Quantcast

Warner Chilcott Reports Operating Results for the Quarter Ended June 30, 2010

August 6, 2010

ARDEE, Ireland, Aug. 6 /PRNewswire-FirstCall/ — Warner Chilcott plc (Nasdaq: WCRX) today announced its results for the quarter ended June 30, 2010. Revenue in the quarter ending June 30, 2010 increased 225.2% to $815.6 million over the prior year quarter. The primary drivers of the increase in revenue were the products acquired from The Procter & Gamble Company (“P&G”), primarily ACTONEL, ASACOL and ENABLEX, which together contributed $477.4 million of revenue growth in the quarter ended June 30, 2010, compared to the prior year quarter. In total, these products and the other new products acquired from P&G contributed $512.2 million in revenue during the quarter ended June 30, 2010. LOESTRIN 24 FE also contributed $31.1 million of revenue growth in the quarter ended June 30, 2010, compared to the prior year quarter.

The acquisition of the global branded prescription pharmaceuticals business (“PGP”) of P&G on October 30, 2009 (the “PGP Acquisition”) significantly impacted the Company’s financial position and results of operations in the quarter ended June 30, 2010, compared to the prior year quarter. The Company reported GAAP net income of $115.3 million, or $0.46 per diluted share, in the quarter ended June 30, 2010, compared with GAAP net income of $56.0 million, or $0.22 per diluted share, in the prior year quarter. Included in cost of sales in the quarter ended June 30, 2010 was an $18.1 million reduction in cost of sales, net of tax, for the reversal of a contingent liability relating to the termination of a contract. Also included in our results for the quarter ended June 30, 2010 was a $9.4 million gain, net of tax, resulting from the Company’s distribution during the quarter of certain inventories sold to LEO Pharma A/S (“LEO”) in connection with a transaction completed during the third quarter of 2009 (the “LEO Transaction”). Cash net income (“CNI”) for the quarter ended June 30, 2010 was $268.8 million compared to $109.2 million in the prior year quarter. Excluding the reversal of the contingent liability described above and the gain relating to the sale of certain inventories in connection with the LEO Transaction, adjusted CNI was $241.2 million, or $0.95 per diluted share.

References in this press release to “cash net income” or “CNI” mean our net income adjusted for the after-tax effects of two non-cash items: amortization (including impairments, if any) of intangible assets and amortization (including write-offs, if any) of deferred loan costs related to our debt. Reconciliations from our reported results in accordance with US GAAP to CNI, adjusted CNI and adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) for all periods are presented in the tables at the end of this press release.

Revenue

Revenue in the quarter ended June 30, 2010 was $815.6 million, an increase of $564.8 million, or 225.2%, over the prior year quarter. In addition to transactions such as the PGP Acquisition, period over period changes in the net sales of our products are a function of a number of factors including changes in: market demand, gross selling prices, sales-related deductions from gross sales to arrive at net sales and the levels of pipeline inventories of our products held by our direct and indirect customers. We use IMS Health, Inc. estimates of filled prescriptions for our products as a proxy for market demand in the U.S.

Net sales of our oral contraceptive products increased $33.0 million, or 44.1%, in the quarter ended June 30, 2010, compared with the prior year quarter. LOESTRIN 24 FE generated revenues of $89.1 million in the quarter ended June 30, 2010, an increase of 53.7%, compared with $58.0 million in the prior year quarter. The increase in LOESTRIN 24 FE net sales was primarily due to an increase in filled prescriptions of 81.1% and higher average selling prices, offset in part by the impact of higher sales-related deductions primarily due to increased utilization of customer loyalty cards and the contraction of pipeline inventories relative to the prior year quarter.

Revenues of ACTONEL were $263.6 million in the quarter ended June 30, 2010. ACTONEL revenues in North America totaled $163.0 million, including $143.5 million in the United States. Filled prescriptions of ACTONEL in the U.S. decreased 22.7% in the quarter ended June 30, 2010 compared to the prior year quarter. In the United States, ACTONEL continues to face market share declines due to the impact of managed care initiatives encouraging the use of generic versions of other products. Generic competition in Canada began to negatively impact our net sales of ACTONEL in the first quarter of 2010 and we expect generic competition in Western Europe to negatively impact our net sales of ACTONEL beginning in the fourth quarter of 2010.

Net sales of our dermatology products increased $11.7 million, or 10.2%, in the quarter ended June 30, 2010, compared with the prior year quarter. Net sales of DORYX increased $6.1 million, or 13.7%, compared to the prior year quarter, as increases in filled prescriptions of 10.0% and higher average selling prices were offset, in part, by a contraction of pipeline inventories relative to the prior year quarter and increases in sales-related deductions. The increase in sales-related deductions compared to the prior year quarter was primarily due to the increased usage of our customer loyalty card for DORYX 150 mg. DOVONEX and TACLONEX revenues recorded during the quarter ended June 30, 2010 totaled $76.0 million, an increase of $5.6 million as compared to the prior year quarter. As a result of the LEO Transaction and related distribution agreement with LEO, we recorded revenue and cost of sales at distributor margins for all TACLONEX and DOVONEX products during the quarter ended June 30, 2010, which negatively impacted our gross margin percentage. We continued to record revenue and cost of sales from the distribution of the products for LEO during 2010 until LEO assumed responsibility of distribution services effective June 30, 2010.

Net sales of ASACOL in the quarter ended June 30, 2010 were $192.5 million. Revenues in North America totaled $179.1 million, in the quarter ended June 30, 2010, including $174.0 million in the United States. Filled prescriptions of ASACOL in the U.S. decreased 6.5% in the quarter ended June 30, 2010 compared to the prior year quarter.

Cost of Sales (excluding Amortization of Intangible Assets)

Cost of sales increased $61.9 million, or 131.6%, in the quarter ended June 30, 2010 compared with the prior year quarter, primarily due to a 211.0% increase in product net sales and approximately $76.0 million of costs for DOVONEX and TACLONEX products which were distributed at nominal distributor margins under the LEO distribution agreement. This increase was offset in part by an $18.5 million reduction in cost of sales for the reversal of a contingent liability relating to the termination of a contract. Additionally, the increase was offset by a $9.6 million gain relating to the distribution during the quarter of certain inventories sold to LEO in connection with the LEO Transaction. Our gross margin, as a percentage of total revenue, increased from 81.3% in the quarter ended June 30, 2009 to 86.7% in the quarter ended June 30, 2010. Excluding the reduction in cost of sales in connection with the reversal of the contingent liability discussed above ($18.5 million), the impact of the gain from the LEO Transaction ($9.6 million) and the impact of the costs from the LEO distribution agreement ($76.0 million), our gross margin as a percentage of total revenue, excluding revenues under the LEO distribution agreement ($76.0 million), was 91.8%.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses for the quarter ended June 30, 2010 were $280.8 million, an increase of $227.8 million, or 429.6%, from $53.0 million in the prior year quarter. A&P expenses increased $15.9 million, or 151.9%, in the quarter ended June 30, 2010 as compared with the prior year quarter, primarily due to advertising and other promotional spending attributable to the acquired PGP products. Selling and distribution expenses increased $116.4 million, or 573.7%, in the quarter ended June 30, 2010 as compared to the prior year quarter. The increase was primarily due to the Sanofi-Aventis U.S. LLC (“Sanofi”) co-promotion expenses of $61.1 million under the Actonel Collaboration Agreement between us and Sanofi, increased headcount resulting from the acquisition of the PGP sales forces as well as new expenses related to the acquired PGP products. G&A expenses increased $95.5 million, or 429.1%, in the quarter ended June 30, 2010, as compared with the prior year quarter. The increase was due in large part to increases in infrastructure costs, compensation expenses and professional and legal fees primarily relating to the PGP Acquisition. Included in G&A expenses in the quarter ended June 30, 2010 were $8.1 million of legal, consulting and other professional fees relating to the PGP Acquisition, expenses payable to P&G under the Transition Services Agreement of $15.9 million, other integration expenses of $11.5 million and severance costs of $2.1 million.

Research and Development (“R&D”)

Our investment in R&D for the quarter ended June 30, 2010 was $51.3 million, an increase of $39.4 million, or 329.1%, compared with $11.9 million in the prior year quarter. Included in the quarter ended June 30, 2010 was a $20.0 million up-front payment to Dong-A PharmTech Co. Ltd. (“Dong-A”), resulting from the amendment of our agreement to add the right to develop, and if approved, market, in the U.S. and Canada, Dong-A’s udenafil product for the treatment of lower urinary tract symptoms associated with Benign Prostatic Hyperplasia. Excluding this up-front milestone payment, R&D expenses increased $19.4 million compared to the prior year quarter. The increase in R&D expenses in the quarter ended June 30, 2010 relative to the prior year quarter, excluding the above-mentioned milestone payment, was primarily due to costs incurred relating to ongoing clinical studies, the addition of R&D projects from PGP and higher costs associated with an increase in personnel and facilities.

Amortization of Intangible Assets

Amortization of intangible assets in the quarters ended June 30, 2010 and 2009 was $157.2 million and $57.0 million, respectively. The increase in amortization expense in the quarter ended June 30, 2010 compared to the prior year quarter was due primarily to the amortization of intellectual property assets acquired in the PGP Acquisition which accounted for $120.0 million of the amortization expense in the 2010 period. We expect amortization expense to continue to be significantly higher in 2010, in relation to 2009, as a result of the PGP Acquisition.

Net Interest Expense

Net interest expense for the quarter ended June 30, 2010 was $43.1 million, an increase of $27.9 million, or 183.6%, from $15.2 million in the prior year quarter. The increase in net interest expense in the quarter ended June 30, 2010 was primarily due to an increase in the amount of our outstanding indebtedness under our senior secured credit facilities which was incurred to fund the PGP Acquisition relative to our total outstanding indebtedness in the prior year period.

Net Income, CNI and Adjusted CNI

For the quarter ended June 30, 2010, we reported net income of $115.3 million, or $0.46 per diluted share, CNI of $268.8 million, and adjusted CNI of $241.2 million, or $0.95 per diluted share. Earnings per share figures are based on 253.0 million diluted ordinary shares outstanding. In calculating CNI, we add back the after-tax impact of the amortization (including impairments, if any) of intangible assets and the amortization (including write-offs, if any) of deferred loan costs. These items are tax-effected at the estimated marginal rates attributable to them. In the quarter ended June 30, 2010, the marginal tax rate associated with the amortization of intangible assets was 6.3% and the marginal tax rate for amortization (including write-offs) of deferred loan costs was 9.8%. Adjusted CNI for the quarter ended June 30, 2010 represents CNI as further adjusted to exclude (1) an $18.1 reduction in cost of sales, net of tax, for the reversal of the contingent liability discussed above and (2) a $9.4 million gain, net of tax, relating to the sale of certain inventories in connection with the LEO Transaction.

Liquidity, Balance Sheet and Cash Flows

As of June 30, 2010, our cash and cash equivalents totaled $296.7 million and our total debt outstanding was $2,491.3 million. We generated $119.9 million of cash from operating activities in the quarter ended June 30, 2010, compared with $124.5 million of cash from operating activities in the prior year quarter.

2010 Financial Guidance

Based on our second quarter results and current outlook for the remainder of 2010, we are affirming our full year 2010 financial guidance previously released on July 30, 2010 in connection with our proposed leveraged recapitalization and special cash dividend transaction.

Please refer to our website at www.wcrx.com for certain information regarding the tax treatment of the proposed special cash dividend.

Investor Conference Call

The Company is hosting a conference call open to all interested parties, on Friday, August 6, 2010 beginning at 8:00 AM EST. The number to call within the United States and Canada is (877) 354-4056. Participants outside the United States and Canada should call (678) 809-1043. A replay of the conference call will be available for two weeks following the call and can be accessed by dialing (800) 642-1687 from within the United States and Canada or (706) 645-9291 from outside the United States and Canada. The passcode for the replay ID number is 90072579.

The Company

Warner Chilcott is a leading specialty pharmaceutical company currently focused on the gastroenterology, women’s healthcare, dermatology and urology segments of the North American and Western European pharmaceuticals markets. The Company is a fully integrated company with internal resources dedicated to the development, manufacturing and promotion of its products. WCRX-F

Forward Looking Statements

This press release contains forward-looking statements, including statements concerning the proposed recapitalization plan, our operations, our economic performance and financial condition, and our business plans and growth strategy and product development efforts. These statements constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “may,” “might,” “will,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “believe” and other similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. The following represent some, but not necessarily all, of the factors that could cause actual results to differ from historical results or those anticipated or predicted by our forward-looking statements: our substantial indebtedness; competitive factors in the industry in which we operate (including the approval and introduction of generic or branded products that compete with our products); our ability to protect our intellectual property; a delay in qualifying any of our manufacturing facilities that produce our products or production or regulatory problems with either third party manufacturers or API suppliers upon whom we may rely for some of our products or our own manufacturing facilities; pricing pressures from reimbursement policies of private managed care organizations and other third party payors, government sponsored health systems, the continued consolidation of the distribution network through which we sell our products, including wholesale drug distributors and the growth of large retail drug store chains; the loss of key senior management or scientific staff; adverse outcomes in our outstanding litigation or an increase in the number of litigation matters to which we are subject; government regulation, including domestic and foreign health care reform, affecting the development, manufacture, marketing and sale of pharmaceutical products, including our ability and the ability of companies with whom we do business to obtain necessary regulatory approvals; our ability to manage the growth of our business by successfully identifying, developing, acquiring or licensing new products at favorable prices and marketing such new products; our ability to obtain regulatory approval and customer acceptance of new products, and continued customer acceptance of our existing products; changes in tax laws or interpretations that could increase our consolidated tax liabilities; our ability to realize the anticipated opportunities from the PGP Acquisition; the other risks identified in our periodic filings including our Annual Report on Form 10-K for the year ended December 31, 2009, and from time-to-time in our public filings, financial statements and other investor communications.

We caution you that the foregoing list of important factors is not exclusive. In addition, in light of these risks and uncertainties, the matters referred to in our forward-looking statements may not occur. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as may be required by law.

Reconciliations to GAAP Net Income

CNI

To supplement its condensed consolidated financial statements presented in accordance with US GAAP, the Company provides a summary to show the computation of CNI and Adjusted CNI. CNI is defined as the Company’s GAAP net income adjusted for the after-tax effects of two non-cash items: amortization (including impairments, if any) of intangible assets and amortization (including write-offs, if any) of deferred loan costs related to the Company’s debt. Adjusted CNI represents CNI as further adjusted to exclude one-time impacts from the LEO Transaction, the PGP Acquisition and the income from the reversal of a contingent liability relating to the termination of a contract. The Company believes that the presentation of CNI and Adjusted CNI provides useful information to both management and investors concerning the approximate impact of the above items. The Company also believes that considering the effect of these items allows management and investors to better compare the Company’s financial performance from period-to-period, and to better compare the Company’s financial performance with that of its competitors. The presentation of this additional information is not meant to be considered in isolation of, or as a substitute for, results prepared in accordance with US GAAP.

Adjusted EBITDA

To supplement its condensed consolidated financial statements presented in accordance with US GAAP, the Company provides a summary to show the computation of adjusted EBITDA taking into account certain charges that were taken during the quarters ended June 30, 2010 and 2009. The computation of adjusted EBITDA is based on the definition of EBITDA contained in the Company’s senior secured credit facilities.


                         WARNER CHILCOTT PUBLIC LIMITED COMPANY
                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (In thousands of U.S. dollars, except per share amounts)
                                       (Unaudited)

                                                          Quarter Ended

                                                      June-30-   June-30-
                                                         10         09

    REVENUE:
            Product net sales                         $763,737   $245,565
            Other revenue                               51,873      5,251

                Total revenue                          815,610    250,816
    COSTS & EXPENSES:
            Cost of sales (excludes amortization of
             intangible assets)                        108,756     46,962
            Selling, general and administrative        280,798     53,022
            Research and development                    51,256     11,945
            Amortization of intangible assets          157,159     56,992
            Interest expense, (net)                     43,103     15,201

    INCOME BEFORE TAXES                                174,538     66,694
            Provision for income taxes                  59,285     10,671

    NET INCOME                                        $115,253    $56,023

    Earnings per share:
    Basic                                                $0.46      $0.22

    Diluted                                              $0.46      $0.22

    RECONCILIATIONS:
    Net income - GAAP                                 $115,253    $56,023
        + Amortization of intangible assets, net
         of tax                                        147,253     52,217
        + Amortization of deferred loan costs,
         net of tax                                      6,251        965

                CASH NET INCOME                       $268,757   $109,205

    Non-recurring, one-time charges
     included above (net of tax):
        + Write-off of fair value step-up on
         acquired PGP inventories                           $-         $-
        + Gain recognized on contract termination      (18,127)         -
        + Gain recognized on sale of certain LEO
         inventories                                    (9,431)         -

                    ADJUSTED CASH NET INCOME          $241,199   $109,205


                                                         Six Months Ended

                                                                  June-30-
                                                     June-30-10      09

    REVENUE:
            Product net sales                        $1,473,193   $484,589
            Other revenue                               103,719     12,216

                Total revenue                         1,576,912    496,805
    COSTS & EXPENSES:
            Cost of sales (excludes amortization of
             intangible assets)                         326,192     95,712
            Selling, general and administrative         600,855     99,788
            Research and development                     82,404     35,817
            Amortization of intangible assets           318,071    113,985
            Interest expense, (net)                     115,501     33,218

    INCOME BEFORE TAXES                                 133,889    118,285
            Provision for income taxes                   35,879     18,926

    NET INCOME                                          $98,010    $99,359

    Earnings per share:
    Basic                                                 $0.39      $0.40

    Diluted                                               $0.39      $0.40

    RECONCILIATIONS:
    Net income - GAAP                                   $98,010    $99,359
        + Amortization of intangible assets, net
         of tax                                         294,031    104,435
        + Amortization of deferred loan costs,
         net of tax                                      31,279      3,121

                CASH NET INCOME                        $423,320   $206,915

    Non-recurring, one-time charges
     included above (net of tax):
        + Write-off of fair value step-up on
         acquired PGP inventories                       $93,743         $-
        + Gain recognized on contract termination       (18,127)         -
        + Gain recognized on sale of certain LEO
         inventories                                    (34,040)         -

                    ADJUSTED CASH NET INCOME           $464,896   $206,915

                     WARNER CHILCOTT PUBLIC LIMITED COMPANY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                         (In thousands of U.S. dollars)
                                   (Unaudited)

                                                      As of        As of
                                                     June 30,  December 31,
                                                       2010         2009

    ASSETS
        Current assets:
            Cash & cash equivalents                   $296,728      $539,006
            Accounts receivable, net                   357,666       339,753
            Inventories                                109,751       236,203
            Prepaid expenses & other current assets    209,285       229,309

                Total current assets                   973,430     1,344,271

        Other assets:
            Property, plant and equipment, net         214,685       177,825
            Intangible assets, net                   2,940,854     3,302,386
            Goodwill                                 1,018,639     1,060,644
            Other non-current assets                   109,633       146,115

    TOTAL ASSETS                                    $5,257,241    $6,031,241

    LIABILITIES
        Current liabilities:
            Accounts payable                          $111,594      $168,477
            Accrued expenses & other current
             liabilities                               583,218       719,180
            Current portion of long-term debt          165,490       208,960

                Total current liabilities              860,302     1,096,617

        Other liabilities:
            Long-term debt, excluding current
             portion                                 2,325,763     2,830,500
            Other non-current liabilities               91,621       215,031

                Total liabilities                    3,277,686     4,142,148

    SHAREHOLDERS' EQUITY                             1,979,555     1,889,093

    TOTAL LIABILITIES & SHAREHOLDERS'
     EQUITY                                         $5,257,241    $6,031,241

                               WARNER CHILCOTT PUBLIC LIMITED COMPANY
                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (In thousands of U.S. dollars)
                                            (Unaudited)

                                                            Quarter Ended

                                                                    June-30-
                                                       June-30-10      09

    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                           $115,253    $56,023
    Adjustments to reconcile net income to net
     cash provided by operating activities:
        Depreciation                                        7,150      3,400
        Amortization of intangible assets                 157,159     56,992
        Write-off of fair value step-up on
         acquired inventories                                   -          -
        Amortization of debt finance costs                  6,934      1,205
        Stock-based compensation expense                    5,656      3,330
    Changes in assets and liabilities:
        (Increase) in accounts receivable, prepaid
         and other assets                                 (96,548)   (19,913)
        Decrease / (increase) in inventories               43,820       (250)
        (Decrease) /increase in accounts payable,
         accrued expenses & other liabilities            (146,588)    24,954
        Increase /(decrease) in income taxes and
         other, net                                        27,017     (1,226)

    Net cash provided by operating activities            $119,853   $124,515

    CASH FLOWS FROM INVESTING ACTIVITIES:
        Purchase of intangible assets                           -     (2,900)
        Capital expenditures                              (39,843)   (12,485)

    Net cash (used in) investing activities              $(39,843)  $(15,385)

    CASH FLOWS FROM FINANCING ACTIVITIES:
        Redemption of the 8.75% Senior
         Subordinated Notes due                                 -          -
    2015
        Term repayments under New Senior Secured
         Credit                                           (28,872)         -
    Facilities
        Term repayments under Prior Senior Secured
         Credit                                                 -     (1,233)
    Facilities
        Other                                               2,135        (15)

    Net cash (used in) financing activities              $(26,737)   $(1,248)

    Effect of exchange rates on cash and cash
     equivalents                                           (2,545)         -

        Net increase /(decrease) in cash and cash
         equivalents                                       50,728    107,882
        Cash and cash equivalents, beginning of
         period                                           246,000     30,308

        Cash and cash equivalents, end of period         $296,728   $138,190


                                                   Six Months Ended

                                             June-30-10    June-30-09

    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                  $98,010        $99,359
    Adjustments to reconcile net income to
     net cash provided by operating
     activities:
        Depreciation                             14,641          6,426
        Amortization of intangible assets       318,071        113,985
        Write-off of fair value step-up on
         acquired inventories                   105,504              -
        Amortization of debt finance costs       34,446          3,771
        Stock-based compensation expense         10,339          5,962
    Changes in assets and liabilities:
        (Increase) in accounts receivable,
         prepaid and other assets               (21,730)       (16,031)
        Decrease /(increase) in inventories      13,832         (3,952)
        (Decrease) /increase in accounts
         payable, accrued expenses & other
         liabilities                           (124,047)        23,437
        Increase /(decrease) in income taxes
         and other, net                         (83,968)        (3,083)

    Net cash provided by operating
     activities                                $365,098       $229,874

    CASH FLOWS FROM INVESTING ACTIVITIES:
        Purchase of intangible assets            (2,900)        (5,800)
        Capital expenditures                    (55,305)       (19,033)

    Net cash (used in) investing
     activities                                $(58,205)      $(24,833)

    CASH FLOWS FROM FINANCING ACTIVITIES:
        Redemption of the 8.75% Senior
         Subordinated Notes due                 (89,460)             -
    2015
        Term repayments under New Senior
         Secured Credit                        (458,747)             -
    Facilities
        Term repayments under Prior Senior
         Secured Credit                               -       (102,727)
    Facilities
        Other                                     3,903            (30)

    Net cash (used in) financing
     activities                               $(544,304)     $(102,757)

    Effect of exchange rates on cash and
     cash equivalents                            (4,867)             -

        Net increase /(decrease) in cash and
         cash equivalents                      (242,278)       102,284
        Cash and cash equivalents, beginning
         of period                              539,006         35,906

        Cash and cash equivalents, end of
         period                                $296,728       $138,190

                              WARNER CHILCOTT PUBLIC LIMITED COMPANY
                          Reconciliation of Net Income to Adjusted EBITDA
                                  (In thousands of U.S. dollars)
                                            (Unaudited)

                                     Quarter Ended        Six Months Ended

                                Jun-30-10  Jun-30-09 Jun-30-10  Jun-30-09

    RECONCILIATION TO
     ADJUSTED EBITDA:
    Net income - GAAP            $115,253    $56,023   $98,010    $99,359
        + Interest expense,
         as defined                43,103     15,201   115,501     33,218
        + Provision for
         income taxes              59,285     10,671    35,879     18,926
        + Non-cash stock-
         based compensation
         expense                    5,656      3,330    10,339      5,962
        + Depreciation              7,150      3,400    14,641      6,426
        + Amortization of
         intangible assets        157,159     56,992   318,071    113,985
        + R&D milestone
         expense                   20,000          -    20,000     11,500
        + Write-off of
         fair value step-
         up on acquired
         inventories                    -          -   105,504          -
        + PGP Acquisition
         costs                      8,123          -    19,629          -
        + Other integration
         expenses                  11,493          -    11,493          -
        + Severance costs           2,104          -    14,634          -

            Adjusted EBITDA of
             WC plc, as defined  $429,326   $145,617  $763,701   $289,376

        + Expenses of WC
         plc and other              3,656      7,481     9,749      9,854

            Adjusted EBITDA of
             Warner Chilcott
             Holdings Company
             III, Limited, as
             defined             $432,982   $153,098  $773,450   $299,230
    Note: Warner Chilcott Holdings Company III, Limited and certain of
    its subsidiaries are parties to the Company's senior
    secured credit facilities. Warner Chilcott plc is not a party to
    these agreements. Certain expenses included in Warner
    Chilcott plc's consolidated operating results are not deducted in
    arriving at Adjusted EBITDA for Warner Chilcott Holdings
    Company III, Ltd and its subsidiaries.

                             WARNER CHILCOTT PUBLIC LIMITED COMPANY
                                       REVENUE BY PRODUCT
                                  (In millions of U.S. dollars)
                                           (Unaudited)

                                                             Quarter Ended

                                                         June-30-   June-30-
                                                            10         09

    Women's Healthcare:
    Oral Contraceptives
        LOESTRIN 24 FE                                      $89.1      $58.0
        FEMCON FE                                            13.7       12.4
        Other Oral Contraceptives                             5.7        5.1

            Total Oral Contraceptives                      $108.5      $75.5

    Hormone Therapy
        ESTRACE Cream                                       $33.6      $28.2
        FEMHRT                                               16.1       13.1
        Other Hormone Therapy                                 7.4        6.1

            Total Hormone Therapy                           $57.1      $47.4

    ACTONEL *                                              $263.6         $-
    Other women's healthcare products                        11.2        4.4

            Total Women's Healthcare                       $440.4     $127.3

    Dermatology:
        DORYX                                               $51.0      $44.9
        TACLONEX**                                           39.2       36.5
        DOVONEX**                                            36.8       33.9

            Total Dermatology                              $127.0     $115.3

    Gastroenterology:
        ASACOL                                             $192.5         $-
    Urology:
        ENABLEX *                                           $21.3         $-
    Other:
        Other products net sales                             25.4        0.5
        Contract manufacturing product sales                  4.0        2.5
        Other revenue                                         5.0        5.2

    Total Revenue                                          $815.6     $250.8


                                                           Six Months Ended

                                                         June-30-   June-30-
                                                            10         09

    Women's Healthcare:
    Oral Contraceptives
        LOESTRIN 24 FE                                     $167.9     $110.4
        FEMCON FE                                            24.3       25.3
        Other Oral Contraceptives                            13.2       12.9

            Total Oral Contraceptives                      $205.4     $148.6

    Hormone Therapy
        ESTRACE Cream                                       $63.4      $51.4
        FEMHRT                                               25.4       25.8
        Other Hormone Therapy                                14.8       12.4

            Total Hormone Therapy                          $103.6      $89.6

    ACTONEL *                                              $525.9         $-
    Other women's healthcare products                        21.9        8.5

            Total Women's Healthcare                       $856.8     $246.7

    Dermatology:
        DORYX                                              $101.9      $95.3
        TACLONEX**                                           74.1       73.1
        DOVONEX**                                            74.6       61.9

            Total Dermatology                              $250.6     $230.3

    Gastroenterology:
        ASACOL                                             $357.5         $-
    Urology:
        ENABLEX *                                           $39.5          -
    Other:
        Other products net sales                             51.3        1.4
        Contract manufacturing product sales                  9.1        6.2
        Other revenue                                        12.1       12.2

    Total Revenue                                        $1,576.9     $496.8
    *  Includes "other revenue" as classified in our condensed
    consolidated statement of operations.
    **  Includes revenue recorded pursuant to our distribution agreement
    with LEO during the quarter and six months ended June 30, 2010.

              WARNER CHILCOTT PUBLIC LIMITED COMPANY
                     SUMMARY OF SG&A EXPENSES
                   (In millions of U.S. dollars)
                            (Unaudited)

                                                   Quarter Ended

                                              Jun-30-10  Jun-30-09

    Advertising & promotion                       $26.4      $10.5
    Selling & distribution                        136.7       20.3
    General, administrative & other               117.7       22.2

        Total SG&A                               $280.8      $53.0

                                               Six Months Ended

                                              Jun-30-10  Jun-30-09

    Advertising & promotion                       $57.4      $18.2
    Selling & distribution                        304.6       43.2
    General, administrative & other               238.9       38.4

        Total SG&A                               $600.9      $99.8

                WARNER CHILCOTT PUBLIC LIMITED COMPANY
                   2010 Full Year Financial Guidance
        (In millions of U.S. dollars, except per share amounts)

                                                   Current Guidance
                                                    August 2010( 1)

    Adjusted Total Revenue (2)                      $2,900 to $2,950
    Adjusted Gross Margin as a % of Adjusted
     Total Revenue (3)                                    90% to 91%
    Total SG&A Expense (4)                          $1,200 to $1,250
    Total R&D Expense (5)                               $160 to $180
    Total Income Tax Provision (6)                  12%-13% of EBTA
    Adjusted Net Income (7)                             $244 to $269
    Adjusted CNI (8)                                    $880 to $905
    Adjusted CNI per share (8) (9)                    $3.45 to $3.55
    (1)  The 2010 current guidance assumes that Roxane (a division of
    Boehringher
    Ingelheim Corporation) will not launch a generic Asacol 400 mg
    product at risk in
    2010, accounts for the amendment to the Actonel Collaboration
    Agreement in April
    2010 and does not account for the impact of any future acquisitions
    or new
    partnership or in-licensing transactions subsequent to the date
    hereof. As noted
    below, the 2010 current guidance excludes the LEO Transaction and the
    impact of
    the distribution arrangement with LEO. In addition, the current
    guidance does not
    give effect to the impact of the proposed leveraged recapitalization
    announced on
    July 30, 2010.
    (2)  Adjusted total revenue excludes the impact of the Company's
    distribution
    arrangement with LEO.
    (3)  Adjusted gross margin as a percentage of adjusted total revenue
    excludes the
     amortization and impairments of intangible assets, the gain
     recognized during the
     quarter ended June 30, 2010 on the termination of a contract, the
     impact of the
     Company's distribution arrangement with LEO and the purchase
     accounting impact
    of the step-up of certain inventories acquired in the PGP
    Acquisition, which was
    included in cost of sales as the inventory was sold.
    (4)  Total SG&A expense does not include any amount that may be
    payable in
    connection with the potential settlement of our outstanding
    litigation.
    (5)  The current 2010 guidance includes actual and anticipated
    milestone payments
    to third parties.
    (6)  The total 2010 tax provision is estimated as a percentage of
    adjusted earnings
    before taxes and book amortization (EBTA).
    (7)  A reconciliation of 2010 expected GAAP net income to expected
    adjusted net
    income excludes the impact of the LEO distribution arrangement, the
    impact of the
    write-off of the fair value step-up of acquired PGP inventories and
    the gain
    recognized during the quarter ended June 30, 2010 on the termination
    of a contract.
    (8)  A reconciliation of 2010 expected adjusted net income to
    expected adjusted
    cash net income adds back the expected after tax impact of the
    amortization of
    intangibles ($593 million) and the after tax impact of deferred
    financing fees
    ($43 million).
    (9)  Expected adjusted cash net income per share is based on 255
    million fully
    diluted ordinary shares.

SOURCE Warner Chilcott plc


Source: newswire



comments powered by Disqus