The Company Provides FY'08 Reported EPS Guidance of $3.05 to $3.15
NEW YORK, April 24 /PRNewswire-FirstCall/ -- Forest Laboratories,
Inc. (NYSE:FRX), a U.S.-based pharmaceutical company, today
announced that fully diluted earnings per share (EPS) for the
fourth quarter of fiscal year 2007 was a loss of ($0.75). Reported
earnings per share includes a one-time in- process research and
development (IPR&D) charge of $476,000,000, or $1.49 per share,
net of tax, for the acquisition of Cerexa, Inc. Excluding the
IPR&D charge, adjusted earnings per share was $0.74*. Reported
earnings per share in the fourth quarter of fiscal year 2006 were
$0.28. Excluding the impact of license and milestone payments, net
of tax, adjusted earnings per share was $0.65* in the fourth
quarter of the last fiscal year 2006. (Logo:
http://www.newscom.com/cgi-bin/prnh/20001011/FORESTLOGO ) Revenues
for the quarter increased 17% to $885,441,000 from $756,322,000 in
the prior fiscal year. Revenues were comprised of net sales of
$815,449,000, an increase of 14% from $712,761,000 in March 2006,
earnings contribution of $45,870,000 from the co-promotion of
Benicar(R) (olmesartan medoxomil) and Benicar HCT(R),
antihypertensive therapies, which increased 49% from $30,721,000 in
last year's fourth quarter, interest income of $23,870,000 which
increased 98% from $12,046,000 in the prior year and other contract
and miscellaneous income of $252,000. Sales of Lexapro(R)
(escitalopram oxalate), an SSRI indicated for the initial and
maintenance treatment of major depressive disorder and generalized
anxiety disorder in adults, increased 14% in the quarter to
$530,440,000 from $464,100,000 in the year-ago quarter, while sales
of Celexa(R) (citalopram HBr), an antidepressant, were $6,249,000
and sales of generic citalopram totaled $343,000. Sales of
Namenda(R), an NMDA receptor antagonist for the treatment of
moderate and severe Alzheimer's disease, totaled $179,746,000 in
the quarter, an increase of 24% from sales of $145,385,000 in last
year's fourth quarter. Selling, general and administrative expenses
during the quarter increased 6% to $274,319,000 from $259,016,000
last year. Research and development spending was $596,140,000 and
included a one-time IPR&D charge of $476,000,000 related to the
acquisition of Cerexa, Inc. Excluding the one-time charge, research
and development expense during the quarter was $120,140,000. There
were no product milestone or license payments during the quarter.
Research and development spending of $194,377,000 in the fourth
quarter of the last fiscal year included total license and
milestone payments of $135,000,000, related to nebivolol and
faropenem. The reported loss before income tax expense for the
quarter was ($174,298,000). Excluding the one-time IPR&D charge
of $476,000,000, with no tax benefit, income before income taxes
was $301,702,000. Income tax expense in the quarter was
$63,618,000, yielding an effective tax rate, excluding the
IPR&D charge, of 21%. Reported net loss in the current quarter
was a loss of ($237,916,000) as compared to net income of
$91,890,000 reported in the fourth quarter of the prior fiscal
year. Excluding the one-time IPR&D charge, adjusted net income
in the current quarter was $238,084,000 as compared to adjusted net
income last fiscal year of $224,379,000, which excludes the impact
of license and milestone payments. *Earnings per share
reconciliation Fourth Quarter Fiscal Year 2007 2006 Reported EPS
($0.75) $0.28 Adjustments, net of tax: IPR&D - Cerexa 1.49
License & milestone payments 0.37 Adjusted EPS $0.74 $0.65
Excluding the acquisition of Cerexa, fully diluted shares
outstanding for the fourth quarter were 322,177,000, a reduction of
7,792,000 shares due mainly to the Company's share repurchase
program. During the quarter the Company did not repurchase any
shares and has 14,685,000 shares available for repurchase under the
current program, which has no expiration date. Twelve-month results
Revenue for the fiscal year ended March 31, 2007 increased 16% to
$3,441,785,000 from $2,962,390,000 in the prior fiscal year.
Lexapro sales crossed the $2 billion threshold and increased 12% to
$2,105,990,000 from $1,873,255,000 last fiscal year, while sales of
Celexa including the generic version increased 49% to $28,401,000
from $19,006,000. Sales of Namenda increased 30% to $660,295,000
from $508,043,000 while the earnings contribution from the Benicar
co-promotion increased 52% to $174,566,000 from $114,472,000.
Selling, general and administrative expenses increased 1% to
$1,046,336,000 from $1,031,451,000 while research and development
spending increased 129% to $941,003,000 from $410,431,000. Included
in research and development spending is a one-time charge of
$476,000,000 for in-process R&D related to the acquisition of
Cerexa, Inc. Excluding the one-time IPR&D charge, research and
development spending increased 13% from the prior fiscal year.
Reported net income for the fiscal year ended March 31, 2007
decreased 36% to $454,103,000 from net income of $708,514,000
reported in the prior fiscal year. Reported earnings per share for
the fiscal year totaled $1.41 per share as compared to reported
earnings per share of $2.08 in fiscal 2006. Excluding the Cerexa
IPR&D charge and the license and milestone payments, as
applicable, adjusted earnings and earnings per share were
$992,899,000 and $3.07* per share and $847,399,000 and $2.49* per
share in fiscal years 2007 and 2006, respectively. During fiscal
year 2007 the Company repurchased 10,315,300 shares under its
currently authorized repurchase program. There is authorization to
repurchase an additional 14,684,700 shares under this program which
has no expiration date. * Earnings per share reconciliation 12
Month Fiscal Year 2007 2006 Reported EPS $1.41 $2.08 Adjustments,
net of tax: IPR&D - Cerexa 1.47 Adjusted EPS - Cerexa $2.88
$2.08 License & milestone payments 0.19 0.41 Adjusted EPS -
total $3.07 $2.49 Fiscal 2008 Guidance Regarding the fiscal year
ending March 31, 2008, the Company expects that reported fully
diluted earnings per share will be approximately $3.05 to $3.15,
including planned milestone payments of approximately $85 million.
Key assumptions supporting the fiscal year forecast include the
following: The Company anticipates that total revenue in fiscal
2008, which includes product sales as well as the earnings
contribution from Benicar, interest income and other income, will
increase by approximately 8% from the $3.44 billion reported in
fiscal 2007. Net sales are also projected to increase by
approximately 8% during fiscal 2008. For Lexapro, the Company
projects an increase in overall prescription volume for the
underlying SSRI/SNRI antidepressant market as a whole of
approximately 3% and an increase in Lexapro's total prescription
market share of approximately ten basis points. This increase in
market growth as well as market share, along with a price increase,
is projected to generate Lexapro sales growth of between 9-10% from
the reported sales of $2,105,990,000 in fiscal year 2007. We
anticipate that Namenda sales should grow approximately 14-16% from
the $660,295,000 reported in fiscal 2007. Earnings from Benicar in
fiscal 2008 are expected to grow nearly 15% from $174,566,000
reported in fiscal 2007. The fiscal 2008 projection includes an
approximate 9% increase in selling, general and administrative
expenses to approximately $1.15 billion. This expense includes
funding continued competitive levels of support behind currently
promoted products and pre-launch and launch expenses to support
nebivolol, which is expected to launch during the fiscal fourth
quarter of 2008 pending FDA approval for an indication of
hypertension. The Company does not plan to make any significant
modifications to the size of its salesforce at this point in time.
Research and development spending is expected to be approximately
$550,000,000 in support of a dramatically increased late-stage
product pipeline. This projection includes planned milestone
payments of approximately $85,000,000, however, the projection does
not include any licensing or milestone payments which may be made
for additional product development transactions or acquisitions
that may occur during the fiscal year. During fiscal 2008, the
Company will be investing heavily in five late stage development
projects, including ceftaroline, an injectable cephalosporin which
is being developed for complicated skin and skin structure
infections and community acquired pneumonia, aclidinium (LAS34273),
which is being developed for chronic obstructive pulmonary disease,
milnacipran for the treatment of fibromyalgia, desmoteplase for the
treatment of acute ischemic stroke, and memantine MR for the
treatment of moderate to severe Alzheimer's disease. The Company is
projecting an effective tax rate for fiscal 2008 of 21%, consistent
with the tax rate for fiscal 2007. The Company also forecasts that
fully diluted shares outstanding will increase by approximately 1.9
million shares to an average of approximately 325,000,000. *
Earnings per Share reconciliation Fiscal Year Guidance 2007 2008
Reported EPS $1.41 $3.05 - 3.15 Adjustments, net of tax: IPR&D
- Cerexa 1.47 Adjusted EPS $2.88 $3.05 - 3.15 Howard Solomon,
Chairman and Chief Executive Officer of Forest, said: "Fiscal 2007
was another strong year for Forest and we continue to be pleased
with the performance of our key marketed products. We also had
another successful year related to business development activities
as we continued to expand our product development pipeline. "Fiscal
2008 will be an important year for Forest as we expect over the
next two months to receive Phase III clinical data for both
milnacipran, being investigated for fibromyalgia and desmoteplase
for treatment of acute ischemic stroke. We also have two additional
significant Phase III clinical programs underway. One program is
for ceftaroline, an injectable cephalosporin antibiotic and the
other for aclidinium (LAS 32471), being investigated for chronic
obstructive pulmonary disorder. We are also conducting a Phase III
study in moderate to severe Alzheimer's disease for a modified
release form of Namenda as well as a Phase III study for Lexapro in
adolescent patients and expect to receive results for both programs
later in the fiscal year. We intend to make a significant
investment in our development pipeline this year as we advance
several important product opportunities. We also expect to launch
nebivolol, a next-generation beta blocker under FDA review for an
indication of hypertension later in the fiscal year pending FDA
marketing approval. We believe that the significant cash flow
generated from our marketed products will enable the Company to
invest appropriately behind sales and marketing and increased
levels of research and development activities while also generating
earnings per share growth rates." * Use of Non-GAAP Financial
Information This press release contains non-GAAP earnings per share
information adjusted to exclude certain costs, expenses and other
specified items as summarized in the tables. This information is
intended to enhance an investor's overall understanding of the
Company's past financial performance and prospects for the future.
This information is not intended to be considered in isolation or
as a substitute for fully diluted earnings per share prepared in
accordance with GAAP. Forest will host a conference call at 10:00
AM EDT today to discuss the results. The conference call will be
webcast live beginning at 10:00 AM EDT 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, 2007 at both
websites and also by dialing 1-800-642- 1687 (US investors) or
+1-706-645-9291 (international investors) passcode 5376257. About
Forest Laboratories and Its Products Forest Laboratories
(http://www.frx.com/) is a U.S.-based pharmaceutical company
dedicated to identifying, developing and delivering products that
make a positive difference in peoples' lives. Forest Laboratories'
growing product line includes Lexapro(R) (escitalopram oxalate), an
SSRI indicated for adults for the initial and maintenance treatment
of major depressive disorder and generalized anxiety disorder;
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, and Benicar* HCT(R) (olmesartan
medoxomil- hydrochlorothiazide), an angiotensin receptor blocker
and diuretic combination product, each indicated for the treatment
of hypertension; and Campral(R)* (acamprosate calcium), indicated
in combination with psychosocial support for the maintenance of
abstinence from alcohol in patients with alcohol dependence who are
abstinent at treatment initiation. * Benicar is a registered
trademark of Daiichi Sankyo, Inc., and Campral is a registered
trademark of Merck Sante s.a.s., subsidiary of Merck KGaA,
Darmstadt, Germany. 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 the Forest Laboratories' SEC reports, including the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2006 and on Form 10-Q for the periods ended June 30,
2006, September 30, 2006 and December 31, 2006. FOREST
LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS THREE MONTHS TWELVE MONTHS ENDED MARCH 31 ENDED MARCH 31
(In thousands, except per share amounts) 2007 2006 2007 2006
Revenues: Net sales $815,449 $712,761 $3,183,324 $2,793,934
Contract revenue 46,458 31,225 176,943 118,170 Interest income
23,870 12,046 80,200 50,287 Other income (loss) (336) 290 1,318 (1)
Net revenues 885,441 756,322 3,441,785 2,962,390 Costs and
expenses: Cost of goods sold 189,280 167,860 745,602 650,996
Selling, general and administrative 274,319 259,016 1,046,336
1,031,451 Research and development 596,140 194,377 941,003 410,431
1,059,739 621,253 2,732,941 2,092,878 Income (loss) before income
tax expense (174,298) 135,069 708,844 869,512 Income tax expense
63,618 43,179 254,741 160,998 Net income (loss) ($237,916) $91,890
$454,103 $708,514 Net income (loss) per share: Basic ($0.75) $0.28
$1.43 $2.11 Diluted ($0.75) $0.28 $1.41 $2.08 Weighted average
number of shares outstanding: Basic 318,614 325,491 318,539 335,912
Diluted 318,614 329,969 322,781 340,321
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, or Web site: http://www.frx.com/
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