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Teva Reports Second Quarter 2012 Results

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Net Revenues Total $5.0 Billion, up 19%

GAAP EPS of $0.99, up 55%; Non-GAAP EPS of $1.28, up 16%

JERUSALEM--(BUSINESS WIRE)--Aug. 2, 2012-- Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) today reported results for the quarter ended June 30, 2012.

Highlights:

  • Net revenues of $5.0 billion, compared to $4.2 billion in the second quarter of 2011, an increase of 19%.
  • Net revenues organic growth of 3% compared to the second quarter of 2011, and 7% excluding the effect of generic competition on Provigil®.
  • GAAP net income and GAAP diluted EPS of $863 million and $0.99, an increase of 50% and 55%, respectively, compared to $576 million and $0.64 in the second quarter of 2011. Non-GAAP operating income of $1.4 billion, an increase of 27% compared to $1.1 billion in the second quarter of 2011.
  • Non-GAAP net income and Non-GAAP diluted EPS of $1.1 billion and $1.28, an increase of 14% and 16%, respectively, compared to $1.0 billion and $1.10 diluted EPS in the second quarter of 2011.
  • Cash flow from operations of $1.2 billion and free cash flow of $709 million.
  • Company reaffirms full year 2012 guidance.

"This was a significant quarter for Teva as we remain on track to reach our financial goals for the year," stated Dr. Jeremy Levin, Teva's President and CEO. "The U.S. generics business continued to recover with a positive trend, our global branded division experienced strong growth, and our European generics business, while down from last year's second quarter results due to macroeconomic conditions, showed solid sequential growth from the first quarter of this year. Overall, we continue to see tremendous opportunities ahead, and look forward to rebuilding shareholder value over time."

Revenues by Geography for the Second Quarter 20121

Net revenues in the United States in the second quarter were $2.5 billion (representing 49% of total revenues), an increase of 28% compared to the second quarter of 2011, primarily as a result of strong revenues of both our generic medicines, including the launch of four new medicines, and our branded medicines, as well as the inclusion of Cephalon.

Net revenues in Europe in the second quarter were $1.5 billion (representing 30% of total revenues), unchanged compared to the second quarter of 2011, and an increase of 12% in local currency terms. Revenues in Europe this quarter benefited from the inclusion of Cephalon's revenues as well as stronger revenues from some of our branded medicines, primarily Copaxone®. We grew our revenues in several markets in Europe, including Italy and Spain, where revenues in local currency terms increased approximately 10% and 6%, respectively. These positives were offset by the negative effect on our revenues of foreign currencies (primarily declines in the value of the euro and Hungarian forint), and to a lesser extent by lower generics sales due to ongoing macro-economic conditions and healthcare reforms in key European markets.

Net revenues in the Rest of the World (ROW) in the second quarter totaled $1.1 billion (representing 21% of total revenues), up 30% compared to the second quarter of 2011. In local currency terms, ROW revenues grew by 36%. The growth in revenues resulted primarily from sales in Russia and other Eastern European countries, Latin America and Israel, as well as from the inclusion of Cephalon and Taiyo, our Japanese acquisition.

  Three Months Ended

June 30,

 

Percentage
Change
2012 from 2011

 

Percentage
Change
2012 from 2011

2012   2011   % of 2012   % of 2011
U.S. $ in millions in local currencies
United States:
Generic $ 1,054 $ 908 21% 22% 16% 16%
Branded 1,365 1,009 27% 24% 35% 35%
Others   45   1 1% §
Total United States 2,464 1,918 49% 46% 28% 28%
Europe*:
Generic 884 999 18% 24% (12%) (1%)
Branded 402 275 8% 6% 46% 63%
Others   187   204 4% 5% (8%) 9%
Total Europe 1,473 1,478 30% 35% § 12%
Rest of the World:
Generic 676 497 13% 12% 36% 40%
Branded 182 140 4% 3% 30% 45%
Others   199   179 4% 4% 11% 19%
Total Rest of the World   1,057   816 21% 19% 30% 36%
Total Revenues $ 4,994 $ 4,212 100% 100% 19% 24%
 
*All members of the European Union as well as Switzerland and Norway.
§ Less than 0.5%
ℓ Over 100%

Revenues by Product Line for the Second Quarter 2012

Generic medicines net revenues in the second quarter were $2.6 billion (including API sales to third parties of $200 million), an increase of 9% compared to $2.4 billion in the second quarter of 2011. Generics revenues consisted of:

  • U.S. revenues of $1.1 billion, an increase of 16% compared to the second quarter of 2011. The U.S. generics business benefited from the launch of four new generic medicines during the quarter, as well as continued benefits from first quarter launches which included several medicines that were either exclusive or semi-exclusive or otherwise had limited competition. Medicines launched in the first quarter included generic versions of Lexapro®, Provigil®, Prometrium®, Avalide®, Avapro®, Seroquel® and Zyprexa®.
  • European revenues of $884 million, a decrease of 12%, or only 1% in local currency terms, compared to the second quarter of 2011. The slight decrease year over year, despite continued economic and regulatory pressures in some key markets in Europe, demonstrates our balanced and diversified business model in the region and the contribution of Mepha. Compared to the first quarter of 2012, our revenues this quarter increased 14% due to several successful multi-country launches, including generic versions of Lipitor® and Atacand®, and overall improved performance.
  • ROW revenues of $676 million, an increase of 36%, or 40% in local currency terms, compared to the second quarter of 2011. The ROW generics business had a strong quarter in Eastern Europe and Latin America, coupled with the inclusion of Taiyo in Japan, and slightly offset by a decrease in generics sales in Canada and the negative effect of foreign currencies.
  Three Months Ended June 30,     Percentage Change
2012 from 2011
2012   2011 % of 2012   % of 2011
U.S. $ in millions
 
Generic Medicines 2,614 2,404 52% 57% 9%
API 200 183 4% 4% 9%

Branded medicines net revenues in the second quarter were $1.9 billion, an increase of 37% compared to $1.4 billion in the second quarter of 2011. Branded revenues consist of:

  • U.S. revenues of $1.4 billion, an increase of 35% compared to the second quarter of 2011.
  • European revenues of $402 million, an increase of 46%, or 63% in local currency terms compared to the second quarter of 2011.
  • ROW revenues of $182 million, an increase of 30%, or 45% in local currency terms compared to the second quarter of 2011.

Branded revenues comprised 39% of total revenues in the quarter, compared to 34% in the second quarter of 2011.

The increase in branded medicines revenues over the second quarter of 2011 was primarily due to the inclusion of Cephalon's sales (mainly Treanda® with $139 million, and Nuvigil® with $91 million) and strong sales of Teva medicines. Sales of Provigil® declined substantially to $48 million this quarter due to the introduction of generic competition.

Global revenues recorded by Teva on Copaxone®, the leading multiple sclerosis therapy in the U.S. and globally, increased 12% to $982 million compared to $877 million in the second quarter of 2011. In local currency terms, Copaxone® revenues increased 16% year over year. The increase is primarily due to Teva recording a first full quarter of sales since the completion of the successful take-back of distribution and marketing rights from Sanofi in Europe, as well as increased sales in ROW. In the U.S., sales increased 3% to $701 million, as a result of a price increase in the first quarter of 2012. Sales outside the U.S. were $281 million, an increase of 44%, or 62% in local currency terms, compared to the second quarter of 2011, mainly as a result of the take back and sales in Russia.

During the quarter there were favorable court rulings in both the U.S. and U.K. which should ensure protection of Copaxone® from generic competition until September 2015. In addition, the recently-presented positive results from the Phase III GALA trial (40mg administered three times per week) demonstrate both a potential alternate dosing regimen and Teva's commitment to improving the patient experience. We expect an FDA submission of the Phase III GALA results in the first quarter of 2013. Azilect® revenues recorded by Teva increased 36% to $95 million, while global in-market revenues increased 11% to $108 million, primarily because of strong sales in the U.S., France and the U.K.

  Three Months Ended June 30,     Percentage Change
2012 from 2011
2012   2011 % of 2012   % of 2011
U.S. $ in millions
 
Branded Medicines 1,949 1,424 39% 34% 37%
CNS 1,309 947 27% 22% 38%
Copaxone® 982 877 20% 21% 12%
Provigil® 48 - 1% - -
Azilect® 95 70 2% 2% 36%
Nuvigil® 91 - 2% - -
Respiratory 209 210 4% 5% §
ProAir™ 87 77 2% 2% 13%
Qvar® 80 90 2% 2% (11%)
Women's Health 112 119 2% 3% (6%)
Oncology 198 27 4% 1%
Treanda® 139 - 3% - -
Other Branded 121 121 2% 3% 0%
 
§ Less than 0.5%
ℓ Over 100%

OTC net revenues in the quarter were $219 million, an increase of 21%, or 31% in local currency terms, compared to $181 million in the second quarter of 2011 primarily due to sales to P&G.

Other net revenues in the quarter were $212 million, mostly from the distribution of third party medicines in Israel and Hungary, compared to $203 million in the second of 2011.

  Three Months Ended June 30,     Percentage Change
2012 from 2011
2012   2011 % of 2012   % of 2011
U.S. $ in millions
 
All Others 431 384 9% 9% 12%
OTC 219 181 5% 4% 21%
Other Revenues 212 203 4% 5% 4%

Key Metrics for the Second Quarter 2012

Exchange rate differences between this quarter and the second quarter of 2011 reduced our revenues by approximately $236 million, while having a minor negative impact on operating income. The impact on revenues resulted primarily from the weakening of certain currencies (primarily the euro, Hungarian forint and Russian ruble) relative to the U.S. dollar.

Non-GAAP Information Non-GAAP net income and non-GAAP EPS for the quarter are adjusted to exclude the following items:

  • Amortization of purchased intangible assets totaling $275 million, of which $267 million is included in cost of goods sold and the remaining $8 million in selling and marketing expenses;
  • Costs related to regulatory actions taken in facilities of $40 million, which relates primarily to our injectables and animal health plants;
  • Inventory step-up of $7 million in connection with the Cephalon acquisition;
  • Impairment of long-lived assets of $8 million;
  • Acquisitions, restructuring and other expenses of $48 million related primarily to the Cephalon and Taiyo acquisitions;
  • Legal settlement benefits of $1 million; and
  • Related tax benefits of $123 million.

Teva believes that excluding such items facilitates investors' understanding of the Company's business. See the attached tables for a reconciliation of our GAAP results to the adjusted non-GAAP figures.

GAAP net income and GAAP EPS were $863 million and $0.99 in the quarter, an increase of 50% and 55%, respectively, compared to $576 million and $0.64 in the second quarter of 2011.

Quarterly non-GAAP operating income of $1.4 billion, up 27% compared to the second quarter of 2011. Quarterly GAAP operating income totaled $1.0 billion, an increase of 69% compared to $597 million in the second quarter of 2011.

Non-GAAP gross profit margin was 59.5% in the quarter, compared to 57.3% in the second quarter of 2011. This reflects the increase in the contribution from branded medicines, primarily due to the integration of Cephalon, and the new launches in the U.S., slightly offset by the decrease in generics sales in Europe. GAAP gross profit margin was 53.2% in the quarter, compared to 52.2% in the second quarter of 2011.

Net Research & Development (R&D) expenditures in the quarter totaled $298 million, or 6.0% of revenues, compared to $243 million, or 5.8% of revenues in the second quarter of 2011. The increase in R&D spending primarily reflects the inclusion of Cephalon. Gross R&D in the second quarter of 2012, before reimbursement from third parties for certain R&D expenses, totaled approximately $329 million, or 6.6% of revenues.

Selling and Marketing expenditures (excluding amortization of purchased intangible assets) totaled $973 million, or 19.5% of revenues, in the quarter, compared to $794 million, or 18.9% of revenues in the second quarter of 2011. The increase was primarily due to the inclusion of Cephalon and Taiyo and the take-back of Copaxone® in Europe, partially offset by exchange rate differences and lower royalty payments made on generic medicines in the U.S.

General and Administrative (G&A) expenditures totaled $316 million in the quarter, or 6.3% of revenues, compared with $284 million, or 6.7% of revenues, for the second quarter of 2011. The increase in expenditures was primarily due to the inclusion of Cephalon as well as Taiyo.

Non-GAAP net financial expense in the second quarter of 2012 totaled $97 million, compared with financial income of $20 million in the second quarter of 2011. The increase is mainly due to higher interest expenses resulting from the additional debt assumed in connection with the acquisitions of Cephalon and Taiyo, as well as from higher hedging costs.

The non-GAAP tax provision for the second quarter of 2012 amounted to $162 million on pre-tax non-GAAP income of $1.3 billion. The provision for tax in the second quarter of 2011 was

$113 million on pre-tax income of $1.1 billion. We expect a slightly higher annual tax rate for 2012 compared to the annual tax rate in 2011, primarily as a result of the change in geographical and product mix following the Cephalon acquisition.

Cash flow from operations during the quarter was $1.2 billion, compared to $1.3 billion in the second quarter of 2011, a decrease of 10%. Free cash flow, excluding net capital expenditures and dividends was $709 million, a decrease of 21%. The decrease is primarily because cash flow in the second quarter of 2011 was atypically high. Cash and marketable securities on June 30, 2012 amounted to $1.8 billion.

During the quarter, share repurchases totaled approximately 3.5 million shares for an aggregate purchase price of approximately $134 million. Since the beginning of 2012, Teva has repurchased 15.4 million shares for approximately $667 million as part of the $3.0 billion share repurchase plan that was authorized in December 2011. As a result of the repurchases, the fully diluted share count has been reduced by approximately eight million shares from December 31, 2011 to June 30, 2012.

For the second quarter of 2012, the weighted average share count for the fully diluted earnings per share calculation was 873 million on both a GAAP and Non-GAAP basis. At June 30, 2012, the share count for calculating Teva's market capitalization was approximately 868 million.

Total equity at June 30, 2012, was $22.9 billion, a decrease of $0.3 billion, compared to $23.2 billion at March 31, 2012. The decrease in total equity is primarily a result of currency translation adjustments, share repurchases and dividends paid, partially offset by GAAP net income of $863 million.

Dividend

The Board of Directors, at its meeting on July 31, 2012, declared a cash dividend for the second quarter of 2012 of NIS 1.00 (approximately 25.0 cents according to the rate of exchange on July 31, 2012) per share.

The record date will be August 15, 2012, and the payment date will be September 9, 2012. Tax will be withheld at a rate of 16%.

Conference Call

Teva will host a conference call to discuss its second quarter 2012 results on Thursday, August 2, 2012, at 8:00 a.m. EDT. The call will be webcast and can be accessed through the Company's website at http://www.tevapharm.com, or by dialing in to 888.713.4205 (U.S. and Canada) or 617.213.4862 (International). The conference ID is 68430667. Following the conclusion of the call, a replay of the webcast will be available within 24 hours at the Company's website at http://www.tevapharm.com. A replay of the call will also be available until August 9, 2012, at 11:59 p.m. ET, by calling 888.286.8010 (U.S. and Canada) or 617.801.6888 (International). The Conference ID is 26396486.

About Teva

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) is a leading global pharmaceutical company, committed to increasing access to high-quality healthcare by developing, producing and marketing affordable generic drugs as well as innovative and specialty pharmaceuticals and active pharmaceutical ingredients. Headquartered in Israel, Teva is the world's leading generic drug maker, with a global product portfolio of more than 1,300 molecules and a direct presence in about 60 countries. Teva's branded businesses focus on CNS, oncology, pain, respiratory and women's health therapeutic areas as well as biologics. Teva currently employs approximately 46,000 people around the world and reached $18.3 billion in net revenues in 2011.

Teva's Safe Harbor Statement under the U. S. Private Securities Litigation Reform Act of 1995:

The following discussion and analysis contains forward-looking statements, which express the current beliefs and expectations of management. Such statements involve a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: our ability to develop and commercialize additional pharmaceutical medicines, competition from the introduction of competing generic equivalents and due to increased governmental pricing pressures, the effects of competition on sales of our innovative medicines, especially Copaxone® (including competition from innovative orally-administered alternatives as well as from potential generic equivalents), potential liability for sales of generic medicines prior to a final resolution of outstanding patent litigation, including that relating to our generic version of Protonix®, the extent to which we may obtain U.S. market exclusivity for certain of our new generic medicines, the extent to which any manufacturing or quality control problems damage our reputation for high quality production and require costly remediation, our ability to identify, consummate and successfully integrate acquisitions (including the acquisition of Cephalon), our ability to achieve expected results through our innovative R&D efforts, dependence on the effectiveness of our patents and other protections for innovative medicines, intense competition in our specialty pharmaceutical businesses, uncertainties surrounding the legislative and regulatory pathway for the registration and approval of biotechnology-based medicines, our potential exposure to product liability claims to the extent not covered by insurance, any failures to comply with the complex Medicare and Medicaid reporting and payment obligations, our exposure to currency fluctuations and restrictions as well as credit risks, the effects of reforms in healthcare regulation and pharmaceutical pricing and reimbursement, adverse effects of political instability and adverse economic conditions, major hostilities or acts of terrorism on our significant worldwide operations, increased government scrutiny in both the U.S. and Europe of our agreements with brand companies, interruptions in our supply chain or problems with our information technology systems that adversely affect our complex manufacturing processes, the impact of continuing consolidation of our distributors and customers, the difficulty of complying with U.S. Food and Drug Administration, European Medicines Agency and other regulatory authority requirements, potentially significant impairments of intangible assets and goodwill, potential increases in tax liabilities resulting from challenges to our intercompany arrangements, the termination or expiration of governmental programs or tax benefits, any failure to retain key personnel or to attract additional executive and managerial talent, environmental risks, and other factors that are discussed in our Annual Report on Form 20-F for the year ended December 31, 2011, in this report and in our other filings with the U.S. Securities and Exchange Commission ("SEC"). Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statements or other information contained in this report, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures we make in our reports to the SEC on Form 6-K. Also note that we provide a cautionary discussion of risks and uncertainties under "Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2011. These are factors that we believe could cause our actual results to differ materially from expected results. Other factors besides those listed could also adversely affect us. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.

1 For a full analysis of our quarterly revenues by geography and by product line, beginning in Q4 2010, please visit our website at www.ir.tevapharm.com

Consolidated Statements of Income

(Unaudited, U.S. dollars in millions, except share and per share data)

 
  Three months ended   Six months ended
June 30, June 30,
2012   2011 2012   2011
Net revenues 4,994 4,212 10,096

8,292

 

Cost of sales 2,337   2,012   4,830   3,904  
Gross profit 2,657 2,200 5,266 4,388
Research and development expenses - net 298 243 590 482
Selling and marketing expenses 981 804 1,909 1,636
General and administrative expenses 316 284 628 505
Legal settlements, acquisition, restructuring and other expenses and impairment 55   272   204   301  
Operating income 1,007 597 1,935 1,464
Financial expenses (income) - net 97   (20 ) 167   18  
Income before income taxes 910 617 1,768 1,446
Provision for income taxes 39 27 30 76
Share in losses of associated companies - net 12   10   24   25  
Net income 859 580 1,714 1,345
Net income (loss) attributable to non-controlling interests (4 ) 4   (8 ) 8  
Net income attributable to Teva 863   576   1,722   1,337  
 
Earnings per share attributable to Teva: Basic ($) 0.99   0.65   1.97   1.49  
Diluted ($) 0.99   0.64   1.96   1.49  
Weighted average number of shares (in millions): Basic 871   892   876   895  
Diluted 873   896   878   899  
                   
Non-GAAP net income attributable to Teva:* 1,117   984   2,417   1,920  
 
Non-GAAP earnings per share attributable to Teva: Basic ($) 1.28   1.10   2.76   2.15  
Diluted ($) 1.28   1.10   2.75   2.14  
 
Weighted average number of shares (in millions): Basic 871   892   876   895  
Diluted 873   896   878   899  
 
 
* See reconciliation attached.
 

Condensed Balance Sheets

(U.S. dollars in millions)

 
  June 30,   December 31,
2012 2011
ASSETS Unaudited Audited
Current assets:
Cash and cash equivalents

1,188

 

1,096

 

Accounts receivable 5,430 6,213
Inventories 5,293 5,012
Deferred taxes and other current assets 2,314   2,132  
Total current assets 14,225 14,453
Long-term investments and receivables 1,115 991
Deferred taxes, deferred charges and other assets 112 142
Property, plant and equipment, net 6,082 5,947
Identifiable intangible assets, net 8,978 10,316
Goodwill 18,369   18,293  
Total assets 48,881   50,142  
 
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities of long term liabilities 889 3,749
Convertible senior debentures - short term 531 531
Sales reserves and allowances 4,603 4,428
Accounts payable and accruals 3,022 3,572
Other current liabilities 960   1,396  
Total current liabilities 10,005 13,676
Long-term liabilities:
Deferred income taxes 2,041 2,610
Other taxes and long term payables 1,317 1,277
Senior notes and loans 12,625   10,236  
Total long term liabilities 15,983 14,123
Equity:
Teva shareholders' equity 22,751 22,195
Non-controlling interests 142   148  
Total equity 22,893   22,343  
Total liabilities and equity 48,881   50,142  
 

 

Condensed Cash Flow

 

(Unaudited, U.S. Dollars in millions)

 

Three months ended   Six months ended
June 30, June 30,
2012   2011 2012   2011
Operating activities:
Net income 859 580 1,714 1,345
Net change in operating assets and liabilities (64 ) 613 (345 ) 590
Items not involving cash flow 396 131 578 289
       
Net cash provided by operating activities 1,191 1,324 1,947 2,224
 
Net cash used in investing activities (282 ) (240 ) (476 ) (916 )
 
Net cash used in financing activities (761 ) (684 ) (1,374 ) (1,454 )
 
Translation adjustment on cash and cash equivalents (22 ) 18 (5 ) 37
       
Net change in cash and cash equivalents 126 418 92 (109 )
 
Balance of cash and cash equivalents at the beginning of period 1,062 721 1,096 1,248
       
Balance of cash and cash equivalents at the end of period 1,188   1,139   1,188   1,139  
 
    Revenues by Geographic Area
(Unaudited)
               
 

Three Months

Ended June 30,

 

Percentage

Change

Percentage

Change

  2012   2011 % of 2012 % of 2011 2012 from 2011 2012 from 2011
U.S. $ in millions in local currencies
United States:
Generic $ 1,054 $ 908 21% 22% 16% 16%
Branded 1,365 1,009 27% 24% 35% 35%
Others   45   1 1% §
Total United States 2,464 1,918 49% 46% 28% 28%
Europe*:
Generic 884 999 18% 24% (12%) (1%)
Branded 402 275 8% 6% 46% 63%
Others   187   204 4% 5% (8%) 9%
Total Europe 1,473 1,478 30% 35% § 12%
Rest of the World:
Generic 676 497 13% 12% 36% 40%
Branded 182 140 4% 3% 30% 45%
Others   199   179 4% 4% 11% 19%
Total Rest of the World   1,057   816 21% 19% 30% 36%
Total Revenues $ 4,994 $ 4,212 100% 100% 19% 24%
 
*All members of the European Union as well as Switzerland and Norway.
§ Less than 0.5%
    Revenues by Geographic Area
  (Unaudited)
             

 

Six Months Ended June 30, Percentage Change Percentage Change
  2012   2011 % of 2012 % of 2011 2012 from 2011 2012 from 2011
U.S. $ in millions

 

in local currencies
United States:
Generic $ 2,273 $ 1,852 22% 22% 23% 23%
Branded 2,862 1,944 28% 23% 47% 47%
Others   81   4 1% §
Total United States 5,216 3,800 51% 45% 37% 37%
Europe*:  
Generic 1,659 1,911 16% 23% (13%) (6%)
Branded 767 530 8% 6% 45% 56%
Others   363   381 4% 5% (5%) 9%
Total Europe 2,789 2,822 28% 34% (1%) 8%
Rest of the World:
Generic 1,299 976 13% 12% 33% 35%
Branded 394 301 4% 4% 31% 41%
Others   398   393 4% 5% 1% 7%
Total Rest of the World   2,091   1,670 21% 21% 25% 29%
Total Revenues $ 10,096 $ 8,292 100% 100% 22% 26%
 
*All members of the European Union as well as Switzerland and Norway.
§ Less than 0.5%
Revenues by Product line
(Unaudited)
 
 

Three Months Ended

   

Percentage

June 30,

Change

2012 from

2012   2011 % of 2012 % of 2011

2011

U.S. $ in millions
 
Generic Medicines 2,614 2,404 52% 57% 9%
API 200 183 4% 4% 9%
Branded Medicines 1,949 1,424 39% 34% 37%
CNS 1,309 947 27% 22% 38%
Copaxone® 982 877 20% 21% 12%
Provigil® 48 - 1% - -
Azilect® 95 70 2% 2% 36%
Nuvigil® 91 - 2% - -
Respiratory 209 210 4% 5% §
ProAir™ 87 77 2% 2% 13%
Qvar® 80 90 2% 2% (11%)
Women's Health 112 119 2% 3% (6%)
Oncology 198 27 4% 1% 633%
Treanda® 139 - 3% - -
Other Branded 121 121 2% 3% 0%
All Others 431 384 9% 9% 12%
OTC 219 181 5% 4% 21%
Other Revenues 212 203 4% 5% 4%
Total 4,994 4,212 100% 100% 19%
 
§ Less than 0.5%
 
Revenues by Product line
(Unaudited)
 
 

Six Months Ended

     

Percentage

June 30,

Change

 

2012 from

2012 2011 % of 2012 % of 2011

2011

U.S. $ in million
 
Generic Medicines. 5,231 4,739 52% 57% 10%
API 399 367 4% 4% 9%
Branded Medicines. 4,023 2,775 40% 34% 45%
CNS 2,758 1,851 27% 22% 49%
Copaxone® 1,891 1,715 19% 21% 10%
Provigil® 339 - 3% -
Azilect® 167 136 2% 2% 23%
Nuvigil® 175 - 2% -
Respiratory 399 393 4% 5% 2%
ProAir™ 177 178 2% 2% (1%)
Qvar® 143 145 1% 2% (1%)
Women's Health 220 222 2% 3% (1%)
Oncology 406 49 4% 1% 729%
Treanda® 287 - 3% -
Other Branded 240 260 3% 3% (8%)
All Others 842 778 8% 9% 8%
OTC 415 365 4% 4% 14%
Other Revenues 427 413 4% 5% 3%
Total 10,096 8,292 100% 100% 22%
 

Non GAAP reconciliation items

(Unaudited, U.S. Dollars in millions)

 
  Three months ended   Six months ended
June 30, June 30,
2012   2011 2012   2011
Amortization of purchased intangible assets - under cost of sales 267 152 669 303
Inventory step-up - under cost of sales 7 15 63 25
Costs related to regulatory actions taken in facilities - under cost of sales 40 45 78 95
Amortization of purchased intangible assets - under selling and marketing expenses 8 10 20 17
Impairment of long-lived assets 8 3 95 14
Restructuring, acquisition and other expenses 48 48 91 70
 
Expense (income) in connection with legal settlements and reserves (1) 221 18 217
Related tax effect (123) (86) (339) (158)
 
 

Reconciliation between reported Net Income attributable to Teva and Earnings per share as reported under US GAAP to Non-GAAP Net Income attributable to Teva and Earnings per share

 
  Six months ended June 30, 2012   Six months ended June 30, 2011
U.S. dollars and shares in millions (except per share amounts)
 

Non-GAAP

 

Non-

 

% of Net

 

Non-GAAP

 

Non-

 

% of Net

GAAP

Adjustments

GAAP

Revenues

GAAP

Adjustments

GAAP

Revenues

 
Gross profit 1

5,266

 

810

6,076

 

60 %

4,388

 

423

4,811

 

58 %
Operating income 1,2 1,935 1,034 2,969 29 % 1,464 741 2,205 27 %
Net income attributable to Teva 1,2,3 1,722 695 2,417 24 % 1,337 583 1,920 23 %

Earnings per share attributable to Teva - Diluted 4

1.96 0.79 2.75 1.49 0.65 2.14
 
 
(1) Amortization of purchased intangible assets 669 303
Costs related to regulatory actions taken in facilities 78 95
Inventory step-up 63   25  
Gross profit adjustments 810 423
 
(2) Impairment of long-lived assets 95 14
Restructuring, acquisition and other expenses 91 70
Amortization of purchased intangible assets 20 17
Expense in connection with legal settlements and reserves 18   217  
224 318
   
Operating profit adjustments 1,034   741  
 
(3) Tax benefit (339 ) (158 )
   
Net income adjustments 695   583  
 
(4) The weighted average number of shares was 878 and 899 million for the six months ended June 30, 2012 and 2011, respectively. Non-GAAP earnings per share can be reconciled with GAAP earnings per share by dividing each of the amounts included in footnotes 1-3 above by the applicable weighted average share number.
 
 

Reconciliation between reported Net Income attributable to Teva and Earnings per share as reported under US GAAP to Non-GAAP Net Income attributable to Teva and Earnings per share

 
  Three months ended June 30, 2012   Three months ended June 30, 2011
U.S. dollars and shares in millions (except per share amounts)
 

Non-GAAP

 

Non-

 

% of Net

 

Non-GAAP

 

Non-

 

% of Net

GAAP

Adjustments

GAAP

Revenues

GAAP

Adjustments

GAAP

Revenues

 
Gross profit 1

2,657

 

 

314

 

 

2,971

 

 

59 %

 

2,200

 

 

212

 

 

2,412

 

 

57 %
Operating income 1,2 1,007

 

377

 

1,384

 

28 %

 

597

 

494

 

1,091

 

26 %
Net income attributable to Teva 1,2,3 863

 

254

 

1,117

 

22 %

 

576

 

408

 

984

 

23 %

Earnings per share attributable to Teva - Diluted 4

0.99

 

0.29

 

1.28

 

 

0.64

 

0.46

 

1.10

 

 

 

(1) Amortization of purchased intangible assets

 

267

 

 

 

 

152

 

 

Costs related to regulatory actions taken in facilities

 

40

 

 

 

 

45

 

 

Inventory step-up

 

7  

 

 

 

 

15  

 

 

Gross profit adjustments

 

314

 

 

 

 

212

 

 

 

(2) Restructuring, acquisition and other expenses

 

48

 

 

 

 

48

 

 

Amortization of purchased intangible assets

 

8

 

 

 

 

10

 

 

Impairment of long-lived assets

 

8

 

 

 

 

3

 

 

Expense (income) in connection with legal settlements and reserves

 

(1 )

 

 

 

 

221  

 

 

 

63

 

 

 

 

282

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit adjustments

 

377  

 

 

 

 

494  

 

 

 

(3) Tax benefit

 

(123 )

 

 

 

 

(86 )

 

 

 

 

 

 

 

 

 

 

 

Net income adjustments

 

254  

 

 

 

 

408  

 

 

 

(4) The weighted average number of shares was 873 and 896 million for the three months ended June 30, 2012 and 2011, respectively. Non-GAAP earnings per share can be reconciled with GAAP earnings per share by dividing each of the amounts included in footnotes 1-3 above by the applicable weighted average share number.

Source: Teva Pharmaceutical Industries Ltd.

Teva Pharmaceutical Industries Ltd.
IR Contacts:
United States:
Kevin C. Mannix, (215) 591-8912
Joseph Marczely, (267) 468-4281
or
Israel:
Tomer Amitai, 972 (3) 926-7656
or
PR Contacts
Israel:
Hadar Vismunski-Weinberg, 972 (3) 926-7687
or
United States:
Denise Bradley, (215) 591-8974