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8-K - FORM 8-K - MEDICIS PHARMACEUTICAL CORP | p18016e8vk.htm |
Exhibit
99.1
NEWS | FOR IMMEDIATE RELEASE |
CONTACT:
|
7720 N. Dobson Road | |
Kara Stancell (media)
|
Scottsdale, AZ 85256 | |
Sean Andrews (investors)
|
(602) 808-8800 | |
(480) 291-5854
|
www.Medicis.com |
MEDICIS REPORTS SECOND QUARTER 2010 FINANCIAL RESULTS
SCOTTSDALE, Ariz.August 5, 2010Medicis (NYSE:MRX) today announced revenues of
approximately $174.0 million for the three months ended June 30, 2010, compared to revenues of
approximately $141.2 million for the three months ended June 30, 2009, which represents an increase
of approximately $32.8 million, or approximately 23.2%. This increase is due primarily to the
strength of SOLODYN®, ZIANA® and the aesthetic franchises including
RESTYLANE® and DYSPORT®, partially offset by decreased sales of
LOPROX® due to generic competition.
Generally accepted accounting principles (GAAP) diluted earnings per share (EPS, defined below) for
the three months ended June 30, 2010, was $0.56, compared to GAAP diluted EPS of $0.25 for the
three months ended June 30, 2009. The Company recorded no special charges for the three months
ended June 30, 2010. As a result, non-GAAP (defined below) diluted EPS for the three months ended
June 30, 2010, was also $0.56, compared to non-GAAP diluted EPS of $0.39 for the three months ended
June 30, 2009, which represents an increase of $0.17 per diluted share, or approximately 42.6% (see
Unaudited Reconciliation of Non-GAAP Adjustments in the financial tables of this press release).
The Companys achievement of approximately $174.0 million in revenues and diluted EPS of $0.56
compares favorably to the Companys published guidance of $165-$170 million in revenues and
$0.45-$0.49 in diluted EPS for the three months ended June 30, 2010.
We are pleased to announce a very solid second quarter, said Jonah Shacknai, Chairman and Chief
Executive Officer of Medicis. We continue to achieve significant milestones with SOLODYN, most
recently, an important Notice of Allowance from the U.S. Patent and Trademark Office. We are
encouraged by the overwhelming response to the DYSPORT Challenge with over 100,000 patients
participating, and the strong acceptance of the brand by physicians. During the second half of
2010, we continue great focus on achieving growth of existing Medicis brands, bringing new products
to market, and further expanding our research and development (R&D) initiatives.
GAAP net income for the three months ended June 30, 2010, was approximately $36.5 million, compared
to GAAP net income of approximately $15.6 million for the three months ended June 30, 2009. The
Company recorded no special charges for the three months ended June 30, 2010. As a result,
non-GAAP net income for the three months ended June 30, 2010, was also $36.5 million, compared to
non-GAAP net income of approximately $24.9 million for the three months ended June 30, 2009, which
represents an increase of approximately $11.6 million, or approximately 46.9%. Non-GAAP net income
for the three months ended June 30, 2009, excluded charges totaling
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approximately $9.3 million, consisting of a $3.0 million charge (pre-tax) for an upfront research
and development payment to a Medicis partner, a $2.2 million (pre-tax) net gain on the sale of
Medicis Pediatrics to BioMarin Pharmaceutical, Inc. and income tax charges of $8.5 million (net)
related to these transactions.
Acne Products
Medicis recorded revenues of approximately $124.8 million from sales of its acne products for the
three months ended June 30, 2010, compared to revenues of approximately $94.2 million for the three
months ended June 30, 2009, which represents an increase of approximately $30.6 million, or
approximately 32.5%. This increase is due primarily to the strong demand for SOLODYN,
TRIAZ® and ZIANA, which resulted in increased sales during the quarter. The Medicis
Acne Products category includes primarily SOLODYN, TRIAZ and ZIANA.
Non-Acne Products
Medicis recorded revenues of approximately $41.0 million associated with its non-acne products for
the three months ended June 30, 2010, compared to revenues of approximately $37.1 million for the
three months ended June 30, 2009, which represents an increase of approximately $3.9 million, or
approximately 10.6%. This increase is due primarily to increased sales of DYSPORT,
VANOS® and the RESTYLANE franchise, offset by a significant decrease in sales of LOPROX
due to generic competition and sales reserves associated with the popular DYSPORT Challenge
promotional campaign. The Medicis Non-Acne Products category includes primarily DYSPORT,
PERLANE®, RESTYLANE and VANOS.
Other Non-Dermatological Products
Medicis recorded revenues of approximately $8.3 million associated with its other
non-dermatological products for the three months ended June 30, 2010, compared to revenues of
approximately $10.0 million for the three months ended June 30, 2009, which represents a decrease
of approximately $1.7 million, or approximately 17.0%. This decrease is due primarily to
reductions in sales of BUPHENYL® and contract revenue. The Medicis Other
Non-Dermatological Products category includes primarily AMMONUL®, BUPHENYL,
LIPOSONIX1 and contract revenue.
Other Income Statement Items
Gross profit margin for the three months ended June 30, 2010, was approximately 90.5% of revenues,
compared to approximately 90.7% of revenues for the three months ended June 30, 2009.
Selling, general and administrative (SG&A) expense for the three months ended June 30, 2010, was
approximately $80.9 million, or approximately 46.5% of revenues, compared to approximately $71.7
million, or approximately 50.7% of revenues, for the three months ended June 30, 2009. This
increase in SG&A expense, which represents a decrease in
SG&A expense as a percentage of revenues, is due primarily to variable costs
associated with the approximately 23.2% increase in revenues for the three months ended June 30, 2010.
R&D expense for the three months ended June 30, 2010, was $10.5 million, compared to approximately
$12.1 million for the three months ended June 30, 2009. R&D expense for the three months ended
June 30, 2009, included a $3.0 million upfront payment to a Medicis partner.
Cash Flow
The Companys cash flow from operations was approximately $21.2 million for the three months ended
June 30, 2010, compared to cash flow from operations of approximately $5.6 million for the
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three months ended June 30, 2009, which represents an increase of approximately $15.6 million.
This increase in cash flow resulted primarily from the Companys strong net profitability and
changes in working capital.
2010 Guidance
Based upon information available currently to the Companys management, the Companys financial
guidance for the remainder of 2010 is as follows:
Calendar 2010
(in millions, except per share amounts)
(in millions, except per share amounts)
First | Second | Third | Fourth | Calendar | ||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Year-End | ||||||||||||||||
(3/31/10) | (6/30/10) | (9/30/10) | (12/31/10) | 2010 | ||||||||||||||||
Actual | Actual | Estimated | Estimated | Estimated | ||||||||||||||||
Revenue |
$ | 166.5 | $ | 174.0 | $ | 175-$180 | $ | 180-$185 | $ | 695-$705 | ||||||||||
Non-GAAP diluted
earnings per share
objectives |
$ | 0.54 | $ | 0.56 | $ | 0.54-$0.58 | $ | 0.57-$0.62 | $ | 2.21-$2.30 |
Additional 2010 Guidance Considerations
| Revenue and non-GAAP diluted earnings per share objectives include certain assumptions associated with the July 2010 launch of a generic version of SOLODYN which was not authorized by Medicis; | |
| gross profit margins of approximately 89-91% of revenues; | |
| SG&A expenses of approximately 46-48% of revenues; | |
| R&D expenses of approximately 7-8% of revenues; | |
| depreciation and amortization of approximately $28-$30 million for the year; | |
| effective tax rate of approximately 38-39%; and | |
| fully diluted weighted average shares outstanding of approximately 63-65 million shares. | |
The above guidance does not take into account the following: | ||
| potential special charges associated with R&D milestones or contract payments; | |
| potential additional recognized losses on our auction rate securities investments; | |
| potential recognized losses resulting from impairments on our intangible assets; |
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| the impact of accounting for new collaborative arrangements with Medicis partners; | |
| the financial impact of changes in accounting or governmental pronouncements; | |
| charges related to the accounting for our investment in Revance or Hyperion; | |
| material changes to the financial reserve assumptions associated with the July 2010 launch of a generic version of SOLODYN which was not authorized by Medicis; | |
| the timing of additional SOLODYN patent allowances, if any; | |
| uncertainty relating to the reduction of the average selling price for covered products as a result of future consumer rebate programs intended to stimulate demand for covered products; | |
| the impact of the U.S. economy on the Companys aesthetic and therapeutic franchises; and | |
| significant changes in assumptions and estimates used for calculating various sales reserves. |
At the time of this disclosure, Medicis believes these objectives are attainable based upon
information currently available to the Companys management.
Diluted Earnings Per Share
Diluted earnings per share amounts are calculated using the if-converted method of accounting
regardless of whether the Companys outstanding convertible bonds meet the criteria for conversion
and regardless of whether the bondholders actually convert their bonds into shares.
Use of Non-GAAP Financial Information
The Company has disclosed non-GAAP financial information in this press release to provide
meaningful supplemental information regarding its operational performance and to enhance its
investors overall understanding of its core financial performance. Management measures the
Companys performance using non-GAAP financial measures such as those that are disclosed in this
press release. This information facilitates managements internal comparisons to the Companys
historical core operating results and competitors core operating results, and is a basis for
financial decision making. Management believes that Medicis investors benefit from seeing the
Companys results on the same basis as management, in addition to the GAAP presentation. In our
view, the non-GAAP financial measures are informative to investors, allowing them to focus on the
ongoing operations and core results of Medicis business. Historically, Medicis has reported
similar non-GAAP information to its investors and believes that the inclusion of comparative
numbers provides consistency in the Companys financial disclosures. This information is not in
accordance with, or an alternative for, information prepared using GAAP. Non-GAAP net income
excludes certain items, such as R&D charges which result from payments made to Medicis partners,
transaction costs, the impairment of long-lived assets, gains resulting from the sale of
subsidiaries, charges related to the accounting for our investment in Revance and litigation
reserves. These items may have a material effect on the Companys net income and diluted net
income per common share calculated in accordance with GAAP. The Company excludes such charges and
the related tax benefits when analyzing its financial results as the items are distinguishable
events. Management believes that, by viewing the Companys results of operations excluding these
charges, investors are given an indication of the ongoing results of the Companys operations.
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About Medicis
Medicis is the leading independent specialty pharmaceutical company in the United States focusing
primarily on the treatment of dermatological and aesthetic conditions. The Company is dedicated to
helping patients attain a healthy and youthful appearance and self-image. Medicis has leading
branded prescription products in a number of therapeutic and aesthetic categories. The Companys
products have earned wide acceptance by both physicians and patients due to their clinical
effectiveness, high quality and cosmetic elegance.
The Companys products include the brands DYSPORT® (abobotulinumtoxinA) 300 Units for
Injection, PERLANE® Injectable Gel, PERLANE-L Injectable Gel with 0.3% Lidocaine,
RESTYLANE® Injectable Gel, RESTYLANE-L Injectable Gel with 0.3% Lidocaine,
DYNACIN® (minocycline HCl Tablets, USP), LOPROX® (ciclopirox) Gel 0.77% and
Shampoo 1%, PLEXION® (sodium sulfacetamide 10% and sulfur 5%) Cleanser, Cleansing Cloths
and Cream, SOLODYN® (minocycline HCl, USP) Extended Release Tablets, TRIAZ®
(benzoyl peroxide) 3%, 6% and 9% Cleansers, Pads and Foaming Cloths, VANOS®
(fluocinonide) Cream 0.1%, ZIANA® (clindamycin phosphate 1.2% and tretinoin 0.025%) Gel,
AMMONUL® (sodium phenylacetate and sodium benzoate) Injection 10%/10%,
BUPHENYL® (sodium phenylbutyrate) Tablets and Powder, the LIPOSONIX system1
and the over-the-counter brand ESOTERICA®.
For more information about Medicis, please visit the Companys website at www.Medicis.com. Printed
copies of the Companys complete audited financial statements are available free of charge upon
request.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act. All statements included in this press release that address
activities, events or developments that Medicis expects, believes or anticipates will or may occur
in the future are forward-looking statements, including:
| the Companys future prospects; | |
| revenues, gross profit margin, expense, tax rate and earnings guidance; | |
| information regarding business development activities and future regulatory approval of the Companys products; | |
| timing of FDA approval of the LIPOSONIX system1, if at all; | |
| the commercial success of the Companys products; | |
| the patentability of certain intellectual property; | |
| the potential for generic competition to SOLODYN and other Medicis products; | |
| the future expansion of the aesthetics market; and | |
| expectations relating to the Companys product development pipeline. |
These statements are based on certain assumptions made by the Company based on its experience and
perception of historical trends, current conditions, expected future developments and other factors
it believes are appropriate in the circumstances. No assurances can be given, however, that these
activities, events or developments will occur or that such results will be achieved. Such
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statements are subject to a number of assumptions, risks and uncertainties, many of which are
beyond the control of the Company. The Companys business is subject to all risk factors outlined
in the Companys most recent annual report on Form 10-K for the year ended December 31, 2009, and
other documents we file with the Securities and Exchange Commission (SEC). At the time of this
press release, the Company cannot, among other things, assess the likelihood, timing or forthcoming
results of R&D projects, the risks associated with the FDA approval process and risks associated
with significant competition within the Companys industry, nor can the Company validate its
assumptions of the full impact on its business of the approval of competitive generic versions of
the Companys primary brands, and any future competitive product approvals that may affect the
Companys brands, including the RESTYLANE franchise. The RESTYLANE franchise currently
includes PERLANE, PERLANE-L, RESTYLANE and RESTYLANE-L.
Additionally, Medicis may acquire and/or license products or technologies from third parties to
enter into new strategic markets. The Company periodically makes up-front, non-refundable payments
to third parties for R&D work that has been completed and periodically makes additional
non-refundable payments for the achievement of various milestones. There can be no certainty about
the periods in which these potential payments could be made, nor if any payments such as these will
be made at all. Any estimated future guidance does not include, among other things, the potential
payments associated with any such transactions.
There are a number of additional important factors that could cause actual results to differ
materially from those projected, including:
| the anticipated size of the markets and demand for the Companys products; | |
| the availability of product supply or changes in the costs of raw materials; | |
| the receipt of required regulatory approvals; | |
| competitive developments affecting our products, such as the FDA approvals of Artefill®, Elevess, Evolence®, Hydrelle, Juvederm® Ultra, Juvederm® Ultra Plus, Juvederm® XC, Prevelle Silk, Radiesse® and Sculptra®, competitors to RESTYLANE and PERLANE, Veltin, a competitor to ZIANA, and generic forms of our DYNACIN Tablets, LOPROX, PLEXION, SOLODYN, VANOS or TRIAZ products; | |
| product liability claims; | |
| the introduction of federal and/or state regulations relating to the Companys business; | |
| dependence on sales of key products; | |
| changes in the treatment practices of physicians that currently prescribe the Companys products, including prescription levels; | |
| the uncertainty of future financial results and fluctuations in operating results, and the factors that may attribute to such fluctuations as set forth in our SEC filings; | |
| dependence on the Companys strategy (including the uncertainty of license payments and/or other payments due from third parties); | |
| changes in reimbursement policies of health plans and other health insurers; | |
| the timing and success of new product development by the Company or third parties; |
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| the inability to secure patent protection from filed patent applications, inadequate protection of the Companys intellectual property or challenges to the validity or enforceability of the Medicis proprietary rights; | |
| the risks of pending and future litigation or government investigations; and | |
| other risks described from time to time in the Companys filings with the SEC. |
Forward-looking statements represent the judgment of the Companys management as of the date of
this release and the Company disclaims any intent or obligation to update any forward-looking
statements contained herein, which speak as of the date hereof.
NOTE: Full prescribing information for any of the Companys prescription products is available by
contacting the Company. All trademarks are the property of their respective owners.
1 | The LIPOSONIXTM system is not approved or cleared for sale in the U.S. |
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Medicis Pharmaceutical Corporation
Summary Statements of Operations (Unaudited)
(in thousands, except per share data)
Summary Statements of Operations (Unaudited)
(in thousands, except per share data)
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Product revenues |
$ | 172,183 | $ | 138,695 | $ | 336,723 | $ | 235,294 | ||||||||
Contract revenues |
1,862 | 2,551 | 3,812 | 5,770 | ||||||||||||
Total revenues |
174,045 | 141,246 | 340,535 | 241,064 | ||||||||||||
Cost of revenues |
16,527 | 13,067 | 32,283 | 22,512 | ||||||||||||
Gross profit |
157,518 | 128,179 | 308,252 | 218,552 | ||||||||||||
Operating expenses: |
||||||||||||||||
Selling, general and administrative |
80,873 | 71,654 | 156,822 | 142,079 | ||||||||||||
Research and development |
10,511 | 12,072 | 20,675 | 25,347 | ||||||||||||
Depreciation and amortization |
7,239 | 7,945 | 14,292 | 15,077 | ||||||||||||
Total operating expenses |
98,623 | 91,671 | 191,789 | 182,503 | ||||||||||||
Operating income |
58,895 | 36,508 | 116,463 | 36,049 | ||||||||||||
Interest expense (income), net |
281 | (1,100 | ) | 179 | (2,533 | ) | ||||||||||
Other (income) expense, net |
(2 | ) | (2,243 | ) | 257 | 630 | ||||||||||
Income tax expense |
22,117 | 24,258 | 44,158 | 22,031 | ||||||||||||
Net income |
$ | 36,499 | $ | 15,593 | $ | 71,869 | $ | 15,921 | ||||||||
Basic net income per common share |
$ | 0.61 | $ | 0.26 | $ | 1.19 | $ | 0.27 | ||||||||
Diluted net income per common share |
$ | 0.56 | $ | 0.25 | $ | 1.10 | $ | 0.27 | ||||||||
Shares used in basic net income per common share |
58,271 | 57,088 | 58,161 | 56,911 | ||||||||||||
Shares used in diluted net income per common share |
64,395 | 63,008 | 64,294 | 62,838 | ||||||||||||
Cash flow from operations |
$ | 21,243 | $ | 5,624 | $ | 59,140 | $ | 51,022 |
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Medicis Pharmaceutical Corporation
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data)
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data)
Three months ended | Three months ended | |||||||||||||||
June 30, 2010 | June 30, 2009 | |||||||||||||||
Dollar Value | EPS Impact | Dollar Value | EPS Impact | |||||||||||||
GAAP net income |
$ | 36,499 | $ | 15,593 | ||||||||||||
Less: income allocated to participating securities |
(1,206 | ) | (526 | ) | ||||||||||||
GAAP net income attributable to common shareholders |
35,293 | $ | 0.61 | 15,067 | $ | 0.26 | ||||||||||
Less: net undistributed earnings allocated to unvested
shareholders |
(5 | ) | (1 | ) | ||||||||||||
Interest expense and associated bond offering costs
(tax-effected) |
666 {a} | 666 {a} | ||||||||||||||
GAAP if-converted net income and diluted EPS |
35,954 | $ | 0.56 | 15,732 | $ | 0.25 | ||||||||||
Non-GAAP adjustments: |
||||||||||||||||
Research and development
expenses related to our
collaborations |
| | 3,000 | $ | 0.05 | |||||||||||
Gain related to the sale
of Medicis Pediatrics,
net of professional fees |
| | (2,210 | ) | $ | (0.03 | ) | |||||||||
Income tax effects
related to the above
transactions |
| | 8,472 | $ | 0.13 | |||||||||||
Less: income allocated
to participating
securities and net
undistributed earnings
allocated to unvested
shareholders related to
the above transactions |
| | (317 | ) | $ | (0.01 | ) | |||||||||
Non-GAAP if-converted net income and diluted EPS |
$ | 35,954 | $ | 0.56 | $ | 24,677 | $ | 0.39 | ||||||||
Shares used in basic net
income per common share |
58,271 | 57,088 | ||||||||||||||
Shares used in diluted
net income per common
share |
64,395 | 63,008 |
{a} | In order to determine if-converted net income, the tax-effected net interest on the 2.5% and 1.5% contingent convertible notes of $0.7 million are added back to GAAP net income for the three months ended June 30, 2010 and June 30, 2009. |
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Medicis Pharmaceutical Corporation
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data)
Unaudited Reconciliation of Non-GAAP Adjustments
(in thousands, except per share data)
Six months ended | Six months ended | |||||||||||||||
June 30, 2010 | June 30, 2009 | |||||||||||||||
Dollar Value | EPS Impact | Dollar Value | EPS Impact | |||||||||||||
GAAP net income |
$ | 71,869 | $ | 15,921 | ||||||||||||
Less: income allocated to participating securities |
(2,368 | ) | (467 | ) | ||||||||||||
GAAP net income attributable to common shareholders |
69,501 | $ | 1.19 | 15,454 | $ | 0.27 | ||||||||||
Less: net undistributed earnings allocated to unvested shareholders |
(11 | ) | (1 | ) | ||||||||||||
Interest expense and associated bond offering costs (tax-effected) |
1,333 | {a} | 1,333 | {a} | ||||||||||||
GAAP if-converted net income and diluted EPS |
70,823 | $ | 1.10 | 16,786 | $ | 0.27 | ||||||||||
Non-GAAP adjustments: |
||||||||||||||||
Research and development expenses related
to our collaborations |
| | 8,000 | $ | 0.13 | |||||||||||
Charge related to our investment in Revance |
| | 2,886 | $ | 0.05 | |||||||||||
Gain related to the sale of Medicis
Pediatrics, net of professional fees |
| | (2,210 | ) | $ | (0.04 | ) | |||||||||
Income tax effects related to the above
transactions |
| | 5,292 | $ | 0.08 | |||||||||||
Less: income allocated to participating
securities and net undistributed earnings
allocated to unvested shareholders related
to the above transactions |
| | (424 | ) | $ | (0.01 | ) | |||||||||
Non-GAAP if-converted net income and diluted EPS |
$ | 70,823 | $ | 1.10 | $ | 30,330 | $ | 0.48 | ||||||||
Shares used in basic net income per common
share |
58,161 | 56,911 | ||||||||||||||
Shares used in diluted net income per
common share |
64,294 | 62,838 |
{a} | In order to determine if-converted net income, the tax-effected net interest on the 2.5% and 1.5% contingent convertible notes of $1.3 million are added back to GAAP net income for the six months ended June 30, 2010 and June 30, 2009. |
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Medicis Pharmaceutical Corporation
Balance Sheets
(in thousands)
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
(unaudited) | ||||||||
Assets |
||||||||
Cash, cash equivalents & short-term
investments |
$ | 543,517 | $ | 528,280 | ||||
Accounts receivable, net |
136,899 | 95,222 | ||||||
Inventory, net |
37,251 | 25,985 | ||||||
Deferred tax assets |
67,261 | 66,321 | ||||||
Other current assets |
20,418 | 16,525 | ||||||
Total current assets |
805,346 | 732,333 | ||||||
Property & equipment, net |
26,281 | 25,247 | ||||||
Intangible assets, net |
309,527 | 321,122 | ||||||
Deferred tax assets |
52,818 | 64,947 | ||||||
Long-term investments |
60,996 | 25,524 | ||||||
Other assets |
3,025 | 3,025 | ||||||
Total assets |
$ | 1,257,993 | $ | 1,172,198 | ||||
Liabilities and stockholders equity |
||||||||
Total current liabilities |
$ | 316,764 | $ | 297,694 | ||||
Contingent convertible senior notes 2.5%,
due 2032 |
169,145 | 169,145 | ||||||
Contingent convertible senior notes 1.5%,
due 2033 |
181 | 181 | ||||||
Other liabilities |
7,961 | 9,919 | ||||||
Stockholders equity |
763,942 | 695,259 | ||||||
Total liabilities and stockholders equity |
$ | 1,257,993 | $ | 1,172,198 | ||||
Working capital |
$ | 488,582 | $ | 434,639 | ||||
# # #
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