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Salix Pharmaceuticals Reports 3Q2012 Results

Stocks in this article: SLXP

Salix markets XIFAXAN ® (rifaximin) tablets 200 mg and 550 mg, MOVIPREP ® (PEG 3350, Sodium Sulfate, Sodium Chloride, Potassium Chloride, Sodium Ascorbate and Ascorbic Acid for Oral Solution), OSMOPREP ® (sodium phosphate monobasic monohydrate, USP and sodium phosphate dibasic anhydrous, USP) Tablets, APRISO ® (mesalamine) extended-release capsules 0.375 g, METOZOLV ® ODT (metoclopramide HCl), RELISTOR ® (methylnaltrexone bromide) Subcutaneous Injection, SOLESTA ®, DEFLUX ®, PEPCID ® (famotidine) for Oral Suspension, Oral Suspension DIURIL ® (Chlorothiazide), AZASAN ® (Azathioprine) Tablets, USP, 75/100 mg, ANUSOL-HC ® 2.5% (Hydrocortisone Cream, USP), ANUSOL-HC ® 25 mg Suppository (Hydrocortisone Acetate), PROCTOCORT ® Cream (Hydrocortisone Cream, USP) 1% and PROCTOCORT ® Suppository (Hydrocortisone Acetate Rectal Suppositories) 30 mg. Crofelemer, budesonide foam, RELISTOR ® , LUMACAN and rifaximin for additional indications are under development.

For full prescribing information and important safety information on Salix products, including BOXED WARNINGS for OSMOPREP, AZASAN and METOZOLV, please visit www.salix.com where the Company promptly posts press releases, SEC filings and other important information or contact the Company at 919 862-1000.

Salix trades on the NASDAQ Global Select Market under the ticker symbol “SLXP”.

For more information, please visit our Website at www.salix.com or contact the Company at 919-862-1000. Follow us on Twitter (@SalixPharma) and Facebook ( www.facebook.com/SalixPharma). Information on our Twitter feed, Facebook page and web site is not incorporated in our SEC filings.

Please Note: The materials provided herein contain projections and other forward–looking statements regarding future events. Such statements are just predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include, among others: the unpredictability of the duration and results of regulatory review of New Drug Applications and Investigational NDAs; generic and other competition in an increasingly global industry; litigation and the possible impairment of, or inability to obtain, intellectual property rights and the costs of obtaining such rights from third parties in an increasingly global industry; the cost, timing and results of clinical trials and other development activities involving pharmaceutical products; post-marketing approval regulation; market acceptance for approved products; revenue recognition and other critical accounting policies; and the need to acquire new products. The reader is referred to the documents that the Company files from time to time with the Securities and Exchange Commission.

Salix Pharmaceuticals, Ltd.    
Condensed Consolidated Statements of Operations
(In thousands, except per share data) Three Months Ended Nine Months Ended
  September 30, September 30, September 30, September 30,
2012 2011 2012 2011
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Net product revenues $ 185,132   $ 146,247   $ 537,271   $ 385,306  
 
Costs and Expenses:
Cost of products sold 26,471 24,056 93,918 67,884
Amortization of product rights and intangible assets 11,345 2,890 34,034 8,017
Research and development 32,819 24,814 86,677 85,294
Selling, general and administrative 61,543 41,439 187,266 132,786
Intangible asset impairment charge 41,600 - 41,600 -
Change in acquisition-related contingent consideration   (31,398 )   -     (31,398 )   -  
Total costs and expenses 142,380 93,199 412,097 293,981
 
Income from operations 42,752 53,048 125,174 91,325
Loss on extinguishment of debt - - (14,369 ) -
Interest expense (15,692 ) (8,080 ) (39,591 ) (23,932 )
Interest and other income   279     509     10,409     2,082  
Income before income tax 27,339 45,477 81,623 69,475
Income tax expense   10,803     11,198     35,000     15,671  
 
Net Income $ 16,536   $ 34,279   $ 46,623   $ 53,804  
 
Income per share, basic $ 0.28   $ 0.58   $ 0.79   $ 0.92  
Income per share, diluted $ 0.26   $ 0.55   $ 0.73   $ 0.89  
Shares used in computing net income per share, basic   58,755     59,076     58,671     58,573  
Shares used in computing net income per share, diluted   62,983     65,160     63,689     65,405  
 
Reconciliation of GAAP Amounts to Non-GAAP Amounts:
(In thousands, except per share data)
 

We are disclosing our non-GAAP Condensed Consolidated Statements of Operations, as adjusted, to eliminate the impact of the $10.0 million Lupin payment that occured in February 2011, the loss on extinguishment of debt and non-cash adjustments related to the repurchase of a portion of our 2028 Notes in March 2012, the intangible asset impairment charge and change in acquisition-related contingent consideration that occurred in September 2012, the difference between income taxes paid and income taxes expensed, and non-cash depreciation, amortization, stock-based compensation and convertible debt interest expenses that occured in the three-month and nine-month periods ended September 30, 2012 and 2011, respectively. We believe these non-GAAP measures might provide investors additional relevant information, in part for purposes of historical comparison. In addition, we use these non-GAAP measures to analyze our performance in more detail and with better historical comparability; however, you should be aware that non-GAAP measures are not superior to nor a substitute for the comparable GAAP measures. A reconciliation of our non-GAAP measures to the comparable GAAP measures follows.

 
 
Three Months Ended Three Months Ended
September 30, September 30, September 30, September 30, September 30, September 30,
2012 2012 - Non-GAAP Adjustments

2012- Non-GAAP

as adjusted

2011 2011 - Non-GAAP Adjustments

2011 - Non-GAAP

as adjusted

(unaudited) (unaudited) (unaudited)   (unaudited) (unaudited) (unaudited)
Revenues:
Net product revenues $ 185,132   $ -   $ 185,132   $ 146,247   $ -   $ 146,247  
 
Costs and Expenses:
Cost of products sold 26,471 - 26,471 24,056 - 24,056
Amortization of product rights and intangible assets 11,345 (11,345 ) - 2,890 (2,890 ) -
Research and development 32,819 (1,455 ) 31,364 24,814 (2,531 ) 22,283
Selling, general and administrative 61,543 (5,824 ) 55,719 41,439 (4,124 ) 37,315
Intangible asset impairment charge 41,600 (41,600 ) - - - -
Change in acquisition-related contingent consideration   (31,398 )   31,398     -     -     -     -  
Total costs and expenses 142,380 (28,826 ) 113,554 93,199 (9,545 ) 83,654
 
Income from operations 42,752 28,826 71,578 53,048 9,545 62,593
Loss on extinguishment of debt - - - - - -
Interest expense (15,692 ) 10,380 (5,312 ) (8,080 ) 4,882 (3,198 )
Interest and other income   279     -     279     509     -     509  
Income before income tax 27,339 39,206 66,545 45,477 14,427 59,904
Income tax expense   10,803     (3,969 )   6,834     11,198     -     11,198  
 
Net Income, as adjusted $ 16,536   $ 43,175   $ 59,711   $ 34,279   $ 14,427   $ 48,706  
 
Income per share, basic $ 0.28   $ 0.73   $ 1.02   $ 0.58   $ 0.24   $ 0.82  
Income per share, diluted $ 0.26   $ 0.69   $ 0.95   $ 0.55   $ 0.22   $ 0.77  
Shares used in computing net income per share, basic   58,755     58,755     58,755     59,076     59,076     59,076  
Shares used in computing net income per share, diluted   62,983     62,983     62,983     65,160     65,160     65,160  
 
Nine Months Ended Nine Months Ended
September 30, September 30, September 30, September 30, September 30, September 30,
2012 2012 - Non-GAAP Adjustments

2012- Non-GAAP

as adjusted

 

2011 2011 - Non-GAAP Adjustments

2011 - Non-GAAP

as adjusted

(unaudited) (unaudited) (unaudited)   (unaudited) (unaudited) (unaudited)
Revenues:
Net product revenues $ 537,271   $ -   $ 537,271   $ 385,306   $ -   $ 385,306  
 
Costs and Expenses:
Cost of products sold 93,918 - 93,918 67,884 - 67,884
Amortization of product rights and intangible assets 34,034 (34,034 ) - 8,017 (8,017 ) -
Research and development 86,677 (3,997 ) 82,680 85,294 (15,816 ) 69,478
Selling, general and administrative 187,266 (15,990 ) 171,276 132,786 (11,265 ) 121,521
Intangible asset impairment charge 41,600 (41,600 ) - - - -
Change in acquisition-related contingent consideration   (31,398 )   31,398     -     -     -     -  
Total costs and expenses 412,097 (64,223 ) 347,874 293,981 (35,098 ) 258,883
 
Income from operations 125,174 64,223 189,397 91,325 35,098 126,423
Loss on extinguishment of debt (14,369 ) 14,369 - - - -
Interest expense (39,591 ) 25,262 (14,329 ) (23,932 ) 14,334 (9,598 )
Interest and other income   10,409     (9,325 )   1,084     2,082     -     2,082  
Income before income tax 81,623 94,529 176,152 69,475 49,432 118,907
Income tax expense   35,000     (13,333 )   21,667     15,671     -     15,671  
 
Net Income, as adjusted $ 46,623   $ 107,862   $ 154,485   $ 53,804   $ 49,432   $ 103,236  
 
Income per share, basic $ 0.79   $ 1.84   $ 2.63   $ 0.92   $ 0.84   $ 1.76  
Income per share, diluted $ 0.73   $ 1.69   $ 2.43   $ 0.89   $ 0.76   $ 1.64  
Shares used in computing net income per share, basic   58,671     58,671     58,671     58,573     58,573     58,573  
Shares used in computing net income per share, diluted   63,689     63,689     63,689     65,405     65,405     65,405  
 
Salix Pharmaceuticals, Ltd.
Condensed Consolidated Balance Sheets
(In thousands) September 30, December 31,
2012 2011
(unaudited) (audited)
Assets
Cash and cash equivalents $ 775,903 $ 292,814
Accounts receivable, net 213,766 151,207
Inventory, net 71,654 49,205

Other assets

  759,578     819,743  
 
Total Assets $ 1,820,901   $ 1,312,969  
 
Liabilities and Stockholders' Equity
Accounts payable and other liabilities $ 1,288,306   $ 763,332  
Total liabilities 1,288,306 763,332
 
Common stock 59 59
Additional paid-in-capital 621,474 685,315
Other comprehensive loss 65 (111 )
Accumulated deficit   (89,003 )   (135,626 )
Total stockholders' equity   532,595     549,637  
 
Total Liabilities and Stockholders' Equity $ 1,820,901   $ 1,312,969  




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