SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 13, 2001
(November 13, 2001)
ENDO PHARMACEUTICALS HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 39040 13-4022871
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(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
100 Painters Drive
Chadds Ford, Pennsylvania 19317
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(Address of principal executive offices) (Zip Code)
(610) 558-9800
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
Item 5. Other Matters.
On November 13, 2001, the Registrant issued a press release, a
copy of which is filed herewith as Exhibit 99.1 and is incorporated herein
by reference.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Exhibit Number Description
99.1 Press release issued by Endo Pharmaceuticals Holdings Inc.
on November 13, 2001
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
ENDO PHARMACEUTICALS HOLDINGS INC.
(Registrant)
By: /s/ CAROL A. AMMON
Name: Carol A. Ammon
Title: President & Chief Executive Officer
Dated: November 13, 2001
INDEX TO EXHIBITS
Exhibit No. Description
99.1 Press release issued by Endo Pharmaceuticals
Holdings Inc. on November 13, 2001
Exhibit 99.1
Contact: Robert Siegfried/Jeremy Fielding
Kekst and Company
212-521-4800
Endo Pharmaceuticals Achieves Strong Third Quarter and
Year-to-Date 2001 Financial Results
-- Net Sales Increase 30% and Consolidated EBITDA
Rises by 58% for the Period -
CHADDS FORD, PA, November 13, 2001 -- Endo Pharmaceuticals
Holdings Inc. (Nasdaq: ENDP; ENDPW), a market leader in pain management,
today reported its financial results for the three months and nine months
ended September 30, 2001.
For the third quarter ended September 30, 2001, Endo's net sales grew
30% to $66.3 million from $50.9 million for the same period in 2000.
Consolidated EBITDA increased by 58% to $24.7 million from $15.6 million
over the comparable 2000 period. Earnings per share, excluding the impact
of non-cash compensation charges related to the vesting of non-dilutive
stock options, increased to $.03 per diluted share for the third quarter of
2001 compared to a net loss per diluted share of ($.04) in the comparable
2000 period, excluding the impact of in-process research and development.
Results for the 2001 periods reflect the company's merger with Algos
Pharmaceutical Corporation, which was completed on July 17, 2000.
Carol A. Ammon, President and Chief Executive Officer of Endo
Pharmaceuticals, said, "Endo's performance reflects the strength of our
established portfolio of products in the fast growing pain management
market. We are particularly pleased with the continued growth of
Lidoderm(R) and our extended-release morphine sulfate. As a result of the
strong performance of these products, we are revising upward for 2001 the
net sales and consolidated EBITDA projections contained in Endo's recent
S-3 filing made in connection with the company's recent and successful
public offering. We anticipate net sales for 2001 to be between $235
million to $240 million and consolidated EBITDA for 2001 to be between $75
million to $77 million."
Carol Ammon further stated, "We are also pleased about the continued
advancement of our three Phase III NDA pipeline products. Specifically, we
are on track to file the amendment to the MorphiDex(R) NDA in mid-2002 and
file NDAs for both an oral extended-release version and an
immediate-release version of our oxymorphone product in the second half of
2002. Although there can be no assurance, we also currently anticipate the
approval and launch of our line extension of Percocet(R) by the end of this
year.
"In addition, on October 29, 2001, we used the $84.9 million net
proceeds from our recent public offering plus $16.1 million from our cash
balance to repay in full the term loans under our existing credit facility.
We are negotiating the terms of a new senior secured credit facility to
replace our existing credit agreement. We, therefore, expect to be in an
advantageous position to pursue acquisitions and other strategic alliances,
which would, we believe, accelerate our growth as a premier specialty
pharmaceutical company."
Third Quarter Results
Net sales for the three months ended September 30, 2001 increased
by 30% to $66.3 million from $50.9 million in the comparable 2000 period.
Operating loss for the three months ended September 30, 2001 decreased to
$31.5 million from $132.7 million in the comparable 2000 period.
Consolidated EBITDA (as defined in footnote (1) below) for the three months
ended September 30, 2001 increased to $24.7 million from $15.6 million in
the comparable 2000 period. A reconciliation of Operating Income as
determined by GAAP to Consolidated EBITDA is as follows:
(Unaudited)
Three Months Ended
September 30,
(in thousands)
--------------
2001 2000
---- ----
GAAP operating loss $(31,475) $(132,729)
Depreciation and amortization 12,394 10,715
Non-cash manufacturing charges 6,539 4,364
Non-cash compensation charges 37,253 -
Purchased in-process R&D - 133,200
-------- -------
Consolidated EBITDA $24,711 $15,550
======== =======
Net loss for the three months ended September 30, 2001 decreased
to $33.0 million from $136.5 million in the comparable 2000 period. Net
loss per diluted share for the three months ended September 30, 2001
decreased to $.37 from $1.59 in the comparable 2000 period. Excluding
non-cash compensation charges related to the vesting of non-dilutive stock
options recorded in the three months ended September 30, 2001 and purchased
in-process research and development recorded in connection with the Algos
acquisition in the three months ended September 30, 2000, the Company
recorded net income in the three months ended September 30, 2001 of $2.4
million and $.03 per diluted share compared to a net loss in the comparable
2000 period of $3.3 million and $.04 per diluted share. A reconciliation of
net income (loss) is as follows:
(Unaudited)
Three Months Ended
September 30,
(in thousands)
--------------
2001 2000
---- ----
GAAP net loss $(32,993) $(136,548)
Non-cash compensation charges (net of tax) 35,394 -
Purchased in-process R&D (net of tax) - 133,200
------- --------
Adjusted net income (loss) $2,401 $ (3,348)
======= ========
Diluted weighted average shares outstanding 89,292 89,139
Diluted earnings (loss) per share $.03 $(.04)
Year-to-Date Results
Net sales for the nine months ended September 30, 2001 increased
by 45% to $173.5 million from $119.8 million in the comparable 2000 period.
Operating loss for the nine months ended September 30, 2001 decreased to
$35.5 million from $152.3 million in the comparable 2000 period. Pro Forma
Consolidated EBITDA (as defined in footnote (1) below) for the nine months
ended September 30, 2001 increased to $55.9 million from $22.2 million in
the comparable 2000 period. A reconciliation of operating loss as
determined by GAAP to Pro Forma Consolidated EBITDA is as follows:
(Unaudited)
Nine Months Ended
September 30,
(in thousands)
--------------
2001 2000
---- ----
GAAP operating loss $(35,546) $(152,322)
Depreciation and amortization 37,170 15,041
Non-cash manufacturing charges 17,010 13,921
Compensation related to stock options 37,253 -
Purchased in-process R&D - 133,200
Non-cash separation benefits - 20,782
-------- ---------
Subtotal: Consolidated EBITDA $55,887 $30,622
Operating loss of Algos - (8,525)
Depreciation and amortization of Algos - 128
-------- --------
Pro Forma Consolidated EBITDA $55,887 $22,225
======== ========
The assets acquired and liabilities assumed, results of operations
and cash flows of Algos have been included in the Company's financial
statements and Management's Discussion and Analysis of Financial Conditions
and Results of Operations prospectively for reporting periods beginning
July 17, 2000. The Company's results have fluctuated in the past, and may
continue to fluctuate. These fluctuations are primarily due to the timing
of new product launches, purchasing patterns of the Company's customers,
market acceptance of the Company's products and the impact of competitive
products and pricing.
Forward-Looking Statements
This press release contains 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, as amended, that are based on management's
beliefs and assumptions, current expectations, estimates and projections.
These statements are subject to risks and uncertainties and, therefore,
actual results may differ materially from those expressed or implied by
these forward-looking statements. Forward-looking statements are not
historical facts and include information regarding the Company's possible
or assumed results of operations. Also, statements or expressions that are
preceded by, followed by, or that include, the words "believes,"
"anticipates," "plans," "expects," "intends," "estimates" or similar
expressions are forward-looking statements. Endo's estimated or anticipated
future results, product performance or other non-historical facts are
forward-looking and reflect Endo's current perspective on existing trends
and information. Many of the factors that will determine the Company's
future results are beyond the ability of the Company to control or predict.
The reader should not rely on any forward-looking statement. The Company
undertakes no obligations to update any forward-looking statements whether
as a result of new information, future events or otherwise. Several
important factors, in addition to the specific factors discussed in
connection with these forward-looking statements individually, could affect
the future results of the Endo and could cause those results to differ
materially from those expressed in the forward-looking statements contained
herein. Important factors that may affect future results include, but are
not limited to: market acceptance of the Company's products and the impact
of competitive products and pricing; dependence on sole source suppliers;
the success of the Company's product development activities and the
timeliness with which regulatory authorizations and product launches may be
achieved; successful compliance with extensive, costly, complex and
evolving governmental regulations and restrictions; the availability on
commercially reasonable terms of raw materials and other third party
manufactured products; exposure to product liability and other lawsuits and
contingencies; dependence on third party suppliers, distributors and
collaboration partners; the ability to timely and cost effectively
integrate acquisitions; uncertainty associated with pre-clinical studies
and clinical trials and regulatory approval; uncertainty of market
acceptance of new products; the difficulty of predicting FDA approvals;
risks with respect to technology and product development; the effect of
competing products and prices; uncertainties regarding intellectual
property protection; uncertainties as to the outcome of litigation; changes
in operating results; impact of competitive products and pricing; product
development; changes in laws and regulations; customer demand; possible
future litigation; availability of future financing and reimbursement
policies of government and private health insurers and others; and other
risks and uncertainties detailed in Endo's Registration Statement on Form
S-4 filed with the Securities and Exchange Commission on June 9, 2000, as
amended and in Endo's Registration Statement on Form S-3 dated October 17,
2001. Readers should evaluate any statement in light of these important
factors.
The following table presents the Company's consolidated statements
of operations for the three months and nine months ended September 30, 2001
and 2000:
Endo Pharmaceuticals Holdings Inc.
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----
NET SALES $66,268 $50,902 $173,507 $119,836
COST OF SALES 20,622 15,254 54,303 43,587
------- ------- -------- --------
GROSS PROFIT 45,646 35,648 119,204 76,249
COSTS AND EXPENSES:
Selling, general and administrative
19,588 14,564 54,931 40,702
Research and development
7,886 8,315 25,396 16,011
Depreciation and amortization
12,394 10,715 37,170 15,041
Compensation related to stock options 37,253 - 37,253 -
Purchased in-process research and
development - 133,200 - 133,200
Merger and other related costs - 1,583 - 1,583
Separation benefits - - - 22,034
------- ------- -------- --------
OPERATING LOSS (31,475) (132,729) (35,546) (152,322)
INTEREST EXPENSE, Net 2,686 3,672 9,129 11,390
------- ------- -------- --------
LOSS BEFORE INCOME TAX BENEFIT (34,161) (136,401) (44,675) (163,712)
------- ------- -------- --------
INCOME TAX (BENEFIT)
(1,168) 147 (175) (10,178)
------- ------- -------- --------
NET LOSS $(32,993) $(136,548) $(44,500) $(153,534)
========= ========== ========= ==========
NET LOSS PER SHARE:
Basic $(.37) $(1.59) $(.50) $(2.01)
Diluted $(.37) $(1.59) $(.50) $(2.01)
Weighted average shares
Basic 89,139 85,848 89,139 76,202
Diluted 89,139 85,848 89,139 76,202
The following table presents the Company's unaudited condensed
consolidated balance sheet data at September 30, 2001 and December 31,
2000:
Endo Pharmaceuticals Holdings Inc.
Condensed Consolidated Balance Sheet Data (unaudited)
(in thousands)
September 30, December 31,
2001 2000
---- ----
ASSETS
Cash and cash equivalents $ 89,309 $59,196
Other current assets 104,568 113,858
-------- --------
Total current assets 193,877 173,054
Property and equipment, net 9,086 5,742
Goodwill and other intangibles, net 245,519 284,560
Deferred income taxes 1,979 736
Restricted cash 150
150
Other assets 5,571 3,598
-------- --------
TOTAL ASSETS $456,182 $467,840
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $88,557 $100,295
Long-term debt, less current portion 174,516 162,154
Other liabilities 2,183 7,218
Total stockholders' equity 190,926 198,173
The following table presents the Company's unaudited net sales for
the three months and nine months ended September 30, 2001 and 2000:
Endo Pharmaceuticals Holdings Inc.
Net Sales (unaudited)
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----
Percocet(R)
$16,430 $23,379 $72,831 $54,251
Lidoderm(R) 16,268 7,343 26,933 12,833
Other Brands 8,087 8,330 16,678 21,311
------- ------- -------- -------
Total Brands $40,785 $39,052 $116,442 $88,395
Total Generics $25,483 $11,850 $57,065 $31,441
Total Net Sales $66,268 $50,902 $173,507 $119,836
======== ======= ========= ========
Endo is a fully integrated specialty pharmaceutical company with
market leadership in pain management. The company researches, develops,
produces and markets both branded and generic pharmaceutical products
primarily for the treatment of pain. Endo has a portfolio of thirteen
branded products that includes established brands such as Percocet(R) and
Percodan(R), opioid analgesics. This and past press releases of Endo
Pharmaceuticals Holdings Inc. are available at Endo's web site at
http://www.endo.com.
(1) Endo's credit facility defines Consolidated EBITDA as consolidated
net income for the applicable period plus, without duplication and
to the extent deducted from revenues in determining consolidated
net income for that period, the sum of (a) the aggregate amount of
consolidated cash interest expense for the period, (b) the
aggregate amount of letter of credit fees paid during the period,
(c) the aggregate amount of income tax expense for the period, (d)
all amounts attributable to depreciation and amortization for the
period, (e) all extraordinary charges during the period and (f)
all other non-cash charges during the period; and minus, without
duplication and to the extent added to revenues in determining
consolidated net income for such period, the sum of (i) all
extraordinary gains during the period and (ii) all other non-cash
gains during such period, all as determined on a consolidated
basis with respect to Endo and subsidiaries in accordance with
generally accepted accounting principles.