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Warner Chilcott Ltd. Reports Operating Results (10-K)

February 24, 2012 | About:
10qk

10qk

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Warner Chilcott Ltd. (WCRX) filed Annual Report for the period ended 2011-12-31.

Warner Chil Plc has a market cap of $4.32 billion; its shares were traded at around $16.67 with a P/E ratio of 4.6 and P/S ratio of 1.5. Warner Chil Plc had an annual average earning growth of 43.7% over the past 5 years.
This is the annual revenues and earnings per share of WCRX over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of WCRX.


Highlight of Business Operations:

Total revenue in the year ended December 31, 2011 was $2,728 million, a decrease of $246 million, or 8%, over the year ended December 31, 2010. The decline was primarily due to a decrease in global ACTONEL revenues of $256 million, primarily due to the loss of exclusivity in Western Europe and a decrease in DOVONEX and TACLONEX net sales of $149 million as a result of LEO’s assumption of responsibility for the distribution of DOVONEX and TACLONEX on June 30, 2010. The decrease was offset, in part, by net sales growth in certain other products, primarily ENABLEX, LO LOESTRIN FE and LOESTRIN 24 FE, as compared to the prior year. Excluding ACTONEL revenues and DOVONEX and TACLONEX net sales in both years, total revenue in the year ended December 31, 2011 was $1,957 million, an increase of $159 million, or 9%, over the year ended December 31, 2010. Primarily as a result of the continued expected declines in global ACTONEL revenues (discussed more fully below), we expect our total revenue in 2012 to decrease as compared to 2011. In addition to the impact of transactions such as the LEO Transaction and ENABLEX Acquisition, period over period changes in the net sales of our products are a function of a number of factors including changes in: market demand, gross selling prices, sales-related deductions from gross sales to arrive at net sales and the levels of pipeline inventories of our products held by our direct and indirect customers. We use IMS Health, Inc. (“IMS”) estimates of filled prescriptions for our products as a proxy for market demand in the U.S.

SG&A expenses for the year ended December 31, 2011 were $924 million, a decrease of $166 million, or 15%, compared to the prior year. A&P expenses for the year ended December 31, 2011 increased $26 million, or 20%, versus the prior year, primarily due to advertising and other promotional expenses attributable to the launch of ATELVIA and LO LOESTRIN FE in the U.S. in early 2011. Selling and distribution expenses for the year ended December 31, 2011 decreased $62 million, or 11%, as compared to the prior year, primarily due to the decrease in Sanofi co-promotion expense of $71 million as a result of lower ACTONEL revenues in Western Europe and Canada and the April 2010 amendment to the Collaboration Agreement. Sanofi co-promotion expenses were $231 million under the Collaboration Agreement in the year ended December 31, 2011 compared to $302 million in the prior year. The decrease was offset, in part, by increases in promotional spending related primarily to the promotion of ATELVIA and LO LOESTRIN FE. G&A expenses for the year ended December 31, 2011 decreased $130 million, or 33%, as compared to the prior year. New G&A expenses in the year ended December 31, 2011, including $12 million relating to a Puerto Rican excise tax and $16 million relating to a pharmaceutical fee imposed on manufacturers resulting from U.S. healthcare reform legislation, were more than offset by operating savings resulting from the Western European restructuring and one-time costs incurred in the year ended December 31, 2010, including: (i) $22 million of consulting and other professional fees relating primarily to the PGP Acquisition, (ii) $23 million of consulting and other professional fees related to the system and other infrastructure initiatives to

Net sales of our oral contraceptive products increased $85 million, or 26%, in the year ended December 31, 2010, compared with the prior year. LOESTRIN 24 FE generated revenues of $342 million in the year ended December 31, 2010, an increase of 38%, compared with $248 million in the prior year. The increase in LOESTRIN 24 FE net sales was primarily due to an increase in filled prescriptions of 64% in the year ended December 31, 2010, as well as higher average selling prices compared to the prior year, offset in part by the impact of higher sales-related deductions primarily due to increased utilization of our customer loyalty cards. Net sales of our oral contraceptive product FEMCON FE were $42 million, a decrease of 16%, compared with $49 million in the prior year. Pursuant to a 2008 settlement agreement, Teva entered the U.S. market with a generic version of FEMCON FE in March 2011.

Cost of sales (excluding amortization) increased $173 million in the year ended December 31, 2010 compared with the prior year, due primarily to the 102% increase in product net sales. In addition, the increase in cost of sales was, in part, due to the impact of the purchase accounting inventory step-up that was recognized as a result of the PGP Acquisition of $106 million in the year ended December 31, 2010 as compared to $73 million in the year ended December 31, 2009. Cost of sales included approximately $149 million and $77 million in the years ended December 31, 2010 and 2009, respectively, related to DOVONEX and TACLONEX products distributed at nominal distributor margins under the LEO distribution agreement. The increases were offset, in part, by gains relating to the sale of certain inventories resulting from the LEO Transaction of $35 million and $34 million in the years ended December 31, 2010 and 2009, respectively. The increase in cost of sales was offset, in part, by an $18 million reduction in cost of sales in the year ended December 31, 2010 as a result of the

SG&A expenses for the year ended December 31, 2010 were $1,090 million, an increase of $654 million, or 150%, compared to the prior year primarily as a result of the PGP Acquisition on October 30, 2009. A&P expenses for the year ended December 31, 2010 increased $62 million, or 102%, versus the prior year, primarily due to advertising and other promotional expenses attributable to the PGP products. Selling and distribution expenses for the year ended December 31, 2010 increased $387 million, or 205%, over the prior year. The increase is primarily due to the Sanofi co-promotion expense of $302 million recognized under the Collaboration Agreement in the year ended December 31, 2010 compared to $99 million in the prior year, increased headcount resulting from the acquisition of the PGP sales force as well as other expenses related to the acquired PGP products. G&A expenses in the year ended December 31, 2010 increased $205 million, or 110%, as compared to the prior year. The increase is due in large part to increases in infrastructure costs, increases in compensation expenses and legal, consulting and other professional fees primarily relating to the PGP Acquisition and integration. Included in G&A expenses in the year ended December 31, 2010 were the following charges; (i) consulting and other professional fees relating to the PGP integration of $22 million, (ii) expenses payable to P&G under the Transition Services Agreement of $47 million, (iii) severance costs of $16 million and (iv) other integration expenses of $12 million. Included in G&A expenses in the year ended December 31, 2009 were $61 million of legal, consulting and other professional fees relating primarily to the PGP Acquisition, expenses payable to P&G under the Transition Services Agreement of $17 million and severance costs of $33 million.

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