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First-Quarter Results
For the first quarter ended March 31, 2007, Par reported total revenues of$234.2 million and net income of $41.5 million, or $1.19 per diluted share.This is compared with reported revenues of $172.3 million and net income of$4.5 million, or $0.13 per diluted share, for the same period in 2006.
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First quarter 2007 reported, or GAAP, results included a $20.0 milliongain on the sale to Optimer Pharmaceutical, Inc. of marketing rights to theinvestigational drug Difimicin (Par 101), a $1.4 million investment gain onthe sale of shares of Optimer common stock, and net settlement gains of $0.6million related to the discontinuation of certain product-developmentagreements. Adjusting for these items, net income for the first quarter of2007 was $28.1 million, or $0.80 per diluted share.
First-Quarter Review
For the first quarter ended March 31, 2007, total revenues increased 35.9percent compared with the same period in 2006 due primarily to new productintroductions. These products include propranolol HCl extended release (ER)capsules, metoprolol succinate, polyethylene glycol, and ranitidine HCl syrupachieving sales of $31.3 million, $12.3 million, $4.3 million and $4.2million, respectively. Partially offsetting the increases were lower sales ofcertain existing products due to competitive pressures, including fluticasone,paroxetine, tramadol HCl and cefprozil. Revenues of branded products for thefirst quarter of 2007 of $19.5 million, an increase of 137 percent over theprior year period, were driven by increased sales of Megace(R) ES (megestrolacetate) oral suspension, and fees related to the co-promotion of AndroGel(R).
Par's first-quarter gross margin was 37.4 percent of sales, compared to28.5 percent in 2006. The increase in the Company's gross margin resultedprimarily from increased sales of higher-margin products, including Megace(R)ES and propranolol ER, royalties related to the sale of ondansetron orallydisintegrating tablets and the co-promotion fee for AndroGel(R).
Research and development (R&D) expenses increased 1.3 percent for thefirst quarter 2007 compared with the first quarter 2006. The results reflectincreased development costs in support of Par's generic product portfoliotempered by reduced clinical development costs following the termination ofthe megestrol acetate concentrated suspension oncology study in 2006 and thetermination of Par's participation in the development of Par 101, as well aslower personnel costs following the restructuring of the R&D organization.
Selling, general and administrative (SG&A) expenses for the first quarter2007 increased 14.9 percent from first quarter 2006. The increase isprimarily due to an increase of the field sales force for Strativa, theCompany's branded division, as well as the expansion of the finance andaccounting functions and increased professional costs associated with theCompany's restatement.
Second-Quarter and Six-Month Results
For the second quarter ended June 30, 2007, Par reported total revenues of$167.6 million and net income of $2.8 million, or $0.08 per diluted share.This is compared with reported revenues of $195.2 million and a net loss of$7.2 million, or $0.21 per diluted share, for the same period in 2006. Forthe six months ended June 30, 2007, Par reported total revenues of $401.9million and net income of $44.3 million, or $1.27 per diluted share. This iscompared with reported revenues of $367.6
