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8-K - FORM 8-K - Jazz Pharmaceuticals plcd491465d8k.htm

Exhibit 99.1

 

LOGO

JAZZ PHARMACEUTICALS REPORTS FULL YEAR

AND FOURTH QUARTER 2012 FINANCIAL RESULTS

- Record Total Revenues of $586 Million in 2012 -

- Company Provides Guidance for Full Year 2013 Total Revenues of $805 to $835 Million -

DUBLIN, February 26, 2013 — Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the full year and fourth quarter ended December 31, 2012.

“2012 was a transformational year, with the acquisitions of Azur Pharma and EUSA Pharma expanding our business and allowing us to improve more patients’ lives,” said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals plc. “In 2013, we anticipate continued strong growth in revenues and earnings driven by our core products. In addition, we plan to pursue business development opportunities for additional specialty products that leverage our unique expertise and infrastructure.”

Adjusted net income for 2012 was $290.4 million, or $4.82 per diluted share, compared to 2011 adjusted net income of $164.9 million, or $3.52 per diluted share. Adjusted net income for the fourth quarter of 2012 was $93.9 million, or $1.53 per diluted share, compared to $55.4 million, or $1.17 per diluted share, for the fourth quarter of 2011.

GAAP income from continuing operations for 2012 was $261.1 million, or $4.34 per diluted share, compared to $125.0 million, or $2.67 per diluted share for 2011. GAAP income from continuing operations for the fourth quarter of 2012 was $166.2 million, or $2.71 per diluted share, compared to $37.5 million, or $0.79 per diluted share, for the fourth quarter of 2011.

GAAP net income for 2012 was $288.6 million, or $4.79 per diluted share, compared to $125.0 million, or $2.67 per diluted share for 2011. GAAP net income for the fourth quarter of 2012 was $200.6 million, or $3.28 per diluted share, compared to $37.5 million, or $0.79 per diluted share, for the same period of 2011. GAAP net income for the full year and fourth quarter of 2012 included the results of the discontinued women’s health business and the reversal of the valuation allowance against substantially all of the company’s U.S. deferred tax assets as discussed below. Also, GAAP net income in the 2012 periods reflected various acquisition-related expenses, including transaction, integration and restructuring expenses, as well as certain non-cash expenses. A reconciliation of applicable GAAP to non-GAAP adjusted information is included with this press release.

2012 Revenues and Product Sales

Total revenues for the full year ended December 31, 2012 were $586.0 million, an increase of 115% over total revenues of $272.3 million for the year ended December 31, 2011. Total revenues for the fourth quarter of 2012 were $183.7 million, compared to $83.5 million for the fourth quarter of 2011. Increases in total revenues for both the year


and the quarter ended December 31, 2012 were driven primarily by inclusion of revenues from the acquired Azur Pharma and EUSA Pharma businesses and increased net sales of Xyrem® (sodium oxybate) oral solution.

Total revenues for the full year and quarter ended December 31, 2012 included net sales, royalties and contract revenues. A table showing pro forma net sales for the full year and fourth quarter 2012 compared to 2011 is included in this press release.

Net sales for the full year and fourth quarter of 2012 were as follows:

 

   

Xyrem: 2012 Xyrem sales increased by 62% to $378.7 million, compared to $233.3 million during the prior year. Net sales of Xyrem were $113.5 million for the fourth quarter of 2012, compared to net sales of $71.8 million for the fourth quarter of 2011. During the fourth quarter of 2012, the average number of active Xyrem patients was approximately 10,450.

 

   

Erwinaze®/Erwinase® (asparaginase Erwinia chrysanthemi): 2012 worldwide net sales of Erwinaze/Erwinase from the EUSA Pharma acquisition closing date of June 12, 2012 were $72.1 million. Full year pro forma net sales of Erwinaze/Erwinase were $131.9 million. 2012 fourth quarter worldwide net sales of Erwinaze/Erwinase were $34.4 million.

 

   

Prialt® (ziconotide) intrathecal infusion: 2012 net sales of Prialt were $26.4 million, including $4.6 million related to a supply agreement to provide Prialt to Eisai Co. for distribution and sale in Europe recorded in the first quarter of 2012. 2012 fourth quarter net sales of Prialt were $5.9 million.

 

   

Psychiatry Products: 2012 net sales of the company’s psychiatry products, including once-daily Luvox CR® (fluvoxamine maleate), FazaClo® (clozapine, USP) HD and FazaClo LD, were $76.5 million. 2012 fourth quarter net sales of the psychiatry products were $18.0 million.

 

   

Other: Net sales of other products for the full year and fourth quarter of 2012 were $26.9 million and $10.2 million, respectively. “Other” includes products acquired in the EUSA Pharma and Azur Pharma transactions that are not mentioned above.

Operating Expenses and Other

Operating expenses for 2012 increased to $388.1 million compared to $144.4 million for 2011. Operating expenses for the fourth quarter of 2012 increased to $116.3 million compared to $45.9 million for the same period of 2011. Operating expenses increased over the prior year for the following reasons:

 

   

Cost of product sales for 2012 was $78.4 million compared to $13.9 million for 2011. Cost of product sales for the fourth quarter of 2012 was $25.8 million compared to $3.9 million for the same period of 2011. The increases in both periods were due primarily to higher net sales, with the full year 2012 cost of product sales also reflecting $16.8 million of acquisition accounting inventory fair value step-up adjustments.


   

Gross margin for 2012, as a percentage of product sales, was 86.5% compared to 94.8% for 2011. Gross margin for the fourth quarter of 2012, as a percentage of product sales, was 85.8% compared to 95.2% for 2011. Our gross margin percentage in 2012 as compared to 2011 was lower primarily due to the effect of the acquisition accounting inventory fair value step-up adjustments recorded as cost of product sales and also due to the impact of changes in our product mix in 2012.

 

   

Selling, general and administrative and research and development expenses for 2012 totaled $244.4 million compared to $123.1 million for 2011. Selling, general and administrative and research and development expenses for the fourth quarter of 2012 totaled $68.7 million compared to $40.1 million for the same period of 2011. The increases in both periods reflected higher headcount and related expenses, sales and promotional expenses, professional fees and transaction, integration and restructuring costs due primarily to the expansion of our business as a result of the Azur Pharma and EUSA Pharma transactions.

 

   

Intangible asset amortization for the full year and fourth quarter of 2012 was $65.4 million and $21.9 million, respectively, primarily related to the company’s expanded product portfolio.

Full year and fourth quarter of 2012 net interest expense was $16.9 million and $7.7 million, respectively. As of December 31, 2012, the balance of cash and cash equivalents was $387.2 million and the remaining balance on the term loan was $456.8 million.

During the fourth quarter of 2012, the company reversed the valuation allowance against substantially all of its U.S. deferred tax assets, since the realization of those assets was deemed to be more likely than not, and recorded a non-recurring income tax benefit of $104.2 million. This tax benefit was reflected in the company’s GAAP results for the fourth quarter and full year of 2012.

In addition, during the fourth quarter of 2012, the company sold its women’s health business for $97.6 million and recorded a non-recurring gain of $35.2 million. Financial results from the women’s health business are reported as discontinued operations for all periods presented.

2013 Financial Guidance

Jazz Pharmaceuticals is providing the following 2013 guidance:

 

Revenues    $805-$835 million
Total Net Product Sales    $798-$827 million
-Xyrem Net Sales    $530-$540 million
-Erwinaze/Erwinase Net Sales    $155-$165 million
Adjusted Gross Margin %1, 3    87-89%
Adjusted Combined SG&A and R&D Expenses2, 3    $260-$275 million
GAAP Net Income Per Diluted Share    $3.17-$3.47
Adjusted Net Income Per Diluted Share3    $5.70-$5.90


1. Excludes $4 million of acquisition accounting inventory fair value step-up and $2 million in share-based compensation expense from estimated GAAP gross margin of 86-88%.
2. Excludes $46-$48 million of share-based compensation expense, $15 million related to a change in fair value of contingent consideration, $4 million of depreciation expense and $1-$2 million of transaction, integration and restructuring costs from estimated GAAP combined SG&A and R&D expenses of $325-$340 million.
3. See “Non-GAAP Financial Measures” below. A reconciliation of non-GAAP adjusted guidance measures shown above is included with this press release.

Conference Call Details

Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. EST (9:30 p.m. GMT) to provide a business and financial update and discuss 2012 full year and fourth quarter results and 2013 financial guidance. The live webcast may be accessed from the Investors & Media section of the company’s website at www.jazzpharmaceuticals.com. Please connect to the website prior to the start of the conference call to ensure adequate time for any software downloads that may be necessary. Investors may participate in the conference call by dialing +1 800 920 8624 in the U.S., or +1 617 597 5430 outside the U.S., and entering passcode 75109778.

An archived version of the webcast will be available for at least one week in the Investors & Media section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com.

About Jazz Pharmaceuticals

Jazz Pharmaceuticals plc is a specialty biopharmaceutical company focused on improving patients’ lives by identifying, developing and commercializing innovative products that address unmet medical needs. The company has a diverse portfolio of products in the areas of narcolepsy, oncology, pain and psychiatry. The company’s U.S. marketed products in these areas include: Xyrem® (sodium oxybate) oral solution, Erwinaze® (asparaginase Erwinia chrysanthemi), Prialt® (ziconotide) intrathecal infusion, FazaClo® (clozapine, USP) HD, FazaClo LD, and Luvox CR® (fluvoxamine maleate). Outside of the U.S., Jazz Pharmaceuticals also has a number of products marketed by its EUSA Pharma division. For further information, see www.jazzpharmaceuticals.com.

Non-GAAP Financial Measures

To supplement Jazz Pharmaceuticals’ financial results and guidance presented on a GAAP basis, the company uses certain non-GAAP adjusted financial measures. The company believes that these non-GAAP financial measures are helpful in understanding its past financial performance and potential future results, particularly in light of the effect of various acquisition and divestiture transactions effected by the company during 2012.


They are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read in conjunction with the consolidated financial statements prepared in accordance with GAAP. Jazz Pharmaceuticals’ management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. Compensation of executives is based in part on the performance of the company’s business based on certain of these non-GAAP measures. In addition, Jazz Pharmaceuticals believes that the use of these non-GAAP measures enhances the ability of investors to compare its results from period to period. The non-GAAP adjusted financial measures as used by Jazz Pharmaceuticals in this press release may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by the company’s competitors and other companies.

As used in this press release, (i) the historical adjusted net income measures exclude from GAAP income from continuing operations, as applicable, revenue related to upfront and milestone payments, amortization of intangible assets, share-based compensation expense, acquisition accounting inventory fair value step-up adjustments, transaction and integration costs, restructuring charges, change in fair value of contingent consideration, loss on extinguishment of debt, other non-cash expense/income, tax related to acquisition restructuring and the release of the valuation allowance against substantially all of the company’s U.S. deferred tax assets, and adjust the income tax provision to the estimated amount of taxes that are payable in cash; (ii) the adjusted net income guidance measures exclude from estimated GAAP net income amortization of intangible assets and depreciation, share-based compensation expense, acquisition accounting inventory fair value step-up adjustments, transaction, integration and restructuring costs, change in fair value of contingent consideration, and other non-cash expense and adjust the income tax provision to the estimated amount of taxes that are payable in cash; (iii) the adjusted gross margin percentage guidance excludes from estimated GAAP gross margin percentage share-based compensation expense and acquisition accounting inventory fair value step-up adjustments; and (iv) the adjusted combined selling, general and administrative and research and development expenses guidance excludes from estimated GAAP combined selling, general and administrative and research and development expenses share-based compensation expense, transaction, integration and restructuring costs, depreciation, and change in fair value of contingent consideration.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements, including, but not limited to, statements related to Jazz Pharmaceuticals’ future financial results and growth potential, including 2013 financial guidance, plans to pursue business development opportunities and other statements that are not historical facts. These forward-looking statements are based on Jazz Pharmaceuticals’ current expectations and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward looking statements as a result of these risks and uncertainties, which include, without limitation, risks and uncertainties associated with maintaining and increasing sales of and revenue from Xyrem, such as the potential introduction of generic competition and changed or increased regulatory restrictions on Xyrem, as well as similar risks related to effectively commercializing the company’s other marketed products, including Erwinaze and Prialt; protecting the


company’s intellectual property rights; obtaining appropriate pricing and reimbursement for the company’s products in an increasingly challenging environment; ongoing regulation and oversight by U.S. and non-U.S. regulatory agencies; dependence on key customers and sole source suppliers; the difficulty and uncertainty of pharmaceutical product development and the uncertainty of clinical success and regulatory approval; the company’s ability to identify and acquire, in-license or develop additional products or product candidates to grow its business; and potential restrictions on the company’s ability and flexibility to pursue future opportunities as a result of its substantial outstanding debt obligations; as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results; and those risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in Jazz Pharmaceuticals plc’s Securities and Exchange Commission filings and reports (Commission File No. 001-33500), including in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 and future filings and reports by the company, including the Annual Report on Form 10-K for the year ended December 31, 2012 . Jazz Pharmaceuticals undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.


JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2012     2011     2012     2011  

Revenues:

        

Product sales, net

   $ 181,942      $ 80,935      $ 580,527      $ 266,518   

Royalties and contract revenues

     1,761        2,601        5,452        5,759   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     183,703        83,536        585,979        272,277   

Operating expenses:

        

Cost of product sales

     25,763        3,862        78,425        13,942   

Selling, general and administrative

     61,377        36,384        223,882        108,936   

Research and development

     7,277        3,764        20,477        14,120   

Intangible asset amortization

     21,907        1,862        65,351        7,448   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     116,324        45,872        388,135        144,446   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     67,379        37,664        197,844        127,831   

Interest expense, net

     (7,670     (41     (16,869     (1,600

Foreign currency loss

     (2,263     —           (3,620     —      

Loss on extinguishment of debt

     —           (150     —           (1,247
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income tax benefit

     57,446        37,473        177,355        124,984   

Income tax benefit

     (108,760     —           (83,794     —      
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     166,206        37,473        261,149        124,984   

Income from discontinued operations, net of tax

     34,345        —           27,437        —      
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 200,551      $ 37,473      $ 288,586      $ 124,984   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic income per ordinary share:

        

Income from continuing operations

   $ 2.87      $ 0.88      $ 4.61      $ 3.01   

Income from discontinued operations

     0.59        —           0.48        —      
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 3.46      $ 0.88      $ 5.09      $ 3.01   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted income per ordinary share:

        

Income from continuing operations

   $ 2.71      $ 0.79      $ 4.34      $ 2.67   

Income from discontinued operations

     0.57        —           0.45        —      
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 3.28      $ 0.79      $ 4.79      $ 2.67   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average ordinary shares used in per share computations:

        

Basic

     57,968        42,367        56,643        41,499   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     61,234        47,451        60,195        46,798   
  

 

 

   

 

 

   

 

 

   

 

 

 


JAZZ PHARMACEUTICALS PLC

SUMMARY OF PRODUCT SALES, NET

(In thousands)

(Unaudited)

 

     Three Months Ended
December 31,
     Year Ended
December 31,
 
     2012      2011      2012      2011  

Xyrem

   $ 113,514       $ 71,845       $ 378,663       $ 233,348   

Erwinaze/Erwinase (1)

     34,423         —            72,083         —      

Prialt (1)

     5,869         —            26,360         —      

Psychiatry:

           

Luvox CR

     10,785         9,090         42,419         33,170   

FazaClo LD (1)

     4,118         —            22,023         —      

FazaClo HD (1)

     3,068         —            12,047         —      

Other (1)

     10,165         —            26,932         —      
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 181,942       $ 80,935       $ 580,527       $ 266,518   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Net sales for the year ended December 31, 2012 reported by Jazz Pharmaceuticals plc include net sales from the historic Azur Pharma business beginning January 18, 2012 and net sales from the historic EUSA Pharma business beginning June 12, 2012.

The following unaudited pro forma information represents the combined net product sales for the three months and years ended December 31, 2012 and 2011, respectively, as if the merger with Azur Pharma, the acquisition of EUSA Pharma and the disposition of the women’s health business had each been completed on January 1, 2011:

SUMMARY OF PRODUCT SALES, NET (PRO FORMA)

(In thousands)

(Unaudited)

 

     Three Months Ended
December 31,
     Year Ended
December 31,
 
   2012      2011      2012      2011  

Xyrem

   $ 113,514       $ 71,845       $ 378,663       $ 233,348   

Erwinaze/Erwinase

     34,423         18,534         131,870         44,220   

Prialt

     5,869         5,773         26,699         20,600   

Psychiatry:

           

Luvox CR

     10,785         9,090         42,419         33,170   

FazaClo LD

     4,118         8,090         22,256         30,105   

FazaClo HD

     3,068         3,143         12,177         8,681   

Other

     10,165         12,688         48,873         52,622   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total pro forma net sales

   $ 181,942       $ 129,163       $ 662,957       $ 422,746   
  

 

 

    

 

 

    

 

 

    

 

 

 


JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

     December 31,
2012
     December 31,
2011
 

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 387,196       $ 82,076   

Marketable securities

     —            75,822   

Accounts receivable

     75,480         34,374   

Inventories

     26,525         3,909   

Prepaid expenses

     7,445         1,690   

Deferred tax assets, net

     35,813         —      

Other current assets

     19,113         1,260   
  

 

 

    

 

 

 

Total current assets

     551,572         199,131   

Property and equipment, net

     7,281         1,557   

Intangible assets, net

     869,952         14,585   

Goodwill

     442,600         38,213   

Deferred tax assets, net, non-current

     74,850         —      

Deferred financing costs

     16,576         —      

Other long-term assets

     3,662         87   
  

 

 

    

 

 

 

Total assets

   $ 1,966,493       $ 253,573   
  

 

 

    

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 15,887       $ 5,129   

Accrued liabilities

     104,666         34,783   

Current portion of long-term debt

     29,688         —      

Income taxes payable

     39,884         —      

Deferred tax liability, net

     275         —      

Purchased product rights liability

     —            4,500   

Liability under government settlement

     —            7,320   

Deferred revenue

     1,138         1,138   
  

 

 

    

 

 

 

Total current liabilities

     191,538         52,870   

Deferred revenue, non-current

     6,776         7,915   

Long-term debt, less current portion

     427,073         —      

Contingent consideration

     34,800         —      

Deferred tax liability, net, non-current

     178,393         —      

Other non-current liabilities

     6,621         —      

Total shareholders’ equity

     1,121,292         192,788   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 1,966,493       $ 253,573   
  

 

 

    

 

 

 


JAZZ PHARMACEUTICALS PLC

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2012     2011     2012     2011  

GAAP income from continuing operations

   $ 166,206      $ 37,473      $ 261,149      $ 124,984   

Intangible asset amortization

     21,907        1,862        65,351        7,448   

Share-based compensation expense

     8,322        10,946        23,006        20,704   

Acquisition accounting inventory fair value step-up

     2,118        —           16,794        —      

Transaction and integration costs

     1,129        5,271        18,821        11,245   

Restructuring charges

     609        —           2,789        —      

Change in fair value of contingent consideration

     (1,400     —           (300     —      

Loss on extinguishment of debt

     —           150        —           1,247   

Other non-cash expense (income)

     1,291        (284     2,860        (744

Valuation allowance release

     (104,247     —           (104,247     —      

Income tax adjustments

     (1,989     —           4,171        —      
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 93,946      $ 55,418      $ 290,394      $ 164,884   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP income from continuing operations per diluted share

   $ 2.71      $ 0.79      $ 4.34      $ 2.67   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per diluted share

   $ 1.53      $ 1.17      $ 4.82      $ 3.52   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing GAAP income from continuing operations and adjusted net income per diluted share amounts

     61,234        47,451        60,195        46,798   
  

 

 

   

 

 

   

 

 

   

 

 

 


JAZZ PHARMACEUTICALS PLC

RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended  
     December 31, 2012     December 31, 2011  
     GAAP     Adjustment     Non-GAAP     GAAP      Adjustment     Non-GAAP  

Total revenues

   $ 183,703      $ —         $ 183,703      $ 83,536       $ (284 )(f)    $ 83,252   

Cost of product sales

     25,763        (2,614 )(a)      23,149        3,862         (194 )(c)      3,668   

Selling, general and administrative

     61,377        (7,242 )(b)      54,135        36,384         (13,877 )(g)      22,507   

Research and development

     7,277        (922 )(c)      6,355        3,764         (2,146 )(c)      1,618   

Intangible asset amortization

     21,907        (21,907     —           1,862         (1,862     —      

Interest expense, net

     7,670        (1,291 )(d)      6,379        41         —           41   

Foreign currency loss

     2,263        —           2,263        —            —           —      

Loss on extinguishment of debt

     —           —           —           150         (150     —      

Income tax provision (benefit)

     (108,760     106,236 (e)      (2,524     —            —           —      

Income from continuing operations

     166,206        (72,260     93,946        37,473         17,945        55,418   

Income from continuing operations per diluted share

   $ 2.71        $ 1.53      $ 0.79         $ 1.17   

 

(a)

Acquisition accounting inventory fair value step-up of $2,118, share-based compensation expense of $417 and restructuring expense of $79.

(b)

Share-based compensation expense of $6,983, transaction and integration costs of $1,129 and restructuring charges of $530, partially offset by change in fair value of contingent consideration of $1,400.

(c)

Share-based compensation expense.

(d)

Non-cash interest expense primarily associated with debt discount and debt issuance costs.

(e) 

Release of the valuation allowance against substantially all U.S. deferred tax assets of $104,247 and adjustments to convert the income tax provision to the estimated amount of taxes payable in cash of $11,721, partially offset by tax related to acquisition restructuring of $9,732.

(f)

Revenue related to upfront and milestone payments.

(g) 

Share-based compensation expense of $8,606 and transaction and integration costs of $5,271.


JAZZ PHARMACEUTICALS PLC

RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS

(In thousands, except per share amounts)

(Unaudited)

 

     Year Ended  
     December 31, 2012      December 31, 2011  
     GAAP     Adjustment     Non-GAAP      GAAP      Adjustment     Non-GAAP  

Total revenues

   $ 585,979      $ —         $ 585,979       $ 272,277       $ (1,138 )(f)    $ 271,139   

Cost of product sales

     78,425        (18,380 )(a)      60,045         13,942         (624 )(c)      13,318   

Selling, general and administrative

     223,882        (40,090 )(b)      183,792         108,936         (26,837 )(g)      82,099   

Research and development

     20,477        (2,640 )(c)      17,837         14,120         (4,488 )(c)      9,632   

Intangible asset amortization

     65,351        (65,351     —            7,448         (7,448     —      

Interest expense, net

     16,869        (2,860 )(d)      14,009         1,600         (394 )(d)      1,206   

Foreign currency loss

     3,620        —           3,620         —            —           —      

Loss on extinguishment of debt

     —           —           —            1,247         (1,247     —      

Income tax provision (benefit)

     (83,794     100,076 (e)      16,282         —            —           —      

Income from continuing operations

     261,149        29,245        290,394         124,984         39,900        164,884   

Income from continuing operations per diluted share

   $ 4.34        $ 4.82       $ 2.67         $ 3.52   

 

(a)

Acquisition accounting inventory fair value step-up of $16,794, share-based compensation expense of $1,416 and restructuring expense of $170.

(b) 

Share-based compensation expense of $18,950, transaction and integration costs of $18,821 and restructuring charges of $2,619, partially offset by change in fair value of contingent consideration of $300.

(c)

Share-based compensation expense.

(d)

Non-cash interest expense primarily associated with debt discount and debt issuance costs.

(e) 

Release of the valuation allowance against substantially all U.S. deferred tax assets of $104,247 and adjustments to convert the income tax provision to the estimated amount of taxes payable in cash of $20,940, partially offset by tax related to acquisition restructuring of $25,111.

(f)

Revenue related to upfront and milestone payments.

(g)

Share-based compensation expense of $15,592 and transaction and integration costs of $11,245.


JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF DISCONTINUED OPERATIONS

(In thousands)

(Unaudited)

 

     Three Months Ended
December 31, 2012
     Year Ended
December 31,  2012
 

Product sales, net

   $ 1,596       $ 20,873   
  

 

 

    

 

 

 

Income from discontinued operations, net of taxes (1)

   $ 34,345       $ 27,437   
  

 

 

    

 

 

 

 

(1) 

Includes gain on sale of $35,244 in both the three months and year ended December 31, 2012.

JAZZ PHARMACEUTICALS PLC

RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2013 FINANCIAL GUIDANCE

(In millions, except per share amounts)

(Unaudited)

 

GAAP net income

   $197 - $215

Intangible asset amortization and depreciation

   79 - 80

Share-based compensation expense

   48 - 50

Acquisition accounting inventory fair value step-up

   4

Transaction, integration and restructuring costs

   1 - 2

Change in fair value of contingent consideration

   15

Other non-cash expense

   5

Income tax adjustments

   0 - 2
  

 

Adjusted net income

   $355 - $367
  

 

GAAP net income per diluted share

   $3.17 - $3.47
  

 

Adjusted net income per diluted share

   $5.70 - $5.90
  

 

Shares used in computing GAAP and adjusted net income per diluted share amounts

   62


Contacts

For Investors:

Kathee Littrell

Vice President, Investor Relations

Jazz Pharmaceuticals plc

Ireland, + 353 1 634 7887

U.S., + 1 650 496 2717

For Media:

Ami Knoefler

Executive Director, Investor Relations and Corporate Communications

Jazz Pharmaceuticals plc

Ireland, + 353 1 638 1032

U.S., + 1 650 496 2947