News Release Detail
Mylan Reports Record EPS, Revenues and Net Earnings For the Fourth Quarter and Fiscal 2003
Financial Highlights
-- Record diluted earnings per share of $1.45 for fiscal 2003 and
$.40 for the fourth quarter, compared to $1.36 and $.35,
respectively, in the prior year.
-- Net revenues increased by 15% to a record $1.27 billion for
fiscal 2003 and 25% to a record $353.7 million for the fourth
quarter.
-- Net earnings increased 5% to $272.4 million for fiscal 2003
and 10% to $73.8 million for the fourth quarter, both record
highs.
-- Mylan's Generic Segment exceeded $1 billion in annual net
revenues for the first time in the Company's history.
-- Mylan confirmed its previously announced fiscal 2004 earnings
guidance of $1.59 to $1.69 per diluted share.
Mylan Laboratories Inc. (NYSE: MYL) announced today financial results for the fiscal year and fourth quarter ended March 31, 2003, which included record results for both periods.
Net revenues for the fiscal year increased 15% to a record $1.27 billion from $1.10 billion in the prior year. Net revenues for the fourth quarter increased 25% to a record $353.7 million from $282.6 million for the same prior year period.
Net earnings for the fiscal year ended March 31, 2003, increased 5% to $272.4 million from $260.3 million in the prior year. Diluted earnings per share for fiscal 2003 were $1.45 per share compared to $1.36 in fiscal 2002, an increase of 7%. Net earnings for the fourth quarter were $73.8 million compared to $67.3 million for the same prior year period, an increase of 10%. Diluted earnings per share increased 14% to $.40 per share in the current quarter from $.35 per share.
"2003 was a milestone year in terms of revenue and earnings for Mylan," commented Robert J. Coury, Vice Chairman and Chief Executive Officer. "Our generic business continued its strong growth, exceeding one billion in sales for the first time ever. At the same time, Bertek Pharmaceuticals, our branded business, successfully launched a significant new product and continued to grow its existing core products."
Net revenues for Mylan's Generic Segment were $1.01 billion in fiscal 2003 compared to $971.1 million in fiscal 2002, an increase of $41.5 million or 4%. The increase in net revenues was achieved despite the expiration of exclusivity on buspirone in March 2002, which contributed net revenues of $167.7 million in fiscal 2002. Excluding sales of buspirone in both periods, net revenues in fiscal 2003 would have increased 24% over the prior fiscal year.
The Brand Segment reported record net revenues of $256.6 million compared to $133.0 million in fiscal 2002, an increase of $123.6 million or 93%. The increase in net revenues is attributable to the launch of Amnesteem® and the growth of existing products including Digitek®, phenytoin and Avita®. Amnesteem was launched late in the third quarter of fiscal 2003, and contributed net revenues of $61.2 million for the fiscal year.
The fourth quarter and fiscal 2003 results included the resolution of three legal matters which in the aggregate did not significantly impact Mylan's financial position or results of operations. In January 2003, Mylan announced that it had reached an agreement with Bristol Myers Squibb to resolve all outstanding disputes between the companies involving buspirone and paclitaxel. As part of the settlement, Mylan received a one-time payment of $35.0 million. In March 2003, Mylan reached a tentative settlement of a class action lawsuit concerning Mylan's 1998 lorazepam and clorazepate anti-trust litigation and received an arbitration decision in a dispute involving verapamil. The anti-trust settlement was for $35.0 million, of which Mylan is responsible for up to $27.9 million, with the remainder to be paid by the other co-defendants. The $27.9 million, along with $4.2 million plus interest to be paid as a result of the verapamil arbitration, was included in expense in the current quarter. The net effect of the resolution of these three legal matters was a gain of $2.4 million during the quarter.
"We are pleased to have resolved these outstanding legal matters as we begin our next fiscal year," stated Mr. Coury. "In addition, subsequent to the end of fiscal 2003, we reached a tentative agreement to receive an additional $10.0 million from the other co-defendants, further reducing our $27.9 million liability under the lorazepam and clorazepate litigation."
Segment Information
Three Months Ended Fiscal Year Ended
March 31, March 31,
2003 2002 Change 2003 2002 Change
----------------------- --------------------------
Net Revenues (in
millions)
Generic Segment $248.8 $247.1 1% $1,012.6 $971.1 4%
Brand Segment 104.9 35.5 195% 256.6 133.0 93%
-------- ------- --------- ---------
Total $353.7 $282.6 25% $1,269.2 $1,104.1 15%
Generic Segment
Net revenues for the fiscal year ended March 31, 2003, increased 4% or $41.5 million to $1.01 billion from $971.1 million for the prior fiscal year. The increase in net revenues in fiscal 2003 was realized despite the loss of exclusivity on buspirone. During the prior year, the Company had market exclusivity with respect to buspirone 15mg and 30mg. Following the expiration of such exclusivity, which occurred in March 2002, buspirone experienced price and volume erosion which is considered normal in the generic industry. Excluding revenue from buspirone, net revenues for fiscal 2003 increased $188.9 million or 24%, due to new products launched during the fiscal year, as well as increased volume and favorable pricing on existing products. New products accounted for $79.5 million, or approximately 42% of the increase in net revenues excluding buspirone, with the remaining increase attributable to growth from the Company's existing product portfolio.
Gross profit for fiscal 2003 decreased $21.6 million to $531.1 million from $552.7 million, primarily attributable to the lower gross profit related to buspirone. Earnings from operations for fiscal 2003 were $454.0 million compared to $483.1 million for the prior year, a decrease of 6% or $29.0 million. The decrease in earnings from operations was driven primarily by the lower gross profit and an increase in research and development expenses. The increase in research and development expense was the result of an increase in clinical studies being performed to expand the development platform.
Net revenues for the fourth quarter increased 1% to $248.8 million from $247.1 million for the same prior year period. Excluding revenue from buspirone, net revenues for the quarter ended March 31, 2003 increased $43.9 million or 22%. The increase was primarily attributable to new products launched in fiscal 2003, which contributed revenues of $30.3 million.
Gross profit for the quarter decreased $7.6 million to $135.0 million from $142.6 million which was primarily attributable to lower gross profit related to buspirone. Earnings from operations were $114.3 million for the quarter compared to $126.6 million for the prior year quarter, a decrease of 10% or $12.3 million. The lower earnings from operations were primarily a result of the lower gross profit along with an increase in research and development expenses.
Brand Segment
For fiscal 2003, the Brand Segment reported net revenues of $256.6 million, an increase of 93% or $123.6 million from $133.0 million in the prior fiscal year. The increase in net revenues was the result of the launch of Amnesteem and growth in the Company's existing portfolio of products including Digitek, phenytoin and Avita. Gross profit for fiscal 2003 increased $69.1 million or 97% to $140.3 million from $71.2 million. Earnings from operations were $32.7 million compared to a loss from operations of $16.2 million in the prior year.
Brand Segment operating expenses for fiscal 2003 increased 23% or $20.2 million to $107.6 million from $87.4 million. The increase was attributable to higher research and development expenses due to ongoing clinical studies related to nebivolol, and increased selling and marketing expenses related to the launch of Amnesteem. These increases were partially offset by lower general and administrative expenses.
The Brand Segment realized record net revenues for the current quarter of $104.9 million, an increase of $69.4 million. The launch of Amnesteem accounted for approximately 67% of the increase in net revenues, while existing products continued to grow. As a result of the increase in net revenues, gross profit for the fourth quarter increased $34.2 million to $52.5 million.
Earnings from operations for the fourth quarter were $21.2 million compared to $0.3 million for the same prior year period. The increase was the result of higher gross profit, partially offset by increased operating expenses, primarily research and development. Research and development expenses increased $11.1 million as a result of clinical studies related primarily to nebivolol.
Corporate/Other Segment
General and administrative expenses for fiscal 2003 were $75.1 million, an increase of $3.4 million from the prior year. Other income for fiscal 2003 was $12.5 million compared to $13.1 million in the prior year. General and administrative expenses for the fourth quarter of fiscal 2003 increased $11.0 million to $26.3 million, primarily due to increased legal costs associated with the litigation settlements previously discussed. Other income increased $11.5 million to $5.2 million for the current quarter versus $6.3 million of expense in the prior year. This increase was due to the performance of investments accounted for under the equity method, as well as realized gains from the sale of certain marketable securities.
Fiscal 2004 Earnings Guidance
Mylan confirmed its previously announced fiscal 2004 earnings guidance of $1.59 to $1.69 per diluted share. In addition to confirming its fiscal 2004 earnings guidance, the Company also noted that going forward it will provide only annual earnings guidance and adjust such earnings guidance as necessary.
Annual Meeting of Shareholders
The Annual Meeting of Shareholders will be held on Friday, July 25, 2003 at 10:00 am EDT at the Westin Convention Center, Pittsburgh, Pennsylvania.
Conference Call and Live Webcast
Mylan will host a conference call and live webcast to discuss its fiscal 2003 earnings today at 10:00 am EDT. The dial-in number to access the live call is (719) 457-2679. A replay of the conference call will be available until 12:00 pm EDT, May 15, 2003 at (719) 457-0820, access code 767392. To access the live webcast, please visit Mylan's website at www.mylan.com and click on the webcast icon. A replay of the webcast will be available until 12:00 pm EDT, May 15, 2003.
Forward-Looking Statements
The statements made in this press release, in filings made with the SEC, on our website, or in other contexts (including statements made by our authorized representatives, either orally or in writing), are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which include:
-- (i) any statement regarding possible or assumed future results
of operations of our business, the markets for our products,
anticipated expenditures, regulatory developments or
competition;
-- (ii) any statement preceded by, followed by or that includes
the words "intends", "estimates," "believes," "expects,"
"anticipates," "should," "could," or the negative or other
variations of these or similar expressions; and
-- (iii) other statement regarding matters that are not
historical facts.
Because such statements are subject to risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual future results to differ materially from historic or expected results or that could cause market prices of our common stock to decline include, but are not limited to:
-- our ability to successfully develop, license or otherwise
acquire and introduce new products on a timely basis in
relation to competing product introductions;
-- our ability to obtain required FDA approvals for new products
on a timely basis;
-- uncertainties regarding continued market acceptance of and
demand for our products;
-- our periodic dependence on a relatively small group of
products as a significant source of our net revenue or net
income;
-- the effects of vigorous competition on commercial acceptance
of our products and their pricing;
-- the high cost and uncertainty associated with compliance with
extensive regulation of the pharmaceutical industry;
-- the significant research and development expenditures we make
to develop products, the commercial success of which is
uncertain;
-- the possible loss of business from our concentrated customer
base;
-- the potential costs and product introduction delays that may
result from use of legal, regulatory and legislative
strategies by our competitors;
-- our dependence on third party suppliers and distributors for
the raw materials, particularly the chemical compound(s) which
produces the desired therapeutic effect, the active ingredient
we use to manufacture our products;
-- the possible negative effects of any interruption of
manufacturing of our generic products at our principal
facility;
-- the effects of consolidation of our customer base;
-- uncertainties regarding patent, intellectual and other
proprietary property protections;
-- the expending of substantial resources associated with
litigation involving patent or other intellectual property
protection of competing products;
-- possible reductions in reimbursement rates for pharmaceutical
products;
-- our exposure to lawsuits and contingencies associated with our
business;
-- our exposure to risks inherent in acquisitions or joint
ventures;
-- our ability to attract and retain key personnel;
-- possible adverse effects resulting from any significant
decline in the value of securities that we hold or from
uninsured losses of funds;
-- uncertainties and matters beyond the control of management,
which could affect the Company's earnings guidance, as well as
the subjectivity inherent in any probability weighted analysis
underlying our assumptions and estimates with respect to the
future; and
-- inherent uncertainties involved in the estimates and judgments
used in the preparation of financial statements in accordance
with GAAP and related standards.
The cautionary statements referred to above should be considered in connection with any subsequent written or oral forward-looking statements that may be made by us or by persons acting on our behalf and in conjunction with our periodic SEC filings. In addition, we refer to the cautionary statements and risk factors mentioned in Item 7 of our Form 10-K for the year ended March 31, 2002, and our most recently filed Form 10-Q. We undertake no duty to update our forward-looking statements, even though our situation may change in the future.
Mylan Laboratories Inc. is a leading pharmaceutical company that develops, manufactures and markets generic and proprietary prescription products. Mylan has two operating segments that market an extensive line of generic and branded products through four business units: Mylan Pharmaceuticals Inc., Mylan Technologies Inc., UDL Laboratories, Inc. and Bertek Pharmaceuticals Inc. For more information about Mylan, visit www.mylan.com.
MYLAN LABORATORIES INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(in thousands, except per share amounts)
Three Months Ended Fiscal Year Ended
March 31, March 31, March 31, March 31,
2003 2002 2003 2002
------------ ----------- ------------------------
Net revenues $353,686 $282,598 $1,269,192 $1,104,050
Cost of sales 166,160 121,667 597,756 480,111
------------ ----------- ------------------------
Gross profit 187,526 160,931 671,436 623,939
Operating expenses:
Research and
development 26,795 12,160 86,748 58,847
Selling and
marketing 17,027 15,238 65,625 59,913
General and
administrative (1) 34,425 21,878 107,445 110,000
Litigation
settlements, net (2,370) - (2,370) -
------------ ----------- ------------------------
Total operating
expenses 75,877 49,276 257,448 228,760
------------ ----------- ------------------------
Earnings from
operations 111,649 111,655 413,988 395,179
Equity in loss of
Somerset (223) (1,229) (4,573) (4,719)
Other income
(expense), net 5,413 (5,037) 17,098 17,863
------------ ----------- ------------------------
Earnings before
income taxes 116,839 105,389 426,513 408,323
Provision for income
taxes 42,996 38,098 154,160 148,072
------------ ----------- ------------------------
Net earnings $73,843 $67,291 $272,353 $260,251
============ =========== ========================
Earnings per common
share:
Basic $0.41 $0.36 $1.47 $1.38
============ =========== ========================
Diluted $0.40 $0.35 $1.45 $1.36
============ =========== ========================
Weighted average
common shares:
Basic 182,118 189,159 185,859 188,288
============ =========== ========================
Diluted 185,687 191,805 188,220 191,052
============ =========== ========================
(1) Due to the April 1, 2002, adoption of Statement of Financial
Accounting Standard ("SFAS") No. 142, Goodwill and Other
Intangible Assets, goodwill and certain other intangible assets
are no longer amortized. General and administrative expenses for
the three months and fiscal year ended March 31, 2002 include
amortization expense of $1,801 and $7,204 for goodwill and certain
other intangibles. Excluding such expense would increase net
earnings to $69,092 and $267,455 and diluted earnings per share to
$.36 and $1.40.
MYLAN LABORATORIES INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands)
March 31, 2003 March 31, 2002
---------------- -----------------
Assets:
Current assets:
Cash and cash equivalents $258,902 $160,790
Marketable securities 427,904 456,266
Accounts receivable, net 187,587 150,054
Inventories 237,777 195,074
Other current assets 116,041 104,461
---------------- -----------------
Total current assets 1,228,211 1,066,645
Non-current assets 517,012 554,628
---------------- -----------------
Total assets $1,745,223 $1,621,273
================ =================
Liabilities:
Current liabilities $265,771 $177,681
Non-current liabilities 33,120 41,353
---------------- -----------------
Total liabilities 298,891 219,034
Total shareholders' equity 1,446,332 1,402,239
---------------- -----------------
Total liabilities and
shareholders' equity $1,745,223 $1,621,273
================ =================
MYLAN LABORATORIES INC. AND SUBSIDIARIES
Segment Results
(in thousands)
Three Months Ended Fiscal Year Ended
March 31, March 31, March 31, March 31,
2003 2002 2003 2002
------------- ---------- -----------------------
Consolidated:
Net revenues $353,686 $282,598 $1,269,192 $1,104,050
Cost of sales 166,160 121,667 597,756 480,111
------------- ---------- -----------------------
Gross profit 187,526 160,931 671,436 623,939
Research and
development 26,795 12,160 86,748 58,847
Selling and marketing 17,027 15,238 65,625 59,913
General and
administrative 34,425 21,878 107,445 110,000
Litigation
settlements, net (2,370) - (2,370) -
------------- ---------- -----------------------
Earnings from
operations $111,649 $111,655 $413,988 $395,179
======================== =======================
Generic Segment:
Net revenues $248,803 $247,101 $1,012,617 $971,075
Cost of sales 113,776 104,479 481,511 418,339
------------- ---------- -----------------------
Gross profit 135,027 142,622 531,106 552,736
Research and
development 12,602 9,041 44,562 33,814
Selling and marketing 3,082 2,931 11,160 12,430
General and
administrative 5,019 4,068 21,341 23,424
------------- ---------- -----------------------
Earnings from
operations $114,324 $126,582 $454,043 $483,068
============= ========== =======================
Brand Segment:
Net revenues $104,883 $35,497 $256,575 $132,975
Cost of sales 52,384 17,188 116,245 61,772
------------- ---------- -----------------------
Gross profit 52,499 18,309 140,330 71,203
Research and
development 14,193 3,119 42,186 25,033
Selling and marketing 13,945 12,307 54,465 47,483
General and
administrative 3,134 2,587 10,997 14,899
------------- ---------- -----------------------
Earnings from
operations $21,227 $296 $32,682 $(16,212)
============= ========== =======================
Corporate/Other:
General and
administrative $26,272 $15,223 $75,107 $71,677
Litigation
settlements, net (2,370) - (2,370) -
------------- ---------- -----------------------
(Loss) earnings from
operations $(23,902) $(15,223) $(72,737) $(71,677)
============= ========== =======================
CONTACT: Mylan Laboratories Inc. Kris King, 724/514-1800
SOURCE: Mylan Laboratories Inc.