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Watson Pharmaceuticals Management Discusses Q2 2012 Results - Earnings Call Transcript

With that, I'll turn the call over to Paul.

Paul M. Bisaro

Thank you, Lisa, and good morning, everyone, and thank you for joining us. We are pleased to report another quarter of solid revenue and double-digit earnings growth. Net revenues increased 25% to over $1.3 billion. Non-GAAP earnings were up 41% to $1.42 per share. Excluding the $0.21 per share contribution from our sales of generic LIPITOR, non-GAAP earnings per share were up 20% from last year. Adjusted EBITDA increased 37% to $330 million in the quarter. We also generated strong cash flow from operations during the quarter of approximately $200 million.

We had a number of highlights in each business segment. In our Global Generics business, we announced an agreement with Endo Pharmaceuticals to settle patent litigation related to Watson's generation version of Lidoderm. The agreement provides the date of certain launch of September 13 -- I'm sorry, September 15, 2013 pending FDA approval and eliminates any risk involving current, pending or future patent litigations surrounding the product.

We also launched 5 new products in the second quarter in the U.S., including generic VANCOCIN, and in third quarter, received approval for generic ARTHROTEC earlier than expected. We expect to launch this product in the fourth quarter.

Our International Generics business experienced the strongest quarter thus far, generating over $210 million in revenue as a result of the acquisitions of Ascent and Specifar and organic growth driven by new product launches in key markets.

In our Global Brands business, we launched Gelnique 3% and had continued strong sales of key promoted products, including RAPAFLO, Generess Fe and CRINONE.

The Phase III U.S. trial for Esmya is ongoing, and we expect the trial to be completed by late 2013. We also submitted the NDS for Esmya for the treatment of anemia associated with uterine fibroids in Canada.

We licensed Herceptin from Synthon and contributed the product our Amgen collaboration. This transaction demonstrates the flexibility of this partnership to make changes and to capitalize on opportunities to develop quality assets for introduction and market formation.

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