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8-K - FORM 8-K - Actavis, Inc. | a59338e8vk.htm |
EX-99.2 - EX-99.2 - Actavis, Inc. | a59338exv99w2.htm |
EXHIBIT 99.1
NEWS RELEASE
CONTACTS: | Watson Pharmaceuticals, Inc. | |||
Patty Eisenhaur | ||||
(862) 261-8141 | ||||
Charlie Mayr | ||||
(862) 261-8483 |
Watson First Quarter 2011 Net Revenue Increases to $877 Million
First Quarter 2011 Non-GAAP EPS up 10% to $0.89
Company Increases 2011 Earnings Forecast
Company Increases 2011 Earnings Forecast
PARSIPPANY, NJ April 27, 2011 Watson Pharmaceuticals, Inc. (NYSE: WPI) today reported net
revenue of $876.5 million for the first quarter ended March 31, 2011, compared to $856.5 million
in the first quarter 2010. On a non-GAAP basis, net income for the first quarter 2011 was $111.9
million or $0.89 per share, an increase of 12 percent, compared to $100.3 million or $0.81 per
share in the first quarter 2010. GAAP diluted earnings per share for the first quarter 2011 were
$0.36, compared to $0.57 in the prior year period. Refer to the attached reconciliation tables for
adjustments to GAAP earnings.
For the first quarter 2011, adjusted EBITDA increased nine percent to $215.9 million, compared to
$198.9 million for the first quarter 2010. Cash and marketable securities were $514.8 million as
of March 31, 2011.
As demonstrated by the first quarter results announced today, Watson had a very solid start to
2011, said Paul Bisaro, President and CEO. In our Global Generics business, revenue grew 10
percent during the quarter reflecting strong organic growth, and we expanded our adjusted gross
margin by 1.6 percentage points. Additionally, we received approval in the United States for two
new generic products and initiated three new patent challenges, including a challenge on a generic version of
OxyContin®. We won the appeal in our generic Seasonique® patent case and won
the district court patent case for generic Mucinex®.
1
In our Global Brands business, net revenue increased six percent, and we had adjusted gross
margins of 81.6 percent. Perhaps the most significant development for our Global Brands business came just after
the close of the quarter, when the positive results of the PROCHIEVE® Phase III PREGNANT
study for the prevention of pre-term birth in women with a short cervix were published in a
peer-reviewed journal. The study results demonstrated a 45 percent reduction in preterm birth and
improvement in infant outcome was noted. Yesterday, we announced the submission of a New Drug
Application (NDA), and if accepted for expedited FDA review, look forward to potential action on the
PROCHIEVE®
NDA prior to the end of this year.
We continued to invest substantial resources in Global Generics and Global Brands research and
development and concluded the quarter with our lowest debt to adjusted EBITDA ratio in over six
years. We are well positioned for continued growth for the remainder of 2011 and we are actively
pursuing opportunities to utilize our strong balance sheet to drive Watsons expansion, concluded
Bisaro.
First Quarter 2011 Business Segment Results
Global Generics Segment Information
Three Months Ended | ||||||||
March 31, | ||||||||
(Unaudited; $ in millions) | 2011 | 2010 | ||||||
Product sales |
$ | 585.0 | $ | 534.1 | ||||
Other revenue |
15.1 | 9.7 | ||||||
Net revenue |
600.1 | 543.8 | ||||||
Operating expenses: |
||||||||
Cost of sales |
289.1 | 287.5 | ||||||
Research and development |
54.4 | 42.2 | ||||||
Selling and marketing |
30.6 | 26.9 | ||||||
Segment contribution |
$ | 226.0 | $ | 187.2 | ||||
Segment margin |
37.7 | % | 34.4 | % | ||||
Adjusted gross profit (1) |
$ | 307.0 | $ | 273.1 | ||||
Adjusted gross margin |
51.8 | % | 50.2 | % |
(1) | Adjusted gross profit represents adjusted net revenue less adjusted cost of sales and excludes amortization of acquired intangibles. Pro forma adjustments for the respective periods include the following: |
Settlement of
contingent asset
acquired as part of
a business
combination |
$ | (7.4 | ) | $ | | |||
Operational
Excellence
Initiative |
3.4 | 5.0 | ||||||
Purchase accounting
adjustments |
| 11.8 |
2
Global Generics net revenue for the first quarter 2011 increased 10 percent to $600.1 million.
Product sales increased 10 percent due to increased sales of extended-release products and the
launch of new products including Zarah®. Other revenue increased primarily as a result
of a settlement of a contingent asset acquired as part of a business combination. First quarter
international net revenue was $108.7 million, down two percent from the first quarter 2010, as
lower pricing in key markets offset the impact of higher unit sales.
Global Generics adjusted gross margin increased 1.6 percentage points to 51.8 percent in the first
quarter 2011, compared to 50.2 percent in the first quarter 2010. Adjusted Global Generics gross
margin was positively influenced by increased sales of higher margin extended-release products and
increased margins on a number of our base business products.
Global Generics R&D investment for first quarter 2011 increased 29 percent to $54.4 million,
primarily due to clinical study costs, global supply chain costs associated with the closure
of our R&D facilities in California and Australia and increased investment in international R&D.
Global Brands Segment Information
Three Months Ended | ||||||||
March 31, | ||||||||
(Unaudited; $ in millions) | 2011 | 2010 | ||||||
Product sales |
$ | 80.3 | $ | 72.4 | ||||
Other revenue |
16.6 | 18.9 | ||||||
Net revenue |
96.9 | 91.3 | ||||||
Operating expenses: |
||||||||
Cost of sales |
17.8 | 24.7 | ||||||
Research and development |
19.9 | 17.3 | ||||||
Selling and marketing |
36.5 | 32.5 | ||||||
Segment contribution |
$ | 22.7 | $ | 16.8 | ||||
Segment margin |
23.4 | % | 18.4 | % | ||||
Adjusted gross profit (1) |
$ | 79.1 | $ | 66.6 | ||||
Adjusted gross margin |
81.6 | % | 72.9 | % |
(1) | Adjusted gross profit represents net revenue less adjusted cost of sales and excludes amortization of acquired intangibles. |
3
Global Brands net revenue increased six percent to $96.9 million in the first quarter 2011.
Global Brands
net revenue increased primarily due to increased sales of Rapaflo®,
Androderm® and the addition of Crinone®.
Adjusted gross margin for the Global Brands segment increased 8.7 percentage points to 81.6 percent
from 72.9 percent in the first quarter 2010, primarily as a result of product sales mix.
Global Brands R&D investment increased $2.6 million to $19.9 million in the first quarter 2011 and included increased R&D investment at Eden
Biodesign.
Distribution Segment Information
Three Months Ended | ||||||||
March 31, | ||||||||
(Unaudited; $ in millions) | 2011 | 2010 | ||||||
Net revenue |
$ | 179.5 | $ | 221.4 | ||||
Operating expenses: |
||||||||
Cost of sales |
148.7 | 192.5 | ||||||
Selling and marketing |
18.4 | 18.2 | ||||||
Segment contribution |
$ | 12.4 | $ | 10.7 | ||||
Segment margin |
6.9 | % | 4.8 | % | ||||
Adjusted gross profit (1) |
$ | 30.8 | $ | 28.9 | ||||
Adjusted gross margin |
17.2 | % | 13.1 | % |
(1) | Adjusted gross profit represents net revenue less cost of sales and excludes amortization of acquired intangibles. |
Distribution segment net revenue for the first quarter 2011 decreased $41.9 million to $179.5
million, due to the lower number of third-party product launches in the quarter. Distribution
revenue consists of sales of third-party products and excludes sales of Watsons brand and generic
products.
Distribution segment adjusted gross margin was 17.2 percent in the first quarter 2011, an increase
of 4.1 percentage points from the prior year, as a result of a lower proportion of chain drug store
sales in the quarter.
4
Other Operating Expenses
Consolidated general and administrative expenses were $79.3 million in the first quarter 2011, an
increase of $4.9 million from the first quarter 2010 due primarily to an increase in international
general and administrative expenses. Amortization expense for the first quarter 2011 was $57.1
million, including $0.5 million amortization on equity method investments recorded in other income
(expense), compared to $39.0 million in first quarter 2010,
reflecting higher amortization of intangible assets in our international
business as a result of product launches and higher amortization rates.
2011 Financial Outlook
Watsons
estimates are based on actual results for the first quarter 2011 and managements current belief about
prescription trends, pricing levels, inventory levels and the anticipated timing of future product
launches and events.
Watson estimates total net revenue for the full year ended December 31, 2011 at approximately
$4.2 billion.
Total Global Generic segment revenue between $2.9 and $3.1 billion
Total Global Brand segment revenue of approximately $445 and $465 million
Total Distribution segment revenue between $770 and $800 million
Adjusted EBITDA between $950 million and $1.0 billion
Non-GAAP earnings per share between $3.95 and $4.20.
Webcast and Conference Call Details
Watson will host a conference call and webcast today at 8:30 a.m. Eastern Daylight Time to discuss
first quarter 2011 results, the outlook for the remainder of the year and recent corporate
developments. The dial-in number to access the call is (877) 251-7980, or from international
locations, (706) 643-1573. A taped replay of the call will be available by calling (800) 642-1687
with access pass code 56748589. The replay may be accessed from international locations by dialing
(706) 645-9291 and using the same pass code. This replay will remain in effect until midnight
Eastern Daylight Time, May 11, 2011. To access the live webcast, go to Watsons Investor Relations
Web site at http://ir.watson.com.
5
About Watson Pharmaceuticals, Inc.
Watson Pharmaceuticals, Inc., is a leading integrated global pharmaceutical company. The Company is
engaged in the development and distribution of generic pharmaceuticals and specialized branded
pharmaceutical products focused on Urology and Womens Health. Watson has operations in many of the
worlds established and growing international markets.
For press release and other company information, visit Watson Pharmaceuticals Web site at
http://www.watson.com.
Forward-Looking Statement
Statements contained in this press release that refer to Watsons estimated or anticipated future
results or other non-historical facts are forward-looking statements that reflect Watsons current
perspective of existing trends and information as of the date of this release. For instance, any
statements in this press release concerning prospects related to Watsons strategic initiatives,
product introductions and anticipated financial performance are forward-looking statements. It is
important to note that Watsons goals and expectations are not predictions of actual performance.
Watsons performance, at times, will differ from its goals and expectations. Actual results may
differ materially from Watsons current expectations depending upon a number of factors affecting
Watsons business. These factors include, among others, the inherent uncertainty associated with
financial projections; the impact of competitive products and pricing; timely and successful
consummation of strategic transactions; the difficulty of predicting the timing or outcome of
litigation; successful integration of strategic transactions including the acquisition of the Arrow
Group; the ability to recognize the anticipated synergies and benefits of strategic transactions;
variability of revenue mix between the Companys Brand, Generic and Distribution business units;
periodic dependence on a small number of products for a material source of net revenue or income;
variability of trade buying patterns; fluctuations in foreign currency exchange rates; changes in
generally accepted accounting principles; risks that the carrying values of assets may be
negatively impacted by future events and circumstances; the timing and success of product launches;
the difficulty of predicting the timing or outcome of product development efforts and FDA or other
regulatory agency approvals or actions; the uncertainty associated with the identification and
successful consummation of external business development transactions; market acceptance of and
continued demand for Watsons products; difficulties or delays in manufacturing; the availability
and pricing of third party sourced products and materials; successful compliance with FDA and other
governmental regulations applicable to Watsons and its third party manufacturers facilities,
products and/or businesses; changes in the laws and regulations, including Medicare, Medicaid, and
similar laws in foreign countries affecting, among other things, pricing and reimbursement of
pharmaceutical products and the settlement of patent litigation; and such other risks and
uncertainties detailed in Watsons periodic public filings with the Securities and Exchange
Commission, including but not limited to Watsons annual report on Form 10-K for the period ended
December 31, 2010. Except as expressly required by law, Watson disclaims any intent or obligation
to update these forward-looking statements.
All trademarks are the property of their respective owners.
6
The following table presents Watsons results of operations for the three months ended
March 31, 2011 and 2010:
WATSON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net revenues |
$ | 876.5 | $ | 856.5 | ||||
Operating expenses: |
||||||||
Cost of sales (excludes amortization, presented below) |
455.6 | 504.7 | ||||||
Research and development |
74.3 | 59.5 | ||||||
Selling, general and administrative |
164.8 | 152.0 | ||||||
Amortization |
56.6 | 39.0 | ||||||
Loss on asset sales and impairments |
14.4 | 1.0 | ||||||
Total operating expenses |
765.7 | 756.2 | ||||||
Operating income |
110.8 | 100.3 | ||||||
Non-operating income (expense): |
||||||||
Interest income |
0.8 | 0.4 | ||||||
Interest expense |
(21.8 | ) | (20.3 | ) | ||||
Other income (expense) |
(3.7 | ) | 26.1 | |||||
Total other income (expense), net |
(24.7 | ) | 6.2 | |||||
Income before income taxes and noncontrolling interest |
86.1 | 106.5 | ||||||
Provision for income taxes |
41.3 | 36.7 | ||||||
Net income |
44.8 | 69.8 | ||||||
Loss attributable to noncontrolling interest |
0.5 | | ||||||
Net income attributable to common shareholders |
$ | 45.3 | $ | 69.8 | ||||
Earnings per share: |
||||||||
Basic |
$ | 0.37 | $ | 0.57 | ||||
Diluted |
$ | 0.36 | $ | 0.57 | ||||
Weighted average shares outstanding: |
||||||||
Basic |
123.7 | 121.7 | ||||||
Diluted |
125.7 | 123.4 | ||||||
7
The following table presents Watsons Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010.
WATSON PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
(Unaudited; in millions)
Condensed Consolidated Balance Sheets
(Unaudited; in millions)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 504.5 | $ | 282.8 | ||||
Marketable securities |
10.3 | 11.1 | ||||||
Accounts receivable, net |
532.7 | 560.9 | ||||||
Inventories, net |
592.3 | 631.0 | ||||||
Other current assets |
297.0 | 313.6 | ||||||
Property and equipment, net |
626.7 | 642.3 | ||||||
Investments and other assets |
225.0 | 225.5 | ||||||
Product rights and other intangibles, net |
1,612.5 | 1,632.0 | ||||||
Goodwill |
1,528.1 | 1,528.1 | ||||||
Total assets |
$ | 5,929.1 | $ | 5,827.3 | ||||
Liabilities & Equity |
||||||||
Current liabilities |
$ | 856.3 | $ | 820.7 | ||||
Long-term debt |
1,020.3 | 1,016.1 | ||||||
Other Liabilities |
682.1 | 707.9 | ||||||
Total equity |
3,370.4 | 3,282.6 | ||||||
Total liabilities and equity |
$ | 5,929.1 | $ | 5,827.3 | ||||
8
The following table presents Watsons Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 2011 and 2010.
WATSON PHARMACEUTICALS, INC.
Condensed Consolidated Statement of Cash Flows
(Unaudited; in millions)
Condensed Consolidated Statement of Cash Flows
(Unaudited; in millions)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Cash Flows From Operating Activities |
||||||||
Net income |
$ | 44.8 | $ | 69.8 | ||||
Reconciliation to net cash provided by operating activities: |
||||||||
Depreciation |
23.0 | 24.7 | ||||||
Amortization |
56.6 | 39.0 | ||||||
Deferred income tax benefit |
(3.2 | ) | (14.8 | ) | ||||
Provision for inventory reserve |
12.5 | 11.9 | ||||||
Share based compensation |
8.4 | 4.9 | ||||||
(Earnings) losses on equity method investments |
4.5 | (2.5 | ) | |||||
Gain on sale of securities |
(0.8 | ) | (23.4 | ) | ||||
Loss on asset sales and impairments |
14.4 | 1.0 | ||||||
Excess tax benefits from stock-based compensation |
(6.7 | ) | | |||||
Accretion of preferred stock and contingent payment consideration |
13.6 | 6.6 | ||||||
Other, net |
1.0 | (1.5 | ) | |||||
Changes in assets and liabilities: |
||||||||
Accounts receivable, net |
31.1 | (32.3 | ) | |||||
Inventories |
33.0 | (44.1 | ) | |||||
Prepaid expenses and other current assets |
13.2 | 4.8 | ||||||
Accounts payable and accrued expenses |
(42.1 | ) | 11.7 | |||||
Deferred revenue |
(1.3 | ) | 4.8 | |||||
Income and other taxes payable |
40.9 | 46.5 | ||||||
Other assets and liabilities |
(10.9 | ) | 5.2 | |||||
Total adjustments |
187.2 | 42.5 | ||||||
Net cash provided by operating activities |
232.0 | 112.3 | ||||||
Cash Flows From Investing Activities |
||||||||
Additions to property and equipment |
(19.3 | ) | (7.3 | ) | ||||
Acquisition of product rights |
(1.0 | ) | (0.6 | ) | ||||
Acquisition of business, net of cash acquired |
| (16.8 | ) | |||||
Proceeds from sale of cost/equity investments |
0.8 | 94.1 | ||||||
Other |
| (1.0 | ) | |||||
Net cash (used in) provided by investing activities |
(19.5 | ) | 68.4 | |||||
Cash Flows From Financing Activities |
||||||||
Principal payments on debt and other long-term liabilities |
| (3.4 | ) | |||||
Principal payments on term loan, revolving loan and other debt |
| (220.0 | ) | |||||
Repurchase of common stock |
(10.3 | ) | (4.4 | ) | ||||
Acquisition of noncontrolling interests |
(5.5 | ) | | |||||
Excess tax benefits from stock-based compensation |
6.7 | | ||||||
Proceeds from stock plans |
20.3 | 14.9 | ||||||
Net cash provided by (used in) financing activities |
11.2 | (212.9 | ) | |||||
Effect of currency exchange rate changes on cash and cash equivalents |
(2.0 | ) | | |||||
Net increase (decrease) in cash and cash equivalents |
221.7 | (32.2 | ) | |||||
Cash and cash equivalents at beginning of period |
282.8 | 201.4 | ||||||
Cash and cash equivalents at end of period |
$ | 504.5 | $ | 169.2 | ||||
9
The following table presents a reconciliation of reported net income and diluted earnings per
share to non-GAAP net income for the three months ended March 31, 2011 and 2010:
Table 4
Watson Pharmaceuticals, Inc.
Reconciliation Table
(Unaudited; in millions except per share amounts)
Reconciliation Table
(Unaudited; in millions except per share amounts)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
GAAP to Non-GAAP net income calculation |
||||||||
Reported GAAP net income |
$ | 45.3 | $ | 69.8 | ||||
Adjusted for: |
||||||||
Amortization (1) |
57.1 | 39.0 | ||||||
Global supply chain initiative(2) |
8.6 | 5.2 | ||||||
Acquisition and licensing charges (3) |
4.6 | 19.4 | ||||||
Interest
accretion on contingent obligations (4) |
9.0 | 6.6 | ||||||
Non-cash impairment charges (5) |
14.4 | 1.0 | ||||||
Other
(gains) losses (6) |
(5.7 | ) | (23.4 | ) | ||||
Legal settlements (7) |
| 3.0 | ||||||
Income taxes on items above |
(21.4 | ) | (20.3 | ) | ||||
Non-GAAP net income |
$ | 111.9 | $ | 100.3 | ||||
Diluted earnings per share |
||||||||
Diluted earnings per share GAAP |
$ | 0.36 | $ | 0.57 | ||||
Diluted earnings per share Non-GAAP |
$ | 0.89 | $ | 0.81 | ||||
Basic weighted average common shares outstanding |
123.7 | 121.7 | ||||||
Effect of dilutive securities: |
||||||||
Dilutive share-based compensation arrangements |
2.0 | 1.7 | ||||||
Diluted weighted average common shares outstanding |
125.7 | 123.4 | ||||||
Notes: | ||
1. | Amortization of acquired intangible assets, such as product rights, core technology and customer relationships, and amoritization related to equity method investments recorded in other income (expense). | |
2. | The global supply chain initiative relates to closing or restructuring operations to gain efficiencies and operational excellence. The types of expenses include employee separation costs, product transfer expenses and accelerated depreciation. | |
3. | Acquisition and licensing include upfront payments for products under development and fair market adjustments related to contingent obligations. | |
4. | Interest accretion represents a non-cash fair value adjustment related to the Companys preferred stock and an adjustment to the fair value of contingent liabilities associated with the acquisition of the Arrow Group and the acquisition of the progesterone business from Columbia Labs. These adjustments are based upon the passage of time and are classified as interest expense. | |
5. | Non-cash impairment charges recorded to write-down tangible or intangible assets to fair value. | |
6. | Other (gains) losses are excluded from Non-GAAP results. | |
7. | Legal settlements include amount associated with significant matters not related to current operations. |
10
The
following table presents a reconciliation of reported net income to
adjusted EBITDA for the three months ended March
31, 2011 and 2010:
Table 5
Adjusted EBITDA Reconciliation Table
(Unaudited; in millions)
(Unaudited; in millions)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
GAAP net income |
$ | 45.3 | $ | 69.8 | ||||
Plus: |
||||||||
Interest expense |
21.8 | 20.3 | ||||||
Interest income |
(0.8 | ) | (0.4 | ) | ||||
Provision for income taxes |
41.3 | 36.7 | ||||||
Depreciation (includes accelerated depreciation) |
23.0 | 24.7 | ||||||
Amortization(1) |
57.1 | 39.0 | ||||||
EBITDA |
187.7 | 190.1 | ||||||
Adjusted for: |
||||||||
Global supply chain initiative (2) |
6.5 | 3.8 | ||||||
Acquisition and licensing charges (3) |
4.6 | 19.4 | ||||||
Non-cash impairment charges (4) |
14.4 | 1.0 | ||||||
Other
(gains) losses (5) |
(5.7 | ) | (23.4 | ) | ||||
Legal settlements (6) |
| 3.0 | ||||||
Share-based compensation (7) |
8.4 | 5.0 | ||||||
Adjusted EBITDA |
$ | 215.9 | $ | 198.9 | ||||
Notes: | ||
1. | Amortization of acquired intangible assets, such as product rights, core technology and customer relationships, and amortization related to equity method investments recorded in other income (expense). | |
2. | The global supply chain initiative relates to closing or restructuring operations to gain efficiencies and operational excellence. The types of expenses include employee separation costs, product transfer expense and accelerated depreciation. | |
3. | Acquisition and licensing include upfront payments for products under development and fair market adjustments related to contingent obligations. | |
4. | Non-cash impairment charges recorded to write-down tangible or intangible assets to fair value. | |
5. | Other (gains) losses are excluded from Non-GAAP results. | |
6. | Legal settlements include amount associated with significant matters not related to current operations. | |
7. | Share-based compensation relates to a non-cash accounting expense resulting from the issuance of restricted stock or stock options to employees and directors. |
11
The following table presents a reconciliation of forecasted net income for the twelve months
ending December 31, 2011 to non-GAAP net income and non-GAAP earnings per diluted share:
Table 6
WATSON PHARMACEUTICALS, INC.
Reconciliation Table Forecasted Non-GAAP Earnings per Diluted Share
(Unaudited; in millions except per share amounts)
Reconciliation Table Forecasted Non-GAAP Earnings per Diluted Share
(Unaudited; in millions except per share amounts)
Forecast for Twelve Months | ||||||||
Ending December 31, 2011 | ||||||||
Low | High | |||||||
GAAP to non-GAAP net income calculation |
||||||||
GAAP net income |
$ | 227 | $ | 258 | ||||
Adjusted for: |
||||||||
Amortization |
276 | 276 | ||||||
Global supply chain initiative |
15 | 15 | ||||||
Acquisition and licensing charges |
34 | 34 | ||||||
Interest
accretion on contingent obligations |
38 | 38 | ||||||
Non-cash
impairment charges |
14 | 14 | ||||||
Other
(gains) losses |
(6 | ) | (6 | ) | ||||
Income taxes |
(99 | ) | (99 | ) | ||||
Non-GAAP net income |
$ | 499 | $ | 530 | ||||
Diluted earnings per share |
||||||||
Diluted earnings per share GAAP |
$ | 1.80 | $ | 2.04 | ||||
Diluted earnings per share Non-GAAP |
$ | 3.95 | $ | 4.20 | ||||
Diluted weighted average common shares outstanding |
126.3 | 126.3 | ||||||
The reconciliation table is based in part on managements estimate of non-GAAP net income
for the year ending December 31, 2011. Watson expects certain known GAAP charges for 2011, as
presented in the schedule above. Other GAAP charges that may be excluded from non-GAAP net income
are possible, but their amounts are dependent on numerous factors that we currently cannot
ascertain with sufficient certainty or are presently unknown. These GAAP charges are dependent
upon future events and valuations that have not yet been performed.
12
The following table presents a reconciliation of forecasted net income for the twelve months
ending December 31, 2011 to adjusted EBITDA:
Table 7
WATSON PHARMACEUTICALS, INC.
Reconciliation Table Forecasted Adjusted EBITDA
(Unaudited; in millions)
Reconciliation Table Forecasted Adjusted EBITDA
(Unaudited; in millions)
Forecast for Twelve Months | ||||||||
Ending December 31, 2011 | ||||||||
Low | High | |||||||
GAAP net income |
$ | 227 | $ | 258 | ||||
Plus: |
||||||||
Interest expense |
88 | 88 | ||||||
Interest income |
(1 | ) | (1 | ) | ||||
Provision for income taxes |
175 | 194 | ||||||
Depreciation (includes accelerated depreciation) |
102 | 102 | ||||||
Amortization |
276 | 276 | ||||||
EBITDA |
867 | 917 | ||||||
Adjusted for: |
||||||||
Global
Supply Chain initiative |
12 | 12 | ||||||
Acquisition
and licensing charges |
34 | 34 | ||||||
Non- cash
impairment charges |
14 | 14 | ||||||
Other gains and losses |
(6 | ) | (6 | ) | ||||
Share-based
compensation |
29 | 29 | ||||||
Adjusted EBITDA |
$ | 950 | $ | 1,000 | ||||
The reconciliation table is based in part on managements estimate of adjusted EBITDA for
the year ending December 31, 2011. Watson expects certain known GAAP charges for 2011, as
presented in the schedule above. Other GAAP charges that may be excluded from estimated EBITDA are
possible, but their amounts are dependent on numerous factors that we currently cannot ascertain
with sufficient certainty or are presently unknown. These GAAP charges are dependent upon future
events and valuations that have not yet been performed.
13