarter. Earnings from the co- promotion agreement with Sankyo Pharma for Benicar(R)* and Benicar HCT(TM), antihypertensive therapies, totaled $21,329,000 in the current quarter. Net income in the current quarter decreased 64% to $52,755,000, or $0.15 per share, as compared to net income of $145,482,000, or $0.38 per share, in the fourth quarter of the prior year. Net income in the quarter was reduced by a one-time special charge of $91 million, or $0.25 per diluted share outstanding, related to taxes associated with $1.239 billion of funds repatriated under the American Jobs Creation Act of 2004. Excluding the one- time charge, earnings per share would have equaled $0.40. Selling, general and administrative expenses decreased 11% from last year's fourth quarter to $266,459,000. Research and development spending decreased 23% to $61,758,000 during the quarter. Research and development expense in the year ago quarter included upfront payments, including a payment of $25 million to Cypress Bioscience, Inc. for the signing of a development and marketing agreement for milnacipran. During the quarter Forest repurchased an additional 7.8 million shares under its exiting share repurchase program increasing the program-to-date total to 23.9 million shares. The Company continues to have an additional 6.1 million shares available for repurchase under the existing 30 million share authorization. Twelve Months Results Net sales for the fiscal year ended March 31, 2005 increased by 15% to $3,052,408,000 from reported net sales of $2,650,432,000 in fiscal 2004. For the fiscal year, total antidepressant franchise sales were $2,263,310,000 which was comprised of $1,605,296,000 of Lexapro, $653,450,000 of Celexa and $4,564,000 of generic citalopram. Antidepressant franchise sales in fiscal 2004 were $2,176,238,000 which was comprised of $1,088,957,000 of Lexapro and $1,087,281,000 of Celexa. Net sales of Namenda were $332,707,000 for fiscal 2005 versus $45,472,000 for fiscal 2004. Net income for the twelve months ended March 31, 2005 increased 14% to $838,805,000 from net income of $735,874,000 reported in the prior year. Excluding the one-time $91 million tax charge, net income increased 26% to $929,462,000 from net income of $735,874,000 in the prior year. Selling, general and administrative expenses increased 12% to $993,715,000, while research and development spending increased 19% to $293,659,000 during the year. Diluted earnings per share for fiscal 2005 equaled $2.25 compared to diluted earnings per share of $1.95 in fiscal 2004 and would have been $2.50 excluding the one-time tax charge. Fiscal 2006 Guidance Regarding the fiscal year ending March 31, 2006, the first full fiscal year with generic competition for Celexa, the Company expects that fully diluted earnings per share will be approximately $2.30. Forest projects that quarterly earnings per share in the fiscal first quarter of 2006 will be higher than reported earnings per share in the fiscal fourth quarter of 2005 and that quarterly earnings per share will show sequential growth through fiscal 2006. The Company anticipates that net sales for the year will be approximately $50 million lower than the $3,052,408,000 reported in fiscal 2005 but that net revenue, which includes the earnings contribution from Benicar, interest income and other income will increase slightly from reported net revenue in fiscal 2005 of $3,159,639,000. Forest anticipates continued growth in revenue for its three principal marketed products, Lexapro, Namenda and Benicar, as well as revenue contribution from our two recently launched products, Campral(R) for the maintenance of abstinence from alcohol in patients with alcohol dependence who are abstinent at treatment initiation and Combunox(TM) for the short-term management of acute moderate to severe pain. Campral and Combunox will reduce earnings in fiscal 2006 during their launch phase but should contribute to earnings in the future. Key assumptions supporting the fiscal year forecast include the following: For Lexapro, a projected decline in overall prescription volume for the underlying SSRI/SNRI antidepressant market as a whole of approximately 0.5% and an increase in Lexapro's total prescription market share from 19.7% at March 31, 2005 to approximately 21.5% at March 31, 2006. This increase in market share along with a price increase should generate Lexapro sales of slightly less than $2 billion. Namenda is also expected to increase its total prescription volume and benefit from a projected underlying prescription volume growth for the Alzheimer's market in the 11% range. We anticipate that Namenda sales should be approximately $530,000,000 for the fiscal year. The Company expects that Benicar will continue to show strong market share gains in fiscal 2006 in a market that will continue to show low double-digit growth. Earnings from Benicar in fiscal 2006 are expected to more than double from fiscal 2005. For purposes of this forecast the Company is not factoring in any increase in inventory levels at key wholesaler and chain customers but rather anticipating that current levels of approximately two weeks supply will be an average level throughout our fiscal year. The fiscal 2006 projection includes an approximate 10% increase in selling, general and administrative expenses which would imply spending near the $1.1 billion level. Research and development spending is expected to increase by approximately 25% during the year to $365,000,000 to support numerous clinical development programs and account for potential milestone payments as these programs progress. The estimate does not include upfront payments, milestone or research payments for new products the Company may license during the fiscal year. Howard Solomon, Chairman and Chief Executive Officer of Forest, said: "Fiscal 2005 demonstrated Forest's ability to replace lost profits from Celexa by continuing to successfully position our key products, Lexapro, Namenda and Benicar in the marketplace. During the just completed fiscal year, all of our principal promoted products increased their prescription market share and continue to be viewed by physicians as important treatments for their respective disease states. In addition, our business development group successfully completed development agreements with three new partner companies for three new product candidates. We believe that our pipeline includes promising product opportunities and we continue to look forward to entering into additional development agreements." Mr. Solomon continued: "For fiscal 2006, although quarterly earnings per share comparisons will be more difficult earlier in the year, the Company is on track to generate meaningful earnings per share despite the availability of generic Celexa. During the year our salesforce will focus on maximizing the in-market potential of our currently promoted products while our Research Institute will continue to progress on its development programs." Mr. Solomon added: "The Lexapro patent infringement case is expected to proceed on schedule with a May 9, 2005 trial date. Forest remains confident in the strength of the Lexapro patent." Forest Management will host a conference call at 10:00 AM EDT today to discuss the results. The conference call will be webcast live on the Company's website at http://www.frx.com/ and also on the website http://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 April 30, 2004 at both websites and also by dialing 1 800 642 1687 (US investors) or +1 706 645 9291 (international investors) passcode 5519975. About Forest Laboratories and Its Products Forest Laboratories' growing line of products includes: Lexapro(R) (escitalopram oxalate), an SSRI antidepressant indicated for the initial and maintenance treatment of major depressive disorder and for generalized anxiety disorder in adults; Namenda(R) (memantine HCl), an N-methyl-D-aspartate (NMDA)-receptor antagonist indicated for the treatment of moderate to severe Alzheimer's disease; Benicar(R)* (olmesartan medoxomil), an angiotensin receptor blocker indicated for the treatment of hypertension; Benicar* HCT(R) (olmesartan medoxomil hydrochlorothiazide), an angiotensin receptor blocker and diuretic combination product indicated for the second-line treatment of hypertension; Campral(R)* (acamprosate calcium), a glutamate receptor modulator, indicated for the maintenance of abstinence from alcohol in patients with alcohol dependence who are abstinent at treatment initiation in combination with psychosocial support; and Combunox(TM) (Oxycodone HCl and Ibuprofen), an opioid and NSAID combination indicated for the short-term management of acute, moderate to severe pain. Except for the historical information contained herein, this release contains "forward-looking statements" within the meaning of the Private Securities Reform Act of 1995. These statements involve a number of risks and uncertainties, including the difficulty of predicting FDA approvals, 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 the Company's SEC reports, including the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2004, and on form 10-Q for the periods ended June 30, September 30, and December 31, 2004. * Benicar is a registered trademark of Sankyo Pharma, Inc., and Campral is a registered trademark under license from Merck Sante s.a.s., subsidiary of Merck KGaA, Darmstadt, Germany. FOREST LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME THREE MONTHS TWELVE MONTHS ENDED MARCH 31 ENDED MARCH 31 (In thousands, except per share amounts) 2005 2004 2005 2004 Revenues: Net sales $618,285 $725,080 $3,052,408 $2,650,432 Contract revenue 22,313 687 61,369 5,810 Other income 12,638 7,372 45,862 24,032 Net revenues 653,236 733,139 3,159,639 2,680,274 Costs and expenses: Cost of goods sold 142,212 169,105 687,510 608,474 Selling, general and administrative 266,459 298,112 993,715 888,517 Research and development 61,758 80,713 293,659 246,461 470,429 547,930 1,974,884 1,743,452 Income before income tax expense 182,807 185,209 1,184,755 936,822 Income tax expense 130,052 39,727 345,950 200,948 Net income $ 52,755 $145,482 $838,805 $735,874 Net income per share: Basic $0.15 $0.39 $2.30 $2.01 Diluted $0.15 $0.38 $2.25 $1.95 Weighted average number of shares outstanding : Basic 351,023 368,537 363,991 365,447 Diluted 356,989 381,088 372,090 376,779 http://www.newscom.com/cgi-bin/prnh/20001011/FORESTLOGODATASOURCE: Forest Laboratories, Inc. CONTACT: Charles E. Triano, Vice President - Investor Relations of Forest Laboratories, Inc, +1-212-224-6714 Web site: http://www.frx.com/ http://www.streetevents.com/

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