Q4 2012 Earnings Call Transcript

Transcript Call Date 03/21/2013

Operator: Good day, ladies and gentlemen, and welcome to the Par Pharmaceutical Companies, Inc. Earnings Conference Call. My name is Kasiv, and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference.

I would like to turn the call over to Michael Tropiano, Chief Financial Officer. Please proceed, sir.

Michael A. Tropiano - EVP and CFO: Good morning, and welcome to Par Pharmaceutical's review of our full year 2012 financial results. I'm Mike Tropiano, CFO of Par and today I'm joined by Paul Campanelli, Par's Chief Executive Officer, Tom Haughey, our President and Barry Gilman, Par's General Counsel. After a few comments, we will open it up to questions.

I need to remind you that certain comments made during this call may constitute forward looking statements. Such forward looking statements are subject to both known and unknown risk and uncertainties that could cause actual results to differ materially from such statements. Those risk and uncertainties are described in Item 1A Risk Factor of our Annual Report on Form 10-K for the year ended December 31, 2011 and in the reporting packages for the third quarter 2012 and the year ended December 31, 2012 posted on the secured portion of our website as well as other SEC filings and postings we have made or may make in the future. We do not undertake any obligation to update these forward-looking statements.

Also during the call today we may be discussing adjusted EBITDA which is a non-GAAP financial measure, please see our reporting package for reconciliation to net income to most directly comparable GAAP measure.

The acquisition of Par by investment funds affiliated with TPG was completed on September 28, 2012 and the third quarter financials we posted subsequently did not include purchase accounting adjustments or give effect to the transactions relating to the closing of the acquisition. These events are now recorded in the 2012 annual report we released last evening.

Our 2012 results show a GAAP determined net loss of $11.4 million on revenues of $1.1 billion after taking the DOJ settlement transaction costs we incurred during the course of the year and took business development into account our 2012 net income adjust to positive $67 million.

The adjusted gross margin generated by our product portfolio for 2012 reached $460.9 million a strong increase of 15.3% as compared to 2011.

Moving over to our cash flow statement you will see that our cash generated from operations was $153.8 million for the predecessor period, which covers the beginning of 2012 through the TPG Par transaction closing. This metric then turns to negative $28.6 million for the period of September through December 31, 2012.

It is important to note that this successor period contains a number of one-time items including $36 million in transaction related cost $10 million business development transaction as well as yearend compensation cost. After giving effect to these items, operational cash flow for this period was positive $29 million.

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