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February 14, 2000 3:18 p.m.
TEVA Pharmaceutical Industries Ltd. Reports 1999 Fourth Quarter and Year End Financial Results; Fourth Quarter Net Income Up 35%
 Jerusalem, Israel, February 14, 2000 - Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA) today reported financial results for the fourth quarter and year ended December 31, 1999.

Total consolidated sales in the 1999 fourth quarter amounted to $379.9 million, an increase of 28% over the comparable 1998 quarter. Net income amounted to $40.1 million, compared with $1.4 million in the comparative period, the latter after absorbing one-time charges of $28.2 million. Before one time charges, 1999 net income rose 35%.

Earnings per ADR for the fourth quarter of 1999 were $0.64, as compared with $0.06 in the corresponding quarter after the one-time charges, and $0.51 before these charges.

Total consolidated sales for the year were $1.28 billion, an increase of 15% over 1998. Net income, after deducting one-time charges, amounted to $117.8 million. Before deducting one-time charges of $17.7 million in 1999 and $28.5 million in 1998, net income amounted to $135.5 million, a 39% increase over the $97.3 million in 1998.

Earnings per ADR for the year, after deducting one-time charges, amounted to $1.88, compared to $1.15 in 1998. Before deducting one-time charges in 1999 and 1998, earnings per ADR rose 35% to $2.16, as compared to $1.60 last year.

It should be noted that the financial results of Copley Pharmaceutical, Inc., ("Copley") acquired on September 17, 1999, are consolidated for the first time in the fourth quarter of 1999 although Copley was already consolidated in Teva's September 30, 1999 Balance Sheet. Also, the results of Pharmachemie B.V. ("Pharmachemie"), acquired on July 1, 1998, were not included in the first half of 1998.

Eli Hurvitz, President and Chief Executive Officer, commented, "We are very pleased with our 1999 results, in which Teva returned to its historical growth rates in both sales and net income. This is especially evident in the fourth quarter - Teva's best ever. During 1999, Teva strengthened its leadership position in the global generic market through the acquisition of U.S. based Copley and the announced acquisition of Canada's Novopharm Ltd. ("Novopharm"). Together with Copley and Novopharm, I believe, Teva will become the global generic leader. Both of these acquisitions will contribute strongly to Teva's operations in the coming year."

Fourth Quarter 1999 Highlights

The main drivers behind the sales growth during the fourth quarter were:
  • A strong performance in North America where pharmaceutical sales increased quarter over quarter by $61.3 million. Approximately one half of the increase is from the first time consolidation of Copley's results, and the balance represents sales from the introduction of new products during the year, including the generic versions of Cardizem CD® and Wellbutrin® launched during the fourth quarter.
  • Record sales in Europe. Strong unit volumes and newly launched products, as well as price increases, resulted in pharmaceutical sales rising 33% to $92.2 million.
  • Continued market penetration by Copaxone®, Teva's first innovative product, prescribed to treat patients with relapsing-remitting multiple sclerosis. Sales (as booked by Teva) increased more than 2.5 times over the fourth quarter of 1998; In-market sales of Copaxone® were $49.0 million, an increase of 50% over the comparable quarter last year.

The higher consolidated gross profit margin, (40.2% in 1999 compared with 39.4% in 1998) reflects higher sales of Copaxone®, an improved product mix in the U.S. and Europe, as well as the positive results of Teva's worldwide production rationalization program initiated two years ago.

While Gross R&D expenses (net of purchased R&D) increased 47% to $27.2 million, the corresponding net R&D increased by a lower 38% to $21.8 million due to higher grants and participations, including for the first time participation of H. Lundbeck A/S ("Lundbeck") in Teva's R&D spending.

During the fourth quarter of 1999, initial R&D expenses were recorded on the two further developments of Copaxone®, namely, Oral Copaxone, and "Promise", the clinical trial for primary progressive patients.

While SG&A increased in nominal terms, mainly as a result of the consolidation of Copley (including amortization of its goodwill), as a percentage of sales, SG&A decreased to 18.2% in the fourth quarter of 1999 from 18.6% in the fourth quarter of 1998, reflecting synergies achieved within Teva's worldwide operations.

Finance expenses increased by 45%. This reflects mainly the interest charges on the Copley acquisition debt. Taxes on income were at a rate of 22.9% for the 1999 fourth quarter, several percentage points lower than the 30% provided for in the fourth quarter of 1998 (on income before one-time charges). Changes in Teva's income mix are the main reasons for this decrease.

During the quarter, Teva generated cash from operations of $39.5 million, as compared with $9.1 million in the comparable quarter of 1998.

Fiscal 1999 Highlights

The $166.0 million increase in sales year over year is almost evenly split between organic growth and the contribution to sales by the acquisitions of Pharmachemie and Copley. Most of the organic growth came from Europe and the balance from the U.S., sales of Copaxone® and the API Business.

Consolidated quarterly sales rose sequentially in 1999, with most of the increase occurring in the second half of the year.

During the first three quarters of 1999, sales growth was primarily attributable to Teva's strong performance in Europe. The fourth quarter sales increase reflects higher U.S. sales, partially due to the first time consolidation of Copley.

Gross profit margins varied during 1999, but overall showed a significant increase over 1998, averaging 40.1% in 1999 as compared to 37.7% in 1998.

The improvement in 1999 reflects the positive effects of Teva's rationalization measures, predominantly in Europe, as well as the introduction of new, higher margin products in the U.S., mainly towards the end of the year.

R&D expenses (net of purchased R&D) for 1999 increased 21% to $91.6 million, while net R&D increased 20% to $ 81.8 million.

SG&A as a percentage of sales decreased from 18.6% to 18.2%, reflecting the benefits of the rationalization plan.

The tax rate of 24.7% in 1999 is lower than the 26% provided for in 1998 (in both years net of one-time charges), reflecting a change in the income mix.

Cash flow from operations for 1999 amounted to $154.0 million, as compared to $70.0 million in 1998.

Mr. Hurvitz continued, "In addition to Teva's strong operating performance, we also consummated a number of significant acquisitions and joint ventures during the year that provide an important foundation for future growth. These include the acquisition of Copley in September 1999; the acquisition of Novopharm (closing is expected on or before March 31, 2000); the agreement reached with BioTechnology General Corp. ("BTG"), whereby Teva obtained global marketing rights for biogeneric products to be developed and manufactured by BTG; and a strategic alliance with Lundbeck of Denmark for the co-development and marketing in Europe of two of its products for the treatment of Parkinson's disease."

"In addition," Mr. Hurvitz added, "during 1999, Teva substantially completed its two-year production rationalization program which included: transferring production of tablets from APS Berk (U.K.) to the European tableting center of expertise in Biogal (Hungary) and to Israel; transferring production of sterile oncological products from Netanya (Israel) to a sterile oncological production center in Haarlem (the Netherlands); and closing production facilities in Zaandam, the Netherlands and Paterson (N.J., USA) and consolidating the production previously carried out at those plants to other facilities in the U.S., the Netherlands and Israel. In addition, we expect to exit the Copley facility in Canton, Mass. before the end of this year. Production of these products will be transferred to other facilities in the U.S. and Israel".

"Teva is entering year 2000 with a pipeline of 32 products awaiting FDA approval (including 4 of Biovail) and 10 tentative approvals. Collectively, the innovative product markets for these products exceeds $10 billion. We are proud of our progress to date and are very excited about our future," Mr. Hurvitz concluded.

In a separate announcement today, Teva's Board of Directors declared an increased regular quarterly cash dividend and a two for one stock split of the Company's Ordinary Shares.

Teva Pharmaceutical Industries Ltd. is Israel's largest pharmaceutical company, with over 80% of its sales outside Israel, mainly in the United States and Europe. The Company develops, manufactures and markets generic and branded human pharmaceuticals, active pharmaceutical ingredients and medical disposables.



Safe Harbor Statement: This report contains forward-looking statements, which express the beliefs and expectations of management. Such statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause the Company's 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 the impact of pharmaceutical industry regulation, the difficulty of predicting FDA and other regulatory authority approvals, the regulatory environment and changes in the health policies and structure of various countries, acceptance and demand for new pharmaceutical products and new therapies, the impact of competitive products and pricing, the availability and pricing of ingredients used in the manufacture of pharmaceutical products, uncertainties regarding market acceptance of innovative products newly launched , currently being sold or in development , the impact of restructuring of clients , reliance on strategic alliances , fluctuations in currency, exchange and interest rates , operating results , the impact of the year 2000 issue and other factors that are discussed in the Company's Annual Report on Form 20-F and the Company's other filings with the U.S. Securities and Exchange Commission.



TEVA Pharmaceutical Industries Limited
Consolidated Statements of Income
(In thousands, except Earnings per ADR)


  Quarter Ended
Year Ended
  December 31
  1999
1998
1999
1998
  U.S. Dollars
         
Sales 379,904 296,906 1,282,406 1,115,928
Cost of Sales 227,203
179,976
767,627
694,763
Gross Profit 152,701 116,930 514,779 421,165
Research and Development Expenses:        
Total expenses 27,155 18,414 91,622 75,581
L e s s grants and participations 5,313
2,559
9,780
7,511
  21,842 15,855 81,842 68,070
Selling, General Administrative Expenses 69,197
55,077
233,891
208,024
  61,662 45,998 199,046 145,071
Acquired Research and Development* - 8,000 17,700 13,500
Restructuring Expenses* -
11,030
-
15,030
Operating Income 61,662 26,968 181,346 116,541
Financial Expenses - net 9,867 6,790 30,165 23,328
Losses from Realization of Assets and Discontinuation of Activities* - 12,760 - 3,308
Other Income - net 1,090
2,907
10,781
8,940
Income Before Taxes on Income 52,885 10,325 161,962 98,845
Taxes on Income 12,088
9,250
44,335
30,888
  40,797 1,075 117,627 67,957
Share in Profits (Losses) of Associated Companies (1,024) 434 (550) 903
Minority Interests in Consolidated Subsidiaries 281
(124)
756
(30)
Net Income * 40,054
1,385
117,833
68,830
Earnings per adr ($) ** 0.64
0.06
1.88
1.15
Weighted Average number of adr's 62,959
62,836
62,941
62,651
         
         
* Net Income before Non- Recurring Items 40,054
29,619
135,533
97,341
**Earnings per adr ($) Before Non Recurring Items 0.64
0.51
2.16
1.60




Teva Pharmaceutical Industries Limited
Consolidated Balance Sheets


  December 31
  1999
1998
  U.S. dollars In thousands
     
A S S E T S    
Current Assets    
Cash and cash equivalents 77,177 47,074
Short-term investments 17,226 2,148
Accounts receivable:    
Trade 361,293 274,592
Other 103,309 99,182
Inventories 351,478
353,249
T o t a l current assets 910,483 776,245
Investments and Non-Current Receivables 31,681 32,566
Property, Plant and Equipment    
Cost 856,493
754,638
Less accumulated depreciation 377,957
299,656
  478,536 454,982
Intangible Assets, net 293,319
172,205
  1,714,019
1,435,998
     
Liabilities and Shareholders' Equity    
Current Liabilities    
Short-term credit - mainly from banks 276,259 324,534
Accounts payable and accruals:    
Trade 114,454 123,743
Other 140,053 84,814
Proposed dividend 6,806
4,554
T o t a l current liabilities 537,572 537,645
Long-Term Liabilities    
Deferred income taxes 31,687 33,172
Accrued employee rights upon retirement, net of amount funded 11,041 3,895
Loans and other liabilities 391,419
201,699
T o t a l long-term liabilities 434,147
238,766
T o t a l liabilities 971,719 776,411
Minority Interests 17 781
Total Shareholders Equity 742,283
658,806
  1,714,019
1,435,998