Barr Pharmaceuticals' Prognosis: Fool by Numbers

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On Feb. 28, Barr Pharmaceuticals (NYSE: BRL) released second-quarter earnings for the period ended Dec. 31.

• Barr Pharmaceuticals acquired Pliva for $2.5 billion after Federal Trade Commission (FTC) approval.
• Net sales increased by 79.4%, driven by higher sales in the oral-contraceptive portfolio, the introduction of generic Actiq, and the addition of Pliva's global product line and proprietary products.
• Gross and operating margin were negatively affected by amortization costs from the Pliva acquisition and by a charge of $57 million inventory acquired from Pliva.
• There was a huge rise in long-term debt, led by $2.4 billion incurred in connection with the Pliva acquisition. Barr's balance sheet is highly leveraged and could limit its flexibility in making significant future acquisitions.
• Management forecasted EPS of approximately $3-$3.30 and total revenues to be in the range of $2.3 billion-$2.4 billion for fiscal year 2007.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q2 2006	Q2 2005	Change
Sales	$584.0	$325.5	79.4%
Net Profit	($390.9)	$94.9	N/A
EPS	($3.67)	$0.88	N/A
Diluted Shares	106.4	107.4	(0.9%)

Get back to basics with a look at the income statement.

Margin Checkup

	Q2 2006	Q2 2005	Change*
Gross Margin	51.1%	72.7%	(21.6)
Operating Margin	(56.2%)	44.5%	(100.6)
Net Margin	(66.9%)	29.2%	(96.1)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q2 2006	Q2 2005	Change
Cash + ST Invest.	$914.7	$421.8	116.9%
Accounts Rec.	$533.1	$192.7	176.7%
Inventory	$452.4	$144.0	214.2%

*Doesn't include marketable securities.

Liabilities	Q2 2006	Q2 2005	Change
Accounts Payable*	$439.8	$142.0	209.7%
Long-Term Debt**	$2,679.7	$11.5	23,201%

*Includes accrued liabilities.
**Includes total debt.

Learn the ways of the balance sheet.

Cash Flow Highlights

	YTD 2006	YTD 2005	Change
Cash From Ops.	$187.0	$104.8	78.5%
Capital Expenditures	$31.7	$36.0	(12.0%)
Free Cash Flow	$155.3	$68.7	126.0%

Find out why Fools always follow the money.

Related Foolishness:

• Barr's Becoming Big
• Barr's Winning Bid
• Barr Labs Resets Bar
• Pliva's Late Christmas Gift to Barr

Barr is a Stock Advisor pick. Check out Tom and David Gardner's market-beating newsletter service free for 30 days.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.