Warner Chilcott Ltd. (WCRX, Financial) filed Quarterly Report for the period ended 2010-03-31.
Warner Chilcott Ltd. has a market cap of $6.72 billion; its shares were traded at around $26.66 with a P/E ratio of 13.8 and P/S ratio of 4.7. WCRX is in the portfolios of Stanley Druckenmiller of Duquesne Capital Management, LLC, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Edward Owens of Vanguard Health Care Fund, Steven Cohen of SAC Capital Advisors, Chuck Royce of Royce& Associates.
The LEO Transaction resulted in a gain of $393.1 million (or $380.1 million, net of tax). During the third quarter of 2009, we recorded a deferred gain of $68.9 million relating to the sale of certain inventories to LEO in connection with the LEO Transaction. In the fourth quarter of 2009, we recognized $34.2 million of the deferred gain as a reduction to cost of sales ($33.5 million, net of tax). In the quarter ended March 31, 2010, we recognized $25.1 million of the deferred gain as a reduction to cost of sales ($24.6 million, net of tax). The
remaining $9.6 million of the deferred gain is expected to be recognized during the remainder of 2010 as we continue to distribute products for LEO under the distribution agreement. The aggregate gain from the LEO Transaction is expected to be $462.0 million ($447.6 million, net of tax).
Our investment in R&D for the quarter ended March 31, 2010 was $31.1 million, an increase of $7.2 million, or 30.5%, compared with $23.9 million in the prior year quarter. The quarter ended March 31, 2009 included $11.5 million of milestone payments including $9.0 million to Dong-A PharmTech Co. Ltd. (Dong-A), upon the achievement of a developmental milestone under our agreement for the development of an orally-administered udenafil product for the treatment of erectile dysfunction and $2.5 million to NexMed, Inc. (NexMed) in connection with our acquisition of NexMeds U.S. rights to its topically applied alprostadil cream. Excluding these milestone payments in 2009, R&D expenses increased $18.7 million. The increase in R&D expenses in the quarter ended March 31, 2010 relative to the prior year quarter was primarily due to costs incurred relating to ongoing clinical studies, the addition of R&D projects from PGP and higher costs associated with an increase in personnel and facilities.
Net interest expense for the quarter ended March 31, 2010 was $72.4 million, an increase of $54.4 million, or 301.8%, from $18.0 million in the prior year quarter. Included in net interest expense in the quarter ended March 31, 2010 was $19.6 million relating to the write-off of debt finance costs associated with the purchase and redemption of the remaining portion of our 8.75% senior subordinated notes due 2015 (the Notes) and with the optional prepayment of $400.0 million of indebtedness under our New Senior Secured Credit Facilities. Included in net interest expense in the quarter ended March 31, 2009 was $1.3 million relating to the write-off of debt finance costs associated with the optional prepayment of $100.0 million of indebtedness under our prior senior secured credit facilities (the Prior Senior Secured Credit Facilities). Excluding the write-off of debt finance costs, net interest expense increased $36.1 million. The increase in net interest expense in the quarter ended March 31, 2010 was primarily due to an increase in the amount of our outstanding indebtedness under our New Senior Secured Credit Facilities used to fund the PGP Acquisition relative to our total outstanding indebtedness in the prior year quarter.
Segment operating profit in North America was $64.3 million in the quarter ended March 31, 2010, compared to $69.6 million in the quarter ended March 31, 2009. ROW segment operating profit in the quarter ended March 31, 2010 was $35.3 million compared to zero in the quarter ended March 31, 2009. Segment operating profit in North America grew as a result of the factors described above. In the quarter ended March 31, 2010, we recognized $71.0 million and $34.5 million in North America and the ROW, respectively, as a charge in the cost of sales relating to the inventory step-up from the PGP Acquisition.
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Warner Chilcott Ltd. has a market cap of $6.72 billion; its shares were traded at around $26.66 with a P/E ratio of 13.8 and P/S ratio of 4.7. WCRX is in the portfolios of Stanley Druckenmiller of Duquesne Capital Management, LLC, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Edward Owens of Vanguard Health Care Fund, Steven Cohen of SAC Capital Advisors, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
On October 30, 2009, pursuant to the purchase agreement dated August 24, 2009 (as amended, the Purchase Agreement), between the Company and The Procter & Gamble Company (P&G), we acquired the global branded prescription pharmaceutical business (PGP) for $2,919.3 million in cash and the assumption of certain liabilities (the PGP Acquisition). The purchase price is subject to certain post-closing adjustments. Under the terms of the Purchase Agreement, we acquired P&Gs portfolio of branded pharmaceutical products, prescription drug pipeline, manufacturing facilities in Puerto Rico and Germany and a net receivable owed from P&G of approximately $60.0 million. The total purchase price of $2,919.3 million was allocated to the estimated fair value of the assets acquired and liabilities assumed as of the date of the PGP Acquisition. The purchase price allocation as of March 31, 2010 is considered preliminary pending completion of the final valuation. In order to fund the consideration for the PGP Acquisition, certain of our subsidiaries entered into the New Senior Secured Credit Facilities, comprised of $2,950.0 million in aggregate term loan facilities and a $250.0 million revolving credit facility. On October 30, 2009, the Company borrowed $2,600.0 million of the aggregate $2,950.0 million of term loan facilities to finance the PGP Acquisition. The PGP Acquisition was accounted for as a business combination using the acquisition method of accounting. The results of operations of PGP since October 30, 2009 have been included in the Companys condensed consolidated statement of operations.The LEO Transaction resulted in a gain of $393.1 million (or $380.1 million, net of tax). During the third quarter of 2009, we recorded a deferred gain of $68.9 million relating to the sale of certain inventories to LEO in connection with the LEO Transaction. In the fourth quarter of 2009, we recognized $34.2 million of the deferred gain as a reduction to cost of sales ($33.5 million, net of tax). In the quarter ended March 31, 2010, we recognized $25.1 million of the deferred gain as a reduction to cost of sales ($24.6 million, net of tax). The
remaining $9.6 million of the deferred gain is expected to be recognized during the remainder of 2010 as we continue to distribute products for LEO under the distribution agreement. The aggregate gain from the LEO Transaction is expected to be $462.0 million ($447.6 million, net of tax).
Our investment in R&D for the quarter ended March 31, 2010 was $31.1 million, an increase of $7.2 million, or 30.5%, compared with $23.9 million in the prior year quarter. The quarter ended March 31, 2009 included $11.5 million of milestone payments including $9.0 million to Dong-A PharmTech Co. Ltd. (Dong-A), upon the achievement of a developmental milestone under our agreement for the development of an orally-administered udenafil product for the treatment of erectile dysfunction and $2.5 million to NexMed, Inc. (NexMed) in connection with our acquisition of NexMeds U.S. rights to its topically applied alprostadil cream. Excluding these milestone payments in 2009, R&D expenses increased $18.7 million. The increase in R&D expenses in the quarter ended March 31, 2010 relative to the prior year quarter was primarily due to costs incurred relating to ongoing clinical studies, the addition of R&D projects from PGP and higher costs associated with an increase in personnel and facilities.
Net interest expense for the quarter ended March 31, 2010 was $72.4 million, an increase of $54.4 million, or 301.8%, from $18.0 million in the prior year quarter. Included in net interest expense in the quarter ended March 31, 2010 was $19.6 million relating to the write-off of debt finance costs associated with the purchase and redemption of the remaining portion of our 8.75% senior subordinated notes due 2015 (the Notes) and with the optional prepayment of $400.0 million of indebtedness under our New Senior Secured Credit Facilities. Included in net interest expense in the quarter ended March 31, 2009 was $1.3 million relating to the write-off of debt finance costs associated with the optional prepayment of $100.0 million of indebtedness under our prior senior secured credit facilities (the Prior Senior Secured Credit Facilities). Excluding the write-off of debt finance costs, net interest expense increased $36.1 million. The increase in net interest expense in the quarter ended March 31, 2010 was primarily due to an increase in the amount of our outstanding indebtedness under our New Senior Secured Credit Facilities used to fund the PGP Acquisition relative to our total outstanding indebtedness in the prior year quarter.
Segment operating profit in North America was $64.3 million in the quarter ended March 31, 2010, compared to $69.6 million in the quarter ended March 31, 2009. ROW segment operating profit in the quarter ended March 31, 2010 was $35.3 million compared to zero in the quarter ended March 31, 2009. Segment operating profit in North America grew as a result of the factors described above. In the quarter ended March 31, 2010, we recognized $71.0 million and $34.5 million in North America and the ROW, respectively, as a charge in the cost of sales relating to the inventory step-up from the PGP Acquisition.
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