Teva Reports First Quarter 2007 Results
JERUSALEM--(BUSINESS WIRE)--May 2, 2007 - Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA) today reported results for the quarter ended March 31, 2007.Quarterly Net Sales reached $2,080 million, an increase of 24% over the comparable quarter of 2006, with sales benefiting from both the inclusion of a full quarter of sales of Ivax businesses, as compared with two months in the comparable quarter of 2006, and from the strengthening of various currencies against the US Dollar, mainly European currencies.
Net Income for the first quarter of 2007 was $342 million and fully diluted EPS reached $0.42. The 2006 GAAP figures include a write-off of $1.3 billion, after tax, relating primarily to the Ivax acquisition and consisting of in-process R&D and an inventory step up. Net Income and EPS for the first quarter of 2007 increased 20% and 14%, respectively, compared to the figures for the first quarter of 2006 after adjustment for these items. These 2006 adjusted data are considered non-GAAP financial measures. Teva believes that excluding these items facilitates investors' understanding of the trends in the Company's underlying business. Currencies had a minimal effect on Net Income.
Shlomo Yanai, Teva's President and Chief Executive Officer, commented on today's results: "Teva is off to a great start in 2007. Strong demand for our generics products across all our geographies, along with record-breaking quarterly sales of Copaxone(R), and the continued rapid growth of our respiratory franchise, drove our results in the first quarter even higher than we had anticipated."
Mr. Yanai added: "Teva's achievements in the first quarter provide a perfect demonstration of this company's unique capabilities, and how we are able to leverage our position as the industry leader to succeed in a highly competitive environment and to maximize the many opportunities that lie ahead."
North American pharmaceutical sales (including Copaxone(R)) accounted for 51% of the Company's total sales and reached $1,071 million in the quarter, compared to $881 million in the first quarter of 2006, an increase of 22%. Sales in the first quarter benefited from strong sales of oxycodone and bupropion XL, and increased sales of Teva's branded respiratory products and innovative products (Copaxone(R) and Azilect(R)).
Pharmaceutical sales in Europe (including Copaxone(R)), accounted for 25% of the Company's total sales and reached $521 million, an increase of 37%. U.K. and France were the main contributors to this growth as well as the strengthening of European currencies relative to the U.S. dollar. While Teva benefited from a favorable environment in the French and German generic markets, it faced challenging markets in Hungary and Italy.
International pharmaceutical sales (including Copaxone(R)), which include primarily Latin America (42%), Israel (28%) and Central and Eastern European countries (23%), increased 30% in the quarter to $340 million. The increase was due to robust growth especially in Latin America, and the positive impact of currency fluctuations.
Global in-market sales of Copaxone(R) during the first quarter exceeded $400 million for the first time, an increase of 22% over the first quarter of 2006. U.S. in-market sales increased by 18% to $260 million reflecting both price increases and increased unit sales. In-market sales outside the U.S., mainly in Europe and Canada, increased by 31% to $141 million, and represented improved performance in several major European countries (Germany, France and UK) and favorable exchange rates.
Azilect(R), Teva's second innovative drug, continued its successful market entry, gaining increasing acceptance as a beneficial option in the treatment of Parkinson's disease patients in the U.S. and Europe. Global in-market sales in the quarter reached $25 million compared with $19 million in the fourth quarter of 2006 and $3 million in the first quarter of 2006. Azilect(R) is now available in 26 countries, including Italy, where it was launched this quarter.
Global respiratory sales during the first quarter of 2007 reached $193 million, more than doubling from the corresponding quarter of 2006. The increase was fueled almost entirely by a substantial increase in sales of ProAir(TM) (albuterol HFA) in the U.S. caused by Teva's leadership in the faster than anticipated conversion to non-CFC-based inhaler products and from strong market share.
API sales to third parties of $148 million remained at practically the same level as in the comparable quarter of 2006. Total API sales, including sales to internal Teva units, amounted to $336 million this quarter.
Net Research and Development (R&D) grew 31% and reached $135 million (6.5% of net sales) reflecting mainly increased generic R&D spending. As of April 23, 2007, Teva had 151 abbreviated new drug applications awaiting final FDA approval. Collectively, the brand products covered by these 151 applications have annual U.S. sales of approximately $90 billion. Teva believes it is the first to file on 42 of these applications relating to products whose annual U.S. branded sales are over $35 billion.
The Tax Rate provided for the first quarter of 18% of pre-tax income represents our estimate of the annual rate of tax for 2007 compared with a rate of 19% for the first quarter of 2006 and 15% of adjusted pre-tax income for the whole of 2006. This reflects a different mix of income sources, including higher proportion of sales of products originated from the U.S.
Cash Flow generated from operating activities for the first quarter of 2007 was $499 million. Free cash flow reached $278 million. Cash and marketable securities amounted to $2.6 billion as of March 31, 2007.
Share Repurchases - During the first quarter of 2007, Teva repurchased 3.4 million shares for a total amount of $152 million. In total, since the Board's authorization in November 7, 2006 to acquire up to a total of $600 million worth of shares, Teva has repurchased a total of 11.7 million shares for an aggregate of $386 million, reflecting an average price of $32.90 per share.
Share Count - For the first quarter of 2007, the share count for the fully diluted EPS calculation was 827 million shares. As of March 31, 2007, Teva's share count for the fully diluted EPS calculation is also 827 million shares.
Outlook - Guidance will be discussed on the conference call. Details are provided below.
Dividend
The Board of Directors, at its meeting on May 1, 2007, declared a cash dividend for the first quarter of 2007 of NIS 0.40 (approx. 10 cent according to the rate of exchange on May 1, 2007) per share. The record date will be May 14, 2007, and the payment date will be May 29, 2007. Tax will be withheld at a rate of 16%.
Conference Call
Teva will host a conference call to discuss the Company's first quarter results on Wednesday, May 2, 2007 at 08:30 AM EDT. The call will be webcast and can be accessed through the Company's website at www.tevapharm.com. Following the conclusion of the call, a replay of the webcast will be available within 24 hours at the Company's web site. Alternatively, a replay of the call will be available until May 9, 2007 at midnight (ET). For international callers please dial 1-(201)-612-7415. From the USA dial 1-(877)-660-6853. To access the replay please enter both Account #: 3055 and Conference ID#: 238370.
Teva Pharmaceutical Industries Ltd., headquartered in Israel, is among the top 20 pharmaceutical companies in the world and is the leading generic pharmaceutical company. The company develops, manufactures and markets generic and innovative human pharmaceuticals and active pharmaceutical ingredients, as well as animal health pharmaceutical products. Over 80 percent of Teva's sales are in North America and Europe.
Safe Harbor Statement under the U. S. Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which express the current beliefs and expectations of management. Such statements are based on management's current beliefs and expectations and involve a number of known and unknown risks and uncertainties that could cause Teva's future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: Teva`s ability to successfully develop and commercialize additional pharmaceutical products, the introduction of competing generic equivalents, the extent to which Teva may obtain U.S. market exclusivity for certain of its new generic products and regulatory changes that may prevent Teva from utilizing exclusivity periods, competition from brand-name companies that are under increased pressure to counter generic products, or competitors that seek to delay the introduction of generic products, the impact of consolidation of our distributors and customers, potential liability for sales of generic products prior to a final resolution of outstanding patent litigation, including that relating to the generic versions of Allegra(R) and Neurontin(R), the effects of competition on our innovative products, especially Copaxone(R) sales, the impact of pharmaceutical industry regulation and pending legislation that could affect the pharmaceutical industry, the difficulty of predicting U.S. Food and Drug Administration, European Medicines Agency and other regulatory authority approvals, the regulatory environment and changes in the health policies and structures of various countries, our ability to achieve expected results though our innovative R&D efforts, Teva's ability to successfully identify, consummate and integrate acquisitions, potential exposure to product liability claims to the extent not covered by insurance, dependence on the effectiveness of our patents and other protections for innovative products, significant operations worldwide that may be adversely affected by terrorism, political or economical instability or major hostilities, supply interruptions or delays that could result from the complex manufacturing of our products and our global supply chain, environmental risks, fluctuations in currency, exchange and interest rates, and other factors that are discussed in Teva's Annual Report on Form 20-F and its other filings with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. -0-
Consolidated Statements of Income (Loss)
----------------------------------------------------------------------
(Unaudited, U.S Dollars in millions, except earnings (loss) per share)
----------------------------------------------------------------------
January - March
----------------------
2007 2006
----------- ----------
NET SALES 2,080 1,673
COST OF SALES 1,043 949
----------- ----------
GROSS PROFIT 1,037 724
RESEARCH AND DEVELOPMENT EXPENSES 135 103
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 456 316
ACQUISITION OF R&D IN PROCESS - 1,248
RESTRUCTURING EXPENSES - 3
----------- ----------
OPERATING INCOME (LOSS) 446 (946)
FINANCIAL EXPENSES - net 28 14
----------- ----------
INCOME (LOSS) BEFORE INCOME TAXES 418 (960)
PROVISION FOR INCOME TAXES 75 48
----------- ----------
343 (1,008)
MINORITY INTERESTS 1 1
----------- ----------
NET INCOME (LOSS) 342 (1,009)
=========== ==========
EARNINGS (LOSS) PER SHARE: Basic ($) 0.45 (1.40)
=========== ==========
Diluted ($) 0.42 (1.40)
=========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES: Basic 764 722
=========== ==========
Diluted 827 722
=========== ==========
----------------------------------------------------------------------
ADJUSTED NET INCOME* 342 286
=========== ==========
ADJUSTED EARNINGS PER SHARE *: Basic ($) 0.45 0.40
=========== ==========
Diluted ($) 0.42 0.37
=========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES: Basic 764 722
=========== ==========
Diluted 827 788
------------------------------------------------===========-==========
*See reconciliation attached
-0-
Reconciliation Between Reported and Adjusted Net Income (Loss)
----------------------------------------------------------------------
(Unaudited, U.S Dollars in millions, except earnings (loss) per share)
----------------------------------------------------------------------
January - March
---------------------
2007 2006
----------- ---------
REPORTED NET INCOME (LOSS) 342 (1,009)
IVAX PURCHASE ACCOUNTING ADJUSTMENTS:
ACQUISITION OF R&D IN PROCESS - 1,248
INVENTORY STEP - UP - 64
RESTRUCTURING EXPENSES - 3
TAX APPLICABLE TO THE ABOVE ITEMS - (20)
----------- ---------
ADJUSTED NET INCOME 342 286
=========== =========
DILUTED EARNINGS (LOSS) PER SHARE: REPORTED ($) 0.42 (1.40)
=========== =========
ADJUSTED ($) 0.42 0.37
=========== =========
-0-
Balance Sheet Data
----------------------------------------------------------------------
(Unaudited, U.S Dollars in millions)
----------------------------------------------------------------------
March 31, December 31,
------------ -------------
2007 2006
------------ -------------
ASSETS
-------------------------------------------
CURRENT ASSETS 8,021 7,640
INVESTMENTS & OTHER ASSETS 686 613
FIXED ASSETS - net 2,288 2,193
INTANGIBLE ASSETS - net 1,958 1,987
GOODWILL 8,074 8,038
------------ -------------
TOTAL ASSETS 21,027 20,471
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------
CURRENT LIABILITIES 4,641 4,071
LONG-TERM LIABILITIES 4,962 5,223
MINORITY INTERESTS 36 35
SHAREHOLDERS' EQUITY 11,388 11,142
------------ -------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 21,027 20,471
============ =============
-0-
January - March % Change % of Total
----------------------- --------- ------------
2007 2006
----------- ----------
(U.S Dollars in
millions)
Sales by Geographical Areas
----------------------------------------------------------------------
North America 1,138 959 19% 55%
Western Europe* 566 429 32% 27%
International 376 285 32% 18%
----------- ---------- --------- ------------
Total 2,080 1,673 24% 100%
=========== ========== ========= ============
Sales by Business Segments
----------------------------------------------------------------------
Pharmaceutical 1,932 1,524 27% 93%
A.P.I.** 148 149 (1)% 7%
----------- -------------------- ------------
Total 2,080 1,673 24% 100%
=========== ==================== ============
Pharmaceutical Sales
----------------------------------------------------------------------
North America 1,071 881 22% 55%
Western Europe* 521 381 37% 27%
International 340 262 30% 18%
----------- -------------------- ------------
Total 1,932 1,524 27% 100%
=========== ==================== ============
* Western Europe and Hungary
** Sales to third parties only
Contact
Teva Pharmaceutical Industries Ltd.
Dan Suesskind, 972-2-589-2840
Chief Financial Officer,
or
George Barrett, 215-591-3030
Executive V.P.
President and CEO
or
Investor Relations:
Kevin Mannix/Liraz Kalif, 972-3-926-7281 or
215-591-8912
www.tevapharm.com
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