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8-K - FORM 8-K - MYLAN INC. | l42550e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
|
CONTACTS: | Nina Devlin (Media) | ||
917.262.2973 | ||||
Kris King (Investors) 724.514.1813 |
Mylans First Quarter 2011 Adjusted Diluted EPS Increases 22% to $0.44
Reaffirms
2011 Adjusted Diluted EPS Guidance of $1.90-$2.10 and 2013 Growth Targets
Announces $350 Million Share Repurchase Program
PITTSBURGH May 3, 2011Mylan Inc. (NASDAQ: MYL) today announced its financial results for
the three months ended March 31, 2011.
Financial Highlights
| Adjusted diluted earnings per share (EPS) of $0.44 for the three months ended March 31, 2011, compared to $0.36 for the three months ended March 31, 2010; a 22% increase | ||
| Total revenues of $1.45 billion for the three months ended March 31, 2011, compared to $1.29 billion for the three months ended March 31, 2010; a 12% increase | ||
| On a GAAP basis, diluted EPS of $0.23 for the three months ended March 31, 2011, compared to $0.20 for the prior year quarter; a 15% increase | ||
| Announces share repurchase program for up to $350 million of Mylans common stock and other equity securities |
Mylans Chairman and CEO Robert J. Coury commented: I am very pleased with our financial
results for the first quarter of 2011, which developed much as we expected. Through the previous
steps we have taken to strategically diversify our business, not only have we realized the benefits
of a well-balanced platform, but we have put ourselves in a position to be able to better absorb
the inherent dynamics of the global marketplace, while at the same time delivering accelerated
revenue growth and strong bottom-line performance. We are therefore reaffirming our 2011 adjusted
diluted EPS guidance of $1.90 to $2.10 per share, and our 2013 growth targets.
Mylans President, Heather Bresch added: Our diluted EPS of $0.44 on an adjusted basis, while in
line with our expectations, would have been even stronger had we not faced headwinds on various
fronts. In the current quarter, we overcame unfavorable pricing in Europe, and also absorbed three
cents, on a sequential quarter basis, related to a combination of share-count dilution and a higher
quarterly tax rate.
In response to the favorable movement in the Companys stock price, which leads to incremental
share dilution, Mylan today announced that their Board of Directors has approved the repurchase of
up to $350 million of the Companys common stock and other equity securities, either in the open
market or through privately-negotiated transactions. The repurchase program is expected to be
completed by June 30, 2011, and does not obligate the Company to acquire any particular amount of
common stock or other equity securities.
John Sheehan, Mylans Chief Financial Officer stated: The planned share repurchase program
represents an effective and prudent use of our Companys assets and allows us to maintain
discipline with respect to the number of outstanding shares, while mitigating the impact that
additional dilution could have on our EPS. Additionally, our strong operations and consistent cash
flow generation have positioned us to be able to finance the repurchase program, while still
allowing us to further de-lever our balance sheet and retain adequate resources to take advantage
of the right strategic opportunities.
Financial Results Summary
Total revenues for the quarter ended March 31, 2011 increased $156.6 million, or 12.1% to $1.45
billion from $1.29 billion in the quarter ended March 31, 2010. Total revenues include both net
revenues and other revenues from third parties. Third party net revenues for the current quarter
were $1.44 billion compared to $1.28 billion for the prior year quarter, representing an increase
of $158.4 million, or 12.4%. Other third party
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revenues for the current quarter were $12.4 million
compared to $14.3 million in the prior year quarter, a decrease of $1.9 million. Revenues in the
current quarter were favorably impacted by the effect of foreign currency translation, generally
reflecting a weaker U.S. dollar as compared to the currencies of several other markets in which
Mylan operates. Translating total current year revenues at prior year exchange rates would have
resulted in year-over-year growth in total revenues excluding foreign currency, of $141 million, or
approximately 11%.
A tabular summary of the Companys revenues for the quarters ended March 31, 2011 and March 31,
2010, is included at the end of this release.
Mylan has two segments, Generics and Specialty. Generics third party net sales, which are
derived from sales in the U.S. and Canada (collectively, North America), Europe, the Middle East
and Africa (collectively, EMEA) and Asia Pacific were $1.34 billion compared to $1.20 billion in
the prior year quarter.
Third party net sales from North America were $674.3 million for the current quarter, compared to
$552.4 million for the prior year quarter, representing an increase of $121.8 million or 22.1%.
This increase was mainly driven by increased volume, partially as a result of Mylans ability to continue to
be a stable and reliable source of supply to the market; new products, which contributed sales of
$81.1 million in the current quarter; and incremental revenue from the acquisition of Bioniche
Pharma in September 2010; partially offset by lower pricing on certain existing products.
Third party net sales from EMEA were $389.1 million for the current quarter, compared to $406.9
million for the prior year quarter, a decrease of $17.8 million, or 4.4%. Translating current
quarter third party net revenues from EMEA at prior year exchange rates would have resulted in a
year-over-year decrease excluding the effect of foreign currency of approximately $15 million, or
4%. This decrease was mainly the result of unfavorable market conditions and lower pricing in a
number of European markets in which Mylan operates, primarily Germany, the U.K. and Portugal, partially
offset by strong performances in Italy and Spain. Local currency revenues from our business in France were essentially flat as compared to the
prior year, with new product launches offsetting the impact of unfavorable pricing due to an increasingly competitive market.
Sales in Asia Pacific are derived from Mylans operations in India, Australia, Japan and New
Zealand. Asia Pacific third party net sales were $276.1 million for the current quarter, compared
to $236.1 million for the prior year quarter, an increase of $40.0 million, or 16.9%. Excluding the
favorable effect of foreign currency, calculated as described above, the increase was approximately
$24 million, or 10%. This increase is primarily driven by increased sales of anti-retroviral
finished dosage form generic products and higher sales of active pharmaceutical ingredients (API)
by Mylans Matrix subsidiary in India.
For the current quarter, Specialty reported third party net sales of $97.0 million, an increase of
$14.3 million, or 17.3%, from the prior year quarter of $82.7 million. The most significant
contributor to Specialty Segment revenues continues to be the EpiPen® Auto-Injector. In the current
quarter, Specialty realized increased sales of the EpiPen Auto-Injector,
mainly as a result of favorable pricing.
Gross
profit for the quarter ended March 31, 2011 was $590.9 million and gross margins were 40.8%.
In the prior year quarter, gross profit was $516.3 million, and gross margins were 40.0%. Gross
profit for the current year quarter was impacted by certain purchase accounting related items, of
approximately $86.7 million, which consisted primarily of amortization related to purchased
intangible assets. Excluding such items, gross margins would have
been approximately 47%. Prior
year gross profit was also impacted by similar purchase accounting related items in the amount of
$71.6 million. Excluding such items, gross margins in the prior year would have been approximately
46%.
The increase in gross margin, excluding the items noted above, can be attributed to both Generics
and Specialty. The improvement in the Generics Segment was a result
of new product introductions and a
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favorable product mix in North America. Gross margin in the Specialty Segment improved as a
result of favorable pricing, mainly on the EpiPen® Auto-injector.
Earnings from operations were $211.7 million for the three months ended March 31, 2011, compared to
$198.5 million for the prior year quarter. During the three-months ended March 31, 2011, the Company
recorded $24.0 million in net charges for litigation settlements, principally related to an adverse ruling for
an anti-competion claim in France, which the Company intends to appeal.
Excluding the impact of purchase accounting related
items in both periods, as mentioned above, as well as net charges for litigation settlements,
earnings from operations increased to $322.4 million in the current quarter from $270.9 million in
the prior year quarter. The increase in operating income was driven by higher sales and gross
profit as discussed above, partially offset by an increases in selling, general and administrative
(SG&A) and research and development (R&D) expenses.
Interest expense for the quarter ended March 31, 2011 was $84.4 million, compared to $74.0 million
for the prior year quarter. The increase is primarily due to interest associated with the 2017 and
2020 Senior Notes debt offerings in May 2010 and July 2010. Included in interest expense for the
current quarter and the comparable prior year period are $11.9 million and $11.0 million, primarily
related to the amortization of the discounts on our convertible debt instruments, net of
amortization of the premium on our 2020 Senior Notes.
EBITDA, which is defined as net income (loss) (excluding the non-controlling interest and income
from equity method investees) plus income taxes, interest expense, depreciation and amortization,
was $334.6 million for the quarter ended March 31, 2011, and $302.1 million for the prior year
quarter. After adjusting for certain items as further discussed
below, adjusted EBITDA was $386.0
million for the current quarter and $323.0 million for the prior year quarter.
Non-GAAP Financial Measures
Mylan is disclosing non-GAAP financial measures when providing financial results. Primarily due to
acquisitions, Mylan believes that an evaluation of its ongoing operations (and comparisons of its
current operations with historical and future operations) would be difficult if the disclosure of
its financial results were limited to financial measures prepared only in accordance with
accounting principles generally accepted in the U.S. (GAAP). In addition to disclosing its
financial results determined in accordance with GAAP, Mylan is disclosing non-GAAP results that
exclude items such as amortization expense and other costs directly associated with the
acquisitions as well as certain other
expense and revenue items in order to supplement investors and other readers understanding and
assessment of the Companys financial performance, because the Companys management uses these
measures internally for forecasting, budgeting and measuring its operating performance. In
addition, the Company believes that including EBITDA and supplemental adjustments applied in
presenting adjusted EBITDA is appropriate to provide additional information to investors to
demonstrate the Companys ability to comply with financial debt covenants (which are calculated
using a measure similar to adjusted EBITDA) and assess the Companys ability to incur additional
indebtedness. Whenever Mylan uses such a non-GAAP measure, it will provide a reconciliation of
non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors and
other readers are encouraged to review the related GAAP financial measures and the reconciliation
of non-GAAP measures to their most closely applicable GAAP measure set forth below and should
consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior
measure to, measures of financial performance prepared in accordance with GAAP.
Below is a reconciliation of GAAP net earnings attributable to Mylan Inc. and GAAP diluted EPS to
adjusted net earnings attributable to Mylan Inc. and adjusted diluted EPS for the three months
ended March 31, 2011 and March 31, 2010 (in millions, except per share amounts):
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Three months ended | Three months ended | |||||||||||||||
March 31, 2011 | March 31, 2010 | |||||||||||||||
GAAP net earnings attributable to Mylan Inc. and
GAAP diluted EPS |
$ | 104.2 | $ | 0.23 | $ | 61.1 | $ | 0.20 | ||||||||
Purchase accounting related amortization |
86.7 | 71.6 | ||||||||||||||
Litigation settlements, net |
24.0 | 0.7 | ||||||||||||||
Interest, primarily amortization of debt discount |
11.9 | 11.0 | ||||||||||||||
Integration and other special items |
17.1 | 12.1 | ||||||||||||||
Tax effect of the above items |
(47.0 | ) | (33.1 | ) | ||||||||||||
Preferred
dividend(a) |
| 34.8 | ||||||||||||||
Adjusted net earnings attributable to Mylan Inc.
and adjusted diluted EPS |
$ | 196.9 | $ | 0.44 | $ | 158.2 | $ | 0.36 | ||||||||
Weighted
average diluted common shares outstanding |
448.5 | 437.2 | (a) |
(a) | Adjusted diluted EPS for the
three months ended March 31, 2010 was calculated under the if-converted method which assumes conversion of the companys
preferred stock into 125.2 million shares of common stock based on an
average share price, and excludes the preferred dividend from the
calculation, as the if converted method is more dilutive. |
Below is a reconciliation of GAAP net earnings attributable to Mylan Inc. to adjusted EBITDA
for the three months ended March 31, 2011 and 2010 (in millions):
Three months ended | Three months ended | |||||||
March 31, 2011 | March 31, 2010 | |||||||
GAAP net earnings attributable to Mylan Inc. before preferred dividends |
$ | 104.2 | $ | 95.9 | ||||
Add/(Deduct): |
||||||||
Net
contribution attributable to the noncontrolling interest and equity method investees |
0.4 | (1.6 | ) | |||||
Income taxes |
26.0 | 31.3 | ||||||
Interest expense |
84.4 | 74.0 | ||||||
Depreciation and amortization |
119.6 | 102.5 | ||||||
EBITDA |
$ | 334.6 | $ | 302.1 | ||||
Add Adjustments: |
||||||||
Non-cash stock-based compensation expense |
10.3 | 7.3 | ||||||
Litigation settlements, net |
24.0 | 0.7 | ||||||
Integration and other special items |
17.1 | 12.9 | ||||||
Adjusted EBITDA |
$ | 386.0 | $ | 323.0 | ||||
Conference Call
Mylan will host a conference call and live webcast today, May 3, 2011, at 8:30 a.m. ET, in
conjunction with the release of its financial results. The dial-in number to access the call is
800.479.9001 or 719.325.2146 for international callers. A replay, available for approximately seven
days, will be available at 888.203.1112 or 719.457.0820 for international callers with access pass
code 2528588. To access a live webcast of the call, and the accompanying presentation, please log
on to Mylans website (www.mylan.com) at least 15 minutes before the event is to begin to register
and download or install any necessary software. A replay of the webcast will be available on
www.mylan.com for approximately seven days.
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About Mylan
Mylan Inc. ranks among the leading generic and specialty pharmaceutical companies in the world and
provides products to customers in more than 150 countries and territories. The company maintains
one of the industrys broadest and highest quality product portfolios supported by a robust product
pipeline; operates one of the worlds largest active pharmaceutical ingredient manufacturers; and
runs a specialty business focused on respiratory, allergy and psychiatric therapies. For more
information about Mylan, please visit www.mylan.com. For more information about generic drugs,
please visit www.ChoosingGenerics.com.
Forward Looking Statements
This press release includes statements that constitute forward-looking statements, including with
regard to the Companys future operations, its earnings expectations and the share repurchase
program. These statements are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Because such statements inherently involve risks and uncertainties,
actual future results may differ materially from those expressed or implied by such forward-looking
statements. Factors that could cause or contribute to such differences include, but are not limited
to: challenges, risks and costs inherent in business integrations and in achieving
anticipated synergies; the effect of any changes in customer and supplier relationships and
customer purchasing patterns; the ability to attract and retain key personnel; changes in
third-party relationships; the impacts of competition; changes in economic and financial conditions
of the Companys business; uncertainties and matters beyond the control of management; inherent
uncertainties involved in the estimates and judgments used in the preparation of financial
statements, the providing of estimates of financial measures, in accordance with GAAP and related
standards; and market conditions or other impediments to completing the share repurchase program as
planned. These cautionary statements should be considered in connection with any
subsequent written or oral forward-looking statements that may be made by the Company or by persons
acting on its behalf and in conjunction with its periodic SEC filings. In addition, please refer to
the cautionary statements and risk factors set forth in the Companys Report on Form 10-K, for the
year ended December 31, 2010, and in its other filings with the SEC. Further, uncertainties or
other circumstances, or matters outside of the Companys control between the date of this release
and the date that its Form 10-Q for the quarter ended March 31, 2011, is filed with the SEC could
potentially result in adjustments to reported results. The Company undertakes no obligation to
update statements herein for revisions or changes after the date of this release.
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Mylan Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Revenues: |
||||||||
Net revenues |
$ | 1,436,510 | $ | 1,278,105 | ||||
Other revenues |
12,448 | 14,269 | ||||||
Total revenues |
1,448,958 | 1,292,374 | ||||||
Cost of sales |
858,012 | 776,076 | ||||||
Gross profit |
590,946 | 516,298 | ||||||
Operating expenses: |
||||||||
Research and development |
75,310 | 61,296 | ||||||
Selling, general and administrative |
279,995 | 255,761 | ||||||
Litigation settlements, net |
23,966 | 734 | ||||||
Total operating expenses |
379,271 | 317,791 | ||||||
Earnings from operations |
211,675 | 198,507 | ||||||
Interest expense |
84,410 | 74,047 | ||||||
Other income, net |
3,251 | 1,069 | ||||||
Earnings before income taxes and noncontrolling interest |
130,516 | 125,529 | ||||||
Income tax provision |
25,971 | 31,259 | ||||||
Net earnings |
104,545 | 94,270 | ||||||
Net (earnings) loss attributable to the noncontrolling interest |
(370 | ) | 1,587 | |||||
Net earnings attributable to Mylan Inc. before preferred dividends |
104,175 | 95,857 | ||||||
Preferred dividends (a) |
| 34,759 | ||||||
Net earnings attributable to Mylan Inc. common shareholders |
$ | 104,175 | $ | 61,098 | ||||
Earnings per common share attributable to Mylan Inc. common shareholders: |
||||||||
Basic |
$ | 0.24 | $ | 0.20 | ||||
Diluted |
$ | 0.23 | $ | 0.20 | ||||
Weighted average common shares outstanding:(a) |
||||||||
Basic |
437,148 | 306,996 | ||||||
Diluted |
448,473 | 311,948 | ||||||
(a) | The three months ended March 31, 2011 includes the effect of the Preferred Stock Conversion into approximately 125.2 million shares of Mylan common stock on November 15, 2010. |
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Mylan Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited; in thousands)
Condensed Consolidated Balance Sheets
(Unaudited; in thousands)
March 31, 2011 | December 31, 2010 | |||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 608,087 | $ | 662,052 | ||||
Restricted cash |
23,876 | 23,972 | ||||||
Marketable securities |
30,884 | 29,085 | ||||||
Accounts receivable, net |
1,335,590 | 1,157,081 | ||||||
Inventories |
1,326,761 | 1,240,271 | ||||||
Other current assets |
431,555 | 446,982 | ||||||
Total current assets |
3,756,753 | 3,559,443 | ||||||
Intangible assets, net |
2,476,183 | 2,501,150 | ||||||
Goodwill |
3,694,002 | 3,599,334 | ||||||
Other non-current assets |
1,951,187 | 1,876,877 | ||||||
Total assets |
$ | 11,878,125 | $ | 11,536,804 | ||||
Liabilities: |
||||||||
Current liabilities |
$ | 2,393,280 | $ | 1,809,612 | ||||
Long-term debt (b) |
4,766,868 | 5,263,376 | ||||||
Other non-current liabilities |
801,003 | 848,415 | ||||||
Total liabilities |
7,961,151 | 7,921,403 | ||||||
Noncontrolling interest |
13,258 | 13,522 | ||||||
Mylan Inc. shareholders equity |
3,903,716 | 3,601,879 | ||||||
Total liabilities and equity |
$ | 11,878,125 | $ | 11,536,804 | ||||
(b) | At March 31, 2011, long-term debt of $610.1 million, net of a $27.7 million discount, related to the Senior Convertible Notes and a portion of the Euro Tranche A and B Term Loans is now classified as a current liability reflecting a maturity date of March 2012. |
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Mylan Inc. and Subsidiaries
Summary of Revenues by Segment
(Unaudited; in millions)
Summary of Revenues by Segment
(Unaudited; in millions)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Generics: |
||||||||
Third party net sales |
||||||||
North America |
$ | 674.3 | $ | 552.4 | ||||
EMEA |
389.1 | 406.9 | ||||||
Asia Pacific |
276.1 | 236.1 | ||||||
Total third party net sales |
1,339.5 | 1,195.4 | ||||||
Other third party revenues |
11.0 | 12.5 | ||||||
Total third party revenues |
1,350.5 | 1,207.9 | ||||||
Intersegment revenues |
0.4 | 30.4 | ||||||
Generics total revenues |
1,350.9 | 1,238.3 | ||||||
Specialty: |
||||||||
Third party net sales |
97.0 | 82.7 | ||||||
Other third party revenues |
1.5 | 1.8 | ||||||
Total third party revenues |
98.5 | 84.5 | ||||||
Intersegment revenues |
16.8 | 16.5 | ||||||
Specialty total revenues |
115.3 | 101.0 | ||||||
Elimination of intersegment
revenues |
(17.2 | ) | (46.9 | ) | ||||
Consolidated total revenues |
$ | 1,449.0 | $ | 1,292.4 | ||||
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