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):
April 25, 2002 (April 25, 2002)
ENDO PHARMACEUTICALS HOLDINGS INC.
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 39040 13-4022871
-------------------------------------------------------------------------------
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification
incorporation) No.)
100 Painters Drive
Chadds Ford, Pennsylvania 19317
-------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(610) 558-9800
-------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
-------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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 April 25, 2002
Item 9. Regulation FD Disclosure.
On April 25, 2002, the Registrant issued a press release, a copy
of which is filed herewith as Exhibit 99.1 and is incorporated herein by
reference.
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: April 25, 2002
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
99.1 Press release issued by Endo Pharmaceuticals Holdings Inc.
on April 25, 2002
Exhibit 99.1
Contact: Robert Siegfried/Jeremy Fielding
Kekst and Company
212-521-4800
Endo Pharmaceuticals Achieves Strong
First Quarter 2002 Financial Results
-- Results Reflect Strength of Product Line Including Lidoderm(R),
Extended-Release Morphine Sulfate and the New Strengths of Percocet(R) --
-- 2002 Guidance Raised --
CHADDS FORD, PA, April 25, 2002 -- Endo Pharmaceuticals Holdings
Inc. (Nasdaq: ENDP; ENDPW), a market leader in pain management, today
announced its financial results for the first quarter ended March 31, 2002.
For the three months ended March 31, 2002, Endo's net sales grew
70% to $67.0 million from $39.4 million for the same period in 2001. Gross
profits for the three months ended March 31, 2002 increased by 80% to $48.1
million from $26.7 million in the comparable 2001 period. Net income
increased to $5.4 million or $.05 per diluted share from a net loss of
$(14.2) million or $(.16) per diluted share in the comparable 2001 period.
Excluding the amortization of goodwill and workforce-in-place, net income
increased to $5.4 million or $.05 per diluted share from a net loss of
$(1.6) million or $(.02) per diluted share for the comparable 2001 period.
Consolidated EBITDA increased to $15.9 million from $4.6 million in the
comparable 2001 period.
Carol A. Ammon, Chairman and Chief Executive Officer of Endo
Pharmaceuticals, said, "We are extremely pleased with our strong financial
performance during the first quarter. We have seen favorable market
acceptance of our new strengths of Percocet(R) and are pleased with the
consistent growth of Lidoderm(R). As a result of the anticipated continued
strength of our product line, we are revising our guidance upward for 2002.
We believe that we are well-positioned to achieve net sales in 2002 of
approximately $300 million and consolidated EBITDA of $100 million. Of
course, there can be no assurance of Endo achieving these numbers.
"We are progressing toward our goal of filing three NDA products in
2002. We believe these three products, MorphiDex(R), oxymorphone oral
extended-release and oxymorphone immediate release, will enable us to
achieve our vision of providing new ways to treat pain. We continue to
invest in research and development as we complete Phase III clinical studies
and prepare for the NDA filings. Endo anticipates releasing data from the
first of three MorphiDex(R) clinical studies late in the second quarter of
2002 and although there can be no assurances, we continue to expect to
resubmit an amendment to the existing MorphiDex(R) NDA with the FDA in the
late third quarter or during fourth quarter of 2002. In addition, we
anticipate releasing data on our two oxymorphone products in development in
late summer and to be in a position to file both oxymorphone NDA's in the
second half of 2002. We are committed to ongoing investment in research and
development as we begin to advance our earlier stage pipeline."
First Quarter Results
Net sales for the three months ended March 31, 2002 increased by
70% to $67.0 million from $39.4 million in the comparable 2001 period. This
increase in net sales was primarily due to the increase in net sales of
Lidoderm(R), the first FDA-approved product for the treatment of the pain of
post-herpetic neuralgia, certain generic products and the new strengths of
Percocet(R). Gross profits for the three months ended March 31, 2002
increased by 80% to $48.1 million from $26.7 million in the comparable 2001
period. Gross profit margins for the three months ended March 31, 2002
improved to 72% from 68% in the comparable 2001 period.
Selling, general and administrative ("SG&A") expenses increased 48%
to $23.6 million as a result of promotional efforts and support provided to
our new products, including Lidoderm(R) and the new strengths of
Percocet(R). Research and development ("R&D") expenses increased 46% to
$13.4 million as a result of our investment in new product development,
including the development of MorphiDex(R) and our extended-release and
immediate-release versions of oxymorphone. Operating income increased to
$10.4 million for the three months ended March 31, 2002 compared to an
operating loss of $(10.7) million in the comparable 2001 period. Excluding
the amortization of goodwill and workforce-in-place, operating income
increased to $10.4 million from $1.0 million in the comparable 2001 period.
Consolidated EBITDA (as defined in endnote (1) below) for the three months
ended March 31, 2002 increased to $15.9 million from $4.6 million in the
comparable 2001 period. A reconciliation of operating income (loss) as
determined by GAAP to Consolidated EBITDA is as follows:
(Unaudited)
Three Months Ended
March 31,
---------
2002 2001
---- ----
(in thousands)
GAAP operating income (loss) $10,371 $(10,730)
Depreciation and amortization 785 12,399
Non-cash manufacturing charges 4,697 2,917
------- ------
Consolidated EBITDA $15,853 $4,586
======= ======
Effective January 1, 2002, Endo adopted the new goodwill accounting
standards and will no longer amortize goodwill and workforce-in-place. The
pro forma effect of the adoption of these new accounting standards,
including the pro forma effect on income tax benefit, is as follows:
(Unaudited)
Three Months Ended
March 31,
---------
2002 2001
---- ----
(in thousands, except per share
data)
Reported net income (loss) $5,376 $(14,238)
Add back: Goodwill amortization - 10,225
Add back: Amortization of workforce-in-place - 1,487
Pro forma income tax benefit - 954
------ --------
Adjusted net income (loss) $5,376 $(1,572)
====== ========
Basic earnings (loss) per share:
Reported net income (loss) $.05 $(.16)
Add back: Goodwill amortization - .11
Add back: Amortization of workforce-in-place - .02
Pro forma income tax benefit - .01
----- -------
Adjusted net income (loss) $.05 $(.02)
===== =======
Diluted earnings (loss) per share:
Reported net income (loss) $.05 $(.16)
Add back: Goodwill amortization - .11
Add back: Amortization of workforce-in-place - .02
Pro forma income tax benefit - .01
---- ------
Adjusted net income (loss) $.05 $(.02)
==== ======
Endo'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 Endo's customers, market acceptance of our
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 Endo's consolidated statements of operations
for the three months ended March 31, 2002 and March 31, 2001:
Endo Pharmaceuticals Holdings Inc.
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
Three Months Ended
March 31,
---------
2002 2001
-------- ---------
NET SALES $67,026 $39,382
COST OF SALES 18,891 12,649
-------- ---------
GROSS PROFIT 48,135 26,733
COSTS AND EXPENSES:
Selling, general and administrative 23,583 15,890
Research and development 13,396 9,174
Depreciation and amortization 785 12,399
-------- ---------
OPERATING INCOME (LOSS) 10,371 (10,730)
INTEREST EXPENSE, Net 1,622 3,540
-------- ---------
INCOME (LOSS) BEFORE INCOME TAX (BENEFIT) 8,749 (14,270)
-------- ---------
INCOME TAX (BENEFIT) 3,373 (32)
-------- ---------
NET INCOME (LOSS) $5,376 $(14,238)
======== =========
NET INCOME (LOSS) PER SHARE:
Basic $.05 $ (.16)
Diluted $.05 $ (.16)
NET INCOME (LOSS)
Pro Forma to Exclude Amortization of Goodwill
and Workforce-in-Place $5,376 $(1,572)
======== ========
NET INCOME (LOSS) PER SHARE
Pro Forma to Exclude Amortization of Goodwill
and Workforce-in-Place:
Basic $.05 $ (.02)
Diluted $.05 $ (.02)
WEIGHTED AVERAGE SHARES:
Basic 102,064 89,139
Diluted 102,281 89,139
The following table presents the Endo's unaudited condensed consolidated
balance sheet data at March 31, 2002 and December 31, 2001:
Endo Pharmaceuticals Holdings Inc.
Condensed Consolidated Balance Sheet Data (unaudited)
(in thousands)
March 31, December 31,
2002 2001
-------- ---------
ASSETS
Cash and cash equivalents $117,695 $95,357
Other current assets 132,584 145,568
--------- --------
Total current assets 250,279 240,925
Property and equipment, net 9,364 9,883
Goodwill 181,079 182,318
Other Intangibles, net 12,311 12,495
Deferred income taxes 20,418 23,420
Restricted cash 150 150
Other assets 1,874 1,804
--------- --------
TOTAL ASSETS $475,475 $470,995
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $92,968 $91,259
Other current liabilities 88,521 84,407
--------- --------
Total current liabilities 181,489 175,666
Long-term debt, less current portion - -
Other liabilities 218 207
Total stockholders' equity 293,768 295,122
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $475,475 $470,995
========= ========
The following table presents condensed consolidated cash flow data for the
three months ended March 31, 2002 and March 31, 2001:
Endo Pharmaceuticals Holdings Inc.
Condensed Consolidated Cash Flow Data (unaudited)
(in thousands)
Three Months Ended
March 31,
---------
2002 2001
-------- ---------
Net cash provided by operating activities $29,148 $25,226
Net cash (used in) provided by investing activities (80) (1,240)
Net cash provided by (used in) financing activities (6,730) (4,127)
-------- -------
Net increase in cash and cash equivalents $22,338 $19,859
Cash and cash equivalents, beginning of period $95,357 $59,196
-------- -------
Cash and cash equivalents, end of period $117,695 $79,055
======== =======
The following table presents Endo's unaudited net sales for the three months
ended March 31, 2002 and March 31, 2001:
Endo Pharmaceuticals Holdings Inc.
Net Sales (unaudited)
(in thousands)
Three Months Ended
March 31,
---------
2002 2001
-------- ---------
Percocet(R) $23,468 $20,159
Lidoderm(R) 10,002 3,643
Other Brands 5,326 5,002
-------- --------
Total Brands $38,796 $28,804
Total Generics $28,230 $10,578
-------- --------
Total Net Sales $67,026 $39,382
======== ========
Endo Pharmaceuticals is a fully integrated specialty pharmaceutical
company with market leadership in pain management products. The company
researches, develops, produces and markets a broad product offering of both
branded and generic pharmaceuticals, meeting the needs of healthcare
professionals and consumers alike. This and past press releases of Endo
Pharmaceuticals Holdings Inc. are available at Endo's Web site at
http://www.endo.com.
(1) Definition of Consolidated EBITDA: Endo's amended and restated
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 and non-recurring charges during the
period (provided that the amount of charges added to consolidated
net income pursuant to this clause (e) that are incurred in
connection with any transfer of manufacturing operations shall not
exceed $10 million during any fiscal year of Endo or $20 million in
the aggregate) 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 its subsidiaries in
accordance with generally accepted accounting principles.
Operating Income (Loss) to Consolidated EBITDA Reconciling Items:
Non-cash manufacturing charges reflect the present value of non-interest
bearing promissory notes issued annually to Bristol-Myers Squibb Pharma
Company ("BMS") (formerly the DuPont Pharmaceuticals Company) over the
initial five-year term of the manufacturing and supply agreement with BMS.
#####