Pharmaceutical Resources ( PRX) will restate results back to 1998 after the SEC advised it to change its accounting for a stock-sale and distribution agreement. The restatement relates to a March 1998 agreement with Merck KgaA in which it sold the German firm 10.4 million shares and entered a product distribution pact. The SEC said the deal should have been booked as a single transaction instead of two separate ones. The company plans to value the distribution agreement at $29 million and record it as a balance sheet asset that it will amortize over 15 to 20 years, retroactive to 1998. In addition, Pharmaceutical Resources raised its third-quarter revenue and earnings to reflect reduction of an accrual for anticipated inventory price reductions.
Earnings Reports & Outlooks
Hollywood Entertainment ( HLYW) swung to a profit in the fourth quarter on growth in rental revenue. The company reported net income of $74.7 million, or $1.35 a share, compared with a year-earlier net loss of $455.5 million, or $9.85 a share. Hollywood posted fourth-quarter adjusted net income of $17.8 million, or 32 cents a share, beating the analyst estimate by 3 cents. The company said its results benefited mainly from the reversal of accruals for planned store closures and the recognition of deferred tax assets.
Mergers, Acquisitions & Joint Ventures
Cytyc ( CYTC) agreed to acquire Digene ( DIGE) for cash and stock worth $553.7 million. Cytyc will pay $76.9 million in cash and issue about 23 million common shares. The deal is expected to dilute Cytyc's 2002 earnings by 4 cents to 5 cents a share, and add to earnings in 2003 and beyond. The company expects to take a charge of up to $65 million, primarily to write off research and development. Sabre Holdings ( TSG) said it will offer to buy the outstanding shares of Travelocity ( TVLY) for $23 each, or $345 million cash. Travelocity, which is already about 70%-owned by Sabre, said it formed a special committee of its board to weigh the offer.
SG Cowen said physicians have told it that Protein Design's ( PDLI) Zenepax hasn't shown results to indicate that it can maintain remission in psoriasis patients. The brokerage reduced its revenue estimates for the company by $9.8 million this year and $95.7 million in 2003. SG Cowen also pushed out revenue related to Xolair to account for development delays.
Nextel's ( NXTL) NII Holdings plans to record restructuring charges of $1 billion to $2 billion as a result of its cash preservation initiatives and proposed debt restructuring. NII is in discussions with its various creditors regarding the restructuring its debt, which could include a sale of assets or reorganization under Chapter 11. NII Holdings is a wholly-owned indirect subsidiary of Nextel whose debt obligations are non-recourse to Nextel. Genta ( GNTA) initiated a multicenter trial of its lead antisense drug Genasense in combination with Rituxan for patients with non-Hodgkin's lymphoma. The trial will also examine Genasense with standard chemotherapy in patients with a highly aggressive form of NHL known as mantle cell lymphoma. Analogic ( ALOG) said its president and chief executive Thomas Miller resigned from the firm on Feb. 15. The company said in a statement that Executive Chairman Bernard Gordon will act as CEO until a successor to Miller is named. The company didn't explain why Miller left.