Teva Pharmaceutical Industries Ltd. Reports Second Quarter Earnings Per ADR Up 32%
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Monday July 31 5:12am Source: BusinessWire JERUSALEM--(BUSINESS WIRE)--July 31st, 2000--Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA) today reported that net income (before one-time charges) for the quarter ended June 30, 2000, reached $44.7 million compared with $31.1 million reported in the second quarter of 1999 (up 44%) and earnings per ADR (before a one-time charge) were $0.33 (up 32%). Total sales for the second quarter 2000 rose 51% to 444.0 million. 59% of these sales were in North America, 24% in Europe, 14% in Israel and 3% in the rest of world. The one-time charge relates to the purchase of in-process R&D, in the amount of $35.7 million, mainly due to the acquisition of Novopharm. Including this one-time charge, net income for the quarter totaled $9.0 million and earnings per ADR amounted to $0.06. The operations of Novopharm, acquired in early April 2000, were consolidated for the first time in the reported quarter. The operations of Copley were consolidated for the first time in Q4 of 1999, and thus were not included in the comparable quarter of 1999. Net income for the first six months of 2000 (before the one-time charge) reached $82.6 million, up 39% from the comparable period of 1999 and earnings per ADR for the six months (before the one-time charge), totaled $0.63, an increase of 31%. Total sales for the first half of 2000 rose 34% to $781.3 million. Eli Hurvitz, President and Chief Executive Officer, commented: "We are pleased with our quarterly and 6 month results - the second quarter was complex, including the integration of Novopharm, several generic product launches and extensive innovative R&D activities. Nevertheless, we again exceeded market expectations." Total pharmaceutical sales for the second quarter which constituted approximately 90% of Teva's total revenue, rose 63% and reached $397.4 million. North America Pharmaceutical Sales reached $239.5 million, up 114% compared to the second quarter of 1999. This increase is due mainly to the consolidation of Novopharm and Copley but also reflects significant sales of new products which have been launched since late 1999. Newly launched products include the generic versions of Voltaren XR(R), Adalat CC(R) 30mg (both supplied by Biovail) Hytrin(R), Cylert(R), which were launched prior to the second quarter and Nizoral(R) 2% Cream, Betapace(R), and Actigall(R), in the second quarter. During the 2nd quarter Teva received final approvals for the generic version of Relafen(R) 500mg and 750mg and Nolvadex(R) 10mg which are Paragraph IV filings. Subsequent to the end of the quarter, Biovail received tentative approval for the generic version of Procardia XL(R) 30mg and 60mg which will be exclusively marketed by Teva. For the 60mg strength, Teva will have 180 days of marketing exclusivity. At the end of the quarter, 50 applications were awaiting FDA final approval including 13 tentative approvals (2 of which are Biovail's) awaiting expiration of either patents or pediatric exclusivity. About half were submitted under paragraph IV, thus, in some of these products, in which Teva was the first to submit an application to the FDA, Teva may be granted a six month exclusivity period. Total annual sales for these 50 products, in terms of branded drugs, reach approximately $14 billion. Pharmaceuticals sales in Europe in the reported quarter reached $93.4 million, up 29%. This increase from the comparable quarter reflects the first time consolidation of Human Serum & Pharmaceutical Manufacturing Co. Ltd, the Hungarian subsidiary of Novopharm. Sales in the rest of Europe increased in terms of the Euro but due to a 9% devaluation of the Euro, sales decreased in dollar terms by 7%. Governmental imposed price constraints, both in Hungary and the U.K, were partially offset by sales of products launched during the first quarter of 2000. At the end of the quarter, 139 product applications were awaiting approval from the Regulatory Authorities in various countries in Europe, mainly in Hungary, the U.K. and the Netherlands. Eli Hurvitz further commented: "The geographic mix of our business serves as a balance, enabling us to maintain our overall growth rates. We intend to pursue further opportunities for acquisitions both in Europe and North America as the industry consolidation continues." Pharmaceutical sales in Israel in the reported quarter amounted to $56.4 million, up 9% from the comparable period. During the second quarter of 2000, Copaxone(R) global in-market sales reached $59.4 million, up 56% as compared with the second quarter of 1999. About 85% of these sales were generated in the U.S. where Copaxone(R), according to IMS, continued to strengthen its number two position in the MS market, exceeding a 25% market share. Active Pharmaceutical Ingredients (API) sales to third parties decreased by 6% to $41.2 as compared with the second quarter of 1999. However, that was compensated by higher margins and increased sales to Teva's pharmaceutical units. Total API sales increased 8% and totaled $76.6 million. Gross profit totaled $168.3 million and the gross profit margin was 37.9% this quarter as compared to the 41.1% margin in the second quarter of 1999. This decrease is almost entirely attributable to the first time consolidation of Novopharm and its subsidiaries. Gross Research and Development (R&D) expenses amounted to $30.1 million, an increase of 35% compared to the same period last year. Over half of this increase is due to higher expenses in innovative R&D (mainly Copaxone(R) and the advanced CNS projects). Net R&D expenses (after participations) totaled $26.3 million. The increase in net R&D expenses (24%) was at a lower rate than the increase in gross R&D due to higher participations by strategic partners in the innovative R&D projects. Gross R&D expenses do not include the acquisition of in-process R&D resulting mainly from the acquisition of Novopharm which was recorded as one-time charge in this quarter and amounted to $35.7 million. Selling, General and Administration (SG&A) expenses totaled $73.1 million in the reported quarter compared to $54.8 million in the comparable quarter last year. This increase is mainly due to the inclusion of Copley's and Novopharm's SG&A expenses (including amortization of goodwill resulting from their acquisition). However, SG&A as a percentage of sales decreased from 18.6% to 16.5%. Financial Expenses-net, amounted to $12.2 million. This reflects an increase of 78% from the second quarter of 1999, mainly due to interest costs arising from the acquisitions of Copley and Novopharm. The Rationalization process relating to Copley's operations continued during the second quarter of 2000 as products are gradually being transferred from Copley's main plant in Boston to other Teva production sites. Operations at Novopharm's North Carolina plant have been curtailed, and Teva has began to implement a rationalization plan for Novopharm's plants in Canada. Teva's Finance Committee, recommended to the Board of Directors to declare a regular cash dividend of NIS 0.225 (approx. $ 0.055) per ADR with respect to the second quarter of 2000. The final declaration of the dividend and the record and payment dates is expected to be determind at the Board meeting to be held on August 21, 2000. Teva Pharmaceutical Industries Ltd. is Israel's largest pharmaceutical company, with over 80% of its sales outside Israel, mainly in North-America and Europe. The Company develops, manufactures and markets generic and branded human pharmaceuticals and active pharmaceutical ingredients. Safe Harbor Statement: This report contains forward-looking statements, which express the beliefs and expectations of management. Such statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause the Company'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 the impact of pharmaceutical industry regulation, the difficulty of predicting FDA and other regulatory authority approvals, the regulatory environment and changes in the health policies and structure of various countries, acceptance and demand for new pharmaceutical products and new therapies, the impact of competitive products and pricing, the availability and pricing of ingredients used in the manufacture of pharmaceutical products, uncertainties regarding market acceptance of innovative products newly launched , currently being sold or in development , the impact of restructuring of clients , reliance on strategic alliances , fluctuations in currency, exchange and interest rates , operating results , the impact of the year 2000 issue and other factors that are discussed in the Company's Annual Report on Form 20-F and the Company's other filings with the U.S. Securities and Exchange Commission. Notice of Conference Call - Q2 Financial Results Monday, July 31, 2000 10:00 a.m. Eastern Time From the UNITED STATES & CANADA, please dial 212-699 - Pass Code: "TEVA" -0- *T Safe Harbor Statement: This report contains forward-looking statements, which express the beliefs and expectations of management. Such statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause the Company'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 the impact of pharmaceutical industry regulation, the difficulty of predicting FDA and other regulatory authority approvals, the regulatory environment and changes in the health policies and structure of various countries, acceptance and demand for new pharmaceutical products and new therapies, the impact of competitive products and pricing, the availability and pricing of ingredients used in the manufacture of pharmaceutical products, uncertainties regarding market acceptance of innovative products newly launched , currently being sold or in development , the impact of restructuring of clients , reliance on strategic alliances , fluctuations in currency, exchange and interest rates , operating results , the impact of the year 2000 issue and other factors that are discussed in the Company's Annual Report on Form 20-F and the Company's other filings with the U.S. Securities and Exchange Commission.
                      Teva Pharmaceutical Industries Ltd.
                       Consolidated Statements of Income
                    (in thousands, except earnings per ADR)

                            Three months                  Six months
                               ended                        ended
                         ------------------          ------------------
                                           June 30
                                   ----------     ----------    ----------

                         2000          1999          2000          1999
                      ----------   ----------     ----------    ----------
                                           U.S. Dollars
                                         (unaudited)
    SALES                443,997      293,740        781,331       581,360
    COST OF SALES        275,721      172,928        475,472       347,720
                      ----------   ----------     ----------    ----------
    GROSS PROFIT         168,276      120,812        305,859       233,640
    RESEARCH AND
    DEVELOPMENT EXPENSES:
     Total expenses       30,130       22,257         52,387        42,819
     Less grants &
     participations        3,838          986          6,172         2,387
                      ----------   ----------     ----------    ----------
                          26,292       21,271         46,215        40,432
    SELLING, GENERAL
    AND ADMINISTRATION
    EXPENSES              73,145       54,794        134,807       107,492
                      ----------   ----------     ----------    ----------
                          68,839       44,747        124,837        85,716
    ACQUISITION OF
    RESEARCH AND
    DEVELOPMENT IN
    PROCESS               35,697          -           35,697           -
                      ----------   ----------     ----------    ----------
    OPERATING INCOME      33,142       44,747         89,140        85,716
    FINANCIAL EXPENSES
    - net                 12,152        6,816         22,041        13,011
    OTHER INCOME
    - net                  1,561        3,434          4,255         5,714
                      ----------   ----------     ----------    ----------
    INCOME BEFORE TAXES   22,551       41,365         71,354        78,419
    TAXES ON INCOME       13,428       10,329         24,508        19,652
                      ----------   ----------     ----------    ----------
                           9,123       31,036         46,846        58,767
    SHARE IN PROFITS
    (LOSSES) OF
    ASSOCIATED
    COMPANIES                418          100            659           332
    MINORITY INTEREST
    - net                   (547)          (2)          (647)          297
                      ----------   ----------     ----------    ----------
    NET INCOME             8,994       31,134         46,858        59,396
                      ==========   ==========     ==========    ==========
    EARNINGS PER ADR
    ($)                     0.06         0.25           0.36          0.48

    NET ADJUSTED INCOME
    BEFORE DEDUCTING
    NON-RECURRING EXPENSES:(a)
    NET INCOME FOR
    THE PERIOD            44,691       31,134         82,555        59,396

    EARNINGS PER ADR        0.33          0.25          0.63          0.48

    WEIGHTED AVERAGE
    NUMBER OF ADR'S      134,801      125,926        130,708       125,828
                       =========    =========      =========    ==========
    (a) Note:

        1. 1999 before deducting non-recurring expenses of $17,700 ($0.14
    perADR)
        2. Three months and nine months ended June 30, 2000: Before
    deducting non-recurring expenses of $35,697 ($0.27 per ADR) Both (1) &
    (2) are in respect of acquired Research & Development in process
                      Teva Pharmaceutical Industries Ltd.
                       Consolidated Statements of Income
                    (in thousands, except earnings per ADR)

                                      Year
                                     ended
                                   -----------
                                     Dec. 31
                                       1999

                                  U.S. Dollars

                                    (audited)
    SALES                           1,282,406

    COST OF SALES                     767,627
                                   ----------
    GROSS PROFIT                      514,779
    RESEARCH AND
    DEVELOPMENT EXPENSES:
    Total expenses                     91,622
    Less grants & participations        9,780
                                   ----------
                                       81,842
    SELLING, GENERAL
    AND ADMINISTRATION
    EXPENSES                          233,891
                                   ----------

                                      199,046
    ACQUISITION OF
    RESEARCH AND
    DEVELOPMENT IN
    PROCESS                            17,700
                                   ----------
    OPERATING INCOME                  181,346
    FINANCIAL EXPENSES
    - net                              30,165
    OTHER INCOME
    - net                              10,781
                                   ----------
    INCOME BEFORE TAXES               161,962
    TAXES ON INCOME                    44,335
                                   ----------
                                      117,627
    SHARE IN PROFITS
    (LOSSES) OF
    ASSOCIATED
    COMPANIES                            (550)
    MINORITY INTEREST
    - net                                 756
                                   ----------
    NET INCOME                        117,833
                                   ==========

    EARNINGS PER ADR ($)                 0.94

    NET ADJUSTED INCOME
    BEFORE DEDUCTING
    NON-RECURRING EXPENSES:(a)
    NET INCOME FOR THE PERIOD         135,533
    EARNINGS PER ADR                     1.08

    WEIGHTED AVERAGE
    NUMBER OF ADR'S                   125,880
                                   ==========

    (a) Note:

        1. 1999 before deducting non-recurring expenses of $17,700 ($0.14
    perADR)
        2. Three months and nine months ended June 30, 2000: Before
    deducting non-recurring expenses of $35,697 ($0.27 per ADR) Both (1) &
    (2) are in respect of acquired Research & Development in process
                      Teva Pharmaceutical Industries Ltd.

                              Balance Sheet Data
                              ------------------
                                (in thousands)
                              ------------------

                                    June 30                     Dec. 31
                                -------------              ---------------

                               2000          1999                1999
                              -------      -------         ---------------
                                 U.S. Dollars
                                 (unaudited)                   (audited)
    ASSETS
    ------------------
    CURRENT ASSETS
    Cash and cash
    equivalents                93,409       55,869              77,177
    Short-term
    investments                   404        1,292              17,226
    Accounts receivalbes:
            Trade             443,078      283,088             361,293
            Other             149,543       81,987             103,309
    Inventories               508,283      371,615             351,478
                              -------      -------             --------
    Total current
     assets                 1,194,717      793,851             910,483

    INVESTMENTS AND
    NON-CURRENT
    RECEIVALBES:               38,991       32,581              31,681

    PROPERTY, PLANT
    AND EQUIPMENT:
         Cost                 962,636      763,012             856,493
         Less accumulated
         depreciation         404,261      319,919             377,957
                              -------      -------            ---------
                              558,375      443,093             478,536

    INTANGIBLE ASSETS
    -net                      588,326      166,574             293,319
                              -------      -------            ---------
                            2,380,409    1,436,099           1,714,019
                             ========    =========           ==========

    LIABILITIES AND
    SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES
    Short-term credit:
    mainly from banks         514,061      286,098             276,259
    Accounts payable
    and accruals:
            Trade             133,813      104,849             114,454
            Other             242,094       95,783             140,053
    Proposed dividend           7,009        4,647               6,806
                              -------      -------             -------
            Total current
            liabilities       896,977      491,377             537,572
    LONG-TERM LIABILITIES:
    Deferred income taxes      28,212       32,831              31,687
    Accrued employee rights
    upon retirement,
        net of
      amount funded            11,825       11,323              11,041
    Loans and
    other liabilities         368,367      203,557             391,419
                             --------      -------             -------
         Total long-term
         liabilities          408,404      247,711             434,147
                             --------      -------             -------
    Total Liabilities       1,305,381      739,088             971,719
    MINORITY INTEREST           7,366          504                  17
    SHAREHOLDERS'
    EQUITY                  1,067,662      696,507             742,283
                             --------      -------             -------
                            2,380,409    1,436,099           1,714,019

    *T
Contact: | Teva Pharmaceutical Industries Ltd.
| Dan Suesskind, 011/972-2-589-2840
| Chief Financial Officer
| Bill Fletcher, 215/256-8400
| President and CEO Teva North America
| Dorit Meltzer, 011/972-3-9267554
| Director, Investor Relations

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