Medicis Reports First Quarter Fiscal 2002 Financial Results
SCOTTSDALE, Ariz.--Oct. 18, 2001--Medicis Pharmaceutical Corporation (NYSE:MRX) today announced first quarter fiscal 2002 net income of $13.8 million, or $0.44 per diluted share, on net revenues of $45.5 million, versus first quarter fiscal 2001 comparative net income of $12.0 million, or $0.38 per diluted share, absent the first quarter fiscal 2001 tax-effected special charge of $11.5 million associated with a research project collaboration, on net revenues of $40.3 million. The Company reported gross margins of 83.2%, an increase in operating income of 28% (absent the special charge in the previous period) and net income margins of 30%. Cash flow from operations for the first quarter of fiscal 2002 was $18.4 million, an increase of 98%, compared to $9.3 million in the first quarter of fiscal 2001.
Strong first quarter fiscal 2002 operating results are attributable primarily to the growth of several of the Company's core prescription brands including LOPROX(R), PLEXION(TM), LUSTRA(R), OVIDE(R) and OMNICEF(R), the brand that provided the Company entrance into the skin and skin-structure infection market.
"We are pleased to announce another strong quarter driven by the continued growth of our core prescription brands," said Jonah Shacknai, Chairman and Chief Executive Officer of Medicis. "The strength of Medicis is evident in consistency of our earnings growth. Company fundamentals remain strong as we continue to execute our four-part growth strategy. We are enthusiastic about our future opportunities, including the planned entrance into new specialty markets, the expansion of our core dermatological franchise and the progress of business development and research pipeline projects."
Medicis previously released fiscal year 2002 revenue guidance of $192.0 million and earnings per share guidance of $1.88. The impact of the first quarter's results improve the fiscal year 2002 guidance to $193.5 million in revenue and $1.90 in earnings per share. Second quarter fiscal year 2002 (for the quarter ending December 31, 2001) revenue guidance of $46.0 million and earnings per share guidance of $0.45 remain unchanged. Assuming a January 2002 closing of the Ascent Pediatrics transaction announced by the companies in October 2001, Medicis expects to adjust its fiscal year 2002 earnings guidance upon the transaction's closing and anticipates raising estimates absent special charges associated with the transaction by approximately $0.03. Medicis is conducting an evaluation of the potential effect of certain in-process research and development projects included in the Ascent transaction, the potential effect of possible net operating loss carryforwards and the potential effect of the valuation of certain intangible assets. Any potential impact of these items is expected to be reported at the time of the transaction's closing date.
Medicis is evaluating the impact of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142) on the amortization of intangible assets. In the course of evaluating FAS 142, the Company performed various analyses on its trademarks and consulted with its Independent Auditors. In doing so, the Company determined that certain of its intangible assets had estimated lives in excess of those currently being used. While the Company has decided not to early adopt FAS 142, it has changed the estimated lives of certain of its intangible assets from periods ranging from 20 to 25 years to 40 years, which is the maximum period permitted under current accounting standards. The Company is continuing its evaluation of the impact of FAS 142 and will be required to adopt it in the next fiscal year beginning July 1, 2002. This change in the estimated lives of certain of the Company's intangible assets had the effect of reducing amortization expense by $360,212 and increasing diluted earnings per share by approximately $0.01 in the quarter ended September 2001. This change does not impact the Company's future guidance, as such amounts will be reinvested in the Company's research and development programs.
Medicis is the leading independent pharmaceutical company in the United States focusing primarily on the treatment of dermatological conditions. Medicis develops and markets leading products for major segments within dermatology, including acne, fungal infections, rosacea, hyperpigmentation, photoaging, psoriasis, eczema, skin and skin-structure infections, seborrheic dermatitis, head lice and cosmesis (improvement in the texture and appearance of skin). The Company's primary products include the prescription brands DYNACIN(R) (minocycline HCl), TRIAZ(R) (benzoyl peroxide), LUSTRA(R) (hydroquinone), LUSTRA-AF(R) (hydroquinone) with sunscreen, ALUSTRA(TM) (hydroquinone) with retinol, LOPROX(R) (ciclopirox), PLEXION(TM) (sodium sulfacetamide/sulfur), PLEXION TS(TM) (sodium sulfacetamide/sulfur), OMNICEF(R) (cefdinir), OVIDE(R) (malathion), LIDEX(R) (fluocinonide), SYNALAR(R) (fluocinolone acetonide), TOPICORT(R) (desoximetasone) and A/T/S(R) (erythromycin); the over-the-counter brand ESOTERICA(R); and BUPHENYL(R) (sodium phenylbutyrate), a prescription product indicated in the treatment of Urea Cycle Disorder.
Except for historical information, this press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act. All statements included in this press release that address activities, events or developments that Medicis expects, believes or anticipates will or may occur in the future are forward-looking statements. This includes completion of the proposed merger with Ascent Pediatrics, Inc., earnings estimates, future financial performance and other matters. These statements are based on certain assumptions made by Medicis based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Medicis. Any such projections or statements include the current views of Medicis with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that such results will be achieved and there are numbers or important factors that could cause actual results to differ materially from those projected, including the ability to consummate the transaction with Ascent, the ability of Medicis to successfully integrate Ascent's operations, the ability to realize anticipated synergies and benefits of the transaction, the risks and uncertainties normally incident to the pharmaceutical industry, dependence on sales of key products, the uncertainty of future financial results and fluctuations in operating results, dependence on Medicis' acquisition strategy, the timing and success of new product introductions and other risks described from time to time in Medicis' SEC filings including its Annual Report on Form 10-K for the year ended June 30, 2001. Forward-looking statements represent the judgment of Medicis' management as of the date of this release, and Medicis disclaims any intent or obligation to update any forward-looking statements.
NOTE: Full prescribing information for any Medicis or Ascent prescription product is available by contacting the Companies. OMNICEF(R) is a registered trademark of Abbott Laboratories, Inc. under a license from Fujisawa Pharmaceutical Co., Ltd. All other marks (or brands) and names are the property of Medicis Pharmaceutical Corporation or its Affiliates.
Medicis Pharmaceutical Corporation
(in thousands, except per share data)
Summary Statements of Operations
--------------------------------
(unaudited)
Three Months Ended
September 30,
-----------------------------
2001 2000
-----------------------------
Revenues $ 45,514 $ 40,254
Cost of sales 7,641 7,480
-------- --------
Gross profit 37,873 32,774
Operating expenses:
Selling, general and
administrative 16,275 15,164
Research and development 1,444 19,226(a)
Depreciation and amortization 1,916 1,939
-------- --------
Total operating expenses 19,635 36,329
-------- --------
Operating income (loss) 18,238 (3,555)
Interest income, net 2,548 4,357
Income tax expense (7,005) (285)
-------- --------
Net income $ 13,781 $ 517
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Basic net income per common
share $0.46 $0.02
===== =====
Diluted net income per common
share $0.44 $0.02
===== =====
Shares used in basic net income
per common share 30,253 29,645
Shares used in diluted net income
per common share 31,442 31,624
Cash flow from operations $ 18,441 $ 9,266
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Absent tax-effected adjustment for
special R&D charge of $11,473 in
fiscal 2001:
Net income $ 13,781 $ 11,991
======== ========
Basic net income per common share $0.46 $0.40
===== =====
Diluted net income per common share $0.44 $0.38
===== =====
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(a) Reported R&D expenses include special charge of $17,788 relating
to the Corixa collaboration.
Balance Sheets
--------------
At September 30, 2001 At June 30, 2001
--------------------- ----------------
(unaudited)
Assets
Cash, cash equivalents and
short-term investments $349,588 $334,157
Accounts receivable, net 37,796 36,526
Inventory, net 9,055 8,750
Other current assets 21,176 19,446
-------- --------
Total current assets 417,615 398,879
Property and equipment, net 1,949 1,964
Intangible assets, net 145,940 147,277
Other assets 68 576
-------- --------
Total assets $565,572 $548,696
======== ========
Liabilities and stockholders'
equity
Current liabilities $ 45,927 $ 40,410
Deferred tax liabilities 5,104 4,832
Long-term obligations --- ---
Stockholders' equity 514,541 503,454
-------- --------
Total liabilities and
stockholders' equity $565,572 $548,696
======== ========
Working capital $371,688 $358,469
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Contacts:
Medicis Pharmaceutical Corporation, Scottsdale
Libby Ivy, 602/808-3854
www.medicis.com